NET SALES - $283.7 MILLION
NET INCOME - $8.1 MILLION OR $2.44 PER DILUTED SHARE
BOCA RATON, Fla., May 28, 2013 (GLOBE NEWSWIRE) -- Q.E.P. CO., INC. (OTC:QEPC.PK) (the "Company") today reported its consolidated results of operations for the fiscal year ended February 28, 2013:
|(In thousands, except per share data)|| February 28, |
| February 29, |
|Net sales||$ 283,699||$ 261,408|
|Cost of goods sold||202,404||182,520|
|Interest expense, net||(718)||(929)|
|Income before provision for income taxes||12,116||15,243|
|Provision for income taxes||3,977||5,022|
|Net income||$ 8,139||$ 10,221|
|Net income per share:|
|Basic||$ 2.46||$ 3.07|
|Diluted||$ 2.44||$ 3.01|
Lewis Gould, Chairman of the Board, commented, "We are pleased with our sales increase for fiscal 2013, which includes the positive contribution of our recent acquisitions. Nonetheless, we continue to face pricing pressures from global customers and we are building our SG&A faster than our margin growth." Mr. Gould continued, "As a result, we are placing an increased focus on our strategic initiatives to expand our sales and earnings base. That strategy will continue to include acquiring companies that contribute to the Company's sales and earnings growth and that leverage our existing overhead. Additionally, the Company is continually taking steps to moderate cost increases and improve efficiency." Lastly, Mr. Gould pointed out "I am extremely pleased that the growth in our book value continues to reflect the Company's focus on building net asset value for our shareholders."
Net sales during fiscal year 2013 increased in every quarter as compared to fiscal year 2012 resulting in a year over year increase of $22.3 million or 8.5%. The year over year increase reflects organic sales growth both internationally and domestically and the contribution of acquisitions in the US during the current year offset by the effects of competitive pricing pressures realized during the year in North American and, to a lesser degree, international markets.
Gross margin increased to $81.3 million from $78.9 million for fiscal 2013 and fiscal 2012, respectively, or $2.4 million. However, as a percentage of net sales, gross margin decreased to 28.7% in fiscal 2013 compared to 30.2% in fiscal 2012. The decrease in gross margin as a percentage of net sales was principally due to competitive pricing pressures and increased sales in our international markets from programs that ship product directly to our customers from our suppliers, which programs carry lower margins and lower expenses with comparable contributions to operating income.
Operating expenses for fiscal 2013 were $69.7 million or 24.6% of net sales compared to operating expenses before restructuring charges for fiscal 2012 of $61.4 million or 23.5% of net sales. The increase in operating expenses as a percentage of net sales principally reflects an increased investment in personnel, increased employee benefit and marketing costs in the US, and transaction costs associated with the Company's acquisition activities. Restructuring charges included in fiscal 2012 relate to non-cash charges associated with the Company's Argentine operations.
Non-operating income for fiscal 2013 represents the fair value of net assets acquired in excess of the purchase price associated with certain of the Company's acquisition activities.
The Company's results of operations also benefited from a decrease in interest expense resulting from continued decreases in average outstanding borrowings throughout fiscal year 2013.
The provision for income taxes as a percentage of income before taxes for fiscal 2013 was 32.8% compared to 32.9% for fiscal 2012. In both years the reduction in the Company's effective tax rate below statutory rates is principally associated with transactions outside the ordinary course of business.
As a result of the increase in operating expenses at a rate faster than our increase in gross margin, net income for fiscal 2013 was $8.1 million as compared to $10.2 million in fiscal 2012. Net income per diluted share for fiscal 2013 was $2.44 compared to $3.01 in fiscal 2012.
Earnings before interest, taxes, depreciation and amortization (EBITDA) excluding the effects of non-operating income and restructuring charges was $14.5 million in fiscal 2013 as compared to $20.1 million for fiscal 2012:
|Net income||$ 8,139||$ 10,221|
|Add back (deduct):|
|Provision for income taxes||3,977||5,022|
|Depreciation and amortization||2,959||2,613|
|EBITDA before non-operating income and restructuring charges||$ 14,533||$ 20,058|
Cash provided by operations for fiscal 2013 was $8.2 million as compared to $12.2 million in fiscal 2012, principally reflecting lower net income after adjustments for non-cash items. Cash from operations during fiscal 2013 was principally used to fund acquisition activities, purchase additional treasury shares and for investments in new IT and manufacturing systems to improve productivity. Additional funding for acquisition activities was provided from existing lines of credit.
Working capital at the end of the Company's fiscal year 2013 was $38.0 million, an increase of $2.1 million from $35.9 million at the end of the 2012 fiscal year. During fiscal year 2013, book value per share of common stock increased 16.0% to $15.79 at February 28, 2013 from $13.61 at February 29, 2012.
The Company will be hosting a conference call to discuss these results and to answer your questions at 10:00 a.m. Eastern Time on Thursday, May 30, 2013. If you would like to join the conference call, dial 1-877-941-4774 toll free from the US or 1-480-629-9760 internationally approximately 10 minutes prior to the start time and ask for the Q.E.P. Co., Inc. Fiscal Year 2013 Conference Call / Conference ID 4620505. A replay of the conference call will be available until midnight June 6th by calling 1-877-870-5176 toll free from the US and entering pin number 4620505; internationally, please call 1-858-384-5517 using the same pin number.
The Company is posting its consolidated fiscal 2013 audited financial statements on the Investor section of its website at www.qepcorporate.com today. The Company expects to announce its first quarter fiscal year 2014 results during the week beginning June 24, 2013.
Q.E.P. Co., Inc., founded in 1979, is a world class, worldwide provider of innovative, quality and value-driven flooring and industrial solutions. As a leading worldwide manufacturer, marketer and distributor, QEP delivers a comprehensive line of hardwood flooring, flooring installation tools, adhesives and flooring related products targeted for the professional installer as well as the do-it-yourselfer. In addition the Company provides industrial tools with cutting edge technology to all of the industrial trades. Under brand names including QEP®, ROBERTS®, Capitol®, Harris®Wood, Vitrex®, Homelux®, TileRite®, PRCI®, Nupla®, HISCO®, Ludell®, Porta-Nail® and Elastiment®, the Company markets over 5,000 products. The Company sells its products to home improvement retail centers, specialty distribution outlets, municipalities and industrial solution providers in 50 states and throughout the world.
This press release contains forward-looking statements, including statements regarding the results of acquisitions, potential acquisitions, expansion of our sales and earnings base, growth in sales and earnings, pricing pressures, cost increases, and efforts to moderate the influence of changes in market pricing and cost conditions. These statements are not guarantees of future performance and actual results could differ materially from our current expectations.
CONTACT: Q.E.P. Co., Inc. Richard A. Brooke Senior Vice President and Chief Financial Officer 561-994-5550Source:Q.E.P. Co., Inc.