Lapolla Reports Record First Quarter 2012 Results

Lapolla Industries, Inc. ("Lapolla") (OTC BB:LPAD.OB), 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 first quarter of 2012.

Douglas J. Kramer, CEO and President of Lapolla, commented, "High and increasingly volatile energy prices continue to heighten the public's interest for green building materials and sustainable energy solutions. Lapolla's first quarter 2012 results reflect sustained aggressive sales growth in our foam segment, while sales volumes declined due to seasonal conditions in our coatings segment. After two years of strategic planning, Lapolla is only now beginning to realize international growth as demand for our products increases and our international plans materialize," concluded Mr. Kramer.

Results of Business Segments

Foam sales increased $1,278,673, or 8.6%, in the first quarter of 2012 compared to the first quarter of 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 replacing traditional insulation systems such as fiberglass. Foam equipment sales increased $177,289, or 19.4%, quarter over quarter. Foam cost of sales increased $1,409,713, or 12.2%, in the first quarter of 2012 compared to the first quarter of 2011, due to increases of $1,278,673, or 8.6%, in sales, $201,572, or 25.4%, in freight, and approximately 7.4% in material costs, partially offset by purchasing power with key vendor alliances and manufacturing efficiencies. Foam gross profit decreased $131,040, or 4.0%, and gross margin percentage decreased 2.6%, primarily from higher freight and material costs, offset by increased sales volumes and product prices, from the first quarter of 2012 compared to the first quarter of 2011. Foam segment profit decreased $201,134, or 31.6%, for the first quarter of 2012 compared to the first quarter of 2011, primarily due to higher freight and material costs, offset by an approximate 6.5% increase in sales prices and 93.5% increase in sales volumes.

Coatings sales decreased $601,276, or 19.1%, in the first quarter of 2012 compared to the first quarter of 2011, due to seasonal factors in the roofing markets. Coatings equipment sales increased $9,331, or 24.0%, quarter over quarter. Coatings cost of sales decreased $485,376, or 18.9%, in the first quarter of 2012 compared to the first quarter of 2011, due to decreases of $601,276, or 19.1%, in sales, and $16,323, or 9.3%, in freight, offset by an increase of approximately 5.8% in material costs. Coatings gross profit decreased $115,900, or 20.2%, due to lower sales volumes, and a gross margin percentage decline of 1.4%, primarily from higher material costs, from the first quarter of 2012 compared to the first quarter of 2011. Coatings segment profit increased $601,276, or 19.1%, for the first quarter of 2012 compared to the first quarter of 2011, primarily due to a decrease in segment operating costs and expenses and an approximate 7.1% increase in sales prices and 107.1% increase in sales volumes.

Total segment sales increased $677,397, or 3.8%, cost of sales increased $924,337, or 6.5%, and gross profit decreased $246,940, or 6.5%, in the first quarter of 2012 compared to the first quarter of 2011. Total segment profits decreased $186,661, or 28.5%, due primarily to increases of $185,249, or 19.1%, in freight, 5.9% in material costs, offset by increases of approximately 18.6% in sales prices and 81.4% in sales volumes, in the first quarter of 2012 compared to the first quarter of 2011.

Overall Results of Operations

Sales increased $677,397, or 3.8%, for the first quarter of 2012 compared to the first quarter of 2011. Cost of sales increased $924,337, or 6.5%, for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. Gross profit decreased $246,940, or 6.5%, for the first quarter of 2012 compared to the first quarter of 2011, due to the 19.1% increase in freight costs, 5.9% increase in material costs, and decrease of 19.1% in our coatings sales, partially offset by our 8.6% increase in our foam sales, of which $131,040, or 4.0%, resulted from our foam segment and $115,900, or 20.2%, resulted from our coatings segment. Gross margin percentage decreased 2.1%, quarter over quarter, due to higher freight and material costs, offset by approximately 46.4% price increases, manufacturing efficiencies from increased foam sales volume, and purchasing power with key vendor alliances. Total operating expenses are comprised of selling, general and administrative expenses, or SG&A, professional fees, depreciation, amortization of other intangible assets, and consulting fees. These total operating expenses increased $197,533, or 4.8%, in the first quarter of 2012 compared to the first quarter of 2011, due to increases of $72,505 for SG&A, $17,941 for amortization of other intangible assets, and $125,603 for consulting fees, offset by decreases of $11,779 for professional fees, and $6,737 for depreciation. Total other (income) expense is comprised of interest expense, gain or loss on derivative liability, and other, net. Total other (income) expense decreased $22,883, or 17.9% from the first quarter of 2012 compared to the first quarter of 2011, due to gains of $33,939 in our derivative liability and $9,947 in our other, net, offset by an increase of $21,220 in interest expense. Net loss increased $421,590, or 94.0%, in the first quarter of 2012 compared to the first quarter of 2011, due to increases of $72,505, or 1.9%, in SG&A, $17,941, or 17.1%, in amortization of other intangible assets, $125,603, or 262.5% in consulting fees, and $21,219, or 16.6%, in interest expense, offset by decreases of $11,779, or 10.1%, in professional fees, $6,737, or 9.9%, in depreciation, and gains of $33,939 in our derivative liability and $9,947 in our other, net. Net loss per share was $0.01 for the quarter ended March 31, 2012 and 2011, respectively.

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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