Atlas Engineered Products scales up its business to meet construction demand from western Canada

• Specializes in the manufacture and supply of roof trusses and wood products and is consolidating the industry in North America
• Positioned for growth with expanding footprint in burgeoning industry
• Addressable Canadian market of C$2.5 billion for trusses, joists, engineered beams, prefabricated walls and floors

What Atlas Engineered Products does:

Atlas Engineered Products Ltd (CVE:AEP) (OTCMKTS:APEUF) is a growth company, which specializes in the manufacture and supply of roof trusses and wood products and is consolidating the industry in North America.

For the uninitiated, trusses are pre-fabricated, triangular frameworks that support the roof of a house. The addressable market in Canada for trusses, joists and engineered beams is said to be $1 billion, while it is $2.5 billion for those products, together with prefabricated walls and floors.

Atlas acquires profitable and well-established firms in the sector, and since listing in November 2017 with just one manufacturing plant of its own, has bought a number of other companies.

The acquisitive opportunity is large because many are ageing firms, whose owners are looking to monetize their considerable investment.

The company aims to strengthen the finances of these smaller firms and protect the interest of the owners while providing career growth to loyal employees..

How is it doing:

It was back to the future for Atlas Engineered Products in its last announcement, with the firm revealing on February 3, 2021, the return of founder Hadi Abassi as its CEO and president.

Abassi previously acted as the company’s CEO from November 8, 2017 to November 5, 2018 when he transitioned to the role of executive vice president. His appointment followed the resignation of former CEO and president Dirk Maritz, who also stepped down from the company’s board of directors.

Abassi established Atlas Engineered Products Ltd in 1999 to manufacture roof trusses at its Nanaimo manufacturing facility to service customers on Vancouver Island and established Coastal Windows in 2003 as a dealer and then subsequently a manufacturer of customer doors and windows. 

Atlas noted that it has grown significantly in the past several years through the acquisition of established operations across Canada and now has seven facilities in three provinces.  It has expanded its product offerings and continues to grow its innovative line of products and services in all regions and said it is well poised to expand its geographical footprint through additional acquisitions and to continue to grow its revenues from all locations.

In January 2021, Atlas announced an agreement with ZyTech Building Systems LP to acquire the bulk of ZyTech’s manufacturing assets from its former Langley location in the Lower Mainland of British Columbia. The company said the purchase price for the equipment of $958,160 was below replacement or market value. It paid ZyTech a deposit of $100,000 on execution of the agreement.

Atlas said ZyTech’s equipment will be installed at the group’s Novum and Atlas Building Systems locations in the first quarter of 2021, ready for the peak building season. In addition to acquiring the equipment, the company said it would also be “completing several supply contracts” for ZyTech’s clients.

On May 19, Atlas announced it had recorded a net profit for its first quarter of 2021 on a double-digit revenue increase. 

For the three months ended March 31, the company recorded net income of C$51,208, compared to a net loss of C$762,961 in the year-ago quarter. Revenue increased 29% year-over-year to C$9,129,633 for the company’s best 1Q to date. 

In addition, Atlas said that non-IFRS measure normalized EBITDA increased substantially to C$1,187,376, from C$102,042 in the 1Q of 2020.

On the financing front, in December 2020, Atlas said it had signed a new credit and banking agreement with TD Canada Trust. The new credit facilities included a C$2.0 million uncommitted revolving line of credit, a C$4.8 million reducing term loan, a C$5.5 million committed revolving line of credit, and a C$2.0 million non-revolving equipment leasing line. 

Inflection points:

• Strategy news from newly-returned CEO
• Further strong product demand
• Ongoing expansion moves

What the boss says:

“The entire team at AEP has been working incredibly hard to navigate the challenges caused by the COVID-19 pandemic; from keeping employees safe to navigating material pricing increases and supply shortages,” said CEO Hadi Abassi in a statement, after the company released 1Q results.

“These record first-quarter results showcase those efforts and I am incredibly proud of what the company and its employees have accomplished. We are optimistic and excited to see what the rest of 2021 will bring with continued hard work and perseverance.”

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Story by ProactiveInvestors