Home Solutions of America Responds To Investor Inquiries
Monday June 5, 9:00 am ET
DALLAS--(BUSINESS WIRE)--June 5, 2006--Home Solutions of America, Inc. (Amex: HOM; the "Company" or "Home Solutions"), a provider of recovery, restoration and rebuilding/remodeling services, responded today to investor inquiries today concerning its Accounts Receivable and other matters.
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In executing the Company's disaster relief work associated with Hurricanes Katrina and Rita, which the Company classifies as recovery services, many of the receivables are paid over longer time periods due to government agencies and insurance companies reimbursing claims for work performed. As a result, receivables have increased in absolute dollars and in days-sales-outstanding (DSO's), although at a more favorable rate than the restoration and recovery industry overall. The Company expects the DSO's to decrease throughout the year as the Company's mix of business shifts to build-back work during the second quarter and throughout the balance of the year.
During the second quarter, the Company has already collected insurance-backed receivables, valued at approximately $1.5 million that were over 150 days old. Over the past two years, the Company has experienced bad debt expense related to receivables of less than 1% of revenue.
The Company's $10 million credit agreement with Texas Capital Bank reflects the nature of receivables in the recovery and restoration industry, as it includes in the Company's borrowing base, "any accounts receivable of Home Solutions and its subsidiaries which remains unpaid for less than 180 days from invoice date" (see sec.gov form8k.htm). (Due to its length, this URL may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.) The credit facility remains unused and the Company had $7.2 million in cash as of its first quarter ended March 31, 2006.
The Company also addressed its business outlook. Home Solutions increased its 2006 forecast to revenue of $160 million to $165 million and diluted earnings per share of $0.56 to $0.60 on May 15, 2006 as a result of the Company receiving contracts worth up to $60 million, the expansion of its relationship with The Home Depot and Centex and rebuilding activities associated with New Orleans and the surrounding areas.
"We remain confident that we will meet or exceed the updated outlook we recently provided," said Frank J. Fradella, Chairman and CEO of Home Solutions. "Since the conclusion of the Mayoral election, work has increased in New Orleans and the surrounding areas. In addition, we expect the need for affordable housing in New Orleans, through the services we provide to American Renaissance Homes, to enhance revenue during the second half of the year."
Finally, Home Solutions noted that sales of the Company's common stock recently by the Chief Executive Officer and the President were the first such sales by the executives since the Company's inception. The sales were conducted for diversification and estate planning purposes. In connection with the sales, Mr. Fradella exercised options to acquire an additional approximately 1.6 million shares of the Company's common stock at a cost of approximately $2.8 million, significantly increasing the number of shares of common stock he directly owns. On a fully diluted basis, the Company's management team owns approximately 18.5% of Home Solutions' stock.
Home Solutions is a provider of recovery, restoration and rebuilding/remodeling services to commercial and residential areas that are (i) prone to flooding, hurricanes, tornados, fires or other naturally occurring and repetitive weather related emergencies; and/or (ii) experiencing robust housing development. The Company has operations in California, Texas, Florida, Alabama, Georgia, Louisiana, Mississippi and South Carolina through its five subsidiaries, Cornerstone Building and Remodeling, Southern Exposure, P.W. Stephens, Home Solutions Restoration of Louisiana and Fiber Seal Systems. Cornerstone is a leading supplier and installer of granite materials for kitchens and baths to national home centers, as well as national builders and remodeling companies, in the southeastern United States. Southern Exposure and related companies is a manufacturer and installer of cabinet and countertop services in the Florida marketplace. P.W. Stephens provides mold and asbestos remediation services, and fire and water restoration services in California, Florida and Louisiana. Home Solutions Restoration of Louisiana provides Recovery Restoration Services in Florida, Louisiana, Mississippi and Texas and Fiber Seal Systems is a national licensor of cleaning and fabric protection businesses.
For more information on Home Solutions, please see the Company's website at homcorp.com.
Statements included in this update that are not historical in nature are intended to be, and are hereby identified as, "forward-looking statements" for purposes of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended by Public Law 104-67. Forward-looking statements may be identified by words including "anticipate," "believe," "intends," "estimates," "expect," and similar expressions. The Company cautions readers that forward-looking statements including, without limitation, those relating to the Company's future business prospects are subject to certain risks and uncertainties that could cause actual results to differ materially from those indicated in the forward-looking statements, due to factors such as those relating to economic, governmental, technological, and other risks and factors identified from time to time in the Company's reports filed with the SEC.
Contact:
CEOcast, Inc. for Home Solutions of America
Jim Fallon, 212-732-4300
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Source: Home Solutions of America, Inc.http://biz.yahoo.com/bw/060605/20060605005728.html?.v=1 |
