ATRM Provides Update on KBS Operations and Outlook
May 26 2015 - 4:10PM
ATRM Holdings, Inc. (Nasdaq:ATRM) ("ATRM" or the "Company") today
provided an update on its KBS operations and outlook for the
remainder of fiscal 2015 and announced that it recently regained
compliance and is now current with its Securities and Exchange
Commission ("SEC") reporting requirements.
Recent Highlights:
- Expect that recent operating improvements at KBS will allow
ATRM to achieve meaningful improvement in results for Q2 and the
second half of 2015
- Completed filings to become current with SEC reporting
requirements
- Received first royalty payment from divested test handler
product line
- Executed agreement for early exit from underutilized corporate
headquarters facility
In April of 2014, ATRM acquired KBS, a Maine-based manufacturer
of modular structures for residential and commercial applications,
and divested its Minnesota-based test handler product line, which
was its only operating business in the first quarter of 2014.
"Our net sales and operating results in the first quarter were
adversely impacted by the winter weather conditions in the New
England area, which were much more severe than normal this year,"
said Dan Koch, ATRM's president and chief executive
officer. "We also incurred approximately $500,000 in excess
costs in the quarter related to two commercial projects that were
in process at the time of the KBS acquisition. We are
continuing to work hard to improve the operations at
KBS. Initiatives include selective price increases,
organizational streamlining, implementation of standard contracts,
and improvements in operating processes, financial reporting, and
controls. As we enter the peak season for our business, we
believe these initiatives will lead to improved operating results
at KBS in future quarters. We expect sales to meaningfully
improve in the second quarter versus the first quarter."
"During the first quarter, we received our first royalty payment
of approximately $770,000 from the transfer of our test handler
product line to a semiconductor equipment company on April 22,
2014," Mr. Koch continued. "The payment was for test handler
sales for the period from April 22, 2014 through December 31, 2014,
or approximately eight months. Future royalty payments are due
quarterly. As a reminder, these royalty payments do not show
up in our income statement, but do show up in our cash flow
statement. In addition, on May 1, 2015, we executed an early
termination of the lease for our underutilized corporate
headquarters facility in North St. Paul, MN, which also helps
improve our cash flow in future periods. We relocated our
corporate offices to nearby St. Paul, MN. Finally, after being
delinquent on our SEC filings for a time following the KBS
acquisition, on May 20, 2015, we filed our Form 10-Q for the
quarterly period ended March 31, 2015, which brought us current on
our SEC filings."
Jeff Eberwein, chairman of ATRM's board of directors, commented,
"While the operating results and order backlog of KBS after we
acquired it in April 2014 were inconsistent with the assurances we
received from the seller, we believe that it will become a good
business in a growing industry with compelling demographics and
will prove to be a good investment after the recent significant
improvements we have made to management and the
operations. Dan Koch, our CEO, recently relocated to Maine to
assume an active role in the daily management of KBS. When
both of KBS's manufacturing plants are operating at full capacity,
we believe KBS could be capable of generating approximately $40
million in annualized revenues and achieving operating margins of
five to ten percent or more. We expect that KBS's operating
results will improve in the second quarter and the rest of
2015. We are pleased to now be current on all our SEC
filings. As a result, we are in a much better position to move
forward with our long-term strategy to seek out additional
acquisitions, generate pre-tax profits, and realize the benefits of
ATRM's significant NOL asset."
About ATRM Holdings, Inc.
ATRM Holdings, Inc. (Nasdaq:ATRM), through its wholly-owned
subsidiaries KBS Builders, Inc. and Maine Modular Haulers, Inc.,
manufactures modular housing units for commercial and residential
applications. ATRM is based in St. Paul, Minnesota, with
facilities in South Paris and Waterford, Maine. ATRM's website
is www.atrmholdings.com.
Forward-Looking Statements
This press release may contain "forward-looking statements", as
such term is used within the meaning of the Private Securities
Litigation Reform Act of 1995. These "forward-looking statements"
are not based on historical fact and involve assessments of certain
risks, developments, and uncertainties in the Company's business
looking to the future. Such forward-looking statements can be
identified by the use of terminology such as "may", "will",
"should", "expect", "anticipate", "estimate", "intend", "continue",
or "believe", or the negatives or other variations of these terms
or comparable terminology. Forward-looking statements may include
projections, forecasts, or estimates of future performance and
developments. These forward-looking statements are based upon
assumptions and assessments that the Company believes to be
reasonable as of the date hereof. Whether those assumptions and
assessments will be realized will be determined by future factors,
developments, and events, which are difficult to predict and may be
beyond the Company's control. Actual results, factors,
developments, and events may differ materially from those the
Company assumed and assessed. Risks, uncertainties, contingencies,
and developments, including those discussed in the Company's
filings with the Securities and Exchange Commission, could cause
the Company's future operating results to differ materially from
those set forth in any forward-looking statement. There can be no
assurance that any such forward-looking statement, projection,
forecast or estimate contained can be realized or that actual
returns, results, or business prospects will not differ materially
from those set forth in any forward-looking statement. Given these
uncertainties, readers are cautioned not to place undue reliance on
such forward-looking statements. The Company disclaims any
obligation to update any such factors or to publicly announce the
results of any revisions to any of the forward-looking statements
contained herein to reflect future results, events or
developments.
CONTACT: Paul Askegaard
ATRM Holdings, Inc.
(651) 704-1812