Lapolla Industries Reports Second Quarter 2014 Results

HOUSTON--()--Lapolla Industries, Inc. (“Lapolla”) (OTCQB: LPAD), a Houston-based global supplier and manufacturer of spray polyurethane foam insulation, reflective roof coatings, and equipment designed to reduce energy consumption in the residential, industrial and commercial markets for both new construction and retrofit applications, today announced financial results for the three month period ended June 30, 2014.

Second Quarter Financial Highlights

For the second quarter of 2014, Lapolla generated sales of $18.7 million, as compared to $17.8 million during the same period in 2013. During the second quarter of 2014, Lapolla’s gross profit was $3.9 million, as compared to $3.8 million for the second quarter of 2013. Adjusted EBITDA for the second quarter was $611,082, as compared to $660,361 in the same period of 2013.

For the second quarter of 2014, Lapolla reported foam segment sales were $16.2 million as compared to $14.9 million in the same period of 2013. Foam segment profit was $819,844 during the second quarter 2014, as compared to $670,559 for the same quarter in 2013. The second quarter 2014 coatings segment sales were $2.5 million versus $2.9 million for the same period in 2013. Coatings segment profit was $354,966, as compared to $446,542 for the second quarter in 2013.

“During the second quarter of 2014, our revenues were in line with last year and our operating expenses were lower by over 4%,” stated Doug Kramer, CEO and President of Lapolla Industries. “This is an exciting time to be in our industry as SPF insulation becomes mainstream as consumers, building owners and multi-family facility managers recognize the environmental and financial benefits Lapolla products provide. Lapolla recently announced its Next Generation technology, utilizing the latest blowing agent, which essentially eliminates ODP and GDP, making our product green and environmentally friendly. This new development solidifies Lapolla as a global technology leader, being the first in the world to deliver this cutting edge technology for wall foam insulation,” concluded Mr. Kramer.

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, available at www.lapolla.com.

About Lapolla Industries, Inc.

Lapolla Industries, Inc. is a global supplier, and manufacturer of spray polyurethane foam insulation, reflective roof coatings, and equipment, designed to reduce energy consumption in the residential, industrial and commercial markets, for both new construction and retrofit applications. More information is available at www.lapolla.com.

Non-GAAP Financial Measures:

Lapolla Industries utilizes Adjusted EBITDA to assist it in reviewing financial results and for management incentives. Adjusted EBITDA is defined as EBITDA increased by total share based compensation included in net income or loss. Lapolla’s management utilizes Adjusted EBITDA in an effort to provide information that reflects the Company’s economic performance. Lapolla’s management team reviews their monthly financial results on an Adjusted EBITDA basis. Adjusted EBITDA has no impact on reported sales. Adjusted EBITDA is used as a supplemental financial measure by management to describe Lapolla’s operations and economic performance to financial institutions, including the economic results of Lapolla’s operations; and repeatable operating performance that is not distorted by non-recurring items, certain other non-cash items, or market volatility. Adjusted EBITDA is not prepared in accordance with GAAP. Adjusted EBITDA should not be considered as an alternative to net income or loss, income or loss from operations, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP.

Forward Looking Statements

Statements made in this press release that are not historical facts constitute "forward-looking statements" pursuant to Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and Private Securities Litigation Reform Act of 1995. Any such forward-looking statements should be considered in context with various disclosures made by Company about its business. All information herein is as of date hereof. Company undertakes no duty to update any forward-looking statement.

 
LAPOLLA INDUSTRIES, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
             

 

June 30, 2014 December 31, 2013
Assets
Current Assets:
Cash

$

-

$

-

Trade Receivables, Net 9,144,940 7,694,589
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contract 261,011

-

Inventories 5,259,157 5,421,935
Prepaid Expenses and Other Current Assets   900,658     1,250,314  
Total Current Assets   15,565,766     14,366,838  
 
Property, Plant and Equipment 1,554,235 1,600,679
 
Other Assets:
Goodwill 4,234,828 4,234,828
Other Intangible Assets, Net 1,204,578 1,165,157
Deposits and Other Non-Current Assets, Net   599,546     686,658  
Total Other Assets   6,038,952     6,086,643  
 
Total Assets $ 23,158,953   $ 22,054,160  
 
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable $ 6,835,253 $ 6,694,633
Accrued Expenses and Other Current Liabilities 1,297,676 1,456,895
Current Portion of Long-Term Debt  

-

    4,599  
Total Current Liabilities   8,132,929     8,156,127  
 
Other Liabilities:
Non-Current Portion of Revolver Loan 5,971,232 4,539,163
Non-Current Portion of Notes Payable – New Enhanced Note 6,911,185 6,683,561
Non-Current Portion of Note Payable – Related Party 1,300,000 1,300,000
Accrued Interest – Note Payable – Related Party   153,646     117,633  
Total Other Liabilities   14,336,063     12,640,357  
 
Total Liabilities   22,468,992     20,796,484  
 
Stockholders' Equity:
Common Stock, $.01 Par Value; 140,000,000 Shares Authorized; 115,094,831 and 114,148,378
Issued and Outstanding for June 30, 2014 and December 31, 2013, respectively. 1,150,948 1,141,484
Additional Paid-In Capital 87,471,484 86,734,757
Accumulated (Deficit) (87,809,560 ) (86,495,654 )
Accumulated Other Comprehensive (Loss)   (122,911 )   (122,911 )
Total Stockholders' Equity   689,961     1,257,676  
 
Total Liabilities and Stockholders' Equity $ 23,158,953   $ 22,054,160  
 
 
LAPOLLA INDUSTRIES, INC.
CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
             
Three Months Ended June 30, Six Months Ended June 30,
2014       2013 2014       2013
 
Sales $ 18,684,868   $ 17,767,776   $ 34,787,068   $ 34,763,286  
 
Cost of Sales   14,815,786     13,918,887     27,848,659     27,280,350  
 
Gross Profit   3,869,082     3,848,889     6,938,409     7,482,936  
 
Operating Expenses:
Selling, General and Administrative 3,129,688 3,202,543 6,433,195 6,477,807
Professional Fees 335,997 317,624 355,948 624,492
Depreciation 40,950 44,687 84,779 89,260
Amortization of Other Intangible Assets 65,345 129,838 133,775 258,451
Consulting Fees   97,830     135,890     234,763     218,329  
Total Operating Expenses   3,669,810     3,830,582     7,242,460     7,668,339  
 
Operating Income (Loss)   199,272     18,307     (304,051 )   (185,403 )
 
Other (Income) Expense:
Interest Expense 291,836 293,052 572,547 556,782
Interest Expense – Related Party 201,430 186,513 400,421 369,715
Interest Expense – Amortization of Discount 45,397

-

90,505

-

(Gain) Loss on Derivative Liability

-

(19,743 )

-

(65,656 )
Other, Net   (71,999 )   6,357     (53,618 )   (18,334 )
Total Other (Income) Expense   466,664     466,179     1,009,855     842,507  
 
Net (Loss) $ (267,392 ) $ (447,872 ) $ (1,313,906 ) $ (1,027,910 )
 
Net (Loss) Per Share – Basic and Diluted $ (0.01 ) $ (0.00 ) $ (0.01 ) $ (0.01 )
Weighted Average Shares Outstanding   114,853,922     110,909,011     113,563,428     110,329,954  
 
Other Comprehensive Income (Loss):
Foreign Currency Translation Adjustment (Loss)        
Total Other Comprehensive (Loss) $

-

  $ (1 ) $

-

  $ (2,205 )
 
Comprehensive (Loss) $ (267,392 ) $ (447,873 ) $ (1,313,906 ) $ (1,030,115 )
 
       
LAPOLLA INDUSTRIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 
Six Months Ended June 30,
2014       2013
 
Cash Flows From Operating Activities
Net Loss: $ (1,313,906 ) $ (1,027,910 )
Adjustments to Reconcile Net Loss to Net Cash (Used in) Operating Activities:
Depreciation 203,924 232,700
Amortization of Other Intangible Assets 133,775 258,451
Provision for Losses on Accounts Receivable 268,524 12,816
Share Based Compensation Expense 381,781 684,914
Interest Expense – Related Party 400,421 369,715
Interest Expense – Enhanced Notes PIK 137,119 42,366
Interest Expense – Amortization of Discount 90,505

-

Loss on Foreign Currency Exchange 18,453

-

Gain on Derivative Liability

-

(65,656 )
Gain on Disposal of Asset (4,052 ) (4,948 )
Changes in Assets and Liabilities:
Trade Receivables (1,737,596 ) (1,097,116 )
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contract (261,011 )

-

Inventories 162,778 (631,386 )
Prepaid Expenses and Other Current Assets 349,656 (162,417 )
Other Intangible Assets (173,196 ) (64,000 )
Deposits and Other Non-Current Assets 87,112 (261,882 )
Accounts Payable 140,889 (63,964 )
Accrued Expenses and Other Current Liabilities   (159,219 )   (171,409 )
Net Cash (Used in) Operating Activities   (1,274,043 )   (1,949,726 )
 
Cash Flows From Investing Activities
Acquisitions of Property, Plant and Equipment (206,428 ) (21,846 )
Proceeds from Disposal of Property, Plant and Equipment   53,000     26,586  
Net Cash Provided by (Used in) Investing Activities $ (153,428 ) $ 4,740  
 
Cash Flows From Financing Activities
Proceeds from Revolver Loan 36,419,491 37,151,524
Principal Repayments to Revolver Loan (34,987,421 ) (34,873,019 )
Principal Repayments to Notes Payable – Enhanced (319,998 )
Principal Repayments on Long Term Debt   (4,599 )   (11,316 )
Net Cash Provided by Financing Activities   1,427,471     1,947,191  
 
Net Effect of Exchange Rate Changes on Cash  

-

    (2,205 )
 
Net Change in Cash

-

-

Cash at Beginning of Period  

-

   

-

 
Cash at End of Period $

-

  $

-

 
 
Supplemental Disclosure of Cash Flow Information:
Cash Payments for Interest $ 513,684 $ 430,277
 
Supplemental Schedule of Non Cash Investing and Financing Activities:
Issuance of Restricted Common Stock for Related Party Personal Guaranty on Note Payable $ 364,409 $ 334,726
 
 
Reconciliation of EBITDA and Adjusted EBITDA to Net Income
(Unaudited)
             
Three Months Ended June 30, Six Months Ended June 30,
2014       2013 2014       2013
Net Loss: $ (267,392) $ (447,872) $ (1,313,906) $ (1,027,910)
Additions / (Deductions):
Interest Expense 291,836 293,052 572,547 556,782
Interest Expense – Related Party 201,430 186,513 400,421 369,715
Interest Expense – Amortization of Discount 45,397

-

90,505

-

Tax Expense (Benefit) 22,437 34,144 48,202 58,286
Depreciation 95,533 114,721 203,924 232,700
Amortization of Other Intangible Assets 65,345 129,838 133,775 258,451
EBITDA $ 454,586 $ 310,396 $ 135,468 $ 448,024
Additions / (Deductions):

Share Based Compensation (1)

156,496 349,965 381,781 659,914
Adjusted EBITDA $ 611,082 $ 660,361 $ 517,249 $ 1,107,938
 

(1) Represents non-cash share-based compensation for the periods then ended.

Contacts

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

Release Summary

Lapolla spray foam, global warming potential, ozone depletion potential, and second quarter results.

Sharing

Contacts

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