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Industrial Services of America Posts Increase in Profits

Date: March 27, 2007

Source: Industrial Services of America Inc.

Industrial Services of America, Inc. Reports Fourth Quarter and Year-end Results

Industrial Services of America, Inc. (NASDAQ:IDSA):

-- Annual net income of $2,188,579

-- Annual EPS of $0.61 per diluted share

-- Fourth quarter net income of $729,728

-- Fourth quarter EPS of $0.20 per diluted share

Industrial Services of America, Inc. IDSA, a leading provider of logistics management services, equipment and processes for waste, recyclable commodities and other materials, announced audited financial results for the fourth quarter and year ending December 31, 2006. A complete report is available in the Company’s Form 10-K, which is available for review at the Securities and Exchange Commission web site, www.sec.gov/edgar/searchedgar/companysearch.html.

Financial Highlights:

-- Total revenues for the year of 2006 were $62.1 million compared with total revenues for the year of 2005 of $117.4 million.

-- Income before income taxes for the year of 2006 was $3,514,508 compared to $1,842,030 for the year of 2005.

-- Net income for the year of 2006 was $2,188,579 (basic and diluted earnings of 61 cents per share) compared with net income of $1,101,597 (basic and diluted earnings of 31 cents per share) for the year of 2005.

-- EBITDA for the year of 2006 was $5,473,135 compared with EBITDA of $3,625,714 for the year of 2005.

-- Total revenues for the fourth quarter of 2006 were $14.6 million compared with total revenues for the fourth quarter of 2005 of $19.7 million.

-- Income before income taxes for the fourth quarter of 2006 was $1,319,689 compared to $698,593 for the fourth quarter of 2005.

-- Net income for the fourth quarter of 2006 was $729,728 (basic and diluted earnings of 20 cents per share) compared with net income of $415,536 (basic and diluted earnings of 12 cents per share) for the fourth quarter of 2005.

-- EBITDA for the fourth quarter of 2006 was $1,838,888 compared with EBITDA of $1,138,091 for the fourth quarter of 2005.

Industrial Services of America, Inc. Management's Comments

With the release of our earnings for the year of 2006, we are pleased to announce that we have now recorded fifteen consecutive profitable quarters. This sustained profitability continues to place us in a stronger financial position, allowing for greater flexibility to adjust to changing economic market conditions. Our goal is to remain dedicated to the recycling, management services, and equipment industry while sustaining steady growth at an acceptable profit, adding to the net worth of the Company, and providing positive returns for our stockholders.

Net income increased $1,086,982 or 99% to $2,188,579 for the year of 2006 compared to $1,101,597 in 2005. Net income increased $314,192 or 76% to $729,728 for the fourth quarter of 2006 compared to $415,536 for the same period in 2005. Commodity markets have improved and our outlook for the industry for the first quarter of 2007 remains positive.

Our ISA Recycling segment continues to flourish as recycling revenues increased 50% for the year of 2006 compared to the year of 2005. Operating levels and shipments for 2006 were up 19% compared to 2005.

A reduction of cost of goods sold within the Management services division of $1,272,241 was recorded in 2006. Additional information is available in the Company’s Form 10-K, which is available for review at the Securities and Exchange Commission web site, www.sec.gov/edgar/searchedgar/companysearch.html.

Industrial Services of America, Inc., is a Louisville, Ky.-based logistics management services company servicing commercial, industrial and logistics customers nationwide. Industrial Services of America, Inc. provides scrap processing, waste and recycling management services, and equipment sales and service. Industrial Services of America, Inc. also actively participates in international markets, exporting non-ferrous metals and other recyclable materials. Additional information is available at www.isa-inc.com.

This news release contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ from predicted results. Specific risks include varying demand for waste managing systems, equipment and services, competitive pressures in the waste managing systems and equipment, competitive pressures in the waste managing business, loss of customers and fluctuations in the price of recycled materials. Further information on factors that could affect the Company's results is detailed in the Company's filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly release the results of any revisions to the forward-looking statements.

 

FINANCIAL RESULTS AND SUPPLEMENTAL FINANCIAL INFORMATION FOLLOW

INDUSTRIAL SERVICES OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
  THREE MONTHS ENDED
Dec. 31,		   YEAR ENDED
Dec. 31,
2006   2005   2006   2005
Revenue from services $ 3,578,595 $ 11,690,829 $ 15,387,241 $ 84,451,367
Revenue from product sales 10,985,564 8,036,924 46,694,807 32,930,492
Total revenue 14,564,159 19,727,753 62,082,048 117,381,859
Cost of goods sold for services 2,947,508 10,776,651 13,984,314 80,600,770
Cost of goods sold for product sales 9,705,173 6,884,677 40,284,368 29,175,791
Reduction of cost of goods sold (822,241) - (1,272,241) -
Total cost of goods sold 11,830,440 17,661,328 52,996,441 109,776,561
Selling, general and administrative expenses 1,465,456 1,434,397 5,609,959 5,816,605
Income before other income (expense) 1,268,263 632,028 3,475,648 1,788,693
Other income (expense)
Interest expense (76,267) (4,210) (212,722) (74,016)
Interest income 92,793 50,859 195,662 126,578
Gain/(loss) on sale of assets 13,619 19,339 22,990 (2,649)
Other income, net 21,281 577 32,930 3,424
51,426 66,565 38,860 53,337
Income before income taxes 1,319,689 698,593 3,514,508 1,842,030
Provision for income taxes 589,961 283,057 1,325,929 740,433
Net income $ 729,728 $ 415,536 $ 2,188,579 $ 1,101,597
Basic earnings per share $ 0.20 $ 0.12 $ 0.61 $ 0.31
Diluted earnings per share $ 0.20 $ 0.12 $ 0.61 $ 0.31
Weighted average shares outstanding:
Basic 3,640,899 3,571,734 3,602,872 3,575,202
Diluted 3,640,899 3,585,727 3,613,090 3,593,810

Industrial Services of America, Inc. Supplemental Financial Information
Reconciliation of EBITDA (1):

Three months ending
Dec. 31,		 Year ending
Dec. 31,
2006   2005   2006   2005
Net Income 729,728 415,536 2,188,579 1,101,597
Interest expense 76,267 4,210 212,722 74,016
Income taxes 589,961 283,057 1,325,929 740,433
Depreciation 442,932 435,288 1,745,905 1,709,668
Amortization - - - -

EBITDA (1)

1,838,888 1,138,091 5,473,135 3,625,714
(1) EBITDA is calculated by the Company as net income before interest expense, income tax expense, depreciation and amortization. The Company uses EBITDA as a key performance measure of results of operations for purposes of evaluating performance internally. This non-GAAP measurement is not intended to replace the presentation of our financial results in accordance with GAAP. Rather, we believe the EBITDA calculation provides additional information to investors and debt holders due to the fact that tax credits, tax rates and other tax related items vary by company. Additionally, years of service for fixed assets and amortizable assets are based on company judgment. Finally, companies have several ways of raising capital which can affect interest expense. We believe the presentation of EBITDA provides a meaningful measure of performance exclusive of these unique items.

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