NANAIMO,
BC, Aug. 29, 2023 /CNW/ - Atlas Engineered
Products ("AEP" or the "Company") (TSXV: AEP) (OTC Markets: APEUF)
is pleased to announce its financial and operating results for the
three and six months ended June 30,
2023. All amounts are presented in Canadian dollars.
"I continue to be proud of the AEP team that produced another
solid quarter, with relatively stable margins in spite of reduced
material prices, continued interest rate hikes causing downward
momentum in the construction sector, and a overall more competitive
market," said Hadi Abassi, the Company's CEO, President and
Founder. "We continue to work hard to ensure the Company is moving
forward with organic and acquisitive growth. We continue to believe
that there is an ongoing need for more housing in Canada and we strive to be the partner of
choice for contractors and homeowners during their construction
projects."
Financial Highlights for Q2 2023:
- Revenue for the three months ended June
30, 2023 was $11,217,336
compared to revenue of $16,836,329
for the three months ended June 30,
2022. Revenues decreased due to some material prices (ie:
lumber) that are passed along to to customers stabilizing at
significantly lower prices than the prior two years. The market has
also seen a slowdown in some areas across Canada, mainly Ontario. This has mainly
been due to rising interest rates resulting in the construction
industry pausing to assess affects on new housing demand, which has
led to reduced housing starts. The Company expects this slowdown to
be short-term in nature and that markets will strengthen as they
adjust to current market conditions and increased demand due to
significant population growth and the ongoing housing deficit.
- Gross margin for the three months ended June 30, 2023 was 30%, up from 28% for the
three months ended June 30, 2022.
Gross margin increased due to continued pricing assessments and the
Company's focus on improving efficiencies across all product lines.
Additionally, due to the continued labour shortage, the Company has
focused on efficient, higher margin work where necessary to fill
the shops at some locations based on the available
labour.
- Operating expenses increased by $439,186 for the three months ended June 30, 2023 compared to the three months ended
June 30, 2022. 39% of this increase
is due to non-cash items of depreciation and amortization and share
based payments. The remaining increase is mainly related to one
time, non-recurring cash outlay expenses incurred in relation to
the acquisition of Léon Chouinard et Fils Co. Ltd./Ltée. ("LCF")
announced on August 23rd,
2023. The anticipated acquisition of LCF led the Company to bolster
human resources and systems to ensure the Company was ready and
able to handle the resulting growth and geographical expansion.
- Net income was $786,236 for the
three months ended June 30, 2023
compared to net income of $2,044,118
for the three months ended June 30,
2022. The Company recorded a lower net income after taxes in
the current period mainly due to decreased revenues and increased
operating expenses.
- Non-IFRS measure adjusted EBITDA decreased to $2,051,169 and $3,791,143 for the three and six months ended
June 30, 2023 from $3,665,814 and $6,623,260 respectively for the three and six
months ended June 30, 2022 as shown
below. These decreases were mainly due to decreased sales and
increased operating costs. Some acquisition costs have been added
back to normalized EBITDA, but additional support costs for the
Company's growth were not added back as these will be ongoing costs
moving forward.
SELECTED FINANCIAL
RESULTS
|
Three Months
Ended
|
Six Months
Ended
|
June
2023
|
June
2022
|
June
2023
|
June
2022
|
Revenue from the
Business
|
$11,217,336
|
$16,836,329
|
$20,846,704
|
$29,270,743
|
Cost of
Sales
|
7,819,049
|
12,092,488
|
14,592,636
|
20,640,545
|
Gross
Profit
|
3,398,287
|
4,743,841
|
6,254,068
|
8,630,198
|
Gross Margin
%
|
30 %
|
28 %
|
30 %
|
29 %
|
Operating
Expenses
|
2,281,058
|
1,841,872
|
4,306,728
|
3,476,056
|
Operating
Profit
|
1,117,229
|
2,901,969
|
1,947,340
|
5,154,142
|
Net Income After
Adjustments and Taxes
|
786,236
|
2,044,118
|
1,329,536
|
3,607,419
|
Adjusted
EBITDA
|
2,051,169
|
3,665,814
|
3,791,143
|
6,623,260
|
Adjusted EBITDA Margin
%
|
18 %
|
22 %
|
18 %
|
23 %
|
Normalized
EBITDA
|
2,243,568
|
3,665,814
|
3,983,542
|
6,623,260
|
Normalized EBITDA
Margin %
|
20 %
|
22 %
|
19 %
|
23 %
|
Weighted Average Number
of Shares, Basic
|
57,447,751
|
59,245,049
|
57,589,181
|
58,914,880
|
Adjusted EBITDA per
Share ($ per share)
|
0.04
|
0.06
|
0.07
|
0.11
|
Income per Share, Basic
($ per share)
|
0.01
|
0.03
|
0.02
|
0.06
|
Income per Share, Fully
Diluted ($ per share)
|
0.01
|
0.03
|
0.02
|
0.06
|
|
|
|
|
|
Selected Financial
Information as at:
|
|
|
|
June
2023
|
Dec
2022
|
Total Assets
|
|
|
$53,939,626
|
$50,491,344
|
Total Non-Current
Liabilities
|
|
|
16,845,334
|
14,757,079
|
Subsequent Event to Q2 2023:
On August 23, 2023, the Company
acquired LCF located in New
Brunswick, Canada. LCF is a manufacturer of roof
trusses, floor systems, and wall panels and a supplier of
engineered wood products. The acquisition of LCF aligns with the
Company's strategic acquisition plan and expands the Company's
geographical reach while also significantly growing AEP's wall
panel manufacturing expertise and capacity.
Outlook for 2023:
The Company is continuing to operate in a more competitive
market during 2023 as interest rates have risen in an effort to
slow inflation. The Company currently anticipates that increased
interest rates will have a minimal overall affect on the housing
market after the initial impact of the increase is absorbed by the
market. The number of homes that are needed to support Canada's continued population growth and
immigration continues to be significant. The Company will continue
to monitor the effects of interest rates on the housing market, and
is prepared to manage pricing and explore new markets in order to
continue to drive organic growth as much as possible during fiscal
2023.
Reduced raw material costs, such as lumber, continue to impact
the Company's revenues. These costs are passed along directly to
the customer and will result in decreased sales prices to the
customer as input costs decrease. Average lumber prices have
decreased by roughly 57% for the three months ended June 30, 2023 compared to the three months ended
June 30, 2022.
The Company's large order announced on March 9, 2023 was delayed in Quarter 1. A small
part of this order was delivered in June of 2023, with the majority
expected to be delivered in Quarter 3 and 4, 2023. Permit and
construction delays have caused postponements in these deliveries
that were outside the Company's control.
The recent acquisition of LCF is a great addition to the AEP
group and acquisitions remains a key part of AEP's long term
strategic goals. The Company has built a strong pipeline of M&A
opportunities and will continue to assess more M&A
opportunities that fit within the Company's goals and strategies,
while also working to bring in the latest automation to improve
operational efficiencies, and adding new products and services to
better serve our customers.
Non-GAAP / Non-IFRS Financial Measures
Certain financial measures in this news release do not have any
standardized meaning under IFRS and, therefore are considered
non-IFRS or non-GAAP measures. These non-IFRS measures are used by
management to facilitate the analysis and comparison of
period-to-period operating results for AEP and to assess whether
AEP's operations are generating sufficient operating cash flow to
fund working capital needs and to fund capital expenditures. As
these non-IFRS measures do not have any standardized meaning under
IFRS, these measures may not be comparable to similar measures
presented by other issuers. The non-IFRS measures used in this news
release may include "EBITDA", "EBITDA margin", "adjusted EBITDA",
"adjusted EBITDA margin", "normalized EBITDA" and "normalized
EBITDA margin". For a description of the composition of these
measures, please refer to AEP's Management's Discussion and
Analysis for the period ended June 30,
2023 under "Non-IFRS / Non-GAAP Financial Measures",
available on AEP's website at www.atlasengineeredproducts.com
or on SEDAR at www.sedar.com.
About Atlas Engineered Products Ltd.
AEP is a growth company that is acquiring and operating
profitable, well-established operations in Canada's truss and engineered products
industry. We have a well-defined and disciplined acquisition and
operating growth strategy enabling us to scale aggressively and
apply new technologies, giving us a unique opportunity to
consolidate a fragmented industry of independent operators.
FORWARD LOOKING INFORMATION
Information set forth in this news release contains
forward-looking statements. These statements reflect management's
current estimates, beliefs, intentions and expectations; they are
not guarantees of future performance. Although AEP believes that
the expectations reflected in the forward looking statements are
reasonable, there is no assurance that such expectations will prove
to be correct, or that such future events will occur in the
disclosed time frames or at all. AEP cautions that all
forward looking statements are inherently uncertain and that actual
performance may be affected by a number of material factors, many
of which are beyond AEP's control. Such factors include,
among other things: Risks and uncertainties relating to AEP,
including those to be described in the Management's Discussion and
Analysis ("MD&A") for AEP's three and six months ended
June 30, 2023. Accordingly,
actual and future events, conditions and results may differ
materially from the estimates, beliefs, intentions and expectations
expressed or implied in the forward-looking information. Except as
required under applicable securities legislation, AEP undertakes no
obligation to publicly update or revise forward-looking
information.
SELECTED FINANCIAL INFORMATION
Except as noted below, the financial information provided in
this news release is derived from the AEP's audited financial
statements for the three and six months ended June 30, 2023 and the related notes thereto as
prepared in accordance with International Financial Reporting
Standards ("IFRS") and related IFRS Interpretations Committee
("IFRICs") as issued by the International Accounting Standards
Board ("IASB"). A copy of AEP's financial statements for the
three and six months ended June 30,
2023 and the related Management's Discussion and Analysis is
available on AEP's website at www.atlasengineeredproducts.com
or on SEDAR at www.sedar.com.
Financial information for AEP's acquisitions are included in
AEP's unaudited financial statements from the date of acquisition.
Financial information for acquired businesses for periods prior to
the date of acquisition were prepared by management and have not
been reviewed or audited by independent auditors.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
SOURCE Atlas Engineered Products Ltd.