Inscape Announces Fiscal Year 2019 First Quarter Results
September 12 2018 - 4:01PM
Inscape (TSX: INQ), a leading designer and manufacturer of
furnishings for the workplace, today announced its first quarter
financial results ended July 31, 2018. Sales in the first
quarter of fiscal year 2019 was $21.2 million which was 9% lower
than the same quarter of the prior year. As previously
reported, Inscape was working towards exiting a partnership with a
leading retailer. The transition was completed on June 30,
2018 and the company has refocussed its resources to its core
business. Excluding the impact of the non profitable business
unit, sales in the current quarter would have been 6% lower than
the prior year.
“Our financial performance reflects incremental
investments and cost saving initiatives consistent with our
strategic plan to deliver profitable long term growth. Current
quarter sales were impacted by the exit of a non profitable
business unit and timing of shipments. Gross profit in the current
quarter was impacted by incremental costs of $0.6 million for new
product development and supply chain efficiency initiatives. The
efficiency improvements are expected to generate in excess of $1.5
million in annual cost savings. The Company has identified and is
evaluating additional cost saving opportunities to be implemented
in fiscal 2019,” said Brian Mirsky, CEO. “We
strongly believe that these investments are critical to
accelerating profitable growth. Early indications are that these
initiatives are working as our sales orders for our core business
and orders for our new benching system called RockIt are trending
upwards.”
|
|
Inscape Corporation Summary of
Consolidated Financial Results (Unaudited) (in
thousands except EPS) |
|
|
|
|
Three Months Ended July 31 |
|
|
|
Fiscal 2018 |
|
|
|
Fiscal
2017 |
|
Sales |
$ |
21,226 |
|
|
$ |
23,307 |
|
Gross Profit |
|
5,492 |
|
|
|
7,193 |
|
Selling, general &
administrative expenses |
|
8,019 |
|
|
|
7,804 |
|
Unrealized loss on
foreign exchange |
|
316 |
|
|
|
457 |
|
Unrealized loss (gain)
on derivatives |
|
668 |
|
|
|
(4,103 |
) |
Gain on sale of
property, plant and equipment |
|
(32 |
) |
|
|
- |
|
Gain on sale of
intangible |
|
(263 |
) |
|
|
- |
|
Investment income |
|
(11 |
) |
|
|
(23 |
) |
(Loss) income before
taxes |
$ |
(3,205 |
) |
|
$ |
3,058 |
|
Income
tax (recovery) |
|
- |
|
|
|
- |
|
Net
(loss) income |
$ |
(3,205 |
) |
|
$ |
3,058 |
|
Basic and diluted
(loss) income per share |
$ |
(0.22 |
) |
|
$ |
0.21 |
|
Weighted average number
of shares (in thousands) |
|
|
|
|
|
|
|
for basic EPS
calculation |
|
14,381 |
|
|
|
14,381 |
|
for diluted EPS
calculation |
|
14,392 |
|
|
|
14,446 |
|
|
|
|
|
|
|
|
|
The first quarter of fiscal year 2019 ended with a loss of $3.2
million or 22 cents per share, compared with a net income of $3.1
million or 21 cents per share in the same quarter of last year. Net
income (loss) 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 2019 had an adjusted net loss of $2.5
million, compared with adjusted net loss of $0.4 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 (loss)
calculated in accordance with GAAP to the non-GAAP measure:
|
Three Months Ended July 31 |
(in thousands) |
|
2018 |
|
|
|
2017 |
|
Net (loss) income before taxes |
$ |
(3,205 |
) |
|
$ |
3,058 |
|
adjust non-operating or unusual items: |
|
|
|
|
|
Unrealized loss (gain) on derivatives |
|
668 |
|
|
|
(4,103 |
) |
Unrealized loss on foreign exchange |
|
316 |
|
|
|
457 |
|
Gain on sale of property, plant and equipment |
|
(32 |
) |
|
|
- |
|
Gain on sale of intangible |
|
(263 |
) |
|
|
- |
|
Stock based compensation |
|
57 |
|
|
|
(267 |
) |
Severance obligation |
|
- |
|
|
|
440 |
|
Adjusted net (loss) income before taxes |
$ |
(2,459 |
) |
|
$ |
(415 |
) |
|
|
|
|
|
|
|
|
Gross profit as a percentage of sales for the first quarter of
fiscal year 2019 at 25.9% was 5 percentage points lower than last
year’s 30.9%. The unfavourable impact of lower volume, sales mix
and costs incurred to improve manufacturing efficiencies negatively
impacted the margin for the quarter.
Selling, general and administrative expenses (“SG&A”) in the
first quarter of fiscal year 2019 were 37.8% of sales, compared to
33.5% in the same quarter of last year. The dollar amount increased
by $0.2 million compared to the same quarter of last year. The
increase includes investments in marketing and sales coverage
initiatives.
At the end of the quarter, the company was debt-free and had
cash, cash equivalents and short-term investments totaling $6.0
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 EST
on Thursday, September 13, 2018 to discuss the company’s quarterly
results. To participate, please call 1-888-221-6261 five minutes
before the start time. A replay of the conference call will also be
available from September 13, 2018 after 10:30 AM EST until 11:59 PM
EST on September 20, 2018. To access the rebroadcast, please dial
1-800-558-5253 (Reservation Number 21894371).
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, CAChief Financial Officer
Inscape
T 905 836 7676 x 3351
ahirji@inscapesolutions.com
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