Inscape Announces Fiscal Year 2018 First Quarter Results
September 07 2017 - 3:30PM
Inscape (TSX:INQ), a leading designer and manufacturer of
furnishings for the workplace, today announced its first quarter
financial results ended July 31, 2017. Sales in the first
quarter of fiscal year 2018 was $23.3 million which was 1.1% lower
than the same quarter of the previous year, however gross profit
improved by two percentage points in the same time period.
“Despite flat sales growth, we are pleased with the
first quarter results,” said Brian Mirsky, CEO.
“We saw improvement in our gross margin which has been our
focus over the past year. This margin improvement has allowed us to
accelerate investment in our growth initiatives to better compete
in the marketplace. These initiatives include product development,
marketing support and expanded sales coverage.”
Inscape
Corporation |
|
Summary of Interim
Consolidated Financial Results |
|
(Unaudited) (in
thousands except EPS) |
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended July 31 |
|
|
|
|
|
Fiscal 2018 |
|
|
|
Fiscal 2017 |
|
|
Change |
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
$ |
23,307 |
|
|
$ |
23,569 |
|
|
-1.1 |
% |
|
|
|
Gross profit |
|
7,193 |
|
|
|
6,852 |
|
|
5.0 |
% |
|
|
|
Selling, general &
administrative expenses |
|
7,804 |
|
|
|
6,925 |
|
|
12.7 |
% |
|
|
|
Unrealized (gain) loss
on foreign exchange |
|
457 |
|
|
|
(166 |
) |
|
|
|
|
|
Unrealized (gain) loss
on derivatives |
|
(4,103 |
) |
|
|
1,641 |
|
|
|
|
|
|
Investment income |
|
(23 |
) |
|
|
(22 |
) |
|
|
|
|
|
Income (loss) before
taxes |
|
3,058 |
|
|
|
(1,526 |
) |
|
|
|
|
|
Income taxes |
|
- |
|
|
|
- |
|
|
|
|
|
|
Net income (loss) |
$ |
3,058 |
|
|
$ |
(1,526 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted
income (loss) per share |
$ |
0.21 |
|
|
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number
of shares (in thousands) |
|
|
|
|
|
|
|
|
for basic EPS
calculation |
|
14,381 |
|
|
|
14,381 |
|
|
|
|
|
|
for diluted EPS
calculation |
|
14,446 |
|
|
|
14,591 |
|
|
|
|
|
|
|
|
|
|
|
The first quarter of fiscal year 2018 ended with a net income of
$3.1 million or 21 cents per share, compared with a net loss of
$1.5 million or 11 cents per share in the same quarter of last
year. Net income of both quarters included certain unrealized,
non-cash expenses and one-time items that have significant impact
on the net income per GAAP. With the exclusion of these items, the
first quarter of fiscal 2018 had an adjusted net loss of $0.4
million, compared with adjusted net income of $0.2 million in the
same quarter of last year.
Adjusted net income or loss is a non-GAAP measure, which does
not have any standardized meaning prescribed by GAAP and is
therefore unlikely to be comparable to similar measures presented
by other issuers.
The following is a reconciliation of net income and loss
calculated in accordance with GAAP to the non-GAAP measure:
|
Three Months Ended July 31 |
(in
thousands) |
Fiscal 2018 |
|
Fiscal 2017 |
NET INCOME (LOSS) |
$ |
3,058 |
|
|
$ |
(1,526 |
) |
adjust non-operating or
unusual items |
|
|
|
Unrealized (gain) loss on derivatives |
|
(4,103 |
) |
|
|
1,641 |
|
Unrealized (gain) loss on foreign exchange |
|
457 |
|
|
|
(166 |
) |
(Increase) Decrease in fair value of short-term investments |
|
- |
|
|
|
(31 |
) |
Stock
based compensation |
|
(267 |
) |
|
|
24 |
|
Severance
obligation |
|
440 |
|
|
|
241 |
|
ADJUSTED NET (LOSS) INCOME |
$ |
(415 |
) |
|
$ |
183 |
|
|
|
|
|
|
|
|
|
Despite lower volume, gross profit as a percentage of sales for
the first quarter of fiscal year 2018 at 30.9% was 1.8 percentage
points higher than last year’s 29.1%. The unfavourable impact of
lower volume was more than offset by lower production costs of
favourable product mix and higher U.S. exchange during the
quarter.
Selling, general and administrative expenses (“SG&A”) in the
first quarter of fiscal year 2018 were 33.5% of sales, compared to
29.4% in the same quarter of last year. The dollar amount incurred
was $0.9 million higher than the same quarter of last year. The
increase includes investment in marketing, sales coverage and
supply chain initiatives.
The first quarter of fiscal year 2018 had a net income of $3.1
million, compared to a net loss of $1.5 million in the same quarter
of last year. With exclusion of unrealized and unusual items, the
adjusted net loss of the current quarter was $0.4 million, compared
with adjusted net income of $0.2 million in the same quarter of
last year. Improvement in gross margin was more than offset by
higher SG&A costs.
At the previous fiscal year ended April 30, 2017, the Company
recorded a valuation allowance of $6.4 million to derecognize the
future income tax benefit of loss carryforwards as deferred tax
assets. The off-balance sheet valuation allowance was utilized to
reduce the Company’s income tax expense of the current quarter.
At the end of the quarter, the company was debt-free and had
cash, cash equivalents and short-term investments totaling $9.8
million and an unused credit facility.
Financial StatementsFinancial
statements are available from our website as of this press
release.
First Quarter Call
DetailsInscape will host a conference call at 8:30 AM EDT
on Friday, September 8, 2017 to discuss the company’s quarterly
results. To participate, please call 1-800-926-7431 five minutes
before the start time. A replay of the conference call will also be
available from September 8, 2017 after 10:30 AM EDT until 11:59 PM
EDT on September 15, 2017. To access the rebroadcast, please dial
1-800-558-5253 (Reservation Number 21856729).
Forward-looking
StatementsCertain of the above statements are
forward-looking statements that involve risks and uncertainties.
Actual results could differ materially as a result of many factors
including, but not limited to, further changes in market conditions
and changes or delays in anticipated product demand. In addition,
future results may also differ materially as a result of many
factors, including: fluctuations in the company’s operating results
due to product demand arising from competitive and general economic
and business conditions in North America; length of sales cycles;
significant fluctuations in international exchange rates,
particularly the U.S. dollar exchange rate; restrictions in access
to the U.S. market; changes in the company’s markets, including
technology changes and competitive new product introductions;
pricing pressures; dependence on key personnel; and other factors
set forth in the company’s Ontario Securities Commission reports
and filings.
About InscapeInscape is a
design enabler. We have been saying yes since 1888 with a versatile
portfolio of systems, storage, and walls products that are
adaptable, and always built to last. With a wide dealer network,
showrooms in both Canada and the U.S., and full service and support
for all of our clients, our philosophy is to always do what we can
to say Yes.
For more information, visit
www.inscapesolutions.com.
Contact
Aziz Hirji, CPA, CA
Chief Financial Officer
Inscape
T 905 836 7676 x 3351
ahirji@inscapesolutions.com
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