DALLAS - U.S. Home Systems, Inc. (nasdaqngm:USHS) today reported financial results for the fourth quarter and year ended December 31, 2011. 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.
Fourth Quarter and Full-Year 2011 Highlights
USHS reported new orders increased to $37.9 million in the fourth quarter 2011 from $37.2 million in the fourth quarter last year.
Full-year new orders increased 11.7% to $166.1 million from $148.6 million in 2010.
USHS had a backlog of uncompleted orders of $21.2 million at December 31, 2011.
Revenues and net income in the fourth quarter 2011 increased to $38.7 million and $0.12 per diluted share from $38.0 million and $0.10 per diluted share in the fourth quarter last year, respectively.
Revenues from the Company's SCN market expansion and DIY programs which were initiated in 2010, increased $7.3 million or 122% in 2011. At December 31, 2011 the SCN network served 359 The Home Depot stores, 177 of which are in 17 new expansion markets.
Full-year revenues increased 13.1% to a record $164.9 million from $145.9 million in 2010.
Fixed operating costs, consisting only of branch operating and general and administrative expenses, declined to 11.9% of revenues in 2011 from 12.5% of revenues in 2010. The decline principally reflected increased leverage from higher revenues.
Financial Results
For the fourth quarter, USHS revenues increased to $38.7 million as compared to $38.0 million in the fourth quarter 2010. Net income was $927,000 or $0.12 per diluted share as compared to $708,000 or $0.10 per diluted share, respectively.
Murray Gross, chairman and chief executive officer, commented, "In the fourth quarter we continued to deliver solid operating performance and financial results. Our new orders in the fourth quarter 2011 were $37.9 million, up from $37.2 million in the fourth quarter last year, driving a year-over-year increase in revenues. Basic EPS was $0.13 for the fourth quarter and diluted EPS was $0.12 as compared with our guidance of $0.13 per diluted share. The difference in diluted EPS to our guidance is largely in the rounding reflecting a slight increase in dilutive shares resulting from the increase in the stock price. Our backlog of uncompleted orders at December 31, 2011 was $21.2 million as compared to $20.1 million last year."
"During the fourth quarter 2011 we developed a new line of Martha Stewart Living(TM) kitchen cabinet refacing products," said Mr. Gross. "Due to the popularity and reputation for style and quality inherent in the Martha Stewart brand, this exciting line of replacement kitchen cabinets has been well-received by customers of The Home Depot. Our line of Martha Stewart Living(TM) cabinet refacing products provides a 'refacing' solution to The Home Depot customers who prefer the look of the Martha Stewart Living(TM) line of cabinetry in a refacing product. We commenced offering these products to our The Home Depot customers in late January 2012. We believe the Martha Stewart Living(TM) line of kitchen refacing products will be an exciting extension to our kitchen refacing product portfolio."
"Also during the fourth quarter 2011, we and The Home Depot agreed to test a new 'installed' product category, 'Replacement Kitchen Remodeling'," continued Mr. Gross. "The pilot program commenced in March 2012 in two markets in Florida. In connection with the test pilot, we will re-market customers who expressed an interest in kitchen refacing, however did not purchase our refacing products. We believe that these customers may be more interested in replacing their complete kitchen cabinetry rather than installing a refacing product."
USHS also announced its Board has authorized a 50% increase in the quarterly dividend from $0.02 per share to $0.03 per share. The dividend is payable April 26, 2012 to stockholders of record at the close of business on April 12, 2012.
Announcing the dividend, Mr. Gross commented, "We believe the payment of dividends will provide us with an additional means of creating value for our stockholders as we continue to pursue growth opportunities."
For the year ended December 31, 2011, new orders increased 11.7% to $166.1 million from $148.6 million last year and revenues increased 13.1% to a record $164.9 million from $145.9 million, respectively. The increase in revenues resulted from strong demand for kitchen and bath refacing products and faster sale-to-completion cycle time. Revenues from USHS SCN market expansion and DIY programs (programs which USHS initiated in the first quarter of 2010) increased $7.3 million, or 122.2% as compared to 2010 principally resulting from growth of the program.
USHS net income was $4.7 million or $0.63 per diluted share for the year ended December 31, 2011 as compared to $2.1 million or $0.30 per diluted share in the prior year.
Mr. Gross said, "The number of our diluted shares increased over 200,000 shares in 2011 as compared to 2010 principally reflecting the increase in our stock price.. Using the same number of shares as we had in 2010, 2011 EPS would compute to $0.65 per diluted share instead of the actual $0.63 per diluted share. This reflects that the increase in shares in the EPS computation resulted in $0.02 additional dilution per share compared to our 2010 results."
Mr. Gross concluded, "We overcame economic challenges, and issues related to lower credit approval rates for our customers to deliver another year of increased new orders during 2011. Resolving the credit approval rate remains a top priority. Nevertheless we are very confident that we will continue to deliver solid performance in 2012."
First Quarter 2012 Outlook
USHS expects:
Revenues in the first quarter 2012 of $40.5 million as compared to revenues of $39.0 million in the first quarter 2011.
Net income of $0.09 per share, compared to $0.08 per share in the first quarter 2011.
USHS REPORTS FOURTH QUARTER 2011 RESULTS
FINANCIAL HIGHLIGHTS
Consolidated Statements of Operations Three Months Ended Year Ended
(In thousands, except shares and per share amounts) December 31, December 31,
------------------ ------------------
2011 2010 2011 2010
--------- --------- --------- ---------
(Unaudited)
Revenues $38,681 $38,004 $164,945 $145,873
Cost of remodeling contracts 18,228 18,383 76,517 68,552
--------- --------- --------- ---------
Gross profit 20,453 19,621 88,428 77,321
Costs and expenses:
Branch operations 1,738 1,858 7,286 7,618
Sales and marketing 14,759 14,162 61,050 55,281
General and administrative 2,611 2,351 12,396 10,620
--------- --------- --------- ---------
Total costs and expenses 19,108 18,371 80,732 73,519
--------- --------- --------- ---------
Operating income 1,345 1,250 7,696 3,802
Interest expense 5 16 25 99
Other income 18 20 26 10
--------- --------- --------- ---------
Income (loss) before income taxes 1,358 1,254 7,697 3,713
Income tax expense 431 546 3,025 1,556
--------- --------- --------- ---------
Net income 927 708 4,672 2,157
--------- --------- --------- ---------
Net income per common share: basic and diluted
- Basic $0.13 $0.10 $0.65 $0.30
--------- --------- --------- ---------
- Diluted $0.12 $0.10 $0.63 $0.30
--------- --------- --------- ---------
Number of weighted-average shares of common stock outstanding - basic 7,256,385 7,143,145 7,228,138 7,138,105
--------- --------- --------- ---------
Number of weighted-average shares of common stock outstanding - diluted 7,468,690 7,261,054 7,418,566 7,205,774
--------- --------- --------- ---------
USHS REPORTS FOURTH QUARTER 2011 RESULTS
U.S. Home Systems, Inc.
Consolidated Balance Sheets
December 31
----------------------
ASSETS 2011 2010
---------- ---------
Current assets:
Cash and cash equivalents $ 13,682,779 $ 8,027,353
Marketable securities 816,510 802,634
Accounts receivable-trade, net 5,768,948 6,168,778
Accounts receivable-other 611,640 729,602
Income tax receivable 22,175 47,383
Commission advances, net 1,072,250 1,430,869
Inventories, net 3,802,255 3,816,907
Prepaid advertising and marketing 1,908,021 1,785,555
Prepaid expenses - other 766,295 809,803
Deferred income taxes, net 856,750 880,882
---------- ---------
Total current assets 29,307,623 24,499,766
---------- ---------
Property, plant, and equipment, net 2,486,965 2,362,624
Goodwill 3,589,870 3,589,870
Other assets 463,863 496,413
---------- ---------
Total assets $ 35,848,321 $ 30,948,673
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,607,866 $ 4,644,331
Accrued wages, commissions, bonuses and vacation 2,044,694 1,995,570
Federal and state taxes payable 1,237,762 1,735,045
Long-term debt, current portion 0 333,333
Other accrued liabilities 692,206 641,256
---------- ---------
Total current liabilities 9,582,528 9,349,535
Deferred income taxes, net 581,162 403,630
Long-term debt, net of current portion 0 555,556
Other liabilities, long-term 195,993 0
Stockholders' equity:
Common stock - $0.001 par value, 30,000,000 shares authorized, 7,288,776 and 7,289 7,193
7,192,886 shares issued; 7,288,776 and 7,152,718 shares outstanding at
December 31, 2011 and December 31, 2010, respectively
Additional capital 14,677,025 14,227,828
Retained earnings 10,804,324 6,494,654
Treasury stock, at cost, 0 and 40,168 shares at December 31, 2011 and December 0 (89,723)
2010, respectively
---------- --------
Total stockholders' equity 25,488,638 20,639,952
---------- ---------
Total liabilities and stockholders' equity $ 35,848,321 $ 30,948,673
Source: U.S. Home Systems, Inc.
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