Reko Reports Strong Q4 Growth and Improved Profitability in Fiscal 2025
MWN-AI** Summary
Reko International Group Inc. (TSX-V: REKO) reported a notable turnaround in its fiscal 2025 performance, highlighting strong growth in the fourth quarter despite a slight decline in overall annual sales. For the three months ending July 31, 2025, the company achieved sales of $10.8 million, a significant increase of 19.5% from $9.0 million in the same quarter a year earlier. However, total fiscal year sales reached $42.2 million, reflecting a decrease of 4.8% compared to the previous fiscal year's $44.3 million. The decline was attributed to lower volumes in the first half and issues within the automotive sector.
Despite the sales dip, Reko's profitability metrics showed substantial improvement. The company's gross profit surged by 167.7% in Q4, reaching $1.8 million, which contributed to an annual gross profit of $7.2 million—up 66.8% year-on-year. Earnings per share (EPS) turned positive at $0.18 for the fourth quarter and $0.19 for the full year, reversing significant losses reported in fiscal 2024. Adjusted EBITDA also climbed sharply, with Q4 showing an increase of over 200% to $1.7 million and year-to-date adjusted EBITDA reaching $6.0 million, an increase of 91.7% over last year.
CEO Diane Reko remarked on the challenging macroeconomic conditions affecting production capacity but expressed optimism regarding the company's trajectory toward sustainable growth. Reko has been investing in initiatives to bolster its operational foundation and enhance customer partnerships. As part of its commitment to shareholder value, the company also executed a share buyback, canceling 69,300 shares during the fiscal year.
MWN-AI** Analysis
Reko International Group Inc. (TSX-V: REKO) has shown a remarkable turnaround in its financial performance for fiscal 2025, despite a slight drop in sales. The company reported significant growth in gross profit and adjusted EBITDA, indicating improved operational efficiency and a better product mix. The gross profit margin surged to 16.5%, up from 7.4% in the previous year, largely due to a favorable shift towards non-automotive clients, which typically yield higher margins.
Investors should take note of several strong indicators. The net income for the fourth quarter reached $996, compared to a loss of $3,459 in the same quarter last year. This marked improvement in earnings per share (EPS) to $0.18 from a loss of ($0.62) signifies that the company is regaining its profitability footing. Additionally, the adjusted EPS rose to $0.06, another positive sign of operational performance.
Looking ahead, Reko's strategic focus on diversification and disciplined execution positions it well for sustainable growth. CEO Diane Reko emphasized investments aimed at enhancing operational capacity amidst macroeconomic challenges, which bodes well for long-term stability. The decision to buy back shares further reflects confidence in the company’s future prospects and is likely to positively impact shareholder value.
Given the combination of improved profitability metrics and the company's strategic initiatives, I would advise investors to consider Reko as a potential buy, particularly for those looking for investments in tech-driven manufacturing sectors. However, monitoring ongoing macroeconomic conditions and trade policies is crucial to assess any potential risks that could impact future performance. Overall, Reko's improving fundamentals suggest a promising trajectory moving forward.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
Reko International Group Inc. (TSX-V: REKO) today announced results for the three and twelve months ended July 31, 2025.
FISCAL 2025 HIGHLIGHTS
- Sales declined $2.1M or 4.8% over the prior year
- Gross profit improved by $2.9M or 66.8% compared to a year ago
- Earnings per share were $0.19, compared to a loss per share of ($0.70) a year ago
- Adjusted earnings per share (2) were $0.39 compared to a loss per share of ($0.13) a year ago
- Adjusted EBITDA (3) of $6.0M improved by $2.9M or 91.7% over last year
FOURTH QUARTER 2025 HIGHLIGHTS
- Gross profit improved by $1.1M or 167.7% compared to a year ago
- Earnings per share were $0.18, compared to a loss per share of ($0.62) a year ago
- Adjusted earnings per share (2) were $0.06 compared to a loss per share of ($0.08) a year ago
- Adjusted EBITDA (3) of $1.7M improved by $1.2M or 213.7% over last year
FINANCIAL HIGHLIGHTS
(in 000’s, except for per share data)
Three months ended | Twelve months ended | |||||||||||||||||||||
July 31 | July 31 | |||||||||||||||||||||
(unaudited) | (unaudited) | |||||||||||||||||||||
Fiscal 2025 | Fiscal 2024 | Variance | Variance | Fiscal 2025 | Fiscal 2024 | Variance | Variance | |||||||||||||||
$ | $ | $ | % | $ | $ | $ | % | |||||||||||||||
| Sales | $ | 10,781 | $ | 9,019 | $ | 1,762 | 19.5 | % | $ | 42,154 | $ | 44,277 | $ | (2,123 | ) | -4.8 | % | |||||
| Earned Revenue (1) | $ | 8,023 | $ | 6,835 | $ | 1,188 | 17.4 | % | $ | 32,001 | $ | 30,125 | $ | 1,876 | 6.2 | % | ||||||
| Earned Revenue Margin (1) | 74.4 | % | 75.8 | % | - | -1.4 | % | 75.9 | % | 68.0 | % | - | 7.9 | % | ||||||||
| Gross Profit | $ | 1,783 | $ | 666 | $ | 1,117 | 167.7 | % | $ | 7,203 | $ | 4,319 | $ | 2,884 | 66.8 | % | ||||||
| Gross Profit Margin | 16.5 | % | 7.4 | % | - | 9.2 | % | 17.1 | % | 9.8 | % | - | 7.3 | % | ||||||||
| Net (loss) income | $ | 996 | $ | (3,459 | ) | $ | 4,455 | 128.8 | % | $ | 1,045 | $ | (3,894 | ) | $ | 4,939 | 126.8 | % | ||||
| EPS Basic | $ | 0.18 | $ | (0.62 | ) | $ | 0.80 | 129.0 | % | $ | 0.19 | $ | (0.70 | ) | $ | 0.89 | 127.1 | % | ||||
| Adjusted EPS (2) | $ | 0.06 | $ | (0.08 | ) | $ | 0.14 | 175.0 | % | $ | 0.39 | $ | (0.13 | ) | $ | 0.52 | 400.0 | % | ||||
| Adjusted EBITDA (3) | $ | 1,700 | $ | 542 | $ | 1,158 | 213.7 | % | $ | 6,049 | $ | 3,155 | $ | 2,894 | 91.7 | % | ||||||
| Working Capital | $ | 22,664 | $ | 25,300 | $ | (2,636 | ) | -10.4 | % | |||||||||||||
| Shareholders' Equity | $ | 42,214 | $ | 41,381 | $ | 833 | 2.0 | % | ||||||||||||||
| Shareholders' Equity per Share | $ | 7.68 | $ | 7.44 | $ | 0.24 | 3.2 | % |
(1) Earned revenue is a non-IFRS measure and is calculated as sales less costs associated with purchased material and subcontracting. Earned revenue margin is an expression of earned revenue as a percentage of sales. A reconciliation of this non-IFRS measure is included in the MD&A.
(2) Adjusted EPS is a non-IFRS measure and is calculated as basic earnings per share excluding items not considered reflective of ongoing operations. A reconciliation of this non-IFRS measure is included in the MD&A.
(3) Adjusted EBITDA is a non-IFRS measure and is defined as adjusted earnings from operations excluding depreciation and amortization. A reconciliation of this non-IFRS measure is included in the MD&A.
Consolidated sales for the quarter ended July 31, 2025, were $10,781, compared to $9,019 in the same quarter of fiscal 2024, an increase of $1,762 or 19.5%, due to a higher volume of active projects. Year-to-date sales were $42,154, down $2,123 or 4.8% from the prior year, reflecting lower volumes in the first half of the year, weakness in the automotive sector and tariff-related delays in project awards.
Despite the decline in sales, earned revenue for the year improved by $1,876, or 6.2%, reflecting a more favourable project mix, including a greater proportion of sales from non-automotive customers whose programs typically require fewer material purchases and therefore generate higher earned revenue.
Gross margin as a percentage of sales for the quarter increased to 16.5% from 7.4% in the prior year, supported by stronger earned revenue. On a year-to-date basis, gross profit of $7,203 was $2,884 higher, or 66.8% favourable, driven by customer mix, improved execution on fixed-price contracts, and growth in markets with greater pricing resilience. Additionally, fixed labour costs were managed to align with fluctuations in sales levels.
Net income for the quarter ended July 31, 2025, was $996, or $0.18 per share, compared to a net loss of ($3,459), or ($0.62) per share, in the same quarter last year. Quarterly results included a $0.13 per share benefit from the re-recognition of deferred tax assets previously derecognized, compared to a ($0.55) per share charge in the same quarter of 2024. This benefit was partially offset by a ($0.02) per share charge related to the settlement of an outstanding receivable from a Tier 1 customer of the Company’s former Tool and Mould Division, with no comparable item in the prior year and by net foreign exchange gains of $0.01 per share, consistent with 2024. Excluding these non-recurring items, earnings per share for the quarter would have been $0.06, compared to a loss of ($0.08) in the same period last year.
On a year-to-date basis, net income was $1,045, or $0.19 per share, compared to a net loss of ($3,894), or ($0.70) per share, in the prior year. Results included a $0.13 per share benefit from the re-recognition of deferred tax assets compared to a ($0.55) per share charge in the prior year, restructuring costs of ($0.16) per share compared to ($0.03) per share last year, net foreign exchange losses of ($0.12) per share compared to net foreign exchange gains of $0.02 per share in the prior year and a ($0.05) per share charge related to the Tier 1 customer settlement and receivable resolution compared to ($0.01) per share last year. In addition, fiscal 2025 results were impacted by several items not applicable in the prior year, including a ($0.05) per share impairment charge and a $0.05 per share benefit from insurance proceeds. Excluding these non-recurring and non-operational items, earnings per share for the year-to-date period would have been $0.39, compared to ($0.13) in the prior year, an improvement of $0.52 per share year over year.
“Macroeconomic conditions and trade uncertainty created a challenging year, contributing to periods of underutilized capacity,” stated Diane Reko, CEO. “Despite these headwinds, our results improved over the prior year. We are investing in initiatives that strengthen our foundation and shape the future today, while delivering value in partnership with our customers. With disciplined execution and a focus on diversification, we are positioning the Company for sustainable growth and long-term success.”
During the fiscal year ended July 31, 2025 the company purchased and subsequently cancelled 69,300 shares under the normal course issuer bid.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the 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 power generation, automotive, aerospace, rail, mining, offsite construction, infrastructure and capital equipment industries. Reko strives to be a pillar and protector of sustainable North American manufacturing and production. For more information, contact Kim Marks, Chief Financial Officer at (519) 727-3287.
View source version on businesswire.com: https://www.businesswire.com/news/home/20251009463199/en/
Kim Marks
Chief Financial Officer
(519) 727-3287
FAQ**
How does Reko International Group Inc. REKO:CC plan to address the challenges posed by macroeconomic conditions and trade uncertainty that affected their capacity in fiscal 2025?
With a decline in sales but improvements in gross profit, what strategies is Reko International Group Inc. REKO:CC implementing to sustain this momentum in the upcoming fiscal year?
Given the significant increase in adjusted EBITDA for Reko International Group Inc. REKO:CC, what specific initiatives were most influential in achieving this growth during fiscal 2025?
How is Reko International Group Inc. REKO:CC positioning itself to diversify its customer base beyond the automotive sector to mitigate risks related to industry volatility?
**MWN-AI FAQ is based on asking OpenAI questions about Reko International Group Inc. (TSXVC: REKO:CC).
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