Shares of Home Solutions of America (NASDAQ: HSOA) jumped as high as 11 percent today in afternoon trading after announcing its 2007 first-quarter revenue was up 107.1 percent to $39.9 million, from $19.3 million in the period ended March 31, 2006.Net income for first-quarter 2007 more than doubled, at $5.7 million, or 12 cents a share, as compared to $2.3 million, or 6 cents a share, reported last year.
In September 2005 the company acquired Florida Environmental Remediation Services Inc., which catapulted the company into the recovery services market in Louisiana, Mississippi, Texas and Florida – areas affected by hurricane activity over the past two years. Combined with expansion into new geographical markets, the company saw an increase in its first-quarter sales.
“We are pleased that during a seasonally slower period for the company we were able to report improved operating results,” said Frank J. Fradella, chairman and CEO of Home Solutions, in a statement. “These results reflect our ability to successfully address several of the operational issues that adversely impacted our 2006 fourth-quarter results and to integrate the Fireline and Associated Contractors acquisitions.”
With fires, flooding and tornadoes in various areas of the country, Home Solutions should have plenty of work ahead.
“Recent contracts that we have been awarded in areas beyond the Gulf Coast reflect our efforts to diversify the company so that it does not rely upon disaster-related work,” commented Fradella. “Although we believe we are uniquely positioned to respond to disasters such as the tornadoes in Kansas, today the Recovery business represents just one part of the Company.”
In a conference call the company gave guidance for the second quarter. Home Solutions expects revenue of $44 million to $48 million with net income of 14 to 17 cents per share for the period ended June 30, 2007.
The company also intends to complete a backlog of projects this year with anticipated revenue of $112 million as well as projects assumed through acquisitions. The acquisitions include: P.W. Stephens, which provides indoor air decontamination; Fiber Seal Systems specializing in the cleaning, drying and deodorization of carpet/furniture, as well as moving and storage systems; Southern Exposure, manufacturer of custom cabinets and countertops; and Cornerstone Marble and Granite Inc. marble, manufacturer of granite countertop installation.
“The shift in our mix of business, while expected to reduce our margins going forward, should make our business more predictable and easier to manage,” added Fradella. “Most of the projects that we are working on are not dependent on funding of the New Orleans rebuilding efforts. While we remain cautiously optimistic that we will participate in the rebuilding efforts there in a more substantial way, many of the large projects that we have recently been awarded are in other parts of the country … The acquisitions we made in 2006, along with our efforts to diversify our business, have created a stable and more predictable business. Although the Company has never been better positioned to respond to disaster-related work across the country, we have built a business that should grow irrespective of natural disasters.”
Shares of Home Solutions were trading on volume of 5,017,547 – up 9 percent, or 47 cents, to $5.72 as of Thursday afternoon.
