LaPolla Industries, Inc (LaPolla), a manufacturer and distributor of foam and coatings, has reported sales of $47.6 million for the year-end 2008, up 49%, compared with the sales of $31.8 million in the previous year-end. It has reported an operating loss of $3.5 million for the year-end 2008, down 30%, compared with the operating loss of $5 million in the previous year-end. The net loss per share is $0.073 for the year-end 2008, down 33.6%, compared with net loss per share of $0.110 in 2007.
Douglas J. Kramer, CEO and president of Lapolla, stated, Lapolla had unprecedented sales growth, a full year of manufacturing its own in-house foam resins, attained essential industry approvals, credentials and certifications for its own products, and integrated AirTight’s equipment, distribution and training programs during 2008. Although we are seeing a clear increase in our margin as a result of our vertical integration, we were not able to fully optimize this value in 2008 as a result of an extraordinary spike in petroleum related raw material costs. Lapolla is now positioned to bring the full value to our bottom line in 2009 and beyond.
Results of Business Segments
The foam sales increased $16.6 million, or 80%, from $20.8 million in 2007 to $37.3 million in 2008, as energy conscious building owners and consumers continued to seek relief from volatile energy prices and polyurethane spray foam (SPF) continues to gain market share from traditional insulation systems such as fiberglass. Lapolla’s AirTight asset purchase furthered market penetration into the Foam segment through AirTight’s training, startup and rig building operations. By providing new market entrants as well as existing insulation companies with the equipment and training to successfully market foam, revenue growth from equipment has escalated and the ongoing sales of Lapolla foam has followed. Foam segment loss decreased $1.8 M, or 94%, from a loss of $2 million in 2007 to a loss of only $127,000 in 2008 as targeted volumes were achieved in the marketplace.
Coatings sales decreased $814,000 in 2008, or 7%, from $11 million in 2007 to $10.3 million in 2008 because of the 2007 divestiture of Lapolla’s retail coatings business. The divestiture has enabled Lapolla to focus more of its resources on its core foam and coating businesses and reduce operating costs in its Coatings segment. As a result, Coating segment profit increased $550,000, or 410%, from $134,000 in 2007 to $683,000 in 2008 due to the increased margin percentage associated with Lapolla’s more strategic product line.
Kramer concluded, After combining the results of our foam and coatings segments, we made a profit in our core businesses. The growth experienced during 2008 despite one of the worst economic conditions since the Great Depression is an incredible feat and a testament to the ripe timing of our foam and coating business in today’s environment.
Outlook for 2009
Lapolla’s outlook is very aggressive, as sales are expected to continue to grow to record levels in 2009. This outlook is based on market share increases in the construction insulation markets which are driven by growing consumer awareness about energy efficient foams and coatings. Margin increases as a result of vertical integration, sales growth, potential acquisitions, in conjunction with tighter controls on spending are expected to enable Lapolla to achieve profitability in 2009. The markets for Lapolla’s products are highly competitive; however, Lapolla’s competitive advantages are rooted in owning its own foam resin plant, proprietary product formulations, product credentials, approvals and performance, price structures, and technical customer service. In addition, Lapolla offers the flexibility, quality of products and responsiveness that a smaller company can offer.