Q.E.P. CO., INC. REPORTS FISCAL 2023 NINE MONTH AND THIRD QUARTER FINANCIAL RESULTS
Nine Month Net Sales of $335.4 million
Nine Month Net Income of $0.7 million
BOCA RATON, FLORIDA — January 17, 2023 — Q.E.P. CO., INC. (OTCQX: QEPC) (the “Company” or “QEP”) today reported its consolidated results of operations for the first nine months and third quarter of its fiscal year 2023, which ended on November 30, 2022.
QEP reported net sales of $335.4 million for the nine months ended November 30, 2022, a decrease of $3.8 million or 1.1% from the $339.2 million reported in the same period of fiscal 2022. The Company reported net sales of $102.8 million for the quarter ended November 30, 2022, a decrease of $9.2 million or 8.2% from the $111.9 million reported in the same period of fiscal 2022. The decrease in net sales for the first nine months and third quarter of fiscal 2023 compared to the prior year reflects lower sales volume in the most recent three months, principally in the Company’s North America flooring business, and the currency translation impact of the strong U.S. Dollar in the current period, which were only partially offset by year-over-year product price increases to customers.
Lewis Gould, Executive Chairman, commented on the Company’s results, “While profitability for the first nine months is disappointing, supply chain costs are trending down from recent unprecedented highs, inventory levels are declining towards more normalized levels and the Company is beginning to reduce its debt burden. As part of our ongoing profit improvement initiatives, we remain focused on expanding primary sales channels, investing in core products and improving or disposing of non-accretive business units.”
The Company’s gross profit for the first nine months of fiscal 2023 was $87.8 million compared to $92.8 million in the corresponding fiscal 2022 period, a decrease of $5.0 million or 5.4%. Gross profit for the third quarter of fiscal 2023 was $27.6 million, representing a decrease of $2.9 million or 9.3%, from $30.5 million in the corresponding fiscal 2022 period. The Company’s gross margin as a percentage of net sales for the first nine months and third quarter of fiscal year 2023 was 26.2% and 26.9%, respectively, which decreased from 27.4% and 27.2% in the corresponding prior fiscal year periods, respectively. The decrease in gross margin as a percentage of net sales was due to inbound freight and other product cost increases during the earlier part of the fiscal year that have not been fully recovered through customer price increases and other cost reduction initiatives.
Operating expenses for the first nine months and third quarter of fiscal 2023 were $85.1 million and $26.6 million, respectively, or 25.4% and 25.8% of net sales in those periods, compared to $81.1 million and $26.4 million, respectively, or 23.9% and 23.6% of net sales in the comparable fiscal 2022 periods. The increase in operating expenses was due to increased outbound freight costs which resulted from higher fuel costs. Additionally, the Company had higher personnel and marketing costs, including marketing displays and samples, to support recently launched flooring product lines.