Atlas Engineered Products (AEP) Completes Acquisition of Key Assets of Trusstem Industries Inc

July 21, 2020

July 21, 2020 - Nanaimo, British Columbia / Atlas Engineered Products (“AEP” or the “Company”) (TSX-V: AEP; OTC Markets: APEUF) announced today that, further to its news release dated July 14, 2020, the Company has now completed the acquisition of selected assets (the “Asset Acquisition”) of Trusstem Industries Inc. (the “Trusstem”), marking a major milestone in AEP’s plans for expansion into the Lower Mainland region of British Columbia.

“We have been evaluating several opportunities in Western Canada for quite some time now. There is significant market demand for AEP’s products and services, and our Vancouver Island location is performing at record levels. COVID-19 has highlighted AEP’s organizational and geographical strengths. With the minimal impacts experienced in the BC building environment during the pandemic, we have made expanding our footprint in British Columbia a priority,” says Dirk Maritz, AEP’s CEO & President. “With this acquisition we not only expand our overall geographic footprint, but we enter into the thriving Lower Mainland BC market. AEP can serve this market with pre-manufactured wall-panels, manufactured floor trusses, I-joists, LVL options, open web floors, roof trusses and other engineered wood products.”

The Asset Acquisition was completed through AEP’s newest company, Novum Building Components Ltd. (“Novum”). The Asset Acquisition was purchased for $350,000 in cash, with 50% of the purchase price paid on closing, and the remaining 50% payable equal monthly installments over 3 years. Novum will be located in Abbotsford, British Columbia and is expected to begin operations immediately. The new operations will be rebranded under the Novum name, meaning ‘new and innovative’.

AEP has identified under-utilized manufacturing assets across the group and will be refurbishing and upgrading them for installation at Novum in addition to the assets acquired from Trusstem. Once completed, the revamped factory with its upgraded equipment will be able to supply similar volumes to AEP’s flagship Nanaimo operations. The first phase of upgrades is scheduled to start in a few weeks and is expected to be completed over the coming months.

All loyal customers of Trusstem will continue to be taken care of, with all current work-on-hand to be completed. In addition, AEP will be adding a number of its own customers based in the Lower Mainland. These include new customers, as well as customers that already have deep relationships with AEP and do business with AEP’s Atlas Building Systems Ltd. operation on Vancouver Island.

AEP has assigned industry veteran Doug Paterson, ex-Director, Sales & Branch Operations British Columbia at Ply Gem Canada Inc., to oversee business development for the Lower Mainland BC market. Mr. Paterson has deep roots in the building and construction industry across Canada and North America. With Mr. Paterson’s industry contacts, combined with AEP’s deep and respected relationships, AEP believes Novum will transform into a significant market player.

“We believe that our expansion into the Lower Mainland market through Novum is a smart acquisition,” commented AEP’s Executive Vice President, Brittany Ray-Wilks. “Unlike other acquisitions we have done to date, this is an asset purchase that adds significant value to AEP. The low-cost structure with which we have entered Lower Mainland BC, combined with the strategic location and robust market

makes sense as a next step in the AEP growth story. Not only are we taking over existing work-on-hand, but we are also adding our own customer base. With our focus on efficiencies, productivity, economies-of-scale and buying power optimization, we are confident we can deliver on our growth and profitability targets with Novum. This deal checks every box to deliver shareholder value.”

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.

For further information please contact:
Atlas Engineered Products Ltd.
Phone: 1-250-754-1400
Email: [email protected]
Unit 102, 6551 Aulds Road
Nanaimo, BC V9S 5X9
www.atlasengineeredproducts.com

For investor relations please contact:
Brittany Ray-Wilks, Executive Vice President
Phone: 1-250-754-1400
Email: [email protected]
Atlas Engineered Products Ltd.
Unit 102, 6551 Aulds Road
Nanaimo, BC V9S 5X9
www.atlasengineeredproducts.com

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. 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 AEP’s unaudited financial statements for the three months ended March 31, 2020 and March 31, 2019, 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 unaudited financial statements for the three months ended March 31, 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 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.

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