QEPC News Q.E.P. Co., Inc., Reports $0.10 Earnings Per Share in Its Fiscal 2007 Third Quarter
BOCA RATON, Fla.--(BUSINESS WIRE)--Q.E.P. CO., INC. (Nasdaq:QEPC), today announced financial results
for its fiscal 2007 third quarter and nine months ended November 30,
2006.
Lewis Gould, Q.E.P.’s Chairman and Chief
Executive Officer, stated: “Because there will
be no conference call highlighting some of the financial results, I have
gone into more detail in discussing my comments for this release, which
parallels our 10-Q filing. Business conditions continued to be
challenging. However, sales stayed firm with the prior quarter and
increased 3.1 percent, compared to the same period last year. I am
greatly pleased that our sales for the nine-month period increased 4.8
percent to an all-time record of $163,063,000.
“For the fiscal 2007 third quarter, the
Company reported net income of $370,000, or $0.10 per diluted share,
compared to net income of $345,000, or $0.09 per diluted share for the
third quarter last year. After excluding the change in the put warrant
liability and other non-recurring items, the Company reported net income
of $971,000, or $0.26 per diluted share for the nine months as compared
to $829,000, or $0.22 per diluted share during the same period last year.
“I am especially pleased to report that for
the third quarter of fiscal 2007, the Company generated $2.4 million of
cash from operations, compared to $1.3 million in the third quarter of
fiscal 2006. For the first nine months of fiscal 2007, the Company
generated $2.5 million of cash from operations, compared to $1.7 million
for the same period last year.
“Although, the outlook for the current quarter
remains uncertain, the Company is pursuing several new initiatives to
offset current market weaknesses.”
On January 10, 2007, the Company reported that as of November 30, 2006,
it was in violation of a financial covenant that requires the Company to
maintain a certain senior debt to trailing EBITDA ratio. On January 12,
2007, the Company was granted a waiver of the non-compliance with this
covenant from the Company’s lenders.
Certain statements in this press release, including statements relating
to the success of the Company’s several new
initiatives to offset current market weaknesses, are forward-looking
statements, which are made pursuant to the safe-harbor provisions of the
Securities Litigation Reform Act of 1995. The forward-looking statements
are made only as of the date of this report and are subject to risks and
uncertainties which could cause actual results to differ materially from
those discussed in the forward-looking statements and from historical
results of operations. Among the risks and uncertainties that could
cause such a difference are our assumptions relating to the expected
growth in sales of our products, the continued success of our
manufacturing processes, continued increases in the cost of raw
materials and finished goods, improvements in productivity and cost
reductions, the continued success of initiatives with certain of our
customers, the success of our price increases initiatives, and the
success of our sales and marketing efforts. A more detailed discussion
of risks attendant to the forward-looking statements included in this
press release are set forth in the “Forward-Looking
Statements” section of our Annual Report on
Form 10-K for the year ended February 28, 2006, as amended, filed with
the SEC, and in other reports already filed with the SEC.
-Financial Information Follows-
Q.E.P. CO., Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share data)
November 30, 2006
February 28, 2006
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
$ 1,111
$ 852
Accounts receivable, less allowance for doubtful accounts of
approximately $276 and $361 as of November 30, 2006 and February 28,
2006, respectively
31,605
33,258
Inventories
30,347
34,128
Prepaid expenses and other current assets
3,399
3,717
Deferred income taxes
660
617
Total current assets
67,122
72,572
Property and equipment, net
7,265
8,296
Goodwill
9,578
16,799
Other intangible assets, net
2,914
3,109
Other assets
208
310
Total Assets
$ 87,087
$ 101,086
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable
$ 17,996
$ 24,041
Accrued liabilities
7,795
7,655
Lines of credit
28,463
26,284
Current maturities of long-term debt
4,162
4,431
Put warrant liability
978
2,298
Total current liabilities
59,394
64,709
Notes payable
3,030
4,950
Other long-term debt
2,601
4,197
Deferred income taxes
214
213
Total Liabilities
65,239
74,069
Commitments and Contingencies
--
--
SHAREHOLDERS' EQUITY
Preferred stock, 2,500,000 shares authorized, $1.00 par value;
336,660 shares issued and outstanding at November 30, 2006 and
February 28, 2006, respectively
337
337
Common stock; 20,000,000 shares authorized, $.001 par value;
3,513,341 and 3,458,341 shares issued, and 3,430,401 and 3,387,401
shares outstanding at November 30, 2006 and February 28, 2006,
respectively
3
3
Additional paid-in capital
9,964
9,539
Retained earnings
15,151
21,205
Treasury stock; 82,940 and 70,940 shares held at cost outstanding at
November 30, 2006 and February 28, 2006, respectively
(639)
(543)
Accumulated other comprehensive income
(2,968)
(3,524)
21,848
27,017
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 87,087
$ 101,086
Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
For the Three Months
Ended November 30,
For the Nine Months
Ended November 30,
2006
2005
2006
2005
As Restated
As Restated
Net sales
$ 54,455
$ 52,822
$ 163,063
$ 155,641
Cost of goods sold
39,760
38,472
118,238
112,540
Gross profit
14,695
14,350
44,825
43,101
Operating costs and expenses:
Shipping
5,560
5,095
16,665
15,416
General and administrative
4,430
4,721
14,565
13,944
Selling and marketing
3,551
3,555
10,842
10,665
Impairment loss on goodwill and other intangibles
(78)
-
7,520
-
Other expense (income), net
(38)
(111)
(41)
(1,275)
Total operating costs and expenses
13,425
13,260
49,551
38,750
Operating income (loss)
1,270
1,090
(4,726)
4,351
Change in put warrant liability
3
88
1,319
1,050
Interest expense, net
(711)
(681)
(2,167)
(1,811)
Income (loss) before provision for income taxes
562
497
(5,574)
3,590
Provision for income taxes
192
152
457
1,003
Net income (loss)
$ 370
$ 345
$ (6,031)
$ 2,587
Net income (loss) per share:
Basic
$ 0.10
$ 0.10
$ (1.78)
$ 0.76
Diluted
$ 0.10
$ 0.09
$ (1.78)
$ 0.69
Weighted-average number of common shares outstanding
Basic
3,423
3,387
3,402
3,387
Diluted
3,623
3,741
3,402
3,756
Net Income (Loss) Compared to Net Income Adjusted for the
Change in the Put Warrant Liability and Non-Recurring Items
(In thousands except per share data)
While Net Income Adjusted for the Change in the Put Warrant
Liability and Non-Recurring Items is not a measure of financial
performance under generally accepted accounting principles, the
Company believes that the measure provides meaningful comparisons
of the Company’s current and projected
operating performance with its historical results. The Company
uses Net Income Adjusted for the Change in the Put Warrant
Liability and Non-Recurring Items as an internal measure of its
business and believes it is utilized as an important measure of
performance by the investment community. Net Income Adjusted for
the Change in the Put Warrant Liability and Non-Recurring Items is
not meant to be considered a substitute or replacement for Net
Income as prepared in accordance with generally accepted
accounting principles. The reconciliation of Net Income to Net
Income Adjusted for the Change in the Put Warrant Liability and
Non-Recurring Items is as follows:
Net Income Adjusted for the Change in the Put Warrant
