SOURCE: LaPolla Industries, Inc.

November 14, 2007 14:05 ET

LaPolla Industries Reports Third Quarter Earnings

Completes Vertical Integration of Foam Resin Manufacturing

HOUSTON, TX--(Marketwire - November 14, 2007) - LaPolla Industries, Inc. ("LaPolla") (OTCBB: LPAD), 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 June 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 Information

  • 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