WINDSOR, ON, Dec. 3, 2020 /CNW/ - Reko International
Group Inc. (TSXV: REKO) today announced results for its first
quarter ended October 31, 2020.
Financial Highlights:
(in 000's, except for per share data)
|
Three
Months
|
(unaudited)
|
Fiscal
|
Fiscal
|
2021
|
2020
|
Sales
|
$6,844
|
$9,350
|
Net income
|
(896)
|
140
|
EPS basic
|
(0.14)
|
0.02
|
Working
capital
|
19,489
|
17,106
|
Shareholders'
equity
|
45,987
|
46,543
|
Shareholders' Equity
per Share
|
7.39
|
7.34
|
Consolidated sales for the quarter ended October 31, 2020, were $6.8 million, compared to $9.4 million in the prior year, a decrease of
$2.5 million or 27.0%.
The continued impact of the COVID-19 pandemic affected the
Company's ability to secure new sales and, in some cases, caused
delays in the kick-off of new awards. Sales in the automotive
sector, driven by the introduction of new models and model changes,
continue to trend at lower volumes, partly due to the adverse
conditions associated with the global pandemic. The company
continues to actively pursue other markets, with some recent
successes in food processing and medical devices. While these
efforts are taking longer than expected, we are starting to get
some traction.
Gross profit for the quarter ended October 31, 2020, was $0.3
million compared to a gross profit of $1.5 million in the prior year. The drop in sales
volume had a significant impact on the company's gross
profit. The current global pandemic not only affected the
Company's ability to secure new work, as noted above, but it also
delayed project kickoffs and increased pressure on pricing. Lower
sales volumes also contributed to occasional operational
inefficiencies. In the latter part of the quarter, the Company
initiated targeted cost reductions to help offset lower sales
volumes.
Selling and administrative expenses for the quarter ended
October 31, 2020 were $2.0 million compared to $1.2 million in the prior year. Due to the
drop in sales volumes and lack of visibility of future
demand mostly as a result of the global pandemic, the Company
decided to make some significant changes in its organizational
structure. To this end Reko took a reserve of $0.8 million to cover severance payments. While
this decision negatively impacted Q1 results, it will produce
significant future cost savings. The Company continues to
carefully monitor its discretionary spending, with new Company
procedures being developed to promote overall cost reduction.
Net loss for the quarter ended October
31, 2020 was $0.9 million or
$(0.14) per share, compared to net
income of $0.1 million, or
$0.02 per share in the prior year.
The utilization of government support programs (CEWS) related to
the global pandemic helped to offset part of the unfavorable
quarterly results.
During the quarter ended October 31,
2020, Reko purchased and subsequently cancelled 21,100
shares under the provision of the normal course issuer
bid.
"The cost of reducing our workforce to address the market
uncertainty caused by the pandemic, negatively impacted our results
for the first quarter of the new year," stated Diane Reko, chief executive officer. "While we
have been able to maintain our strong balance sheet, the sales
impact in certain parts of our business has left us with excess
capacity. We continue to work diligently to improve our sales
volume while pursuing new growth opportunities and paying close
attention to our costs."
About Reko International Group Inc.
Reko International Group Inc. (TSX-V:REKO) is a diversified,
technology-driven manufacturing organization located in
Southwestern Ontario, just minutes
from the U.S. border. Areas of expertise include robotic factory
automation solutions, the precision machining of large critical
parts, and plastic injection and low compression acoustic tooling.
Reko's family-oriented culture embraces past experience, fosters
innovation, and always ensures the highest standard of quality.
Reko believes in strengthening communities by advancing
manufacturing.
SOURCE Reko International Group Inc.