CAMBRIDGE, ON, Sept. 1, 2021 /CNW/ - ATS Automation Tooling
Systems Inc. (TSX: ATA) ("ATS" or the "Company"), an
industry-leading automation solutions provider, today announced it
has acquired NCC Automated Systems, Inc. ("NCC"), a provider of
engineered to order sanitary automation solutions and stand-alone
precision conveyance equipment for US$40
million (~C$50 million),
subject to customary post-closing adjustments, representing 11.4x
NCC's FY2020 adjusted EBITDA or 6.2x post synergies(1).
ATS has funded the acquisition by drawing on its revolving credit
facility.
"The acquisition of NCC expands our portfolio of precision
conveyor technologies through the addition of adjacent and
complementary products to ATS' SuperTrak, addressing an important
pillar of ATS' automation products strategy while enhancing our
position in the food and beverage end-market," said Andrew Hider, CEO of ATS. "NCC's strong design
software toolkit also allows us to play a more holistic role in
supporting the needs of our customers from the design phase through
to implementation by bridging the connection between the design
engineer and manufacturing operator."
Founded in 1986 and based in Souderton, Pennsylvania, NCC, an
employee-owned company, provides turnkey automation solutions under
the NCC and Nutra-Pack brands and manufactures high precision
pallet handling and sanitary conveyance products under the
Glide-LineTM and SideDrive brands, serving customers in
the food and packaging, ophthalmic, assembly automation and
nutraceutical markets. In FY2020, NCC generated revenues of
US$31 million and EBITDA of
US$3.5 million. Over the five-year
period ending in FY2020, NCC posted approximately 8% revenue
compound annual growth rate (CAGR). The majority of the company's
revenues are derived from customers in North America. By end-market, in
FY2021(2) NCC is expected to generate approximately half
of its sales from food and packaging, 25% from optical, 21% from
assembly automation, and the balance from other markets. The sale
of automation systems is expected to comprise approximately 68% of
revenues, with standalone conveyance products generating
approximately 23% of revenues and the balance derived from
aftermarket services. NCC employs 92 employees at its US
manufacturing facility.
NCC will continue to be led by its President, Kevin Mauger. "It was evident from our early
conversations with ATS' management team that our two companies
share strong alignment when it comes to our culture, business
plans, vision and purpose," commented Kevin
Mauger, President of NCC. "By being part of the ATS family,
we are better able to execute on our plans and drive strong growth
across our business units."
Attractive Synergy Opportunity
ATS expects to realize approximately US$1.2 million in annual cost synergies within
three years of acquisition, including supply chain savings and
operational efficiencies. ATS also expects revenue synergies to
generate approximately US$1.8 million
of additional EBITDA within three years by leveraging the combined
ATS and NCC technologies in turnkey customer solutions and joint
product development. The transaction is expected to be accretive to
ATS' earnings and cash flow per share metrics in the first year
following the acquisition. ATS expects double-digit returns on
invested capital (ROIC) by year three following completion of the
acquisition.
About NCC Automated Systems, Inc.
Founded in 1986, NCC provides turnkey automation solutions, and
manufactures high precision pallet handling and sanitary conveyance
products and systems. Combining the company's expertise in
engineered to order solutions for food and packaging applications,
and the ability to develop a portfolio of modular, flexible and
configurable products enables NCC to serve a long list of blue-chip
customers. Based in Souderton,
Pennsylvania, NCC employs 92 people. Visit the company's
website at www.nccas.com for more details.
About ATS
ATS is an industry-leading automation solutions provider to many
of the world's most successful companies. ATS uses its extensive
knowledge base and global capabilities in custom automation, repeat
automation, automation products and value-added services, including
pre-automation and after-sales services, to address the
sophisticated manufacturing automation systems and service needs of
multinational customers in markets such as life sciences, food
& beverage, transportation, consumer products, and energy.
Founded in 1978, ATS employs over 5,000 people at 28 manufacturing
facilities and over 50 offices in North
America, Europe,
Southeast Asia and China. The Company's shares are traded on the
Toronto Stock Exchange under the symbol ATA. Visit the Company's
website at www.atsautomation.com.
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|
1)
|
6.2x post
synergies multiple includes revenue and cost synergies of
approximately US$3.0 million; FY2020 represents fiscal year ending
Dec. 31; 2) Based on ATS' projections for FY2021
|
Note to Readers: Non-IFRS measures:
This news release
uses the non-IFRS measures EBITDA, and return on invested capital
associated with this investment. These terms do not have any
standardized meanings prescribed within IFRS and therefore may not
be comparable to similar measures presented by other companies.
These measures should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with
IFRS. EBITDA is defined as earnings from operations excluding
depreciation and amortization (which includes amortization of
intangible assets). EBITDA is used by the Company to evaluate the
performance of operations. Management believes that EBITDA is an
important indicator of ability to generate operating cash flows to
fund continued investment in operations. Management believes that
ATS shareholders and potential investors in ATS use these non-IFRS
financial measures in making investment decisions and measuring
operational results. Return on invested capital associated with
this investment, as used herein, means in respect of any fiscal
year, the net income of NCC in such fiscal year, divided by the
purchase price for the acquisition. Return on invested capital, as
used herein, is used by ATS to evaluate the efficiency of the
allocation of ATS' capital.
Forward-Looking Statements:
This news release
contains certain statements that constitute forward-looking
information within the meaning of applicable securities laws
("forward-looking statements"). Such forward-looking statements
involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance or achievements of
ATS or NCC, or developments in either ATS' or NCC's business or in
their industry, to differ materially from the anticipated results,
performance, achievements or developments expressed or implied by
such forward-looking statements. Forward-looking statements include
all disclosure regarding possible events, conditions or results of
operations that is based on assumptions about future economic
conditions and courses of action. Forward-looking statements may
also include, without limitation, any statement relating to future
events, conditions or circumstances. ATS cautions you not to place
undue reliance upon any such forward-looking statements, which
speak only as of the date they are made.
Forward-looking statements in this press release relate to,
among other things: funding of the transaction, expectations
relating to NCC revenue breakdown by end market and business
composition, expectations related to quantum and timing of cost and
revenue synergies, expectations relating to impact on ATS' earnings
and cash flow per share metrics and return on invested capital. The
risks and uncertainties that may affect forward-looking statements
include, among others: performance of the market sectors that NCC
and ATS serve; the progression of COVID-19 and its impacts on the
Company's and NCC's ability to operate their respective assets,
including the possible shut-down of facilities due to COVID-19
outbreaks; the severity and duration of the COVID-19 pandemic in
all jurisdictions where the Company and NCC conduct business; the
nature and extent of government imposed restrictions on travel and
business activities and the nature, extent, and applicability of
government assistance programs, in both cases related to the
COVID-19 pandemic, as applicable in all jurisdictions where the
Company and NCC conduct business; the impact of the COVID-19
pandemic on the Company's and NCC's employees, customers, and
suppliers; the impact of COVID-19 on the global economy; general
market performance including capital market conditions and
availability and cost of credit; foreign currency and exchange
risk; the relative strength of the Canadian dollar; impact of
factors such as increased pricing pressure and possible margin
compression; the regulatory and tax environment; failure or delays
associated with new customer programs; that NCC's business does not
perform as expected, impacting the expected revenue breakdowns
and/or that expected cost and revenue synergies are not realized
within the expected timeframe or at all; that earnings and cash
flow per share metrics are not accretive in the first year for any
number of reasons, including those stated above; that return on
invested capital targets are not reached within the expected
timeframe or at all; that one or more customers, or other persons
with which NCC has contracted, experience insolvency or bankruptcy
with resulting delays, costs or losses; political, labour or
supplier disruptions; imposition of new duties, tariffs or other
legal barriers that impact NCC's markets; that growth in markets
NCC serves is less than expected; risks relating to legal
proceedings to which NCC and/or ATS is or may become a party;
exposure to product liability claims; risks associated with greater
than anticipated tax liabilities or expenses; and other risks
detailed from time to time in ATS' filings with Canadian provincial
securities regulators. Forward-looking statements are based on
management's current plans, estimates, projections, beliefs and
opinions, and other than as required by applicable securities laws,
ATS does not undertake any obligation to update forward-looking
statements should assumptions related to these plans, estimates,
projections, beliefs and opinions change.
SOURCE ATS Automation Tooling Systems Inc.