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LaPolla Reports Second Quarter Profit - Spray Foam Sales Surge 63% Driving Double Digit Growth
Economic conditions have helped raise awareness and further escalate the growing momentum of energy conserving spray polyurethane foam.
HOUSTON, TX - September 1, 2008 - LaPolla Industries, Inc. (LPAD.OB) (“LaPolla”) a leading manufacturer and supplier of spray foam insulation and coatings designed to reduce energy consumption in the commercial and residential new construction and retrofit markets, today announced results for the second quarter and six months ended June 30, 2008.

Second Quarter Results

For the second quarter of 2008 total sales increased 26% to $12.0 million compared to $9.5 million in the second quarter of 2007. Foam sales surged 63% due to market share gains as consumers and distributors recognize the economic advantages foam provides homeowners and commercial landlords compared to less energy-efficient conventional insulation products, such as fiberglass. Public awareness of green building materials and sustained energy solutions has greatly risen, and our foam and coatings product lines will provide millions of people the opportunity to realize sought after, environmentally conscious, energy cost savings. Coatings sales declined 25% due to the 2007 divestiture of our retail coating distribution channel. Gross profit increased 53% to $2.7 million from $1.8 million in the second quarter of 2007 primarily due the aggressive sales growth of our foam products and a more favorable product mix associated with the divestiture of our retail distribution channel allowing us to focus on higher margin coatings used in conjunction with our insulating roofing foam. Gross margin percentage increased 3.9% compared to same period in 2007 due primarily to manufacturing efficiencies recognized from our new foam resin plant which started up in the latter part of 2007. Operating expenses were $2.7 million in the second quarter of 2008 compared to $2.4 million in the same period last year, reflecting anticipated increases associated with our aggressive growth in sales. Operations in the second quarter produced net income of $69 thousand, or $.001 per share, compared to a net loss of $621 thousand, or $.01 per share for the same period in 2007.

“Delivering 63% sales growth in our foam business and our move into profitability this quarter was a direct result of execution of our business strategies and underscores consumer demand for sustainable energy efficient materials to meet market requirements. Economic conditions have helped raise awareness and further escalate the growing momentum of energy conserving spray polyurethane foam,” stated Douglas J. Kramer, CEO and President, of LaPolla Industries, Inc.

Six Months Results

For the six months ended June 30, 2008 total sales increased 20% to $20.2 million compared to $16.8 million in the six months ended June 30, 2008. Foam sales escalated 50% due to market share gains as volatile oil prices (and the associated impact on utilities) drive consumers and businesses alike to our energy efficient product lines. Coatings sales declined 25% due to the 2007 divestiture of our retail coating distribution channel. Gross profit increased 42% to $4.2 million from $3.0 million in the six months ended June 30, 2008 due to aggressive sales growth of our foam products partially offset by the divestiture of our retail coatings products. Gross margin percentage increased 3.2% compared to same period in 2007 due primarily to efficiencies recognized from our new foam resin plant, as well as a more favorable coatings products mix more aligned with our core competencies. Operating expenses were $5.3 million in the six month period of 2008 compared to $4.6 million in the same period last year, reflecting anticipated increases in volume related expenses such as commissions, as well as increases realized in legal fees, interest expense, and non cash share based compensation. Operating loss for the six months ended June 30, 2008 was $1.1 million, or $.018 per share, compared to $1.6 million, or $.03 per share for the same period last year.

Mr. Kramer further commented, “Our products provide long term appeal to consumers as volatile energy costs will likely remain a continuing concern. With our infrastructure and vertical integration in place, LaPolla remains positioned for continued aggressive sales and margin growth.” “LaPolla differentiates itself from its competition by focusing on customer dynamics, product technology and performance, and market responsiveness,” concluded Mr. Kramer.

Results of Core Business Segments

Second Quarter Results


Foam sales increased $3,509,204, or 62.6%, compared to the same period in 2007, due to increased volumes associated with energy efficient building products amid volatile crude oil prices. The attainment of critical third party approvals and credentials on our foam formulations has allowed us to penetrate markets previously unavailable. Gross profit increased $940,027, or 108.2%, compared to the same period in 2007, due to higher sales volumes in this energy efficient product line and improved manufacturing efficiencies from our new Foam facility, partially offset by higher freight and transportation costs. Segment profit was $297,699 compared to a segment loss of $189,740 for the same period for 2007.

Coatings sales decreased $995,590, or 25.4%, due to the divestiture of our retail distribution channel in 2007. Gross profit increased $3,239, or .003%, compared to the same period in 2007, due to an improved product mix with higher margin coatings used in conjunction with our insulating roof foams. We had a segment profit of $493,709 compared to a segment loss of $56,384 for the same period in 2007.

Six Months Results

Foam sales increased $5,049,890, or 49.9%, compared to the same period in 2007, due to increased volumes associated with energy efficient building products amid volatile crude oil prices and attainment of certain third party approvals and credentials on our foam formulations. Gross profit increased $1,418,996, or 102.2%, compared to the same period in 2007, due to higher sales volumes and improved manufacturing efficiencies, partially offset by higher freight and transportation costs. Segment loss decreased $702,707, or 91.3%, primarily from increased volumes and margins associated with the aggressive growth realized in our energy saving product lines and improvement from manufacturing our own foam resins.

Coatings sales decreased $1,632,355, or 24.5%, and gross profit decreased $157,155, or 9.9%, compared to the same period in 2007, due to the divestiture of our retail distribution channel in 2007. However, this enabled us to increase our focus on a more favorable product mix relating to our core competencies, which resulted in a segment profit increase of $481,027, or 103.9%, compared to the same period in 2007.

About LaPolla Industries, Inc.
LaPolla Industries, Inc. is a leading manufacturer and supplier of spray polyurethane foam for insulation and coatings targeting commercial and residential applications in the building envelope construction industries.

Forward Looking Statements
Statements made in this press release that are not historical facts constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21 of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are necessarily estimates reflecting the best judgment of senior management and express the Company's opinions about trends and factors which may impact future operating results. You can identify these and other forward-looking statements by the use of words such as "may," "will," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "intends," "potential," "continue," or the negative of such terms, or other comparable terminology. Such statements rely on a number of assumptions concerning future events, many of which are outside of the Company's control, and involve risks and uncertainties that could cause actual results to differ materially from opinions and expectations. Any such forward-looking statements should be considered in context with the various disclosures made by the Company about its businesses including, without limitation, the risk factors described below. Although the Company believes its expectations are based on reasonable assumptions, judgments, and estimates, forward-looking statements involve known and unknown risks, uncertainties, contingencies, and other factors that could cause the Company or the Company's industries' actual results, level of activity, performance or achievement to differ materially from those discussed in or implied by any forward-looking statements made by or on the Company and could cause the financial condition, results of operations, or cash flows to be materially adversely affected. In evaluating these statements, some of the factors that you should consider include the following: financial position and results of operations, cash position and cash requirements, accounting estimates, doubtful accounts, inventories, and warranties; operations, supply chain, quality control, and manufacturing supply, capacity, and new and existing facilities; products, price of products, product lines, and product and sales channel mix; relationship with customers, suppliers and strategic partners; credit facilities; industry trends and responses to these trends; sources of competition; and outcome and effect of current and potential future litigation. All information in this release is as of the date hereof. The Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations.

For further information regarding risks, uncertainties, and other factors associated with LaPolla’s business, please refer to LaPolla’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, which are available at www.lapollaindustries.com.

LaPolla Industries, Inc. Contacts:
Douglas J. Kramer, CEO
Michael T. Adams, CGO
(281) 219-4700

Public Relations Contacts:
Kristin Sommers
5W Public Relations
(212) 999-5585
ksommers@5wpr.com


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