BOCA RATON, Fla., Jan. 14, 2025 (GLOBE NEWSWIRE) -- Q.E.P. CO., INC. (OTCQX: QEPC) (the "Company" or "QEP") today reported its consolidated results of operations for the first nine months and third quarter of fiscal year 2025, which ended on November 30, 2024.
Results of Operations
During the prior fiscal year, QEP completed the sale of its Harris Flooring Group in North America and its businesses in the United Kingdom, Australia and New Zealand in order to streamline operations and concentrate resources on its core product lines in the North American market. These divested operations have been classified as discontinued operations in our financial statements for all periods presented.
QEP reported net sales of $187.1 million for the nine months ended November 30, 2024, a decrease of $2.9 million or 1.5% from the $190.0 million reported in the same period of fiscal 2024. The Company reported net sales of $61.1 million for the quarter ended November 30, 2024, an increase of $1.0 million or 1.6% from the $60.1 million reported in the same period of fiscal 2024. The third quarter of fiscal 2025 increase in net sales was due to the slight increase in consumer spending on home improvement projects as interest rates and inflationary pressures were reduced compared to earlier in the fiscal year.
The Company's gross profit for the first nine months of fiscal 2025 was $66.5 million compared to $61.0 million in the corresponding fiscal 2024 period, an increase of $5.5 million or 9.0%. Gross profit for the third quarter of fiscal 2025 was $21.7 million, representing an increase of $1.7 million or 8.5%, from $20.0 million in the corresponding fiscal 2024 period. The Company's gross margin as a percentage of net sales for the first nine months and third quarter of fiscal 2025 was 35.5% in both periods, which increased from 32.1% and 33.3% in the same periods of the prior fiscal year, respectively. The increase in gross margin as a percentage of net sales was largely due to lower inbound freight costs, improved product sourcing and other cost reduction initiatives.
Leonard Gould, President & Chief Executive Officer, commented on the Company's results, "QEP's third quarter results continue to confirm the successful affirmation of our strategic plan. Our relentless focus on 'Product Innovation' and 'Shipping Complete' proves to be a winning combination. We are just getting started but it is gratifying to see our efforts clearly resonating as our share of the Flooring Professional continues to grow. This could not have been accomplished without the hard work and dedication of many different teams across QEP.
"While much of the world is in flux, QEP continues its focus excited and invigorated with a strong foundation to greet 2025."
Operating expenses for the first nine months and third quarter of fiscal 2025 were $50.0 million and $15.5 million, respectively, or 26.7% and 25.5% of net sales in those periods, compared to $50.5 million and $17.2 million, respectively, or 26.6% and 28.7% of net sales in the comparable fiscal 2024 periods. The reduction in operating expenses was due to the current year impact of cost reduction initiatives associated with the reorganization activities started in the previous fiscal year.
Interest income for the first nine months and third quarter of fiscal 2025 was $0.7 million and $0.2 million, respectively, compared to interest expense of $1.4 million and $0.3 million, respectively, in the comparable fiscal 2024 periods. This change is due to the Company's significant repayment of debt in the latter part of fiscal 2024 and the investment of the Company's cash surplus in fiscal 2025.
The provision for income taxes as a percentage of income before taxes remained unchanged at 28.0% for the first nine months and third quarter for both fiscal 2025 and fiscal 2024.
Net income from continuing operations for the first nine months and third quarter of fiscal 2025 was $12.3 million and $4.6 million, respectively, or $3.74 and $1.40, respectively, per diluted share. For the comparable periods of fiscal 2024, net income from continuing operations was $6.5 million and $1.8 million, respectively, or $1.95 and $0.53, respectively, per diluted share.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations for the first nine months and third quarter of fiscal 2025 was $17.5 million and $6.5 million, respectively, or 9.4% and 10.6% of net sales, respectively. For the comparable periods of fiscal 2024, EBITDA was $11.5 million and $3.1 million, respectively, or 6.1% and 5.2% of net sales, respectively.
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| November 30, 2024 | November 30, 2023 | November 30, 2024 | November 30, 2023 | |||||||||||||
| Net income from continuing operations | $ | 4,606 | $ | 1,758 | $ | 12,341 | $ | 6,532 | ||||||||
| Add: | Interest expense, net | (246 | ) | 309 | (652 | ) | 1,408 | |||||||||
| Provision for income taxes | 1,784 | 683 | 4,787 | 2,540 | ||||||||||||
| Depreciation and amortization | 349 | 347 | 1,035 | 1,052 | ||||||||||||
| EBITDA from continuing operations | $ | 6,493 | $ | 3,097 | $ | 17,511 | $ | 11,532 | ||||||||
Cash provided by operations during the first nine months of fiscal 2025 was $16.1 million as compared to $29.7 million in the first nine months of fiscal 2024, reflecting the reduction in inventory to more normalized levels during the prior year period. In the first nine months of fiscal 2025, cash provided by operations, along with proceeds from the sale of businesses, were used to pay a stockholder dividend, repurchase stock and increase the Company's cash surplus. In the first nine months of fiscal 2024, cash provided by operations was used to reduce borrowings under the Company's lines of credit and increase cash balances.
Working capital as of November 30, 2024 was $64.9 million compared to $60.0 million at the end of fiscal 2024. Aggregate available cash, net of outstanding debt at November 30, 2024 was $34.0 million compared to $21.7 million at the end of fiscal 2024.
The Company welcomes investor inquiries 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.
-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 | For the Nine Months Ended | ||||||||||||
| November 30, | November 30, | November 30, | November 30, | ||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||
| Net sales | $ | 61,061 | $ | 60,092 | $ | 187,145 | $ | 190,057 | |||||
| Cost of goods sold | 39,370 | 40,101 | 120,662 | 129,079 | |||||||||
| Gross profit | 21,691 | 19,991 | 66,483 | 60,978 | |||||||||
| Operating expenses: | |||||||||||||
| Shipping | 6,381 | 6,897 | 20,370 | 21,074 | |||||||||
| General and administrative | 5,788 | 7,481 | 19,024 | 19,856 | |||||||||
| Selling and marketing | 3,349 | 2,906 | 10,533 | 9,887 | |||||||||
| Other income, net | 29 | (43 | ) | 80 | (319 | ) | |||||||
| Total operating expenses | 15,547 | 17,241 | 50,007 | 50,498 | |||||||||
| Operating income | 6,144 | 2,750 | 16,476 | 10,480 | |||||||||
| Interest income (expense), net | 246 | (309 | ) | 652 | (1,408 | ) | |||||||
| Income before provision for income taxes | 6,390 | 2,441 | 17,128 | 9,072 | |||||||||
| Provision for income taxes | 1,784 | 683 | 4,787 | 2,540 | |||||||||
| Net income from continuing operations | 4,606 | 1,758 | 12,341 | 6,532 | |||||||||
| Gain/(Loss) from discontinued operations, net of tax | 50 | (7,620 | ) | 588 | (9,787 | ) | |||||||
| Net income (loss) | $ | 4,656 | $ | (5,862 | ) | $ | 12,929 | $ | (3,255 | ) | |||
| Basic earnings (loss) per share: | |||||||||||||
| From continuing operations | 1.40 | 0.53 | 3.75 | 1.96 | |||||||||
| From discontinued operations | 0.02 | (2.29 | ) | 0.18 | (2.93 | ) | |||||||
| Basic earnings (loss) per share | 1.42 | (1.76 | ) | 3.93 | (0.97 | ) | |||||||
| Diluted earnings (loss) per share: | |||||||||||||
| From continuing operations | 1.40 | 0.53 | 3.74 | 1.95 | |||||||||
| From discontinued operations | 0.02 | (2.28 | ) | 0.18 | (2.92 | ) | |||||||
| Diluted earnings (loss) per share | 1.42 | (1.75 | ) | 3.92 | (0.97 | ) | |||||||
| Weighted average number of common shares outstanding: | |||||||||||||
| Basic | 3,276 | 3,336 | 3,292 | 3,341 | |||||||||
| Diluted | 3,276 | 3,344 | 3,297 | 3,347 | |||||||||
| Q.E.P. CO., INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands, except par values) | |||||||
| November 30, 2024 | February 29, 2024 | ||||||
| (Unaudited) | (Audited) | ||||||
| ASSETS | |||||||
| Cash | $ | 34,102 | $ | 22,369 | |||
| Accounts receivable, less allowance for credit losses of $302 and | |||||||
| $134 at November 30, 2024 and February 29, 2024, respectively | 29,134 | 30,338 | |||||
| Inventories, net | 33,734 | 29,913 | |||||
| Prepaid expenses and other current assets | 2,507 | 7,491 | |||||
| Prepaid income taxes | - | 1,375 | |||||
| Discontinued operations | - | 693 | |||||
| Current assets | 99,477 | 92,179 | |||||
| Property and equipment, net | 12,252 | 9,894 | |||||
| Right of use operating lease assets | 18,115 | 19,852 | |||||
| Deferred income taxes, net | 2,548 | 2,548 | |||||
| Intangibles, net | 3 | 99 | |||||
| Other assets | 552 | 1,276 | |||||
| Total assets | $ | 132,947 | $ | 125,848 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Trade accounts payable | $ | 13,046 | $ | 14,438 | |||
| Accrued liabilities | 17,721 | 13,352 | |||||
| Current operating lease liabilities | 3,252 | 3,210 | |||||
| Income taxes payable | 501 | - | |||||
| Lines of credit | 63 | 601 | |||||
| Current maturities of debt | 9 | 74 | |||||
| Discontinued operations | - | 479 | |||||
| Current liabilities | 34,592 | 32,154 | |||||
| Long term debt | 12 | - | |||||
| Non-current operating lease liabilities | 17,746 | 19,855 | |||||
| Other long term liabilities | 506 | 1,209 | |||||
| Total liabilities | 52,856 | 53,218 | |||||
| Preferred stock, 2,500 shares authorized, $1.00 par value; 0 shares | |||||||
| issued and outstanding at November 30, 2024 and February 29, 2024, | - | - | |||||
| respectively | |||||||
| Common stock, 20,000 shares authorized, $.001 par value; | |||||||
| 4,005 shares issued: 3,265 and 3,286 shares outstanding at | |||||||
| November 30, 2024 and February 29, 2024, respectively | 4 | 4 | |||||
| Additional paid-in capital | 10,361 | 11,901 | |||||
| Retained earnings | 82,871 | 73,211 | |||||
| Treasury stock, 740 and 719 shares held at cost at November 30, 2024 | |||||||
| and February 29, 2024, respectively | (10,008 | ) | (9,517 | ) | |||
| Accumulated other comprehensive income | (3,137 | ) | (2,969 | ) | |||
| Shareholders' equity | 80,091 | 72,630 | |||||
| Total liabilities and shareholders' equity | $ | 132,947 | $ | 125,848 | |||
| Q.E.P. CO., INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| For the Nine Months Ended | |||||||
| November 30, 2024 | November 30, 2023 | ||||||
| Operating activities: | |||||||
| Net income (loss) | $ | 12,929 | $ | (3,255 | ) | ||
| Adjustments to reconcile net income to net cash | |||||||
| provided by (used in) operating activities: | |||||||
| Depreciation and amortization | 1,035 | 2,261 | |||||
| (Gain)/Loss on disposal of businesses | (547 | ) | 5,863 | ||||
| (Gain)/Loss on sale of property | (1 | ) | 41 | ||||
| Gain from insurance recoveries | - | (134 | ) | ||||
| Proceeds from settlement of insurance claims | - | 537 | |||||
| Impairment of long-lived asset | 201 | ||||||
| Other non-cash adjustments | 174 | 265 | |||||
| Changes in assets and liabilities: | |||||||
| Accounts receivable | 997 | 7,795 | |||||
| Inventories | (3,953 | ) | 20,442 | ||||
| Prepaid expenses and other assets | 2,667 | 3,167 | |||||
| Trade accounts payable and accrued liabilities | 2,582 | (7,287 | ) | ||||
| Net cash provided by operating activities | 16,084 | 29,695 | |||||
| Investing activities: | |||||||
| Capital expenditures | (3,380 | ) | (2,602 | ) | |||
| Proceeds from sale of businesses | 4,890 | 22,560 | |||||
| Proceeds from sale of property | 1 | 81 | |||||
| Proceeds from settlement of insurance claims | - | 285 | |||||
| Net cash provided by investing activities | 1,511 | 20,324 | |||||
| Financing activities: | |||||||
| Net repayments under lines of credit | (531 | ) | (22,800 | ) | |||
| Net repayments of term loan facilities | - | (7,249 | ) | ||||
| Repurchase of equity-based awards | (1,540 | ) | - | ||||
| Purchase of treasury stock | (433 | ) | (198 | ) | |||
| Principal payments on finance leases | (80 | ) | (82 | ) | |||
| Dividends paid | (3,269 | ) | - | ||||
| Net cash used in financing activities | (5,853 | ) | (30,329 | ) | |||
| Effect of exchange rate changes on cash | (9 | ) | 660 | ||||
| Net increase in cash | 11,733 | 20,350 | |||||
| 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 | $ | 34,102 | $ | 25,346 | |||
| Q.E.P. CO., INC. AND SUBSIDIARIES | |||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY | |||||||||||||||||||||||||||||
| (In thousands, except shares data) | |||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||
| The following table shows the changes in the shareholder's equity for the nine months ended November 30, 2024 and 2023. | |||||||||||||||||||||||||||||
| 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 loss | (3,255 | ) | (3,255 | ) | |||||||||||||||||||||||||
| Realized currency translation adjustments | 719 | 719 | |||||||||||||||||||||||||||
| Unrealized currency translation adjustments | 162 | 162 | |||||||||||||||||||||||||||
| Purchase of treasury stock | (107 | ) | (107 | ) | |||||||||||||||||||||||||
| Stock-based compensation expense | 186 | 186 | |||||||||||||||||||||||||||
| Balance at November 30, 2023 | - | $ | - | 4,005,370 | - | $ | 4 | $ | 11,635 | $ | 77,950 | $ | (9,517 | ) | $ | (4,527 | ) | $ | 75,545 | ||||||||||
| 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 income | 12,929 | 12,929 | |||||||||||||||||||||||||||
| Unrealized currency translation adjustments | (168 | ) | (168 | ) | |||||||||||||||||||||||||
| Repurchase of equity-based awards | (1,540 | ) | (1,540 | ) | |||||||||||||||||||||||||
| Purchase of treasury stock | (491 | ) | (491 | ) | |||||||||||||||||||||||||
| Dividends paid | (3,269 | ) | (3,269 | ) | |||||||||||||||||||||||||
| Balance at November 30, 2024 | - | $ | - | 4,005,370 | $ | 4 | $ | 10,361 | $ | 82,871 | $ | (10,008 | ) | $ | (3,137 | ) | $ | 80,091 | |||||||||||
CONTACT:
Q.E.P. Co., Inc.
Enos Brown
Executive Vice President and
Chief Financial Officer
561-994-5550
