WALNUT CREEK, CA -- (Marketwired) -- May 06, 2014 -- ARC Document Solutions, Inc. (NYSE: ARC), the nation's leading document solutions provider for the architecture, engineering, and construction (AEC) industry, today reported its financial results for the first quarter ended March 31, 2014.
Quarterly Business Highlights:
- Quarterly revenue has continued to grow year-over-year since the third quarter of 2013, though increase was muted due to effects of severe weather
- Adjusted earnings per share of $0.03 vs. $0.01 in Q1 2013
- Gross margin of 33.8%; year-over-year increase of 140 basis points
- Q1 Adjusted EBITDA margin of 15.7%; year-over-year decrease of 20 basis points largely due to lower than anticipated sales
- YTD cash flow from operations of $7.7 million vs. $11.9 million for the same period last year; comparison influenced by receipt of a tax refund in 2013
- Maintains 2014 diluted annual adjusted earnings per share outlook in the range $0.19 to $0.23 and outlook for 2014 annual cash provided by operating activities in the range of $51-$56 million
- Introducing annual adjusted EBITDA guidance of $69-$73 million
Financial Highlights:
Three Months Ended
March 31,
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(All dollar amounts in millions, except EPS) 2014 2013
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Net Revenue $ 100.4 $ 100.0
Gross Margin 33.8% 32.4%
Net Income attributable to ARC $ 1.4 $ 0.4
Adjusted Net Income attributable to ARC $ 1.5 $ 0.6
Earnings per share $ 0.03 $ 0.01
Adjusted earnings per share $ 0.03 $ 0.01
Adjusted EBITDA $ 15.7 $ 15.9
Cash provided by operating activities $ 7.7 $ 11.9
Capital Expenditures $ 3.6 $ 5.6
Debt & Capital Leases (including current) $ 216.4 $ 219.4
Management Commentary
"We generated good results in the first quarter, thanks largely to the strength of our margin structure and the diversification of our business lines," said K. Suri Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "We were also pleased to see activity rise substantially in March after experiencing the dampening effects of severe weather during January and February. Despite a year-over-year sales increase of less than one percent during the quarter, our gross margin grew by 140 basis points. This kind of leverage demonstrates the sustainable strength of our new business model. Combined with the improving economic environment, better news in employment, and incremental gains throughout the construction industry, our first quarter results give me confidence in our increasing value throughout 2014."
John Toth, ARC's CFO, said, "We experienced weather-related sales losses between $1 million and $1.5 million in the early part of the quarter, but we were able to take it largely in stride, essentially matching our revenue performance in the first quarter of 2013 but improving our gross margin. Cash from operations was healthy despite the lower than expected sales and the changes in levels of working capital we typically experience in the first quarter. In spite of these headwinds, we were able to generate enough cash to comfortably double the principal payment required under our new Term Loan, reducing our principal from $200 million to $195 million. We plan to continue to aggressively reduce our long term debt and thereby our invested capital in the future."
2014 First Quarter Supplemental Information:
Net sales were $100.4 million, a 0.3% increase compared to the first quarter of 2013.
Days sales outstanding in Q1 2014 were 53, compared to 55 days in Q1 2013.
AEC customers comprised approximately 77% of our total net sales, while non-AEC customers made up approximately 23% of our total net sales.
Total number of Onsite Services contracts at the end of the first quarter was approximately 7,900, a gain of nearly 200 contracts from the beginning of the year.
