SOURCE: LaPolla Industries, Inc.

May 17, 2011 17:09 ET

Lapolla Reports Record First Quarter 2011 Results

Delivers 34.1% Sales Growth and Profitability Across Business Segments

HOUSTON, TX--(Marketwire - May 17, 2011) - Lapolla Industries, Inc. ("Lapolla") (OTCBB: LPAD), a Houston based manufacturer and supplier of spray foam insulation, cool roof coatings and equipment designed to reduce energy consumption in the residential and commercial markets, for both new construction and retrofit applications, today announced results for the first quarter of 2011.

Douglas J. Kramer, CEO and President of Lapolla, commented, "Lapolla's first quarter 2011 results reflect an increase of 34.1% in sales compared to the prior year's first quarter. We experienced commodity cost challenges during the quarter from escalated oil prices, resulting in higher freight and materials costs, and a reduction in our gross profit for the period. From all indications, the current volatility in petroleum based commodity prices will eventually subside. Further investment was made in our infrastructure to support our continued growth both domestically and internationally. Although we had an overall net loss for the quarter, we stayed the course and believe the costing challenges in freight and materials are temporary, as both of our foam and coatings segments generated a profit. Demand for our products is evident by our compounded annual sales growth of 60% over the past 7 years. As we enter the second quarter, the Company continues to experience sustained growing demand for its products. We fully expect our current period strategic buildup to result in a more profitable bottom line in the near term as the effects of our global expansion take hold."

Overall Results

Sales increased $4,568,249, or 34.1%, from the first quarter of 2011 compared to the first quarter of 2010. Foam sales increased $2,955,054, or 24.9%, and coatings sales increased $1,613,195, or 105.2%, quarter over quarter, due to continued market penetration and higher consumer demand attributed to cost conscious residential and commercial building owners transitioning from traditional insulation and roofing systems to energy efficient SPF and acrylic coatings. Cost of sales increased $4,130,953, or 41.2%, for the three months ended March 31, 2011 compared to the three months ended March 31, 2010. Cost of sales increased $2,721,339, or 30.7%, for our foams, and $1,409,614, or 121.1%, for our coatings, quarter over quarter, due primarily to increases of $2,955,054, or 24.9%, and $1,613,195, or 105.2%, in our foam and coatings sales, respectively. We had a 70.7% increase in freight costs, along with an approximate 5.5% increase in material costs, in the first quarter of 2011. Freight and material costs increased in 2011 due primarily to surging oil prices which justified higher trip rates as well as fuel surcharges during the quarter. Gross profit increased $437,296, or 12.9%, for the first quarter of 2011 compared to the first quarter of 2010, due to our 34.1% in sales growth, offset by a 70.7 increase in freight costs and 5.5% increase in material costs, of which $233,714, or 53.4%, resulted from our foam segment and $203,581, or 46.6%, resulted from our coatings segment. Gross margin percentage decreased 3.9%, quarter over quarter, due to higher freight and material costs, offset by approximately 6.9% price increases, manufacturing efficiencies from increased volume, and purchasing power with key vendor alliances in both of our segments. Net loss was $448,531 in the first quarter of 2011 compared to net income of $164,424. Net loss per share was $0.01 for the quarter ended March 31, 2011 compared to net income per share of $0.00 for the quarter ended March 31, 2010.

Results of Business Segments

Foam sales increased $2,955,053, or 24.9%, in the first quarter of 2011 compared to the first quarter of 2010, due to energy conscious building owners and consumers continuing to seek relief from costly energy prices, as SPF gains market share from the paradigm shift away from traditional insulation systems. Foam equipment sales were $736,826 for the first quarter of 2011 compared to $1,257,427 for the first quarter of 2010. Foam cost of sales increased $2,721,339, or 30.7%, quarter over quarter, due to increases of $2,955,053, or 24.9%, in sales, $290,909, or 58.0%, in freight, and approximately 3.8% in material costs, partially offset by purchasing power with key vendor alliances. Foam gross profit increased $233,714, or 7.8%, due to higher sales volumes, and gross margin percentage decreased 3.5%, primarily from higher freight and material costs, from the first quarter of 2011 compared to the first quarter of 2010. Foam segment profit decreased $276,683, or 30.3%, for the first quarter of 2011 compared to the first quarter of 2010, primarily due to higher freight and material costs, offset by an approximate 7.4% increase in sales prices and 92.6% increase in sales volumes.

Coatings sales increased $1,613,195, or 105.2%, in the first quarter of 2011 compared to the first quarter of 2010, due to energy saving acrylic coatings regaining traction from pent up demand in the roofing and construction markets. Coatings equipment sales were $38,780 for the first quarter of 2011 compared to $-0- for the first quarter of 2010. Coatings cost of sales increased $1,409,614, or 121.1%, quarter over quarter, due to increases of $1,613,195, or 105.2%, in sales, $110,231, or 167.2%, in freight, and approximately 5.9% in material costs. Coatings gross profit increased $203,581, or 55.2%, due to higher sales volumes, and gross margin percentage decreased 5.9%, primarily from higher freight and material costs, from the first quarter of 2011 compared to the first quarter of 2010. Coatings segment profit decreased $276,683, or 30.3%, for the first quarter of 2011 compared to the first quarter of 2010, primarily due to higher freight and material costs, offset by an approximate 6.5% increase in sales prices and 93.5% increase in sales volumes.

Total segment profits decreased $355,868, or 35.2%, due primarily to increases of $401,140, or 70.7%, in freight, 5.5% in material costs, offset by increases of approximately 6.9% in sales prices and 93.1% in sales volumes, resulting in a decrease of 3.9% in gross margin percentage, in the first quarter of 2011 compared to the first quarter of 2010.

About Lapolla Industries, Inc.

Lapolla Industries, Inc. is a manufacturer of spray foam insulation and cool roof coating products targeting commercial, industrial and residential applications in the roofing and insulation construction industries. Additional information about Lapolla is available at www.Lapolla.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, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, 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. 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. 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.

Contact Information

  • Lapolla Contacts:
    Douglas J. Kramer
    CEO
    Michael T. Adams
    CGO
    Charles A. Zajaczkowski
    CFO
    (281) 219-4700