Review of ATS Corporation

JUL 31, 2025 - ATS’s capital allocation policy prioritizes the vast majority of cash towards reinvestment and growth, and the company has been quite successful with its acquisitive growth playbook over the years. However, the recent operating results have been quite poor, driven by a combination of weak organic growth and a one-time settlement with a large EV customer from the transportation segment. Consequently, the balance sheet suddenly became over-leveraged relative to the historical trend because of the significant decline in earnings. In addition, the near-term uncertainty driven by tariffs also puts pressure on the company’s ability to grow. That being said, with backlog and bookings remaining healthy, we think the worst is already behind ATS for now. To remain conservative, we are downgrading our rating by one notch to ‘B’.