Tuesday April 15, 2008
LaPolla Reports Fourth Quarter and Year End Results
LaPolla Delivers 14% Sales Growth in Foam Business
HOUSTON, TX--(MARKET WIRE)--Apr 15, 2008 -- April 15, 2008 -- LaPolla Industries, Inc. ("Company" or "LaPolla") (OTC BB:LPAD.OB - News) a leading manufacturer of foam and coating products targeting commercial, industrial and residential building envelope applications, today announced results for the fourth quarter and full year ended December 31, 2007.
Sales for the fourth quarter of 2007 were $6.7 million compared to $7.7 million in the fourth quarter of 2006. Operating loss for the fourth quarter was $2.6 million compared to $1.3 million for the same period last year. Included in the 2007 results were $1.18 million of noncash stock-based compensation expense and $0.5 million of start-up, manufacturing costs associated with the Company's new foam resin plant. Net loss available for common stockholders for the three months ended December 31, 2007 was $2.9 million, or $0.05 per share, compared to $1.5 million, or $0.02 per share, for the three months ended December 31, 2006.
Sales were $31.8 million for the full year 2007 compared to $30.3 million in 2006, as increases in foam sales were partially offset by declines in coatings volumes primarily associated with the sale of our retail distribution channel. Operating loss in 2007 was $5.1 million compared to $3.1 million for the same period last year. Net loss available to common stockholders in 2007 was $5.9 million, or $0.11 per share, compared to $3.0 million, or $0.05 per share, for the same period in 2006.
"2007 was a year of tremendous change at LaPolla and an investment in the future. We centralized our manufacturing operations, began operating our new foam resin plant, and expanded our national sales footprint by securing new regional distributors and strengthening our internal sales force. Despite a weakened demand for housing products that intensified in the second half of the year, as well as a period of transitioning our existing customer base to our in-house manufactured foam resins, we succeeded in increasing sales in our foam segment by 14% and in expanding our share of the construction insulation market," said Douglas J. Kramer, president and chief executive officer.
"Although the severe downturn in the building products industry temporarily slowed our growth plans, the benefits of our energy efficient spray foam insulation products, continue to resonate with contractors and consumers, particularly in the residential market. Our established brand, experienced sales and technical personnel, national and international presence, and vertical integration position us to further gain market share. Additionally, improved manufacturing efficiencies and tighter controls on spending, will enable us to attain profitability in the near term," concluded Kramer.
Results of Core Business Segments
Foam sales increased 14% to $20.7 million in 2007 compared to $18.2 million last year due to increased market penetration in the traditional insulation markets, with superior energy efficient technology amid escalating oil prices. Segment loss was $1.9 million in 2007 compared to $1.5 million in 2006 primarily due to start up costs and expenses related to the company's new foam resin plant and higher overhead to support sales growth.
Coatings sales decreased 8% to $11.1 million in 2007 compared to $12.1 million in 2006 reflecting the sale of the company's retail distribution channel and a general downturn in the building products market. Segment income was $133,825 in 2007 compared to a segment loss of $13,117 in 2006, primarily due to cost reductions associated with the sale of the retail distribution channel and the closure of the company's Florida manufacturing facility.
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 insulation construction industries. Additional information about LaPolla is available on the World Wide Web at www.lapollaindustries.com.
Forward-Looking Statements
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.
CONSOLIDATED BALANCE SHEETS
As of December 31,
--------------------------
2007 2006
------------ ------------
Assets
Current Assets:
Cash $ 339,855 $ 382,116
Trade Receivables 3,350,154 3,595,431
Inventories 2,698,097 2,882,236
Prepaid Expenses and Other Current Assets 532,233 537,254
------------ ------------
Total Current Assets 6,920,339 7,397,037
------------ ------------
Property, Plant and Equipment 2,626,068 1,489,639
Other Assets:
Goodwill 1,951,000 1,951,000
Other Intangible Assets 142,318 165,396
Deposits and Other Non-Current Assets 226,320 149,236
------------ ------------
Total Other Assets 2,319,638 2,265,632
------------ ------------
Total Assets $ 11,866,045 $ 11,152,308
------------ ------------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable $ 2,422,625 $ 5,069,478
Accrued Expenses and Other Current
Liabilities 1,266,533 1,091,947
Line of Credit -- 1,007,120
Current Portion of Convertible Term Note 589,761 --
Current Portion of Long-Term Debt 84,939 97,589
Current Portion of Liabilities from
Discontinued Operations -- 232,479
------------ ------------
Total Current Liabilities 4,363,858 7,498,613
------------ ------------
Other Liabilities:
Revolving Credit Note 4,879,152 --
Non Current Portion of Convertible Term
Note 775,185 --
Non Current Portion of Long-Term Debt 107,255 202,923
Non Current Portion of Liabilities from
Discontinued Operations 848 103,650
------------ ------------
Total Other Liabilities 5,762,440 306,573
------------ ------------
Total Liabilities 10,126,298 7,805,186
------------ ------------
Commitments and Contingencies (Note 13)
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 (Less Offering Costs of
$7,465) for 2007 and 2006, respectively;
$62,500 aggregate liquidation
preference for 2007 and 2006,
respectively. 55,035 55,035
Series D, 25,000 Shares Authorized;
8,176 Issued and Outstanding for 2007
and 2006, respectively; $8,176,000
aggregate liquidation preference for
2007 and 2006, respectively. 8,176 8,176
Common Stock, $.01 Par Value;
65,000,000 Shares Authorized;
59,125,700 and 53,574,251 Issued and
Outstanding for 2007 and 2006,
respectively. 591,257 535,743
Additional Paid-In Capital 73,600,876 70,201,151
Accumulated (Deficit) (72,515,597) (67,452,982)
------------ ------------
Total Stockholders' Equity 1,739,747 3,347,123
------------ ------------
Total Liabilities and
Stockholders' Equity $ 11,866,045 $ 11,152,308
------------ ------------
LAPOLLA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
----------------------------------------
2007 2006 2005
------------ ------------ ------------
Sales $ 31,840,799 $ 30,314,736 $ 20,179,263
------------ ------------ ------------
Cost of Sales 26,967,721 25,496,901 17,017,566
------------ ------------ ------------
Gross Profit 4,873,078 4,817,835 3,161,697
------------ ------------ ------------
Operating Expenses:
Selling, General and
Administrative 8,448,037 7,108,942 5,719,156
Professional Fees 556,286 221,666 493,149
Depreciation and Amortization 190,410 198,113 103,310
Consulting Fees 173,717 136,049 182,026
Interest Expense 710,370 136,847 78,411
Interest Expense - Related
Party 21,841 146,096 237,760
Other (Income) Expense (164,968) (3,211) (22,611)
------------ ------------ ------------
Total Operating Expenses 9,935,693 7,944,502 6,791,201
------------ ------------ ------------
Operating (Loss) $ (5,062,615) $ (3,126,667) $ (3,629,504)
Income (Loss) From Discontinued
Operations, Net of Income Tax
Benefit - Deferred -- 313,972 131,971
------------ ------------ ------------
Net (Loss) $ (5,062,615) $ (2,812,695) $ (3,497,533)
Plus: Dividends on Preferred
Stock (817,600) (175,262) --
Net (Loss) Available to Common
Stockholders $ (5,880,215) $ (2,987,957) $ (3,497,533)
------------ ------------ ------------
Net Income (Loss) Per Share-Basic
and Diluted
Continuing Operations $ (0.110) $ (0.056) $ (0.069)
Discontinued Operations -- 0.006 0.003
------------ ------------ ------------
Net (Loss) Per Share $ (0.110) $ (0.050) $ (0.067)
------------ ------------ ------------
Weighted Average Shares
Outstanding 53,677,675 53,414,914 50,538,175
LAPOLLA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2007 2006 2005
------------ ------------ ------------
Cash Flows From Operating
Activities
Net (Loss):
Continuing Operations $ (5,062,615) $ (3,126,667) $ (3,629,504)
Discontinued Operations 0 313,972 131,971
Adjustments to Reconcile Net
(Loss) to Net Cash (Used in)
Operating Activities:
Depreciation and Amortization 268,604 95,019 158,532
Provision for Losses on
Accounts Receivable (45,866) 157,715 53,771
Amortization of Discount on
Convertible Term and
Revolving Credit Notes 263,553 -- --
Share Based Compensation
Expense 1,186,595 384,475 327,169
Stock Based Operating
Expenses -- 153,640 550,991
Changes in Assets and
Liabilities:
Trade Receivables 291,143 456,785 (2,059,564)
Inventories 184,140 (1,488,633) (814,037)
Prepaid Expenses and Other
Current Assets 5,021 (241,697) (249,004)
Deposits and Other Non
Current Assets (77,083) (1,128) (82,573)
Accounts Payable (2,646,853) 994,532 1,779,945
Accrued Expenses and Other
Current Liabilities 174,586 (1,045,833) 1,704,603
Other Liabilities (216) (2,319) 317,807
Net Operating Activities of
Discontinued Operations (9,152) (330,069) (905,059)
------------ ------------ ------------
Net Cash (Used in)
Operating Activities (5,468,143) (3,680,208) (2,714,952)
------------ ------------ ------------
Cash Flows From Investing Activities
Additions to Property, Plant
and Equipment (1,381,955) (654,005) (713,847)
Payment for Acquired Company,
Net of Cash Acquired -- -- (1,933,748)
------------ ------------ ------------
Net Cash (Used in)
Investing Activities $ (1,381,955) $ (654,005) $ (2,647,595)
------------ ------------ ------------
Cash Flows From Financing
Activities
Proceeds from the Issuance of
Preferred Stock -- 200,000 --
Proceeds from Revolving
Credit Note 5,000,000 -- --
Proceeds from Convertible
Term Note 2,000,000 -- --
Principal Repayments to
Convertible Term Note (200,000) -- --
Proceeds from Line of Credit 1,398,000 8,310,120 --
Payments to Line of Credit (2,405,120) (7,324,816) (197,336)
Proceeds from Loans Payable -
Related Party 3,386,224 5,479,445 4,302,500
Payments to Loans Payable -
Related Party (1,838,800) (576,445) --
Proceeds from Note Payable -
Other -- 3,813,336 1,693,211
Payments to Note Payable -
Other -- (5,493,211) --
Principal Repayments on Long
Term Debt (191,270) 81,068 (59,672)
Payment of Preferred Stock
Dividends (15,068) -- --
Net Financing Activities of
Discontinued Operations (326,129) (173,789) --
------------ ------------ ------------
Net Cash Provided by
Financing Activities 6,807,837 4,315,708 5,738,703
------------ ------------ ------------
Net Increase (Decrease) In Cash (42,261) (18,505) 376,156
Cash at Beginning of Year 382,116 400,621 24,465
------------ ------------ ------------
Cash at End of Year $ 339,855 $ 382,116 $ 400,621
------------ ------------ ------------
Supplemental Disclosure of Cash
Flow Information:
Cash Payments for Income
Taxes $ -0- $ -0- $ -0-
Cash Payments for Interest 447,317 161,661 78,411
Supplemental Schedule of Non Cash
Investing and Financing
Activities:
Property, Plant and Equipment
acquired via Issuance of
Long Term Debt $ 34,989 $ 105,952 $ 317,807
Conversion of Loans Payable -
Related Party to Note
Payable - Related Party -- 3,000,000 --
Conversion of Note Payable -
Other to Note Payable -
Related Party -- 3,000,000 --
Common Stock Issued for
Director Fees and Other
Compensation 27,521 233,640 350,250
Common Stock Issued upon
Cancellation of Indebtedness 1,571,841 -- 7,217,375
Common Stock Issued as
Payment for Accrued
Preferred Stock Dividends 788,859 -- --
Preferred Stock Issued upon
Cancellation of Indebtedness -- 7,903,000 --
Preferred Stock Issued as
Payment for Accrued
Preferred Stock Dividends -- 73,000 --
Warrants Issued in
conjunction with Issuance of
Convertible Term and
Revolving Notes 555,902 -- --
Contact:
Company Contacts:
Douglas J. Kramer,
CEO
Paul Smiertka,
CFO
Michael T. Adams. CGO
(281) 219-4700
Investor Relations Contacts:
Jody Burfening
Lippert/Heilshorn & Associates
(212) 838-3777
jburfening@lhai.com
