Can The New Utility Contracts Improve Appliance Recycling Centers Of America (NASDAQ: ARCI)’s Financials?

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Appliance Recycling Centers of America (NASDAQ: ARCI) recently announced a portfolio of new recycling contracts with seven utilities operating in eight states. Management said that the appliance recycling programs with the utilities will be undertaken by the company’s 100%-owned subsidiary called ARCA Recycling, Inc. Those programs are expected to kick off later this year.

Appliance Recycling Centers of America (NASDAQ: ARCI) announced the new recycling contracts with utilities after posting losses in 4Q2015 and blamed the disappointing results on lower volumes of utility recycling contracts.

Which states are covered in the latest utility deals?

Appliance Recycling Centers of America (NASDAQ: ARCI) said that the turnkey recycling programs recently inked with utilities will cover eight states that include California, Indiana, Kentucky, Idaho and Washington. The other states are West Virginia, Pennsylvania and Michigan. ARCI did not name the utilities that have contracted its wholly-owned subsidiary ARCA for the appliance recycling jobs.

When are the projects beginning?

The seven utility recycling programs will begin in 2Q2016 and 3Q2016. Although programs have varying life, Appliance Recycling Centers of America (NASDAQ: ARCI) said that they are all multiple-year contracts.

The seven utility contracts primarily involve appliance recycling, but there is a particular one that involves appliance replacement.

The effect of Paris climate deal?

Appliance Recycling Centers of America (NASDAQ: ARCI) expects to sign more utility orders in 2016 and the coming years. Although the company is not directly mentioning benefits of the recently signed Paris climate agreement that commits enterprises and nations to act more proactively in combating adverse climate change, the climate deal presents a compelling opportunity for recyclers.

For example, utilities are investing more in energy-efficient programs that have environmental benefits and ARCI is helping them do that.

What was in ARCI’s 4Q2015 report?

Appliance Recycling Centers of America (NASDAQ: ARCI) posted 4Q2015 revenue of $26 million, down more than 18% from the corresponding quarter a year earlier. Lower volumes of energy programs from utilities impacted the quarter.

The company posted EPS loss of $0.14, wider than EPS loss of $0.11 a year earlier.

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