Arabian American Announces
Second Quarter 2011 Financial Results
Quarterly Revenues Increase by
17.0% to $42.7 Million Year over Year and Sequentially by 26.6% from Q1 201
American Development Co. (Nasdaq:ARSD
�- News) today announced
financial results for the second quarter and six months ended June 30, 2011.
Second Quarter 2011 Highlights
- Revenue for the second
quarter increased 17.0% to $42.7 million
from $36.5
million in the same period last year and increased
sequentially by 26.6% from $33.8 million
in first quarter of 2011.
- Gross profit for the second
quarter of 2011 was $3.2 million compared to $3.7
million in the comparable period in 2010.
- EBITDA, a non-GAAP
financial measure, for the second quarter of 2011 increased 40% to $1.4
million as compared to $1.0 million
for the same period in 2010.
- Net income attributable to
Arabian American Development Company for the second quarter was
approximately $159,000,
or $0.01
per basic and diluted share, compared to net income of approximately $2,000,
or $0.00
per basic and diluted share, for the second quarter last year.
- Arabian American
Development's South Hampton Resources subsidiary announced plans to
build a renewable hydrocarbon processing demonstration plant in
collaboration with Gevo, Inc. and will
provide Gevo with toll-processing services
necessary to process up to 10,000 gallons of Gevo's
isobutanol per month into a variety of
renewable hydrocarbon materials.
Al Masane Al Kobra (AMAK) Mine Update
- Subsequent to the end of
the second quarter, The Arab Mining Company (ARMICO) invested US $37.3
million for 10% ownership in the AMAK mine; the capital
provides the remaining financing to commence full production in early
2012; at the same time, a Saudi Deputy Minister for Petroleum and
Minerals joins the AMAK Board; election increases the total number of
board members to nine.
- Announced a three-year, $79
million contract with China National Geological &
Mining Corporation for the operation, management and maintenance of
the surface works of the AMAK mine.
- Announced that the AMAK
mining operation has entered into an agreement with Walid S. Bugshan &
Partners Co. Ltd. (Metafco), for the design,
supply and construction of a seaport storage facility in Jizan, Saudi Arabia.
Second Quarter 2011 Financial Results
Revenue for the second quarter increased 17.0% to $42.7 million
from $36.5
million in the same period last year and increased
sequentially by 26.6% from $33.8 million in first quarter of 2011.
This was primarily due to increases in average selling prices of 31.9%.
Petrochemical product sales (predominantly C5 and C6 hydrocarbons and
related products) represented $41.6 million, or 97.3%, of total
revenue for the second quarter of 2011 and $35.4 million, or 96..8%, of total revenue, for the second quarter last
year. The Company reported $1.2 million in toll processing fees
during the second quarter of 2011 flat with $1.2 million for the
prior year's second quarter which reflects the stability of the toll
processing market. Sales volume of petrochemical products decreased by
10.9% from the second quarter of 2010; however, sales revenue from
petrochemical products increased by 17.5% quarter over quarter.
During the second quarter of 2011, the cost of petrochemical sales
and processing (including depreciation) increased approximately $6.7 million,
or 20.3%, to $39.5
million as compared to $32.8 million in the
same period in 2010 primarily due to the higher cost of feedstock. Total
gross profit on revenue for the second quarter of 2011 decreased
approximately $469,000,
or 12.6%, to $3.2
million as compared to $3.7 million the
same period in 2010. The cost of petrochemical product sales and processing
and gross profit for the three months ended June 30, 2011
includes a net gain of approximately $40,000 from
derivative transactions. For the same period of 2010, there was a net loss
of approximately $841,000.
Nick Carter, President and Chief Executive Officer, commented, "The price
increases we initiated in March, April and May had a positive effect on our
revenues in the second quarter although year over year volume was down and
did not rebound as much as anticipated. During the second quarter our
monthly volume averaged 3,200 bpd due to the weaker than expected demand
although we did see a 10.3% sequential volume increase and that positive
trend has continued into the third quarter. To date, we have averaged
4,000 bpd in Q3 and are currently running at 4,900 bpd. We currently
have approximately 50% of our business on a contract basis using the prior
months average feedstock price. When prices are rising steeply,
formula prices keep us in the game but slightly behind; however we will
benefit if feedstock price pulls back. Average feedstock prices
increased by 16.6% from Q1 to Q2 and we have recently announced our third
price increase since the end of the first quarter for August for our
customers not on contract based pricing."
Mr. Carter continued, "We are very excited about the contract
we signed subsequent to our quarter end to build a renewable hydrocarbon
processing demonstration plant in collaboration with Gevo,
a leading renewable chemicals and advanced biofuels company. The new
processing facility will continue to expand our capabilities into the
renewable energy market, and we will be able to contribute our processing
expertise with their innovative technology. We look for this to be a
long-term, positive collaboration that will ultimately expand our
toll-processing opportunities."
General and Administrative costs for the second quarter of 2011
decreased $482,000,
or 15.7%, to $2.6
million from $3.1 million in the same period last
year primarily due to lower consulting fees, directors' fees, post
retirement expense, and legal fees and accounting fees offset by increases
in officer compensation, health insurance premiums and Saudi administrative
expenses.
The Company reported net income attributable to Arabian American
Development Company in the second quarter of 2011 of approximately $159,000
or $0.01
per basic and diluted share (based on 24.0 million basic and 24.6 million
diluted weighted average shares outstanding, respectively). This compares
to net income attributable to Arabian American Development Company of
approximately $2,000,
or $0.00
per basic and diluted share for the second quarter of 2010 (based on 23.8
million basic and diluted weighted average shares outstanding).
The Company reported EBITDA for the second quarter of 2011 of
approximately $1.4
million compared to $1.0 million for the
same period in 2010.
YTD 2011 Financial Results
Consolidated revenue for the six months ended June 30, 2011
increased 11.6% to $76.5
million compared to revenue of $68.5 million in the
same period in 2010 primarily due to increases in average selling prices of
27.1% offset by a decrease in total sales volume of 11.7%. Petrochemical
product sales represented $74.4 million or 97.2%, of total
revenue year-to-date in 2011 compared to $65.6 million, or
95.7% of total revenue, for the same period last year. The Company
generated $2.1
million in toll processing fees, down 6.0%, during the six
months ended June
30, 2011 compared with $2.3 million for the
same period last year due to a decrease in run volumes by one of the
tolling customers.
During the six months ended June 30, 2011, the
cost of petrochemical sales and processing (including depreciation)
increased approximately $8.9
million, or 14.5%, as compared to the same period in 2010.
Consequently, total gross profit on revenue for the six months ended June 30
of 2011 decreased approximately $904,000 or 12.1%,
to $6.5
million, as compared to $7.4 million for the
same period in 2010. The cost of petrochemical product sales and processing
and gross profit for the six months ended June 30, 2011,
includes a net gain of approximately $284,000 from
derivative transactions. For the same period of 2010, the net loss
was approximately $264,000.
Year-to-date General and Administrative costs decreased
approximately $603,000,
or 10.6%, to $5.1
million from $5.7 million in the same period in 2010
primarily due to decreased consulting fees, directors' fees, post retirement benefits, and legal fees offset by
increases in officer compensation, cost of living adjustments, health
insurance premiums and property taxes.
For the six months ended June 30, 2011, net
income attributable to Arabian American Development was approximately $416,000,
or $0.02
per basic and diluted share (based on 24.0 million basic and 24.6 million
diluted weighted average shares outstanding, respectively), compared to net
income of approximately $406,000,
or $0.02
per basic and diluted share (based on 23.7 million basic and diluted
weighted average shares outstanding) for the year-ago period.
EBITDA for the six months ended June 30, 2011, was $2.9 million
as compared to $2.6
million for the same period in 2010.
The Company completed the quarter with $6.7 million in cash
and cash equivalents compared to $7.6 million as of December 31,
2010. Trade receivables increased by $5.7 million, 51%,
to $16.9
million compared to $11..2
million at December 31, 2010 due to foreign sales
with longer payment terms and an increase in the average selling price per
gallon in the second quarter. The average collection period remains normal
for the business. Inventory increased approximately $245,000 due to a
5.5% decrease in volume offset by a 23.2% increase in cost per gallon.
The Company had $21.8
million in working capital compared to $19.0 million in
working capital as of December
31, 2010. It ended the quarter with a current ratio of 3.1 to
1. Shareholders' equity increased to $57.4 million as of June 30, 2011,
from $56.6
million as of December 31, 2010.
Mr. Carter concluded, "We made great progress with the AMAK
mining operation. ARMICO's cash infusion not only provides the financial
wherewithal necessary for the mine to start full production in early 2012
but also provides technical expertise and high-profile credibility as well.
In addition, the AMAK Board will benefit from the appointment of Saudi
Deputy Minister for Petroleum and Minerals, Mr. Sultan Al-Shawli,
due to his knowledge, expertise and many relationships within the region.
The contract with China National Geological & Mining Corporation for
the operation, management and maintenance of the surface works mine and the
agreement with Walid S. Bugshan
& Partners Co. Ltd. (Metafco), for the
design, supply and construction of a seaport storage facility in Jizan, Saudi Arabia are other important
milestones that bring the mine closer to full production and delivery
status. We anticipate the start of operating cash flows assuming successful
operational testing of the mill beginning in 2012."
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
37% owner of Al-Masane Al-Kobra
Mining Company (AMAK), a Saudi Arabian joint stock company which is in the
final stages of development in Najran Province of
southwestern Saudi
Arabia. The mine is scheduled to be in production in early
2012 and will produce economic quantities of copper, zinc, 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, 2010, and the Company's subsequent Quarterly
Reports on Form 10-Q.
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