BOCA RATON, Fla., July 15, 2025 (GLOBE NEWSWIRE) -- Q.E.P. CO., INC. (OTCQX: QEPC) (the "Company" or "QEP") today announced its financial results for the first quarter ended May 31, 2025 and declared its second quarter cash dividend.
Results of Operations
Net sales for the quarter ended May 31, 2025 were $61.5 million, down $2.0 million or 3.1% from $63.5 million reported for the first quarter of fiscal 2025. The slight decline in net sales was primarily due to the ongoing softness in home improvement spending due to elevated interest rates and macroeconomic uncertainty.
Gross profit for the first quarter of fiscal 2026 increased $0.2 million or 0.1% to $22.7 million, up from $22.5 million for the same period in the prior year. As a percentage of net sales, gross margin improved to 36.9% in the first quarter of fiscal 2026, up from 35.4% in the first quarter of fiscal 2025, primarily due to the sell-through of inventory purchased before recent tariff increases. This improvement may be temporary, as future gross margins are expected to be impacted by higher landed costs resulting from newly imposed tariffs.
"Despite persistent economic headwinds, the first quarter results demonstrate the strength and resiliency of our business," said Len Gould, President and Chief Executive Officer. "This is a reflection of the hard work of our people throughout QEP, and their efforts are to be applauded."
Gould continued, "We continue to proactively expand and enhance our domestic manufacturing footprint and our sourcing capabilities. Earlier this week the Grand Opening of our latest adhesive production facility in Dalton, Georgia was held. This completed a multi-year effort to bring new technology and enhanced capacity to our lineup, along with the ability to 'in-house' formerly purchased items, which represents a major milestone for the Company, and a true win for our customers."
Operating expenses totaled $16.9 million or 27.4% of net sales versus $17.3 million or 27.2% of net sales in the prior year period, reflecting lower variable expenses tied to sales volumes.
Interest income from the Company's invested cash balances was $0.2 million, unchanged from the prior year.
The provision for income taxes as a percentage of income before taxes was 26% compared to 28% in the first quarter of fiscal 2025.
Net income was $4.4 million or $1.36 per diluted share, as compared to $4.5 million or $1.34 per diluted share for the prior year period. Excluding discontinued operations, adjusted net income for the first quarter of the prior year was $3.9 million or $1.17 per diluted share.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations for the first quarter of fiscal 2026 was $6.1 million or 10.0% of net sales, up from $5.6 million or 8.8% of net sales in the first quarter of fiscal 2025.
| For the Three Months Ended | ||||||||
| May 31, 2025 | May 31, 2024 | |||||||
| Net income from continuing operations | $ | 4,444 | $ | 3,903 | ||||
| Add: | Interest (income) expense, net | (178 | ) | (183 | ) | |||
| Provision for income taxes | 1,561 | 1,508 | ||||||
| Depreciation and amortization | 369 | 338 | ||||||
| Gain on sale of business | (71 | ) | - | |||||
| EBITDA, as adjusted | $ | 6,125 | $ | 5,566 | ||||
Cash provided by operating activities during the first quarter of fiscal 2026 was $2.6 million, compared to $6.1 million in the comparable fiscal 2025 period, reflecting a strategic inventory build in anticipation of potential tariff impacts. In the first quarter of fiscal 2026, the Company used its cash from operations, along with proceeds from the sale of a business, to fund capital expenditures, repurchase stock, return capital to stockholders through dividends and increase cash balances. In the first quarter of fiscal 2025, cash provided by operations, along with proceeds from the sale of businesses, was used to repurchase stock and increase the Company's cash surplus.
As of May 31, 2025, working capital totaled $70.2 million, compared to $67.4 million at the end of fiscal 2025. Aggregate available cash, net of outstanding debt at May 31, 2025 was $30.4 million, up from $28.4 million at the end of fiscal 2025.
Cash Dividend Declaration
QEP's Board of Directors declared a quarterly cash dividend of $0.20 per share on its common stock, payable on August 28, 2025 to stockholders of record as of August 1, 2025, which reflects QEP's ongoing commitment to returning value to stockholders.
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 worldwide. 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® and Homelux®.
QEP is headquartered in Boca Raton, Florida with other offices in the United States, Canada 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, (i) statements regarding (a) pending legal proceedings and/or administrative matters, (b) exposure of the Company to significant fines and penalties if the Company fails to comply with certain environmental laws or approval requirements and (c) the inability to obtain components and products as required or to develop alternative sources, if and as required in the future and (ii) statements under the section titled "Competitive Business Conditions, the Issuer's Competitive Position in the Industry, and Methods of Competition." Any forward-looking statements contained herein are based on current expectations and beliefs, and are subject to a number of risks and uncertainties, including risks related to the following: challenges presented by (i) scarcity and rising cost for raw materials, (ii) shifts in global sourcing patterns, and (iii) 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, including as a result of (A) the imposition and changes to tariffs, including the effects of tariffs on goods imported from China and Vietnam, which countries the Company relies on for the manufacturing and importation of many of the Company's flooring installation tool products and related accessories, and tariffs on all steel and aluminum imports into the United States, (B) trade policies affecting macroeconomic conditions and/or (C) retaliatory trade actions taken by global trading partners. 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, among other factors. The forward-looking statements contained herein 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 | |||||||
| May 31, | May 31, | ||||||
| 2025 | 2024 | ||||||
| Net sales | $ | 61,528 | $ | 63,524 | |||
| Cost of goods sold | 38,850 | 41,021 | |||||
| Gross profit | 22,678 | 22,503 | |||||
| Operating expenses: | |||||||
| Shipping | 6,874 | 7,081 | |||||
| General and administrative | 6,166 | 6,284 | |||||
| Selling and marketing | 3,927 | 3,905 | |||||
| Other (income) expense, net | (116 | ) | 5 | ||||
| Total operating expenses | 16,851 | 17,275 | |||||
| Operating income | 5,827 | 5,228 | |||||
| Interest income (expense), net | 178 | 183 | |||||
| Income before provision for income taxes | 6,005 | 5,411 | |||||
| Provision for income taxes | 1,561 | 1,508 | |||||
| Net income from continuing operations | 4,444 | 3,903 | |||||
| Gain from discontinued operations, net of tax | - | 565 | |||||
| Net income | $ | 4,444 | $ | 4,468 | |||
| Basic earnings per share: | |||||||
| From continuing operations | $ | 1.36 | $ | 1.17 | |||
| From discontinued operations | - | 0.17 | |||||
| Basic earnings per share | $ | 1.36 | $ | 1.34 | |||
| Diluted earnings per share: | |||||||
| From continuing operations | $ | 1.36 | $ | 1.17 | |||
| From discontinued operations | - | 0.17 | |||||
| Diluted earnings per share | $ | 1.36 | $ | 1.34 | |||
| Weighted average number of common shares outstanding: | |||||||
| Basic | 3,257 | 3,323 | |||||
| Diluted | 3,257 | 3,334 | |||||
| Q.E.P. CO., INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands, except par values) | |||||||
| May 31, 2025 | February 28, 2025 | ||||||
| (Unaudited) | (Audited) | ||||||
| ASSETS | |||||||
| Cash | $ | 30,479 | $ | 28,552 | |||
| Accounts receivable, less allowance for credit losses of $223 and $221 at May 31, 2025 and February 28, 2025, respectively | 30,291 | 31,752 | |||||
| Inventories, net | 30,024 | 36,595 | |||||
| Prepaid expenses and other current assets | 2,944 | 2,781 | |||||
| Prepaid income taxes | 19 | 1,544 | |||||
| Current assets | 93,757 | 101,224 | |||||
| Property and equipment, net | 13,585 | 13,044 | |||||
| Right of use operating lease assets | 21,166 | 21,520 | |||||
| Deferred income taxes, net | 1,996 | 1,996 | |||||
| Intangibles, net | - | 1 | |||||
| Other assets | 497 | 489 | |||||
| Total assets | $ | 131,001 | $ | 138,274 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Trade accounts payable | $ | 7,251 | $ | 15,569 | |||
| Accrued liabilities | 13,276 | 15,251 | |||||
| Current operating lease liabilities | 2,992 | 2,887 | |||||
| Lines of credit | 21 | 105 | |||||
| Current maturities of debt | 9 | 9 | |||||
| Current liabilities | 23,549 | 33,821 | |||||
| Long term debt | 7 | 10 | |||||
| Non-current operating lease liabilities | 20,612 | 21,084 | |||||
| Other long term liabilities | 418 | 427 | |||||
| Total liabilities | 44,586 | 55,342 | |||||
| Preferred stock, 2,500 shares authorized, $1.00 par value; 0 shares issued and outstanding at May 31, 2025 and February 28, 2025, respectively | - | - | |||||
| Common stock, 20,000 shares authorized, $.001 par value; 4,005 shares issued: 3,244 and 3,255 shares outstanding at May 31, 2025 and February 28, 2025, respectively | 4 | 4 | |||||
| Additional paid-in capital | 10,361 | 10,361 | |||||
| Retained earnings | 89,338 | 85,544 | |||||
| Treasury stock, 761 and 750 shares held at cost at May 31, 2025 and February 28, 2025, respectively | (10,905 | ) | (10,377 | ) | |||
| Accumulated other comprehensive income | (2,383 | ) | (2,600 | ) | |||
| Shareholders' equity | 86,415 | 82,932 | |||||
| Total liabilities and shareholders' equity | $ | 131,001 | $ | 138,274 | |||
| Q.E.P. CO., INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| For the Three Months Ended | |||||||
| May 31, 2025 | May 31, 2024 | ||||||
| Operating activities: | |||||||
| Net income | $ | 4,444 | $ | 4,468 | |||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||
| Depreciation and amortization | 369 | 338 | |||||
| Gain on disposal of businesses | (71 | ) | (516 | ) | |||
| Gain on sale of property | (3 | ) | (1 | ) | |||
| Other non-cash adjustments | - | 44 | |||||
| Changes in assets and liabilities: | |||||||
| Accounts receivable | 236 | 2,529 | |||||
| Inventories | 6,719 | 491 | |||||
| Prepaid expenses and other assets | 248 | 833 | |||||
| Trade accounts payable and accrued liabilities | (9,320 | ) | (2,135 | ) | |||
| Net cash provided by operating activities | 2,622 | 6,051 | |||||
| Investing activities: | |||||||
| Capital expenditures | (895 | ) | (679 | ) | |||
| Proceeds from sale of businesses | 1,374 | 4,292 | |||||
| Proceeds from sale of property | 2 | 1 | |||||
| Net cash provided by investing activities | 481 | 3,614 | |||||
| Financing activities: | |||||||
| Net repayments under lines of credit | (87 | ) | (394 | ) | |||
| Repurchase of equity-based awards | - | (1,183 | ) | ||||
| Purchase of treasury stock | (441 | ) | (30 | ) | |||
| Principal payments on finance leases | (2 | ) | (28 | ) | |||
| Dividends paid | (650 | ) | - | ||||
| Net cash used in financing activities | (1,180 | ) | (1,635 | ) | |||
| Effect of exchange rate changes on cash | 4 | 9 | |||||
| Net increase in cash | 1,927 | 8,039 | |||||
| Cash at beginning of period | 28,552 | 22,369 | |||||
| Cash at end of period | $ | 30,479 | $ | 30,408 | |||
| Q.E.P. CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands, except shares data) | ||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Retained | Treasury | Other Comprehensive | Total 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 equity-based awards | (1,183 | ) | (1,183 | ) | ||||||||||||||||||||||||||||
| Balance at May 31, 2024 | - | $ | - | 4,005,370 | $ | 4 | $ | 10,718 | $ | 77,679 | $ | (9,894 | ) | $ | (2,970 | ) | $ | 75,537 | ||||||||||||||
| Preferred Stock | Common Stock | Paid-in | Retained | Treasury | Accumulated Other Comprehensive | Total Shareholders' | ||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Earnings | Stock | Income | Equity | ||||||||||||||||||||||||
| Balance at February 28, 2025 | - | $ | - | 4,005,370 | $ | 4 | $ | 10,361 | $ | 85,544 | $ | (10,377 | ) | $ | (2,600 | ) | $ | 82,932 | ||||||||||||||
| Net lncome | 4,444 | 4,444 | ||||||||||||||||||||||||||||||
| Unrealized currency translation adjustments | 217 | 217 | ||||||||||||||||||||||||||||||
| Purchase of treasury stock | (528 | ) | (528 | ) | ||||||||||||||||||||||||||||
| Dividends paid | (650 | ) | (650 | ) | ||||||||||||||||||||||||||||
| Balance at May 31, 2025 | - | $ | - | 4,005,370 | $ | 4 | $ | 10,361 | $ | 89,338 | $ | (10,905 | ) | $ | (2,383 | ) | # | $ | 86,415 | |||||||||||||
CONTACT:
Q.E.P. Co., Inc.
Enos Brown
Executive Vice President and
Chief Financial Officer
561-994-5550
