NANAIMO,
BC, May 30, 2024 /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 months ended March 31, 2024.
All amounts are presented in Canadian dollars.
"As previously stated, 2023 was an anticipated challenging year
in the construction market where new housing starts were impacted
in the first part of 2024 by higher interest rates and slowing
demand. However I am pleased as our results were in line with
expectations," said Hadi Abassi, the Company's CEO & President.
"We are excited for the rest of 2024 and beyond as we have been
growing our salesforce and taking a more aggressive approach to
establishing new partnerships with builders, expanding into new
markets, and increasing our wall panel production to support the
Company's organic growth goals and anticipated robotic
automation."
Financial Highlights for First Quarter 2024:
- Revenue for the three months ended March
31, 2024 was $9,121,059
compared to revenue of $9,629,368 for
the three months ended March 31,
2023. Revenue has decreased due to some material prices
stabilizing at a lower level which are less than the prior few
years and a more competitive construction market fueled by interest
rate hikes by the Bank of Canada.
The Company does not anticipate that increased interest rates will
affect sales long-term as the structural housing shortage will need
to be solved. However sales may continue to be affected in
the short-term as the market stabilizes and everyone waits to see
if interest rates will be lowered by the Bank of Canada.
- Gross margin for the three months ended March 31, 2024 decreased to 16% compared to gross
margin of 30% for the three months ended March 31, 2023. Gross margins decreased due to
the more competitive market for sales but primarily due to the
greater seasonality differences at Leon Chouinard & Fils Co.
Ltd. ("LCF") between summer and winter, whose results are
included for the period ended 2024 but not 2023 due to the timing
of the acquisition. The building season in northern New Brunswick is more condensed than the
building season at the Company's Ontario locations. As a result, in northern
New Brunswick sales are more
concentrated to the summer and fall months far more substantially
than the winter and early spring months. This combined with the
need to keep key labourers and designers employed due to the
competitive labour market, leads to this seasonal increase in cost
of sales related to revenues and in turn drives gross profit and
gross margins lower during winter. This is consistent with this
location's history prior to its acquisition. The impact of
seasonality to margins is anticipated to average out over the
course of a year back to a historical 24-30% range.
- Net loss after taxes was $993,436
for the three months ended March 31,
2024 compared to net income after taxes of $543,300 for the three months ended March 31, 2023. The Company recorded net loss
after taxes mainly due to lower revenues in a market with reduced
housing demand and reduced gross margins due to the increased
market competition and greater seasonality variations attributable
to LCF, whose results are not included for the period ended
March 31, 2023.
- Non-IFRS measure adjusted EBITDA margin decreased to 3% for the
three months ended March 31, 2024
from 18% for the three months ended March
31, 2023. This decrease was mainly due mainly to decreased
sales, increased cost of sales, decreased gross margins, and
increased operating costs. Sales decreased due to the normal
seasonal slowdown through winter on top of material prices
stabilizing at normal levels compared to prior periods.
Additionally, the added costs of LCF increased cost of sales and
operating expenses, while more extreme seasonality at LCF decreased
gross margins for the winter months.
SELECTED FINANCIAL
RESULTS
|
Three
Months
Ended
|
Three
Months
Ended
|
Mar
2024
|
Mar
2023
|
Revenue
|
$9,121,059
|
$9,629,368
|
Cost of
Sales
|
7,693,906
|
6,773,587
|
Gross
Profit
|
1,427,153
|
2,855,781
|
Gross Margin
%
|
16 %
|
30 %
|
Operating
Expenses
|
2,248,080
|
2,025,670
|
Operating (loss)
income
|
(820,927)
|
830,111
|
Net (loss) income After
Adjustments and Taxes
|
(993,436)
|
543,300
|
Adjusted
EBITDA
|
247,738
|
1,739,974
|
Adjusted EBITDA Margin
%
|
3 %
|
18 %
|
Normalized
EBITDA
|
247,738
|
1,739,974
|
Normalized EBITDA
Margin %
|
3 %
|
18 %
|
Weighted Average Number
of Shares
|
59,267,649
|
57,881,215
|
Adjusted EBITDA per
Share ($ per share)
|
0.00
|
0.03
|
(Loss) income per
Share, Basic ($ per share)
|
(0.02)
|
0.01
|
(Loss) income per
Share, Fully Diluted ($ per share)
|
(0.02)
|
0.01
|
|
|
|
Selected Financial
Information as at:
|
|
Mar
2024
|
Dec
2023
|
Total Assets
|
$71,530,777
|
$79,443,699
|
Total Non-Current
Liabilities
|
29,972,218
|
37,089,753
|
Outlook for 2024:
The Company has continued to operate in a highly competitive
market for the first part of 2024 as the construction industry
waits to see if interest rates will decline. Despite these
challenges, the macro-backdrop of a nationwide housing shortage
remains in place and the Company has seen a steady increase in
quote activity and incoming orders across most operations, with
some operations already at maximum capacity for the summer building
season.
A key focus for AEP in 2024 is the rollout of robotic truss
manufacturing automation. Robotic automation can offer improved
efficiency and increased manufacturing capacity, which in addition
to wall panel production, will help position the Company to support
builders for the future and the housing shortage in Canada.
In late 2023, the Company ramped up its salesforce across
Canada to drive sales through
market expansion and new product offerings, including wall panels
and floor cassettes. This strategy aims to bolster organic growth
and has started to show results as noted in our recent announcement
of a partnership with Westhaven Builders, which marks a significant
milestone in AEP's expansion into the U.S. market.
Future strategic acquisitions remain a key part of AEP's growth
plans after the successful acquisition of LCF in 2023. The Company
will continue to explore M&A opportunities and integrate the
latest technology to improve efficiencies and expand its product
and service offerings.
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 three months ended March
31, 2024 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 related to the housing
market, changes in interest rates and other risks and uncertainties
relating to AEP, including those described in the Management's
Discussion and Analysis ("MD&A") for AEP's three months ended
March 31, 2024. 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 months ended March
31, 2024 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
months ended March 31, 2024 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.