Appliance Recycling Centers of America, Inc. (NASDAQ:ARCI) Reports Third Quarter 2016 Operating Results, How Will Investors Respond to This Information?

Conduit for utilities and appliance manufacturers to the end customer by recycling, replacing, and selling major household appliances in North America, Appliance Recycling Centers of America, Inc. (NASDAQ:ARCI), releases Q3, 2016 operating results.

Minneapolis, MN, Nov. 21, 2016 (GLOBE NEWSWIRE) — Minneapolis, MN-November 21, 2016–Appliance Recycling Centers of America, Inc. (NASDAQ: ARCI), (the “Company” or “ARCA”), serves as a conduit for utilities and appliance manufacturers to the end customer by recycling, replacing, and selling major household appliances in North America. We are committed to energy efficiency programs and appliances and have been a pioneer in appliance recycling.  On November 15, 2016 we reported profitable results for the third quarter ended October 1, 2016.

ARCA recorded net income of $1.1 million for the quarter ended October 1, 2016 as compared to a net loss of $0.8 million for the quarter ended October 3, 2015.  This represents our first net income since the 2nd Quarter 2015 when the commodity markets were starting to collapse and we faced the loss of some recycling and replacement programs.  For the nine months ended October 1, 2016, we reduced our loss 24% to $1.4 million compared to a loss of $1.9 million for the nine months ended October 3, 2015.  This improvement in operating performance is largely due to the sale of the carbon offset credits, new collection programs, price increases, cost reduction strategies and the continued stabilization of the commodity markets. 

For the three months ended October 1, 2016, net sales declined 2.7% or $0.7 million compared to the three months ended October 3, 2015.  Retail sales declined $1.2 million for the three months ended October 1, 2016 compared to the same period in 2015, reflecting price competition among major big box retailers.  The largest decrease came from our replacement programs which were down $3.4 million as some contracts were delayed or ended.  This was offset by an increase of $2.4 million for collected recycled programs commenced during the quarter.  The number of customers invoiced in our recycling segment for the quarter ended October 1, 2016 was 48 compared to 21 in the three months ended October 3, 2015. Our by-product revenue was up $1.5 million for the three months ended October 1, 2016 compared to the same period in 2015 which was led by $1.7 million payment received from carbon offset credits further reduced by lower scrap prices for the quarter.   

For the nine months ended October 1, 2016 net sales declined 9.8% or $8.3 million compared to the same period ended October 3, 2015.  Retail sales declined $3.0 million for the nine months ended October 1, 2016 compared to the same period in 2015, reflecting price competition among major big box retailers.  Revenues from appliance replacement programs were down $8.4 million due to the loss or delay of contracts, which was offset by a $3.6 million increase in revenue from new collecting programs that we added due to the receivership of our largest competitor. By-product revenue was down $0.5 million for the nine months ended October 1, 2016 compared to the same period in 2015 which reflects the lower price of scrap material which was offset by a net increase of $1.0 in payments from carbon offset credit sales.

“Although we are working to be profitable and improve our net income, we decided to invest in the recycling side of our business since our largest competitor went into receivership in late 2015.  We are investing significantly in new business opportunities.   In addition, we will be investing in our retail to take market share from competitors as our business model gives us a competitive advantage over most big box retailers.   We will be opening new retail stores when we find locations that support our business model,” said Tony Isaac CEO.  

ARCA’s SEC filings are available for review on our website http://www.arcainc.com/investors/

About ARCA

ARCA’s business components are uniquely positioned in the industry to work together to provide a full array of appliance-related services. ARCA’s regional centers process appliances at end of life to remove environmentally damaging substances and produce material byproducts for recycling for utilities in the U.S. and Canada. Eighteen company-owned stores under the name ApplianceSmart, Inc.® sell new appliances directly to consumers and provide affordable ENERGY STAR® options for energy efficiency appliance replacement programs.

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Appliance Recycling Centers of America, Inc. (NASDAQ:ARCI) shares have moved -0.91% on the news thus far today and have traded in the range of $1.01 – 1.18 during the current session. In order to take a look at where the stock might be headed longer term, investors often look to research firms that cover the stock. Sell-side research firms currently have a consensus one-year price target of $4.00 on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.  The sell-side analysts are projecting earnings per share of $0.00 for the next fiscal quarter.  For the current year, analysts are predicting earnings of $-0.26 per share according to First Call.

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In looking at where the stock is trading on a technical level, the stock is trading +12.34% away from its 50-day moving average of $0.97.  Based on the most recent available data, the equity is -39.44% off of its 52-week high of $1.80 and +101.85% away from its 52-week low which is $0.54.

Today, the stock opened at $1.15 and the last bid at the time of writing stood at $1.09.  During the session thus far, the equity dipped down to $1.01 and touched $1.18 as the high point.  Appliance Recycling Centers of America, Inc. (NASDAQ:ARCI) has a market cap of $6.49M and has seen an average daily volume of 29,177 over the past three months.

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