Inscape Corporation
TSX : INQ

Inscape Corporation

September 12, 2013 16:30 ET

Inscape Announces First Quarter Results

HOLLAND LANDING, ONTARIO--(Marketwired - Sept. 12, 2013) - 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
Sales $ 17,288 $ 21,067 -17.9 %
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 )
Loss before taxes (1,877 ) (11 )
Income taxes (494 ) (67 )
Net (loss) income $ (1,383 ) $ 56
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.

Contact Information

  • Inscape Corporation
    Kent Smallwood CPA, CA, Chief Financial Officer
    & Executive Vice President, Corporate Development
    905 836 7676
    905 836 5037 (FAX)
    www.inscapesolutions.com