Q.E.P. CO., INC. REPORTS FISCAL 2023 FIRST QUARTER FINANCIAL RESULTS
Quarterly Net Sales of $117.1 million
Quarterly Net Income of $1.0 million
BOCA RATON, FLORIDA — July 14, 2022 — 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 2023, which ended on May 31, 2022.
Q.E.P. reported net sales of $117.1 million for the quarter ended May 31, 2022, an increase of $2.7 million or 2.3% compared to $114.4 million in the first quarter of fiscal 2022. The increase in net sales was primarily due to year-over-year price increases that were implemented to mitigate the impact of inflationary pressures. These price increases were partially offset by lower sales volume and the currency translation impact of the strong U.S. Dollar in the current period. As a percentage of net sales, gross margin was 26.4% in the first quarter of fiscal 2023, as compared to 27.4% in the first quarter of fiscal 2022.
Lewis Gould, Executive Chairman, commented on the Company’s results, “We continue to be adversely impacted by significant inflationary pressures and disruption to the global supply chain. Despite implementing an unprecedented series of price increases, we continue to lag the impact of elevated inbound freight rates, along with higher product, labor and other operating costs. In light of these headwinds, the Company continues to closely monitor and take appropriate actions on marginally profitable products, product lines and operating expenses.”
Mr. Gould concluded, “The Company recognizes the challenging and volatile environment in which we operate and remains focused on improving the overall profitability of our operations.”
The Company’s gross profit for the first quarter of fiscal 2023 was $30.9 million, representing a decrease of $0.4 million, or 1.4% from $31.3 million in the first quarter of fiscal 2022. The decrease in absolute gross margin and gross margin as a percentage of net sales was due to increased inbound freight and products costs, that were not fully recovered through price increases to customers and cost reduction initiatives.
Operating expenses for the first quarter of fiscal 2023 and 2022 were $29.1 million or 24.9% of net sales and $27.3 million or 23.9% of net sales, respectively. The increase in operating expenses was due to higher outbound freight costs directly related to higher energy costs. Additionally, the Company had higher personnel and marketing costs as it reinvested in sales support infrastructure, including marketing displays and samples, to support the recent launch of certain flooring product lines.
The higher interest expense during the first quarter of fiscal 2023 compared to the first quarter of fiscal 2022 was due to an increase in borrowings under the Company’s credit facilities and higher interest rates during the current period.