This report was originally published on 5/7/09.

ARP reported 1Q09 results after the close. You can read the detail here. The quick highlights are as follows:

• Revenues were inline with street consensus, but the company had clear positive sequential improvement in trends over the course of the quarter.
• As we anticipated in our original post, ARP was able to deftly manage costs. Gross margins improved 60 bps sequentially and the company exited the quarter with 40%+ gross margins due to its cost reduction efforts.
• EPS of $0.17 beat consensus by $0.06 due in large part to better than expected gross margins, but also G&A reductions.
• ARP generated $20MM in FCF in the quarter! It is indeed a cash cow.

Management reiterated guidance for the year of $0.50-$0.75 in EPS and $70-$90 million in cash from operations, both of which look incredibly conservative given the cost reduction actions taken thus far and the sequential improvement in ARP’s business from winter to spring.

ARP’s stock is up substantially after hours on very light volume. The company is still not well understood.

We will simplify it: Assuming the company’s business for the remainder of the year is on par with March levels (i.e. no better, no worse), ARP will generate:

• EBITDA of $130 million,
• EPS in excess of $0.75,
• FCF in excess of $70 million ($1.55/share).
• At a 10% FCF yield, ARP would trade at $15-16/share.

As always, please act accordingly….