BOCA RATON, Fla., Oct. 15, 2008 (GLOBE NEWSWIRE) -- Q.E.P. Co., Inc. (Nasdaq:QEPC) (the "Company") today filed a Form 10-Q with the SEC to announce its financial results for the second quarter of its fiscal year ending on February 28, 2009.
The Company reported record quarterly net sales of $61.0 million for the second quarter of fiscal 2009, an increase of $3.8 million from the $57.2 million reported in the same quarter of fiscal 2008. In addition, gross profit margin increased by 47 basis points from 28.3% in the second quarter of fiscal 2008 to 28.8% in the second quarter of fiscal 2009.
Sales were $113.9 million for the first six months of fiscal 2009 with a gross profit margin of 29.5% compared to sales of $114.1 million with a gross profit margin of 28.7% for the first six months of fiscal 2008.
Improved margins in both the second quarter and year to date of fiscal 2009 offset by increased operating costs and the second quarter fiscal 2008 realization of a one-time $0.6 million gain on the sale of businesses resulted in second quarter fiscal 2009 operating income of $2.0 million compared to $3.6 million for the second quarter of fiscal 2008 and year to date fiscal 2009 operating income of $4.5 million compared to $6.3 million for fiscal 2008.
Net income for the second quarter of fiscal 2009 was $0.8 million ($0.23 per diluted share) compared to $0.1 million ($0.02 per diluted share) for the second quarter of fiscal 2008. The fiscal 2008 period includes a $1.4 million, non-tax deductible, expense related to the Company's settlement of its then outstanding put warrant liability.
Year to date fiscal 2009 net income was $2.1 million ($0.59 per diluted share) compared to $0.9 million ($0.25 per diluted share) for the first six months of fiscal 2008.
Q.E.P. CO., Inc. and Subsidiaries Consolidated Balance Sheets (In thousands, except share data) August 31, February 29, 2008 2008 --------- --------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 990 $ 949 Accounts receivable, less allowance for doubtful accounts of $478 and $431 as of August 31, 2008 and February 29, 2008, respectively 38,996 32,543 Inventories 33,726 26,496 Prepaid expenses and other current assets 1,987 2,505 Deferred income taxes 746 754 --------- --------- Total current assets 76,445 63,247 Property and equipment, net 7,092 7,851 Deferred costs 3,008 -- Deferred income taxes 1,796 1,787 Goodwill 9,402 9,685 Other intangible assets, net 2,514 2,717 Other assets 324 339 --------- --------- Total Assets $ 100,581 $ 85,626 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Trade accounts payable $ 22,131 $ 15,968 Accrued liabilities 10,816 11,690 Lines of credit 34,260 24,537 Current maturities of long term debt 1,346 1,977 --------- --------- Total current liabilities 68,553 54,172 Notes payable 4,301 4,472 Other long term debt 250 250 Other long term liabilities 484 377 --------- --------- Total Liabilities 73,588 59,271 Commitments and Contingencies -- -- SHAREHOLDERS' EQUITY Preferred stock, 2,500,000 shares authorized, $1.00 par value;336,660 shares issued and outstanding at August 31, 2008 and February 29, 2008 337 337 Common stock; 20,000,000 shares authorized, $.001 par value; 3,531,341 and 3,528,341 shares issued, and 3,410,026 and 3,433,363 shares outstanding at August 31, 2008 and February 29, 2008, respectively 3 3 Additional paid-in capital 10,226 10,154 Retained earnings 18,618 16,574 Treasury stock; 121,315 and 94,978 shares (held at cost) outstanding at August 31, 2008 and February 29, 2008, respectively (908) (756) Accumulated other comprehensive income (loss) (1,283) 43 --------- --------- Total Shareholders' Equity 26,993 26,355 --------- --------- Total Liabilities and Shareholders' Equity $ 100,581 $ 85,626 ========= ========= Q.E.P. CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) (Unaudited) For the Three Months For the Six Months Ended August 31, Ended August 31, ------------------ ------------------ 2008 2007 2008 2007 -------- -------- -------- -------- Net sales $ 61,000 $ 57,162 $113,885 $114,125 Cost of goods sold 43,456 40,992 80,305 81,402 -------- -------- -------- -------- Gross profit 17,544 16,170 33,580 32,723 Operating costs and expenses: Shipping 7,211 5,680 12,818 11,779 General and administrative 4,584 4,123 9,038 8,813 Selling and marketing 3,773 3,430 7,398 6,530 Other expense (income), net (33) (687) (145) (686) -------- -------- -------- -------- Total operating costs and expenses 15,535 12,546 29,109 26,436 -------- -------- -------- -------- Operating income 2,009 3,624 4,471 6,287 Change in put warrant liability -- (1,400) -- (1,439) Interest expense, net (578) (638) (1,033) (1,298) -------- -------- -------- -------- Income before provision for income taxes 1,431 1,586 3,438 3,550 Provision for income taxes 618 1,527 1,387 2,634 -------- -------- -------- -------- Net income $ 813 $ 59 $ 2,051 $ 916 ======== ======== ======== ======== Net income per share: Basic $ 0.24 $ 0.02 $ 0.60 $ 0.26 ======== ======== ======== ======== Diluted $ 0.23 $ 0.02 $ 0.59 $ 0.25 ======== ======== ======== ======== Weighted average number of common shares outstanding Basic 3,426 3,436 3,429 3,438 ======== ======== ======== ======== Diluted 3,463 3,641 3,479 3,621 ======== ======== ======== ======== Q.E.P. CO., INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (In Thousands) (Unaudited) For the Six Months Ended August 31, ---------------------- 2008 2007 --------- --------- Cash flows from operating activities: Net income $ 2,051 $ 916 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 922 1,055 Change in fair value of put warrant liability -- 1,439 Bad debt expense 113 111 Gain on sale of businesses -- (605) Stock-based compensation expense (37) 265 Deferred income taxes -- 1,734 Changes in assets and liabilities: Accounts receivable (7,655) (1,719) Inventories (8,564) (2,959) Prepaid expenses and other current assets 458 1 Deferred costs and other assets (2,952) 23 Trade accounts payable and accrued liabilities 6,208 2,137 --------- --------- Net cash provided by (used in) operating activities (9,456) 2,398 --------- --------- Cash flows from investing activities: Capital expenditures (360) (289) Proceeds from sale of businesses 335 3,053 --------- --------- Net cash provided by (used in) investing activities (25) 2,764 --------- --------- Cash flows from financing activities: Net borrowings under lines of credit 10,236 (1,520) Borrowings of long-term debt 547 1,397 Repayments of long-term debt (1,054) (2,427) Settlement of put warrant liability -- (2,300) Purchase of treasury stock (154) (60) Dividends (7) (12) --------- --------- Net cash provided by (used in) financing activities 9,568 (4,922) --------- --------- Effect of exchange rate changes on cash (46) 13 --------- --------- Net increase in cash 41 253 Cash and cash equivalents at beginning of period 949 822 --------- --------- Cash and cash equivalents at end of period $ 990 $ 1,075 ========= =========