Atlas Engineered Products Announces Acquisition of a Truss and Wall Panel Manufacturer in New Brunswick, Canada

NANAIMO, BC , Aug. 23, 2023 /CNW/ - Atlas Engineered Products ("AEP" or the "Company") (TSXV: AEP) (OTC Markets: APEUF) announced today that the Company has completed the acquisition of Léon Chouinard et Fils Co. Ltd./Ltée. ("LCF") located in New Brunswick, Canada. LCF is a manufacturer of roof trusses, floor systems, and wall panels and a supplier of engineered wood products ("EWP").

"We are excited to announce the acquisition of our 8th manufacturing facility. Now is the time to move forward with a strategic acquisition that expands our reach into a new location as we continue to grow our national footprint," said Hadi Abassi, CEO, President and Founder of the Company. "LCF fits nicely into our overall, long term strategic plan and we are excited they have joined the AEP group of companies. The Company is currently reviewing a number of additional acquisition targets and will maintain a disciplined approach to acquiring new manufacturing facilities that fit our long-term goals."

This transaction is aligned with the Company's strategic acquisition plan and expands the Company's geographical reach, as well as growing its wall panel manufacturing expertise and capacity. In 2022, LCF generated over $25.7 million in revenues, net income of over $6.3 million and non-IFRS measure normalized EBITDA of approximately $9.47 million (see "Non-GAAP/Non-IFRS Financial Measures"). Moving forward, AEP anticipates being able to bring its considerable operating synergies and material buying power to LCF's operations as it integrates LCF into the AEP group of companies.

The acquisition of LCF was completed effective August 23, 2023. To acquire all the issued and outstanding shares of LCF, the Company paid a purchase price of $26 million plus $2,884,737 ($28,884,737 total) in net closing adjustments for LCF's cash, income taxes receivable and payable and working capital excluding inventory as at June 30, 2023. The purchase price includes the land and buildings on which LCF's facilities are located which have been appraised at $2.792 million. The purchase price was paid by:

(a)

The issuance of 1,739,129 common shares in the capital of the Company (the "Consideration Shares") having a value of $2,000,000 at a price of $1.14 per share to certain shareholders of LCF; and

(b)

Payment of $26,884,737 in cash (the "Cash Payment"), financed using a combination of the Company's existing cash and bank financing through the Company's existing banking relationships with a major Canadian chartered bank. The bank financing consists of a term loan and mortgage for $22.4 million, having a term of 5 years with an amortization period of 10 years for the term loan and 25 years for the mortgage. Both the term loan and the mortgage will bear interest at the bank's prime rate of interest plus an additional amount determined based on the Company's quarterly debt to EBITDA ratio. At closing, the interest rate applicable is expected to be prime plus 25 bps. The amounts advanced are secured by the Company's assets as well as mortgages over the facilities in Lantzville, BC and Eel River Crossing, NB. The Company opted to fund this acquisition mainly with debt to preserve majority of its cash for future strategic plans.

The purchase price for LCF is subject to additional post-closing adjustments based on LCF's working capital, inventory, cash and income taxes payable/receivable at closing. The Consideration Shares issued to former shareholders of LCF are subject to a hold period of four months plus one day from the closing date of the acquisition.

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". The description of the composition of these measures is incorporated by reference from AEP's Management's Discussion and Analysis for the period ended March 31, 2023 under "Non-IFRS / Non-GAAP Financial Measures", available on AEP's website at www.atlasengineeredproducts.com or on SEDAR at www.sedar.com.

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 INFORMATIONInformation 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 months ended March 31, 2023. In addition, completion of the Transaction remains subject to a number of conditions precedent and there is no assurance that the Transaction will complete as contemplated or at all. 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.

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.

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