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Good morning, ladies and gentlemen. Welcome to the ATS Automation Third Quarter 2019 Conference Call and Webcast. I would like to remind you that this call is being recorded on February 6, 2019, at 10:00 a.m. Eastern Time. [Operator Instructions]I'd now like to turn the call over to Stewart McCuaig, Vice President, General Counsel of ATS.
Thanks, operator, and good morning, everyone. Your main hosts today are Andrew Hider, Chief Executive Officer of ATS; and Maria Perrella, Chief Financial Officer. Before we begin, I'm required to provide the following statement respecting forward-looking information, which is made on behalf of ATS and all of its representatives on this call. The oral statements made on this call will contain forward-looking information. The actual results could differ materially from a conclusion, forecast or projection in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are contained in ATS's filings with Canadian provincial securities regulators. Now it's my pleasure to turn the call over to Andrew.
Thank you, Stewart. Good morning, ladies and gentlemen, and thank you for joining us. Our third quarter performance featured year-over-year growth in revenues and margins. We finished the quarter with records in both order bookings and order backlog. We also completed our acquisition of KMW and signed an agreement to acquire Comecer, 2 important assets that will help to advance our strategy and growth trajectory.This morning, I'm going to highlight our performance, outlook and progress of the ABM as well as provide an update on our recent innovation and M&A activity. Maria will then provide more detail on our third quarter financials.Starting with our Q3 financial value drivers. Bookings were $397 million, up 28% year-over-year. Q3 bookings were driven by life sciences, which featured a $60 million program for 2 turnkey fully automated manufacturing and packaging systems for a current global life sciences customer. A number of ATS proprietary technologies will be incorporated into these systems, including SuperTrak and ATS toolkit. This is an important win for our business as it builds on a successful relationship we have had with this customer over the last several years. The program will be executed over the next 30 months. In EV, bookings remain strong. Q3 orders featured 2 discrete battery assembly programs for different customers. Both of which are in the $25 million range. Overall, EV continues to drive activity in the transportation market. The consumer market was down from last year when we booked the initial orders for our warehousing automation program. This program remains active, and we continue to receive orders in the third quarter on this program for both new equipment and services. As expected, energy bookings were lower following the major program for Bruce Power we announced earlier this year. Work is well underway on this program and will be ongoing over the next year. As you know, we remain focused on driving year-over-year growth in bookings on an annual basis, recognizing we may see normal course wearability from quarter-to-quarter due to our project-based business. That said, for the first 9 months of the year, our bookings increased 33% over last year to $1.1 billion. Q3 revenues were $321 million, up 16% over last year. Year-to-date, revenues were $905 million, up 11% over last year. Our Q3 adjusted EBIT margin was 14.5%, up from 10.6% last year as we benefited from both higher revenues, which drove operating leverage and the reversal of stock-based compensation costs. Moving to our outlook. We ended the quarter with record order backlog of $926 million, up 34% over the last year. This provides us with good visibility into the next fiscal year and a very good base of business to continue to generate organic growth. Importantly, our backlog growth is increasingly being driven by our continued success in winning large enterprise programs. These programs are an important area of focus as they improve our ability to plan capacity, provide more control over programs and enable deeper customer relationships. They also lengthen the average performance period of our backlog. As I have stated in the past, I expect customers will continue to exercise caution and be thorough in making their capital investment decisions. While this may lead to variability in order bookings from quarter-to-quarter, our record order backlog provides good visibility into the next fiscal year. Looking at our funnel, life sciences continues to be strong, and we are seeing good opportunities in both medical devices and pharmaceuticals. The upcoming edition of Comecer will provide us with additional exposure to this attractive market. On a pro forma basis, we expect life sciences will represent over 50% of our consolidated revenues. Life sciences has positive dynamics, high barriers to entry, including stringent regulation and high consequence of failure. These characteristics are complementary to ATS's capabilities, which include high-speed, high-precision solutions across the growing number of life sciences applications. EV activity is strong and accounts from the majority of our transportation funnel. EV represents considerable changeover for the transportation industry, which I expect will result in continued strong market activity. Our proven success in EV applications, including battery module and pack assembly and E motor assembly as well as the recent addition of KMW, position us well to capitalize on the EV market shift and deliver value to our customers. We are proactively targeting the life sciences and EV markets for growth. Our niche positions in consumer and energy have positively contribute to our business, and we will continue to pursue opportunities where our technologies align well with the value required by our customers. On after-sales services, customer receptivity remains positive, and we continue to see favorable trends in attaching service sales to our CapEx business. Q3 bookings and revenues were up over last year and our overall funnel per services has grown. For the year, our services bookings are up double digits. We are focused on the strategic area of our business, as service sales not only are important to our customers, but attractive to our margins. Moving to the ABM, our ATS Business Model. As a reminder, the ABM is our playbook, designed to run our business strategies, collective strengths and commitment to performance. During the quarter, we completed the first ATS Leadership Academy, where over 40 of our senior leaders came together to learn, share best practices, establish a baseline and applying ABM companywide. It helps set priorities for continuous improvement in the critical areas of our business, our value drivers. As well in Q3, our team continued to drive process improvements. For example, one of our divisions conducted a focused value analysis, value engineering, continuous improvement of that. With a target to improve lead time and reduce cost on a specific customer project. The event generated a 10% improvement to lead time and a 4% reduction in direct costs of the program. Also, our supply chain group implemented a new cost reduction funnel process, which involved supply chain leaders, engineering and category managers from all divisions. The group collaborated to identify a number of cost reduction opportunities, which will drive incremental savings in fiscal 2020. The continued rollout of our ABM boot camps and weekly lean training sessions is ongoing and driving the advancement of the ABM throughout the business. The pace of advancement is encouraging, and we have many opportunities ahead for continued improvement. The ABM is driving positive changes that I expect will continue to support our margin expansion plans. Turning to our work on innovation. As I've noted, this is a key focus area for us. Our goal is to drive technology leadership and expand the reach and scope of our capabilities that benefit our customers by reducing complexity, shortening customer development cycles and improving production efficiencies. We have continued to make progress. Specifically, in Q3, we acquired the intellectual property of Transformix Engineering. This includes rapid speed-matching technology, which provides the ability to link and synchronize movements of devices together, allowing for faster and more efficient assembly systems. The ability to increase line speed and utilize a smaller more efficient footprint are significant advantages, particularly in applications where high speed and precision is required. We will work over the next several quarters to integrate this technology and expect that this will be complementary to our best-in-class SuperTrak platform. We have made additional progress with our linear motion system. In Q3, we recorded our first sale of SuperTrak pharma, made specifically for aseptic applications. And recently, we launched SuperTrak Micro, which provides an improved solution for smaller batch processing and provides more flexibility and efficiency in line layouts and processing. Overall, we have more work to do to drive our innovation agenda. Over time, value-added innovations that address the needs of both new and existing ATS customers globally will enable us to capture additional systems, product and services business. Moving to M&A. In October, we completed our acquisition of KMW, a German-based provider of micro assembly systems for the EV market. KMW is a great fit, as it provides us with additional capability in micro assembly and fills a niche that adds to our overall offering in EV. We are integrating both administrative and operational activities at KMW. Importantly, we will be deploying our playbook, the ABM into KMW to enable the business to grow and drive improvements going forward. And as you know, we entered into an agreement to purchase Comecer in December. This acquisition represents an exciting opportunity for our business. And I would like to provide an update and some additional detail. Our acquisition of Comecer is well aligned with our stated long-term growth strategy as we are well -- as we are disciplined in our approach to M&A, which targets leading technology in attractive markets. Comecer gives us access to approximately EUR 1 billion of additional addressable market. This will allow us to leverage our automation capabilities and expand our offering into highly regulated, high consequence of failure markets within life sciences. This includes further penetration into the fast-growing radio pharma equipment, aseptic processing and advanced therapy medicinal production or ATMP subsegments. We are extremely excited about this acquisition for 3 main reasons: one, this is a very attractive market that is large, growing and core to our long-term strategy. More specifically, the combination of Comecer and ATS provides access to the high-growth pharma and nuclear medicine industries. And positions us to aggressively increase Comecer's position in the aseptic fill and finish market, which is expected to grow at a high single-digit rate through 2023; two, there are meaningful and tangible synergy opportunities. These include a significant cross-selling opportunity across the globe, deeper penetration for the combined company in Europe and North America, the ability to provide holistic solutions in a much more efficient and effective manner for the benefit of our customers and increasing Comecer's service revenue to a level that is commensurate with ATS. Moreover, well cost synergies were not a key driver of the deal. We do anticipate many opportunities for improvement as we implement our ABM playbook and drive Comecer's operating leverage going forward. We'll disclose more detail once the deal is closed, and we have the opportunity to collaborate with the Comecer team. And reason three, this transaction, coupled with the existing ATS life sciences business, creates a new and sizable platform that we expect to grow both organically and inorganically in the coming years. From an organic growth perspective, this combination pairs Comecer's aseptic fill and finish technology with our automation technology to provide customers with more comprehensive solutions. And we see additional opportunities to improve our revenue growth and margin expansion profile in the long run. Perhaps, the most encouraging development since our announcement, did several of our blue-chip customers, have already expressed excitement and interest in the solutions we will be able to provide with Comecer. I'm confident that this meaningful entry into pharma will not only make our combined offering more attractive to our existing and potential customers but also strengthen -- strengthens our position as a formidable player in the life sciences sector. In summary, I'm pleased with the results of the quarter. We achieved growth in revenues, margin expansion and bookings. With our record order backlog, we are well positioned to have a positive finish to the year and to start fiscal 2020 from a solid base. Importantly, our balance sheet remained strong, which we continue to put to work through internal investment, including innovation, strategic M&A and share repurchases. We continue to execute our value creation strategy, build, grow and expand. We're focused on driving continuous improvement in all aspects of our business, this is to support the creation of long-term shareholder value. Now, I'll turn the call over to Maria.
Thank you, Andrew. Our Q3 performance, including year-over-year improvement in all financial value drivers, including bookings, revenues, operating margins and our noncash working capital as a percentage of revenue. Substantially, all of this growth was organic. Our Q3 results included KMW for 8 weeks, but this did not have a material impact. KMW's purchase price will be EUR 18.3 million subject to final adjustments with cash of EUR 16.4 million paid in Q3. The balance is payable within 18 months. In December, as you heard from Andrew, we reached a definitive agreement to acquire Comecer in an all-cash EUR 113 million transaction that is subject to working capital and other adjustments. We expect to complete this acquisition in our fiscal fourth quarter following normal course regulatory review. Q3 also featured the acquisition of Transformix's intellectual property for $10 million cash. We will work over the next few quarters to finalize development and integration of the technology and amortization of the asset will begin at that time. There is also a commission structure in place, which will be paid out contingent on sales of products that incorporate the acquired IP. Total payout is capped at $20 million. This morning, the balance of my comments will be focused on our Q3 results and our balance sheet. I'll start with operating results. Q3 bookings were $397 million, up 28% from last year's bookings of $311 million and up 12% from Q2. On a year-to-date basis, bookings of $1.1 billion were 33% higher than prior year bookings of $834 million. Q3 bookings include a $60 million Enterprise program from a global life sciences customer, which we announced in December. This record bookings quarter also included 2 large EV orders in the $25 million range and 2 large life sciences orders in $20 million range. With these orders, we have achieved the highest booking quarter in our history. This also changes the profile of our backlog conversion, which I'll speak to shortly. Q3 revenues of $321 million were 16% higher than last year's $278 million. Organic growth was 14% with the balance related to foreign exchange and KMW. Organic growth was primarily due to higher order backlog entering the third quarter of fiscal 2019 and included the impact of certain programs that were delayed in Q2. The impact of those delays has for the most part been reversed. On a year-to-date basis, revenues were $905 million, up 11% over last year, primarily reflecting higher order backlog entering fiscal 2019 and higher order bookings in the first 9 months of this year. Q3 ending order backlog increased by 34% to $926 million, up from $689 million last year. Our record order backlog provides us with a strong foundation to generate continued organic growth. Over the last 3 quarters, we have won a number of large enterprise orders, which have changed the composition and increased the size of our backlog. These programs do not have a quick revenue conversion cycle but have performance periods ranging from 18 to 24 months. Due to the increased duration and size of our backlog, and taking into consideration our estimates of in-quarter orders, our Q4 revenues are estimated to be in the 30% to 35% range of backlog. While this range is lower than previous quarters, we view the change in the profile of our backlog to be positive as these enterprise or large programs provide greater visibility for capacity planning and future revenue. This expectation does not include Comecer, which would provide additional revenues if closed prior to the end of Q4. During the quarter, gross margins expanded 30 basis points to 26.3% versus the same period a year ago. On a year-to-date basis, gross margin expanded 40 basis points to 26.1% versus the same period a year ago. We have made progress upon our margin expansion initiatives, which have more than offset investment and innovation, people and capacity. Moving to SG&A, excluding $2.7 million of deal-related M&A costs in Q3 this year and acquisition-related amortization expenses in both periods, Q3's SG&A was $44.2 million, approximately $3.5 million higher than Q3 last year. SG&A has increased over the prior year, primarily due to increased employee costs and sales-related expenses. However, our higher gross margins more than offset increased SG&A costs. It is important to note that we continue to achieve operating leverage. For example, excluding acquisition-related transaction costs and the restructuring charge last year, SG&A as a percentage of revenue improved 60 basis points for the first 9 months of the year to 14.1% versus the same period a year ago. Going forward, we expect SG&A dollars to increase slightly as we assume KMW and Comecer's costs and incur integration-related expenses. Q3 adjusted earnings from operations of $46.7 million were 14.5% of revenue, up from 10.6% last year, reflecting higher gross margin and stock compensation recovery. Stock compensation expense decreased by $8.4 million from Q3 last year and impacted margins by approximately 2.6% due primarily to mark-to-market adjustments. Excluding the impact of stock compensation, our margins have improved by approximately 100 basis points year-to-date. As mentioned, we have made progress on our margin expansion plans as we are working to drive further improvements through the deployment of our ABM, capacity utilization, supply chain management, increasing services revenues, standardization and program management. Moving to the balance sheet. Our noncash working capital as a percent of revenue remained low in Q3 at 6.6%, down from 9.3% in Q2 and 8.3% at Q3 last year. Favorable payment terms on some of the large orders we received in Q3 resulted in this low percentage. Going forward, working capital will increase as we start to work through these programs utilizing the deposits. Working capital as a percent of revenue will be variable as project schedules and the timing of progress payments will fluctuate. However, this is normal, and we continue to target to be below 15%. Cash from operations was $62.2 million in Q3 compared to Q2 when we generated $39.5 million, and Q3 last year, when we generated $5.5 million. Higher cash generation is primarily due to decreased investment in noncash operating working capital and increased profitability. At quarter end, our cash net of debt position was $37.1 million, an improvement from last year's net position, which was effectively 0. This increase was net of approximately $50 million in outflows with the acquisitions of KMW and the intellectual property of Transformix and purchases made under our share buyback program. As you would have seen in our press release today, we have filed an amended notice with the TSX to increase the maximum number of shares that may be purchased under our NCIB in order to maintain flexibility in our capital deployment. We continue to have strong liquidity, with cash on hand of $374 million and our credit facility of which approximately $637 million is available. In Q4, the Comecer acquisition will be funded with the existing cash on hand. In Q3, we generated earnings per share of $0.27, up from $0.07 last year. On an adjusted earnings per share basis, we generated $0.33 in Q3, up $0.15 from last year. Increased revenues and margins accounted for approximately half of the increase, with stock compensation recovery accounting for the other half. Our effective tax rate was 25.5% in the quarter, consistent with our expectations. In summary, our business performed well. Our record order backlog of $926 million provides a substantial platform for organic growth as we finish fiscal '19 and move into the new fiscal year. We will continue to focus on the deployment of the ABM and initiatives to drive margin expansion going forward. Our funnel remains well diversified with the mix of end markets programs and enterprise solutions. We have a strong balance sheet with available credit, which will support our objective of profitable growth. Now we'd like to open the call to your questions. Operator, could you please provide instructions to our listeners? Thank you.
[Operator Instructions] Your first question comes from Mark Neville of Scotiabank.
First, just a point of clarification. The 30% to 35% backlog conversion for Q4, does that include KMW? Is that additive?
That does include KMW. It doesn't include Comecer.
All right. Okay. But for KMW, locally you'd added about $2 million to backlog, but I think it's about a $20 million revenue businesses. So is that sort of typically, there's really no backlog in that business, is that typical?
Not typical. Soon after we acquired they got more orders, and we saw the backlog come back up. So typical would be to have higher backlog.
Okay. And just generally, on that sort of conversion rate, I know it sort of depends on what your backlog looks like in your book of business. But from your perspective, I mean, is there an ideal range that it gets to or where it finishes and -- or is this sort of where you want it to be? Or -- with greater enterprise orders does it -- would it decline further? I'm just sort of just -- again, just broadly speaking where ideally, it lands for you?
I think it all depends on what our backlog is. So I would say there isn't an ideal range. It's more about growing our bookings and our backlog and then, driving the revenues each quarter.
Okay. And on these large orders, I mean, is there a service component attached to it? I mean, if we think about maybe a percentage of the capital cost or some sort of service -- long-term service agreements sort of how that might -- how the service component might work for those orders?
Mark, so we had seen an increase in our attach rate to CapEx and these oftentimes have a service element to them, both service and support as well as installation as well as toolkit. And we're very pleased with the progress we've made with the toolkit application. As we've talked that enables us to continue to add value over the life of the equipment and certainly provide an IoT smart factor solution.
Okay. And the toolkit is also something your driving for, sort of, as a product at the moment?
Mark, can you repeat the question?
I mean, you're charging for the toolkit now. It's not just sort of embedded or coming with the order. I don't know, again how you're splitting it, but maybe I'm thinking about that way. But your charges on the toolkit?
So it is an independent product that we offer to our customers.
All right. Maybe just one last one for Maria. Just a comment on SG&A. I think it was $44 million and change in this quarter if you adjust. I think you said it might increase slightly. Just sort of some kind of maybe quantum around that or order of magnitude. Just with the Comecer coming and what that might look like?
Sure. So if we look at adding KMW and Comecer for a full quarter, we're looking at increased SG&A in the range of $4.5 million to $5.5 million.
Got it. So that's per quarter?
Per quarter. Correct.
Your next question comes from Cherilyn Radbourne of TD Securities.
Wanted to start Andrew by asking you whether you saw any indications in the quarter or post quarter that the equity in credit market volatility is doing anything to impact. Is this the tenure of the length of customer decision processes?
Cherilyn, first, we get asked this question a lot on tariffs as well as the taxation in the U.S. as well as some of the macro trends. And what we found, and we continue -- and I've mentioned this in the past, one of my standard work as a CEO is to visit with customers, really sit down with them and understand their capital plans and how they plan to deploy within their business. And what we found is that customers are still looking at automation is a way that they can improve quality, maximize their output and have a cost advantage potentially to the markets that they serve. And so those dynamics again back to our statement around a very good bookings quarter as well as a healthy funnel as we enter into this quarter and potentially, enter the year puts us, we believe, in a solid position as we enter into our 2020. That said, we're constantly talking to customers to make sure it aligns with the needs and confirm that we can offer that level of value.
Okay. That's helpful. And then, in terms of the year-to-date margin improvements that you referenced, is there any way to rank for us of the 5 drivers that we've been talking about relative to margin improvement, which ones have been more impactful on a year-to-date basis?
I'll give it a try. Most impactful is really the operating leverage and you can see that at the SG&A line, where we have 60 basis point improvement there. And then, at the gross margin level, operating leverage, but we know that we've also made improvements in areas of supply chain and application of the ABM and Andrew has spoken of some examples. And, although on their own, they're not a lot when we add them all up, they do impact. But in addition to that, we had some investment that we've talked about, which offsets some of these areas. And as we've said, we've made investments and innovation, in training and we had some headcount increases also, which has offset some of the gains.
And then last one for me in terms of M&A. Having done 3 deals relatively close together, do you think that you pause for a bit of an integration period or do you think that you still have some operational capacity to do deals?
So, Cherilyn, I'll answer the second part of your question and then I'll go back to the first. We believe we still have capacity to do deals. And from a capital deployment standpoint and I've outlined the 4 criteria, we're going to be extremely disciplined in our approach in ensuring that we're aligned around true shareholder value. And so to answer your question, our funnel remains healthy. We have a lot of businesses, we're cultivating today. That said, we're going to make sure, it's the right asset to the business. And we do have capability and capacity to move when we see the right opportunity.
[Operator Instructions] Your next question comes from Justin Keywood of GMP Securities.
Just with the continued record bookings and backlog, I'm wondering if there's any capacity challenges in executing on this. And if so, is that affecting the conversion rate at all?
No, no issues on capacity. From a headcount perspective, we've grown our headcount over the last 2 quarters on average about 100 people each quarter and in addition to that, we augment with subcontractors. So no issues there. And then, physical space, we've added a facility in Q3. We also did something in Q2, and we have plans in place to also continue to expand in Canada, U.S. and Europe. So the lower backlog conversions has nothing to do with our ability to deliver.
Okay. And what's the planned remaining CapEx for the year?
We had provided a range of between $20 million and $30 million. Right now, I believe we've spent about $18 million. I would still give that range, and it's a bit of a range. A bit of a range because we -- as I said, we have certain plans to start building expansions and depending on when that happens, it'll impact our numbers either fiscal '19 or fiscal '20.
Okay. And then, just going back to the services revenue growing double digit, first, if that's both revenue and backlog. And is this being driven by some more recent orders or has there also been an uptick from existing machines already deployed?
Justin, so I'm going to take a minute to highlight the section of the business. Can't be more pleased with what the team has executed. First, we've increased our attach rate on CapEx, and this is a true value that we offer to our customers, both on new CapEx, but then also as we're going to be servicing equipment over the life of the equipment. And number two, we continued to drive expansion on existing equipment in the market space. And it was double digit on bookings and revenue. And this team -- as we step back and look at the remaining year and as we go into 2020, we will have a lot of opportunities to continue to drive. And I've had the chance to sit down with this group and really go into detail about how they're going to continue to execute on the strategy. So pleased with the progress, lot of work to do.
Your next question comes from Mark Neville with Scotiabank.
I just want to ask a question. Just on the NCIB, pretty significant bump. I guess, two questions. First, is there a level where you may get more or less aggressive or not because you've been quite aggressive thus far? And then just broad -- more broad just thoughts around that versus dividend. Yes.
So, Mark, I'll answer the second piece, and we'll start there. First, let's talk a bit about capital deployment. In terms of priority, in our view, we have a strategic layout on this. We've aligned with the board. We've done a significant amount of analysis. And first and foremost, we invest in a business and drive profitable growth. And I highlight a lot of those areas, we often missed the opportunity to talk about CapEx, innovation, training, true training so we can continue to drive all aspects of our business as we've got a great business. And it's about aligning to continue to achieve our aspirations, first and foremost. Number two, M&A. Disciplined, very focused approach on M&A. And I've talked to you the 4 criteria, just to hit them quickly, the market that we like. It's the areas that we like. We have to like the up and down of the market over the long haul. Number two, the strategic rationale of the asset. Is it a platform play? Number three, how we're going to manage, how we're going to implement the ABM, how we're going to operate the asset? And number four, ROIC. And next, a share buyback. And we have certain areas that when we see that, that our shares at a place where we believe they're undervalued, we're in a position to be able to pull the trigger, and we're aligned on that. The board's aligned, and it's all with a mindset to have true shareholder return.
And just to add a little bit more on that. As you've seen, we've increased the amount, and we've done it because we want the flexibility to be able to buy back when it makes sense. And so that means we want to have an active program in place.
Okay. Maybe just a couple of housekeeping questions following on. The Transformix, I wasn't sure if it was capped at $20 million or just potential for another incremental of $20 million?
It's capped at $20 million.
Okay. And you made a comment earlier about I think SuperTrak pharma was the first sale you had. Just curious, is that something like to an end user or just to another automation vendor?
It was to a specific area in the aseptic filling process, and that's truly all I can add. What I can tell you is the product is an exciting product. It's an area that we've been driving to get to, and we're very pleased that we've launched. And the difference is on aseptic, right? It's no expose lubricant. It's ISO certified, IP65 rated standard steel construction. So this is a very strong platform as we're looking at aseptic in its totality.
[Operator Instructions] Your next question comes from Robert Caldwell of Richardson GMP.
I have a double-tiered question. Question number one, perhaps to you Andrew. What's our current position in China? I'm thinking of plans from employees and perhaps at all in the business. And more importantly, number two, we've read in some analysis that upwards of 45% of the potential EV business is going to be in China. Large players, including Volkswagen, will be doing a great deal of their business there. Question then, of course, is what's our opportunity to attract EV business in China?
Robert, so ATS has solid positions in multiple areas. So we've got PA Solutions that has a position in China. We've got our AWK business that has positions in China, and we have our systems facility. And our systems business has, call it, several hundred folks that represent and drive a solution set for the market. That said, we've got a lot of opportunity here. And in the past, we've really utilized this business to offer the capability to existing customers that have gotten to the region, and we shifted that to really align them around in China, for China and EV is one example. And the opportunity in China is going to continue to grow EV, life sciences, key areas that we can provide a total solution for our customers, regardless of whether they are a western company performing in China or they are a China company that's performing in China. And so, early days, and our strategy deployment on this critical region, and I would say we've got a lot of opportunity, which means we've got a lot of work to do. And it's around gaining and ensuring that we've got the right value story to the -- to our customers. We can service, support and continue to drive that solution set in this critical region.
And perhaps just a brief follow-on, Andrew. Is there any pause because of the current environment between both Canada and China, and China and others as well? Any uneasiness about the relationship?
So Robert, what I can tell you is, we believe we've got a great solution in the region to provide high-level value to our Chinese customers as well as other parts of the world. And ATS, one of our key strengths is our ability to plan, execute and service regardless of location and drive that whether it's in China, whether it's in Canada, U.S. or other parts of the world. So we're very excited about our opportunities ahead. That said, we've got some work to do.
There are no further questions at this time. Mr. Hider, I return the call to you, sir.
Thank you, everyone. Appreciate your time this morning. I look forward to reporting our fourth quarter and full year results in May. Have a great day.
This concludes today's conference call and webinar. You may now disconnect.