Atlas Engineered Products Ltd (CVE:AEP) (OTC:APEUF) posted second-quarter results on Wednesday that saw its revenue jump 11% compared to the first quarter driven by the “strong resilience” in the British Columbia and Manitoba markets despite the coronavirus (COVID-19) restrictions.
"Although Q2 2020 resulted in lower revenues than in Q2 2019, I am pleased to report an 11% revenue increase in Q2 2020 over Q1 2020 amidst the most impacted months of the COVID-19 pandemic. Normalized EBITDA margin was at 14%, with positive operating profit and net income for Q2 2020,” Atlas Engineered Products CEO Dirk Maritz said in a statement.
“This was achieved through our comprehensive cost saving and cash preservation strategy, implemented at the end Q1 2020, as well as disciplined sales activities, and an increased focus on improving operational efficiencies and margin expansion throughout Q1 and Q2 2020," he added.
For the period ended June 30, 2020, the wood truss and engineering firm posted revenue of $7,900,805, compared to revenue of $9,067,334 for the same period a year earlier. However, the $7,900,805 second quarter revenue number was up 11%, compared to $7,097,979 in the first quarter of 2020.
The Nanaimo, British Columbia-based company said the quarter over quarter increase in total revenue was driven by the “strong resilience of the British Columbia and Manitoba markets” despite the "ambiguity in the Ontario market at the time due to COVID-19 restrictions."
Positive outlook
The specialist in the manufacture and supply of roof trusses and wood products said it anticipated “strong volumes” throughout the rest of the 2020 fiscal year on the back of “exceptional quoting activity, increased housing starts and permitting, and low interest rates” that it expected will fuel further demand.
Gross margins in the first quarter were 24%, up from a gross margin of 16% for the three months ended March 31, 2020. As a result of increased gross margins and stringent cost controls and cash preservation activities, the company posted an operating profit of $248,675 and net income of 220,601 for the second quarter.
The company said that despite typically higher working capital requirements ramping up to higher seasonal market demand from June onwards, Atlas Engineered had a robust cash balance of $3,033,576 as of June 30, 2020, due to a private placement completed in February 2020, and a “number of cost reduction and cash preservation strategies.”
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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