Net Sales - $302.7 Million
Net Income - $16.1 Million or $4.88 Per
Diluted Share
Q.E.P. CO., INC. (OTC:QEPC.PK) (the "Company")
today reported its consolidated results of operations for the
fiscal year ended February 28, 2014:
|
Year Ended |
|
February 28, 2014 |
February 28, 2013 |
|
|
|
Net sales |
$ 302,706 |
$ 283,699 |
Cost of goods sold |
217,481 |
202,404 |
Gross profit |
85,225 |
81,295 |
Operating expenses |
75,324 |
69,721 |
Operating income |
9,901 |
11,574 |
Non-operating income |
11,461 |
1,260 |
Interest expense, net |
(963) |
(718) |
Income before provision for income
taxes |
20,399 |
12,116 |
Provision for income taxes |
4,311 |
3,977 |
Net income |
$ 16,088 |
$ 8,139 |
|
|
|
Net income per share: |
|
|
Basic |
$ 4.92 |
$ 2.46 |
Diluted |
$ 4.88 |
$ 2.44 |
Weighted average number of common
shares outstanding: |
|
|
Basic |
3,271 |
3,308 |
Diluted |
3,295 |
3,338 |
Lewis Gould, Chairman of the Board, commented, "This was a
transitional year for your company. Our sales are up substantially
as a result of the continuing implementation of our acquisition
strategy and our expanded market penetration. Through this
process, we also are addressing the concentration of our business
with a major customer. As this transition takes place, there
is always some pain with associated margin erosion while we build
our business in new areas. That was the case this year."
Mr. Gould continued "To further advance our transformation, the
Company purchased Faus Group, Inc. on February 28th. Faus is a
manufacturer of very high end laminate flooring. The laminate
will help to round out our offering along with our previous Harris
Wood acquisition, so that we now have wood, laminate and a
comprehensive bundle of installation accessories. This makes
us a more complete supplier and adds to our stable of industry
recognized brands. This strategy also can be seen in the overseas
acquisitions of Homelux and Plasplugs that the company completed
this past year and its purchase of the Tomecanic and Bénètiere
trade names subsequent to our fiscal year-end."
Mr. Gould concluded "The Faus acquisition also provided the
Company with significant tax advantages and a superior
manufacturing and distribution facility with over 380,000 square
feet in Calhoun, Georgia. This provides the Company with an
opportunity to consolidate some of its operations within the
Calhoun facility. This consolidation will continue throughout
the coming year."
Net sales during fiscal year 2014 increased by $19.0 million, or
6.7% as compared to the prior fiscal year. This increase is a
result of the fiscal 2014 acquisitions of Homelux and Plasplugs in
Europe, the impact of including a full year of the fiscal 2013
investments in Nupla, Imperial and a US injection molding
operation, and organic growth in most of our businesses. These
increases were partially offset by the impact of a significant
North American customer's discontinued purchases of certain
products during the second quarter of fiscal 2014, changes in
foreign currency exchange rates and the impact of a fire in the
Company's Australian operations during fiscal year 2014.
Gross profit increased during fiscal 2014 by $3.9 million or
4.8% to $85.2 million from $81.3 million in the prior fiscal year.
As a percentage of net sales, gross margin decreased modestly to
28.2% in fiscal 2014 compared to 28.7% in fiscal 2013. The
change in gross profit reflects the incremental contribution of
acquisitions with overall higher gross margins and a somewhat more
favorable product mix offset by discontinued sales of certain
products, increases in raw material costs associated with wood
flooring manufacturing operations, changes in foreign currency
exchange rates that impact both the purchasing power of the
Company's foreign operations and the translation of foreign
results, and the opportunity costs of the Australian fire.
Operating expenses for fiscal 2014 were $75.3 million or 24.9%
of net sales compared with operating expenses for fiscal 2013 of
$69.7 million or 24.6% of net sales. The increase of $5.6 million
was principally attributable to the expenses of acquired operations
offset by decreases in shipping costs associated with the loss of
certain North American sales and decreases from the impact of
changes in foreign currency exchange rates.
Non-operating income for fiscal year 2014 primarily resulted
from the excess of $8.3 million of the fair value of net assets
acquired in the Faus Group, Inc. acquisition over the related
purchase price and the $3.4 million net gain realized on the sale
and leaseback of a facility in Canada. The non-operating income for
fiscal year 2013 represents the excess of the fair value of net
assets acquired in the Imperial Industries, Inc. acquisition over
the related purchase price.
Interest expense increased from $0.7 million in fiscal 2013 to
$1.0 million in fiscal 2014 principally due to an increase in
average outstanding borrowings driven by the Company's acquisition
activities.
The provision for income taxes as a percentage of income before
taxes for fiscal 2014 was 21.1% compared to 32.8% for fiscal 2013.
In both fiscal years, the reduction in the effective tax rate below
the US statutory tax rate is principally associated with
non-operating income that is not subject to tax and lower foreign
tax rates offset by state and local US taxes and certain
non-deductible amortization costs of acquired intangible
assets.
As a result, fiscal 2014 net income increased to $16.1 million
from $8.1 million in fiscal 2013 and net income per diluted share
increased to $4.88 per share from $2.44 per share,
respectively.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) excluding the effects of non-operating income were $14.2
million in fiscal 2014 as compared to $14.5 million for fiscal
2013:
|
Fiscal Year |
|
2014 |
2013 |
Net income |
$ 16,088 |
$ 8,139 |
Add back (deduct): |
|
|
Interest |
963 |
718 |
Provision for income taxes |
4,311 |
3,977 |
Depreciation and amortization |
4,270 |
2,959 |
Non-operating income |
(11,461) |
(1,260) |
EBITDA before non-operating income |
$ 14,171 |
$ 14,533 |
The increase in depreciation and amortization in fiscal 2014 as
compared to fiscal 2013 was principally associated with the
amortization of acquired intangible assets.
Cash provided by operations for fiscal 2014 was $7.7 million as
compared to $8.2 million in fiscal 2013. The modest decrease in
cash from operations was entirely attributable to an increase in
the funding of working capital. Cash from operations during fiscal
2014 and net proceeds from the sale and leaseback of a Canadian
facility principally were used to contribute approximately $7.8
million toward the funding of acquisitions, to increase cash
balances, and to fund capital expenditures and the purchase of
treasury shares. The remaining funding for acquisition activities
was provided from existing credit facilities. Subsequent to its
fiscal 2014 year-end, the Company expanded its existing credit
facilities to include new term loan facilities.
Working capital at the end of the Company's fiscal year 2014
decreased to $29.2 million from $38.0 million at the end of the
2013 fiscal year and total debt increased to $41.4 million from
$15.3 million during the same period primarily due to changes
associated with acquisition activities. During fiscal year
2014, book value per share of common stock increased 29.8% to
$20.49 at February 28, 2014 from $15.79 at February 28, 2013.
The Company will be hosting a
conference call to discuss these results and to answer your
questions at 10:00 a.m. Eastern Time on Thursday, May 22, 2014. If
you would like to join the conference call, dial 1-877-941-1427
toll free from the US or 1-480-629-9664 internationally
approximately 10 minutes prior to the start time and ask for the
Q.E.P. Co., Inc. Fiscal Year 2014 Conference Call / Conference ID
4683751. A replay of the conference call will be available until
midnight May 29th by calling 1-877-870-5176 toll free from the US
and entering pin number 4683751; internationally, please call
1-858-384-5517 using the same pin number.
The Company is posting its consolidated fiscal 2014 audited
financial statements on the Investor section of its website at
www.qepcorporate.com today. The Company expects to announce
its first quarter fiscal year 2015 results during the week
beginning June 23, 2014.
Q.E.P. Co., Inc., founded in 1979, is a world class, worldwide
provider of innovative, quality and value-driven flooring and
industrial solutions. As a leading manufacturer, marketer and
distributor, QEP delivers a comprehensive line of hardwood and
laminate flooring, flooring installation tools, adhesives and
flooring related products targeted for the professional installer
as well as the do-it-yourselfer. In addition, the Company provides
industrial tools with cutting edge technology to the industrial
trades. Under brand names including QEP®, ROBERTS®, Capitol®,
Harris®Wood, Fausfloor®, Vitrex®, Homelux®, TileRite®, PRCI®,
Nupla®, HISCO®, Plasplugs, Ludell®, Porta-Nails®, Tomecanic®,
Bénètiere® and Elastiment®, the Company markets over 7,000
products. The Company sells its products to home improvement retail
centers, specialty distribution outlets, municipalities and
industrial solution providers in 50 states and throughout the
world.
This press release contains forward-looking statements,
including statements regarding future market position and
profitability, potential acquisition opportunities and benefits,
capital availability and shareholder value. These statements
are not guarantees of future performance and actual results could
differ materially from our current expectations.
CONTACT: Q.E.P. Co., Inc.
Richard A. Brooke
Senior Vice President and
Chief Financial Officer
561-994-5550
Q E P (QX) (USOTC:QEPC)
Historical Stock Chart
From May 2024 to Jun 2024
Q E P (QX) (USOTC:QEPC)
Historical Stock Chart
From Jun 2023 to Jun 2024