Inscape Announces Fourth Quarter and Annual Results
June 26 2014 - 4:33PM
Marketwired
Inscape Announces Fourth Quarter and Annual Results
HOLLAND LANDING, ONTARIO--(Marketwired - Jun 26, 2014) - Inscape
(TSX:INQ) today announced its fourth quarter and fiscal year 2014
annual financial results ended April 30, 2014.
Fiscal year 2014 was
a challenging year for the Company. The fourth quarter of fiscal
year 2014 had a net loss of $1.5 million or 10 cents per share. The
same quarter of last year had a net loss of $1.4 million or 10
cents per share. On an annual basis, the fiscal year ended with a
net loss of $7.1 million or 49 cents per share, compared to a net
loss of $1.3 million or 9 cents per share in fiscal year 2013. The
current year's loss included $2.8 million decrease in the fair
value of outstanding hedge contracts as the U.S. spot exchange rate
at the end of the year was higher than the average strike price of
the hedges. Fiscal year 2014's operating loss before taxes was $6.1
million, compared with an operating loss of $1.6 million a year ago
due to an 11.7% decline in sales.
The sales decline
from fiscal 2013 to fiscal 2014 was the key driver of the Company's
losses and is attributable to several factors: disruption to
distribution channels partially caused by the bankruptcy of a major
dealer; stagnation in US Government budget approvals; delayed key
product launches, as well as significant concentration of resources
on the launch of new products for fiscal 2015.
Although resolving
these issues will take some time, management is cautiously
optimistic about the plans in place to address them. A
reinvigorated sales force focusing on key markets across North
America, improved brand messaging and training programs, and a
back-to-basics approach to communicating our brand to dealers
demonstrate management's focus on distribution channels. The US
Government has approved budgets for office spaces this year. A
focus on sales efforts has begun paying off with an increase in
opportunities, and the new product introductions which received
five Best of NeoCon Awards (4 Gold and 1 Silver) in the June 2014
trade show. Inscape won the most awards of any manufacturers at
NeoCon this year.
"We have a strong
financial position and our foundation remains strong," said Jim
Stelter, CEO. "Our outlook continues to improve as we actively
engage our markets, intensify our marketing efforts, and make more
people aware of how we can provide great solutions for them."
Sales in the fourth
quarter of fiscal year 2014 at $15.2 million were 5.4% lower than
the $16 million for same quarter of the previous year. The annual
sales of $66.2 million fell 11.7% from last year's sales of $74.9
million. The drop in the year-over-year sales was mainly caused by
a decline in the volume of the office furniture projects by 13.1%,
while the moveable wall segment had a 3.9% decrease from last
year.
The fourth quarter's
gross profit as a percentage of sales was 21.1%, a decrease of 1.4
percentage points from the 22.5% of the same quarter a year ago.
The decrease in gross profit percentage was mainly caused by lower
realized selling prices, partially offset by lower overheads and
better margin on services. The annual gross profit as a percentage
of sales decreased 4.2 percentage points from last year's 26.5% to
the current year's 22.3%. The reduced gross margin percentage was
attributable to lower realized selling prices and decrease in
volume, partially offset by lower overheads and variable production
costs.
Selling, general and
administrative expenses ("SG&A") in the fourth quarter were
35.7% of sales, compared to 33.6% in the same quarter of last year.
In terms of dollar amounts, SG&A expense during the current
quarter was comparable to the same quarter of last year. SG&A
for the year was 31.6% of sales versus 28.6% of last year. The
dollar spent was $0.5 million lower than last year. The lower
SG&A was attributable to $0.2 million variable selling expenses
due to reduced sales volume, $0.3 million lower provision for
doubtful accounts accrued in last year relating to the bankruptcy
of a dealer, $0.4 million overheads. The lower SG&A was
partially offset by a $0.3 write off of a product licence fee
during the year.
During the fourth
quarter, the Company booked a valuation allowance relating to
deferred tax assets accrued during the first three quarters of
fiscal 2014. Due to the continued losses in the fourth quarter and
the effects of lower accounting income in the previous two years,
management deemed it appropriate to charge a valuation allowance
for these assets. This adjustment is a non-cash charge to the
results and the Company has 20 years in which the assets can be
realized against future income, at which point the valuation
allowance can be reversed.
At the end of the
fiscal year 2014, the company was debt-free with cash and cash
equivalents totaling $18.9 million.
Inscape Corporation |
Summary of Consolidated Financial
Results |
(Unaudited) (in thousands of Canadian dollars
except EPS) |
|
|
|
Three Months Ended April 30, |
|
|
|
|
2014 |
|
2013 |
|
Change |
|
|
Sales |
$ |
15,171 |
|
$ |
16,038 |
|
|
-5.4 |
% |
Gross profit |
|
3,203 |
|
|
3,614 |
|
|
-11.4 |
% |
Selling, general & administrative expenses |
|
5,423 |
|
|
5,390 |
|
|
0.6 |
% |
Unrealized loss (gain) on foreign exchange |
|
151 |
|
|
(93 |
) |
|
|
|
(Increase) Decrease in fair value of derivatives |
|
(1,777 |
) |
|
499 |
|
|
|
|
Investment income |
|
(88 |
) |
|
(100 |
) |
|
|
|
Loss before taxes |
|
(506 |
) |
|
(2,082 |
) |
|
|
|
Income taxes |
|
945 |
|
|
(642 |
) |
|
|
|
Net loss |
$ |
(1,451 |
) |
$ |
(1,440 |
) |
|
|
|
|
|
Basic earnings per share |
$ |
(0.10 |
) |
$ |
(0.10 |
) |
|
|
|
|
|
Weighted average number of shares (in thousands) |
|
|
|
|
|
|
|
|
|
for basic EPS calculation |
|
14,373 |
|
|
14,373 |
|
|
|
|
for diluted EPS calculation |
|
14,380 |
|
|
14,383 |
|
|
|
|
|
|
|
Twelve Months Ended April 30, |
|
|
|
|
|
2014 |
|
2013 |
|
Change |
|
|
Sales |
$ |
66,155 |
|
$ |
74,900 |
|
|
-11.7 |
% |
Gross profit |
|
14,742 |
|
|
19,852 |
|
|
-25.7 |
% |
Selling, general & administrative expenses |
|
20,890 |
|
|
21,413 |
|
|
-2.4 |
% |
Unrealized gain on foreign exchange |
|
(389 |
) |
|
(95 |
) |
|
|
|
Decrease in fair value of derivatives |
|
2,825 |
|
|
989 |
|
|
|
|
Investment income |
|
(374 |
) |
|
(394 |
) |
|
|
|
Loss before taxes |
|
(8,210 |
) |
|
(2,061 |
) |
|
|
|
Income taxes |
|
(1,118 |
) |
|
(805 |
) |
|
|
|
Net loss |
$ |
(7,092 |
) |
$ |
(1,256 |
) |
|
|
|
|
|
Basic and diluted earnings per share |
$ |
(0.49 |
) |
$ |
(0.09 |
) |
|
|
|
|
|
Weighted average number of shares (in thousands) |
|
|
|
|
|
|
|
|
|
for basic EPS calculation |
|
14,373 |
|
|
14,375 |
|
|
|
|
for diluted EPS calculation |
|
14,380 |
|
|
14,452 |
|
|
|
|
Financial
Statements
http://media3.marketwire.com/docs/F2014_Qt4.pdf
Fourth Quarter Call
Details
Inscape will host a
conference call at 8:30 a.m. on Friday, June 27, 2014 to discuss
the company's quarterly and annual results. To participate, please
call 1-800-381-7839. A replay of the conference call will also be
available from June 27, 2014 after 10:30 a.m. until midnight on
July 4, 2014. To access the rebroadcast, please dial 1-800-558-5253
(Reservation Number 21718745).
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.
Inscape CorporationMatthew PosnoChief Financial Officer905 836
7676905 836 5037www.inscapesolutions.com
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