Atlas Engineered closes Penn-Truss acquisition

Executive Summary

• Atlas Engineered Products Ltd. (AEP) has completed the acquisition of Penn-Truss MFG Inc., a manufacturer of roof and floor trusses and engineered wood products located in Saltcoats, Saskatchewan.
• The transaction marks AEP's 10th manufacturing facility and its first entry into Saskatchewan, aiming to expand national footprint and create operational synergies with its existing Manitoba facility.
• The total purchase price is $3.8 million, subject to a working capital adjustment, with payment structured through cash at closing, deferred cash, and potential earn-out shares based on fiscal 2025 performance.

Key Details

• Transaction Structure:
  • Target: Penn-Truss MFG Inc. (Saltcoats, Sask.).
  • Closing Date: July 24, 2025.
  • Total Purchase Price: $3.8 million (subject to working capital adjustment to be finalized within 60 days of closing).
  • Payment Terms:
    • Remaining balance paid at closing.
    • $760,000 in cash payable nine months post-closing (subject to working capital adjustment).
    • Up to $760,000 payable in cash or AEP shares at AEP's discretion, based on Penn-Truss's fiscal 2025 performance.
  • Earn-out Valuation:
    • Based on adjusted EBITDA to be finalized within five business days of filing fiscal 2025 audited financial results.
    • Share price for earn-out determined as the greater of: (i) 10-day VWAP at determination time, or (ii) market price at determination time, with a floor price set at the discounted market price of AEP shares on the day prior to the announcement.
• Financial Metrics of Target:
  • 2024 Revenues: Just over $8.7 million (unaudited, fiscal year ended Dec. 31, 2024).
  • 2024 Normalized EBITDA: Approximately $500,000 (non-IFRS).
  • Three-Year Average Normalized EBITDA: Approximately $955,000.
  • EBITDA Multiple: 3.98 times (excluding land and buildings, which were not purchased).
  • Equipment Value: Independent appraisal assessed fair market value of equipment at $3.1 million.
• Strategic Rationale:
  • Expands AEP's national footprint into the Canadian Prairies.
  • Enables resource sharing and synergy building with AEP’s south-central Manitoba facility.
  • Establishes a 600-kilometre delivery radius based on historical business patterns.
  • Identifies opportunities for organic growth in wall panel manufacturing, an area Penn-Truss has previously engaged in but not as a primary operation.
  • Aims to leverage operating synergies and purchasing power to enhance operations.

Notable Quotes

• "I am excited to announce the acquisition of our 10th manufacturing facility and our first facility in Saskatchewan. This acquisition expands our national footprint with more coverage through the Canadian Prairies... Penn-Truss in Saskatchewan is close enough to our south-central facility in Manitoba that they can share some resources and build synergies that will increase efficiencies in the Prairie market." — Hadi Abassi, CEO, President and Founder of Atlas Engineered Products Ltd.