ATS Automation sees stronger revenues, accelerates efforts to spin off or sell Photowatt unit

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ATS Automation Tooling Systems reported earnings for fiscal Q1 2012 of CAN$10.5 million, with an 8% operating margin, compared to CAN$8.5 million in fiscal Q1 2011. Order bookings saw an 85% increase year-over-year to CAN$157 million; however, revenues from the energy market decreased 29% to CAN$25 million, when compared to the same period last year.

Photowatt’s fiscal Q1 2012 revenues amounted to CAN$62.9 million, showing a 29% increase over Q1 2011. The company attributes the change in the division’s revenues to an increase in megawatts sold, which totaled 14.7MW in Q1 2012, compared to 11.4MW during Q1 2011.

“The strong first quarter performance of ASG reflected revenue contributions from recent acquisitions and continued strong performance from our base business,” said Anthony Caputo, CEO. “Market activity remains healthy and record period-end backlog provides a foundation for growth. We advanced our plans to separate Photowatt and are targeting completion by the end of the calendar year.”

ATS advised that the restructuring plan at Photowatt France, which commenced in Q4 2011, is ongoing with an aim to increase system sales in France and other emerging European solar markets, diminish manufacturing costs and improve its global supply chain, including subcontracting the assembly of solar modules to third parties. The company noted that its one-third Photowatt workforce reductions were completed before the end of Q1 2012 and that it had terminated all internal module production, now allowing it to be subcontracted.

In its quest to reform Photowatt, ATS’s board approved a plan that will separate Photowatt from ATS. The company noted that it had begun a dual track process so that the separation can take effect, which included a spinoff of the company’s combined solar businesses or a sale of the Photowatt unit. ATS maintained that it is entertaining various interested parties for the potential sale of the unit and is waiting for a promising offer to be made so that it can give it full consideration.

Meanwhile, ATS has outlined plans that will spinoff Photowatt to ATS shareholders with actions necessary to begin the process underway. The Photowatt unit has notified and received advice from its employee works council in regards to the transaction with ATS compiling a list of candidates for the CEO and board of director roles. Roles for the new seats are anticipated to be confirmed in the next quarter.

ATS plans to organize the spinoff as a return of capital to be implemented through a plan of arrangement. ATS shareholders will have to approve of the deal, along with other regulatory requirements being confirmed before any finalization can be made. Under its plan, ATS will preserve sole and absolute judgment in order to determine whether it is suitable to engage in the spinoff transaction.

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