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
Strong Retail Sales Growth
In Third Quarter of 2005
November 3, 2005—Minneapolis, MN—Appliance Recycling Centers of America,
Inc. (OTC BB: ARCI) today reported revenues of $20,706,000 for the third
quarter of 2005 ended October 1, an increase of 42% from $14,543,000 in the
year-earlier period. Net income totaled $47,000 or $0.01 per diluted share,
compared to $260,000 or $0.08 per diluted share in the third quarter of 2004.
For the first nine months of 2005, revenues increased 45% to
$56,757,000 from $39,135,000 in the same period a year ago. Net income for this
period was a breakeven of $18,000 or $0.00 (rounded) per diluted share, compared
to a net loss of $514,000 or $0.21 per share in the first nine months of 2004.
Same-store sales of the nine ApplianceSmart factory outlets that were
open during the third quarters of 2005 and 2004 rose 19%, while total retail
sales from 12 ApplianceSmart outlets increased 52% to $16,513,000 compared to
last year’s third quarter. A 37,000-square-foot ApplianceSmart factory outlet
in San Antonio, the second store in this market, opened in October 2005.
Recycling revenues increased 17% to $3,757,000 in this year’s third
quarter compared to the year-earlier period. The majority of this growth was
generated by the energy conservation program in California sponsored by
Southern California Edison Company, but growing revenue contributions came from
utility-related recycling programs in Connecticut, the city of Austin, Texas,
and the state of Wisconsin.
Edward R. (Jack) Cameron, president and chief
executive officer, commented: “The sales
growth of our ApplianceSmart operation remained exceptionally strong in this
year’s third quarter. We believe this
sales performance reflects the fundamental soundness of ApplianceSmart’s value
proposition, as well as our ability to target attractive locations for new
factory outlets in both new and existing markets. However, ARCA’s profitability was affected by
growth-related expenses generated by the expansion of our ApplianceSmart
network, which grew from nine outlets in the third quarter of 2004 to 12 at the
end of this year’s third quarter. Having
demonstrated ApplianceSmart’s viability and effectiveness from the standpoint
of top line growth, we now must improve the operating efficiencies in order to
strengthen ARCA’s profitability.”
Cameron continued: “We remain very confident
in ARCA’s prospects. We have made
substantial progress in recent years and believe that ARCA is moving in the
right strategic direction. Over the
near-term, the fourth quarter typically marks the onset of a seasonal slowdown
in appliance sales. In addition, the
advertising support provided by our utility partners for their recycling
programs tends to wind down toward the end of each calendar year.”
ARCA is currently in the process of
submitting a bid for renewing its multi-year contract for the California
statewide appliance recycling program.
This new contract would have three-year durations starting in January
2006.
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 October 2005, ApplianceSmart was
operating 13 factory outlets: five in the Minneapolis/St. Paul market; three in
the Columbus, Ohio, market; two in the Atlanta market; two in San Antonio,
Texas and one in Los Angeles. ARCA is
also 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
3rd Quarter 2005 Results
(000’s omitted except for share amounts)
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Three months ended
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Nine months ended
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October 1
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October 2
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October 1
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October 2
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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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16,513
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$
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10,838
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$
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47,709
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$
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31,161
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Recycling
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3,757
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3,199
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7,973
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6,854
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Byproduct
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436
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506
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1,075
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1,120
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Total revenues
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20,706
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14,543
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56,757
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39,135
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Cost of Revenues
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14,873
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10,041
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39,667
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27,661
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Gross profit
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5,833
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4,502
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17,090
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11,474
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Selling, General & Administrative Expenses
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5,529
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4,086
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16,401
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11,516
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Operating income (loss)
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304
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416
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689
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(42
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Other Income (Expense)
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Other income
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2
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33
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1
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22
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Interest expense
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(259
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(187
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(672
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(558
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Income (loss) before provision for income taxes
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47
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262
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18
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(578
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Provision for (Benefit of) Income Taxes
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—
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2
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—
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(64
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Net income (loss)
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$
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47
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$
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260
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$
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18
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$
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(514
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Basic Earnings (Loss) per Common Share
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$
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0.01
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$
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0.09
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$
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0.00
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$
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(0.21
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Diluted Earnings (Loss) per Common Share
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$
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0.01
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$
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0.08
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$
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0.00
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$
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(0.21
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Basic Weighted Average No. of Common Shares Outstanding
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4,269
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2,986
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4,242
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2,429
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Diluted Weighted Average No. of Common Shares
Outstanding
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4,388
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3,095
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4,353
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2,429
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