Arabian American Announces Fourth Quarter and Full-Year 2010 Financial Results
Quarterly Revenues Increase by 8.3% to $33.5 Million Year-over-Year
Fourth Quarter Earnings up 195.6% to $610,000 Year-over-Year
DALLAS, March 9, 2011 /PRNewswire/ -- Arabian American Development Co. (Nasdaq: ARSD) today announced financial results for the fourth quarter and full year period ended December 31, 2010.
-- Revenue for the fourth quarter increased 8.3% to $33.5 million from $31.0 million in the same period last year. -- Gross profit for the fourth quarter of 2010 increased 96.5% to $4.4 million from $2.2 million in the comparable period in 2009. -- EBITDA, a non-GAAP financial measure, for the fourth quarter of 2010 was $2.2 million as compared to $165,000 for the same period in 2009. -- Net income attributable to Arabian American Development Company for the fourth quarter increased 195.6% to $610,000, or $0.02 per basic and diluted share, compared to a net loss of $(638,000), or $(0.03) per basic and diluted share, for the fourth quarter last year.
Fourth Quarter 2010 Operational Highlights
-- Completed the expansion of South Hampton Resources' Hexane treater unit that adds an additional 800 barrels per day for treating C6 product. This unit completes the plant expansion started in 2008 which doubled capacity. -- Finished the addition of a new Isomerization unit for increased C5 flexibility. This allows South Hampton to convert up to 600,000 gallons per month of Normal Pentane to Isopentane. -- Signed an agreement to merge the assets of Silsbee Trading and Transportation Company (STTC), a company owned by Nicholas Carter, President and Chief Executive Officer of Arabian American Development Co., into its operating unit, South Hampton Resources, Inc.
Subsequent to 2010 Year End
-- Signed two new contracts including a five-year contract with a North America-based company and a three-year contract with an international-based organization for a total value of more than $29 million over the length of the contracts. These continue the diversification and global expansion of the Company's customer base. -- AMAK, the Saudi Joint Stock company owned 41% by ARSD, applied for four additional mining leases which surround the Al Masane area (Najran province) in southwestern Saudi Arabia. Conditional approval has been granted. The business and operational plan has been submitted for final approval. These prospects were part of the previous exploration of the region which was undertaken in the late 1980's when approximately $3.0 million was spent by ARSD in research and core drilling. -- AMAK received the first US$38 million (SR141 million) payment related to a permanent loan from the Saudi Industrial Development Fund (SIDF). This opening draw enabled AMAK to repay the initial bridge loan from a Saudi French Bank and allowed AMAK to arrange a further bridge loan from the Saudi French Bank in the amount of approximately US$44 million (SR165 million) which was needed for the completion of the mine's construction and working capital. This bridge loan will be repaid via the second draw on the SIDF loan later in the year. -- AMAK has hired a Chief Financial Officer and an Environmental Manager. The AMAK Board is now interviewing laboratory personnel and geologists in order to complete supervisory staffing requirements in preparation for operations. -- The AMAK Board named one of its members, Mohammed Aballala, as the Managing Director in an effort to expedite the decision making process at the mine. Mr. Aballala has a long history of managing construction projects and is capable of guiding the staff to keep the project on schedule. The mine is well positioned for subsequent operations as the mill is now approximately 95% complete. -- Recently in conjunction with the 5th Global Competitiveness Forum in Riyadh, ARSD was listed as #54 on the list of top 100 foreign investors in Saudi Arabia. AMAK signed on as a sponsor in the Najran Investment Forum to be held on March 13-15.
Fourth Quarter 2010 Financial Results
Consolidated revenue for the quarter ended December 31, 2010 increased 8.3% to $33.5 million compared to revenue of $31.0 million in the fourth quarter of 2009. Petrochemical product sales (predominantly C5 and C6 hydrocarbons and related products) represented $32.4 million, or 96.6%, of total revenue for the fourth quarter of 2010 and $29.9 million, or 96.6%, of total revenue, for the fourth quarter last year. The Company generated $1.13 million in toll processing fees, up 6.6% during the fourth quarter of 2010 compared with $1.06 million for the prior year's fourth quarter. Processing revenues increased in the fourth quarter of 2010 compared to 2009 due to one of the tolling customers running above minimum capacity during the quarter. The Company remains dedicated to maintaining a certain level of toll processing business in the facility and has several opportunities in various stages of evaluation.
During the fourth quarter of 2010, the cost of petrochemical sales and processing (including depreciation) increased approximately $429,000, or 1.5%, to $29.2 million as compared to $28.7 million in the same period in 2009. Total gross profit on revenue for the fourth quarter of 2010 increased approximately $2.1 million, or 96.5%, to $4.4 million as compared to $2.2 million the same period in 2009. The cost of petrochemical product sales and processing and gross profit for the three months ended December 31, 2010 includes a net gain of $179,000 from derivative transactions. For the same period of 2009, there was an $11,000 net gain.
Nick Carter, President and Chief Executive Officer, commented, "Our quarterly revenue results show modest gains from the year-ago period. Gross profit, however, increased by over 96% as we moved over 50% of our larger customers to formula pricing, a mechanism which is gaining traction and is beneficial to both parties as it allows product prices to move in conjunction with feed prices without the necessity of announced price changes. We also continued to successfully use derivative contracts to offset any fluctuating feedstock prices. These actions, along with careful cost control and the ISOM expansion (which allows Normal Pentane to be converted into Isopentane and provides flexibility in managing products) is also providing greater stability to gross margins."
Mr. Carter continued, "We capitalized on our updated and expanded pentane and hexane units to target new opportunities both domestically and globally which was not possible a year ago. As a result of our expanded capability, we announced several new sales contracts in fourth quarter 2010 and subsequent to the year-end that will help drive revenues going forward."
General and Administrative costs for the fourth quarter of 2010 were up $138,000, or 5.4%, at $2.7 million from $2.6 million in the same period last year primarily due to higher administrative payroll costs, consulting fees, insurance premiums, directors' fees, post retirement expense and legal fees.
The Company reported net income attributable to Arabian American Development Company in the fourth quarter of 2010 of approximately $610,000 or $0.02 per basic and diluted share (based on 23.8 million basic and 23.9 million diluted weighted average shares outstanding, respectively). This compares to a net loss attributable to Arabian American Development Company of $638,000, or $0.03 per basic and diluted share for the fourth quarter of 2009 (based on 23.7 million basic and diluted weighted average shares outstanding).
The Company reported EBITDA for the fourth quarter of 2010 of approximately $2.2 million compared to $165,000 for the same period in 2009.
Full Year 2010 Financial Results
Consolidated revenue for the year ended December 31, 2010 increased 18.3% to $139.1 million compared to revenue of $117.6 million in the same period in 2009. Excluding transloading revenues of $854,000 generated in the year ended December 31, 2010, revenues were $138.3 million, a 22.4% increase from $113.0 million in the year-ago period, excluding transloading revenues of $4.6 million. Year-to-date 2010 transloading sales reflected spot opportunities that were fulfilled. Petrochemical product sales represented $133.6 million or 96.0% of total revenue year-to-date in 2010 compared to $109.2 million or 92.8% of total revenue for the same period last year. The Company generated $4.7 million in toll processing fees up 23.6%, during the full year 2010 compared with $3.8 million for the same period last year. Again, processing revenues increased primarily due to one of the tolling customers running above minimum capacity during the full year 2010. Total sales volume decreased approximately 6.4% due to expiration of the transloading contract; however, petrochemical product sales volume remained steady.
During the year ended December 31, 2010, the cost of petrochemical sales and processing (including depreciation) increased approximately $26.2 million, or 27.4%, as compared to the same period in 2009. Consequently, total gross profit on revenue for the full year of 2010 decreased approximately $4.7 million or 21.4%, to $17.2 million as compared to $21.9 million for the same period in 2009. The cost of petrochemical product sales and processing and gross profit for the year ended December 31, 2010, includes a net gain of $205,000 from derivative transactions. For the same period of 2009, the net gain was $1.1 million.
General and Administrative costs for the full year of 2010 increased approximately $1.8 million or 19.5%, to $10.9 million from $9.1 million in the same period in 2009 primarily due to increases in accrued liabilities for Pioche environmental issues, administrative payroll costs, insurance premiums, consulting fees, property taxes, directors' fees, post retirement benefits, and legal fees.
For the full year of 2010, net income attributable to Arabian American Development was $2.7 million or $0.11 per basic and diluted share (based on 23.8 million weighted average shares outstanding) compared to net income of $6.6 million or $0.28 per basic and diluted share (based on 23.7 million and 23.8 million weighted average shares outstanding, respectively) for the year-ago period.
EBITDA for the year ended December 31, 2010, was $8.2 million as compared to $15.0 million for the same period in 2009.
The Company completed the quarter with $7.6 million in cash and cash equivalents compared to $2.5 million as of December 31, 2009. Trade receivables decreased by $1.1 million to $11.2 million from $12.3 million due to decreased sales volume in the fourth quarter. The average collection period remains normal for the business. Inventory increased approximately $852,000 due to a slight increase in volume and price.
The Company had $19.0 million in working capital as of December 31, 2010 and ended the quarter with a current ratio of 3.5 to 1. Shareholders' equity increased to $56.6 million as of December 31, 2010 from $52.2 million as of December 31, 2009.
Mr. Carter concluded, "Our balance sheet remains strong with cash and cash equivalents that increased over 210% from the year-ago period. In addition, we generated cash from operations of $11.3 million which is up 62% sequentially from $7.0 million at the end of our third quarter 2010 and up 73.9% from $6.5 million in the fourth quarter of 2009."
About Arabian American Development Company (ARSD)
ARSD owns and operates a petrochemical facility located in southeast Texas just north of Beaumont which specializes in high purity petrochemical solvents and other solvent type manufacturing. The Company is also the original developer and now a 41% investor in a Saudi Arabian joint stock company involving a mining project which is currently under construction in the Najran Province area of southwest Saudi Arabia. The mine is scheduled to be in production in 2011 and will produce economic quantities of zinc, copper, gold, and silver.
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, 2009, and the Company's subsequent Quarterly Reports on Form 10-Q.
Company Contact: Nick Carter, President and Chief Executive Officer (409) 385-8300 email@example.com Investor Contact: Cameron Donahue Hayden IR (651) 653-1854 Cameron@haydenir.com
- Tables follow - ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2010 2009 ASSETS CURRENT ASSETS Cash and cash equivalents $ 7,609,943 $ 2,451,614 Financial contracts 177,446 - Trade Receivables, net of allowance for doubtful accounts of $155,000 and $126,500, respectively 11,212,290 12,302,955 Current portion of notes receivable, net of discount of $684 and $16,109, respectively 34,427 372,387 Prepaid expenses and other assets 669,367 739,989 Contractual based intangible assets 250,422 - Inventories 5,917,283 5,065,169 Deferred income taxes 487,513 640,057 Taxes receivable 216,461 4,726,708 Total current assets 26,575,152 26,298,879 PLANT, PIPELINE, AND EQUIPMENT – AT COST 54,703,710 50,082,441 LESS ACCUMULATED DEPRECIATION (20,839,442) (17,674,938) PLANT, PIPELINE, AND EQUIPMENT, NET 33,864,268 32,407,503 INVESTMENT IN AMAK 30,883,657 31,146,157 MINERAL PROPERTIES IN THE UNITED STATES 588,311 588,311 NOTES RECEIVABLE, net of discount of $0 and $684, respectively, net of current portion - 35,001 CONTRACTUAL BASED INTANGIBLE ASSETS, net of current portion 605,185 - OTHER ASSETS 10,938 10,938 TOTAL ASSETS $ 92,527,511 $ 90,486,789
ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (continued) December 31, 2010 2009 LIABILITIES CURRENT LIABILITIES Accounts payable $ 2,778,161 $ 3,617,043 Accrued interest 120,533 148,538 Current portion of derivative instruments 396,527 436,203 Accrued liabilities 1,777,642 1,336,219 Accrued liabilities in Saudi Arabia 184,593 471,280 Notes payable 12,000 12,000 Current portion of post retirement benefit 246,605 31,500 Current portion of long-term debt 1,864,770 1,400,000 Current portion of other liabilities 199,939 579,500 Total current liabilities 7,580,770 8,032,283 LONG-TERM DEBT, net of current portion 20,836,098 23,439,488 POST RETIREMENT BENEFIT, net of current portion 680,196 815,378 DERIVATIVE INSTRUMENTS, net of current portion 719,693 838,489 OTHER LIABILITIES,net of current portion 390,232 562,011 DEFERRED INCOME TAXES 5,480,683 4,332,911 Total liabilities 35,687,672 38,020,560 COMMITMENTS AND CONTINGENCIES EQUITY Common Stock authorized 40,000,000 shares of $.10 par value; issued and outstanding, 23,682,915 and 23,433,995 shares in 2010 and 2009, respectively 2,368,291 2,343,399 Additional Paid-in Capital 43,162,641 41,604,168 Accumulated Other Comprehensive Loss (736,706) (841,297) Retained Earnings 11,756,390 9,070,736 Total Arabian American Development Company Stockholders' Equity 56,550,616 52,177,006 Noncontrolling interest 289,223 289,223 Total equity 56,839,839 52,466,229 TOTAL LIABILITIES AND EQUITY $ 92,527,511 $ 90,486,789
ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED 12 MONTHS ENDED 31-Dec 31-Dec 2010 2009 2010 2009 REVENUES Petrochemical Product Sales $ 32,394,750 $ 29,897,604 $ 133,579,088 $ 109,178,541 Transloading Sales - - 853,636 4,624,681 Processing Fees 1,128,440 1,058,656 4,677,470 3,783,457 33,523,190 30,956,260 139,110,194 117,586,679 OPERATING COSTS AND EXPENSES Cost of Petrochemical Product Sales and Processing 29,169,093 28,740,179 121,894,912 95,688,819 GROSS PROFIT 4,354,097 2,216,081 17,215,282 21,897,860 GENERAL AND ADMINISTRATIVE EXPENSES General and Administrative 2,701,525 2,563,067 10,930,141 9,144,710 Depreciation 104,974 114,799 433,372 443,538 2,806,499 2,677,866 11,363,513 9,588,248 OPERATING INCOME (LOSS) 1,547,598 (461,785) 5,851,769 12,309,612 OTHER INCOME (EXPENSE) Interest Income 962 9,693 16,184 63,669 Interest Expense (275,577) (356,673) (1,132,968) (1,327,530) Equity in Loss from AMAK - - (262,500) - Miscellaneous Income (expense) (58,374) (71,332) (84,015) (74,332) (332,989) (418,312) (1,463,299) (1,338,193) INCOME (LOSS) BEFORE INCOME TAXES 1,214,609 (880,097) 4,388,470 10,971,419 INCOME TAXES 604,809 (242,575) 1,702,816 4,343,968 NET INCOME (LOSS) 609,800 (637,522) 2,685,654 6,627,451 NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST - - - - NET INCOME (LOSS) ATTRIBUTABLE TO ARABIAN AMERICAN DEVELOPMENT CO. $ 609,800 $ (637,522) $ 2,685,654 $ 6,627,451 Basic Earnings (Loss) per Common Share Net Income (Loss) $0.02 ($0.03) $0.11 $0.28 Basic Weighted Average Number of Common Shares Outstanding 23,828,976 23,736,745 23,769,047 23,733,955 Diluted Earnings (Loss) per Common Share Net Income $0.02 ($0.03) $0.11 $0.28 Diluted Weighted Average Number of Common Shares Outstanding 23,874,000 23,736,745 23,780,303 23,800,499
ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2010 2009 Operating activities Net income (loss) attributable to Arabian American Development Co. $ 2,685,654 $ 6,627,451 Adjustments to reconcile net income (loss) to Arabian American Development Co. to Net cash provided by operating activities: Depreciation 2,613,164 2,689,847 Accretion of notes receivable discounts (16,109) (53,628) Unrealized (gain) loss on derivative instruments (177,448) (6,976,232) Share-based compensation 807,917 280,161 Provision for doubtful accounts 28,500 111,154 Deferred income taxes 684,582 8,977,317 Postretirement obligation - 23,378 Impairment loss - - Loss attributable to noncontrolling interest - - Equity in loss from AMAK 262,500 - Changes in operating assets and liabilities: (Increase) decrease in trade receivables 1,062,165 (510,083) Decrease in notes receivable 389,070 582,177 (Increase) decrease in income tax receivable 4,510,247 (4,297,082) Increase in inventories (852,114) (2,618,969) Decrease in prepaid expenses and other assets 70,622 59,353 Decrease in derivative instruments deposits - 3,950,000 Increase in other liabilities - 773,000 Decrease in accounts payable and accrued liabilities (504,088) (2,146,279) Increase (decrease) in accrued interest (28,005) 1,077 Decrease in accrued liabilities in Saudi Arabia (206,764) (957,876) Net cash provided by operating activities 11,329,893 6,514,766 Investing activities Additions to property, pipeline and equipment (2,898,752) (3,184,140) Purchase of transportation company (250,000) - Net cash used in investing activities (3,148,752) (3,184,140) Financing Activities Additions to long-term debt 1,396,751 2,530,761 Repayment of long-term debt (4,419,563) (6,169,009) Net cash provided (used) in financing activities (3,022,812) (3,638,248) Net increase (decrease) in cash 5,158,329 (307,622) Cash and cash equivalents at beginning of year 2,451,614 2,759,236 Cash and cash equivalents at end of year $ 7,609,943 $ 2,451,614
ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES(1) THREE MONTHS ENDED 12 MONTHS ENDED 31-Dec 31-Dec 2010 2009 2010 2009 (in thousands) NET INCOME (LOSS) $ 610 $ (638) $ 2,686 $ 6,627 Add back: Interest 276 357 1,133 1,328 Taxes 605 (243) 1,703 4,344 Depreciation 105 115 432 444 Depreciation in Cost of sales 568 574 2,271 2,246 EBITDA $ 2,164 $ 165 $ 8,225 $ 14,989
12/31/2010 (in thousands except ratio) Current assets $ 26,575 Current liabilities $ 7,581 Working capital $ 18,994 (current assets less current liabilities) Current ratio 3.5 (current assets divided by current liabilities)
(1) This press release includes non-GAAP measures. Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
SOURCE Arabian American Development Co.