Q.E.P. CO., INC. REPORTS FISCAL 2022 YEAR-END SALES AND EARNINGS
Full Year Net Sales of $445.5 million and Net Income of $9.6 million
BOCA RATON, FLORIDA — June 1, 2022 — Q.E.P. CO., INC. (OTCQX: QEPC) (the “Company” or “QEP”) today reported its consolidated results of operations for its fiscal year ended February 28, 2022.
QEP reported net sales of $445.5 million for the year ended February 28, 2022, an increase of $57.9 million or 14.9% from the $387.6 million reported in fiscal 2021. The fiscal 2022 increase in net sales compared to the prior fiscal year reflects strong economic activity in the current year and the adverse impact of the worldwide economic downturn caused by the COVID-19 pandemic during the first quarter of fiscal 2021. As a percentage of net sales, gross margin was 27.1% in fiscal 2022, as compared to 28.0% in fiscal 2021.
Lewis Gould, Executive Chairman, commented on the Company’s results, “Despite significant inflationary pressures and unprecedented disruption in the global supply chain throughout fiscal 2022, the Company was able to achieve year-over-year net sales growth of 15% and adjusted EBITDA growth of 18%. The Company closely monitors the impact of rising costs on our profitability, and, where appropriate, has implemented price increases to mitigate margin erosion. In the latter part of the year, we also increased our investment in inventory to offset supply chain risk and ensure product availability to meet customer service levels.”
Mr. Gould concluded, “With increased volatility and uncertainty in global markets, the Company is focused on preserving profitability by managing overhead costs while still making the necessary investments to support our strategic priorities.”
The Company’s gross profit for fiscal 2022 was $120.7 million, representing an increase of $12.0 million, or 11.1% from $108.7 million in fiscal 2021. The decrease in gross margin as a percentage of net sales was due to increased inbound freight and cost of goods, that were not fully recovered through price increases to customers or cost reduction initiatives.
Operating expenses, excluding restructuring charges, were $106.7 million or 23.9% of net sales for fiscal 2022 and $96.7 million or 25.0% of net sales for fiscal 2021. The increase in operating expenses was due to higher shipping costs related to sales volume, along with higher personnel and marketing costs from the Company’s reinvestment in sales support infrastructure. The Company was able to leverage the 14.9% year-over-year net sales growth, resulting in 110 basis points decline in operating expenses as a percentage of net sales.
Operating expenses for fiscal 2022 and 2021 include restructuring charges related to the Company’s Canadian subsidiary of $0.2 million and $0.8 million, respectively, which consisted of legal, administrative and asset impairment charges, net of the benefit related to the Plan of Compromise and Arrangement approved by the subsidiary’s unsecured creditors.