Inscape Corporation

Inscape Corporation

September 11, 2014 16:30 ET

Inscape Announces First Quarter Results

HOLLAND LANDING, ONTARIO--(Marketwired - Sept. 11, 2014) - Inscape (TSX:INQ) today announced its first quarter financial results ended July 31, 2014. The first quarter of fiscal year 2015 ended with a net income of $0.8 million or 5 cents per share, compared with a net loss of $1.4 million, or 10 cents per share a year ago. The current quarter's results included an unrealized derivative gain of $1.0 million relating to the fair value of outstanding U.S. currency hedge contracts, whereas the same quarter of last year had an unrealized derivative loss of $0.8 million in the fair value of outstanding currency hedge contracts. With the exclusion of these unrealized currency hedge contract gain and loss from both periods, the current quarter had a pre-tax income of $0.2 million, versus last year's pre-tax loss of $1.1 million. The significant improvement of $1.3 million in the pre-tax operating results was driven by a $1.8 million or 10.1% increase in sales, which generated $0.9 million increase in gross profit, while the total selling, general and administrative expense was lower than last year by $0.4 million.

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.

"We're building on our improved performance from the previous quarter," said Jim Stelter, CEO. "This improvement reflects the benefits of our renewed focus on connecting with the dealer community and the success of our new product launches at NeoCon. We are pleased with the results so far, but recognize we still have work to do."

Sales in the first quarter of fiscal year 2015 were 10.1% higher than the same quarter of the previous year. While the furniture sales gained about 19.7% from the previous year, sales of the Walls segment was about 8.5% lower than last year due to delays in certain projects.

The first quarter's gross profit as a percentage of sales was 26.8%, an increase of 2.4 percentage points from the 24.4% of the same quarter a year ago. The improvement in gross profit percentage was the result of favourable overhead absorption due to increased sales, higher U.S. exchange rate and reduced overheads. The benefits were partially offset by higher variable production and installation costs for certain projects.

Selling, general and administrative expenses ("SG&A") in the first quarter were 26.6% of sales, compared to 31.4% in the same quarter of last year. Despite the 10.1% increase in sales, the current quarter's SG&A expense was $0.4 million lower than the same period of last year. The lower SG&A was attributable to $0.5 million reduction in various overheads, which was partially offset by an increase of $0.1 million variable selling expenses for the incremental sales.

At the end of the first quarter of fiscal year 2015, the company was debt-free with cash and cash equivalents totaling $16.5 million.

Inscape Corporation
Summary of Consolidated Financial Results (Unaudited) (in thousands except EPS)
Three Months Ended July 31,
2014 2013 Change
Sales $ 19,040 $ 17,288 10.1 %
Gross profit 5,097 4,212 21.0 %
Selling, general & administrative expenses 5,067 5,427 -6.6 %
Unrealized (gain) loss on foreign exchange (74 ) 11
(Increase) Decrease in fair value of derivatives (1,014 ) 750
Investment income (89 ) (99 )
Income (loss) before taxes 1,207 (1,877 )
Income taxes 428 (494 )
Net income (loss ) $ 779 $ (1,383 )
Basic earnings per share $ 0.05 $ (0.10 )
Diluted earning per share $ 0.05 $ (0.10 )
Weighted average number of shares (in thousands)
for basic EPS calculation 14,373 14,373
for diluted EPS calculation 14,409 14,399

Financial Statements

First Quarter Call Details

Inscape will host a conference call at 8:30 a.m. on Friday, September 12, 2014 to discuss the company's quarterly results. To participate, please call 1-888-754-4430. A replay of the conference call will also be available from September 12, 2014 after 10:30 a.m. until midnight on September 19, 2014. To access the rebroadcast, please dial 1-800-558-5253 (Reservation Number 21731310).

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.


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.

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