Appliance Recycling Centers of America Reports Return to
Profitability in Second Quarter Fueled by Sales Growth
ApplianceSmart Same-Store Sales Increase 16% MINNEAPOLIS, Aug. 1
/PRNewswire-FirstCall/ -- Appliance Recycling Centers of America,
Inc. (OTC:ARCI) (BULLETIN BOARD: ARCI) today reported improved
operating results for the second quarter of 2005 ended July 2: --
Revenues increased 47% to $19,142,000, from $12,995,000 in the
year-earlier period. -- Operating income totaled $620,000, up from
$80,000 in the year-earlier period. -- Net earnings were $404,000
or $0.09 per diluted share, compared to a net loss of $42,000 or
$0.02 per diluted share in the second quarter of 2004. For the
first six months of 2005, revenues increased 47% to $36,051,000,
from $24,592,000 in the same period a year ago. Operating income
was $388,000, compared to the operating loss of $458,000 in the
year-earlier period. ARCA's first half net loss narrowed to $29,000
or $0.01 per diluted share, from the net loss of $774,000 or $0.32
per diluted share in the first six months of 2004. Edward R. (Jack)
Cameron, president and chief executive officer, commented: "We are
extremely encouraged that the positive momentum our operations
started generating during the first three months of 2005 continued
in the second quarter. Our return to a level of profitability was
paced by the growing sales and improved efficiency of our
ApplianceSmart operation. Growing numbers of consumers are buying
from ApplianceSmart due to our strong value proposition, which
combines low prices with wide brand name choice. In addition, our
appliance manufacturing partners are attaching considerable
importance to ApplianceSmart's role as a strategic distribution
channel for their special-buy appliances. ARCA's second quarter
performance also benefited from a solid contribution by our
multi-state appliance recycling operations. The outlook for the
continuation of high energy prices is resulting in renewed interest
in the type of demand-side residential energy conservation programs
that ARCA has pioneered over the past 17 years. In all, the
fundamentals and momentum of our operations are positive, making us
optimistic about ARCA's prospects in this year's third quarter."
Same-store sales of the nine ApplianceSmart factory outlets that
were open during the second quarters of 2005 and 2004 rose 16%
while total retail sales from all 12 ApplianceSmart outlets
nationally increased 54% to $16,285,000 for the second quarter of
2005 compared to the prior year period. The three factory outlets
that were opened late in 2004 in St. Paul, Minnesota, San Antonio,
Texas, and Atlanta, Georgia, also made solid contributions to
ApplianceSmart's second quarter sales growth. A 37,000-square-foot
ApplianceSmart factory outlet in San Antonio, the second store in
this market, is scheduled to open in September. Recycling revenues
increased 20% to $2,462,000 in this year's second quarter compared
to the prior year period, reflecting the positive impact of the
resumption of full advertising support by ARCA's utility partners
in California and Connecticut. In addition, revenue contributions
to ARCA's recycling operation also were generated by new programs
in Austin, Texas, as well as in the state of Wisconsin. About ARCA
Through its ApplianceSmart ( http://www.appliancesmart.com/ )
operation, ARCA is one of the nation's leading retailers of
special-buy household appliances, primarily those manufactured by
Maytag, GE, Frigidaire and Whirlpool. These special-buy appliances,
which include close-outs, factory overruns and scratch-and-dent
units, typically are not integrated into the manufacturer's normal
distribution channel. ApplianceSmart sells these virtually new
appliances at a discount to full retail, offers a 100% money- back
guarantee and provides warranties on parts and labor. As of July
2005, ApplianceSmart was operating 12 factory outlets: five in the
Minneapolis/St. Paul market; three in the Columbus, Ohio, market;
two in the Atlanta market; one in San Antonio, Texas and one in Los
Angeles. ARCA is also one of the nation's largest recyclers of
major household appliances for the energy conservation programs of
electric utilities. Statements about ARCA's outlook are
forward-looking and involve risks and uncertainties, including but
not limited to: the strength of recycling programs, the growth of
appliance retail sales, the speed at which individual retail stores
reach profitability, and other factors discussed in the Company's
filings with the Securities and Exchange Commission. Visit our web
site at http://www.arcainc.com/ . Appliance Recycling Centers of
America, Inc. and Subsidiaries CONSOLIDATED STATEMENT OF OPERATIONS
2nd Quarter 2005 Results (000's omitted except for share amounts)
Three months Six months ended ended July 2 July 3 July 2 July 3
2005 2004 2005 2004 Revenues Retail $16,285 $10,589 $31,196 $20,323
Recycling 2,462 2,060 4,216 3,655 Byproduct 395 346 639 614 Total
revenues 19,142 12,995 36,051 24,592 Cost of Revenues 12,988 9,160
24,794 17,620 Gross profit 6,154 3,835 11,257 6,972 Selling,
General & Administrative Expenses 5,534 3,755 10,869 7,430
Operating income (loss) 620 80 388 (458) Other Income (Expense)
Other income (expense) 1 (3) (1) (11) Interest expense (217) (185)
(413) (371) Income (loss) before provision for income taxes 404
(108) (26) (840) Provision for (Benefit of) Income Taxes - (66) 3
(66) Net income (loss) $404 $(42) $(29) $(774) Basic Earnings
(Loss) per Common Share $0.09 $(0.02) $(0.01) $(0.32) Diluted
Earnings (Loss) per Common Share $0.09 $(0.02) $(0.01) $(0.32)
Basic Weighted Average No. of Common Shares Outstanding 4,266 2,506
4,205 2,421 Diluted Weighted Average No. of Common Shares
Outstanding 4,341 2,506 4,205 2,421 Appliance Recycling Centers of
America, Inc. and Subsidiaries CONSOLIDATED BALANCE SHEET 2nd
Quarter 2005 Results (000's) July 2, January 1, 2005 2005
(Unaudited) Assets Current Assets Cash and cash equivalents $2,676
$4,362 Receivables - net of allowance of $102,000 $3,331 $2,034
Inventories, net of reserves of $382,000 and $385,000 respectively
$13,390 $10,154 Deferred income taxes $468 $468 Other current
assets $678 $338 Total Current Assets $20,543 $17,356 Property and
Equipment, at cost Land $2,050 $2,050 Building and Improvements
$4,450 $4,338 Equipment $6,172 $5,928 $12,672 $12,316 Less
accumulated depreciation $6,386 $5,982 Net property and equipment
$6,286 $6,334 Other assets $356 $300 Restricted cash $350 $350
Total Assets $27,535 $24,340 Liabilities and Shareholders' Equity
Current Liabilities Line of credit $7,159 $5,415 Current maturities
of long term obligations $213 $615 Accounts payable $5,276 $3,889
Accrued expenses $3,054 $2,779 Income taxes payable $58 $58 Total
Current Liabilities $15,760 $12,756 Long-Term Obligations, less
current maturities $4,987 $5,053 Deferred Income Tax Liabilities
$468 $468 Total Liabilities $21,215 $18,277 Shareholders' Equity
Common stock, no par value; authorized 10,000,000 shares; issued
and outstanding 4,311,000 and 4,136,000 shares respectively $14,835
$14,549 Accumulated Deficit ($8,515) ($8,486) Total Shareholders'
Equity $6,320 $6,063 Total Liabilities and Shareholders' Equity
$27,535 $24,340 DATASOURCE: Appliance Recycling Centers of America,
Inc. CONTACT: Edward R. (Jack) Cameron, CEO of Appliance Recycling
Centers of America, Inc., +1-952-930-9000; or Richard G. Cinquina
of Equity Market Partners, +1-904-261-2210 Web site:
http://www.appliancesmart.com/ http://www.arcainc.com/
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