U.S. Home Systems Reports Financial Results for the Fourth Quarter and Year Ended December 31, 2009
DALLAS, March 3 /PRNewswire-FirstCall/ — U.S. Home Systems, Inc. (Nasdaq: USHS) today reported financial results for the fourth quarter and year ended December 31, 2009. USHS is engaged in the specialty products home improvement business. The Company’s principal product lines include kitchen cabinet refacing products, bathroom tub liners and wall surround products, storage organization systems for closets and garages and related accessories.
For the fourth quarter, U.S. Home Systems, Inc. (USHS) had revenues of $30.9 million, a sequential increase of 8.6% compared to $28.4 million for the third quarter and an increase of 2.5% compared to $30.1 million in the same quarter last year. Excluding revenues from deck products, which USHS phased out in 2008, revenues increased 11.2% or $3.2 million from $27.7 million in the fourth quarter last year.
USHS reported a net loss for the fourth quarter 2009 of $1.3 million or $0.18 per share The loss in the quarter included pre-tax charges of $2.2 million ($1.5 million after tax) related to settlement of a class action lawsuit pending against the company in the United States District Court for the Northern District of California and an on-going sales tax matter. Excluding these charges, net income was $204,000, or $0.03 per share in the fourth quarter 2009.
Net loss in the fourth quarter of 2008 was $540,000, or $0.07 per share, which included one-time charges of $425,000 ($236,000 after tax) for asset write-downs in connection with the Company’s decision to cease offering deck products. Excluding the non-recurring charges, net loss in the fourth quarter 2008 was $304,000, or $0.04 per share.
Murray Gross, chairman and chief executive officer, commented, “In the fourth quarter we continued to experience both sequential and year-over-year quarterly improvement in new orders. We believe that our efforts to stimulate sales, including sales incentives and marketing promotions have had a positive effect on the level of our new orders in the quarter. Further, we believe that the continued sequential quarterly improvement in new orders gives us confidence that we are recovering from the severe economic decline of the past two years and that consumers are feeling more comfortable proceeding with home improvement projects.”
Fourth Quarter 2009 Highlights
- USHS reported new orders in the fourth quarter, excluding deck products, increased 35.6% to $32.7 million from $24.1 million in the fourth quarter of 2008 and 5.9% sequentially from $30.9 million in the third quarter 2009. Historically new orders in the fourth quarter decline from the third quarter due to the holiday season.
- Careful cost controls and favorable product mix contributed to a 180 basis point improvement in gross profit margin in the current quarter as compared to the fourth quarter last year, excluding one-time charges.
- USHS continued to restructure its in-store marketing initiatives resulting in reduced lead generation costs in the fourth quarter 2009 compared with the fourth quarter last year. USHS believes that its in-store marketing strategy will drive sales growth and reduce lead generation costs as the economic environment improves.
Mr. Gross continued, “We are excited to report that in January 2010 we commenced new initiatives with The Home Depot. First, we started the installation of new kitchen refacing product displays in all The Home Depot stores. The new displays better demonstrate the value proposition of the cabinet refacing category and our product offering. We believe the new displays combined with our in-store marketing program and The Home Depot’s kitchen designers will increase lead development. Second, we began to offer our kitchen refacing products in conjunction with The Home Depot’s customer Do-It-Yourself (“DIY”) program. Under the DIY program, our refacing products will be made available for The Home Depot customers to purchase. The customers will then complete their own installation. Our new kitchen refacing displays will provide information as to the availability of our products in conjunction with The Home Depot’s DIY program. It is expected that the DIY program will be available in all The Home Depot stores by the end of the second quarter of 2010.”
“Also in January, we initiated a new subcontractor network program (SCN) to expand the number of markets in which we serve The Home Depot,” added Mr. Gross. “These additional markets are generally much smaller in size than the major metropolitan areas which we currently operate. In these smaller markets we plan to operate through local independent contractors rather than open our own branch sales and installation center in the market. We are also evaluating certain segments of markets which we currently serve that could be candidates for transition to this model to better penetrate the marketplace and reduce our costs. We anticipate that we will complete this expansion over the next 18 – 24 months.”
For the year ended December 31, 2009, USHS had revenues of approximately $111.0 million as compared to $132.5 million in 2008. Excluding revenues from deck products, revenues declined $9.1 million to $110.7 million in the year ended December 31, 2009 from $119.8 million in the year ended December 31, 2008.
USHS had a net loss of $4.0 million, or $0.55 per share in the year ended December 31, 2009. Excluding non-recurring pre-tax charges of $3.7 million related to class action settlements and a sales tax matter, net loss in the year ended December 31, 2009 was $1.5 million or $0.21 per share.
Net income for the year ended December 31, 2008 was $775,000, or $0.10 per share. Excluding non-recurring pre-tax charges of $515,000 related to ceasing deck sales last year, full year 2008 net income was $1.1 million or $0.14 per share.
First Quarter 2010 Outlook
- Revenues in the first quarter 2010 will be $30 to $31 million as compared to revenues of $26.2 million in the first quarter 2009. USHS expects less than $100,000 in revenues from the new SCN and DIY programs in the first quarter 2010.
- Net income in the first quarter 2010 of break even to $200,000, or $0.00 to $0.03 per share compared to a net loss of $960,000, or $0.13 per share in the first quarter of 2009.
“We believe the long-term outlook for the home improvement industry and our business is favorable,” Mr. Gross concluded. “We believe we are emerging from the severe economic decline of the past two years and that the weak economy and tightness in the consumer credit market has created significant pent-up demand which should accelerate our recovery as the credit market and the overall economy improves. In the short term, we expect that we will continue to face challenges of a slow rate of growth in demand in certain markets we operate while other regions of the country will recover at a faster rate. Although the recent severe weather across several markets disrupted our ability to visit with consumers in the beginning of February 2010, we have taken measures to recover a substantial portion of the opportunity within the first quarter and therefore we do not expect any material impact to our business.”
Conference Call Information
Management of USHS will hold a conference call on March 3, 2010 at 4:30 p.m. ET to discuss its 2009 fourth quarter and full-year financial results. Interested parties may access the call by calling 1-877-941-2069 from within the United States, or 1-480-629-9713 if calling internationally, approximately five minutes prior to the start of the call. A replay will be available through March 10, 2010, and can be accessed by dialing 1-800-406-7325 (U.S.), 1-303-590-3030 (Int’l), passcode 4243113.
The conference will include a slide show presentation, which can be accessed via the Internet at U.S. Home Systems’ website at www.ushomesystems.com. The web cast may also be accessed at ViaVid’s website at www.viavid.net. The web cast can be accessed for six months on either site. The Company encourages interested parties to visit the URL at least 15 minutes in advance to make sure any system updates are made to accommodate the presentation. To access the web cast, you will need to have the Windows Media Player on your desktop. For the free download of the Media Player please visit: http://www.microsoft.com/windows/windowsmedia/en/download/default.asp .
About U.S. Home Systems, Inc.
U.S. Home Systems, Inc. (www.ushomesystems.com) manufactures or procures, designs, sells and installs custom quality specialty home improvement products. The Company’s product lines include kitchen cabinet refacing products utilized in kitchen remodeling, bathroom tub liners and wall surround products utilized in bathroom remodeling, and storage organization systems for closets and garages. The Company manufactures its own cabinet refacing products and bathroom cabinetry.
This press release contains certain statements that may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical fact included herein are “forward-looking statements” including statements regarding the Company’s business strategy, plans and objective and statements of non-historical information. These forward looking statements are often identified by the use of forward-looking terminology such as “believes,” “expects” or similar expressions, involve known and unknown risks and uncertainties. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in the Company’s periodic reports that are filed with and available from the Securities and Exchange Commission. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these factors. Other than as required under the securities laws, the Company does not assume a duty to update these forward-looking statements.
USHS REPORTS FOURTH QUARTER AND YEAR 2009 RESULTS FINANCIAL HIGHLIGHTS Consolidated Statements of Operations (In thousands, except shares and per share amounts) Three Months Ended Year Ended December 31, December 31, ------------ ------------ 2009 2008 2009 2008 ---- ---- ---- ---- (Unaudited)(Unaudited)(Unaudited) Revenues $30,855 $30,089 $110,951 $132,503 Cost of remodeling contracts 14,076 14,215 49,399 62,864 ------ ------ ------ ------ Gross profit 16,779 15,874 61,552 69,639 Costs and expenses: Branch operations 1,905 2,208 7,907 9,031 Sales, marketing and license fees 12,503 11,868 46,097 48,541 General and administrative 2,579 2,556 10,365 10,652 Legal settlement 1,746 - 3,246 - ----- --- ----- --- Total costs and expenses 18,733 16,632 67,615 68,224 ------ ------ ------ ------ Operating income (loss) (1,954) (758) (6,063) 1,415 Interest expense 35 43 145 171 Other income 35 35 139 150 --- --- --- --- Income (loss) before income taxes (1,954) (766) (6,069) 1,394 Income tax expense (benefit) (635) (226) (2,069) 619 ---- ---- ------ --- Net income (loss) ($1,319) ($540) ($4,000) $775 ======= ===== ======= ==== Net income (loss) per common share - basic and diluted: ($0.18) ($0.07) ($0.55) $0.10 ====== ====== ====== ===== Number of weighted-average shares of common stock outstanding - basic 7,143,880 7,441,106 7,221,680 7,572,238 ========= ========= ========= ========= Number of weighted-average shares of common stock outstanding - diluted 7,143,880 7,441,106 7,221,680 7,582,871 ========= ========= ========= =========
USHS REPORTS FOURTH QUARTER AND YEAR 2009 RESULTS U.S. Home Systems, Inc. Consolidated Balance Sheets December 31, ------------ ASSETS 2009 2008 ---- ---- (Unaudited) Current assets: Cash and cash equivalents $6,336,889 $9,825,528 Marketable securities 797,410 2,036,049 Accounts receivable-trade, net 4,242,435 3,060,337 Accounts receivable-other 451,090 28,060 Income tax receivable 1,415,582 574,303 Commission advances 1,150,154 863,405 Inventories, net 3,650,545 3,538,637 Prepaid advertising and marketing 1,103,689 1,272,535 Prepaid expenses - other 767,278 835,512 Deferred income taxes 1,605,813 568,737 --------- ------- Total current assets 21,520,885 22,603,103 ---------- ---------- Property, plant, and equipment, net 2,485,542 2,518,849 Assets held for sale 2,514,643 2,514,643 Goodwill 3,589,870 3,589,870 Other assets 623,365 662,391 ------- ------- Total assets $30,734,305 $31,888,856 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,936,798 $2,968,908 Accrued wages, commissions, bonuses and vacation 1,588,833 1,396,326 Accrued legal settlement 1,897,822 - Federal and state taxes payable 1,381,635 616,182 Long-term debt, current portion 222,553 214,254 Other accrued liabilities 748,596 1,032,778 ------- --------- Total current liabilities 9,776,237 6,228,448 Deferred income taxes 310,491 309,942 Long-term debt, net of current portion 2,292,221 2,530,636 Stockholders' equity: Common stock - $0.001 par value, 30,000,000 shares authorized, 7,155,058 and 7,654,196 shares issued; 7,132,026 and 7,341,943 shares outstanding at December 31, 2009 and 2008, respectively 7,155 7,654 Additional capital 14,059,625 15,449,223 Retained earnings 4,337,755 8,337,420 Treasury stock, at cost, 23,032 and 312,253 shares at December 31, 2009 and 2008, respectively (49,179) (974,467) ------- -------- Total stockholders' equity 18,355,356 22,819,830 ---------- ---------- Total liabilities and stockholders' equity $30,734,305 $31,888,856 =========== ===========
Contacts: Murray H. Gross Brett Maas Chairman & CEO Hayden IR Email: email@example.com Email: firstname.lastname@example.org (214) 488-6300 (646) 536-7331
SOURCE U.S. Home Systems, Inc.