ARC Document Solutions has reported its second quarter results, and they show a slight drop in sales and margin, though an increase in cash flow. In addition, the report showed that the AEC market continues to provide the vast majority of the company's sales, 77 percent.
"From a financial perspective, the company had a strong second quarter," said K. "Suri" Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "In the first half of 2017 we generated nearly four million dollars more in cash flows from operations than we did in 2016. Our second quarter gross margin was a healthy 33.7%, and SG&A for the period was essentially flat compared to 2016, even with our investments in sales and marketing. This is extremely gratifying, especially in light of continuing headwinds in print sales and our ongoing transformation."
"In addition to this, we were also able to successfully renegotiate our debt agreement with our banks," said Mr. Suriyakumar. "Our previous agreements reflected a time when the company was working towards stabilizing its revenues after an unprecedented financial crisis. Today however, we need more flexibility and dry powder to invest in areas where we can grow our current market share, and accelerate revenues with our new technology offerings. The new agreement provides us the ability to do exactly that."
"Our margins and cash flow performance demonstrate the tight controls over our expenses, and the leverage we can exert over every dollar we make," said Jorge Avalos, Chief Financial Officer for ARC Document Solutions. "In addition to our strong financial performance in the second quarter, it was rewarding to be able to enhance our capital structure with our five-year amended credit agreement which reduces our interest rate, and significantly improves our amortization schedule."
2017 Second Quarter Supplemental Information:
Net sales were $102.3 million, a 1.4% decrease compared to the second quarter of 2016.
Days sales outstanding in Q2 2017 were 52, compared to 53 days in Q2 2016.
Architectural, engineering, construction and building owner/operators (AEC/O) customers comprised approximately 77% of our total net sales, while customers outside of construction made up approximately 23% of our total net sales.
Total number of MPS locations at the end of the second quarter has grown to approximately 9,830, a net gain of approximately 590 locations over Q2 2016.
Adjusted EBITDA excludes loss on extinguishment of debt, goodwill impairment, restructuring expense and stock-based compensation expense.