ATS: Takeaways from management meetings

Research evidence excerpt

ATS: Takeaways from management meetings

ATS Corporation

Target/Upside/Downside Scenarios Investment summary

A well-positioned business heading in the right direction –ATS Corporation

With a new CEO at the helm, the company is undertaking steps

65 125 Weeks 05FEB24 - 26JUN26 to reposition the business for sustainable top-line growth

60 and improved margins. The company has largely exited/de-

50 TARGETTARGET 50.0050.00 emphasized its Transportation business, and is undergoing a

45 transition period and returning towards its historical “staples”

40 CURRENTCURRENT 39.7839.78 oriented mix (i.e., where Life Sciences, Food & Beverage, and

30 Energy accounted for the vast majority of annual revenue).

25 The company is also shifting its focus and resources toward its

20 core markets, a process that has included a reorganization of

10m the Transportation segment.

5m

2024 2025 2026

F M A M J J A S O N D J F M A M J J A S O N D J F M A M J Supportive industry backdrop – Bain expects the +US

ATS CN Rel. S&P/TSX COMP IDX MA 40 weeks $250B global Automation market to grow at a ~6% CAGR

Source: Bloomberg and RBC Capital Markets estimates for Target through 2030, while ATS has historically expected ~mid-

Valuation single-digit long-term growth rates in its core end-markets.

Our $50 price target is based on ~14.5x our F2027 Adjusted Market growth is being driven by the increased adoption

EBITDA forecast of $417 million. We believe our valuation of automation across various manufacturing end-markets,

multiple (above the company’s 3-year average NTM EV/ which in turn is being driven by factors such as aging/

EBITDA multiple and a premium vs. peers) fairly reflects our retiring populations, wage growth, and near-shoring, in our

outlook for top-line growth and margin expansion. These view.