Q2 2026 ATS Corp Earnings Call
Operator: Welcome to the ATS Corporation Q2 Conference Call and Webcast. This call is being recorded on 5 November 2025, at 8:30 AM Eastern Time. Following the presentation, we will conduct a question and answer session. I'd now like to turn the call over to David Ocampo, Head of Investor Relations at ATS.
At a T S.
David Ocampo: Thank you, operator, and good morning, everyone. On the call today are Ryan McLeod, interim chief executive officer of ATS, and Anne Cybulski, interim 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 atsautomation.com. 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 the statements are detailed in slide 3 of the slide deck. Now it's my pleasure to turn the call over to Ryan.
Thank you operator, and good morning, everyone.
On the call today, Brian Mccloud interim Chief Executive Officer, Jeff <unk>.
Ansible interim Chief Financial Officer.
Please note that our remarks today are accompanied by wide that which can be viewed via our webcast and available at H S automation dot com.
Cautioned that the statements made on the webcast and conference call may contain forward looking information in 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 in slide three of the slide deck.
Now, it's my pleasure to turn the call over to Brian.
Ryan McLeod: Thank you, David. Welcome to ATS. It's great to have you on the team. Good morning, everyone, and thank you for joining us today. Today, ATS reported Q2 results for fiscal 2026, highlighted by strong organic revenue growth and an improvement in adjusted earnings margins in line with our expectations. These results reflect the strength of our decentralized organization and the collective efforts of our teams. During this leadership transition period, it is business as usual as we build on our culture of continuous improvement through the ATS business model, with a clear focus on creating value across our diversified global portfolio. As we've previously discussed, the board began its search for a permanent CEO over the summer and is now well into the process, while our entire senior leadership team remains intensely focused on advancing our strategic growth priorities.
Thank you David and welcome to HCS, it's great to have you on the team and good morning, everyone and thank you for joining us today.
<unk> reported second quarter results for fiscal 'twenty, six highlighted by strong organic revenue growth and an improvement adjusted earnings margins in line with our expectations.
These results reflect the strength of our decentralized organization and the collective efforts of our teams.
During this leadership transition period. It is business as usual, we build on our culture continuous improvement through the Ats business model with a clear focus on creating value across our diversified global portfolio.
As we've previously discussed the board began its search for a permanent CEO over the summer and is now well into the process well our entire senior leadership team remains intensely focused on advancing our strategic growth priorities.
Ryan McLeod: This morning, I will update you on the business and our markets, and Anne will provide her financial report. Starting with our financial value drivers. Order bookings were CAD 734 million, up 6% sequentially, reflecting solid performance and strength across our diversified end markets. Q2 revenues were CAD 729 million, up 19% from Q2 last year, driven primarily by organic growth and supported by solid performance and services. Adjusted earnings from operations in Q2 were CAD 79 million. Moving to our outlook. Order backlog of approximately CAD 2.1 billion continues to provide good revenue visibility. Our opportunity funnel remains healthy and well-diversified. Within life sciences, order backlog at quarter end remains strong at CAD 1.1 billion, supported by demand across submarkets.
This morning, I will update you on the business in our markets and Ann will provide her financial report.
Starting with our financial value drivers.
Order bookings were $734 million up 6% sequentially, reflecting solid performance and strength across our diversified end markets.
Q2 revenues were $729 million up 19% from Q2 last year.
Primarily by organic growth and supported by solid performance in services.
Adjusted earnings from operations in Q2 were $79 million.
Moving to really look.
Order backlog of approximately $2 1 billion continues to provide good revenue visibility.
Our opportunity funnel is healthy and well diversified.
Within life Sciences order backlog at quarter end remains strong at $1 1 billion supported.
Supported by demand across Submarkets.
Ryan McLeod: Importantly, the wider life sciences funnel includes a mix of opportunities in radiopharma, auto-injectors, diagnostic wearables, and automated pharmacies. ATS works with a broad set of leading GLP-1 customers, providing diversification across platforms and drug delivery formats. In addition, as other applications for GLP-1 therapies emerge, including for treatment of cardiovascular and neurological disorders, ATS is well-positioned to support providers of drug delivery solutions. Momentum remains especially strong in the radiopharma space, supported by investments in production capacity and the advancement of new therapeutics. To support growth and meet evolving customer needs, our recently opened Comecer Competence Center in Indianapolis delivers enhanced service capabilities and faster response times for customers in North America. During the quarter, Comecer secured new wins in diagnostic and therapeutic projects, advancing next generation capabilities for radiopharmaceutical production.
Importantly, the wider life Sciences funnel includes a mix of opportunities and radio pharma auto injectors diagnostic wearables and automated firms.
<unk> works with a broad set of leading G. L. P. One customers, providing diversification across platforms and drug delivery formats.
In addition, as other applications for G. L. P. One therapies emerge including for treatment of cardiovascular and neurological disorders.
<unk> is well positioned to support providers of drug delivery solutions.
Momentum remains especially strong in the radio pharma space supported by investments in production capacity and the advancement of new therapeutics.
To support growth and meet evolving customer needs. Our recently opened Coleman share competence center in Indianapolis delivers enhanced service capabilities and faster response times for customers in North America.
During the quarter co mature secured new wins in diagnostic and therapeutic projects advancing next generation capabilities a radiopharmaceutical production.
Ryan McLeod: Within the lab research space, government-funded customers continued to take a more measured approach to capital investment given the changing US funding environment. While orders from these customers represent a small portion of our overall business, our lab equipment businesses have been leveraging the common ABM framework to improve joint commercial initiatives and to expand shared access to their individual customer bases. In food and beverage, quarter end backlog was CAD 218 million, with customer wins in multiple regions during Q2 in primary processing and in sorting and inspection, supported by internally developed products and technology. Our food and beverage funnel remains strong, with customer investment focused on automation that enhances yield, quality, and energy efficiency across our comprehensive solutions spanning primary processing, inspection, primary and secondary packaging, and aftermarket support.
It's in the lab research space government funded customers continue to take a more measured approach to capital investment given the changing U S funding environment.
While orders from these customers represent a small portion of our overall business for lab equipment businesses have been leveraging the common AVM framework to improve joint commercial initiatives into expand shared access to their individual customer basis.
And food and beverage quarter end backlog was $218 million with customer wins in multiple regions during Q2 and primary processing and in sorting and inspection supported by internally developed products and technology.
Our food and beverage funnel remains strong with customer investment focused on automation that enhances yields quality and energy efficiency across our comprehensive solutions spanning primary processing inspection primary and secondary packaging and aftermarket support.
Ryan McLeod: In Energy, order backlog was a record CAD 277 million, up 154% over Q2 last year. This increase was driven primarily by nuclear refurbishment projects as operators continued to invest in life extension programs. The nuclear funnel continues to broaden beyond refurbishment, covering service and new nuclear reactor builds, including small modular reactors. On new builds, initial activity centers on early phase design and engineering programs that support modular fabrication of reactor structures and fuel handling systems. These programs position ATS to participate as projects move into commercial deployment. While order timing may vary, supportive policies and growing demand for clean and reliable energy, including from data centers, support a strong outlook for nuclear. In Consumer Products, our funnel remains stable, with ongoing programs in personal care and household goods packaging, along with warehouse automation.
In energy order backlog was a record $277 million up 100.
Third 54% over Q2 last year.
This increase was driven primarily by nuclear refurbishment projects as operators continue to invest in life extension programs.
The nuclear funnel continues to broaden beyond refurbishment covering service his new nuclear reactor builds including small modular reactors.
On new bills initial activity centers on early phase design and engineering programs that support modular fabrication of reactor structures and fuel handling systems.
These programs position Etfs to participate as projects move into commercial deployment.
While order timing me very supportive policies and growing demand for clean and reliable energy, including from data centers support a strong outlook for nuclear.
In consumer products, our funnel remains stable with ongoing programs and personal care and household goods packaging along with warehouse automation.
Ryan McLeod: In transportation, the funnel consists of relatively smaller opportunities consistent with our expectations. Our capabilities in battery assembly allow us to win and deliver on these opportunities as they arise. Overall, our balanced exposure to regulated and growth-oriented end markets, along with a strong order backlog, positions us well to navigate the current environment. Turning to the ATS business model, it remains central to how we operate and is well embedded into our culture. I recently attended our global ABM conference, where our continuous improvement leaders from across the business demonstrated their commitment to driving the ABM, along with a renewed focus on creating impact for customers and shareholders through disciplined execution and operational efficiency.
In transportation the funnel consists of relatively smaller opportunities consistent with our expectations.
Our capabilities in battery assembly allow us to win and deliver on these opportunities as they arise.
Overall, our balanced exposure to regulated and growth oriented end markets, along with a strong order backlog positions us well to navigate the current environment.
Turning to the Ats business model, if it remains central to how we operate it is well embedded into our culture.
I recently attended our global ABM conference, where a continuous improvement leaders from across the business demonstrated their commitment to driving the ABM along with a renewed focus on creating impact for customers and shareholders through disciplined execution and operational efficiency.
Ryan McLeod: I continue to be impressed by our team's use of the ABM to drive value within their operations. This includes daily visual management tools to create immediate focus and drive problem-solving, as well as sustained process improvements through Kaizen and strategy deployment. On M&A, our funnel is healthy and active as we cultivate and review opportunities that align with our long-term strategic priorities. We continue to integrate our more recent acquisitions and drive further synergies, particularly through shared customer access and integrated offerings from across our portfolio. We're also working diligently to return leverage to within our target range, with good progress made during the quarter. On innovation, we have further developed our Illuminate manufacturing intelligence platform to support new deployments at select businesses, including some of our more recent acquisitions. These efforts allow us to efficiently integrate equipment, standardize data capture and analytics, and improve visibility across our installed base.
I continue to be impressed by our team's use of the ABM to drive value within their operations. This includes daily visual management tools to create immediate focus and drive problem solving as well as sustained process improvements through kaizen in strategy deployment.
On M&A, our funnel is healthy and active as we cultivate and review opportunities that align with our long term strategic priorities. We continue to integrate our more recent acquisitions and drive further synergies, particularly through shared customer access and integrated offerings from across our portfolio.
We're also working diligently to return leverage to within our target range with good progress made during the quarter.
On innovation, we have further developed our illuminate manufacturing intelligence platform to support new deployments of select businesses, including some of our more recent acquisitions.
These efforts allow us to efficiently integrate equipment standardized data capture and analytics and improve visibility across our installed base.
Ryan McLeod: The 2025 ATS Innovation Summit is being held this week, bringing together key innovation leaders from across the ATS organization. Through panels and workshops, the summit seeks to foster a unified innovation ecosystem, accelerate product development, and strengthen collaboration on translating emerging technologies into customer value. Our investment in innovation has been core to our strategy and remains a key differentiator for ATS. In summary, our results this quarter reflect good progress across our value drivers, supported by a strong backlog. Our advantages today, including our global footprint, our talented workforce aligned around our ABM culture, and our strong customer relationships will serve us well advancing our growth and long-term value creation strategy for the future. Now, I will turn the call over to Anne. Anne, over to you.
The 2025 Ats innovation summit is being held this week, bringing together key innovation leaders from across the Acs organization.
Through panels and workshops, the summit seeks to foster a unified innovation ecosystem accelerate product development and strengthen collaboration on translating emerging technologies into customer value.
Our investment in innovation has been core to our strategy and remains a key differentiator for Etfs.
In summary.
Our results this quarter reflect good progress across our value drivers supported by a strong backlog.
Our advantages today, including our global footprint for talented workforce aligned around our a b M culture, and our strong customer relationships will service well advancing your growth and long term value creation strategy for the future.
Now I will turn the call over to you and over to you.
Anne Cybulski: Thank you, Ryan, and good morning, everyone. Starting with our operating results for the quarter, order bookings were CAD 734 million, down 1.1% compared to Q2 last year, which included several larger enterprise bookings in life sciences. This was largely offset by growth in all other markets over last year. Our trailing twelve-month book-to-bill ratio at the end of Q2 remained healthy at 1.12 to 1, and was at or above 1 across all market verticals. Revenues for Q2 were CAD 729 million, up 18.9% compared to last year, including organic growth of 12.6%, along with a 3.9% benefit from foreign exchange translation and a 2.4% contribution from acquisitions.
Thank you Ryan and good morning, everyone, starting with our operating results for the quarter order bookings were $734 million down one 1% compared to Q2 last year, which included several larger enterprise bookings in life Sciences. This was largely offset by growth in all other markets over last year.
Trailing 12 month book to Bill ratio at the end of Q2 remained healthy at 1.12 to one and was at or above one across all market verticals.
Revenues for the second quarter were $729 million up 18, 9% compared to last year, including organic growth of 12, 6% along with a 3.9% benefit from foreign exchange translation and a 2.4% contribution from acquisitions.
Anne Cybulski: Moving to earnings, Q2 adjusted earnings from operations were CAD 79.1 million, a 40% increase from prior year, primarily on higher revenue volumes. Gross margin for Q2 was 29.9%, a 36 basis point increase on Q2 last year. On SG&A, excluding acquisition-related amortization and transaction costs, expenses in the Q1 totaled CAD 134.5 million, a CAD 14.5 million increase over the prior year, primarily a result of incremental SG&A from acquired companies and FX translation impact. Excluding a recovery related to forfeitures from our former CEO's departure and mark-to-market impact related to changes in our share price, stock-based compensation expense was CAD 4.3 million in Q2. Earnings per share were CAD 0.45 on an adjusted basis. Moving to our outlook.
Moving to earnings second quarter adjusted earnings from operations were $79 1, Million% to 40% increase from prior year, primarily on higher revenue volumes.
Gross margin for Q2 was 29, 9% or 36 basis point increase on Q2 last year.
On SG&A, excluding acquisition related amortization and transaction costs.
<unk> in the first quarter totaled $134 $5 million.
$14 5 million dollar increase over the prior year.
Primarily a result of incremental SG&A from acquired companies and FX translation impact.
Excluding a recovery related to forfeitures from our former Ceos departure, and mark to market impacts related to changes in our share price stock based compensation expense was $4 $3 million in Q2.
Earnings per share were <unk> 45 on an adjusted basis.
Moving to our outlook.
Anne Cybulski: We ended the quarter with an order backlog of approximately CAD 2.1 billion. Q3 revenues are expected to be in the range of CAD 700 million to 740 million. As a reminder, this assessment is updated every quarter, taking into account revenue expectations from current order backlog and new orders booked and billed within the quarter. This quarter, we have identified an opportunity to realign our cost structure to strategic focus areas and to drive global operational efficiencies. We estimate restructuring costs of approximately CAD 15 million will be incurred in the H2 of this fiscal year, with an expected payback of less than 1 year. For clarity, there is no change to our expectations for full-year high single-digit revenue growth as previously disclosed. We continue to expect adjusted operating margin improvement on a full-year basis in fiscal 2026.
We ended the quarter with an order backlog of approximately $2 $1 billion Q3 revenues are expected to be in the range of 700 million to $740 million.
As a reminder, this assessment is updated every quarter taking into account revenue expectations from current order backlog and new orders booked and billed within the quarter.
This quarter, we have identified an opportunity to realign our cost structure, two strategic focus areas and to drive global operational efficiencies.
We estimate restructuring costs of approximately $15 million will be incurred in the final half of this fiscal year with an expected payback of less than one year.
For clarity there is no change to our expectations for full year high single digit revenue growth as previously disclosed we continue to expect adjusted operating margin improvement on a full year basis in fiscal 'twenty six.
Anne Cybulski: ABM discipline and tools help to create focus across all of our value drivers, including margin expansion. The macro environment remains dynamic, including geopolitical tensions and trade and tariff considerations. As a reminder, the majority of our exports from Canada into the US remain covered under the USMCA. Our global and decentralized operating model positions us well to navigate market dynamics to serve customers where they are deploying capital. In this environment, ATS continues to execute well, maintaining leadership in our key submarkets and driving progress on our growth priorities. Moving to the balance sheet. In Q2, cash flows from operating activities were CAD 28 million. Our non-cash working capital as a percentage of revenues was 18.3%. While timing of milestone billings and collections do impact this percentage, our focus on driving working capital efficiency across the business and our target of 15% remains unchanged.
A b M disciplining tools helped to create focused across all of our value drivers including margin expansion.
The macro environment remains dynamic, including geopolitical tension and trade and tariff considerations. As a reminder, the majority of our exports from Canada into the U S remain covered under the U S. M C. A.
Our global and decentralized operating model positions us well to navigate market dynamic to serve customers, where they are deploying capital.
In this environment a T S continues to execute well maintaining leadership in our key submarkets in driving progress on our growth priorities.
Moving to the balance sheet.
In Q2 cash flows from operating activities were $28 million or noncash working capital as a percentage of revenues was 18, 3% and while timing of milestone billings and collections do impact this percentage our focus on driving working capital efficiency across the business and our target of 15%.
Remains unchanged.
Anne Cybulski: We expect to see improvement by the end of the fiscal year. During the quarter, we invested CAD 18.3 million in CapEx and intangible assets, reflecting our disciplined focus on innovation and strengthening our capabilities. For fiscal 2026, we expect our CapEx and intangible investment to be within our previously disclosed range of CAD 80 to 100 million. On leverage, our net debt to adjusted EBITDA ratio was 3.4x. This progress since the beginning of the year supports our expectation of reducing leverage to within our target range of 2x to 3x. In summary, we're pleased with second quarter results and with the alignment of our leadership team and global employee base as we continue to execute on our plans and drive the business forward.
We expect to see improvement by the end of the fiscal year.
During the quarter, we invested $18 $3 million in Capex and intangible assets, reflecting our disciplined focus on innovation and strengthening our capabilities.
For fiscal 'twenty, six we expect our capex and intangible investments to be within our previously disclosed range of $80 million to $100 million.
On leverage.
Our net debt to adjusted EBITDA ratio was 3.4 times.
This progress since the beginning of the year supports our expectation of reducing leverage to within our target range of two to three times.
In summary.
We're pleased with second quarter results and with the alignment of our leadership team and global employee base as we continue to execute on our plans and drive the business forward.
Anne Cybulski: Our strong order backlog supports our outlook for sustained growth, and our expectations for revenue and margin expansion in fiscal 2026 are unchanged. ATS is leveraging our culture of continuous improvement and our embedded structural advantages to drive tangible value through a consistent, disciplined approach. We are confident that our team's continued efforts will deliver value to both our customers and shareholders. Now we will open the call to questions from our analysts. Operator, could you please provide instructions? Thank you.
Our strong order backlog supports our outlook for sustained growth and our expectations for revenue and margin expansion in fiscal 'twenty six are unchanged.
A T S is leveraging our culture of continuous improvement and our embedded structural advantages should drive tangible value to our consistent disciplined approach.
We are confident that our team continued efforts will deliver value to both our customers and shareholders.
Now we will open the call to questions from our analysts operator could you. Please provide instructions. Thank you.
Operator: Thank you. We will now begin the question-and-answer session. Your first question today comes from the line of Cherilyn Radbourne from TD Cowen. Your line is open.
Thank you we will now begin the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad. If you would like to withdraw your question simply press Star. One again, we ask that you. Please limit yourself to two questions. Only you may re queue for any further questions. Your first question today comes from the line of Cheryl and Radbourne from TD Cowen Your line.
Is open.
Cherilyn Radbourne: Thanks very much. Good morning. When we look at your results, the one thing that is of some concern to us is that it appears bookings momentum has slowed over the last 6 months relative to H2 of last year. Just curious what gives you confidence that that's just normal lumpiness in the business and not something more?
Thanks, very much and good morning.
When we look at your results, but one thing that is of some concern to US is that it appears the bookings momentum has slowed over the last six months relative to the second half of last year. So just curious what gives you confidence that that's just normal lumpiness in that business and not something more.
Ryan McLeod: Hi, good morning, Cherilyn Radbourne. I mean, a couple things. First of all, I mean, when we look at, you know, the state of the business, there is normal course variability and there's some larger programs which can really drive that. You know, our book-to-bill is healthy at 1.12. From a backlog perspective, we're up about 14%, 13.5%, 14% year-over-year. In a really good position from a backlog standpoint. I think importantly to your question, funnel activity, and I talked about it a little bit in my prepared remarks, but in general is healthy across our vertical markets. Life sciences, really good activity. Auto-injectors remains very active.
Hi, good morning, Cherilyn so I.
I mean, a couple of things.
First of all I mean, when we look at the state of the business.
There is a normal course variability in.
There are some larger programs, which can really drive that.
But so are our book to Bill is healthy.
One point I wanted to.
From a backlog perspective, we're up about 14% 13, 514% year over year. So so in a really good position from a backlog standpoint, but I think importantly to your question.
Funnel activity and I talked about it a little bit in my prepared remarks, but in general is healthy across our.
Our vertical markets. So so life sciences.
Really good activity.
So injectors remains.
Very active we're.
Ryan McLeod: We're seeing a lot of activity in radiopharm as well as, you know, general medical device, wearables, contact lenses, automated pharmacy. A lot of activity across life sciences which supports that outlook. You know, food continues to be strong. We're seeing some really good uptake and interest based on what we're doing in primary processing, packaging, as well as some of the inspection and sorting capability that we have. Consumers, consumer staples, it's been very resilient, and transportation is, you know, as we expected, it's lower relative to where it was a couple years ago. There's still opportunities that are rising. I think the other area that's we're seeing a lot of growth opportunity in is energy, and there's a lot happening. Refurbishment has continued to be active.
We're seeing a lot of activity in radio pharma as well as medical general medical device Wearables contact lenses automated pharmacy. So so a lot of activity across life sciences, which which supports that outlook.
Food continues to be strong.
We're seeing some some really good uptake and interest based on.
What we're doing in primary processing packaging.
Well in some of the inspection and sorting capability that we have.
Consumers consumers stable, it's been very resilient in.
And in transportation is is as we expected it's slower relative to where it was a couple of years ago, but there's still opportunities that are rising and I think the other area. That's.
We're seeing a lot of growth opportunity and as energy and there's a lot happening.
Refurbishment has continued to be active.
Ryan McLeod: We're seeing good activity in decommissioning and maybe a bit more mid to long term, but certainly accelerating is the new nuclear space. New builds, whether it's conventional technology or SMRs, we're seeing a lot of activity in that space and participating in a lot of early stage projects to support the ongoing build-out that's going to be coming in the nuclear space. Overall, I mean, as I said, our funnels were very positive in terms of where they sit and support the continued growth that we expect.
We're seeing good activity in decommissioning and.
Maybe a bit more mid to long term, but certainly accelerating as the new nuclear space So new builds.
Whether its conventional technology or <unk>, we're seeing a lot of activity.
In that space and participating in a lot of early stage projects to support the ongoing build out that's going to be coming in that in the nuclear space. So overall I mean as I said, our funnel is where we're very positive in terms of.
Where they fit in and support the continued growth that we expect.
Cherilyn Radbourne: Okay, that's helpful color. Then just specifically, how did the services business perform in Q2? Along with that, are you intending to recruit someone to replace Simon Roberts to head that segment?
Okay. That's helpful color and then just specifically how did the services business perform in the second quarter and along with that are you intending to recruit someone to replace Simon Roberts to head that segment.
Hi, Sherlin and I'll start with the numbers question. So overall, where we're happy with the performance of the service business.
Anne Cybulski: Hi, Cherilyn. I'll start with the numbers question. Overall, we're happy with the performance of the service business in the quarter, also on a year to date basis. I would call the performance strong. There were some easy numbers in the comparatives, really good performance across other areas of the business. Services, as you know, are kind of reoccurring in nature. We have some in the numbers that are like upgrades that are less regular, services remains strategic to our overall growth plans. Good performance, happy with what we're seeing across the business. I'll let Ryan comment on the other piece.
In the quarter are also on a year to date basis.
I I would call a call. The performance are strong there were some EV numbers in the comparative.
Good performance across other areas of the business.
And services are as you know are kind of reoccurring in nature. So we have some some and in the numbers that are like upgrades that are less regular but services remain strategic to our overall growth plans. So good performance happy with what we're seeing across the business.
Let Brian comment on the other piece, yes, so sure the short answer is yes.
Ryan McLeod: Yeah. Cherilyn, the short answer is yes. I mean, first of all, we're very pleased that Simon has taken on the leadership role within our packaging and food tech business. Simon's a longtime ATS executive, very experienced, knows the business very well. After sales is an attractive opportunity within packaging and food tech, so very well aligned with some of Simon's background. We will be replacing that role, yes.
I mean first of all we're very pleased that assignment is taken on.
The leadership role within our packaging and food Tech business Simons.
A longtime Hs executive very experienced knows the business very well and after sales is is an attractive opportunity within packaging and food tech so very well aligned with with some of the islands background.
And we will be replacing that that rule, yes.
Anne Cybulski: That's fine too. Thank you.
That's my two thank you.
Ryan McLeod: Thank you.
Thank you.
Operator: Your next question comes from a line of Sabahat Khan from RBC. Your line is open.
Your next question comes from the line of <unk> Khan from RBC. Your line is open.
David Brown: Great. Thanks, good morning. I guess just looking ahead to sort of the H2 of this year and into fiscal 2027, as you think about the margin trajectory, at this point in the cycle, do you think it's more driven by some incremental initiatives you need to take on the cost reduction side? I know you announced a restructuring a little bit this morning. Is it more from sales picking up on a more consistent basis over the next 4 to 6 quarters that sort of gets you moving towards the medium to longer term targets you have on the margin side? Thanks.
Great. Thanks, Good morning I.
I guess, just looking ahead to the back half of this year and into.
We enter fiscal 'twenty, seven or do you think about the margin trajectory.
Do you think it's at this point in the cycle do you think it's more driven by some incremental initiatives you need to take on the cost reduction side I know you announced a restructuring a little bit this morning or is it more from sales picking up on a more consistent basis over the next four to six quarters that sort of gets you moving towards a the medium to longer term targets you have on the margin side. Thanks.
Anne Cybulski: Hi. Good morning, Sabahat. Let me start with just reiterating what we're expecting on a full year basis from a margin expansion perspective. It remains an area of focus for us. There's nothing really in the backlog that I'd call out that would, you know, drive a different view. We do continue to have a number of levers available to us to drive improvement across the board on margin. We've talked about those before. I think the growth of the business will continue to support that margin expansion expectation. On the restructuring, one of the areas that, you know, that we expect to see, well, we will have some cost savings from that.
Hi, good morning.
So so let me start with.
Just reiterating what we're expecting on a on a full year basis from a margin expansion perspective.
It remains an area of focus for us.
There is nothing really in the backlog that I'd call out that would.
Would drive a different view we do.
Continue to have.
A number of levers available to us to to to drive improvement across the board on margin, we've talked about talked about those.
Before and I think.
The the growth of the business as well, we'll continue to support that that margin expansion expectation.
And on the restructuring of one of the areas that you know that we expect to see is what we will have some cost savings from that we would also expect to be able to reinvest some of those savings in higher growth areas of the business and as well as in innovation. So the overall number of levers available to us to continue.
Anne Cybulski: We would also expect to be able to reinvest some of those savings in higher growth areas of the business and as well as in innovation. Overall, a number of levers available to us to continue to drive towards that longer term objective that you referenced.
Two to drive towards that longer term objective that you referenced.
Okay, Great and then just for my follow up I guess as you think about sort of the inorganic side.
David Brown: Great. Then just 1 follow-up, I guess. As you think about sort of the inorganic side, you know, sounds like you guys are still sort of keeping your options open. Should we expect that to pick up in a more meaningful way when leverage sort of heads in that, you know, with a 2 handle on it, or is that something you're sort of open to right now? If so, what are some of the end markets in focus as it relates to your pipeline? Thanks.
Sounds like you had still sort of keeping options open but should we expect that to pick up in a more meaningful way one leverage sort of heads and that you know with a two handle on it or is that something you sort of open to right now and if so what are some of the end markets and focus as it relates to your pipeline. Thanks.
Yeah.
Ryan McLeod: Good morning, Sabah. Yeah, I mean, we're certainly very active in cultivating, reviewing opportunities. At the same time, we are, as Anne said in her prepared remarks, focused on bringing our leverage down. Really that provides us more flexibility. Cultivation does take time. We have seen good activity over the last several months in terms of what's happening in our funnel. I mean, we're gonna be prudent in how we, you know, go forward here. Certainly conscious of where we're trading right now. I mean, equity remains an option for us. As I said, we're conscious of where we're trading right now.
Good morning, Thomas So yeah, I mean, we're certainly very active in cultivating reviewing opportunities.
At the same time, we are we are as Anne said in her prepared remarks focused on on bringing our leverage down and really that provides us more flexibility.
Cultivation.
It does take time.
We have seen.
Good activity over the last several months in terms of.
What's happening in our funnel, but I mean, we're going to be prudent in how we how we go forward here.
Conscious of where were.
Trading right now I mean equity remains an option for us and as we said, we're conscious of where we're trading right now.
Ryan McLeod: You know, for the right deal and in the right circumstance, that certainly remains an option for us. Just to go back, I mean, the US listing, one of the rationale there was that does make our shares more attractive as currency in M&A. All of those options remain on the table. As I said, we do wanna delever. That ultimately provides us more flexibility. At the same time, there's an active market right now. We're gonna find the right balance on both.
But for the right deal and the right circumstance that certainly remains an option for us so.
Just to go back I mean, the U S listing.
One of the one of the rationale there was was that does make our shares more attractive as currency and M&A. So all of those options remain on the table.
But as I said, we do want to Delever is that ultimately provides us more flexibility at the same time.
There's an active market right now so we're going to find the right balance on both.
David Brown: Great. Thanks very much.
Great. Thanks very much.
Operator: Your next question comes from the line of Maxim Sytchev from National Bank Financial.
Your next question comes from the line of Maxine <unk> from National Bank of Canada markets. Your line is open.
Maxim Sytchev: Hi. Good morning, team.
Hi, good morning team.
Ryan McLeod: Morning.
Good morning, Brian I was wondering if it's possible to get a bit of your general sense on the health care space I mean, we seem to seeing more healthcare M&A as the pharma companies need to replace the pipelines I guess, how quickly can we see potentially sort of inflection point in terms of opportunities on that side.
Maxim Sytchev: Ryan, I was wondering if it's possible to get a bit of your general sense on the healthcare space. I mean, we seem to seeing more healthcare M&A as the pharma companies need to replace the pipelines. I guess how quickly can we see potentially sort of inflection point in terms of opportunities on that side, even though, like, obviously you're quoting a pretty healthy funnel? Just curious around your general thoughts in relation to that. Thank you.
Though like obviously, you're quoting a pretty healthy funnel, but just just curious around your general thoughts in relation to that thank you.
Ryan McLeod: Good morning, Max. I mean, Max, I'll probably reiterate a little bit of what I said, but we are seeing good activity in our funnel. If I start with auto-injector, you know, that's really the drug delivery format that's, you know, the really being used in with GLP-1 drugs. We're in the middle of executing some larger programs there, but as I said, funnel activity is still encouraging, and some of that is tied to continued expansion of those drugs and consumer adoption and as well as some new therapies. I mentioned, you know, conditions such as cardiovascular health and neurological conditions which are, you know, there's research and trials ongoing to support GLP-1s as therapies for those conditions.
Yes, good morning, Matt I mean, Max I'll, probably reiterate a little bit of what I said, but.
We are seeing good activity.
In our funnel and so if I start with auto injector and that's really the drug delivery format.
The really being used in with <unk> drugs.
We're in the middle of executing some larger programs there, but as I said funnel activity is still encouraging and some of that is tied to continued expansion.
Of those drugs and consumer adoption and as well as some new therapies that I mentioned.
Condition.
Conditions, such as cardiovascular health and neurological conditions, which are.
There is research and trials ongoing too to support.
<unk> ones as therapies for those to those conditions. So.
Ryan McLeod: All of that we do expect to drive continued growth in the auto-injector space. We're also working with customers on new technologies there. A lot of the drug delivery today is single-use auto-injectors, and there's a move towards fixed dosage, multi-dose auto-injectors. Rather than one-time use and throwing it away, it can be used for multiple injections. There is, as I said, a good funnel there and good activity.
All of that we do expect to drive continued growth in the auto injector space and we're also working with customers on new.
New technologies, there so a lot of the drug delivery today is single use auto injectors and there's there's.
Move towards fixed dosage.
Multi dose auto injectors, so rather than one time use and throw it away it can be used for multiple injections. So.
There is as I said, a good funnel there and good activity.
I think that equals.
Maxim Sytchev: Yeah.
Ryan McLeod: Sorry, just equally. The other area that I mentioned, but I'll spend a little bit more time on is radiopharm, and That's very active. There's a lot of drug discovery, drug development happening, customers moving from R&D into clinical trials and then into commercial manufacturing. We've been winning projects in new diagnostics and therapeutic applications. There's a lot of activity happening in that space. It's very exciting. We talked, I talked in my prepared remarks about our Comecer competence center, which recently opened in Indianapolis, and that really positions us well to provide regional support in North America, collaborate more closely with our customers, and have an improved service response time for customers in that region.
Sorry, just equally.
Yeah, the other area.
I mentioned, but I'll spend a little bit more time on his radio pharma and that's that's very active there's a lot of.
Drug discovery drug development happening customers moving from R&D into clinical trials, and then into commercial manufacturing and so.
We've been winning projects in new diagnostics and therapeutic applications and theirs.
There is there is a lot of activity happening in that space is very exciting and we talked.
You talked in my prepared remarks, you better call mature.
Our competence center, which recently opened in Indianapolis and that really positions us well to provide regional support North America <unk>.
<unk> worked closely with our customers and have an improved service response time for our customers.
Customers in that region.
Maxim Sytchev: Yeah, that's great, Carl. Thank you so much. Maybe just a question in relation to nuclear. I'm not sure if, you know, Anne wants to take this one. In terms of, I mean, like, obviously the backlog is up significantly in that space, but how should we think about the tail of that backlog to revenue conversion? Can you, like, is there anything different in relation to these projects? Can you provide any more color there? Thank you.
Yes, that's great color. Thank you so much and then maybe just a question in relation to two nuclear.
And I'm not sure if it and wants to take this one but in terms of the.
Backlog is up significantly in that space, but how should we think about the tail of that backlog to revenue conversion.
Can you like is there anything different in relation to these projects I can provide any more color there. Thank you.
Anne Cybulski: Hi, Max. Yeah, we've seen good growth in terms of the nuclear backlog, as you said. A good chunk of the backlog is related to the reactor refurbishment or life extension programs that are primarily CANDU technology-driven. That said, there are a number of customers that we have also in the backlog that would represent our earlier participation from a design perspective in some of the new build work that is ongoing. It's a good cross-section of customers.
Hi, Max so yeah, we've seen good good.
Good growth in terms of the nuclear backlog as you said most of the good a good chunk of the backlog is related to the the reactor refurbishment.
Furbished meant or life extension program.
That are that are primarily can you can you technology driven.
That said there are a number of customers that we have are also in the backlog that would represent our earlier participation from a design perspective.
In some of the new build work that is that is ongoing.
It's a it's a good cross section of customers in terms of overall weighting of the backlog, we would expect to see that refurbishment work continue over the next say call. It a year and a half two years at a minimum and then be supplemented over the mid to longer term with some of the work that we're doing on the on the <unk>.
Anne Cybulski: In terms of overall weighting of the backlog, we'd expect to see that refurbishment work continue over the next, say, call it 1.5 to 2 years at a minimum, and then be supplemented over the mid to longer term with some of the work that we're doing on the new builds. From an early participation standpoint on the new builds, we're very active there. That's important to the longer term play.
Bill.
So from a from an early participation standpoint on Newbuild, where we're very active there so and that's important to the longer term play.
Maxim Sytchev: Absolutely. Thank you so much.
Absolutely. Thank you so much.
Anne Cybulski: Yeah.
Yeah.
Operator: Your next question comes from the line of Justin Keywood from Stifel. Your line is open.
Your next question comes from the line of Justin <unk> from Stifel. Your line is open.
Justin Keywood: Good morning. Thanks for taking my call. I'll start off with leverage. Does the target remain to exit this fiscal year at 3x?
Good morning, Thanks for taking my call I'll start off with the leverage does.
Does the target remain two exit this fiscal year at three times.
Anne Cybulski: Hi, Justin. Short answer is we do expect to come back within our targeted range by the end of the fiscal year. That's our goal.
Hi, Justin.
Short answer is we do expect to come come back within our targeted range by the end of the fiscal year, that's our ethical.
Justin Keywood: Okay. Suggest some healthy free cash flow generation in the next few quarters. Just on the circling back on the nuclear, just to drill down here, because in the backlog, it does show as the second-largest segment, which is a bit surprising. And I understand that some of these projects are longer term in nature, but how should we see that nuclear energy segment as a percentage of revenue trending over the next year or over the next few years? Thank you.
Okay. So suggest some healthy free cash flow generation over the next few quarters.
And then just on the circling back on the nuclear.
Just two.
To drill down here because in the backlog. It does show is the second largest segment, which is a bit surprising.
And I understand that some of these projects are longer term in nature, but how should we see that.
Nuclear energy segment as a percentage of our revenue trend.
Trending over the next year or over the next few years. Thank you.
Got it.
Ryan McLeod: Hey, Justin. I mean, the short answer is it's going to grow. I don't wanna get too specific in terms of percentage of business, but, as you noted, it's become a significant part of our backlog. The activity in that space and funnel activity is very healthy. We are working with a number of customers in the new build space, in addition to the work that we continue to execute on in refurbishments. Decommissioning also is a growing space. There's a lot of opportunity and it's an attractive growth opportunity for us. It will continue to grow, but, you know, I'm not gonna put a percentage on it in terms of how big of the business it will be.
Justin so.
The short answer is it's going to grow.
I don't want to get too specific in terms of percentage of business, but.
As you noted it's become a significant part of our backlog.
The activity in that space and funnel activity is very healthy.
We're working with a number of customers in the Newbuild space.
In addition to the work that we continue to execute on and Refurbishments.
Decommissioning also is a growing space. So there is there is a lot of opportunity and it's it's it's an attractive growth opportunity for us. So it will continue to grow but.
Not going to put a percentage on it in terms of how big of the business it will be.
Justin Keywood: Okay. Thank you. Those are my two questions.
Okay. Thank you those are my two questions.
Operator: Your next question comes from the line of Jonathan Goldman from Scotiabank. Your line is open.
Again, if you'd like to ask a question press Star then the number one on your telephone keypad. Your next question comes from the line of Jonathan Goldman from Scotiabank. Your line is open.
Jonathan Goldman: Hi. Good morning, team. Thanks for taking my questions. Maybe just on the backlog, when do you expect to lap the large enterprise orders?
Hi, good morning team thanks for taking my questions.
Maybe just on the backlog when do you expect to lap the large enterprise orders.
Yeah.
Just to make sure I heard your question Jonathan when when do we expect to can you repeat it I didn't hear you.
Anne Cybulski: Just to make sure I heard your question, Jonathan. Can you repeat it? I didn't hear you.
Jonathan Goldman: Cycle over the large enterprise orders from last year. I think that seems like a pretty clear reason why backlog is stabilized or not growing as fast. I just wanna know when you plan to lap those large, tough comps from last year.
Nicole over the large enterprise orders from last year, I think that seems like a pretty clear reason why backlog is.
Stabilized or not growing as fast.
Wanted to know when you would plan to lap those large tough comps from last year.
Anne Cybulski: We are, as I said in my prepared remarks, we're executing on some of those larger orders that we did book in Q2 last year. They are. There's a number of those that are still in progress, and we're getting into the later stages of them. That said, we continue to book new work. As Ryan talked about, the funnel is healthy. You know, as we continue to execute on those larger programs, we'd expect the backlog to fill in with new work.
So we are as I said in our as I said in my prepared remarks.
We're executing on some of those larger orders that we did book in Q2 last year.
They are there theres a number of those are still in progress and we're continuing we're getting into the later stages of them.
That said, we continue to book New work as Ryan talked about that the funnel is healthy and so.
We continue to execute on those larger programs, we would expect the backlog to just to fill in with with new with new work.
And remind me I think the larger enterprise orders have a longer delivery period beyond 12 months.
Jonathan Goldman: Remind me, I think the larger enterprise orders have a longer delivery period beyond 12 months. Is that correct?
Correct.
Anne Cybulski: Yes, that's right. They tend to run more in the 12 to 18-month range and sometimes up to 24.
Yes, that's right they tend to run more in the 12 to 18 months range and sometimes up to 24.
Jonathan Goldman: Perfect. I guess the second one for me on the working cap, what's the visibility or maybe what gives you confidence as you sit here today that you can hit the 15% target this year? I don't know if that's an exit rate for the year totally, but what do you think needs to happen to get there?
Perfect and I guess the second one for me on the working cap, what's the visibility or maybe what gives you confidence as you sit here today that you can hit the 15% target.
This year and I don't know if that's an exit rate for the year totally but why do you think needs to happen to get there.
Yeah.
Anne Cybulski: There's obviously things that could affect from a timing perspective. The main, the main piece of that would be related to a timing of milestone billings and then collection on some of those larger opportunities. As we continue to work through that backlog, we would expect improvement by the end of the year. Throughout Q3, I would say we'll still see that higher working capital need on some of those larger programs. Overall, our objective remains 15%. There are opportunities across the business to drive working capital efficiency, including in some of our more recently acquired businesses that came on board with a heavier working capital intensity.
So there are there's obviously things that can affect a fact that from a timing perspective in the main the main piece of that would be related to timing of milestone billings and then collection on some of those larger.
Larger opportunities, but as we continue to work through that backlog, we would expect.
Improvement by the end of the year.
Throughout Q throughout Q3, I would say, we'll still see that higher working capital need on on some of those larger programs, but overall our objective remains 15% there are opportunities across the business to drive working capital efficiency.
Including in some of our more recently acquired businesses that came on board with a with a heavier working capital intensity. So overall the business is focused on this.
Anne Cybulski: Overall, the business is focused on this, and those are the factors that'll drive the improvement by the end of the year.
But those are the those are the factors that'll that'll drive the improvement by the end of the year.
Jonathan Goldman: Okay, that's good color. Thanks for taking my questions.
Okay. That's good color thanks for taking my questions.
Anne Cybulski: Welcome.
Welcome.
Operator: Your next question comes from the line of Patrick Bowman from J.P. Morgan. Your line is open.
Your next question comes from the line of Patrick Baumann from Jpmorgan. Your line is open.
Patrick Bowman: Oh, hi, good morning. I had a couple questions here. One is on life sciences. Any reason why the revenue seems to be coming in a little bit slow there? Just wondering if there's hesitation at all related to some of the order backlog that's been built there related to government policy and things of that nature.
Hi, good morning.
I had a question a couple of questions here. One is on life Sciences any any reason why the revenue seems to be coming in a little bit slow there.
I'm wondering if there is hesitation at all related to some of the order backlog that's been built there related to government policy and things of that nature.
Ryan McLeod: Good morning, Patrick. I mean, the short answer is no. It's largely timing on execution of projects in our backlog that drives the bulk of our revenue conversion. As I said, in my prepared remarks, we do have some exposure to publicly funded institutions, organizations within the lab space, but it's a small part of our business. I mean, if we step back on that, a couple of years ago or even in last year, China was weak and we've actually seen that improve in that part of the business. Now, you know, this year with some of those funding changes, that's created headwinds in North America. But as I said, it's a small piece of our overall business.
Good morning, Patrick.
I mean, the short answer is no.
It's largely timing on execution of projects in our backlog that drives the bulk of our revenue conversion as I said the the.
In my prepared remarks, so we do have some exposure to publicly funded.
Yeah.
Institutions organizations within the lab space, but it's a small part of our business.
We step back on that a couple of years ago or even last year.
China was weak and we've actually seen that improve in that part of the business and now.
This year with some of those funding changes that's created headwinds in North America. So.
But as I said.
It's a small piece of our overall business.
Ryan McLeod: Actually, I think I mentioned this in my prepared remarks as well. We're in the process of doing some joint go-to-market approaches across our lab businesses to share customer lists and how we're approaching customers in certain geographies. Early days of that initiative, but we do expect that'll provide some offset to some of the funding challenges that do exist within the US.
We're actually I think I mentioned this in my prepared remarks as well.
In the process, we are in the process of.
Doing some some joint go to market approaches across our lab businesses to share customer lists.
And now we're approaching customers in certain geographies. So early days of that initiative, but we do expect that will provide some offset to some of the funding challenges that do exist within our within the U S.
Patrick Bowman: Got it. I guess I missed maybe the first part of the Q&A. Did you comment on how you think margins will trend sequentially in Q3? Also, the CAD 15 million of restructuring, what's that targeted at?
Got it and.
Have you I guess I missed maybe the first part of the Q&A did did you comment on how you think margins will trend sequentially in the third quarter and then also the 15 million of restructuring.
What's the targeted that.
Anne Cybulski: Hi, Patrick. Yes, I did briefly mention it, just to recap, when we think about the margin trajectory for the back half of the year, we do expect to see full year margin expansion. That's consistent with what we've said previously. On the restructuring, the benefit of that as we execute on those initiatives there'll be some cost savings that we'll see as part of our overall margin expansion efforts. There's also an opportunity for us to reinvest some of those savings in higher growth areas of the business.
Hi, Patrick Yes, I did I did briefly mentioned it but just to just to recap.
When we think about the margin.
Trajectory for the for the back half of the Air we do expect to see full year margin expansion.
And that's.
That's consistent with what we've said previously.
On the restructuring.
The the benefit of that as we as we execute on those initiatives will Ah well will flow into will be there'll be some cost savings that we will see as part of our our overall margin expansion efforts. There. There's also an opportunity for us to reinvest some of that.
Savings in higher growth areas of the business and Orion had flagged a N.
Anne Cybulski: Ryan had flagged energy and nuclear as a growth area, and we also continue to focus on innovation. That has really been a core of our strategy and the key to our success over the years.
<unk> in nuclear as a growth area and we also continue to focus on innovation and that has really been a core of our strategy and a key to our success over the years.
Okay.
Patrick Bowman: Thanks. If you don't wanna comment on quarterly trajectory, remind me what the annual margin expansion target was.
Thanks, and then so if you don't want to comment on quarterly trajectory, but remind me what the annual margin expansion target was.
Anne Cybulski: We didn't peg a specific number, but we did say we were expecting to see year-over-year margin expansion compared to last year. Last year, we were at, from an adjusted EBITDA perspective, 13.8%. It's better than that by the end of the year through continuing to execute on the projects we've got in our backlog and driving some of the efficiencies that we've talked about through the levers that we have available to us.
We didn't we didn't peg a specific number but we didn't say we are expecting to see over year over year margin expansion compared to compared to last year and last year. We were at from an adjusted EBITDA perspective, 13, 8%. So that are better than that by the end of the year through continuing to execute on.
The projects, you've got in our backlog and driving some of the efficiencies that we've talked about through the leverage that we have available to us.
Patrick Bowman: On the high single digit revenue growth guidance that was reaffirmed for the year, can you remind me if that is organic revenue or if it is total revenue?
And they're in the high single digit revenue growth guidance that was reaffirmed for the year can you remind me if that is organic revenue or if its total revenue.
Anne Cybulski: It is total revenue. We do have in our year-to-date numbers some M&A benefit, barring any further M&A in H2, which we don't build into our guidance. There would be no M&A benefit in H2. The FX rates will do what the FX rates are going to do. We do still expect that high single digit growth top line that would include continued organic growth.
It is it is total revenue.
We do have in our in our year to date numbers.
Some M&A benefit barring any further M&A in the back half of the year, which we don't build into our into our guidance.
There will be no M&A benefit benefit in the back half of the year and the FX rates will do what the FX rates are going to do.
But we do still expect that that high single digit growth topline.
It includes continued organic growth.
And that includes FX as well in M&A.
Patrick Bowman: That includes FX as well and M&A.
Anne Cybulski: From the H1, yep. The M&A from the H1.
From the first half yet.
Emanate from the first half.
Operator: Your next question comes from the line of Michael Glen from Raymond James. Your line is open.
Your next question comes from the line of Michael Glen from Raymond James Your line is open.
Michael Glen: Hey. Hey, good morning. Ryan, are you able to comment on what the customer feedback is with the oral application for GLP-1s? Are you seeing this impact your funnel or is it raising any concerns as to how this may impact future orders for auto-injector?
Hey, Hey, good morning, Ryan.
Brian are you able to comment.
On what the customer feedback is with the oral application for <unk> lines are you seeing this impact your funnel or is it raising any.
Concerns as to what the how this may impact future orders for auto injector.
Ryan McLeod: Good morning, Michael. You know, customers in this space, they are working to develop an oral alternative, and I think that really stems from the belief that that'll drive wider consumer adoption versus an injectable. You know, to date, a lot of the studies and the development work, there's been some challenges with that, some of it tied to the patient's experience, you know, causing nausea. There's a tolerability trade-off. There's also been some challenges around the active ingredients and how they get absorbed into the system. Nevertheless, I do expect that's gonna continue to be a focus area for customers.
Good morning, Michael So.
Customers in this space.
They are they are working to develop an oral alternative in.
That really stems from.
I believe that that will drive wider consumer adoption versus an injectable but.
Yeah.
To date.
A lot of the.
The the studies and the development work.
There has been some challenges with that some of it tied to.
The patient experience, causing nausea so.
There's a tolerability.
Trade off.
There's also been some challenges around the active ingredients and how they how they get absorbed into the system. So.
But nevertheless, I do expect that's going to continue to be a focus area for four customers but.
Ryan McLeod: To date, and, you know, as we see it, that auto-injectors really remain and direct injection really remain the most reliable, effective, and widely adopted delivery format for these GLP-1 drugs. Oral formulations could certainly become a complement to that if you get into maintenance phases, as an example. We continue to see that auto-injectors will have a very prominent place in drug delivery for GLP-1 therapies.
To date.
And.
We see it auto injectors really remain and direct injection really remain the most reliable effective and widely adopted delivery format for these <unk> drugs.
Oral formulations could certainly become a complement to that if you get into maintenance fees as an example, but we.
We continue to see that auto injectors will have a very prominent place in drug delivery for for <unk> therapies.
Michael Glen: Okay. Can you remind us, I believe in the past you've indicated that GLP-1 was roughly 20% of the life science backlog. Are you able to give an update on where that figure sits today?
Okay, and then can you remind us.
I believe in the past.
<unk> indicated that <unk>, one was roughly 20% of the life science backlog are you able to give an update on where that figure sits today.
Ryan McLeod: It's Yeah, it's still in that range.
Yes, it's still in that range.
Michael Glen: Okay. Last one for me, just looking at the SG&A for the overall business, and I believe you gave the CAD 134.6 million figure as the run rate ex-share-based comp. Is this the right level for at this point in time, should we start to see leverage on SG&A? Should SG&A on that adjusted basis grow slower than overall revenue growth?
Okay and then.
Last one for me just looking at the SG&A.
For the overall business and I believe you gave the $134 6 million.
Figure as the as the run rate ex share based comp is this the right level for sure.
At this point in time.
Should we start to see leverage on SG&A should SG&A on that adjusted basis grow.
Slower than overall revenue growth.
So that's the that's the goal as part of our margin expansion focus internally, we do have a focus on on SG&A, but.
Anne Cybulski: That's the, that's the goal. As, as part of our margin expansion focus internally, we do have a focus on SG&A. As, as the top line grows, I would expect to see that improved leverage drop through.
As the topline grows I would expect to see that that improved our leverage drop through.
Michael Glen: Okay. Thank you.
Okay. Thank you.
Anne Cybulski: Yeah.
Yeah.
And that concludes our question and answer session I will now turn the call back over to Ryan Mcleod for some final closing remarks.
Operator: That concludes our question and answer session. I will now turn the call back over to Ryan McLeod for some final closing remarks.
Ryan McLeod: Great. Thank you, operator, and thank you everyone for joining us today. We look forward to speaking to you on our Q3 call in February.
Great. Thank you operator, and thank you everyone for joining US today, we look forward to speaking to you on our third quarter call in February.
Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect.
This concludes today's conference call. Thank you for your participation you may now disconnect.
[noise].
Okay.
Yeah.
Okay.