Arabian American Development Announces Fiscal 2007 Third Quarter Financial Results

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DALLAS, Nov. 8 /PRNewswire-FirstCall/ -- Arabian American Development Co. (OTC Bulletin Board: ARSD) today announced financial results for the third quarter and nine-month period ended September 30, 2007.

    Third Quarter 2007 Highlights:
    --  Revenue of $28.0 million, up 3% sequentially compared to $27.1 million
        for the second quarter of 2007 and up 1.8%, essentially flat, compared
        to $27.5 million for the third quarter of 2006.
    --  The Company received official notification that the Ministry of
        Commerce and Industry for the Kingdom of Saudi Arabia has approved the
        formation of the Al-Masane Al-Kobra Mining Company (ALAK).
    --  Company adds two additional Board members achieving the goal of 4
        independent Board of Directors, bringing total Board to seven

Financial Results

Consolidated revenue for the third quarter of fiscal 2007 was $28.0 million, an increase of 1.8% compared to revenue of $27.5 million in the third quarter last year and a 3.0% sequential increase compared to revenue of $27.1 million in the second quarter of 2007. Refined product sales (predominantly C5 and C6 Hydrocarbons and related products) represented $26.6 million, or 94.9% of total revenue for the third quarter and $26.3 million, or 95.3% of total revenue for the third quarter last year. The Company generated $1.4 million in toll processing fees during the third quarter compared with $1.3 million for the prior year's third quarter.

Gross profit on product sales and processing for the third quarter was $2.4 million, or 9.5% gross profit margin, compared with gross profit of $2.8 million, or 11.2% gross profit margin for the third quarter last year. The decrease in both whole dollars and as a percent of sales is due to a change in the fair value of derivatives for feedstock purchases. The cost of petrochemical product sales and processing and gross profit margin for the three months ended September 30, 2007 and 2006 includes an unrealized (loss)/gain of approximately ($2,860,000) and $222,000 respectively, on the derivative agreements.

General and administrative expenses increased 6.0% to $1.6 million from $1.5 million for the third quarter last year primarily due to generally higher labor costs and increased business activity. The Company expects to incur increased expense for the remainder of 2007 and early 2008 due to increased training of additional personnel and in certain process interruptions which may occur as the new process train is integrated with existing equipment. These events are in anticipation of the expanded production activities in early 2008 and will be managed to avoid major disruptions to our customers or our financial performance.

The Company reported $559,000 in operating income compared to $1,025,000 in operating income for the third quarter last year. The Company reported net income of $382,000, or $0.017 per basic and $0.016 per fully diluted share (based on 22.9 and 23.3 million shares, respectively) compared to net income of $515,000, or $.023 per basic and $0.022 fully diluted share last year (based on 22.9 million shares) for the third quarter last year.

"The expansion initiative is well underway as we have acquired all of the major process equipment necessary to complete the project," commented Nick Carter, the Secretary Treasurer of ARSD and also the President of the petrochemical segment. "We are currently accomplishing as much preliminary field work as possible while waiting for the final permit approval. We have spent about $4.0 million to date and will make the first draw on the credit line this month."

For the first nine months the Company generated consolidated revenue of $78.8 million, an increase of 3.8% compared to revenue of $75.9 million for the first nine months of 2006. Gross profit on product sales and processing was $16.9 million, or 27.2% gross profit margin, compared with gross profit of $14.8 million, or 24.2% gross profit margin, for the first nine months last year. General and administrative expenses increased 28.5% to $5.5 million from $4.3 million last year. The Company reported $10.6 million in operating income compared to $9.9 million in operating income last year. The Company reported net income of $7.2 million, or $0.31 per basic and diluted share (based on 22.9 and 23.3 million shares, respectively) compared to net income of $5.9 million, or $.26 per basic and diluted share last year (based on 22.8 and 23.0 million shares, respectively) last year.

Mr. Carter continued, "Our efforts in Saudi Arabia to form a joint stock corporation which will be owned 50% by ARSD are coming to fruition. The formation of ALAK will allow us to make real progress toward our goal of producing the zinc, copper, gold and silver deposits which we had discovered many years ago. The next step in the process will be for the joint stock company to hold an organizational meeting to form its Board of Directors. The Board of Directors of Arabian American has approved Hatem El-Khalidi, Ghazi Sultan, Dr. Ibrahim Al-Moneef and Mohammed Al-Omair to represent its interests on the Board of ALAK. After the organizational meeting, the Ministry will issue the license allowing ALAK to conduct business in the Kingdom, and we can then apply to the Ministry of Minerals and Petroleum to transfer the lease into the name of ALAK. Simultaneously, ALAK will prepare to sign a contract with the primary contractor for the project, so that work can commence without delay."

"The Company is also working on our stated goal of qualifying for listing on a major U.S. stock exchange. To move toward this goal, the Board of Directors identified and recruited two additional, well qualified, board members, Mohammed Al-Omair and Charles W. Goehringer, Jr. This brings the board to a total of seven, the majority of whom are independent. We welcome them and their expertise to the Board and, importantly, this brings the Company into compliance to facilitate a listing change. Our target timeframe for this initiative remains the end of 2007," concluded Mr. Carter.

The Company completed the quarter with $1.9 million in cash compared to $2.9 million as of December 31, 2006. Increased feedstock costs and the capital outlay on the expansion equipment resulted in lower cash. The Company's trade receivables increased $3.3 million to $12.2 million 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. The Company had $10.1 million in working capital as of September 30, 2007 and ended the quarter with a current ratio of 2.2 to 1. Both working capital and current ratio were calculated excluding the 1984 dated $11 million non interest-bearing/non-recourse current note payable to the Saudi Government. The Company will explore the options for handling of this note after ALAK is fully established and operational. Shareholder's Equity increased 16.3 percent during the quarter to $52.0 million compared to $44.7 million as of December 31, 2006.

Teleconference

Management will conduct a conference call and live web cast at 4:30 p.m. Eastern Time, on Thursday, November 8, 2007. Anyone interested in participating should call 866-328-4270 if calling within the United States or 480-293-1744 if calling internationally. There will be a playback available until November 15, 2007. 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 3804070 for the replay. This call is being web cast by ViaVid Broadcasting and can be accessed at ViaVid's website at http://www.viavid.net/. The web cast can be accessed until December 8, 2007. To access the web cast, you will need to have the Windows Media Player on your desktop.

About Arabian American Development Co.

Arabian American owns and operates a petrochemical facility employing about 110 people located in southeast Texas just north of Beaumont, Texas, specializing in high purity petrochemical solvents and other solvent type manufacturing. Arabian American also has a mining project in Saudi Arabia which is under development and will produce economic quantities of zinc, copper, gold, and silver when it is put into production.

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 Form 10-Q.

                              -Tables to Follow-



    ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES
    CONSOLIDATED BALANCE SHEETS

                                                 SEPTEMBER 30,   DECEMBER 31,
                                                     2007            2006
                                                 (unaudited)

    ASSETS
      Current Assets
        Cash and cash equivalents                 $1,909,213     $2,939,022
        Trade Receivables, Net of allowance
         for doubtful accounts of $35,000 and
         $35,000, respectively                    12,239,558      8,893,182
        Current portion of notes receivable,
         net of discount and deferred gross
         profit of $139,341 and $200,492,
         respectively                                572,055        605,955
        Financial contracts                          423,639             --
        Financial contract deposits                       --      1,500,000
        Prepaid expenses and other assets            538,750        576,751
        Inventories                                2,922,845      3,576,317
        Income tax receivable                             --        619,598
            Total Current Assets                  18,606,060     18,710,825

      Plant, Pipeline and Equipment               29,399,276     21,643,903
        Less: Accumulated Depreciation           (12,148,577)   (11,017,503)
          Net Plant, Pipeline and Equipment       17,250,699     10,626,400

      Al Masane Project                           37,416,719     37,137,022
      Other Assets in Saudi Arabia                 2,431,248      2,431,248
      Mineral Properties in the United States      1,085,209      1,084,711
      Notes Receivable, net of discount of
       $65,551 and $172,041, respectively,
       net of current portion                      1,118,655      1,545,714
      Other Assets                                    22,875         54,246

          TOTAL ASSETS                           $77,931,465    $71,590,166

    LIABILITIES AND STOCKHOLDERS' EQUITY
      Current Liabilities
        Accounts payable                          $4,313,935     $2,989,203
        Accrued interest                              60,242         59,857
        Financial contracts                               --        765,672
        Accrued liabilities                        2,124,305      1,210,054
        Accrued liabilities in Saudi Arabia        1,378,923      1,645,257
        Notes payable                             11,012,000     11,012,500
        Current portion of long-term debt             28,172        488,828
        Current portion of other liabilities         621,806        584,349
            Total Current Liabilities             19,539,383     18,755,720

      Long-Term Debt, net of current portion       3,087,399      5,108,309
      Other Liabilities, net of current portion    1,660,686      1,621,105
      Deferred Income Taxes                          798,604        540,000
      Minority Interest in Consolidated
       Subsidiaries                                  803,529        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                           12,598,459      5,403,069
            Total Stockholders' Equity            52,041,864     44,747,474
                                                 $77,931,465    $71,590,166
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY



    ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES
    CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

                               THREE MONTHS ENDED        NINE MONTHS ENDED
                                   SEPTEMBER 30            SEPTEMBER 30
                                 2007       2006         2007        2006

    REVENUES
      Petrochemical Product
       Sales                $26,600,738 $26,253,133  $74,706,740 $72,635,032
      Processing Fees         1,437,684   1,288,351    4,135,064   3,305,099
                             28,038,422  27,541,484   78,841,804  75,940,131

    OPERATING COSTS AND
     EXPENSES
      Cost of Petrochemical
       Product
        Sales and Processing 25,597,105  24,763,985   61,969,234  61,158,976
        GROSS PROFIT          2,441,317   2,777,499   16,872,570  14,781,155

    GENERAL AND ADMINISTRATIVE
     EXPENSES
      General and
       Administrative         1,613,612   1,522,286    5,509,742   4,289,185
      Depreciation              268,180     230,391      772,096     637,589
                              1,881,792   1,752,677    6,281,838   4,926,774

    OPERATING INCOME            559,525   1,024,822   10,590,732   9,854,381

    OTHER INCOME (EXPENSE)
      Interest Income            70,253      72,592      219,296     171,918
      Interest Expense          (10,037)    (92,973)    (115,742)   (632,804)
      Minority Interest           3,680       3,184       14,029       6,791
      Miscellaneous Income
       (Expense)                (22,621)   (192,174)      (3,356)   (104,404)
                                 41,275    (209,371)     114,227    (558,499)

      INCOME BEFORE
       INCOME TAXES             600,800     815,451   10,704,959   9,295,882

    INCOME TAXES                219,200     300,849    3,509,569   3,432,267

      NET INCOME               $381,600    $514,602   $7,195,390  $5,863,615

    Basic Earnings per
     Common Share
      Net Income                 $0.017      $0.023       $0.314      $0.257
    Basic Weighted Average
     Number of Common Shares
     Outstanding             22,901,994  22,808,954   22,893,194  22,782,092

    Diluted Earnings per
     Common Share
      Net Income                 $0.016      $0.022       $0.309      $0.255
    Diluted Weighted Average
     Number of Common Shares
     Outstanding             23,299,289  23,073,902   23,274,093  22,967,626


     Company Contact:  Nick Carter, President, Secretary and Treasurer
                       (409) 385-1400
                       ncarter@southhamptonrefining.com

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

SOURCE Arabian American Development Co.