Atlas Third Quarter 2013 Review

Report for the Quarter Ended September 30, 2013

Atlas Holdings experienced a busy third quarter, concluding the sale of the Southeast Division of Wood Resources to Boise Cascade, establishing two additional platform companies, Veritas Steel (“Veritas”) and New Wood Resources LLC (“New Wood”), completing the acquisition of a “Bolt-on” to ASG Group (“ASG”) and securing financing for Detroit Renewable Energy (“DRE”). Performance continued to improve at most of our portfolio companies as we grow value in partnership with our talented management teams. Atlas’ portfolio companies generally showed improving performance in the third quarter, perhaps nowhere in greater evidence than at Erickson. Sometimes the transformation of our acquisitions into Performance Organizations takes longer than we would like; in the case of Erickson, progress was achieved in an accelerated timeframe. In less than one year, our team at Erickson has returned the business to profitability. We also enjoyed a standout quarter at Forest Resources LLC (“Forest“). Forest is delivering a record year by combining excellent execution with supportive market conditions, both with respect to selling prices and raw material costs.

One highlight of the quarter was the installation of Pat McCauley as CEO of Bridgewell. We are confident that Pat’s highly relevant experience in senior management roles at Susquehanna International Group will bring great value to Bridgewell. With Pat’s hiring, Jim Toya will remain an active Chairman of the Board, but will step down from day-to-day responsibilities. We want to thank Jim for his terrific leadership at Bridgewell; he played a central role in stabilizing this franchise in 2010 and has handed off to Pat a business with an excellent foundation for strong growth in the future. We had another key victory in our War for Talent at Twin Rivers during the quarter, hiring Ken Winterhalter as President. Ken joins us after serving as CEO of National Envelope and previously, as President of Unisource. We are excited to welcome Pat and Kelly McCauley and Ken and Marsha Winterhalter to the Atlas Family.

Despite the danger posed by political gridlock in the U.S., we are encouraged by the broader economy’s resilience and apparent traction and remain optimistic about a slow but continuing recovery. Europe appeared to stabilize in the quarter. While improvement on the Continent is hardly robust, our most important markets are Germany and Poland, both of which appear to be outpacing the rest of Europe. Slower growth continued in China, sustaining moderation of a number of input costs for commodities consumed by our companies. It is clear that the domestic-demand driven manufacturers in China are faring far better than the export-driven SOEs. In the U.S., capital remains available and domestic monetary policy is expansionary for the moment, as the Fed appeared to delay action given the risks to the economy induced by political impasse. Among the industrial sectors most relevant to the “Atlas Economy”, the U.S. construction industry continues to recover toward more normalized levels of activity, improving the prospects for Bridgewell, Erickson, RedBuilt, Twin Rivers and New Wood. We also believe that Veritas will benefit from improving construction trends, as government/infrastructure construction generally recovers later in the economic recovery cycle.

In closing, we lost our good friend Tripp Brower, who passed away in September after a 16 month battle with Multiple Myeloma. Tripp co-founded Capstone Partners in 2001, and over the past 12 years built Capstone into a leading global private equity funds placement firm. Tripp played a formative role, through his incessant pestering and wonderful charm, in convincing us to raise Atlas Capital Resources LP, our first institutional fund, and then shepherded us through an effective and ultimately, successful process during a challenging time in the financial markets. Along the way, he became part of the Atlas Family. Capstone reflects Tripp’s ideals of compassion, hard work, and selfless service to others. Tripp’s philanthropic pursuits included serving as founding member of the Governing Board for Executives in Action and as a prominent member of Crosspoint Church. He will be sorely missed.


Andrew Bursky
Managing Partner
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Timothy Fazio
Managing Partner
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Acquisition of Veritas Steel

In August 2013, Atlas purchased all of the senior secured debt (“Debt”) of PDM Bridge, LLC (“PDM”) pursuant to a direct purchase solicitation. The Debt was purchased to establish a position from which we could take ownership of the assets of PDM pursuant to an Article 9 foreclosure. In September, we completed the purchase of the Debt. The foreclosure was completed after the quarter’s close on November 5, and operations have been commenced under the newly-formed Veritas Steel LLC (“Veritas”).

Veritas will own and operate the assets of PDM. PDM was a leader in the steel bridge fabrication industry with extensive experience in the manufacture of highly complex bridge structures. PDM produced a complete line of bridge structures ranging from simple plate girder bridges commonly found in highway overpasses and interchanges to complex bridges such as arch, bascule (drawbridge), cable-stayed, lift, railroad, suspension and truss designs. The company has three facilities located in the Midwest and Southeast with, in the aggregate, 691,000 square feet of fabrication workspace and 250 tons of lifting capability on 220 acres. These plants have close proximity to major rail, highway and waterway transportation, which provided PDM with effective access to the eastern half of the United States for bridge contracts. PDM was founded in 1994 through the acquisition of Phoenix Steel and Hartwig Manufacturing by Pitt-Des Moines (resulting in the “PDM Bridge” name); however, the company’s roots stretch back over 100 years at its flagship facility in Eau Claire, WI.

Atlas was attracted to the transaction due to favorable long-term market dynamics, Veritas’ experienced workforce and competitive asset base, and by the enhanced revenue opportunities made possible by Atlas’ ownership. We are very excited about the opportunity represented by Veritas and believe the Company is well-positioned for the future.

Sale of Wood Resources

The original investment in Wood Resources LLC (“Wood Resources”) was made in 2003. At that time, Atlas agreed to acquire Olympic Panel Products LLC (“Olympic”) from Simpson Timber Company, a large privately-owned natural resources company. In December 2004, Wood Resources acquired two additional plywood mills, Chester Wood Products and Moncure Plywood (together, the “Southeast Operations”) from Weyerhaeuser Company. SE Panel & Lumber Supply LLC (“SEP”) was begun in 2006 in the southeastern United States to extend the distribution reach for Olympic’s products. Earlier this year, after nearly two years of analysis and negotiation, the newly formed Omak Wood Products LLC (“Omak”) entered into an agreement with the Colville Tribe to restart an idled veneer mill on the Colville reservation in Omak, Washington and to enter into a long-term log supply agreement. This business is in the process of ramping up production.

On September 30, 2013, Wood Resources sold the Southeast Operations to Boise Cascade Company (“Boise”), a leading wood products manufacturer and building materials distributor in North America. Boise was a logical buyer of the facilities and we expect these operations to continue their excellent performance under Boise ownership. Following the sale of the Southeast Operations, Atlas established New Wood Resources LLC (“New Wood”) to purchase Olympic, Omak and SEP (together, the “Subsidiaries”) from Wood Resources. This decision was driven by the need for additional investment capital to execute the stabilization and growth plan (“Plan”) for the Subsidiaries. Given the 10 year duration of the  original investment in Wood Resources by its investors and the inability of certain of Wood Resources’ institutional investors to commit additional capital or extend their investment period, we believe this transaction to be the best path forward for the business.

Olympic, based in Shelton, WA, is a leading manufacturer of overlay plywood. Its product offering includes HDO and MDO panels for concrete forming, sign making and the transportation industry as well as industrial panels with skid resistant, chemical resistant and decorative features for a wide range of industrial and building applications. SE Panel, based in South Daytona, FL, distributes a broad line of concrete forming panels, shoring materials and laminated veneer lumber. While SE Panel primarily represents Olympic’s products in the marketplace, it also has partnered with other suppliers of ancillary concrete forming products to expand its product line. Omak, based in Omak, WA, produces veneer and began its production restart in October. Omak was previously known as the Colville Indian Plywood & Veneer mill. The Confederated Colville Tribes operated the mill from 2002 until 2009, when the harshest decline in the construction industry in 50 years forced its closure. Wood Resources developed the engineering, capital and restart plans in the first half of 2013 and began hiring employees and refurbishing the mill in the third quarter. New Wood will be the beneficiary of these efforts. New Wood’s objective is to transition Olympic and Omak into an integrated, low-cost supplier of veneer and plywood in the Pacific Northwest (“PNW”) and to sustain Olympic’s market-leading position in specialized, concrete-forming panels.

Rapidly escalating log costs in the Pacific Northwest have proven to be a challenge for Olympic and other plywood producers in the region. Omak is an elegant solution to the fiber cost issue and holds the potential for conveying sustainable competitive advantage to New Wood’s combined operations. Omak has begun start-up activities after nearly a year of engineering, facilities and equipment assessments, recruiting of a leadership team, reengaging the foresters in the region and establishing a staffing plan in concert with local community employment organizations. Omak commenced peeling logs and producing veneer in October. Management anticipates a measured rampup of production through the first half of next year.

We believe New Wood represents a unique way to continue the successful legacy of Wood Resources with a proven and very capable team of management partners.



Mike Ukropina
Chief Executive Officer

ASG is a leading global creative services and packaging provider to the consumer products and electronic media industries. Atlas formed ASG by acquiring the AGI media packaging business (“AGI“) of MeadWestvaco Corporation and combining it with the Shorewood Packaging business (“Shorewood”) purchased from International Paper Company.

ASG had an excellent aggregate RIR of 0.6 during the third quarter of 2013 and an RIR of 0.8 for the 2013 year to date period. This was a good safety performance both on an absolute basis and relative to the same period in 2012, when the RIR was 1.2 for both the third quarter and year to date period. ASG’s Europe division (“ASG Europe”) had two  recordable incidents during the third quarter while the North America division (“ASG NA”) had a disappointing four recordable incidents but no lost work day incidents. ASG’s Asia division (“ASG Asia”) continued its perfect safety streak with no recordable incidents during the quarter. September marked the fifth month in a row without any recordable injuries at ASG’s Mexico division (“ASG Mexico”), bringing the year to date RIR to 0.7 and holding the 2013 lost time incident rate at 0.

ASG NA experienced a disappointing third quarter, but on a year to date basis the print division and ASG NA in the aggregate are both ahead of the prior year’s profitability by a significant margin. This demonstrates the effect of the cost reduction and synergy initiatives the management team has executed since the combination of AGI with Shorewood.

ASG Mexico delivered another strong quarter, generating profitability and revenue gains over the third quarter of 2013. Highlights of the quarter included excellent audit results from major consumer customers. Operations were strong and estimating activity was high, which bodes well for 2014 sales prospects.

ASG Asia delivered substantially higher profitability and revenue during the quarter relative to the prior year. Operations were strong at both the Guangzhou and Kunshan plants and sales were particularly strong with local customers. Other highlights included the smooth execution of rigid box projects as well as being awarded a tier 1 supplier position for a major customer.

ASG Europe experienced a tough quarter. The plastics business performed well relative to the same period in the prior year while shortfalls occurred in the Creative Services and Print divisions. Creative Services suffered from reduced creative expenditures by the major studios, as they reduced their marketing and POS spends. Additionally, the absence of major title releases during this quarter contributed to the difficulties faced by ASG Europe. However, many of the studios have pushed their releases from the third to the fourth quarter this year, which should provide some lift for Europe during the fourth quarter.



James Toya

Bridgewell supplies a variety of construction products, utility supplies, wood products, food ingredients and crop inputs, together with logistics services, to suppliers and customers globally. Bridgewell commenced operations on March 1, 2010, when it acquired certain assets of the Trading Division of North Pacific Group Inc. out of a Federal receivership.

During the third quarter of 2013, the company sustained its world-class safety standard of 0.0 Recordable Incident Rate (“RIR”), a record that the company has maintained since formation.

In the quarter, Bridgwell’s revenue increased slightly, but profitability jumped significantly. The improvement in profitability is largely attributable to i) the elimination of slow moving inventory in the International Wood Products division that compressed margins in 2012, ii) the success of the Contractor Direct division’s strategy for managing the volatility of raw material prices, implemented in the first quarter of 2013 and iii) increased activity with a major utility customer in the Utility and Construction division.

Bridgewell continues to make strides in several Key Performance Indicators (“KPI”) that we use to track the business. One KPI used to track trader efficiency is “Sales Expense/Gross Profit”, a percentage measurement of the total selling expense relative to the gross profit generated in the business. In the third quarter, this metric improved in comparison to the same period in 2012, indicating greater sales efficiency. Another KPI, used to track working capital efficiency, is “Cycle Days”, which measures the average number of days that working capital is invested until inventory is converted into collected cash. A reduction in Cycle Days is the result of concerted efforts by management to reduce inventories, accelerate accounts receivable collections and extend payables. For the third quarter of 2013, the average Cycle Days for the business was lower than for the same quarter in 2012.

At the end of the third quarter, Bridgewell announced that Pat McCauley would join the company as Chief Executive Officer. Pat formerly served as Chief Operating Officer of Trading and Head of New Business Development for Susquehanna International Group, a global quantitative trading firm. We believe Pat’s multi-disciplinary skills are ideally suited to take Bridgewell into the next phase of its growth and we welcome his engagement in the business.

Bridgewell will continue to make significant investments to grow its business, both in the form of new traders and expansion into new geographic and product markets. We are also exploring strategic bolt-on acquisitions as a means of leveraging the company’s infrastructure and capabilities, accelerating growth and further diversifying Bridgewell’s end markets. We remain excited by the potential of Bridgewell and believe the company is well-positioned to take advantage of the growth prospects available to it in both domestic and international markets.



Steve White
Chairman and Chief Executive Officer

Detroit Renewable Energy (“DRE”) owns a group of infrastructure assets providing the City of Detroit and surrounding municipalities with safe, reliable and cost-effective solutions for clean energy and waste disposal.

During the quarter, DRE had one recordable incident across all of its business units. DRE had an RIR of 1.3 during the third quarter of 2013 and an overall RIR of 0.4 for the year-to-date period as compared to the third quarter and year-to-date period of 2012 of 1.4 and 0.9, respectively. Our managers continue to emphasize the Atlas safety culture as we strive to achieve world-class safety performance across all of our businesses.

The third quarter for DRE was highlighted by the completion of a bond financing (“Bonds”) through the Michigan Strategic Fund (a state entity that was established to issue tax-exempt bonds and provide those proceeds to qualifying entities) at the end of July, a great achievement by the DRE team as the offering was completed less than one week after the City of Detroit filed under Chapter IX of the Federal bankruptcy code on July 18. As we communicated last quarter, the proceeds of the Bonds will be used to fund capital expenditures at Detriot Renewable Power (“DRP”) and Detroit Thermal (“DT”) and to enable the start-up of Detroit Renewable Cooling (“DRC”)’s service offering. The DRP expenditures are particularly critical - they will enable the facility to achieve the level of consistent operational performance that delivers acceptable profitability.

In the third quarter, DRE experienced disappointing performance primarily due to a single causal factor - boiler reliability at DRP. Despite these difficulties, we are confident that DRP management has identified the issues and expect to see tangible evidence of the effectiveness of the work underway in the latter half of the fourth quarter.

In terms of our other growth initiatives, we previously announced that DRE had signed a long-term contract with a major Detroit-based manufacturer to replace its aging, coal-based boilers with environmentally sound and lower cost steam through a significant expansion of DT’s pipeline, while leveraging much of the infrastructure of DRE. We can now announce that the customer is General Motors, and this project will make GM's Hamtramck plant the top GM facility in the world by percentage of renewable energy used. The project is being financed with the proceeds of the Bonds. Permitting, engineering and planning are in process and we remain on target to provide “first steam” in 2014.

During the quarter, DRE made two important additions to its Board of Managers, Cynthia Pasky and James Wood. In addition to her role as President and CEO of Detroit-headquartered Strategic Staffing Solutions, Ms. Pasky is the Chairwoman of the Board of Directors of the Detroit Downtown Partnership and co-chairs the Urban Strategies Committee of Business Leaders for Michigan. Ms. Pasky has been named one of Detroit’s most powerful people by Crains Detroit Business and one of the Top Women Entrepreneurs in North America by Women Impacting Public Policy. Mr. Wood joins DRE with decades of experience in power generation, boilers systems and waste to energy including having served as the President and Chief Executive Officer of Babcock & Wilcox, a multi-billion dollar global power and environmental business, and previously, in senior leadership positions at Wheelabrator Environmental Systems. In addition, Mr. Wood most recently served in the United States Department of Energy as the Deputy Assistant Secretary for Clean Coal. We are fortunate to have both Ms. Pasky and Mr. Wood joining us as the newest members of the DRE team.



Robert Quinonez
Chief Operating Officer

Erickson is a leading construction services and prefabricated building products company that provides turnkey framing services, framing packages, trusses and other products to builders and developers. Erickson’s primary geographic markets include Arizona, Northern California and the greater Reno, NV area. Atlas formed Erickson by acquiring the company’s core assets in October 2012.

Erickson reported an RIR of 9.1 in the third quarter of 2013. Year-to-date September 2013, Erickson experienced an RIR of 10.2. While these results are disappointing and well below our objectives for Erickson, they represent a significant improvement over preacquisition performance and third quarter 2012 RIR of 19.2. All four Erickson divisions are showing year-over-year improvement in safety, with Erickson’s two largest divisions, Arizona Framing (“AZ Framing”) and California Framing (“CA Framing”), which includes the Nevada Framing operations), showing the largest improvements. As mentioned in previous letters, the most challenging safety period for Erickson is the seasonal construction peak during the third quarter, when Erickson hires new employees to handle additional volume. To improve safety, management has revamped Erickson’s hiring and new employee training program and implemented changes to safety staffing and field auditing practices. The safety improvement exhibited in the third quarter is encouraging and suggests that continued focus on safety will yield results in Erickson’s march towards world class safety performance.

During the third quarter, Erickson hosted President Barack Obama for a facility tour prior to his policy address on housing delivered later that day. The President spent about an hour on-site at AZ Framing, conversing with a number of Erickson’s employees including COO Bob Quinonez as well as Atlas representatives, Andrew Bursky and Sam Astor. “One of the cornerstones of a middle-class life in America is the chance to own your own home,” said President Obama in his nationally televised speech on housing and jobs. “Thanks  to the steps we’ve taken over the past four years, companies like Erickson Construction are bringing on new workers to build more new homes — and my Administration is committed to helping more responsible homebuyers afford those homes.” Regardless of political leanings, we believe the honor of receiving the President is a tribute to both the hard work of Erickson’s employees and to the value Atlas is creating in reviving troubled businesses.

In the third quarter, Erickson generated positive profitability, marking the first time since the third quarter of 2007 that this has happened. While Erickson continues to benefit from the recovering housing market, Erickson’s experience suggests that the recovery has been more fully realized in housing prices than new construction volume.

Erickson’s business is driven by housing starts rather than housing prices. Even so, good news in the housing market is good news for Erickson, and the company is seeing year over-year volume improvements in all core markets. Management expects the pricing pressure in most housing markets to drive increased volumes in quarters ahead. Also during the third quarter, Erickson completed a financing, providing ample liquidity to fund the company’s growth while allowing the company to continue executing its growth plan.

AZ Framing continues to outperform its plan, having operated profitably in the quarter and experiencing its busiest quarter thus far in 2013. CA Framing also continues to improve with an intense focus on operating costs, improved volume and continued margin expansion. CA Framing generated positive results in the third quarter. Newly awarded projects suggest that the best is yet to come. Erickson’s door molding and millwork business (“DSI”) is co-located with AZ Framing. In the third quarter, DSI continued to operate profitably. Management remains focused on margin expansion to drive increased profits in future quarters.

Erickson’s performance is a testament to management’s commitment to take Erickson “back to the future”, returning to the operating approach that delivered the success experienced in previous decades. We remain focused on the touchstones of the Erickson Turnaround Plan: operating safely, focusing on profitable work instead of market share, and driving operational efficiency through training and incentives.



Deba Mukherjee
President and Chief Executive Officer

Finch, located in upstate New York, is a leading producer of premium uncoated printing papers. Finch operates an integrated paper mill utilizing on-site sustainable energy resources, including biomass and hydroelectric power and also manages more than 160,000 acres of Adirondack forests for the Nature Conservancy.

We remain focused on our goal to achieve world class safety performance. At the end of Q3 2013, our YTD recordable incident rate (RIR) was 1.9 compared to a year end 2012 rate and Q3 2012 rate of 1.8. YTD Lost Time Days Away rate (LTDA) was 1.0 vs. a year end 2012 rate and Q3 2012 rate of 0.5. Staff reductions aimed at rightsizing Finch’s cost structure for the long-term resulted in the placement of employees in new roles, which negatively impacted safety. We have been addressing the situation through increased employee awareness, training, and communication. We have made great progress in the quarter, as both our RIR and LTDA have dropped from 2.2 and 1.3, respectively, at the end of Q2 2013.

Financial results for Q3 2013 were largely impacted by selling price, as we saw a drop in selling price compared to Q3 2012. Excess capacity in the market continued to suppress prices. Despite market conditions, our strong focus on pricing discipline resulted in an increase in selling price versus the prior quarter.

The continued pricing pressure as a result of market overcapacity finally led to significant capacity closure announcements during the quarter. Capacity closure announcements occurred in the form of machine shutdowns at Georgia-Pacific and Boise, as well as International Paper’s announced Courtland, AL mill closure. Collectively, the closures are expected to reduce uncoated freesheet capacity over the next six months.

Despite a challenging environment, Finch remains focused on selling its valued-added papers and maintaining a competitive cost profile. While the recent market announcements are expected to have a positive impact to Finch, we are making progress in our transformation plan that will position Finch to succeed regardless of industry conditions.



Larry Richard
President and Chief Executive Officer

Forest Resources LLC (“Forest”) had one lost time incident and three total recordable incidents during Q3 2013. The DART (Days Away/Restricted/Transferred) rate for Q3 2013 was .6 compared to the 1.8 industry average. Forest’s TRR (Total Recordable Rate) for Q3 2013 was 1.8 compared to the 3.2 industry average. This quarter’s safety performance indicated a positive trend in the incident rates for Forest as we increased focus on safety awareness and culture at our mills, where most of the recent incidents occurred.

Forest generated higher revenue and profitability in Q3 2013 compared to Q3 2012. Year-over-year financial improvement at Forest is largely attributable to selling price increases, offset partially by higher fiber input cost prices. Orders and pricing both remain firm in Hartford City Paper‘s end markets although there appears to be early signs of selling price erosion in the market. Production at Ivex Specialty Paper (“Peoria”), our specialty grade mill, was slightly down for the third quarter of 2013 compared to Q3 2012. Peoria’s primary product, crepe paper for the sewn bag industry, saw marginally increased sales over Q3 2012 despite market pressure from product substitution. Peoria remains focused on development of new products with their expanded product capabilities resulting from the recently installed calendar stack. Shillington Box sales volume and profitability increased in Q3 2013 over Q3 2012. Reduced manufacturing costs, driven by the use of lighter weight purchased corrugated sheets, and improved operating efficiencies were the principal components of Shillington’s increased profitability.

The North American folding carton market strengthened in the third quarter over a very soft 2012. Price increases for coated recycled board implemented during the third quarter helped offset lower Strathcona Paper production and sales. Boehmer Box Q3 2013 order volumes, revenues, and profitability are all up significantly year-over-year. The third quarter has seen continued higher levels of quoting and customer development at Boehmer Box, which should continue to result in new business.

Containerboard markets are in balance but with higher levels of inventory than in recent quarters. Fiber prices are expected to seasonally rise above current levels during the fourth quarter. New containerboard capacity coming into the market is starting to impact waste paper pricing in Strathcona Paper’s northeast market. Several newsprint producers are repurposing their assets and entering the containerboard markets. Both the containerboard and folding carton/CRB markets are expected to show year over year volume growth and selling price pressures in an increasingly competitive market during the fourth quarter.



Henrik Krabsen Jensen
President and Chief Executive Officer

For the nine months ended September 2013, the Pangborn Group had no lost time injuries. The trailing twelve month recordable incident rate through the end of September 2013 is 0.6, down from 1.1 in 2012 and 2.3 in 2011.

The implementation of our Continuous Improvement / Lean projects gained further traction and we are beginning to realize operational and financial improvements throughout the Group. Our focus for the next six months is to accelerate implementation in our German facilities and to introduce Continuous Improvement/Lean in our new entities (Pangborn China and Pangborn SES).

During Q3, we successfully finalized the acquisition of SES, located in England. The products of SES will close a gap in our product portfolio and enable us to provide more
competitive products/solutions in and around Europe. Pangborn UK will be consolidated into SES in early October. The new name of the consolidated entity is Pangborn SES.

Overall, Q3 2013 developed as we had expected with the delivery of several large equipment orders moving into Q4 and early next year at the request of customers. As a result, revenues declined slighted compared to Q3 2012. However, based upon our current backlog, we expect significantly higher sales in Q4 and strengthened financial performance overall.

Market conditions in North America and China continued to be favorable. The European market has been relatively weak in 2013, but we have seen some recent strengthening of order intake on spare parts and customers have started to revitalize equipment projects for 2014. Our activities in the Russian market continued with many customer activities and we signed a new representative agreement with a wellestablished South African representative. We moved into our new manufacturing facility in China and are now operational with equipment manufacturing starting in Q4.



R. Douglas Lane
President and Chief Executive Officer

Phoenix Services International LLC (“Phoenix Services” or the “Company”) reported an OSHA recordable incident rate of 2.6 for the quarter ended September 30, 2013, which compares to the quarter ended September 30, 2012 rate of 1.9 and the national slag industry standard of 5.0.

Phoenix Services continues to increase its business under contract and is now operating at over 40 sites globally. In spite of early integration hiccups, Phoenix has made positive strides in its French operations. Phoenix received a new contract at one French location and a ten-year extension on its contract at another without the mill owner putting the contract out to bid. These developments are concrete evidence of the positive structural changes that Phoenix has effected in the French operations. In other operations, Phoenix had a smooth Phase 1 start-up of the Gent operations in Belgium. Phoenix commenced Phase 2 on October 1, 2013, which is also going as planned. The Galati scrapyard project is on schedule and expected to commence operations on December 1, 2013.

Phoenix Services’ sites are running well and continue to benefit from positive macroeconomic trends in the steel sector. According to the World Steel Association, global steel production for the first eight months of 2013 was up 3.2% relative to the first eight months of 2012. While it is worth noting that the Company’s results are not strictly correlated to the results of the steel industry, these statistics are consistent with the Company’s experience.

The Company continues to focus on operational excellence and attractive growth opportunities and has the capitalization needed to execute its plans. The company continues to evaluate new opportunities and is considering multiple opportunities in Latin America. We remain extremely optimistic about the future performance and growth at Phoenix Services.



Kurt Liebich
President and Chief Executive Officer

The safety of our associates remains RedBuilt’s top priority; however, our recordable incident rate for the year has been disappointing. Year to date, RedBuilt has a recordable incident rate of 3.4, which is significantly higher than our target of less than 1.0. The good news is that we have only had one lost time accident and none of our incidents have been severe. We remain highly focused on limiting the number of events that can lead to safety incidents.

The level of commercial activity continues to improve, slowly but steadily. The AIA’s Architecture Billings Index (“ABI”) continues to forecast an improvement in commercial construction. The ABI measures the amount of projects in the early stages of the construction pipeline. Architecture firms have reported growth through most of 2013, suggesting that the climate for nonresidential building projects is gaining strength as the planning pipeline becomes more active. Year-to-date core commercial quoting activity has increased over last year and bookings (projects sold) have also increased year-over-year. The majority of this improvement comes as a result of price increases implemented in the first quarter. Our current order file is strong going into the fourth quarter at a level that is above the same time last year. From a financial perspective, net sales for the quarter increased over the same period in 2012. As raw materials have returned to normalized levels, RedBuilt’s profitability has increased.

We remain optimistic about the fourth quarter. The strength in our current order file coupled with our current margin structure will generate solid financial performance for the balance of the year. As we look ahead toward 2014, we expect RedBuilt’s financial performance will continue to improve in concert with the overall level of construction activity.



George Wurtz
President and Chief Executive Officer

Soundview, headquartered in Elmwood Park, New Jersey, manufactures and distributes bath tissue, towel, napkin and facial products made from recycled and virgin fiber to retailers such as grocery stores, drug stores, office supply and dollar store chains, as well as to wholesale distributors, food service and janitorial supply companies. Soundview commenced operations in April 2012 when it acquired the equity and debt of Marcal Paper Mills, LLC.

Soundview reported an RIR of 4.4 for the third quarter of 2013, up from 1.6 for the third quarter of 2012, pro forma for the Putney acquisition. Year to date September 2013, the company experienced an RIR of 3.0, flat relative to the same period in 2012, pro forma for the Putney acquisition. Soundview New Jersey showed a decline in safety performance with a year to date RIR of 2.3, up from 1.7 during 2012. Soundview Vermont’s year to date safety performance exhibited significant improvement with an RIR of 5.9 relative to a 2012 RIR of 9.6. Nonetheless, safety results in the third quarter remain unacceptable. Management is committed to achieving world class safety performance, and safety leadership will be improved to lead employee accountability and safe work practices.

In the third quarter of 2013, Soundview generated higher revenue profitability as compared to the same quarter in 2012. The third quarter’s improvement over the prior year is due to increased converted sales relative to parent roll sales, as well as converted sales mix.

On the operations front, Soundview continues to make progress on parent roll productivity. The third quarter got off to a slow start with a paper machine outage, but each month showed increasing tons per day. In addition, Soundview has worked to improve its cost model and financial reporting. In Vermont, production has also been strong and production in September was a record month in both the paper and converting divisions. Moreover, management believes that higher levels of productivity are attainable. Further, Soundview purchased six additional converting lines and began installation of several of these lines in Vermont. Management expects the added converting capacity to be phased in during the fourth quarter of 2013 and the first quarter of 2014.

The revenue engine continues to perform well, with gross converted sales up for the quarter relative to the prior year. In the At Home segment, Soundview began shipping bath tissue to a significant new customer and new product to an existing one. The Marcal brand continues to perform well with successful promotions. In Private Label, production began for fourth quarter shipments for three major new customers. In the Away From Home segment, the new converting lines in Vermont will greatly expand our production capabilities in the stronger selling items and will help Soundview introduce four new products in 2014.

At the end of the third quarter, as a result of the stabilization and growth trajectory of the company, Soundview completed a refinancing which provides the company with ample liquidity to achieve its growth objectives.

We remain excited about the continued growth and operational improvements taking place at Soundview as well as the long-term prospects for the company. With our team of experienced management partners leading a group of motivated employees, Soundview is well-positioned to take further advantage of its strengthening market position and physical proximity to one of the most densely populated markets in North America.



Tim Lowe
Chief Executive Officer

Twin Rivers is an integrated manufacturer of lumber and specialty packaging, label, and publishing paper products. The company operates a paper mill located in Madawaska, Maine, a pulp mill and cogeneration plant located in Edmundston, New Brunswick, and a lumber mill located in Plaster Rock, New Brunswick. Atlas acquired a controlling interest in the company in early June, so this report covers the first full quarter under our ownership.

Twin Rivers’ recordable incident rate during the quarter was 4.1, up sequentially from 2.9 during the second quarter of 2013. There is tremendous opportunity to improve workplace safety at Twin Rivers and our expectation is that future progress in this area will both improve company culture and yield valuable productivity gains.

Twin Rivers performed a comprehensive maintenance shutdown during the month of September. The 2013 outage was of critical importance and an event for which our senior management team began preparing several months in advance of Atlas’ acquisition. The company did not perform a full maintenance shutdown during the prior year period.

Twin Rivers demonstrated operating progress by addressing many of the issues which previously hampered performance. During the quarter, Twin Rivers made adjustments to sales, marketing, pricing, distribution, new product development, customer service and commercial strategy for the company’s paper business. Additionally, Twin Rivers’ sales and marketing team neared completion of the “Voice of the Customer” initiative, retaining a leading market research firm tasked with supporting Twin Rivers’ goal of achieving strong and profitable growth.

In Twin Rivers’ Plaster Rock lumber operation, we continue to take steps towards adding a third shift and expanding production capacity. Lumber prices had a hard landing following a steep run-up during the first several months of 2013 and appear to have troughed in June, gradually recovering throughout the third quarter. Long-term, we believe that Plaster Rock is well-positioned to benefit from a resurgent U.S. construction market.



Richard Yarbrough

Kurt Liebich
President and Chief Executive Officer

Wood Resources LLC (the “Company”) incurred six recordable incidents in the third quarter for a recordable incident rate (RIR) of 2.4 compared to our best ever RIR of 0.9 during the same period in 2012.

Third quarter 2013 profitability from operations was significantly higher than the same period last year, with revenues also increasing. Chester profitability was flat when compared to Q3 2012, with plywood pricing slightly lower. This was offset by lower cash costs driven by higher production volume. Moncure Plywood realized an improvement in profitability even though fiber prices for hardwood logs increased when compared to Q3 2012. Fiber cost increases were offset by higher plywood and veneer production, and higher average plywood selling prices, compared to Q3 2012.

Olympic Panel Products continued to increase capacity utilization, resulting in a second consecutive profitable quarter. More importantly, fiber costs continue to be managed with an increase in internal veneer production, offsetting high-cost, open market veneer purchases.

At the end of the third quarter, the Company concluded the sale of Wood Resources’ Southeast Operations to Boise Cascade. Simultaneously, the Company sold its Olympic, Southeast Panel and Omak subsidiaries to  Atlas Capital Resources LP (“ACR”). ACR will provide the funding and liquidity necessary to complete the restart of Omak and the turnaround of Olympic. As a result of these transactions, Wood Resources no longer has any operating activities and its affairs will be wound down over the next months. As such, this is the final operating report of the Company.




Tara Russell
Founder and CEO

Create Common Good (“CCG”) uses food to change lives and build healthy communities. Our vision is a healthy community where people have access to empowerment opportunities, quality employment, self-sufficiency, and access to healthy food. We provide job training and employment to vulnerable populations by offering food products and services the market needs. Create Common Good (CCG) is a social enterprise: a non-profit/business model. We differ from other nonprofits in that our goal is to build a sustainable business model over the next five years that does not rely solely on grants and donations to fuel our growing impact model.

CCG spent Q3 in the new production food facility initially targeting regular volume weekly food service institution customers, and establishing packaging and logistics options. This allowed CCG to quickly increase food production revenues coming into the fall and hammer out the onboarding, packaging, and logistical execution challenges. We’ve successfully established customers (restaurants, schools, a corporate cafeteria, and a gas station chain), and developed stock packaging options, along with local delivery solutions. Packaging and logistics are the largest challenges we currently face with larger scale production.

Currently, our Supperclub launch has been successful, attracting sold-out crowds, corporate bookings and some great press and local buzz. CCG partners with local and regional wineries that donate wine for the evening, showcasing their wines and attracting new customers. These memorable monthly events are fantastic engagement opportunities for potential customers, partners and donors.

We’re thrilled to enter Q4 as recipients of a Newman’s Own Foundation grant for our farm experiential education programs focused on nutrition for youth and families. We’ve downsized our farms to one smallfarm location, which will enable us to focus primarily on the continued engagement of youth and families for service and healthy education while minimizing overall farm resource needs.