Inscape announced its third quarter financial results ended January 31, 2020. Sales in the third quarter of fiscal year 2020 were $17.4 million and adjusted EBITDA was a deficit of $0.7 million.

In the quarter:

Third quarter sales were 40% less than the same quarter of the previous year. A year ago, sales were driven by an unusually large number of calendar year end projects implemented by our Platinum customers. In addition, Q3/F’20 results were impacted by several large projects moving out to future quarters and the exit of unprofitable Walls sales.
Gross profit for the third quarter decreased to $4.4 million (25.2%) compared to $8.2 million (28.5%) in the previous year’s quarter. Manufacturing efficiencies realized were offset by unfavourable product mix and lower sales volume in the quarter.
Selling, general and administrative expenses (“SG&A”) declined by $1.2 million compared to the same quarter of the previous year due to cost reduction initiatives implemented in fiscal 2020.
Gain from disposal of $1.8 million was realized in the third quarter as Inscape restructured its U.S. based Walls operating facilities. This included the sale and leaseback of the Falconer property and realized gross proceeds of $4.4 million.
Net income for the third quarter was $0.1 million.
At the end of the quarter, the company was debt-free and had cash totaling $2.7 million.

“Third quarter results were mixed. We were disappointed in our sales performance after posting 6 consecutive quarters of organic growth. However, we continue to make progress on improving our margins through our cost savings and plant restructuring initiatives,” said Brian Mirsky, CEO. “Our focus remains on driving profitable sales growth. We are encouraged with a number of recent wins with both our existing and new customers and the strength of our sales pipeline.”

The third quarter of fiscal year 2020 ended with net income of $0.1 million or 1 cent 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 2020 had an adjusted net loss before taxes of $1.5 million, compared with an adjusted net income before taxes of $1.1 million in the same quarter of last year. This represents a reduction in net income of $1.2 million compared to the prior year driven by lower sales volumes.

The nine-month period of fiscal year 2020 ended with a net loss of $0.2 million or 1 cent per share, compared with a net loss of $4.3 million or 30 cents per share for the same period of last year. Net losses of both periods included certain unrealized, non-cash expenses and one-time items that have significant impact on the net loss per GAAP. With the exclusion of these items, the nine-month period of fiscal year 2020 had an adjusted net loss before taxes of $2.9 million, compared with an adjusted net loss before taxes of $3.5 million for the same period of the previous year. Realized manufacturing efficiencies and lower SG&A expense contributed to the $0.6 million improvement in net results. Furthermore, the sale and leaseback of the Falconer Facility which currently manufactures Inscape’s branded Walls products; and sale of the DC Rollform integrated metal fabrication business resulted in net gains of $1.8 million being recognized in the third quarter.

Adjusted net income or loss and adjusted EBITDA are non-GAAP measures, which do not have any standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other issuers.

At the end of the quarter, the company was debt-free and had cash totaling $2.7 million.