Q.E.P. CO., INC. REPORTS FISCAL 2022 FIRST QUARTER FINANCIAL RESULTS
Record Quarterly Net Sales of $114.4 million
Quarterly Net Income of $2.6 million
BOCA RATON, FLORIDA — July 14, 2021 — Q.E.P. CO., INC. (OTC: QEPC.PK) (the “Company” or “QEP”) today reported its consolidated results of operations for the first quarter of fiscal year 2022, which ended on May 31, 2021.
Q.E.P. reported net sales of $114.4 million for the quarter ended May 31, 2021, an increase of $28.4 million or 33.0% from the $86.0 million reported in the first quarter of fiscal 2021. The increase in net sales increase was due to strong economic activity during the current period as compared to the adverse impact of the worldwide economic downturn caused by the COVID-19 pandemic in the corresponding prior year period. As a percentage of net sales, gross margin was 27.4% in the first quarter of fiscal 2022, as compared to 27.5% in the first quarter of fiscal 2021.
Lewis Gould, Executive Chairman, commented on the Company’s results, “We are pleased with the Company’s record sales for the first quarter, which not only reflect an economic rebound from last year’s decline caused by the COVID-19 pandemic, but also strong industry trends and demand for our products. To support this sales growth, the Company is cautiously reinvesting in personnel and marketing initiatives. The scarcity and rising cost of raw materials and labor, the weakened US Dollar and unprecedented increases in transcontinental freight rates, present operating challenges.”
Mr. Gould concluded, “In light of current inflationary pressures, the Company is actively engaged in discussions with our suppliers and customers to implement actions to mitigate these threats and preserve shareholder value.”
The Company’s gross profit for the first quarter of fiscal 2022 was $31.3 million, representing an increase of $7.6 million, or 32.3% from $23.7 million in the first quarter of fiscal 2021, which is the result of the same economic factors that caused the increase in sales.
Operating expenses for the first quarter of fiscal 2022 and 2021 were $27.3 million or 23.9% of net sales and $22.3 million or 25.9% of net sales, respectively. The increase in operating expenses was due to higher shipping costs related to higher sales volume, as well as higher personnel and marketing costs as the Company reinvested in sales support infrastructure that was eliminated or reduced during the prior year due to the economic downturn caused by the COVID-19 pandemic. Additionally, during the prior year the Company, non-US based operations benefited from local government subsidies received for maintaining employment levels.
The lower interest expense during the first quarter of fiscal 2022 compared to the first quarter of fiscal 2021 was due to a reduction in borrowings under the Company’s credit facilities and lower interest rates during the current period.