Buy-Side Brief: Atlas Engineered Products Ltd. (AEP.V)

Founder-led Atlas Engineered Products uses robots and acquisitions to meet Canada’s housing shortage, trades far below peers.

Atlas Engineered Products isn’t the flashiest name in the building products space—but sometimes the most compelling opportunities are hiding in plain sight. In a fragmented industry facing a structural housing shortage, Atlas Engineered Products stands out as a founder-involved, automation-driven consolidator that’s quietly assembling both scale and operating leverage. It’s the kind of business you want to catch just before the inflection hits.

Start with the backdrop: Canada’s housing market isn’t cooling—it’s undersupplied by millions of units. The CMHC estimates a 3.5 million-home gap by 2030, and both major political parties are now aligned on expanding starts toward 500,000 annually. Even partial delivery on those goals would keep construction volumes elevated for years. For Atlas Engineered Products, which supplies roof trusses, wall panels, and other engineered structural components to homebuilders, that’s a long runway of demand.

But Atlas Engineered Products isn’t simply riding the cycle. It’s building a competitive edge. The company has begun installing robotic manufacturing lines—starting with its Clinton facility in late 2025—that will double plant output, cut labor requirements in half, and pay back within two years. A second automation-ready site has already been secured: 42 acres in Colborne that could host the next wave of growth. In an industry still dominated by regional job shops, Atlas Engineered Products is pulling away.

Alongside automation, the company is expanding its total addressable market. New product lines—wall panels and engineered wood—grew 42% and 30% year-over-year respectively in Q1 2025. These offerings let Atlas Engineered Products shift from a “roof-only” vendor to a full-envelope supplier, increasing customer stickiness and smoothing revenue across construction types.

The M&A model deserves attention. Atlas Engineered Products has completed nine tuck-in acquisitions since 2017, with the most recent—Truss-Worthy, in May 2025—coming in at just 0.8x trailing sales. Across the portfolio, deals have averaged ~3x EBITDA, a steep discount to public comps that typically trade at 10–12x. These are profitable, owner-operated businesses that Atlas Engineered Products integrates for margin expansion and procurement scale.

The financial picture is starting to reflect that strategy. FY 2024 adjusted EBITDA came in at C$8.5 million, with a 15% margin. In Q1 2025 alone, EBITDA jumped 137% year-over-year on just 21% top-line growth. That kind of operating leverage—before automation even kicks in—is telling. The company is self-funding growth with net debt at just C$11.8 million (~1.4x EBITDA), and a normal course issuer bid (NCIB) in place shows they’re willing to buy back shares when appropriate.

Despite all this, the market hasn’t caught up. At a C$80 million enterprise value and trailing EBITDA of C$8.5 million, Atlas Engineered Products trades at 9x EBITDA. That’s a deep discount to North American peers, particularly for a business with visible growth, improving margins, and insider ownership north of 14%.

There are risks, of course. Any delay in automation deployment or misstep in acquisition integration could dampen near-term upside. Housing starts could wobble if interest rates stay elevated. But Atlas Engineered Products has tools to manage through—ample balance sheet flexibility, disciplined deal pacing, and a cost structure about to get much leaner.

This isn’t a “just discovered” story—but it is one that feels priced as if nothing has changed. In reality, plenty has. Atlas Engineered Products is shifting from a regional consolidator into a national player, building real operating leverage into a secularly growing market. If automation expands margins by even 300 basis points, as management believes it can, then today’s valuation leaves plenty of room for multiple expansion.

For investors who’ve seen this movie before—industry laggards giving way to tech-enabled consolidators—the setup is familiar. Atlas Engineered Products is still early in that trajectory, which makes now the right time to watch closely. The earnings curve is steepening, and the market hasn’t noticed yet.