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Inscape Corporation announces 4th quarter & annual Results

Thursday 28 June 2012

Rod Turgeon, President and Chief Executive Officer of Inscape a leading designer, manufacturer and marketer of systems, storage and wall solutions for commercial office environments – announced financial results for the 4th quarter and fiscal year ended April 30, 2012. Sales for the quarter at $17.9m were 11.6% down on the same quarter in 2011 and what had been a pre-tax profit of $77,000 was turned into a loss of $596,000. The company commented "The Company had a disappointing final quarter. Sales revenue declined by 5.4% in constant currency, yielding a full year annual sales revenue decline of 1.8%. Furniture sales revenue grew for the year, while wall division sales declined. To meet targets, the Company must increase revenue faster than the rate of industry growth.
We have already introduced significant changes in our go-to-market strategy. Our strategic intent over the next few years is to establish a clear and compelling market position as the leading provider of application based solutions to deliver smart workspaces. Going into fiscal 2013, the Company is implementing three business initiatives that will support our objectives of revenue growth and improved profitability. The effective deployment of market focused strategies will be complemented by ongoing improvements in business operations. The combined positive impact of revenue growth and continual improvement in business efficiencies will, we believe, deliver profitability in a par dollar currency environment. We believe that the Company is well positioned to capitalize on our strengths moving forward." said Rod Turgeon, President and Chief Executive Officer.
OPERATING PERFORMANCE
Fourth Quarter Results
The fourth quarter of fiscal year 2012 had a net loss of $0.7 million or 5 cents per share, compared to a net income of $0.2 million or 1 cent per share in the same quarter of last year.
Sales in the fourth quarter ended April 30, 2012 were 11.6% less than the same quarter of last year. The current quarter's sales included U.S. currency hedge gains of $0.3 million versus hedge gains of $1.8 million in last year's fourth quarter. On a normalized currency basis, the current quarter's sales were 5.4% lower. The growth in the furniture division was offset by lower sales recorded in the walls division.
Gross margin percentage in the fourth quarter was 20.2%, compared with 26.4% of last year's fourth quarter. The drop of 6.2 percentage points consists mainly of 5.5 percentage points from the lower U.S. currency hedge gains. The quarter's gross margin percentage was also reduced by pressure on realized selling prices, which was mitigated to some extent by improvements in manufacturing costs during the quarter.
The decrease of $0.9 million in the quarter's financial results compared to the same quarter of last year was mainly attributable to lower gross margin offset by lower SG&A and income tax expense,
Annual Results
On an annual basis, fiscal year 2012 had a net loss of $2.0 million, or 14 cents per share, compared to a net income of $3.6 million or 24 cents per share in fiscal year 2011.
The sales of fiscal year 2012 were 9.7% lower than the same period of last year. The decline in sales was attributable to substantial decrease in U.S. currency hedge gains and fewer large project sales for the moveable walls division.
The current year's sales included U.S. currency hedge gains of $1.5 million, compared to hedge gains of $7.3 million in fiscal year 2011. With the exclusion of the U.S. currency hedge gains and the adverse impacts of lower average U.S. spot rate during fiscal year 2012, the current year's sales on a normalized currency basis were 1.8% less than fiscal year 2011. While the furniture divisions of the business recorded an average growth of about 12%, the walls division experienced significant decline in sales because of fewer large projects sales during the year.

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