Wednesday November 14, 2007
LaPolla Industries Reports Third Quarter Earnings
HOUSTON, TX--(MARKET WIRE)--Nov 14, 2007 -- LaPolla Industries, Inc. ("LaPolla") (OTC BB:LPAD.OB - News), a leading manufacturer of foam and coating products targeting commercial, industrial and residential applications, today announced results for the third quarter and nine months ended September 30, 2007.
Sales for the third quarter of 2007 were $8.4 million compared to $9.0 million in the third quarter of 2006. Gross profit increased 14% to $1.7 million for the three months ended September 30, 2007 compared to $1.5 million for the same period last year. Gross margin increased 3.9 percentage points to 20.6% for the third quarter of 2007 compared to 16.7% for the third quarter of 2006. Operating loss for the third quarter was $0.8 million compared to $0.9 million for the same period last year. Net loss available for common stock holders for the three months ended September 30, 2007 was $1.0 million, or $0.02 per share, compared to $0.9 million, or $0.02 per share, for the three months ended September 30, 2006.
Sales increased to $25.2 million for the nine months ended September 30, 2007 compared to $22.6 million in the nine months ended September 30, 2006. Gross profit increased 29% to $4.7 million for the nine months ended September 30, 2007 compared to $3.6 million the same period last year. Gross margin increased 2.6 percentage points to 18.7% for the first nine months 2007 compared to 16.1% the first nine months of 2006. Operating loss for the first nine months of 2007 was $2.4 million compared to $1.8 million for the same period last year. Net loss available to common stockholders for the nine months ended September 30, 2007 was $3.0 million, or $0.05 per share, compared to $1.5 million, or $0.03 per share, for the same period in 2006.
"This quarter's revenue softness masked important strategic developments at LaPolla and the progress we made in moving closer to profitability. We continued to broaden our national sales footprint, adding regional distributors in every geography except California, where we already have a strong presence, and increasing the size of our inside sales force. In addition, even though a slow down in spending in the building products industry caused volume to decline, we produced higher gross margin, on both on a year-over-year and quarter-over-quarter basis, as we continued to realize the manufacturing efficiencies associated with our vertically integrated operations," said Douglas J. Kramer, president and chief executive officer. "As a result of this gross margin improvement, combined with tightened expense control, we succeeded in narrowing the company's quarterly operating and net loss."
"The investments we are making in strengthening our distribution capabilities are critical to placing LaPolla in the best position to capitalize on the growing demand for energy efficient residential construction, or what is being called 'green building,' that is arising primarily in response to soaring fuel costs. Particularly in the mid-priced market, more and more residential contractors are offering energy efficient designs as a means of combating a sluggish housing market," continued Mr. Kramer. "These industry trends bode well for LaPolla and our family of spray foam insulation products, and our confidence in our long-term growth prospects is unwavering. We remain keenly focused on executing our ambitious growth plans, further leveraging our established brand and national presence."
Results of Core Business Segments
Foam sales increased 18% to $15.2 million for the nine months ended September 30, 2007 compared to $12.9 million for the same period in 2006 also due to an increase in the company's sales force, advertising, marketing and promotion programs, partially offset by a general downturn in the building products market. Segment loss was $1.0 million for the nine months ended September 30, 2007 compared to $0.7 million in the same period in 2006. The increase in our Foam segment loss in 2007 was primarily attributable to cost increases related to resale foam purchases prior to vertical integration, partially offset by improved manufacturing efficiencies and favorable raw material pricing associated with vertical integration.
Coatings sales increased 4.3% to $7.7 million for the nine months ended September 30, 2007 compared to $7.4 million in the same period in 2006 due to an increase in the company's sales force, advertising, marketing and promotion programs, partially offset by a general downturn in the building products market. Segment income was $182,839 for the nine months ended September 30, 2007 compared to a segment profit of $174,027 for the same period in 2006, primarily attributable to improved manufacturing efficiencies and favorable raw material pricing.
About LaPolla Industries, Inc.
LaPolla Industries, Inc. is a national manufacturer of foam and coating products targeting commercial, industrial and residential applications in the roofing and perimeter insulation construction industries. Additional information about LaPolla is available on the World Wide Web at www.lapollaindustries.com.
Statements made in this press release that are not historical facts constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21 of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are necessarily estimates reflecting the best judgment of senior management and express the Company's opinions about trends and factors which may impact future operating results. You can identify these and other forward-looking statements by the use of words such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "continue," or the negative of such terms, or other comparable terminology. Such statements rely on a number of assumptions concerning future events, many of which are outside of the Company's control, and involve risks and uncertainties that could cause actual results to differ materially from opinions and expectations. Any such forward-looking statements should be considered in context with the various disclosures made by the Company about its businesses including, without limitation, the risk factors described below. Although the Company believes its expectations are based on reasonable assumptions, judgments, and estimates, forward-looking statements involve known and unknown risks, uncertainties, contingencies, and other factors that could cause the Company or the Company's industries' actual results, level of activity, performance or achievement to differ materially from those discussed in or implied by any forward-looking statements made by or on the Company and could cause the financial condition, results of operations, or cash flows to be materially adversely affected. In evaluating these statements, some of the factors that you should consider include the following: financial position and results of operations, cash position and cash requirements, accounting estimates, doubtful accounts, inventories, and warranties; operations, supply chain, quality control, and manufacturing supply, capacity, and new and existing facilities; products, price of products, product lines, and product and sales channel mix; relationship with customers, suppliers and strategic partners; credit facilities; industry trends and responses to these trends; sources of competition; and outcome and effect of current and potential future litigation. All information in this release is as of the date hereof. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.
For further information regarding risks, uncertainties, and other factors associated with LaPolla's business, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of LaPolla's SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of LaPolla's press releases and additional information about LaPolla is available on the World Wide Web at www.lapollaindustries.com.
LAPOLLA INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2007 2006
------------- -------------
(Unaudited) (As Restated)
ASSETS
Current Assets:
Cash $ 73,029 $ 382,116
Trade Receivables, Net 4,991,221 3,595,431
Inventories 3,437,776 2,882,236
Prepaid Expenses and Other Current Assets 540,512 537,253
------------- -------------
Total Current Assets 9,042,538 7,397,036
------------- -------------
Property, Plant and Equipment, Net 2,732,993 1,489,639
Other Assets:
Goodwill 1,951,000 1,951,000
Other Intangible Assets, Net 148,087 165,396
Deposits and Other Non-Current Assets 245,968 149,237
------------- -------------
Total Other Assets 2,345,056 2,265,633
------------- -------------
Total Assets $ 14,120,587 $ 11,152,308
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 3,923,826 $ 5,069,478
Accrued Expenses and Other Current
Liabilities 1,199,689 1,091,947
Line of Credit -- 1,007,120
Loan Payable - Related Party 550,000 --
Current Portion of Convertible Term Note 666,925 --
Current Portion of Long-Term Debt 94,524 97,589
Current Portion of Liabilities from
Discontinued Operations -- 232,479
------------- -------------
Total Current Liabilities 6,634,706 7,498,613
------------- -------------
Other Liabilities
Revolving Credit Note, Net 4,857,732 --
Non Current Portion of Convertible Term
Note, Net 763,856 --
Non Current Portion of Long-Term Debt 123,217 202,923
Non Current Portion of Liabilities from
Discontinued Operations 848 103,650
------------- -------------
Total Other Liabilities 5,545,912 306,573
------------- -------------
Total Liabilities 12,180,617 7,805,186
------------- -------------
Stockholders' Equity:
Preferred Stock, $1.00 Par Value; 2,000,000
Shares Authorized, of which Designations:
Series A Convertible, 750,000 Shares
Authorized; 62,500 Issued and Outstanding
at September 30, 2007 and December 31,
2006; $62,500 aggregate liquidation
preference at September 30, 2007 and
December 31, 2006 55,035 55,035
Series D, 25,000 Shares Authorized; 8,176
Issued and Outstanding at September 30,
2007 and December 31, 2006; $8,176,000
aggregate liquidation preference at
September 30, 2007 and December 31, 2006 8,176 8,176
Common Stock, $.01 Par Value; 70,000,000
Shares Authorized; 53,635,699 and
53,574,251 Issued and Outstanding at
September 30, 2007 and December 31, 2006,
Respectively 536,357 535,743
Additional Paid-In Capital 71,207,998 70,201,151
Accumulated Deficit (69,867,596) (67,452,983)
------------- -------------
Total Stockholders' Equity 1,939,970 3,347,122
------------- -------------
Total Liabilities and Stockholders'
Equity $ 14,120,587 $ 11,152,308
------------- -------------
LAPOLLA INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------- --------------------------
2007 2006 2007 2006
------------ ------------ ------------ ------------
(As (As
Restated) Restated)
Sales $ 8,369,502 $ 9,037,490 $ 25,158,695 $ 22,599,052
------------ ------------ ------------ ------------
Cost of Sales 6,646,741 7,528,351 20,460,092 18,959,122
------------ ------------ ------------ ------------
Gross Profit 1,722,761 1,509,139 4,698,603 3,639,930
------------ ------------ ------------ ------------
Operating Expenses:
Selling, General
and Administrative 2,135,274 2,184,581 6,197,023 4,810,740
Professional Fees 157,431 53,212 294,077 167,465
Depreciation and
Amortization 55,113 51,023 181,693 135,387
Consulting Fees 58,871 34,458 99,180 94,893
Interest Expense 225,716 53,486 471,517 94,806
Interest Expense -
Related Party 2,067 52,849 2,067 143,096
Other (Income)
Expense (134,251) -- (138,945) --
------------ ------------ ------------ ------------
Total Operating
Expenses 2,500,221 2,429,609 7,106,612 5,446,387
------------ ------------ ------------ ------------
Operating Loss (777,460) (920,470) (2,408,009) (1,806,457)
------------ ------------ ------------ ------------
Income From
Discontinued
Operations, Net
of Income Tax
Benefit-Deferred -- (5,000) -- 319,068
------------ ------------ ------------ ------------
Net Loss $ (777,460) $ (925,470) $ (2,408,009) $ (1,487,389)
------------ ------------ ------------ ------------
Plus: Dividends on
Preferred Stock (205,970) (1,323) (611,520) (1,323)
Net Loss Available
to Common
Stockholders $ (983,430) $ (926,793) $ (3,019,529) $ (1,488,712)
------------ ------------ ------------ ------------
Net Loss Per Share
- Basic and Diluted:
Continuing
Operations $ (0.018) $ (0.017) $ (0.056) $ (0.034)
Discontinued
Operations 0.000 (0.000) 0.000 0.006
------------ ------------ ------------ ------------
Total $ (0.018) $ (0.017) $ (0.056) $ (0.028)
------------ ------------ ------------ ------------
Weighted Average
Shares Outstanding 53,635,699 53,551,051 53,611,138 53,360,621
------------ ------------ ------------ ------------
Contact:
Company Contacts:
Douglas J. Kramer, CEO
Timothy J. Novak, CFO
Michael T. Adams, CGO
(281) 219-4700 (t)
Investor Relations Contacts:
Jody Burfening
Elric Martinez
Lippert/Heilshorn & Associates
(212) 838-3777 (t)
emartinez@lhai.com
