Inscape’s Response to Impact of COVID-19
Inscape (TSX: INQ), a leading designer and manufacturer of furnishings for the workplace, is providing an update on the company’s response to the COVID-19 crisis.
During the COVID-19 pandemic, Inscape’s primary focus has been the health and well-being of our employees while keeping the business moving forward and delivering products to our customers in need.
The economic impact from COVID-19 on the global economy has been unprecedented. In anticipation of its impacts, Inscape took aggressive actions to minimize all non-essential spending while re-evaluating certain commitments to reduce the anticipated short-term impact to our cash flow. As part of this exercise, we also had to eliminate some full-time positions and temporarily furlough certain employees to achieve further savings.
We are thankful that some of our major customers who provide essential services have continued their planned purchasing and installations, but, like others in our industry, our business has been impacted by other projects that have been postponed or delayed as customers wait to evaluate the economic effects of the crisis or have been unable to take deliveries as previously contemplated.
Our two manufacturing facilities have remained in operation as per government guidelines and are following Public Health Agency of Canada, Centers for Disease Control and Prevention and World Health Organization best practices to ensure the safety of all our employees who are required to be onsite at these facilities. Most of our office staff relating to these facilities as well as our showrooms and sales teams are working remotely and continue to support the company’s operations.
As we anticipated, additional initiatives relating to people costs are required. Inscape is now implementing a Work-Share program to include most of the salaried office staff in the company’s headquarters and anticipate similar actions will need to be taken in our walls operations in late June as part of the overall cost reduction program. Team members who cannot work a reduced work week in view of business demands will be taking a 20% salary reduction. Additionally, Inscape’s leadership team will take a 25% salary reduction while the CEO will be taking a 30% salary reduction.
These employee initiatives will be in force for the next three months and re-evaluated quarterly. The leadership team and CEO salary reductions will be in force for six months. The Board of Directors is also reducing their cash compensation by 30% for a similar period of time as the leadership group.
These measures are in addition to the company’s efforts to access government subsidy, loan and grant programs, some of which have already proven successful and some of which the company anticipates will be available, which together with the people initiatives and thorough working capital management have allowed us to reinforce our balance sheet and prepare us for the economic impact of the COVID-19 pandemic. We are pleased to report that at the end of the fiscal year-end as at April 30, 2020 the company was debt-free, excluding a $1 million loan expected to convert to a full grant during Q1 of the current fiscal year, had over $5.9 million in cash and our $5 million bank operating loan facility was unutilized.
Inscape is actively developing selling strategies, evaluating and adapting existing product development plans and improving our operating efficiencies to enable us to be resilient in the face of this adversity and to ensure we will be in a much stronger position to grow our business as the economic recovery begins.
Since 1888, Inscape has been designing products and services that are focused on the future, so businesses can adapt and evolve without investing in their workspaces all over again. Our versatile portfolio includes systems furniture, storage, and walls – all of which are adaptable and built to last. Inscape’s wide dealer network, showrooms in the United States and Canada, along with full service and support for all our clients, enable us to stand out from the crowd. We make it simple. We make it smart. We make our clients wonder why they didn’t choose us sooner. myinscape.com