Net Sales - $237.9 Million
Net Income - $9.4 Million or $2.77 Per Diluted Share
BOCA RATON, Fla., May 19, 2011 (GLOBE NEWSWIRE) -- Q.E.P. CO., INC. (Pink Sheets:QEPC) (the "Company") today reported its consolidated results of operations for the fiscal year ended February 28, 2011:
| Year Ended February 28 | ||
| (In thousands, except per share data) | 2011 | 2010 |
| Net sales | $ 237,886 | $ 205,853 |
| Cost of goods sold | 164,334 | 140,486 |
| Gross profit | 73,552 | 65,367 |
| Costs and expenses | 58,383 | 51,655 |
| Operating income | 15,169 | 13,712 |
| Interest expense, net | (1,363) | (1,156) |
| Income before provision for income taxes | 13,806 | 12,556 |
| Provision for income taxes | 4,372 | 3,579 |
| Net income | $ 9,434 | $ 8,977 |
| Net income per share: | ||
| Basic | $ 2.84 | $ 2.59 |
| Diluted | $ 2.77 | $ 2.57 |
| Weighted average number of common shares outstanding: | ||
| Basic | 3,314 | 3,468 |
| Diluted | 3,409 | 3,496 |
Lewis Gould, Chairman of the Company's Board of Directors, commented: "This year's results reflect positively on the Company's continued progress in successfully expanding its business while maintaining a diligent focus on controlling costs. This year's success also provides a stronger foundation for future growth within our industry. The February 2010 acquisition of Harris®Wood has been successfully integrated into our operations and our growth in net assets remains at historic highs while we continue to pay down debt and increase share value." Mr. Gould added, "We are continuously evaluating opportunities to expand our product lines and customer base, increase market share and improve performance. We continue to seek synergistic acquisitions and in this regard, this month, the Company acquired Porta-Nails, Inc., a manufacturer of quality wood floor installation equipment and fasteners. This acquisition expands the product line in our ROBERTS® distributor and tool rental business."
The growth in fiscal 2011 net sales reflects the expansion of the Company's operations to include a comprehensive line of hardwood flooring through the acquisition of its Harris®Wood operations, a modest year over year growth in net sales from the Company's operations outside of North America, a decrease in certain accumulated sales allowances and the benefit of changes in currency exchange rates.
Gross profit showed substantial improvement associated with increased sales. As a percent of net sales, gross profit was 30.9% in fiscal 2011 versus 31.8% in fiscal 2010 reflecting the lower margins inherent in our Harris®Wood operations offset by both improved product mix in the Company's other operations and the increased purchasing power of its international operations associated with changes in currency exchange rates.
While operating expenses for fiscal 2011 increased compared to fiscal 2010, as a percentage of sales operating expenses decreased to 24.5% in fiscal 2011 compared to 25.1% in fiscal 2010. The overall increase in costs reflects the costs of supporting higher sales volume, including both personnel and marketing efforts. Both fiscal years' results also reflect realized currency translation losses and other costs associated with the restructuring of certain international operations.
The Company's results of operations also were impacted by a modest increase in interest expense, principally resulting from the financing of the Harris®Wood acquisition offset by reductions in other debt outstanding, and an increase in the fiscal 2011 effective tax rate to 31.7% from 28.5% in fiscal 2010, which reflected larger tax benefits associated with our international operations.
Separately, the Company noted that during fiscal year 2011 aggregate borrowings decreased over 19% from $26.8 million to $21.7 million and that the Company purchased 109 thousand treasury shares for $1.4 million during the fiscal year. Working capital at the end of the Company's fiscal 2011 year was $27.6 million, an increase from $20.2 million at the end of the Company's 2010 fiscal year.
The Company also announced that today it posted its consolidated fiscal 2011 audited financial statements on the Investor Relations section of its website at www.qepcorporate.com and that it expects to announce its first quarter fiscal year 2012 results during the week beginning June 20, 2011.
If you would be interested in participating in a conference call to discuss the Company's fiscal year 2011 results and its first quarter 2012 results, please contact Ms. Paula Siegel at 561-994-5550 to indicate your interest. If there is sufficient investor interest, the Company will schedule a call to take place after it announces its first quarter results and notify investors by issuing a press release and through a posting on its website at www.qepcorporate.com in the Investor Relations section. Alternatively, the Company encourages investors who have questions concerning its results to contact the Company's Chief Financial Officer.
Q.E.P. Co., Inc., founded in 1979, is a leading worldwide manufacturer, marketer and distributor of a comprehensive line of hardwood flooring, flooring installation tools, adhesives and flooring related products targeted for the professional installer as well as the do-it-yourselfer. Under brand names including QEP®, ROBERTS®, Capitol®, Harris®Wood, Vitrex®, PRCI®, BRUTUS® and Elastiment®, the Company markets over 3,000 flooring and flooring related products. In addition to a complete hardwood flooring line, Q.E.P. products are used primarily for surface preparation and installation of wood, laminate, ceramic tile, carpet and vinyl flooring. The Company sells its products to home improvement retail centers and specialty distribution outlets in 50 states and throughout the world.
This press release contains forward-looking statements, including statements regarding market share, Company performance, cost control and potential growth associated with acquisitions, new products and customers. These statements are not guarantees of future performance and actual results could differ materially from our current expectations.