Arabian American Dev. Co. (ARSD:BUY) Record Q4 petrochemical revenues (+33%) driven by 40% rise in volumes.
Arabian American Dev. Co. (ARSD:BUY) Record Q4 petrochemical revenues (+33%) driven by 40% rise in volumes.
April 24, 2014 By
Senior Analyst
Q4:13 HIGHLIGHTS
- ARSD reported Q4:13 diluted EPS of $0.13 vs. $0.08 LY (restated), consensus of $0.15, and our $0.16 estimate. The performance was driven by a 40% rise in petrochemical volumes, partially offset by lower petrochemical margins coupled with lower AMAK equity income of $1.1 million.
- Q4 revenues rose 33% to $66.6 million vs. $49.9 million (restated) in Q4:12 and were above our $55.7 million estimate due principally to higher sales volumes and toll processing fees, partially offset by lower product prices.
- Volumes rose 40% to 19.7 million gallons from 14.1 million in Q4:12, well above our 15.5 million gallon estimate. North American volumes rose 35% to 15.7 million gallons due to the increased deliveries to a Canadian tar sands customer and a 60% increase in international sales to 4.0 million gallons.
- Gross margins (excl. D&A) were 16.3% vs. 15.5% LY but below our 17.8% estimate. The shortfall vs. our estimate was due to larger than expected sales volumes of by-products at lower margins. The by-product volumes arose from higher sales of prime products to the Canadian tar sands customer.
- We previously revised our FY:14 estimate to $1.03 from $0.86 and our FY:15 estimate to $1.23 from $1.02 to reflect higher petrochemical volumes partially offset by lower margins, as well a reduction in estimated AMAK earnings. We maintain our BUY rating and raise our price target to $19.50 from $18.50.
RISKS
- Continued volatility in the company’s product selling prices and feedstock (natural gasoline) could pressure margins and profitability.
- Delays in signing new customers could restrict revenue and earnings growth.
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