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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Peter
Hausback, 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 Strong First Quarter
Operating Results
Same-Store Sales Up 2.4%, Revenues Increase 29%
Minneapolis,
MN—May 7, 2008—Appliance Recycling Centers of America, Inc. (Nasdaq:
ARCI) today reported results for the first quarter of 2008 ended March 29,
2008.
Financial
highlights for the first quarter versus the year-earlier period include:
· Total revenues increased 29% to $25.8
million.
· ApplianceSmart same-store sales increased
2.4% despite a weakening economy.
· Recycling revenues rose to $5.9 million, more
than triple the year-earlier level.
· Earnings of $.03 per diluted share were a
significant improvement from the net loss of ($0.11) per share in the first
quarter of 2007.
Total
revenue for the first quarter of 2008 increased 29% to $25.8 million, from
$19.9 million in the first quarter of 2007. ARCA also reported net income of
$117,000 or $0.03 per diluted share for this period, compared to the net loss
of $472,000 or $0.11 per share in the first quarter of 2007. Earnings for the
current period include non-cash stock compensation expense of $78,000 or $0.02
per diluted share.
Same-store
sales of the 14 ApplianceSmart factory outlets that were open during the
complete first quarters of 2008 and 2007 increased 2.4%, while total retail
sales rose 7% to $18,962,000 on a year-over-year basis, reflecting the impact
of a new factory outlet in the Columbus, Ohio, market that opened in November 2007.
First
quarter recycling revenues increased 214% to $5,944,000 from $1,894,000 in the
comparable period of 2007. This growth was generated by significant appliance
recycling programs in Los Angeles and Ontario, Canada, in addition to other
recycling programs in southern California, Wisconsin and Texas.
Edward
R. (Jack) Cameron, President and Chief Executive Officer, commented: “ARCA
continued its solid turnaround in this year’s first quarter even though this
period is typically the seasonally weakest period of the year for our
ApplianceSmart and recycling operations. We are particularly encouraged by
ApplianceSmart’s same-store sales growth, which was achieved amid ongoing
weakness in the nation’s residential construction sector and high gasoline
prices. We believe this performance reflects the benefits of ApplianceSmart’s
strong value proposition and strategic focus on the appliance replacement and
home remodeling market, not new construction. As a result, ApplianceSmart’s
sales have been bucking the negative sales trends experienced by most appliance
retailers. To further strengthen ApplianceSmart’s momentum, we plan to open our
sixth factory outlet in the Minneapolis/St. Paul market later this month. This
new outlet, our sixteenth nationally, will enable us to increase our market
penetration and generate greater economies of scale as we leverage advertising
support and other overhead expenses.”
Cameron
continued: “ARCA’s recycling operation posted strong revenue growth in this
year’s first quarter, paced by our significant recycling programs with the
Ontario Power Authority and the Los Angeles Department of Water and Power. This
growth was attained despite the normal seasonal slowdown in advertising support
by our utility partners, particularly at our Canadian program. Advertising
support is forecasted to resume to more normal levels in the second quarter. We
believe that interest in ARCA’s appliance recycling capabilities is continuing
to heighten, given the need of North American electric utilities and government
agencies to conserve energy and reduce emissions of greenhouse gases. As a
result, more recycling opportunities are developing.”
Cameron
added: “We believe the second quarter outlook for our ApplianceSmart operation
is positive, although we remain alert to the impact of high gas prices, the
housing slowdown and a weakening general economy. The prospects for ARCA’s
recycling operation are also encouraging.”
About
ARCA
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 March 2008,
ApplianceSmart was operating 15 factory outlets: five in the Minneapolis/St.
Paul market; four in the Columbus, Ohio, market; four in the Atlanta market;
and two in San Antonio, Texas.
#
# #
This
press release contains statements that are forward-looking statements as
defined within the Private Securities Litigation Reform Act of 1995, including
statements regarding ARCA’s future success. These forward-looking statements
are subject to risks and uncertainties that could cause actual results to
differ materially from the statements made, including the risks associated with
general economic conditions, competition in the retail and recycling industries
and regulatory risks. Other factors that could cause operating and financial
results to differ are described in ARCA’s periodic reports filed with the
Securities and Exchange Commission. Other risks may be detailed from time to
time in reports to be filed with the SEC.
Appliance Recycling Centers of
America, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
1st Quarter 2008 RESULTS
(000’s omitted except for per share
amounts)
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Three months ended
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29-Mar
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31-Mar
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2008
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2007
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Revenues
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Retail
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$
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18,962
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$
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17,689
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Recycling
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5,944
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1,894
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ByProduct
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900
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349
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Total revenues
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25,806
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19,932
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Cost of
revenues
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17,826
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13,366
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Gross profit
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7,980
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6,566
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Selling,
General & Administrative Expenses
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7,579
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6,742
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Operating income
(loss)
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401
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(176
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Other
Income (Expense)
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Other income
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—
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2
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Interest expense
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(397
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(298
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Income (loss)
before provision for income taxes
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4
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(472
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Provision
for (benefit of) income taxes
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(113
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)
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—
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Net
income (loss)
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$
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117
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$
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(472
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Basic
Income (Loss) per Common Share
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0.03
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(0.11
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)
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Diluted
Income (Loss) per Common Share
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0.03
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(0.11
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Basic
Weighted average no. of common shares outstanding
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4,556
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4,341
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Diluted
Weighted average no. of common shares outstanding
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4,624
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4,341
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APPLIANCE RECYCLING CENTERS OF
AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
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March 29,
2008
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December 29,
2007
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ASSETS
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Current
Assets:
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Cash
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$
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1,853,000
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$
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2,777,000
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Accounts
receivable, net of allowance of $170,000 and $152,000, respectively
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5,689,000
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10,086,000
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Inventories, net
of reserves of $61,000 and $84,000, respectively
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14,771,000
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14,064,000
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Deferred income
taxes
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259,000
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259,000
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Other current
assets
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687,000
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995,000
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Total current
assets
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23,259,000
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28,181,000
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Property
and Equipment:
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15,483,000
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15,154,000
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Less:
accumulated depreciation
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8,659,000
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8,392,000
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Net property and
equipment
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6,824,000
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6,762,000
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Other
Assets
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579,000
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589,000
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Total assets
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$
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30,662,000
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$
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35,532,000
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LIABILITIES
AND SHAREHOLDERS’ EQUITY
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Current
Liabilities:
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Accounts payable
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$
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2,014,000
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$
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4,350,000
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Checks issued in
excess of cash in bank
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75,000
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310,000
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Accrued expenses
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3,383,000
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4,113,000
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Line of credit
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11,772,000
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13,585,000
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Long-term
obligations, current portion
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530,000
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479,000
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Income taxes
payable
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12,000
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218,000
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Total current
liabilities
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17,786,000
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23,055,000
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Long-Term
Obligations, less
current maturities
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4,984,000
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4,956,000
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Deferred
Income Tax Liabilities
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259,000
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259,000
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Total
liabilities
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23,029,000
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28,270,000
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Commitments
and Contingencies
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—
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—
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Shareholders’
Equity:
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Common Stock, no
par value; authorized 10,000,000 shares; issued and outstanding 4,567,777 and
4,509,277 shares, respectively
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15,754,000
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15,475,000
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Accumulated
deficit
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(8,172,000
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(8,289,000
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Accumulated
Other Comprehensive Income
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Foreign Currency
Translation Adjustments
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51,000
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76,000
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Total
shareholders’ equity
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7,633,000
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7,262,000
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Total
liabilities and shareholders’ equity
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$
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30,662,000
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$
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35,532,000
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