Arabian American Development Co. Announces Fiscal 2007 Fourth Quarter Financial Results

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DALLAS, March 13 /PRNewswire-FirstCall/ -- Arabian American Development Co. (Nasdaq: ARSD) today announced financial results for the quarter and year ended December 31, 2007.

    Recent Highlights:
    --  Al-Masane Al-Kobra Mining Company (ALAK) joint venture received the
        commercial license from the Saudi Arabia Ministry of Commerce, which
        enabled the joint venture to contract with construction companies,
        prepare for the transfer of mining assets and appoint independent
        auditors.
    --  The Company's application for listing its common stock on The NASDAQ
        Stock Market was approved and began trading under its current stock
        symbol, "ARSD", on January 29, 2008. The Company presided over the
        closing bell on February 1, 2008 to celebrate its listing on NASDAQ.
    --  Received permit from the Texas Commission on Environmental Quality for
        Company's South Hampton Resources, Inc. facilities expansion.
        Projected start-up date is late May or early June.
    --  Formal application to transfer the mining lease to ALAK was filed with
        the Saudi Arabia Ministry of Petroleum and Mineral Resources on
        February 23, 2008.

Financial Results

Consolidated revenue for the fourth quarter of fiscal 2007 was $29.8 million, an increase of 32.1% compared to revenue of $22.6 million in the fourth quarter last year and a 6.2% sequential increase compared to revenue of $28.0 million in the third quarter of 2007. Refined product sales (predominantly C5 and C6 hydrocarbons and related products) represented $28.5 million, or 95.6%, of total revenue for the fourth quarter 2007 and $21.2 million, or 94.1% of total revenue for the fourth quarter last year. The Company generated $1.3 million in toll processing fees during the fourth quarter 2007 consistent with $1.3 million for the prior year's fourth quarter.

Gross profit on product sales and processing for the fourth quarter was $2.9 million, or 9.7% gross profit margin, compared with gross profit of $3.8 million, or 17.0% gross profit margin for the fourth quarter last year. The decrease in both whole dollars and as a percent of sales is primarily due to a change in the fair value of derivatives for feedstock and fuel gas. The cost of petrochemical product sales and processing and gross profit margin for the three months ended December 31, 2007 and 2006 includes an unrealized gain/(loss) of approximately $(181,000) and $1.6 million respectively, on the derivative agreements.

General and administrative expenses increased 35.8% to $2.1 million from $1.6 million from the fourth quarter last year primarily due to higher labor costs and increased business activity and training of additional personnel associated with the expansion of the South Hampton Resources facility.

The Company reported $492,000 in operating income compared to $2.4 million for the fourth quarter of 2006. The Company reported net income of $576,000, or $0.03 per basic and fully diluted share (based on 22.9 and 23.3 million shares, respectively) compared to net income of $2.0 million, or $.09 per basic and fully diluted share last year (based on 22.9 and 23.2 million shares, respectively) for the fourth quarter 2006.

Nick Carter, Executive Vice President and Chief Operating Officer, of Arabian American, commented, "We achieved a number of major milestones during fiscal year 2007 and subsequent to the year end. Our common stock moved to the NASDAQ Global Select Market and began trading there on January 29, 2008. This gives our common stock greater visibility and liquidity, both of which benefit our shareholders. We then had the honor of presiding at the closing bell of NASDAQ at the end of that first week of trading. In addition, we recently announced that we received the permit from the Texas Commission on Environmental Quality for our facilities' expansion. The permitting process took longer than what we initially anticipated, moving the projected start-up date to late May or early June rather than early second quarter. The new facility is in a "non-attainment" area for air quality; therefore, the permit process took approximately two months longer than expected. The new facility will greatly expand our capacity, which is expected to double revenue and EBITDA opportunities, as well as, open up opportunities globally."

For the year ended December 31, 2007, the Company generated consolidated revenue of $108.7 million, an increase of 10.3% compared to revenue of $98.5 million for the prior period. Gross profit on product sales and processing year to date was $19.8 million, or 18.2% gross profit margin, compared with gross profit of $18.6 million, or 18.9% gross profit margin, for the year-ago period. General and administrative expenses increased 30.4% to $7.6 million from $5.8 million last year. The Company reported $11.1 million in operating income compared to $11.9 million in operating income last year. The Company reported net income of $7.8 million, or $0.34 per basic and $0.33 per diluted share (based on 22.9 and 23.3 million shares, respectively) compared to net income of $7.9 million, or $.35 per basic and $0.34 per diluted share last year (based on 22.9 and 23.0 million shares, respectively) last year.

Mr. Carter continued, "Several significant events also occurred in our ongoing efforts to finalize a joint stock corporation in Saudi Arabia for the Al-Masane Al-Kobra Mining Company (ALAK) joint venture. The joint venture received the commercial license from the Saudi Arabia Ministry of Commerce, which enabled it to contract with construction companies, prepare for transfer mining assets and appoint independent auditors. In addition, the formal application for the transfer of the mining lease to ALAK was filed with the Saudi Arabian Ministry of Petroleum and Mineral Resources on February 23, 2008. The Company believes that the Ministry will approve the transfer promptly since ALAK has agreed to fulfill all the provisions of the mining lease and has demonstrated its financial and technical competence to do so."

The Company completed the quarter with $4.8 million in cash as of December 31, 2007, compared to $2.9 million as of December 31, 2006. Trade receivables increased by $3.4 million to $12.3 million, primarily due to increased sales. The changes in the Balance Sheet accounts are part of the normal ebb and flow of the business and are not considered unusual. Collections on accounts receivable remain timely and the higher balance reflects a return to normal sales levels from the dip at the end of December 2006. The Company had $13.9 million in working capital as of December 31, 2007 and ended the quarter with a current ratio of 2.6 to 1. Both working capital and current ratio were calculated excluding the $11 million non interest-bearing/non-recourse current note payable to the Saudi Government. Shareholders' Equity increased 17.6% during the quarter to $52.6 million compared to $44.7 million as of December 31, 2006.

Teleconference

Management will conduct a conference call and live webcast at 4:30 p.m. Eastern Time, on Thursday, March 13, 2008. Anyone interested in participating should call 800-762-8795 if calling within the United States or 480-629-1990 if calling internationally. There will be playback available until March 20, 2008. To listen to the playback, please call 800-406-7325 if calling within the United States or 303-590-3030 if calling internationally. Please use pin number 3854561 for the replay. This call is being webcast by ViaVid Broadcasting and can be accessed at ViaVid's website at http://www.viavid.net. The webcast can be accessed until April 13, 2008. To access the webcast, you will need to have the Windows Media Player on your desktop.

About Arabian American Development Company (ARSD):

Arabian American owns and operates a petrochemical facility located in southeast Texas just north of Beaumont, specializing in high purity petrochemical solvents and other solvent type manufacturing. The Company is also the original developer and is now a 50% owner of a joint venture in a mining project in the Al-Masane area of Saudi Arabia which is under construction and is scheduled to be in production in late 2010. The mine will produce economic quantities of zinc, copper, gold, and silver.

Safe Harbor

Statements in this release that are not historical facts are forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward looking statements are based upon management's belief as well as assumptions made by and information currently available to management. Because such statements are based upon expectations as to future economic performance and are not statements of fact, actual results may differ from those projected. These risks, as well as others, are discussed in greater detail in Arabian American's filings with the Securities and Exchange Commission, including Arabian American's annual Report on Form 10-K for the year ended December 31, 2006 and the Company's subsequent Quarterly Report Forms 10-Q.

     Company Contact:   Nick Carter, Executive Vice President and Chief
                        Operating Officer
                        (409) 385-8300
                        ncarter@southhamptonrefining.com

     Investor Contact:  Cameron Donahue or Brett Maas
                        Hayden Communications
                        (651) 653-1854
                        Cameron@haydenir.com


                                Tables follow



            ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES

                         CONSOLIDATED BALANCE SHEETS

                                                           December 31,
                                                       2007           2006
                       ASSETS
    CURRENT ASSETS
      Cash and cash equivalents                    $ 4,789,924    $ 2,939,022
       Trade Receivables, Net of allowance for
        doubtful accounts of $35,000 and
        $35,000, respectively                       12,310,561      8,893,182
       Current portion of notes receivable,
        net of discount and deferred gross profit
        of $101,620 and $200,492, respectively         609,777        605,955
       Financial contracts                             206,832             --
       Financial contract deposits                          --      1,500,000
       Prepaid expenses and other assets               648,313        404,228
       Inventories                                   2,887,636      3,576,317
       Taxes receivable                              1,070,407        619,598

           Total current assets                     22,523,450     18,538,302

    PLANT, PIPELINE, AND EQUIPMENT - AT COST        32,229,709     21,643,903
     LESS ACCUMULATED DEPRECIATION                 (12,463,214)   (11,017,503)

    PLANT, PIPELINE, AND EQUIPMENT, NET             19,766,495     10,626,400

    AL MASANE PROJECT                               37,468,080     37,137,022
    OTHER INTERESTS IN SAUDI ARABIA                  2,431,248      2,431,248
    MINERAL PROPERTIES IN THE UNITED STATES          1,084,617      1,084,711
    NOTES RECEIVABLE, net of discount of
     $70,421 and $172,041, respectively,
     net of current portion                            935,937      1,545,714

    OTHER ASSETS                                        10,938        226,769

                    TOTAL ASSETS                   $84,220,765    $71,590,166



            ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES

                   CONSOLIDATED BALANCE SHEETS - Continued

                                                             December 31,
                                                         2007          2006

         LIABILITIES AND STOCKHOLDERS' EQUITY
    CURRENT LIABILITIES
      Accounts payable                                $4,524,042    $2,989,203
      Accrued interest                                    85,552        59,857
      Financial contracts                                     --       765,672
      Accrued liabilities                              1,931,822     1,210,054
      Accrued liabilities in Saudi Arabia              1,406,801     1,645,257
      Notes payable                                   11,012,000    11,012,500
      Current portion of long-term debt                   30,573       488,828
      Current portion of other liabilities               630,731       584,349

               Total current liabilities              19,621,521    18,755,720

     LONG-TERM DEBT, net of current portion            9,077,737     5,108,309
     POST RETIREMENT BENEFIT                             441,500            --
     OTHER LIABILITIES, net of current portion           990,375     1,621,105
     DEFERRED INCOME TAXES                               677,131       540,000
     MINORITY INTEREST IN CONSOLIDATED
      SUBSIDIARIES                                       794,646       817,558

    STOCKHOLDERS' EQUITY
      Common Stock - authorized 40,000,000 shares
       of $.10 par value; issued and outstanding,
       22,601,994 and 22,571,994 shares in 2007
       and 2006, respectively                          2,260,199     2,257,199
      Additional Paid-in Capital                      37,183,206    37,087,206
      Retained Earnings                               13,174,450     5,403,069

           Total stockholders' equity                 52,617,855    44,747,474

      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $84,220,765   $71,590,166



            ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF INCOME

                       For the years ended December 31,

                                                         2007         2006
    Revenues
      Petrochemical product sales                   $103,204,565  $93,854,726
      Processing fees                                  5,433,550    4,647,431
                                                     108,638,115   98,502,157
    Operating costs and expenses
      Cost of petrochemical product sales and
       processing                                     88,861,365   79,888,772
      Gross Profit                                    19,776,750   18,613,385

    General and administrative expenses
      General and administrative                       7,619,280    5,842,564
      Depreciation                                     1,074,762      859,059
                                                       8,694,042    6,701,623

    Operating income                                  11,082,708   11,911,762

    Other income (expense)
      Interest income                                    297,494      276,184
      Interest expense                                  (142,696)    (704,282)
      Minority interest                                   22,912       17,535
      Miscellaneous income (expense)                     (62,794)     383,545
                                                         114,916      (27,018)
           Income before income taxes                 11,197,624   11,884,744

    Income tax expense                                 3,426,243    4,009,416

           Net income                                 $7,771,381   $7,875,328

    Basic weighted average net income
     per common share                                      $0.34        $0.35
    Basic weighted average number
     of common shares outstanding                     22,895,394   22,804,567

    Diluted weighted average net income
     per common share                                      $0.33        $0.34
    Diluted weighted average number
     of common shares outstanding                     23,291,669   23,030,573



            ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF INCOME

                     For the quarters ended December 31,

                                                     2007             2006
    Revenues
      Petrochemical product sales                $28,497,825      $21,219,694
      Processing fees                              1,298,486        1,342,332
                                                  29,796,311       22,562,026
    Operating costs and expenses
      Cost of petrochemical product sales
       and processing                             26,892,131       18,729,796
      Gross Profit                                 2,904,180        3,832,230

    General and administrative expenses
      General and administrative                   2,109,538        1,553,379
      Depreciation                                   302,666          (82,453)
                                                   2,412,204        1,470,926

    Operating income                                 491,976        2,361,304

    Other income (expense)
      Interest income                                 78,198          104,266
      Interest expense                               (26,954)         (71,478)
      Minority interest                                8,883           10,744
      Miscellaneous income (expense)                 (59,438)         184,026
                                                         689          227,558
         Income before income taxes                  492,665        2,588,862

    Income tax expense                               (83,326)         577,149

         Net income                                 $575,991       $2,011,713

    Basic weighted average net income
     per common share                                  $0.03            $0.09
    Basic weighted average number
     of common shares outstanding                 22,901,994       22,871,994

    Diluted weighted average net income
     per common share                                  $0.03            $0.09
    Diluted weighted average number
     of common shares outstanding                 23,323,532       23,190,750

SOURCE Arabian American Development Co.