NANAIMO,
BC, May 26, 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 months ended March 31, 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 the reduced material prices, increased interest rates
causing downward momentum in the contruction sector, and a more
overall competitive market," said Hadi Abassi, CEO & President,
Founder. "We continue to work hard to ensure the Company is moving
forward with organic and acquisitive growth as more housing is
desperately needed in Canada and
we strive to be the partner of choice for contractors and
homeowners during their construction projects."
Financial Highlights for Q1
2023:
- Revenue for the three months ended March
31, 2023 was $9,629,368
compared to revenue of $12,434,414
for the three months ended March 31,
2022. Revenues have decreased due to some material prices
(ie: lumber) stabilizing at significantly lower prices than the
prior two years. The market has also seen a slowdown in some areas
across Canada, mainly Ontario, 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 in duration and that
markets will strengthen as they adjust to current market conditions
and the increased demand due to significant growth in population
and the ongoing housing deficit.
- Gross margin for the three months ended March 31, 2023 was 30%, which was down slightly
from a gross margin of 31% for the three months ended March 31, 2022. Gross margins reduced slightly
due to a more competitive market that resulted in the return of
"winter work" compared to the last two years where demand was very
high year round. "Winter work" are jobs taken at lower margins to
fill the winter months and keep skilled staff.
- Operating expenses increased by $216,481 for the three months ended March 31, 2023 compared to the three months ended
March 31, 2022. 45% of this increase
is due to non-cash items of depreciation and amortization and share
based payments. 55% of the increase is related to cash outlay
expenses, mainly salaries and benefits. The Company is preparing
for future organic and M&A growth and with this anticipated
growth it was required to bolster human resources in advance to
ensure the Company is ready and able to handle the growth and
geographical expansion.
- Net income was $543,300 for the
three months ended March 31, 2023
compared to net income of $1,563,301
for the three months ended March 31,
2022. This decrease primarily due to decreased sales and
increased operating expenses.
- Non-IFRS Adjusted EBITDA and normalized EBITDA for the three
months ended March 31, 2023 was
$1,739,974 with an adjusted EBITDA
and normalized EBITDA margin of 18%, which is a decrease from
$2,957,446 and 24%, respectively, for
the three months ended March 31,
2022. These decreases were mainly due to decreased sales due
to market conditions and increase in operating expenses compared to
the decreased sales. The Company anticipates this to change as the
market stabilizes and future growth occurs.
SELECTED FINANCIAL
RESULTS
|
Three
Months
Ended
|
Three
Months
Ended
|
Mar
2023
|
Mar
2022
|
Revenue
|
$9,629,368
|
$12,434,414
|
Cost of
Sales
|
6,773,587
|
8,548,057
|
Gross
Profit
|
2,855,781
|
3,886,357
|
Gross Margin
%
|
30 %
|
31 %
|
Operating
Expenses
|
2,025,670
|
1,634,184
|
Operating
Income
|
830,111
|
2,252,173
|
Net Income After
Adjustments and Taxes
|
543,300
|
1,563,301
|
Adjusted
EBITDA
|
1,739,974
|
2,957,446
|
Adjusted EBITDA Margin
%
|
18 %
|
24 %
|
Normalized
EBITDA
|
1,739,974
|
2,957,446
|
Normalized EBITDA
Margin %
|
18 %
|
24 %
|
Weighted Average Number
of Shares
|
57,881,215
|
58,581,042
|
Adjusted EBITDA per
Share ($ per share)
|
0.03
|
0.05
|
Income per Share, Basic
($ per share)
|
0.01
|
0.03
|
Income per Share, Fully
Diluted ($ per share)
|
0.01
|
0.02
|
|
|
|
Selected Financial
Information as at:
|
|
Mar
2023
|
Dec
2022
|
Total Assets
|
$50,524,909
|
$50,491,344
|
Total Non-Current
Liabilities
|
14,101,878
|
14,757,079
|
Normal Course Issuer Bid ("NCIB")
Update:
From the renewal of the NCIB on December 1, 2022, the Company has acquired
738,000 shares for cancellation. The NCIB is ongoing until
December 1, 2023 and the Company may
purchase up to 4,732,015 common shares of the Company. All
purchases of common shares will be made on the open market through
the facilities of the TSXV and will be purchased for
cancellation.
Outlook for 2023:
Housing starts in some parts of the country have
declined due to the increase in interest rates and colder than
normal winter weather. While the company witnessed a slowdown in
the Ontario region in the first
quarter, business activity in British
Columbia and Manitoba
remained robust. Quarter 1 revenues were also impacted by a large
order that was delayed and is now expected to be recognized in the
second and third Quarter.
AEP has built a strong pipeline of M&A
opportunities and will continue to assess new M&A opportunities
that fit within the Company's goals and strategies, while also
working to bring the latest automation to improve operational
efficiencies, and adding new products and services to better serve
our customers.
The Company is continuing to operate in a more
competitive market for 2023 as interest rates have risen in order
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 given the number of
homes that are still needed to support Canada's continued population growth and
immigration. 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.
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 March 31,
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
months ended March 31, 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 months ended
March 31, 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 months ended March 31, 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.