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Atlas Engineered Products Ltd
Symbol AEP
Shares Issued 59,245,049
Close 2022-08-22 C$ 0.59
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Atlas Engineered earns $2.04-million in Q2 2022

2022-08-22 12:01 ET - News Release

Mr. Hadi Abassi reports

ATLAS ENGINEERED PRODUCTS REPORTS RECORD SECOND QUARTER FINANCIAL AND OPERATING RESULTS

Atlas Engineered Products Ltd. has released its financial and operating results for the three and six months ended June 30, 2022.

"We are pleased with another successful quarter of organic growth, as well as the contribution from our latest acquisition, Hi-Tec Industries Ltd.," said Hadi Abassi, chief executive officer, president and founder of Atlas. "In addition to the ongoing operational improvements and growth of our legacy facilities, we have seen an immediate improvement in both revenues and margins from Hi-Tec. Our order book for the remainder of 2022 continues to be strong and we anticipate another year of record results for the company."

Financial highlights for Q2 2022:

  • Revenue increased 17 per cent to $16,836,329 for the three months ended June 30, 2022, from $14,408,430 for the three months ended June 30, 2021. Additionally, revenue increased 24 per cent to $29,270,743 for the six months ended June 30, 2022, from $23,538,063 for the six months ended June 30, 2021. This increase now represents the company's best second quarter to date.
  • Non-IFRS earnings before interest, taxes, depreciation and amortization (EBITDA) for the three and six months ended June 30, 2022, was $3,581,190 and $6,463,031, respectively, with an EBITDA margin of 21 per cent and 22 per cent, respectively. EBITDA for the three and six months ended June 30, 2021, was $2,827,271 and $3,654,283, respectively, with an EBITDA margin of 20 per cent and 16 per cent. EBITDA and EBITDA margin for the three and six months ended June 30, 2022, increased compared with the three and six months ended June 30, 2021, due to increased net income for the period resulting from increased sales and improved gross margins.
  • Gross margin for the three and six months ended June 30, 2022, was 28 per cent and 29 per cent, which was up from a gross margin of 26 per cent and 23 per cent for the three and six months ended June 30, 2021. Gross margins increased due to pricing assessments and updates being completed at all locations due to the fluctuating costs of raw materials and labour. The company has also focused on improving efficiencies on new product lines and acquisitions.
  • Net income after taxes was $2,044,118 and $3,607,419 for the three and six months ended June 30, 2022, compared with net income after taxes of $1,649,359 and $1,700,567 for the three and six months ended June 30, 2021. This increase was primarily due to the increase in revenues, improvements in gross margin and the new acquisition of Hi-Tec Industries Ltd.

Expansion for 2022

On Feb. 28, 2022, the company acquired Hi-Tec, located in Lantzville, B.C., on Vancouver Island. The shares of Hi-Tec were acquired for $5.8-million in cash, with a working capital adjustment of $454,981 that was finalized subsequent to the three months ended March 31, 2022. The land and buildings of Hi-Tec were also acquired by the company for the appraised value of $3.25-million in cash. The company financed the Hi-Tec acquisition with a term loan for $5.8-million and a mortgage for $2,437,500. 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 of $1.25-million, resulting in a normalized EBITDA margin of 25 per cent. (Financial information for Hi-Tec for the year ended Aug. 31, 2021, was unaudited and unreviewed.)

Since purchasing Hi-Tec Industries on Feb. 28, 2022, this operation contributed $2,227,555 in revenues and approximately $667,827 in EBITDA for the three months ended June 30, 2022, and $2,855,014 in revenues and approximately $839,496 in EBITDA for the six months ended June 30, 2022.

Normal course issuer bid (NCIB) update

From the commencement of the NCIB on Nov. 3, 2021, the company has acquired 1,170,500 shares for cancellation. Once all shares are cancelled that have been acquired the number of shares outstanding would be 58,713,049. The NCIB is continuing until Nov. 3, 2022, and the company may purchase up to 2,886,286 common shares of the company. All purchases of common shares will be made on the open market through the facilities of the TSX Venture Exchange and will be purchased for cancellation.

Atlas Engineered Products' board of directors continues to believe that the current market price for the company's common shares does not currently reflect the underlying value of the company. As a result, depending on the future price movements and other factors, the board of directors believes that the purchase of the shares is an appropriate use of the company's funds and in the best interests of its shareholders.

About Atlas Engineered Products Ltd.

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

We seek Safe Harbor.

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