Q.E.P. CO., INC. REPORTS FISCAL 2022 SIX MONTH AND SECOND QUARTER FINANCIAL RESULTS Q.E.P. Co., Inc. • October 14, 2021 • Press Release Record Six Month Net Sales of $227.3 million Six Month Net Income of $5.0 million BOCA RATON, FLORIDA — October 14, 2021 — 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 its fiscal year 2022, which ended on August 31, 2021. QEP reported net sales of $227.3 million for the six months ended August 31, 2021, an increase of $38.2 million or 20.2% from the $189.1 million reported in the same period of fiscal 2021. The Company reported net sales of $112.9 million for the quarter ended August 31, 2021, an increase of $9.8 million or 9.5% from the $103.1 million reported in the same period of fiscal 2021. The increase in net sales for the first six months and second quarter of fiscal 2022 compared to the prior 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 the prior year. Lewis Gould, Executive Chairman, commented on the Company’s results, “We continue to be pleased with the Company’s year-over-year sales growth in both the second quarter and first six months of the current fiscal year. Demand for the Company’s products remains strong in all geographic segments and channels, despite significant inflationary pressure and unprecedented disruptions in the global supply chain. The Company, in collaboration with its customers, has implemented a series of price increases to moderate the impact of rising product costs. We continue to relentlessly follow our growth plan.” Mr. Gould concluded, “The Company remains steadfast in balancing the need to maintain profitability while investing in the resources necessary to continue our market expansion.” The Company’s gross profit for the first six months of fiscal 2022 was $62.3 million compared to $53.1 million in the corresponding fiscal 2021 period, an increase of $9.2 million or 17.4%. Gross profit for the second quarter of fiscal 2022 was $31.0 million, representing an increase of $1.6 million or 5.4%, from $29.4 million in the corresponding fiscal 2021 period. The Company’s gross margin as a percentage of net sales for the first six months and second quarter of fiscal year 2022 was 27.4% and 27.5%, respectively, which decreased from 28.1% and 28.5% in the corresponding prior fiscal year periods, respectively. The decrease in gross margin as a percentage of net sales was due to inbound freight and product cost increases that have not been fully recovered through customer price negotiations during the first six months and second quarter of fiscal 2022. Operating expenses for the first six months and second quarter of fiscal 2022 were $54.7 million and $27.4 million, respectively, or 24.1% and 24.3% of net sales in those periods, compared to $47.5 million and $25.2 million, respectively, or 25.1% and 24.4% of net sales in the comparable fiscal 2021 periods. The increase in operating expenses was due to higher shipping costs related to sales volume, along with higher personnel and market costs as the Company reinvested in sales support infrastructure that was eliminated or reduced during the prior year in response to the economic downturn caused by the COVID-19 pandemic. Additionally, during the prior year, the Company’s non-US based operations benefited from local government subsidies received for maintaining certain employment levels during the pandemic. The lower interest expense during the first six months and second quarter of fiscal 2022 compared to the same periods in the prior fiscal year was principally due to a reduction in borrowings under the Company’s credit facilities. The provision for income taxes as a percentage of incomes before taxes was 28.0% for the first six months and second quarter for both fiscal 2022 and fiscal 2021. Net income for the first six months and second quarter of fiscal 2022 was $5.0 million and $2.4 million, respectively, or $1.50 and $0.71, respectively, per diluted share. For the comparable periods of fiscal 2021, net income was $3.4 million and $2.7 million, respectively, or $1.03 and $0.82, respectively, per diluted share. Earnings (loss) before interest, taxes, depreciation and amortization (EBITDA) for the first six months and second quarter of fiscal 2022 was $9.7 million and $4.6 million, respectively as compared to $7.8 million and $5.3 million for the first six months and second quarter of fiscal 2021, respectively. Cash provided by operations during the first six months of fiscal 2022 was $1.7 million as compared to $20.8 million in the first six months of fiscal 2021, principally reflecting an increase in investment in inventory to mitigate delays in stock replenishment caused by supply chain disruptions and the rising cost of inbound freight from Asia. During the first six months of fiscal 2021, cash from operations was used primarily to fund capital expenditures and increase cash balances. In the prior fiscal year period, cash provided by operations was used primarily to pay down debt. Working capital as of August 31, 2021 was $48.4 million compared to $44.7 million at the end of fiscal 2021. Aggregate debt, net of available cash balances at the end of the second quarter of fiscal 2022 was $22.0 million or 29.3% of equity, a decrease of $1.0 million compared to $23.0 million or 32.4% of equity at the end of fiscal 2021. VIEW FULL PRESS RELEASE SHARE ON About Us Our Brands Investors Careers Pressroom Contact Follow Us twitter icon facebook icon youtube icon linkedin icon instagram icon Q.E.P. Co., Inc. is an equal-opportunity employer and is committed to providing a workplace free from harassment and discrimination. We are committed to recruiting, hiring, training and promoting qualified people of all backgrounds, and make all employment decisions without regard to any protected status. Terms and Conditions Privacy Policy Americans with Disabilities Act California Transparency in Supply Chains Act © 2021 Q.E.P. Co., Inc. All Rights Reserved.