Q.E.P. Co., Inc. Reports Fiscal 2025 First Quarter Financial Results

Quarterly Adjusted Net Income More than Doubles to $3.9 Million or $1.17 per Share

Q.E.P. CO., INC. (the “Company” or “QEP”) reported its consolidated results of operations for the first quarter of fiscal year 2025, which ended on May 31, 2024.

During the prior fiscal year, 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 the Company’s Harris Flooring Group in North America and the Company’s businesses in the United Kingdom, Australia and New Zealand. These divested operations have been classified as discontinued operations in our financial statements for all periods presented.

QEP reported net sales of $63.5 million for the quarter ended May 31, 2024, a decrease of $2.5 million or 3.7% from the $66.0 million reported for the first quarter of fiscal 2024, which was primarily due to continued softening of consumer demand across multiple product categories and sales channels. The Company continues to invest in the expansion of its regional sales coverage in order to penetrate new and existing sales channels.

The Company’s gross profit for the first quarter of fiscal 2025 increased $2.5 million or 12.2% to $22.5 million, from $20.0 million for the first quarter of fiscal 2024. As a percentage of net sales, gross margin was 35.4% for the first quarter of fiscal 2025, as compared to 30.4% for the first quarter of fiscal 2024. The increase in gross margin as a percentage of net sales was largely due to lower inbound freight, along with continued improvement in product mix and other cost-reduction initiatives.

Leonard Gould, President & Chief Executive Officer, commented on the Company’s results, “I am grateful for the support of the QEP Team as we continue our transformation. These positive results allow us to reinvest in resources to provide the ultimate service to our customers and critically to move forward with the numerous innovations in our product pipeline.”

Operating expenses were $17.3 million or 27.2% of net sales for the first quarter of fiscal 2025 as compared to $16.9 million or 25.6% of net sales for the first quarter of fiscal 2024. The increase in operating expenses was due to higher personnel and outbound shipping costs in the current period.
Interest income was $0.2 million for the first quarter of fiscal 2025 as compared to interest expense of $0.6 million in the first quarter of fiscal 2024. This change is due to the Company’s significant repayment of debt in the latter part of fiscal 2024 and the investment of the Company’s cash surplus in the first quarter of fiscal 2025.

The provision for income taxes as a percentage of income before taxes was 28% for both the first quarter of fiscal 2025 and the first quarter of fiscal 2024.

Net income for the first quarter of fiscal 2025 was $4.5 million or $1.34 per diluted share, as compared to $0.9 million or $0.28 per diluted share for first quarter of fiscal 2024. Excluding discontinued operations, adjusted net income for the first quarter of fiscal 2025 was $3.9 million or $1.17 per diluted share, as compared to $1.8 million or $0.55 per diluted share for the first quarter of fiscal 2024.

Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations for the first quarter of fiscal 2025 was $5.6 million or 8.8% of net sales, as compared to $3.5 million or 5.3% of net sales for the first quarter of fiscal 2024.

Cash provided by operating activities during first quarter of fiscal 2025 was $6.1 million compared to $13.1 million in the comparable fiscal 2024 period, reflecting the reduction in inventory to more normalized levels during the prior year period. 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. In the first quarter of fiscal 2024, cash provided by operations was used to reduce borrowings under the Company’s lines of credit and increase cash balances.

Working capital as of May 31, 2024 was $62.3 million compared to $60.0 million at the end of fiscal 2024. Aggregate available cash, net of outstanding debt at May 31, 2024 was $30.1 million compared to $21.7 million at the end of fiscal 2024.

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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.