SOURCE: LaPolla Industries, Inc.

April 15, 2008 16:58 ET

LaPolla Reports Fourth Quarter and Year End Results

LaPolla Delivers 14% Sales Growth in Foam Business

HOUSTON, TX--(Marketwire - April 15, 2008) - April 15, 2008 -- LaPolla Industries, Inc. ("Company" or "LaPolla") (OTCBB: LPAD) 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 Information

  • 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