BOCA RATON, Fla., July 16, 2007 (PRIME NEWSWIRE) -- Q.E.P. CO., INC. (Nasdaq:QEPC), today announced financial results for the first quarter of its fiscal 2008.
Lewis Gould, Q.E.P.'s Chairman and Chief Executive Officer, stated: "I am pleased with our performance in the first quarter of fiscal 2008. Several of the initiatives we launched during the latter half of fiscal 2007 took full effect at the start of fiscal 2008. Our quarterly sales were approximately $57 million for the first time in our history, a 5.5% increase over the $54 million achieved in the first quarter of fiscal 2007. Our gross profit percentage increased to 29.1% from 28.0% primarily due to product mix.
"These revenue increases at higher margins coupled with a small decrease in operating costs and expenses produced pre-tax profits of $2.0 million for the first quarter of fiscal 2008 as compared to $0.5 million for the same quarter last year.
"For the first quarter of fiscal 2008, the Company reported quarterly net income of $0.9 million, or $0.23 per diluted share, compared to income of $0.3 million or $0.08 per share for the first quarter of fiscal 2007.
"Also, I am delighted to report that for the first quarter of fiscal 2008, the Company generated $4.8 million of cash from operations, compared to $1.3 million of cash used in operations in the first quarter of fiscal 2007. With this generated cash, the Company was able to pay down debt by $4.5 million."
Certain statements in this press release, including statements relating to the Company's expectation for the results of its first fiscal quarter, are forward-looking statements, which are made pursuant to the safe-harbor provisions of the Securities Litigation Reform Act of 1995. The forward-looking statements are made only as of the date of this report and are subject to risks and uncertainties which could cause actual results to differ materially from those discussed in the forward-looking statements and from historical results of operations. Among the risks and uncertainties that could cause such a difference are our assumptions relating to the expected growth in sales of our products, the continued success of our manufacturing processes, continued increases in the cost of raw materials and finished goods, improvements in productivity and cost reductions, the continued success of initiatives with certain of our customers, the success of our price increases initiatives, the success of our sales and marketing efforts and other business and economic factors. A more detailed discussion of risks attendant to the forward-looking statements included in this press release are set forth in the "Forward-Looking Statements" section of our Annual Report on Form 10-K for the year ended February 28, 2007, filed with the SEC, and in other reports already filed with the SEC.
Q.E.P. CO., Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
May 31, February 28,
2007 2007
----------- -----------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 1,150 $ 822
Accounts receivable, less allowance for
doubtful accounts of $441 and $354 as
of May 31, 2007 and February 28, 2007,
respectively 33,904 34,491
Inventories 27,113 27,042
Prepaid expenses and other current assets 1,369 1,349
Deferred income taxes 1,875 1,299
----------- -----------
Total current assets 65,411 65,003
Property and equipment, net 6,766 6,770
Deferred income taxes 1,475 2,764
Goodwill 9,548 9,563
Other intangible assets, net 2,793 2,831
Other assets 188 225
----------- -----------
Total Assets $86,181 $87,156
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $18,319 $17,705
Accrued liabilities 11,010 9,868
Lines of credit 23,364 27,405
Current maturities of long term debt 4,256 4,085
Put warrant liability 900 861
--------- -----------
Total current liabilities 57,849 59,924
Notes payable 2,912 2,398
Other long term debt 1,651 2,551
Other long term liabilities 370
----------- -----------
Total Liabilities 62,782 64,873
Commitments and Contingencies -- --
SHAREHOLDERS' EQUITY
Preferred stock, 2,500,000 shares
authorized, $1.00 par value; 336,660
shares issued and outstanding at
May 31, 2007 and February 28, 2007 337 337
Common stock; 20,000,000 shares authorized,
$.001 par value; 3,523,341 shares issued
and 3,440,401 shares outstanding at
May 31, 2007 and February 28, 2007 3 3
Additional paid-in capital 10,017 9,981
Retained earnings 15,479 15,003
Treasury stock; 82,940 shares
(held at cost) outstanding (639) (639)
Accumulated other comprehensive loss (1,798) (2,402)
----------- -----------
23,399 22,283
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $86,181 $87,156
=========== ===========
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,
--------------------------
2007 2006
-------- --------
Net sales $56,963 $54,013
Cost of goods sold 40,410 38,866
-------- --------
Gross profit 16,553 15,147
Operating costs and expenses:
Shipping 6,099 5,867
General and administrative 4,690 5,052
Selling and marketing 3,100 3,120
Other expense (income), net 1 (2)
-------- --------
Total operating costs and expenses 13,890 14,037
-------- --------
Operating income 2,663 1,110
Change in put warrant liability (39) 85
Interest expense, net (660) (724)
-------- --------
Income before provision for income taxes 1,964 471
Provision for income taxes 1,107 142
-------- --------
Net income $ 857 $ 329
======== ========
Net income per share:
Basic $ 0.25 $ 0.09
======== ========
Diluted $ 0.23 $ 0.08
======== ========
Weighted average number of common
shares outstanding
Basic 3,440 3,392
======== ========
Diluted 3,601 3,767
======== ========
Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
For the Three Months Ended
May 31,
-------- --------
2007 2006
-------- --------
Cash flows from operating activities:
Net income $ 857 $ 329
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization 553 648
Change in fair value of put warrant
liability 39 (85)
Bad debt expense 90 25
Loss on sale of business 41 --
Stock-based compensation expense 37 103
Deferred income taxes 701 (38)
Changes in assets and liabilities:
Accounts receivable 713 334
Inventories 111 681
Prepaid expenses and other current assets (9) 407
Other assets 62 41
Trade accounts payable and accrued
liabilities 1,596 (3,695)
-------- --------
Net cash provided by (used in)
operating activities 4,791 (1,250)
-------- --------
Cash flows from investing activities:
Capital expenditures (206) (189)
Proceeds from sale of business 250 --
-------- --------
Net cash provided by (used in) investing
activities 44 (189)
-------- --------
Cash flows from financing activities:
Net borrowings under lines of credit (4,117) 2,669
Borrowings of long-term debt 1,400 --
Repayments of long-term debt (918) (693)
Repayments of acquisition debt (871) (1,069)
Payments related to the purchase of
treasury stock (30) (30)
Proceeds from exercise of stock options -- 43
Dividends (11) (10)
-------- --------
Net cash (used in) provided by financing
activities (4,547) 910
-------- --------
Effect of exchange rate changes on cash 40 408
-------- --------
Net increase (decrease) in cash 328 (121)
Cash and cash equivalents at beginning
of period 822 852
-------- --------
Cash and cash equivalents at end of period $ 1,150 $ 731
======== ========