Atlas Engineered Products' revenue for the nine months ended September 30, 2023 was $35.2 million compared to revenue of $46.9 million for the nine months ended September 30, 2022. Revenues decreased due to some material prices (ie: lumber & I-Joist) that are passed along to to customers stabilizing at significantly lower prices than the prior two years. The market has also seen a slowdown in some areas of Canada, mainly Ontario and recently the slowdown has been seen in British Columbia as well. This has mainly been due to rising interest rates resulting in the construction industry pausing to assess affects on new housing demand, which has led to reduced housing starts. The Company expects this slowdown to be short-term in nature and that markets will strengthen as they adjust to current market conditions and increased demand due to significant population growth and the ongoing housing deficit.
Gross margin for the nine months ended September 30, 2023 was 30%, which is lower than gross margin of 32% for the nine months ended September 30, 2022. Gross margins decreased due to the more competitive market for sales that is driven by the significantly lower cost of lumber compared to the prior period. Closer to the end of the nine months ended September 30, 2023, the Company had to find a balance between generating sales and compromising slightly on the gross margin available in a more competitive market. The Company continues to focus on gross margins as well as revenue generation. Typically, the Company has an increase in gross margins for the third quarter, but due to the competitive market, lower lumber prices and demand not increasing the Company had to lower gross margins slightly in order to generate more revenues.
Net income after taxes was $2.6 million for the nine months ended September 30, 2023 compared to a net income after taxes of $6.7 million for the nine months ended September 30, 2022. The Company recorded a lower net income after taxes in the current period mainly due to decreased revenues, decreased gross margins, and increased operating expenses.
“The continued interest rate hikes and their effects on our industry have resulted in a more competitive market for the company’s products where some contractors are putting their building projects on pause until there is more certainty around the direction of interest rates,” said Hadi Abassi, the Company’s CEO, President and Founder. “Despite the effect of higher interest rates, there is an ongoing need for more housing in Canada and we strive to be the partner of choice for contractors and homeowners during their construction projects.”
Atlas Engineered Products is a growth company that is acquiring and operating profitable, well-established operations in Canada’s truss and engineered products industry.
