BOCA RATON, Fla., Oct. 15, 2025 (GLOBE NEWSWIRE) -- Q.E.P. CO., INC. (OTCQX: QEPC) (the "Company" or "QEP") today reported its consolidated results of operations for the first six months and second quarter of fiscal year 2026, which ended on August 31, 2025.
Results of Operations
Net sales for the six months ended August 31, 2025 were $119.2 million, down $6.9 million or 5.5% from $126.1 million reported in the same period of fiscal 2025. Net sales for the second quarter ended August 31, 2025 were $57.7 million, down $4.9 million or 7.8% from $62.6 million reported in the second quarter of fiscal 2025. Net sales through the first six months of fiscal 2026 continue to be adversely impacted by elevated interest rates and consumer caution amid ongoing economic uncertainty, which have constrained home improvement spending.
Gross profit for the first six months of fiscal 2026 was $43.3 million compared to $44.8 million in the corresponding fiscal 2025 period, down $1.5 million or 3.4%. Gross profit for the second quarter of fiscal 2026 was $20.6 million compared to $22.3 million for the second quarter of fiscal 2025, down $1.7 million or 7.6%. As a percentage of net sales, gross margin for the first six months and second quarter of fiscal 2026 was 36.3% and 35.7%, respectively, up from 35.5% and 35.6% in the same periods of the prior fiscal year. The Company has maintained its gross margin as a percentage of net sales principally through the sell-through of inventory purchased before recent tariff increases. Current inventory values reflect the incremental tariff cost that will cycle through gross margin in the coming months.
"Thank you to the 350 QEP Associates who wake up every day to serve our customers," said Len Gould, President and Chief Executive Officer. "Despite tariff variabilities and a challenging economic environment, we continue to fill orders at or near 100% levels, while shipping 100% on time." Gould continued, "QEP has transformed itself mightily over the course of the past few years. Our balance sheet has never been stronger. We remain absolutely laser focused on fast tracking innovation throughout our business, all while continuing to invest in our domestic manufacturing base."
Operating expenses totaled $32.9 million and $16.0 million for the first six months and second quarter of fiscal 2026, respectively, or 27.6% and 27.8% of net sales in those periods, compared to $34.5 million and $17.2 million, respectively, or 27.3% and 27.5% of net sales in the comparable fiscal 2025 periods. The reduction in operating expenses reflects lower variable freight costs and personnel-related expenses.
Interest income from the Company's invested cash was $0.4 million and $0.2 million for the first six months and second quarter of fiscal 2026, respectively, relatively unchanged from the comparable fiscal 2025 periods.
The provision for income taxes as a percentage of income before taxes was 26.0% for both the first six months and second quarter of fiscal 2026 versus 28.0% in each of the corresponding fiscal 2025 periods.
Net income from continuing operations for the first six months and second quarter of fiscal 2026 was $8.0 million and $3.5 million, respectively, or $2.45 and $1.09, respectively, per diluted share. For the comparable periods of fiscal 2025, net income from continuing operations was $7.7 million and $3.8 million, respectively, or $2.34 and $1.17, respectively, per diluted share.
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, as adjusted, for the first six months and second quarter of fiscal 2026 was $11.1 million and $5.0 million, respectively, or 9.3% and 8.6% of net sales, respectively. For the comparable periods of fiscal 2025, EBITDA was $11.0 million and $5.5 million, respectively, or 8.7% of net sales each period.
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||
| August 31, 2025 | August 31, 2024 | August 31, 2025 | August 31, 2024 | ||||||||||||||
| Net income from continuing operations | $ | 3,538 | $ | 3,832 | $ | 7,982 | $ | 7,735 | |||||||||
| Add: | Interest (income) expense, net | (240 | ) | (223 | ) | (417 | ) | (406 | ) | ||||||||
| Provision for income taxes | 1,244 | 1,495 | 2,805 | 3,003 | |||||||||||||
| Depreciation and amortization | 439 | 348 | 807 | 686 | |||||||||||||
| Gain on sale of business | - | - | (71 | ) | - | ||||||||||||
| EBITDA, as adjusted | $ | 4,981 | $ | 5,452 | $ | 11,106 | $ | 11,018 | |||||||||
Cash provided by operations during the first six months of fiscal 2026 was $8.8 million, compared to $11.2 million in the first six months of fiscal 2025, reflecting payments to suppliers for the strategic inventory increase in anticipation of tariff implementation. In the first six months of fiscal 2026, cash provided by operations, along with proceeds from the sale of a business, was used to fund capital expenditures, repurchase stock, return capital to stockholders through dividends, and increase cash balances. In the first six months of fiscal 2025, cash provided by operations, along with proceeds from the sale of businesses, was used to fund capital expenditures, pay dividends, repurchase stock and increase the Company's cash surplus.
As of August 31, 2025, working capital totaled $72.3 million, compared to $67.4 million at the end of fiscal 2025. Aggregate available cash, net of outstanding debt, as of August 31, 2025 was $34.3 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 November 26, 2025 to stockholders of record as of November 3, 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 | For the Six Months Ended | |||||||||||||
| August 31, | August 31, | August 31, | August 31, | |||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||
| Net sales | $ | 57,663 | $ | 62,559 | $ | 119,191 | $ | 126,084 | ||||||
| Cost of goods sold | 37,072 | 40,271 | 75,922 | 81,292 | ||||||||||
| Gross profit | 20,591 | 22,288 | 43,269 | 44,792 | ||||||||||
| Operating expenses: | ||||||||||||||
| Shipping | 6,653 | 6,909 | 13,528 | 13,989 | ||||||||||
| General and administrative | 6,012 | 6,952 | 12,178 | 13,236 | ||||||||||
| Selling and marketing | 3,431 | 3,278 | 7,357 | 7,184 | ||||||||||
| Other (income) expense, net | (47 | ) | 45 | (164 | ) | 51 | ||||||||
| Total operating expenses | 16,049 | 17,184 | 32,899 | 34,460 | ||||||||||
| Operating income | 4,542 | 5,104 | 10,370 | 10,332 | ||||||||||
| Interest income (expense), net | 240 | 223 | 417 | 406 | ||||||||||
| Income before provision for income taxes | 4,782 | 5,327 | 10,787 | 10,738 | ||||||||||
| Provision for income taxes | 1,244 | 1,495 | 2,805 | 3,003 | ||||||||||
| Net income from continuing operations operations | 3,538 | 3,832 | 7,982 | 7,735 | ||||||||||
| Gain from discontinued operations, net of tax | 300 | (27 | ) | 300 | 538 | |||||||||
| Net income | $ | 3,838 | $ | 3,805 | $ | 8,282 | $ | 8,273 | ||||||
| Basic earnings per share: | ||||||||||||||
| From continuing operations | 1.09 | 1.17 | 2.45 | 2.34 | ||||||||||
| From discontinued operations | 0.09 | (0.01 | ) | 0.09 | 0.17 | |||||||||
| Basic earnings per share | 1.18 | 1.16 | 2.54 | 2.51 | ||||||||||
| Diluted earnings per share: | ||||||||||||||
| From continuing operations | 1.09 | 1.17 | 2.45 | 2.34 | ||||||||||
| From discontinued operations | 0.09 | (0.01 | ) | 0.09 | 0.16 | |||||||||
| Diluted earnings per share | 1.18 | 1.16 | 2.54 | 2.50 | ||||||||||
| Weighted average number of common | ||||||||||||||
| shares outstanding: | ||||||||||||||
| Basic | 3,255 | 3,276 | 3,256 | 3,300 | ||||||||||
| Diluted | 3,255 | 3,280 | 3,256 | 3,307 | ||||||||||
| Q.E.P. CO., INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands, except par values) | |||||||
| August 31, 2025 | February 28, 2025 | ||||||
| (Unaudited) | (Audited) | ||||||
| ASSETS | |||||||
| Cash | $ | 34,367 | $ | 28,552 | |||
| Accounts receivable, less allowance for credit losses of $70 and | |||||||
| $223 at August 31, 2025 and February 28, 2025, respectively | 28,854 | 31,752 | |||||
| Inventories, net | 32,909 | 36,595 | |||||
| Prepaid expenses and other current assets | 1,926 | 2,781 | |||||
| Prepaid income taxes | 764 | 1,544 | |||||
| Current assets | 98,820 | 101,224 | |||||
| Property and equipment, net | 14,643 | 13,044 | |||||
| Right of use operating lease assets | 20,593 | 21,520 | |||||
| Deferred income taxes, net | 1,996 | 1,996 | |||||
| Intangibles, net | - | 1 | |||||
| Other assets | 491 | 489 | |||||
| Total assets | $ | 136,543 | $ | 138,274 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Trade accounts payable | $ | 9,109 | $ | 15,569 | |||
| Accrued liabilities | 14,423 | 15,251 | |||||
| Current operating lease liabilities | 2,927 | 2,887 | |||||
| Lines of credit | 40 | 105 | |||||
| Current maturities of debt | 9 | 9 | |||||
| Current liabilities | 26,508 | 33,821 | |||||
| Long term debt | 5 | 10 | |||||
| Non-current operating lease liabilities | 20,025 | 21,084 | |||||
| Other long term liabilities | 408 | 427 | |||||
| Total liabilities | 46,946 | 55,342 | |||||
| Preferred stock, 2,500 shares authorized, $1.00 par value; 0 shares | |||||||
| issued and outstanding at August 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 | |||||||
| August 31, 2025 and February 28, 2025, respectively | 4 | 4 | |||||
| Additional paid-in capital | 10,361 | 10,361 | |||||
| Retained earnings | 92,528 | 85,544 | |||||
| Treasury stock, 761 and 750 shares held at cost at August 31, 2025 | |||||||
| and February 28, 2025, respectively | (10,905 | ) | (10,377 | ) | |||
| Accumulated other comprehensive income | (2,391 | ) | (2,600 | ) | |||
| Shareholders' equity | 89,597 | 82,932 | |||||
| Total liabilities and shareholders' equity | $ | 136,543 | $ | 138,274 | |||
| Q.E.P. CO., INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (In thousands) | |||||||
| (Unaudited) | |||||||
| For the Six Months Ended | |||||||
| August 31, 2025 | August 31, 2024 | ||||||
| Operating activities: | |||||||
| Net income | $ | 8,282 | $ | 8,273 | |||
| Adjustments to reconcile net income to net cash | |||||||
| provided by (used in) operating activities: | |||||||
| Depreciation and amortization | 807 | 686 | |||||
| Gain on disposal of businesses | (476 | ) | (512 | ) | |||
| Gain on sale of property | (4 | ) | (1 | ) | |||
| Impairment of right of use operating lease asset | 85 | ||||||
| Other non-cash adjustments | (153 | ) | 82 | ||||
| Changes in assets and liabilities: | |||||||
| Accounts receivable | 1,833 | 103 | |||||
| Inventories | 3,829 | (2,233 | ) | ||||
| Prepaid expenses and other assets | 1,688 | 1,678 | |||||
| Trade accounts payable and accrued liabilities | (7,034 | ) | 3,019 | ||||
| Net cash provided by operating activities | 8,772 | 11,180 | |||||
| Investing activities: | |||||||
| Capital expenditures | (2,392 | ) | (2,121 | ) | |||
| Proceeds from sale of businesses | 1,374 | 4,305 | |||||
| Proceeds from sale of property | 4 | 1 | |||||
| Net cash provided by (used in) investing activities | (1,014 | ) | 2,185 | ||||
| Financing activities: | |||||||
| Net repayments under lines of credit | (70 | ) | (548 | ) | |||
| Repurchase of equity-based awards | (1,540 | ) | |||||
| Purchase of treasury stock | (565 | ) | (403 | ) | |||
| Principal payments on finance leases | (5 | ) | (55 | ) | |||
| Dividends paid | (1,298 | ) | (3,269 | ) | |||
| Net cash used in financing activities | (1,938 | ) | (5,815 | ) | |||
| Effect of exchange rate changes on cash | (5 | ) | 25 | ||||
| Net increase in cash | 5,815 | 7,575 | |||||
| Cash at beginning of period | 28,552 | 22,369 | |||||
| Cash at end of period | $ | 34,367 | $ | 29,944 | |||
| 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 shareholders' equity for the six months ended August 31, 2025 and 2024. | |||||||||||||||||||||||||||||
| 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 | 8,273 | 8,273 | |||||||||||||||||||||||||||
| Unrealized currency translation adjustments | 102 | 102 | |||||||||||||||||||||||||||
| Repurchase of equity-based awards | (1,540 | ) | (1,540 | ) | |||||||||||||||||||||||||
| Purchase of treasury stock | (491 | ) | (491 | ) | |||||||||||||||||||||||||
| Dividends paid | (3,269 | ) | (3,269 | ) | |||||||||||||||||||||||||
| Balance at August 31, 2024 | - | $ | - | 4,005,370 | $ | 4 | $ | 10,361 | $ | 78,215 | $ | (10,008 | ) | $ | (2,867 | ) | $ | 75,705 | |||||||||||
| 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, 2025 | - | $ | - | 4,005,370 | $ | 4 | $ | 10,361 | $ | 85,544 | $ | (10,377 | ) | $ | (2,600 | ) | $ | 82,932 | |||||||||||
| Net income | 8,282 | 8,282 | |||||||||||||||||||||||||||
| Unrealized currency translation adjustments | 209 | 209 | |||||||||||||||||||||||||||
| Purchase of treasury stock | (528 | ) | (528 | ) | |||||||||||||||||||||||||
| Dividends paid | (1,298 | ) | (1,298 | ) | |||||||||||||||||||||||||
| Balance at August 31, 2025 | - | $ | - | 4,005,370 | $ | 4 | $ | 10,361 | $ | 92,528 | $ | (10,905 | ) | $ | (2,391 | ) | $ | 89,597 | |||||||||||
CONTACT:
Q.E.P. Co., Inc.
Enos Brown
Executive Vice President and
Chief Financial Officer
561-994-5550
