Inscape Announces Third Quarter Fiscal 2021 Financial Results

HOLLAND LANDING, Ontario, March 04, 2021 (GLOBE NEWSWIRE) — Inscape (TSX: INQ), a leading designer and manufacturer of furnishings for the workplace, today announced its results of operations for the three and nine months ended January 31, 2021.
“Third Quarter Fiscal Year 2021 represented our highest quarterly revenue to date in this fiscal year while in the midst of the COVID-19 pandemic,” said Eric Ehgoetz, CEO. “Management worked tirelessly during the quarter to position the business with an appropriate foundation for growth and profitability once the economy moves to a post-pandemic environment. Despite reporting a nine month year to date net loss of $1.4 million, we would note that, this includes $1.4 million of inventory write-downs during the fiscal year reflecting management’s efforts to properly manage inventory levels and working capital. Since the beginning of the fiscal year, management has reduced inventory by $2.2 million and is actively monitoring optimal inventory levels and mix. During the quarter, the Company also successfully executed the preparation of our furniture plant for new capital equipment arriving in Q4 which will materially improve its efficiency and also executed on the move of our Walls factory to a new location with an appropriate footprint designed to lower overheads. Both of these actions will begin to be reflected in our results in our fourth quarter. Management also implemented a number of initiatives designed to improve the Company’s sales pipeline and reach. Furthermore, we continue to focus on rapid payback initiatives and adoption of new technologies to improve the operations of the business for the eventual return of a more normal economic environment.”Total sales for the third quarter of fiscal 2021 were $11.6 million, compared to $17.4 million for the same period of fiscal 2020. Net loss for the third quarter of fiscal 2021 was $1.0 million or negative $0.07 per diluted share, compared to net income of $0.1 million or positive $0.01 per diluted share for fiscal 2020. Non-GAAP EBITDA for the third quarter was negative $4 thousand, compared to positive $1.0 million, for fiscal 2020.
        
Total sales for the nine months ended January 31, 2021 were $30.2 million, compared to $61.4 million for the same period of fiscal 2020. The nine month period ended with a net loss of $1.4 million or negative $0.10 per diluted share, compared to a net loss of $0.2 million or negative $0.01 per diluted share for fiscal 2020. Non-GAAP EBITDA for the nine months ended January 31, 2021 was $1.7 million, compared to $2.4 million for fiscal 2020.
Third Quarter Financial Highlights(All comparisons are relative to the three month period ended January 31, 2020 unless otherwise stated):EBITDA of ($4) thousand, compared to EBITDA of $1.0 millionAdjusted EBITDA of ($1.2) million, compared to adjusted EBITDA of ($0.7) millionNet loss before taxes of $1.0 million compared to net income before taxes of $0.1 million. This quarter’s results were lower than the comparative period mainly due to lower sales volume as a result of the COVID-19 pandemicGross profit margin of 22.9%, with gross profit down by $1.7 million, versus gross profit margin of 25.2%Inventory of $3.7 million, a decrease of $2.2 million, versus $6.0 millionInventory write-downs of $0.3 million for the three month periodGross profit margin of 25.6%, excluding inventory write-downs of $0.3 millionEBITDA of $0.3 million, excluding inventory write-down of $0.3 millionAdjusted EBITDA of ($0.9) million, excluding inventory write-down of $0.3 millionTotal sales of $11.6 million, a decrease of 33.1%SG&A expenses of $4.9 million, a decrease of $1.2 million versus $6.1 million due to lower selling expenses from reduced sales volumeCash of $1.2 million with additional borrowing capacity of $3.0 million, versus $5.9 million in cash with additional borrowing base of $4.5 million as at April 30, 2020Government assistance from subsidies of $0.6 millionSubsequent to the quarter, the Company received additional funds of US $1.4 million under the SBA loan program and received notification that the first tranche of the SBA loan has been forgivenThird Quarter Year-to-Date Financial Highlights(All comparisons are relative to the nine month period ended January 31, 2020 unless otherwise stated):EBITDA of $1.7 million, compared to EBITDA of $2.4 millionAdjusted EBITDA of ($5.0) million, compared to adjusted EBITDA of ($0.3) millionNet loss before taxes of ($1.4) million, compared to net loss before taxes of ($0.2) millionGross profit margin of 21.0%, with gross profit down by $10.6 million, versus gross profit margin of 27.6%Inventory write-downs of $1.4 million for the nine month periodGross profit margin of 25.4%, excluding inventory write-downs of $1.4 millionEBITDA of $3.0 million, excluding inventory write-down of $1.4 millionAdjusted EBITDA of ($3.6) million, excluding inventory write-down of $1.4 millionTotal sales of $30.2 million, a decrease of 50.9%SG&A expenses of $14.6 million, a decrease of $5.2 million versus $19.8 million due to less selling expenses resulting from lower sales volumeGovernment assistance from subsidies (including the forgivable loan) of $3.4 million

Inscape Corporation
Summary of Interim Condensed Consolidated Financial Results
(in thousands except EPS)

(i)Stock-based compensation and severance obligations were displayed separately from selling, general and administrative (SG&A) expenses for the purpose of these tables.Sales for the three and nine months ended January 31, 2021 were 33.1% and 50.9% lower than the same periods of the previous year due to the economic impact of the COVID-19 pandemic (“COVID-19”), which resulted in lower Furniture sales of 21.2% and 48.6% and lower Walls sales of 62.6% and 57.1%, respectively.Adjusted net (loss) income and adjusted EBITDA are non-GAAP measures, which do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers.The following is a reconciliation of net (loss) income calculated in accordance with GAAP to adjusted net (loss) income before taxes, the non-GAAP measure:
The following is a reconciliation of net (loss) income before taxes calculated in accordance with GAAP to EBITDA and adjusted EBITDA, the non-GAAP measures:
Gross profit margin for the three and nine months ended January 31, 2021 decreased by 2.3 and 6.6 percentage points, respectively, over the same periods last year as a result of the lower sales volume due to COVID-19. In addition, for the three and nine months ended January 31, 2021, excess inventory totaling $0.3 million and $1.4 million, respectively, relating to discontinued product lines and obsolescence were written off during the periods. The Company continues to identify initiatives to achieve cost efficiencies and improved margins as sales levels return to normal. Gross profit margins without the effects of these excess inventory write-downs would have been 25.6% and 25.4% for the three and nine months ended January 31, 2021, respectively.SG&A for the three and nine months ended January 31, 2021 were 41.8% and 48.5% of sales, compared to 34.8% and 32.3% for the same periods of last year. The $1.2 million and $5.2 million decrease in SG&A in the respective periods, resulted from workforce reductions, decrease in marketing initiatives and lower selling, travel and entertainment expenses. Cumulatively, these actions are largely the results of measures adopted by management to manage cost during COVID-19. In the current fiscal, the lower sales volumes impacted the overall higher SG&A to sales ratios.At the end of the quarter, the Company had cash totaling $1.2 million, no debt and an unused credit facility with borrowing availability of $3.0 million based on the new credit terms.Financial Statements
Financial statements are available from our website as of this press release.
Third Quarter Call Details
Inscape will host a conference call at 8:30 AM EST on Friday, March 5, 2021 to discuss the Company’s quarterly results. To participate, please call 1-800-915-4731 about 10 – 15 minutes before the start time. A replay of the conference call will also be available from March 5, 2021 after 10:30 AM EST until 11:59 PM EDT on April 4, 2021. To access the rebroadcast, please dial 1-800-558-5253 (Reservation Number 21991597).
Fourth Quarter Fiscal 2021 Financial Results
Inscape Corporation intends to release its full fourth quarter financial results later than we have historically done as a precautionary measure to allow more time due to COVID-19. The Company is anticipating releasing its entire fourth quarter results after the close of business on Thursday, July 15, 2021.
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
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 of our clients, enables 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.
For more information, visit www.myinscape.comContactJon Szczur, CPA, CMA
Chief Financial Officer
Inscape Corporation
T 905 952 4102  
jszczur@myinscape.com

Disclaimer & Cookie Notice

Welcome to GOLDEA services for Professionals

Before you continue, please confirm the following:

Professional advisers only

I am a professional adviser and would like to visit the GOLDEA CAPITAL for Professionals website.

Cookie Notice

We use cookies to improve your experience on our website

Information we collect about your use of Goldea Capital website

Goldea Capital website collects personal data about visitors to its website.

When someone visits our websites, we use a third party service, Google Analytics, to collect standard internet log information (such as IP address and type of browser they’re using) and details of visitor behavior patterns. We do this to allow us to keep track of the number of visitors to the various parts of the sites and understand how our website is used. We do not make any attempt to find out the identities or nature of those visiting our websites. We won’t share your information with any other organizations for marketing, market research or commercial purposes and we don’t pass on your details to other websites.

Use of cookies
Cookies are small text files that are placed on your computer or other device by websites that you visit. They are widely used to make websites work, or work more efficiently, as well as to provide information to the owners of the site.