Inscape (TSX: INQ) on Jun. 26 announced its fourth quarter and annual financial results ended April 30, 2018. Sales in the fourth quarter of fiscal year 2018 were $21.5 million, or 2% higher than the same quarter of the previous year. The fourth quarter net loss was $4.8 million compared to a net loss of $2.1 million in the prior year.
“Inscape’s fourth quarter and full year performance reflect our commitment to building a strong foundation for future growth. Three key factors – exiting an unprofitable business, initiating a capacity utilization restructuring and investing in top line growth initiatives place us in a strong position for profitable growth in 2019.” said Brian Mirsky, CEO. “Even with these investments, our cash balance of $9.0 million remains strong.”
The fourth quarter of fiscal year 2018 ended with a net loss of $4.8 million or 33 cents per share, compared with a net loss of $2.1 million or 15 cents per share in the same quarter of last year. Net loss of both quarters included certain unrealized, non-cash expenses and one-time items that have significant impact on the net loss per GAAP. With the exclusion of these items, the fourth quarter of fiscal 2018 had an adjusted net loss of $3.5 million, compared with adjusted net income of $1.4 million in the same quarter of last year. The adjusted net loss of $3.5 million in the quarter is inclusive of $1.2 million of incremental investment in sales, marketing and product development. The quarter also included costs to exit an unprofitable business unit.
On a year-to-date basis, the twelve month period had a net loss of $3.0 million, compared to a net loss of $0.2 million a year ago. The current year-to-date period included certain unrealized and non-cash expense and severance obligations, which were considered as unusual operating expenses. With the exclusion of these unusual items, the year-to-date had an adjusted net loss of $4.9 million compared to adjusted net income of $4.0 million in the prior period. The adjusted year-to-date net loss of $4.9 million is inclusive of $2.7 million in incremental investment in sales, marketing and product development and losses attributable to the business unit.
Adjusted net income or loss 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.
Sales in the fourth quarter of fiscal year 2018 were $0.5 million or 2.4% higher than the same quarter of the previous year. Increase in fourth quarter sales were led by strong Walls sales compared to the previous year.
Year-to-date sales declined by $1.3 million or 1.4% compared to the prior year. The previous year benefitted from two large non-recurring projects totaling $5 million which if normalized would result in a year over year sales growth of 4%.
Gross profit as a percentage of sales for the fourth quarter of fiscal year 2018 was 22.8%, a decline from 26.5% from the same quarter of the previous year. Unfavorable product mix and non recurring costs negatively impacted gross profit.
Year-to-date gross profit percentage was 26.8% compared to last year’s 30.0% due to the same factors as described in the quarter.
Selling, general and administrative expenses (“SG&A”) in the fourth quarter of fiscal year 2018 were 40.0% of sales, compared to 28.6% in the same quarter of last year. The increase in SG&A of $2.6 million was mainly due to costs associated with the unprofitable business unit, severance and investments in marketing, sales coverage and supply chain initiatives.
Year-to-date SG&A was 32.8% of sales, compared to 27.6% last year. The dollar amount increased by $4.5 million for the same reasons as the quarter.
At the end of the quarter, the company was debt-free and had cash, cash equivalents and short-term investments totaling $9.0 million and an unused credit facility.
The full text of Inscapes 4Q18 earnings release, including all tables, is available at http://inscapesolutions.com/company/investors/press-releases/.
About Inscape
Inscape is a design enabler. We have been saying yes since 1888 with a versatile portfolio of systems, storage, and walls products that are adaptable, and always built to last. With a wide dealer network, showrooms in both Canada and the U.S., and full service and support for all of our clients, our philosophy is to always do what we can to say Yes. For more information, visit www.inscapesolutions.com