Photowatt nightmare over for ATS Automation

On Thursday, ATS Automation (TSX:ATA) released its Q4, 2012 results. Compared to last year’s Q4, revenue was up 17% to $173-million. Earnings came in at $3-million or four cents per share, compared with net loss of $79.5 million or $. 91 cents a share in the same period last year.

CEO Anthony Caputo said the company had “turned the corner on solar separation” and is now “solely focused on our core business, which is robust and growing.”

Versant Partners analyst Neil Lindsell says the quarter beat his expectations. He says that with a record backlog and still growing sales funnel, ATS has put the bad taste of its failed solar effort, Photowatt in the rear view mirror. In a research update to clients Friday, Lindsell maintained his BUY recommendation on ATS and $12 target on the stock.

Cambridge, Ontario based ATS was founded in 1978 and employs more than 2400 people worldwide. The company has tackled more than 15,000 projects in its history, ranging from programmable conveyors to robotic cells, to adhesive bonding. The failure of ATS’ Photowatt division meant some disastrous recent numbers. The company lost $18-million in 2011, followed that up with a $5-million loss in Q1 and, finally a $67-million skunking in Q2 of 2012, when it bore the brunt of the Photowatt mistake.

Photowatt was divided into two regions, one operation was in ATS’ home province, and a second division was located in a suburb of Lyon, France. Photowatt France was slow out of the gate and never recovered from declining government subsidies, lower demand for solar and cheaper solutions out of China. Late in February, a French court allowed the sale of the assets of the division, which were in bankruptcy protection. Lindsell says Photowatt Ontario has received several non-binding indicative offers and the company expects a binding offer in the “near term”.

Now that ATS is back to focusing on its core business, says Lindsell, we can expect the company to utilize a surprisingly strong balance sheet that features net cash and credit facilities of nearly $170-million, to use. Lindsell says he expects the company will follow through on its promise to make “significant” acquisitions in the near future.

Share of ATS Automation closed Friday down 2.8% to $8.60.