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Q4 2008 Inscape Corporation Earnings Conference Call - Final.

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Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Ladies and gentlemen, thank you for standing by. Welcome to the Inscape fourth-quarter and year-end results conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded Friday, June 27, 2008.

I would now like to turn the call over to Peter Brunelle, President and Chief Executive Officer. Please go ahead, sir.

PETER BRUNELLE, PRESIDENT, CEO, INSCAPE CORPORATION: Thank you, operator. Good morning, everyone. I will open our call with some introductory remarks and then turn things over to Kent for a detailed review of our financial results for the quarter and for the fiscal year, following which we will open the call to your questions.

Fiscal 2008 was a good year for us, with continued improvement in sales, margins, and profitability despite the negative impact of foreign currency translation over the course of the fiscal year. Consistent with last year, our improvement has been predicated on the execution of three basic strategies, including research and commercialization of new products, development of a committed dealer channel, and continuous improvement in operations that allows us to better serve customers while improving our overall competitiveness.

Sales for the year increased by 6.3% on a source currency basis. This follows growth in the preceding year of 8.2%, again on a source currency basis.

A constant theme for much of the last four years for Inscape, and in fact for all Canadian manufacturers exporting into the US, has been the appreciation of the Canadian dollar. With our high concentration of US-denominated sales, representing some 86% of total for the year, this is an especially acute issue for us. After adjusting for the negative impact of currency, total sales for the year grew by 2.4%.

While we're pleased with our unit growth increase, we know our biggest challenge lies in further improving our selling capabilities in the coming year, particularly so in the Canadian market, which obviously helps offset the currency issues.

The volume increases over the last two years do, however, provide us with some confidence that our efforts to establish a committed dealer channel and the introduction of new products are gaining traction.

Results from operations, in particular gross margins of 30.3% for the year, reflect the impact of ongoing efforts to improve our material yield and labor utilization. During the fourth quarter, we also initiated automation projects in manufacturing, and we anticipate accelerating the level of these investments during fiscal '09. Ultimately, we believe these investments not only enhance our cost competitiveness, they improve our ability to serve customers with product solutions tailored specifically to their needs and to do so with greater agility.

In terms of profitability, the net result of our improved sales, gross margins, and expense management was a doubling in earnings per share in fourth quarter, up to C$0.10. On a full-year basis, our earnings per share improved...

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