Okay, things look good. L.A. Dept of Water and Power contract started in June Q, Edison contract started in April, and retail sales were up 25% even with a 33% reduction in stores, and same store sales for 7 of 8 stores open in 98Q1 were up over 90%...Wow.
Q1 gross margin was 33% vs 24%?, ON LOWER REVENUES. SGA way down to $1.2M per Q.
So, since retail is really kicking ass with those Whirlpool scratch and dent units, and recycling should return to $1.5M+ per Q for a while, we should be profitable, and generate some cash consistently going forward.
My Q2 prediction (1000's):
Revenues: $3,500
Gr Profit:$1,400 40% margin
SG&A: ($1,200)
Op Income:$200
Int Exp: ($200)
Net Inc: ----
Operating cash flow (EBITDA): $100+
If ARCI does $4M in revs:
Revenues: $4,000
Gr Profit:$1,600+ 40%+ margin
SG&A: ($1,200)
Op Income: $400+
Int Exp: ($200)
Net Inc: $200+
Operating cash flow (EBITDA) $300+
EPS $0.07+
Diluted Shares 3M
Retail is now major revenue source, and is smoothing out overall revenue growth even as recycling continues to be volatile. In a few more quarters, retail will likely be approaching $2.5M per quarter, maybe $3M next year, and recycling will no longer screw earnings as much from Q to Q.
With $4 per share in revenues, and only 3M diluted shares outstanding, a measly $300,000 in Q profits in near future will put annualized EPS at $0.40...so shares might return to $4 within a year, closer to their price a year ago, when outlook looked weaker than now.
...so you might want to accumulate ARCI near $0.75. That's a BK price, but there's no way ARCI is in trouble now. They can continue servicing their debt, and as earnings/cash flow come around in a quarter or two, and stock rises within 12 months, they can renegotiate their loans, and later do a private placement with modest dilution.
This looks like LPAC under $1 a year ago. BK price. Look at it now: $6, heading to $10.
GO ARCI!!! |
