Inscape Announces Financial Results

Jon Szczur

Inscape, a leading designer and manufacturer of furnishings and movable wall systems based in Holland Landing, Ontario, announced its results of operations for the fourth quarter and full-year ended April 30, 2021.

“Fiscal Year 2021 results reflect a full year of operations impacted by the COVID-19 pandemic and, as such, any comparison to prior fiscal years is of little value,” said Eric Ehgoetz, CEO. “Instead, it’s important to highlight that Inscape has utilized this past fiscal year to position for the eventual recovery from the pandemic and implement the changes necessary to be a successful and growing enterprise.”

During the fiscal year, management successfully:

  • Eliminated surplus equipment and added a state-of-the-art laser turret press to their Holland Landing plant to improve their core manufacturing capabilities;
  • Prepared for a different competitive landscape by re-assessing their competitive strengths and developed an execution plan to support both the Inscape brand and their Office Specialty brand for the new realities of the market;
  • Reinvigorated new product plans to ensure relevant offerings are launched into the market during Fiscal Year 2022 and after that; and,
  • Developed a framework to implement some of the necessary changes to the business’s core operating model and identified the other changes needed in the early portion of the coming fiscal year to properly position the company for long-term growth in sales and profitability.

While Inscape is pleased with the accomplishments to date, this work is not yet complete. Management continues to focus on realignment of costs while investing in both the right talent and technology to drive top line growth and profitability once the economic recovery becomes evident.

Fourth Quarter Financial Highlights

  • Retirement benefit obligation decrease of $6.3 million related to favourable returns on the fair value of plan assets and actuarial gains
  • Revolving credit facility loan with FrontWell Capital Partners Inc. of $15.0 million was closed, and the company drew $8.0 million as of April 30, 2021
  • Asset held for sale of $5.2 million disclosure related to the planned Holland Landing property sale and leaseback
  • Deferred tax assets of $2.6 million related to tax loss carry-forwards recognized due to sufficient positive evidence that they will be realized against expected profits in the foreseeable future
  • SG&A expenses of $5.9 million, a decrease of $0.7 million versus $6.6 million
  • EBITDA of $1.3 million, compared to EBITDA of $4.0 million
  • Gross profit margin of 7.6%, with gross profit down by $3.3 million, versus gross profit margin of 26.8%
  • Inventory write-downs of $0.2 million during the quarter

Full Year 2021 Financial Highlights

  • SG&A expenses of $20.5 million, a decrease of $5.8 million versus $26.4 million due to fewer selling expenses resulting from lower sales volume and management actions to reduce costs
  • Government assistance from subsidies (including the forgivable loan) of $5.3 million
  • Cash on hand of $3.7 million as of April 30, 2021, and $2.8 million in restricted cash put forth as collateral security for certain derivative financial instruments
  • EBITDA of $0.5 million, compared to EBITDA of ($1.6) million
  • Gross profit margin of 18.2%, with gross profit down by $13.9 million, versus gross profit margin of 27.4%
  • Inventory write-downs of $1.5 million for the twelve months
  • Gross profit margin of 22.1%, excluding inventory write-downs of $1.5 million
  • EBITDA of $2.0 million, excluding inventory write-down of $1.5 million
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