Atlas Third Quarter 2014 Review

Report for the Quarter Ended September 30, 2014

Atlas and its portfolio companies made significant progress in the third quarter of 2014.

Our newest platform, ACR II Motus Integrated Technologies (“Motus”) delivered satisfactory performance during the early stages of its critical transformation phase. The Motus management team has exceeded our expectations – while no shortage of challenges remain, the first several months of our ownership have avoided major misses and Motus has been successful at landing important new business. More detailed information on the early days of Motus’ journey from an undermanaged group of plants and product lines to a Performance Organization – a business that sustainably outperforms its peers – is provided below.

Two Bolt-on acquisitions discussed in the second quarter report, the specialty packaging business of MeadWestvaco in Bydgoszcz, Poland which was purchased by our ASG Group (“ASG”) platform in June and Banker Steel Co., L.L.C. (“Banker Steel”), a Bolt-on for our Bridge Fabrication Holdings LLC (“BFH”) platform completed in July, have been consolidated and are delivering profit enhancement. Several of our companies posted significantly improved results in the quarter, indicative of business transformations that are well underway and beginning to drive financial performance. BFH, Detroit Renewable Energy LLC (“DRE”) and Twin Rivers Paper Company Inc. (“Twin Rivers”) all delivered solid results. The improvement at DRE is particularly noteworthy and while we have a long way to go before we can declare this investment a success, this was the first quarter in which DRE demonstrated an ability to sustain reliable performance at Detroit Renewable Power, its primary operating unit.

After the quarter ended, ASG announced the sale of its North American and China print businesses to Multi Packaging Solutions (“MPS”), a global leader in value-added print and packaging solutions for the branded consumer, healthcare and multi-media markets. This transaction, closed on November 21, continues our investment strategy of transforming the component parts of ASG into Performance Organizations and then identifying an appropriate strategic partner. We believe that the combination with MPS will provide excellent long-term opportunities for most of the 1,600 associates in these operations. With the MPS transaction completed, ASG now consists of ASG Europe Print (paperboard packaging for consumer products and home entertainment) and Amaray (global plastic packaging). We will be working hard to build additional value at ASG through these business units.

Progress of a different sort was achieved at New Wood Resources LLC (“New Wood”). As we have previously reported, New Wood’s Winston Plywood and Veneer LLC (“Winston Plywood”) subsidiary was in the process of being prepared for restart through an extensive capital renovation when its facility in Louisville, Mississippi was hit by an F4 tornado on April 28. Since that date, our team has been on the ground, working closely with the community, state and Federal officials to establish an executable plan for financing a rebuild and restart of the facility. During the third quarter, the hard work began to pay off as a package of grants, tax credits and low-interest loans took shape. We are optimistic that, with this financing package firmed up, construction can begin in the fourth quarter and Winston Plywood can begin producing plywood before the end of 2015.

The safety of our employees is a core value underlying each Atlas company. The third quarter of 2014 presented mixed results across the portfolio as many companies realized continuing improvements in safety metrics after months of hard work, others faced seasonal and site-specific challenges and new members of the Atlas Family just began the journey on the path to safety excellence.

ASG, BFH’s Veritas business unit, Bridgewell Resources Holdings LLC (“Bridgewell”), DRE and Soundview Paper Holdings LLC (“Soundview”) enjoyed improvements or maintained world-class safety performance. Although Erickson Framing Holdings LLC’s (“Erickson”) Recordable Incident Rate (“RIR”) increased in the third quarter, the company made significant progress in reducing the severity of injuries during a period of peak seasonal volume and increased hiring. Twin Rivers and New Wood’s Omak facility experienced declines in safety performance and management teams implemented aggressive intervention plans. Their experiences highlight the fact that that safety is a “team sport” and achieving world-class safety, our goal for each Atlas portfolio company, can only be accomplished by continued engagement of all of our associates.

The third quarter began strong but seemed to lose momentum as autumn approached. Recently announced data from the Bureau of Economic Analysis indicated that the U.S. economy grew at an estimated 3.5% rate in the quarter, down from 4.6% in the second quarter. The U.S. economy remains in the “happy zone”; increasing availability and declining cost of energy, increasing industrial competitiveness, reasonable job growth, strong corporate profits, increasing optimism of businesses and consumers and a strong dollar deflating the cost of imported goods. Yet the combination of an uncertain European economy, a downshifted China, increased concerns about Middle East inspired global tensions, a continued recalcitrant Russia and Ebola fears have manifested as volatility in the “psychology” of the domestic economy. We remain quite optimistic about the U.S. investment environment for both the short and medium term and we are continuing to look for value in Europe, where uncertainty has moderated purchase price expectations. Our penchant for investing in challenged businesses has largely immunized us from the remarkable escalation of purchase price multiples. We believe it will be exceedingly difficult to generate acceptable returns at entry points that are at the historically high levels of today’s market. Fortunately, the flow of undermanaged, troubled businesses – both in independent cloak and in the form of unloved units of large corporates – remains quite strong and we are busy. As well, inasmuch as the portfolio is focused on Bolt-ons to accelerate growth of our stabilized platform companies, we can still find value driven by the significant synergies from which Bolt-ons benefit.

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

Timothy Fazio
Managing Partner
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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 through two newly created holding companies (one which acquired the U.S. assets and the second which purchased the European assets) in September 2010 and combining it with the Shorewood Packaging business purchased from International Paper Company. The closing on the U.S. portion of the Shorewood transaction occurred in December 2011 and the closing of the non-U.S. portions of the Shorewood transaction occurred in January.

ASG continued its progress in safety metrics, achieving an aggregate RIR of 0.3 during the third quarter of 2014 – an improvement from 0.6 in the third quarter of 2013. ASG’s Asia division once again had no recordable or lost time accidents in its two facilities during the quarter. ASG’s North America Print Division, Global Plastics Division (“Amaray”) and European Print Division each had one recordable incident.

ASG NA Print’s revenue and adjusted EBITDA declined in the third quarter of 2014 relative to the third quarter of 2013. The revenue decline was primarily attributable to the Smiths Falls facility. After adjusting out the Smiths Falls figures, revenue increased slightly year-over-year in North America. Adjusted EBITDA in the U.S. and Canada facilities during the third quarter (excluding Smiths Falls) also increased relative to the third quarter of 2013. In Mexico, revenue increased but adjusted EBITDA decreased due to reduced margin with certain customers. The Louisville, KY plant set revenue and adjusted EBITDA records as a result of manufacturing strategies that were implemented last year combined with a good sales mix and strong plant management. Overall, the ASG NA Print team made steady progress executing the continued restructuring of the North America platform in the face of declining home entertainment volumes and compressed consumer margins.

ASG Europe Print experienced a slight increase in revenue and a decline in adjusted EBITDA during the third quarter of 2014 relative to the third quarter of 2013. Sales softening driven by the decline in Europe’s core home entertainment markets was offset by the inclusion of the new Bydgoszcz, Poland facility. The sales team is being reorganized to better focus on ASG Europe Print’s transition to consumer packaging segments.

As a result of the previously announced sale of ASG’s North America Print and Asia divisions to MPS which closed on November 21, ASG now consists of the ASG Europe Print division and Amaray. We are particularly optimistic about Amaray as a result of tangible progress led by new CEO, Jim Sykes. Under Jim’s leadership, Amaray’s transition to nonmedia end markets has accelerated. Amaray has won new business with important consumer product customers, built a significant pipeline of additional non-media business, installed a new managing director in Europe, and recruited key sales talent.


Don Banker
Chief Executive Officer-Banker Steel

Tracy Glende
Chief Executive Officer-Veritas Steel

On November 5, 2013, Bridge Fabrication Holdings LLC (“BFH”) foreclosed on certain of the operating assets of PDM Bridge, LLC (“PDM”) at which time BFH commenced operating these assets as newly-formed Veritas Steel LLC (“Veritas”), a wholly-owned subsidiary of BFH. 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 with, in the aggregate, 691,000 square feet of fabrication workspace on 220 acres and featuring 250 tons of lifting capability. The company’s three plants enjoy close proximity to major rail, highway and waterway transportation, providing effective access to the eastern half of the United States for bridge contracts. The company purchases up to 70,000 tons of structural steel annually which it fabricates into simple and complex bridges to satisfy contracts throughout the central and eastern United States.

On July 31, 2014, BFH acquired Banker Steel Co., L.L.C. (“Banker Steel”). Banker Steel is a full-service fabricator of structural steel components used in commercial and infrastructure projects. Banker Steel operates out of two fabrication facilities in Lynchburg, VA and one in Orlando, FL aggregating a total of 340,000 square feet, fabricating approximately 50,000 tons of steel annually. In total, BFH is a national leader in bridge and structural steel fabrication with over 1 million square feet of fabrication workspace, six locations and over 600 employees.

Veritas reported an RIR of 2.1 for the third quarter of 2014 and 4.9 for 2014 year-to-date. In the third quarter, Veritas added several Environmental Health and Safety professionals to its leadership team, including a Continuous Improvement Leader who will focus on improving safety performance across the business. In addition, new daily, weekly and monthly safety communications have been established with a goal of developing a more professional and sustainable health and safety program to drive world class safety performance. Banker Steel had a challenging third quarter as the summer months tend to have a high number of recordable incidents due to increased volume. As the newest member of the Atlas family, it will take some time for Banker Steel to deploy the disciplines that ultimately improve safety culture, the critical first step to becoming a world class organization.

Management has made great strides firming up key relationships with general contractors which is reflected in a growing backlog. Veritas booked significant new business year to date and has identified hundreds of millions of dollars worth of potential contracts in the pipeline that will be up for bid in the next six months. 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. Banker Steel booked significant new business for September year to date (inclusive of the period prior to our ownership) and the company has identified over similarly large volumes of potential contracts in its bidding pipeline. Banker Steel remains focused on winning top jobs in its operating regions by establishing itself as a high quality producer trusted by general contractors as well as a fabricator uniquely capable of manufacturing complex structures. Though the list of potential opportunities is long, Banker Steel management has identified and is focused on winning certain target projects, which represent about one third of the pipeline, that have a combination of characteristics (location, complexity, relationship with owner or general contractor, timeframe) that suggest a higher probability of winning.

Veritas also made operational progress as the team implemented an improved project tracker. Management is reviewing all operational processes and rolling out new policies and handbooks related to safety, quality and administration. Creation of a process map entitled “Opportunity to Cash” began during the quarter, charting the deployment of Lean manufacturing approaches across the three Veritas plants. As one example of this process, a key priority is improving throughput and reducing waste when painting girders. A plan has been developed to improve throughput by almost 50% while reducing waste materially. Banker Steel continues to deliver and install high quality fabrications, on time and on budget, as evidenced in client surveys and testimonials. One of Banker Steel’s larger projects, the Hudson Yards mega-development in Manhattan, continues to perform better than plan as management focuses on reducing labor hours. Finally, Banker Steel management has begun collaborating with the Veritas team and we expect both companies to benefit as they share best practices.

We remain excited by Veritas’ potential and by the opportunities made available with the acquisition of Banker Steel. Furthermore, we continue to see opportunities to strategically grow the business through potential joint venture partnerships as well as through further Bolt-on acquisitions. With a strong balance sheet and an energetic team at the helm, BFH is well-positioned for future growth.


Pat McCauley
President and Chief Executive Officer

Bridgewell Resources LLC (“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 third quarter of 2014, the company achieved an RIR of 0.0, compared to an RIR of 0.0 for the third quarter of 2013 and an RIR of 0.5 for all of 2013.

We are encouraged by the improvements experienced this year, and we continue to build on existing business, explore new opportunities and streamline operations. Several KPIs relied upon by management indicate meaningful progress. One KPI used to track sales efficiency is “Sales Expense/Gross Profit,” which saw continued improvements in the third quarter. 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 remained roughly the same year over year despite decreases in sales. 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.


Steve White
Chairman and Chief Executive Officer

Detroit Renewable Energy (“DRE”) consists of four operating units, three of which were acquired through simultaneous transactions in November 2010 and a fourth which was created in 2012 to leverage the DRE infrastructure. The operating units of DRE are (i) Detroit Thermal, LLC, a district heating business which provides efficient heat to Detroit’s central core; (ii) Detroit Renewable Power LLC, an EFW (energy-from-waste) facility that processes up to 3,500 tons per day of municipal solid waste (iii) Detroit Renewable Cooling LLC, DRE’s subsidiary created to provide district cooling services to buildings in the City of Detroit and (iv) Hamtramck Energy Services which provides operating and maintenance services to industrial customers, primarily in the Detroit area. DRE is committed to providing the City of Detroit and surrounding municipalities with safe, reliable and cost-effective solutions for clean energy and waste disposal, utilizing its essential (and irreplaceable) infrastructure assets.

DRE had no recordable incidents across its business units in the third quarter which resulted in an RIR of 0.0. DT has now operated almost four years without a recordable incident, operating in an environment that is inherently hazardous.

For the third quarter of 2014, DRE experienced substantially higher revenue than the third quarter of 2013 and similarly improved adjusted EBITDA performance. The solid results of the quarter are indicative of operational stability (especially considering the normal seasonal softness of DRE’s business in the second and third quarters).

Importantly, DRE began a new program with General Motors which enables GM to replace aging, coal-fired boilers at its Hamtramck, Michigan plant with environmentally sound and lower cost steam. This long-term contractual relationship provides energy reliability to GM and will generate a consistent income stream for DRE.


Rich Gallagher
Chief Executive Officer

Erickson Framing Holdings LLC’s (“Erickson”) is a leading construction services and pre-fabricated building products company that provides turnkey framing services, framing packages, trusses and other products to builders and developers. The company’s primary geographic markets include Arizona, Northern California and the greater Reno, NV area. Atlas formed Erickson by acquiring Erickson’s core assets from Masco Corporation in October 2012.

Erickson reported an RIR of 13.7 for the third quarter of 2014 compared to an RIR of 12.2 in the same quarter last year. During these periods, Erickson’s Lost Day Severity Rate declined from 126.7 to 84.6, indicating a marked reduction in severe injuries. On a year-to-date basis, Erickson’s RIR improved from 10.5 in 2013 to 9.0 in 2014. Of Erickson’s four operating divisions, three are showing year-over-year improvement in 2014 safety performance. The most challenging safety period for Erickson is the third quarter, during which time Erickson hires new employees to handle seasonal peak volume. 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 third quarter experienced higher revenue but lower profitability relative to the same period in 2013. Year to date results were similar year over year. Arizona Framing (“AZ Framing”) saw its usual seasonal uptick; however, Phoenix housing starts are down, significantly and unexpectedly, thus far in 2014. New home starts are down 10% year-over-year through September, which has intensified competition among framers. Conversations with major builders and AZ Framing’s monthly trends suggest that the year-over-year decline will worsen through the end of the year. Notwithstanding the surprising softening in Phoenix, solid management, price discipline and cost controls salvaged the quarter at AZ Framing. Interestingly, a major competitor shut down operations in September, suggesting that Erickson is well-positioned from a cost perspective for the eventual market recovery.

California Framing, (“CA Framing”, which includes the Nevada Framing operations,) continues to strengthen in both volume and profitability. The Sacramento and Reno markets are showing no signs of the typical seasonal slowdown, with September posting the strongest results of 2014 and October looking even stronger. The Nevada Framing operations continue to outperform expectations, a credit to strong leadership taking advantage of a growing market.

Erickson’s door molding and millwork business (“DSI”) is co-located with AZ Framing. DSI reported profitable results in the third quarter of 2014. DSI continues to experience increased competition, which has shrunk its book of business.

Heading into 2014, most economists believed that the housing market had entered a sustained recovery. This expectation was especially true for Erickson’s core markets, which were hit disproportionately hard during the Great Recession. Unfortunately, the recovery has proceeded at a more muted pace nationally than had been expected as first time homebuyers remain largely locked out of the market due to restrictive mortgage lending practices to this demographic. The company will remain focused on operating profitably and safely in the current market environment, while preparing for the demands of a future market recovery.


Deba Mukherjee
President and Chief Executive Officer

In June 2007, Finch Paper LLC (“Finch”) was formed to acquire the assets of Finch, Pruyn & Co. The predecessor company was founded in 1865 as a sawmill, lumberyard and quarry operation on the upper Hudson River and began papermaking operations in 1905.

Today, Finch sets itself apart by providing innovative solutions and exceptional service to help customers adapt to the changing print world. Using advanced manufacturing systems, the company produces papers designed for multi-press environments and are ideal for corporate marketing materials, direct mail, book publishing, and business office uses.

Finch’s year to date RIR was 2.9, down from Q2 2014 but above our year-end rate of 2.6 in 2013. Our lost time incident rate (LTIR) for Q3 2014 was 0.9 versus a year-end rate of 1.2 in 2013. We continued to make progress versus the second quarter and we were encouraged by two events in the third quarter, i) a reduction in our LTIR and RIR rates from Q2 2014, and ii) the formation of our Joint Union/Management Health and Safety Committee. The committee recommended and created a new, full-time Mill Wide Hourly Safety Representative position. This position will work with our Safety Manager and all employees throughout the mill to assist with safety initiatives, audits, investigations and training.

Market conditions remain soft despite the significant industry-wide capacity closures executed over the previous twelve months. Structural demand in the uncoated free sheet market continues to decline at a 4% annual rate with shipments down 8% compared to last year. Imports remained strong, representing 12% of North American consumption, increasing 39% over the prior year. The strength of the U.S. dollar should continue to attract imports in the near term. The quarter ended with an increased September industry utilization rate of 94% versus 90% compared to 2013, the highest operating levels since March.

Despite weaker than projected market conditions, financial performance is much improved over prior year’s results. Adjusted EBITDA and revenues for Q3 2014 and year to date improved over the prior year’s period. Performance by both sales and operations mitigated a very challenging roundwood market, which resulted in an increase in fiber costs vs. Q3 2013. A colder winter in Q1 negatively impacted energy costs; however, strong operational performance, pricing discipline and quality control have continued to improve earnings.

Finch is focused on leveraging its mill-wide continuous improvement plan to continue the momentum through the remainder of 2014. 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 LLC is a holding company engaged in manufacturing industrial packaging products, including recycled corrugated medium, kraft, crepe and specialty packaging papers as well as corrugated boxes. In March 1999, Forest was formed with the acquisition of Hartford City Paper. Today, Forest employs 630 people and generates revenues from six facilities across North America.

Forest Resources’ DART (Days Away/Restricted/Transferred) rate was .6 for both Q3 2014 and Q3 2013. Forest’s TRR (Total Recordable Rate) for Q3 2014 was .6 compared to 1.8 in Q3 2013. This quarter’s safety performance indicated a positive trend in the incident rates for Forest as we increased focus on safety awareness and culture.

Forest had slightly lower EBITDA performance for Q3 2014 compared to Q3 2013. Hartford City Paper increased production over the third quarter of 2013, which had unscheduled downtime. Orders and pricing are showing some softness due to additional capacity in the market. Production volume at Ivex Specialty Paper (“Peoria”), our specialty grade mill, met 2013 performance levels. Peoria continues to work on new product development and began trial shipments of new filter and color kraft products during the quarter. Shillington Box’s revenues, unit volumes and EBITDA profitability all increased in Q3 2014 over Q3 2013, despite the competitive St. Louis box market. Shillington’s improved performance and competitiveness is a result of great management and the investment in a new flexo folder-gluer, which has reduced manufacturing costs and improved operating efficiency.

The North American folding carton market softened in the third quarter of 2014, with a focus by customers on leaner inventories. Mill order backlogs remain in the two week range. Strathcona Paper’s production, sales volumes and EBITDA profitability were down slightly in Q3 2014 compared to Q3 2013 due to the inventory sell off from closure of the Fusion mill in Connecticut. Q3 sales volumes and net revenues at Boehmer Box are up year-over-year. The third quarter witnessed very competitive quoting for large blocks of national account business. Boehmer Box had slightly higher EBITDA profitability in Q3 2014 compared to Q3 2013 due to higher revenues and better absorption of fixed manufacturing costs.

We remain focused on our continuous improvement initiatives to drive sustained improvements in operations. We are optimistic about our prospects for the remainder of 2014 and for the coming year.


Shannon White
Chief Executive Officer

In June, 2014, a newly formed entity, ACR II Motus Integrated Technologies (“Motus”) purchased the North American and European automotive headliner and sun visor business of Johnson Controls Inc. and commenced operations as Motus.

Motus is a leading global manufacturer of automotive headliners and a variety of unlit, illuminated and auxiliary coverage sun visors with over 1,300 employees operating out of plants in the U.S., France, Mexico and Germany. The company has longstanding customer relationships with some of the world’s leading automotive OEMs, including BMW, Daimler, Ford, General Motors, Honda and Volkswagen. Motus 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 Motus’ 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.

Motus’ first full quarter under Atlas ownership was a good one from a safety perspective. Motus reported an RIR of 0.6 for the quarter ended September 30, 2014, experiencing zero recordable incidents at its visor facilities. Motus’ financial performance was driven by strong volumes around the globe and good operating performance at the Creutzwald, France facility. While there is room for improvement on both the safety and financial fronts, Motus is off to a strong start, particularly in light of distractions from transition-related matters. Our management team has had its hands full and so far, has performed admirably.

Motus’ new Chief Operating Officer, Kevin Kernan, joined the company during the third quarter and immediately began rolling out the “Motus Business System” – Motus’ Continuous Improvement program. On the commercial front, Motus continues to impress its customers. General Motors visited Motus’ facilities and noted the transformation of the facility during Motus’ brief ownership period, creating the potential for additional business with GM.

Creutzwald’s Plant Manager has done an excellent job improving the operating efficiencies of the facility. Since he re-joined Creutzwald in August 2013 after a seven year hiatus, he has led several improvement initiatives which have resulted in significantly reduced scrap rates, improved quality and on-time delivery and reduced headcount. On the commercial front, Creutzwald also had important wins during the third quarter.

In addition to managing transition complexities, the Motus team won the confidence of key customers, laid the groundwork for important long-term strategic initiatives and began to instill a culture of “winning” in our associates. Atlas’ continuous “War for Talent” has already included the addition of a new Chief Operating Officer, Vice President of Purchasing and head of Global Engineering, who joined Motus from our largest competitor. A strong team is forming and the mix of old blood with new has led to constructive tension and new ideas.


Richard Yarbrough

Kurt Liebich
President and Chief Executive Officer

In September 2013, Atlas’ newly formed entity, New Wood Resources LLC (“New Wood”), purchased Olympic Panel Products LLC (“Olympic”) and Omak Wood Products LLC (“Omak”) from Wood Resources LLC. In March 2014, New Wood completed a Bolt-on acquisition of an idled plywood mill in Louisville, MS through New Wood’s newly-established subsidiary, Winston Plywood LLC (“Winston”). Olympic, based in Shelton, WA, is a leading manufacturer of overlay plywood. Its product offering includes both high and medium density overlay 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. 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. During the third quarter, New Wood had nine recordable incidents, seven of which were at Omak, resulting in a company-wide RIR of 8.7 during the quarter and 7.3 during the last twelve months, a step backwards from the results posted in the second quarter. As of October, Atlas Operating Partner Dr. Richard Baldwin assumed direct oversight responsibility for Omak. Dr. Baldwin is one of our most distinguished and capable leaders in the wood products sector and we are already seeing the impact of his presence.

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. Since that time, our team has been on the ground in Louisville coordinating the removal of debris from the mill site, assessing and quantifying the loss and gathering information to help us understand the magnitude and challenges of a rebuild. Support from FEMA and the Mississippi Development Authority is anticipated to eliminate what was a significant funding gap in rehabilitating the facility that was the damaged by the tornado. With these resources, Winston has the potential to become the largest employer in this economically depressed and now physically devastated community.

Revenues and adjusted EBITDA for New Wood improved sequentially in the third quarter of 2014. While Omak restarts, Olympic is driving profitability and is exhibiting progress across its KPIs resulting in improved financial performance.

Although all of New Wood’s subsidiaries 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. Patience will be required inasmuch as the earnings power of these businesses will not be evident for some time.


Henrik Krabsen Jensen
President and Chief Executive Officer

With roots dating back to 1873, the Pangborn Group provides superior surface preparation solutions through a broad range of wheel-blasting, shot-peening and airblasting equipment and services. Its products are utilized in an array of industries including aerospace, automotive, defense, energy and foundry. Pangborn Group is comprised of four brands in Europe and North America: Pangborn Corporation in the U.S., V + S - Vogel & Schemmann Maschinen GmbH in Germany, Berger Strahltechnik GmbH in Germany, and Pangborn Europe S.r.l. in Italy. Each of the four companies is a technology leader in the global wheel blast and surface preparation industry, with significant in-house design and engineering capabilities. By investing in and expanded these companies, Pangborn Group is providing a new level of service and performance around the world.

The Pangborn Group has had no lost time accidents since Q4 2012 and our trailing twelve month recordable incident rate at the end of September 2014 remains at zero. Our main focus in Q3 was to perform safety training and ensure safety emphasis at all sites, especially at our new operations in China, Mexico and the UK.

The implementation of Continuous Improvement and Lean projects progressed as planned. We continued to develop our new approach to the aftermarket business segment and several activities will be implemented in the coming 6-12 months. The integration of our new locations is on track and quoting volume remains strong. We plan to introduce Pangborn UK’s updated aftermarket parts and equipment portfolio to a broader range of sales representatives.

Overall, Q3 2014 was a very strong quarter with sequentially increased revenue and adjusted EBITDA. Equipment and aftermarket sales increased relative to the prior year period and operating leverage was generated by higher sales on lower operating costs. Market conditions in North America and China continue to be favorable. The European market also shows some strengthening, 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.


Terry Wagaman
Chief Executive Officer

In June 2006, Phoenix Services International LLC was formed by R. Douglas Lane, an experienced operating partner in the mill services sector, in partnership with Atlas Holdings LLC to acquire Thor Mill Service, Inc. Phoenix Services provides steel mill services, including slag handling, metal recovery, equipment rental and a variety of other related services.

Phoenix Services reported an OSHA recordable rate of 2.4 for the quarter ended September 30, 2014, which compares to the quarter ended September 30, 2013 rate of 2.1 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. Phoenix Services had a busy quarter bidding work with numerous new customers.

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 nine months of 2014 was up relative to the first nine 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.

At the end of the quarter, CEO Doug Lane announced his retirement. Terry Wagaman assumed the CEO role, Paul Diaz was promoted to President-Americas and Stan Ben was promoted to President-Europe and Asia.

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, 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

In August 2009, RedBuilt LLC was formed to acquire the assets of the Trus Joist Commercial division of Weyerhaeuser Company. RedBuilt manufactures and designs joists, beams and wood trusses for commercial, industrial and multifamily residential building applications.

The safety of RedBuilt Associates is our top priority. Through the end of the third quarter, eight RedBuilt Associates have been injured on the job, resulting in an RIR of 3.2. As a result of these injuries, RedBuilt Associates have experienced 5.0 days of restricted duty and a Days Away, Restricted, Transferred (DART) rate of 2.4. Both rates are disturbing and above our target of less than 1.0. All safety incidents continue to be investigated, key learnings shared and corrective actions implemented across the organization.

The overall level of commercial construction activity continues to trend positively. The AIA’s Architecture Billings Index (“ABI”) and the Dodge Momentum Index continue to forecast an improvement in commercial construction. The ABI is a leading economic indicator that provides a nine to twelve month glimpse into the future of nonresidential construction spending activity, and the Dodge Momentum Index indicates building opportunity beyond one year. 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. They also reported that one third of polled architecture firms have seen “stalled” projects resurface in the past year. The Dodge Momentum Index remains higher than a year ago, indicating that the upward trend for nonresidential building projects at the planning stage is still present.

We are optimistic as we head into the final months of the year and begin planning for 2015. Higher sales, lower raw material pricing and higher net realizations resulted in RedBuilt’s gross margins increase relative to the third quarter of 2013. As a result, EBITDA in the quarter was higher than the third quarter of 2013.

Raw material costs have trended down slightly and we expect that trend to continue through the fourth quarter. Revenue in the latter half of the fourth quarter historically has trended down, due to seasonal weather influences. We anticipate our business activity to mirror that trend.


Karl Meyers

Soundview Paper Holdings LLC (“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 New Jersey”). 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 improved RIR of 1.6 for the third quarter of 2014, an improvement from 4.4 for the third quarter of 2013. Soundview New Jersey showed an improvement in safety performance with a third quarter RIR of 1.9, down from 5.4 for the same period in 2013. Soundview Vermont achieved an RIR of 0.0 in the third quarter, consistent with the excellent safety performance in the third quarter of 2013. Across the business, management remains committed to achieving world class safety performance and developing safety leadership, driving employee accountability and safe work practices.

Soundview revenue and adjusted EBITDA experienced declines in the third quarter sequentially and on a year to date basis compared to the prior year's period. Consistent with our investment thesis, management has focused on shifting the sales mix to an increasing percentage of converted product; unfortunately, poor execution resulted in increased costs and customer service issues in the third quarter.

During the third quarter, Soundview announced the retirement of George Wurtz from his position of President and CEO. George will continue as Chairman and as a significant investor. Karl Meyers was promoted from Chief Operating Officer of Soundview's Away-From-Home division to President. Karl brings decades of experience in the pulp and paper industry to the position and we are excited to continue to work with him in his new leadership role. Also during the quarter, Rob Baron, previously Chief Financial Officer of Finch Paper (an Atlas portfolio company), transitioned to Soundview as Senior Vice President. Rob has been a significant part of Finch's success and brings a wealth of strategic and financial experience to Soundview.


Tim Lowe
Chief Executive Officer

Twin Rivers Paper Company Inc. (“Twin Rivers”) is an integrated manufacturer of lumber, 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 5.0, up sequentially from 2.5 during the second quarter of 2014. In response to a series of safety incidents during the quarter, management implemented an intervention plan at the Madawaska facility with a focus on housekeeping and additional behavioral training for all employees. At the Plaster Rock facility, employees received a follow-up Critical Safety Audit from the Safety Leadership Team and a process is now underway to perform facility-wide machine guarding inspections. One-on-one employee safety talks continue as management works to improve Twin Rivers’ safety metrics over the coming quarters.

Twin Rivers generated significantly higher revenues and adjusted EBITDA in the third quarter of 2014 compared to the prior year’s period. Sulphite pulp production during the quarter was up slightly relative to the prior quarter, while paper production was down. The company’s paper machines remained full during the third quarter of 2014, but the environment proved challenging for the broader market in North America. Through the first nine months of the calendar year, North American uncoated freesheet shipments declined 7.9% year-over-year as rising imports created headwinds for domestic producers. Through the first eight months of the calendar year, imports comprised 11.8% of North American uncoated freesheet demand compared to 8.2% during the prior year period as imports from Europe, Brazil and Asia took advantage of a strengthening dollar. Directionally, trends in the North American uncoated mechanical market have mirrored those of the uncoated freesheet market, albeit at a more moderated pace, as shipments declined 1.8% through the first eight months of the year compared to the prior year period. Despite these market headwinds, Twin Rivers’ net selling price per ton increased sequentially in the quarter and the company continues to make progress on product development initiatives and other strategies designed to optimize machine utilization and margin.



Tara Russell
Founder and CEO

Create Common Good (“CCG”) is a non-profit social enterprise that offers food service staffing talent, food products and food services to institutional food service customers. We aim to build a sustainable and replicable model that does not rely exclusively on grants and donations to fuel our growing impact model.

Create Common Good (CCG) uses food to change lives and build healthy communities. We aim to broadly impact communities through our training and feeding programs. We provide job training and employment to populations with barriers to employment, youth development programs, and a wide variety of healthy food access programs. CCG continues to successfully place trainees into jobs and expand its food production business footprint in the community. We are furthering our path to financial sustainability through growing earned revenues. We have grown our school lunch program, expanded the volume of grab-n-go food products offered and have even seen a lost customer return because of the “great progress we’ve made and great things he’s hearing about our food production consistency.”

The business passed significant milestones in Q3: We passed our FDA inspection with flying colors, began the USDA inspection process (opening the doors to a much broader range of food production potential including proteins and national customer reach) and we were awarded a two-year grant from the Newman’s Own Foundation. We are nearing the finishing line with USDA and we look forward to this important milestone in our food production progress.

We remain optimistic with a healthy pipeline, and we are on track to double our 2014 food production revenues, with great growth potential in the pipeline for 2015. Less than a year after moving into our new CCG kitchen facility, we have already reached capacity and we are now working on our Phase 2 expansion efforts. We will nearly double our food storage and production space and we will relocate our offices in the building in order to keep up with the growing customer demand.

As we kick-off our year-end campaign to raise funds to support this second expansion, we are excited about the additional kids, families, and customers that we have the opportunity to feed. We will soon service the lower Idaho YMCA Childcare network, providing healthy snacks and meals for the network of 22 childcare centers. Additionally, we will develop new breakfast and lunch items for Jackson’s Food Stores, our favorite $1B gas station chain in the Pacific Northwest. As we grow, we will co-locate with two local food producers, Steph’s Seriously Good Salsa and Zacca Hummus.

The Power of a network can spur and scale impact for so many who need our help! Thanks for the enduring commitment to our work at CCG – please consider joining us in this upcoming expansion as we further scale our impact!

For more information or to donate, please visit