HSOA (nee HOM) earnings:
Press Release Source: Home Solutions of America, Inc.
Home Solutions Reports Record Second Quarter 2006 Results; Net Income Increases 320 Percent on 90 Percent Sales Growth
Monday August 14, 4:24 pm ET
DALLAS, Aug. 14 /PRNewswire-FirstCall/ -- Home Solutions of America, Inc. (Nasdaq: HSOA - News; the "Company" or "Home Solutions"), a provider of recovery, restoration and rebuilding/remodeling services, today reported record financial results for its second quarter ended June 30, 2006.
"We are very proud to report record-setting results for the second quarter, primarily related to rebuilding efforts along the Gulf Coast that are now under way," said Frank J. Fradella, Chairman and Chief Executive Officer of Home Solutions. "Our second quarter operating results are consistent with our goals that we established earlier this year. They also represent significant progress made in establishing measurable contracts that provide sustainable revenues and earnings for the balance of 2006 and into 2007."
Second Quarter 2006 Consolidated Results
* Revenues from continuing operations for the second quarter grew
90 percent to a record $24.2 million, versus $12.7 million for the
same period in 2005.
* Second quarter 2006 net income increased 320 percent to a record
$4.4 million, or $0.11 per diluted share compared to $1.1 million, or
$0.04 per diluted share, in the same quarter last year. Second
quarter net income included a net gain of $0.02 on discontinued
operations.
* Second quarter 2006 EBITDA increased 186 percent to $6.3 million
(including $5.9 million of operating income and $.4 million of
depreciation and amortization), compared to $2.2 million (including
$1.9 million of operating income and $.3 million of depreciation and
amortization) in the 2005 second quarter.
* The Company's effective tax rate for the second quarter of 2006 was
38 percent compared to 8 percent in the second quarter of 2005.
* Second quarter gross margin was 47.1 percent compared to 43.7 percent
in the same quarter of 2005 and compared to 51.6 percent in the first
quarter 2006. The changes in gross margin relate to mix between the
Recovery/Restoration and Rebuilding/Remodeling segments.
* As of June 30, 2006, the Company reported $13.8 million in cash, and
debt of $1.6 million.
* On July 31, 2006, the Company announced its agreement to acquire
Fireline Restoration, Inc. ("Fireline"), a privately held provider of
recovery and restoration services throughout Florida, Louisiana and
Mississippi for cash consideration of approximately $11.5 million, an
unsecured promissory note issued to the owner in the principal amount
of $21.7 million, and 4 million shares of Home Solutions' restricted
common stock. The acquisition, which was closed, July 31, 2006, is
effective as of July 1, 2006. The Company expects Fireline's
operations to be accretive to its earnings per share during the first
12 months following the effective date of the acquisition.
Second Quarter 2006 Financial Segment Results
* The Recovery/Restoration Services segment generated a 208 percent
increase in revenue to $15.0 million and 742.3 percent increase in
operating income to $6.4 million compared to the 2005 second quarter,
primarily due to the rapid increase in build-back work taking place in
hurricane-affected areas. Cost of sales as a percentage of the
segment revenues declined to 43.8 percent compared to 51.5 percent for
the second quarter of 2005.
* Revenues from continuing operations in the Rebuilding/Remodeling
business segment for the second quarter of 2006 increased 17 percent
to $9.2 million. Operating income from continuing operations
decreased 35 percent to $1.1 million compared to the second quarter of
2005. This resulted from increased spending in infrastructure on the
Home Depot business during the second quarter of 2006. For the
remainder of the year, we expect the quarterly comparisons of segment
operating profit to show increases over the prior year. We expect the
operating profit in the segment to increase over the prior year during
the remainder of the year. While the second quarter growth rate
slowed due to timing of customer deliveries and a softer housing
environment, overall growth in Rebuilding/Remodeling revenues from
continuing operations in the first half of the year is up 65 percent
and operating income is up 27 percent. Cost of sales from continuing
operations increased to 67.9 percent of segment revenues from
59.4 percent due to changes in scale for the quarter.
Six Months Ended June 30, 2006 Consolidated and Segment Results
* Revenues from continuing operations for the six-month period ended
June 30, 2006 increased 97.3 percent to a record $43.4 million, versus
$22.0 million for the same period in 2005.
* For the six-month period, gross margin improved from 46 percent as
compared to the same period a year ago to 49 percent.
* EBITDA increased 149 percent to $10.7 million (including $9.9 million
of operating income and $0.8 million of depreciation and
amortization), compared to $4.0 million (including $3.5 million of
operating income and $0.5 million of depreciation and amortization).
* Net income for the six-month period ended June 30, 2006 increased to
$7.6 million from $2.1 million in the same period last year,
representing a 262 percent gain.
* For the six-month period, net revenue for the Recovery/Restoration
Services were $23.6 million compared to $10.0 million, representing a
136 percent increase over the same period last year due to the
increased activity in the Gulf Coast region and the acquisition by HSR
of Louisiana, a wholly-owned subsidiary of the Company, of the assets
of FERS.
* Rebuilding/Remodeling revenue for the six-month period was
$19.8 million from continuing operations, compared to $12.0 million in
the year-ago period. The growth was attributable to an increase in
sales from increased demand by its primary customers.
* Operating income for Recovery/Restoration increased to $9.0 million
from $1.8 million. Operating margin for Recovery/Restoration improved
to 38.1 percent from 18.3 percent. Operating income for
Rebuilding/Remodeling increased to $3.5 million from $2.7 million.
Operating margin improved to 17.7 percent from 13.4 percent.
Outlook
"While we are pleased that revenues and margins improved in the second quarter, we are more excited that the funding for numerous projects associated with post-Katrina rebuilding is well under way. Previously these projects were hampered by Federal funding and political obstacles," said Fradella. "These projects began in the second quarter and continue to accelerate rapidly going into the second half of the year as we expected and previously announced. We are already seeing signs of additional revenue growth in this segment, and anticipate a very busy second half of the year in meeting the demands of this region.
"We are pleased with the improvements made to our balance sheet, including strengthening of our cash position, collection of receivables and reducing debt, enabling the company to execute its planned strategy of making accretive acquisitions such as Fireline Restoration.
"Fireline Restoration will help us in meeting the tremendous demands of the Gulf Coast region affected by last year's storms and broaden our geographic reach into the Mid-Atlantic region. We believe that increased opportunities with potential new customers will assist us with our growth objectives beyond this year. In addition, we will invest in infrastructure improvements that will effectively combine all of the recovery and restoration businesses under one management team. This should result in operating efficiencies across the entire operating segment. Overall, the outlook for the balance of the year remains very positive," continued Mr. Fradella. "We believe we are on target to meet our financial objectives for the balance of this year. We remain committed to our previous guidance of revenues in the range of $160 million to $165 million for the full fiscal year, and diluted earnings per share of $0.56 to $0.60."
Conference Call
Home Solutions will host a conference call today at 3:30 p.m. Central Time (CT) and will simultaneously broadcast it live over the Internet. To participate in the teleconference, please dial into the call a few minutes before the start time: 877-809-9543 (U.S. and Canada) and 706-679-0135 (international). A replay of the call will be available two hours after the completion of call through August 21, 2006. To access the replay, please dial 800-642-1687 (U.S. and Canada) and 706-645-9291 (international). Please refer to pass code 4449309. To access the webcast, go to homcorp.com . The online archive of the webcast will be available for approximately 90 days.
About Home Solutions of America, Inc.
Home Solutions of America, Inc. 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. For additional information, please visit the Company's Web site at homcorp.com .
Cautionary Notice
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.
Home Solutions of America, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
June 30, December 31,
2006 2005
Assets (unaudited) (audited)
Current assets:
Cash $13,831 $8,225
Accounts receivable, net 21,962 20,585
Current portion of notes receivable 938 361
Inventories 3,564 1,026
Current assets of discontinued operations
held for sale --- 767
Deferred tax asset 9,171 ---
Prepaid expenses and other current assets 2,070 1,041
Assets held for sale 840 840
Total current assets 52,376 32,845
Property and equipment, net 2,636 2,466
Intangibles, net 9,094 9,501
Goodwill 42,802 41,882
Notes receivable, net of current portion 1,628 525
Non-current assets of discontinued
operations held for sale --- 391
Deferred tax asset --- 793
Other assets 329 264
$108,865 $88,667
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $4,750 $6,267
Current portion of debt 1,196 3,382
Current portion of capital lease obligations 64 76
Current liabilities of discontinued
operations held for sale --- 1,216
Total current liabilities 6,010 10,941
Long-term Liabilities:
Debt, net of current portion 334 1,363
Non-current liabilities of discontinued
operations held for sale --- 158
Minority interest 366 483
Capital lease obligations, net of current portion 120 117
Total liabilities 6,830 13,062
Commitments and Contingencies
Stockholders' Equity:
Common stock, $.001 par value, 100,000 shares
authorized; 40,446 and 35,510 shares issued
and outstanding, respectively 40 36
Additional paid-in capital 108,957 90,122
Accumulated deficit (6,962) (14,553)
Total stockholders' equity 102,035 75,605
$108,865 $88,667
Home Solutions of America, Inc.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(unaudited)
For the For the
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Net sales $24,154 $12,732 $43,433 $22,047
Costs and expenses
Cost of sales 12,781 7,164 22,112 12,013
Selling, general and
administrative expenses 5,471 3,690 11,420 6,529
18,252 10,854 33,532 18,542
Operating income 5,902 1,878 9,901 3,505
Other income (expense):
Gain on sale of assets --- --- 22 1
Interest income 74 15 124 32
Interest expense (58) (433) (118) (780)
Other income 29 29 55 47
Total other income
(expense) 45 (389) 83 (700)
Income from continuing
operations before income
taxes and minority
interest 5,947 1,489 9,984 2,805
Income taxes (2,246) (116) (3,668) (218)
Minority interest (208) (287) (466) (480)
Income before discontinued
operations 3,493 1,086 5,850 2,107
Gain (loss) from
discontinued operations,
net of taxes of $958 975 (21) 1,741 (21)
Net income $4,468 $1,065 $7,591 $2,086
Net income available to
common shareholders per
share:
Basic earnings per share:
Income from continuing
operations $ 0.09 $ 0.04 $ 0.16 $ 0.09
Gain from discontinued
operations, net of tax 0.03 --- 0.04 ---
$ 0.12 $ 0.04 $ 0.20 $ 0.09
Diluted earnings per share:
Income from continuing
operations $ 0.09 $ 0.04 $ 0.15 $ 0.08
Gain from discontinued
operations, net of tax 0.02 --- 0.04 ---
$ 0.11 $ 0.04 $ 0.19 $ 0.08
Weighted average number
of common shares outstanding:
Basic 38,295 20,929 37,103 18,959
Diluted 40,594 22,464 39,642 20,622
Contact: Jeff Mattich
Chief Financial Officer
(214) 623-8446
Matt Kreps
Account Manager
Halliburton Investor Relations
(972) 458-8000 |
