ATS Corporation

Q1 adjusted revenues were $698 million, down 5.2% from last year. Adjusted earnings from operations were $68.1 million, down 13.4% year over year, and adjusted EPS was $0.35. Adjusted gross margin was 30% of adjusted revenues, up 18 basis points year over year. Bookings were $656 million, down 5.3%, and backlog ended at approximately $1.9 billion. For Q2, management expects revenue of $660 million to $700 million. For fiscal 2027, they said margins should strengthen in the second half as backlog converts and cost actions take effect, while CapEx and intangible investment is expected to be between $70 million and $90 million.

Doug Wright said his portfolio review increased his confidence in ATS’s technical capabilities, customer relationships, and exposure to attractive secular markets like radiopharma, energy security, and food production. He emphasized AI as both a demand driver and a capability lever, and said he believes ATS can eventually operate above its 15% operating margin target while still growing. His tone was constructive and more assertive than cautious, but he repeatedly stressed that execution will take time because the company is balancing cost actions with investment in growth markets.

Anne Cybulski said the quarter reflected lower revenue, but adjusted gross margin improved sequentially and year over year, helped by higher-margin after-sales service revenue. She cited $5.7 million of restructuring costs in Q1 versus an expected $10 million to $15 million, plus $21.5 million of noncash reorganization charges, mainly asset write-downs. Cash flow used in operating activities was $10 million, noncash working capital was 14.3% of revenue, CapEx and intangible spending was $15.6 million in the quarter, and net debt to adjusted EBITDA was 2.9x. She reiterated a target leverage range of 2x to 3x and said normalized stock-based comp is expected to be about $5 million per quarter.

Analysts focused on whether the company can still deliver modest organic growth after early-year order slippage, and management said it remains achievable but will depend on larger awards and second-half conversion, especially in lumpy markets like nuclear and radiopharma. Questions also probed the new cost transformation program; Doug said the review was comprehensive across facilities and that the company sees meaningful savings opportunities, while Anne said the framework is data-driven and will continue to identify further opportunities. On M&A and dispositions, management said the appetite for acquisitions has not changed, but any divestitures would be considered only if a business could not earn an acceptable return, and there is nothing currently on the agenda.