Q.E.P. Co., Inc. Reports Fiscal 2024 Full Year Financial Results

Adjusted Net Income More than Doubles to $9.1 Million or $2.73 per Share

Q.E.P. CO., INC. (the “Company” or “QEP”) reported its consolidated results of operations for its full year ended February 29, 2024.

During fiscal 2024, QEP completed several strategic divestments to streamline operations and concentrate resources on its core product lines in the North American market. These divestments included the sale of our North American hard surface flooring business, which consisted of the Harris®, Kraus®, Naturally Aged Flooring^TM and Heritage Mills® brands, as well as a wood flooring manufacturing facility in Johnson City, Tennessee. This was followed by the divestment of QEP’s businesses in the United Kingdom, Australia and New Zealand.

As of fiscal 2024, these divested operations have been classified as discontinued operations in our financial statements. Amounts for prior periods, including sales and operating income, have been reclassified to conform to this presentation.

QEP reported net sales of $252.0 million for the year ended February 29, 2024, a decrease of $17.5 million or 6.5% from the $269.5 million reported in fiscal 2023, which was primarily due to softening consumer demand across multiple product categories. To mitigate this impact, the Company is expanding its regional sales coverage in order to penetrate new and existing sales channels.

The Company’s gross profit for fiscal 2024 increased $8.8 million or 12.0% to $82.0 million, from $73.2 million in fiscal 2023. As a percentage of net sales, gross margin was 32.5% in fiscal 2024, as compared to 27.2% in fiscal 2023. The increase in gross margin as a percentage of net sales was largely due to lower inbound freight, improved product mix, and multiple cost-reduction and streamlining initiatives.

Leonard Gould, President & Chief Executive Officer, commented on the Company’s results, “I would like to personally thank all of our QEP associates for their noteworthy contributions which have enabled QEP to ‘return to its roots’ and fuel our ongoing transformation. The massive efforts underway to better serve our customers and our innovation/patent roadmap over the next few years makes me incredibly proud. Our retail and distribution partners are our lifeblood and together we continue to implement initiatives to drive volume and profitability of their QEP business. We are also grateful for the ongoing support of our vendor and banking partners.”

Lewis Gould, Executive Chairman, added, “We are pleased with our continuing transformation which has resulted in significant repayment of our debt and generated a healthy cash surplus. The Company has shared this success with its stockholders through two special dividends in 2024. We hope to continue to reward all of our stakeholders in concert with the Company’s success.”

Operating expenses were $68.7 million or 27.3% of net sales for fiscal 2024 as compared to $63.9 million or 23.7% of net sales for fiscal 2023. The increase in operating expenses was due to higher personnel and one-time transaction costs related to the divestitures in fiscal 2024.

Interest expense declined in the latter part of fiscal 2024 as the Company’s significant repayment of debt offset higher interest rates during the earlier part of the fiscal year and during fiscal 2023.

The provision for income taxes as a percentage of income before taxes was 23.4% for fiscal 2024, as compared to 37.6% for fiscal 2023. Fiscal 2023 includes a full valuation allowance on operating losses generated by the Company’s Canadian operation.

Net loss for fiscal 2024 was $4.7 million or $1.40 per diluted share, as compared to $0.1 million or $0.02 per diluted share for fiscal 2023. Excluding discontinued operations, adjusted net income for fiscal 2024 was $9.1 million or $2.73 per diluted share, as compared to $4.5 million or $1.34 per diluted share for fiscal 2023.

Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations for fiscal 2024 was $14.7 million or 5.8% of net sales, as compared to $10.6 million or 3.9% of net sales for fiscal 2023.

Cash provided by operating activities during fiscal 2024 was $29.5 million as compared to cash used in operating activities of $0.1 million in the fiscal 2023 period, reflecting the reduction in inventory to more normalized levels from the elevated levels of the previous year. During the fiscal 2024 period, cash provided by operations, along with proceeds from the sale of businesses, was used to reduce borrowings under the Company’s credit facilities, fund capital expenditures, pay a dividend to stockholders and increase cash balances. During the fiscal 2023 period, borrowings under the Company’s lines of credit were used to fund operating activities and capital expenditures.

Working capital as of February 29, 2024 was $60.0 million compared to $55.0 million at the end of fiscal 2023. Aggregate available cash, net of outstanding debt at the end of fiscal 2024 was $21.7 million compared to aggregate debt, net of available cash of $26.1 million or 33.5% of equity at the end of fiscal 2023.

The Company will not be hosting a conference call to discuss these results and welcomes inquiries from investors via email at ir@qep.com.

For full results click here.

About QEP

Founded in 1979, Q.E.P. Co., Inc. is a leading designer, manufacturer and distributor of a broad range of best-inclass flooring and installation solutions for commercial and home improvement projects worldwide. QEP offers a comprehensive line of specialty installation tools, adhesives, and underlayment as well as 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®, Vitrex®, Brutus®, PRCI®, Plasplugs®, Tomecanic®, Premix-Marbletite® (PMM), Apple Creek®, Homelux®, Capitol® and XPS Foam™. Brand names featured under QEP’s Harris Flooring Group® include Harris®, Kraus® and Naturally Aged Flooring™. QEP is headquartered in Boca Raton, Florida with offices in Canada, Europe, Asia, Australia and New Zealand.

Contact:

Enos Brown – Executive Vice President & CFO – (561) 994-5550

Source: Q.E.P. Co., Inc.