ARC Document Solutions

ARC Document Solutions Reports Results for Fourth Quarter and Fiscal Year 2012

ARC Document Solutions, Inc. has reported its financial results for the fourth quarter and full year ended December 31, 2012.

"The aggressive and ambitious restructuring plan we announced in November helped us avoid what could have been a significantly depressed earnings per share and cash performance in the fourth quarter of 2012," said K. "Suri" Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "A timely response was critical to transition the company in line with the dramatic changes we observed in our customers' behavior."

"While our organization continues to strengthen its position as a leading document solutions provider, I am pleased with the speed and efficiency with which we implemented our restructuring plan," added Mr. Suriyakumar. " It not only provided a strong finish for the year, but our improved cost structure certainly will allow us to deliver significantly better performance in 2013 even without a full recovery in the AEC industry."

CFO John Toth commented, "Throughout 2012 we maintained our strong cash flow and balance sheet. We absorbed the costs of the restructuring without drawing on our revolver, and we ended the year with our highest amount of cash since 2009. And in the fourth quarter, we took critical steps to improve the quality of our earnings through diversification across product lines and importantly, refining our cost structure to support and grow margin from multiple service lines. This fundamental improvement in our value proposition -- and in the quality of our earnings -- can be seen in the expansion of our adjusted EBITDA margin which increased almost 200 basis points between Q3 and Q4, bucking the historic trends of margin contraction between Q3 and Q4."

The company announced that beginning with its annual filing on Form 10-K, ARC Document Solutions' statement of operations will reflect net sales reporting under two categories -- "Service sales" and "Equipment and supplies sales" -- replacing the historical revenue categories of "Reprographics services," "Facilities management," and "Equipment and supplies sales." The broader categories of "Service sales" and "Equipment and supplies sales" will allow the company to better assign and report distinct sales recognized from its traditional reprographics services, onsite services, color printing services, digital services, and equipment and supplies sales. Under its previous revenue reporting structure, traditional reprographics, color, and digital services were blended in "Reprographics services."

Restructuring Charge

ARC Document Solutions management recorded a restructuring charge of $3.3 million as a result of reducing its service center footprint and headcount during October and November of 2012. The charges pertain primarily to property lease exit costs and severance payments related to headcount reductions.

ARC anticipates annual adjusted earnings per share in 2013 to be in the range of $0.03 to $0.07 on a fully-diluted basis, and annual cash flow from operations to be in the range of $38 million to $45 million.