Atlas Engineered Products Ltd (CVE:AEP), the roof truss and engineered wood products group, has struck a lumber deal, which will reduce costs and increase cashflow, it told investors Tuesday.
The new supply deal is with an experienced private company with operations across Canada and the Western US and is for five of Atlas's plants.
DEEP DIVE: Atlas Engineered Products making great progress as it consolidates Canada's wood product industry
It is expected to result in cost savings of up to 14.7% per facility depending on location, and potentially result in between $750,000 and $1 million in additional cash flow, the company said.
Dirk Maritz, the group's CEO, said the agreement was "part of AEP's strategic plan to capitalize on the efficiencies of consolidating the engineered wood products industry."
"All of our current facilities in BC, Manitoba and Ontario will benefit from this supply certainty and cost savings."
Seasonality of business
"The seasonality of the lumber business and construction industry has, in the past, resulted in supply and delivery challenges for all manufacturers of roof and floor trusses, wall panels,
windows and doors," added executive VP (vice-president) Hadi Abassi.
"This comprehensive approach to lumber supply will ensure we receive full load deliveries throughout the busy summer building season, a competitive advantage for our clients."
Shares in Toronto were unchanged at $0.38.
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