ARC Document Solutions

ARC Reports Results for Second Quarter 2012

ARC has reported its financial results for the second quarter ended June 30, 2012.

Business Highlights:

  • Q2 adjusted earnings per share of $0.02 vs. $0.00 for Q2 2011
  • Gross margin for the second quarter was 31.8%, increase of 100 basis points over prior quarter
  • Cash from operations was $16.9 million for the six months ended June 30, 2012 vs. $11.9 million for the same period last year
  • Senior secured credit facility remains undrawn
  • Revises 2012 fully-diluted annual adjusted earnings per share forecast to be in the range ($0.03) to $0.03, and projected 2012 annual cash from operating activities to be in the range of $35 million to $45 million

"We continue to make significant progress in expanding our presence among leading AEC companies as evidenced by the 7.4 percent year-over-year sales increase in our facilities management and managed print services line during the second quarter, and our healthy sales pipeline with Global Solutions," said K. "Suri" Suriyakumar, Chairman, President and CEO of ARC. "Our MPS offering combined with our off-site services, cloud-based printing and technology solutions, gives these larger companies a compelling reason to select ARC as a single source for their document workflow. In addition, we are making progress in transforming the company to a true technology-enabled document solutions provider as we make significant changes to our internal processes and procedures, and market more effectively to our external audience."

"Macroeconomic conditions remain difficult in our traditional markets, and unfortunately, we don't expect improvement through the end of the year," Suriyakumar continued. "In the meantime we are aggressively investing in positioning the company for a recovery while maintaining the operating cash flows required to comfortably meet our financial obligations."

CFO John Toth commented, "We see opportunity for significant future returns on investments made today in our non-traditional business lines. We continue to closely manage our business as evidenced by our stable adjusted EBITDA margins -- 15.8 percent for the first six months of the year vs. 15.3 percent for the same period last year -- our EPS performance in Q2, and the zero balance of our senior secured revolver. With the increased investment in our business combined with the uncertain macroeconomic outlook for the balance of the year, we think it is prudent to revise downward our EPS and cash flow from operations forecasts."

Due to the volatility and overall uncertainty in the macroeconomic forecast for the rest of 2012, ARC management revised its expectation of the private non-residential construction activity for the remainder of the year. It now forecasts continued hesitation in the funding and execution of new construction projects.

As a result, ARC is revising its projection of adjusted earnings per share for 2012 to be in the range of ($0.03) to $0.03 on a fully-diluted basis from its previous forecast of a range of $0.05 to $0.10, and annual cash flow from operating activities to be in the range of $35 million to $45 million, down from a range of $40 million to $50 million.