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Home Solutions of America, Inc. (Amex: HOM); the
"Company" or "Home Solutions"), a provider of recovery, restoration
and rebuilding/remodeling services, announced record financial results
for its fourth quarter and year-ended December 31, 2005. Fourth
quarter revenue from continuing operations increased 186% to $25.5.
million, compared to revenue of $9.0 million in the fourth quarter of
fiscal 2004. Fiscal 2005 fourth quarter EBITDA from continuing
operations increased 221% to $5.7 million (including $5.4 million of
operating income and $.3 million of depreciation and amortization),
compared to $1.8 million (including $1.5 million of operating income
and $.3 million of depreciation and amortization) in the 2004 fourth
quarter. Fourth quarter net income from continuing operations
increased 287% to $4.1 million or $.09 per diluted share, compared to
net income from continuing operations of $0.9 million, or $.03 per
diluted share, in the same period for the prior year. Operating profit
for the quarter increased 260% to $5.4 million from $1.5 million in
the same period for the prior year.
The fourth quarter results exclude the results from discontinued
operations of certain assets and liabilities ("net assets") of one of
the Company's subsidiaries, which the Company first marketed for sale
in the fourth quarter of 2005 and recently sold for $3.5 million.
These net assets have been classified on the balance sheet as
discontinued operations held for sale. In connection with the decision
to sell the net assets, the Company reclassified the results of the
operation held for sale, reflecting a loss of $.9 million, net of tax.
The operations that were classified as discontinued generated $1.1
million in revenue in the fourth quarter, that were previously
included in the Company's business outlook. The Company elected to
wind down operations during December in connection with the sale.
Including this charge, net income for the quarter increased 287.3% to
$3.3 million or $.09 per diluted share, compared to $0.9 million or
$.03 per diluted share in the year-earlier period.
For the year ended December 31, 2005, the Company generated
revenue of $72.4 million, a 132% increase versus $31.1 million in the
year ended December 31, 2004. Sales from discontinued operations were
$4.2 million for the year. EBITDA increased 196% to $14.4 million from
continuing operations in 2005 (including $13.3 million of operating
income and $1.1 million of depreciation and amortization), compared to
$4.9 million (including $4.0 million of operating income and $.9
million depreciation and amortization) of EBITDA in 2004. Net income
from continuing operations increased 231% to $8.6 million, or $.30 per
diluted share in 2005, compared to net income from continuing
operations of $2.6 million or $.10 per diluted share in the prior
year. Net income increased 180% to $7.2 million, or $.25 per diluted
share in 2005, compared to net income of $2.6 million or $.10 per
diluted share in 2004. The December 31, 2005 year-end results include
a $1.4 million (net of tax) charge, or $.06 per diluted share, from
the discontinued operations of net assets of one of the Company's
subsidiaries, which the Company sold in March 2006.
As of December 31, 2005, Home Solutions had cash and cash
equivalents of $8.2 million and long-term debt of $4.7 million.
"We are pleased by the tremendous progress we made in the fourth
quarter and in 2005, and the improvement to our balance sheet," said
Rick O'Brien, President and Chief Operating Officer of Home Solutions.
"Our results demonstrate that we are able to integrate the
acquisitions we have made in our target markets, and grow our business
organically. The fourth quarter demonstrated that through the
value-added services we provide that we are able to expand our
operating margins. This helped to drive a 368% increase in operating
income from our Recovery/Restoration Services segment and a 62%
increase in operating income from our Rebuilding/Remodeling business
for the year ended December 31, 2005. In addition, we further built
the infrastructure to support our growth in 2006 and beyond and
improved our balance sheet through the completion of a $26.5 million
private placement, which provides us with the financial strength to
continue to invest in our business and to support synergistic
acquisitions."
"We believe the opportunities for growth across our business lines
remain strong," said Frank Fradella, Chairman and Chief Executive
Officer. "While we undoubtedly benefited from hurricane activity in
2005, we feel that the rebuilding activity in the affected areas over
the next 3-5 years represents a far greater opportunity for the
Company. We will continue to focus on strategic growth opportunities
with our major customers such as Home Depot and Centex. We continue to
invest in infrastructure to support strong anticipated growth. In
addition, we expect our focus on Recovery/Restoration projects in
Louisiana, Mississippi, Florida, and Texas to significantly contribute
to our organic growth for the next several years."
Business Outlook:
Due to uncertainty in the timing of allocation of funding for
projects as a result of political uncertainty in New Orleans and the
distribution of funds by FEMA, the Company today elected to reiterate
its full year guidance for the year ending December 31, 2006, of
revenue of $130 million to $140 million and diluted earnings per share
of $0.42 to $0.46. The Company will increase its guidance as
developments warrant.
The Company believes that it provides meaningful information and
therefore uses pro forma non-GAAP reporting to supplement its GAAP
reporting and internally in evaluating operations, managing and
benchmarking performance, and determining a portion of bonus
compensation. Home Solutions has chosen to provide this supplemental
information to investors, analysts and other interested parties to
enable them to perform additional analyses of the Company's operating
results and to illustrate the results of operations giving effect to
such pro forma non-GAAP adjustments. The pro forma non-GAAP financial
information presented herein should be considered supplemental to, and
not as a substitute for, or superior to, financial measures calculated
in accordance with GAAP.
The Company's executives will host a conference at 4:30 p.m.
eastern time today to discuss the results and outlook for 2006.
Interested participants should call (877) 776-4984 for domestic access
or (706) 679-7077 for international access. Please reference
Conference I.D. Number 7032074.
There will be a playback available until midnight, April 30, 2006.
To listen to the playback, please call (800) 642-1687 for domestic
access or (706) 645-9291 for international access. Please use pass
code 7032074 for the replay.
This call is being webcast and can be accessed at Home Solutions'
web site at www.homcorp.com until April 30, 2006.
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.
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HOME SOLUTIONS OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, Except Per Share Amounts)
Years Ended
December 31,
------------------------
2005 2004
--------- ----------
Net sales $ 68,135 $ 31,121
--------- ----------
Costs and expenses:
Cost of sales 38,372 16,718
Selling, general and administrative
expenses 16,485 10,356
--------- ----------
54,857 27,074
--------- ----------
Operating income 13,278 4,047
--------- ----------
Other income (expense):
Loss on sale of assets (76) (17)
Interest income 61 38
Interest expense (3,351) (930)
Other income 97 224
--------- ----------
Total other expense, net (3,269) (685)
--------- ----------
Income from continuing operations
before income taxes and minority
interest 10,009 3,362
Income taxes 446 219
Minority interest (933) (580)
--------- ----------
Income from continuing operations 8,630 2,563
--------- -----------
Loss from discontinued operations, net of
tax benefit (1,445) -
--------- ----------
Net income $ 7,185 $ 2,563
========= ==========
Net income (loss) available to common
shareholders per share:
Basic
Net income from continuing operations $ 0.34 $ 0.11
Net loss from discontinued operations,
net of tax benefit (0.06) -
--------- ----------
Net income $ 0.28 $ 0.11
========= ==========
Diluted
Net income from continuing operations $ 0.30 $ 0.10
Net loss from discontinued operations,
net of tax benefit $ (0.05) -
--------- ----------
Net income $ 0.25 $ 0.10
========= ==========
Weighted average number of common shares
outstanding:
Basic 23,210 16,393
Diluted 26,315 17,192
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HOME SOLUTIONS OF AMERICA, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2005
(In Thousands, Except Per Share Data)
ASSETS
Current assets:
Cash $ 8,225
Accounts receivable, net of allowance for doubtful accounts
of $70 20,585
Note receivable 361
Inventories 1,026
Current assets of discontinued operations held for sale 767
Prepaid expenses and other current assets 1,041
Assets held for sale 840
--------
Total current assets 32,845
Property and equipment, net of accumulated depreciation of 2,466
Intangibles, net 9,501
Goodwill 41,882
Note Receivable, net of current portion 525
Non-current assets of discontinued operations held for sale 391
Deferred tax asset 793
Other assets 264
--------
$ 88,667
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 6,712
Current portion of debt 3,382
Current portion of capital lease obligations 76
Current liabilities of discontinued operations held for
sale 1,216
--------
Total current liabilities 11,386
Long-term liabilities:
Debt, net of current portion 1,363
Minority interest 38
Non-current liabilities of discontinued operations held for
sale 158
Capital lease obligations, net of current portion 117
--------
Total liabilities 13,062
--------
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 par value, 50,000 shares authorized;
35,510 shares issued and outstanding 36
Additional paid-in capital 90,122
Accumulated deficit (14,553)
--------
Total stockholders' equity 75,605
--------
$ 88,667
========
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Home Solutions of America, Inc.
Income statement from continuing operations
3 months ended December 31, 2005
Q4
--------------------------------
(in thousands)
--------------------------------
2005 2004
Continuing Total % change
Operations full year
--------------------------------
Net Sales $ 25,502 $ 8,991 183.6%
Gross profit margin % 40.0% 47.0% -14.8%
Costs and expenses:
Cost of sales 15,300 4,769 220.8%
Selling, general and
administrative expenses 4,793 2,719 76.3%
----------- -----------
20,093 7,488 168.3%
Operating income 5,409 1,503 259.9%
Operating profit margin % 21.2% 16.7% 26.9%
Other income (expense):
Gain (loss) on sale of assets (101) (3)
Interest income 15 28
Interest expense (1,957) (264) 641.3%
Other Income 23 24
----------- -----------
Total other (expense) (2,020) (215)
Income before income taxes
and minority interest 3,389 1,288 163.1%
Income taxes 206 (219)
Minority interest in income of
consolidated subsidiary (202) (193)
Net income from Continuing
operations $ 3,393 $ 876 287.3%
=========== ===========
Loss on Discontinued operation (net
of tax) - -
----------- -----------
Net income (loss) $ 3,393 $ 876 287.3%
=========== ===========
Net income available to common
stockholders per share: $ 3,393 $ 535 534.2%
=========== ===========
Basic $ 0.11 $ 0.03 245.0%
Diluted $ 0.09 $ 0.03 196.9%
Weighted average number of common
shares outstanding:
Basic 31,046,560 16,780,817
Diluted 35,713,417 17,651,618
EBITDA 5,738 1,783 221.8%
22.5% 19.8%
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