INVEST STOR OR P PRE RESE SENTATION ON Winter 2019 AEP TSXv - - PowerPoint PPT Presentation

AEP TSXv

INVEST STOR OR P PRE RESE SENTATION ON

Winter 2019

TSX.V: V:AEP OTC:APEU EUF

AEP TSXv

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This presentation is not, and nothing in it should be construed as, an offer, invitation or recommendation in respect of securities of Atlas Engineered Products Ltd. (the “Company”), or an offer, invitation or recommendation to sell, or solicitation of an offer to buy, the facilities or the securities of the Company in any jurisdiction. Neither this presentation nor anything in it shall form the basis of any contract or commitment. This presentation is not intended to be relied on as advice to investors or potential investors and does not take into account the investment objectives, financial situation

• r needs of any investor. All investors should consider such factors in consultation with a professional advisor of their

choosing when deciding if an investment is appropriate. The Company has prepared this presentation based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. These projections should not be considered a representation of the Company’s potential cash-generation performance in any way. The financial modelling is a projection, preliminary and subject to change. All forward–looking statements attributable to the Company or persons acting on its behalf apply only as of the date of this document, and are expressly qualified in their entirety by the cautionary statements included elsewhere in this document. The financial modelling is a projection, is preliminary, and is subject to change; the Company undertakes no obligation to update or revise these forward– looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Inevitably, some assumptions will not materialize, and anticipated events and circumstances may affect the ultimate financial results. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic, and competitive risks, and the assumptions underlying the projections may be inaccurate in any material respect. Therefore, the actual results achieved may vary significantly from the forecasts, and the variations may be material.

FORWAR ARD D LOOKING NG STATEM EMEN ENTS DISCL SCLAI AIMER CHAN ANGE O OF YEAR AR- END ND

As of 2019, pursuant to Section 4.8(2) of NI 51-102 Atlas Engineered Products Ltd. has changed its financial year- end from May 31 of each year to December 31 of each year to better align its financial reporting periods to those of its peers.

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Atlas E Engineer ered ed P Produc ucts Ltd. i is a longstandin ing C Canadia ian s supplier lier o

• f trusses

es a and engineer eered ed wood p products cts, o , oper erating f for mo more t than 18 18 yea

• ears. A

Atla las’ g goal l is is to be be the e lea leading d dis isruptor a and consolidat ator o

• f the engineered w

d wood p d produ ducts an and d components s sector i in Can anada ada.

Ou Our S STRA RATEGY ORGANIC & IC & ACQUISIT ISITIVE G GROWT WTH - We will create value for our stakeholders through the SMART acquisition and roll- up of Engineered Product Companies with strong Regional Brands on their own, and be recognized as a North American provider of CHOICE in Engineered Products, serving the Residential & Commercial Building / Construction Industry

Our V r VISI SION

“The Engineered Product Supplier of CHOICE To Our Customers Across North America”

We We A ARE:

“Expert DESIGNE NERS RS, with rock solid ENGINE NEERI RING skills plus leading MANUF UFACTURI URING, CONSTRUC RUCTION ON, and ASSEMBLY LY capabilities”

• EXPERT

RT Designers of Engineered Materials & Products

• TO

TOP-CL CLASS SS Manufacturers & Assemblers of Quality Engineered Products

• TRUS

RUSTED partner to our clients in the Residential and Commercial Building & Construction Industry

• PROUD

ROUDLY Canadian led, and aspiring North American Industry Leader

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Will llia iam ( m (Bill ill) W Wood

• ds

Chief Financial Officer

• Mr. Woods is a seasoned executive with more than

20 years of experience in North American mining, manufacturing, biotech, telecommunications, and transportation companies. He previously held the positions of CFO and Chief Operating Officer of Athabasca Minerals, CFO of Cardio-Metabolics, CFO

• f Liberty Mines, and served as Vice President

Finance for companies in the transportation, manufacturing, and business brokerage fields. He has held the Chartered Professional Accountant (CPA, CMA) designation since 1986.

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EX EXEC ECUTIVE T TEA EAM

Hadi adi A Abas assi EVP: Strategic Business Development

• Mr. Abassi founded Atlas Engineered

Products Ltd. in 1999 at its Nanaimo facility to manufacture roof trusses for customers on Vancouver Island. In 2003, he established Coastal Windows as a dealer, then subsequently as a manufacturer of custom doors and

• windows. Mr. Abassi holds a degree in

Mechanical Engineering from Swindon Technical College.

Brittan ttany R Ray-Wilks Group Manager: Human Resources

Brittany holds a Bachelors degree in Business Administration – Human Resources Management. She is a vibrant

• rganizational developer and human

resources practitioner. Brittany also held positions of Corporate Services Manager at Atlas, as well as worked for the Corporation of the District of Saanich.

Dirk Dirk M Maritz President & CEO

Dirk joins Atlas from SMS Equipment Inc. (Canada) where he served since 2012. From 2004 to 2012 he was President and CEO of Tradelander Group and Fridgetech Services operating throughout Africa. He positioned these organizations to be industry and market leaders, growing revenues exponentially while improving bottom-line from break-even to a 40%+ return on capital employed. Dirk is a visionary leader and change agent with over 15 years of proven experience as a CEO, VP and Director in large, complex, multi-industry companies.

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BOAR ARD OF OF DIR DIRECTORS

Don Don H Hubbard, ICD ICD.D Board Chair

• Mr. Hubbard is currently President and CEO
• f Hubbard Consulting Ltd., and Owner,

Partner, and Manager of RCR Mining LLP. He was also Board Chair of the Vancouver Island Health Authority from 2010-2017. Formerly Mr. Hubbard was General Manager of Lafarge North West Division and Island operations, which merged with Hub City Paving. He holds the ICD.D designation from the Institute of Corporate Directors.

Dirk Dirk Marit itz President & CEO

Dirk joins Atlas from SMS Equipment Inc. (Canada) where he served since 2012. From 2004 to 2012 he was President and CEO of Tradelander Group and Fridgetech Services operating throughout Africa. He positioned these

• rganizations to be industry and market leaders, growing

revenues exponentially while improving bottom-line from break-even to a 40%+ return on capital employed. Dirk is a visionary leader and change agent with over 15 years

• f proven experience as a CEO, VP and Director in large,

complex, multi-industry companies.

Hadi adi Abassi ssi Director

• Mr. Abassi founded Atlas Engineered

Products Ltd. in 1999 at its Nanaimo facility to manufacture roof trusses for customers on Vancouver Island. In 2003, he established Coastal Windows as a dealer, then subsequently as a manufacturer of custom doors and

• windows. Mr. Abassi holds a degree in

Mechanical Engineering from Swindon Technical College.

Kevin in S Smit ith Director

• Mr. Smith is a Chartered Accountant and has been Chief Financial Officer of

IntraCorp Projects Ltd., since August 14, 2012. He served as Chief Financial Officer, Executive Vice President, and Corporate Secretary at Whistler Blackcomb Holdings Inc. until September 10, 2012, where he successfully led it through an initial public offering in 2010. He is a Director of Lite Access Technologies Inc. Mr. Smith holds a Bachelor of Science from the University of British Columbia.

Gre reg Smi Smith Director

• Mr. Smith held senior positions in investment banking before

transitioning to private equity with the acquisition of one of the largest HVAC companies in Western Canada. He was Portfolio Manager for Phillips, Hager & North and Executive Director, Canadian Securitization Group, CIBC World Markets in Toronto for close to 10 years. Currently he serves as President and Director of Broadway Refrigeration & Air Conditioning Co. Ltd. and Omega Mechanical Ltd. and as Chairman of Lite Access Technologies.

AEP TSXv

Current Price $0.36 ( (as as of

• f Jan

Jan 7 7) Market Capitalization $14. 14.26M Shares Outstanding (Basic) 44.99M 99M Average Daily Volume 34. 34.7K 52 Week High $0 $0.7 .72 52 Week Low $0 $0.3 .34 Insider Ownership 31.64% 64% (9,713, 713,494 494 s shares)

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CAPITAL L STRUC UCTUR URE

Atlas Enginee eered Produ

• ducts L

Ltd. d.

OP OPTIONS NS & WARR RRANT NTS

Options (exercisable at $0.53) 2,370,000 Warrants (exercisable at $0.40) 737,500 Fully D Diluted S d Shar ares Outstan anding 48,527,500

DEBT BT Interest R t Rate te Maturity D ty Date Va Value (CAD) D)

Revolving Line of Credit Prime+1.75% N/A $ Current Portion of Capital Leases Misc. May 2020- October 2021 $1,067,000 Long-term Portion of Capital Leases Misc. May 2020- October 2021 $3,127,000 Non-Revolving Term Loan from RBC Prime+2.5% N/A $5,465,000 Non-Revolving Term Loan from RBC Prime+1.0% N/A $546,000 Term Loan from RBC 5.05% Jan 2025 $437,000 To Tota tal D Debt O Outstand nding ng $10,642, 42,000 000

TSX TSX.V:AEP OT OTC:APE PEUF UF

100000 200000 300000 400000 500000 600000 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18

0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8

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GROWTH TH S STRATE TEGY

PR PROFI FIT G GROWTH

We F FOCU CUS S on g growing ing Profitability i y in o

• ur

currently O Owned A Assets s through: ✓ Gross Margin improvements ✓ Lowest Cost Producer Methodology ✓ Economies of Scale ✓ Buying Power Savings ✓ Lean and Nimble Overheads ✓ Capitalizing on Synergies ✓ Best Practices in Processes ✓ Standardized Policies & Procedures

ORGANI NIC G GROW OWTH

St Stro rong o

• rg

rganic g c gro rowth dri driven b by: ✓ Offering additional products through traditional channels. Flooring systems, floor panels, and wall panels are produced and sold by few locations, yet represent a significant opportunity to grow ‘wallet share’ of building projects. ✓ Adding sales talent at all locations to capture market share and drive revenue growth

ACQUISIT ISITIO ION G GROWT WTH

To ach achieve o

• ur g

r goal al o

• f $50

50 mill illion in in sale les in in 2019 a and nd co continued g gro rowth af afterward rds: ✓ Acquire targets with strong financial performance, satisfying our SMART Acquisition criteria, using structures that minimize dilution ✓ Maintain strong share value as a currency for acquisitions ✓ Be prudent in our due diligence ✓ Integrate intelligently at lowest cost

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Advan anced d Technology

Atlas engineered truss and panel products are manufactured to order for the specific building projects in which they will be used. They offer the advantages

• f:
• Less waste
• Easier installation
• Superior design value
• Increased design flexibility
• Shorter cycle times
• Higher profit margins for clients (builders, developers)

Compreh ehen ensive e Solutio ion

Atlas is unique in offering a group of products designed to work together as a system:

• Atlas produces engineered wood product solutions for both the residential

and commercial building markets

• Atlas collaborates with clients to increase efficiencies and savings in

transportation and labour costs, as well as to reduce time and waste on the job site

• Atlas employs

ys s specialized s software a applications and chooses the right materials to optimize solutions, giving itself and its clients both significant flexibility and cost advantages

OUR OUR B BUS USINESS

ATL TLAS I IS S A STEAD EADY STAT ATE BU BUSI SINESS GROWING NG W WITHIN N A MATU TURE RE INDUST STRY

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PRODUCT CTS A S AND S SERVICE CES

✓ Desig ign, n, E Engine ineering ing and P Perm rmit itting ng S Servic ices ✓ Floor

• r J

Joist sts ✓ Floor

• r T

Trusse sses ✓ Fl Floor P r Pan anels ✓ Roof

• f T

Trusse sses ✓ Wall P Panels ✓ Wind indows ✓ Project M Management and S Site A Assembly S Services

I-JOIST IST RIM B BOARD LVL

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INDUST STRY C Y CHARACT CTERIST STICS CS

Revenue

$7.8 8 billion

• n

Profit

$1.1 1 billion

• n

Annual Growth

(2012-2017)

8. 8.8% 8%

Exports

$4.2 2 billion

• n

Annual Growth

(2017-2022)

2. 2.9% 9%

Businesses

538 538

INDUSTRY K KEY STATIS ISTIC ICS PRODUCT CT A AND SE SERVICES SE S SEGMENTATION (2017) (2017) Steady ady O Out utlook

• ok

Structural wood products is a mature industry with low volatility in revenue The same is true for the truss manufacturing and engineered wood segment of the construction supply industry Ke Key D Drivers

• Value of residential construction
• Housing starts
• Value of non-residential construction
• Canadian-dollar exchange rate

Addressa ssable M Market $1 b billi illion for trusses, joists, and engineered beams $2.5 b bill illio ion for trusses, joists, engineered beams, PLU LUS prefabricated walls and floors

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INDUST STRY C Y CHARACT CTERIST STICS CS

FRAGMENTATION

The engineered product manufacturing segment of the construction supply industry is characterized by hundreds of small regional operators with sales in the range of $3 million to $15 million, headed by owner-managers that need succession planning

OPPORTUNIT ITY

Atlas has become the preferred exit choice for many of these small operators. Their choice gives Atlas:

• Opportunities to profit from operational efficiencies, technological advances, advantages of scale in procurement, and

expanded product distribution

• Opportunities for arbitrage as acquired companies transition from private ownership to public amid varying transaction

structures and prices

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ACQUIS ISIT ITION ION H HISTOR ORY

Clinton had revenues of $3.6 million and EBITDA

• f $675,000 in 2017

AEP acquires Clinto ton Tr Truss for $2.6 milli million in cash 2/21/ 1/18 8 Satellite had revenues of $1.5 million in 2017 AEP acquires Satellit llite Truss for $1.2 milli million in cash 8/1/ 1/18 8 Coastal had revenues of $1.7 million and EBITDA

• f $89,000 in 2017

AEP acquires Coastal al Win Windows for $250, 0,000 00 in cash and $400, 0,000 00 in AEP shares 10/01/ 01/18 8 AEP acquires Ta Tandelle- Pacer for $8.1 milli million in cash, $500, 00,000 0 in AEP shares Tandelle-Pacer had revenues of $14.4 million and EBITDA of $1.9 million in 2017 11/19/ 19/18 8

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SYNERGIES ES

SYNERGY PROCESS RESULT

Focus on Lowering Fabrication Costs Capacity Planning & Utilization Design & Engineering Skill Sales Productivity & Penetration Consolidate, Standardize & Increase Design & Engineering Capabilities Improved Territorial Market Coverage, Enhance Sales Processes & Marketing Management Increase Automation, Equipment Utilization & Staff Productivity, Smart Equipment Selection & Multiple Shift Planning Enhance Plant Efficiency, Manufacturing Flows and Controls, Improve Quality Management Systems, Lower Wastages, AUTOMATE

Gro rowing M Mark rket S Sha hare re & Par articipat ation R Rat ates Increas ase P Produ

• duct &

Servic ice Offerin ing Increas ased Quan uantity & & Qualit lity T Throughpu put Lower Costs & & Increas ase Marg rgins ns

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INNOVATION ION

Deploy information and communication technologies strategically to give Atlas a competitive advantage in the marketplace. Support company-wide enterprise resource planning (ERP), design and engineering, customer relationship management (CRM), and supply chain management methods. Establish a design and engineering centre to help all sales and manufacturing locations across Canada achieve efficiency, cost- effectiveness, high expertise, and fine quality. Use regional facilities to manufacture and distribute the floor and wall panel components needed by truss plants in dispersed local markets. Institute national purchasing to supply raw materials to every Atlas facility economically and just-in-time. As is common in the ‘business process outsourcing’ industry, deploy Atlas personnel to work with large customers in-house. As resident design and project management teams, become ideally positioned to lead construction projects from inception through to lockup.

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INTEG EGRATION S N STEPS EPS

Address ‘low hanging fruit’ opportunities identified during due diligence:

• Cost savings
• Sales improvements
• Performance drivers

Introduce system-wide benefits

• Integrated branding, marketing,

and sales systems

• Shared design resources
• Joint procurement
• Pooled best practices

Drive strategic initiatives

• Introduce expanded product

portfolio to new sites

• Grow building project wallet share
• Leverage product mix from plant

configuration

PHASE 2 2

Organ anizat ational al In Integration w wit ith A Atla las Family mily

PHASE 1 1

Sit Site-speci cific c Imp Improvements

PHASE 3 3

Transfor formation

• n T

Throu

• ugh

Syner ergies es

1 2 3

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CATALYST YSTS

3 1 5 4 2

Shortages of skilled labour for traditional construction jobs drive dema mand f for easi sily a asse ssemb mbled component nents Gaps in business succession in the truss manufacturing industry lead to adv advantag ageously p pri riced acquisition o n opportuni niti ties es Growth in the popularity of multi- family and multi-floor residential wood-framed buildings as affordable housing drives greater ter co consu sump mption o

• f

engineer neered ed p products Fragmented industry populated by independents una nable to to inv nvest i t in n tr trans nsformati tion Software to design each step in the process places con

• ntrol of
• f

the c the cons nstr tructi tion v value c cha hain n with th the ‘ the ‘first to touch p point’ nt’ suppl pplier

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INVESTM TMENT H NT HIGHLIGHTS TS

✓ Atlas is an established Canadian supplier of engineered wood products, in business for more than 18 y 18 year ars, NOW with operations across Canada in British C Columbia, Manitoba, a and Ontario

MARKET LE LEADER

✓ Fragmented industry ripe for consolidation and disruption ✓ Attractive profile of organic growth of 20% for the last 12 months (LTM) at its three locations

MUL ULTIPLE AVENUES VENUES F FOR OR G GROW OWTH

✓ Engineered wood products is a mature industry with low volatility and steady growth ✓ Fabrication of trusses and prefabricated floor and wall panels is expected to grow at a significantly higher rate owing to labour and skills shortages in the construction industry

PO POSIT ITIVE INDU DUSTRY TREND NDS

✓ Strong profitability with revenue run rate of $18.8 million and $2.3 million of earnings before interest, taxes, depreciation, and amortization, with growing EBITDA margins for fiscal 2019

STRONG TRACK R RECORD O D OF PROFIT ITABILI ILITY

✓ Highly talented, experienced, and motivated team of Employees ✓ Strong management team with 15+ years average industry experience

CAPAB ABLE LE LEADE DERSHIP IP T TEAM

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CON ONTACT US US

TSX.V: V:AEP OTC:APEU EUF

Bill Woods ds Chief Financial Officer Dirk k Maritz tz President & CEO

6551 6551 Aulds ds Road ad, U Unit 102 102 Nan anai aimo, BC V C V9T 9T 6K 6K2 atlase sengineeredprod

• ducts.c

.com

• m

info@a @atlase sep.ca