DALLAS, March 28 /PRNewswire-FirstCall/ -- Arabian American Development Co. (BULLETIN BOARD: ARSD) today announced record financial results for the fourth quarter and full-year period ended December 31, 2006.
Fiscal 2006/First Quarter 2007 Highlights:
* Revenues increase 4.1% for the quarter; 22.6% to the year
* Operating Income increased $2.6 million in the fourth quarter
* 4th Quarter EPS of $.09 vs. loss of $.05 in year ago period
* The company recently gained approval from the Saudi Department of
Petroleum and Mineral Resources to transfer the mining lease to the
joint stock corporation.
* The Company's Board of Directors approved a $12 million expansion of
the Company's Penhex Unit, with up to $2 million to be financed by the
Company and the balance through a line of credit from Bank of America
* Robert E. Kennedy joined the Company's Board of Directors, effective
January 13, 2007 and will sit on the Board's Audit and Compensation
Committees. Mr. Kennedy brings more than 36 years experience in the
industrial chemical and petrochemical industry, including leadership
positions with Chevron Chemical, Resinate Corp. and his consulting
firm, R.E. Kennedy and Associates LP.
Financial Results
Revenues for the fourth quarter of fiscal 2006 were $22.6 million, an increase of 4.1 percent compared to the $21.7 million for the fourth quarter last year. Refined product sales (predominantly C5 and C6 Hydrocarbons and related products) represented $21.2 million, or 94.1 percent of total revenues for the fourth quarter of 2006 and $20.7 million, or 95.4 percent of total revenues for the fourth quarter of 2005. The Company generated $1.3 million in toll processing fees during the fourth quarter of 2006 compared with $1.0 million for the prior-year's fourth quarter.
Gross profit for the fourth quarter was $3.8 million, or 17 percent gross profit margin compared with gross profit of $729,000, or 3.4 percent gross profit margin for the fourth quarter last year. General and administrative expenses increased 28.5 percent to $1.6 million compared to $1.2 million last year.
The Company reported $1.9 million in operating income compared to a loss from operations of $763,000 last year. The Company reported $718,000 in other income for the quarter, which included $743,000 in miscellaneous expense related to insurance compensation for hurricane damage, compared to other expenses of $8,300 in the prior-year's fourth quarter, primarily related to $133,000 in interest expense.
Inclusive of $577,000 in income tax expense, the Company reported net income of $2.0 million, or $.09 per basic and fully diluted share (based on 23.2 million shares) compared to a net loss from of $1.1 million, or $(.05) per basic and fully diluted share last year (based on 22.7 million shares). Last year's fourth quarter included $304,000 in income tax expense.
"We continued to demonstrate steady revenue growth throughout 2006 despite reaching near full capacity at our Penhex plant, constraining our ability to meet demand," commented Nick Carter, the Company's President. "Our expansion initiative will alleviate this issue, enabling us to maintain our growth rate and expand our market leadership position. Once we reach full capacity following the expansion, we will be able to double both our revenue and EBITDA opportunity. In the fourth quarter, we experienced typical seasonality in December, with sales dropping 30 percent compared to the other two months in the quarter. As in the past, we expect sales to return to normal levels in January."
For the full-year period, revenues were $98.5 million, an increase of 22.6 percent compared to the $80.4 million last year. Gross profit margin was 18.9 percent for fiscal 2006, negatively impacted by an unrealized loss of $690,000, compared to 20.8 percent for fiscal 2005, which were positively impacted by an unrealized gain of $75,000.
Total operating expenses for the year were $87.3 million, an increase of 26.7 percent compared to the $68.9 million for the prior-year period. Other income for the year was $644,000 compared to other expenses of $568,000 last year. Net income from continuing operations was $7.9 million, or $.35 per basic and fully diluted share (based on 22.8 million shares) compared to income from continuing operations of $9.8 million, or $.43 per basic and fully diluted share (based on 22.7 million shares) for the year ago period. In fiscal 2005, the Company divested its Coin mining assets and reported those operations as discontinued operations. Inclusive of discontinued operations, the comprehensive net income was $16.6 million or $.73 per share.
Mr. Carter continued, "We continue to make progress on our mining initiative and believe we are quickly approaching the final approval needed for the formation of the Joint Stock Corporation. Accordingly, we expect to begin construction on the mining facility in the second half of this year. Preliminary work is being done at the site while we are waiting on the approvals for the business structure. As the mineral spot prices that form the majority of our reserves continue to increase and we move closer towards revenue generation, we believe this segment of our business will gain a closer valuation to the proven underlying mineral assets. We remain excited about this opportunity."
The Company completed the year with $2.9 million in cash compared to $1.7 million as of December 31, 2005. The Company had $8.1 million in working capital as of December 31, 2006. The Company ended the year with a current ratio of 2.1 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. The company expects this note to be transferred to the joint stock corporation with the mining lease in the second quarter of 2007. Shareholder's equity increased 22.5 percent during the year to $44.7 million compared to $36.3 million as of December 31, 2005.
Teleconference
Management will conduct a conference call and live web cast at 4:30 p.m. Eastern Time, on Wednesday, March 28, 2007 to discuss these results. Anyone interested in participating should call 800-936-9754 if calling within the United States or 973-935-2048 if calling internationally. There will be a playback available until April 4, 2007. To listen to the playback, please call 877-519-4471 if calling within the United States or 973-341-3080 if calling internationally. Please use pin number 8601186 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 April 28, 2007.
About Arabian American Development Co.
Arabian American owns and operates a petrochemical facility 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 is expected to produce economic quantities of zinc, copper, gold, and silver when it is put into production. There are currently about 20 employees at the mine site.
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, 2005 and the Company's subsequent Quarterly Report Form 10-Q.
Tables to follow
Arabian American Development Company
Consolidated Statement of Operations
(UNAUDITED)
Three Months ended Twelve Months ended
December 31, December 31,
2006 2005 2006 2005
REVENUES
Refined Product Sales $21,219,694 $20,660,127 $93,854,726 $76,268,360
Processing Fees 1,342,332 1,005,187 4,647,431 4,105,227
22,562,026 21,665,314 98,502,157 80,373,587
OPERATING COSTS &
EXPENSES
Cost of Refined Product
Sales/Process. 18,729,796 20,936,225 79,888,772 63,626,497
General and
Administrative 1,563,379 1,216,581 6,033,393 4,468,253
Depreciation 397,549 275,035 1,339,061 756,596
20,690,724 22,427,841 87,261,226 68,851,346
OPERATING INCOME
(LOSS) 1,871,302 (762,527) 11,240,931 11,522,241
OTHER INCOME (EXPENSE)
Interest Income 58,899 38,471 230,817 80,489
Interest Expense (71,478) (133,924) (704,282) (792,976)
Minority Interest in
Loss (Pioche) 10,744 1,489 17,535 8,437
Bad Debt Expense (Pioche) (23,570) (2,547) (37,876) (17,151)
Miscellaneous Income
(Expense) 742,965 88,203 1,137,619 153,424
717,560 (8,308) 643,813 (567,777)
INCOME (LOSS) BEFORE
INCOME TAXES 2,588,862 (770,835) 11,884,744 10,954,464
Income Tax Expense (577,149) (304,187) (4,009,416) (1,133,787)
NET INCOME (LOSS)
from continuing
operations 2,011,713 (1,075,022) 7,875,328 9,820,677
Discontinued operations
Income from Coin
operations 0 0 0 989,856
Gain on disposal of
Coin 0 0 0 5,825,668
Income from discontinued
operations 0 0 0 6,815,524
NET INCOME $2,011,713 $(1,075,022) $7,875,328 $16,636,201
Basic net income per
share
Continuing operations $0.088 $(0.047) $0.345 $0.432
Discontinued operations --- --- --- 0.300
Net Income $0.088 $(0.047) $0.345 $0.732
Basic weighted average
shares outstanding 22,871,994 22,731,994 22,804,567 22,731,994
Diluted net income per
share
Continuing operations $0.087 $(0.047) $0.342 $0.432
Discontinued operations --- --- --- 0.300
Net income $0.087 $(0.047) $0.342 $0.732
Diluted weighted average
shares outstanding 23,190,085 22,731,994 23,030,283 22,731,994
ARABIAN AMERICAN DEVELOPMENT COMPANY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
December 31,
ASSETS 2006 2005
CURRENT ASSETS:
Cash and cash equivalents $2,939,022 $1,738,558
Natural gas derivatives --- 74,752
Trade receivables 8,893,182 12,972,657
Income tax receivable 41,228 ---
Prepaid derivative settlement 1,500,000 ---
Inventories 3,576,317 1,164,674
Total current assets 16,949,749 15,950,641
REFINERY PLANT, PIPELINE AND
EQUIPMENT - AT COST 21,643,903 17,905,048
LESS ACCUMULATED DEPRECIATION (11,017,503) (9,678,443)
REFINERY PLANT, PIPELINE AND
EQUIPMENT, NET 10,626,400 8,226,605
AL MASANE PROJECT 37,137,022 36,804,098
OTHER INTERESTS IN SAUDI ARABIA 2,431,248 2,431,248
MINERAL PROPERTIES IN THE UNITED STATES 1,084,711 1,084,711
OTHER ASSETS 2,821,036 2,476,865
TOTAL ASSETS $71,050,166 $66,974,168
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $2,989,203 $1,787,353
Accrued interest 59,857 58,749
Financial Contracts 765,672 ---
Accrued liabilities 1,210,054 1,282,993
Accrued liabilities in Saudi Arabia 1,645,257 2,407,282
Notes payable 11,012,500 11,025,833
Current portion of long-term debt 488,828 1,425,932
Total current liabilities 18,171,371 17,988,142
LONG-TERM DEBT 5,108,309 9,838,662
DEFERRED REVENUE 2,205,454 1,732,556
DEFERRED INCOME TAXES --- 297,000
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES 817,558 834,662
STOCKHOLDERS' EQUITY:
Common stock 2,257,199 2,243,199
Additional paid-in capital 37,087,206 36,512,206
Accumulated deficit 5,403,069 (2,472,259)
Total stockholders' equity 44,747,474 36,283,146
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $71,050,166 $66,974,168
Company Contact: Nick Carter, President, Secretary and Treasurer
(409) 385-1400
