MINNEAPOLIS, May 19, 2016 /PRNewswire/ -- Appliance Recycling
Centers of America, Inc. ("ARCA" or the "Company") (NASDAQ: ARCI),
a leading provider of appliance recycling and retailing services,
today announced results for its financial reporting period ended
April 2, 2016.
Revenues for the first quarter of 2016 were $25.3 million, down 8.1% compared with the same
period in 2015, as a result of decreased recycling division
appliance replacement sales and byproduct revenues. Net loss
for the first quarter of 2016 was $0.5
million, or $(0.08) per
diluted share, compared with net loss of $1.7 million, or $(0.29) per diluted share, reported in the first
quarter of last year.
First Quarter Highlights
During the first quarter of 2016:
- We invested in start-up activities for new business and the
opening of new recycling centers. Despite the costs incurred in
such activities, our cost reduction efforts helped reduce our
overall loss in the first quarter of 2016 by $1.2 million as compared with the first quarter
of 2015.
- Operating income for the retail segment returned to
profitability with the rationalization of occupancy costs and
rightsizing of a number of stores and strong vendor support and
cost containment efforts.
- We experienced declines in appliance replacement revenues to
utilities, municipalities and others of $1.4
million, declines in carbon offset program revenues of
$0.2 million, and declines in other
byproduct revenues of $0.6 million as
a result of the continuation of the depressed levels in the price
of scrap steel and other non-ferrous metal that we sold as compared
with 2015.
- Recycling programs that we have been adding and pricing
adjustments to existing customer programs are beginning to yield
improved margins for our recycling segment.
Tony Isaac, chief executive
officer of ARCA, Inc. commented, "We expect to record close to
$1.9 million in revenues in the
second quarter of 2016 from the activities of our carbon offset
program. This along with recent improvements in scrap and
other metal markets in which we sell should help pave the way for a
brighter future. We have been working to amend existing
contracts to improve pricing and have been entering into contracts
for new business that is less dependent of the recovery of
byproduct revenues. We are working extremely hard to serve
our business partners and to offer the highest quality service
levels. We are proud to be the oldest and largest service
provider in the appliance recycling market and look forward to the
challenges ahead."
Retail Appliance Sales
ApplianceSmart, Inc., the company's retail division, posted
sales of $16.6 million for the first
quarter, a decrease of $0.5 million,
or 3.1%, compared with the same period of 2015. The decrease
was due mainly to lower sales of our out-of-carton
merchandise. ApplianceSmart reported segment operating income
for the first quarter of $0.1
million, compared with an operating loss of $0.6 million in the same period of the prior
year.
Brad Bremer, president of
ApplianceSmart, commented, "Although we were challenged with
maintaining top line revenues, we were successful in improving our
overall gross profit as a result of improved purchasing terms and
vendor support." Brad added, "We have also started to see the
results of our efforts to rationalize our retail space requirements
and continue to downsize our larger locations where
appropriate. We are actively looking to expand in the markets
in which we are operating to increase the economies of scale of our
processing centers."
Recycling Revenues
ARCA Recycling, Inc. saw reductions in revenues of $0.9 million to $6.9 million in the first quarter
of 2016. Appliance replacement revenues decreased
$1.4 million, while appliance
recycling and processing fees increased $0.5
million. Appliance replacement units in the first
quarter of 2016 decreased as a number of the utility customers
delayed their 2016 launch plans.
"We anticipate for the remainder of 2016 new programs will
outpace the decline in revenues that we expect to result from the
recent end of some of our oldest programs in Southern California," commented Jack Cameron (President of ARCA Recycling,
Inc.). Jack commented further, "We have invested a
considerable amount of time and resources in our efforts to take
care of our existing customers and to expand our operations in
response to the failure of JACO Environmental. It takes time
and proven processes to effectively on-board new customers and
their programs. We wish to thank our vendors and key
strategic partners (engaging us to lead their appliance recycling
programs) with whom we have been working closely as we expand our
national footprint. Our team of experienced employees and
subcontractors has been doing a remarkable job. We have been
successful in our efforts to roll-out several new programs and have
plans to continue the expansion of our recycling programs over the
coming months. We have been hiring and training teams across
the country and are very proud of the response that our team has
made toward this new business development effort."
Byproduct Revenues
The company's byproduct revenues decreased from $2.6 million in the first quarter of 2015 to
$1.8 million in the first fiscal
quarter of 2016. The decline in byproduct revenues was
primarily due to the lack of carbon offset revenues in the first
quarter of fiscal 2016, compared to $0.2
million in the first quarter of fiscal 2015, and declines in
revenues of $0.6 million in fiscal
2016 due to decreased steel and non-ferrous metal pricing.
Steel prices remained low for much of 2015 and depressed pricing
continued in the first quarter of 2016. Steel selling prices
in Philadelphia have fallen as
much as $90 per ton (or 33%) compared to the first
quarter of 2015. Non-ferrous pricing saw
similar declines.
"We have begun to see steel prices moving in a more favorable
direction in April and May 2016 with
recent selling prices of $290 per ton
in Philadelphia, a level not seen
since January 2015," commented
Brian Conners, President of ARCA
Advanced Processing, LLC in Philadelphia.
Liquidity and Capital Resources
Cash and cash equivalents were $2.3
million as of April 2, 2016,
compared with $2.0 million as of
January 2, 2016. As of
April 2, 2016, the company had excess
available borrowing capacity under its revolving line of credit of
$1.6 million.
About ARCA
ARCA's three business components are uniquely positioned in
the industry to work together to provide a full array of
appliance-related services. ARCA Advanced Processing, LLC
employs advanced technology to refine traditional appliance
recycling techniques to achieve optimal revenue-generating and
environmental benefits. ARCA is also the exclusive North
American distributor for UNTHA Recycling Technology (URT), one of
the world's leading manufacturers of technologically advanced
refrigerator recycling systems and recycling facilities for
electrical household appliances and electronic scrap. ARCA's
regional centers process appliances at end of life to remove
environmentally damaging substances and produce material byproducts
for recycling for utilities in the U.S. and Canada. Eighteen
company-owned stores under the name ApplianceSmart, Inc.® sell new
appliances directly to consumers and provide affordable ENERGY
STAR® options for energy efficiency appliance replacement
programs.
This press release contains statements that are
forward-looking statements as defined within the Private Securities
Litigation Reform Act of 1995, including statements regarding
ARCA's future success. These forward-looking statements are
subject to risks and uncertainties that could cause actual results
to differ materially from the statements made, including the risks
associated with general economic conditions, competition in the
retail and recycling industries and regulatory risks. Other
factors that could cause operating and financial results to differ
are described in ARCA's periodic reports filed with the Securities
and Exchange Commission. Other risks may be detailed from
time to time in reports to be filed with the SEC.
APPLIANCE
RECYCLING CENTERS OF AMERICA, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
Thousands)
|
|
|
April
2,
2016
|
January
2,
2016
|
ASSETS
|
(unaudited)
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$ 2,323
|
$
1,969
|
Accounts
receivable
|
11,006
|
11,536
|
Inventories
|
15,277
|
16,733
|
Income taxes
receivable
|
1,441
|
1,126
|
Other current
assets
|
1,081
|
1,350
|
Deferred income tax
assets
|
1,657
|
1,657
|
Total current
assets
|
32,785
|
34,371
|
Property and
equipment, net
|
10,817
|
10,985
|
Restricted
cash
|
500
|
500
|
Other
assets
|
585
|
596
|
Deferred income tax
assets
|
327
|
327
|
Total assets
(a)
|
$ 45,014
|
$
46,779
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$ 6,726
|
$
7,019
|
Accrued
expenses
|
9,868
|
8,934
|
Line of
credit
|
10,412
|
12,668
|
Current maturities of
long-term obligations
|
2,732
|
1,251
|
Total current
liabilities
|
29,738
|
29,872
|
|
|
|
Long-term obligations,
less current maturities
|
3,463
|
4,506
|
Other noncurrent
liabilities
|
342
|
357
|
Total liabilities
(a)
|
33,543
|
34,735
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
Common
Stock
|
21,504
|
21,466
|
Accumulated deficit
|
(10,028)
|
(9,577)
|
Accumulated other
comprehensive loss
|
(546)
|
(565)
|
Total shareholders'
equity
|
10,930
|
11,324
|
Noncontrolling
interest
|
541
|
720
|
|
11,471
|
12,044
|
Total liabilities and
shareholders' equity
|
$ 45,014
|
$
46,779
|
|
(a)
|
Assets of ARCA
Advanced Processing, LLC (AAP), ARCA's consolidated variable
interest entity (VIE), that can only be used to settle obligations
of AAP were $9,263 and $8,856 as of April 2, 2016, and January 2,
2016, respectively. Liabilities of AAP for which creditors do not
have recourse to the general credit of Appliance Recycling Centers
of America, Inc. were $3,668 and $2,838 as of April 2, 2016, and
January 2, 2016, respectively.
|
APPLIANCE
RECYCLING CENTERS OF AMERICA, INC.
|
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In Thousands,
Except Per Share Amounts)
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
April
2,
2016
|
April
4,
2015
|
Revenues:
|
|
|
|
|
|
Retail
|
|
|
|
$ 16,570
|
$ 17,098
|
Recycling
|
|
|
|
6,936
|
7,823
|
Byproduct
|
|
|
|
1,839
|
2,617
|
Total
revenues
|
|
|
|
25,345
|
27,538
|
Costs of
revenues
|
|
|
|
19,154
|
21,670
|
Gross
profit
|
|
|
|
6,191
|
5,868
|
Selling, general and
administrative expenses
|
|
|
|
6,978
|
7,868
|
Operating
loss
|
|
|
|
(787)
|
(2,000)
|
|
|
|
|
|
|
Other
expense:
|
|
|
|
|
|
Interest
expense, net
|
|
|
|
(283)
|
(321)
|
Other
expense, net
|
|
|
|
120
|
(149)
|
Loss before income
taxes and noncontrolling interest
|
|
|
|
(950)
|
(2,470)
|
Benefit from income
taxes
|
|
|
|
(320)
|
(485)
|
Net loss
|
|
|
|
(630)
|
(1,985)
|
Net loss attributable
to noncontrolling interest
|
|
|
|
179
|
285
|
Net loss attributable
to controlling interest
|
|
|
|
$ (451)
|
$
(1,700)
|
|
|
|
|
|
|
Loss per common
share:
|
|
|
|
|
|
Basic
|
|
|
|
$ (0.08)
|
$
(0.29)
|
Diluted
|
|
|
|
$ (0.08)
|
$
(0.29)
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
Basic
|
|
|
|
5,901
|
5,795
|
Diluted
|
|
|
|
5,901
|
5,795
|
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SOURCE Appliance Recycling Centers of America, Inc.