ATS Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 18, 2023

There are 9 speakers on the call.

Operator

Good morning, ladies and gentlemen. Welcome to the ATS Corporation 4th Quarter Conference Call and Webcast. This call is being recorded on May 18, 2023 at 8:30 am Eastern Time. I I will now turn the call over to David Galison, Head of Investor Relations at ATS.

Speaker 1

Thank you, operator, and good morning, everyone. On the call today are Andrew Hyder, 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 atatsautomation.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 2 of the slide deck. Now it's my pleasure to turn the call over to Andrew.

Speaker 2

Thank you, David. Good morning, ladies and gentlemen, and thank you for joining us. Today, ATS reported record 4th quarter revenues and backlog, solid bookings and adjusted earnings in line with our expectations. We completed the acquisition of ZArgus to enhance our capabilities in Asia Pacific. We also announced and closed the acquisition of Triad Unlimited.

Speaker 2

For the fiscal year as a whole, ATS drove profitable growth and achieved the highest bookings and revenues in company history. We also reported record adjusted earnings for the fiscal year even as supply chain constraints and inflation challenged our margins. Results reported today reflect strong execution across our strategic markets and our team's application of the ABM to drive continuous improvement throughout the business. Next, I will update you on the business and Ryan will provide his Financial report. Starting with our financial value drivers.

Speaker 2

Order bookings for the quarter were $737,000,000 up 16% year over year and included $292,000,000 of Life Sciences bookings and $255,000,000 from Transportation. For the full year, bookings grew by 33%, mainly as a result of the growth in EV, In addition to solid contributions from the rest of the business, including our previous acquisitions, Q4 revenues were $731,000,000 up 21% from Q4 last year. For the full year, Revenues increased by 18%. Adjusted earnings from operations in Q4 were $102,000,000 up 25% year over year. Full year adjusted earnings were $343,000,000 Up 11.5% compared to fiscal 2022.

Speaker 2

Ryan will provide further details in his remarks. Moving to our outlook. We finished the quarter with backlog of $2,200,000,000 providing us with a solid base to work from and our key target markets moving into fiscal 2024. Life Sciences backlog was $761,000,000 at the end of the year. We secured a number of wins in Q4 with repeat customers, including assembly systems for auto injectors and contact lenses.

Speaker 2

We also brought on several new life sciences customers, doing innovative work in diverse areas such as needleless blood tests and animal health. Our funnel remains strong for fiscal 2024 across our major life sciences submarkets. Our synergy funnel is growing, particularly in pharmaceutical fill finish, and we've seen ongoing examples of collaboration across the business. Transportation ending backlog was $939,000,000 up 3 51% year over year With the majority of the increase in EV applications, as previously announced in January, We booked an additional US120 $1,000,000 in EV orders with a strategic customer. The market for electric vehicles is dynamic.

Speaker 2

With over a decade of experience, ATS is well positioned to secure additional business with existing and new OEM customers. In the quarter, we had a key win with a new customer for smart battery assembly automation and booked an important order with another OEM on initial scope of work order. In Food and Beverage, our funnel remains healthy following a seasonally strong second half of the fiscal year When we generated record backlog, including strong uptake for our energy efficient evaporators, We typically experience seasonal variation in bookings in this vertical relating to primary processing. In fiscal Q1, the team will be focused on delivering on our backlog ahead of the harvest season. In energy, a growing number of countries are committing to increase power generation from nuclear energy to meet climate related carbon reduction targets.

Speaker 2

These commitments require long term planning and investment. With our specialized capabilities, ATS can support industry participants in several areas. From the refurbishment of nuclear power plants to our early involvement with small modular reactors and grid battery storage solutions. By way of example, we are collaborating with Bruce Power on automated solutions to support reactor refurbishment. These efforts are focused on shortening schedules, improving safety and quality and eliminating human error, all while enhancing the overall performance of Bruce Power's major component replacement projects.

Speaker 2

In Consumer Products, our backlog and funnel remains stable. However, we're seeing some signs of caution On digital, all ATS businesses are working to drive innovations in our digital value proposition to our customers. Our global teams are collaborating to share best practices, support our customers where they need it most, whether that's Performance visualization as a starting point, machine analytics, predictive analysis and service to improve effectiveness or improvements to overall productivity at the factory level or across multiple factories. We are also driving Digital innovation in several other areas, including digital twin and in support of customers' sustainability needs. On aftersales services, our regional networks had a strong year over year and provided support to customers from across the business.

Speaker 2

Our global teams are coordinating in key focus areas, including spares and digitally enabled services, and we're seeing ongoing progress and attaching services to CapEx sales. Growing aftermarket revenues across ATS, including with new acquisitions remains a priority. The acquisition of Triad extends our lifecycle and digitally enabled service capabilities and our ability to help customers improve overall equipment effectiveness. On supply chain, we've seen a reduction in some raw material costs. However, We are still experiencing price volatility and inflationary pressures, particularly with electrical and mechanical parts.

Speaker 2

Lead times remain extended and increased for electrical parts in the 4th quarter. Some suppliers are starting to indicate lead times We have not seen this materialize in our operation. That said, for fiscal 2024, We are prepared to operate with volatility in our supply chain and in the overall macro environment and expect some ongoing inflationary pressures. However, our countermeasures and savings initiatives are designed to help address these issues. We also remain focused on long term business goals through value engineering workshops and other ongoing problem solving events as a means to drive material cost improvements that support competitiveness and long term margin growth.

Speaker 2

Our ABM continues to bring our people together to solve problems and drive continuous improvement. During the quarter, we completed 59 ABM events across all business segments, all with a clear focus on our value drivers. In January, we held our 5th Annual President's Kaizen Events. 6 teams from across the company's global footprint participated to drive sustainable results. For example, a multi region team created a global virtual warehouse to enhance inventory visibility across the business, including hard to source parts.

Speaker 2

I personally attended 3 President's Kaizen events in Europe, And I was encouraged to see such a high level of commitment, energy and ultimately performance. On M and A, in Q4, we were pleased to welcome Trident Limited and ZArgus, in addition to IPCOS, which joined us in Q3. These three acquisitions are expected to bolster our digital and service offerings, And our previous acquisitions are continuing to add value. Overall M and A funnel development remains active and healthy across all target sizes. On sustainability, our customers are interested in both Energy Efficient Automation as well as Energy Management Solutions.

Speaker 2

At Energy Efficient Automation, our CFT business Saw continued success with Apollo evaporators due to gas price sensitivity in Europe. Our IWK team is collaborating with customers through its packaging competence center to deliver sustainable and energy efficient packaging solutions. For Energy Management Solutions, our PA business successfully launched an energy management module based on the PAFAX digital platform. In addition, 2 large life sciences customers are currently working with us to pilot a module in illuminate that will provide them with the ability to measure carbon footprint at the part level. On innovation, we continue to deploy capital and leverage talent to create differentiated, enabling solutions that drive return.

Speaker 2

A few highlights from the quarter. Our Innovate Day concept was expanded to another part of the business and we are excited to see the benefits of this ongoing fast turn idea generation in a friendly competitive environment. Our industrial automation team is developing further expertise in digital twin technology and in particular, Specialized simulation techniques specific to our customers' needs. CFT is developing and improving its processing techniques And the production of fruit and vegetable juices and purees, we're reducing overall energy consumption and carbon footprint. Our SuperTrak Pharma Linear Motion Conveyor is being introduced to our integrated solutions offerings in life sciences alongside platforms from Esphi and Comecer for pharmaceutical fillfinish applications.

Speaker 2

In summary, we are pleased with Q4 and overall fiscal 2023 performance and progress. Record order backlog gives us a strong base to start fiscal 2024, where we continue to build our funnel. We expect there will be ongoing macro challenges to navigate and we are not immune. However, operational execution with the ABM as our playbook Along with our choice of strategic end markets remain important strengths and advantages for ATS. We look forward to delivering continued profitable growth in fiscal 2024 supported by the drive, ingenuity and dedication of over 6,500 employees globally.

Speaker 2

Now, I will turn the call over to Ryan. Ryan, over to you.

Speaker 3

Thank you, Andrew, and good morning, everyone. Fiscal 'twenty three performance reflected good execution in the context of Supply chain and inflation challenges. In particular, Q4 results represented a strong finish to the year and included record quarterly revenues. This morning, I will review our operating results and then provide details on our balance sheet. Beginning with orders, bookings were $737,000,000 up 15.5% compared to Q4 last year.

Speaker 3

The increase was driven by organic growth of 11%, along with 1% growth from acquired companies and a 4% benefit from foreign exchange translation. During the quarter, ATS booked another US120 $1,000,000 EV order from an existing global automotive customer as an expansion of their program. Our trailing 12 month book to bill ratio at the end of the year was 1.26:one, positioning us well for continued revenue growth. Moving to revenues. Q4 revenues were $731,000,000 Up 21.2 percent over Q4 last year.

Speaker 3

Organic revenue growth was 16.5% year over year and related primarily to increases in transportation. Recently acquired companies added approximately 1% to quarterly revenue growth And foreign exchange translation created a 3.9% benefit compared to Q4 last year. Our Q4 ending backlog Of $2,150,000,000 was 50% higher than Q4 last year. With continued growth in our order backlog, Including the presence of large EV programs, our revenue conversion for Q1 is estimated to be in the 32% to 35% range of backlog. This assessment is made every quarter based on revenue expectations from existing backlog and new orders booked and billed within the quarter.

Speaker 3

Q4 adjusted gross margin was 28.9%, down 70 basis points from last year when we executed higher margin programs and backlog. Additionally, the year over year decrease reflected supply chain headwinds, including cost inflation and longer lead times, which have challenged our business this year. In the short term, we expect the supply chain environment to remain dynamic through fiscal 2024. As Andrew noted, Our teams are continuing to address the challenges through proven ABM tools. Moving to SG and A, Expenses were $13,200,000 higher than Q4 last year.

Speaker 3

This quarter's costs included $17,600,000 of acquisition related amortization and $1,500,000 of acquisition related transaction costs. Excluding these comparable items in both periods, Q4's SG and A was $104,800,000 $13,000,000 higher than last year, primarily reflecting increased employee costs. Sequentially, excluding the same items, SG and A increased by approximately $11,000,000 over Q3, primarily due to increased employee costs and sales related expenses. During fiscal 'twenty three, we announced our plan to make improvements to our cost structure through targeted reductions. Our full year restructuring expenses were $27,500,000 with $15,800,000 recorded in Q4.

Speaker 3

The estimated payback period remains at approximately 18 months. Stock based compensation expense Q4 was $19,300,000 up $18,500,000 over Q4 last year. Of note, Some of our non IFRS measures have now been adjusted to exclude the impact on stock based compensation expenses of the revaluation of deferred stock units and restricted share units resulting from the change in market price of the company's shares between periods. We believe this adjustment provides improved insight into the company's operating performance by eliminating volatility in earnings unrelated to operations. A full reconciliation of the adjustments for the last eight quarters has been provided in our financial filings.

Speaker 3

Q4 adjusted earnings from operations were $101,900,000 or 13.9 percent, up $20,300,000 and 42 basis points compared to last year, primarily due to revenue growth, partially offset by higher costs. Moving to the balance sheet. In Q4, cash flows generated from our operating activities were $81,400,000 An increase over the $30,000,000 generated in Q4 last year. Non cash working capital as a percentage of revenue was 10.1% in Q4. This is an improvement from 13% in Q3 and in line with our stated target of being below 15%.

Speaker 3

Over the next several quarters, we expect our period end working capital will continue to fluctuate as we work through billing milestones on some of our larger projects. In fiscal 'twenty three, total investments in CapEx and intangible assets were $80,300,000 We expect our fiscal 'twenty four CapEx to be in the $80,000,000 to $100,000,000 range in order to support growth through continued innovation and capacity to meet demand. However, there is flexibility in this plan spent. On leverage, our net debt to adjusted EBITDA ratio was 2.7 to 1 as of the end of Q4. As noted previously, our target leverage range is 2 to 3 times net debt to adjusted EBITDA.

Speaker 3

We are willing to temporarily increase beyond that threshold to support short term working capital requirements or for an acquisition that fits within our framework and creates value for shareholders. Our focus is on maintaining a healthy balance sheet that allows us the flexibility to meet our strategic goals. In summary, ATS produced strong results for the quarter, highlighting the value of the ABM and the advantage of serving growing and diversified We continue to move our value creation strategies forward with organic and inorganic investments and measures to counter supply chain issues and cost inflation, which remain challenges in our business. Our record order backlog supports our planned growth into fiscal 2024 and our teams remain focused and motivated on delivering value for customers and shareholders through innovation and disciplined execution. Now we will open the call to questions from our analysts.

Speaker 3

Operator, could you please provide instructions? Thank you.

Operator

Thank you. Ladies We'll hear a 3 tone prompt acknowledging your request. Your first question comes from Michael Glen Raymond James. Please go ahead.

Speaker 4

Hey, good morning. Thanks for taking my questions. So just to start, Andrew, just want to drill down into the Life Sciences Vertical a bit more. And you highlighted the auto injector win in your opening remarks. Can you just speak about Or give some insight into the relative size of your auto injector business right now?

Speaker 4

And what type of growth Do you see from this business, say over the next 2 to 3 years?

Speaker 2

Yes. Good morning. Look, This area, 1st and foremost, our funnel continues to remain strong in life sciences. And auto injectors, While we've been in this space for a while, have really shown expansion into new solution sets into the end market And we're seeing drug development, drug launches that will utilize this technology. So we do see this as a higher growth area of our life And it's one that we've been and continue to offer high value for our customers.

Speaker 2

So while I'm not putting an exact number On the real opportunity, it is a strong potential and one that we view as we as the market shifts To newer solutions, newer products and get FDA approval on these products, ATS can really support our customers as they navigate this space.

Speaker 4

And your expectation overall though would be that like your auto injector business would over index Your organic growth over the next few years, that would be your expectation?

Speaker 2

Yes. So I would say in general, if you step back and look at our Life Sciences business, we have many areas that we view have strong tail and strong potential. And While we do view this as one opportunity and one we would put in the higher camp, there are several areas that will draw on life sciences that we view. We have High value solutions for our customers, but this would be one of those areas and we have many more.

Speaker 4

Okay. And then perhaps just on the ramping transportation vertical. Ryan or Andrew, are you able to Perhaps give us some insight into how we should think about margins trending from that business as it ramps higher and that backlog conversion takes place?

Speaker 3

Yes. So I guess I'll start. I mean, the margins in that business, I think I've talked about are really in line with our corporate average. And That's been an area of growth for ATS over the last year. It's going to continue to be an area of growth given the strong performance on In general, on the gross margin line, as I said, it's in line.

Speaker 3

There's some operating leverage available in that business that as it scales up or continues to scale, We will realize, but overall, I would say it's very much in line with the rest of the business.

Speaker 4

Okay. Thanks for taking the questions. I'll jump back in the queue.

Operator

Thank you. The next question comes from David Ocampo of Cormark Securities. Please go ahead.

Speaker 5

Thanks. Good morning, everyone.

Speaker 2

Good morning. Good morning.

Speaker 5

Andrew, if I take a look at the outlook section in your release, I think for the 2nd straight quarter now you guys have flagged on shoring and reshoring as a positive tailwind here. So I'm just curious, have you seen any of your customers pull the trigger because of these themes? Or when do you expect that to become a Bigger theme or when does it expect to show up in the results for ATS?

Speaker 2

So to give an exact example Would be more of a challenge. And what do I mean by that? There is many dynamics that customers are going through right now. And let me just walk those a little bit. One is this onshore and reshoring that's real with our customers, but additional, they're looking at their supply chain risk And they're looking at areas where and what customers will often say is they're looking at areas where they can build capability, build Their capacity, where they have the demand.

Speaker 2

And so those are really a bit more on the conversation. And so while we do view this as an It's really aligned with how our customers think strategically about their products. And oftentimes they'll build capability in North America and then they'll take that And even in this last quarter, we saw our customer do this. And we saw them Really expand their capability and capacity in a region that they were looking to support. And so I would say we're feeling this, we're seeing this, But it really aligns with the customers' desire to really launch new solutions in the markets that they support.

Speaker 5

Okay, got it. That makes sense. And then maybe just a clarification question for Ryan. I mean, I take a look at the backlog turnover. Last quarter, you guys were guiding for 29% to 32%, came in closer to 34%.

Speaker 5

Can you walk us through what led for the higher turnover? Was it FX or programs getting pulled forward?

Speaker 3

Yes. So a couple of things and those are 2 of them. But If we compare to the high end of the range, you're right. Roughly half of that was good program performance and Executing ahead of expectation. And we've talked about some of the supply chain challenges and our teams have really done An excellent job in overcoming some of those.

Speaker 3

There was also a foreign exchange translation benefit relative to where we finished the prior quarter. And then there was also a small impact from acquisitions that weren't part of our backlog. But the main driver, as I said, was really good program performance in the quarter.

Speaker 5

Yes, got it. Those are my 2. I'll hop back in the queue. Thanks everyone.

Speaker 2

Thank you.

Operator

Thank you. The next question comes from Cherilyn Radbourne of TD Cowen. Please go ahead.

Speaker 6

Thanks very much and good morning.

Speaker 1

Good morning, Denise.

Speaker 6

You've recorded some absolutely massive EV bookings over the Past 12 months, largely with one customer. So it was really nice to see some new customers in the EV bookings this quarter. Can you give us some perspective at a high level on the potential for follow on orders from those customers and the associated timeline?

Speaker 2

Yes. And Cherilyn, we're obviously proud and pleased with the progress in And as a reminder, and I had in my prepared remarks that we've been in for over a decade. And so we've had many customers Start and just to walk through the general process for customers when they engage with ATS is they'll often start with a pilot production line and we saw Call it a couple of those wins within the quarter. And it really does depend on the OEM or the customer working with it With how fast the follow on work happens and sometimes they'll wait to the end of the project and install and align around that or at times they'll pull in. So What I can say is it does depend on the customer from a standpoint of when they trigger a follow on.

Speaker 2

We target customers that we view have Follow on, that is the goal, that is the target. And we do view these new wins as having potential follow on work. All that said, we need to execute and we need to prove out the value for these customers.

Speaker 6

Okay. That is helpful color. And then based on what you're seeing, how long do you think it will be before your supply chain kind of normalizes? And Is there anything that ATS itself plans to do differently going forward to add resiliency to its own supply chain?

Speaker 2

Yes. So to put a number, I'm going to probably be wrong, but we're planning for the year Here to really be in a proactive and not reactive, but a heightened awareness And what do I mean by that? There are areas we've seen come back in line. And when we step back and look, raw materials And certain areas within the supply chain have come back in more in line with what we would expect. What we've seen in some areas continue to be challenged and to call 1 specifically would be Really, electrical components continue to be a bit of a challenge for our business.

Speaker 2

All that said, we Continue to drive our supply chain as a competitive advantage and we look at areas for opportunity. And one of the areas we implemented Early on was our daily visual management and identifying where we potentially have gaps To ensure we minimize what the impact is and 1st and foremost on customers and in the margin of the program. And so we've continued to execute here. We do view this is going to be a challenging environment for the remainder of the calendar year. That said, we do view that There is light at the end of the tunnel and our team is focused around executing and really delivering on what we set out to achieve for our customers and ultimately our performance.

Speaker 2

As we look at our own supply chain, we have taken initiative, we have taken drive into really how we want to rethink and continue to evolve. One of the areas we do now that we might not have done in the past as detailed, as structured He is looking at the predictive aspect of when we need a product and or when a product might be short. And what do I mean? We'll look at each project, each individual area and then determine where we potentially have inventory to fill that GAAP to ensure that we don't slow down production. Additionally, where we have higher risk componentry, We at times will have a secondary source and we've done that in the past where we've been more aggressive and continue to be more aggressive around identification And pursuit of minimizing imports.

Speaker 2

And so I do view our business has really continued to evolve and outpace, but it's one that we are looking to really drive and continue to drive within the air.

Speaker 6

Right. That's my view. Thank you.

Speaker 2

Thank you, Cherilyn.

Operator

Thank you. The next question comes from Maxim Sytchev of

Speaker 7

And if I may, the first question in terms of healthcare and how you're thinking about the resiliency of the outlook? And I guess specifically the question is, how much exposure do you have to sort of the biotech space, which be sort of more dependent on external funding right now. Yes, just wondering what your thoughts are there. Thanks.

Speaker 2

Yes. So Max, when we look at our space, generally it's when it's Beyond just the test phase and it's gone into more a production process. And so and if you're getting at Smaller areas or new drug launches and some of the funding challenges, we haven't really seen that. And we don't see that in our life sciences. Where we See opportunity and where we continue to see opportunity is in the biologics and really the alignment around the growth of what these drugs, what these new Solutions offer and we're often aligned with that.

Speaker 2

And if you look at the radiopharmaceutical with this new Actinium-two twenty five and what that can mean as well as I mentioned the auto injector earlier, we align with areas that have Higher growth in areas that are really aligned with strategic focus for our customers. And so I would say that that's the case in All areas that we target for expansion within our Life Sciences business.

Speaker 7

Okay. And then just as a follow-up to Biologics, I mean, are you seeing outsized growth In this area specifically?

Speaker 2

We're seeing good opportunities in this area specifically. To say outsized growth, I would say it's in line with our overall opportunity for Life Sciences.

Speaker 7

Okay. Okay. Understood. Thank you. And then my other question pertains to the free cash flow generation.

Speaker 7

And I think, Ryan, we spoke about this maybe last quarter, like sort of about that non cash working capital cadence. And at what like At what point do you have to ramp up in order to see sort of the milestone payments starting to sort of come through and start to be sort of more positively impactful in terms of Free cash, because I presume most of the drag is coming from the EV space right now, do you mind maybe providing your thoughts or some guidance in terms of how we should be thinking about Fiscal 2024, besides sort of the obvious 15% of revenues as a working capital dynamic? Thanks.

Speaker 3

Sure. Well, I mean, I'll start there. And that is our goal to maintain working capital below 15%. We did As you're aware, we did exceed that target in Q2 and then we've drawn back down to 10%. So the second half of the year It was strong from a cash flow generation perspective as we expected.

Speaker 3

That said, We have normal variability in our business and cash flows and that's part of the having the project based business and the milestones. And the large projects that are part of our business today that drives a larger variability than what we've seen in the past. So over the long term, I think we're operating our goal is to remain below 15%. We're operating in That below that target today, but we will continue to see variability in this metric at period ends. It's going to be part of our business as we're executing these large programs that have large milestone payments attached to them.

Speaker 3

All that said, we have very good customer relationships. Programs are executing well. The payments are being made in accordance with contracts. And so we are pleased with our progress here.

Speaker 7

Right. Is it also maybe could be useful for us to think how you guys are thinking about like maybe EBITDA or net income to sort of CF conversion, sort of on a normalized basis, I'm not sure if you have some early thoughts on that.

Speaker 3

Well, yes. So again, this is a tougher metric from a quarterly perspective because of the variability. Even annual, some of these projects are 18 to 24 months that we're executing. So over a rolling annual period, It's certainly in the range of we would expect to be close to that 100% of net income. But again, there could be some variability From period to period as we've talked about.

Speaker 7

Okay. That's super helpful. Thank you so much.

Operator

Thank you. The next question comes from Justin Keywood of Stifel. Please go ahead.

Speaker 8

Hi, good morning. Thanks for taking my call. On M and A, there was mention of active funnel in a range of potential assets. Is there any bookends to the size of Assets that you're looking at and has expectations from potential sellers, has that abated at all as compared to earlier this year?

Speaker 2

Yes. Good morning, Justin. And I referenced this, but our funnel is and remains healthy. And When we look at the funnel within the funnel, it's there's a good mix of small, medium and large. And we don't put bookends on.

Speaker 2

I mean, Clearly, we do have an appetite to continue. That said, we do look at businesses and the criteria Is aligned around truly adding value for the organization. And as we step back and look at those as the 4 and And it's oftentimes around the market, the technology that they offer. So looking at really higher technology, higher value solutions, How we're going to operate and then lastly, the financial return. And so we have a good mix within.

Speaker 2

We don't have bookends on size. We generally are within a certain size range, but we don't have bookends on size as we look at many opportunities. And lastly, Sellers' expectations, we haven't seen a marked shift. We certainly continue to cultivate and continue to stay very close with Potential new adds and it's one that I've mentioned this in the past, we're always cultivating and we're always looking to add Real strong technology, strong businesses that will continue to add value to our shareholders and our customers.

Speaker 8

Understood. Thank you. And then on the reorganization in Final Charge in Q4, did we see any of the benefits Of that program show up in the margins or will it be a more gradual basis?

Speaker 3

So no, certainly nothing material in the quarter. I talked about an 18 month payback. And so most of the the program is largely complete. There is from a cost perspective, it's complete. From an actions perspective, largely complete by the end of Q4.

Speaker 3

So we'll see the benefit going forward.

Speaker 8

And should we see some of that benefit in Q1 or will it be a bit of a longer tail?

Speaker 3

Well, so it's a bit of a longer tail, but as I said, It's roughly an 18 month impact, largely Towards the latter half of next year.

Speaker 2

Thank you.

Operator

Thank you. The next question comes from Michael Glen, Raymond James. Please go ahead.

Speaker 4

Hey. So again, just looking at Life Sciences in the coming year, you did spend much of fiscal 'twenty three going up against some Difficult compares for the prior year. So like if we're thinking of overall organic for Life Sciences in 'twenty four And putting all the pieces of that business together, any sort of thought on where we should think about organic growth? It be like a high single digit this year or something different than that?

Speaker 2

Yes. Good morning, Michael. Just to kind of lay out The thinking broader on life sciences. We look at any market, we look at them over A rolling period of time, because no one quarter is going to really dictate how that market or how we're doing within the market. And just to give you some narrative on this, life Cianci's book to bill over the last trailing 12 months was above 1.

Speaker 2

And so while it was a obviously challenging competitor, we continue to grow on that. And as we look at the market, we do view this market as opportunity and we do view this market as continuing to grow. And Our funnel is healthy for this space. It continues to evolve. We continue to add new customers, new solutions.

Speaker 2

Our synergy funnel continues to grow, Which we're very pleased with. And so we give you this as an area we're going to continue to drive expansion into.

Speaker 7

Okay. Thank you.

Operator

Thank you. Mr. Heider, there are no further questions. Back to you for closing comments.

Speaker 2

Great. Thank you, operator. We look forward to pursuing ongoing value creation in fiscal 2024. We truly believe that our capabilities align well with the solutions we offer on a global basis. I look forward to speaking to you on our Q1 call in August.

Operator

Ladies and gentlemen, this does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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