(Windsor, Ontario – June 9, 2022) – Reko International Group Inc. (TSX-V: REKO) today announced results for its quarter ended April 30, 2022.
Consolidated sales for the third quarter of 2022 were $13.4 million compared to $12.4 million in the same period last year, an increase of $0.9 million, or 7.6%. Year to date sales for fiscal 2022 were $38.9 million, a 29% increase from the year to date sales of $30.2 million reported in fiscal 2021. Sales volumes continue to climb and we are experiencing a solid flow of work in all divisions.
Gross profit for the quarter ended April 30, 2022 was $2.0 million compared to $2.4 million for the same period in the prior year. Gross profit as a percentage of sales averaged 14.6% for the three months, compared to 19.1% for the same period last year. Due to contracted pricing negotiated prior to recent inflationary cost increases, Reko’s profit margin was negatively affected on programs already underway.
Selling, general and administrative expenses (“SG&A”) for the third quarter of fiscal 2022 totaled $2.0 million compared to $1.1 million for the same period in fiscal 2021. SG&A expenses for the nine months of the year totalled $4.5 million, compared to $4.2 million in the prior year. Near the end of the quarter, the company made a strategic decision to move from designing and building tooling to a more concentrated effort on machining. This decision resulted in some permanent layoffs; the cost for these layoffs was accrued for at the end of the third quarter. An increase in wage costs contributed to the remainder of the overall increase.
Net income for the three months ended April 30, 2022 was $0.09 million, or $0.02 per share compared to $0.8 million, or $0.13 per share, for the same period in the prior year. For the nine months ended April 30, 2022, net income was $1.5 million, or $0.25 per share, compared to net income of $0.4 million, or $0.06 per share, in the same period last year.
During the quarter, the company re-purchased 153,900 shares under the normal course issuer bid. Year-to-date, the company re-purchased 218,700 shares.
“We are pleased to report sales for both the quarter and year to date which exceed fiscal 2021 levels”, stated Diane Reko, CEO. “Unfortunately, cost increases in almost everything that we purchase have negatively impacted profits on orders which were quoted and accepted before the full impact of these cost increases was known. Additionally, the company decided to pivot the sales focus of its mold division from building tooling to providing machining services. As a result, the company incurred restructuring costs of $0.3 million during the quarter. Future capacity resulting from this decision will be used to support demand for our automation equipment and is expected to improve overall profitability once the transition is completed, later in calendar 2022.”