ARC reported that its 2017 gross sales slipped from $406 million in 2016 to $395 million in 2017, a drop of about 2.7 percent. The company also reported that AEC firms remain its primary market, accounting for 78 percent of total net sales.
One growth area the company reported is CAD color printing. Here is an excerpt from the earnings call that February 27. The speaker is Dilo Wijesuriya, ARC's COO:
"The use of color in architectural and engineering drawings continued to grow. We are seeing more traction in the use of our smart color services and more project color printing in the form of red lines and change tracking. It has become less expensive and more efficient to print in color and our recent investment in new print technology has helped us to penetrate and grow this market."
If you would like to read the transcript of the entire earnings call at the website Seeking Alpha, click here.
Below is the management commentary portion of the press release announcing the results. Click here if you'd like to read the entire press release.
Management Commentary
"At the end of 2017, ARC was more than half way through the transition we announced in 2016. While we still have our work cut out for us, we've made significant progress in protecting our print revenues while driving interest and growth in our technology offerings," said K. "Suri" Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "In the fourth quarter, CDIM declined just one percent year-over-year, and MPS sales were flat for the same period. Both were welcome improvements, and gave us reason to believe that we can counter the negative sales trends in print for the foreseeable future with aggressive measures to gain market share."
"Meanwhile, there has been significant interest and adoption in our facilities management solution. As we announced earlier this month, Facilities Executive magazine readers voted us the best provider in the 'Facility Software/Reporting Tools' category for our mobile facilities dashboards in their 25th annual Readers' Choice Award Program," said Mr. Suriyakumar. "It is tremendously exciting to disrupt such a huge market, but progress toward a purchasing decision consistently requires more education and time than we anticipated."
"While the remaining steps of our transition continue to present both challenges and opportunities, it is critical that we manage through them with a solid financial foundation. That's exactly what we delivered in 2017," Mr. Suriyakumar continued. "Our performance in 2017 was characterized by the strength of our cash flows. We paid down more than $20 million of our senior debt to maintain the strength of our capital structure; we bought back $3.4 million worth of our own stock in the fourth quarter; and we ended the year with $28 million in cash on the balance sheet. It's an indication of the continuing health of the Company and the base from which we can build in 2018."
Management anticipates its 2018 diluted annual adjusted earnings per share to be in the range of $0.10 to $0.16; annual cash provided by operating activities is projected to be in the range of $44 million to $50 million; and annual adjusted EBITDA is forecast to be in the range of $48 million to $54 million.
"We believe the investments we've made in both print and technology will fuel our progress in the coming quarters," Mr. Suriyakumar added. "As we continue to preserve our print revenue and capture more facilities business toward the latter part of 2018, we anticipate these sales will begin to offset the shrinkage in print volumes we've experienced over the past several years. While our forecast for 2018 is conservative, we expect the progress of our transition to be evident."