Record Six Month Sales – $121.2 MillionQuarterly Sales – $60.6 Million
Six Month Net Income – $3.9 Million Quarterly Net Income – $2.0 Million
BOCA RATON, Fla., Sept. 16, 2010 (GLOBE NEWSWIRE) -- Q.E.P. Co., Inc. (Pink Sheets:QEPC) (the "Company") today announced its financial results for the first six months and second quarter of its fiscal year ending on February 28, 2011.
The Company reported record net sales of $121.2 million for the six months ended August 31, 2010, an increase of $19.4 million from the $101.8 million reported in the same period of fiscal 2010. As a percentage of net sales, gross profit was 29.9% in the first six months of fiscal 2011 compared to 31.0% in the first six months of fiscal 2010.
Net sales for the second quarter of fiscal 2011 matched this fiscal year's first quarter of $60.6 million with a current quarter gross profit margin of 29.5% compared to net sales of $51.2 million and a gross profit margin of 31.4% for the second quarter of fiscal 2010.
Lewis Gould, Chairman of the Company's Board of Directors, commented: "While the Company continues to enjoy the benefit of having integrated our acquired Harris®Wood operations, we are renewing our focus on opportunities to expand our product lines and market share and on responding to the continuing and, at times, volatile economic uncertainties present in the markets we serve worldwide. In that regard, we are actively seeking synergistic acquisitions that are complementary to our existing businesses."
The increase in net sales for both the six months ended August 31, 2010 and for the quarter then ended principally reflects the expansion of the Company's operations to include a comprehensive line of hardwood flooring through its February 2010 acquisition of its Harris®Wood operations. While the majority of the increase in net sales was the result of the Harris®Wood business, the increase in net sales also reflects modest year over year growth in net sales of the Company's other operations as well as the net impact of changes in foreign currency exchange rates compared to the U.S. Dollar.
As a result of the substantial increase in net sales, gross profit for the six months ended August 31, 2010 and the second quarter of fiscal 2011 was $36.2 million and $17.8 million, respectively, up from $31.6 million and $16.1 million, respectively, in fiscal 2010. The reduction in margin for both the current fiscal year's six month and the quarterly operations reflects the lower average margins inherent in our Harris®Wood operations.
Operating expenses for the first six months and second quarter of fiscal 2011 were $29.4 million and $14.4 million, respectively, or 24.3% and 23.8% of net sales in those periods, compared to $24.2 million and $12.6 million, respectively, or 23.7% and 24.6% of net sales in the comparable fiscal 2010 periods. The increase in operating expenses is the result of the addition of the Harris®Wood operations and, consistent with the Company's growth strategy, other increases in personnel costs. Operating expenses also included a net increase in costs associated with changes in foreign currencies compared to the U.S. dollar.
Operating income for the first six months and second quarter of fiscal 2011 was $6.8 million and $3.4 million, respectively, as compared to the prior year amounts of $7.4 million and $3.5 million, respectively. During the 2011 fiscal year increased operating costs offset the accretive benefit of our acquired Harris®Wood operations.
Net income for the first six months and second quarter of fiscal 2011 was $3.9 million and $2.0 million, respectively, or $1.15 and $0.58 per diluted share. For the comparable periods of fiscal 2010, net income was $4.3 million and $2.1 million, respectively, or $1.23 and $0.59 per diluted share.
Cash provided by operations during the first six months of fiscal 2011 was $3.8 million and was used to fund capital expenditures principally related to expanding the Company's manufacturing capabilities, a reduction in aggregate debt and the purchase of treasury stock. By comparison, cash provided by operations during the first six months of fiscal 2010 was $6.9 million, substantially all of which was used to reduce debt. Working capital at the end of the Company's fiscal year 2011 second quarter was $19.9 million compared to $19.7 million at the Company's fiscal 2010 year-end.
If you would be interested in participating in a conference call to discuss this press release and to answer questions concerning the current year's results, please contact Ms. Paula Siegel at 561-994-5550 to indicate your interest. If more than fifteen investors indicate an interest, the Company will schedule a call for later this month and notify investors by issuing a press release and through a posting on its website at in the Investor Relations section. Alternatively, the Company encourages investors who have questions concerning its results to contact the Company's Chief Financial Officer.
Q.E.P. Co., Inc., founded in 1979, is a leading worldwide manufacturer, marketer and distributor of a comprehensive line of hardwood flooring, flooring installation tools, adhesives and flooring related products targeted for the professional installer as well as the do-it-yourselfer. Under brand names including QEP®, ROBERTS®, Capitol®, Harris®Wood, Vitrex®, PRCI®, BRUTUS® and Elastiment®, the Company markets over 3,000 flooring and flooring related products. In addition to a complete hardwood flooring line, Q.E.P. products are used primarily for surface preparation and installation of wood, laminate, ceramic tile, carpet and vinyl flooring. The Company sells its products to home improvement retail centers and specialty distribution outlets in 50 states and throughout the world.
This press release contains forward-looking statements, including statements regarding worldwide economic conditions, the successful completion of acquisitions and benefits derived from such acquisitions, new product development and the potential growth of products, business opportunities, growth of distribution channels, ability to gain market share, company performance, expense management conditions and capital availability that involve risks and uncertainties. These statements are not guarantees of future performance and actual results could differ materially from our current expectations.
CONTACT: Q.E.P. Co., Inc. Richard A. Brooke, Senior Vice President and Chief Financial Officer 561-994-5550