Lapolla Industries Reports Financial Results for the Third Quarter Ended September 30, 2016

Climate-Friendly FOAM-LOK® 4G Spray Foam Insulation Taking Hold of Market Share

HOUSTON--(BUSINESS WIRE)--Lapolla Industries, Inc. (“Lapolla” or the “Company”)(LPAD), a Houston-based publicly traded manufacturer and global supplier of high performance, energy efficient building products, today announced its financial results for the third quarter ended September 30, 2016.

Third Quarter 2016 Highlights:

• Sales for the nine months ended September 30, 2016 increased by 8% to $61.7 million compared to the same period in 2015
• Net Income from the nine months ended September 30, 2016 was $4.0 million, an increase of $5.3 Million compared to the same period in 2015
• Adjusted EBITDA for the nine months ended September 30, 2016 was $7.1 million, an increase of $4.8 million compared to the same period in 2015
• Paid off $5.8 million debt with Enhanced Capital and $2.7 million revolver loan with Bank of America with new line of credit
• New $15 million line of credit with Bank of America reduced average cost of capital from 9.7% to 3.0% resulting in annual interest savings of $583,000
• Reduced debt by $5.7 million for the nine months ended September 30, 2016 resulting in annual interest savings of $382,000
• Overall interest savings of $965,000 on an annual basis

“Lapolla’s continued positive financial performance correlates directly to enhanced sales both domestically and internationally of our high performance building envelope and roofing product lines,” stated Douglas J. Kramer, Chief Executive Officer and President of Lapolla. “Additionally, we believe our market share growth is tied to the environmental stewardship we have driven through our energy efficient spray polyurethane foam roofing and insulation offerings, as well as our company being recognized as the first spray foam manufacturer to bring to market a spray foam system that reduces Global Warming Potential (GWP) and eliminates Ozone Depletion Potential (ODP), in line with, and as a partner to, the White House in its Climate Action Plan,” concluded Mr. Kramer.

The company’s Chief Financial Officer, Jomarc Marukot added, “In the third quarter, Lapolla achieved strong revenue and profitability. We remain focused on delivering value to our shareholders. The reductions in our debt and cost of capital will contribute significantly to our bottom line, improve our cash flow, and further strengthen our balance sheet.”

For further information regarding Lapolla’s financial results as of September 30, 2016, including Adjusted EBITDA, and a reconciliation of Adjusted EBITDA to net income or loss for the three and nine months ended September 30, 2016 and 2015, respectively (see below), refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Lapolla’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, available at www.lapolla.com.

About Lapolla Industries, Inc.

Lapolla Industries, Inc. (LPAD) is a global supplier and manufacturer of spray polyurethane foam for insulation and roofing applications, reflective roof coatings and equipment. Based in Houston, Texas, the company’s building envelope and roofing product solutions are designed to reduce energy consumption in the building environment, across the residential, commercial and industrial sectors, in both new construction and retrofits. Visit Lapolla Industries at www.lapolla.com.

FORWARD LOOKING STATEMENTS

Certain statements in this press release that are forward-looking and not statements of historical fact are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by the use of words like "may," "will," "should," "could," "expect," "anticipate," "estimate," "believe," "intend," or "project" or the negative of these words or other variations on these words or comparable terminology. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties outside of our control that can make such statements untrue, including, but not limited to, adverse economic conditions and their effect on demand for foams and coating; adverse effects of fluctuations in sales; intense competition from competitors that are better established and have significantly greater resources than us; our dependence on a few large suppliers for a large portion of materials required for production and sales of our products; loss or departure of key personnel; market acceptance of our existing and new products; unanticipated increases in raw material prices or disruptions in supply; restrictive loan covenants and/or our ability to repay or refinance debt under our credit facilities; operating margin risk due to competitive pricing and operating efficiencies, supply chain risk, material, labor or overhead cost increases, interest rate risk and commodity risk; the fact that our chairman controls a majority of our combined voting power, and may have, or may develop in the future, interests that may diverge from those of other stockholders; future sales of large blocks of our common stock, which may adversely impact our stock price; and the liquidity and trading volume of our common stock. More detailed information about the Company and the risk factors that may affect the realization of forward-looking statements is set forth in the Company's filings with the Securities and Exchange Commission (SEC), including the Company's Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q. Investors and security holders are urged to read these documents free of charge on the SEC's web site at http://www.sec.gov. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.

Results of Operations

Summary

The following table presents selected financial and operating data derived from the audited financial statements of the Company as of the dates and for the periods indicated. In addition, the table presents our unaudited non-GAAP financial measures, EBITDA and Adjusted EBITDA, and includes our reconciliation to net income or loss, its most directly comparable financial measure calculated and presented in accordance with GAAP. The table is presented in thousands. All financial information for September 30, 2016 and September 30, 2015, is derived from the Company's unaudited financial statements, as disclosed in the Company's Quarterly Report on Form 10-Q, for the three and nine months ended September 30, 2016, filed with the SEC.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2016		2015		2016		2015
Summary of Overall Results of Operations
Sales	$	20,917	$	20,182	$	61,647	$	57,219
Operating Income		2,070		881		5,149		655
Other Expense		563		575		1,034		1,715
Net Income (Loss)		1,468		215		3,964		(1,333	)
EBITDA	$	2,315	$	1,090	$	6,388	$	1,253
Adjusted EBITDA	$	2,562	$	1,279	$	7,099	$	2,270
Reconciliation of EBITDA and Adjusted EBITDA to Net Income (Loss):
Net Income (Loss):	$	1,468	$	215	$	3,964	$	(1,333	)
Additions / (Deductions):
Interest Expense		192		335		818		995
Interest Expense – Related Party		125		196		491		579
Interest Expense – Amortization of Discount		30		46		120		136
Loss on Extinguishment of Debt		306		–		306		–
Tax Expense (1)		67		150		277		416
Depreciation (2)		60		88		202		268
Amortization of Other Intangible Assets		67		60		210		192
EBITDA	$	2,315	$	1,090	$	6,388	$	1,253
Additions / (Deductions):
Share Based Compensation (3)		247		189		711		1,017
Adjusted EBITDA	$	2,562	$	1,279	$	7,099	$	2,270

(1) Represents amounts included in operating expenses and income tax expense for the periods then ended.

(2) Represents amounts included in cost of sales and operating expenses for the periods then ended.

(3) Represents non-cash share-based compensation expense for the periods then ended.

Non-GAAP Financial Measures

To supplement our financial statements presented on a GAAP basis, we disclose non-GAAP measures as EBITDA and Adjusted EBITDA because management uses these supplemental non-GAAP financial measures to evaluate performance period over period, to analyze the underlying trends in its business, and to establish operational goals and forecasts that are used in allocating resources. In addition, we believe many investors use these non-GAAP measures to monitor the Company’s performance. Our presentation includes these non-GAAP financial measures, and a reconciliation of EBITDA and Adjusted EBITDA to the GAAP measures most directly comparable thereto. The GAAP measure most directly comparable to EBITDA and Adjusted EBITDA is net income or loss. The non-GAAP financial measures of EBITDA and Adjusted EBITDA should not be considered as an alternative to net income or loss or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Adjusted EBITDA are not presentations made in accordance with GAAP and have important limitations as analytical tools. You should not consider EBITDA or Adjusted EBITDA in isolation or as substitutes for analysis of our results as reported under GAAP. Because EBITDA and Adjusted EBITDA exclude some, but not all, items that affect net income and is defined differently by different companies, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

EBITDA

We define EBITDA as net income or loss before interest, income taxes, depreciation and amortization of other intangible assets.

Adjusted EBITDA

Adjusted EBITDA is defined as EBITDA increased by total share based compensation included in net income or loss. The Company believes that presenting EBITDA and Adjusted EBITDA, in addition to the corresponding GAAP financial measures, provides investors greater transparency to the information used by management for financial and operational decision-making, and allows investors to see the Company’s results "through the eyes" of management. We further believe that providing this information assists investors in understanding the Company’s operating performance and the methodology used by management to evaluate and measure such performance.

We recognize that the usefulness of EBITDA and Adjusted EBITDA as an evaluative tool may have certain limitations, including:

• EBITDA and Adjusted EBITDA do not include interest expense. Because we have borrowed money in order to finance our operations, interest expense is a necessary element of our costs and impacts our ability to generate profits and cash flows. Therefore, any measure that excludes interest expense may have material limitations;
• EBITDA and Adjusted EBITDA do not include depreciation and amortization of other intangible assets expense. Because we use capital assets, depreciation and amortization of other intangible assets expense is a necessary element of our costs and ability to generate profits. Therefore, any measure that excludes depreciation and amortization of other intangible assets expense may have material limitations;
• EBITDA and Adjusted EBITDA do not include tax expenses. Because the payment of taxes is a necessary element of our costs, any measure that excludes tax expense may have material limitations;
• EBITDA and Adjusted EBITDA do not reflect capital expenditures or future requirements for capital expenditures or contractual commitments;
• EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and
• Adjusted EBITDA does not include share-based compensation expense.