Cameron said he's "fully confident" ARCI will be profitable in Q4.
That makes sense. Look at Q2 for an idea of what Q4 can look like:
Q2's $250,000 profit did not include profits from new DWP recycling contract, did not include reduced costs of downsized retail network and greater same store sales.
Also note that Q3 included maybe $100,000 of Y2K costs (since the Q2 10-Q said ARCI had $200,000 left in Y2K costs which must be charged to SG&A according to SEC regs), and a $74,000 cash payout related to litigation settlement (along with 20,000 shares issued).
I think Q4 will be $0.05-0.10 EPS, and if Edison is NOT renewed until 00Q2, then 00Q1 looks like a small loss or B/E vs 99Q1's $0.23 loss.
Thus Q EPS looks like this:
1999
($0.23) 0.11 0.22 0.05-0.10 = 0.15-0.20
Without Y2K exps in Q3/Q4, and one-time payout in Q3:
($0.23) 0.11 0.30 0.10-0.15 = 0.20-0.25 w/o nonrecurring chgs
2000 might look like this:
($0.05) 0.20 0.40 0.15 = 0.70 = $1.6M in profit on 2.291M shrs
If ARCI trades for just 5-7 times EPS, it can hit $3-5, and still be trading for half revenues per share ($16-18M revs going forward, or $7-8 per share)
Looks like it's trading for under 2 times forward EPS now.
The key is to grow retail revenue to such an extent that it smooths out recycling volatility.
Once ARCI gets stock to $3-5 range, they can issue 250,000 shares raising $1M dollars, with only about 10% dilution, raising book value to $1.05 on 2.541M shares ($1.688M + $1M = $2.688M / 2.541M shrs). I'm sure $1M cash would do ARCI a lot of good.
Note that ARCI now has 2.291M diluted shares outstanding after making the 20,000 share payout along with the $74K payout in Q3 related to litigation settlement.
I consider ARCI a lifetime holding, since the growth potential of the company and stock from current levels seems exceptional to me. |
