Reko Reports Results for Third Quarter of Fiscal 2024

• Consolidated third quarter sales of $9.6M are $0.7M or 6.8% unfavourable to same quarter of the prior year
• Quarterly net loss of $0.8M and EPS of ($0.15)
• Strong balance sheet with improved cash position of $2.1M over prior quarter

WINDSOR, ON, June 6, 2024 /CNW/ - Reko International Group Inc. (TSXV: REKO) today announced results for its third fiscal quarter of 2024.

Financial Highlights:

(in 000's, except for per share data)

Consolidated sales in the third quarter were $9,606 compared to $10,306 in the same quarter of the prior year, a decrease of $700 or 6.8%.  The challenging dynamics of the automotive market contributed to lower volumes, delayed awards and projects put on hold, resulting in unexpected underutilized capacity within certain areas of the business. Year to date sales for fiscal 2024 were $35,257 compared to $35,768 in the previous fiscal, a decline of $511 or 1.4%, driven by third-quarter performance.

Earned revenue for the quarter decreased $570 or 7.4% compared to the same period of the prior year. The decline was driven by reduced sales due to a lack of customer kick-offs during the quarter, partly offset by savings on materials purchases.

Gross profit for the quarter was $557 or 5.8% of sales, compared to $1,253 or 12.2% in the preceding year. The decline in sales and earned revenue has adversely affected gross profit.  This impact was further compounded by lower earnings on certain fixed price automotive projects, which encountered unforeseen challenges in the second quarter and persisted in the current quarter.

Selling and administrative expenses ("SG&A") were $1,582 or 16.5% of sales which is $161 or 11.3% higher when compared to SG&A expenses of $1,421 in the same period of the prior year.  During the quarter the company recorded $185 in restructuring charges and increased its provision for a certain Export Development Canada ("EDC") insured receivable by $50, which together is approximately $0.04 per share.

The company's earnings have also been adversely affected by fluctuations in foreign exchange rates when compared to the same period of the prior year; $0.03 per share in the current quarter and $0.04 per share on a year-to-date basis.

Net loss for the quarter ended April 30, 2024 was ($849) or ($0.15) per share compared to net earnings of $55 or $0.01 per share in the prior year.

"While our efforts to include non-automotive markets in our customer base have been ongoing, we acknowledge that progress has taken longer than anticipated", stated Diane Reko, CEO. "However, the continued volatility experienced in the automotive sector underscores the importance of this strategic initiative. Recently, we have reallocated a portion of our capacity to serve customers in the offsite construction and infrastructure markets  and have onboarded colleagues with proven success in these areas.  These steps will expedite the expansion of our customer base in the coming months.  In the meantime, we will continue to focus on operational efficiencies and a reduced cost structure in an effort to minimize the impact that any further volatility may have in our operations".

Reko has not repurchased any shares under the normal course issuer bid announced on January 5, 2024.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Reko International Group Inc. (TSX-V:REKO) is a diversified, technology-driven manufacturing company located in Southwestern Ontario, just minutes from the U.S. border. With expertise in robotic automation equipment and precision machining services, Reko is a "go-to" supplier for companies in the automotive, aerospace, rail, power generation, offsite construction, infrastructure and capital equipment industries. Reko strives to be a pillar and protector of sustainable North American manufacturing and production.

SOURCE Reko International Group Inc.