Atlas Engineered Products' revenue for the three months ended March 31, 2024 was $9.1 million compared to revenue of $9.6 million for the three months ended March 31, 2023.
Revenue has decreased due to some material prices stabilizing at a lower level which are less than the prior few years and a more competitive construction market fueled by interest rate hikes by the Bank of Canada.
Gross margin for the three months ended March 31, 2024 decreased to 16% compared to gross margin of 30% for the three months ended March 31, 2023.
Gross margins decreased due to the more competitive market for sales but primarily due to the greater seasonality differences at Leon Chouinard & Fils Co. Ltd. (“LCF”) between summer and winter, whose results are included for the period ended 2024 but not 2023 due to the timing of the acquisition.
The building season in northern New Brunswick is more condensed than the building season at the Company’s Ontario locations. As a result, in northern New Brunswick sales are more concentrated to the summer and fall months far more substantially than the winter and early spring months. This combined with the need to keep key labourers and designers employed due to the competitive labour market, leads to this seasonal increase in cost of sales related to revenues and in turn drives gross profit and gross margins lower during winter. This is consistent with this location’s history prior to its acquisition. The impact of seasonality to margins is anticipated to average out over the course of a year back to a historical 24-30% range.
Net loss after taxes was $993,436 for the three months ended March 31, 2024 compared to net income after taxes of $543,300 for the three months ended March 31, 2023. The Company recorded net loss after taxes mainly due to lower revenues in a market with reduced housing demand and reduced gross margins due to the increased market competition and greater seasonality variations attributable to LCF, whose results are not included for the period ended March 31, 2023.
Non-IFRS measure adjusted EBITDA margin decreased to 3% for the three months ended March 31, 2024 from 18% for the three months ended March 31, 2023. This decrease was mainly due mainly to decreased sales, increased cost of sales, decreased gross margins, and increased operating costs.
“As previously stated, 2023 was an anticipated challenging year in the construction market where new housing starts were impacted in the first part of 2024 by higher interest rates and slowing demand. However I am pleased as our results were in line with expectations,” said Hadi Abassi, the Company’s CEO & President. "We are excited for the rest of 2024 and beyond as we have been growing our salesforce and taking a more aggressive approach to establishing new partnerships with builders, expanding into new markets, and increasing our wall panel production to support the Company’s organic growth goals and anticipated robotic automation.”
Atlas Engineered Products is a growth company that is acquiring and operating profitable, well-established operations in Canada’s truss and engineered products industry.
