Appliance Recycling Centers of America (Nasdaq: ARCI) reported that for the third quarter, sales increased 32% to $27.3 million from the same quarter in 2006. ARCA reported net income of $1.4 million or $0.31 per diluted share for the period, a significant improvement from net income of $21,000 (no per share earnings) in the third quarter of 2006.
Same-store sales of the 13 ApplianceSmart factory outlets that were open during the complete third quarters of 2007 and 2006 declined 2%, while total retail sales rose 4% to $17,561,000 on a year-over-year basis, reflecting the impact of two additional factory outlets in the Atlanta market that were opened during the past year. Third quarter recycling revenues increased to $9,035,000 from $3,407,000 in the comparable period of 2006.
Edward R. (Jack) Cameron, president and chief executive officer, commented: “As evidenced by the modest decline in same-store sales of our ApplianceSmart operation, the primary focus of our retail business on the replacement appliance market has helped moderate the impact of the ongoing slowdown in the nation’s residential construction sector. ApplianceSmart is also benefiting from the improved operating efficiencies that have been achieved by strengthening inventory management and implementing other new business systems. We closed our small factory outlet in Compton, California, in October to enable this facility to better focus on its appliance recycling operation. In November, we plan to open another ApplianceSmart factory outlet in the Columbus, Ohio, market, which will be our fifteenth nationally.”
He continued: “During this period, ARCA’s recycling operation benefited from two previously reported programs that commenced in this year’s second quarter. Under the expansion of our recycling contract with the Southern California Public Power Authority to include the Los Angeles Department of Water and Power that started in late April, we expect to replace and recycle 50,000 old, inefficient refrigerators owned by low-income residents in Los Angeles. This program is expected to run through mid-2008.
In addition, ARCA’s Canadian subsidiary, ARCA Canada Inc., received a three-year appliance recycling contract in June with the Ontario Power Authority to recycle up to 400,000 older but working refrigerators, freezers and room air conditioners. We believe these new recycling programs signal heightening interest in demand-side energy conservation programs by utility companies and government agencies. Our other recycling operations in California, Wisconsin and Texas performed at planned levels in the third quarter.”
About ARCA
ARCA is one of the nation’s largest recyclers of major household appliances for the energy conservation programs of electric utilities. Through its ApplianceSmart operation, ARCA also is one of the nation’s leading retailers of special-buy household appliances, primarily those manufactured by Maytag, GE, Frigidaire and Whirlpool. These special-buy appliances, which include close-outs, factory overruns and scratch-and-dent units, typically are not integrated into the manufacturer’s normal distribution channel. ApplianceSmart sells these virtually new appliances at a discount to full retail, offers a 100% money-back guarantee and provides warranties on parts and labor.
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