DALLAS -- U.S. Home Systems, Inc. (Nasdaq: USHS) today reported financial results for the third quarter and nine months ended September 30, 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.
For the third quarter, USHS revenues increased 39.2% to a record $39.6 million as compared to $28.4 million in the third quarter 2009. This was the fifth consecutive quarter of sequentially increasing revenue.
Net income for the third quarter 2010 was $620,000 or $0.09 per share. The quarter included a pre-tax loss of $171,000 on the sale of its deck manufacturing facility. Excluding this loss, net income would have been $722,000, or $0.10 per share. Net loss in the third quarter 2009 was $510,000, or ($0.07) per share.
Murray Gross, chairman and chief executive officer, commented, "We recorded our fifth consecutive quarterly increase in revenues and new orders in the third quarter, indicating an ongoing improvement in our industry and continued demand for our solutions. Our new orders in the third quarter increased 28.3% to $39.7 million from $30.9 million in the third quarter last year, and increased 6.0% sequentially from $37.4 million in the second quarter 2010. We saw robust growth in our kitchen refacing and countertop product line across most of our geographic regions."
Mr. Gross continued, "We again attribute much of the increase in new orders to The Home Depot's inclusion of the cabinet refacing category in their new national kitchen marketing strategy, 'A Solution for Every Kitchen and Budget - Replace, Reface, Renew'. In support of this marketing strategy, we continued the installation of new kitchen refacing product displays in The Home Depot stores and are actively participating in special sales pricing promotions for cabinet refacing and countertop products. Although the sales promotions have squeezed our profit margins, we believe they have contributed to record revenues and higher profit dollars. The sales promotion ended at the conclusion of the quarter. We expect margin improvement in the fourth quarter 2010."
Third Quarter 2010 Highlights
* USHS reported new orders increased to $39.7 million in the third quarter 2010 from $30.9 million in the third quarter last year.
* USHS launched an internet micro-site in September 2010 which generated $660,000 in new orders in the first month.
* In connection with USHS market expansion program, USHS initiated service in three new markets during the third quarter 2010. As of September 30, 2010, it had initiated service in nine new markets in 2010 encompassing approximately 117 The Home Depot stores.
* Fixed operating costs, consisting of branch operating and general and administrative expenses, declined to 11.1% of revenues in the third quarter 2010 from 16.0% in the same quarter last year. The decline reflected increased leverage from higher revenues.
Mr. Gross continued, "In September we launched a new internet micro-site for kitchen refacing and countertop products. The site is a micro-site accessible from The Home Depot's site. We believe that marketing research indicates that increasing numbers of consumers are researching and selecting home improvements online. In the first month of the sites operation we generated customer appointments which resulted in approximately $660,000 in new orders."
For the nine months ended September 30, 2010, USHS had revenues of approximately $107.9 million as compared to $80.0 million in the same period last year. Net income was $1.4 million or $0.20 per share as compared to a net loss of $2.7 million, or ($0.37) per share, respectively.
Mr. Gross concluded, "We continued to be challenged by a lower credit approval rate in the quarter. Resolving the credit approval rate remains a top priority. However, despite no improvement in the credit approval rate for our customers, we have achieved solid growth in the last nine months. We remain confident in continuing near term improvement as we work together with our strategic partner."
Fourth Quarter 2010 Outlook
* Revenues in the fourth quarter 2010 of $35 to $36 million as compared to revenues of $30.9 million in the fourth quarter 2009.
* Net income of $0.05 to $0.06 per share, compared to a net loss of $1.3 million, or $0.18 per share in the fourth quarter of 2009.
SOURCE: US Home Systems
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