April 18, 2012 at 15:32 PM EDT
Lapolla Reports Record 2011 Year Results
Delivers 22.3% Sales Growth Across Business Segments

HOUSTON, April 18, 2012 /PRNewswire/ -- Lapolla Industries, Inc. ("Lapolla") (OTC BB:LPAD.OB - News), 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 2011 year.

Douglas J. Kramer, CEO and President of Lapolla, commented, "Lapolla's 2011 year results reflect aggressive sales growth across our business segments despite extraordinarily high raw material and freight costs. We are seeing modest gross margin growth so far in 2012." "As we progress through the first half of 2012, we continue to experience sustained growing demand for our products both domestically and internationally. We hired a Chief Operating Officer, Harvey L. Schnitzer, last week, to broaden the depth of our management team and prepare for handling much larger sales volumes in 2012 and beyond," concluded Mr. Kramer.

Results of Business Segments

Foam sales increased $9,995,501, or 16.2%, from 2010 to 2011 due to energy conscious building owners and consumers continuing to seek relief from costly energy prices, as spray polyurethane foam (SPF) gains market share from the paradigm shift away from traditional insulation systems such as fiberglass. AirTight furthered market penetration through start-up training and rig building operations. Foam cost of sales increased $11,903,905, or 25.4%, from 2010 to 2011, dueprimarily to increased sales volumes, higher freight and raw material costs, partially offset by manufacturing efficiencies. Foam gross profit decreased $1,908,404, or 13.0%, from 2010 to 2011, due to extraordinary increases in raw material costs from global allocation and unusual geopolitical circumstances, offset by sales growth.  Foam gross margin percentage decreased 13.0% from 2010 to 2011, due primarily to increased raw material and freight costs and the inability to pass on these increased costs to our customers due to market softness during 2011. Foam segment profit decreased $3,290,157, or 65.9%, from 2010 to 2011, primarily due to an increase of $9,995,501, or 16.2% from aggressive sales growth, offset by an increase of $11,903,905, or 25.4%, in cost of sales fromhigher freight and raw material costs and $1,381,753, or 14.2%, in segment operating costs.

Coatings sales increased $5,727,581, or 64.4%, from 2010 to 201,1due to increased demand from general economic improvements and loosening of credit markets. Coatings cost of sales increased $5,344,227, or 77.4%, from 2010 to 2011, due primarily to increased sales volumes, higher freight and raw material costs, partially offset by manufacturing efficiencies. Coatings gross profit increased $383,354, or 19.2%, from 2010 to 2011, due to higher sales volumes, offset by higher raw material costs and a gross margin decrease of 6.2% primarily from higher freight and raw material costs. Coating segment profit decreased $542,779, or 80%, from 2010 to 2011, due to higher freight and raw material costs, and an increase of $926,133, or 70.1%, in segment operating costs.

Total sales increased $15,723,082, or 22.3%, from 2010 to 2011.  Total cost of sales increased $17,248,132, or 32.1%, from 2010 to 2011. Total gross profits decreased $1,525,050, or 9.1%, and gross margin percentage decreased 6.1%, from 2010 to 2011. Total segment operating expenses increased $2,307,886, or 20.9%, from 2010 to 2011.  Total segment profits decreased $3,832,936, or 67.5%, from 2010 to 2011.

Overall Results of Operations

Sales increased $15,723,082, or 22.3%, from 2010 to 2011. Cost of sales increased $17,248,132, or 32.1%, from 2010 to 2011. We had a 60.8% and 58.6% increase in freight costs, along with a 5.8% and 2.9% increase in material costs, in 2011 and 2010. Freight and material costs increased in 2011 due primarily to sales volumes. Gross profit decreased $1,525,050, or 9.1%, from 2010 to 2011.  Gross margin percentage decreased 9.1% from 2010 to 2011 due primarily to increased freight costs and raw materials costs, offset by manufacturing efficiencies. Total operating expenses increased $4,755,668, or 25.9%, from 2010 to 2011, due to increases of $4,216,991 for SG&A, $224,243 for professional fees, $63,316 for amortization of other intangible assets, and a decrease of $14,884 for depreciation expense. Consulting fees increased $246,003, or 54.0%, from 2010 to 2011, due to the Company entering into an advisory and consulting agreement with a non-employee director in the first quarter of 2011. Total other income (expense) decreased $673,365, or 207.6%, from 2010 to 2011, due to decreases of $247,864 for interest expense, $200 for interest expense – related party, $702,232 for interest expense – amortization of discount, a $4,051 gain on the sale of an asset, offset by a decrease of $141,902 in gain on our derivative liability and $139,082 in other, net. Net loss was $3,506,290, from 2010 to 2011, due primarily to an increase in cost of sales of $17,248,132, or 32.1%, from an increase of 60.8% in freight costs and 5.8% in material costs, total operating expenses of $4,755,668, or 25.9%, from an increase of 25.5% in SG&A (which includes non-cash share based compensation of $1,192,384), 40.4% in professional fees, and 54.0% in consulting fees, offset by a decrease of $673,363 in other, net, from a decrease of 43.8% in interest expense, 100% in interest expense – amortization of discount, 103.0% in gain on derivative liability, and 207.6% in other income. Net loss per share was $0.05 for 2011, compared to net income per share of $0.01 for 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.

Lapolla Contacts:
Douglas J. Kramer, CEO
Harvey L. Schnitzer, COO
Michael T. Adams, CGO
Charles A. Zajaczkowski, CFO
(281) 219-4700

SOURCE Lapolla Industries, Inc.

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