(Windsor, Ontario – March 1, 2018) – Reko International Group Inc. (TSX-V: REKO) today announced results for its second quarter ended January 31, 2018.
Consolidated sales for the quarter ended January 31, 2018, were $11.5 million, compared to $11.2 million in the prior year, an increase of $0.3 million or 2.8%. The increase in sales was related to increases in demand in both the automotive and capital equipment markets.
Gross profit for the quarter ended January 31, 2018, was $1.5 million, or 13.4% of sales, compared to a gross profit of $2.0 million, or 18.0% of sales in the prior year. The decrease in gross profit was reflective of a change in product mix, with certain projects worked on during the quarter experiencing lower margins than in prior quarters.
Selling and administrative expenses for the quarter ended January 31, 2018 were $1.1 million, or 9.8% of sales, compared to $1.0 million, or 8.5% of sales in the prior year. The increase in SG&A largely relates to one-time consulting fees pertaining to the upcoming expansion.
Net income for the quarter ended January 31, 2018 was $0.4 million or $0.07 per share, compared to net income of $0.8 million, or $0.12 per share in the prior year.
Subsequent to the end of the quarter, the mortgage payable of $3,211 at a rate of 6% which matured in February 2018 was repaid in full and a commitment received for a new mortgage facility in the amount of $3,500 with a rate of 3.95% and a five year term. This change will result in reduced payments of approximately $490 annually.
“Reko’s second quarter results showed an improvement in profitability from the prior quarter,” stated Diane Reko, chief executive officer. “New orders during the quarter improved by 32% compared to the prior quarter. Investments in new equipment, along with the completion of our new building will position us to take advantage of additional opportunities and improve performance. Reko has spent almost $5.5M on these capital initiatives year to date and is renewing long term debt at attractive rates to assist us with the upcoming expansion of our manufacturing footprint and technical capabilities.”