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.
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(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.
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(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.
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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.