Home Solutions of America Responds To Investor Inquiries
05 Giugno 2006 - 3:00PM
Business Wire
Home Solutions of America, Inc. (Amex: HOM; the "Company" or "Home
Solutions"), a provider of recovery, restoration and
rebuilding/remodeling services, responded today to investor
inquiries today concerning its Accounts Receivable and other
matters. In executing the Company's disaster relief work associated
with Hurricanes Katrina and Rita, which the Company classifies as
recovery services, many of the receivables are paid over longer
time periods due to government agencies and insurance companies
reimbursing claims for work performed. As a result, receivables
have increased in absolute dollars and in days-sales-outstanding
(DSO's), although at a more favorable rate than the restoration and
recovery industry overall. The Company expects the DSO's to
decrease throughout the year as the Company's mix of business
shifts to build-back work during the second quarter and throughout
the balance of the year. During the second quarter, the Company has
already collected insurance-backed receivables, valued at
approximately $1.5 million that were over 150 days old. Over the
past two years, the Company has experienced bad debt expense
related to receivables of less than 1% of revenue. The Company's
$10 million credit agreement with Texas Capital Bank reflects the
nature of receivables in the recovery and restoration industry, as
it includes in the Company's borrowing base, "any accounts
receivable of Home Solutions and its subsidiaries which remains
unpaid for less than 180 days from invoice date" (see
http://www.sec.gov/Archives/edgar/data/855424/000100329706000097/
form8k.htm). (Due to its length, this URL may need to be
copied/pasted into your Internet browser's address field. Remove
the extra space if one exists.) The credit facility remains unused
and the Company had $7.2 million in cash as of its first quarter
ended March 31, 2006. The Company also addressed its business
outlook. Home Solutions increased its 2006 forecast to revenue of
$160 million to $165 million and diluted earnings per share of
$0.56 to $0.60 on May 15, 2006 as a result of the Company receiving
contracts worth up to $60 million, the expansion of its
relationship with The Home Depot and Centex and rebuilding
activities associated with New Orleans and the surrounding areas.
"We remain confident that we will meet or exceed the updated
outlook we recently provided," said Frank J. Fradella, Chairman and
CEO of Home Solutions. "Since the conclusion of the Mayoral
election, work has increased in New Orleans and the surrounding
areas. In addition, we expect the need for affordable housing in
New Orleans, through the services we provide to American
Renaissance Homes, to enhance revenue during the second half of the
year." Finally, Home Solutions noted that sales of the Company's
common stock recently by the Chief Executive Officer and the
President were the first such sales by the executives since the
Company's inception. The sales were conducted for diversification
and estate planning purposes. In connection with the sales, Mr.
Fradella exercised options to acquire an additional approximately
1.6 million shares of the Company's common stock at a cost of
approximately $2.8 million, significantly increasing the number of
shares of common stock he directly owns. On a fully diluted basis,
the Company's management team owns approximately 18.5% of Home
Solutions' stock. Home Solutions is a provider of recovery,
restoration and rebuilding/remodeling services to commercial and
residential areas that are (i) prone to flooding, hurricanes,
tornados, fires or other naturally occurring and repetitive weather
related emergencies; and/or (ii) experiencing robust housing
development. The Company has operations in California, Texas,
Florida, Alabama, Georgia, Louisiana, Mississippi and South
Carolina through its five subsidiaries, Cornerstone Building and
Remodeling, Southern Exposure, P.W. Stephens, Home Solutions
Restoration of Louisiana and Fiber Seal Systems. Cornerstone is a
leading supplier and installer of granite materials for kitchens
and baths to national home centers, as well as national builders
and remodeling companies, in the southeastern United States.
Southern Exposure and related companies is a manufacturer and
installer of cabinet and countertop services in the Florida
marketplace. P.W. Stephens provides mold and asbestos remediation
services, and fire and water restoration services in California,
Florida and Louisiana. Home Solutions Restoration of Louisiana
provides Recovery Restoration Services in Florida, Louisiana,
Mississippi and Texas and Fiber Seal Systems is a national licensor
of cleaning and fabric protection businesses. For more information
on Home Solutions, please see the Company's website at
http://www.homcorp.com. Statements included in this update that are
not historical in nature are intended to be, and are hereby
identified as, "forward-looking statements" for purposes of the
safe harbor provided by Section 21E of the Securities Exchange Act
of 1934, as amended by Public Law 104-67. Forward-looking
statements may be identified by words including "anticipate,"
"believe," "intends," "estimates," "expect," and similar
expressions. The Company cautions readers that forward-looking
statements including, without limitation, those relating to the
Company's future business prospects are subject to certain risks
and uncertainties that could cause actual results to differ
materially from those indicated in the forward-looking statements,
due to factors such as those relating to economic, governmental,
technological, and other risks and factors identified from time to
time in the Company's reports filed with the SEC.
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