Boca Raton, FL--June 20, 2006--Q.E.P. Co. for its fourth fiscal quarter of 2006 reported a net loss of $2.7 million, or $0.76 per share, compared with a net profit of $376,000, or $0.08 per diluted share for the fourth quarter last fiscal year.
The company reported a net sales increase in the quarter of 17.1 percent to $52.4 million, compared with $44.7 million in the fiscal 2005 fourth quarter.
For fiscal 2006 the company reported a net loss full year of $1.2 million, or $0.37 per share, compared to a net income of almost $4.0 million, or $1.06 per diluted share, last fiscal year.
Net sales for fiscal 2006 increased 22.3 percent to $212.3 million, compared with net sales of $173.6 million in fiscal 2005.
Sales outside North America increased by approximately $1.4 million during fiscal 2006 over fiscal 2005 and now represent approximately 21.0 percent of the company's total sales compared to 26.0 percent for the fiscal 2005 period. Changes in foreign currency exchange rates accounted for approximately $2.5 million of the sales increase in fiscal 2006.
Lewis Gould, Q.E.P.'s chairman and CEO, stated: "Fiscal 2006 was one of the most challenging years in our 26 year history. I am pleased with our consistent top-line growth, as we have recorded five consecutive years of record sales. However, we continue to struggle with our ability to transfer this top-line success into bottom-line profitability. Inflated commodity prices remain the biggest culprit to our gross margin percentage. We continue to work with our customers and suppliers to ease the cost pressures and margin volatility.
"During the year there were a number of what we feel were one-time events that also negatively affected our profitability. Earnings for the year were negatively impacted by a $1 million expense related to an increase in the estimated value of the warrant put liability, which was in part a result of a change in the valuation methodology. The company moved its warehousing and distribution operations to Dalton, Georgia from Boca Raton, Florida. In addition, the company restructured a portion of its European manufacturing and distribution operations.
"Moving forward, I am optimistic about the direction of the company. We have learned a lot over the past year and are working hard to control costs, while maintaining our position as one of the leading manufacturers, marketers, and distributors of specialty tools," concluded Gould.
