ARC Document Solutions, Inc. has reported its financial results for the third quarter ended September 30, 2013.
Business Highlights:
- Quarterly revenue grew year-over-year for first time in five years
- Q3 adjusted earnings per share of $0.02 vs. $(0.04) in Q3 2012
- Gross margin in Q3 of 32.5%; year-over-year increase of 310 basis points
- Q3 Adjusted EBITDA margin of 16.3%; year-over-year increase of 320 basis points
- YTD cash flow from operations of $40.0 million vs. $30.9 million for the same period last year
- Maintains 2013 fully-diluted annual adjusted earnings per share forecast to be in the range $0.06 to $0.09 and maintains projected 2013 annual cash provided by operating activities to be in the range of $38-$45 million
"We're very happy to have achieved year-over-year organic growth in the third quarter," said K. "Suri" Suriyakumar, Chairman, President and CEO of ARC Document Solutions, Inc. "After five long years of an unprecedented downturn in the industry, it's exciting to see our sales trend in a positive direction again."
"While the non-residential segment of our business has yet to recover, our impressive performance is attributable to the excellent execution of the management team," Mr. Suriyakumar continued. "On a year-over-year basis we have significantly improved our gross margins, and by positioning ourselves as a document solutions provider, we have dramatically expanded our addressable market. Sales of onsite services are now the largest segment of our business, surpassing our traditional reprographics line for the second quarter in a row, we've continued to receive recognition for our innovation in managed print services, and our color services sales have improved year-over-year. We intend to build on these strong performance trends in 2014 as our markets pick up steam."
"We are continuing to make progress expanding our margins, increasing our cashflow, and changing our capital structure -- the very things we promised to do in the fourth quarter of 2012," said John Toth, ARC Document Solution's Chief Financial Officer. "Adjusted EBITDA margin for the quarter improved by 320 basis points from a year ago, our cash position improved 21% year-over-year even after $11 million of cash outlays for bond repurchases and restructuring payments during the period, and we generated an increase of 51% in free cash flow over the same period last year."
Mr. Toth continued, "Thanks to the seven million dollar re-purchase of our bonds early in the third quarter and stronger margin performance, we've also made significant progress on our debt-to-EBITDA ratio which is now 3.3 as compared to 3.6 in the second quarter. We're in an excellent position to end the year with strength and momentum to carry us forward in 2014."
2013 Third Quarter Supplemental Information:
Net sales were $101.3 million, a 2% increase compared to the third quarter of 2012.
Days sales outstanding in Q3 2013 were 52, which were consistent with 52 days in Q3 2012.
AEC customers comprised approximately 76% of our total net sales, while non-AEC customers made up 24% of our total net sales.
Total number of Onsite Services contracts was approximately 7,500, a gain of nearly 200 contracts in Q3 2013.