Date: March 16, 2007
Source: Advanced Environmental Recycling Technologies, Inc.
Advanced Environmental Recycling Technologies, Inc. (NASDAQ: AERT) today announced that net sales for the year ended December 31, 2006 were $97.8 million, an increase of 12% over net sales of $87.3 million for 2005.
For the year ended December 31, 2006, net income was $1.8 million, or $0.04 per fully diluted share, versus $7.8 million, or $0.19 per fully diluted share, for the year ended December 31, 2005. Income before extraordinary item and taxes was $968,000 in 2006, down from $3.3 million in 2005. Net income for the fiscal year and fourth quarter of 2006 and 2005 includes tax benefits of $836,000 and $4,450,000, respectively.
Net sales for the three months ended December 31, 2006 were $21.3 million compared to $23.3 million for the comparable period in 2005, an 8.8% decrease. Net loss in the fourth quarter of 2006 was $519,000, or $0.01 per fully diluted share, compared to net income of $4.56 million, or $0.11 per fully diluted share, for the similar period in 2005.
Please join the Company’s earnings conference call at 4:00 p.m. ET on Tuesday, March 20, 2007. The event will be a live web cast available at the AERT Company web site at www.aertinc.com or at www.earnings.com.
About AERT:
Since 1989, AERT has pioneered the use of recycled polyethylene plastic in the manufacture of composite building materials. With its constantly evolving portfolio of patented and proprietary recycling technologies, AERT has been widely recognized as a leader in resource conservation innovation, receiving the EPA Award for Environmental Excellence for its process of converting scrap plastic to composite outdoor decking. AERT converts reclaimed plastic and wood fiber waste into quality outdoor decking systems, fence systems, and door and window components. AERT operates manufacturing facilities in Springdale, Lowell, and Tontitown, Arkansas; Junction, Texas; and Alexandria, Louisiana. The Company's products are sold across North America. For more information, visit www.aertinc.com.
| ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC. | |||||
| Balance Sheets | |||||
| ASSETS | |||||
| December 31, 2006 |
December 31, 2005 |
||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 2,164,532 | $ | 1,748,023 | |
| Restricted cash | 787,191 | 668,344 | |||
| Trade accounts receivable, net of allowance of $374,894 at December 31, 2006 and $420,319 at December 31, 2005 | |||||
| 3,789,302 | 2,865,386 | ||||
| Other accounts receivable | 760,970 | 128,315 | |||
| Inventories | 14,515,845 | 9,748,743 | |||
| Prepaid expenses | 1,018,657 | 706,301 | |||
| Deferred tax asset | 1,163,017 | 2,036,962 | |||
| Total current assets | 24,199,514 | 17,902,074 | |||
| Land, buildings and equipment: | |||||
| Land | 1,988,638 | 1,986,033 | |||
| Buildings and leasehold improvements | 5,979,223 | 5,717,054 | |||
| Machinery and equipment | 39,475,682 | 35,647,614 | |||
| Transportation equipment | 1,243,556 | 970,204 | |||
| Office equipment | 801,231 | 770,803 | |||
| Construction in progress | 14,762,153 | 8,997,223 | |||
| 64,250,483 |
54,088,931 |
||||
| Less accumulated depreciation | 26,728,540 | 23,002,809 | |||
| Net land, buildings and equipment | 37,521,943 | 31,086,122 | |||
| Other assets: | |||||
| Deferred tax asset | 4,293,912 | 2,597,920 | |||
| Debt issuance costs, net of accumulated amortization of $790,532 at December 31, 2006 and $549,256 at December 31, 2005 | |||||
| 2,814,390 | 3,055,666 | ||||
| Debt service reserve fund | 2,040,000 | 2,110,881 | |||
| Restricted certificate of deposit | 829,961 | - | |||
| Other assets, net of accumulated amortization of $392,736 at December 31, 2006 and $364,163 at December 31, 2005 | |||||
| 350,246 | 200,010 | ||||
| Total other assets | 10,328,509 | 7,964,477 | |||
| Total assets | $ | 72,049,966 | $ | 56,952,673 | |
Read the notes in the Form 10-K which are an integral part of these financial statements.
| ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC. | |||||
| Balance Sheets | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
|
|
December 31,
2006 |
December 31,
2005 |
|||
| Current liabilities: | |||||
| Accounts payable – trade | $ | 10,861,648 | $ | 10,508,451 | |
| Accounts payable – related parties | 494,831 | 3,006,306 | |||
| Current maturities of long-term debt | 1,673,612 | 938,704 | |||
| Accrued payroll expense | 575,782 | 668,485 | |||
| Litigation loss payable | 655,769 | 655,769 | |||
| Other accrued liabilities | 1,933,821 | 1,712,217 | |||
| Line of credit | 10,060,000 | - | |||
| Notes payable – related parties | 1,000,000 | 746,775 | |||
| Notes payable – other | 410,181 | 352,406 | |||
| Total current liabilities | 27,665,644 | 18,589,113 | |||
| Long-term debt, less current maturities | 16,827,717 | 17,010,889 | |||
| Accrued premium on convertible preferred stock | - | 235,367 | |||
| Commitments and contingencies | |||||
| Stockholders' equity: | |||||
| Class A common stock, $.01 par value; 75,000,000 shares authorized; 43,041,164 and 37,651,369 shares issued and outstanding at December 31, 2006 and 2005, respectively | |||||
| 430,412 | 376,514 | ||||
| Class B convertible common stock, $.01 par value; 7,500,000 shares authorized; 1,465,530 shares issued and outstanding at December 31, 2006 and 2005 | |||||
| 14,655 | 14,655 | ||||
| Warrants outstanding; 4,606,132 at December 31, 2006 and 9,176,242 at December 31, 2005 | |||||
| 2,519,389 | 4,489,419 | ||||
| Additional paid-in capital | 37,891,274 | 31,340,363 | |||
| Accumulated deficit | (13,299,125) | (15,103,647) | |||
| Total stockholders' equity | 27,556,605 | 21,117,304 | |||
| Total liabilities and stockholders' equity | $ | 72,049,966 | $ | 56,952,673 | |
Read the notes in the Form 10-K which are an integral part of these financial statements.
| ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC. | ||||||||
| STATEMENTS OF OPERATIONS | ||||||||
|
|
Year Ended December 31, | |||||||
| 2006 | 2005 | 2004 | ||||||
| Net sales | $ | 97,840,126 | $ | 87,312,560 | $ | 63,637,285 | ||
| Cost of goods sold | 77,594,965 | 66,389,964 | 48,963,166 | |||||
| Gross margin | 20,245,161 | 20,922,596 | 14,674,119 | |||||
| Selling and administrative costs | 16,407,400 | 14,595,854 | 11,099,911 | |||||
| Research and development | 285,858 | 110,134 | 97,207 | |||||
| 16,693,258 | 14,705,988 | 11,197,118 | ||||||
| Operating income | 3,551,903 | 6,216,608 | 3,477,001 | |||||
| Other income (expense): | ||||||||
| Insurance proceeds related to lost income | - | - | 8,720 | |||||
| Net litigation contingency | - | (610,206) | - | |||||
| Gain (loss) on disposition of equipment | 58,285 | (26,122) | - | |||||
| Interest income | 202,724 | 90,908 | 5,324 | |||||
| Interest expense | (2,844,327) | (2,087,818) | (2,121,062) | |||||
| (2,583,318) | (2,633,238) | (2,107,018) | ||||||
| Income before extraordinary item, accrued premium on preferred stock and income taxes |
968,585 |
3,583,370 |
1,369,983 |
|||||
| Accrued premium on preferred stock | - | (235,367) | (276,000) | |||||
| Income before extraordinary item and income taxes | 968,585 | 3,348,003 | 1,093,983 | |||||
| Net income tax benefit | (835,937) | (4,449,682) | - | |||||
| Income before extraordinary item | 1,804,522 | 7,797,685 | 1,093,983 | |||||
| Extraordinary gain on involuntary conversion of non-monetary assets due to fire |
- |
- |
173,536 |
|||||
| Net income applicable to common stock | $ | 1,804,522 | $ | 7,797,685 | $ | 1,267,519 | ||
| Income per share of common stock before extraordinary item (Basic) |
$ |
0.04 |
$ |
0.22 |
$ |
0.03 |
||
| Income per share of common stock before extraordinary item (Diluted) |
$ |
0.04 |
$ |
0.19 |
$ |
0.03 |
||
| Extraordinary gain per share of common stock (Basic) | -- | -- | $ | 0.01 | ||||
| Extraordinary gain per share of common stock (Diluted) | -- | -- | $ | 0.00 | ||||
| Income per share of common stock after extraordinary item (Basic) |
$ |
0.04 |
$ |
0.22 |
$ |
0.04 |
||
| Income per share of common stock after extraordinary item (Diluted) |
$ |
0.04 |
$ |
0.19 |
$ |
0.03 |
||
|
Weighted average number of common shares outstanding (Basic) |
41,990,150 |
35,861,060 |
31,815,067 |
|||||
|
Weighted average number of common shares outstanding (Diluted) |
45,881,498 |
40,475,244 |
41,070,289 |
|||||
Read the notes in the Form 10-K which are an integral part of these financial statements.
| ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC. | ||||||||
| STATEMENTS OF CASH FLOWS | ||||||||
| Year Ended December 31, | ||||||||
| 2006 | 2005 | 2004 | ||||||
| Cash flows from operating activities: | ||||||||
| Net income applicable to common stock | $ | 1,804,522 | $ | 7,797,685 | $ | 1,267,519 | ||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 4,083,638 | 4,176,523 | 4,086,811 | |||||
| Premium accrued on preferred stock | - | 235,367 | 276,000 | |||||
| Provisions for returns | - | 266,793 | 61,319 | |||||
| Deferred tax benefit | (822,047) | (4,634,882) | - | |||||
| Extraordinary gain on involuntary conversion of non-monetary assets due to fire | - | - | (173,536) | |||||
| (Gain) loss on disposition of equipment | (58,285) | 26,122 | - | |||||
| (Increase) decrease in other assets | (696,614) | 192,683 | 67,765 | |||||
| (Increase) decrease in cash restricted for letter of credit and interest costs | (328,050) | 42,708 | (224,014) | |||||
| Changes in current assets and current liabilities | (6,202,868) | (784,790) | 65,361 | |||||
| Net cash provided by (used in) operating activities | (2,219,704) | 7,318,209 | 5,427,225 | |||||
| Cash flows from investing activities: | ||||||||
| Purchases of land, buildings and equipment | (6,841,889) | (5,907,695) | (5,868,218) | |||||
| Proceeds from disposition of equipment | 17,400 | 94,596 | - | |||||
| Insurance proceeds from involuntary disposition of property and equipment | - | - | 669,012 | |||||
| Net cash used in investing activities | (6,824,489) | (5,813,099) | (5,199,206) | |||||
| Cash flows from financing activities: | ||||||||
| Net borrowings on line of credit | 10,060,000 | - | - | |||||
| Proceeds from issuance of notes | 3,303,225 | 1,900,000 | 2,050,000 | |||||
| Payments on notes | (5,861,763) | (4,200,749) | (3,804,520) | |||||
| (Increase) decrease in cash restricted for payment of long-term debt | 209,202 | (31,417) | (2,708) | |||||
| Increase (decrease) in outstanding advances on factored receivables | (2,450,788) | 353,235 | 301,884 | |||||
| Debt acquisition costs | - | (19,821) | 11,100 | |||||
| Proceeds from exercise of stock options and warrants, net | 4,200,826 | 1,163,129 | 1,238,550 | |||||
| Net cash provided by (used in) financing activities | 9,460,702 | (835,623) | (205,694) | |||||
| Increase in cash and cash equivalents | 416,509 | 669,487 | 22,325 | |||||
| Cash and cash equivalents, beginning of period | 1,748,023 | 1,078,536 | 1,056,211 | |||||
| Cash and cash equivalents, end of period | $ | 2,164,532 | $ | 1,748,023 | $ | 1,078,536 | ||
For more information, contact:
AERT, Inc., Springdale
Bob Thayer, 479-756-7400
or
Cameron Associates
Richard Moyer, 212-554-5466
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