Q.E.P. Co., Inc. Reports Fiscal 2026 Six Month And Second Quarter Financial Results

2025-10-15 08:31:10

(MENAFN- GlobeNewsWire - Nasdaq) Declares Third Quarter Cash Dividend

BOCA RATON, Fla., Oct. 15, 2025 (GLOBE NEWSWIRE) -- Q.E.P. CO., INC. (OTCQX: QEPC) (the“Company” or“QEP”) today reported its consolidated results of operations for the first six months and second quarter of fiscal year 2026, which ended on August 31, 2025.

Results of Operations

Net sales for the six months ended August 31, 2025 were $119.2 million, down $6.9 million or 5.5% from $126.1 million reported in the same period of fiscal 2025. Net sales for the second quarter ended August 31, 2025 were $57.7 million, down $4.9 million or 7.8% from $62.6 million reported in the second quarter of fiscal 2025. Net sales through the first six months of fiscal 2026 continue to be adversely impacted by elevated interest rates and consumer caution amid ongoing economic uncertainty, which have constrained home improvement spending.

Gross profit for the first six months of fiscal 2026 was $43.3 million compared to $44.8 million in the corresponding fiscal 2025 period, down $1.5 million or 3.4%. Gross profit for the second quarter of fiscal 2026 was $20.6 million compared to $22.3 million for the second quarter of fiscal 2025, down $1.7 million or 7.6%. As a percentage of net sales, gross margin for the first six months and second quarter of fiscal 2026 was 36.3% and 35.7%, respectively, up from 35.5% and 35.6% in the same periods of the prior fiscal year. The Company has maintained its gross margin as a percentage of net sales principally through the sell-through of inventory purchased before recent tariff increases. Current inventory values reflect the incremental tariff cost that will cycle through gross margin in the coming months.

“Thank you to the 350 QEP Associates who wake up every day to serve our customers,” said Len Gould, President and Chief Executive Officer.“Despite tariff variabilities and a challenging economic environment, we continue to fill orders at or near 100% levels, while shipping 100% on time.” Gould continued,“QEP has transformed itself mightily over the course of the past few years. Our balance sheet has never been stronger. We remain absolutely laser focused on fast tracking innovation throughout our business, all while continuing to invest in our domestic manufacturing base.”

Operating expenses totaled $32.9 million and $16.0 million for the first six months and second quarter of fiscal 2026, respectively, or 27.6% and 27.8% of net sales in those periods, compared to $34.5 million and $17.2 million, respectively, or 27.3% and 27.5% of net sales in the comparable fiscal 2025 periods. The reduction in operating expenses reflects lower variable freight costs and personnel-related expenses.

Interest income from the Company's invested cash was $0.4 million and $0.2 million for the first six months and second quarter of fiscal 2026, respectively, relatively unchanged from the comparable fiscal 2025 periods.

The provision for income taxes as a percentage of income before taxes was 26.0% for both the first six months and second quarter of fiscal 2026 versus 28.0% in each of the corresponding fiscal 2025 periods.

Net income from continuing operations for the first six months and second quarter of fiscal 2026 was $8.0 million and $3.5 million, respectively, or $2.45 and $1.09, respectively, per diluted share. For the comparable periods of fiscal 2025, net income from continuing operations was $7.7 million and $3.8 million, respectively, or $2.34 and $1.17, respectively, per diluted share.

Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, as adjusted, for the first six months and second quarter of fiscal 2026 was $11.1 million and $5.0 million, respectively, or 9.3% and 8.6% of net sales, respectively. For the comparable periods of fiscal 2025, EBITDA was $11.0 million and $5.5 million, respectively, or 8.7% of net sales each period.


		For the Three Months Ended		For the Six Months Ended
		August 31, 2025		August 31, 2024		August 31, 2025		August 31, 2024

Net income from continuing operations	$	3,538			$	3,832			$	7,982			$	7,735

Add:	Interest (income) expense, net		(240	)			(223	)			(417	)			(406	)
	Provision for income taxes		1,244				1,495				2,805				3,003
	Depreciation and amortization		439				348				807				686
	Gain on sale of business		-				-				(71	)			-
EBITDA, as adjusted	$	4,981			$	5,452			$	11,106			$	11,018

Cash provided by operations during the first six months of fiscal 2026 was $8.8 million, compared to $11.2 million in the first six months of fiscal 2025, reflecting payments to suppliers for the strategic inventory increase in anticipation of tariff implementation. In the first six months of fiscal 2026, cash provided by operations, along with proceeds from the sale of a business, was used to fund capital expenditures, repurchase stock, return capital to stockholders through dividends, and increase cash balances. In the first six months of fiscal 2025, cash provided by operations, along with proceeds from the sale of businesses, was used to fund capital expenditures, pay dividends, repurchase stock and increase the Company's cash surplus.

As of August 31, 2025, working capital totaled $72.3 million, compared to $67.4 million at the end of fiscal 2025. Aggregate available cash, net of outstanding debt, as of August 31, 2025 was $34.3 million, up from $28.4 million at the end of fiscal 2025.

Cash Dividend Declaration

QEP's Board of Directors declared a quarterly cash dividend of $0.20 per share on its common stock, payable on November 26, 2025 to stockholders of record as of November 3, 2025, which reflects QEP's ongoing commitment to returning value to stockholders.

The Company welcomes investor inquiries via email at ... .

About QEP

Founded in 1979, Q.E.P. Co., Inc. is a leading designer, manufacturer and distributor of a broad range of best-in-class flooring installation solutions for commercial and home improvement projects worldwide. QEP offers a comprehensive line of specialty installation tools, adhesives, and underlayment. QEP sells its products throughout the world to home improvement retail centers, and professional specialty distribution outlets, under brand names including QEP^®, LASH^®, ROBERTS^®, Capitol^®, Premix-Marbletite^® (PMM), Brutus^® and Homelux^®.

QEP is headquartered in Boca Raton, Florida with other offices in the United States, Canada and Asia. Please visit our website at .

Forward-Looking Statements

All statements contained in this press release, other than statements of historical facts, may constitute forward-looking statements within the meaning of the federal securities laws. These statements can be identified by words such as "expects," "plans," "projects," "will," "may," "anticipates," "believes," "should," "intends," "estimates," and other words of similar meaning. These forward-looking statements include, but are not limited to, (i) statements regarding (a) pending legal proceedings and/or administrative matters, (b) exposure of the Company to significant fines and penalties if the Company fails to comply with certain environmental laws or approval requirements and (c) the inability to obtain components and products as required or to develop alternative sources, if and as required in the future and (ii) statements under the section titled“Competitive Business Conditions, the Issuer's Competitive Position in the Industry, and Methods of Competition.” Any forward-looking statements contained herein are based on current expectations and beliefs, and are subject to a number of risks and uncertainties, including risks related to the following: challenges presented by (i) scarcity and rising cost for raw materials, (ii) shifts in global sourcing patterns, and (iii) general inflationary pressures, economic conditions, sales growth, price increases, maintaining and improving profitability, product development and marketing, operating expenses, cost savings, the successful completion of acquisitions and dispositions, acquisition integration, operational synergy realization, global sourcing, political uncertainty, cash flow, debt and currency exchange rates, including as a result of (A) the imposition and changes to tariffs, including the effects of tariffs on goods imported from China and Vietnam, which countries the Company relies on for the manufacturing and importation of many of the Company's flooring installation tool products and related accessories, and tariffs on all steel and aluminum imports into the United States, (B) trade policies affecting macroeconomic conditions and/or (C) retaliatory trade actions taken by global trading partners. Forward-looking statements may also be adversely affected by general market factors, competitive product development, product availability, federal and state regulations and legislation, manufacturing issues that may arise, patent positions and litigation, among other factors. The forward-looking statements contained herein speak only as of the date the statements were made, and the Company does not undertake any obligation to update forward-looking statements, except as required by law.

-Financial Information Follows-

Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)

	For the Three Months Ended		For the Six Months Ended
	August 31,		August 31,	August 31,		August 31,
	2025		2024	2025		2024

Net sales	$	57,663		$	62,559		$	119,191		$	126,084
Cost of goods sold		37,072			40,271			75,922			81,292
Gross profit		20,591			22,288			43,269			44,792

Operating expenses:
Shipping		6,653			6,909			13,528			13,989
General and administrative		6,012			6,952			12,178			13,236
Selling and marketing		3,431			3,278			7,357			7,184
Other (income) expense, net		(47	)		45			(164	)		51
Total operating expenses		16,049			17,184			32,899			34,460

Operating income		4,542			5,104			10,370			10,332

Interest income (expense), net		240			223			417			406

Income before provision for income taxes		4,782			5,327			10,787			10,738

Provision for income taxes		1,244			1,495			2,805			3,003

Net income from continuing operations operations		3,538			3,832			7,982			7,735

Gain from discontinued operations, net of tax		300			(27	)		300			538

Net income	$	3,838		$	3,805		$	8,282		$	8,273

Basic earnings per share:
From continuing operations		1.09			1.17			2.45			2.34
From discontinued operations		0.09			(0.01	)		0.09			0.17
Basic earnings per share		1.18			1.16			2.54			2.51

Diluted earnings per share:
From continuing operations		1.09			1.17			2.45			2.34
From discontinued operations		0.09			(0.01	)		0.09			0.16
Diluted earnings per share		1.18			1.16			2.54			2.50

Weighted average number of common
shares outstanding:
Basic		3,255			3,276			3,256			3,300
Diluted		3,255			3,280			3,256			3,307

Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except par values)

	August 31, 2025		February 28, 2025
	(Unaudited)		(Audited)

ASSETS
Cash	$	34,367		$	28,552
Accounts receivable, less allowance for credit losses of $70 and
$223 at August 31, 2025 and February 28, 2025, respectively		28,854			31,752
Inventories, net		32,909			36,595
Prepaid expenses and other current assets		1,926			2,781
Prepaid income taxes		764			1,544
Current assets		98,820			101,224

Property and equipment, net		14,643			13,044
Right of use operating lease assets		20,593			21,520
Deferred income taxes, net		1,996			1,996
Intangibles, net		-			1
Other assets		491			489
Total assets	$	136,543		$	138,274

LIABILITIES AND SHAREHOLDERS' EQUITY

Trade accounts payable	$	9,109		$	15,569
Accrued liabilities		14,423			15,251
Current operating lease liabilities		2,927			2,887
Lines of credit		40			105
Current maturities of debt		9			9
Current liabilities		26,508			33,821

Long term debt		5			10
Non-current operating lease liabilities		20,025			21,084
Other long term liabilities		408			427
Total liabilities		46,946			55,342

Preferred stock, 2,500 shares authorized, $1.00 par value; 0 shares
issued and outstanding at August 31, 2025 and February 28, 2025,		-			-
respectively
Common stock, 20,000 shares authorized, $.001 par value;
4,005 shares issued: 3,244 and 3,255 shares outstanding at
August 31, 2025 and February 28, 2025, respectively		4			4
Additional paid-in capital		10,361			10,361
Retained earnings		92,528			85,544
Treasury stock, 761 and 750 shares held at cost at August 31, 2025
and February 28, 2025, respectively		(10,905	)		(10,377	)
Accumulated other comprehensive income		(2,391	)		(2,600	)
Shareholders' equity		89,597			82,932
Total liabilities and shareholders' equity	$	136,543		$	138,274


Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	For the Six Months Ended
	August 31, 2025		August 31, 2024

Operating activities:
Net income	$	8,282			$	8,273
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization		807				686
Gain on disposal of businesses		(476	)			(512	)
Gain on sale of property		(4	)			(1	)
Impairment of right of use operating lease asset				85
Other non-cash adjustments		(153	)			82
Changes in assets and liabilities:
Accounts receivable		1,833				103
Inventories		3,829				(2,233	)
Prepaid expenses and other assets		1,688				1,678
Trade accounts payable and accrued liabilities		(7,034	)			3,019
Net cash provided by operating activities		8,772				11,180

Investing activities:
Capital expenditures		(2,392	)			(2,121	)
Proceeds from sale of businesses		1,374				4,305
Proceeds from sale of property		4				1
Net cash provided by (used in) investing activities		(1,014	)			2,185

Financing activities:
Net repayments under lines of credit		(70	)			(548	)
Repurchase of equity-based awards				(1,540	)
Purchase of treasury stock		(565	)			(403	)
Principal payments on finance leases		(5	)			(55	)
Dividends paid		(1,298	)			(3,269	)
Net cash used in financing activities		(1,938	)			(5,815	)

Effect of exchange rate changes on cash		(5	)			25

Net increase in cash		5,815				7,575
Cash at beginning of period		28,552				22,369
Cash at end of period	$	34,367			$	29,944


Q.E.P. CO., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands, except shares data)
(Unaudited)

The following table shows the changes in the shareholders' equity for the six months ended August 31, 2025 and 2024.

														Accumulated
										Other		Total
	Preferred Stock	Common Stock		Paid-in		Retained		Treasury		Comprehensive		Shareholders'
	Shares	Amount		Shares		Amount		Capital		Earnings		Stock		Income		Equity

Balance at February 29, 2024	-	$	-		4,005,370		$	4		$	11,901			$	73,211		$	(9,517	)		$	(2,969	)	$	72,630
Net income											8,273								8,273
Unrealized currency translation adjustments														102			102
Repurchase of equity-based awards									(1,540	)									(1,540	)
Purchase of treasury stock													(491	)					(491	)
Dividends paid											(3,269	)							(3,269	)
Balance at August 31, 2024	-	$	-		4,005,370		$	4		$	10,361			$	78,215		$	(10,008	)		$	(2,867	)	$	75,705

														Accumulated
										Other		Total
	Preferred Stock	Common Stock		Paid-in		Retained		Treasury		Comprehensive		Shareholders'
	Shares	Amount		Shares		Amount		Capital		Earnings		Stock		Income		Equity

Balance at February 28, 2025	-	$	-		4,005,370		$	4		$	10,361			$	85,544		$	(10,377	)		$	(2,600	)	$	82,932
Net income											8,282								8,282
Unrealized currency translation adjustments														209			209
Purchase of treasury stock													(528	)					(528	)
Dividends paid											(1,298	)							(1,298	)
Balance at August 31, 2025	-	$	-		4,005,370		$	4		$	10,361			$	92,528		$	(10,905	)		$	(2,391	)	$	89,597

CONTACT:
Q.E.P. Co., Inc.
Enos Brown
Executive Vice President and
Chief Financial Officer
561-994-5550

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