Atlas Engineered Products Announces Acquisition of Hi-Tec Industries in British Columbia

NANAIMO, BC, March 1, 2022 /CNW/ - Atlas Engineered Products ("AEP" or the "Company") (TSXV: AEP) (OTC Markets: APEUF) announced today that the Company has completed the acquisition of Hi-Tec Industries Ltd. ("Hi-Tec") located in Lantzville, British Columbia. The letter of intent entered in to for this transaction was previously announced on November 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, AEPs CEO, 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 AEP's Atlas Building Systems location in Nanaimo, British Columbia which will offer some unique synergies from labour to shipping to equipment and more. During its last fiscal year ended August 31 2021, Hi-Tec earned unaudited revenues of just over $5.0 million,  net income before taxes of just over $1.0 million and a normalized EBITDA⁽¹⁾ of $1.25 million, resulting in a normalized EBITDA margin⁽¹⁾ of 25%.⁽²⁾ Over the last three years, Hi-Tec earned average unaudited revenues of approximately $4.6 million, net income before taxes of $751,000,  normalized EBITDA⁽¹⁾ of $1.16 million, with an average normalized EBITDA margin⁽¹⁾ of 25%. ⁽²⁾

Under the terms of the share purchase agreement ("SPA"), AEP 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, AEP 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 advisor to Hi-Tec for this transaction.

AEP has entered into a term loan for the $5.8 million and a mortgage for 75% 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 funded by internally generated cash. The Company opted to fund this acquisition with debt given the current low interest rates and to preserve majority of its cash for future strategic plans and opportunities.

⁽¹⁾ NON-GAAP/NON-IFRS FINANCIAL MEASURES.  "Normalized EBITDA" and "Normalized EBITDA margin" 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. "EBITDA" is calculated as revenue less operating expenses before interest expense, interest income, amortization and depletion, impairment charges, and income taxes. "Normalized EBITDA" is EBITDA adjusted for one-time items.  "Normalized EBITDA margin" is normalized EBITDA expressed as a percentage of revenues.

⁽²⁾ Financial information for Hi-Tec was provided to AEP by Hi-Tec and the former shareholders of Hi-Tec.  This information is unaudited and may not be prepared in accordance with IFRS for public companies.

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 and nine months ended September 30, 2021.  In addition, the financial information for Hi-Tec Industries Ltd. was provided by Hi-Tec and the former shareholders of Hi-Tec, were unaudited, and may not have been prepared in accordance with IFRS for public companies.  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.

Readers are cautioned that the financial results of the Target were prepared by management, and have not been audited by an independent auditor. 

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.

Atlas Engineered Products Ltd., Phone: [phone], Email: [email protected], PO Box 37036 Country Club PO, Nanaimo, BC V9T 6N4, www.atlasengineeredproducts.com; For investor relations please contact: Paul Andreola, Director, Phone: [phone], Email: [email protected], Atlas Engineered Products Ltd., PO Box 37036 Country Club PO, Nanaimo, BC V9T 6N4, www.atlasengineeredproducts.com