Arabian American Development Co. Announces Fiscal 2007 Fourth Quarter Financial Results
DALLAS, March 13 /PRNewswire-FirstCall/ -- Arabian American Development Co. (Nasdaq: ARSD) today announced financial results for the quarter and year ended December 31, 2007.
Recent Highlights:
-- Al-Masane Al-Kobra Mining Company (ALAK) joint venture received the
commercial license from the Saudi Arabia Ministry of Commerce, which
enabled the joint venture to contract with construction companies,
prepare for the transfer of mining assets and appoint independent
auditors.
-- The Company's application for listing its common stock on The NASDAQ
Stock Market was approved and began trading under its current stock
symbol, "ARSD", on January 29, 2008. The Company presided over the
closing bell on February 1, 2008 to celebrate its listing on NASDAQ.
-- Received permit from the Texas Commission on Environmental Quality for
Company's South Hampton Resources, Inc. facilities expansion.
Projected start-up date is late May or early June.
-- Formal application to transfer the mining lease to ALAK was filed with
the Saudi Arabia Ministry of Petroleum and Mineral Resources on
February 23, 2008.
Financial Results
Consolidated revenue for the fourth quarter of fiscal 2007 was $29.8 million, an increase of 32.1% compared to revenue of $22.6 million in the fourth quarter last year and a 6.2% sequential increase compared to revenue of $28.0 million in the third quarter of 2007. Refined product sales (predominantly C5 and C6 hydrocarbons and related products) represented $28.5 million, or 95.6%, of total revenue for the fourth quarter 2007 and $21.2 million, or 94.1% of total revenue for the fourth quarter last year. The Company generated $1.3 million in toll processing fees during the fourth quarter 2007 consistent with $1.3 million for the prior year's fourth quarter.
Gross profit on product sales and processing for the fourth quarter was $2.9 million, or 9.7% gross profit margin, compared with gross profit of $3.8 million, or 17.0% gross profit margin for the fourth quarter last year. The decrease in both whole dollars and as a percent of sales is primarily due to a change in the fair value of derivatives for feedstock and fuel gas. The cost of petrochemical product sales and processing and gross profit margin for the three months ended December 31, 2007 and 2006 includes an unrealized gain/(loss) of approximately $(181,000) and $1.6 million respectively, on the derivative agreements.
General and administrative expenses increased 35.8% to $2.1 million from $1.6 million from the fourth quarter last year primarily due to higher labor costs and increased business activity and training of additional personnel associated with the expansion of the South Hampton Resources facility.
The Company reported $492,000 in operating income compared to $2.4 million for the fourth quarter of 2006. The Company reported net income of $576,000, or $0.03 per basic and fully diluted share (based on 22.9 and 23.3 million shares, respectively) compared to net income of $2.0 million, or $.09 per basic and fully diluted share last year (based on 22.9 and 23.2 million shares, respectively) for the fourth quarter 2006.
Nick Carter, Executive Vice President and Chief Operating Officer, of Arabian American, commented, "We achieved a number of major milestones during fiscal year 2007 and subsequent to the year end. Our common stock moved to the NASDAQ Global Select Market and began trading there on January 29, 2008. This gives our common stock greater visibility and liquidity, both of which benefit our shareholders. We then had the honor of presiding at the closing bell of NASDAQ at the end of that first week of trading. In addition, we recently announced that we received the permit from the Texas Commission on Environmental Quality for our facilities' expansion. The permitting process took longer than what we initially anticipated, moving the projected start-up date to late May or early June rather than early second quarter. The new facility is in a "non-attainment" area for air quality; therefore, the permit process took approximately two months longer than expected. The new facility will greatly expand our capacity, which is expected to double revenue and EBITDA opportunities, as well as, open up opportunities globally."
For the year ended December 31, 2007, the Company generated consolidated revenue of $108.7 million, an increase of 10.3% compared to revenue of $98.5 million for the prior period. Gross profit on product sales and processing year to date was $19.8 million, or 18.2% gross profit margin, compared with gross profit of $18.6 million, or 18.9% gross profit margin, for the year-ago period. General and administrative expenses increased 30.4% to $7.6 million from $5.8 million last year. The Company reported $11.1 million in operating income compared to $11.9 million in operating income last year. The Company reported net income of $7.8 million, or $0.34 per basic and $0.33 per diluted share (based on 22.9 and 23.3 million shares, respectively) compared to net income of $7.9 million, or $.35 per basic and $0.34 per diluted share last year (based on 22.9 and 23.0 million shares, respectively) last year.
Mr. Carter continued, "Several significant events also occurred in our ongoing efforts to finalize a joint stock corporation in Saudi Arabia for the Al-Masane Al-Kobra Mining Company (ALAK) joint venture. The joint venture received the commercial license from the Saudi Arabia Ministry of Commerce, which enabled it to contract with construction companies, prepare for transfer mining assets and appoint independent auditors. In addition, the formal application for the transfer of the mining lease to ALAK was filed with the Saudi Arabian Ministry of Petroleum and Mineral Resources on February 23, 2008. The Company believes that the Ministry will approve the transfer promptly since ALAK has agreed to fulfill all the provisions of the mining lease and has demonstrated its financial and technical competence to do so."
The Company completed the quarter with $4.8 million in cash as of December 31, 2007, compared to $2.9 million as of December 31, 2006. Trade receivables increased by $3.4 million to $12.3 million, primarily due to increased sales. The changes in the Balance Sheet accounts are part of the normal ebb and flow of the business and are not considered unusual. Collections on accounts receivable remain timely and the higher balance reflects a return to normal sales levels from the dip at the end of December 2006. The Company had $13.9 million in working capital as of December 31, 2007 and ended the quarter with a current ratio of 2.6 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. Shareholders' Equity increased 17.6% during the quarter to $52.6 million compared to $44.7 million as of December 31, 2006.
Teleconference
Management will conduct a conference call and live webcast at 4:30 p.m. Eastern Time, on Thursday, March 13, 2008. Anyone interested in participating should call 800-762-8795 if calling within the United States or 480-629-1990 if calling internationally. There will be playback available until March 20, 2008. To listen to the playback, please call 800-406-7325 if calling within the United States or 303-590-3030 if calling internationally. Please use pin number 3854561 for the replay. This call is being webcast by ViaVid Broadcasting and can be accessed at ViaVid's website at http://www.viavid.net. The webcast can be accessed until April 13, 2008. To access the webcast, you will need to have the Windows Media Player on your desktop.
About Arabian American Development Company (ARSD):
Arabian American owns and operates a petrochemical facility located in southeast Texas just north of Beaumont, specializing in high purity petrochemical solvents and other solvent type manufacturing. The Company is also the original developer and is now a 50% owner of a joint venture in a mining project in the Al-Masane area of Saudi Arabia which is under construction and is scheduled to be in production in late 2010. The mine 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, 2006 and the Company's subsequent Quarterly Report Forms 10-Q.
Company Contact: Nick Carter, Executive Vice President and Chief
Operating Officer
(409) 385-8300
ncarter@southhamptonrefining.com
Investor Contact: Cameron Donahue or Brett Maas
Hayden Communications
(651) 653-1854
Cameron@haydenir.com
Tables follow
ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31,
2007 2006
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,789,924 $ 2,939,022
Trade Receivables, Net of allowance for
doubtful accounts of $35,000 and
$35,000, respectively 12,310,561 8,893,182
Current portion of notes receivable,
net of discount and deferred gross profit
of $101,620 and $200,492, respectively 609,777 605,955
Financial contracts 206,832 --
Financial contract deposits -- 1,500,000
Prepaid expenses and other assets 648,313 404,228
Inventories 2,887,636 3,576,317
Taxes receivable 1,070,407 619,598
Total current assets 22,523,450 18,538,302
PLANT, PIPELINE, AND EQUIPMENT - AT COST 32,229,709 21,643,903
LESS ACCUMULATED DEPRECIATION (12,463,214) (11,017,503)
PLANT, PIPELINE, AND EQUIPMENT, NET 19,766,495 10,626,400
AL MASANE PROJECT 37,468,080 37,137,022
OTHER INTERESTS IN SAUDI ARABIA 2,431,248 2,431,248
MINERAL PROPERTIES IN THE UNITED STATES 1,084,617 1,084,711
NOTES RECEIVABLE, net of discount of
$70,421 and $172,041, respectively,
net of current portion 935,937 1,545,714
OTHER ASSETS 10,938 226,769
TOTAL ASSETS $84,220,765 $71,590,166
ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - Continued
December 31,
2007 2006
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $4,524,042 $2,989,203
Accrued interest 85,552 59,857
Financial contracts -- 765,672
Accrued liabilities 1,931,822 1,210,054
Accrued liabilities in Saudi Arabia 1,406,801 1,645,257
Notes payable 11,012,000 11,012,500
Current portion of long-term debt 30,573 488,828
Current portion of other liabilities 630,731 584,349
Total current liabilities 19,621,521 18,755,720
LONG-TERM DEBT, net of current portion 9,077,737 5,108,309
POST RETIREMENT BENEFIT 441,500 --
OTHER LIABILITIES, net of current portion 990,375 1,621,105
DEFERRED INCOME TAXES 677,131 540,000
MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES 794,646 817,558
STOCKHOLDERS' EQUITY
Common Stock - authorized 40,000,000 shares
of $.10 par value; issued and outstanding,
22,601,994 and 22,571,994 shares in 2007
and 2006, respectively 2,260,199 2,257,199
Additional Paid-in Capital 37,183,206 37,087,206
Retained Earnings 13,174,450 5,403,069
Total stockholders' equity 52,617,855 44,747,474
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $84,220,765 $71,590,166
ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31,
2007 2006
Revenues
Petrochemical product sales $103,204,565 $93,854,726
Processing fees 5,433,550 4,647,431
108,638,115 98,502,157
Operating costs and expenses
Cost of petrochemical product sales and
processing 88,861,365 79,888,772
Gross Profit 19,776,750 18,613,385
General and administrative expenses
General and administrative 7,619,280 5,842,564
Depreciation 1,074,762 859,059
8,694,042 6,701,623
Operating income 11,082,708 11,911,762
Other income (expense)
Interest income 297,494 276,184
Interest expense (142,696) (704,282)
Minority interest 22,912 17,535
Miscellaneous income (expense) (62,794) 383,545
114,916 (27,018)
Income before income taxes 11,197,624 11,884,744
Income tax expense 3,426,243 4,009,416
Net income $7,771,381 $7,875,328
Basic weighted average net income
per common share $0.34 $0.35
Basic weighted average number
of common shares outstanding 22,895,394 22,804,567
Diluted weighted average net income
per common share $0.33 $0.34
Diluted weighted average number
of common shares outstanding 23,291,669 23,030,573
ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the quarters ended December 31,
2007 2006
Revenues
Petrochemical product sales $28,497,825 $21,219,694
Processing fees 1,298,486 1,342,332
29,796,311 22,562,026
Operating costs and expenses
Cost of petrochemical product sales
and processing 26,892,131 18,729,796
Gross Profit 2,904,180 3,832,230
General and administrative expenses
General and administrative 2,109,538 1,553,379
Depreciation 302,666 (82,453)
2,412,204 1,470,926
Operating income 491,976 2,361,304
Other income (expense)
Interest income 78,198 104,266
Interest expense (26,954) (71,478)
Minority interest 8,883 10,744
Miscellaneous income (expense) (59,438) 184,026
689 227,558
Income before income taxes 492,665 2,588,862
Income tax expense (83,326) 577,149
Net income $575,991 $2,011,713
Basic weighted average net income
per common share $0.03 $0.09
Basic weighted average number
of common shares outstanding 22,901,994 22,871,994
Diluted weighted average net income
per common share $0.03 $0.09
Diluted weighted average number
of common shares outstanding 23,323,532 23,190,750
SOURCE Arabian American Development Co.