Inscape Corporation
TSX : INQ

Inscape Corporation

September 13, 2012 16:30 ET

Inscape Corporation Announces Fiscal 2013 First Quarter Results

HOLLAND LANDING, ONTARIO--(Marketwire - Sept. 13, 2012) - Inscape (TSX:INQ) today announced financial results for its first quarter ended July 31, 2012:

Inscape Corporation
Summary of Interim Consolidated Financial Results
(Unaudited) (in thousands except EPS)
Three Months Ended July 31,
2012 2011 Change
Sales $ 21,067 $ 19,325 9.0 %
Gross margin 5,402 3,061 76.5 %
Selling, general & administrative expenses 5,333 5,685 -6.2 %
Unrealized (gain) loss on foreign exchange (42 ) 84
Unrealized loss (gain) on derivatives 177 (124 )
Investment income (68 ) (116 )
Income (Loss) before taxes 2 (2,468 )
Income tax recovery (64 ) (778 )
Net income (loss) $ 66 $ (1,690 )
Basic and diluted earnings per share $ - $ (0.11 )
Weighted average number of shares (in thousands)
for basic EPS calculation 14,379 14,592
for diluted EPS calculation 14,407 14,743

Commentary

Rod Turgeon, President and Chief Executive Officer, said: "We are encouraged by our first quarter results. Revenue grew by 9% year-over-year with improved financial results. Making operational progress continues to be a priority and we remain committed to our strategy. We're gaining momentum in our focused markets, especially New York City where we have made significant investments and we're very pleased with our success on a major project. In addition to appointing key players to our leadership and sales teams and improving our collective capability, we have also added new sales partners to expand our distribution. We're pleased with our progress, but recognize there is still work to do. We are building a strong team and believe that we are on the right track. We must remain relentless in our strategy focus, operational discipline and execution."

Financial Performance

The first quarter of fiscal 2013 ended with a breakeven result, compared with a net loss of $1.7 million or 11 cents per share in the same quarter of last year. The improvement in the quarterly financial results was attributable to a combination of a 9% increase in sales, a 4.5% increase in the average U.S. exchange rate, lower material costs favourable product mix and lower fixed overheads.

Sales in the first quarter of fiscal 2013 were $21.1 million, an increase of 9% from the sales of $19.3 million in the same quarter of last year. The current quarter's U.S. sales were translated at an average exchange rate of $1.02 Canadian dollar per USD, compared to an average exchange rate of $0.98 in the same quarter of last year. On a constant dollar basis that removes the positive impact of U.S. exchange rate, the current quarter's sales were 4.7% higher than the same quarter of last year.

Gross profit as a percentage of sales in the first quarter of fiscal year 2013 was higher by 9.8 percentage points; moving from, last year's 15.8% to the current quarter's 25.6%. In addition to the higher U.S. exchange rate, the gross margin percentage also benefited from lower steel prices, more cost-efficient production processes, higher realized selling prices and better overhead absorption resulting from the volume increase.

Selling, general and administrative expenses ("SG&A") in the first quarter of fiscal year 2013 were $5.3 million or 25.3% of sales, compared to $5.7 million or 29.4% of sales in the same quarter of last year. The dollar amount of SG&A was $0.4 million lower than last year. The decrease mainly consists of improved management of discretionary selling expenses, lower estimated fair value for share-based compensation and lower fixed overheads.

Financial Statements

http://media3.marketwire.com/docs/InscapeFS.pdf

Conference Call

Inscape will host a conference call at 8:30 a.m. on Friday, September 14, 2012 to discuss the Company's quarterly results. To participate, please call 1-800-381-7839. A replay of the conference call will also be available from Friday, September 14, 2012 after 10:30 a.m. until midnight on September 21, 2012. To access the rebroadcast, please dial 1-800-558-5253 (Reservation Number 21602161).

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 is a leading designer, manufacturer and marketer of systems, storage and wall solutions for commercial office environments. Inscape has offices and production facilities in Canada and the United States totalling approximately 438,000 square feet and serves customers through a network of authorized dealers.

Inscape makes smart workspaces - thoughtfully designed spaces that perform beyond expectations. 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. For more information, visit www.inscapesolutions.com.

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