News Column

Inscape Announces Fourth Quarter & Annual Results

Jun 27 2013 12:00AM

Marketwire

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HOLLAND LANDING, ONTARIO -- (Marketwired) -- 06/27/13 -- Inscape (TSX: INQ) today announced its fourth quarter and annual financial results ended April 30, 2013.

The fourth quarter of fiscal 2013 had a net loss of $1.4 million, compared to a net loss of $0.7 million in the same quarter of last year. Fiscal 2013 had a net loss of $1.2 million or 8 cents per share, compared to a net loss of $2.0 million or 14 cents per share in the previous fiscal year.

Sales in the fourth quarter of fiscal 2013 were $16.0 million, down 8.6% from the same quarter the previous year. The annual sales of $74.9 million were 5.1% below the $78.9 million recorded in fiscal 2012. The decrease in the overall sales was attributable to a drop in volume in the furniture segment, as several large storage projects delivered in last fiscal year were not repeated in the current year. This decrease was partially offset by sales of wall products, which increased by more than 30% over fiscal 2012.

"Although this was a disappointing quarter, we saw good growth in our sales of walls products and have made significant progress in implementing our strategy this past year," said Rod Turgeon, President & CEO. "We remain committed to improving the Company's profitability and strengthening our representation and distribution to increase sales."

Gross profit in the fourth quarter of fiscal 2013 was slightly higher than in the same quarter last year. The gross margin percentage of 22.6% was 2.4 percentage points higher than the 20.2% in the same quarter last year. Similarly, the annual gross margin percentage increased 3.8 percentage points from 22.8% to 26.6%, resulting in $1.9 million increased gross profit. The year-over-year higher gross margin percentages were attributable to a combination of more profitable product mix with higher realized net selling prices; more efficient production processes as a result of last year's capital investments in technologically-advanced machinery; lower commodity costs; and supply chain improvements. The gain in gross margin percentage was partially reduced by unfavourable overhead absorption due to lower volume.

Selling, general and administrative expenses ("SG&A") in the fourth quarter were 33.7% of sales, compared to 28.7% in the same quarter of last year. In terms of dollar amounts, SG&A during the current quarter was $0.4 million higher than the same quarter of last year primarily due to higher marketing expenses, dealer investments and non-recurring consulting fees, partially offset by lower variable selling expenses.

The annual SG&A expense for fiscal year 2013 was 28.6% of sales versus 27.4% in fiscal 2012. The dollar amount spent was $0.27 million less than the previous year due to $0.44 million lower variable selling expenses, offset by $0.17 million higher overheads. The ongoing management of discretionary overheads provided savings to absorb increased investments in dealer development, marketing, higher depreciation expense from the fully operational New York showroom and a provision for doubtful account in relation to the closure of a distributor during the year.

Inscape Corporation Summary of Consolidated Financial Results (Unaudited) (in thousands except EPS) Three Months Ended April 30, 2013 2012 Change------------------------------------------------------------------ ---------Sales $ 16,038 $ 17,549 -8.6%------------------------------------------------------------------Gross profit 3,627 3,539 2.5%Selling, general & administrative expenses 5,406 5,042 7.2%Loss on disposals of property, plant and equipment - 261Unrealized (gain) loss on foreign exchange (93) 128Decrease (Increase) in fair value of derivative assets 499 (547)Investment income (116) (28)------------------------------------------------------------------Loss before taxes (2,069) (1,317)Income taxes (639) (596)------------------------------------------------------------------Net loss $ (1,430) $ (721)------------------------------------------------------------------------------------------------------------------------------------Basic earnings per share $ (0.10) $ (0.05)Weighted average number of shares (in thousands)for basic EPS calculation 14,373 14,385for diluted EPS calculation 14,378 14,420 Twelve Months Ended April 30, 2013 2012 Change------------------------------------------------------------------ ---------Sales $ 74,900 $ 78,944 -5.1%------------------------------------------------------------------Gross profit 19,903 17,997 10.6%Selling, general & administrative expenses 21,404 21,670 -1.2%Loss on disposals of property, plant and equipment - 424Unrealized gain on foreign exchange (95) (301)Decrease in fair value of derivative assets 989 (146)Investment income (385) (414)------------------------------------------------------------------Loss before taxes (2,010) (3,236)Income taxes (792) (1,247)------------------------------------------------------------------Net loss $ (1,218) $ (1,989)------------------------------------------------------------------------------------------------------------------------------------Basic and diluted earnings per share $ (0.08) $ (0.14)Weighted average number of shares (in thousands)for basic EPS calculation 14,375 14,461for diluted EPS calculation 14,431 14,537



Financial Statements

http://media3.marketwire.com/docs/627INQ-FS.pdf

Fourth Quarter Call Details

Inscape will host a conference call at 8:30 a.m. on Friday, June 28, 2013 to discuss the Company's quarterly and annual results. To participate, please call 1-800-621-4410. A replay of the conference call will also be available from Friday, June 28, 2013 after 10:30 a.m. until midnight on July 5, 2013. To access the rebroadcast, please dial 1-800-558-5253 (Reservation Number 21658748).

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.



Contacts:
Inscape Corporation
Kent Smallwood CPA, CA
Chief Financial Officer, EVP Corporate Development
905 836 7676
905 836 5037 (FAX)





Source: Marketwire