Atlas Engineered Products Delivers Another Profitable Quarter with Q3 2020 Financial and Operating Results

NANAIMO, BC, Nov. 12, 2020 /CNW/ - Atlas Engineered Products ("AEP" or the "Company") (TSX-V: AEP) (OTC Markets: APEUF) is pleased to announce its financial and operating results for the third quarter ended September 30, 2020. All amounts are presented in Canadian dollars.

"Q3 2020 was a solid quarter for AEP as we delivered another increase in revenues and profitability, over both of the previous quarters in 2020, despite the ongoing global pandemic and skyrocketing lumber prices. This was achieved through targeted sales activities to ensure that the sales pipelines at all locations continue to grow, and a continuation of our comprehensive cost reduction and cash preservation strategies implemented at the end Q1 2020,"said AEP CEO & President Dirk Maritz.

Financial Highlights for Q3 2020:

• Revenue was $9,677,692 for the three months ended September 30, 2020 as compared to $7,900,805 for the three months ended June 30, 2020. This expansion through Q3 2020 represents a quarterly  growth in revenue of 22%. The quarter over quarter increase in total revenues was driven by reslient markets in  BC and Manitoba , paired with a rebound of the Ontario market after Covid-19-related permitting restrictions were lifted at the end of May. We anticipate strong sales volumes to continue in to Q4 2020, following a very active third quarter that saw strong quoting activity, increased housing starts, increased permitting, and low interest rates. We expect that this combination of factors will continue to push demand through Q4 2020.

SUMMARY OF QUARTERLY REVENUES	Sep-20	Jun-20	Mar-20
Revenues	$9,677,692	$7,900,805	$7,097,979
% Increase over previous quarter	22%	11%

• Gross Margins decreased to 22% for the three months ended September 30, 2020, from 24% for the three months ended June 30, 2020, but still showcases a 6% increase from the three months ended March 31, 2020. This two percentage point decline in Q3 2020 was due to a number of competing factors including: a slightly depressed margin in some of our commercial and subdivision projects due to orders taken prior to lumber price increases; the successful launch of the new pre-manufactured wall line in Nanaimo which required additional production and design employee training and sales pipeline development; and startup costs, including sales pipeline development, associated with the new Novum Building Components acquisition.
  
  
• Operating Expenses were $1,641,994 for the three months ended September 30, 2020 as compared to $1,909,014 for the three months ended September 30, 2019. This represents a 14% improvement from the same period in the prior year, and can be attributed to the continued cost reduction and cash preservation plan that was implemented at the end of the first quarter and has continued through to date.
  
  
• Profitability has continued to improve during 2020. The Company had an operating profit of $482,818 in Q3 2020, $248,675 in Q2 2020, compared to an operating loss of ($866,084) in Q1 2020. In addition, the Company earned net income of $419,589 in Q3 2020, $220,601 in Q2 2020, compared to a net loss of ($762,961) in Q1 2020. AEP is pleased to report continued operating profit and net income for the three months ended September 30, 2020 as a result of increased revenues and implemented cost cutting and cash preservation strategies.

SELECTED FINANCIAL RESULTS	Three Months Ended		Nine Months Ended
	Sep-2020	Sep-2019	Sep-2020	Sep-2019
Revenue from the Business	$9,576,353	$4,416,465	$24,676,476	$11,860,872
Revenue from New Acquisitions	101,339	6,035,097	-	13,874,932
Total Revenue	9,677,692	10,451,562	24,676,476	25,735,804
Cost of Sales	7,552,880	7,806,785	19,569,812	19,424,868
Gross Profit	2,124,812	2,644,777	5,106,664	6,310,936
Gross Margin %	22%	25%	21%	25%
Operating Expenses	1,641,994	1,909,014	5,241,255	5,272,081
Operating Profit (Loss)	482,818	735,763	(134,591)	1,038,855
Net Income (Loss) After Adjustments and Taxes	419,589	531,710	(122,771)	254,949
Adjusted EBITDA	1,175,598	1,537,787	1,957,190	3,275,860
Adjusted EBITDA Margin %	12%	15%	8%	13%
Normalized EBITDA	1,363,275	1,669,774	2,542,363	3,531,306
Normalized EBITDA Margin %	14%	16%	10%	14%
Weighted Average Number of Shares	57,725,730	45,990,930	56,126,635	45,771,150
Adjusted EBITDA per Share ($ per share)	0.02	0.03	0.03	0.07
Income (Loss) per Share, Basic and Fully Diluted ($ per share)	0.01	0.01	(0.00)	0.01
Selected Financial Information as at:
			Sep-2020	Dec-2019
Total Assets			$28,168,787	$26,762,977
Total Non-Current Liabilities			9,062,329	6,221,430

Mr. Maritz stated, "The AEP team has continued to deliver strong revenues and operating profits in Q3 2020, while remaining diligent in maintaining the safety and well being of all our staff during this global pandemic. I am proud of the team we have built at AEP. We all have a focus to expand product lines, increase revenues, and ensure that all locations contribute to a healthy sales pipeline and continued growth".

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, 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 year ended December 31, 2019 and for the interim period ended September 30, 2020.  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 unaudited interim financial statements for the three and nine months ended September 30, 2020 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 interim financial statements for the three and nine months ended September 30, 2020  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.

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". "EBITDA" is calculated as revenue less operating expenses before interest expense, interest income, amortization and depletion, impairment charges, and income taxes. "EBITDA margin" is EBITDA expressed as a percentage of revenues. "Adjusted EBITDA" is EBITDA after adjusting for share-based payments, foreign exchange gains or losses and non-recurring items. "Adjusted EBITDA margin" is adjusted EBITDA expressed as a percentage of revenues. "Normalized EBITDA" is EBITDA adjusted for one-time items.  "Normalized EBITDA margin" is normalized EBITDA expressed as a percentage of revenues.

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], Unit 102, 6551 Aulds Road, Nanaimo, BC V9S 5X9, www.atlasengineeredproducts.com; For investor relations please contact: Melissa MacRae, Interim CFO, Phone: [phone], Email: [email protected], Atlas Engineered Products Ltd., Unit 102, 6551 Aulds Road, Nanaimo, BC V9S 5X9, www.atlasengineeredproducts.com