Atlas Engineered Products (“AEP” or the “Company”) announces its financial and operating results for the year ended December 31, 2023.
“2021 and 2022 were marked by pent-up demand, inflated material prices, and never-ending supply chain issues. 2023 was an anticipated correction year in the construction market that was exacerbated further by steadily rising interest rates.” said Hadi Abassi, the Company’s CEO, President and Founder. “Despite rising interest rates negatively impacting housing starts and intensifying competition, the Company was still able to generate solid revenues, maintain disciplined margin control, and still produce profits while also completing another significant acquisition. It was a busy year in a lot of ways, and we aren’t slowing down; we are moving forward to be ready for the house-building expansion Canada requires.”
AEP revenue for the year ended December 31, 2023 was $49,413,675 compared to revenue of $61,899,620 for the year ended December 31, 2022. Revenues decreased due to the stabilization of some material prices (such as lumber and engineered wood products) at significantly lower levels than the prior two years, which are passed along to customers.
Gross margin for the year ended December 31, 2023 decreased to 27% compared to gross margin of 32% for the year ended December 31, 2022. Gross margins decreased mainly due to the more competitive market for sales driven by higher interest rates. The Company did a solid job striking a balance between generating sales and compromising slightly on the gross margin available in a more competitive market. As demand expands, the Company will continue to focus on gross margins as well as revenue generation.
Operating expenses increased by $977,616 for the year ended December 31, 2023 to $8,294,053 compared to $7,316,437 for the year ended December 31, 2022.
Net income after taxes was $3,149,838 for the year ended December 31, 2023 compared to net income after taxes of $8,830,337 for the year ended December 31, 2022. The Company recorded lower net income after taxes mainly due to lower revenues in a market with reduced housing demand and a slightly reduced gross margins due to the increased market competition.
Outlook for 2024
The Company is continuing to operate in a more competitive market during the first part of 2024 and anticipates this will continue until either the market adjusts to current interest rates or there is a decrease in interest rates. The Company still anticipates that increased interest rates will have a minimal overall effect on the long-term housing market due to the number of homes that are needed to support Canada’s continued population growth and the number of homes required to restore housing affordability by 2030. The Company is prepared to continue managing pricing by balancing revenues with gross margins and explore new markets in order to continue to drive organic growth as much as possible during fiscal 2024. Since the beginning of 2024, the Company has seen a steady increase in quote activity and incoming orders on a weekly basis.
AEP is a growth company that is acquiring and operating profitable, well-established operations in Canada’s truss and engineered products industry.
