OTTAWA (Reuters) - ATS Automation Tooling Systems Inc ATA.TO swung to a quarterly profit, lifted by gains from an asset sale and operating improvements from a restructuring that will extend through 2009, the company said on Wednesday.
ATS, which makes manufacturing and other industrial equipment, reported earnings of C$7.9 million ($7.8 million), or 10 Canadian cents a share, in the three months ended March 31. That compares with a loss of C$80.8 million, or C$1.35, in
“We view these as very positive results,” said Paradigm Capital analyst J. Marvin Wolff in a note.
Revenue rose 10 percent to C$186.5 million in the quarter, ATS said, lifted by strong order bookings.
The results include a C$16.8 million gain on the sale of scrap silicon along with restructuring costs including C$11.1 million for severance and about C$900,000 to close a spheral solar unit.
Cambridge, Ontario-based ATS repeated that it will spend about C$30 million under a turnaround plan, which it said has a payback period of less than one year.
To offset some remaining costs, the company plans to sell non-core assets. It is in talks to sell key operating assets from its precision components group,
“For fiscal 2009, we plan to stabilize and improve operating performance,” said Chief Executive Anthony Caputo in a statement.
“Our plan has four elements: improve management; fix Automation Systems Group; position Photowatt France to become a standalone company; and strengthen the balance sheet.”
Scotia Capital analyst David Tyerman said in a note preceding the results that the new management team’s turnaround efforts have only just begun. He expects “substantial improvements” in coming years.
Versant Partners analyst Neil Linsdell said ATS remains a “show me” story and cautioned investors to await proof of restructuring benefits before buying the stock.
ATS shares notched 1.4 percent higher to C$7.90 on the Toronto Stock Exchange in early afternoon trade. So far this year, the stock has gained about 58 percent.
Reporting by Susan Taylor and John McCrank; Editing by Frank McGurty