Bridgewell Resources LLC – Q3 Review 2011

Jim Toya, Chairman
Kyle Burdick, President

Bridgewell Resources LLC – Q2 Review 2011

Jim Toya, Chairman
Kyle Burdick, President

Bridgewell Resources LLC (“Bridgewell” or the “Company”) 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.

As we have previously communicated, upon acquisition we set out to address the challenges facing Bridgewell in a systematic fashion. We are pleased to report that the Company is nearing the end of its stabilization phase and is about to embark on the next phase of its recovery — accelerated growth and driving excellence in operations to become a Performance Organization. During Q2 2011, the Company saw its revenue in backlog KPI (sales commitments that have not yet shipped) grow sequentially by 28.5% from the end of Q1 to the end of Q2.

As a key enabler of its growth strategy, Bridgewell successfully closed on a new working capital facility, providing the Company with ample additional liquidity to fund business expansion. We believe Bridgewell is well-positioned to take advantage of growth prospects in both domestic and international markets.

Bridgewell Resources LLC – Q1 Review 2011

Kyle Burdick, President

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. (“North Pacific”) out of a Federal receivership.

As we have previously communicated, upon acquisition we set out to address the challenges facing Bridgewell in a systematic fashion. We engaged a deeply experienced group of our Operating Partners to serve on Bridgewell’s Board of Managers and to augment the management team. Our immediate focus was to stabilize the Company, build the analytics to focus on the KPIs, re-establish key trading relationships with vendors and customers who were impacted by the receivership and, ultimately, return Bridgewell to growth.

During the fourth quarter of 2010, Bridgewell continued its world-class safety record of zero recordable incidents, a record that the Company has been able to maintain since inception. In addition, Q4 saw a great deal of activity to prepare the Company for growth in 2011. During this seasonally slow quarter (the Company generally shows its strongest revenue in the second and third calendar quarters), the Company turned its attention toward culture change, aggressive recruiting efforts, new customer acquisition and expansion of trade credit.

One of the key tasks as a company emerges from a bankruptcy or receivership is to re-engage the management team and reignite the “winning” culture of a Performance Organization. In Bridgewell’s case, we are fortunate that its managers and traders know what success looks like; they were part of divisions of North Pacific that were profitable up until the moment of receivership. The expansion efforts undertaken by Bridgewell are beginning to bear fruit. At the end of Q1, revenue in backlog had grown to approximately $51 million from $34 million at the end of 2010.

We remain excited by the potential of Bridgewell and believe the Company is well-positioned to take advantage of the growth prospects available to us in both domestic and international markets. We believe that, as the traders in whom the Company has invested establish their books of business and increase their productivity, the operating leverage of these investments relative to our largely fixed cost structure will drive profitability and returns on capital employed to attractive levels consistent with the predecessor company’s historic performance.

Bridgewell Resources LLC – Q3 Review 2010

Kyle Burdick, President

Bridgewell Resources LLC (“Bridgewell” or the “Company”) continues to enjoy an incident rate of zero for both Q3 and YTD.

Market conditions remain challenging in the majority of our core markets. Pricing for certain products has softened, particularly in the structural panel market, where prices have declined dramatically since the end of Q2. Flooring markets were strong in Q3 as a result of short supply rather than increasing demand, a phenomenon we are seeing across a variety of the products we trade as the broader economy lurches toward recovery. Sales volumes in domestic utility markets continue to lag prior years as domestic utility clients defer infrastructure maintenance spending.

Our Q3 financial performance saw positive momentum. Both Utility & Construction and International Wood Products posted stronger sales performance, with Panel, Domestic Wood Products and Food & Ag posting slight declines. Overall, we continue to be confident in our ability to leverage our existing cost structure as the Company grows. We believe that Bridgewell has now stabilized following the acquisition and transition out of receivership, and is poised for significant growth.

Moving into Q4, we expect to experience the traditional seasonal decline in business activity. We are well positioned to take advantage of the exciting growth prospects available to us in a variety of products in both domestic and international markets and we anticipate substantial increases in revenue and profitability in 2011.

Bridgewell Resources LLC – Q2 Review 2010

Kyle Burdick, General Manager

Bridgewell Resources LLC is the newest addition to the Atlas family and Atlas’ eighth platform company. Bridgewell, with 134 associates, operates out of its corporate headquarters in Tigard, Oregon, and four other sales offices, and utilizes 130 warehouse and storage locations throughout the United States and Canada. The company is currently comprised of five divisions:

Utility & Construction Division. U&C is the nation’s largest independent distributor of wood poles. U&C trades and distributes treated wood poles and pilings, crane mats, bridge kits, sign posts, guard rails and railroad ties to electric and telephone companies, distributors, contractors and foreign buyers.

Food & Agriculture Division. F&A trades and distributes conventional bakery ingredients, oils, canned goods, lentils and a full line of organic products to food manufacturers and food service distributors, primarily in the Pacific Northwest, as well as feed and seed products and mineral-based soil amendments/fertilizers across the United States and internationally.

Domestic Wood Products. DWP trades and distributes quality hardwood, softwood and industrial products for furniture and cabinet manufacturers, flooring manufacturers and distributors and manufacturers of other consumer and industrial products throughout the United States and Canada.

International Wood Products. IWP imports and exports quality hardwood, softwood and industrial products for customers and suppliers around the world.

Lumber & Panel Products. L&P trades commodity lumber and structural panel products (oriented strand board and plywood) throughout the United States and Canada.

Bridgewell’s first four months of operations were focused on reviving a business that had been weakened from lack of liquidity in 2009, followed by the damage caused by the receivership of its former parent company, North Pacific Group. Upon acquisition, Bridgewell’s immediate focus was to launch the new enterprise, establish new supplier credit, rebuild damaged customer relationships and maintain internal infrastructure. The company has made significant progress on a number of key initiatives launched immediately upon closing the transaction, including introducing the company to the marketplace, reacquainting customers and suppliers with the value-added services that Bridgewell provides, restoring customer relationships that were lost or severely damaged during the receivership, and developing new accounts.

Bridgewell’s primary focus over the next 90 days is on increasing sales and continuing to build trade credit. Although in the near term the U.S. economy — with high unemployment, low housing starts, and high levels of uncertainty — makes this a very challenging operating environment, we expect improved operating performance in Q3 and solid results in 2011.

Bridgewell Resources LLC – Q1 Review 2010

Kyle Burdick, General Manager

Bridgewell Resources LLC is the newest addition to the Atlas family and our eighth platform company. Bridgewell focuses on the trading and wholesale distribution of utility and construction products, food and agriculture products and wood products. The company acquired certain assets related to three highly profitable trading divisions of North Pacific Group, Inc., through a court-ordered receivership process on March 1, 2010. Concurrently with the purchase, Bridgewell hired traders, managers and support staff of the three trading divisions.

Bridgewell, with more than 130 associates, operates primarily out of its corporate headquarters in Tigard, Oregon, and utilizes approximately 120 warehouse and storage locations throughout the United States and Canada. The company is currently comprised of four lines of business:

• Utility & Construction Division. The Utility & Construction Division is the nation’s largest independent distributor of poles. The division also offers a wide variety of construction products, including crane mats, bridge kits, signposts, guard rail and railroad ties, architectural products and renewable energy products.
• Food & Agriculture Division. The Food & Agriculture Division trades and distributes conventional bakery ingredients, oils, canned goods, pulses and a full line of organic products to food manufacturers and food service distributors, primarily in the Pacific Northwest. The division also trades and distributes agricultural minerals, fertilizers and specialty agricultural products such as birdseed, grain seed and feed ingredients.
• Hardwood & Industrial Products Division. The Hardwood & Industrial Products division trades and distributes wood products, including hardwood lumber for molding and cabinets, softwood lumber products, building materials and engineered and commodity products.
• Panel Division. The Panel division trades oriented strand board and plywood panels.

In its first month of operation, the business ramped-up well and established itself as a standalone entity. We have high expectations for the company, given the capability of its deeply experienced employees and the company’s value proposition to its customers and suppliers.