Inscape (INQ.TO) Thursday announced its first quarter financial results ended July 31, 2016.
Sales in the first quarter were 57.9% higher than the same quarter of last year. Increase in sales volume was achieved in all business segments, including West Elm Workspace with Inscape that was introduced in the second quarter of last year.
"It is gratifying to deliver the fourth consecutive quarter of growth over the previous periods," said Jim Stelter, CEO. "I remain confident in our plan and the ability to provide continued growth in both the top line and profitability. We are benefiting from the team's focus on our strategic objectives. The increase in committed distribution partners has made a positive impact on opportunities and market awareness."
The first quarter of fiscal year 2017 ended with a net loss of $1.5 million or 11 cents per share, compared with a net loss of $5.0 million or 35 cents per share a year ago. With the exclusion of the unrealized derivative loss and other unusual items to be discussed below, the current quarter would have an adjusted income of $0.2 million compared with the same quarter of last year's adjusted loss of $2.8 million. The improvement of $3.0 million was mainly a result of higher sales volume, the addition of West Elm Workspace with Inscape which was introduced in the second quarter of last year, better U.S. exchange rate, improved U.S. currency hedge contracts and management of fixed overheads.
Adjusted income (loss)
The following is a reconciliation of income (loss) before taxes calculated in accordance with GAAP to the non-GAAP measure of adjusted income (loss), which does not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers:
The first quarter gross profit as a percentage of sales at 28.9% was 8 percentage points higher than the 20.9% for the same quarter of last year, representing an increase of 38.3%. The improvement in gross profit percentage was due to better overhead absorption with higher sales volume and favourable U.S. exchange rates; partially offset by unfavourable realized selling prices and additional overheads for the West Elm division.
SG&A for the quarter was 29.2% of sales, compared with the same quarter of last year's 41.2%. The current quarter's expense of $7.1 million was $0.8 million higher than the same quarter of last year, of which $0.5 million was variable SG&A relating to higher sales volume. The remaining $0.3 million increase in SG&A consists mainly of increased investments in fixed selling and marketing expenses, severance obligation, accrued bonuses; partially offset by reduced payroll and trade show expenses.
At the end of the first quarter of fiscal 2017, the company was debt-free with cash and cash equivalents of $5.6 million and short-term investments of $4.5 million.