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 information
contact:
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Edward R. (Jack)
Cameron (CEO)
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Linda A. Koenig (CFO)
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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) 415-1415
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Appliance Recycling Centers of America
Reports Improved 2005 Operating Results
Minneapolis, MN—March 20, 2006—Appliance
Recycling Centers of America, Inc. (Nasdaq:
ARCI) today reported revenues of $74,893,000 for the year ended December
31, 2005, an increase of 42% from $52,830,000 in 2004. ARCA’s net loss for the
year declined to $933,000 or $0.22 per diluted share, from $1,314,000 or $0.48
per diluted share in the prior year.
For the fourth quarter of 2005, revenues rose 32% to $18,136,000, from
$13,695,000 in the fourth quarter of 2004. ARCA’s net loss for the fourth
quarter of 2005 was $951,000 or $0.22 per diluted share, compared to the net
loss of $800,000 or $0.27 per diluted share in the fourth quarter of 2004. All
per-share amounts reflect the greater number of weighted average number of
shares outstanding in 2005 due to the private placement of ARCA common stock in
December 2004.
As previously reported, ARCA commenced trading on the Nasdaq Capital
Market on February 22.
Same-store sales of the nine ApplianceSmart factory outlets that were
open during full years 2005 and 2004 increased 16%, while total retail sales of
all 13 ApplianceSmart outlets rose 49% in 2005 to $62,365,000. Same-store sales
of the nine ApplianceSmart outlets that were open during the fourth quarters of
2005 and 2004 rose 11%, with total retail sales in this year’s fourth quarter
up 37% to $14,656,000. Total retail sales for the fourth quarter and full year
include the impact of ApplianceSmart’s second factory outlet in San Antonio,
Texas, that opened in October 2005. ApplianceSmart will open its third factory
outlet in the Atlanta market early in this year’s second quarter.
Recycling revenues increased 16% in 2005 to $10,937,000 and rose 16% in
the fourth quarter to $2,964,000. The majority of this growth was generated by
the energy conservation program that ARCA handles for Southern California
Edison Company. Revenue contributions were also generated by utility-related
recycling programs in Connecticut, Wisconsin and Austin, Texas.
ARCA
has submitted a proposal for the continuation of its Edison-sponsored
California appliance recycling program for the years 2006 through 2008. This
proposal covers substantially the same Southern California territory as the
2004-2005 program, which has been rolled over into this year’s first quarter,
pending approval of ARCA’s proposal by the California Public Utilities
Commission. In addition, ARCA has submitted a proposal for renewing its
appliance recycling program with San Diego Gas & Electric. Existing
programs with the Los Angeles Department of Water and Power as well as with
electric utilities in Connecticut, Wisconsin and Austin, Texas, will continue
in 2006.
Edward R. (Jack) Cameron, president and chief executive officer,
commented: “We are encouraged to be reporting a reduced net loss for 2005,
reflecting strong ApplianceSmart sales growth and another solid contribution
from our appliance recycling operation. The progress that we have made with our
operations over the past few years has enabled us to be listed on the Nasdaq
Capital Market, a development that is expected to enhance trading liquidity and
raise ARCA’s visibility and credibility among investors. Included in our fourth
quarter and year-to-date loss for 2005 are legal fees for our lawsuit against
JACO of approximately $200,000 and $317,000, respectively.”
He continued: “ARCA has clearly demonstrated its ability to generate
strong top-line growth. However, our profitability has been affected by the
ramifications that come with rapid growth. We are not only entering into new
markets and opening additional outlets in existing markets, we are also
directing significant resources toward improved operating systems and
associated personnel to support our expansion. As previously reported, we
entered into a purchase agreement for the sale of our corporate headquarters
facility for approximately $6 million. To continue to grow and gain efficiencies
in our operations in this market, we have determined that we need to move to
facilities that will better accommodate the expansion of our business. Our goal
of dropping more of every sales dollar to our bottom line is our top priority
going forward. We are committed to making measurable progress toward this
objective during the coming year.”
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 March 2006, ApplianceSmart is
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 recycler 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 speed at which individual ApplianceSmart outlets reach
profitability, the growth of appliance retail sales, the strength of energy
conservation recycling programs, and other factors discussed in the Company’s
filings with the Securities and Exchange Commission.
Visit our web sites at www.arcainc.com and www.appliancesmart.com.
Appliance
Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF
OPERATIONS
4th Quarter 2005
Results
(000’s
omitted except for per-share amounts)
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Three months
ended
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Twelve months
ended
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Dec. 31,
2005
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Jan. 1,
2005
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Dec. 31,
2005
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Jan. 1,
2005
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Revenues
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Retail
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$
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14,656
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$
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10,686
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$
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62,365
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$
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41,847
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Recycling
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2,964
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2,560
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10,937
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9,414
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Byproduct
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516
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449
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1,591
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1,569
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Total revenues
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18,136
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13,695
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74,893
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52,830
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Cost of Revenues
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12,739
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9,626
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52,406
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37,287
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Gross profit
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5,397
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4,069
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22,487
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15,543
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Selling, General & Administrative
Expenses
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6,248
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5,130
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22,637
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16,646
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Operating loss
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(851
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(1,061
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(150
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(1,103
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Other
Income (Expense)
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Other income (expense)
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67
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(2
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68
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20
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Interest income
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32
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—
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32
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—
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Interest expense
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(211
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(219
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(883
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(777
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Minority interest
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12
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—
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—
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—
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Loss before provision for income taxes
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(951
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(1,282
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(933
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(1,860
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Benefit of Income Taxes
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—
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(482
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(546
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Net loss
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$
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(951
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$
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(800
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$
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(933
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$
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(1,314
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Basic
Loss per Common Share
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$
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(0.22
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$
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(0.27
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$
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(0.22
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$
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(0.48
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Diluted Loss per Common Share
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$
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(0.22
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$
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(0.27
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$
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(0.22
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$
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(0.48
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Basic
Weighted Average No. of Common Shares Outstanding
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4,269
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2,999
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4,261
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2,722
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Diluted
Weighted Average No. of Common Shares Outstanding
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4,269
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2,999
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4,261
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2,722
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Appliance
Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
(000’s)
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December 31,
2005
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January 1,
2005
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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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2,095
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$
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4,362
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Receivables, net of allowance of $252,000
and $102,000, respectively
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2,896
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2,034
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Inventories, net of reserves of $379,000
and $385,000, respectively
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11,900
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10,154
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Deferred income taxes
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464
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468
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Other current assets
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449
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338
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Total Current Assets
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17,804
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17,356
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Property and
Equipment, at cost
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Land
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2,050
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2,050
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Building and improvements
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4,501
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4,338
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Equipment
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6,299
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5,928
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12,850
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12,316
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Less accumulated depreciation
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6,798
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5,982
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Net property and equipment
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6,052
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6,334
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Other assets
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356
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300
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Restricted cash
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350
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350
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Deferred income taxes
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30
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—
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Total Assets
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$
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24,592
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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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6,125
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$
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5,415
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Current maturities of long-term obligations
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262
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615
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Accounts payable
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3,868
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3,889
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Accrued expenses
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3,541
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2,779
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Income taxes payable
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58
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58
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Deferred income tax liabilities
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71
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—
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Total Current Liabilities
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13,925
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12,756
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Long-Term Obligations, less current
maturities
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4,823
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5,053
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Deferred Income Tax Liabilities
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423
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468
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Total Liabilities
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19,171
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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 4,320,000 and 4,136,000 shares respectively
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14,840
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14,549
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Accumulated deficit
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(9,419
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(8,486
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Total shareholders’ equity
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5,421
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6,063
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Total Liabilities and Shareholders’ Equity
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$
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24,592
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$
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24,340
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