Atlas Second Quarter 2014 Review

Report for the Quarter Ended June 30, 2014

The second quarter of 2014 was a mixed one for Atlas Holdings, as continued sluggish economic growth, stagnated improvement in the single-family residential construction sector, and an F4 tornado contributed to disappointing results at some of our business units. We expected more than we achieved in the quarter, but our disappointment was tempered by a series of important accomplishments that position us well for a stronger second half and continued value creation. On the acquisition front, we created a new platform, Motus Integrated Technologies, with the purchase of the global sun visor and headliner business of Johnson Controls, Inc., and completed a Bolt-on acquisition for our ASG Group platform, purchasing the specialty packaging business of MeadWestvaco in Bydgoszcz, Poland, with both transactions occurring in June. Just after the end of the quarter, we completed the acquisition of Banker Steel Co., which will operate as a sister company of Veritas Steel. Twin Rivers Paper Company reached an important milestone, completing new contracts with the unions at its three operating facilities and reaching agreement with the various former pension plans of the company. These important agreements establish the foundation for significant value creation at Twin Rivers.

While we were disappointed in the results of some of our portfolio companies, several others delivered solid performances in the quarter, most notably Bridgewell Resources, Forest Resources, the Pangborn Group, Phoenix Services, RedBuilt, Twin Rivers and Veritas Steel. Bridgewell is beginning to show the operating leverage in its business model as it had a strong quarter, further enhanced by substantially improved return on capital as management’s renewed focus on balance sheet discipline began to bear fruit. Forest Resources continued to deliver solid operating and financial results across all of its business units. Pangborn’s order intake grew, driven in large part by the strength of investment in the automotive sector. Phoenix continued its remarkable growth story, winning new business in the quarter. RedBuilt was buoyed by the continuation of positive trends in the commercial construction market. Veritas displayed significant improvement in operating metrics and continued to win new business at improving margins. Twin Rivers benefited from both better operating performance and a soft Canadian dollar, which conveyed material competitive advantages relative to U.S. based mills.

New Wood Resources, Motus Integrated Technologies and Greenidge Generation Holdings, the most recent companies added to the Atlas Family, are still in the early stages of their development. New Wood has a particularly high hill to climb, resulting from the virtually complete destruction of the plywood mill being restarted by its Winston Plywood and Veneer subsidiary. As we previously advised, the Winston Plywood mill, which was in the process of being prepared for restart through an extensive capital renovation, was hit by an F4 tornado on April 28. The tornado leveled the plant – and destroyed much of the town of Louisville, Mississippi in which the Winston Plywood mill is located. As we have often remarked, the belief that, as responsible business owners, we serve multiple constituencies is hard-wired into the Atlas culture. In addition to our financial stakeholders, we are committed to serving our people, the environment and the communities where our businesses operate. Our history has shown that we can hold true to these values and not compromise the financial returns we generate – responsible, moral behavior is also good business.

When we were told of the Louisville, MS disaster, our hearts went out to the affected community and its citizens. Through the Atlas Foundation, we organized a fund-raising effort – seeking the assistance of the employees of each of the Atlas companies. A few weeks later, we were gratified to present Whit Hill, the Mayor of Louisville, with a check for about $75,000 to help the people of our newest Atlas home community. Additional assistance has poured into Louisville, including a commitment of several tens of millions of dollars from FEMA directed specifically to the repair of the Winston Plywood plant site.

Workplace safety is the foundation of each of our companies’ operating plans, and continued progress was evident in the quarter. We generally comment on the safety metrics at the portfolio company level or aggregated across all of Atlas, because we have learned that safety is a “team sport” and achieving world-class safety, our goal for each Atlas portfolio company, can only be accomplished by engaging all of our associates. But in this quarterly report, we wanted to comment about the dedication of an individual, who is the safety leader of Erickson’s California and Nevada operations. We have previously talked about the tremendous improvement in safety metrics achieved at Erickson since its acquisition in October 2012. This achievement has required the dedication of many, including Tulio Hernandez, the west coast safety lead. Tulio has been a tireless and dedicated leader who brings passion to his job, not only because he is a real professional, but because he cares deeply about the well-being of his coworkers. This dedication has never been more in evidence than over the past weeks, when he has been forced to take a leave of absence as he was diagnosed with brain cancer and hospitalized for treatment. A recent email from Tulio describes his passion and provides a window into the humor and spirit that he brings to his job and, we hope, will enable him to overcome his current challenge,

“So far so good. I have not taken any pain killers. Compared to the dude next to me. Talk about the woosification of America. I discovered a new dimension. At any rate, I should be out of this joint soon and back to teamwork building for a safe and efficient Erickson team once again.”

We wish Tulio all the best as he begins his journey to recovery. The second quarter showed a solid snap back in the domestic economy after a frigid start in the first quarter. Recently released data indicated that GDP grew at a strong clip and many economists believe that this growth will be sustained in the second half. Notwithstanding continued improvement in employment, including reductions in what has been a stubbornly high level of long-term unemployed, there remain large reserves of labor in reported unemployment as well as substantial room for increases in labor participation rates. Both housing and capital spending levels remain at “earlycycle” levels.

Europe is working hard to shake itself out of the doldrums – and slow improvement is beginning to trickle from north to south. Modest gains (or reduced losses) in the economies of the periphery offer some reason for hope, but the marked softening in Germany, itself responsible for 30% of the EU economy, is troubling.

China continues to march along at a modest clip, at least by Chinese standards. Second quarter GDP showed its usual strength, driven by government-stimulated investment and a domestic economy that has become the most reliable engine of Chinese economic growth.

We’ve passed the halfway point of 2014 and look forward to reporting the progress of the Atlas Family in the second half of the year. Enjoy the remainder of the summer.

Andrew Bursky
Managing Partner
To contact Andy by e-mail, please click here

Timothy Fazio
Managing Partner
To contact Tim by e-mail, please click here



Mike Jackson

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 of MeadWestvaco Corporation and combining it with the Shorewood Packaging business purchased from International Paper Company.

In our last quarterly report, we noted that ASG had hired Jim Sykes as President and CEO of ASG Amaray, ASG’s plastic division in both North America and Europe. Because ASG Amaray (“Amaray”) is now managed as a stand-alone business unit, we will begin to report on Amaray separately. The ASG North America Print division (“ASG NA Print”) will refer to the North American print packaging business of ASG, including Mexico and Spark! (our creative services business) and the ASG Europe Print division (“ASG Europe Print”) will refer to the European print packaging business of ASG, including Spark!

ASG continued its excellent safety performance during the second quarter, achieving an aggregate RIR of 0.7 – equivalent to the same period in 2013. ASG’s Asia division (“ASG Asia”) led the way with zero recordable incidents during the quarter and the Mexico facility of ASG NA Print extended its streak of zero recordable incidents to 14 consecutive months. While the aggregate RIR for the quarter was at best-in class levels, there is still room for improvement.

ASG NA Print’s revenue and profitability declined in the second quarter of 2014 relative to the second quarter of 2013. This unit’s reduced profitability during the quarter was largely driven by restructuring activities that took place in the Hendersonville, NC and Mexico plants. Both facilities underwent significant operational reconfigurations during the first and second quarters of 2014, including plant footprint reorganizations, the installation of new presses and equipment and, in Hendersonville’s case, the introduction of substantial new business that was transferred from the Indianapolis facility. The Hendersonville restructuring suffered from inadequate labor planning to take on the increased and more complex workload. While the issues will take time to resolve, the leadership team is confident that Hendersonville will return to high levels of profitability as one of the division’s flagship facilities.

ASG Asia had another strong quarter, significantly growing revenue and profitability relative to the second quarter of 2013. Driving the strong results was a significant amount of new customer wins and great operational execution. The sales growth is particularly impressive against the backdrop of the softening Chinese economy. Much of the strong operational performance can be credited to the emphasis ASG Asia management team has placed on training associates. Improvement was also bolstered by the new General Manager of the Guangzhou facility, who was hired during the second quarter and who had a quick impact on 5S and plant productivity. Additionally, ASG Asia made good progress on its innovation sales goals, introducing new product variations for a number of customers.

Revenue and profitability declined at ASG Europe Print in the second quarter of 2014 relative to the second quarter of 2013. The soft performance was primarily in the western European plants, and was symptomatic of a reduction in unit volume in the home entertainment market (rather than a loss of share) with especially weak demand from two of ASG Europe’s largest DVD replicator customers. Continued progress was made in sales efforts to customers outside of the home entertainment sector and the integration of the new Bydgoszcz facility, acquired in June, went well. As previously described, this important addition greatly improves ASG Europe Print’s low-cost and flexible Poland platform — the future of the ASG Europe Print business.

At ASG Amaray, revenue increased slightly during the second quarter and profitability decreased slightly compared to the same period in 2013. The primary driver of the decrease in profitability simultaneous with the increase in revenue was a shift in the product mix, reduced overhead absorption as production and inventory build was reduced, and higher compensation. Jim Sykes became President and CEO of ASG Amaray at the end of the first quarter and has already had a positive impact. In the U.S., a new Vice President of Business Development was hired in order to jump-start sales of non-media products. ASG Amaray was granted new awards from important nonmedia customers. In Europe, ASG Amaray hired a new Managing Director and finalized an agreement with a major DVD replicator which results in a year-over-year business increase and more favorable resin pass-through terms. The company also achieved improved quality metrics.



Pat McCauley
President and Chief Executive Officer

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 in March 2010, when it acquired certain assets of the Trading Division of North Pacific Group Inc. out of a Federal receivership.

During the second quarter of 2014, the company achieved a Recordable Incident Rate of 0.0, compared to a 0.0 RIR for the second quarter of 2013 and an RIR of 0.5 for all of 2013.

Both revenue and profitability increased in the second quarter relative to the prior year, largely a result of improved margins at Utility & Construction (“U&C”), Contractor Direct (“CD”) and Food & Ag (“F&A”) divisions. The majority of the revenue improvement in the quarter resulted from increased activity in U&C, Renewable Resources (“RR”) and Mats divisions. RR revenues saw a large increase in the quarter related to a successful solar transaction, while U&C and Mats revenues increased as a result of increased export business and a large transmission order, respectively.

Bridgewell saw excellent quarterly results in the Key Performance Indicators (“KPIs”) that we use to track the business. One KPI used to track sales associate efficiency is “Sales Expense/Gross Profit”. In the second quarter, the Sales Expense/Gross Profit improved significantly compared to the same period in 2013, indicating an increase in the productivity of our sales resource. 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. For the second quarter of 2014, the average Cycle Days was dramatically lower compared to the same quarter in 2013, largely driven by i) attractive payment terms on large transactions in RR and Mats and ii) an improvement in inventory management in CD. Finally, “Sales in Backlog”, a KPI used to track near‐term revenue trajectory as well as sales associate activity, increased relative to the prior quarter, a positive indicator of the company’s future growth.

Bridgewell will continue to make significant investments to grow its business, both in the form of new sales associates and expansion into new geographic and product markets, which may lead to depressed financial performance in the short term. We are also exploring strategic Bolt‐ons 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.

DRE had three recordable incidents across its business units in the second quarter which resulted in an RIR of 4.6, compared to an RIR of 0.0 for the second quarter of 2013, and an RIR of 3.0 over the last twelve month period. DT continues to get a gold star — it has gone over 1,200 days without a recordable incident, operating in an environment that is inherently hazardous.

DRE’s second quarter financial performance was disappointing, even after considering the normal seasonal softness of DRE’s business in the second and third quarters. Although we are making good progress on the execution phase of the capital improvement program at DRP, the operating results are still below our expectations. We believe that management is on the right track at DRP, but the road ahead will not be easy.

DT’s second quarter results were in line with expectations and with the same period of 2013. DT’s three most critical KPIs are i) units of steam (measured in “Mlbs”, or thousands of pounds of steam) purchased vs. produced (a measure of the reliability of DRP as a steam source), ii) HDD (Heating Degree Days, a measure of steam demand for heating) and iii) Mlbs sold (a function of HDD and the number and scale of customers). The first KPI drives overall DRE system efficiency and is a fundamental determinant of DRP profitability. In the second quarter, DT was required to selfgenerate a higher percentage of its steam requirements using natural gas as compared to the comparable quarter of 2013, a result of inadequate boiler system utilization at DRP. The HDD KPI is outside of the control of our managers; however, this KPI can often create substantial variability in our quarterly results, especially in the winter months. For the second quarter of 2014, the HDD in Detroit was slightly colder than the prior five year average HDD for the same period. Accordingly, steam sold during the second quarter tracked the change in HDD, increasing versus the average annual volumes sold over the last five years for this period. The third KPI can be directly impacted by management; however, switching to the DT system is influenced by the cost of natural gas. Most typically, these prospects are buildings that are facing major capital expenditures to replace aging boilers as well as new construction. There were no new customer additions in the second quarter.

During the quarter, construction was completed on the previously announced pipeline extension which will bring DT steam to General Motors (“GM”) under a long-term contract. This supply will enable GM to replace aging, coalfired boilers at its Hamtramck, Michigan plant with environmentally sound and lower cost steam, leveraging much of the infrastructure of DRE. Testing and final preparation were completed in early July and “first steam” was delivered to GM in July 2014.



Rich Gallagher
Chief Executive 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, Nevada area. Atlas formed Erickson by acquiring Erickson’s core assets in October 2012.

Erickson reported an RIR of 7.2 for the second quarter of 2014, an improvement from the 10.6 reported in the same period last year. Erickson is also showing improvement on a year-to-date basis, with an RIR of 5.8 for year-to-date 2014, as compared to 9.4 for the first half of 2013. While the RIR level remains unacceptably high, the rate of improvement is excellent (Erickson’s RIR was well over 20.0 before the Atlas’ acquisition) and a tribute to the dedication and commitment of the leadership team. The challenges in managing Erickson’s safety performance to targeted levels are significant, given both the nature of the work and the field conditions under which it is performed. We are pleased with the safety culture that has been established at Erickson and we anticipate continued improvement in safety KPIs in quarters ahead.

Arizona Framing (“AZ Framing”) has seen its usual seasonal uptick in volume, with a high number of units being completed in both May and June 2014. While the increase in units contributed to a more profitable quarter than last year, AZ Framing did not achieve the level of performance that we had anticipated. There were a number of “models” built in the quarter, which are sample units that Erickson builds for its major customers at little profit, depressing financial results but holding promise for increased activity as the models drive sales volume. In light of slower growth, management is reviewing the book of business with a focus on price increases for projects that aren’t achieving adequate profitability.

The California Framing division (“CA Framing”, which includes the Nevada Framing operations) has shown signs of strengthening in both volume and profitability. California units were up in June from April and May, and June was California’s first positive profitability month of 2014. The other half of CA Framing, the Nevada Framing operations, showed robust growth. Nevada Framing sales continue to show massive improvement year-over-year and margins were solid. Given the weak performance of Nevada Framing in the years leading up to Atlas’ acquisition of Erickson, we had ascribed minimal value to this operation. The rapid and sustained recovery in Reno has been a pleasant surprise.

Erickson’s door molding and millwork business (“DSI”) is co‐located with AZ Framing. DSI reported profitable but disappointing results in the second quarter of 2014. DSI experiences a different seasonal cycle than its sister divisions, as the doors and millwork are installed in a house significantly after the frame is complete. Nevertheless, revenue is down year-over-year at DSI, which has translated into lower profitability.

Unfortunately, housing starts in Phoenix and Sacramento haven’t kept pace with the anemic growth in housing starts nationwide. New home permits have decreased in both markets by about 10%, although Sacramento has exhibited a modest improvement in June and early July. While key economic drivers continue to improve in Phoenix and Sacramento (e.g. jobs and population growth), management believes the persistent problem is the marked decline in first-time home buyers. In addition to tighter lending standards, average home prices have increased materially in all categories in both markets. Builders have been cautious to rebuild inventories: inventories in both markets are below six months, which is considered a tight market.

While market demand has been disappointing, Erickson remains well-positioned for a recovery and will continue to focus on operating profitably and safely in the current market environment.



Deba Mukherjee
President and Chief Executive Officer

In Q2 2014, our recordable incident rate (RIR) was 3.6, flat to Q1 2014 and above our year-end rate of 2.6 in 2013. Our lost time incident rate (LTIR) for Q2 2014 was 1.4 versus a year-end rate of 1.2. While we remain disappointed in our safety results, we were encouraged by two events in the second quarter, i) a reduction in our LTIR rate from 1 2014 (1.8), and ii) the increased level of partnership with union leadership to identify and address unsafe acts and conditions. We expect the recent activities and heightened awareness will result in better performance over the balance of the year.

Market conditions remain soft despite the significant capacity closures executed over the previous nine months. Although industry demand for the year reflects a secular decline, growth from imports continue to have a significant impact in the U.S. market. Total 2014 consumption has fallen versus last year, and domestic mill shipments are down even more as shipments of imported products have grown.

Despite weaker than projected market conditions, financial performance is much improved over the prior year’s results. Both revenue and profitability were up in Q2 2014 compared to Q2 2013. Financial results continued to be driven by strong operational performance and improved selling prices. Both paper mill and pulp mill production were up compared to the same period in the prior year. We continue to realize the benefits of our recent actions to diversify our product portfolio and remain disciplined on pricing.

Performance by both sales and operations mitigated a very challenging pulpwood market, which resulted in a sharp increase in fiber costs vs. Q2 2013. Coupled with the record cold winter that negatively impacted Q1 2014 results, these headwinds have been significant but mitigated by strong operational performance, pricing discipline, and expense management.

The second quarter was our best financial performance in a year and a half, and Finch is focused on leveraging its mill-wide continuous improvement plan to continue the momentum over the second half of 2014. In addition, we remain committed to our transformation plan that will position the organization to perform regardless of industry conditions.



Larry Richard
President and Chief Executive Officer

Forest Resources’ DART (Days Away/Restricted/Transferred) rate for Q2 2014 was 2.4 compared to 0.6 in Q2 2013. Forest’s TRR (Total Recordable Rate) for Q2 2014 was 4.1, compared to 3.5 in Q2 2013. Forest has increased the focus on safety awareness and culture to address the negative trend in safety performance.

Forest had slightly lower profitability for Q2 2014 compared to Q2 2013. Hartford City Paper’s production level during the second quarter was down slightly from the second quarter of 2013. Orders and pricing are showing some softness as they enter the seasonally slow summer months. Production volume at Ivex Specialty Paper (“Peoria”), our specialty grade mill, was the same for both the second quarters of 2014 and 2013. Peoria’s primary product, crepe paper for the sewn bag industry, saw a rise in year-over-year second quarter sales, while most other grades saw reduced sales volumes. Peoria continues to work on new product development. Shillington Box’s revenues, unit volumes, and profitability all increased in Q2 2014 over Q2 2013, while selling prices remain under pressure in the competitive St. Louis area box market.

The North American folding carton market strengthened in the second quarter of 2014 following the extreme winter weather during first quarter, and mill order backlogs remain in the two week range. Strathcona Paper’s production, sales volumes and profitability were up in Q2 2014 compared to Q2 2013. Management attributes improved operational performance to the recently installed paper machine drive upgrades. Q2 sales volumes and net revenues at Boehmer Box are up year-over-year. The second quarter has seen very competitive quoting for large blocks of national account business. Boehmer Box had slightly lower profitability in Q2 2014 compared to Q2 2013 due to higher revenues at lower overall margins.

Containerboard markets are starting to show some early signs of weakness from the new capacity already in the market as we enter the seasonally soft summer quarter. Fiber prices are expected to seasonally rise during the lower waste paper generation of the third quarter. While the waste paper export market remains soft due to China’s uncertain demand, new containerboard capacity is impacting waste paper pricing regionally. The next few years will see several paper machine conversions and new mills targeting the North American containerboard market.



On February 28, 2014, a newly formed Atlas entity, Greenidge Generation Holdings LLC (“Greenidge”), completed the acquisition of Greenidge Generation LLC and Lockwood Hills LLC. Greenidge is a 104MW coal-fired power plant that was idled during the bankruptcy of AES Corporation. Greenidge is our first execution of a strategy we have been developing for investing in the rapidly transforming power generation industry and represents the kind of asymmetric return profile we seek in our acquisitions. The Greenidge power plant remains idled, but we have been in active discussions with the New York Department of Environmental Protection concerning our re-start plans and the reception has been favorable.

We remain focused on reinstating the facility’s Title V air permit, which would allow it to restart in a coal-fired configuration. Concurrently, we are planning for the restart activities and performing confirmatory testing of idled equipment. Since permitting for coal-firing is not certain, we are also focused on diversifying Greenidge’s firing capabilities, including evaluating options to increase natural gas supply and biomass feedstock. We are also exploring the installation of solar panels on excess land.

We remain confident that re-permitting will be successful, but we are also comfortable that the Atlas’ invested capital would be recoverable through liquidation of the assets if re-permitting is not granted. We will continue to explore all possible generation permutations to maximize value as we work to return a strategically significant power source to market.



Shannon White
Chief Executive Officer

Motus Integrated Technologies (“Motus” or the “Business”) is a leading global manufacturer of automotive headliners and a variety of unlit, illuminated and auxiliary coverage sun visors operating out of plants in the U.S., France, Mexico and Germany. Atlas formed Motus, our newest platform, by purchasing the North American and European automotive headliner and sun visor business of Johnson Controls, Inc. (“JCI”).

Motus has longstanding customer relationships with some of the world’s leading automotive OEMs. The Business manufactures headliners from its facilities in Maplewood, Michigan and Uberherrn, Germany. A headliner is the composite material that is affixed to the inside metal panel of the vehicle roof and is critical to vehicle design and functionality. The headliner conceals wiring and curtain airbags and acts as a structural foundation for other interior components such as overhead consoles, sun visors and overhead lighting. Sun visors are manufactured from the Business’ facilities in Ramos, Mexico and Creutzwald, France. The sun visor product is an interior component located above the windshield, designed to shield the driver from the sun.

The Motus acquisition has many of the hallmarks of an Atlas-style opportunity. The transaction dynamic was complicated, resulting in a very protracted negotiation and sale process. The Business had been operated within JCI’s Automotive Interiors unit and required a complex carve-out from JCI and transition to a stand-alone enterprise. The combination of carve-out complexity, operational distress and the multi-jurisdictional nature of the Business highlighted the opportunity’s fit within our investment style.

Ultimately, JCI concluded that Atlas was well-suited to be their transaction partner, having demonstrated our recognition of the collaboration required between buyer and seller to structure a transaction that satisfied the objectives of both parties. Over the course of the negotiation and due diligence process we were able to develop and gain comfort with our transformation plan as well as the prospects for improvements in operations. In addition, our team, which includes Shannon White, former CEO of Guilford Performance Textiles (appointed President and CEO of Motus), Tim Lee, former Executive Vice President of General Motors Global Manufacturing and Chairman of GM China (appointed Chairman of Motus) and Henrik Jensen, currently the Chairman of Veritas Steel LLC and CEO of the Pangborn Group, both of which are Atlas portfolio companies (appointed as a member of the Board of Directors), had the opportunity to participate actively in both the due diligence process and in creating and vetting the transformation plan.

Since the acquisition, Shannon has been adding additional senior level talent, including a Chief Operating Officer, a head of Global Engineering, a Vice President of Supply Chain and a head of Global Human Resources. The team will continue to develop and grow and to date, it is off to a strong start.

On the safety front, for month of Atlas ownership ended June 30, 2014, Motus reported a Recordable Incident Rate (“RIR”) of 0.0. This is a great result, and while one month without a recordable does not constitute a trend, we are proud of the team for staying focused on safety during the hectic period immediately after closing. Motus’ financial performance was also strong in its first month. This performance was driven, in large part, by strong volumes in the U.S., good operating performance in Mexico and improvement in France. The strong performance on both the safety and financial fronts is particularly impressive given the “day one distractions” and the required focus on a host of “extra-curricular” activities as well, including separating from JCI, communicating with customers, employees and other stakeholders and beginning life as a new and unknown company.

In the Maplewood, MI headliner plant, June 2014 revenue and profitability were both higher compared to June 2013. The progress was driven largely by strong volumes of headliner product for the Ford F-150 truck and some improvements in overall pricing and mix. In the Ramos, Mexico visor plant (“Ramos”), June 2014 revenue was flat and profitability was higher compared to June 2013, attributable largely to a reduction in variances and certain corporate costs. Ramos had a big win on the sale front during its first month as it was awarded a five year contract for sun visors for a large volume vehicle program with the award representing a strong vote of confidence in Motus. In the Uberherrn, Germany headliner plant (“Uberherrn”), revenue was slightly higher in June 2014 relative to June of 2013 while profitability was lower. The reduction in profitability is primarily attributable to a change in mix. Uberherrn requires a lot of attention and it will take some time to see progress in its financial performance. In the Creutzwald, France visor plant, June 2014 revenue and profitability were both significantly higher compared to June 2013. While this facility still requires substantial performance improvement, the year-over-year improvement is very encouraging, driven by an increase in volumes and a significant expansion in margin resulting from operational improvement, reduced scrap and labor and improved efficiencies.



Richard Yarbrough

Kurt Liebich
President and Chief Executive Officer

In September 2013, Atlas purchased Olympic Panel Products (“Olympic”) and Omak Wood Products (“Omak”) from Wood Resources LLC. Olympic, based in Shelton, WA, is a leading manufacturer of overlay plywood. Omak, based in Omak, WA, produces veneer and began its production restart in October of 2013. 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.

As we communicated last quarter, the Winston Plywood facility was struck by a large tornado on April 28, causing significant damage to the equipment and completely destroying the plywood production buildings. Fortunately, none of our associates or contractors were injured. Our team has spent the last three months on the ground in Louisville beginning to dig out from under the piles of debris, working through the process of assessing and quantifying the loss and gathering information to help us begin to understand the magnitude of the challenge that lies ahead. In concert with the insurance company, local and state officials, Mississippi Governor Bryant and FEMA, much has been accomplished. As of this report, all debris has been removed from the mill site in a timeframe well ahead of expectations and on budget. While the path forward is not fully resolved and the cost of reestablishing the Winston Plywood facility has escalated substantially, we remain hopeful that additional resources that may be made available by FEMA, municipal and state resources will permit us to move forward. Winston Plywood has the potential to become the largest employer in this physically devastated community. We are highly motivated to see this important project through.

During the second quarter, New Wood had six recordable incidents, five of which were at Omak, resulting in a company-wide RIR of 5.7 during the second quarter of 2014, a significant improvement when compared to the overall RIR of 7.1 for the LTM period. Although there is much room for improvement on the safety front, Omak did cut its number of recordable incidents in half as compared to the first quarter, an encouraging sign considering that the relatively inexperienced workforce at Omak continues to face upset conditions as the restart of Omak progresses.

The Omak investment thesis called for a measured ramp-up of production in the first half of 2014 as restart activities progressed. The goal of adding a second production shift was achieved by the end of the first quarter, which eliminated the need for Olympic to run its green end (log peeling) operations, reducing Olympic’s fixed costs and expanding Omak’s production.

Although all of the Subsidiaries of New Wood remain very much in transition, we are optimistic about the opportunities for this investment and our management team’s abilities to execute a series of challenging and complex transformations.



Henrik Krabsen Jensen
President and Chief Executive Officer

The Pangborn Group has had no lost time accidents since Q4 2012 and our trailing twelve month recordable incident rate at the end of June 2014 remains at zero. Our main focus in Q2 was to ensure safety training and emphasis at our new operations in China, Mexico and the UK.

The implementation of our Continuous Improvement / Lean projects continued in Q2. We conducted audits at our European facilities and we started to identify projects at our new manufacturing facilities in the UK and China. We continued to develop the future plan and setup for the aftermarket business segment and several activities will be implemented during the second half of 2014, including a more optimized strategy for sourcing of parts. The integration of our new locations is on track and quoting volume is still strong. For Pangborn UK, we are planning to introduce both the updated aftermarket parts and the equipment portfolio to a broader range of sales representatives.

Aftermarket order intake in Germany weakened during the quarter, but was offset by stronger order intake in Italy and North America. New equipment quote volume remains very strong at all sites and we are now quoting machines for delivery in 2015. The main driver for the increase in equipment quotes is the strong global investment occurring in the automotive segment. During Q2, we signed an agreement with a new representative in Turkey who has comprehensive access to the attractive local foundry market. We also participated in several industry trade shows in China, Italy and Germany, our booths were well visited and we met with many important customers.

Market conditions in North America and China continue to be favorable. We also see the European market beginning to strengthen, particularly with new project inquiries for equipment replacement or rebuild optimization. Our equipment backlog is at a good level and we expect that the markets will remain relatively strong throughout the rest of the year.



R. Douglas Lane
President and Chief Executive Officer

Phoenix Services International LLC reported an OSHA recordable rate of 2.2 for the quarter ended June 30, 2014, which compares to the quarter ended June 30, 2013 rate of 2.6 and the national slag industry standard of 5.0.

Phoenix Services continues to increase its business under contract. After its Q1 2014 startup, the Fos sur Mer site is now running at fully budgeted capacity. The Indiana Harbor site continues to run smoothly, with production up year-over-year.

Phoenix Services’ sites are running well and continue to benefit from positive macro-economic trends in the steel sector. According to the World Steel Association, global steel production for the first six months of 2014 was up relative to the first six months of 2013. 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 specifically considering multiple opportunities in Latin America, South Africa and the United States. We remain extremely optimistic about the prospective performance and growth at Phoenix Services.



Kurt Liebich
President and Chief Executive Officer

The safety of RedBuilt associates continues to be our top priority. Through the end of the second quarter, three RedBuilt associates have been injured on the job, resulting in a recordable incident rate of 1.35, near our target of less than 1.0. All safety incidents are investigated, key learnings are shared and corrective actions implemented across the organization.

The overall level of commercial construction activity continues to trend in positive territory. The AIA’s Architecture Billings Index (“ABI”) and the Dodge Momentum Index continue to forecast an improvement in commercial construction. Architecture firms have reported modest growth in inquiries, contracts and billings over the past twelve months, suggesting that the climate for nonresidential building projects is gaining strength. The Dodge Momentum Index is at its highest point since mid-2009. Year-to-date core commercial quoting activity is ahead of last year and trending upward. Our current order file is strong going into the third quarter, at a level that is significantly above the same time last year.

From a financial perspective, net sales for the quarter were up over the same period in 2013. Severe weather across the U.S. in the first quarter slowed sales below seasonal expectations, however, second quarter sales rebounded, exceeding seasonal trends. Higher sales, lower raw material pricing, and higher net realizations resulted in RedBuilt’s gross margins increasing to relative to the second quarter of 2013. As a result, profitability in the quarter was improved compared to the second quarter of 2013.

We are optimistic about the third quarter. Our order file and quoting activity remains strong and supports our seasonal sales expectations. Raw materials have trended flat to down slightly and within our current pricing structure. As overall business activity and commercial construction activity in particular increases, we expect to see continued strong financial performance the balance of the year.



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 Marcal Paper Mills, LLC. In December 2012, the company acquired an additional facility located in Putney, Vermont (“Soundview Vermont”, and together with Soundview New Jersey, “Soundview”).

Soundview reported an excellent RIR of 1.0 for the second quarter of 2014, an improvement from 2.3 for the second quarter of 2013. Soundview New Jersey showed a slight decline in safety performance with a second quarter RIR of 1.3, up from 0.0 for the same period in 2013. Soundview Vermont’s second quarter safety performance exhibited significant improvement, with an RIR of 0.0 relative to a 2013 second quarter RIR of 12.0. Safety results at Soundview Vermont have improved dramatically since its acquisition; Vermont’s year to date RIR of 2.9 is the best it has been under Soundview management. Mike Bonin, previously responsible for Soundview improvement processes, has played a critical role in Vermont’s improved safety performance by driving increased operator engagement and safety best practices as part of his new role as General Manager of Soundview Vermont. Across the business, management remains committed to achieving world class safety performance and continues to develop safety leadership in order to drive employee accountability and safe work practices.

Soundview improved production levels from the first quarter, but the plants are still operating at production rates below management expectations. A deterioration in production rates occurred at both our New Jersey and Vermont facilities, but was primarily the result of poor performance by the tissue machines in New Jersey. One of the tissue machines was in need of maintenance, and should benefit from repairs going forward. Soundview is restructuring its organization in converting to improve quality and reduce waste. The de-inking process, whereby ink is removed from the wastepaper before producing tissue, has also been a focal point for management. The team has added new controls which are already improving the fiber yield and reducing residuals.

On the revenue side, results remain mixed. The parent roll market continues to experience challenges. The tissue market has been soft because of the combination of sluggish converted products demand and capacity expansion by a number of competitors. This has forced major tissue suppliers to sell more parent rolls than normal.
Converted products continue to perform strongly in the second quarter, with consolidated revenues up from last year. Results were driven by the Private Label business, which is benefiting from new business won in the fourth quarter of 2013. Away From Home products were up from last year, driven by the rollout of new business as well as expanding relationships with existing customers. At Home products also performed well, experiencing a year-to-date increase from last year, driven largely by growth in the grocery category.



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, in partnership with Blue Wolf Capital, acquired a controlling interest in the company in June 2013.

Twin Rivers’ RIR during the quarter was 2.5, down sequentially from 4.1 during the first quarter of 2014 as a result of initiatives designed to improve safety. In Edmundston, the company held a safety training and strategy session with department safety representatives. In Madawaska, associates participated in the OSHA/NIOSH annual “Stand Down” for fall protection awareness and underwent an extensive review of the Lockout Program. At Plaster Rock, safety action plans were implemented for lock-out challenges and safety orientation for approximately 50 new third-shift associates was administered.

Sulphite pulp production during the second quarter was up slightly relative to the prior quarter, with paper production also up sequentially. While the company’s paper machines remained full during the second quarter, the market environment proved challenging for manufacturers of both coated and uncoated freesheet papers. Through the first five months of the calendar year, North American uncoated freesheet shipments declined as rising imports created pricing headwinds for domestic producers. Directionally, the trend in the coated paper market mirrored the uncoated segment as North American coated paper demand declined. Despite these market challenges, the company did realize modest price increases in select publishing and packaging grades during the period.

As part of Twin Rivers’ continuing effort to bolster existing customer relationships, the company hosted a series of customer advisory sessions during May and June with nearly 30 senior level executives from over 15 customers which directly led to new orders and product development opportunities. Additionally, Twin Rivers’ commercial team is aggressively managing the sales pipeline for the back half of the year and will benefit from the recent implementation of an upgraded CRM system and pipeline management tool which were added during the quarter.

The Plaster Rock lumber mill launched its third shift in mid-May, creating approximately 50 new jobs in New Brunswick that will allow the company to monetize the incremental 200,000 m3 of Crown Land allocated earlier in 2014. While the lumber operation is well-positioned to significantly expand production and meaningfully contribute to Twin Rivers’ bottom line over the long-term, performance during the second quarter was hampered by inadequate machine uptime, log throughput and logistics issues. Uptime problems were, in part, a result of a longer than expected ramp in the training of new associates. A process information system has been implemented, newly hired associates are overseeing the rollout of a revamped sales and logistics strategy, and the company’s senior leadership is directly involved in driving progress at Plaster Rock.

On the restructuring front, the company continues to make forward progress and now has ratified long-term labor agreements with unions at all three facilities. The successful completion of the balance sheet restructuring will fix the company’s capital structure and provide an opportunity to inject additional capital into the enterprise.



Tracy Glende
Chief Executive Officer

In November 2013, Atlas commenced operating the newly-formed Veritas Steel LLC (“Veritas”). Veritas is a leader in the steel bridge fabrication industry with extensive
experience in the manufacture of highly complex bridge structures. Veritas produces 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. Veritas has three facilities located in the Midwest and Southeast.

Veritas reported an RIR of 8.4 for the second quarter of 2014 and 6.2 for the year to date. Safety results are unacceptably high, a continuation of the absence of a safety culture that our newly established management team is addressing aggressively. Our new CEO, Tracy Glende, is working with his team to bring the discipline and focus to solid operating practices and processes at each of the Veritas locations. During the second quarter, Veritas added two new environmental health and safety managers and implemented a new safety reporting system.

The results for both the second quarter and first half of 2014 were as anticipated, indicative of low margin legacy jobs that are being worked off, as well as low sales volumes due to PDM’s inability to win large bridge projects while operating in a state of financial distress throughout 2013. Weather-related delays contributed to lower than expected volume in the second quarter which was more than offset by improved margin. We expect financial performance to continue to improve as the company begins to work on newer, post-transaction jobs and to benefit from improvements to work processes currently being implemented.

The foundation is being established for the transformation of Veritas from a struggling and inefficient manufacturer into a lean and effective competitor. Our new management team has focused on redesigning and modifying processes to drive efficiencies. Key elements of the transformation include improved project scheduling through the plants and asset maintenance, both of which will favorably impact capacity utilization and labor efficiency and ultimately, margins. We remain focused on winning high margin jobs in our operating regions by establishing ourselves as a high quality producer trusted by general contractors as well as a fabricator uniquely capable of manufacturing complex structures. Because new projects are dependent on government funding, we continue to track legislative action regarding Federal funding for national highways and infrastructure as well as state funding in our key markets.

Shortly after the end of the second quarter, Atlas completed the acquisition of Banker Steel, which became a sister company of Veritas. Banker Steel is a leading fabricator of structural steel components used in commercial and infrastructure projects. The company operates out of two fabrication facilities in Lynchburg, VA and one in Orlando, FL. The company’s reputation for high quality and on-time delivery together with its strong relationships with leading general contractors has resulted in Banker Steel being named the fabricator of choice on a number of marquee projects including the Barclays Center in Brooklyn, NY, the award winning Washington Nationals Park in Washington, DC and the Hudson Yards, the largest development in New York City since Rockefeller Center.

We remain excited by Veritas’ potential to return to the level of financial performance historically achieved by its predecessor company and by the opportunities made available with the purchase of Banker Steel. Furthermore, we continue to see opportunities to strategically grow the business through potential joint venture partnerships as well as through acquisitions. With a debt free balance sheet and an energetic management team at the helm, Veritas is well-positioned for future growth and value creation.



Mark Young
CI/Lean Director

In June we ran our first Lean Coordinator training course this year at Boehmer Box in Kitchener, Ontario, Canada. CEO Terry Macleod and his Lean Team hosted the event with the training topic being Value Stream Mapping through the SIPOC (Supplier, Input, Process, Output, Customer) methodology. Joe Sarianides of ASG North America was willing to teach the event to our 21 attendees. As always, when we teach our platform companies new techniques, the hope is the Lean Coordinators will take what they have learned and apply it to each of their organizations. I am happy to say I have assisted 3 companies in the SIPOC exercise which they have found to be one of the best techniques in identifying opportunities within their process value streams. This past month, I also went to Slough, England to teach the SIPOC method to the ASG Europe Lean Coordinators.

As many of the CEOs and GMs who I am assisting in their Lean Journey know, I talk about the importance of transparency. In my mind, to be a true Lean Organization you must have a certain level of transparency within your organization. This will accomplish two very important things; it allows everyone in the organization to understand how the company is performing and how each can contribute to the Vision. It is also key to the development of all within the organization, the more people understand, the more they will help keep the ship going in the right direction. Informed people are always more productive and strive to be their best.

Again as stated in my last report, Continuous Improvement will always be the goal; the success of that Continuous Improvement will always be our people.




Tara Russell
Founder and CEO

Create Common Good (“CCG”) uses food to change lives and build healthy communities. We broadly impact communities through our training and feeding programs. We provide job training and employment to a broad base of populations with barriers to employment, youth development programs, and a wide variety of healthy food access programs. CCG is a non-profit social enterprise that offers food service staffing talent, food products and food services to institutional food service customers.

Create Common Good had a solid first two quarters of 2014, improving operations, and is on track to double 2013 earned revenues by year-end. CCG welcomed Kelly Parker, new director of community engagement & sales. Kelly is focused on building a new CCG sales and marketing plan to ensure continued growth of earned revenues, leading the organization to greater financial sustainability.

CCG has focused on increasing the number and types of populations engaged in the job-training program, and we’ve successfully doubled the number of trainees involved year-to-date with nearly 60 involved through June 2014. dditionally, CCG continues to explore “beyond Boise” opportunities to provide job-training solutions in new global locations where there is genuine need combined with market opportunities. We have implemented monthly safety trainings and monthly safety inspections to ensure our whole team, including new trainees, adopt a culture of safety and are held accountable for safe practices on a regular basis.

CCG celebrated our first ever gala with FUNDSY on May 3rd, 2014, which was a tremendous success. The funds raised from the gala, the tremendous generosity of other CCG friends, and our continued earned revenue growth allowed CCG to pay off all remaining loans on the new CCG training and production facility. This financial freedom positions CCG for continued growth and scale.

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