DALLAS, March 9, 2011 /PRNewswire/ -- Arabian American Development Co. (Nasdaq:ARSD - News) today announced financial results for the fourth quarter and full year period ended December 31, 2010.

Financial Highlights

• 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.

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,  2009, and the Company's subsequent Quarterly Reports on Form 10-Q.