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Appliance Recycling Centers of America I Reports Operating Results (10-Q)

August 10, 2012 | About:
10qk

10qk

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Appliance Recycling Centers of America I (ARCI) filed Quarterly Report for the period ended 2012-06-30.

Appliance Recycling Centers Of America has a market cap of $23 million; its shares were traded at around $3.25 with a P/E ratio of 6.5 and P/S ratio of 0.2.

Highlight of Business Operations:

Our total revenues of $29.3 million for the second quarter of 2012 decreased $3.6 million or 11% from $32.9 million in the second quarter of 2011. Retail segment revenues increased $0.5 million or 2% to $19.3 million compared to $18.8 million in the second quarter of 2012. The increase was primarily related to revenues generated by our St. Cloud, Minnesota store that was not operating in the second quarter of 2011. Recycling segment revenues decreased $4.1 million or 29% to $10.0 million compared to $14.1 million in the second quarter of 2011. The decrease in recycling segment revenues is attributed primarily to 26% decline in our energy efficiency program volumes, which had an impact on fees charged and byproduct materials sold. Also the second quarter of 2011 benefited from replacing and recycling over 3,000 additional refrigerators through a replacement contract in California that was not repeated this year.

Selling, General and Administrative Expenses. Our selling, general and administrative (SG&A) expenses for the second quarter of 2012 increased $0.4 million to $7.8 million compared to $7.4 million for the same period of the prior year. Our SG&A expenses as a percentage of total revenues increased to 27% in the second quarter of 2012 compared to 23% in the second quarter of 2011. Selling expenses increased $0.4 million to $5.0 million or 17% of total revenues in the second quarter of 2012 compared to $4.6 million or 14% of total revenues for the second quarter of 2011. The increase in selling expenses was due primarily to additional expenses as a result of new stores not open in the second quarter of 2011. General and administrative expenses of $2.8 million for the second quarter of 2012 were flat compared to the second quarter of the prior year. However, general and administrative expenses in the second quarter of 2012 included over $100,000 in expenses related to opening a new recycling center in Louisville for GE business, a new retail store in Minnesota and additional call center expenses related to implementing new programs and technology.

Our total revenues of $58.8 million for the six months ended June 30, 2012 decreased $4.0 million or 6% compared to $62.8 million for the six months ended July 2, 2011. Retail segment revenues accounted for 67% of total revenues for the six months ended June 30, 2012 compared to 61% in same period of 2011. Recycling segment revenues and retail segment revenues each include a portion of byproduct revenues. Retail segment revenues of $39.4 million for the six months ended June 30, 2012 increased $1.0 million or 2% compared to $38.4 million in the same period of 2011. The increase was primarily related to revenues generated by our St. Cloud, Minnesota store that was not operating in the six months ended July 2, 2011. Recycling segment revenues of $19.4 million for the six months ended June 30, 2012 decreased $5.0 million or 20% compared to $24.4 million in the same period of 2011. The decrease in recycling segment revenues is attributed primarily to 25% decline in our energy efficiency program and replacement program volumes, which had an impact on fees charged and byproduct materials sold. Also the second quarter of 2011 benefited from replacing and recycling over 3,000 additional refrigerators through a replacement contract in California that was not repeated this year.

Recycling Revenues. Our recycling revenues of $11.4 million for the six months ended June 30, 2012 decreased $3.9 million or 26% compared to $15.3 million in the same period of 2011. Appliance recycling revenues decreased 25% to $6.4 million for the six months ended June 30, 2012 compared to $8.6 million in the same period of 2011, due primarily to a 25% decline in energy efficiency program volumes. Replacement program revenues decreased 27% to $5.0 million for the six months ended June 30, 2012 compared to $6.7 million in the same period of 2011. The replacement program units were down 3,250 units for the six months ended June 30, 2012 compared to the same period of the prior year. The six month period ending July 2, 2011 benefited from replacing and recycling over 3,000 additional refrigerators representing approximately $1.5 million in revenues that was not repeated in the same period of 2012.

Selling, General and Administrative Expenses. Our selling, general and administrative (SG&A) expenses of $15.3 million for the six months ended June 30, 2012 increased $0.4 million or 3% compared to $14.9 million for the six months ended July 2, 2011. Our SG&A expenses as a percentage of total revenues increased to 26% for the six months ended June 30, 2012 compared to 24% in the same period of 2011. Selling expenses of $9.7 million for the six months ended June 30, 2012 increased 3% or $0.2 million compared to $9.5 million in the same period of 2011. The increase in selling expenses was due primarily to additional expenses to operate new retail stores and partially offset by a reduction in advertising expenses. General and administrative expenses of $5.6 million for the six months ended June 30, 2012 increased 3% or $0.2 million compared to $5.4 million in the same period of 2011. General and administrative expenses for the six month period ended June 30, 2012 included over $250,000 in expenses related to opening a new recycling center in Louisville for GE business, a new retail store in Minnesota and additional call center expenses related to implementing new programs and technology.

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