Atlas showed operational and financial improvement across many of our platform companies during 2015. Several businesses delivered stand-out performances, especially BF Holdings LLC, Detroit Renewable Energy LLC, Erickson Framing Holdings LLC, Finch Paper LLC, Novipax Holdings LLC and Twin Rivers Paper Company Inc.
Soundview Paper Holdings LLC displayed much improved performance in 2015, while ASG Group, Greenidge Generation Holdings LLC, Guardwell Distribution LLC and New Wood Resources LLC each made progress during the year on strategic initiatives aimed at creating long-term value. Motus Integrated Technologies and Aludium also delivered solid performance, while Tecumseh Products Company, Inc., acquired in partnership with Mueller Industries, Inc. during the third quarter of 2015, is off to a solid start under the Atlas banner.
The Atlas aggregate Recordable Incident Rate (“RIR”) for the fourth quarter of 2015 was 2.1, a slight improvement from the 2.3 achieved during the last twelve month (“LTM”) period. Our objective is clear and unwavering; to continually reinforce and enhance safety cultures and performance. We will leverage the strong safety fundamentals already in place at each of our platform companies. The tragic accidents which occurred in 2015 deliver the point in the most difficult of ways; we simply can never grow complacent. Excellent safety performance, and the elimination of the risk of severe losses, requires a continuous commitment to behavior change.
There was news on the acquisition front as the quarter came to a close. At our Annual Conference in Naples in January, we announced an agreement to purchase NCR Corporation’s Interactive Printer Solutions (“IPS”) division. IPS is the leading provider of consumable products that help facilitate the world’s transactions, logistics and business processes across the retail, financial, hospitality and travel sectors. The business is a global enterprise with a very broad footprint, serving more than 1,000 multinational and regional customers covering more than 40,000 ship-to locations with more than 10,000 products, the largest volume of which is thermal receipt paper. As such, the company is the world’s largest thermal paper converter. IPS operates seven manufacturing facilities and 29 distribution centers, supplying customers in 97 countries. The transaction is anticipated to close in the coming weeks.
We close the book on 2015 with a great deal of pride in the results produced by our businesses and with much gratitude for the dedication of our 20,000 leaders and associates across the globe. Throughout Atlas, we are optimistic that our proven approach, driven by our outstanding leadership teams, will deliver continued value creation in 2016.
Please feel free to contact us or stop by our Greenwich home and see us. If you happen to wait until Spring and join us on any dry Friday around noon, you can participate in our weekending barbecue, which has become another Atlas tradition.
Best of luck to all in the New Year.
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Arnaud de Weert
Chief Executive Officer
Atlas Holdings created Aludium LLC (“Aludium”) to acquire the rolling mill assets of Alcoa, Inc. in Spain and France in December 2014. Aludium is an integrated, midstream aluminum system with casting, hot mill, cold mill and finishing capabilities. The company produces coils, sheets, shates and strips for the distribution, building and construction, beverage closure, cosmetic, decorative, foil and other industrial end markets.
Aludium posted an RIR of 2.1 for the quarter as compared to 1.5 for the LTM. The tragic loss of longtime colleague and friend Maria Carmen Martinez Sansano has led Aludium and Atlas to redouble efforts to establish and maintain a culture of world-class safety and employee engagement.
Commercially, the company continued to make inroads with key customers in its core markets of distribution and building and construction, as well as with foil stock customers. Sales volume for the quarter increased from the prior year and, for the full year, volumes were up over 2014 in a market that has remained flat. The company’s differentiated service offering of quick lead times, smaller quantities and specialty products has allowed Aludium to achieve higher pricing in the marketplace than many competitors. Feedback from key customers continues to be positive and the company has made significant strides in expanding its product offering.
Operationally, the company performed well during the fourth quarter, largely driven by outperformance at Amorebieta, Spain. On-time delivery performance, a critical component of Aludium’s value proposition, improved in all three of its locations after suffering a setback in the third quarter. Recovery yields saw significant improvement over the prior quarter at Castelsarrasin, France after a multi-location task force led an in-depth review of Castelsarrasin’s processes and procedures.
ASG operates two packaging businesses, with over 1,300 associates serving the consumer products and electronic media industries. Amaray, a provider of plastic injection-molded packaging, operates four manufacturing facilities located in the U.S. and Europe. ASG Print, a provider of creative services and folding carton packaging, operates six manufacturing facilities across Europe.
ASG had a disappointing fourth quarter of 2015 from a financial perspective but produced strong results on the safety front. The company incurred two recordable incidents in the quarter of 2015, resulting in an aggregate quarterly RIR of 0.6.
A plant leadership change in Elizabethtown, effective this quarter, has helped reduce labor inefficiencies and generate process improvement. Management expects operational performance in Elizabethtown to improve substantially in the first quarter of 2016 and beyond.
Despite underwhelming financial performance, ASG Print executed well on several important initiatives in 2015. The company closed its Thalgau, Austria facility, implemented a new ERP system in its Polish operations, restructured its Slough, UK facility and completed significant investments in its facility in the Netherlands. The Spark! division executed an extensive turnaround plan in the fourth quarter, as greater visibility on this start-up operation’s cost structure evidenced lower margins than had been assumed.
We believe this turnaround will position the Spark! Division to expand its customer base and generate positive earnings in 2016.
While excess capacity and some operational missteps impacted ASG’s profitability in 2015, we believe that restructuring and operational improvement undertaken by both Amaray and ASG Print in the second half of the year will generate positive earnings momentum to offset the continued media decline, driving improved profitability in 2016.
Chief Executive Officer – Banker Steel
Henrik Krabsen Jensen
Chief Executive Officer – Veritas Steel
BF Holdings LLC (“BFH”) consists of two subsidiaries, Veritas Steel (“Veritas”) and Banker Steel (“Banker”). Veritas is a leader in the steel bridge fabrication industry, with extensive experience in the manufacture of highly complex bridge structures. Banker Steel is a full-service fabricator of structural steel components used in commercial and infrastructure projects.
BFH delivered strong financial performance and improving safety performance in the fourth quarter of 2015.
As a result of BFH’s heightened focus on improving the safety culture at all Veritas and Banker facilities, its safety record in the fourth quarter of 2015 improved over the prior quarter and the LTM period. Veritas’ progress was particularly evident, as it posted an RIR of 1.6 for the fourth quarter of 2015 as compared to 7.2 for the LTM period. The disappointing LTM safety metric is primarily attributable to the addition of new associates in the second quarter of 2015, with nearly half of all recordable incidents involving new associates. The fourth quarter’s performance is evidence of the progress the company is making in the onboarding process and safety policies with new associates.
Banker’s safety performance still has a distance to go but improved when compared to the LTM period; RIR was 6.3 for the fourth quarter compared to 8.3 for the LTM period. In addition, both companies are continuing to qualitatively improve their safety plans. In the last quarter of 2015, each company assessed its operations to determine the areas where employees were at risk for the highest severity injuries and subsequently began planning on how to most effectively mitigate these risks.
Veritas exhibited strong financial performance in the fourth quarter, driven by increased volume and productivity gains in each of its three facilities. Banker also enjoyed a strong fourth quarter, driven by the continuation of the Rockefeller University project in New York City as well as several other key projects. As always, both businesses remain intensely focused on operations and have seen key operating indicators improve as a result.
Both companies continue to add higher margin work to backlog and pursue additional major new projects. Banker booked $45 million of new business in the fourth quarter, which included the Miami Convention Center. This win evidenced Banker’s continued ability to win large, high-margin jobs outside of its mid-Atlantic base. Veritas booked approximately $37 million of new business in the quarter, with strong bookings at the Palatka and Wausau facilities.
We remain excited about the opportunities that exist to grow the business. Enactment of the $305 billion, five-year Federal Highway Bill during Q4 represents the first long-term infrastructure funding measure in over a decade, and Veritas leadership advocated strongly for its passage throughout 2015. With engaged associates throughout our facilities, we are ready to take advantage of the opportunities this new funding will provide.
Detroit Renewable Energy
Chief Executive Officer
Detroit Renewable Energy LLC (“DRE”) operates renewable energy generation and distribution assets that provide the City of Detroit with safe, reliable and cost-effective solutions for clean energy and waste disposal. The company was formed in 2010 with the objective of improving the operating efficiency, safety and reliability of Detroit’s existing renewable energy and waste infrastructure: the city’s energy-from-waste facility (now Detroit Renewable Power) and Detroit Thermal’s underground steam loop, serving downtown and midtown Detroit.
DRE had two recordable incidents across its business units in the fourth quarter, which resulted in an RIR of 3.0 for the quarter as compared to an RIR of 1.7 for the LTM period.
DRE finished 2015 on much improved operational footing. As a result, DRE’s EBITDA doubled in 2015 due to the hard work and perseverance of our leadership team and associates, as the business accomplished these improved results despite lower revenues because certain contractual revenues are tied to the price of natural gas.
Detroit Renewable Power the energy-from-waste facility that is DRE’s largest business unit posted boiler system capacity utilization over 90% in the fourth quarter, an improvement from the full year of 2015. The higher utilization rates positively impacted revenues, with volumes of waste and corresponding tip fees, district heating steam and metals sales all improving. In addition, steam sales to General Motors’ Hamtramck, MI facility via the industrial pipeline constructed in 2014 were consistent with expectations for the fourth quarter and were nearly double that of the third quarter of 2015 due to planned downtime in Q3 at the GM facility.
Detroit Thermal’s fourth quarter results were adversely impacted by an especially mild start to the winter heating season. Steam sales to district heating customers for the quarter were off compared to the prior five year average. There were no new customer additions in the fourth quarter.
Chief Executive Officer
Founded forty years ago, Erickson Construction (“Erickson”) is one of the leading providers of construction services and prefabricated building components in the western United States. Erickson helped pioneer the concept of complete framing systems and continues to lead the industry with state-of-the-art, computer-assisted production facilities in both Arizona and California. Atlas Holdings formed Erickson by acquiring the company’s core assets from Masco Corporation in 2012.
Erickson showed continued financial and safety improvement in the fourth quarter of 2015. The company reported an RIR of 4.1 in the quarter, an improving trend from 5.4 for the LTM period.
The fourth quarter for Erickson generally marks the beginning of the slow season, which precipitates lower activity. In 2015, however, this was not the case. Erickson was able to retain employees brought on and trained during the peak season as a result of improved markets and increased bidding activity. This contributed to the delivery of Erickson’s best fourth quarter results in almost a decade. With a strong backlog, trained workforce and what appears to be sustained improvement in our key geographic markets, we remain optimistic about the future.
Arizona Framing built more houses than in any quarter since Atlas acquired the business in 2012. The California Framing division delivered its best quarterly EBITDA results since acquisition, slightly besting the second quarter of 2015. Nevada Framing showed continued improvement and expectations for the Reno, Nevada market remain positive given the economic development efforts underway in the City. DSI, Erickson’s door molding and millwork business, also reported a solid fourth quarter.
Erickson is well-positioned geographically in some of the most attractive residential construction markets. Further, the backlog built at all Erickson divisions is bringing important benefit during the beginning of the typical seasonal slowdown: this backlog, in combination with leveraging the Erickson workforce in a tight labor market, is resulting in customer commitments to a more consistent flow of releases.
President and Chief Executive Officer
Having begun as a family-owned sawmill, lumberyard and quarry business 145 years ago, Finch Paper LLC (“Finch”) is a premier, vertically integrated paper manufacturer specializing in high-bright, uncoated papers for North American printing and converting markets. Using advanced manufacturing systems, Finch produces a broad portfolio of opaque, text and cover and digital papers for multi-press environments.
Finch continued to deliver strong performance in this quarter. In fact, Q4 2015 represented the 8th consecutive quarter of trailing twelve month EBITDA growth driven by our unwavering focus on safety, quality, productivity and sales diversification. On the safety front, our 2015 RIR was 2.3, down from 3.0 in 2014. Our 2015 lost time incident rate (LTIR) of 1.1 matched our 2014 result. More specifically, the safety initiatives implemented this year resulted in a second half RIR of 2.2 and LTM of 0.6. Solid financial results continue to be driven by operational performance, improved procurement culture, and the profitable growth of our municipal solid waste landfill. Of special consequence was Finch’s ability to increase sales of its most profitable grades for the first year under Atlas’ ownership. Finch’s plan for the coming year builds on these accomplishments. We will continue the journey toward achieving world class safety and meeting our aggressive goals for sales and production.
Greenidge Generation Holdings
President and Chief Executive Officer
Greenidge is an environmentally sound power generation facility located in Dresden, New York. Atlas is in the process of reactivating this facility and is preparing to return it to market upon conclusion of regulatory review.
Greenidge remains idled, but efforts toward securing the necessary regulatory approval for reactivation continue to advance in earnest. Last summer, the New York Department of Environmental Conservation (“NYDEC”) deemed the facility’s Title V Air Permit application complete. On October 26, 2015, NYDEC formally provided both Greenidge’s proposed Title V and Title IV Acid Rain Permit to the U.S. Environmental Protection Agency (“USEPA”) for the required 45-day review. Despite legal and factual analyses conducted by NYDEC which supported reactivation, USEPA objected to the Title V Air Permit as submitted. Greenidge is currently working with NYDEC to fully address the issues underlying USEPA’s objection and anticipates submission by Greenidge of a revised Title V Permit application shortly. We continue to work toward returning this environmentally-sound power generation facility to market, with natural gas as its primary fuel, as soon as possible in 2016.
President and Chief Executive Officer – Bridgewell Resources
President and Chief Executive Officer – Merchants Metals LLC
Guardwell Distribution LLC (“Guardwell”) has two divisions, Bridgewell Resources (“Bridgewell”) and Merchants Metals LLC (“MMI”). Bridgewell is a leading supplier of construction products, utility supplies, wood products, food ingredients and crop inputs, together with logistics services, to suppliers and customers across the globe. MMI is one of the nation’s largest manufacturers and distributors of fencing products and accessories in the United States.
Guardwell recorded an unacceptable RIR of 3.7 in the fourth quarter and a 2.5 for the LTM period. Management is intensely focused on modifying behaviors to drive Guardwell to our goal of world-class safety. We believe a focus on fundamentals will begin to show up in improving safety trends in 2016.
Bridgewell’s Key Performance Indicators saw improvement during the quarter, with some continued impact from restructuring activities. For example, Bridgewell’s backlog at the end of the fourth quarter was significantly higher compared to the end of the fourth quarter of 2014. The growth in backlog is largely attributable to: (i) growth of the edible oils and pulses business in F&A, (ii) a ramp up in the rail tie business in U&C and (iii) an increase in bookings at CD as a result of increased demand as well as the addition of new and productive sales associates.
Merchants Metals performed soundly from a financial perspective in its third quarter under Atlas ownership. These solid results were driven by our ability to maintain strong pricing to our largest customers despite recent declines in steel prices (falling steel costs typically reduce selling prices and overall adversely impact gross margins). Profitability would have been even higher if it were not for the exit of Merchants’ largest tube supplier from the fencing industry. Merchants did consummate an arrangement with a new supplier during the quarter and should realize these additional benefits in 2016.
Moreover, this quarter saw considerable progress regarding transition services, including implementation of a new ERP system, completion of “conference room” pilot testing, as well as completion of the IT infrastructure conversion (e-mail, network and domain) at every Merchants location. Merchants also continued to execute its aggressive 80/20 program, part of an Atlas-wide initiative to drive continuous improvement, which disciplines the organization to better focus its capital and human resources on the smaller number of activities (i.e. the 20%) that produce the vast majority of the value to the enterprise (i.e. the 80%).
Motus Integrated Technologies
Chief Executive Officer
Motus Integrated Technologies (“Motus”) is a leading global manufacturer of automotive headliners and a variety of unlit, illuminated and auxiliary coverage sun visors. The company has one of the industry’s broadest and most technologically advanced product portfolios. In 2014, Atlas Holdings formed Motus to acquire certain assets of technology and industrial giant Johnson Controls. Motus acquired the assets of Leon Plastics, Inc. (“Leon”) in 2015. Leon is a premier supplier of highly-engineered automotive decorative soft interior trim components, including door and console armrests, instrument panel trim, and interior handles.
Motus finished 2015 by turning in a solid performance during the fourth quarter. On the safety front, Motus delivered a fourth quarter RIR of 0.4, a strong rate on an absolute basis and also significantly improved relative to the LTM RIR of 1.1. The Maplewood, Ramos, Saltillo, Arteaga and Uberherrn plants all had zero recordable incidents during the quarter. As you may recall from last quarter’s report, Motus Uberherrn had five recordable incidents during the third quarter — the worst safety performance of the Motus group — so the improvement this quarter is especially important. As previously reported, a new General Manager began at Uberherrn at the end of the third quarter and one of his top priorities was to improve the safety culture.
While Motus and Leon both saw somewhat mixed results operationally during the fourth quarter, Motus saw success with many of its commercial initiatives. These included winning new sun visor programs with Volkswagen, Acura, BMW and Daimler. With respect to engineering, substantial progress was made on the initiatives to develop a wireless visor and a thin visor and at the Maplewood plant. The team also poured their first foam “bun” during the quarter – an important step in vertical integration for the headliner business.
In Creutzwald, the team began operation of the automatic production line for the “AdBlue” filters in anticipation of volume ramp up during the first quarter of 2016. Motus has benefitted from high auto production volumes and favorable exchange rate dynamics.
New Wood Resources
President and Chief Executive Officer
New Wood Resources LLC (“New Wood”) consists of three subsidiaries, Olympic Panel Products and Omak Wood Products both located in the State of Washington and Winston Plywood & Veneer in Mississippi. New Wood companies are engaged in producing and distributing wood panels for industrial and commercial customers in North America.
While operating results at New Wood’s Omak Wood Products LLC (“Omak”) business unit remained disappointing, the construction of Winston Plywood & Veneer LLC’s (“Winston”) state-of-the-art plywood manufacturing facility in Mississippi took several meaningful steps forward during the quarter. On the safety front, New Wood had an unacceptable RIR of 4.9 for the quarter, compared to an overall RIR of 3.7 for the LTM period.
Olympic Panel Products LLC (“Olympic”) continued to perform well. As discussed previously, in March, 2015, New Wood sold Olympic to Swanson Group Manufacturing LLC (“Swanson”), a Pacific Northwest forest products company. Swanson intends to relocate the Olympic assets into a facility currently under construction by Swanson, which is expected to be completed by June, 2016. Until then, New Wood is operating Olympic pursuant to an operations agreement under which the business is run for New Wood’s account during this period.
As noted previously, in August, historic wildfires devastated the Omak region and impacted about 180,000 acres of the Colville commercial forest, which serves the Omak facility. While the fires did not directly impact the mill, the damage to surrounding areas was severe. Following the fire, the leadership team performed a comprehensive analysis of the fire’s implications for Omak’s long-term fiber supply. The analysis concluded that the fiber basket had been severely impacted, raising concerns about the sustainability of the mill’s long-term fiber supply and, at a minimum, resulting in increased operating costs. In light of these concerns and the sale of Olympic, New Wood began a review of strategic alternatives for Omak and during the quarter, entered into conversations with the Colville Tribe regarding Omak’s future.
The construction of Winston’s new plywood mill in Louisville, Mississippi continued to advance toward completion. Commercial operations are currently scheduled to commence in the first half of 2016. During the quarter, the leadership and sales teams began to visit customers to share Winston’s story in advance of the mill’s startup. Furthermore, the team continued its preparation for the startup by developing an employee training curriculum and implementing the IT systems necessary for commercial operations.
Chief Executive Officer
Novipax Holdings LLC (“Novipax”) is the leading producer of absorbent pads for the meat packaging industry and one of the top manufacturers of expanded polystyrene foam trays in the United States. The company was created by Atlas Holdings’ acquisition of the Trays and Pads business of Sealed Air Corporation in April 2015. It serves more than 150 food processors, supermarkets and food packaging distributors through its five manufacturing facilities.
Novipax continued to deliver strong financial performance during the fourth quarter. Despite focused safety training and processes, RIR was 2.7 in the fourth quarter, as compared to 1.9 experienced in LTM 2015. A large share of the injuries were strains and sprains – as a result, ergonomics training and stretching routines have been reinforced across the plants in our continued march to world class safety.
Separation from Sealed Air’s corporate infrastructure progressed according to plan and all open management positions were filled in the fourth quarter. Novipax’s new standalone resources and focus on innovation has enabled many developments to progress, including a new absorbent pad which incorporates a granular agent that releases carbon dioxide when moisture is absorbed into the pad.
Novipax intends to complete the full migration to its own ERP system in the first quarter of 2016. ERP systems configuration, training and testing are well underway. The system chosen is specifically tailored to the plastics and packaging industry and will provide higher quality analytics and controls, allowing management to better drive and track pricing, operational improvement and other initiatives.
Novipax continued to execute ongoing value creation initiatives through the fourth quarter. Procurement savings implemented in December 2015 on raw materials such as polystyrene resin and fluff pulp are expected to yield significant savings during 2016. Freight and logistics programs, contracted during the fourth quarter, will also contribute to reduced costs in 2016. In addition, Novipax retained a third-party consultant to conduct an in-depth profitability analysis at the SKU level in order to begin implementation of SKU consolidation, 80/20 business practices and targeted sales and pricing strategies.
Phoenix Services International
Chief Executive Officer
Phoenix Services International LLC (“Phoenix”) provides responsive, world-class service to steel producers around the globe. The company was formed in 2006 through the acquisition of Thor Mill Service Inc. by a partnership of Atlas Holdings and experienced operators in the mill services sector. Through a management team that brings decades of experience and innovation to its customers around the globe, Phoenix provides steel mill services that include slag handling, metal recovery and equipment rental.
Phoenix reported an RIR of 1.6 for the fourth quarter of 2015, which compares to the same quarter in 2014 of 2.1 and the national slag industry standard of 5.0. We continue to advance a new, 20-year service contract with CSP (Companhia Siderúrgica do Pecém), a green-field steel mill under construction in Fortaleza, Brazil. The site is nearly complete, with operations now scheduled to commence in April, 2016.
As Phoenix’s customer base widens with the addition of the US Steel mill in Kosice, Slovakia and Nucor Gallatin in 2015, more opportunities to grow and expand the enterprise are opening. Our company’s brand is highly visible in the marketplace due to excellent performance at our customer mills. We expect to bid on contracts worth over $400 million over the next two years and, given our anticipated “win” rate, we project significant continued growth.
President and Chief Executive Officer
RedBuilt LLC (“RedBuilt”) was formed by Atlas Holdings in 2009 to acquire the assets of the Trus Joist Commercial division of Weyerhaeuser Company. The company is a leader in the design, manufacture and support of proprietary engineered structural wood products for commercial, industrial and multi-family residential building applications.
RedBuilt produced strong safety and performance in 2015 with a 50% reduction in both injuries and RIR when compared to the previous two years. We continue to investigate all safety incidents, near misses and potential hazards. We then share key findings and trends, and implement the appropriate corrective actions across the company. Several locations have engaged OSHA and will use the SHARP certification process to help drive world class performance across the organization.
From a financial perspective, net sales for the quarter decreased while gross margins increased from the same period in 2014. Fourth quarter unit net realizations were ahead of last year; lower raw material costs and a sales mix toward the higher margin commercial segment have contributed to the quarter-to-quarter gross margin increase.
EBITDA in this quarter was significantly higher than the same period one year ago. We continue to aggressively pursue further margin expansion through continuous improvement projects, organization wide cost reductions and price adjustments.
Soundview Paper Company
Chief Executive Officer
With operations in New Jersey and Vermont, Soundview Paper Company (“Soundview”) is a leading, world-class manufacturer of recycled and virgin fiber towel and tissue products for the At-Home and Away-From-Home markets in North America. The company commenced operations in April 2012 when it acquired the equity and debt of Marcal Paper Mills, LLC.
Soundview continued its favorable trajectory as it closed out 2015, recording positive results with respect to EBITDA for the third consecutive quarter. In the fourth quarter, Soundview recorded an RIR of 1.3 — a deterioration from the LTM period of 1.1. Management remains committed to achieving world class safety performance and continues to drive employee accountability and safe work practices. For example, Soundview completed a forklift recertification on all relevant operators. Soundview Vermont’s safety performance continues to hold steady at zero for the LTM period, showing remarkable improvement after a full year RIR of 12.7 at the time of Soundview’s acquisition of the division in 2012.
Financial performance has continued to improve over the past five quarters due to operational improvements and cost reductions; however, overall financial performance is still far below potential. EBITDA in the fourth quarter of 2015 improved dramatically relative to the prior year, primarily due to cost reductions in New Jersey, including the elimination of costly converted products outsourcing, fiber processing improvements and energy and sewerage rate reductions. Soundview Vermont’s performance continues to be strong.
Key initiatives mentioned in the last two quarters’ reports continue to bear fruit and have become standard operating procedure. For example, Soundview succeeded in its petition before the New Jersey Board of Public Utilities for a substantial energy rate reduction, yielding immediate cost savings on both parent roll and converted product costs. In parent roll sales, year-over-year volume more than doubled, although volume declined vs. last quarter, consistent with seasonal trends. Soundview secured substantial monthly volume with a new parent roll customer late in the fourth quarter, giving the sales team additional time to secure new converted business.
The team continues to assess further cost saving opportunities across the business. Soundview also embarked on a wastewater treatment capital project that the team expects will further reduce sewerage costs by nearly 50%. This project is scheduled to be completed in early 2016.
During the quarter, we continued to win the War for Talent, strengthening the Soundview team with several key additions, including Michael Breen, who joined our team as Paper Mill Manager and Jim Foster, who joined as Corporate Controller.
President and Chief Executive Officer
Tecumseh Products Company (“Tecumseh”) is a global manufacturer of hermetically sealed compressors for residential and specialty air conditioning, household refrigerators and freezers, and commercial refrigeration applications, including air conditioning and refrigeration compressors, as well as condensing units, heat pumps and complete refrigeration systems.
Tecumseh operates from 12 manufacturing facilities dispersed globally across four continents, thus maintaining a consistent safety culture, and a “safety first” work environment, is a top priority. Tecumseh recorded an RIR of 1.6 for the fourth quarter of 2015 and we remain encouraged by senior management’s commitment to driving to World Class safety. In addition, while severity of safety incidents remains a priority, management is also focusing on ergonomics to bring safety performance to the next level at Tecumseh.
One of our initial focus areas for Tecumseh has been on winning the War for Talent, initially by supplementing the executive management team.
The company’s first key hire was General Counsel Carrie Williamson, who had been General Counsel of Soundview Paper, another Atlas company, since 2012. We also added Adam Levy, who previously served as Chief Restructuring Officer at Twin Rivers Paper, also an Atlas company, to address a number of strategic and tactical finance and operations opportunities. Finally, just after the quarter ended, Tecumseh hired Michael Bauersfeld as Chief Financial Officer. Mike was previously Chief Financial Officer at Armored Auto Group. We remain excited about the opportunity at Tecumseh and look forward to a strong, long-term partnership with our partner, Mueller Industries.
Chief Executive Officer
Twin Rivers is a leading 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 acquired a controlling interest in the company in June 2013, in partnership with Blue Wolf Capital.
Twin Rivers’ RIR during the fourth quarter was 4.0, compared to the LTM period of 2.0. While safety performance represents a significant improvement from the period prior to our acquisition, it remains well short of our goal.
The company’s leadership team is executing against its plan to protect share in core markets while aggressively pursuing opportunities to expand into more attractive end-markets. We are currently analyzing capital investment opportunities that will accelerate Twin Rivers’ transition to these potential new markets.
The company’s lumber operation in Plaster Rock continues to face operational challenges in a very difficult market environment. During the quarter, units sold (measured in Mfbm) decreased on a year-over-year basis and average net selling price per Mfbm decreased from the prior year. From a market perspective, the U.S./Eastern Canada benchmark weekly lumber price index was $356 per Mfbm in the fourth quarter, down from the 2014 average. While it was a difficult quarter, Plaster Rock finished on a high note, as throughput and grade mix improved meaningfully during the final weeks of 2015. We are optimistic that we will see substantially improved performance in 2016 and continue to believe that Plaster Rock remains a significant source of value creation over the coming years.
Our Atlas Foundation Partners
Create Common Good
Chief Executive Officer
Create Common Good (CCG) uses food to change lives and build healthy communities by providing job training and placement services to individuals with barriers to employment. These individuals include refugees, those previously incarcerated, women overcoming domestic violence situations, those experiencing homelessness, and others. CCG is a 501(c) 3 non-profit social enterprise that does not rely exclusively on donations and grants, but also operates a business-to-business food production kitchen as a way to generate diversified revenue and create sustainability for our job training programs.
Create Common Good trained 114 individuals, exceeding our 2015 goal of 90. Compared to 70 trained in 2014, we are proud to have realized over 50% growth. Currently, 71% of our trainees have non-native English speaking barriers. With refugee resettlement and related global issues at the forefront of our news, we expect demand for our job training and placement programs to grow as populations continue to be displaced and migrate to our community.
Sales in 2015 skyrocketed by 198% with Jacksons Food Stores continuing to be our largest customer with consistent diced onion business for their condiment bars, as well as their new line of meat-filled pastries that are baked in-store in their convection ovens. We are continuing to enjoy co-packing business with local Boise customers like Steph’s Seriously Good Salsa and Mobley’s Hand-crafted Ice Cream and are currently in discussions with three additional customers with products ranging from packaged BBQ sauce to ground beef.
Our focus continues to be on our trainees and we are proud to announce that we are expanding our program in 2016 to an 8-week course that we believe will better serve our trainees and the employers who hire them, resulting in a long-lasting, mutually beneficial partnership.
For more information or to donate, please visit www.createcommongood.org.
Project Lead the Way
Dr. Vince Bertram
President and Chief Executive Officer
Project Lead the Way is a nonprofit organization that provides a transformative learning experience for K-12 students and teachers across the United States. Through PLTW pathways in computer science, engineering, and biomedical science, K-12 students learn problem-solving strategies, critical and creative thinking, and how to communicate and collaborate. Students apply knowledge from a variety of disciplines as they engage in hands-on activities, projects, and problems reflective of real-world scenarios and careers. The PLTW experience empowers students to develop in-demand knowledge and skills necessary to thrive in an evolving world.
We recently announced the next initiative of the Atlas Foundation — a unique collaboration with Project Lead the Way (“PLTW”). PLTW creates and delivers the premier model for STEM instruction in more than 8,000 schools across the country, serving approximately 1.5 million students nationwide. In so doing, it is directly addressing a significant threat to our economic future; the reality that, today, the U.S. public education system is failing to graduate young people in sufficient quantity with the skillset necessary for the increasingly technical workplaces of today and tomorrow. PLTW is ensuring that students “learn by doing,” via its superior, hands-on STEM curriculum – one we have seen firsthand and wholeheartedly endorse. Moreover, through its own innovative business model, PLTW has scaled in a manner unique among non-profit organizations. It is facilitating corporate and philanthropic engagement through the creation of a 100% revenue-driven model, enabling partners like the Atlas Foundation – and the companies which make up the Atlas family – to generate meaningful results in the classroom.
The Atlas / PLTW Partnership has two core elements: First, we will expand PLTW across the Atlas footprint. Second, we will create the Atlas PLTW Manufacturing Institute. Our goal is not simply to provide a corporate donation. It is to do something different, something uniquely Atlas. We will unleash the best of Atlas to enhance not only the education of students but the schools they attend and the communities where our associates live.
We’ve already begun implementation, with extensive work slated for the first quarter of 2016. In just the last few weeks, for example, several Atlas businesses have committed to “adopt a school” (or more than one, in some cases). That means they will be funding the implementation of a PLTW Program in a community where one of its manufacturing facilities are located, beginning with the 2016-2017 school year. In addition, we have established an Atlas / Project Lead the Way Leadership Team. Made up of one representative from each participating Atlas business, this Team is spearheading the development and implementation of the Atlas / PLTW Partnership. In just the last several weeks, we’ve identified fourteen potential schools. We have also begun to craft an engagement strategy that will connect Atlas associates to their chosen school, and further weave our companies into the fabric of their communities.
If you wish to learn more about PLTW, please visit www.pltw.org. If you’d like to support the Atlas/PLTW Partnership, there are two ways you can do so. The first is by visiting www.pltw.org/atlas. The second is by sending a check to: Project Lead the Way, 3939 Priority Way South Drive Suite 400, Indianapolis, IN 46240 and note “Atlas Foundation / PLTW Partnership” on your check.
Project Lead the Way and Atlas are uniquely suited to join forces. PLTW is addressing a core need of Atlas businesses and that of the broader American manufacturing sector – the demand for technically proficient high school and college graduates. Together, we will create and implement a new, exciting, and scalable model of corporate engagement that fosters STEM education in schools across the country. In so doing, we will help to prepare the manufacturing sector’s workforce of tomorrow – and make a profound impact on students, their schools and their communities.