Quarterly EBITDA Increases 233% to $7.2 Million Year
over Year
Arabian
American Development Co. (Nasdaq: ARSD - News) today announced financial
results for the fourth quarter and full year ended December 31, 2011.
Fourth Quarter
and Full Year 2011 Highlights
- Revenue for the fourth quarter
increased 83.4%
- Revenue for the full year
increased 43.4%
- Gross profit for the fourth
quarter was $10.2 million
- Gross profit for the full year
was $25.9 million
- EBITDA, a non-GAAP financial
measure, for the fourth quarter increased 233% to $7.2 million
- EBITDA for the full year
increased 105.3% to $16.9 million
- Net income attributable to ARSD
for the fourth quarter was up 569% to $4.1 million, or $0.17 per basic and
diluted share
- Net income attributable to ARSD
for the full year was up 213% to $8.4 million or $0.35 per basic and
diluted share
- Shipments of commercial
quantities of a previously announced contract expected to add
approximately $20 million in annual revenue began
- Construction of the
demonstration unit was completed and startup operations commenced -
delivered initial targeted volume of bio-based jet fuel from unit
Subsequent to Fourth Quarter End
- Signed a two year contract
extension with an existing Fortune 500 customer effective January 1, 2012
- Accompanied a group of
investors to the AMAK (Al Masane Al Kobra Mining Company) mine in February 2012 to review
operations and meet with key Saudi investors and mine personnel.
Al Masane Al Kobra Mine Update
- The AMAK mine in Saudi Arabia,
which is 37% owned by Arabian American, was officially transferred to the
surface facility operator, China National Geological & Mining
Corporation and officially began operations on November 28, 2011, after
successfully completing construction.
- Ocean Partners was appointed as
the exclusive sales and marketing agent to handle logistics and marketing.
- Initial concentrate production
began at the mine and will be sold on a spot basis for the first several
months possibly moving toward establishing longer term contracts in the
future. Interested parties will be informed once sufficient concentrates
are available to fulfill a spot sale.
- The start up
of AMAK's ore processing mill is underway and has produced approximately
500 metric tons of ore to date. Typical
adjustments and modifications are being made as needed.
Fourth Quarter
2011 Financial Results
Revenue for
the fourth quarter increased 83.4% to $61.5 million from $33.5 million in the
same period last year and was comparable sequentially to the record quarterly
results of $61.5 million reported in third quarter of 2011. Revenue increased
during the fourth quarter of 2011 from 2010 due to an increase in average
selling price of 13.8% and volume of 63.3%. Petrochemical product sales
(predominantly C5 and C6 hydrocarbons and related products) represented $60.2
million, or 97.9%, of total revenue for the fourth quarter of 2011 and $32.4
million, or 96.6%, of total revenue, for the fourth quarter last year. Petrochemical product sales increased by 85.8% from the fourth
quarter of 2010 to the fourth quarter of 2011. The Company reported $1.3
million in toll processing fees during the fourth quarter of 2011 up 14.8%
compared to $1.1 million for the prior year's fourth quarter due to an increase
in run volumes by one of the tolling customers.
During the
fourth quarter of 2011, the cost of petrochemical sales and processing
(including depreciation) increased approximately $22.1 million, or 75.9%, to
$51.3 million as compared to $29.2 million in the same period in 2010 due to
higher feedstock prices and volume processed. Average
feedstock price per gallon increased 20.9% from 2010 to 2011 while volume
processed increased 66.8%. Gross profit on revenue for the fourth quarter of
2011 increased approximately $5.8 million, or 133.4%, to $10.2 million as
compared to $4..4 million in the same period in 2010
and compared sequentially to $9.2 million in the third quarter of 2011. The
cost of petrochemical product sales and processing and gross profit for the
three months ended December 31, 2011 includes a net gain of approximately
$512,000 from derivative transactions. For the same period of 2010, there was a
net gain of approximately $179,000.
Nick Carter,
President and Chief Executive Officer, commented, "Our strong fourth
quarter revenue gains reflect our increased volume levels which we indicated on
our third quarter conference call. We have established a new base
supported by both retention and expansion within our existing customer base and
new contracts and applications for our products. As a result, full year
revenues increased to a record $199.5 million. We are seeing the success of our
strategy to increase volumes due to our facility expansion in 2008 which has
allowed us to increase revenues and expand margins with a more diverse product
mix including capturing more business in emerging technologies. We are also
leveraging our operating infrastructure more efficiently as the increased
volume decreases the per unit operating costs."
Mr. Carter
continued, "Recently, we signed a new contract with an existing customer
that is expected to generate $10.4 million in annual revenue for 2012. The
pricing structure for this contract extension was changed to a formula basis to
create additional margin stability. Over the course of 2011, we successfully
moved some of our existing and added new customers to this pricing formula.
This has reduced margin volatility and stabilized gross profits. In addition,
we began shipping commercial quantities of product to a customer that will add
approximately $20 million to annual revenues. We also began shipping test
product for Gevo from our demonstration plant. Both
of these involve product being used in emerging technologies."
General and
Administrative costs for the fourth quarter of 2011 increased $941,000, or
34.8%, to $3.6 million from $2.7 million in the same period last year primarily
due to increases in officer and administrative compensation, travel expense,
group health insurance premium, investor relations' expenses, and
administrative expenses in Saudi Arabia. These increases were offset by
decreases in directors' fees, post retirement
expense, legal fees, consulting fees and accounting fees.
The Company
reported net income attributable to Arabian American Development Company in the
fourth quarter of 2011 of approximately $4.1 million or $0.17 per basic and
diluted share (based on 24.0 million basic and 24.5 million diluted weighted
average shares outstanding, respectively). This compares to net income
attributable to Arabian American Development Company of approximately $610,000,
or $0.03 per basic and diluted share for the fourth quarter of 2010 (based on
23.9 million basic and diluted weighted average shares outstanding,
respectively). This compare sequentially to $3.9 million, or
$0.16 per basic and diluted share in the third quarter of 2011.
The Company
reported EBITDA for the fourth quarter of 2011 up 233% to approximately $7.2
million compared to $2.2 million for the same period in 2010 and compared
sequentially to $6..8 million in the third quarter of
2011.
Full Year 2011
Financial Results
Consolidated revenue
for the full year ended December 31, 2011, increased 43.4% to a record $199.5
million compared to revenue of $139.1 million in the same period in 2010
primarily due to an increase in the average selling price of 24.7% and total
sales volume of 16.1%. Petrochemical product sales represented $194.6 million
or 97.5%, of total revenue for the full year of 2011 compared to $133.6
million, or 96.0% of total revenue, for the same period last year. There were
no transloading sales for the full year ended December
31, 2011 compared to $854,000 in the same period last year. The Company
generated $4.9 million in toll processing fees, up 4.7%, during the full year
ended December 31, 2011, compared with $4.7 million for the same period last
year.
During the
full year ended December 31, 2011, the cost of petrochemical sales and
processing (including depreciation) increased approximately $51.7 million, or
42.4%, as compared to the same period in 2010 due to higher feedstock prices
and a 17.7% increase in gallons processed. Average feedstock price per
gallon increased 30.7% from 2010 to 2011.
Total gross
profit on revenue for the full year ended December 31, 2011, increased
approximately $8.7 million, or 50.5%, to $25.9 million, as compared to $17.2
million for the same period in 2010. The cost of petrochemical product sales
and processing and gross profit for the full year ended December 31, 2011,
includes a net gain of approximately $403,000 from derivative transactions.
For the same period of 2010, the net gain was approximately $205,000.
Year-to-date
General and Administrative costs increased approximately $847,000, or 7.8%, to
$11.8 million from $10.9 million in the same period in 2010.
For the full
year ended December 31, 2011, the Company reported net income attributable to
Arabian American Development of approximately $8.4 million, or $0.35 per basic
and diluted share (based on 24.0 million basic and 24.3 million diluted
weighted average shares outstanding, respectively), compared to net income of
approximately $2.7 million, or $0.11 per basic and diluted share (based on 23.8
million basic and diluted weighted average shares outstanding) for the year-ago
period.
EBITDA for the
full year ended December 31, 2011, was $16.9 million as compared to $8.2
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 $12.0
million, 107%, to $23.2 million compared to $11.2 million at December 31, 2010,
due to an increase in the average selling price per gallon and an increase in
volume sold.
The average
collection period remains normal for the business. Inventory increased
approximately $3.5 million (due to a 17.7% increase in volume and a 30.7%
increase in cost per gallon).
The Company
had $29.7 million in working capital compared to $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 $65.9 million as of December 31,
2011, from $56.6 million as of December 31, 2010.
Mr. Carter
concluded, "Subsequent to the year end, we took a small group of investors
to Saudi Arabia for a first-hand look at the AMAK mining operation as it moves
further into commericialization. I am delighted to
say that the outcome of this visit for them was a more thorough understanding
of the potential of the joint venture as they had an opportunity to meet with
key Saudi investors and the operations staff. Operationally, the AMAK
staff continues to make progress on the startup issues which have arisen, and
we remain confident that full production will develop as we move through the
process. We've not had any issues arise which would not be typical for a
startup situation."
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 AMAK, a Saudi Arabian joint stock mining company.
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.