Q.E.P. Reports Record Sales and Earnings

Boca Raton, FL, July 12–Q.E.P. Co., Inc. today announced financial results for its fiscal 2005 first quarter ended May 31, 2004.

For the fiscal 2005 first quarter, net sales increased 24.2 percent to a quarterly record $43.1 million compared with $34.7 million for the same period last fiscal year. Acquisitions accounted for approximately $3.5 million in sales in the 2005 first quarter and changes in foreign currency accounted for approximately $972,000 of the increase. The effect of foreign currency on net income was not material. Gross profit for the 2005 first quarter, which reflects a slight increase in the cost of certain raw materials, declined to 33.9 percent from last year’s 34.9 percent.

Operating income for the fiscal 2005 first quarter was approximately $2.2 million versus operating income of approximately $1.4 million in last year’s comparable period. Last year’s results included $617,000 of expenses related to the early repayment of the company’s $4.5 million subordinated debt. Excluding this charge in the first quarter of fiscal year 2004, operating income was approximately $2.1 million. Interest expense decreased by $416,000 from the prior year predominantly because of a $270,000 prepayment penalty related to the aforementioned repayment of subordinated debt that occurred during the 2004 fiscal first quarter.

Net income was $1.2 million, or $0.32 per diluted share, compared with $411,000, or $0.12 per diluted share, for the first quarter of the prior fiscal year. The total after-tax effect of the repayment of the subordinated debt and related costs during the first quarter of fiscal 2004 was $568,000, or $0.16 per share. Diluted net income per share, excluding unusual items, improved 14.3 percent to $0.32 versus $0.28 in last fiscal year’s first quarter.