Diamond Home Services, Inc. Updates Earnings Outlook; Benefits of Restructuring Not Yet Fully Realized.

WOODSTOCK, Ill.--(BUSINESS WIRE)--June 21, 1999--

Diamond Home Services, Inc. (NASDAQ: DHMS) announced today that due to lower-than-expected sales, it is unlikely that the Company will attain its comparative second quarter 1998 earnings of seven cents per share. According to the Company, earnings for the second quarter 1999 are more likely to be in the range of five cents loss per share to one cent profit per share on estimated flat revenues of $65 million. (Not included in the comparative second quarter 1998 results are revenues for the first three weeks of 1998 for Reeves Southeastern Corporation, acquired in April 1998.)

The lower-than-expected sales and decrease in earnings are entirely attributable to the Company's installed home improvement segment. Installed home improvement revenues in May 1999 were 30% below the comparative May 1998 period. The Company reported that the first quarter 1999 restructuring of its installed home improvement business has contributed to the sales decrease and earnings revision, and has temporarily affected the Company's close ratios and timely processing and installation of its book of orders.

"We are entirely confident that our operating processes and organizational restructuring are fundamentally sound for managing future sustained growth in the installed home improvement industry," stated Mr. Geoffrey H. Foreman, the Company's President and COO. "While we are disappointed - though not discouraged - that not all sales markets and newly consolidated district operations centers are up to speed, we remain encouraged with the potential benefits of our changes, as illustrated in the improvements of our key operating metrics in the first half of June 1999. We believe that although April and May were difficult months, we are witnessing a reversal of this trend and that we will soon benefit from our restructuring efforts."

Diamond Home Services, Inc. is a leading national marketer and contractor of installed home improvement products, including roofing systems, gutters, doors, and fencing. The Company, through its subsidiary, Reeves Southeastern Corporation, is one of the largest manufacturers and distributors of fencing and perimeter security products to the industrial and residential markets in the U.S. Reeves Southeastern operates 32 distribution centers primarily in the eastern half of the U.S. In addition, Reeves Southeastern furnishes and installs private-label fencing home improvement products. Through its subsidiary Diamond Exteriors, Inc.(R) the Company markets installed home improvement products and services directly to consumers, primarily under the "SEARS" name. Through its finance subsidiary Marquise Financial Services, Inc., the Company also offers financing to its customers. The Company has home consultants located in major cities across the U.S., providing the Company with a presence in markets covering approximately 80% of the owner-occupied households in the U.S.

Certain statements contained herein, including without limitation, statements addressing the beliefs, plans, objectives, estimates or expectations of the Company or future results or events constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements involve known or unknown risks, including, but not limited to, general economic and business conditions, matters related to the licensing agreement between Diamond Exteriors, Inc. and Sears, Roebuck and Co., warranty exposure, the Company's reliance on sales associates and on the availability of qualified independent installers, lead activity and costs related thereto, and conditions in the installed home improvement industry. There can be no assurance that the actual future results, performance, or achievements expressed or implied by such forward-looking statements will occur. Users of forward-looking statements are encouraged to review Item 7 of the Company's latest annual report on Form 10-K, its filings on Form 10-Q, management's discussion and analysis in the Company's latest annual report to stockholders, the Company's filings on Form 8-K, and other federal securities law filings for a description of other important factors that may affect the Company's business, results of operations and financial condition.