Q1 2024 ATS Corporation Earnings Call
Welcome to the H S Corporation first quarter conference call and webcast. This call is being recorded on August nine 2023 at 830, a M eastern time.
Following the presentation, we will conduct a question and answer session instead.
Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference. Please press star followed by zero for operator assistance at any time.
I'll now turn the call over to David Galison head of Investor Relations at a T S.
Thank you operator, and good morning, everyone.
On the call today are Andrew Hider, Chief Executive Officer of Etfs and.
And Brian Macleod, Chief Financial Officer.
Please note that our remarks today are accompanied by a slide deck, which can be viewed via our webcast and available at Ats automation dotcom.
We caution that the statements made on the webcast and conference call may contain forward looking information.
And our cautionary statement regarding such information, including the material factors that could cause actual results to differ materially from the statements and the material factors or assumptions applied in making these statements are detailed on slide two of the slide deck.
Now, it's my pleasure to turn the call over to Andrew.
Thank you David.
Good morning, ladies and gentlemen, and thank you for joining us.
This has been an exciting and transformational few months rates yes.
We successfully completed our U S IPO and New York Stock Exchange listing.
This represents.
Important milestone and supports our strategic growth objectives.
Providing increased liquidity in our shares and additional flexibility for M&A.
Today.
Toward a strong start to fiscal 'twenty four.
Including record revenues supported by solid bookings.
Backlog in adjusted earnings.
These results reflect our team's disciplined execution of the Ats business model.
Our a b M has reached a level of maturity that allows us to refine our approach and add new tools to drive performance for our customers and shareholders.
First I will update you on the business and Ryan will provide his financial report.
Starting with our financial value drivers.
Bookings for the quarter were $690 million.
And included growth in life Sciences, and continued strength in E b and food and beverage.
Q1 revenues were a record $754 million up 23% from Q1 last year, including strong organic growth.
Adjusted earnings from operations in Q1 were $102 million up 29% versus Q1 last year.
Moving to our outlook.
We ended the quarter with order backlog of over $2 billion.
This was anchored by our strong bookings in life Sciences, partially offset by the expected revenue ramp up on our projects and execution of primary processing projects ahead of the harvest season, and food and beverage.
As a reminder, the <unk>.
Timing of customer decisions on larger opportunities can cause variability in order bookings from quarter to quarter.
By market life.
Life Sciences backlog was $783 million.
Of note our Q1 bookings included several key wins at strategic sub markets, including contact lenses.
Oh injectors in diabetes care, along with pharma and radio pharma.
We secured another significant order based on Symphony, our innovative high speed Assembly technology.
Overall, the life Sciences funnel for fiscal 'twenty four remains strong.
Transportation ending backlog was $834 million.
124% year over year as we continued to execute on our current EV programs.
Our existing programs are being executed well and are on track from a cost and timing perspective.
Because of the strategic nature of EV program and large order values just can cause variability in bookings that said our transportation funnel remains strong.
And we remain well positioned given our significant experience and expertise in this space.
And food and beverage.
Bookings were solid the ending backlog was $188 million up 15.
Percent year over year, even as our teams delivered on projects in backlog ahead, the tomato harvest season.
Our funnel remains strong.
Timing of the summer harvest season drives some seasonality in this vertical.
In energy.
The nuclear market continues to provide long term opportunities.
Including new public sector interests.
The focus on clean sustainable energy to support future subtle needs, including grid requirements for electric vehicles.
The driver for our business as is the adoption of carbon reduction targets.
<unk> is well positioned to support in several areas as customers add and refurbished nuclear power plants and commercialize small larger reactors.
We also have specialized skills in energy storage and continue to work with customers on select opportunities.
In consumer products, our backlog and funnel are stable. However, inflationary pressures continue to have an effect on discretionary spending in the personal care markets, which may impact timing of some customer investments.
On digital.
To create real value out of production Digitization, our customers are looking for a partner who.
We're strong in both automation integration.
And domain knowledge.
Our teams are helping customers understand how to capture data and more importantly, how to extract value from that data to drive impact.
For example.
A major global customer utilizing our Iot platform for plant performance management.
The award Us with a global management services contract for digital services.
Another life Sciences customer recently launched a pilot with us for a global Iot platform for performance management.
On after sales services.
We're actively engaged with customers you leveraged both technology and services to provide a better customer experience and outcome.
For example, our enhanced remote support platform streamlines the process of contacting HTS support simply by scanning a QR code.
With one customer just ease of contact has led to an annual remote service contract leveraging the technology and our subject matter experts.
Also on after sales services, our regional networks and service centers, our training and Onboarding, new resources to support our customers and critical geographic regions.
The recent acquisition of triad provides extended capabilities to support customers with predictive maintenance.
On supply chain material cost and lead time pressures remain and will take time to work through some of our larger projects.
We have started to see some improvements in both pricing and lead times in certain areas.
Hunter measures that were created to combat volatility throughout much of fiscal 'twenty three remain in effect.
Allowing us to stay on schedule with our operations.
Our Ats business model, our ABM playbook continues to create a competitive advantage during the quarter, we completed 45 ABM events across all business groups and geographies.
We use our ABM tools to drive improvements in all aspects of our business not just on the shop floor.
The ABM itself is also subject to continuous improvement.
We constantly challenge ourselves on ABM tools and events to drive impact and stay focused on our value drivers.
Im pleased that our AGM is evolving and improving with time and use.
In June we hosted our annual Ats leadership conference.
The theme was building the best Ats and.
And was aligned to our three core values of people.
<unk> and performance.
Provide an opportunity for our leaders to see examples of the ABM and action across our decentralized business as we drive value for our employees.
Customers and shareholders.
On M&A we.
We recently announced and closed two acquisitions <unk>.
<unk> zoom in Q1, and Odyssey validation consultants in early Q2.
Both are part of our process automation group and enhance our capabilities in AI process optimization and digital services.
Our M&A funnel remains active and healthy and with our recent equity offering and listing on the NYSE, we have the balance sheet and financial capacity to move quickly should a potential opportunity meets our strict acquisition criteria.
Our sustainability.
Hs recently earned a bronze medal from eco virus.
One of the world's leading providers of business sustainability ratings.
This award speaks to our ongoing commitment to improve sustainability within Ats.
And leverage our solutions to help customers achieve their sustainability goals.
Our teams are working closely with our global customers to meet their needs through energy efficient automation and energy management solutions.
We are actively monitoring regulatory developments, including international reporting standards and more specific regional requirements.
We look forward to releasing our next sustainability report later this year.
On innovation.
We continue to deploy capital and leverage talent.
<unk> differentiated.
Enabling solutions that generate attractive returns for our customers and shareholders.
When customers visit our sites, where our innovations are displayed their enthusiasm is clear.
In particular, our patented Symphony technology.
On view at our <unk> Innovation Center in Cambridge, Ontario.
It's a good example of our investment in leading edge technology with applications across life Sciences. In addition to other possible market applications that we will explore in the future.
A few other innovation highlights from the quarter, our <unk> team launched its micros machine for dispensing micro fluid drops of radioisotopes.
Used in the preparation of Radiopharmaceuticals.
And built on its contribution to automating their production of prostate cancer therapies.
Our SP team has developed its easy to bionic automated evaporator for integration into automated chemistry reliance which enables the production of pharmaceuticals that used new approaches to delivering drugs to target cells within a patient.
Finally, our.
Our Ats innovation Center developed a novel method for performing ultrasonic welding using our symphony platform that we believe have a variety of applications.
In summary.
Disciplined adherence to our build.
ROE and expand strategy is driving positive results.
Our strong backlog and funnel give us confidence moving forward.
With a focus on operational excellence.
We will continue to build the best Ats.
For our employees customers and shareholders.
Now I'll turn the call over to Ryan Brian over to you.
Thank you Andrew and good morning, everyone.
This was a productive quarter for Etfs that included solid and diversified bookings and continued good execution across our business.
Beginning with orders bookings were $690 million down six 3% compared to Q1 last year, which included a 70 million U S. BV order.
Our trailing 12 month book to Bill ratio at the end of the quarter was $1 one eight to one.
Broader context for our Q1 results ranks among the five best quarters for order bookings and Etfs is history.
Moving to revenues Q1 revenues were $754 million up 23, 4% over Q1 last year.
<unk> revenue growth was 15, 4% year over year and was primarily due to increases in transportation related to EV battery projects.
Recently acquired companies added approximately 3% to revenue growth and foreign exchange translation added a five 5% benefit compared to Q1 last year.
Our Q1, ending backlog of just over $2 billion.
It was 30% higher than Q1 last year.
Finding good revenue visibility for the fiscal year.
Our revenue conversion for Q2 is estimated to be in the 34% to 37% range of backlog based on revenue expectations from existing backlog and new orders booked and billed within the quarter.
As a reminder, we do tend to experience seasonality in our business in the second fiscal quarter due to seasonality in our food business and higher vacation periods in our European based businesses.
Moving to earnings Q1, adjusted earnings from operations were $102 1 million up 29% from last year, primarily due to revenue growth.
Adjusted earnings from operations margin was 13, 5% in the quarter up 58 basis points compared to last year, reflecting higher operating leverage partially offset by lower gross margin.
Our Q1 adjusted gross margin was 28, 2% down 50 basis points from Q1 last year.
The year over year decrease primarily reflected the execution of higher margin programs in the prior year period due in part to supply chain cost inflation and lead time impacts and current programs being executed.
In supply chain, we have seen improvement in specific cost categories, such as raw materials and freight and cost inflation has stabilized.
Despite some improvement overall volatility remains in the supply chain environment.
Lead times remain extended in key areas, primarily electrical control components, which impacts our ability to drive efficiency in our supply chain in the short term.
Our global supply chain teams are focused on countermeasures to help mitigate these challenges.
Moving to SG&A expenses were $11 $5 million higher than Q1 last year.
This quarter's cost included $18 6 million of acquisition related amortization.
And 0.1 million of acquisition related transaction costs.
Excluding these comparable items in both periods Q1, SG&A was $105 million $13 5 million higher than Q1 last year, primarily reflecting foreign exchange translation incremental SG&A expenses from acquisitions and increased employee costs.
Stock based compensation expense for Q1 was $10 million, an increase of $14 million from last year's recovery of $4 million.
Excluding the mark to market impact related to changes in our share price stock based compensation expense was $5 6 million in Q1 compared to an expense of $4 $3 million last year.
Moving to the balance sheet and.
In Q1 cash flows used in operating activities were $107 8 million.
Primarily driven by an increase in working capital on our large television programs.
Noncash working capital as a percentage of revenue was 15, 6% at the end of Q1 up from 10, 1% at the end of Q4, primarily reflecting the timing of progress and milestone billings on our large EV programs because I have noted previously cash generation and period end working capital values can fluctuate.
Depending on timing of billing milestone payments in execution of work on our larger programs.
In the short term, we continue to expect working capital to remain variable and could exceed 15% in certain quarters as was the case in Q1.
In the first quarter of fiscal 'twenty, four total investments in Capex and intangible assets were $23 million. This.
This is in line with our expected fiscal 'twenty four capex spend of $80 million to a $100 million, which is supporting our organic growth.
On leverage or net debt to adjusted EBITDA ratio was 2.0 to one as of the end of Q1 down from $2 71 at the end of Q4 and in line with our target leverage range of two to three times net debt to adjusted EBITDA.
Our lower sequential leverage reflects net proceeds from our recently completed equity offering that we've used to initially pay down amounts outstanding on our revolving senior secured line of credit.
We ultimately intend to utilize capital from the offering to pursue strategic opportunities including acquisitions.
As noted previously we are willing to temporarily increased our leverage beyond our target leverage range to support short term working capital requirements or for an acquisition that fits within our framework increase long term value for our shareholders.
In summary.
<unk> delivered solid results for the quarter again, highlighting the strength of our strategic end markets and the value of the ABM and driving disciplined execution across all parts of the business. Our teams remained focused on serving our customers and delivering value.
Going forward, we expect supply chain challenges will take some time to abate and we are continually driving existing and new countermeasures to address inflation and other persistent supply chain issues.
Strong order backlog supports our immediate growth plans and with the additional financial flexibility gained from our recent U S. IPO, we have additional capacity to pursue organic and acquisition opportunities that meet our disciplined investment criteria and create value for our customers and shareholders.
Now we will open the call to questions from our analysts operator could you. Please provide instructions. Thank you.
Yeah.
Yes.
Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the one on your Touchtone phone.
You will hear three Tom prompt acknowledging your request.
Should you wish to remove yourself from the queue. Please press star two.
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One moment. Please for your first question.
The first question comes from Cherilyn Radbourne of TD Cowen. Please go ahead.
Good morning. This is Patrick Sullivan on behalf of Cheryl and Rob Bourne. Thank you for taking my questions.
As it relates to bookings backlog and the transfer Tech transportation segment, specifically previously you'd mentioned a few ongoing pilot projects with new EV customers are you able to provide any updates with respect to those pilot projects and whether or not their indications for further follow on orders.
Yes, it could good morning, Patrick So we've talked about pilot and then go into production I would say.
We see the same as we've seen in the past where customers are aligning their solution set with the launch of EV vehicles, and we do view the pilot moving to our production whether it's in the short term or long term. So I would say no change in the dynamic with customers around this around this taking from an identification to.
Our solution set and full automation.
Patrick just just as a reminder, these programs are typically longer in duration. So.
12 to 18 months.
Kind of gives you a bit of a sense around.
When when further opportunities could be could materialize.
Okay, great. Thank you switched.
Switching over to the topic of M&A.
Most recent group of tuck ins seem to support building out the process automation platform further while in particular acquisition, you zoom, which you've talked about springing more expertise in the areas of AI and ml can.
Can you discuss how that those capabilities may be integrated across the larger process automation portfolio, and then whether or not there other AI machine learning tools that Ats has either evaluating in the market or working on internally.
Absolutely and Patrick I will take this in a bit of kind of.
To answer your question as it was asked so yes zoom really pleased with this edition and as a.
Minder.
Set the framework or <unk> business.
Is really aligned itself with the ability to.
To pull information and data from from customer sites to then bring it. So we can take action will provide insight on said data to then drive improvements in the process and we've been continuing to build out and really enable this transition and as a reminder, because etfs is a strong position.
<unk> integration and automation and domain expertise it really enables us to support our customers to drive actionable insights because customers look for just beyond a dashboard how they can really improve their process to then improve their output.
And so <unk> really been enabling Sn and has positioned themselves as a strong leader in this space.
Which then positions for more data analytics and more AI and that's where he is zoom really comes in and in this business. We identified what are their AI based detections of anomalies in the data where it allows us to SaaS and do more predictive. So we can start to understand when things get out.
Of sequence or out of spec and take action before the machine goes down and Youre going to see pega and our total business continuing to build out capability around solutions SaaS around capabilities in that space around.
Specific actionable insights and we have launched <unk> facts, which is a cloud based solution set where customers can now be part of.
If you step back Ats as a whole we've made we've made a shift to enabling our solutions our products to be digitally enabled in the fields.
And we're continuing down that debt that progress.
If you then step back and look at AI within the business.
It's impacting every aspect of our business and I can talk about it from a standpoint of how we operate.
We innovate to how we launched solutions and.
As a case in point example.
We now are doing incoming inspection utilizing AI, where we're testing incoming products or parts. We can understand are they having abnormalities are they starting to get out of spec. So we can notify the supplier that they are having an issue.
So not only going to even our auditing process to identify where we might want to go deeper and harder.
And really enabling our ability to maximize data maximize the impact to then innovation and launch in just a couple of examples.
We're very excited and one of them I'll highlight is our <unk> business.
And they have no. They are working with two customers in Italy and have highlighted this at a tradeshow logistic up where they're now doing it.
<unk> hundred 60 scanned.
Peeled Tomatoes.
And the challenge here is not a defect in the tomato list. That's usually something that is fairly easy to identify they're looking actually for appeal fragments, where it might not have gotten all the peel off the tomato itself and then it will kick it off to reprocessing and so it really enables them to become higher value to customers higher on the quality.
Change higher on the impact.
And utilizing technology and innovation with AI to bring a full solution set to market and so it is certainly something that we're invested in focused on and really maximizing the impact in the space that we have but it is early in its journey and so while we're pleased with our progress there is a lot more to go here and we're excited about what the opportunity.
Presents itself in the future.
Excellent. Thank you.
Thank you. The next question comes from David Ocampo Cormack Securities. Please go ahead.
Hi, Thanks, good morning, everyone.
Good morning, David.
I mean, I think everyone knows that GM raised some automation supply chain concerns with their battery pack Assembly and I think you guys touched on it briefly in your prepared remarks.
But I was hoping you guys could share a little bit more details on how you've been able to mitigate supply chain issues.
Particularly as it relates to delivering projects on time, which you alluded to in your remarks.
Yes so.
Our business and if we look at the supply chain, we are seeing some improvements here.
And we've actually seen lead times come down, but you know David is as we've walked in the past we identified supply chain as a real target years ago and our teams went into.
Really a proactive countermeasure about identifying where we might have a gap.
And starting to align around how to minimize that impact and we call. It daily visual management, where you basically look at the business on a total level at a regional level at a site level, where you can understand where you have an impact on whether it's electronic or mechanical part and then determine where you minimize.
That impact and our teams have done really an excellent job around minimizing this and turning it into a real advantage for Etfs now we are seeing supply chain start to ease I would say, we're not we're not back to pre pandemic levels, but it is moving in the right direction, especially on lead time.
And when we then look at.
The EV space.
We're a proven leader in this space, we have a track record we've done more than 100 battery lines to date, and we continue to position ourselves.
And have and looked at high value for customers that are going to navigate launching new EV solutions in the market and so.
Continued focus continued monitoring, but but certainly something that is on our on our radar.
Got it that's perfect and then just maybe a quick one for Brian if it's taking a look at.
Your working capital, it's above that 15% threshold should we should we be thinking about any big cash flow collection milestones in the next quarter or maybe even two quarters and that trend that Laura.
Well.
So a couple of things.
Our goal is to maintain that below 15% we've talked about.
These large programs, causing variability and certainly we've seen that in the uptick in this quarter I would say, we're going to continue to see variability in this metric.
At period ends I mean cash flows are.
Coming in on these projects, but there was large project come large billing milestones and if they fall.
In the week after quarter end or the week before that can drive a pretty dramatic difference.
But.
All the see that the.
The cash collection.
Our ongoing and we don't see any issue, but a variability we will continue to see just given the size of the programs.
Got it that's helpful. That's it for me thanks, guys.
Thank you David.
<unk>.
Thank you. The next question comes from Michael <unk> of Scotiabank. Please go ahead.
Hey, good morning, guys.
Just to follow up on the supply chain discussion.
I Wonder if you can maybe talk about to what extent, it's still weighing on margins.
Any way you can help us understand how much they've improved so far again versus last year, and then how much more to go to kind of get back to that desired.
The margin level.
Yes, good morning, Michael So there is still an impact.
Keep in mind, a lot of what we do our projects, which take 12 to 18 months to complete.
And so.
The supply chain impacts that we've seen over the past year in terms of inflation and lead time.
Those are those are embedded in the work that we're executing today so.
We've talked about in the past our team has done an excellent job in implementing mitigation and working to overcome these challenges, but it is part of our portfolio today I would say as we see improvement and we talked about.
Some some incremental improvement although.
Generally we're still we're still not near pre pandemic.
Efficiency in terms of lead times.
But as we see that improvement.
It will take to.
A quarter or two it really depends on where we are in projects, but it will take there'll be a bit of a lag before we start to see any sort of benefit in our margins from a from a return to normal supply chain environment perspective.
That makes ton of sense and maybe on the lead times.
It feels like your peers are talking about again moderate in lead time, just just like you did here.
Which again I presume helps the supply chain. It helps the margin profile I wonder whether the normalization of lead times means we may see a normalization of your backlog as well as your burn rate over the next couple of quarters.
Sorry next couple of quarters as customers.
Not have to order as in advance as they did before.
We haven't really seen that impact in our business.
Most of I mean.
What we're doing for customers.
<unk>.
People, we've been asked around around double ordering and things like that thats not an issue.
We're doing it.
Typically very strategic projects, where.
Our customers launching a new product or theyre ramping up capacity and so it's not the type of item.
Item, you're going to double order.
From a lead time perspective.
We've seen some extension of our project lead times due to supply chain, but we're also able to mitigate a lot of it through some of the tools that Andrew talked about when we.
We're looking at daily visual management around.
Lead times on specific components and having that knowledge early in a project allows us to order now the challenges that that takes away some ability for us to drive efficiency and supply chain.
It doesn't affect schedule as much as it does affect efficiency.
Perfect. Thanks for the color.
Thank you.
Once again, ladies and gentlemen, if you do have a question. Please press star one at this time.
Our next question comes from Justin <unk> of Stifel. Please go ahead.
Good morning, Thanks for taking my questions.
On the comments surrounding digital which I assume are involves the ta business are you able to characterize the percentage of total revenue that would be classified as digital and also if I heard correctly in the opening remarks Ats is searching for a partner.
In digital if that is true what would the criteria be and what type of form could that look like thanks.
Yes.
Good morning, I guess I'll start and Ryan can add.
We look at digital it it really is going to be in line with not only our business, but also our services impact and it's what are the what are the challenges that we bought that looked at is how do you characterize revenue from from AI to digital offering full services and so we do characterize this within our within our <unk> and <unk>.
<unk> business and we continue to see real opportunity for growth here, we've had nice progress throughout the year, we also see real potential for the future.
As far as partnering we often look for partners around digital we also look for future ads like zoom and others to bring that value to the market and we have a focus around owning the floor.
And how we mean around that is is the ability to extract bringing the data to an area, where you could take action on the insights and then bring that value back into customers.
And so whether we own whether we partner whether we innovate to bring solution. We are constantly looking to move up that value chain for owning the production owning the capability for customers and as a reminder.
Most sites with our customer base are brownfield sites, meaning they've been in existence and they look for solutions like what <unk> can bring to market, where they want to digitize a production floor that maybe doesn't have the ability to have a digital output and we bring that to market.
And Justin just on the first part of your question so in terms of.
Software digital revenues.
In the low single digit percentage of our overall revenue base today.
And would that be close to software as a service revenue or SaaS.
Yes.
Yes short answer is yes, okay, great and then just on M&A. If you can provide us an update on the funnel target segments that you're looking at any changes in multiple and then also I believe Ryan mentioned.
The net debt to EBITDA, and bringing that up potentially for a quarter or two on M&A and what that could look like thank you.
Sure I'll take the first part and then Ryan can walk through the second look our funnel remains healthy and it has a good mix.
Small medium and large deals and what are the things that we've really been lining up in the ABM has helped tiers as our process around when.
When we identify to driving to the ability to either move forward or not and really enabling that continuous improvement on cultivation as well as assessment.
And so our funnel remains healthy as you know we have a focus on Halloween cultivating.
Are always cultivating and looking for technologies and IP in the spaces that we view our high consequence of failure.
Whether it's life sciences, or digital or capabilities that go across platforms.
We are actively continuing to look at the market and continuing to build relationships that said, we're disciplined and we're going to continuously be disciplined around ensuring that as high value for our customers and our shareholders.
And making sure we maximize that value.
And just in terms of leverage so we've talked about it two times to three times range for four leverage.
We would be open to exceeding that in the short term.
It's three five potentially but that would really depend on the asset in there their profile and.
And where we see short term working capital needs for our business.
So so I don't want to put out.
A definitive number out there, but it's something we would consider in the right circumstance.
Understood. Thanks for taking my questions.
Thank you.
Thank you.
The next question comes from <unk> Khan of RBC capital.
Please go ahead.
Okay, great. Thanks, and good morning, I guess, just a question on kind of the larger push towards after sales service and illuminate.
Current environment.
Can you maybe talk about your go to market strategy with getting more customers sort of activate that software and sort of how you're pushing the after sales service element just broadly does that evolve as the macro backdrop evolves.
Okay.
So I'll answer that almost going backwards in our view is it does magnify S as things become potentially uncertain. We do view services. We view the digital capability is enabling our customers to really maximize their assets in the field and so we do view this as a real opportunity in <unk>.
<unk> opportunity that that we can bring high value too.
As far as as far as the digital approach and how we're positioning it.
We have launched tools like demand generation lead generation, we have launched tools like value selling and really identifying where customers see that their most significant value and personally I've been on calls with customers where.
They'll often talk we don't just want a dashboard anymore, you have to help us implement solutions.
And we do that very effectively and we've actually acquired a business I've talked about in the past called BLS G, where we take that insight and we help them implement the solution.
I do want to come back to your your statement around illuminate and I just want to remind that illuminate as an on prem solution and our <unk> is in the cloud and so we're continuing to push in the cloud. It's obviously an area that we view has.
We'll have a lot of potential, but we can offer both to customers where they need to be on primary or in the cloud and really maximize that performance maximize the usage of data to improve process.
Great and then I guess, just one on sort of end markets transportation, obviously become a big part of the mix, but now youre seeing kind of growth in spaces like life Sciences, and so forth I guess.
12, 24 months from now what do you envision your end market mix looks like or does it more is it do you think it evolves more and it's unclear at this point just curious based on the discussions you are having and where youre seeing the demand indicators of what that mix could look like one two years from now thank you.
Yes.
No.
So it's always hard to predict the percent of Hs, we liked the spaces. We serve we like the areas we serve and if I can just walk through them life Sciences, I would characterize as a strong funnel and we're seeing real opportunity in areas like auto injectors contact lenses pharma radio pharma and we're continually launching new.
<unk> in this space that have real value and high value to customers.
I just started out as a reference the symphony platform hours with the innovation team yesterday going through.
And they're using AI to bring solutions sets around an area of auto injectors, where they can identify defects early on so you don't continue to add value in the production process and until we see a lot of areas that we can continue to expand and we see growth in the market itself. So.
Science is going to be a continued focus for us.
EV, our ore transportation more specifically EV look this is an area that we continue to see opportunity and I've talked about this with.
The demand and need for production to meet the.
The market space and launching new vehicles, we see our funnel is healthy here it is going to be.
More variable in that these are large programs large projects often starting with a pilot going to production over a period of time.
And food and beverage pleased with the progress we like this space I talked about our business right tack with optical sorting. We see continued opportunity here and then just to round this out with energy and nuclear.
The change for nuclear being a greener energy and alignment to not only refurbishment, but small modular reactors is seeing real opportunity for Hs is a niche capability within within our group.
And it's one that we view weaken off our offer high value for our customers. Both on the initial as well as serving and to support them. So overall, we like the mix, we like the area of focus and we're going to continue to drive both organic and potential inorganic growth in the spaces that we view have long term value for our shareholders.
Alright, thanks very much.
Yes.
Thank you.
There are no further questions I will turn the call back to Mr. Hider for closing remarks.
Thank you operator.
We look forward to pursuing ongoing value creation in fiscal 'twenty four we believe that our capabilities aligned well for the long term trends driving the need for our solutions on a global basis.
If you haven't already done so I encourage you to register for our institutional Investor Day on September six in New York.
Sure.
Hear directly from members of the Ats executive team on corporate strategy, our growth opportunities key business groups.
In our financial value drivers more immediately we are.
Also invite you to participate in our annual and special shareholders meeting, which will be held virtually tomorrow, beginning at 10 am eastern time.
Otherwise I look forward to speaking to you on our Q2 call in November . Thank you for joining us today stay safe and goodbye for now.
Ladies and gentlemen, this does conclude the conference call for today, we thank you for your participation and ask that you. Please disconnect your lines.
Yeah.
Yeah.
Yeah.
Yes.
Hum.
Yes.
Okay.
Yeah.