Q.E.P. Co., Inc. Reports Fiscal 2021 Six Month and Second Quarter Financial Results

BOCA RATON, Fla., Sept. 29, 2020 (GLOBE NEWSWIRE) — Q.E.P. CO., INC. (OTC: QEPC.PK) (the “Company” or “QEP”) today reported its consolidated results of operations for the first six months and second quarter of its fiscal year ending February 28, 2021.
QEP reported net sales of $189.1 million for the six months ended August 31, 2020, a decrease of $13.3 million or 6.6% from the $202.4 million reported in the same period of fiscal 2020. The Company reported net sales of $103.1 million for the quarter ended August 31, 2020, an increase of $3.3 million or 3.3% from the $99.8 million reported in the same period of fiscal 2020. The fiscal 2021 six month decline in sales compared to the prior year reflects the adverse impact of the worldwide economic downturn caused by the COVID-19 pandemic during the first quarter of the current year.Lewis Gould, Chairman & CEO, commented on the Company’s results, “I am pleased with the Company’s return to sales growth during the current quarter, which partially offset the sales decline in the previous quarter that was the results of Stay in Place Orders that were enacted in all of our sales territories. The sales increase during the quarter was driven by retail channels in North America, despite COVID-19 related challenges in the dealer and distributor channels, and growth in the Company’s overseas operations. During the quarter, the Company continued to implement and maintain aggressive cost reduction measures, which included reductions in personnel, overhead and general expenses. Additionally, the Company continued to access government subsidy and support programs that were available to our non-US based operations. Collectively, these actions resulted in the Company’s increased profitability during the quarter and for the first six months of the year.”       Mr. Gould concluded, “The Company is diligently monitoring and adjusting its response to the challenges presented during these unparalleled times. We are committed to the well-being and success of our associates, customers, suppliers, shareholders and the broader communities in which we operate. We believe the Company is emerging from the current crisis better positioned for sustainable long-term profitability and shareholder value.”The Company’s gross profit for the first six months of fiscal 2021 was $53.1 million compared to $53.0 million in the corresponding fiscal 2020 period. Gross profit for the second quarter of fiscal 2021 was $29.4 million, representing an increase of $3.2 million or 12.3%, from $26.2 million in the fiscal 2020 period. The Company’s gross margin as a percentage of net sales for the first six months and second quarter of fiscal year 2021 was 28.1% and 28.5%, respectively, which increased from 26.2% in each of the prior fiscal year periods, respectively. The gross margin as a percentage of net sales improvement is due to favorable changes in product mix and timely actions taken by the Company to reduce manufacturing overhead during the second quarter and first half of fiscal 2021.Operating expenses for the first six months and second quarter of fiscal 2021 were $47.5 million and $25.2 million, respectively, or 25.1% and 24.4% of net sales in those periods, compared to $58.6 million and $28.2 million, respectively, or 29.0% and 28.3% of net sales in the comparable fiscal 2020 periods. The reduction in operating expenses is due to year-over-year synergies realized through the integration and rationalization of fiscal 2019 acquisitions, lower personnel costs through reduction-in-force and employee furlough activities during the COVID-19 economic downturn, lower marketing and travel expenses, along with government subsidies received for maintaining employment levels at the Company’s international operations.The lower interest expense during the first six months and second quarter of fiscal 2021 compared to the same periods in the prior fiscal year was principally due to a reduction in borrowings under the Company’s credit facilities during the current period.The provision for income taxes as a percentage of incomes before taxes was 28.0% for the first six months and second quarter of fiscal 2021 compared to a benefit for income taxes as a percentage of the loss before taxes of 28.0% for the related fiscal 2020 periods.Net income for the first six months and second quarter of fiscal 2021 was $3.4 million and $2.7 million, respectively, or $1.08 and $0.87, respectively, per diluted share. For the comparable periods of fiscal 2020, net loss was $3.3 million and $1.9 million, respectively, or $1.03 and $0.62, respectively, per diluted share.Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) as adjusted for non-operating income for the first six months and second quarter of fiscal 2021 was $7.8 million and $5.3 million, respectively as compared to a loss of $3.2 million and $0.8 million for the first six months and second quarter of fiscal 2020, respectively.Cash provided by operations during the first six months of fiscal 2021 was $20.8 million as compared to $4.7 million in the first six months of fiscal 2020, reflecting an increase in operating income and a reduction in net investments in working capital. During the first six months of fiscal 2020, the Company sold a certain non-core product line and recorded a gain on the sale of $2.4 million before income taxes, which was recorded in non-operating income.   In the first six months of fiscal 2021, cash from operations was used primarily to pay down $17.1 million of debt. In the prior fiscal year period, cash provided by operations and proceeds from the sale of a non-core product line was used to pay down debt.  Working capital at the end of the Company’s second quarter of fiscal 2021 was $35.5 million compared to $29.1 million at the end of fiscal 2020.   Aggregate debt, net of available cash balances at the end of the second quarter of fiscal 2021 was $26.6 million or 39.8% of equity, a decrease of $19.8 million compared to $46.4 million or 73.9% of equity at the end of fiscal 2020.On June 29, 2020, the Company’s Canadian operating subsidiary, Roberts Company Canada Limited, was granted an Order by the Ontario Superior Court of Justice (Commercial List) to commence a restructuring proceeding under the Companies’ Creditor Arrangement Act (CCAA). This filing was initiated to allow the subsidiary to be able to continue operating while it efficiently restructures its business. The subsidiary expects to complete its reorganization and emerge from the CCAA protection before the end of the calendar year. The Company is not a party to this proceeding.Conference Call InformationThe Company will be hosting the following conference call to discuss its second quarter financial results and answer questions.About QEP
Founded in 1979, Q.E.P. Co., Inc. is a leading global provider of high quality, innovative and value-driven flooring and flooring installation solutions. QEP manufactures, markets and sells a comprehensive line of flooring installation tools, adhesives, and underlayment for both consumers as well as professional installers. Under the Harris Flooring Group ™, QEP manufactures and offers a complete line of hardwood, luxury vinyl, and modular carpet tile. QEP sells its products throughout the world to home improvement retail centers, professional specialty distribution outlets, and flooring dealers under brand names including QEP®, LASH®, Roberts®, Harris Flooring Group™, Capitol®, Harris®Wood, Kraus®, Naturally Aged Flooring™, Vitrex®, Homelux®, Brutus®, PRCI®, Plasplugs®, Tomecanic®, Premix-Marbletite® (PMM), Apple Creek® and Elastiment®.QEP is headquartered in Boca Raton, Florida with offices in Canada, Europe, Asia, Australia and New Zealand. Please visit our website at www.qepcorporate.com.Forward-Looking StatementsThis press release contains forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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. Any forward-looking statements contained herein are based on current expectations and beliefs, and are subject to a number of risks and uncertainties. These forward-looking statements include, but are not limited to, statements regarding economic conditions, sales growth, price increases, profit improvements, product development and marketing, operating expenses, cost savings, acquisition integration, operational synergy realization, cash flow, debt and currency exchange rates. Forward-looking statements may also be adversely affected by general market factors, competitive product development, product availability, federal and state regulations and legislation, CCAA proceedings, manufacturing issues that may arise, patent positions and litigation, 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-



CONTACT:
Q.E.P. Co., Inc.
Enos Brown
Executive Vice President and
Chief Financial Officer
561-994-5550


Wall St Business News, Latest and Up-to-date Business Stories from Newsmakers of Tomorrow

Wall Street Business News

Start typing and press Enter to search