U.S. Home Systems Reports Financial Results for Fourth Quarter and Year Ended December 31, 2010

March 17, 2011

DALLAS, March 17, 2011 /PRNewswire/ — U.S. Home Systems, Inc. (Nasdaq: USHS) today reported financial results for the fourth quarter and year ended December 31, 2010. USHS is engaged in the specialty products home improvement business. The Company’s principal product lines include kitchen cabinet refacing products, bathroom remodeling products, storage organization systems for closets and garages and related accessories.

Financial Results

For the fourth quarter, USHS revenues increased 23% to $38.0 million as compared to $30.9 million in the fourth quarter 2009.

Net income for the fourth quarter 2010 was $708,000 or $0.10 per share. During the quarter USHS recorded a pre-tax benefit of $370,000 for partial reimbursement of legal fees which the Company incurred defending certain class action lawsuits, which had been settled. Excluding this non-recurring item, USHS net income would have been $494,000 or $0.07 per share. This compares to net loss for the fourth quarter of 2009 of $1.3 million or $0.18 per share. The loss in the fourth quarter of 2009 included non-recurring pre-tax charges of $2.2 million ($1.5 million after tax) related to settlement of a class action lawsuit 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.

Murray Gross, chairman and chief executive officer, commented, “We recorded our sixth consecutive year-over-year quarterly increase in revenues and new orders in the fourth quarter. Our new orders in the fourth quarter increased 13% to $37.2 million from $32.8 million in the fourth quarter last year. This improvement demonstrates the progress we are making and the improvements in demand for our solutions.”

Mr. Gross continued, “We have experienced an increase in consumer interest in our kitchen refacing and countertop products since the beginning of the year when The Home Depot included the kitchen refacing category in their new kitchen marketing strategy, ‘A Solution for Every Kitchen and Budget – Replace, Reface, Renew’. We are confident that this new marketing strategy, combined with our enhanced in-store marketing initiatives and the installation of new kitchen refacing displays in all The Home Depot stores, has significantly contributed to our increased new orders and revenues.

“We believe that a number of external factors have also contributed to increased consumer interest in our products during 2010 and that these factors will continue to enhance consumer interest in 2011. We know that remodeling activity is generally higher in the first 12 months of home ownership. We have seen increased demand in 2010 from recent home buyers as a result of the first time home buyers tax credit program, however, we believe that a significant number of these home owners will be in the market for home improvements in 2011. Additionally, we believe that homeowners who are unable to move up due to eroded equity in their homes are looking for economical alternatives to upgrade their kitchens. We believe these customers are finding that cabinet refacing is an alternative to full kitchen remodeling. We believe that current data from the Joint Center for Housing Studies at Harvard University supports the trend that the cabinet refacing category is growing.”

Fourth Quarter 2010 Highlights

  • USHS reported new orders increased to $37.2 million in the fourth quarter 2010 from $32.8 million in the fourth quarter last year. USHS had backlog of uncompleted orders of $20.0 million at December 31, 2010.
  • In connection with USHS market expansion program, USHS initiated service in five new markets during the fourth quarter 2010. As of December 31, 2010, it had initiated service in fourteen new markets in 2010 encompassing approximately 189 The Home Depot stores.
  • Fixed operating costs, consisting of branch operating and general and administrative expenses, declined to 12.0% of revenues in the fourth quarter 2010 from 14.5% in the same quarter last year. The decline reflected increased leverage from higher revenues.

For the year ended December 31, 2010, USHS had revenues of approximately $145.9 million as compared to $111.0 million last year, an increase of 31.4%. Net income was $2.1 million or $0.30 per share as compared to a net loss of $4.0 million, or $0.55 per share, respectively. Both 2010 and 2009 included non-recurring items, including those described above. Excluding one time items, net income for the year ended December 31, 2010 would have been $2.1 million, or $0.30 per diluted share, as compared to net loss of $1.5 million, or $0.21 per diluted share for the year ended December 31, 2009.

Year 2010 Highlights

  • The Company reported new orders increased 29.3% to $148.6 million in 2010 from $114.9 million in 2009.
  • USHS began offering its kitchen refacing products in the Home Depot Do-It-Yourself (DIY) program.
  • The Company installed new kitchen refacing product displays in all U.S. The Home Depot stores.
  • USHS initiated a market expansion program, beginning service in fourteen new markets encompassing approximately 189 The Home Depot stores.
  • The Company launched an internet micro-site in September 2010 generating $3.3 million in new orders since the site’s launch.
  • USHS completed in excess of 17,000 jobs and received a VOC (Voice of the Customer) rating of 9.46 out of a maximum of 10.0. The Home Depots VOC rating is based on customer surveys and is an indication of customer satisfaction and service provider quality.
  • Fixed operating costs, consisting of branch operating and general and administrative expenses, declined to 12.6% of revenues in 2010 from 16.5% last year. The decline principally reflected increased leverage from higher revenues.

Mr. Gross concluded, “In spite of continuing challenges of lower credit approval rates for our customers, we increased our new orders in 2010. Resolving the credit approval rate remains a top priority. As we enter the first quarter of 2011, our seasonally slower quarter of the year, we remain confident in near term improvement as we work together with our strategic partner.”

First Quarter 2011 Outlook

USHS expects:

  • Revenues in the first quarter 2011 of $36 to $37 million as compared to revenues of $33.1 million in the first quarter 2010.
  • Net income of $0.06 to $0.07 per share, compared to $0.05 per share in the first quarter 2010.

Conference Call Information

Management of USHS will hold a conference call on March 17, 2011 at 4:30 p.m. ET to discuss its 2010 fourth quarter and year end financial results.

Interested parties may access the call by calling 1-877-941-2068 from within the United States, or 1-480-629-9712 if calling internationally, approximately five minutes prior to the start of the call. A replay will be available through March 24, 2011, and can be accessed by dialing 1-877-870-5176 (U.S.), 1-858-384-5517 (international), passcode 4418992.

This call is being web cast by ViaVid Broadcasting and can be accessed 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 until April 17, 2011 on either site. 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:


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.

    Murray H. Gross                           Brett Maas
    Chairman & CEO                            Hayden IR
    Email: mgross@ushomesystems.com           Email: brett@haydenir.com
    (214) 488-6300                            (646) 536-7331

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                               FINANCIAL HIGHLIGHTS
    Consolidated Statements
     of Operations               Three Months Ended          Year Ended
    (In thousands, except
     shares and per share
     amounts)                       December 31,            December 31,
                                    ------------            ------------
                                    2010       2009       2010        2009
                                    ----       ----       ----        ----
    Revenues                     $38,004    $30,855   $145,873    $110,951
    Cost of remodeling
     contracts                    18,383     14,076     68,552      49,399
                                  ------     ------     ------      ------
    Gross profit                  19,621     16,779     77,321      61,552

    Costs and expenses:
      Branch operations            1,858      1,905      7,618       7,907
      Sales and marketing         14,162     12,503     55,281      46,097
      General and
       administrative              2,721      2,579     10,819      10,365
      Loss on sale of building         -          -        171           -
      Legal settlement              (370)     1,746       (370)      3,246
                                    ----      -----       ----       -----
      Total costs and expenses    18,371     18,733     73,519      67,615
                                  ------     ------     ------      ------
    Operating income (loss)        1,250     (1,954)     3,802      (6,063)
    Interest expense                  16         35         99         145
    Other income (expense)            20         35         10         139
                                     ---        ---        ---         ---
    Income (loss) before
     income taxes                  1,254     (1,954)     3,713      (6,069)
    Income tax expense
     (benefit)                       546       (635)     1,556      (2,069)
                                     ---       ----      -----      ------
    Net income (loss)                708     (1,319)     2,157      (4,000)
                                     ---     ------      -----      ------

    Net income (loss) per
     common share: basic and
     diluted                       $0.10     ($0.18)     $0.30      ($0.55)
                                   -----     ------      -----      ------

    Number of weighted-
     average shares of common
     stock outstanding -
     basic                     7,143,145  7,143,880  7,138,105   7,221,680
                               ---------  ---------  ---------   ---------
    Number of weighted-
     average shares of common
     stock outstanding -
     diluted                   7,261,054  7,143,880  7,205,774   7,221,680
                               ---------  ---------  ---------   ---------

                          U.S. Home Systems, Inc.
                        Consolidated Balance Sheets
                                           December 31
                     ASSETS               2010                2009
                                          ----                ----
    Current assets:
    Cash and cash equivalents       $8,027,353          $6,336,889
    Marketable securities                802,634             797,410
    Accounts receivable-trade, net     6,168,778           4,242,435
    Accounts receivable-other            729,602             451,090
    Income tax receivable                 47,383           1,415,582
    Commission advances                1,430,869           1,150,154
    Inventories, net                 3,816,907           3,650,545
    Prepaid advertising and
     marketing                       1,785,555           1,103,689
    Prepaid expenses - other           809,803             767,278
    Deferred income taxes, net         880,882           1,605,813
                                       -------           ---------
         Total current assets       24,499,766          21,520,885
                                    ----------          ----------
    Property, plant, and
     equipment, net                  2,362,624           2,485,542
    Assets held for sale                     -           2,514,643
    Goodwill                         3,589,870           3,589,870
    Other assets                       496,413             623,365
                                       -------             -------
    Total assets                   $30,948,673         $30,734,305

                                     LIABILITIES AND STOCKHOLDERS' EQUITY
    Current liabilities:
    Accounts payable                $4,644,331          $3,936,798
    Accrued wages, commissions,
     bonuses and vacation            1,995,570           1,588,833
    Accrued legal settlement                 -           1,897,822
    Federal and state taxes
     payable                         1,735,045           1,381,635
    Long-term debt, current
     portion                           333,333             222,553
    Other accrued liabilities          641,256             748,596
                                       -------             -------
    Total current liabilities        9,349,535           9,776,237
    Deferred income taxes, net         403,630             310,491
    Long-term debt, net of
     current portion                   555,556           2,292,221
    Stockholders' equity:
    Common stock - $0.001 par
     value, 30,000,000 shares
     authorized, 7,192,886 and
     7,155,058 shares issued;
     7,152,718 and 7,132,026
     shares outstanding at
     December 31, 2010 and 2009,
     respectively                        7,193           7,155
    Additional capital              14,227,828          14,059,625
    Retained earnings                6,494,654           4,337,755
    Treasury stock, at cost,
     40,168 and 23,032 shares at
     December 31, 2010 and 2009,
     respectively                      (89,723)            (49,179)
                                       -------             -------
    Total stockholders' equity      20,639,952          18,355,356
                                    ----------          ----------
    Total liabilities and
     stockholders' equity          $30,948,673         $30,734,305

SOURCE U.S. Home Systems, Inc.

Source: newswire

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