Appliance Recycling Centers of America Reports Third Quarter 2016 Operating Results
November 21 2016 - 5:15PM
Minneapolis, MN-November 21, 2016–Appliance
Recycling Centers of America, Inc. (NASDAQ: ARCI), (the
“Company” or “ARCA”), serves as a conduit for utilities and
appliance manufacturers to the end customer by recycling,
replacing, and selling major household appliances in North America.
We are committed to energy efficiency programs and appliances and
have been a pioneer in appliance recycling. On November 15,
2016 we reported profitable results for the third quarter ended
October 1, 2016.
ARCA recorded net income of $1.1 million for the quarter ended
October 1, 2016 as compared to a net loss of $0.8 million for the
quarter ended October 3, 2015. This represents our first net
income since the 2nd Quarter 2015 when the commodity markets were
starting to collapse and we faced the loss of some recycling and
replacement programs. For the nine months ended October 1,
2016, we reduced our loss 24% to $1.4 million compared to a loss of
$1.9 million for the nine months ended October 3, 2015. This
improvement in operating performance is largely due to the sale of
the carbon offset credits, new collection programs, price
increases, cost reduction strategies and the continued
stabilization of the commodity markets.
For the three months ended October 1, 2016, net sales declined
2.7% or $0.7 million compared to the three months ended October 3,
2015. Retail sales declined $1.2 million for the three months
ended October 1, 2016 compared to the same period in 2015,
reflecting price competition among major big box retailers.
The largest decrease came from our replacement programs which were
down $3.4 million as some contracts were delayed or ended.
This was offset by an increase of $2.4 million for collected
recycled programs commenced during the quarter. The number of
customers invoiced in our recycling segment for the quarter ended
October 1, 2016 was 48 compared to 21 in the three months ended
October 3, 2015. Our by-product revenue was up $1.5 million for the
three months ended October 1, 2016 compared to the same period in
2015 which was led by $1.7 million payment received from carbon
offset credits further reduced by lower scrap prices for the
quarter.
For the nine months ended October 1, 2016 net sales declined
9.8% or $8.3 million compared to the same period ended October 3,
2015. Retail sales declined $3.0 million for the nine months
ended October 1, 2016 compared to the same period in 2015,
reflecting price competition among major big box retailers.
Revenues from appliance replacement programs were down $8.4 million
due to the loss or delay of contracts, which was offset by a $3.6
million increase in revenue from new collecting programs that we
added due to the receivership of our largest competitor. By-product
revenue was down $0.5 million for the nine months ended October 1,
2016 compared to the same period in 2015 which reflects the lower
price of scrap material which was offset by a net increase of $1.0
in payments from carbon offset credit sales.
“Although we are working to be profitable and improve our net
income, we decided to invest in the recycling side of our business
since our largest competitor went into receivership in late
2015. We are investing significantly in new business
opportunities. In addition, we will be investing in our
retail to take market share from competitors as our business model
gives us a competitive advantage over most big box
retailers. We will be opening new retail stores when we
find locations that support our business model,” said Tony Isaac
CEO.
ARCA’s SEC filings are available for review on our website
http://www.arcainc.com/investors/
About ARCA
ARCA's business components are uniquely positioned in the
industry to work together to provide a full array of
appliance-related services. 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 news release contains forward-looking statements that
involve risks and uncertainties that could cause actual results to
differ from predicted results, and other written and oral
forward-looking statements made by us from time to time, are
subject to risks and uncertainties that could cause actual results
to differ materially from those anticipated in the forward-looking
statements. Any forward-looking information regarding our
operations will be affected primarily by individual retail stores’
profitability, the volume of appliance sales, the strength of
energy conservation recycling programs, general economic conditions
affecting consumer demand for appliances, prices at which we can
sell by-products, and timing and prices of sales of carbon offset
credits. Any forward-looking information will also be affected by
our continued ability to purchase product from our suppliers at
acceptable prices, the ability of individual retail stores to meet
planned revenue levels, the number of retail stores, costs and
expenses being realized at higher than expected levels, our ability
to secure an adequate supply of special-buy appliances for resale,
the ability to secure appliance recycling and replacement contracts
with sponsors of energy efficiency programs, the ability of
customers to supply units under their recycling contracts with us,
the performance of our consolidated variable interest entity, the
continued availability of our current line of credit and the
outcome of the pending sales and use tax examination in
California.
Tony Isaac, CEO
(952) 930-9000
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