Q.E.P. Co., Inc. Reports Fiscal 2025 First Quarter Financial Results
Q.E.P. Co., Inc. (OTCQX: QEPC) reported its fiscal 2025 first quarter results, ending May 31, 2024. Despite a 3.7% decrease in net sales to $63.5 million, the company's adjusted net income more than doubled to $3.9 million or $1.17 per diluted share. Gross profit increased by 12.2% to $22.5 million, with gross margin improving to 35.4%. EBITDA from continuing operations rose to $5.6 million or 8.8% of net sales.
The company's financial position strengthened, with cash provided by operating activities at $6.1 million and aggregate available cash, net of outstanding debt, increasing to $30.1 million. QEP continues to focus on its core North American market following strategic divestments in the prior fiscal year.
- Adjusted net income more than doubled to $3.9 million or $1.17 per diluted share
- Gross profit increased by 12.2% to $22.5 million
- Gross margin improved from 30.4% to 35.4%
- EBITDA from continuing operations rose to $5.6 million or 8.8% of net sales
- Aggregate available cash, net of outstanding debt, increased to $30.1 million
- Net sales decreased by 3.7% to $63.5 million
- Operating expenses increased to 27.2% of net sales from 25.6% in the previous year
- Continued softening of consumer demand across multiple product categories and sales channels
Quarterly Adjusted Net Income More than Doubles to
BOCA RATON, Fla., July 15, 2024 (GLOBE NEWSWIRE) -- Q.E.P. CO., INC. (OTCQX: QEPC) (the “Company” or “QEP”) today reported its consolidated results of operations for the first quarter of fiscal year 2025, which ended on May 31, 2024.
During the prior fiscal year, QEP completed several strategic divestments to streamline operations and concentrate resources on its core product lines in the North American market. These divestments included the sale of the Company’s Harris Flooring Group in North America and the Company’s businesses in the United Kingdom, Australia and New Zealand. These divested operations have been classified as discontinued operations in our financial statements for all periods presented.
QEP reported net sales of
The Company’s gross profit for the first quarter of fiscal 2025 increased
Leonard Gould, President & Chief Executive Officer, commented on the Company’s results, “I am grateful for the support of the QEP Team as we continue our transformation. These positive results allow us to reinvest in resources to provide the ultimate service to our customers and critically to move forward with the numerous innovations in our product pipeline.”
Operating expenses were
Interest income was
The provision for income taxes as a percentage of income before taxes was
Net income for the first quarter of fiscal 2025 was
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations for the first quarter of fiscal 2025 was
| For the Three Months Ended | |||||||||
| May 31, 2024 | May 31, 2023 | ||||||||
| Net income from continuing operations | $ | 3,903 | $ | 1,820 | |||||
| Add: | Interest (income) expense, net | (183 | ) | 603 | |||||
| Provision for income taxes | 1,508 | 709 | |||||||
| Depreciation and amortization | 338 | 356 | |||||||
| EBITDA, as adjusted | $ | 5,566 | $ | 3,488 | |||||
Cash provided by operating activities during first quarter of fiscal 2025 was
Working capital as of May 31, 2024 was
The Company will not be hosting a conference call to discuss these results and welcomes inquiries from investors via email at ir@qep.com.
About QEP
Founded in 1979, Q.E.P. Co., Inc. is a leading designer, manufacturer and distributor of a broad range of best-in-class flooring installation solutions for commercial and home improvement projects. QEP offers a comprehensive line of specialty installation tools, adhesives, and underlayment. QEP sells its products throughout the world to home improvement retail centers, and professional specialty distribution outlets, under brand names including QEP®, LASH®, ROBERTS®, Capitol®, Premix-Marbletite® (PMM), Brutus®, Homelux®, PRCI®, and Tomecanic®.
QEP is headquartered in Boca Raton, Florida with other facilities in the United States, Canada, Europe and Asia. Please visit our website at www.qepcorporate.com.
Forward-Looking Statements
All statements contained in this press release, other than statements of historical facts, may constitute forward-looking statements within the meaning of the federal securities laws. These statements can be identified by words such as "expects," "plans," "projects," "will," "may," "anticipates," "believes," "should," "intends," "estimates," and other words of similar meaning. These forward-looking statements include, but are not limited to, statements regarding implementation of the Company’s strategies and increasing profitability and stockholder value. Any forward-looking statements contained herein are based on current expectations and beliefs, and are subject to a number of risks and uncertainties, including those listed in the Company’s annual report, as such risk factors may be amended, supplemented or superseded from time to time by other reports and disclosures made by the Company. Forward-looking statements may also be adversely affected by general market factors, competitive product development, product availability, federal and state regulations and legislation, manufacturing issues that may arise, patent positions and litigation, scarcity and rising cost for raw materials, shifts in global sourcing patterns, and general inflationary pressures, economic conditions, sales growth, price increases, maintaining and improving profitability, product development and marketing, operating expenses, cost savings, the successful completion of acquisitions and dispositions, acquisition integration, operational synergy realization, global sourcing, political uncertainty, cash flow, debt and currency exchange rates, among other factors. The forward-looking statements contained in this press release speak only as of the date the statements were made, and the Company does not undertake any obligation to update forward-looking statements, except as required by law.
CONTACT:
Q.E.P. Co., Inc.
Enos Brown
Executive Vice President and
Chief Financial Officer
561-994-5550
-Financial Information Follows-
| Q.E.P. CO., INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (In thousands except per share data) | ||||||||
| (Unaudited) | ||||||||
| For the Three Months Ended | ||||||||
| May 31, | May 31, | |||||||
| 2024 | 2023 | |||||||
| Net sales | $ | 63,524 | $ | 65,978 | ||||
| Cost of goods sold | 41,021 | 45,928 | ||||||
| Gross profit | 22,503 | 20,050 | ||||||
| Operating expenses: | ||||||||
| Shipping | 7,081 | 7,010 | ||||||
| General and administrative | 6,284 | 6,126 | ||||||
| Selling and marketing | 3,905 | 3,871 | ||||||
| Other income, net | 5 | (89 | ) | |||||
| Total operating expenses | 17,275 | 16,918 | ||||||
| Operating income | 5,228 | 3,132 | ||||||
| Interest income (expense), net | 183 | (603 | ) | |||||
| Income before provision for income taxes | 5,411 | 2,529 | ||||||
| Provision for income taxes | 1,508 | 709 | ||||||
| Net income from continuing operations operations | 3,903 | 1,820 | ||||||
| Gain/(Loss) from discontinued operations, net of tax | 565 | (895 | ) | |||||
| Net income | $ | 4,468 | $ | 925 | ||||
| Basic earnings (loss) per share: | ||||||||
| From continuing operations | 1.17 | 0.55 | ||||||
| From discontinued operations | 0.17 | (0.27 | ) | |||||
| Basic earnings per share | 1.34 | 0.28 | ||||||
| Diluted earnings (loss) per share: | ||||||||
| From continuing operations | 1.17 | 0.55 | ||||||
| From discontinued operations | 0.17 | (0.27 | ) | |||||
| Diluted earnings per share | 1.34 | 0.28 | ||||||
| Weighted average number of common | ||||||||
| shares outstanding: | ||||||||
| Basic | 3,323 | 3,343 | ||||||
| Diluted | 3,334 | 3,350 | ||||||
| Q.E.P. CO., INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (In thousands, except par values) | ||||||||
| May 31, 2024 | February 29, 2024 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Cash | $ | 30,408 | $ | 22,369 | ||||
| Accounts receivable, less allowance for credit losses of | ||||||||
| 27,880 | 30,338 | |||||||
| Inventories, net | 29,406 | 29,913 | ||||||
| Prepaid expenses and other current assets | 2,927 | 7,491 | ||||||
| Prepaid income taxes | - | 1,375 | ||||||
| Discontinued operations | 708 | 693 | ||||||
| Current assets | 91,329 | 92,179 | ||||||
| Property and equipment, net | 10,248 | 9,894 | ||||||
| Right of use operating lease assets | 19,432 | 19,852 | ||||||
| Deferred income taxes, net | 2,548 | 2,548 | ||||||
| Intangibles, net | 94 | 99 | ||||||
| Other assets | 1,097 | 1,276 | ||||||
| Total assets | $ | 124,748 | $ | 125,848 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Trade accounts payable | $ | 11,553 | $ | 14,438 | ||||
| Accrued liabilities | 13,787 | 13,352 | ||||||
| Current operating lease liabilities | 3,296 | 3,210 | ||||||
| Income taxes payable | 109 | - | ||||||
| Lines of credit | 204 | 601 | ||||||
| Current maturities of debt | 57 | 74 | ||||||
| Discontinued operations | - | 479 | ||||||
| Current liabilities | 29,006 | 32,154 | ||||||
| Long term debt | 17 | - | ||||||
| Non-current operating lease liabilities | 19,213 | 19,855 | ||||||
| Other long term liabilities | 975 | 1,209 | ||||||
| Total liabilities | 49,211 | 53,218 | ||||||
| Preferred stock, 2,500 shares authorized, | ||||||||
| issued and outstanding at May 31, 2024 and February 29, 2024, | - | - | ||||||
| respectively | ||||||||
| Common stock, 20,000 shares authorized, $.001 par value; | ||||||||
| 4,005 shares issued: 3,269 and 3,286 shares outstanding at | ||||||||
| May 31, 2024 and February 29, 2024, respectively | 4 | 4 | ||||||
| Additional paid-in capital | 10,722 | 11,901 | ||||||
| Retained earnings | 77,679 | 73,211 | ||||||
| Treasury stock, 736 and 719 shares held at cost at May 31, 2024 | ||||||||
| and February 29, 2024, respectively | (9,894 | ) | (9,517 | ) | ||||
| Accumulated other comprehensive income | (2,974 | ) | (2,969 | ) | ||||
| Shareholders' equity | 75,537 | 72,630 | ||||||
| Total liabilities and shareholders' equity | $ | 124,748 | $ | 125,848 | ||||
| Q.E.P. CO., INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| For the Three Months Ended | ||||||||
| May 31, 2024 | May 31, 2023 | |||||||
| Operating activities: | ||||||||
| Net income | $ | 4,468 | $ | 925 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 338 | 858 | ||||||
| Gain on disposal of businesses | (516 | ) | - | |||||
| Gain on sale of property | (1 | ) | (4 | ) | ||||
| Gain from insurance recoveries | - | (390 | ) | |||||
| Proceeds from settlement of insurance claims | - | 529 | ||||||
| Other non-cash adjustments | 44 | 171 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable | 2,529 | (744 | ) | |||||
| Inventories | 491 | 11,768 | ||||||
| Prepaid expenses and other assets | 833 | (820 | ) | |||||
| Trade accounts payable and accrued liabilities | (2,135 | ) | 791 | |||||
| Net cash provided by operating activities | 6,051 | 13,084 | ||||||
| Investing activities: | ||||||||
| Capital expenditures | (679 | ) | (362 | ) | ||||
| Proceeds from sale of businesses | 4,292 | - | ||||||
| Proceeds from sale of property | 1 | 30 | ||||||
| Proceeds from settlement of insurance claims | - | 568 | ||||||
| Net cash provided by investing activities | 3,614 | 236 | ||||||
| Financing activities: | ||||||||
| Net repayments under lines of credit | (394 | ) | (8,010 | ) | ||||
| Net repayments of term loan facilities | - | (202 | ) | |||||
| Repurchase of restricted stock awards | (1,183 | ) | - | |||||
| Purchase of treasury stock | (30 | ) | (30 | ) | ||||
| Principal payments on finance leases | (28 | ) | (29 | ) | ||||
| Net cash used in financing activities | (1,635 | ) | (8,271 | ) | ||||
| Effect of exchange rate changes on cash | 9 | (8 | ) | |||||
| Net increase in cash | 8,039 | 5,041 | ||||||
| Cash at beginning of period | 22,369 | 3,060 | ||||||
| Cash at beginning of the period from discontinued operations | - | 1,936 | ||||||
| Cash at end of period | $ | 30,408 | $ | 10,037 | ||||
| Q.E.P. CO., INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||||||
| (In thousands, except shares data) | |||||||||||||||||||||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||||
| Other | Total | ||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Retained | Treasury | Comprehensive | Shareholders' | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Stock | Income | Equity | |||||||||||||||||||||||||
| Balance at February 28, 2023 | - | $ | - | 4,005,370 | $ | 4 | $ | 11,449 | $ | 81,205 | $ | (9,410 | ) | $ | (5,408 | ) | $ | 77,840 | |||||||||||||||
| Net lncome | 925 | 925 | |||||||||||||||||||||||||||||||
| Unrealized currency translation adjustments | 43 | 43 | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | 186 | 186 | |||||||||||||||||||||||||||||||
| Balance at May 31, 2023 | - | $ | - | 4,005,370 | $ | 4 | $ | 11,635 | $ | 82,130 | $ | (9,410 | ) | $ | (5,365 | ) | $ | 78,994 | |||||||||||||||
| Accumulated | |||||||||||||||||||||||||||||||||
| Other | Total | ||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Retained | Treasury | Comprehensive | Shareholders' | |||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Stock | Income | Equity | |||||||||||||||||||||||||
| Balance at February 29, 2024 | - | $ | - | 4,005,370 | $ | 4 | $ | 11,901 | $ | 73,211 | $ | (9,517 | ) | $ | (2,969 | ) | $ | 72,630 | |||||||||||||||
| Net lncome | 4,468 | 4,468 | |||||||||||||||||||||||||||||||
| Unrealized currency translation adjustments | (1 | ) | (1 | ) | |||||||||||||||||||||||||||||
| Purchase of treasury stock | (377 | ) | (377 | ) | |||||||||||||||||||||||||||||
| Repurchase of restricted stock awards | (1,183 | ) | (1,183 | ) | |||||||||||||||||||||||||||||
| Balance at May 31, 2024 | - | $ | - | 4,005,370 | $ | 4 | $ | 10,718 | $ | 77,679 | $ | (9,894 | ) | $ | (2,970 | ) | $ | 75,537 | |||||||||||||||
FAQ
What was QEPC's adjusted net income for Q1 fiscal 2025?
How did QEPC's net sales perform in Q1 fiscal 2025?
What was QEPC's gross margin percentage for Q1 fiscal 2025?
How much cash did QEPC generate from operating activities in Q1 fiscal 2025?
