ATS Corporation

Q1 fiscal 2027 adjusted revenue was $698 million, down 5.2% year over year, with adjusted earnings per share of $0.35. Adjusted earnings from operations were $68.1 million, down 13.4% versus Q1 last year, while adjusted gross margin was 30% of adjusted revenues, up 18 basis points year over year. Order bookings were $656 million, down 5.3%, and backlog ended the quarter at approximately $1.9 billion. For Q2, ATS guided revenues to $660 million to $700 million. For the balance of fiscal 2027, management said margins should strengthen in the second half as backlog converts and cost actions take effect; capital spending and intangible investment are expected to be between $70 million and $90 million for fiscal 2027, and leverage is expected to remain within the 2 to 3x net debt to adjusted EBITDA target range.

Doug Wright emphasized that his portfolio review increased his confidence in ATS’s long-term growth profile and in its ability to expand margins. He pointed to attractive end markets such as radiopharma, nuclear, food and beverage, and energy, and said AI is creating opportunities both as a demand driver and as a capability ATS can harness. He framed the company’s margin plan as a mix of fixed cost transformation and higher-margin services, stronger commercial discipline, and better use of ABM tools, while stressing that the company will keep investing in growth markets.

Anne Cybulski said Q1 gross margin improved sequentially and year over year, mainly helped by higher-margin after-sales service revenues. She detailed $5.7 million of restructuring costs in the quarter versus expected spend of $10 million to $15 million, plus $21.5 million of noncash reorganization-related charges, and said more charges may come as the broader transformation program is executed. She also noted Q1 operating cash flow used was $10 million, noncash working capital was 14.3% of revenue, CapEx and intangible investment was $15.6 million, and net debt to adjusted EBITDA was 2.9x, with a long-term working capital target of 15% of revenue or less and leverage expected to stay within 2 to 3x through fiscal 2027.

Analysts focused on whether ATS can still deliver modest organic growth after a slower start to fiscal 2027 and some order slippage into later periods. Wright said growth is still achievable, but it depends on the timing of larger awards and the conversion pace in the second half, noting lumpiness in nuclear and radiopharma bookings. Questions also probed the size and scope of the cost transformation plan; Wright said the review covered the full business and that the European phase is only the first step, while Cybulski said the company will keep using data-driven frameworks as the plan unfolds. On M&A and dispositions, management said appetite for acquisitions remains intact, but capital will be allocated selectively and any portfolio exits would be considered only if a business could not earn an acceptable return.