Item 7.01 Regulation FD Disclosure.
As previously disclosed, in connection with the proposed initial business
combination (the "business combination") between
In connection with the arrangement of the Credit Facilities, Atlas will be
providing to potential lenders the following preliminary, unaudited financial
results of Atlas for the fiscal year ended
For the year ended
· total gross revenues are estimated to be
· revenue net of reimbursable expenses is estimated to be
reimbursable expenses include billings for travel and other out-of-pocket
expenses and third-party costs);
· net income is estimated to be
· Covenant Adjusted EBITDA* is estimated to be
· backlog is estimated to be
account the backlog of
The selected preliminary financial data in this Current Report on Form 8-K has
been prepared by, and is the responsibility of, the management of Atlas. The
information and estimates have not been compiled or examined by Atlas'
independent auditors and are subject to revision as Atlas prepares its financial
statements as of and for the year ended
The information in this Current Report on Form 8-K is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing made by the Company under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
1 Forward-Looking Statements
This Current Report includes certain statements that may constitute
"forward-looking statements" for purposes of the federal securities laws.
Forward-looking statements include, but are not limited to, statements that
refer to projections, forecasts or other characterizations of future events or
circumstances, including any underlying assumptions. The words "anticipate,"
"believe," "continue," "could," "estimate," "expect," "intends," "may," "might,"
"plan," "possible," "potential," "predict," "project," "should," "would" and
similar expressions may identify forward-looking statements, but the absence of
these words does not mean that a statement is not forward-looking.
Forward-looking statements may include, for example, statements about certain
preliminary, unaudited financial results for Atlas' year ended
*Non-GAAP Financial Measures
Covenant Adjusted EBITDA is a financial measure not prepared in accordance with GAAP.
Atlas believes that the presentation of Covenant Adjusted EBITDA is appropriate to provide additional information to investors about the calculation of, and compliance with, certain financial covenants under the agreements governing Atlas' existing indebtedness and the Credit Facilities. Atlas and the Company caution investors that amounts presented in accordance with Atlas' definition of Covenant Adjusted EBITDA may not be comparable to similar measures disclosed by other issuers, because not all issuers and analysts calculate Covenant Adjusted EBITDA in the same manner.
Atlas defines Covenant Adjusted EBITDA as net income before interest expense, income taxes, depreciation and amortization, adjustments for certain one time or nonrecurring items and other adjustments permitted in certain covenant calculations under the agreements governing Atlas' existing indebtedness and the Credit Facilities.
Covenant Adjusted EBITDA is not a measurement of Atlas' financial performance,
is defined and calculate differently than the Adjusted EBITDA performance
measure disclosed in "Atlas' Management's Discussion and Analysis of Financial
Condition and Results of Operations-Non-GAAP Financial Measures" in the
Company's definitive proxy statement filed with the
Atlas excludes these items from net income in arriving at Covenant Adjusted EBITDA because these amounts are either nonrecurring or can vary substantially within the industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Certain items excluded from Covenant Adjusted EBITDA are significant components in understanding and assessing a company's financial performance, such as a company's cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are reflected in Covenant Adjusted EBITDA. Atlas' presentation of Covenant Adjusted EBITDA should not be construed as an indication that results will be unaffected by the items excluded from Covenant Adjusted EBITDA. Atlas is unable to provide a quantitative reconciliation of Covenant Adjusted EBITDA to cash flow from operating activities as the items necessary to provide such reconciliation are not yet available.
2 See the following table for a quantitative reconciliation of Covenant Adjusted EBITDA to net income. Fiscal Year Ended December 31, ($ in thousands) 2019 Net Income$ 9,346 Interest Expense 10,842 Provision for income taxes 2,927 Depreciation and amortization 21,701 EBITDA$ 44,816 Non-recurring expenses One-time legal fees and transaction professional costs(1)$ 14,565 Non-cash equity compensation(2) 2,041 Startup expenses for new divisions(3) 1,417 Costs to implement synergies and severance costs(4) 1,532 Previous owner expenses(5) 760 Shutdown of telecom division(6) 226 Discontinued business lines(7) 213 Total non-recurring expenses 20,753 Pro forma cost synergies(8) 6,236 Public company costs(9) (2,500 ) Acquisition of Long Engineering(10) 3,600 Covenant Adjusted EBITDA$ 72,905 ____________
(1) Includes non-recurring professional fees for legal, accounting, investment
banking and consulting services incurred in connection with the review and consummation of Atlas' acquisitions in 2018, the merger withATC Group Partners LLC ("ATC") in 2019 and the business combination with Boxwood in 2019.
(2) Represents non-cash equity-based compensation to Atlas employees which will
not continue after the consummation of the business combination.
(3) Includes startup expenses incurred in late 2018 and early 2019 in connection
with the opening of three new offices and the hiring of related new personnel as part of a one-time major internal expansion and represents the amount of such expenses in each period required to bring each such office to break-even. As Atlas' operational strategy has historically focused on external growth and accretive acquisitions rather than internal expansions of this type, these office openings were undertaken due to specific anticipated contracted revenue for 2019 and represent atypical startup expenses within Atlas' operational strategy which are not indicative of Atlas' ongoing and expected future operating performance. The aforementioned contracted revenue caused such offices to report profit in mid-2019.
(4) Reflects one-time severance, office lease termination and other costs to
implement the cost savings synergies in connection with the merger with ATC.
(5) Represents non-recurring expenses incurred by Atlas related to former owners
of certain of Atlas' subsidiaries, including litigation involving Atlas and one such former owner that resulted in significant legal fees and arbitration expenses, the write-off of loans owed to Atlas by a former owner, the payout of deferred compensation to former owners and other non-recurring payments to former owners.
(6) Represents one-time costs incurred in connection with the closing of Atlas'
telecom division in 2019.
(7) Reflects losses related to business lines sold off in 2018 and 2019 (Power &
Industrials,
(8) Pro forma cost reductions implemented in connection with the merger with ATC,
including headcount reduction, facility closures, sourcing and information
technology.
(9) Pro forma incremental costs to be incurred in connection with Atlas becoming
a public company.
(10) Pro forma impact of the acquisition of Long Engineering.
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