Q.E.P. CO., INC. REPORTS FISCAL 2021 FIRST QUARTER SALES AND EARNINGS
BOCA RATON, FLORIDA — July 13, 2020 — Q.E.P. CO., INC. (OTC: QEPC.PK) (the “Company” or “QEP”) today reported its consolidated results of operations for the first quarter of its fiscal year ending February 28, 2021.
Q.E.P. reported net sales of $86.0 million for the quarter ended May 31, 2020, a decrease of $16.6 million or 16.2% from the $102.6 million reported in the first quarter of fiscal 2020. The decline in net sales reflects the adverse impact of the worldwide economic downturn caused by the COVID-19 pandemic. As a percentage of net sales, gross margin was 27.5% in the first quarter of fiscal 2021, as compared to 26.1% in the first quarter of fiscal 2020.
Lewis Gould, Chairman & CEO, commented on the Company’s results, “The Company’s sales were negatively impacted by the Stay in Place Orders that were enacted in all of our sales territories. This sales downturn was
significantly mitigated by many of the Company’s larger customers, and, by extension, the Company being designated as a provider of essential services, which allowed us to continue operating and shipping without a
major interruption. Notwithstanding this, the Company took aggressive actions to reduce overhead and discretionary expenses, including a reduction-in-force, employee furloughs, curtailing non-essential travel, and
overtime, along with accessing government subsidy and support programs that were available to our non-US based operations. Collectively, these actions were able to preserve the Company’s profitability during the
Mr. Gould concluded, “The Company has made a deliberate and careful response to the challenges presented during these difficult times and has been sensitive to our social responsibility to our associates, customers,
suppliers and shareholders, along with the broader communities in which we operate. As we navigate these turbulent headwinds, we believe the Company will emerge better positioned for sustainable future earnings
The Company’s gross profit for the first quarter of fiscal 2021 was $23.7 million, representing a decrease of $3.2 million, or 11.8% from $26.8 million in the first quarter of fiscal 2020, which is the result of the same economic
factors that caused the sales decline. The gross margin as a percentage of net sales improved due to favorable changes in product mix and timely actions taken by the Company to reduce manufacturing overhead during the first quarter of fiscal 2021.
Operating expenses for the first quarter of fiscal 2021 and 2020 were $22.3 million or 25.9% of net sales and $30.4 million or 29.6% of net sales, respectively. The reduction in operating expenses was due to lower shipping costs related to lower sales volume and quarter-over-quarter synergies realized through the integration and rationalization of the fiscal 2019 acquisitions, along with lower personnel costs due to reduction-in-force and furlough activity during the COVID-19 economic activity downturn, along with government subsidies received for maintaining employment levels at the Company’s international operations.
The lower interest expense during the first quarter of fiscal 2021 compared to the first quarter of fiscal 2020 was due to a reduction in borrowings under the Company’s credit facilities and lower interest rates during the current period.
The provision for income taxes as a percentage of income before taxes was 28.0% for the first quarter of fiscal 2021, as compared to a benefit for income taxes of 28.0% for the first quarter of fiscal 2020.
Net income for the first quarter of fiscal 2021 was $0.7 million or $.22 per diluted share, compared to net loss of $1.3 million or $.42 per diluted share for the first quarter of fiscal 2020.
Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) as adjusted for non-operating income for the first quarter of fiscal 2021 was $2.5 million compared to a loss of $2.4 million for the first quarter
of fiscal 2020.
|For the Three Months|
|Net income (loss)||$688||$(1,320)|
|Add: Interest expense, net||$403||$678|
|(Benefit)/provision for income taxes||$268||$(513)|
|Depreciation and amortization||$1,140||$1,190|
|EBITDA as adjusted for non-operating income||$2,499||$(2,364)|