ATS swings to loss on C$65 mln accounting charge ...................................
25/05/06
By Susan Taylor
OTTAWA - ATS Automation Tooling Systems Inc. reported a deep fourth-quarter loss on Thursday, as it took a C$65 million ($58.5 million) writedown of cutting-edge solar technology assets to account for a commercialization delay.
ATS, which makes automated systems, solar power products and precision components, said results were also pinched by a surging Canadian dollar and tough automotive market.
Shares in the Cambridge, Ontario-based company were hammered to a new year low after the news. The stock was the biggest net loser on the Toronto Stock Exchange, falling 20 percent to C$11.99.
"It was a decent quarter on a sequential basis, they're showing a little bit of traction here and there, but right now nobody cares," said Blackmont Capital analyst James Bradford. "Everyone cares about the spheral solar program being at risk entirely."
ATS took a C$65 million writedown, or C$1.10 a share, associated with development costs and assets for its spheral solar power technology. The company said it remains committed to commercializing the technology, but faces delays and uncertainty in the timing of commercial production.
The technology produces cheaper, flexible products, which could eventually be integrated into building supplies such as siding and roofing, said Bradford.
In a conference call with analysts, ATS said it has hired a technical consulting firm to help fix production problems, but didn't set any timetable for the work.
"If they can get it going, the potential for that product is enormous," Bradford said.
"Unfortunately when you're writing off the assets it means there's uncertainty as to whether you can get cash flows ... and combined with the fact that management said that they're going back into, basically, development mode, tells me that they've got major problems over there. We're not going to see anything for a long time."
ATS also said it planned to expand its photowatt technology business in France, which manufactures crystalline solar cells. It expects to boost capacity by about 50 percent by the end of fiscal 2007 and spend about 25 million euros ($32 million) on the project.
"It's just a matter of whether they'll be able to fill all of the capacity when they expand it," Bradford said.
The company stuck to its schedule for a much-anticipated initial public offering of its photowatt business for the fourth quarter of calendar 2006.
For the quarter ended March 31, ATS posted a net loss of C$1.3 million, or C$1.11 a share, versus a profit of C$15.4 million, or 1 Canadian cent a share, a year earlier.
Revenue at the company's core automation systems group edged down to C$143.4 million from C$146.1 million. Consolidated sales notched higher to C$210.8 million from C$208.7 million.
"Our number one goal is to drive sustained earnings recovery," Chief Executive Ron Jutras told analysts. "Make no mistake, we're not finished with our transition or our improvements." |
