• Quarterly net loss of $3.5M and EPS of ($0.62) including a tax effected non-cash deferred tax expense related to the recoverability of deferred tax assets of $3.2M or ($0.55) per share
• Consolidated fourth quarter sales were unfavourable compared to the same quarter of the prior year by $1,963 or 17.9% due to ongoing softness in the automotive industry
• Continued strong balance sheet with improved cash position of $3.8M over prior quarter

WINDSOR, ON , Oct. 10, 2024 /CNW/ - Reko International Group Inc. (TSXV: REKO) today announced results for its fourth quarter and year ended July 31, 2024.

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

Consolidated sales in the fourth quarter were $9,019 compared to $10,982 in the same quarter of the prior year, a decrease of $1,963 or 17.9%. The challenging dynamics of the automotive market continued to affect performance as lower volumes and delayed awards persisted in the fourth quarter and resulted in underutilized capacity within certain areas of the business. Year to date sales for fiscal 2024 were $44,277 compared to $46,751 in the previous fiscal year, a decline of $2,474 or 5.3%  driven by weak second half of year performance predominantly with customers in the automotive sector.

Earned revenue for the quarter decreased $1,125 or 14.1% 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 subcontracting expenses.

Gross profit for the quarter was $813 or 9.0% of sales, compared to $1,380 or 12.6% in the previous year. The decline in sales and earned revenue negatively impacted gross profit. Additionally, certain fixed-priced automotive projects encountered unforeseen challenges beginning in the second quarter with timelines extending into the fourth quarter, further impacting fiscal year performance.

Selling and administrative expenses ("SG&A") were $1,183 or 13.1% of sales which is $86 or 6.8% lower when compared to SG&A expenses of $1,269 in the same period of the prior year.

In line with our updated business strategy, we have recorded an adjustment of $4,282 to the value of deferred tax assets based on the probability of future recoverability. This resulted in a tax effected provision of $3,160, or a loss of ($0.55) per share primarily related to our Tooling division which was closed in 2022. The anticipated realization of these assets, initially planned through various strategic initiatives including potential acquisitions, has been delayed due to shifts in our strategy and evolving market conditions. We may recognize the benefits of these tax assets once their realization becomes more certain.

Net loss for the quarter ended July 31, 2024 was ($3,459) or ($0.62) per share compared to net earnings of $80 or $0.01 per share in the prior year. The loss per share prior to the valuation allowance discussed above was ($0.07), an improvement of $0.08 per share when compared to our third quarter.

Cash flow from operations improved to $3,244 during the quarter, reflecting a notable increase of $4.3 million since our third quarter.

"This past year has presented significant challenges, primarily due to a slowdown in awards and delayed capital decisions driven by ongoing softness in the automotive market," stated Diane Reko, CEO. " In response, we remain fully committed to accelerating our efforts to diversify our customer base and expand our offerings within our existing customer relationships. We are optimistic about promising opportunities with new partners outside of the automotive sector, which we believe will contribute to greater sales stability and improved absorption of fixed costs throughout the next fiscal year. While we have made progress in managing expenses, we will continue to explore ways to achieve more stable and sustainable margins as we navigate these difficult market conditions."

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.

About Reko International Group Inc.

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.