Record Quarterly Sales – $67.8 Million
Record Quarterly Net Income – $4.1 Million
BOCA RATON, Fla., June 21, 2011 (GLOBE NEWSWIRE) -- Q.E.P. CO., INC. (Pink Sheets:QEPC) (the "Company") today announced its financial results for the first quarter of its fiscal year ending on February 29, 2012.
The Company reported net sales of $67.8 million for the three months ended May 31, 2011, an increase of $7.2 million from the $60.6 million reported in the comparable period of the prior fiscal year. As a percentage of net sales, gross profit increased to 32.7% for the first quarter of fiscal 2012 as compared to 30.3% for the first quarter of fiscal 2011.
Mr. Lewis Gould, Chairman of the Company's Board of Directors, commented: "We are exceptionally pleased with the Company's continued growth, especially the growth in our domestic Harris Wood manufacturing operations and in our overseas operations. The company is seeking to expand its presence in flooring-related markets while continuing to improve on the performance of our other businesses. Our President, Leonard Gould, is overseeing several new initiatives, including the implementation of an advanced distribution system and a cost control strategy to continue our progress." Mr. Gould added, "Our recent acquisition of Porta-Nails in combination with these operating initiatives reflects our strategy in the current stressful economic environment that includes the constant pressure of commodity cost increases."
The increase in net sales principally reflects the growth of the Company's Harris Wood and international operations driven by both an expansion of sales to existing customers and an expansion of the Company's customer base and product lines. Additionally, the Company's international operations benefited from the effects of the strengthening of local currencies against the U.S. dollar during the first quarter of fiscal 2012 as compared to the first quarter of fiscal 2011. Net sales for the first quarter of fiscal 2012 also include the benefit of a $0.6 million decrease in certain accumulated sales allowances.
The Company's gross margin was 32.7% for the first quarter of fiscal 2012 as compared to 30.3% for the first quarter of the prior fiscal year and 30.9% for the Company's 2011 fiscal year. The improvement in margin reflects an improved product mix, increased production volumes in the Company's manufacturing operations and the improved purchasing power of our international operations associated with the strengthening of local currencies against the US dollar. These margin improvements were partially offset by cost increases during the first quarter of fiscal 2012 principally associated with changes in commodity prices. As a result of both the increase in net sales and the improvement in gross margins, gross profit for the first quarter of fiscal 2012 was $22.2 million, up $3.9 million or 20.9% from $18.3 million in the first quarter of fiscal 2011.
Operating expenses for first quarter of fiscal 2012 were $15.5 million, slightly higher than the prior year first quarter of $15.0 million. Operating expenses as a percentage of net sales decreased to 22.9% for the first quarter of fiscal 2012 as compared to 24.8% for the same quarter of fiscal 2011. By comparison, operating expenses for the Company's 2011 fiscal year were 24.5% of net sales.
Net income for the first quarter of fiscal 2012 was $4.1 million ($1.22 per diluted share) as compared to $1.9 million ($0.56 per diluted share) for the first quarter of fiscal 2011.
Cash provided by operations during the first quarter of fiscal 2012 was $3.6 million as compared to cash used in operations of $0.2 million during the first quarter of fiscal 2011, principally reflecting improved operating results in fiscal 2012 and reduced inventory levels that offset the traditional growth in accounts receivable during the first quarter of the Company's fiscal year. Cash from operations was used primarily to reduce aggregate borrowings by $1.7 million, to purchase the business of Porta-Nails Inc. and additional treasury shares, and for investments in new systems. Working capital at the end of the Company's fiscal 2012 first quarter was $29.9 million, an increase from $27.6 million at the end of the 2011 fiscal year. Aggregate debt at the end of the Company's fiscal 2012 first quarter was reduced to $20.0 million or 50.0% of equity from $21.7 million or 61.5% of equity at the end of the 2011 fiscal year.
Q.E.P. Co., Inc., founded in 1979, is a leading worldwide manufacturer, marketer and distributor of a comprehensive line of flooring installation tools, hardwood flooring, flooring adhesives and flooring related products targeted for the professional installer as well as the do-it-yourselfer. Under brand names that include QEP®, Harris®Wood, ROBERTS®, Capitol®, 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 that are subject to risks and uncertainties including current and potential future growth, Company performance, expense control, raw materials costs, new products and customers, potential growth and integration associated with acquisitions, global economic conditions, and currency fluctuations. These statements are not guarantees of future performance and actual results could differ materially from our current expectations.
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CONTACT: Q.E.P. Co., Inc. Richard A. Brooke Senior Vice President and Chief Financial Officer 561-994-5550