REKO Reports Year End Profit
(Windsor, Ontario – October 4, 2017) – Reko International Group Inc. (TSX-V: REKO) today announced results for its fourth quarter and year ended July 31, 2017.
On July 4, 2016, Reko announced that the customer related to the long term supply agreement announced in 2014, had exercised its right to make an advance payment. This one time payment of $3.9 million increased sales, gross profit and net income in Q4 2016 by this amount and net income by $2.9 million. There was no comparable payment in fiscal 2017, and therefore variances must be viewed in the context of this difference.
Consolidated sales for the year ended July 31, 2017, were $43.0 million, compared to $50.6 million in the prior year, a decrease of $7.6 million or 15.1%. The decrease in sales was related to the receipt of a one time payment in lieu of guaranteed volume under the long term agreement in the prior year, noted above, as well as a decrease in volumes in certain types of work in transportation and oil and gas sectors.
Gross profit for the year ended July 31, 2017, was $7.5 million, or 17.4% of sales, compared to a gross profit of $15.6 million, or 30.9% of sales in the prior year. The decrease relates to the payment received from the long term agreement as described in sales, as well the impact of a change in customer mix.
Selling and administrative expenses for the year ended July 31, 2017, were $4.0 million, or 9.2% of sales, compared to $4.6 million, or 9.1% of sales in the prior year. The decrease in SG&A is due to decreases in non-production wages & salaries due to reductions in variable pay, decreases in office expenses, and a decrease in premiums relating to our accounts receivable insurance.
Net income for the year ended July 31, 2017, was $2.5 million or $0.40 per share, compared to net income of $7.6 million, or $1.18 per share in the prior year.
“Volatility in our workload and in exchange rates heavily impacted our profitability this year,” stated Diane Reko, chief executive officer. “We look forward to the completion of our new facility in early 2018 and the opportunity to expand our offerings of innovative manufacturing solutions.”
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