Q.E.P. Co., Inc. Reports Fiscal 2022 Year-End Sales and Earnings
Q.E.P. Co., Inc. (the “Company” or “QEP”) 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.
Non-operating loss in fiscal 2021 represents the sale of assets related to a non-core business unit.
The decrease in interest expense during fiscal 2022 as compared to fiscal 2021 was principally due to the reduction in borrowings under the Company’s credit facilities during the current year.
The provision for income taxes as a percentage of income before taxes was 23.4% for fiscal 2022, as compared to 27.3% for fiscal 2021.
Net income for fiscal 2022 was $9.6 million or $2.88 per diluted share, as compared to $6.9 million or $2.06 per diluted share for fiscal 2021.
Earnings before interest, taxes, depreciation and amortization (EBITDA), as adjusted for restructuring charges, non-operating income and gain on sale of real property was $18.3 million for fiscal 2022 as compared to $15.5 million for fiscal 2021.
Cash used by operations during fiscal 2022 was $11.0 million as compared to cash provided by operations of $24.8 million in fiscal 2021, reflecting an increase in operating income and an increase net investment in working capital, principally in inventory to mitigate the impact of supply chain disruptions during fiscal 2022. In fiscal 2022, cash used in operations was funded by borrowings under the Company’s credit facility and proceeds from the sale of property. In fiscal 2021, cash provided by operations, along with proceeds from the sale of property and the sale of a non-core business line were used to fund capital expenditures and repay borrowings under the Company’s credit facility.
Working capital as of February 28, 2022 was $55.0 million compared to $44.7 million at the end of the 2021 fiscal year. Aggregate debt, net of available cash balances at the end of fiscal 2022 was $33.4 million or 42.0% of equity, an increase of $10.0 million compared to $23.4 million or 32.9% of equity at the end of the 2021 fiscal year.
For the full fourth quarter results, click here.
Founded in 1979, Q.E.P. Co., Inc. is a leading designer, manufacturer and distributor of a broad range of best-inclass flooring and installation solutions for commercial and home improvement projects worldwide. QEP offers a comprehensive line of specialty installation tools, adhesives, and underlayment as well as a complete line of hardwood, luxury vinyl, and modular carpet tile. QEP sells its products throughout the world to home improvement retail centers, professional specialty distribution outlets, and flooring dealers under brand names including QEP®, LASH®, ROBERTS®, Vitrex®, Brutus®, PRCI®, Plasplugs®, Tomecanic®, Premix-Marbletite® (PMM), Apple Creek®, Homelux®, Capitol® and XPS Foam™. Brand names featured under
QEP’s Harris Flooring Group® include Harris®, Kraus® and Naturally Aged Flooring™. QEP is headquartered in Boca Raton, Florida with offices in Canada, Europe, Asia, Australia and New Zealand.
Enos Brown – Executive Vice President & CFO – (561) 994-5550
Source: Q.E.P. Co., Inc.