WALNUT CREEK, CA--(Marketwired - Aug 2, 2016) - ARC Document Solutions, Inc. ( NYSE :ARC), a leading document solutions provider to design, engineering, construction, and facilities management professionals, today reported its financial results for the second quarter ended June 30, 2016.
2016 Second Quarter Business Highlights:
- Net sales of $103.8 million vs. $113.4 million in Q2 2015
- Adjusted diluted earnings per share were $0.10 vs. $0.13 in Q2 2015
- Gross margin of 35.1% vs. 36.0% in Q2 2015 due to lower sales volume
- Cash flow from operations of $16.6 million vs. $16.9 million in Q2 2015
- Adjusted EBITDA of $18.1 million or 17.5%
- Approximately 581,000 shares of ARC common stock repurchased in the open market
- Revised 2016 forecast is for annual adjusted earnings per share to be in the range of $0.24 to $0.28; annual cash flow from operations to be in the range of $48 million to $52 million; and annual adjusted EBITDA is expected to be in the range of $59 million to $63 million.
Management Commentary
"Despite continuing drops in our traditional business, our new services continue to grow, led by year-over-year growth of nine percent in archiving and information management," said K. "Suri" Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "While our technology services have yet to offset declines related to printing services, our cash position remains strong as evidenced by our continuing ability to repurchase our shares and reduce our senior debt. Our capital structure is excellent, and we are confident in our ability to keep the company stable and productive during this transition."
"The type of transition ARC is going through is a tough one. The result is that we are changing at every level -- sales, operations, technology, and finance -- to balance the future needs of the market against what customers need today," Mr. Suriyakumar continued. "This is especially true given that the construction industry is slow in adopting technology. It is why I have emphasized in my previous discussions that we require 24 to 36 months to get on top of this transition."
"The company remains on sound financial footing while we work our way through the difficult sales comparison to last year," said Jorge Avalos, Chief Financial Officer of ARC Document Solutions. "Cash flow from operations is on par with last year's performance, the leverage ratio on our senior debt is below 2.5 times, and we continue to repurchase shares, all of which demonstrates our continuing focus on cash generation, debt pay-down, and returning value to our shareholders."
2016 Second Quarter Supplemental Information:
Net sales were $103.8 million, an 8.5% decrease compared to the second quarter of 2015.
Days sales outstanding in Q2 2016 were 53, compared to 54 days in Q2 2015.
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 9,240, a gain of 520 locations over Q2 2015. This information reflects the reduction of approximately 200 locations associated with a large client that did not renew their MPS engagement with us at the end of 2015.
Adjusted EBITDA excludes loss on extinguishment of debt, goodwill impairment, the impact of trade secret litigation costs, stock-based compensation expense, and restructuring expense.