Inscape (INQ.TO), a leading designer and manufacturer of furnishings for the workplace, today announced its third quarter financial results ended January 31, 2019. Sales in the third quarter of fiscal year 2019 were $28.9 million, an increase of 29% compared to the same quarter of the prior year on a comparable basis when excluding prior year sales from an exited business unit. Including prior year sales from the exited business unit, sales were up 12% compared to the same quarter of the prior year.

Third Quarter Highlights:

Sales of the base business (excluding sales from an exited business unit) increased by 29% for the third quarter of fiscal 2019 compared to the prior year
This is the third quarter in a row of organic sales increase compared to the prior year excluding the impact of the exited business unit
Bookings remain strong; however, timing of project shipments can have a significant impact on sales
Gross profit for the third quarter of 28.5% is 1.5 percentage points higher compared to the prior year
SG&A as a % of sales decreased to 25% due to higher sales volume and completion of several nonrecurring marketing initiatives
Net income for the third quarter came in at $1.3 million, comparable to the prior year

“We are pleased with our third quarter performance. It demonstrates our ability to grow our core business, profitably. We remain focussed on delivering improved results via differentiated products and reducing our costs throughout the supply chain,” said Brian Mirsky, CEO.

The third quarter of fiscal year 2019 ended with a net income of $1.3 million or 9 cents per share, compared with a net income of $1.3 million or 9 cents per share in the same quarter of last year. Net income of both quarters included certain unrealized, non-cash expenses and one-time items that have significant impact on the net income per GAAP. With the exclusion of these items, the third quarter of fiscal 2019 had an adjusted net income of $1.1 million, compared with adjusted net loss of $0.3 million in the same quarter of last year due to improvement in gross margin.

The nine month period of fiscal year 2019 ended with a net loss of $4.3 million or 30 cents per share, compared with a net income of $1.8 million or 12 cents per share for the same period of last year. Net income (loss) of both periods included certain unrealized, non-cash expenses and one-time items that have significant impact on the net income (loss) per GAAP. With the exclusion of these items, the nine month period of fiscal year 2019 had an adjusted net loss of $3.5 million, compared with an adjusted net loss of $1.4 million in the same period of the previous year. Incremental investments in sales and marketing initiatives contributed to the year-to-date loss.

Gross profit as a percentage of sales for the third quarter of fiscal year 2019 at 28.5% was 1.5 percentage points higher than the same quarter of last year’s gross profit of 27.0%. Despite a favourable product mix and improvements in supply chain efficiencies, the Walls business unit’s gross margin was challenged.

For the nine month period of fiscal year 2019, gross profit as a percentage of sales of 28.2% was 0.2 percentage points higher than the same period of the previous year due to higher sales volume.

Selling, general and administrative expenses (“SG&A”) in the third quarter of fiscal year 2019 were 25% of sales, compared to 28% in the same quarter of last year. Investments in incremental sales and marketing initiatives are substantially completed.