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Atlas Engineered completes Hi-Tec acquisition

2022-03-01 15:13 ET - News Release

Mr. Hadi Abassi reports

ATLAS ENGINEERED PRODUCTS ANNOUNCES ACQUISITION OF HI-TEC INDUSTRIES IN BRITISH COLUMBIA

Atlas Engineered Products Ltd. has completed the acquisition of Hi-Tec Industries Ltd. located in Lantzville, B.C. The letter of intent entered in to for this transaction was previously announced on Nov. 24, 2021.

"We are excited to announce the acquisition of Hi-Tec. Hi-Tec is a successful, well-run business and, when this acquisition opportunity arose, it was too good to pass up. The future synergies with our Atlas Building Systems location and additional customer base for product expansion is exciting and our team is looking forward to this integration moving forward," said Hadi Abassi, Atlas Engineered's chief executive officer, president and founder. "AEP has completed the next step in expanding its footprint in British Columbia where seasonality and the effects of winter are not as impactful as the rest of Canada."

Hi-Tec manufactures roof trusses and sells engineered wood products to a strong, loyal customer base on Vancouver Island in British Columbia. This location is just under 15 minutes north of Atlas Engineered's Atlas Building Systems location in Nanaimo, B.C., which will offer some unique synergies from labour to shipping to equipment and more. During its last fiscal year ended Aug. 31 2021, Hi-Tec earned unaudited revenues of just over $5-million, net income before taxes of just over $1-million and a normalized EBITDA (earnings before interest, taxes, depreciation and amortization) of $1.25 million, resulting in a normalized EBITDA margin of 25 per cent. Over the last three years, Hi-Tec earned average unaudited revenues of approximately $4.6-million, net income before taxes of $751,000 and normalized EBITDA of $1.16-million, with an average normalized EBITDA margin of 25 per cent.

Under the terms of the share purchase agreement (SPA), Atlas Engineered has acquired all of the issued and outstanding shares of Hi-Tec for a purchase price of $5.8-million in cash, with a working capital adjustment to be determined and finalized within 60 days of closing date of the SPA. In addition, Atlas Engineered has acquired the land and buildings on which Hi-Tec's facilities are located for a price of $3.25-million in cash based on a completed independent appraisal. Stillwater Capital acted as the exclusive financial adviser to Hi-Tec for this transaction.

Atlas Engineered has entered into a term loan for the $5.8-million and a mortgage for 75 per cent of the $3.25-million through the company's existing banking relationships, with the remaining portion of the land and building purchase and working capital adjustment will be financed by internally generated cash. The company opted to finance this acquisition with debt given the current low interest rates and to preserve majority of its cash for future strategic plans and opportunities.

About Atlas Engineered Products Ltd.

Atlas Engineered is a growth company that is acquiring and operating profitable, well-established operations in Canada's truss and engineered products industry. It has a well-defined and disciplined acquisition and operating growth strategy, enabling it to scale aggressively and apply new technologies, giving it a unique opportunity to consolidate a fragmented industry of independent operators.

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