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
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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)
415-1415
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Appliance Recycling Centers of America Reports Strong Third Quarter
Results
Minneapolis,
MN—October 24, 2007—Appliance
Recycling Centers of America, Inc. (Nasdaq: ARCI) today reported sales of $27,370,000
for the third quarter of 2007 ended September 29, an increase of 32% from
$20,783,000 in the year-earlier period. ARCA reported net income of $1,403,000
or $0.31 per diluted share for this period, a significant improvement from net
income of $21,000 (no per share earnings) in the third quarter of 2006.
Same-store
sales of the 13 ApplianceSmart factory outlets that were open during the
complete third quarters of 2007 and 2006 declined 2%, while total retail sales
rose 4% to $17,561,000 on a year-over-year basis, reflecting the impact of two
additional factory outlets in the Atlanta market that were opened during the
past year. Third quarter recycling revenues increased to $9,035,000 from
$3,407,000 in the comparable period of 2006.
Edward
R. (Jack) Cameron, president and chief executive officer, commented: “As
evidenced by the modest decline in same-store sales of our ApplianceSmart
operation, the primary focus of our retail business on the replacement
appliance market has helped moderate the impact of the ongoing slowdown in the
nation’s residential construction sector. ApplianceSmart is also benefiting
from the improved operating efficiencies that have been achieved by
strengthening inventory management and implementing other new business systems.
We closed our small factory outlet in Compton, California, in October to enable
this facility to better focus on its appliance recycling
operation.
In November, we plan to open another ApplianceSmart factory outlet in the
Columbus, Ohio, market, which will be our fifteenth nationally.”
He
continued: “During this period, ARCA’s recycling operation benefited from two
previously reported programs that commenced in this year’s second quarter.
Under the expansion of our recycling contract with the Southern California
Public Power Authority to include the Los Angeles Department of Water and Power
that started in late April, we expect to replace and recycle 50,000 old,
inefficient refrigerators owned by low-income residents in Los Angeles. This
program is expected to run through mid-2008. In addition, ARCA’s Canadian
subsidiary, ARCA Canada Inc., received a three-year appliance recycling
contract in June with the Ontario Power Authority to recycle up to 400,000
older but working refrigerators, freezers and room air conditioners. We believe
these new recycling programs signal heightening interest in demand-side energy
conservation programs by utility companies and government agencies. Our other
recycling operations in California, Wisconsin and Texas performed at planned
levels in the third quarter.”
During
the third quarter, ARCA incurred legal costs of approximately $61,000 related
to two previously reported lawsuits involving JACO Environmental, Inc. In one
lawsuit, ARCA has charged JACO with engaging in unfair business practices in
violation of federal and California laws. ARCA has charged JACO with committing
fraud on the U.S. Patent Office in order to obtain a patent for a refrigerator
recycling method that was previously developed by ARCA. This litigation is
expected to go to trial in early 2008. The second lawsuit, which was filed by
JACO and SEG Basis GmbH and SEG
Umwelt-Service GmbH, was dismissed earlier in the year by U.S. District
Court for lack of prosecution.
Cameron
added: “At this time, we believe the fourth quarter of 2007 should be another
period of improved operating results for ARCA. Although ApplianceSmart may
continue to be affected by continued weakness in the housing sector and high
fuel prices, we remain very optimistic about the future of our retail
operation. In addition, we currently anticipate another quarter of improved
appliance recycling revenues. If our fourth quarter performance meets
anticipated levels, our full-year results would make 2007 ARCA’s strongest year
in recent times.”
AboutARCA
ARCA
is one of the nation’s largest recyclers of major household appliances for the
energy
conservation
programs of electric utilities. Through its ApplianceSmart operation, ARCA also
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 2007, ApplianceSmart was
operating 14 factory outlets: five in the Minneapolis/St. Paul market; three in
the Columbus, Ohio, market; four in the Atlanta market; and two in San Antonio,
Texas.
# # #
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 2007 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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September 29
2007
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September 30
2006
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September 29
2007
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September 30
2006
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Revenues
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Retail
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$
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17,561
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$
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16,839
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$
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53,993
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$
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48,786
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Recycling
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9,035
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3,407
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14,282
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7,685
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Byproduct
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774
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537
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1,609
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1,389
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Total revenues
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$
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27,370
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$
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20,783
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$
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69,884
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$
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57,860
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Cost of
Revenues
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18,078
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14,068
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46,051
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40,243
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Gross profit
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$
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9,292
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$
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6,715
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$
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23,833
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$
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17,617
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Selling,
General & Administrative Expenses
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7,459
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6,413
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20,969
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17,969
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Operating income
(loss)
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$
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1,833
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$
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302
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$
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2,864
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$
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(352
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Other
Income (Expense)
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Other income
(expense)
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31
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2
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(14
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7
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Interest expense
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(395
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(283
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(1,017
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(773
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Income (loss)
before provision for (benefit of) income taxes
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$
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1,469
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$
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21
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$
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1,833
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$
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(1,118
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Provision
for (Benefit of) Income Taxes
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66
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—
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66
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—
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Net income
(loss)
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$
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1,403
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$
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21
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$
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1,767
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$
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(1,118
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Basic
Income (Loss) per Common Share
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0.32
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$
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0.00
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0.40
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$
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(0.26
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Diluted
Income (Loss) per Common Share
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0.31
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$
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0.00
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0.40
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$
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(0.26
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Basic
Weighted Average No. of Common Shares Outstanding
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4,409
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4,341
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4,368
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4,332
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Diluted
Weighted Average No. of Common Shares Outstanding
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4,511
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4,388
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4,438
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4,332
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Appliance
Recycling Centers of America, Inc. and Subsidiaries
CONSOLIDATED
BALANCE SHEET
3rd
Quarter 2007 Results
(000’s)
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September 29
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December 30,
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2007
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2006
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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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1,893
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$
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2,753
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Receivables -
net of allowance of $152,000 and $152,000 respectively
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$
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9,749
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$
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2,411
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Inventories, net
of reserves of $116,000 and $207,000
respectively
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$
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12,323
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$
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10,998
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Deferred income
taxes
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$
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601
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$
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601
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Other current
assets
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$
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1,141
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$
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657
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Total Current
Assets
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$
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25,707
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$
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17,420
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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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4,740
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$
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4,696
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Equipment
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$
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7,544
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$
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6,889
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$
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14,334
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$
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13,635
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Less accumulated
depreciation
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$
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8,148
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$
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7,575
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Net property and
equipment
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$
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6,186
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$
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6,060
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Other assets
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$
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553
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$
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433
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Total
Assets
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$
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32,446
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$
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23,913
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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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12,484
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$
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6,872
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Current
maturities of long term obligations
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$
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364
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$
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309
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Accounts payable
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$
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3,900
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$
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3,198
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Accrued expenses
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$
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3,930
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$
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3,957
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Income taxes
payable
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$
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104
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$
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58
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Total Current
Liabilities
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$
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20,782
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$
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14,394
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Long-Term
Obligations, less current maturities
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$
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4,788
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$
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4,776
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Deferred Income
Tax Liabilities
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$
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601
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$
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601
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Total
Liabilities
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$
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26,171
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$
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19,771
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Shareholders’ Equity
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Common stock, no
par value; authorized 10,000,000 shares; issued and outstanding 4,457,000 and
4,320,000 shares respectively
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$
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15,279
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$
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14,970
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Accumulated
Deficit
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$
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(9,060
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$
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(10,828
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Accumulated
Other Comprehensive Income
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Foreign Currency
Translation
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$
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56
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$
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0
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Total
Shareholders’
Equity
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$
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6,275
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$
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4,142
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Total
Liabilities and Shareholders’ Equity
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$
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32,446
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$
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23,913
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