Harris Wood Floors/Q.E.P. Co. Inc.'s (Johnson City, Tenn.) fiscal 2014 report showed a large boost to the company's profits and sales. The company said the increases were due to its acquisitions strategy and decreased provision for income taxes.
Net income in fiscal year 2014 was $16.1 million, an increase of nearly 50 percent from fiscal 2013's $8.1 million. But the company's provision for income taxes as a percentage of income before taxes for fiscal 2014 was 21.1 percent compared with 32.8 percent for fiscal 2013. QEP Chairman of the Board Lewis Gould explained that the company's acquisition of Calhoun, Georgia-based Faus Group Inc. provided QEP with "significant tax advantages" as well as a first-rate manufacturing and distribution facility.
Income before interest, taxes, depreciation and amortization (EBITDA), excluding the effects of non-operating income, shows a different story. QEP's EDITDA in 2014 was $14.2 million, a decrease from the prior year's $14.5 million.
"This was a transitional year for the company," Gould said. "As this transition takes place, there is always some pain with associated margin erosion while we build our business in new areas. That was the case this year."
Gross margins also decreased, dropping to 28.2 percent from 28.7 percent.
The acquisitions strategy and deeper market penetration did lead to an increase in net sales: $302 million in 2014 compared with $283 million in 2013. Specifically, the report said the increase in sales was a result of the acquisitions of Homelux and Plasplugs in Europe, a full year of investments in Nupla, Imperial and a U.S. injection molding operation and organic growth in the business.
