ATS Q3 2026 ATS Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q3 2026 ATS Corp Earnings Call
Speaker #1: Welcome to the ATS Corp /ATS Ryan McLeod and webcast. This call is being recorded on February 4th, 2026 at 8:30 AM Eastern Time. Following the presentation, we will conduct a question and answer session.
Operator: Welcome to the ATS Corporation Q3 conference call and webcast. This call is being recorded on 4 February 2026, at 8:30AM 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.
Operator: Welcome to the ATS Corporation Q3 conference call and webcast. This call is being recorded on 4 February 2026, at 8:30AM 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.
Speaker #1: I'd now like to turn the call over to David Ocampo, Head of Investor Relations at
Speaker #2: Thank you, Operator, and
David Ocampo: Thank you, operator, and good morning, everyone. On the call today are Doug Wright, Chief Executive Officer; Ryan McLeod, Chief Financial Officer; and Anne Cybulski, Vice President, Corporate Controller. Please note, 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. As many of you know, this is Doug's first conference call as CEO of ATS. We're very pleased to welcome Doug as the new leader of our organization. With that, it's my pleasure to turn the call over to Doug.
David Ocampo: Thank you, operator, and good morning, everyone. On the call today are Doug Wright, Chief Executive Officer; Ryan McLeod, Chief Financial Officer; and Anne Cybulski, Vice President, Corporate Controller. Please note, 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. As many of you know, this is Doug's first conference call as CEO of ATS. We're very pleased to welcome Doug as the new leader of our organization. With that, it's my pleasure to turn the call over to Doug.
Speaker #2: good morning, everyone. On the call today are Doug Wright, Chief ATS. Executive Officer, Ryan McLeod, Chief Financial Officer, and Anne Cybulski, Vice President, Corporate Controller.
Speaker #2: Please note 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 are cautionary statements regarding such information.
Speaker #2: 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 of the slide deck.
Speaker #2: 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 three. As many of you know, this is Doug's first conference call as CEO of ATS.
Speaker #2: We're very pleased to welcome Doug as the new leader of our organization. With that, it's my pleasure to turn
David Ocampo: Doug, over to you.
David Ocampo: Doug, over to you.
Speaker #2: Thank you. I'll turn the call over to Doug. Doug, over to you.
Doug Wright: Thank you, David, and good morning, everyone. I'm pleased to be with you here today. As you know, I joined ATS in mid-January. While it's still early in my tenure, my focus has been on rapidly translating learning into action, particularly around execution discipline, margin performance, and capital allocation. This focus has included spending time with our teams across the organization, building a deeper understanding of the business and our day-to-day operations. I've also participated in our president's Kaizen events, listening to and meeting with teams, including at our Cambridge, Ontario, head office. What stood out from this year's group of Kaizens was the depth and breadth of our people's technical capabilities and the high-performance nature of our culture, anchored by the ATS business model. During my career, I've had the opportunity to serve several organizations in different parts of the world, focusing on automation and diversified industrial technologies.
Doug Wright: Thank you, David, and good morning, everyone. I'm pleased to be with you here today. As you know, I joined ATS in mid-January. While it's still early in my tenure, my focus has been on rapidly translating learning into action, particularly around execution discipline, margin performance, and capital allocation. This focus has included spending time with our teams across the organization, building a deeper understanding of the business and our day-to-day operations. I've also participated in our president's Kaizen events, listening to and meeting with teams, including at our Cambridge, Ontario, head office. What stood out from this year's group of Kaizens was the depth and breadth of our people's technical capabilities and the high-performance nature of our culture, anchored by the ATS business model. During my career, I've had the opportunity to serve several organizations in different parts of the world, focusing on automation and diversified industrial technologies.
Speaker #3: David, and good morning, everyone. I'm pleased to be with you here today. As you know, I joined ATS in mid-January while it's still early in my tenure.
Speaker #3: My focus has been on rapidly translating learning into action. Particularly around execution discipline, margin performance, and capital allocation. This focus has included spending time with our teams across the organization, building a deeper understanding of the business and our day-to-day operations.
Speaker #3: I've also participated in our President's Kaizen events, listening to and meeting with teams including at our Cambridge Ontario head office. What stood out from this year's group of technical capabilities and the high-performance nature of our culture, anchored by the ATS business model.
Speaker #3: During my career, I've had the opportunity to serve several organizations in different parts of the world, focusing on automation and diversified industrial technologies. In bringing an background and applied in multiple general analytical lens rooted in my engineering management and CEO roles, one key takeaway for me is that companies built in a strong lean operating system are better positioned to execute and deliver sustained results.
Doug Wright: In bringing an analytical lens rooted in my engineering background and applied in multiple general management and CEO roles, one key takeaway for me is that companies built in a strong, lean operating system are better positioned to execute and deliver sustained results.... That lean culture is deeply embedded at ATS through the ABM, and our focus will only get sharper going forward. These fundamentals, along with our attractive market positions, growing end markets, and our high-quality customer base, have reinforced my decision to join this organization. Importantly, that foundation is supported by a deep and capable leadership bench, positioning us well to execute on our strategic priorities. In Q3, we welcomed Sarah Moore as our new Life Sciences Group Executive.
Doug Wright: In bringing an analytical lens rooted in my engineering background and applied in multiple general management and CEO roles, one key takeaway for me is that companies built in a strong, lean operating system are better positioned to execute and deliver sustained results.... That lean culture is deeply embedded at ATS through the ABM, and our focus will only get sharper going forward. These fundamentals, along with our attractive market positions, growing end markets, and our high-quality customer base, have reinforced my decision to join this organization. Importantly, that foundation is supported by a deep and capable leadership bench, positioning us well to execute on our strategic priorities. In Q3, we welcomed Sarah Moore as our new Life Sciences Group Executive.
Speaker #3: That lean culture is deeply embedded at ATS through the ABM and our focus will only get sharper going forward. These fundamentals, along with our attractive market positions and growing end markets, and our high-quality customer base, have reinforced my decision to join this organization.
Speaker #3: Importantly, that foundation is supported by a deep and capable leadership bench positioning us well to execute on our strategic priorities. In Q3, we welcomed Sarah Moore as our new life sciences group executive.
Speaker #3: Sarah brings over 20 years of experience across healthcare diagnostics, medical devices, and life sciences, along with a deep sector expertise and a strong operations background to lead our presence in one of our key end markets.
Doug Wright: Sarah brings over 20 years of experience across healthcare diagnostics, medical devices, and life sciences, along with a deep sector expertise and a strong operations background to lead our presence in one of our key end markets. We also recently appointed Simon Roberts, a long-tenured ATS leader, to lead our Packaging and Food Technology business. This brings a leader with strong operational background to this key end market. This appointment coincided with our decision to embed our growing services business within our operating units. This change strengthens accountability, improves customer alignment, and allows each business to manage services as a recurring, margin-enhancing component of their solution offering. Our focus on people and leadership continues to be acknowledged externally. Our US operations recently received a certificate of recognition from the Top Employers Institute, and we were once again named a top employer in the Waterloo area.
Doug Wright: Sarah brings over 20 years of experience across healthcare diagnostics, medical devices, and life sciences, along with a deep sector expertise and a strong operations background to lead our presence in one of our key end markets. We also recently appointed Simon Roberts, a long-tenured ATS leader, to lead our Packaging and Food Technology business. This brings a leader with strong operational background to this key end market. This appointment coincided with our decision to embed our growing services business within our operating units. This change strengthens accountability, improves customer alignment, and allows each business to manage services as a recurring, margin-enhancing component of their solution offering. Our focus on people and leadership continues to be acknowledged externally. Our US operations recently received a certificate of recognition from the Top Employers Institute, and we were once again named a top employer in the Waterloo area.
Speaker #3: We also recently appointed Simon Roberts, a long-tenured ATS leader to lead our packaging and food technology business. This brings a leader with strong operational background to this key end market.
Speaker #3: coincided with our decision to embed our This appointment units. This changed strengthens accountability, improves customer alignment, and allows each business to manage services as a recurring margin-enhancing component of their solution offering.
Speaker #3: Our focus on people and growing services business within our operating leadership continues to be acknowledged externally. Our US operations recently received a certificate of recognition from the top employers institute and we were once again named a top employer in the Waterloo area.
Speaker #3: From an operating standpoint, I expect we can continue to build on the systems, rigor, and accountability required to build long-term value, with an emphasis on driving margin expansion across the portfolio.
Doug Wright: From an operating standpoint, I expect we can continue to build on the systems, rigor, and accountability required to build long-term value, with an emphasis on driving margin expansion across the portfolio. There are meaningful opportunities ahead through increased asset utilization and operating leverage, improved mix, and continued advancement of the ATS business model. That same discipline also guides our capital investment decisions across the portfolio. Our focus remains on allocating capital where it generates attractive risk-adjusted returns and enhances long-term shareholder value. We continue to evaluate opportunities that support growth and profitability, reinforce our core capabilities, and remain consistent with our leverage framework. This approach aligns with ATS's long-term capital allocation strategy and the priorities of our board. Before I move on, I want to recognize Ryan McLeod for his contributions to ATS.
Doug Wright: From an operating standpoint, I expect we can continue to build on the systems, rigor, and accountability required to build long-term value, with an emphasis on driving margin expansion across the portfolio. There are meaningful opportunities ahead through increased asset utilization and operating leverage, improved mix, and continued advancement of the ATS business model. That same discipline also guides our capital investment decisions across the portfolio. Our focus remains on allocating capital where it generates attractive risk-adjusted returns and enhances long-term shareholder value. We continue to evaluate opportunities that support growth and profitability, reinforce our core capabilities, and remain consistent with our leverage framework. This approach aligns with ATS's long-term capital allocation strategy and the priorities of our board. Before I move on, I want to recognize Ryan McLeod for his contributions to ATS.
Speaker #3: There are meaningful opportunities ahead through increased asset utilization and operating leverage, improved mix, and continued advancement of the ATS business model. That same discipline also guides our capital investment decisions across the portfolio.
Speaker #3: Our focus remains on allocating capital where it generates attractive risk-adjusted returns and enhances long-term shareholder value. We continue to evaluate opportunities that support growth and profitability, reinforce our core capabilities, and remain consistent with our leverage framework.
Speaker #3: This priorities of our approach aligns with ATS's long-term board. Before I move on, I want to contributions to ATS. Ryan has played an important role in recognize Ryan McLeod for his foundation and building a strong finance strengthening ATS's financial team.
Doug Wright: Ryan has played an important role in strengthening ATS's financial foundation and building a strong finance team. We thank him for his leadership and wish him continued success in his new chapter. Ryan's transition is orderly and planned. Anne Cybulski, a trusted member of our leadership team, will resume as interim CFO and provide continuity. Our finance organization has been built by Ryan and Anne and is stable and capable. As I continue to deepen my understanding of the business, I'll provide additional perspectives as appropriate. With that, I'll turn the call over to Ryan to walk through our third quarter performance and outlook.
Doug Wright: Ryan has played an important role in strengthening ATS's financial foundation and building a strong finance team. We thank him for his leadership and wish him continued success in his new chapter. Ryan's transition is orderly and planned. Anne Cybulski, a trusted member of our leadership team, will resume as interim CFO and provide continuity. Our finance organization has been built by Ryan and Anne and is stable and capable. As I continue to deepen my understanding of the business, I'll provide additional perspectives as appropriate. With that, I'll turn the call over to Ryan to walk through our third quarter performance and outlook.
Speaker #3: We thank him for his capital allocation strategy and the new chapter. Ryan's transition is orderly and leadership and wish him continued success in his planned.
Speaker #3: trusted member of our leadership team, will resume Anne Cybulski, a as interim CFO and provide continuity. Our finance organization has been built by Ryan and Anne and is stable and capable.
Speaker #3: As I continue to deepen my understanding of the business, I'll provide additional perspectives as appropriate. With that, I'll turn the call over to Ryan to walk through our third quarter performance and
Speaker #3: outlook. Thank you,
Ryan McLeod: Thank you, Doug, and good morning, everyone. Before moving to the quarter, I would like to welcome Doug to ATS. Doug brings a proven track record in lean operations and a disciplined approach to capital allocation. I'm confident that under his leadership, ATS will build on its strong foundation and continue to drive value creation for shareholders. Turning to the quarter, I'll start with a brief overview of our Q3 performance before providing an update on our end markets, and we'll provide additional financial details in her remarks. Starting with our financial value drivers, order bookings were CAD 821 million, up almost 12% sequentially, supported by activity across multiple end markets. Q3 revenues were CAD 761 million, up almost 17% from Q3 last year, driven primarily by organic growth, including continued momentum in services.
Ryan McLeod: Thank you, Doug, and good morning, everyone. Before moving to the quarter, I would like to welcome Doug to ATS. Doug brings a proven track record in lean operations and a disciplined approach to capital allocation. I'm confident that under his leadership, ATS will build on its strong foundation and continue to drive value creation for shareholders. Turning to the quarter, I'll start with a brief overview of our Q3 performance before providing an update on our end markets, and we'll provide additional financial details in her remarks. Starting with our financial value drivers, order bookings were CAD 821 million, up almost 12% sequentially, supported by activity across multiple end markets. Q3 revenues were CAD 761 million, up almost 17% from Q3 last year, driven primarily by organic growth, including continued momentum in services.
Speaker #4: Doug. Good morning, everyone. Before moving to the quarter, I would like to welcome Doug to ATS. Doug brings a proven track record in lean operations and a disciplined approach to capital allocation.
Speaker #4: I'm confident that under his foundation and continue to drive leadership, ATS will build on its strong value creation for shareholders. Turning to the quarter, I'll start with a brief overview of our Q3 performance before providing an update on our end markets.
Speaker #4: Anne will provide additional financial details in her remarks starting with our financial value drivers. Order bookings were 821 million dollars, up almost 12% sequentially, supported by activity across multiple end markets.
Speaker #4: Q3 revenues were dollars, up almost 17% from Q3 last year, driven 761 million including continued momentum in services. From a profitability standpoint, adjusted earnings from operations in Q3 were 80 million dollars, in line with our expectations.
Ryan McLeod: From a profitability standpoint, adjusted earnings from operations in Q3 were CAD 80 million, in line with our expectations. Moving to our outlook, we ended the quarter with an order backlog of approximately CAD 2.1 billion. Our backlog reflects a well-balanced mix across end markets and geographies. Looking ahead, our funnel remains healthy and diversified. Within life sciences, order backlog was CAD 1.1 billion, and revenues for the quarter were CAD 391 million, the second highest in ATS's history. Demand remains constructive in our end markets, with ATS's global scale supporting consistent execution in multiple regions and multi-site customer programs. Radiopharma, led by our Comecer business, remains a key growth market, supported by strong customer relationships, an expanded services footprint, and a proven track record.
Ryan McLeod: From a profitability standpoint, adjusted earnings from operations in Q3 were CAD 80 million, in line with our expectations. Moving to our outlook, we ended the quarter with an order backlog of approximately CAD 2.1 billion. Our backlog reflects a well-balanced mix across end markets and geographies. Looking ahead, our funnel remains healthy and diversified. Within life sciences, order backlog was CAD 1.1 billion, and revenues for the quarter were CAD 391 million, the second highest in ATS's history. Demand remains constructive in our end markets, with ATS's global scale supporting consistent execution in multiple regions and multi-site customer programs. Radiopharma, led by our Comecer business, remains a key growth market, supported by strong customer relationships, an expanded services footprint, and a proven track record.
Speaker #4: outlook, we ended the quarter with an Moving to our order backlog of approximately 2.1 billion dollars. Our backlog reflects a well-balanced mix across end markets and geographies.
Speaker #4: Looking ahead, our funnel remains healthy and diversified. Within life sciences, order backlog was 1.1 billion. And revenues for the quarter were 391 million. The second highest in ATS's history.
Speaker #4: Demand remains constructive in our end markets, with ATS's global scale supporting consistent execution in multiple regions and multi-site customer programs. Radio Pharma, led by our co-mature business, remains a key growth market supported by a strong customer expanded services footprint and a proven track record.
Speaker #4: Our unique engagement with both established and capabilities in this market are driving emerging customers, across the relationships, an programs. Within GLP-1 auto injectors, ATS's radio pharmaceutical executing against a healthy backlog and partnering with customers as they scale production.
Ryan McLeod: Our unique capabilities in this market are driving engagement with both established and emerging customers across the development and commercial phases of radiopharmaceutical programs. Within GLP-1 auto-injectors, ATS is executing against a healthy backlog and partnering with customers as they scale production. As device requirements evolve and new therapeutic applications emerge, our teams continue to support customers throughout the product life cycle. In food and beverage, quarter-end order backlog was $203 million. Funnel activity in food and beverage remains strong, driven by brand recognition in core processing markets, including tomato, and other fresh fruit applications. In energy, order backlog was a record $296 million, up 87% over Q3 last year, driven by refurbishment and life extension projects for nuclear reactors. These refurbishment programs are longer cycle in nature and include service components that support both execution and ongoing operational requirements....
Ryan McLeod: Our unique capabilities in this market are driving engagement with both established and emerging customers across the development and commercial phases of radiopharmaceutical programs. Within GLP-1 auto-injectors, ATS is executing against a healthy backlog and partnering with customers as they scale production. As device requirements evolve and new therapeutic applications emerge, our teams continue to support customers throughout the product life cycle. In food and beverage, quarter-end order backlog was $203 million. Funnel activity in food and beverage remains strong, driven by brand recognition in core processing markets, including tomato, and other fresh fruit applications. In energy, order backlog was a record $296 million, up 87% over Q3 last year, driven by refurbishment and life extension projects for nuclear reactors. These refurbishment programs are longer cycle in nature and include service components that support both execution and ongoing operational requirements....
Speaker #4: As device requirements evolve, and new therapeutic applications customers throughout the product emerge, our teams continue to support lifecycle. In food and beverage, quarter-end order backlog was 203 million dollars.
Speaker #4: Funnel activity in food and beverage remains strong, driven by brand recognition and core processing markets, including tomato and other fresh fruit applications. In energy, order backlog was a record 296 million dollars, up 87% over Q3 last year, driven by refurbishment, life extension projects for nuclear reactors.
Speaker #4: These refurbishment programs are longer cycle in nature and include service components that support both execution and ongoing operational requirements. Alongside refurbishment work, activity continues to progress in new build programs including both large-scale reactors and SMRs.
Ryan McLeod: Alongside refurbishment work, activity continues to progress in new build programs, including both large-scale reactors and SMRs. ATS is engaged early in the project life cycle, supporting front-end design, engineering, and prototyping activities. This work spans fuel production, fuel handling, and modular fabrication across multiple reactor technologies. Within consumer products, backlog reached a record CAD 321 million, supported by a large enterprise warehouse packaging automation program that leverages ATS's global manufacturing and aftermarket capabilities. The consumer products funnel remains steady, with ongoing opportunities across warehouse automation and packaging. In transportation, the funnel continues to reflect smaller scale opportunities in both commercial and traditional vehicle platforms. In summary, quarter reflects steady execution across our priorities, supported by a strong order backlog and diversified end markets.
Ryan McLeod: Alongside refurbishment work, activity continues to progress in new build programs, including both large-scale reactors and SMRs. ATS is engaged early in the project life cycle, supporting front-end design, engineering, and prototyping activities. This work spans fuel production, fuel handling, and modular fabrication across multiple reactor technologies. Within consumer products, backlog reached a record CAD 321 million, supported by a large enterprise warehouse packaging automation program that leverages ATS's global manufacturing and aftermarket capabilities. The consumer products funnel remains steady, with ongoing opportunities across warehouse automation and packaging. In transportation, the funnel continues to reflect smaller scale opportunities in both commercial and traditional vehicle platforms. In summary, quarter reflects steady execution across our priorities, supported by a strong order backlog and diversified end markets.
Speaker #4: ATS is engaged early in the project lifecycle, supporting front-end design, engineering, and prototyping activities. This work spans fuel production, fuel handling, and modular fabrication, across multiple reactor technologies.
Speaker #4: Within consumer products, backlog reached a record 321 million dollars, supported by a large enterprise warehouse packaging automation program that leverages ATS's global manufacturing and aftermarket capabilities.
Speaker #4: Consumer products funnel remains steady, with ongoing opportunities across warehouse automation and packaging. In transportation, the funnel continues opportunities, in both commercial and traditional vehicle platforms.
Speaker #4: In to reflect smaller-scale summary, quarter reflects steady execution across our priorities, supported by a strong order backlog and diversified end markets. Before we move to the financial review, I want to take a moment to express my confidence in the depth, capability, and professionalism of the organization I've had the privilege to lead.
Ryan McLeod: Before we move to the financial review, I want to take a moment to express my confidence in the depth, capability, and professionalism of the organization I've had the privilege to lead. I've worked closely with Anne for many years, and I've seen firsthand the strength of her leadership and that of the broader team. I'll be moving on knowing the business is in very capable hands, supported by a strong leadership team and an organization deeply committed to operational excellence and disciplined execution. I also want to convey my sincere appreciation to the entire ATS team for their dedication and unwavering commitment to the company's success. With this continuity in place, ATS remains firmly focused on the business and well-positioned to deliver long-term value for shareholders. Now, I'll turn the call over to Anne. Anne, over to you.
Ryan McLeod: Before we move to the financial review, I want to take a moment to express my confidence in the depth, capability, and professionalism of the organization I've had the privilege to lead. I've worked closely with Anne for many years, and I've seen firsthand the strength of her leadership and that of the broader team. I'll be moving on knowing the business is in very capable hands, supported by a strong leadership team and an organization deeply committed to operational excellence and disciplined execution. I also want to convey my sincere appreciation to the entire ATS team for their dedication and unwavering commitment to the company's success. With this continuity in place, ATS remains firmly focused on the business and well-positioned to deliver long-term value for shareholders. Now, I'll turn the call over to Anne. Anne, over to you.
Speaker #4: I've worked closely with Anne for many years, and I've seen firsthand the strength of her leadership and that of the broader team. I'll be moving on, knowing the business is in very capable hands, supported by a strong leadership team, and an organization deeply committed to operational excellence and disciplined execution.
Speaker #4: I also want to convey my sincere appreciation to the entire ATS team for their dedication, and unwavering commitment to the company's success. With this continuity in place, ATS remains firmly focused on the business, and well-positioned to deliver long-term value for shareholders.
Speaker #4: Now, I'll turn the call over to Anne. Anne,
Speaker #5: Thank
Speaker #5: you, Ryan. The entire team and I wish over to you. you success in your next chapter. I share your confidence in ATS's experienced leadership and finance teams.
Anne Cybulski: Thank you, Ryan. The entire team and I wish you success in your next chapter. I share your confidence in ATS's experienced leadership and finance teams. I also echo both David's and Ryan's words of welcome to Doug. Doug, we're happy to have you on board. On to our operating results for the quarter. Order bookings were $821 million, down 7% compared to Q3 last year, due to the expected lower run rate in transportation and the inclusion of several larger enterprise bookings in life sciences, and food and beverage last year. Notably, our trailing twelve-month book-to-bill ratio at the end of Q3 remained healthy at 1.06 to 1.
Anne Cybulski: Thank you, Ryan. The entire team and I wish you success in your next chapter. I share your confidence in ATS's experienced leadership and finance teams. I also echo both David's and Ryan's words of welcome to Doug. Doug, we're happy to have you on board. On to our operating results for the quarter. Order bookings were $821 million, down 7% compared to Q3 last year, due to the expected lower run rate in transportation and the inclusion of several larger enterprise bookings in life sciences, and food and beverage last year. Notably, our trailing twelve-month book-to-bill ratio at the end of Q3 remained healthy at 1.06 to 1.
Speaker #5: I also echo both David's and Ryan's words of welcome to Doug. Doug, we're happy to have you on board. Onto our operating results for the quarter.
Speaker #5: Order bookings were $821 million, down 7% compared to Q3 last year. Due to the expected lower run rate in Transportation, and the inclusion of several larger enterprise bookings in Life Sciences and Food and Beverage last year, notably, our trailing 12-month book-to-bill ratio at the end of Q3 remained healthy at 1.06 to 1.
Speaker #5: Revenues for the third quarter were $761 million, up 16.7% compared to last year, including organic growth of 12.6%, along with a 4.1% benefit from foreign exchange translation.
Anne Cybulski: Revenues for the third quarter were $761 million, up 16.7% compared to last year, including organic growth of 12.6%, along with a 4.1% benefit from foreign exchange translation. Of note, revenue increased in all market verticals except for transportation, as expected. Moving to earnings. Third quarter adjusted earnings from operations were $79.9 million, a 21.6% increase from Q3 last year, primarily on higher revenue volumes. Gross margin for Q3 was 29.6%, a 111 basis point decrease from last year, mainly due to program mix. Put another way, the decrease is a reflection of timing of programs being executed across our market verticals, which have different gross margin profiles.
Anne Cybulski: Revenues for the third quarter were $761 million, up 16.7% compared to last year, including organic growth of 12.6%, along with a 4.1% benefit from foreign exchange translation. Of note, revenue increased in all market verticals except for transportation, as expected. Moving to earnings. Third quarter adjusted earnings from operations were $79.9 million, a 21.6% increase from Q3 last year, primarily on higher revenue volumes. Gross margin for Q3 was 29.6%, a 111 basis point decrease from last year, mainly due to program mix. Put another way, the decrease is a reflection of timing of programs being executed across our market verticals, which have different gross margin profiles.
Speaker #5: Of note, revenue increased in all market verticals except for transportation, as expected. Moving to earnings. Third quarter adjusted earnings from operations were 79.9 million dollars, a 21.6% increase from Q3 last year.
Speaker #5: Primarily on higher revenue volumes. Gross margin for Q3 was 29.6%, a 111 basis point decrease from last year, mainly due to program mix. Put another way, the decrease is a reflection of timing of programs being executed across our market verticals, which have different gross margin profiles.
Speaker #5: On SG&A, excluding acquisition-related amortization and transaction costs, expenses in the third quarter totaled 141.9 million dollars, an 11.3 million dollar increase over the prior year, mainly due to foreign exchange translation and to a lesser extent increased employee costs and professional fees.
Anne Cybulski: On SG&A, excluding acquisition-related amortization and transaction costs, expenses in the third quarter totaled $141.9 million, an $11.3 million increase over the prior year, mainly due to foreign exchange translation and, to a lesser extent, increased employee costs and professional fees. Excluding the mark-to-market impact related to changes in our share price, stock-based compensation expense was $3.1 million in Q3. Earnings per share were $0.48 on an adjusted basis. Moving to our outlook. We ended the quarter with an order backlog of approximately $2.1 billion. Q4 revenues are expected to be in the range of $710 million to $750 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.
Anne Cybulski: On SG&A, excluding acquisition-related amortization and transaction costs, expenses in the third quarter totaled $141.9 million, an $11.3 million increase over the prior year, mainly due to foreign exchange translation and, to a lesser extent, increased employee costs and professional fees. Excluding the mark-to-market impact related to changes in our share price, stock-based compensation expense was $3.1 million in Q3. Earnings per share were $0.48 on an adjusted basis. Moving to our outlook. We ended the quarter with an order backlog of approximately $2.1 billion. Q4 revenues are expected to be in the range of $710 million to $750 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.
Speaker #5: Excluding the mark-to-market impact related to changes in our share price, stock-based compensation expense was 3.1 million dollars in Q3. Earnings per share were 48 cents on an adjusted basis.
Speaker #5: Moving to our outlook. We ended the quarter with an order backlog of approximately $2.1 billion. Q4 revenues are expected to be in the range of $710 million to $750 million.
Speaker #5: 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.
Speaker #5: During the quarter, we encouraged 5.5 million of restructuring costs under the program we disclosed last quarter. As we identified additional opportunities to further realign our cost structure, total costs under the program are now expected to be approximately 20 remains unchanged.
Anne Cybulski: During the quarter, we incurred CAD 5.5 million of restructuring costs under the program we disclosed last quarter. As we identified additional opportunities to further realign our cost structure, total costs under the program are now expected to be approximately CAD 20 million. The associated payback period remains unchanged. We do expect some reinvestment in strategic growth areas while also supporting our operating leverage, mainly as we move into fiscal 2027. As we head into the last quarter of this fiscal year, we are pleased with our overall revenue growth of 13.6% on a year-to-date basis, including approximately 8% organic growth. Adjusted earnings from operations are up 14% on a year-to-date basis. ABM discipline and tools will continue to support a focused execution across all of our value drivers, supported by the strong lean pedigree among our leadership team.
Anne Cybulski: During the quarter, we incurred CAD 5.5 million of restructuring costs under the program we disclosed last quarter. As we identified additional opportunities to further realign our cost structure, total costs under the program are now expected to be approximately CAD 20 million. The associated payback period remains unchanged. We do expect some reinvestment in strategic growth areas while also supporting our operating leverage, mainly as we move into fiscal 2027. As we head into the last quarter of this fiscal year, we are pleased with our overall revenue growth of 13.6% on a year-to-date basis, including approximately 8% organic growth. Adjusted earnings from operations are up 14% on a year-to-date basis. ABM discipline and tools will continue to support a focused execution across all of our value drivers, supported by the strong lean pedigree among our leadership team.
Speaker #5: We do million. The associated payback period expect some reinvestment in strategic growth areas, while also supporting our operating leverage, mainly as we move into fiscal 27.
Speaker #5: As we head into the last quarter of this fiscal year, we are pleased with our overall revenue growth of 13.6% on a year-to-date basis.
Speaker #5: Including approximately 8% organic growth. Adjusted earnings from operations are up 14% on a year-to-date basis. AVM discipline and tools will continue to support a focused execution across all of our value drivers, supported by the strong lean pedigree amongst our leadership team.
Speaker #5: In addition, Doug's experience and focus on lean discipline is clear. While the macro environment remains dynamic amid geopolitical and trade uncertainty, once again, we can confirm that we have not been materially impacted by tariffs across our different geographies.
Anne Cybulski: In addition, Doug's experience and focus on lean discipline is clear. While the macro environment remains dynamic amid geopolitical and trade uncertainty, once again, we can confirm that we have not been materially impacted by tariffs across our different geographies. Most of our exports from Canada to the US continue to be covered under the USMCA. Our global decentralized operating model positions ATS well to adapt and serve customers where capital is being deployed. As a result, we continue to execute, maintain leadership in our key submarkets, and advance our growth priorities. Moving to the balance sheet. In Q3, cash flows from operating activities were CAD 115 million. Our non-cash working capital as a percentage of revenues was 16.4%, an improvement sequentially and also from Q3 last year.
Anne Cybulski: In addition, Doug's experience and focus on lean discipline is clear. While the macro environment remains dynamic amid geopolitical and trade uncertainty, once again, we can confirm that we have not been materially impacted by tariffs across our different geographies. Most of our exports from Canada to the US continue to be covered under the USMCA. Our global decentralized operating model positions ATS well to adapt and serve customers where capital is being deployed. As a result, we continue to execute, maintain leadership in our key submarkets, and advance our growth priorities. Moving to the balance sheet. In Q3, cash flows from operating activities were CAD 115 million. Our non-cash working capital as a percentage of revenues was 16.4%, an improvement sequentially and also from Q3 last year.
Speaker #5: Most of our exports from Canada to the U.S. continue to be covered under the USMCA. Our global decentralized operating model positions ATS well to adapt and serve customers where capital is being deployed.
Speaker #5: As a result, we continue to execute, maintain leadership in our key submarkets, and advance our growth priorities. Moving to the balance sheet. In Q3, cash flows from operating activities were 115 million dollars, our non-cash working capital as a percentage of revenues was 16.4%, an improvement sequentially and also from Q3 last year.
Speaker #5: As a result, we moved closer to our targeted working capital value of less than 15% of revenues, as we received some larger milestone
Anne Cybulski: As a result, we moved closer to our targeted working capital value of less than 15% of revenues as we received some larger milestone payments before the end of the quarter. As always, payment timing can affect this ratio around period ends, but our goal is to continue to sharpen our working capital efficiency and, more broadly, overall asset efficiency. During the quarter, we invested $16.6 million in CapEx and intangible assets, supporting innovation and the continued strengthening of our capabilities. For fiscal 2026, we expect our CapEx and intangible investment to be between $70 million and $90 million, slightly lower than the previously disclosed range. On leverage, our net debt to adjusted EBITDA ratio was 3x, reflecting continued progress towards the top end of our target range of 2x to 3x, as expected and previously disclosed.
Anne Cybulski: As a result, we moved closer to our targeted working capital value of less than 15% of revenues as we received some larger milestone payments before the end of the quarter. As always, payment timing can affect this ratio around period ends, but our goal is to continue to sharpen our working capital efficiency and, more broadly, overall asset efficiency. During the quarter, we invested $16.6 million in CapEx and intangible assets, supporting innovation and the continued strengthening of our capabilities. For fiscal 2026, we expect our CapEx and intangible investment to be between $70 million and $90 million, slightly lower than the previously disclosed range. On leverage, our net debt to adjusted EBITDA ratio was 3x, reflecting continued progress towards the top end of our target range of 2x to 3x, as expected and previously disclosed.
Speaker #1: payments before the end of the quarter On . As always , payment timing can affect this ratio around period ends , but our goal is to continue to sharpen our working capital efficiency broadly , overall asset efficiency during the buyout .
Speaker #1: Our goal is to continue to sharpen our efficiency and working more , overall asset . During the quarter , we $16.6 million in invested CapEx and assets , supporting innovation and the continued strengthening intangible of our capabilities .
Speaker #1: For fiscal 26 , we expect our CapEx and investment to be intangible between 70 million and $90 million , slightly lower than the previously disclosed range on leverage .
Speaker #1: net debt Our to adjusted EBITDA ratio was Reflecting continued three times . progress toward the top end target of our range of 2 to 3 times .
Anne Cybulski: In summary, third quarter results were in line with our expectations, supported by a strong order backlog and diversified end market exposure. Our leadership team and global employee base remain focused on leveraging our opportunities for margin expansion and capital efficiency across our business to drive shareholder value. Now, we will open the call to questions from our analysts. Operator, could you please provide instructions? Thank you.
Anne Cybulski: In summary, third quarter results were in line with our expectations, supported by a strong order backlog and diversified end market exposure. Our leadership team and global employee base remain focused on leveraging our opportunities for margin expansion and capital efficiency across our business to drive shareholder value. Now, we will open the call to questions from our analysts. Operator, could you please provide instructions? Thank you.
Speaker #1: Expected, and previously disclosed. In the third quarter summary, results expectations were in line with ours and our diversified end market exposure.
Speaker #1: Our leadership team and employee base global remain focused on leveraging our opportunities for margin expansion and capital efficiency across our business to drive shareholder value .
Operator: 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'd like to withdraw your question, simply press star one again. We ask that you please limit yourself to two questions. You may return to the queue for any further questions. Your first question today comes from the line of Maxim Sytchev from National Bank Financial. Your line is open.
Operator: 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'd like to withdraw your question, simply press star one again. We ask that you please limit yourself to two questions. You may return to the queue for any further questions. Your first question today comes from the line of Maxim Sytchev from National Bank Financial. Your line is open.
Speaker #1: Now , we will open the call to questions from our analysts . Operator , could you please provide instructions ? Thank you .
Speaker #2: 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 .
Speaker #2: like to If you'd withdraw your question , simply press star one again . We ask that you please limit yourself to two questions .
Speaker #2: You may return to the queue for any further questions . Your first question today comes from the line of Maksim Sicha from National Bank financial .
Maxim Sytchev: Hi, good morning.
Maxim Sytchev: Hi, good morning.
Anne Cybulski: Good morning.
Anne Cybulski: Good morning.
Operator: Good morning.
Operator: Good morning.
Maxim Sytchev: Doug, congratulations on joining the company. Maybe the first question, if I may, for you: do you mind maybe talking about your 90-day and kind of six months priorities in terms of what's gonna be on your slate? Thanks so much.
Speaker #2: Your line is open .
Maxim Sytchev: Doug, congratulations on joining the company. Maybe the first question, if I may, for you: do you mind maybe talking about your 90-day and kind of six months priorities in terms of what's gonna be on your slate? Thanks so much.
Speaker #3: Hi . Good morning . Good morning . That congratulations on joining the company maybe and the first question , if I may , for you .
Speaker #3: About talking your mind, do maybe your—maybe 90-day and priorities in six months, in terms of kind of what's going to be on slate?
Doug Wright: Sure. Thanks, Maxim. So while it's early, I do have a few observations that I'll share with the group. You know, first, I believe that we're aligned to strong and growing end markets in the portfolio. And growth has been strong, and while there's a few areas that need some improvement, our focus will be on continuing to focus on those core end markets that we're in today. So we're not, you know, I wouldn't say that my appointment brings any outlook change in terms of the end markets that we're focused on. Secondly, we recognize that margin expansion potential has not been realized, and I think we have a lot of runway in front of us.
Doug Wright: Sure. Thanks, Maxim. So while it's early, I do have a few observations that I'll share with the group. You know, first, I believe that we're aligned to strong and growing end markets in the portfolio. And growth has been strong, and while there's a few areas that need some improvement, our focus will be on continuing to focus on those core end markets that we're in today. So we're not, you know, I wouldn't say that my appointment brings any outlook change in terms of the end markets that we're focused on. Secondly, we recognize that margin expansion potential has not been realized, and I think we have a lot of runway in front of us.
Speaker #3: Thanks so much .
Speaker #4: Sure . Thanks , Maxim . So while it's early , I do have a few . that I'll Observations share with the group .
Speaker #4: You know , first , I believe that we're aligned to strong and growing in markets in the portfolio and growth has been strong .
Speaker #4: And while there are a few areas in need of improvement, our focus will be on continuing to focus on those core end markets that we're in today.
Speaker #4: So we're know , I not you that my appointment brings any outlook change in terms of the end markets that we're focused on Secondly , we recognize that margin expansion potential has not realized .
Doug Wright: While I'm not ready to establish a new target for the organization yet, our team knows that we need to do better. There's opportunity in both ABM type improvement, which are a great set of tools that we just need to drive harder at executing, as well as commercial actions to get more value for the important work that our teams do. Third, as our leverage ratios are now back into our targeted range, we will deploy capital with a high level of discipline, as usual, but with an emphasis on improving our margins, our aftermarket mix, and bringing in new technologies that complement our portfolio within our existing end market framework.
Doug Wright: While I'm not ready to establish a new target for the organization yet, our team knows that we need to do better. There's opportunity in both ABM type improvement, which are a great set of tools that we just need to drive harder at executing, as well as commercial actions to get more value for the important work that our teams do. Third, as our leverage ratios are now back into our targeted range, we will deploy capital with a high level of discipline, as usual, but with an emphasis on improving our margins, our aftermarket mix, and bringing in new technologies that complement our portfolio within our existing end market framework.
Speaker #4: think we have been a lot of runway in front of And while I'm not us . ready to establish a new target for the organization yet , our team knows that we need to do better opportunity .
Speaker #4: in There's both ABM type improvement , which are a great set of tools that need we just to harder drive at executing , as well as commercial actions to get more value for the important work that our teams do .
Speaker #4: And third , as our leverage ratios are now back into our targeted range , we will deploy capital with a high level of discipline as usual , but with an emphasis on improving our margins , our aftermarket mix and bringing in new technologies that complement our portfolio within our existing end market framework .
Doug Wright: So those are some of the key observations I would make today, and you can kind of convert that into what I'm focused on in the early days, both with the executive team, our operating units, as well as with our board. And I really remain very optimistic for the outlook for ATS.
Doug Wright: So those are some of the key observations I would make today, and you can kind of convert that into what I'm focused on in the early days, both with the executive team, our operating units, as well as with our board. And I really remain very optimistic for the outlook for ATS.
Speaker #4: So those are some of the key observations I would make today . And you can of convert kind that into what what I'm focused on in the in the early days , both with the executive team , our operating units as well as with our board , and I really remain very optimistic for the outlook for , for , for ATS .
Maxim Sytchev: That's excellent. Thank you so much, Doug. And one quick question for Ryan. And Ryan, obviously, all the best, and it's been a pleasure. If I may, do you mind maybe connecting a little bit the improvement in margins that you were telegraphing at the beginning of the year, and how that correlates to the gross margin change in the mix perspective on how I guess we should be thinking about modeling the rest of the year? Thank you.
Maxim Sytchev: That's excellent. Thank you so much, Doug. And one quick question for Ryan. And Ryan, obviously, all the best, and it's been a pleasure. If I may, do you mind maybe connecting a little bit the improvement in margins that you were telegraphing at the beginning of the year, and how that correlates to the gross margin change in the mix perspective on how I guess we should be thinking about modeling the rest of the year? Thank you.
Speaker #3: That's thank you so much , Doug . And one quick question for Ryan and Ryan . Obviously , the all best . And it's been a pleasure .
Speaker #3: If I may . Do you mind maybe connecting a little bit the improvement in margins that you were telegraphing at the beginning of the year and how that correlates to the the gross margin mix change in the perspective on how , I guess we should be thinking about modeling the rest of the year .
Doug Wright: Yeah, thanks, Max. I, I appreciate it. I'm gonna let Anne walk through the margin dynamics.
Doug Wright: Yeah, thanks, Max. I, I appreciate it. I'm gonna let Anne walk through the margin dynamics.
Speaker #3: Thank you .
Anne Cybulski: Thanks, Ryan. So, so Max, I would say from a, from a growth margin perspective, you know, we talk about, we talk about mix, and it really is reflective of the... what we're seeing, the, what we've got in our backlog and what we're executing on. I wouldn't call it anything unusual there. We've been pretty consistent in terms of performance there and, and in line with, with our expectations. We still, as Doug said, you know, we've still got opportunities across the board, but specifically on growth margins through some of our, some of our levers that we'll continue to pull, including the, the usual standardization, supply chain, operational excellence initiatives.
Anne Cybulski: Thanks, Ryan. So, so Max, I would say from a, from a growth margin perspective, you know, we talk about, we talk about mix, and it really is reflective of the... what we're seeing, the, what we've got in our backlog and what we're executing on. I wouldn't call it anything unusual there. We've been pretty consistent in terms of performance there and, and in line with, with our expectations. We still, as Doug said, you know, we've still got opportunities across the board, but specifically on growth margins through some of our, some of our levers that we'll continue to pull, including the, the usual standardization, supply chain, operational excellence initiatives.
Speaker #5: Thanks , Max . I appreciate it . I know that an through walk the margin dynamics . Thanks , Ryan .
Speaker #1: So I would say from a from a gross margin perspective , you know , we talk about we talk about mix and it really is reflective of the what we're seeing what we've got in our backlog and what we're executing on .
Speaker #1: I wouldn't anything call out unusual there . We've been pretty consistent in terms of performance . There and in line with our expectations .
Speaker #1: We still , as Doug we still got said , you know , opportunities the across board , but specifically on gross margin through some of our some of our levers that will continue to continue to pull , including the usual standardization , supply chain , operational excellence initiatives .
Anne Cybulski: So overall, I think, you know, some of the work we've got in our backlog right now, you know, is more, you see nuclear bumping up, and we've talked about that being, generally speaking, lower growth margin, but accretive to the bottom line. So, you know, I don't see anything unusual, but there are some dynamics there, and then the levers that we have available to us remain available, and we'll continue to focus on them.
Anne Cybulski: So overall, I think, you know, some of the work we've got in our backlog right now, you know, is more, you see nuclear bumping up, and we've talked about that being, generally speaking, lower growth margin, but accretive to the bottom line. So, you know, I don't see anything unusual, but there are some dynamics there, and then the levers that we have available to us remain available, and we'll continue to focus on them.
Speaker #1: So , so overall , I think , you know , some of the some of the work we've got in our in our backlog right now , you know , is , is more you see nuclear bumping up .
Speaker #1: And we've talked about that being generally speaking lower gross margin . But but accretive to the bottom line . So you know I don't I don't think there's anything unusual .
Maxim Sytchev: Okay, that's great. Thank you so much.
Maxim Sytchev: Okay, that's great. Thank you so much.
Speaker #1: But there are some dynamics there . And then the levers that we have available to us remain remain available . And we'll continue to focus on them .
Operator: Your next question comes from the line of Sabahat Khan from RBC Capital Markets. Your line is open.
Operator: Your next question comes from the line of Sabahat Khan from RBC Capital Markets. Your line is open.
Speaker #3: That's great . Okay . Thank you so much .
Sabahat Khan: ... Great. Thanks, and good morning. Just maybe starting at a high level on the revenue side, you know, obviously, you provided a bit of color on the outlook for each of the segments earlier. So maybe you could just dig a little bit more into the nuclear, the energy side, and the life sciences side. One, were you just sort of expecting the nuclear side numbers to be that big? Are there, you know, new orders that came through the year that drove sort of that size growth in nuclear? Then on the life sciences side, if you can maybe just talk about, you know, what you're seeing on the, on the outlook there in terms of maybe things that could drive, you know, mid to high single digit type growth that the segment's seen times in the past. Thanks.
Sabahat Khan: ... Great. Thanks, and good morning. Just maybe starting at a high level on the revenue side, you know, obviously, you provided a bit of color on the outlook for each of the segments earlier. So maybe you could just dig a little bit more into the nuclear, the energy side, and the life sciences side. One, were you just sort of expecting the nuclear side numbers to be that big? Are there, you know, new orders that came through the year that drove sort of that size growth in nuclear? Then on the life sciences side, if you can maybe just talk about, you know, what you're seeing on the, on the outlook there in terms of maybe things that could drive, you know, mid to high single digit type growth that the segment's seen times in the past. Thanks.
Speaker #2: Your next question comes from the line of Saba Harken from RBC Capital Markets . Your line is open .
Speaker #6: Great . Thanks and good morning . Just maybe starting at a high level on the revenue side , you know , obviously provided a bit of color outlook on the for each of the segments , or at least if you could just dig a little bit more into the nuclear , the energy side and the life sciences side , one , were you just sort of expecting the nuclear side numbers to be that big ?
Speaker #6: Are there , you know , new orders that came through the year that drove sort of size that growth in nuclear . And then on the life sciences side , if you can maybe just talk about , you know , what you're seeing on the on the outlook there in terms of maybe things that could drive mid to high single type growth digit , that segment seems times in the past .
Anne Cybulski: Yeah. So maybe, Saba, I'll start with the numbers, and then Doug can chime in on the outlook. So, from an energy perspective, as we've talked about, you know, the majority of the work that we have in our backlog right now is focused on life extension projects, and those tend to run out over 18 to 24 months in some cases from a top-line standpoint. That said, we also have, you know, good backlog that we're continuing to generate in terms of our participation in new builds, both SMR and traditional reactors. And, you know, an example, in the quarter, we did have an order for a new build reactor for fuel fabrication.
Anne Cybulski: Yeah. So maybe, Saba, I'll start with the numbers, and then Doug can chime in on the outlook. So, from an energy perspective, as we've talked about, you know, the majority of the work that we have in our backlog right now is focused on life extension projects, and those tend to run out over 18 to 24 months in some cases from a top-line standpoint. That said, we also have, you know, good backlog that we're continuing to generate in terms of our participation in new builds, both SMR and traditional reactors. And, you know, an example, in the quarter, we did have an order for a new build reactor for fuel fabrication.
Speaker #6: Thanks .
Speaker #5: Yeah .
Speaker #1: So maybe I'll start with with the numbers . And then Doug can can chime in on on the outlook . So a from from an energy perspective as we've talked about you know the majority of the work that we have in our backlog right now is focused on life extension projects .
Speaker #1: And those tend to run out over 18 to 24 months in some cases from a from a top line standpoint we . That said , also have , you know , good , good backlog that we're continuing to to generate in terms our of participation in new builds , both SMR and traditional reactors and , you know , an example , in the quarter , we did have an order for new builds , reactor for fuel fabrication .
Anne Cybulski: So, good participation there, and not specific to any one technology. So, I think a good demonstration of our team's capabilities beyond the CANDU technology that is the majority of the life extension work. From a life sciences standpoint, you know, we've continued to build out that part of the business. And of course, we have the customer integration piece of the business, but we've also got, you know, a good portfolio from a products and services standpoint that we'll continue to focus on driving the business forward from a top-line standpoint. So Doug, go ahead.
Anne Cybulski: So, good participation there, and not specific to any one technology. So, I think a good demonstration of our team's capabilities beyond the CANDU technology that is the majority of the life extension work. From a life sciences standpoint, you know, we've continued to build out that part of the business. And of course, we have the customer integration piece of the business, but we've also got, you know, a good portfolio from a products and services standpoint that we'll continue to focus on driving the business forward from a top-line standpoint. So Doug, go ahead.
Speaker #1: So , so good , good participation there and not specific to any one technology . So I think a good demonstration of our team's capabilities beyond the Candu technology that is the majority of the the the life extension work from a life sciences standpoint .
Speaker #1: We've, you know, continued to build out that part of the business. And of course, we have the custom integration piece of the business.
Speaker #1: But we've also got , you know , a good portfolio from a , from a products and services standpoint that will continue to focus on driving the business forward from a top line point .
Doug Wright: Sure. So I would just add in terms of the outlook, Saba, that we've obviously in the nuclear side, we've obviously had a very long-standing relationship with a number of customers on the CANDU platforms, and we're really pleased that we're continuing to support those life extension and refurb programs. But inside of our pipeline and, you know, kind of looking forward, we are also active on, I would call it a handful, a full handful of SMR customers, in the early stage activities in both modular fabrication and fuel handling. And we do expect that over time, these customer relationships will expand as projects gain traction and evolve into operations.
Doug Wright: Sure. So I would just add in terms of the outlook, Saba, that we've obviously in the nuclear side, we've obviously had a very long-standing relationship with a number of customers on the CANDU platforms, and we're really pleased that we're continuing to support those life extension and refurb programs. But inside of our pipeline and, you know, kind of looking forward, we are also active on, I would call it a handful, a full handful of SMR customers, in the early stage activities in both modular fabrication and fuel handling. And we do expect that over time, these customer relationships will expand as projects gain traction and evolve into operations.
Speaker #1: So Doug . Go ahead .
Speaker #4: Sure . So I would just add in terms of the outlook that the we've we've nuclear side , we've obviously in the obviously had a very long standing relationship with a number of customers on the Candu platforms , and we're really pleased that we're continuing to support those life extension and refurb programs .
Speaker #4: But inside of our pipeline and , you know , kind of looking forward , we are also active on , I would call it a handful of full handful of SMR customers in the early stage activities in both modular fuel fabrication and handling .
Doug Wright: You know, obviously, this is a long-term investment for the company to get involved early, and we have to obviously be prudent in how we manage uncertainty that comes with new technology and new regulatory frameworks, but we feel like ATS is in a strong position to support those evolving technologies as they go forward. I would say on the life sciences side of things, we really are pleased with the improvement in the diversity at the application layer within the pipeline and the backlog in life sciences. We're really excited about some of the new innovations that our customers are working on around radiopharma, visual inspection, other med tech applications, including things like mail order pharmacy.
Doug Wright: You know, obviously, this is a long-term investment for the company to get involved early, and we have to obviously be prudent in how we manage uncertainty that comes with new technology and new regulatory frameworks, but we feel like ATS is in a strong position to support those evolving technologies as they go forward. I would say on the life sciences side of things, we really are pleased with the improvement in the diversity at the application layer within the pipeline and the backlog in life sciences. We're really excited about some of the new innovations that our customers are working on around radiopharma, visual inspection, other med tech applications, including things like mail order pharmacy.
Speaker #4: And we do expect that over time , these customer relationships will expand as projects gain traction and evolve into operations . You know , obviously , this is a long term investment for the company to get involved early .
Speaker #4: And we have to obviously be prudent in how we manage, and that comes with new technology and new regulatory frameworks. But we feel like ATS is in a strong position to support those evolving technologies.
Speaker #4: As as they as they go forward . I would on the life sciences side the on say of things , we really are pleased with the improvement in the diversity in the , in the , at the application layer within the pipeline and the backlog in in life sciences , we're really excited about some of the new innovations that our customers are working on around Radiopharma visual inspection , other medtech applications , including things like mail order pharmacy .
Doug Wright: So we believe that we have a pretty good stable of new applications coming in that portion of our business, that will allow us to help continue to support those great innovations that are happening with our customers.
Doug Wright: So we believe that we have a pretty good stable of new applications coming in that portion of our business, that will allow us to help continue to support those great innovations that are happening with our customers.
Speaker #4: believe So we that we have a pretty good stable of new applications coming in that portion of our business that will us allow help continue to to to support those those great innovations that are happening with our customers .
Sabahat Khan: Great. And then just for my follow-up, I guess, you know, a bit more on the capital side, leverage moved in the right direction. You know, if you can just maybe comment a little bit on sort of the working capital target that you guys have, any initial plans there, and then, you know, understanding it's your early days, but just your views on, you know, where M&A ranks in capital allocation as the leverage moves further in the right direction. Thanks.
Sabahat Khan: Great. And then just for my follow-up, I guess, you know, a bit more on the capital side, leverage moved in the right direction. You know, if you can just maybe comment a little bit on sort of the working capital target that you guys have, any initial plans there, and then, you know, understanding it's your early days, but just your views on, you know, where M&A ranks in capital allocation as the leverage moves further in the right direction. Thanks.
Speaker #6: Great . And then just for my follow up , I guess a bit more on the capital side , leverage moved in the right direction .
Speaker #6: You know , if you can just maybe comment a little bit on sort of the working capital target that you guys have any initial plans then , you know , there and understanding it's views your early just your you know , on , where M&A ranks and capital allocation as the moves leverage further in the right direction .
Doug Wright: Sure. So, it's a little premature for us to set new financial targets in terms of the working capital ratio, but you can be sure that in future calls with you, we will be reviewing those targets and coming forward with a, you know, a, an updated framework. I think the team did make a lot of progress here in the last quarter on working capital, and that's a... You know, honestly, improving working capital is actually quite hard operationally, so I think it shows a good level of execution by the team. And of course, you know, my job is to keep pushing to make it even better than it has been. So, you can count on that.
Doug Wright: Sure. So, it's a little premature for us to set new financial targets in terms of the working capital ratio, but you can be sure that in future calls with you, we will be reviewing those targets and coming forward with a, you know, a, an updated framework. I think the team did make a lot of progress here in the last quarter on working capital, and that's a... You know, honestly, improving working capital is actually quite hard operationally, so I think it shows a good level of execution by the team. And of course, you know, my job is to keep pushing to make it even better than it has been. So, you can count on that.
Speaker #6: Thanks .
Speaker #4: Sure . So it's a little premature for us to set new financial targets in terms of the working capital ratio . But you can be sure that in future calls with you , we will be reviewing those targets and coming forward with a , you know , an updated framework .
Speaker #4: I think the team did make a lot of progress here in the last quarter . On working capital , and a , that's you know , honestly , improving working actually capital is quite hard operationally .
Speaker #4: think it's So I shows a good level of execution by the team . And of course , you know , my job is to keep pushing to make it even better than it than it has been .
Doug Wright: I think in terms of capital allocation models, I would think about it like this: We're not going to change our level of discipline, focus, and our committed leverage architecture that we've communicated to investors. We recognize that there's, you know, a view that as our leverage ratio gets back into our targeted zone, that we can become more thoughtful about deploying M&A capital, and you can be confident that internally, we are doing that. We have a pretty rich pipeline that, across a number of our end markets, that we are continuing to evolve.
Doug Wright: I think in terms of capital allocation models, I would think about it like this: We're not going to change our level of discipline, focus, and our committed leverage architecture that we've communicated to investors. We recognize that there's, you know, a view that as our leverage ratio gets back into our targeted zone, that we can become more thoughtful about deploying M&A capital, and you can be confident that internally, we are doing that. We have a pretty rich pipeline that, across a number of our end markets, that we are continuing to evolve.
Speaker #4: So you can count on that . I think in terms of capital allocation models , I would think about it like this . We're not going to level of change our discipline and focus and our committed leverage architecture that we've communicated to investors .
Speaker #4: We that recognize there's know a , you , a view that as our leverage ratio gets back into our targeted zone , that we can become more , more thoughtful deploying about capital .
Speaker #4: And you can be confident that internally , we are doing that . We have a pretty rich pipeline across a that number of our end we markets that are continuing to evolve .
Doug Wright: And as I'm meeting with our business unit leaders, and our corporate development team and getting an understanding of within their pipeline, I'm pretty confident that we've got the ideas to utilize to deploy capital. But, you know, obviously, as I said, we will remain quite disciplined in how we do that, but you should expect us to favor deploying capital toward M&A going forward.
Doug Wright: And as I'm meeting with our business unit leaders, and our corporate development team and getting an understanding of within their pipeline, I'm pretty confident that we've got the ideas to utilize to deploy capital. But, you know, obviously, as I said, we will remain quite disciplined in how we do that, but you should expect us to favor deploying capital toward M&A going forward.
Speaker #4: as I'm meeting with our our And unit business leaders and our development team and corporate getting an understanding of what's in their pipeline , I'm pretty confident that we've got the ideas to to utilize to deploy capital , but obviously , as I as I said , we will remain quite disciplined in how we do that .
Justin Keywood: ... Great. Thanks very much for the color, and Ryan, all the best with your transition, looking ahead.
Sabahat Khan: ... Great. Thanks very much for the color, and Ryan, all the best with your transition, looking ahead.
Speaker #4: But you should expect us to favor deploying capital toward M&A going forward
Doug Wright: Thanks, Sabin.
Doug Wright: Thanks, Sabin.
Speaker #4: .
Speaker #6: Thanks very much for the color . And Ryan , all the best with your transition . Looking ahead .
Operator: Your next question comes from the line of Patrick Sullivan from TD Cowen. Your line is open.
Operator: Your next question comes from the line of Patrick Sullivan from TD Cowen. Your line is open.
Speaker #5: Thank you , Sarah .
Patrick Sullivan: Thank you, good morning. You know, like I once said, good luck, Ryan, and then Doug, welcome, welcome to the call. I guess first question I had was, it looks like there's a specific line kind of outlining opportunities outside of GLP-1 in the life sciences sector. So I guess, has there been any updates to customer plans within that market for you guys? Is there, you know, still significant capacity that needs to be constructed, or have advancements in other, you know, oral therapies kind of influenced capital expenditure plans more recently?
Patrick Sullivan: Thank you, good morning. You know, like I once said, good luck, Ryan, and then Doug, welcome, welcome to the call. I guess first question I had was, it looks like there's a specific line kind of outlining opportunities outside of GLP-1 in the life sciences sector. So I guess, has there been any updates to customer plans within that market for you guys? Is there, you know, still significant capacity that needs to be constructed, or have advancements in other, you know, oral therapies kind of influenced capital expenditure plans more recently?
Speaker #2: next Your question comes from the line of Patrick Sullivan from TD Cowan . Your line is open
Speaker #2: .
Speaker #7: And good. You, thank you. You know, like I said, good luck, Ryan. And then Doug, welcome. Welcome to the call.
Speaker #7: I guess first question I had was it looked like there was a specific line kind of outlining opportunities outside of GLP one in the life sciences sector .
Speaker #7: So I guess , has there been any updates to customer plans within that , that market for you guys ? Is there , you know , still significant capacity that needs to be constructed or have advancements in other oral therapies kind of influenced capital expenditure plans more recently ?
Doug Wright: Sure. I would say, you know, obviously, Patrick, the GLP-1 ecosystem has a lot of dynamics involved in terms of both the ramp-up of capacity that we're participating in now, as we're shifting into the delivery phase of the great upfront capacity partnerships that we entered in a while back. But there's still a significant amount of new therapies around GLP-1s, new delivery form factors, such as multi-use devices or more sustainable concepts in the devices themselves, as well as new trials and customer activities around continuing to deploy new therapies around these therapeutics.
Doug Wright: Sure. I would say, you know, obviously, Patrick, the GLP-1 ecosystem has a lot of dynamics involved in terms of both the ramp-up of capacity that we're participating in now, as we're shifting into the delivery phase of the great upfront capacity partnerships that we entered in a while back. But there's still a significant amount of new therapies around GLP-1s, new delivery form factors, such as multi-use devices or more sustainable concepts in the devices themselves, as well as new trials and customer activities around continuing to deploy new therapies around these therapeutics.
Speaker #4: Sure . I would say obviously , Patrick , the the GLP one ecosystem has a lot of dynamics involved in terms of both the ramp up of capacity that we're we're in participating now as we're shifting into the delivery phase of the great upfront capacity partnerships that we entered in a while back .
Speaker #4: there's But still a significant amount of new therapies around GLP ones . New delivery form factors such as multi-use devices or more sustainable in in concepts devices the themselves .
Speaker #4: As well as new trials and customer activities around continuing to deploy new therapies around these . These therapeutics . So I would say that the long term , the autoinjector market for us with respect to GLP one , it will , you know , it's obviously going to go through its lumpiness in the in the order cycle .
Doug Wright: So I would say that the long term, the auto-injector market for us with respect to GLP-1s, it will, you know, it's obviously gonna go through its lumpiness in the order cycle, but from a revenue perspective, we still see a pretty strong pipeline of incremental opportunities to continue to support those therapies. And now being prudent, we obviously have to, you know, improve the diversity of our pipeline for other types of therapies we mentioned in our prepared remarks. There's a lot of excitement around radiopharma, oncology, and other activities that we think will. Well, we don't think, it is diversifying our pipeline, and that'll start to diversify our revenue footprint as time goes on. So we're committed to continuing to work with our GLP-1 and auto-injector customers.
Doug Wright: So I would say that the long term, the auto-injector market for us with respect to GLP-1s, it will, you know, it's obviously gonna go through its lumpiness in the order cycle, but from a revenue perspective, we still see a pretty strong pipeline of incremental opportunities to continue to support those therapies. And now being prudent, we obviously have to, you know, improve the diversity of our pipeline for other types of therapies we mentioned in our prepared remarks. There's a lot of excitement around radiopharma, oncology, and other activities that we think will. Well, we don't think, it is diversifying our pipeline, and that'll start to diversify our revenue footprint as time goes on. So we're committed to continuing to work with our GLP-1 and auto-injector customers.
Speaker #4: But from a revenue perspective , we still see a pretty strong pipeline of incremental opportunities to continue to support those therapies . And I'm being prudent .
Speaker #4: We obviously have to , you know , in our the diversity , diversity of our pipeline for other types of therapies , we mentioned in our prepared remarks , there's a lot of excitement around Radiopharma oncology and other activities that we think .
Speaker #4: will Well , we're not we don't think it is diversifying our pipeline , and that will start to diversify our revenue as as time footprint goes on .
Doug Wright: We recognize that there's a lot of press now about different companies guiding different views on utilization of orals and other traditional and new therapies around GLP-1s. And I would say that from our perspective, our customers are still being pretty consistent, that there's a lot of long-term opportunity in GLP-1s that, you know, we'll continue to support over time. Recognizing that we have to diversify the portfolio to make sure that we can keep the machine running.
Speaker #4: So we're we're committed to work continuing to with our GLP one and Autoinjector customers . We recognize that there's a lot of press now about different companies different guiding views on utilization of orals and other other other traditional and new therapies around GLP one .
Doug Wright: We recognize that there's a lot of press now about different companies guiding different views on utilization of orals and other traditional and new therapies around GLP-1s. And I would say that from our perspective, our customers are still being pretty consistent, that there's a lot of long-term opportunity in GLP-1s that, you know, we'll continue to support over time. Recognizing that we have to diversify the portfolio to make sure that we can keep the machine running.
Speaker #4: And I would say from our that customers perspective , our being pretty are still consistent , that there's a lot of long term opportunity in GLP that we'll continue to support one time , recognizing over that we have to diversify the portfolio sure that we to make can we keep the keep machine the running .
Anne Cybulski: And just a small bit of extra color on the quarter. Within the quarter, we saw, you know, good examples of that diversification that Doug referred to. You know, outside of GLP-1, we had orders in radiopharma and other areas of med device, which they're a good demonstration of our team's capability and our capacity to execute across those submarkets. So, just hopefully that adds a little bit extra color for you there.
Anne Cybulski: And just a small bit of extra color on the quarter. Within the quarter, we saw, you know, good examples of that diversification that Doug referred to. You know, outside of GLP-1, we had orders in radiopharma and other areas of med device, which they're a good demonstration of our team's capability and our capacity to execute across those submarkets. So, just hopefully that adds a little bit extra color for you there.
Speaker #4: .
Speaker #1: just a small And bit of extra the quarter color on on . Within the quarter , we saw good good , examples of that diversification that Doug's referring to outside of GLP had .
Speaker #1: one , we You know , orders we had in Radiopharma and , and other med areas of device , our demonstration of capability and our capacity to execute those across submarkets .
Patrick Sullivan: Yeah, that's great. Thank you for all the detail. If I could ask one more? I know ATS often talks about cultivating assets as it relates to acquisition targets, sometimes over many years. Doug, is that approach consistent with your experience? Was that part of your mandate in previous roles? I guess any experience you can elaborate on with respect to that strategy would be great.
Patrick Sullivan: Yeah, that's great. Thank you for all the detail. If I could ask one more? I know ATS often talks about cultivating assets as it relates to acquisition targets, sometimes over many years. Doug, is that approach consistent with your experience? Was that part of your mandate in previous roles? I guess any experience you can elaborate on with respect to that strategy would be great.
Speaker #1: So just that adds hopefully a little bit extra color for you . There .
Speaker #7: That's Yeah . great . Thank you for for all that detail . If I could ask one more , I know it's often talks about cultivating assets as it relates to acquisition targets .
Speaker #7: Sometimes over over many years . Doug . Is that is that approach consistent experience ? Was with your that part of your And mandate ?
Speaker #7: and previous roles ? I guess any experience you can elaborate on with respect to to that strategy would be great .
Doug Wright: Yeah, thanks for the question, Patrick. I think the answer is very simple. I am very committed to the idea that I have a role, and my executive team have a role in working with innovators, founders, sometimes families, and other, you know, we work in a universe of you know, strong levels of innovation that often start as small businesses and then evolve into, you know, opportunities to join a larger organization like ATS. That does require a lot of kind of pick and shovel activity on the ground to cultivate those relationships.
Doug Wright: Yeah, thanks for the question, Patrick. I think the answer is very simple. I am very committed to the idea that I have a role, and my executive team have a role in working with innovators, founders, sometimes families, and other, you know, we work in a universe of you know, strong levels of innovation that often start as small businesses and then evolve into, you know, opportunities to join a larger organization like ATS. That does require a lot of kind of pick and shovel activity on the ground to cultivate those relationships.
Speaker #4: Yeah . Thanks for the question , Patrick . I think the you your answer is very simple . I am very committed to the idea that I have a role in my my executive team have a role in working with innovators , founders , sometimes families and other , you know , we we work in a universe of , you know , strong levels of often innovation that start as small businesses and evolve then into , you know join a , opportunities larger ATS that does require a lot of kind of pick and shovel of kind activity to on ground to the cultivate those relationships something that I .
Doug Wright: It is something that I have a lot of experience in, and I think we'll continue to have a pretty, very tactical focus on getting out and meeting partners and working with them over the long term, to make those acquired companies feel at home inside ATS.
Doug Wright: It is something that I have a lot of experience in, and I think we'll continue to have a pretty, very tactical focus on getting out and meeting partners and working with them over the long term, to make those acquired companies feel at home inside ATS.
Speaker #4: of have a lot And it is in . experience I And we'll continue think you'll a to have a pretty very tactical focus on getting out and meeting with them partners and working over the long term put us to in a better position to to make those acquired companies home inside ATS .
Patrick Sullivan: Great. Thank you.
Patrick Sullivan: Great. Thank you.
Speaker #4: feel at
Operator: Your next question comes from the line of Justin Keywood from Stifel. Your line is open.
Operator: Your next question comes from the line of Justin Keywood from Stifel. Your line is open.
Speaker #7: Great . Thank you .
Justin Keywood: Good morning. Thanks for taking my questions. Just following up on the outlook for life sciences. We've seen some substantial CapEx investments in over the last 6 to 8 months. By our math, about $480 billion has been announced, much of which are ATS's customers, and this is in part to potentially sidestep tariffs and reshore with US manufacturing. I'm wondering if that narrative is leading to increased business for ATS, or is it just regular business as it goes, as far as new CapEx, and if you have any additional color there?
Justin Keywood: Good morning. Thanks for taking my questions. Just following up on the outlook for life sciences. We've seen some substantial CapEx investments in over the last 6 to 8 months. By our math, about $480 billion has been announced, much of which are ATS's customers, and this is in part to potentially sidestep tariffs and reshore with US manufacturing. I'm wondering if that narrative is leading to increased business for ATS, or is it just regular business as it goes, as far as new CapEx, and if you have any additional color there?
Speaker #2: Your question next from the comes line of Justin Keywood from Stifel . Your line is open .
Speaker #8: Good morning . Thanks for taking my questions . Just following up on the outlook for life sciences , we've seen some substantial CapEx investments , you know , over the last 6 to 8 months by our math , about 480 billion has been announced , much of which are Ats's customers .
Speaker #8: And this is in part to potentially side step tariffs and reshore with us manufacturing . I'm wondering if that narrative is leading to increased for for business ATS , or is it is it just a regular business as it goes as far as new CapEx ?
Doug Wright: ... So, Justin, I think specifically, we probably—I think at a high level, we certainly are aware that there's a lot of discussion within the broader sort of healthcare and life sciences space around reshoring and tariff mitigations. And we certainly are probably seeing some benefit from that in our own pipeline. But I can't—I think at the end of the day, most of our customers are being very balanced in being close to their large markets as they build out their capacity. So I wouldn't say that it's necessarily dependent on tariff dynamics. I think it's related to just the dramatic increase in demand for these therapeutics and just needing raw capacity.
Doug Wright: ... So, Justin, I think specifically, we probably—I think at a high level, we certainly are aware that there's a lot of discussion within the broader sort of healthcare and life sciences space around reshoring and tariff mitigations. And we certainly are probably seeing some benefit from that in our own pipeline. But I can't—I think at the end of the day, most of our customers are being very balanced in being close to their large markets as they build out their capacity. So I wouldn't say that it's necessarily dependent on tariff dynamics. I think it's related to just the dramatic increase in demand for these therapeutics and just needing raw capacity.
Speaker #8: And if you have any additional color there? Yeah.
Speaker #4: So , Justin , I think the specifically we probably I think at a at a high level , we certainly are aware that there's a lot of discussion within the broader sort of healthcare and life sciences space around reshoring tariff and mitigations and we certainly are probably seeing some benefit from that in our own in our own pipeline .
Speaker #4: But I can't I think at the end of the day , most of our customers are being very balanced in being close to their large their markets as they build out their capacity .
Speaker #4: So I wouldn't say that it's necessarily dependent on tariff dynamics . I think it's related to the just the the dramatic increase in demand for these therapeutics and just needing raw capacity .
Doug Wright: And if you're doing, if you're adding new capacity in an environment where tariffs and geopolitical items are volatile, it's kind of rational to spread your, your capacity out among different geographies. I think that's common across a lot of the industrial tech and, and landscape as well, among our peers. So I think that's kind of a natural outcome, and but you're correct, that there is still, still a significant amount of capacity in the pipeline, and, and our job is to be able to serve that, whatever geography the customer decides to, to land in.
Doug Wright: And if you're doing, if you're adding new capacity in an environment where tariffs and geopolitical items are volatile, it's kind of rational to spread your, your capacity out among different geographies. I think that's common across a lot of the industrial tech and, and landscape as well, among our peers. So I think that's kind of a natural outcome, and but you're correct, that there is still, still a significant amount of capacity in the pipeline, and, and our job is to be able to serve that, whatever geography the customer decides to, to land in.
Speaker #4: And if you're doing if you're adding new in an capacity environment where . Tariffs and geopolitical items are volatile , it's rational to spread your your capacity out among different geographies .
Speaker #4: that's I think common across a lot industrial tech and landscape as well . Among our peers . So I think that's kind of a natural outcome .
Speaker #4: but you're And correct that there is still still a significant amount of capacity in the pipeline . And in our job is to be able to serve that whatever geography the customer decides to , to in .
Justin Keywood: Understood. That's very helpful. And then for the transportation or EV segment, we saw continued pressure this quarter. Our expectation was it was near bottom levels last quarter. Are we at that range where we should see some stabilization going forward? And also, how strategic is the EV or transportation segment to the overall business going forward?
Justin Keywood: Understood. That's very helpful. And then for the transportation or EV segment, we saw continued pressure this quarter. Our expectation was it was near bottom levels last quarter. Are we at that range where we should see some stabilization going forward? And also, how strategic is the EV or transportation segment to the overall business going forward?
Speaker #8: That's very Understood . . And then helpful for the or transportation we EV saw continued segment , pressure this quarter . Our expectation was it was near bottom levels .
Speaker #8: Last quarter . Are we at that range where we should see some stabilization going forward ? And also how strategic is the EV or transportation segment to overall forward going the business ?
Doug Wright: Sure. So I think we look at transportation, you know, holistically, the way we look at all of our end markets through a long-term, you know, value creation lens. And part of that is specific to transportation: we recognize that we have a lot of technology and value to bring to the EV ecosystem. But it's frankly going to be more targeted than it has been historically. I think we recognize that pursuing mega projects in, call it, the broad transportation sector carries a lot of risk that we're not comfortable with.
Doug Wright: Sure. So I think we look at transportation, you know, holistically, the way we look at all of our end markets through a long-term, you know, value creation lens. And part of that is specific to transportation: we recognize that we have a lot of technology and value to bring to the EV ecosystem. But it's frankly going to be more targeted than it has been historically. I think we recognize that pursuing mega projects in, call it, the broad transportation sector carries a lot of risk that we're not comfortable with.
Speaker #4: Sure . So think I we we look at transportation , you know , holistically , the way we look at all of our end markets through a long term , you know , value creation lens .
Speaker #4: And part of that is specific to transportation is we we we recognize that we we have a lot of technology and value to to the EV ecosystem .
Speaker #4: But it's going to frankly targeted has historically . I been than it think we recognize that pursuing megaprojects call it transportation sector and the broad has carries a lot of risk don't we're not that we But comfortable sort of within with .
Doug Wright: But within sort of niches within the transportation segment, maybe it's assembly of batteries or, you know, hybrid engines or other sort of unique, targeted areas where our technology can bring value, and we can be rewarded appropriately for it. We're still have a significant amount of pipeline in transportation, but we're gonna be more cautious in how we go after, you know, the shiny objects. We're gonna be more disciplined in how we pursue those projects. So it's still a market that we feel optimistic about, but on a relative scale, it will relative to our larger segments that we're participating in now, I think it will stay kind of in its current range.
Doug Wright: But within sort of niches within the transportation segment, maybe it's assembly of batteries or, you know, hybrid engines or other sort of unique, targeted areas where our technology can bring value, and we can be rewarded appropriately for it. We're still have a significant amount of pipeline in transportation, but we're gonna be more cautious in how we go after, you know, the shiny objects. We're gonna be more disciplined in how we pursue those projects. So it's still a market that we feel optimistic about, but on a relative scale, it will relative to our larger segments that we're participating in now, I think it will stay kind of in its current range.
Speaker #4: niches transportation within the maybe segment , assembly of it's or batteries hybrid engines or sort of other unique where our areas targeted technology can bring value be rewarded and we can appropriately for it .
Speaker #4: still have a significant amount of We pipeline in transportation , but we're going to be more cautious in we go how after , you know , the shiny going to be more objects .
Speaker #4: in how we We're disciplined pursue those projects . So a it's still market that we feel optimistic about . But on a relative scale , it will to relative our , our our larger segments that we're participating in now .
Anne Cybulski: And Justin, just to add, I mean, that's what Doug said is reflective of what, you know, we see in the backlog and also in bookings in the quarter, as well as the funnel. So, I think that's a fair reflection of what we'd expect going forward.
Anne Cybulski: And Justin, just to add, I mean, that's what Doug said is reflective of what, you know, we see in the backlog and also in bookings in the quarter, as well as the funnel. So, I think that's a fair reflection of what we'd expect going forward.
Speaker #4: I think it will stay kind of in its in its current range . .
Speaker #1: And Justin , just to add , I mean , that's what I've said is reflective of what we see in the in the backlog in the bookings in the quarter , as well as as well as the funnel .
Justin Keywood: Thank you for taking my questions.
Justin Keywood: Thank you for taking my questions.
Speaker #1: So and I think that's that's a fair reflection of what we'd expect going forward
Doug Wright: You're welcome.
Doug Wright: You're welcome.
Operator: Again, if you'd like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Patrick Baumann from JP Morgan. Your line is open.
Operator: Again, if you'd like to ask a question, please press star one on your telephone keypad. Your next question comes from the line of Patrick Baumann from JP Morgan. Your line is open.
Speaker #8: taking my . Thank you for . You're welcome .
Speaker #8: questions
Speaker #2: Again , if you'd a like to ask question , please press telephone star One in your keypad . Your next question comes from the line of Patrick Bowman from Morgan .
Speaker #2: Again , if you'd a like to ask question , please press telephone star One in your keypad . Your next question comes from the line of Patrick Bowman from JP open is .
Patrick Baumann: Oh, hi, good morning. Hey, so I know it's been a couple of months already, but we haven't spoken yet, so wanted to say congrats to Doug on the new role. And also thanks to Ryan for all the help and guidance while we've been following the company, and best of luck in your new role. I had a couple of questions.
Patrick Baumann: Oh, hi, good morning. Hey, so I know it's been a couple of months already, but we haven't spoken yet, so wanted to say congrats to Doug on the new role. And also thanks to Ryan for all the help and guidance while we've been following the company, and best of luck in your new role. I had a couple of questions.
Speaker #7: Hi . Good morning .
Speaker #9: Hey. So I know it's been a couple of months already, but we haven't spoken yet, so I wanted to say congrats to Doug on the new role.
Speaker #9: And also, thanks to Help and Ryan for all the guidance we've had while we've been following the company. And best of luck in your new role.
Doug Wright: Thank you.
Doug Wright: Thank you.
Patrick Baumann: Yeah. Had a couple of questions. First, on sales. So generally, like, when I look at the quarterly, I know you guys don't like to talk about quarterly, but when I look at the quarters over time, you see a growth rate from Q3 to Q4, like in the mid-single digit range, sequentially. Can you help me understand why that might not happen this year? Is it, you know, was there some sales pulled ahead to the Q3, maybe? Any color on that would be helpful.
Patrick Baumann: Yeah. Had a couple of questions. First, on sales. So generally, like, when I look at the quarterly, I know you guys don't like to talk about quarterly, but when I look at the quarters over time, you see a growth rate from Q3 to Q4, like in the mid-single digit range, sequentially. Can you help me understand why that might not happen this year? Is it, you know, was there some sales pulled ahead to the Q3, maybe? Any color on that would be helpful.
Speaker #9: Had a couple questions . Yeah , had a couple questions first . First on sales . So generally like when I look at the quarterly I know you guys don't like talk about quarterly , but when I look at the quarters over time , you see growth a rate from third quarter to fourth quarter , like in the mid-single digit range sequentially .
Speaker #9: Can you help me understand why that might not happen this year ? it , you Is there sales some ahead to the third quarter ?
Anne Cybulski: Yeah. Hi, Patrick. I can take that one. So, on a full year basis, we're, you know, we're still expecting what we talked about before in terms of high single digits growth, and we're, you know, we're happy with where we are from an organic growth perspective on a year-to-date basis, especially given some of the market dynamics. The Q3 number, I mean, there was some benefit from scope adjustments and, you know, things that the timing of execution of the program. So what we have in our guide for Q4, you know, leaves us consistent with what we would have expected on a full year basis, and I don't think there's anything unusual that I'd call out.
Anne Cybulski: Yeah. Hi, Patrick. I can take that one. So, on a full year basis, we're, you know, we're still expecting what we talked about before in terms of high single digits growth, and we're, you know, we're happy with where we are from an organic growth perspective on a year-to-date basis, especially given some of the market dynamics. The Q3 number, I mean, there was some benefit from scope adjustments and, you know, things that the timing of execution of the program. So what we have in our guide for Q4, you know, leaves us consistent with what we would have expected on a full year basis, and I don't think there's anything unusual that I'd call out.
Speaker #9: pull Maybe any color on that would be helpful on .
Speaker #1: Yeah . Hi , I can take that one . So from a on a full year basis we're you know we're still expecting what we talked in terms of high single digits growth .
Speaker #1: And we're we're happy with where we are from an organic growth perspective on a year to date , especially given some basis some of the market dynamics , the number , I mean , there was some some benefit Q3 from scope adjustments .
Speaker #1: And , you know , things that just timing of execution of the program . So what we have in our guide for Q4 , you know , leaves us consistent with what we would have expected on a full year basis .
Patrick Baumann: Okay, that's helpful. And then the second one's on backlog, so I guess I just wanted to understand the sequential decline in context of the positive book to bill. It looked to me like maybe in transport there was a rescoping or something of that nature. Is that right? And if you could provide any color on that, that'd be helpful. And then also on the orders front, like, consumer looked like it had a big order in there. Could you provide any color on that?
Patrick Baumann: Okay, that's helpful. And then the second one's on backlog, so I guess I just wanted to understand the sequential decline in context of the positive book to bill. It looked to me like maybe in transport there was a rescoping or something of that nature. Is that right? And if you could provide any color on that, that'd be helpful. And then also on the orders front, like, consumer looked like it had a big order in there. Could you provide any color on that?
Speaker #1: And I don't think there's anything unusual that that I'd call out .
Speaker #9: Okay . That's helpful . And then the second one is on backlog . And guess I I so just wanted to understand the the sequential decline in context of the positive Bill .
Speaker #9: book to It looked to me like maybe in transport there was a rescoping or something of that nature . Is that right ? And if you could provide any color on that , that'd be helpful .
Speaker #9: And then also on the orders front , like consumer looked like it had a big order in there . Could you provide any that color on ?
Anne Cybulski: Yeah, I'd be happy to. So just with respect to backlog, I mean, just about half of our business, roughly half, is products and services. So as that portfolio continues to grow, I mean, we kind of look at a number of metrics across the board. So in our guide, we look at the shorter term businesses. We kind of look at where we are from an execution standpoint on our larger projects. So there's some timing stuff in there. But I would say, you know, we're happy with the book to bill staying above one.
Anne Cybulski: Yeah, I'd be happy to. So just with respect to backlog, I mean, just about half of our business, roughly half, is products and services. So as that portfolio continues to grow, I mean, we kind of look at a number of metrics across the board. So in our guide, we look at the shorter term businesses. We kind of look at where we are from an execution standpoint on our larger projects. So there's some timing stuff in there. But I would say, you know, we're happy with the book to bill staying above one.
Speaker #1: Yeah , I'd be happy to . So just with respect to tobacco , I mean , just about half of our business , roughly half is products and services .
Speaker #1: as that So portfolio to continues mean grow , I , we kind of look at a number of metrics across the board . So in our in our guide , we look at the the shorter term businesses .
Speaker #1: kind We of look at where we are in an from an execution standpoint on our larger projects . So there's some there's some timing stuff in there would I .
Anne Cybulski: Even if it does dip below one in any particular market or period on a, you know, on a individual quarter or trailing twelve-month basis, if we're executing off of a healthy backlog, that doesn't give us cause for concern. So I think. And then your question on consumer, we have had some strength in that area, again, reflective of the capabilities of the team. So that work will get executed over a normal time frame, consistent with other work, the other work in our backlog, we typically say 12 to 18 months.
Anne Cybulski: Even if it does dip below one in any particular market or period on a, you know, on a individual quarter or trailing twelve-month basis, if we're executing off of a healthy backlog, that doesn't give us cause for concern. So I think. And then your question on consumer, we have had some strength in that area, again, reflective of the capabilities of the team. So that work will get executed over a normal time frame, consistent with other work, the other work in our backlog, we typically say 12 to 18 months.
Speaker #1: would say , you know , we're happy with But I with the , with the book to Bill above , staying one . And staying above even if it does dip below one in any particular market or periods on a on a individual quarter or trailing 12 month basis , if we're executing off of a healthy backlog , that us give doesn't cause cause for concern .
Speaker #1: So so I think and then your question on consumer , we did have we have had some strength in that area . Again , reflective of the of the team that work .
Speaker #1: , we'll get So so executed over a normal frame consistent time with The other work other work . with backlog , we typically say 12 to 18 months
Patrick Baumann: Okay. Thank you.
Patrick Baumann: Okay. Thank you.
Anne Cybulski: Yep.
Anne Cybulski: Yep.
Operator: Your next question comes from the line of Jonathan Goldman from Scotiabank. Your line is open.
Operator: Your next question comes from the line of Jonathan Goldman from Scotiabank. Your line is open.
Speaker #9: Thank Okay .
Speaker #9: you . .
Speaker #1: Yes .
Jonathan Goldman: Hi, good morning, team, and thanks for taking my questions. Maybe just the first one, circling back on the bookings. What are you guys thinking in terms of bookings growth this year? If you can give us any help parsing all the different puts and takes on funnel commentary, the strong revenue this quarter, you know, you're lapping the enterprise orders last year, the timing as well. But how are you thinking about the full year case of bookings?
Jonathan Goldman: Hi, good morning, team, and thanks for taking my questions. Maybe just the first one, circling back on the bookings. What are you guys thinking in terms of bookings growth this year? If you can give us any help parsing all the different puts and takes on funnel commentary, the strong revenue this quarter, you know, you're lapping the enterprise orders last year, the timing as well. But how are you thinking about the full year case of bookings?
Speaker #2: question comes from the Your next line of Jonathan Goldman from Scotiabank . Your open line is .
Speaker #2: question comes from the Your next line of Jonathan Goldman from Scotiabank . Your open line is .
Speaker #10: team , and Hi . Good thanks for morning , taking my questions . Maybe just the first one . on the Circling back what are you guys thinking in terms of year ?
Speaker #10: team , and Hi . Good thanks for morning , taking my questions . Maybe just the first one . on the Circling back what are you guys thinking in terms of growth this bookings I'm just if you can give us any help all the different puts and takes on funnel commentary , the strong revenue this quarter , you know , you're lapping the enterprise orders last year , the timing as well .
Anne Cybulski: So, you mean for... Sorry, Jonathan, just to clarify, for this year, or what are you-
Anne Cybulski: So, you mean for... Sorry, Jonathan, just to clarify, for this year, or what are you-
Speaker #10: But how are you thinking about the full year cadence of bookings ?
Jonathan Goldman: Yep, for this year.
Jonathan Goldman: Yep, for this year.
Speaker #1: from so you mean . a So Sorry , just to Jonathan , clarify this year , for or do you what yeah .
Anne Cybulski: Yeah, I mean, we're. We'll continue to. There's obviously, in our custom integration business, there's some timing things that may impact the number. But on a full year basis, we're happy with where we've come in on it from a year-to-date perspective, and the funnel is healthy across the board, as we've talked about. And even if and as, you know, auto injector orders are modulate based on where customers are in their buying cycles, the funnels and the rest of the submarkets remain healthy. If there's anything, Doug, you'd like to add, go ahead.
Anne Cybulski: Yeah, I mean, we're. We'll continue to. There's obviously, in our custom integration business, there's some timing things that may impact the number. But on a full year basis, we're happy with where we've come in on it from a year-to-date perspective, and the funnel is healthy across the board, as we've talked about. And even if and as, you know, auto injector orders are modulate based on where customers are in their buying cycles, the funnels and the rest of the submarkets remain healthy. If there's anything, Doug, you'd like to add, go ahead.
Speaker #10: For this year .
Speaker #1: Yeah . I mean we're we'll continue to this obviously in our custom business . integration There's there's some timing things that that may number .
Speaker #1: on a But impact the full year basis we're we're happy with we've come in to date where And the funnel from a year perspective .
Speaker #1: is healthy across across the board . As we've talked about and even even if and as you know , auto injector orders are modulate based on where customers are in their buying cycles funnels .
Doug Wright: No, I think it's a, you know, I think we've got a great pipeline and, you know, there's obviously some economic uncertainty that we live with every day, and I think the team has calibrated the orders outlook, you know, effectively. That's why we provide a range and, but, you know, I think it's the pipeline is robust, and we've got, I think, a pretty good, pretty good opportunity to continue to deliver the type of growth that we've delivered in Q3. And, you know, obviously, our job is to, you know, beat those expectations.
Doug Wright: No, I think it's a, you know, I think we've got a great pipeline and, you know, there's obviously some economic uncertainty that we live with every day, and I think the team has calibrated the orders outlook, you know, effectively. That's why we provide a range and, but, you know, I think it's the pipeline is robust, and we've got, I think, a pretty good, pretty good opportunity to continue to deliver the type of growth that we've delivered in Q3. And, you know, obviously, our job is to, you know, beat those expectations.
Speaker #1: The rest of the market and the submarkets remain healthy. If there's anything, Doug, you'd like to add, go ahead.
Speaker #4: No , I think it's got you know , I think we've a great pipeline . And , you know , there's obviously some economic uncertainty that we live with day .
Speaker #4: every And I is think the team calibrated the orders you outlook , know , effectively . That's why we provide a range . And but you know I think it's the pipeline is robust .
Speaker #4: And we've got a I think a pretty good pretty good opportunity to to continue to deliver the type of growth that that , we've , that we've delivered in Q3 you know , .
Jonathan Goldman: Okay, that's helpful. Maybe switching to SG&A. You upsized the restructuring charges this quarter. I think you talked about maybe reinvesting some of that in strategic areas. What sort of areas are you planning to reinvest those savings in? And if we're thinking about kind of payback from restructuring, is this more of a top line payback or a cost payback at this point?
Jonathan Goldman: Okay, that's helpful. Maybe switching to SG&A. You upsized the restructuring charges this quarter. I think you talked about maybe reinvesting some of that in strategic areas. What sort of areas are you planning to reinvest those savings in? And if we're thinking about kind of payback from restructuring, is this more of a top line payback or a cost payback at this point?
Speaker #4: obviously And , our job to , is you know , beat those expectations .
Speaker #10: helpful . Okay . That's Maybe switching to SG&A upsized the restructuring charges this think you quarter . I about maybe of that reinvesting some in strategic areas .
Speaker #10: What sort of areas are you planning to reinvest those savings in ? And if we're thinking about kind of payback on restructuring , is this more of a top line payback or a cost payback at this point ?
Anne Cybulski: So, yeah, I mean, I would expect that it will be a mix, Jonathan. So we've—The bump up in the range is basically just associated with some additional opportunities we've identified for efficiency across the program, including with associated with our services shift. I think some margin protection measures in a few parts of the business that have seen lower volumes, but nothing that I would call as material. From a reinvestment standpoint, I mean, we've had a history of investing in innovation, and that's been critical to our success and will continue to be going forward. So, that would be where some of the reinvestment would be, as well as in areas of growth. We've talked about nuclear, which is a people business.
Anne Cybulski: So, yeah, I mean, I would expect that it will be a mix, Jonathan. So we've—The bump up in the range is basically just associated with some additional opportunities we've identified for efficiency across the program, including with associated with our services shift. I think some margin protection measures in a few parts of the business that have seen lower volumes, but nothing that I would call as material. From a reinvestment standpoint, I mean, we've had a history of investing in innovation, and that's been critical to our success and will continue to be going forward. So, that would be where some of the reinvestment would be, as well as in areas of growth. We've talked about nuclear, which is a people business.
Speaker #1: , yeah , I mean , So I would expect that it will be a mix . And so we've we've the bump up in the range is basically just associated with some additional opportunities .
Speaker #1: We've identified for efficiency across the program , including with associated with our services shift . I think some margin protection measures in a few parts of the business that have lower seen volumes , but nothing that I would call out , that's material from a reinvestment standpoint .
Speaker #1: I mean , we've had a history of investing in innovation , and that's been critical to our continue to be success , and we'll going forward .
Speaker #1: So that would be where some of the some of the reinvestment would be , as well as in areas of growth . And we've talked about nuclear , which is a people business .
Anne Cybulski: So, for example, and other areas, other market focus areas, including life sciences. You know, and as we work through the timing of some of this, from a bottom-line perspective, the piece that would flow through to operating to help with operating leverage would primarily be into fiscal 2027, just based on the timing of the execution of the program.
Anne Cybulski: So, for example, and other areas, other market focus areas, including life sciences. You know, and as we work through the timing of some of this, from a bottom-line perspective, the piece that would flow through to operating to help with operating leverage would primarily be into fiscal 2027, just based on the timing of the execution of the program.
Speaker #1: So , there so , for example , and other areas , other markets , focus areas , including including life sciences , you know , and as we as we work through the timing of some of this from a bottom line piece that would perspective , the flow through to to operating to help with operating leverage would primarily be into fiscal 27 , just based on the timing of the execution of the program .
Doug Wright: Yeah, and I think, Jonathan, one of the things that, as I've gotten around to meet our division leaders and talk to some of our innovators, you know, these new therapies that are evolving in life sciences and these new kind of energy form factors that we're seeing evolve in our energy business are very exciting, and I think create... it's a great alignment between the technology that we have in-house and the needs that these customers have to support their evolution of their product as they kind of bring, in some cases, game-changing new technologies to the marketplace. So I think it's a very prudent action for us to take our restructuring savings and redeploy those into investments in those growth areas.
Doug Wright: Yeah, and I think, Jonathan, one of the things that, as I've gotten around to meet our division leaders and talk to some of our innovators, you know, these new therapies that are evolving in life sciences and these new kind of energy form factors that we're seeing evolve in our energy business are very exciting, and I think create... it's a great alignment between the technology that we have in-house and the needs that these customers have to support their evolution of their product as they kind of bring, in some cases, game-changing new technologies to the marketplace. So I think it's a very prudent action for us to take our restructuring savings and redeploy those into investments in those growth areas.
Speaker #4: Yeah . And I think , Jonathan , one of the things that I'm , as I've gotten around to meet our division leaders and talked to some of our innovators , you know , these new therapies that are evolving in life sciences and these new kind of energy form factors that we're seeing evolve in our in our energy business are very exciting .
Speaker #4: And I think create a , a great alignment the between technology that that we have in-house and the needs these that customers have to support their , their evolution of their of their as product they kind of some in some cases , game bring technologies to the marketplace .
Speaker #4: So I think it's a prudent action for us to take our restructuring savings and redeploy those into investments in those growth areas.
Doug Wright: So when we talk about diversifying our pipeline and making early-stage investments in these new technologies, that's generally the destination for any incremental investment dollars that we get, and that's, I think, a pattern you'll see us repeat.
Doug Wright: So when we talk about diversifying our pipeline and making early-stage investments in these new technologies, that's generally the destination for any incremental investment dollars that we get, and that's, I think, a pattern you'll see us repeat.
Speaker #4: So when we talk about diversifying our pipeline and making early stage investments in these new technologies , that's that's generally the destination for any incremental investment dollars that we that we get .
Jonathan Goldman: Okay, that's wholesome color. Maybe just one housekeeping one. The sequential increase in the SG&A, how much of that was due to FX?
Jonathan Goldman: Okay, that's wholesome color. Maybe just one housekeeping one. The sequential increase in the SG&A, how much of that was due to FX?
Speaker #4: And that's I think a pattern . You'll see us repeat .
Speaker #10: Okay , that's fulsome color . And maybe just one housekeeping , one . The sequential increase in the SG&A , how much of that was due to FX ?
Anne Cybulski: It would be relatively in line from a proportionate standpoint to what we saw from the top line perspective. But we can follow up with you, Jonathan, on the specific, values.
Anne Cybulski: It would be relatively in line from a proportionate standpoint to what we saw from the top line perspective. But we can follow up with you, Jonathan, on the specific, values.
Speaker #1: It would be relatively in line from a proportionate standpoint to what we saw from the top line perspective . But we can follow up with you , Jonathan , on the specific value .
Jonathan Goldman: Okay, thanks for taking my questions. I'll get back in queue.
Jonathan Goldman: Okay, thanks for taking my questions. I'll get back in queue.
Operator: Your next question comes from a line of Michael Glenn from Raymond James. Your line is open.
Operator: Your next question comes from a line of Michael Glenn from Raymond James. Your line is open.
Speaker #10: Okay . Thanks for taking my back in queue questions . I'll get .
Michael Glenn: Hey, good morning. Doug, maybe to start, we've heard a focus on margin expansion mentioned a few times. Are you able to speak to some of your prior roles, any of the margin initiatives you implemented in those roles, and maybe highlight some of the success you realized in expanding margins in prior roles?
Michael Glenn: Hey, good morning. Doug, maybe to start, we've heard a focus on margin expansion mentioned a few times. Are you able to speak to some of your prior roles, any of the margin initiatives you implemented in those roles, and maybe highlight some of the success you realized in expanding margins in prior roles?
Speaker #2: Your next question comes from the line of Michael Glenn from Raymond James . Your line is open .
Speaker #11: Hey . Good morning Doug . Maybe to start , we've heard a focus on margin expansion . Mentioned a few times . Are you able to speak to some of your prior roles ?
Speaker #11: Any of the margin initiatives you implemented in those roles , and maybe highlight some of the success you realized in expanding margins in prior roles ?
Doug Wright: Nice to meet you, Michael. Sure. I think I've kinda categorized the margin improvement opportunities in three areas, all of which I've had, you know, extensive experience in my prior roles. So first is amplifying the deployment of our ABM tools to find productivity opportunities. This could be reducing costs, improving lead times, which helps us drive market share. The tool set that we have inside ATS is very strong. They're very familiar tools to, you know, companies I've served. And I think there's just a need within the team to drive more focus in executing them, perhaps being, you know, prioritizing a little differently.
Doug Wright: Nice to meet you, Michael. Sure. I think I've kinda categorized the margin improvement opportunities in three areas, all of which I've had, you know, extensive experience in my prior roles. So first is amplifying the deployment of our ABM tools to find productivity opportunities. This could be reducing costs, improving lead times, which helps us drive market share. The tool set that we have inside ATS is very strong. They're very familiar tools to, you know, companies I've served. And I think there's just a need within the team to drive more focus in executing them, perhaps being, you know, prioritizing a little differently.
Speaker #4: Nice to meet you , Michael . Sure . I think I kind of categorize the margin improvement opportunities in in three areas , all of which I've had , you know , extensive experience in my in my prior roles .
Speaker #4: So first is amplifying the deployment of our ABM find tools to opportunities . could be reducing This costs , improving lead times , which helps us drive market share .
Speaker #4: The tool set that we have inside ATS is very is very strong . They're very familiar tools to , you know , my prior my roles that I companies I've served .
Speaker #4: And I think there's just a a need within the team to to drive more focus and executing them . Perhaps being prioritizing a little So I'm pretty differently .
Doug Wright: So I'm pretty comfortable that we actually have the tools in mind, but we'll be working harder to more effectively deploy them where we can, where we can move the needle on margins. And it could be looking at, you know, 80/20 pricing. It could be looking at low-cost country supply chain. It could be on, you know, finding labor productivity through value stream mapping exercises at the shop floor level. All up and down the architecture of the company, we have opportunities to deploy ABM to drive more efficiency, and I'm confident that we'll be able to accelerate that.
Doug Wright: So I'm pretty comfortable that we actually have the tools in mind, but we'll be working harder to more effectively deploy them where we can, where we can move the needle on margins. And it could be looking at, you know, 80/20 pricing. It could be looking at low-cost country supply chain. It could be on, you know, finding labor productivity through value stream mapping exercises at the shop floor level. All up and down the architecture of the company, we have opportunities to deploy ABM to drive more efficiency, and I'm confident that we'll be able to accelerate that.
Speaker #4: comfortable that we actually have the tools in mind . But we'll we'll be working harder to more effectively deploy them where we can , where we can move the needle on margins .
Speaker #4: And it could be at , you know , looking 80 , 20 pricing . It could be looking at low country supply cost chain .
Speaker #4: It could be on , you know , finding labor productivity through value stream mapping exercises shop floor level at the all up and down the architecture of the company .
Speaker #4: deploy We have opportunities to ABM to drive more efficiency . And I'm confident that we'll be able to accelerate that . The second area is around focusing on R&D and commercial efforts on within applications our current and markets , but that require more advanced technology and application knowledge that we have inside ATS .
Doug Wright: The second area is around focusing on R&D and commercial efforts on applications within our current end markets, but that require more advanced technology and application knowledge that we have inside ATS, and that then brings us the opportunity to enjoy improved gross margin. Some of the new applications that we talked about in our pipeline and emerging into our backlog around life sciences, nuclear, the examples that we talked about earlier, these are all areas where the physics challenges of creating something for our customers is quite a big challenge, and we bring technology to the table to help them solve those problems, and that gives us the opportunity to have a better yield and share in that value creation.
Doug Wright: The second area is around focusing on R&D and commercial efforts on applications within our current end markets, but that require more advanced technology and application knowledge that we have inside ATS, and that then brings us the opportunity to enjoy improved gross margin. Some of the new applications that we talked about in our pipeline and emerging into our backlog around life sciences, nuclear, the examples that we talked about earlier, these are all areas where the physics challenges of creating something for our customers is quite a big challenge, and we bring technology to the table to help them solve those problems, and that gives us the opportunity to have a better yield and share in that value creation.
Speaker #4: And that then brings us the opportunity to to to enjoy improved gross margins . Some of the new applications that we talked about in our in our pipeline and emerging into our backlog around life sciences , nuclear , the examples that we talked about earlier , these are all areas where the the physics challenges of of creating something for our customers is quite a big challenge .
Speaker #4: And we bring technology to the table to help them solve those problems . And that gives us the opportunity to to have a better yield and , and share in that , in that value creation .
Doug Wright: And then the third area, which has been a focus of the company, but I think has further opportunities, is in increasing our mix of aftermarket. You know, I think having a significant portion of our business being in, you know, the CapEx cycle, we recognize that from an earnings volatility standpoint, having a higher share of aftermarket can both improve our margin profile, as well as smooth out the natural ebbs and flows that come with, you know, the CapEx side of the company.
Doug Wright: And then the third area, which has been a focus of the company, but I think has further opportunities, is in increasing our mix of aftermarket. You know, I think having a significant portion of our business being in, you know, the CapEx cycle, we recognize that from an earnings volatility standpoint, having a higher share of aftermarket can both improve our margin profile, as well as smooth out the natural ebbs and flows that come with, you know, the CapEx side of the company.
Speaker #4: And then third area , which has been a focus of the company . But I think has further opportunities , is , is increasing our mix of aftermarket .
Speaker #4: You know , I think being having a significant portion of our business being in , you know , the CapEx cycle , we recognize that from an earnings volatility standpoint , having a higher share of aftermarket can both can improve our margin profile as well as smooth out the the natural ebbs and flows that come with , you know , the CapEx side of the company .
Doug Wright: It's one of the reasons that, you know, I supported the decision that the team made to move the services teams into the business units to provide more of an end-to-end model with our, with our end users, from all the way from conceptual engineering through lifetime service and support. I think that's very logical, and it will start to allow us to pursue, you know, organic strategies to expand our service potential. And, you know, even in our capital deployment discussions, you know, one of the, one of the criteria that we talk about is the same things. We talk about, is, is there potential to employ ABM to improve the target company's performance? Do we have the ability to use the technology to create something new for our customers?
Doug Wright: It's one of the reasons that, you know, I supported the decision that the team made to move the services teams into the business units to provide more of an end-to-end model with our, with our end users, from all the way from conceptual engineering through lifetime service and support. I think that's very logical, and it will start to allow us to pursue, you know, organic strategies to expand our service potential. And, you know, even in our capital deployment discussions, you know, one of the, one of the criteria that we talk about is the same things. We talk about, is, is there potential to employ ABM to improve the target company's performance? Do we have the ability to use the technology to create something new for our customers?
Speaker #4: That's one of the reasons that , you know , I supported the the decision that the team made to move the services teams into the business units to provide more of an end to end model with our with our end users from all the way from conceptual engineering through lifetime service and support .
Speaker #4: I think that's very logical . And it will start to allow us to pursue , you know , to organic strategies expand our service potential .
Speaker #4: you know , And , even in our capital deployment discussions , you know , one of the one of the criteria that we talk about is the same things we talk about .
Speaker #4: Is there a potential to employ ABM to improve the target company's performance ? Do we have the ability to use the technology to create new for our something customers , and does it improve our aftermarket ?
Doug Wright: And does it improve our aftermarket, you know, mix? So both in the internal work that we're doing, as well as in our capital deployment work, those are kind of the themes that I've seen work in other enterprises similar to ATS. And, you know, that's what the team and I are gonna be working through. And we'll. Once we have a more definitive framework about what that's going to mean to the economics, we'll come and share that with you.
Doug Wright: And does it improve our aftermarket, you know, mix? So both in the internal work that we're doing, as well as in our capital deployment work, those are kind of the themes that I've seen work in other enterprises similar to ATS. And, you know, that's what the team and I are gonna be working through. And we'll. Once we have a more definitive framework about what that's going to mean to the economics, we'll come and share that with you.
Speaker #4: You know , mix ? So both in the internal work that we're doing as well as in our capital deployment work , those are kind of the themes that I've seen work in other other enterprises similar to ATS .
Speaker #4: And , you know , that's what the team and I are going to be working through and will once we have a a more definitive framework about what that's going to mean to the economics , we'll come and share that with you .
Michael Glenn: Okay. That's, that's a great amount of detail. Thank you. Thank you for that detailed answer. And then, just my second question, kind of plays off the first one, but, you did see quite a move higher in the run rate on your services bucket revenue in the quarter. And are you able to give some context as to where that move higher did come from?
Michael Glenn: Okay. That's, that's a great amount of detail. Thank you. Thank you for that detailed answer. And then, just my second question, kind of plays off the first one, but, you did see quite a move higher in the run rate on your services bucket revenue in the quarter. And are you able to give some context as to where that move higher did come from?
Speaker #11: Okay . That's that's a great amount of detail . Thank you . Thank you for that detailed answer . And then just my second question , kind of plays off the one .
Speaker #11: first did But see quite a you move higher in the run rate on your services bucket . Revenue in the quarter . And are you able to give some context as to where that move higher did come from ?
Anne Cybulski: I can cover that one, Michael. So, included in our service revenues, we have some refurbishment work that is ongoing, and so a big chunk of the increase in the quarter came from that work. And beyond that, though, the rest of the services, deliverables or, you know, streams of revenue continue to perform well. But the majority of the increase was from refurbishment work, which is being executed.
Anne Cybulski: I can cover that one, Michael. So, included in our service revenues, we have some refurbishment work that is ongoing, and so a big chunk of the increase in the quarter came from that work. And beyond that, though, the rest of the services, deliverables or, you know, streams of revenue continue to perform well. But the majority of the increase was from refurbishment work, which is being executed.
Speaker #1: I can I can cover that one . Michael . So the there's included in our service revenues . We have some refurbishment work that is ongoing and so a good chunk of the increase in the in the quarter came from , from that , from that work and beyond that though , the service , the rest of the services deliverables or streams of revenue continue to perform well .
Michael Glenn: And we would expect that to continue in future quarters as well?
Michael Glenn: And we would expect that to continue in future quarters as well?
Speaker #1: But the majority of the increase was from refurbishment work, which is being executed.
Speaker #11: And would that be would expect that to continue in future quarters as well ?
Anne Cybulski: So that specific refurbishment program is ongoing, although nearing completion. But, you know, refurbishment is an important part of our services portfolio, in addition to other areas like spares, on-site support, asset management, those types of offerings.
Anne Cybulski: So that specific refurbishment program is ongoing, although nearing completion. But, you know, refurbishment is an important part of our services portfolio, in addition to other areas like spares, on-site support, asset management, those types of offerings.
Speaker #1: So that is refurbishment ongoing , specific program completion , but we , you know , refurbishment is an important part of our services portfolio in addition to , to other areas like fairs , on site support , asset management , those types of those types of offerings , okay , okay .
Michael Glenn: Okay. Okay, thank you.
Michael Glenn: Okay. Okay, thank you.
Anne Cybulski: Yep.
Anne Cybulski: Yep.
Operator: We have reached the end of our question-and-answer session. I will now turn the call back over to Mr. Wright for closing remarks.
Operator: We have reached the end of our question-and-answer session. I will now turn the call back over to Mr. Wright for closing remarks.
Speaker #11: Thank you .
Speaker #1: Yeah .
Speaker #2: And we have reached the end of our question and session . answer I will now turn the call back over to Mr. Wright for closing remarks .
Doug Wright: Thank you, operator, and thank you everyone for joining us today. I'm excited to be part of the team here at ATS, and we look forward to speaking with you further on our Q4 call in May.
Doug Wright: Thank you, operator, and thank you everyone for joining us today. I'm excited to be part of the team here at ATS, and we look forward to speaking with you further on our Q4 call in May.
Speaker #4: Thank you . Operator . And thank you , everyone , for joining us I'm excited to be today . part of the team here at ATS , and we look speaking with you forward to further on our Q4 call in May .
Operator: This concludes today's conference call. We thank you for your participation. You may now disconnect.
Operator: This concludes today's conference call. We thank you for your participation. You may now disconnect.
