Sales from Services and Product Lines as a Percentage of Net Sales
Three Months Ended
March 31,
--------------------
Services and Product Line 2014 2013
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Traditional Reprographics 28.2% 29.5%
Onsite Services 31.3% 29.0%
Color Services 21.1% 20.9%
Digital Services 8.0% 8.4%
Equipment and Supplies Sales 11.4% 12.2%
Outlook:
ARC Document Solutions anticipates annual adjusted earnings per share in 2014 to be in the range of $0.19 to $0.23 on a fully diluted basis. Annual cash flow from operations is expected to be in the range of $51 million to $56 million. Annual adjusted EBITDA is projected to be in the range of $69 million to $73 million.
Teleconference and Webcast:
ARC Document Solutions will host a conference call and audio webcast today at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time) to discuss results for the Company's first quarter of 2014. To access the live audio call, dial 888-430-8694. International callers may join the conference by dialing 719-325-2470. The conference ID number is 7020350. A live webcast will also be made available on the investor relations page of ARC Document Solution's website at www.e-arc.com.
A replay of the call will be available for five days after the call's conclusion. To access the replay, dial 888-203-1112. International callers may access the replay by dialing 719-457-0820. The conference ID number is 7020350. The webcast will also be made available at www.e-arc.com for approximately 90 days following the call's conclusion.
About ARC Document Solutions (NYSE: ARC)
ARC Document Solutions is a leading document solutions company serving businesses of all types, with an emphasis on the non-residential segment of the architecture, engineering and construction industries. The Company helps more than 90,000 customers reduce costs and increase efficiency in the use of their documents, improve document access and control, and offers a wide variety of ways to print, produce, and store documents. ARC provides its solutions onsite in more than 7,900 of its customers' offices, offsite in service centers around the world, and digitally in the form of proprietary software and web applications. For more information please visit www.e-arc.com.
Forward-Looking Statements
This press release contains forward-looking statements that are based on current opinions, estimates and assumptions of management regarding future events and the future financial performance of the Company. Words such as "continuing growth," "confidence" "sustainable," and similar expressions identify forward-looking statements and all statements other than statements of historical fact, including, but not limited to, any projections regarding earnings, revenues and financial performance of the Company, could be deemed forward-looking statements. We caution you that such statements are only predictions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. In addition to matters affecting the construction, managed print services, document management or reprographics industries, or the economy generally, factors that could cause actual results to differ from expectations stated in forward-looking statements include, among others, the factors described in the caption entitled "Risk Factors" in Item 1A in ARC Document Solution's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, Quarterly Reports on Form 10-Q, and other periodic filings and prospectuses. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
ARC Document Solutions, Inc.
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
March 31, December 31,
-------------------------
Current assets: 2014 2013
-------------------------
Cash and cash equivalents $ 23,993 $ 27,362
Accounts receivable, net of allowances for
accounts receivable of $2,512 and $2,517 59,493 56,328
Inventories, net 16,066 14,047
Deferred income taxes 353 356
Prepaid expenses 4,590 4,324
Other current assets 4,155 4,013
-------------------------
Total current assets 108,650 106,430
Property and equipment, net of accumulated
depreciation of $209,649 and $206,636 56,574 56,181
Goodwill 212,608 212,608
Other intangible assets, net 26,316 27,856
Deferred financing fees, net 3,083 3,242
Deferred income taxes 1,222 1,186
Other assets 2,323 2,419
-------------------------
Total assets $ 410,776 $ 409,922
=========================
Current liabilities:
Accounts payable $ 22,652 $ 23,363
Accrued payroll and payroll-related expenses 11,059 11,497
Accrued expenses 23,230 21,365
Current portion of long-term debt and capital
leases 19,188 21,500
-------------------------
Total current liabilities 76,129 77,725
Long-term debt and capital leases 197,197 198,228
Deferred income taxes 32,339 31,667
Other long-term liabilities 3,186 3,163
-------------------------
Total liabilities 308,851 310,783
-------------------------
Commitments and contingencies
Stockholders' equity:
ARC Document Solutions, Inc. stockholders' equity:
Preferred stock, $0.001 par value, 25,000 shares
authorized; 0 shares issued and outstanding - -
Common stock, $0.001 par value, 150,000 shares
authorized; 46,684 and 46,365 shares issued and
46,639 and 46,320 shares outstanding 46 46
Additional paid-in capital 107,599 105,806
Retained earnings (13,232) (14,628)
Accumulated other comprehensive income 396 634
-------------------------
94,809 91,858
Less cost of common stock in treasury, 45 shares 168 168
-------------------------
Total ARC Document Solutions, Inc.
stockholders' equity 94,641 91,690
Noncontrolling interest 7,284 7,449
-------------------------
Total equity 101,925 99,139
-------------------------
Total liabilities and equity $ 410,776 $ 409,922
=========================
ARC Document Solutions, Inc.
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited) Three Months Ended
March 31,
----------------------
2014 2013
----------------------
Service sales $ 88,931 $ 87,800
Equipment and supplies sales 11,442 12,236
----------------------
Total net sales 100,373 100,036
Cost of sales 66,439 67,657
----------------------
Gross profit 33,934 32,379
Selling, general and administrative expenses 26,106 23,773
Amortization of intangible assets 1,498 1,747
Restructuring expense 483 472
----------------------
Income from operations 5,847 6,387
Other income (26) (26)
Interest expense, net 3,913 6,041
----------------------
Income before income tax provision (benefit) 1,960 372
Income tax provision (benefit) 664 (311)
----------------------
Net income 1,296 683
Loss (income) attributable to noncontrolling interest 100 (268)
----------------------
Net income attributable to ARC Document Solutions,
Inc. shareholders $ 1,396 $ 415
======================
Earnings per share attributable to ARC Document
Solutions, Inc. shareholders:
Basic $ 0.03 $ 0.01
======================
Diluted $ 0.03 $ 0.01
======================
Weighted average common shares outstanding:
Basic 45,990 45,762
Diluted 46,782 45,791
ARC Document Solutions, Inc.
Non-GAAP Measures
Reconciliation of cash flows provided by operating activities to EBIT,
EBITDA and Adjusted EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
--------------------
2014 2013
--------------------
Cash flows provided by operating activities (1) $ 7,714 $ 11,881
Changes in operating assets and liabilities, net of
effect of business acquisitions 4,229 (1,756)
Non-cash expenses, including depreciation,
amortization and restructuring (10,647) (9,442)
Income tax provision (benefit) 664 (311)
Interest expense, net 3,913 6,041
Income attributable to the noncontrolling interest 100 (268)
--------------------
EBIT 5,973 6,145
Depreciation and amortization 8,493 8,702
--------------------
EBITDA 14,466 14,847
Restructuring expense 483 472
Stock-based compensation 781 592
--------------------
Adjusted EBITDA $ 15,730 $ 15,911
====================
(1) Cash flows provided by operating activities for the three months ended
March 31,2013 includes an income tax refund of $3.8 million received in 2013
related to our 2009 consolidated federal income tax return.
ARC Document Solutions, Inc.
Non-GAAP Measures
Reconciliation of net income attributable to ARC to unaudited adjusted net
income attributable to ARC
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
--------------------
2014 2013
--------------------
Net income attributable to ARC Document Solutions, Inc. $ 1,396 $ 415
Restructuring expense 483 472
Income tax benefit related to above items (188) (179)
Deferred tax valuation allowance and other discrete
tax items (157) (154)
--------------------
Unaudited adjusted net income attributable to ARC
Document Solutions, Inc. $ 1,534 $ 554
====================
Actual:
Earnings per share attributable to ARC Document
Solutions, Inc. shareholders:
Basic $ 0.03 $ 0.01
====================
Diluted $ 0.03 $ 0.01
====================
Weighted average common shares outstanding:
Basic 45,990 45,762
Diluted 46,782 45,791
Adjusted:
Earnings per share attributable to ARC Document
Solutions, Inc. shareholders:
Basic $ 0.03 $ 0.01
====================
Diluted $ 0.03 $ 0.01
====================
Weighted average common shares outstanding:
Basic 45,990 45,762
Diluted 46,782 45,791
ARC Document Solutions, Inc.
Non-GAAP Measures
Reconciliation of net income attributable to ARC Document Solutions, Inc.
shareholders to EBIT, EBITDA and Adjusted EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
--------------------
2014 2013
--------------------
Net income attributable to ARC Document Solutions, Inc.
shareholders $ 1,396 $ 415
Interest expense, net 3,913 6,041
Income tax provision (benefit) 664 (311)
--------------------
EBIT 5,973 6,145
Depreciation and amortization 8,493 8,702
--------------------
EBITDA 14,466 14,847
Restructuring expense 483 472
Stock-based compensation 781 592
--------------------
Adjusted EBITDA $ 15,730 $ 15,911
====================
ARC Document Solutions, Inc.
Net Sales by Product Line
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
--------------------
2014 2013
--------------------
Service Sales
Traditional reprographics $ 28,325 $ 29,558
Color 21,165 20,905
Digital 8,059 8,361
--------------------
Subtotal 57,549 58,824
Onsite services(1) 31,382 28,976
--------------------
Total services sales 88,931 87,800
Equipment and supplies sales 11,442 12,236
--------------------
Total net sales $ 100,373 $ 100,036
====================
(1) Represents work done at our customer sites, which includes Facilities
Management ("FM") and Managed Print Services ("MPS").
