管理層發言
Welcome to the ATS Corporation Third Quarter Conference Call and Webcast. This call is being recorded on February 4, 2026, at 8:30 a.m. Eastern Time. Instructions are provided for participants.
Thank you, operator, and good morning, everyone. On the call today are Doug Wright, Chief Executive Officer; Ryan McLeod, Chief Financial Officer; and Anne Cybulski, Vice President, Corporate Controller. Please note, our remarks today are accompanied by a slide deck, which can 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 in Slide 3 of the slide deck. As many of you know, this is Doug's first conference call as CEO of ATS. We're very pleased to welcome Doug as the new leader of our organization. With that, it's my pleasure to turn the call over to Doug. Doug, over to you.
Thank you, David, and good morning, everyone. I'm pleased to be with you here today. As you know, I joined ATS in mid-January. While it's still early in my tenure, my focus has been on rapidly translating learning into action, particularly around execution discipline, margin performance, and capital allocation. This focus has included spending time with our teams across the organization, building a deeper understanding of the business and our day-to-day operations. I've also participated in our President's Kaizen Events, listening to and meeting with teams, including at our Cambridge, Ontario head office. What stood out from this year's group of Kaizens was the depth and breadth of our people's technical capabilities and the high-performance nature of our culture anchored by the ATS business model. During my career, I've had the opportunity to serve several organizations in different parts of the world, focusing on automation and diversified industrial technologies. In bringing an analytical lens rooted in my engineering background and applied in multiple general management and CEO roles, one key takeaway for me is that companies built in a strong lean operating system are better positioned to execute and deliver sustained results. That lean culture is deeply embedded at ATS through the ABM, and our focus will only get sharper going forward. These fundamentals, along with our attractive market positions in growing end markets and our high-quality customer base, have reinforced my decision to join this organization. Importantly, that foundation is supported by a deep and capable leadership bench, positioning us well to execute on our strategic priorities. In Q3, we welcomed Sarah Moore as our new Life Sciences Group Executive. Sarah brings over 20 years of experience across Healthcare Diagnostics, Medical Devices, and Life Sciences, along with deep sector expertise and a strong operations background to lead our presence in one of our key end markets. We also recently appointed Simon Roberts, a long-tenured ATS leader, to lead our Packaging & Food Technology business. This brings a leader with a strong operational background to this key end market. This appointment coincided with our decision to embed our growing Services business within our operating units. This change strengthens accountability, improves customer alignment, and allows each business to manage services as a recurring margin-enhancing component of their solution offering. Our focus on people and leadership continues to be acknowledged externally. Our U.S. operations recently received a certificate of recognition from the Top Employers Institute, and we were once again named a top employer in the Waterloo area. From an operating standpoint, I expect we can continue to build on the systems, rigor, and accountability required to build long-term value with an emphasis on driving margin expansion across the portfolio. There are meaningful opportunities ahead through increased asset utilization and operating leverage, improved mix, and continued advancement of the ATS business model. That same discipline also guides our capital investment decisions across the portfolio. Our focus remains on allocating capital where it generates attractive risk-adjusted returns and enhances long-term shareholder value. We continue to evaluate opportunities that support growth and profitability, reinforce our core capabilities, and remain consistent with our leverage framework. This approach aligns with ATS' long-term capital allocation strategy and the priorities of our Board. Before I move on, I want to recognize Ryan McLeod for his contributions to ATS. Ryan has played an important role in strengthening ATS' financial foundation and building a strong finance team. We thank him for his leadership and wish him continued success in his new chapter. Ryan's transition is orderly and planned. Anne Cybulski, a trusted member of our leadership team, will resume as interim CFO and provide the continuity. Our finance organization has been built by Ryan and Anne and is stable and capable. As I continue to deepen my understanding of the business, I'll provide additional perspectives as appropriate. With that, I'll turn the call over to Ryan to walk through our third quarter performance and outlook.
Thank you, Doug, and good morning, everyone. Before moving to the quarter, I would like to welcome Doug to ATS. Doug brings a proven track record in lean operations and a disciplined approach to capital allocation. I'm confident that under his leadership, ATS will build on its strong foundation and continue to drive value creation for shareholders. Turning to the quarter. I'll start with a brief overview of our Q3 performance before providing an update on our end markets. Anne will provide additional financial details in her remarks. Starting with our financial value drivers. Order bookings were $821 million, up almost 12% sequentially, supported by activity across multiple end markets. Q3 revenues were $761 million, up almost 17% from Q3 last year, driven primarily by organic growth, including continued momentum in services. From a profitability standpoint, adjusted earnings from operations in Q3 were $80 million, in line with our expectations. Moving to our outlook. We ended the quarter with an order backlog of approximately $2.1 billion. Our backlog reflects a well-balanced mix across end markets and geographies. Looking ahead, our funnel remains healthy and diversified. Within Life Sciences, order backlog was $1.1 billion, and revenues for the quarter were $391 million, the second highest in ATS' history. Demand remains constructive in our end markets, with ATS' global scale supporting consistent execution in multiple regions and multisite customer programs. Radiopharma, led by our Comecer business, remains a key growth market supported by strong customer relationships and expanded services footprint and a proven track record. Our unique capabilities in this market are driving engagement with both established and emerging customers across the development and commercial phases of radiopharmaceutical programs. Within GLP-1 auto-injectors, ATS is executing against a healthy backlog and partnering with customers as they scale production. As device requirements evolve and new therapeutic applications emerge, our teams continue to support customers throughout the product lifecycle. In Food & Beverage, quarter-end order backlog was $203 million. Funnel activity in Food & Beverage remains strong, driven by brand recognition in core processing markets, including tomato and other fresh fruit applications. In Energy, order backlog was a record $296 million, up 87% over Q3 last year, driven by refurbishment and life extension projects for nuclear reactors. These refurbishment programs are longer cycle in nature and include service components that support both execution and ongoing operational requirements. Alongside refurbishment work, activity continues to progress in new build programs, including both large-scale reactors and SMRs. ATS is engaged early in the project lifecycle, supporting front-end design, engineering, and prototyping activities. This work spans fuel production, fuel handling, and modular fabrication across multiple reactor technologies. Within Consumer Products, backlog reached a record $321 million, supported by a large enterprise warehouse packaging automation program that leverages ATS' global manufacturing and aftermarket capabilities. Consumer Products funnel remains steady, with ongoing opportunities across warehouse automation and packaging. In Transportation, the funnel continues to reflect smaller-scale opportunities in both commercial and traditional vehicle platforms. In summary, the quarter reflects steady execution across our priorities, supported by a strong order backlog and diversified end markets. Before we move to the financial review, I want to take a moment to express my confidence in the depth, capability, and professionalism of the organization I've had the privilege to lead. I've worked closely with Anne for many years, and I've seen firsthand the strength of her leadership and that of the broader team. I'll be moving on knowing the business is in very capable hands, supported by a strong leadership team and an organization deeply committed to operational excellence and disciplined execution. I also want to convey my sincere appreciation to the entire ATS team for their dedication and unwavering commitment to the company's success. With this continuity in place, ATS remains firmly focused on the business and well-positioned to deliver long-term value for shareholders. Now I'll turn the call over to Anne. Anne, over to you.
Thank you, Ryan. The entire team and I wish you success in your next chapter. I share your confidence in ATS' experienced leadership and finance teams. I also echo both David's and Ryan's words of welcome to Doug. Doug, we're happy to have you on board. On to our operating results for the quarter. Order bookings were $821 million, down 7% compared to Q3 last year due to the expected lower run rate in Transportation and the inclusion of several larger enterprise bookings in Life Sciences and Food & Beverage last year. Notably, our trailing 12-month book-to-bill ratio at the end of Q3 remained healthy at 1.06:1. Revenues for the third quarter were $761 million, up 16.7% compared to last year, including organic growth of 12.6%, along with a 4.1% benefit from foreign exchange translation. Of note, revenue increased in all market verticals, except for Transportation as expected. Moving to earnings. Third quarter adjusted earnings from operations were $79.9 million, a 21.6% increase from Q3 last year, primarily on higher revenue volumes. Gross margin for Q3 was 29.6%, a 111 basis point decrease from last year, mainly due to program mix. Put another way, the decrease is a reflection of the timing of programs being executed across our market verticals, which have different gross margin profiles. On SG&A, excluding acquisition-related amortization and transaction costs, expenses in the third quarter totaled $141.9 million, an $11.3 million increase over the prior year, mainly due to foreign exchange translation and, to a lesser extent, increased employee costs and professional fees. Excluding the mark-to-market impact related to changes in our share price, stock-based compensation expense was $3.1 million in Q3. Earnings per share were $0.48 on an adjusted basis. Moving to our outlook. We ended the quarter with an order backlog of approximately $2.1 billion. Q4 revenues are expected to be in the range of $710 million to $750 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. During the quarter, we incurred $5.5 million of restructuring costs under the program we disclosed last quarter. As we identified additional opportunities to further realign our cost structure, total costs under the program are now expected to be approximately $20 million. The associated payback period remains unchanged. We do expect some reinvestment in strategic growth areas while also supporting our operating leverage, mainly as we move into fiscal '27. As we head into the last quarter of this fiscal year, we are pleased with our overall revenue growth of 13.6% on a year-to-date basis, including approximately 8% organic growth. Adjusted earnings from operations are up 14% on a year-to-date basis. ABM discipline and tools will continue to support focused execution across all of our value drivers, supported by the strong lean pedigree amongst our leadership team. In addition, Doug's experience and focus on lean discipline is clear. While the macro environment remains dynamic amid geopolitical and trade uncertainty, we can once again confirm that we have not been materially impacted by tariffs across our different geographies. Most of our exports from Canada to the U.S. continue to be covered under the USMCA. Our global decentralized operating model positions ATS well to adapt and serve customers where capital is being deployed. As a result, we continue to execute, maintain leadership in our key submarkets, and advance our growth priorities. Moving to the balance sheet. In Q3, cash flows from operating activities were $115 million. Our noncash working capital as a percentage of revenues was 16.4%, an improvement sequentially and also from Q3 last year. As a result, we moved closer to our targeted working capital value of less than 15% of revenues as we received some larger milestone payments before the end of the quarter. As always, payment timing can affect this ratio around period ends, but our goal is to continue to sharpen our working capital efficiency and, more broadly, overall asset efficiency. During the quarter, we invested $16.6 million in CapEx and intangible assets, supporting innovation and the continued strengthening of our capabilities. For fiscal '26, we expect our CapEx and intangible investment to be between $70 million and $90 million, slightly lower than the previously disclosed range. On leverage, our net debt to adjusted EBITDA ratio was 3x, reflecting continued progress towards the top end of our target range of 2 to 3x as expected and previously disclosed. In summary, the third quarter results were in line with our expectations, supported by a strong order backlog and diversified end market exposure. Our leadership team and global employee base remain focused on leveraging our opportunities for margin expansion and capital efficiency across our business to drive shareholder value. Now we will open the call to questions from our analysts. Operator, could you please provide instructions? Thank you.
分析師問答
Instructions to participants for questions.
Doug, congratulations on joining the company. And maybe the first question, if I may, for you. Do you mind maybe talking about your 90-day and kind of 6 months priorities in terms of what's going to be on your slate?
Sure. Thanks, Maxim. So while it's early, I do have a few observations that I'll share with the group. First, I believe that we're aligned to strong and growing end markets in the portfolio. And growth has been strong. And while there are a few areas that need some improvement, our focus will be on continuing to focus on those core end markets that we're in today. So I'm not saying that my appointment brings any outlook change in terms of the end markets that we're focused on. Secondly, we recognize that margin expansion potential has not been realized. I think we have a lot of runway in front of us. And while I'm not ready to establish a new target for the organization yet, our team knows that we need to do better. There are opportunities in both ABM-type improvement, which are a great set of tools that we just need to drive harder at executing, as well as commercial actions to get more value for the important work that our teams do. And third, as our leverage ratios are now back into our targeted range, we will deploy capital with a high level of discipline as usual, but with an emphasis on improving our margins, our aftermarket mix, and bringing in new technologies that complement our portfolio within our existing end-market framework. So those are some of the key observations I would make today, and you can kind of convert that into what I'm focused on in the early days, both with the executive team and our operating units as well as with our Board. I really remain very optimistic for the outlook for ATS.
That's excellent. And one quick question for Ryan. And Ryan, obviously all the best, and it's been a pleasure. If I may, do you mind maybe connecting a little bit the improvement in margins that you were telegraphing at the beginning of the year and how that correlates to the gross margin change in the mix perspective and how I guess we should be thinking about modeling the rest of the year?
Yes. Thanks, Maxim. I appreciate it. I'm going to let Anne walk through the margin dynamics.
Thanks, Ryan. So Max, I would say from a gross margin perspective, we talked about mix, and it really is reflective of what we're seeing in our backlog and what we're executing on. I wouldn't call it anything unusual there. We've been pretty consistent in terms of performance there and in line with our expectations. We still, as Doug said, have opportunities across the board, but specifically on gross margin through some of our levers that we'll continue to pull, including the usual standardization, supply chain, operational excellence initiatives. Overall, I think some of the work we've got in our backlog right now is more reflective of the nuclear bumping up, and we've talked about that being, generally speaking, lower gross margin, but accretive to the bottom line. So I don't think there's anything unusual, but there are some dynamics there, and then the levers that we have available to us remain available, and we'll continue to focus on them.
Your next question comes from the line of Sabahat Khan from RBC Capital Markets.
Great. Just maybe starting at a high level on the revenue side. Obviously, you provided a bit of color on the outlook for each of the segments in your release. So maybe if you could just dig a little bit more into the nuclear, the Energy side and the Life Sciences side. One, were you just sort of expecting the nuclear side numbers to be that big? Are there new orders that came through the year that drove sort of that size growth in nuclear? And then on the Life Sciences side, if you can maybe just talk about what you're seeing on the outlook there in terms of maybe things that could drive mid- to high single-digit type growth that segment has seen times in the past?
Yes. So maybe, Saba, I'll start with the numbers and then Doug can chime in on the outlook. From an Energy perspective, as we've talked about, the majority of the work that we have in our backlog right now is focused on life extension projects, and those tend to run out over 18 to 24 months, in some cases, from a top-line standpoint. That said, we also have good backlog that we're continuing to generate in terms of our participation in new builds, both SMR and traditional reactors. An example in the quarter, we did have an order for a new build reactor for fuel fabrication. So good participation there and not specific to any one technology. So I think a good demonstration of our team's capabilities beyond the CANDU technology that is the majority of the life extension work. From a Life Sciences standpoint, we've continued to build out that part of the business. And of course, we have the custom integration piece of the business, but we've also got a good portfolio from a products and services standpoint that we'll continue to focus on driving the business forward from a top-line standpoint. So Doug, go ahead.
Sure. I would just add in terms of the outlook, Saba, that we've obviously had a very long-standing relationship with a number of customers on the CANDU platforms, and we're really pleased that we're continuing to support those life extension and refurb programs. But inside of our pipeline and kind of looking forward, we are also active on, I would call it, a full handful of SMR customers in the early-stage activities in both modular fabrication and fuel handling. We do expect that over time, these customer relationships will expand as projects gain traction and evolve into operations. Obviously, this is a long-term investment for the company to get involved early. We have to be prudent in how we manage uncertainty that comes with new technology and new regulatory frameworks, but we feel that ATS is in a strong position to support those evolving technologies as they go forward. I would say on the Life Sciences side of things, we really are pleased with the improvement in the diversity at the application layer within the pipeline and the backlog in Life Sciences. We're really excited about some of the new innovations that our customers are working on around radiopharma, visual inspection, and other med tech applications, including things like mail order pharmacy. We believe that we have a pretty good stable of new applications coming in that portion of our business that will allow us to help continue to support those great innovations that are happening with our customers.
Great. And then just for my follow-up, I guess, a bit more on the capital side, leverage moved in the right direction. And if you can just maybe comment a little bit on the working capital target that you guys have, any initial plans there? And then understanding it's early days, but just your views on where M&A ranks in capital allocation as the leverage moves further in the right direction.
Sure. It's a little premature for us to set new financial targets regarding the working capital ratio, but you can be sure that in future calls with you, we will be reviewing those targets and coming forward with an updated framework. I think the team made a lot of progress here in the last quarter on working capital, and improving working capital is actually quite hard operationally, so I think it shows a good level of execution by the team. Of course, my job is to keep pushing to make it even better than it has been. You can count on that. In terms of capital allocation models, I would think about it like this. We're not going to change our level of discipline and focus and our committed leverage architecture that we've communicated to investors. We recognize that there's a view that as our leverage ratio gets back into our targeted zone, we can become more thoughtful about deploying M&A capital, and you can be confident that internally we are doing that. We have a pretty rich pipeline across a number of our end markets that we are continuing to evolve. I'm meeting with our business unit leaders and our corporate development team and getting an understanding of what's in their pipeline. I'm pretty confident that we've got the ideas to utilize to deploy capital. But obviously, as I said, we will remain quite disciplined in how we do that, but you should expect us to favor deploying capital toward M&A going forward.
Your next question comes from the line of Patrick Sullivan from TD Cowen.
Like everyone said, good luck, Ryan, and then Doug, welcome to the call. I guess the first question I had was, it looks like there's a specific line kind of aligning opportunities outside of GLP-1 in the Life Sciences sector. So I guess, has there been any updates to customer plans within that market for you guys? Is there still significant capacity that needs to be constructed? Or have advancements in other oral therapies kind of influenced capital expenditure plans more recently?
Sure. I would say, obviously, Patrick, the GLP-1 ecosystem has a lot of dynamics involved in terms of both the ramp-up of capacity that we're participating in now as we're shifting into the delivery phase of the great upfront capacity partnerships that we entered a while back. But there's still a significant amount of new therapies around GLP-1s, new delivery form factors such as multi-use devices or more sustainable concepts in the devices themselves as well as new trials and customer activities around continuing to deploy new therapies around these therapeutics. I would say that long-term, the auto-injector market for us with GLP-1s, it's obviously going to go through its lumpiness in the order cycle. From a revenue perspective, we still see a pretty strong pipeline of incremental opportunities to continue to support those therapies. Now being prudent, we obviously have to improve the diversity of our pipeline for other types of therapies we mentioned in our prepared remarks. There's a lot of excitement around radiopharma, oncology, and other activities that we think will diversify our pipeline and start to diversify our revenue footprint as time goes on. We're committed to continuing to work with our GLP-1 and auto-injector customers. We recognize that there's a lot of press now about different companies guiding different views on utilization of orals and other traditional and new therapies around GLP-1s. From our perspective, our customers are still being pretty consistent that there's a lot of long-term opportunity in GLP-1s that we'll continue to support over time, recognizing that we have to diversify the portfolio to keep the machine running.
And just a small bit of extra color on the quarter. Within the quarter, we saw good examples of that diversification that Doug is referring to. Outside of GLP-1, we had orders in radiopharma and other areas of med device, which are a good demonstration of our team's capability and our capacity to execute across those submarkets. So just hopefully, that adds a little bit of extra color for you there.
Yes, that's great. If I could ask one more. ATS often talks about cultivating assets as it relates to acquisition targets, sometimes over many years. Doug, is that approach consistent with your experience? Was that part of your mandate in previous roles? Any experience you can elaborate on with respect to that strategy would be great.
Yes. Thanks for the question, Patrick. I think the answer is very simple. I am very committed to the idea that I have a role and my executive team have a role in working with innovators, founders, sometimes families, and others. We work in a universe of strong levels of innovation that often start as small businesses and then evolve into opportunities to join a larger organization like ATS. That does require a lot of kind of pick-and-shovel activity on the ground to cultivate those relationships. It is something I have a lot of experience in, and I think we'll continue to have a very tactical focus on getting out and meeting partners and working with them over the long term to put us in a better position to make those acquired companies feel at home inside ATS.
Your next question comes from the line of Justin Keywood from Stifel.
Just following up on the outlook for Life Sciences. We've seen some substantial CapEx investments over the last 6 to 8 months. By our math, about $480 billion has been announced, much of which are ATS' customers. This is in part to potentially sidestep tariffs and reshore with U.S. manufacturing. I'm wondering if that narrative is leading to increased business for ATS? Or is it just regular business as it goes as far as new CapEx, and do you have any additional color there?
Justin, we are certainly aware of the discussions around reshoring and tariff mitigations in the Healthcare and Life Sciences sector. We are experiencing some benefits from this in our pipeline. However, most of our customers are focusing on being close to their large markets as they expand their capacity. This isn't necessarily tied to tariff dynamics; it's more about the significant increase in demand for these therapeutics and the need for additional capacity. When adding new capacity in a volatile environment with tariffs and geopolitical factors, it's sensible to distribute that capacity across various locations. This trend is common among our peers in the industrial tech landscape as well. There is still a considerable amount of capacity in the pipeline, and we aim to support our customers, regardless of the geography they choose.
Understood. That's very helpful. And then for the Transportation or EV segment, we saw continued pressure this quarter. Our expectation was it was near bottom levels last quarter. Are we at that range where we should see some stabilization going forward? And also, how strategic is the EV or Transportation segment to the overall business going forward?
We view Transportation in a comprehensive manner, similar to how we assess all our markets with a focus on long-term value creation. In the context of Transportation, we acknowledge the significant technology and value we can contribute to the EV ecosystem. However, our approach will be more focused than in the past. We understand that pursuing large-scale projects within the broad Transportation sector carries risks that we are not willing to take. We will concentrate on specific niches within the Transportation segment, such as battery assembly, hybrid engines, or other specialized areas where our technology can add value, allowing us to gain appropriate rewards. While we still have a considerable amount of opportunities in transportation, we will adopt a more cautious approach to pursuing appealing projects. We will be more disciplined in our project selection. We remain optimistic about this market, but in comparison to the larger segments we are currently involved in, it is likely to maintain its current position.
And Justin, just to add, I mean, what Doug said is reflective of what we see in the backlog and also in bookings in the quarter as well as the funnel. And I think that's a fair reflection of what we'd expect going forward.
Your next question comes from the line of Patrick Baumann from JPMorgan.
I know it's been a couple of months already, but we haven't spoken yet, so I wanted to congratulate Doug on the new role. I also want to thank Ryan for all the help and guidance while we've been following the company and wish you the best of luck in your new position. I have a couple of questions. First, regarding sales. Generally, when I look at the quarterly data, I understand you prefer not to discuss quarterly performance, but over time I've noticed a growth rate from the third quarter to the fourth quarter in the mid-single-digit range sequentially. Can you help me understand why that might not happen this year? Was there any sales pulled ahead to the third quarter perhaps? Any insight on that would be appreciated.
Yes. Patrick, I can take that one. So from a full year basis, we're still expecting what we talked about before in terms of high single-digit growth, and we're happy with where we are from an organic growth perspective on a year-to-date basis, especially given some of the market dynamics. The Q3 number, I mean, there was some benefit from scope adjustments and things that just timing of execution of the program. So what we have in our guide for Q4 leaves us consistent with what we would have expected on a full year basis. I don't think there's anything unusual that I'd call out.
Okay. That's helpful. And then the second one is on backlog. I guess I just wanted to understand the sequential decline in context of the positive book-to-bill. It looked to me like maybe in Transport, there was a rescoping or something of that nature. Is that right? And if you could provide any color on that, that would be helpful. And then also on the orders front, like consumer looked like it had a big order in there. Could you provide any color on that?
Yes, I'd be happy to. Regarding the backlog, approximately half of our business is comprised of products and services. As this portfolio continues to grow, we analyze various metrics. In our guidance, we focus on shorter-term businesses and assess our execution on larger projects. There are timing factors to consider. However, we are pleased that our book-to-bill ratio remains above 1. Even if it occasionally drops below 1 in a specific market or quarter, as long as we are working from a healthy backlog, we are not concerned. As for consumer, we have seen some strength in that area, thanks to our team's capabilities. This work will typically be completed within a normal timeframe, consistent with our other backlog efforts, which we generally estimate at 12 to 18 months.
Your next question comes from the line of Jonathan Goldman from Scotiabank.
Could you provide your thoughts on bookings growth for this year? I'd appreciate any insights you can share regarding the various factors influencing the funnel commentary and the strong revenue this quarter. Given the enterprise orders from last year and the timing, how are you approaching the bookings cadence for the entire year?
So, just to clarify, are you asking about this year?
Yes for this year?
Yes, we will continue to monitor the situation. In our Custom Integration business, there are some timing factors that could affect the numbers. However, we are pleased with our year-to-date performance in the funnel, which remains healthy overall. Even as auto-injector orders fluctuate with customers' buying cycles, the funnels in other submarkets continue to be robust. Doug, if you have anything to add, feel free to jump in.
No, I think we've got a great pipeline, and there's obviously some economic uncertainty that we live with every day. The team has calibrated the orders outlook effectively, and that's why we provide a range. But I think the pipeline is robust, and we've got a pretty good opportunity to continue to deliver the type of growth that we've delivered in Q3. Obviously, our job is to beat those expectations.
I had a couple of questions. First on SG&A. You upsized the restructuring charges this quarter. I think you talked about maybe reinvesting some of that in strategic areas. What sort of areas are you planning to reinvest those savings in? And if we're thinking about kind of payback on restructuring, is this more of a top-line payback or a cost payback at this point?
I expect it will be a mix. The increase in the range is mainly due to additional efficiency opportunities we've found within the program, particularly related to our services shift. We are implementing some margin protection measures in certain parts of the business experiencing lower volumes, but nothing significant stands out. Regarding reinvestment, we have a history of investing in innovation, which has been crucial for our success and will continue to be essential. This is where some of the reinvestment will go, as well as in growth areas we've discussed, such as nuclear and other market focus areas like Life Sciences. As we navigate the timing of this from a bottom-line perspective, the operating leverage will primarily affect fiscal '27 based on the timing of the program's execution.
Yes. I believe that one of the key insights I've gained from meeting our division leaders and discussing with some of our innovators is that the new therapies emerging in Life Sciences, along with the innovative energy solutions developing in our Energy business, are very promising. This represents a strong alignment between our in-house technology and the demands of our customers, who are introducing groundbreaking new technologies to the market. It's wise for us to channel our restructuring savings into investments in these growth areas. When we mention diversifying our pipeline and making early-stage investments in these new technologies, that typically targets where any additional investment funds will be directed. You will notice this trend as we move forward.
Okay. That's a great amount of detail. And then just my second question, kind of plays off the first one, but you did see quite a move higher in the run rate on your services bucket revenue in the quarter. Are you able to give some context as to where that move higher did come from?
I can address that, Michael. A significant portion of our service revenues comes from ongoing refurbishment work, which contributed greatly to the increase this quarter. The other service deliverables are stable, and revenue streams are performing well, but the primary driver of the increase was the refurbishment work that we are currently executing.
And would we expect that to continue in future quarters as well?
So that specific refurbishment program is ongoing, although nearing completion, but refurbishment is an important part of our services portfolio in addition to other areas like spares, on-site support, and asset management, those types of offerings.
And we have reached the end of our question-and-answer session. I will now turn the call back over to Mr. Wright for closing remarks.
Thank you, operator, and thank you, everyone, for joining us today. I'm excited to be part of the team here at ATS, and we look forward to speaking with you further on our Q4 call in May.
This concludes today's conference call. We thank you for your participation. You may now disconnect.