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. -0- *T 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 *T -0- *T 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 ======== *T -0- *T
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% *T
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