ATS Corporation (ATO0) Q2 2027 Earnings Report

The call presented strong bookings, a record and diversified life sciences backlog, attractive nuclear and radiopharma opportunities, improved cash flow, and progress on the fixed cost transformation program. However, these positives were offset in the near term by revenue and earnings declines, margin compression, tariff-related order delays, withdrawn fiscal-year growth and margin objectives, longer backlog conversion timelines, restructuring actions, and leverage above the target range. Overall, the outlook was balanced, with management confident in medium- and long-term growth but acknowledging meaningful near-term execution and demand challenges.

For fiscal 27, ATS said it does not expect to achieve its previous goals for modest revenue growth and for margin expansion in the year; third quarter revenues are expected to be in the range of $640 million to $680 million. The fixed cost transformation program is expected to deliver $65 million to $75 million of annualized savings, or roughly 250 basis points of margin expansion, from a base of 10%, representing approximately half of the path to the adjusted earnings from operations margin target of 15%, with implementation continuing over the next 15 months. Announced actions are expected to reduce square footage by approximately 10% and result in a workforce reduction, including subcontractors, of 300 to 400 globally; payback on restructuring is expected to be less than 1 year overall. Fiscal 27 CapEx and intangible investment is expected to be between $60 million and $80 million, leverage is expected to operate moderately above the target leverage range of 2 to 3 times during the remainder of fiscal 27, and working capital is expected to stay within the long term target of 15% or less through the back half of the year.