Arabian American Announces Third Quarter and Year-to-Date 2012 Financial Results Year-to-Date Revenues Increased by 25.3% to $172.9 Million Year over Year;

Year-To-Date 2012 Earnings $9.5 Million, Up $5.2 Million From 2011;

Basic Earnings Per Share Of $0.40 Were Reported For 2012, Up $0.22 From 2011;

Sales Volume Increased 32.9% From The First Nine Months Of 2011

SUGAR LAND, Texas, Oct. 30, 2012 /PRNewswire/ -- Arabian American Development Co. (NYSE: ARSD) today announced financial results for the three and nine months ended September 30, 2012.

Third Quarter 2012 Highlights

  • Revenue for the third quarter decreased 11.8% to $54.3 million from $61.5 million in the same period last year and compared sequentially to revenues of $61.8 million reported in the second quarter of 2012.
  • Gross profit for the third quarter was $8.8 million with a 16.2% gross margin, compared to $9.2 million with a 15.0% gross margin in the comparable period in 2011 and compared sequentially to $8.4  million with 13.5% gross margin the second quarter of 2012.
  • EBITDA, a non-GAAP financial measure, for the third quarter decreased 6.6% to $6.4 million as compared to $6.8 million for the same period in 2011 and compared sequentially to $6.5 million in the second quarter of 2012.
  • Net income attributable to Arabian American Development Company for the third quarter was down 10.3% to $3.5 million, or $0.15 per basic and $0.14 per diluted share, compared to net income of approximately $3.9 million, or $0.16 per basic and diluted share, for the third quarter last year and compared sequentially to $3.8 million, or $0.16 per basic and $0.15 per diluted share in the second quarter of 2012.
  • The Company appointed Simon Upfill-Brown to the newly created position of Executive Vice President; an internationally known executive, Mr. Upfill-Brown will be responsible for the South Hampton Resources petrochemical business and expanding current opportunities both domestically and internationally.

Al Masane Al Kobra Mine (AMAK) Update

  • The AMAK zinc and copper mine in Saudi Arabia, which is 37% owned by Arabian American, has produced approximately 425,000 metric tons of ore to date, and is currently averaging 1,500 metric tons per day.
  • The AMAK mill has produced approximately 10,600 dry metric tons of copper concentrate and 13,000 dry metric tons of zinc concentrate to date.
  • The AMAK mill passed the production test of 54,000 metric tons of ore processed and four continuous days of 100% capacity during the month of July.
  • Initial shipment of copper concentrate was loaded and shipped during October, with the next shipment expected in mid-December 2012.  Final signatures on two of the four additional leases in the area surrounding the AMAK mine are expected to be signed after the Eid holiday.

Third Quarter 2012 Financial Results

Revenue for the third quarter decreased 11.8% to $54.3 million from $61.5 million in the same period last year and sequentially compared to $61.8 million reported in second quarter of 2012. Petrochemical product sales represented $53.2 million, or 98.0%, of total revenue for the third quarter of 2012 and $60.1 million, or 97.6%, of total revenue, for the third quarter last year. Petrochemical product sales decreased by 11.5% in the third quarter of 2012 from the third quarter of 2011 due to an decrease in volume of 2.3% and a decrease in the average selling price of 9.4%.  The Company reported $1.1 million in toll processing fees during the third quarter of 2012 compared to $1.5 million for the prior year's third quarter due to one tolling customer having raw material issues.  

During the third quarter of 2012, the cost of sales and processing (including depreciation) decreased 13.0%, to $45.5 million as compared to $52.3 million in the same period in 2011 due to slightly lower volume processed and a decrease in the average feedstock cost per gallon. Average feedstock price per gallon decreased 17.0% from 2011 to 2012 while volume processed decreased 4.6%. Total gross profit on revenue for the third quarter of 2012 decreased approximately $0.4 million, or 4.9%, to $8.8 million as compared to $9.2 million in the same period in 2011 and compared sequentially to $8.4 million in the second quarter of 2012. The cost of sales and processing and gross profit for the three months ended September 30, 2012, includes no gain or loss from derivative transactions. For the same period of 2011, there was a net loss of approximately $0.4 million.

Nick Carter, President and Chief Executive Officer, commented, "We continue to execute our strategic initiatives which include continued supply of quality product and service to existing customers, expanding our geographic footprint, and pursuing and identifying appropriate opportunities for expanding our South Hampton Resources core business.  We are also assisting and supporting the full scale operation of the AMAK mine which includes pursuing the surrounding lease application areas in Saudi Arabia."

Mr. Carter continued, "Year-to-date revenues were up over 25%, gross profit was up by 51% and net income attributable to Arabian American was up almost 119%. Demand for the Company's products continued to be strong in the third quarter both domestically and internationally, and our fundamentals remain solid. However, quarterly revenues decreased due to a slight decrease in volume and the continued decline in the average selling price which began in the spring and continued throughout the summer months. During the quarter, we renewed one three-year contract with an existing Middle Eastern customer and signed an additional contract with a new Middle Eastern customer on a six-month trial basis."

Mr. Carter concluded, "During the quarter the AMAK mine sold its first quantities of zinc and copper concentrate from the mill which is running currently at about 95% capacity and entering the stage of full and routine operation. The permanent facility for storing and loading concentrates at the Port of Jizan is complete and was used for the first shipment. We are extremely pleased with the performance and productivity of the mine and the entire staff that is supporting its ongoing operation."

General and Administrative costs for the third quarter of 2012 increased $0.1 million or 2.7%, to $3.1 million from $3.0 million in the same period last year primarily due primarily to increases in insurance premiums including health, worker's compensation and liability offset by a decrease in officer compensation due to reduced profit sharing distributions.

The Company reported net income attributable to Arabian American Development Company in the third quarter of 2012 of approximately $3.5 million or $0.15 per basic and $0.14 per diluted share (based on 24.1 million basic and 24.8 million diluted weighted average shares outstanding, respectively). This compares to net income attributable to Arabian American Development Company of approximately $3.9 million, or $0.16 per basic and diluted share for the third quarter of 2011 (based on 24.0 million basic and 24.5 million diluted weighted average shares outstanding, respectively) and sequentially to $3.8 million, or $0.16 per basic and $0.15 per diluted share in the second quarter of 2012 (based on 24.1 million basic and 24.8 million diluted weighted average shares outstanding, respectively).

EBITDA for the third quarter of 2012 decreased 6.6% to approximately $6.4 million compared to $6.8 million for the same period in 2011 and compared sequentially to $6.5 million in the second quarter of 2012.

YTD 2012 Financial Results

Consolidated revenue for the nine months ended September 30, 2012 increased 25.3% to $172.9 million compared to revenue of $138.0 million in the same period in 2011 primarily due to an increase in total sales volume of 32.5%. Petrochemical product sales represented $169.7 million or 98.1%, of total revenue for the nine months of 2012 compared to $134.4 million, or 97.4% of total revenue, for the same period last year. The Company generated $3.2 million in toll processing fees, down 10.0%, during the nine months ended September 30, 2012, compared with $3.6 million for the same period last year.

During the nine months ended September 30, 2012, the cost of petrochemical sales and processing (including depreciation) increased approximately $26.8 million, or 21.9%, as compared to the same period in 2011 due to an increase in volume processed of 26.9% because of higher demand and an increase of $1.8 million in realized/unrealized hedging losses offset by a reduction in the LIFO allowance of $0.4 million. Average feedstock price per gallon decreased by 7.3% from 2011 to 2012. 

Total gross profit on revenue for the nine months ended September 30, 2012, increased approximately $8.1 million, or 51.4%, to $23.9 million, as compared to $15.8 million for the same period in 2011. The cost of sales and processing and gross profit for the nine months ended September 30, 2012, includes a net loss of approximately $1.8 million from derivative transactions. For the same period of 2011, the net loss was approximately $109,000.

Year-to-date General and Administrative costs increased $0.6 million or 7.6%, to $8.8 million from $8.1 million in the same period in 2011 due to increases in management and administrative compensation, travel expense, health insurance premiums, Saudi administrative expenses, accounting fees, and liability and property insurance premiums offset by a decrease in post-retirement benefits.

For the nine months ended September 30, 2012, the Company reported net income attributable to Arabian American Development Company of approximately $9.5 million, or $0.40 per basic and $0.38 per diluted share (based on 24.1 million basic and 24.8 million diluted weighted average shares outstanding, respectively), compared to net income of approximately $4.4 million, or $0.18 per basic and diluted share (based on 24.0 million basic and 24.6 million diluted weighted average shares outstanding, respectively) for the year-ago period.

EBITDA for the nine months ended September 30, 2012, was $17.2 million as compared to $9.7 million for the same period in 2011.

The Company completed the quarter with $3.0 million in cash and cash equivalents compared to $6.7 million as of December 31, 2011. Trade receivables decreased by approximately $1.4 million due to a 9.4% decrease in price per gallon and a 2.3% decrease in volume sold during the third quarter. The average collection period remains normal for the business. Inventory increased approximately $0.9 million due to a 10.2% increase in volume partially offset by a 6.0% decrease in cost per gallon.

The Company had $29.1 million in working capital compared to $29.7 million in working capital as of December 31, 2011. It ended the quarter with a current ratio of 3.6 to 1. Shareholders' equity increased to $76.0 million as of September 30, 2012, from $66.0 million as of December 31, 2011.

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, 2011, and the Company's subsequent Quarterly Reports on Form 10-Q.

Company Contact:

Nick Carter, President and Chief Executive Officer



(409) 385-8300



ncarter@arabianamericandev.com





Investor Contact:

Brett Maas

Cameron Donahue


Hayden IR

Hayden IR


(646) 536-7331

(651) 653-1854


brett@haydenir.com 

cameron@haydenir.com

- Tables follow –

 

ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



SEPTEMBER 30,

2012

(unaudited)

DECEMBER 31,

2011

ASSETS

(thousands of dollars)

 Current Assets



  Cash and cash equivalents

$  3,008

$  6,674

  Derivative instruments

--

393

  Trade receivables, net

21,764

23,198

  Advance to AMAK

1,662

120

  Inventories

10,325

9,456

  Prepaid derivative settlement

500

--

  Prepaid expenses and other assets

1,762

561

  Current portion of contractual based intangible assets, net

250

251

  Deferred income taxes

1,257

1,169

          Total current assets

40,528

41,822




  Plant, pipeline and equipment, net

38,881

36,952




  Investment in AMAK

30,884

30,884

  Mineral properties in the United States

588

588

  Contractual based intangible asset, net

167

355

  Other assets

11

11




     TOTAL ASSETS

$ 111,059

$ 110,612

 

LIABILITIES



  Current Liabilities



    Accounts payable

$  6,256

$  5,857

    Accrued interest

99

116

    Current portion of derivative instruments

760

345

    Accrued liabilities

1,514

2,956

    Accrued liabilities in Saudi Arabia

140

140

    Current portion of post-retirement benefit

266

258

    Current portion of long-term debt

1,500

1,500

    Current portion of other liabilities

852

937

          Total current liabilities

11,387

12,109




  Long-term debt, net of current portion

14,689

22,739

  Post-retirement benefit, net of current portion

649

649

  Derivative instruments, net of current portion

662

789

  Other liabilities, net of current portion

659

1,071

  Deferred income taxes

6,719

7,016

     Total liabilities

34,765

44,373




EQUITY



  Common stock‑authorized 40 million shares of $.10 par value; issued and outstanding

      23.8 million and 23.7 million shares in 2012 and 2011,   respectively

2,380

2,373

  Additional paid-in capital

44,569

44,138

  Accumulated other comprehensive loss

(645)

(748)

  Retained earnings

29,701

20,187

  Total Arabian American Development Company Stockholders' Equity

76,005

65,950

  Noncontrolling Interest

289

289

   Total equity

76,294

66,239




     TOTAL LIABILITIES AND EQUITY

$ 111,059

$ 110,612


 

 

ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)



THREE MONTHS ENDED

NINE MONTHS ENDED


SEPTEMBER 30,

SEPTEMBER 30,


2012

2011

2012

2011


(thousands of dollars)

REVENUES





  Petrochemical Product Sales

$ 53,181

$ 60,078

$ 169,681

$ 134,437

  Processing Fees

1,097

1,467

3,240

3,602


54,278

61,545

172,921

138,039






OPERATING COSTS AND EXPENSES





  Cost of  Sales and Processing





    (including depreciation of  $762, $677, $2,236, and $2,049,

       respectively)

45,511

52,329

149,069

122,283






   GROSS PROFIT

8,767

9,216

23,852

15,756






GENERAL AND ADMINISTRATIVE EXPENSES





  General and Administrative

3,122

3,039

8,755

8,135

  Depreciation

126

124

375

356


3,248

3,163

9,130

8,491






OPERATING INCOME

5,519

6,053

14,722

7,265






OTHER INCOME (EXPENSE)





  Interest Income

2

--

2

4

  Interest Expense

(120)

(191)

(435)

(514)

  Losses on Cash Flow Hedge Reclassified from OCI

(90)

(103)

(275)

(316)

  Miscellaneous Income (Expense)

(15)

(10)

(92)

15


(223)

(304)

(800)

(811)






  INCOME BEFORE INCOME TAXES

5,296

5,749

13,922

6,454






  INCOME TAXES

1,764

1,812

4,408

2,101






  NET INCOME

3,532

3,937

9,514

4,353






 NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST

--

--

--

--






 NET INCOME ATTRIBUTABLE TO ARABIAN AMERICAN

  DEVELOPMENT COMPANY

$ 3,532

$ 3,937

$ 9,514

$ 4,353






Basic Earnings per Common Share





  Net Income Attributable to Arabian American Development Company (dollars)

$ 0.15

$ 0.16

$ 0.40

$ 0.18






  Basic Weighted Average Number of Common Shares Outstanding

24,091

23,990

24,073

23,990






Diluted Earnings per Common Share





  Net Income Attributable to Arabian American Development Company (dollars)

$ 0.14

$ 0.16

$ 0.38

$ 0.18






  Diluted Weighted Average Number of Common Shares Outstanding

24,753

24,542

24,759

24,612


 

ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES RECONCILIATION OF

SELECTED GAAP MEASURES TO NON-GAAP MEASURES(1)



THREE MONTHS ENDED

NINE MONTHS ENDED


September 30,

September 30,


2012

2011

2012

2011


(in thousands)

(in thousands)






NET INCOME

$ 3,532

$3,937

$ 9,514

$4,353






Add back:





  Interest

210

294

710

830

 Taxes

1,764

1,812

4,408

2,101

  Depreciation

126

124

375

356

 Depreciation in Cost of sales

762

677

2,236

2,049






EBITDA

$ 6,394

$ 6,844

$ 17,243

$ 9,689

 


09/30/12

12/31/11


(in thousands except ratio)




Current assets

$  40,528

$ 41,822




Current liabilities

11,387

12,109




Working capital

$  29,141

$ 29,713

(current assets less current liabilities)



Current ratio

3.6

3.5

 (current assets divided by current liabilities)



(1) This press release includes non-GAAP measures.  Our non-GAAP measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

SOURCE Arabian American Development Co.




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