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 ======== ========