Reko reports sales decline but remains profitable
(Windsor, Ontario – June 4, 2020) – Reko International Group Inc. (TSX-V: REKO) today announced results for its quarter ended April 30, 2020.
Consolidated sales for the third quarter of 2020 were almost $10.0 million compared to $14.3 million in the same period last year, a decrease of $4.3 million, or 30%. The decrease is primarily a result of continued lower volumes in certain sectors, as well as continued challenges with breaking into diversified markets. Sales for the nine months ended April 30, 2020 decreased 23% to $28.9 million, compared to $37.3 million in the same period in the prior year.
Gross profit for the quarter ended April 30, 2020 was $0.7 million compared to $2.7 million for the same period in fiscal 2019. In the third quarter, gross profit declined to 7% of revenue. The weakness was due to a combination of lower levels of orders from traditional sources, and additional costs associated with more specialized or unique programs. For the nine-month period of the current fiscal year, gross profit as a percentage of sales was 11% compared to 16% in the previous year.
Selling and administrative expenses for the third quarter of fiscal 2020 totaled $1.2 million compared to $1.4 million for the same period in fiscal 2019. The company continues to monitor its expenses, with a focus on cost control and reduced spending where possible.
Net income for the three months ended April 30, 2020 was $0.065 million or $0.01 per share compared to $0.6 million or $0.10 per share for the same period in the prior year. For the nine months ended April 30, 2020, net income was $0.26 million or $0.04 per share, compared to $1.05 million or $0.17 per share in the same period last year.
Due to a change in strategy, the Company is also reporting the departure of Mark Read, Director, Automation Division on June 3, 2020. We appreciate his contributions and wish him success in his future endeavours. In the interim, the position will be covered by current team members who have proven skills and experience, while the Company actively seeks an individual with strong strategic sales experience.
“The third quarter of fiscal 2020 will always be remembered for the COVID-19 isolation orders which were enacted near its mid-point. Reko was committed to ensuring the safety of its employees and was able to provide a safe work environment for its team.”, stated Diane Reko, CEO. “I am so proud of how our employees were able to adapt to the circumstance. By continuing to operate during the depths of the pandemic, Reko was able to continue essential work on orders which started in the early part of the quarter as well as COVID-related manufacturing needs. While sales and net income were significantly lower than the prior year’s third quarter, we were pleased to improve our working capital and cash position significantly year over year. This will assist us to weather the economic impact of the pandemic and take advantage of opportunities which may present themselves. We will continue to protect our team and adapt the way that we serve our customers to ensure everyone’s safety and the continued satisfaction of our customers.”
