LifeGoal Home Down Payme... (AMEX:HOM)
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Company Increases 2006 Business Outlook to Diluted EPS of
$0.56-$0.60 From Previous Forecast of Diluted EPS of $0.42-$0.46
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 first quarter ended March 31, 2006. The Company reported record
first quarter revenue from continuing operations of $19.3 million, an
increase of 106.5% compared to revenue from continuing operations of
$9.3 million in the 2005 fiscal first quarter. Fiscal 2006 first
quarter EBITDA from continuing operations increased 158.8% to $4.4
million (including $4.0 million of operating income and $.4 million of
depreciation and amortization), compared to $1.7 million (including
$1.5 million of operating income and $.2 million of depreciation and
amortization) in the 2005 first quarter.
First quarter net income was a record $3.1 million, or $0.08 per
diluted share, compared to $1.0 million, or $0.04 per diluted share in
the year earlier period. First quarter net income included a net gain
on discontinued operations of $781,000 (net of tax) resulting from the
Company's decision to sell certain assets and liabilities of one of
the Company's subsidiaries, which the Company first marketed for sale
in the fourth quarter of 2005 and sold in the first quarter of 2006.
2006 first quarter pre-tax income from continuing operations before
minority interest was $4.0 million, compared to pre-tax income from
continuing operations before minority interest of $1.3 million in the
first quarter of fiscal 2005. First quarter net income from continuing
operations was $2.3 million, or $0.06 per diluted share, compared to
net income from continuing operations of $1.0 million, or $0.04 per
diluted share in the year-earlier period. The Company's effective tax
rate for the first quarter of fiscal 2006 was 37.1% compared to 6.3%
in the first quarter of fiscal 2005.
Gross margin for the first quarter was 51.6% compared to 40% in
the fourth quarter of fiscal 2005 and 47.8% in the same period in
fiscal 2005. Gross margin increased as a result of higher overall
margins in both of the Company's business segments and a more
favorable mix of business than in the fourth quarter and throughout
2005. The Recovery/Restoration Services segment generated a 67.8%
increase in revenue and 146.1% increase in operating income compared
to the first quarter of fiscal 2005 while the Rebuilding/Remodeling
business grew revenue by 153.8% and increased operating income by
122.9%. The Company ended the first quarter of 2006 with cash and cash
equivalents of approximately $7.2 million, and long-term debt of $1
million.
"We were pleased that in a seasonally slow period, the Company was
able to generate another strong quarter of growth," said Frank J.
Fradella, Chairman and CEO of Home Solutions. "The first quarter was
yet another period of expanded operating margins for the Company,
driven by efficiencies across both of our business units. In contrast
to fiscal 2005, when Recovery/Restoration services represented 55% of
the Company's revenue, during the first quarter Rebuilding and
Remodeling business comprised 55% of our revenue, driven by our
growing relationship with customers such as the Home Depot and Centex
as well as the long-term rebuilding process, which has recently begun
in areas affected by hurricanes Katrina, Rita and Wilma.
Despite these gains, we faced challenges, particularly in New
Orleans and surrounding areas, as funding for rebuilding activity
continued to experience delays. Recently, as demonstrated by several
large contracts we have received, activity has significantly
increased, and we have begun, in the early stages, to participate in
additional work in the area. We believe that the conclusion of the
Mayoral election this week, as well as the allocation of incremental
funding by FEMA will trigger further activity.
While we do not plan our business expecting hurricanes or storms,
we have significantly invested during the first quarter in developing
the infrastructure to not only be able to handle the build-back work
that we expect over the next three to five years in the region, but to
respond immediately if there is further storm-related work as
Hurricane Season begins in just a few weeks. We have also invested in
positioning the Company to service major customers in many additional
markets. The new locations increase the number of stores to 150 that
Home Solutions provides services to the leading retailer. We have also
invested in increasing our presence in Louisiana, Mississippi,
Florida, and Texas, where we expect Recovery/Restoration projects to
significantly contribute to our growth for many years."
Business Outlook:
Due to the recent increase in activity and backlog, the Company
today increased its full year guidance for the year ending December
31, 2006, to revenue of $160 million to $165 million and diluted
earnings per share of $0.56 to $0.60. Home Solutions previously had
expected revenue of $130 million to $140 million and diluted earnings
per share of $0.42 to $0.46. The Company reported revenue for fiscal
2005 of $68.1 million and net income of $0.25. The Company expects an
effective tax rate for fiscal 2006 of approximately 36%. In 2005, Home
Solutions had an effective tax rate of 4.5%.
Due to the timing of when projects commence, the Company expects
that the majority of the revenue and earnings will be recognized
during the second half of its fiscal year.
Conference Call and Webcast
The Company 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 8985828.
There will be a playback available until midnight, June 15, 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
8985828 for the replay. This call is being webcast and can be accessed
at Home Solutions' web site at www.homcorp.com until June 15, 2006.
Home Solutions 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 through its five subsidiaries,
Cornerstone Building and Remodeling, Southern Exposure, P.W. Stephens,
Home Solutions Restoration of Louisiana and Fiber Seal Systems.
Cornerstone is a leading supplier and installer of granite materials
for kitchens and baths to national home centers, as well as national
builders and remodeling companies, in the southeastern United States.
Southern Exposure and related companies is a provider of cabinet and
countertop installation services in the Florida marketplace. P.W.
Stephens provides mold and asbestos remediation services, and fire and
water restoration services in California, Florida and Louisiana. Home
Solutions Restoration of Louisiana provides Recovery Restoration
Services in Florida, Louisiana, Mississippi and Texas and Fiber Seal
Systems is a national licensor of cleaning and fabric protection
businesses.
For more information on Home Solutions, please see the Company's
website at http://www.homcorp.com/
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.
Income statement from continuing operations
For the three months ended March 31 2006 and 2005
($ in thousands, except
per share data)
------------------------
2006 2005
1st 1st
Quarter Quarter
-------------------------
Net Sales 19,280 9,337
Costs and expenses:
Cost of sales 9,332 4,871
Selling, general and administrative
expenses 5,949 2,927
------------------------
15,281 7,798
Operating income 3,999 1,539
Other income (expense):
Gain (loss) on sale of assets (2) 1
Interest income 51 17
Interest expense (60) (279)
Other Income 25 18
------------------------
Total other (expense) 14 (243)
Income before income taxes and
minority interest 4,013 1,296
Income taxes (1,413) (82)
Minority interest in income of consolidated
subsidiary (258) (193)
------------------------
Net income from continuing operations 2,342 1,021
Gain on Discontinued operation (net of tax) 781 -
------------------------
Net income $ 3,123 $ 1,021
========= =========
Net income available to common stockholders $ 3,123 $ 680
========= =========
EPS
Basic
Income from continuing operations $ 0.07 $ 0.05
Gain from discontinued operations $ 0.02 $ -
------------------------
Net Income $ 0.09
========================
Diluted
Income from continuing operations $ 0.06 $ 0.04
Gain from discontinued operations $ 0.02 $ -
------------------------
Net Income $ 0.08 $ 0.04
========================
Weighted average number of common shares
outstanding:
Basic 35,898 16,968
Diluted 40,702 18,990
HOME SOLUTIONS OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands, Except Per Share Data)
(Unaudited)
March 31, December 31,
2006 2005
--------- -----------
ASSETS
Current assets:
Cash $ 7,186 $ 8,225
Accounts receivable, net 20,857 20,585
Current portion of notes receivable 1,375 361
Inventories 1,669 1,026
Current assets of discontinued operations held
for sale - 767
Prepaid expenses and other current assets 1,231 1,041
Assets held for sale 840 840
---------------------
Total current assets 33,158 32,845
Property and equipment, net of accumulated
depreciation 2,624 2,466
Intangibles, net of accumulated amortization 9,275 9,501
Goodwill 42,802 41,882
Notes receivable, net of current portion 2,375 525
Non-current assets of discontinued operations
held for sale - 391
Deferred tax asset - 793
Other assets 336 264
---------------------
$ 90,570 $ 88,667
---------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 6,060 $ 6,267
Current portion debt 1,562 3,382
Deferred gain on disposal of discontinued
operation assets, current 478 -
Current portion of capital lease obligations 66 76
Current liabilities of discontinued operations
held for sale - 1,216
---------------------
Total current liabilities 8,166 10,941
Long-term liabilities:
Debt, net of current portion 1,041 1,363
Non-Current liabilities of discontinued
operations held for sale - 158
Non-current portion on deferred gain on
disposal of discontinued operation assets 955 -
Minority interest 254 483
Capital lease obligations, net of current
portion 120 117
---------------------
Total liabilities 10,536 13,062
Commitments and contingencies
Stockholders' equity:
Common stock, $0.001 per value, 50,000 shares
authorized; 36,125 and 35,510 shares issued
and outstanding, respectively 36 36
Additional paid-in capital 91,428 90,122
Accumulated deficit (11,430) (14,553)
---------------------
Total stockholders' equity 80,034 75,605
---------------------
$ 90,570 $ 88,667
---------------------
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