Inscape Announces First Quarter Results
12 September 2013 - 10:30PM
Marketwired Canada
Inscape (TSX:INQ) today announced its first quarter financial results ended July
31, 2013. The first quarter of fiscal year 2014 had a net loss of $1.4 million
or 10 cents per share, compared with a breakeven result in the same quarter of
last year.
Sales of $17.3 million in the first quarter of fiscal 2014 were 17.9% lower than
the sales of $21.1 million in the same quarter of last year. The decrease was
the net result of lower furniture sales, which were offset by an increase in the
movable walls business and slight improvements in realized selling prices and
U.S. exchange rate.
"We are disappointed with results this quarter but are focused on a longer term
view of our products and business. Although we have been impacted by turnover in
our dealer network, we are making significant strides in our efforts to improve
support for our dealers and partners," said Rod Turgeon, President & CEO. "This
year's 125th anniversary of Office Specialty marks a special milestone in our
company's history. We are energized by the positive response to this division's
rebranding and our renewed focus on the creative role storage can play in
designing work environments. We are also excited about the recent launch of
Inscape Bench, which significantly broadens our solutions for open office
environments."
Gross margin percentage of the first quarter of fiscal year 2014 was 24.4%, a
decrease of 1.2 percentage points from 25.6% of the same quarter of the previous
year. The lower gross margin percentage was caused by unfavorable overhead
absorption associated with lower volume, which was offset by more favorable
realized selling prices, U.S. exchange rate and production costs.
Selling, general and administrative expenses ("SG&A") in the first quarter of
fiscal year 2014 were 31.4% of sales, compared to 25.6% of sales in the same
quarter of last year. SG&A in terms of dollars spent was at the same level as
last year at $5.4 million. Variable selling expenses were $0.15 million lower
than last year due to lower sales volume, whereas non-variable SG&A was $0.19
million higher than last year mainly due to a decrease in the mark-to-market
fair values of short-term investments and increased investments in the
development of sales partners.
The current quarter's loss of $1.4 million included a small amount of unrealized
exchange loss and a net decrease of $0.75 million in the fair values of
derivatives relating to U.S. hedge agreements, compared with a decrease of $0.18
million in the same quarter of last year. The net decrease in the derivatives'
fair values mainly consisted of reversals of unrealized gains of some previously
outstanding hedge agreements, which were settled in the current quarter; and a
decline in the mark-to-market values of unsettled hedge agreements. With the
exclusion of the derivatives and unrealized exchange loss, net loss of the
current quarter would be $0.8 million instead of $1.4 million, whereas results
of the same quarter of last year would be a net income of $0.1 million instead
of breakeven.
Net income or loss with the exclusion of these unrealized items 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.
Inscape Corporation
Summary of Consolidated Financial Results
(Unaudited) (in thousands except EPS)
Three Months Ended
July 31,
2013 2012 Change
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Sales $ 17,288 $ 21,067 -17.9%
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Gross profit 4,212 5,389 -21.8%
Selling, general & administrative expenses 5,427 5,385 0.8%
Unrealized loss (gain) on foreign exchange 11 (42)
Decrease in fair value of derivative assets 750 177
Investment income (99) (120)
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Loss before taxes (1,877) (11)
Income taxes (494) (67)
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Net (loss) income $ (1,383) $ 56
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Basic earnings per share $ (0.10) $ -
Weighted average number of shares (in
thousands)
for basic EPS calculation 14,373 14,379
for diluted EPS calculation 14,399 14,407
Financial Statements
http://media3.marketwire.com/docs/inscapeq12014fs.pdf
First Quarter Call Details
Inscape will host a conference call at 8:30 a.m. on Friday, September 13, 2013
to discuss the Company's quarterly results. To participate, please call
1-800-708-4339. A replay of the conference call will also be available from
Friday, September 13, 2013 after 10:30 a.m. until midnight on September 20,
2013. To access the rebroadcast, please dial 1-800-558-5253 (Reservation Number
21670244).
Forward-looking Statements
Certain 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 INSCAPE
Inscape makes smart workspaces. For over a century, we have collaborated with
our clients to provide customized solutions based on their individual needs. Our
meticulously engineered system, storage and wall products provide unparalleled
flexibility to create unique applications at a lower cost of ownership. Easy
reconfiguration and seamless integration with other products means our smart
applications will work today and tomorrow. And they look fabulous.
For more information, visit www.inscapesolutions.com.
FOR FURTHER INFORMATION PLEASE CONTACT:
Inscape Corporation
Kent Smallwood CPA, CA, Chief Financial Officer
& Executive Vice President, Corporate Development
905 836 7676
905 836 5037 (FAX)
www.inscapesolutions.com
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