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Contact:
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Jeff
Mattich
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Chief
Financial Officer
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(214) 623-8446
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Matt
Kreps
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Account
Manager
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Halliburton
Investor Relations
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(972) 458-8000
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Home Solutions Reports Record
Third Quarter 2006 Results
Third Quarter Revenues, Net
Income Grow Significantly
Company Updates Outlook, Reaffirms EPS Guidance
November 14, 2006 (Dallas, TX) — Home
Solutions of America, Inc. (NASDAQ: HSOA; the “Company”
or “Home Solutions”), a provider of recovery, restoration and
rebuilding/remodeling services, today reported record financial
results for its third quarter ended September 30, 2006. Third
quarter revenue, operating income and net income all increased
substantially related to the rebuilding activity upswing in New
Orleans and the Gulf Coast region.
“As
anticipated, the third quarter represents the launching point for
rebuilding the storm affected areas of the Gulf Coast, especially
the New Orleans area,” said Frank J. Fradella, Chairman and
Chief Executive Officer of Home Solutions. “The multiyear
rebuilding effort is now making significant progress and we are
confident that Home Solutions will play a leading role in helping
New Orleans and the surrounding area rebuild their communities.
Increased workflow has propelled the Company to record growth and
net income. The Company has invested in its recovery and
restoration segments through recent acquisitions to be ahead of the
curve for future growth through the increased operating capacity
provided by Fireline Restoration and the growth capabilities of
Associated Contractors. Both acquisitions are fully integrated into
Home Solutions today and making significant contributions to our
rebuilding efforts. We recently obtained a $60 million credit
facility to support the working capital requirements of our
business. The Company’s excellent history of project
management affords us excellent support to take these steps today
for continued future success. ”
Nine Months
Ended September 30, 2006 Consolidated and Segment
Results
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•
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Revenues from continuing operations
for the nine-month period ended September 30, 2006 increased
125% to a record $92.5 million, versus $41.1 million for
the same period in 2005 and greater than the Company’s
full-year 2005 revenue.
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•
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For
the nine-month period, gross margin remained effectively level at
45.8% as compared to the same period a year ago at 45.3%. Gross
margins remain strong into the rebuilding cycle reflecting the
large volume of work needs of the Gulf Coast region and high value
of reconstruction services.
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•
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EBITDA increased 200% to
$24.4 million (including $23.2 million of operating
income and $1.2 million of depreciation and amortization),
compared to $8.1 million (including $7.2 million of operating
income and $0.9 million of depreciation and
amortization).
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•
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Year-to-date net income was
$15.7 million, or $0.38 per diluted share, up 253% from $4.4
million, or $0.18 per diluted share in 2005.
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Home
Solutions Reports Record Third Quarter 2006 Results,
continued
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•
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For
the nine-month period, net revenue for the Recovery/Restoration
Services was $63.4 million compared to $20.6 million,
representing a 208% increase over the same period last year due to
the increased activity in the Gulf Coast region.
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•
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Rebuilding/Remodeling revenue for
the nine-month period was $29.1 million from continuing
operations, compared to $20.5 million in the year-ago period.
The Company continues to see growth on increased sales activity
with its end customers.
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Third
Quarter 2006 Consolidated Results
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Revenues from continuing operations
for the third quarter grew to a record $49.1 million, up 103% from
the second quarter 2006 revenues of $24.2 million and up 159%
from $19.0 million for the third quarter of 2005.
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Third quarter 2006 net income
increased 243% to a record $8.1 million, or $0.18 per diluted
share compared to $2.4 million, or $0.08 per diluted share, in
the same quarter last year.
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•
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Third quarter 2006 EBITDA increased
239% to $13.8 million (including $13.3 million of
operating income and $.5 million of depreciation and
amortization), compared to $4.1 million (including
$3.8 million of operating income and $.3 million of
depreciation and amortization) in the 2005 third
quarter.
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Third quarter gross margin was 42.8%
compared to 45.2% in the same quarter of 2005 and compared to 47.1%
in the second quarter 2006. The change in gross margin reflects the
Company’s anticipated smoothing of overall margins in the
restoration business
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•
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As
of September 30, 2006, the Company reported $5.7 million
in cash, and debt of $46.8 million, including the
$21.5 million seller note associated with the Fireline
acquisition. The Company recently announced an increased credit
facility of up to $60 million to accommodate the
Company’s growth and lower its cost of capital.
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•
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The
Recovery/Restoration Services segment generated a 277% increase in
revenue to $39.8 million. Gross profit increased 216% to
$17.8 million over the prior year same three-month period.
This increase is due to the ongoing increase of reconstruction
under the Company’s contracts. Work in this segment includes
fully integrated activity by the Company’s historic
businesses plus the acquisition of Fireline Restoration. The
Company also recently announced the acquisition of Associated
Contractors II, LLC in October 2006 furthering the
Company’s ability to compete for additional contracts in the
Gulf Coast region.
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•
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Revenues f
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