EXHIBIT 99.1
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Appliance
Recycling Centers of America, Inc.
7400 Excelsior Boulevard, Minneapolis MN 55426 (952) 930-9000
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For Immediate Release
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For Additional Information Contact:
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Edward R. (Jack) Cameron (CEO)
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952/930-9000
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Richard G. Cinquina
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Equity Market Partners
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904/261-2210
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Appliance Recycling Centers of
America Reports
Return to Profitability in Second
Quarter Fueled by Sales Growth
ApplianceSmart Same-Store Sales
Increase 16%
Minneapolis, MN—August 1, 2005— Appliance Recycling Centers of America, Inc.
(OTC BB: 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 (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 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)
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Three months
ended
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Six months
ended
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July 2
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July 3
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July 2
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July 3
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2005
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2004
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2005
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2004
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Revenues
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Retail
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$
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16,285
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$
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10,589
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$
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31,196
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$
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20,323
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Recycling
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2,462
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2,060
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4,216
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3,655
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Byproduct
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395
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346
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639
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614
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Total revenues
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19,142
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12,995
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36,051
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24,592
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Cost of Revenues
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12,988
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9,160
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24,794
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17,620
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Gross profit
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6,154
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3,835
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11,257
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6,972
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Selling, General & Administrative
Expenses
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5,534
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3,755
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10,869
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7,430
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Operating income (loss)
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620
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80
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388
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(458
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Other Income (Expense)
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Other income (expense)
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1
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(3
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(1
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(11
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Interest expense
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(217
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(185
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(413
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(371
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Income (loss) before provision for income taxes
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404
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(108
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(26
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(840
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Provision for (Benefit of) Income Taxes
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—
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(66
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3
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(66
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Net income (loss)
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$
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404
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$
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(42
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$
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(29
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$
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(774
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Basic Earnings (Loss) per Common Share
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$
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0.09
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$
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(0.02
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$
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(0.01
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$
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(0.32
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Diluted Earnings (Loss) per Common Share
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$
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0.09
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$
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(0.02
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$
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(0.01
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$
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(0.32
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Basic Weighted Average No. of Common Shares
Outstanding
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4,266
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2,506
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4,205
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2,421
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Diluted Weighted Average No. of Common
Shares Outstanding
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4,341
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2,506
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4,205
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2,421
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Appliance Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED
BALANCE SHEET
2nd
Quarter 2005 Results
(000’s)
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July 2,
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January 1,
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2005
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2005
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(Unaudited)
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Assets
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Current Assets
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Cash and cash equivalents
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$
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2,676
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$
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4,362
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Receivables - net of allowance of $102,000
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$
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3,331
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$
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2,034
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Inventories, net of reserves of $382,000 and
$385,000 respectively
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$
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13,390
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$
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10,154
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Deferred income taxes
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$
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468
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$
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468
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Other current assets
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$
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678
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$
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338
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Total Current Assets
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$
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20,543
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$
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17,356
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Property and Equipment, at cost
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Land
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$
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2,050
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$
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2,050
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Building and Improvements
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$
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4,450
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$
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4,338
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Equipment
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$
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6,172
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$
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5,928
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$
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12,672
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$
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12,316
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Less accumulated depreciation
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$
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6,386
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$
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5,982
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Net property and equipment
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$
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6,286
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$
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6,334
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Other assets
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$
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356
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$
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300
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Restricted cash
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$
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350
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$
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350
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Total Assets
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$
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27,535
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$
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24,340
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Liabilities and Shareholders’ Equity
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Current Liabilities
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Line of credit
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$
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7,159
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$
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5,415
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Current maturities of long term obligations
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$
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213
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$
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615
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Accounts payable
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$
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5,276
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$
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3,889
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Accrued expenses
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$
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3,054
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$
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2,779
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Income taxes payable
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$
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58
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$
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58
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Total Current Liabilities
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$
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15,760
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$
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12,756
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Long-Term Obligations, less current maturities
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$
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4,987
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$
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5,053
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Deferred Income Tax Liabilities
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$
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468
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$
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468
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Total Liabilities
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$
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21,215
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$
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18,277
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Shareholders’ Equity
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Common stock, no par value; authorized 10,000,000
shares; issued and outstanding 4,311,000 and 4,136,000 shares respectively
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$
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14,835
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$
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14,549
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Accumulated Deficit
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$
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(8,515
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$
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(8,486
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Total Shareholders’ Equity
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$
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6,320
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$
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6,063
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Total Liabilities and Shareholders’ Equity
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$
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27,535
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$
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24,340
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