NANAIMO, BC, June 30, 2020 /CNW/ - Atlas Engineered
Products ("AEP" or the "Company") (TSXV: AEP) (OTCMarkets: APEUF)
is pleased to announce its financial and operating results for the
first quarter ended March 31, 2020.
All amounts are presented in Canadian dollars.
Financial Highlights for Q1 2020:
- Overall revenue for the three months ended March 31, 2020 was $7,097,979 compared to revenue of $6,216,908 for the three months ended
March 31, 2019. This represents
overall growth in revenue of 14% in comparison to the three months
ended March 31, 2019. This increase
in total revenues was driven by the organic growth of AEP's
existing operations and the first full quarter with the Company's
South Central Building Systems location in Carman, Manitoba.
- Gross margins for the three months ended March 31, 2020 was 16%, which was down from a
gross margin of 19% for the three months ended March 31, 2019. Gross margins declined in Quarter
1 2020 due to lumber price volatility at the beginning of 2020. The
decrease was mainly associated with the prices of lumber rising
sharply in anticipation of the 2020 summer and fall building
season, as shown in the graph below. The largest of these increases
occurred in January and February, when most winter work being
completed had already been quoted and ordered in 2019, at lower
lumber prices. As lumber prices increased, inventories were
purchased at higher pricing in the beginning of 2020 to meet
demand. Lumber prices fell sharply from mid-February 2020 as the COVID-19 pandemic hit
North America. AEP's vendor
managed inventory had to be depleted at the higher values during a
time where the market was scrambling to get volumes at competitive
prices.
- The Company's cash balance has increased to $3,244,684 as at March 31,
2020 from $83,005 (net of bank
indebtedness) as at December 31,
2019. This is due to the private placement completed in
February of 2020 and has put the Company in a significantly
positive cash position moving forward with targeted 2020
acquisition and product expansion activities.
SELECTED FINANCIAL
RESULTS
|
Three Months
Ended
|
Three Months
Ended
|
Mar
2020
|
Mar
2019
|
Revenue from the
Business
|
$7,097,979
|
$3,021,181
|
Revenue from New
Acquisitions
|
-
|
3,195,727
|
Total
Revenue
|
7,097,979
|
6,216,908
|
Cost of
Sales
|
5,985,305
|
5,056,491
|
Gross
Profit
|
1,112,674
|
1,160,417
|
Gross Margin
%
|
16%
|
19%
|
Operating
Expenses
|
1,978,758
|
1,639,338
|
Operating
Loss
|
(866,084)
|
(478,921)
|
Net Loss After
Adjustments and Taxes
|
(762,961)
|
(439,637)
|
Adjusted
EBITDA
|
(160,974)
|
198,963
|
Adjusted EBITDA
Margin %
|
-2%
|
3%
|
Normalized
EBITDA
|
102,042
|
287,919
|
Normalized EBITDA
Margin %
|
1%
|
5%
|
Weighted Average
Number of Shares
|
52,910,873
|
45,324,263
|
Adjusted EBITDA per
Share ($ per share)
|
(0.00)
|
0.00
|
Loss per Share, Basic
and Fully Diluted ($ per share)
|
(0.01)
|
(0.01)
|
|
|
|
Selected Financial
Information as at:
|
|
Mar
2020
|
Mar
2019
|
Total
Assets
|
$27,981,392
|
$27,737,581
|
Total Non-Current
Liabilities
|
10,204,196
|
7,397,663
|
2020 Integration, Optimization, and Expansion Strategy
- AEP continues to work incredibly hard to optimize workflows,
productivity, and capitalize on economies of scale such as a new
national engineered wood product supply arrangement. This new
arrangement is expected to result in cost savings, guaranteed lead
times, and improved delivery of products to our locations.
- In June 2020, the Company
announced its expansion into pre-fabricated wall panels in
British Columbia. This product
expansion will assist the Company in its growth and product
diversification.
- Significant cost saving and cash preservation strategies were
implemented near the end of Quarter 1 2020. This has supported the
Company's ability to handle the impacts of the COVID-19 pandemic
and move forward with 2020 activities such as product expansion,
targeted acquisitions, and improved workflows and automation.
Dirk Maritz, President and CEO of
AEP stated, "Despite the challenges and effects posed by COVID-19,
AEP remains in a solid financial position. AEP has strong liquidity
and entered 2020 with an improved financial position over the
previous year. We continue to grow our orderbook despite the
unprecedented times. I am incredibly proud of my team's ability to
respond quickly, significantly reduce costs from March onwards,
return AEP to positive EBITDA margins and protect our cash reserves
while increasing productivity and efficiency under physical
distancing mandates. The AEP team counteracted the sudden lumber
price free-fall as well as the incurred costs in Q4 2019 and Q1
2020 in anticipation of our acquisition plans for 2020. We have
successfully eliminated the costs and we are optimistic about our
targeted acquisitions for 2020. Upwards. Onwards."
In closing, the Company believes revenues for Quarter 2 2020
will show further improvement over Quarter 1 2020, and a return to
strong, positive normalized EBITDA margins for Quarter 2 2020.
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, 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 months ended March 31, 2020.
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 AEP's unaudited financial statements for
the three months ended March 31, 2020
and March 31, 2019, 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 unaudited
financial statements for the three months ended March 31, 2020 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.
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 include "EBITDA", "EBITDA margin", "adjusted EBITDA",
"adjusted EBITDA margin", "normalized EBITDA" and "normalized
EBITDA margin". "EBITDA" is calculated as revenue less operating
expenses before interest expense, interest income, amortization and
depletion, impairment charges, and income taxes. "EBITDA margin" is
EBITDA expressed as a percentage of revenues. "Adjusted EBITDA" is
EBITDA after adjusting for share-based payments, foreign exchange
gains or losses and non-recurring items. "Adjusted EBITDA margin"
is adjusted EBITDA expressed as a percentage of revenues.
"Normalized EBITDA" is EBITDA adjusted for one-time items.
"Normalized EBITDA margin" is normalized EBITDA expressed as a
percentage of revenues.
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.