Yes. ARCI's biz is seasonal.
Appliance retailing follows general retail seasonality: highest June and Sept Q.
Appliance recycling thru Edison (in SoCal) is strongest in June and Sept Q's. The new L.A. Dept of Water and Power contract for recycling old refrigerators from low income housing renovation projects may offset some Edison seasonality, though.
I've increased my Dec Q estimate to $0.07-0.10 from $0.05, in light of Sept 10-Q. ARCI revealed they made a $74,000 cash payment to settle some litigation with a former employee, and they charged that to SG&A. They also issued 20,000 shares to the plaintiff.
So, without the extra $74,000 SG&A, Sept Q earnings would have been $606,000 on assumed 2,291,000 shares, or $0.26+, instead of $0.22
So, I added $74,000 to Q4 estimate and increased shares, for $0.08.
Who knows, maybe ARCI will do $0.10, putting trailing 3 Q's at $0.11/0.22/0.10 = $0.43. The new L.A. DWP recycling contract and retail consolidation have really pumped up the margins and made ARCI cashflow positive. Sept Q operating cash flow (EBITDA-Earnings Before Interest Taxes Depreciation and Amortization), excluding the one-time $74,000 cash payout from SG&A, was over $900,000...may top $2,500,000 annually next year.
That's over $1.00 in operating cash flow. ARCI could trade for 5+ times that, which is still below $7 per share in revenues, and would be under 10 times earnings next year, which I think will be $0.60-0.70.
This is like LPAC a year ago.
We could easily trade for $4+ right now with those earnings. |
