管理層發言
Welcome to the ATS Corporation Fourth Quarter Conference Call and Webcast. This call is being recorded on May 28, 2025, at 6:00 p.m. Eastern Time. Following the presentation, we will conduct a question-and-answer session. I'll now turn the call over to David Galison, Head of Investor Relations at ATS.
Thank you, operator, and good evening, everyone. On the call today are Andrew Hider, Chief Executive Officer of ATS; and Ryan McLeod, Chief Financial Officer. Please note that our remarks today are accompanied by a slide deck, which could be viewed via our webcast and available at atsautomation.com. We caution that the statements made on the webcast and conference call may contain forward-looking information and our cautionary statement regarding such information, including the material factors that could cause actual results to differ materially from the statements and the material factors or assumptions applied in making the statements are detailed on Slide 3 of the slide deck. Now it's my pleasure to turn the call over to Andrew.
Thank you, David. Good evening, everyone, and thank you for joining us. Today, ATS reported fourth quarter and full year results for fiscal 2025. As you know, we announced a negotiated settlement with our EV customer. It was important that we put this matter behind us to enable us to continue to execute on our growth strategy. On that front, Q4 was the third highest bookings quarter in the company's history and included organic growth along with contributions from acquisitions. Our life sciences businesses demonstrated strength and market leadership, complemented by contributions from across ATS and other key market verticals. During the year, we welcomed Paxiom and Heidolph, further expanding our products portfolio. Fiscal '25 was not without its challenges, and the results reported today reflect the resilience of our teams, the breadth and depth of our capabilities across our vertical markets, and the value of the ATS business model.
This evening, I'll update you on our business and markets, including macroeconomic influences, and Ryan will provide his financial report. Starting with our financial value drivers. Order bookings for the quarter were $863 million, up 9% from the fourth quarter last year. Our growth was supported by diversified bookings across all of our markets. Bookings for the full year were $3.3 billion, a record for ATS, setting us up well for fiscal '26. Q4 adjusted revenues were $721 million, down 9% from Q4 last year. For the full year, adjusted revenues were 12% lower year-over-year as a result of lower EV revenues, as expected. Adjusted earnings from operations in Q4 were $74 million. For the full year, they were $283 million. Moving to our outlook. Order backlog ended the quarter at approximately $2.1 billion, the highest in the last 8 quarters. Our trailing 12-month book-to-bill ratio was 1.23:1, again, highlighting the importance of our entire portfolio of offerings across services, standard equipment and products, as well as custom integration.
From a macro perspective, geopolitical and trade tensions are creating an uncertain environment. Although we are not immune to this uncertainty, we have not seen any material change in customer behavior to date. It is possible that we could see impacts on demand in some areas of our business if uncertainty continues in the near to midterm. That said, given our Q4 order bookings, we remain optimistic. ATS is well positioned in regulated markets with strategic customer relationships. Our global footprint gives us the capacity to help our customers address their risks as well as our own. Furthermore, our embedded ABM tools help our teams respond to changing requirements. Expanding our market reach through our capabilities while growing recurring revenue is important for shareholder value creation. To that end, our teams are dedicated to delivering for customers globally and actively planning for and addressing any short-term disruptions.
This includes further optimizing our global supply chain, strengthening regional capabilities, and taking targeted price action where necessary to support margins while ensuring reliable delivery across customer programs. Within life sciences, order backlog ended the quarter at $1.2 billion with key wins across all of our major life sciences businesses, including diversification in bookings such as auto-injector assembly, radiopharma, wearables, and other medical devices. Our life sciences opportunity funnel is strong, supported by market growth in key submarkets, including the demand for GLP-1 drugs, wearable devices for diabetes care, automated pharmacies, contact lenses and the ongoing need for solutions to support detection and treatment in pharma and radiopharma. Our capabilities and deep understanding of the life sciences markets position us well to explore new areas to broaden our customer base.
In the current environment, some customers are evaluating capital spending plans, particularly within the lab research space. But as I indicated, we have not seen a material shift or change at this time. In food and beverage, our funnel remains strong, and we ended the year with a backlog of $258 million. The team is actively pursuing greater diversification to offset some seasonal variability in the CFT business with advancements into services and secondary processing, as well as packaging, which is supported by the addition of Paxiom. In energy, our funnel remains strong as the global nuclear industry experiences growth and transformation driven by increasing energy demands, advancements in nuclear technology, and sustained government support. Near-term demand is driven by ongoing CANDU refurbishment projects, and we expect that longer-term demand will also come from new nuclear builds in both large-scale and small modular reactors.
Our end-to-end strategic capabilities enable us to support customers across all phases from concept and design through to factory automation of modular assemblies and waste handling. ATS is well positioned for sustained growth in these key energy markets. In consumer products, our funnel remains stable with attractive niche opportunities. Our capabilities in such areas as warehouse automation and packaging solutions delivered strength in bookings in the quarter. Within transportation, our funnel remains stable with smaller opportunities as expected, due to lower end-market demand than previous years, particularly in the EV battery space. During the quarter, we received an additional order from an EV customer in Europe. On after-sales, we continue to make progress on our strategy, our evolving service plan offerings, including higher value services, and the expansion of digital tools are helping to drive greater customer adoption and retention.
Our goal is to serve as a global partner for continuous productivity optimization across our customer base. Globally, our ATS teams are aligned and have a deep understanding of where value can be driven for our customers with our digital solutions. Our strategy and ability to drive improved life cycle performance, asset utilization, and overall operational efficiency through areas like our Connected Care Hub will allow us to help our customers reduce their enterprise risk over time. On the ATS business model, we hosted our seventh annual President's Kaizen Events, which included teams from across all ATS groups in major geographies. The teams brought focus to strategic areas, including resource planning and optimization, business simplification, product development, quotation processes, and reimagining processes to drive greater efficiency in operations. These events are a great demonstration of our team's collective drive for breakthrough change.
The level of work completed in a single week is a testament to the evolution of our ABM culture over time. On M&A, we are making steady progress on cultivating strategic opportunities that align with our long-term growth priorities and enhance the value of our portfolio over time. In the short term, we remain focused on returning leverage to targeted levels and on the continued integration of our recent acquisitions to maximize their long-term contributions to our business. On innovation, we are deploying capital and empowering our talent to create differentiated solutions that drive value for our customers. Going into fiscal '26, we've identified opportunities to innovate in areas such as expanding the utilization of our Symphoni platform, incorporating more digital applications in our portfolio to drive further efficiency. For example, in our Digital Tomato solution for food and beverage markets, and adding additional functionality into our proprietary SuperTrak system.
In summary, our global businesses continue to demonstrate ongoing commitment to serving our customers supported by deep industry knowledge and experience. To that end, I want to congratulate two businesses on hitting significant milestones this past year. Comecer celebrated their 50th anniversary, and CFT celebrated their 80th. I'm also pleased to note that ATS was once again recognized by Canada's top 100 for being a leading employer in both the Waterloo region and Southwestern Ontario. Strong fourth quarter bookings, combined with a record order backlog, provide us with good revenue visibility and a strong foundation for profitable growth heading into fiscal '26. Our teams remain focused on driving improvements across all of our value drivers. As we enter fiscal '26, our opportunity funnel is well diversified, and we are confident in our ability to drive our ABM culture as our engaged and dedicated teams remain intensely focused on creating strong customer and long-term shareholder value. We're responding to the challenges in the macro environment with clear alignment across the leadership team and our individual businesses. Now I will turn the call over to Ryan. Ryan, over to you.
Thank you, Andrew, and good evening, everyone. Before I review results, I'll provide a few comments on two specific nonrecurring items. First, our EV settlement and second, income taxes. On the EV settlement, as we disclosed, we expect to receive USD 134.75 million or about CAD 194 million based on our Q4 ending exchange rate before the end of fiscal Q1. This settlement resulted in an after-tax impact of approximately CAD 129 million, which was reflected in our Q4 results. The preliminary fourth quarter fiscal '25 results that we disclosed on May 23, including net income, earnings per share, EBIT, and EBITDA are unchanged. However, in finalizing our results and in accordance with IFRS standards, rather than having the expense flow through SG&A, you will see in our financial statements that we have recorded a reduction in revenues in the quarter of $146.9 million, with the remainder of the settlement impact of $24.2 million reflected in SG&A expenses.
This income statement classification differs from what we disclosed in our preliminary earnings release. However, as I noted, there is no change in net income. We are presenting an adjusted revenue measure to reflect this one-time event and have adjusted for the total P&L impact on our adjusted earnings, consistent with what we previously disclosed. Importantly, the settlement will reduce our net debt to adjusted EBITDA leverage by 0.5x or approximately half a turn, providing us with greater flexibility to continue to execute on our growth strategy, relative to a prolonged process where timing is hard to predict. Given the deteriorating market conditions in transportation and the added uncertainty in the market caused by tariffs, settling the matter at this time was a good outcome for ATS. Separately, on taxes, in our Q4 results, we recognized tax assets related to a plan that will benefit our cash taxes and result in an expected effective tax rate in the mid-20% range going forward.
We've adjusted for the nonrecurring impacts related to this plan in our adjusted EPS, which was a $0.38 per share benefit to reflect normalized operations for the year. Now moving on to Q4 operating results. Order bookings were $863 million, an increase of 9% over Q4 last year and included 2.6% organic growth, a 4% contribution from acquisitions, and a 2.5% positive impact from foreign exchange translation. At the end of Q4, the trailing 12-month book-to-bill ratio was 1.23:1 and was above 1 in all market verticals. For the year, order bookings grew 14.3% and included organic growth of 6.2%, a foreign exchange benefit of 1.9%, and contributions from acquisitions of 6.2%. After adjusting for the revenue portion of the EV settlement, which adds back the $146.9 million impact, revenues for the fourth quarter of fiscal '25 were $721 million, down 8.9% compared to last year. Year-over-year organic growth in life sciences and consumer products, along with a 3.6% contribution from recent acquisitions provided some offset to lower transportation revenues.
Notably, revenues increased sequentially by 10.6% as we continued to benefit from strong order bookings over the past several quarters. Moving to earnings. Fourth quarter adjusted earnings from operations were $74.3 million, a 23% decline from the prior year, primarily from lower revenue volumes, particularly in transportation. Excluding acquisition-related inventory fair value charges, gross margin for Q4 was 29%, a 90 basis point improvement from last year, driven by a more favorable mix, which included higher-margin programs. On SG&A, excluding acquisition-related amortization and transaction costs and the SG&A portion of the EV settlement, expenses in the fourth quarter totaled $133.9 million, an $11.2 million increase over the prior year, primarily due to SG&A from acquired companies in addition to increased employee costs and the impact of foreign exchange translation. As always, we continue to work to enhance efficiency in both our existing operations and newly acquired entities through our disciplined integration process.
Excluding the mark-to-market impact related to changes in our share price, stock-based compensation expense was $1.1 million in Q4. Earnings per share were $0.41 on an adjusted basis, down from last year, primarily due to the lower revenue volumes. Turning to our outlook. We ended the fiscal year with an order backlog of approximately $2.1 billion, and we expect Q1 revenues to be in the range of $680 million to $730 million. As a reminder, this assessment is updated every quarter taking into account revenue expectations from current order backlog and new orders booked and billed within the quarter. In the quarter, we incurred an additional $3.5 million of restructuring costs related to the previously disclosed reorganization activities. Expanding our operating margins remains an ongoing priority. In particular, as life sciences order bookings from the latter half of fiscal '25 moved to higher revenue-generating phases and as we benefit from the cost structure and volume alignment in our EV businesses, we expect to see improvement throughout fiscal '26.
Across our business, we continue to systematically use ABM tools to enhance our processes, streamline our supply chain, and achieve further standardization. We will continue to invest in innovation and services. On tariffs, we're working to mitigate risks as they arise and where possible. Our global footprint and decentralized operating model, along with our proven ABM tools, provide us the flexibility required to address disruptions over the longer term. Short-term costs have been manageable to date and we are staying close to our customers as the current environment continues to evolve. We're also actively working with our global supply base to mitigate challenges and flow of goods and manage potential cost increases. Moving to the balance sheet. In Q4, cash flows from operating activities were $39.3 million. Our noncash working capital as a percentage of revenue was 22.4%. Excluding the settlement receivable from the EV dispute, our noncash working capital was just over 15%, and as we continue to progress across the rest of our businesses on working capital efficiency and moving back towards our target range.
During the quarter, we invested $29 million in CapEx and intangible assets, with an investment for the year of $78.1 million. Our innovation efforts in critical growth areas remain a priority. For fiscal '26, we expect our CapEx and intangible investment to be in the range of $80 million to $100 million. Our leverage at the end of the quarter, our net debt to adjusted EBITDA ratio was 3.9x on a pro forma basis, which includes full year contributions from our most recent acquisitions. As I noted, this will be helped by receipt of the EV settlement payment in Q1 of fiscal '26. We remain committed to bringing our leverage to our target range of 2 to 3x. For reference, early in Q1, we were active in our NCIB, acquiring 309,000 shares for approximately $10 million. Share buybacks remain an important and opportunistic element of our overall capital deployment strategy. That said, our primary capital allocation priorities remain a focus as we continue to invest internally in innovation and growth while cultivating acquisition opportunities.
In summary, fourth quarter results were encouraging as we move into fiscal '26 with our goal of driving growth and margin expansion. For the year, despite challenges in fiscal '25 as a result of changes in demand in the North American EV markets, we had record order bookings that were diversified across our strategic global markets in regulated industries. Order backlog is strong and gives us good revenue visibility in fiscal '26. We expect short-term margin pressures from large transportation revenues to continue to abate through our reorganization efforts as we drive improved volumes in transportation and growth in the rest of the business. Looking ahead, we're committed to building on our positive momentum in fiscal '26. We remain focused on driving growth in our core markets, leveraging our acquisitions and executing on our value creation strategy.
分析師問答
Your first question comes from the line of Cherilyn Radbourne from TD Cowen.
First question, I guess, is as you look at the backlog and the underlying duration of it, as well as what you're seeing and hearing from customers, how confident do you feel about returning to positive organic growth in fiscal '26?
Yes. Cherilyn, the short answer is very positive. If you look at our trailing 12-month book-to-bill ratio of 1.23, it really supports that alignment. If you look at all markets, all of our markets are above 1 and led by some key areas and key technologies. So when we look at the year, we are confident we'll be returning to growth. We're confident in the areas that we're supporting. To substantiate that further, in visiting customers, our global team has observed that where we see products that align with strategic priorities for our customers, they are continuing to invest. Overall, I would say our view of the year is cautiously optimistic.
And Cherilyn, maybe I'll just jump in with a couple of data points, some of which we covered in the prepared remarks. But the order backlog being up 19.3% does support growth, obviously. About 23% of that backlog goes beyond 1 year, which is fairly consistent with where we typically operate in terms of some of those longer-term programs. Just to echo what Andrew said, the strength of our backlog gives us a lot of confidence in terms of organic growth in fiscal '26.
That's really helpful. The midpoint in the range you provided for fiscal Q1 suggests a modest increase in EPS, which is encouraging. Regarding the internal control deficiency that was noted, could you explain how it was identified and what steps are being taken to address the issue? Was it related to the accounting treatment of the EV settlement?
So, during our normal process, we identified a couple of things. This is our first year under the SOX requirements, which are more rigorous than what we previously followed. We conduct a testing and assessment process, and there were certain business processes involved, particularly related to IP information prepared by entity, which consists of spreadsheets and related documentation. Importantly, as stated in our disclosure, none of this affected our reported financial statements for the current or prior periods. It mainly pertains to improvements in documentation that we need to focus on as we enter fiscal '26.
Your next question comes from the line of Maxim Sytchev from National Bank Financial.
Andrew, maybe the first question for you. Do you mind providing a bit of color on the composition of programs that exist within the healthcare backlog right now? One question we often get from investors is how sustainable the GLP-1 sort of growth rate; I'm just curious to see around the sort of the exposure there.
Yes. So Max, to give you a little bit more color, I mean, we're certainly excited about our continued support in the GLP-1 space, and we have a diversified customer base within this area. Right now, we're working with eight-plus customers, aligning around their ability to meet market demand. We view this as a short- to mid-term area of focus with sustained ability to grow. Additionally, if you step back, we're also involved in radiopharmaceuticals, which is the identification and treatment of cancer, wearable devices, automated pharmacy solutions, and contact lenses. We view the potential for the year as having much to be cautiously optimistic about. Engagements with customers indicate they are looking to further build their product portfolios, and we have capabilities in many niche markets beyond those specified. I would say that my engagement with the customers has been aligned around their growth needs.
Okay. And then, Ryan, around working capital, correct me if I'm wrong, but historically transportation was more capital intensive than other buckets in the business. So now that part of the business has shrunk fairly significantly versus the rest. How should we think about that working capital intensity velocity of improvement? I mean, theoretically, that should get better faster? How should we think about this?
Yes. So Max, excluding the remaining working capital that's on our balance sheet at Q4 tied to the EV settlement and dispute, we're just over the 15% target. So you're right that in terms of market verticals, commercial terms in transportation are typically more working capital intensive. As that becomes and will be a smaller part of our business, we do see a benefit to our working capital from that. There is an offset, though, as we've expanded into more product-based businesses, which are shorter cycle where we're carrying more inventory. These businesses are also more working capital intensive. I've spoken about some of the acquisitions, particularly Heidolph, Paxiom, and Avidity; these are all 20%-plus working capital businesses. Now, there's efficiency available in those. It's primarily around inventories and being more efficient there. But all that said, that does provide some offset to the lowered transportation now. Our target is to be below 15%. I expect we'll get there this year while anticipating normal variability in quarters. We have a number of initiatives across the organization to support that progress.
Okay. So just one quick one around the tax rate expectation for 2026. How should we model it on a prospective basis?
Yes. So a couple of unusual items went through our taxes this year, particularly in Q4. But on a normalized basis, we're in the mid-20% range. There are normal course impacts from changes in jurisdictions where we operate, and our profitability in certain jurisdictions. We're always looking at how our business is structured globally to maximize those benefits. We did implement a legal entity consolidation that will result in a cash tax benefit over the next several years. However, that doesn't significantly affect our effective tax rate. So the way to think about it is really in the mid-20% range, specifically 24% to 26%. Realize there are tax benefits from some of the planning and also from the EV settlement that will help our cash taxes.
Your next question comes from the line of Sabahat Khan from RBC Capital Markets.
I wanted to follow up on the discussion that Cherilyn began regarding this year's organic revenue growth. It seems you've provided a revenue range. What does the outlook for conversion look like? How much could that fluctuate throughout the year depending on the work you undertake? Should we rely on this range when considering the rest of fiscal '26, or will it change based on the projects you can see developing behind the scenes? I'm looking to understand how the larger backlog influences our expectations for conversion in upcoming quarters.
Yes. A couple of things, Sab. I'll step back a little. The conversion rate is going to change. That's driven by material flows and different factors that significantly impact our project revenues. Our backlog is up 19%. Several of those programs do go beyond a year, approximately 23%. Our expectation is that we're going to drive growth this year. Prior to the headwinds in EV, we were at a high single-digit organic growth rate. Keep in mind that the global automation market is a mid-single-digit growth rate market, and our objective is to outpace that growth. That's how we're thinking about fiscal '26.
Great. And then maybe just kind of on the margin side, with the EV business being much smaller as we look ahead over the course of fiscal '26. Just directionally, as you look ahead into your backlog and expectations for revenue for the rest of the year, how are you thinking about margin progression? Should we assume that EV was a good portion of the drag over the last year? Can you give a high-level commentary on what you're expecting for the rest of this year?
Yes. The transportation business was a drag in fiscal '25. It saw some improvement from the low point in Q2. It's still not operating in Q4 at the level that we expect, but it is improving, and we expect it to be profitable in fiscal '26. Similar to how we operate, we're targeting margin expansion. We have a number of initiatives relating to material productivity, labor productivity, pricing, and other areas of efficiency in our operations. That said, what we saw this quarter in terms of sequential expansion is probably a reasonable run rate. I've used the term modest previously, and that remains my expectation. There's variability; it's not going to be linear, but that’s how we’re approaching the business this year in terms of margin expansion and progression throughout the year that we will see in our EBIT and EBITDA margins.
Great. And then maybe just one last one, maybe a high-level one. As we think about tariffs, obviously, there are negatives from the perspective of actual tariffs. However, given where you are in the industrial landscape, you could see some positive benefits from reshoring efforts. Can you frame for us the pros and cons, and what you're hearing from customers given all the headlines out there?
Yes. Sabahat, it's certainly challenging to navigate, and this is an evolving landscape. That said, our teams have been laser-focused on identifying risks and actively monitoring and mitigating where possible. We've largely been able to do that. The impact on ATS has been minimal, and we continue to ensure that we can identify supply options, control areas, and areas to build. We look at this market and see tariffs as providing a potential mid-term benefit. ATS, being a global player, allows us to utilize our global strength. Certain businesses are able to move their product and build in the regions where they are needed. We view ATS as being in a potential position of strength to support our customers through this.
Your next question comes from the line of David Ocampo from Cormark Securities.
Maybe the first one for Ryan. When we think about the inventory and the contract assets tied to your EV customer, it sounds like they were almost written off to zero. Is there any room for that to be redeployed to other areas, whether they were standard products? Can we view that as potential upside? Or should we just consider that as a zero going forward?
Well, contract assets are at zero. We've written down the inventory to what we expect to be able to utilize, but I wouldn't expect a benefit from that going forward. There are materials that we can redeploy, but not a material benefit.
Okay. And then just following up on Max's line of questioning as it relates to life sciences, I do expect that GLP-1 is just one end market that you serve. I'm curious how you guys are thinking about both the positives and negatives just as they relate to Lilly's positive trial results regarding ingestible GLP-1 drugs?
Yes. To provide some context and to add to my comment for Max, novel drug approvals truly indicate future demand. The last couple of years have been above average on the approval process and set the foundation for future potential growth. This year aligns with last year in terms of its run rate. Overall, we view this market as having continued ability to support our position as it currently stands. As for the pill form of the drug, we’ve observed a lot of discussion on this. We’ve seen some customers pull back based on trials. Our view is that this could be an option for the future. We're monitoring this closely; customers are still investing around the high potency ability for GLP-1 with an auto-injector, which supports our capability to serve our customers.
Okay. That's very helpful and useful color. Lastly, you talked about always cultivating M&A transactions. However, when we think about your leverage, even with all the moving parts and collection of cash, it suggests you will still be above 3x leveraged. Are larger acquisitions on pause until you can get below 3x? Ryan, can you refresh us on the maximum leverage ratio you are willing to go for the right acquisition?
Yes. With the settlement, we are looking at about a 0.5 turn reduction, bringing us closer to our mark. That said, the landscape for M&A today has sellers' expectations that aren't changing. Overall volumes are slightly decreasing in M&A. However, our cultivation and opportunity funnel continues strong. We consistently seek out those assets that, when they become available, we can act on quickly. The two we acquired this past year, Paxiom and Heidolph, were years in the making. Looking forward, we will continue to cultivate high-potential assets for ATS and our shareholders.
Yes. We're targeting to reach that 2x to 3x range as it gives us more flexibility compared to our current situation, especially for larger opportunities. That said, we will always consider the right opportunity from the perspective of creating value. We'll remain disciplined in our approach.
Your next question comes from the line of Michael Glen from Raymond James.
Just a couple of questions. So number one, what are you thinking about regarding moving some of your product manufacturing to the U.S.? Do you have any CapEx plans? Is any of the CapEx this year associated with that? Can you share your thoughts?
Yes, Michael. There is nothing I would specifically call out as material moves. As Andrew noted, we have capacity in the U.S. for some of our products, and for some of our work, it's straightforward. Anything significant from a CapEx perspective is not at the point where we've committed to move production yet; this will depend on whether it makes sense under changing global trade environments and tariffs. It's something we're monitoring but not directly tied to our current CapEx plans.
With the EV situation seemingly resolved, Andrew, can you provide commentary? Do you think it's potentially the right time to divest the EV business?
Yes. The EV business is rightsized to reflect the current demand environment, setting it up for future success. It's essential to remember that our work in this business is centered around factory automation. With the business adjusted for current demand and with the potential for more reshoring of manufacturing, there are opportunities we can pursue in factory automation that extend beyond that segment. We have solid capabilities in this space, which we can leverage to create value for our customers and shareholders.
Your next question comes from the line of Cherilyn Radbourne from TD Cowen.
Just a couple of other questions for me. With regard to the backlog by market, and you alluded to this a little bit in your prepared remarks, but we saw a new backlog record in consumer products and nuclear. So I was hoping for a bit more color on those two areas.
Yes. Cherilyn, I'll take those separately. In consumer products, we've continued to receive support for our niche solution in the warehouse automation space. This solution is targeted to support our customers in meeting sustainability goals while enhancing efficiency. We've moved the product to be built regionally for their use. In nuclear, CANDU reactors remain our largest segment. We've successfully engaged in refurbishment and are continuing to do so. CANDU reactors exhibit long life, and ATS has a leading niche position in this area. There’s also traditional reactors undergoing a decommissioning process, creating opportunities. The small modular reactor segment presents about five-plus years of potential growth, and we’re collaborating with key players to enable this as a clean energy solution to meet increased energy demands. Lastly, we are seeing growth in nuclear fuel support to enhance market supply. We view this as a niche area with significant growth potential, and our trailing 12-month book-to-bill ratio in energy supports continued growth.
Great. Finally, as you consider how to protect yourselves in light of changing tariffs and potential related inflation, have you made or contemplated changes to the terms of your contracts in response to this?
Our contracts protect us well from this situation. As we enter new contracts, it's a topic we discuss, but it hasn't posed a significant challenge. With regard to pricing, we address it. When changes occur or tariffs impact, we generally pass those costs on to customers. Much of our work focuses on supply chain management. We're localizing our supply chains, working closely with our suppliers and logistics advisers. Much of what we do in our Canadian operations benefits from the USMCA agreement. Overall, we have managed most of the impacts well; as Andrew stated, it hasn't been a material headwind for us.
And that concludes our question-and-answer session. I will now turn the call back to Mr. Hider for closing remarks.
Thank you, operator, and thank you, everyone, for joining us today. I look forward to speaking to you on our Q1 call in August. Stay safe, and goodbye for now.
This concludes today's conference call. Thank you for your participation. You may now disconnect.