ATS Q3 Earnings Call Highlights

ATS (NYSE:ATS) executives highlighted steady third-quarter execution, continued revenue growth, and a diversified backlog during the company’s fiscal Q3 conference call held February 4, 2026. The discussion also marked CEO Doug Wright’s first earnings call since joining the company in mid-January, with leadership emphasizing sharper execution discipline, margin improvement, and a continued focus on disciplined capital allocation.

New CEO outlines early priorities and leadership updates

Wright said his initial focus has been “rapidly translating learning into action,” particularly around execution discipline, margin performance, and capital allocation. He pointed to ATS’s lean operating culture—anchored by the ATS Business Model (ABM)—as a foundation for sustained results, and said the company’s focus on lean discipline “will only get sharper going forward.”

Management also noted several leadership changes and organizational shifts:

• Sarah Moore joined as Life Sciences Group Executive, bringing experience across healthcare diagnostics, medical devices, and life sciences.
• Simon Roberts was appointed to lead ATS’s packaging and food technology business.
• ATS embedded its growing services business within operating units, a move management said strengthens accountability, customer alignment, and helps position services as a recurring, margin-enhancing part of offerings.

Wright also recognized CFO Ryan McLeod’s planned transition. Corporate Controller Anne Cybulski will serve as Interim CFO, with Wright stating the transition is “orderly and planned” and that the finance organization is “stable and capable.”

Third-quarter results: revenue growth with mix-driven gross margin pressure

On the quarter, ATS reported order bookings of $821 million. Management described bookings as up nearly 12% sequentially, while Cybulski noted bookings were down 7% year-over-year due to an expected lower run rate in transportation and the prior-year inclusion of larger enterprise bookings in life sciences and food and beverage. The trailing-twelve-month book-to-bill ratio ended Q3 at 1.06x.

Revenue in Q3 was $761 million, up 16.7% from the prior year. Cybulski said growth included 12.6% organic growth and a 4.1% benefit from foreign exchange translation, with revenue rising in all market verticals except transportation, “as expected.”

Adjusted earnings from operations were $79.9 million (also referenced as $80 million by McLeod), up 21.6% year-over-year, driven primarily by higher volumes. Gross margin was 29.6%, down 111 basis points from last year, which Cybulski attributed mainly to program mix and timing across verticals with differing margin profiles.

SG&A expenses (excluding acquisition-related amortization and transaction costs) totaled $141.9 million, up $11.3 million year-over-year, mainly due to foreign exchange translation and, to a lesser extent, higher employee costs and professional fees. Adjusted EPS was $0.48. Stock-based compensation expense, excluding mark-to-market impacts tied to the share price, was $3.1 million.

Backlog and market commentary: nuclear, life sciences, and consumer stand out

ATS ended the quarter with an order backlog of approximately $2.1 billion, which management described as balanced across end markets and geographies. McLeod said the company’s funnel remains “healthy and diversified.”

In life sciences, ATS reported order backlog of $1.1 billion and quarterly revenue of $391 million, which management called the second highest in company history. McLeod highlighted radiopharma—led by the Comecer business—as a key growth market supported by customer relationships and an expanded services footprint. Wright added that ATS is seeing improving diversity in life sciences applications, citing radiopharma, visual inspection, med tech applications, and mail-order pharmacy, while also noting ongoing activity tied to GLP-1 auto-injectors.

On GLP-1, Wright said ATS is executing against a healthy backlog and continues to partner with customers as device requirements evolve. He acknowledged “lumpiness” in the order cycle but said ATS continues to see a strong pipeline of incremental opportunities. He also said customers have been “pretty consistent” that there is long-term opportunity in GLP-1s, while ATS works to diversify its pipeline into other therapies such as radiopharma and oncology.

Energy backlog reached a record CAD 296 million, up 87% from Q3 last year, driven by refurbishment and life extension projects for nuclear reactors. Management described these as longer-cycle programs that include service components. ATS also cited early-stage work on new builds, including large-scale reactors and small modular reactors (SMRs), spanning front-end design, engineering, and prototyping activities in areas such as fuel production, fuel handling, and modular fabrication. In Q&A, management referenced an order in the quarter for a new build reactor for fuel fabrication.

Consumer products backlog also reached a record CAD 321 million, supported by a large enterprise warehouse packaging automation program that leverages ATS’s global manufacturing and aftermarket capabilities. Food and beverage backlog was CAD 203 million, with management citing strong funnel activity in core processing markets including tomato and other fresh fruit applications.

Transportation remained the primary vertical where revenue did not increase year-over-year. Wright said ATS still sees value in the EV ecosystem but intends to be more targeted, emphasizing a more disciplined approach and avoiding what he described as higher-risk “mega projects” in the broader transportation sector.

Outlook, restructuring, and capital allocation

For Q4, ATS expects revenue in the range of $710 million to $750 million. In Q&A, management said the Q4 revenue guide reflects timing of program execution and scope adjustments and remains consistent with expectations for full-year growth discussed previously, including high single-digit growth on a full-year basis.

The company incurred CAD 5.5 million of restructuring costs during the quarter under a program disclosed last quarter. Cybulski said ATS identified additional opportunities to realign its cost structure, lifting total expected program costs to approximately CAD 20 million, while the payback period remains unchanged. She said some savings will be reinvested in strategic growth areas while also supporting operating leverage, primarily as the company moves into fiscal 2027.

Wright repeatedly emphasized margin expansion as a central focus, stating ATS has “a lot of runway” and needs to do better. He pointed to opportunities through more aggressive deployment of ABM tools and commercial actions to “get more value” for the work ATS performs. In another response, he outlined three margin themes: intensified ABM productivity initiatives, focusing R&D and commercial efforts on higher-value applications within existing end markets, and increasing the aftermarket/services mix to improve margins and reduce earnings volatility.

On tariffs, Cybulski said the company has not been materially impacted, noting that most exports from Canada to the U.S. remain covered under the USMCA. She added that ATS’s decentralized operating model supports serving customers where capital is being deployed.

Cash flow, working capital, and leverage

Cash flows from operating activities were CAD 115 million in Q3. Non-cash working capital as a percentage of revenues improved to 16.4%, moving closer to the company’s target of less than 15% of revenues, aided by the receipt of larger milestone payments before quarter-end.

ATS invested $16.6 million in CapEx and intangible assets during the quarter. For fiscal 2026, the company lowered its expected CapEx and intangible investment range to $70 million to $90 million, “slightly lower” than previously disclosed.

Net debt to adjusted EBITDA was 3.0x, which management said reflects progress toward the top end of its stated 2x–3x target range. With leverage back within the targeted range, Wright said ATS will continue to deploy capital with discipline, with an emphasis on improving margins, expanding aftermarket mix, and adding complementary technologies within its existing end-market framework. He also said investors should expect ATS to favor deploying capital toward M&A going forward, while maintaining its leverage framework and discipline.

About ATS (NYSE:ATS)

ATS Corporation (NYSE: ATS) is a Canada-based global provider of automation and energy solutions. Headquartered in Cambridge, Ontario, the company specializes in the design, engineering and manufacturing of custom automation and test systems, as well as fluid handling and control products. Since its founding in 1978, ATS has focused on delivering integrated hardware and software solutions that help original equipment manufacturers (OEMs) improve efficiency, quality and throughput across a range of industries.

Through its Automation segment, ATS develops bespoke assembly and testing platforms for sectors such as life sciences, consumer electronics, automotive and industrial equipment.