Inscape Thursday announced its results of operations for the three and nine months ended January 31, 2021.

“Third Quarter Fiscal Year 2021 represented our highest quarterly revenue to date in this fiscal year while in the midst of the COVID-19 pandemic,” said Eric Ehgoetz, CEO. “Management worked tirelessly during the quarter to position the business with an appropriate foundation for growth and profitability once the economy moves to a post-pandemic environment. Despite reporting a nine month year to date net loss of $1.4 million, we would note that, this includes $1.4 million of inventory write-downs during the fiscal year reflecting management’s efforts to properly manage inventory levels and working capital. Since the beginning of the fiscal year, management has reduced inventory by $2.2 million and is actively monitoring optimal inventory levels and mix. During the quarter, the Company also successfully executed the preparation of our furniture plant for new capital equipment arriving in Q4 which will materially improve its efficiency and also executed on the move of our Walls factory to a new location with an appropriate footprint designed to lower overheads. Both of these actions will begin to be reflected in our results in our fourth quarter. Management also implemented a number of initiatives designed to improve the Company’s sales pipeline and reach. Furthermore, we continue to focus on rapid payback initiatives and adoption of new technologies to improve the operations of the business for the eventual return of a more normal economic environment.”

Total sales for the third quarter of fiscal 2021 were $11.6 million, compared to $17.4 million for the same period of fiscal 2020. Net loss for the third quarter of fiscal 2021 was $1.0 million or negative $0.07 per diluted share, compared to net income of $0.1 million or positive $0.01 per diluted share for fiscal 2020. Non-GAAP EBITDA for the third quarter was negative $4 thousand, compared to positive $1.0 million, for fiscal 2020. Total sales for the nine months ended January 31, 2021 were $30.2 million, compared to $61.4 million for the same period of fiscal 2020. The nine-month period ended with a net loss of $1.4 million or negative $0.10 per diluted share, compared to a net loss of $0.2 million or negative $0.01 per diluted share for fiscal 2020. Non-GAAP EBITDA for the nine months ended January 31, 2021 was $1.7 million, compared to $2.4 million for fiscal 2020.

Third Quarter Financial Highlights

(All comparisons are relative to the three month period ended January 31, 2020 unless otherwise stated):

EBITDA of ($4) thousand, compared to EBITDA of $1.0 million
Adjusted EBITDA of ($1.2) million, compared to adjusted EBITDA of ($0.7) million
Net loss before taxes of $1.0 million compared to net income before taxes of $0.1 million. This quarter’s results were lower than the comparative period mainly due to lower sales volume as a result of the COVID-19 pandemic
Gross profit margin of 22.9%, with gross profit down by $1.7 million, versus gross profit margin of 25.2%
Inventory of $3.7 million, a decrease of $2.2 million, versus $6.0 million
Inventory write-downs of $0.3 million for the three month period
Gross profit margin of 25.6%, excluding inventory write-downs of $0.3 million
EBITDA of $0.3 million, excluding inventory write-down of $0.3 million
Adjusted EBITDA of ($0.9) million, excluding inventory write-down of $0.3 million
Total sales of $11.6 million, a decrease of 33.1%
SG&A expenses of $4.9 million, a decrease of $1.2 million versus $6.1 million due to lower selling expenses from reduced sales volume
Cash of $1.2 million with additional borrowing capacity of $3.0 million, versus $5.9 million in cash with an additional borrowing base of $4.5 million as at April 30, 2020
Government assistance from subsidies of $0.6 million
Subsequent to the quarter, the Company received additional funds of US $1.4 million under the SBA loan program and received notification that the first tranche of the SBA loan has been forgiven

Third Quarter Year-to-Date Financial Highlights

(All comparisons are relative to the nine-month period ended January 31, 2020, unless otherwise stated):

EBITDA of $1.7 million, compared to EBITDA of $2.4 million
Adjusted EBITDA of ($5.0) million, compared to adjusted EBITDA of ($0.3) million
Net loss before taxes of ($1.4) million, compared to net loss before taxes of ($0.2) million
Gross profit margin of 21.0%, with gross profit down by $10.6 million, versus gross profit margin of 27.6%
Inventory write-downs of $1.4 million for the nine-month period
Gross profit margin of 25.4%, excluding inventory write-downs of $1.4 million
EBITDA of $3.0 million, excluding inventory write-down of $1.4 million
Adjusted EBITDA of ($3.6) million, excluding inventory write-down of $1.4 million
Total sales of $30.2 million, a decrease of 50.9%
SG&A expenses of $14.6 million, a decrease of $5.2 million versus $19.8 million due to less selling expenses resulting from lower sales volume
Government assistance from subsidies (including the forgivable loan) of $3.4 million