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Arabian American Announces Fourth Quarter and Full-Year 2010 Financial Results

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Quarterly Revenues Increase by 8.3% to $33.5 Million Year-over-Year

Fourth Quarter Earnings up 195.6% to $610,000 Year-over-Year

DALLAS, March 9, 2011 /PRNewswire/ -- Arabian American Development Co. (Nasdaq: ARSD) today announced financial results for the fourth quarter and full year period ended December 31, 2010.

Financial Highlights

    --  Revenue for the fourth quarter increased 8.3% to $33.5 million from
        $31.0 million in the same period last year.
    --  Gross profit for the fourth quarter of 2010 increased 96.5% to $4.4
        million from $2.2 million in the comparable period in 2009.
    --  EBITDA, a non-GAAP financial measure, for the fourth quarter of 2010 was
        $2.2 million as compared to $165,000 for the same period in 2009.
    --  Net income attributable to Arabian American Development Company for the
        fourth quarter increased 195.6% to $610,000, or $0.02 per basic and
        diluted share, compared to a net loss of $(638,000), or $(0.03) per
        basic and diluted share, for the fourth quarter last year.


Fourth Quarter 2010 Operational Highlights

    --  Completed the expansion of South Hampton Resources' Hexane treater unit
        that adds an additional 800 barrels per day for treating C6 product.
        This unit completes the plant expansion started in 2008 which doubled
        capacity.
    --  Finished the addition of a new Isomerization unit for increased C5
        flexibility. This allows South Hampton to convert up to 600,000 gallons
        per month of Normal Pentane to Isopentane.
    --  Signed an agreement to merge the assets of Silsbee Trading and
        Transportation Company (STTC), a company owned by Nicholas Carter,
        President and Chief Executive Officer of Arabian American Development
        Co., into its operating unit, South Hampton Resources, Inc.


Subsequent to 2010 Year End

    --  Signed two new contracts including a five-year contract with a North
        America-based company and a three-year contract with an
        international-based organization for a total value of more than $29
        million over the length of the contracts. These continue the
        diversification and global expansion of the Company's customer base.
    --  AMAK, the Saudi Joint Stock company owned 41% by ARSD, applied for four
        additional mining leases which surround the Al Masane area (Najran
        province) in southwestern Saudi Arabia. Conditional approval has been
        granted. The business and operational plan has been submitted for final
        approval. These prospects were part of the previous exploration of the
        region which was undertaken in the late 1980's when approximately $3.0
        million was spent by ARSD in research and core drilling.
    --  AMAK received the first US$38 million (SR141 million) payment related to
        a permanent loan from the Saudi Industrial Development Fund (SIDF). This
        opening draw enabled AMAK to repay the initial bridge loan from a Saudi
        French Bank and allowed AMAK to arrange a further bridge loan from the
        Saudi French Bank in the amount of approximately US$44 million (SR165
        million) which was needed for the completion of the mine's construction
        and working capital. This bridge loan will be repaid via the second draw
        on the SIDF loan later in the year.
    --  AMAK has hired a Chief Financial Officer and an Environmental Manager.
        The AMAK Board is now interviewing laboratory personnel and geologists
        in order to complete supervisory staffing requirements in preparation
        for operations.
    --  The AMAK Board named one of its members, Mohammed Aballala, as the
        Managing Director in an effort to expedite the decision making process
        at the mine. Mr. Aballala has a long history of managing construction
        projects and is capable of guiding the staff to keep the project on
        schedule. The mine is well positioned for subsequent operations as the
        mill is now approximately 95% complete.
    --  Recently in conjunction with the 5th Global Competitiveness Forum in
        Riyadh, ARSD was listed as #54 on the list of top 100 foreign investors
        in Saudi Arabia. AMAK signed on as a sponsor in the Najran Investment
        Forum to be held on March 13-15.


Fourth Quarter 2010 Financial Results

Consolidated revenue for the quarter ended December 31, 2010 increased 8.3% to $33.5 million compared to revenue of $31.0 million in the fourth quarter of 2009. Petrochemical product sales (predominantly C5 and C6 hydrocarbons and related products) represented $32.4 million, or 96.6%, of total revenue for the fourth quarter of 2010 and $29.9 million, or 96.6%, of total revenue, for the fourth quarter last year. The Company generated $1.13 million in toll processing fees, up 6.6% during the fourth quarter of 2010 compared with $1.06 million for the prior year's fourth quarter. Processing revenues increased in the fourth quarter of 2010 compared to 2009 due to one of the tolling customers running above minimum capacity during the quarter. The Company remains dedicated to maintaining a certain level of toll processing business in the facility and has several opportunities in various stages of evaluation.

During the fourth quarter of 2010, the cost of petrochemical sales and processing (including depreciation) increased approximately $429,000, or 1.5%, to $29.2 million as compared to $28.7 million in the same period in 2009. Total gross profit on revenue for the fourth quarter of 2010 increased approximately $2.1 million, or 96.5%, to $4.4 million as compared to $2.2 million the same period in 2009. The cost of petrochemical product sales and processing and gross profit for the three months ended December 31, 2010 includes a net gain of $179,000 from derivative transactions. For the same period of 2009, there was an $11,000 net gain.

Nick Carter, President and Chief Executive Officer, commented, "Our quarterly revenue results show modest gains from the year-ago period. Gross profit, however, increased by over 96% as we moved over 50% of our larger customers to formula pricing, a mechanism which is gaining traction and is beneficial to both parties as it allows product prices to move in conjunction with feed prices without the necessity of announced price changes. We also continued to successfully use derivative contracts to offset any fluctuating feedstock prices. These actions, along with careful cost control and the ISOM expansion (which allows Normal Pentane to be converted into Isopentane and provides flexibility in managing products) is also providing greater stability to gross margins."

Mr. Carter continued, "We capitalized on our updated and expanded pentane and hexane units to target new opportunities both domestically and globally which was not possible a year ago. As a result of our expanded capability, we announced several new sales contracts in fourth quarter 2010 and subsequent to the year-end that will help drive revenues going forward."

General and Administrative costs for the fourth quarter of 2010 were up $138,000, or 5.4%, at $2.7 million from $2.6 million in the same period last year primarily due to higher administrative payroll costs, consulting fees, insurance premiums, directors' fees, post retirement expense and legal fees.

The Company reported net income attributable to Arabian American Development Company in the fourth quarter of 2010 of approximately $610,000 or $0.02 per basic and diluted share (based on 23.8 million basic and 23.9 million diluted weighted average shares outstanding, respectively). This compares to a net loss attributable to Arabian American Development Company of $638,000, or $0.03 per basic and diluted share for the fourth quarter of 2009 (based on 23.7 million basic and diluted weighted average shares outstanding).

The Company reported EBITDA for the fourth quarter of 2010 of approximately $2.2 million compared to $165,000 for the same period in 2009.

Full Year 2010 Financial Results

Consolidated revenue for the year ended December 31, 2010 increased 18.3% to $139.1 million compared to revenue of $117.6 million in the same period in 2009. Excluding transloading revenues of $854,000 generated in the year ended December 31, 2010, revenues were $138.3 million, a 22.4% increase from $113.0 million in the year-ago period, excluding transloading revenues of $4.6 million. Year-to-date 2010 transloading sales reflected spot opportunities that were fulfilled. Petrochemical product sales represented $133.6 million or 96.0% of total revenue year-to-date in 2010 compared to $109.2 million or 92.8% of total revenue for the same period last year. The Company generated $4.7 million in toll processing fees up 23.6%, during the full year 2010 compared with $3.8 million for the same period last year. Again, processing revenues increased primarily due to one of the tolling customers running above minimum capacity during the full year 2010. Total sales volume decreased approximately 6.4% due to expiration of the transloading contract; however, petrochemical product sales volume remained steady.

During the year ended December 31, 2010, the cost of petrochemical sales and processing (including depreciation) increased approximately $26.2 million, or 27.4%, as compared to the same period in 2009. Consequently, total gross profit on revenue for the full year of 2010 decreased approximately $4.7 million or 21.4%, to $17.2 million as compared to $21.9 million for the same period in 2009. The cost of petrochemical product sales and processing and gross profit for the year ended December 31, 2010, includes a net gain of $205,000 from derivative transactions.  For the same period of 2009, the net gain was $1.1 million.

General and Administrative costs for the full year of 2010 increased approximately $1.8 million or 19.5%, to $10.9 million from $9.1 million in the same period in 2009 primarily due to increases in accrued liabilities for Pioche environmental issues, administrative payroll costs, insurance premiums, consulting fees, property taxes, directors' fees, post retirement benefits, and legal fees.

For the full year of 2010, net income attributable to Arabian American Development was $2.7 million or $0.11 per basic and diluted share (based on 23.8 million weighted average shares outstanding) compared to net income of $6.6 million or $0.28 per basic and diluted share (based on 23.7 million and 23.8 million weighted average shares outstanding, respectively) for the year-ago period.

EBITDA for the year ended December 31, 2010, was $8.2 million as compared to $15.0 million for the same period in 2009.

The Company completed the quarter with $7.6 million in cash and cash equivalents compared to $2.5 million as of December 31, 2009. Trade receivables decreased by $1.1 million to $11.2 million from $12.3 million due to decreased sales volume in the fourth quarter. The average collection period remains normal for the business. Inventory increased approximately $852,000 due to a slight increase in volume and price.

The Company had $19.0 million in working capital as of December 31, 2010 and ended the quarter with a current ratio of 3.5 to 1. Shareholders' equity increased to $56.6 million as of December 31, 2010 from $52.2 million as of December 31, 2009.

Mr. Carter concluded, "Our balance sheet remains strong with cash and cash equivalents that increased over 210% from the year-ago period. In addition, we generated cash from operations of $11.3 million which is up 62% sequentially from $7.0 million at the end of our third quarter 2010 and up 73.9% from $6.5 million in the fourth quarter of 2009."

About Arabian American Development Company (ARSD)

ARSD owns and operates a petrochemical facility located in southeast Texas just north of Beaumont which specializes in high purity petrochemical solvents and other solvent type manufacturing. The Company is also the original developer and now a 41% investor in a Saudi Arabian joint stock company involving a mining project which is currently under construction in the Najran Province area of southwest Saudi Arabia. The mine is scheduled to be in production in 2011 and will produce economic quantities of zinc, copper, gold, and silver.

Safe Harbor

Statements in this release that are not historical facts are forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward looking statements are based upon management's belief as well as assumptions made by and information currently available to management. Because such statements are based upon expectations as to future economic performance and are not statements of fact, actual results may differ from those projected. These risks, as well as others, are discussed in greater detail in Arabian American's filings with the Securities and Exchange Commission, including Arabian American's Annual Report on Form 10-K for the year ended December 31,  2009, and the Company's subsequent Quarterly Reports on Form 10-Q.


Company Contact:  Nick Carter, President and Chief Executive Officer

                  (409) 385-8300

                  ncarter@southhamptonr.com



Investor Contact: Cameron Donahue

                  Hayden IR

                  (651) 653-1854

                  Cameron@haydenir.com






- Tables follow -



ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

                                                     December 31,

                                                     2010         2009

ASSETS

CURRENT ASSETS

Cash and cash equivalents                            $ 7,609,943  $ 2,451,614

Financial contracts                                  177,446      -

Trade Receivables, net of allowance for doubtful
accounts

of $155,000 and $126,500, respectively               11,212,290   12,302,955

Current portion of notes receivable, net of discount
of $684 and $16,109,

respectively                                         34,427       372,387

Prepaid expenses and other assets                    669,367      739,989

Contractual based intangible assets                  250,422      -

Inventories                                          5,917,283    5,065,169

Deferred income taxes                                487,513      640,057

Taxes receivable                                     216,461      4,726,708



Total current assets                                 26,575,152   26,298,879



PLANT, PIPELINE, AND EQUIPMENT – AT COST           54,703,710   50,082,441

LESS ACCUMULATED DEPRECIATION                        (20,839,442) (17,674,938)



PLANT, PIPELINE, AND EQUIPMENT, NET                  33,864,268   32,407,503



INVESTMENT IN AMAK                                   30,883,657   31,146,157

MINERAL PROPERTIES IN THE UNITED STATES              588,311      588,311



NOTES RECEIVABLE, net of discount of $0 and $684,
respectively, net

of current portion                                   -            35,001

CONTRACTUAL BASED INTANGIBLE ASSETS, net of current

portion                                              605,185      -

OTHER ASSETS                                         10,938       10,938



TOTAL ASSETS                                         $ 92,527,511 $ 90,486,789








ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (continued)

                                                   December 31,

                                                   2010         2009

LIABILITIES

CURRENT LIABILITIES

Accounts payable                                   $ 2,778,161  $ 3,617,043

Accrued interest                                   120,533      148,538

Current portion of derivative instruments          396,527      436,203

Accrued liabilities                                1,777,642    1,336,219

Accrued liabilities in Saudi Arabia                184,593      471,280

Notes payable                                      12,000       12,000

Current portion of post retirement benefit         246,605      31,500

Current portion of long-term debt                  1,864,770    1,400,000

Current portion of other liabilities               199,939      579,500



Total current liabilities                          7,580,770    8,032,283



LONG-TERM DEBT, net of current portion             20,836,098   23,439,488

POST RETIREMENT BENEFIT, net of current portion    680,196      815,378

DERIVATIVE INSTRUMENTS, net of current portion     719,693      838,489

OTHER LIABILITIES,net of current portion           390,232      562,011

DEFERRED INCOME TAXES                              5,480,683    4,332,911



Total liabilities                                  35,687,672   38,020,560



COMMITMENTS AND CONTINGENCIES



EQUITY

Common Stock  authorized 40,000,000 shares of $.10
par value;

issued and outstanding, 23,682,915 and 23,433,995
shares

in 2010 and 2009, respectively                     2,368,291    2,343,399

Additional Paid-in Capital                         43,162,641   41,604,168

Accumulated Other Comprehensive Loss               (736,706)    (841,297)

Retained Earnings                                  11,756,390   9,070,736

Total Arabian American Development Company
Stockholders'

Equity                                             56,550,616   52,177,006

Noncontrolling interest                            289,223      289,223

Total equity                                       56,839,839   52,466,229



TOTAL LIABILITIES AND EQUITY                       $ 92,527,511 $ 90,486,789








ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF INCOME

                         THREE MONTHS ENDED        12 MONTHS ENDED

                         31-Dec                    31-Dec

                         2010         2009         2010          2009



REVENUES

Petrochemical Product
Sales                    $ 32,394,750 $ 29,897,604 $ 133,579,088 $ 109,178,541

Transloading Sales       -            -            853,636       4,624,681

Processing Fees          1,128,440    1,058,656    4,677,470     3,783,457

                         33,523,190   30,956,260   139,110,194   117,586,679



OPERATING COSTS AND
EXPENSES

Cost of Petrochemical
Product

Sales and Processing     29,169,093   28,740,179   121,894,912   95,688,819



GROSS PROFIT             4,354,097    2,216,081    17,215,282    21,897,860



GENERAL AND
ADMINISTRATIVE EXPENSES

General and
Administrative           2,701,525    2,563,067    10,930,141    9,144,710

Depreciation             104,974      114,799      433,372       443,538

                         2,806,499    2,677,866    11,363,513    9,588,248



OPERATING INCOME (LOSS)  1,547,598    (461,785)    5,851,769     12,309,612



OTHER INCOME (EXPENSE)

Interest Income          962          9,693        16,184        63,669

Interest Expense         (275,577)    (356,673)    (1,132,968)   (1,327,530)

Equity in Loss from AMAK -            -            (262,500)     -

Miscellaneous Income
(expense)                (58,374)     (71,332)     (84,015)      (74,332)

                         (332,989)    (418,312)    (1,463,299)   (1,338,193)



INCOME (LOSS) BEFORE
INCOME TAXES             1,214,609    (880,097)    4,388,470     10,971,419



INCOME TAXES             604,809      (242,575)    1,702,816     4,343,968



NET INCOME (LOSS)        609,800      (637,522)    2,685,654     6,627,451



NET LOSS ATTRIBUTABLE TO
NONCONTROLLING INTEREST  -            -            -             -



NET INCOME (LOSS)
ATTRIBUTABLE TO ARABIAN
AMERICAN DEVELOPMENT CO. $ 609,800    $ (637,522)  $ 2,685,654   $ 6,627,451



Basic Earnings (Loss)

per Common Share

Net Income (Loss)        $0.02        ($0.03)      $0.11         $0.28

Basic Weighted Average
Number

of Common Shares
Outstanding              23,828,976   23,736,745   23,769,047    23,733,955



Diluted Earnings (Loss)

per Common Share

Net Income               $0.02        ($0.03)      $0.11         $0.28

Diluted Weighted Average
Number

of Common Shares
Outstanding              23,874,000   23,736,745   23,780,303    23,800,499








ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS
OF CASH FLOWS

                                               For the years ended December 31,

                                               2010        2009

Operating activities

Net income (loss) attributable to Arabian

American Development Co.                       $ 2,685,654 $ 6,627,451

Adjustments to reconcile net income (loss)

to Arabian American Development Co. to Net
cash provided by

operating activities:

Depreciation                                   2,613,164   2,689,847

Accretion of notes receivable discounts        (16,109)    (53,628)

Unrealized (gain) loss on derivative
instruments                                    (177,448)   (6,976,232)

Share-based compensation                       807,917     280,161

Provision for doubtful accounts                28,500      111,154

Deferred income taxes                          684,582     8,977,317

Postretirement obligation                      -           23,378

Impairment loss                                -           -

Loss attributable to noncontrolling interest   -           -

Equity in loss from AMAK                       262,500     -

Changes in operating assets and liabilities:

(Increase) decrease in trade receivables       1,062,165   (510,083)

Decrease in notes receivable                   389,070     582,177

(Increase) decrease in income tax receivable   4,510,247   (4,297,082)

Increase in inventories                        (852,114)   (2,618,969)

Decrease in prepaid expenses and other assets  70,622      59,353

Decrease in derivative instruments deposits    -           3,950,000

Increase in other liabilities                  -           773,000

Decrease in accounts payable and accrued
liabilities                                    (504,088)   (2,146,279)

Increase (decrease) in accrued interest        (28,005)    1,077

Decrease in accrued liabilities in Saudi
Arabia                                         (206,764)   (957,876)

Net cash provided by operating activities      11,329,893  6,514,766



Investing activities

Additions to property, pipeline and equipment  (2,898,752) (3,184,140)

Purchase of transportation company             (250,000)   -

Net cash used in investing activities          (3,148,752) (3,184,140)



Financing Activities

Additions to long-term debt                    1,396,751   2,530,761

Repayment of long-term debt                    (4,419,563) (6,169,009)

Net cash provided (used) in financing
activities                                     (3,022,812) (3,638,248)



Net increase (decrease) in cash                5,158,329   (307,622)

Cash and cash equivalents at beginning of year 2,451,614   2,759,236



Cash and cash equivalents at end of year       $ 7,609,943 $ 2,451,614








ARABIAN AMERICAN DEVELOPMENT COMPANY AND SUBSIDIARIES RECONCILIATION OF
SELECTED GAAP MEASURES TO NON-GAAP MEASURES(1)

                              THREE MONTHS ENDED 12 MONTHS ENDED

                              31-Dec             31-Dec

                              2010    2009       2010    2009

                              (in thousands)



NET INCOME (LOSS)             $ 610   $ (638)    $ 2,686 $ 6,627



Add back:

Interest                      276     357        1,133   1,328

Taxes                         605     (243)      1,703   4,344

Depreciation                  105     115        432     444

Depreciation in Cost of sales 568     574        2,271   2,246



EBITDA                        $ 2,164 $ 165      $ 8,225 $ 14,989










                                                12/31/2010

                                                (in thousands except ratio)



Current assets                                  $ 26,575



Current liabilities                             $ 7,581



Working capital                                 $ 18,994

(current assets less current liabilities)

Current ratio                                   3.5

(current assets divided by current liabilities)








(1) This press release includes non-GAAP measures. Our non-GAAP measures are
    not meant to be considered in isolation or as a substitute for comparable
    GAAP measures and should be read only in conjunction with our consolidated
    financial statements prepared in accordance with GAAP.





SOURCE Arabian American Development Co.