ARC logo
ARC's third quarter report shows a slight decrease in its sales and a reduction in its outlook for the year from 37-41 cents to 33-36 cents. Other highlights include:
- Adjusted diluted earnings per share were $0.09 vs. $0.06 in Q3 2014; adjustments include the reversal of more than $70 million of a valuation allowance against certain of ARC's deferred tax assets as a result of the company's sustained profitability over the past three years and forecasted continuing profitability
- Adjusted cash flow from operations was $21.0 million, a 23% increase over Q3 2014
- Gross profit was flat year-over-year, delivering a gross margin of 33.8%
- Sales of $106.4 million were flat year-over-year
- Adjusted EBITDA of $17.9 million fell 2% year-over-year
- Management revises its annual outlook for 2015; diluted annual adjusted earnings per share currently projected to be in the range of $0.33 to $0.36; annual adjusted cash provided by operating activities currently projected to be in the range of $58 to $61 million; and annual adjusted EBITDA to currently projected to be in the range of $70 million to $73 million
Here is some management commentary from the press release:
"The third quarter demonstrated the increasing momentum of our cloud-based solutions. Our archiving and information management offering rose from 16% year-over-year growth in the second quarter to 44% year-over-year growth in the third quarter, and we were pleased with the response to the latest release of SKYSITE", our mobile document and information management application for construction professionals. The reception of both solutions highlight the growing value we can provide to a market that is increasingly focused on reducing costs and boosting efficiency with cloud-based tools," said K. "Suri" Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "We were also able to reverse a valuation allowance of more than $70 million against certain of our deferred tax assets. This represents an important milestone in the company's history. We've produced three years of strong financial performance following the recession and its aftermath which allows us to forecast the use of these deferred tax assets in future periods."
"Not withstanding these successes, challenges remain," continued Mr. Suriyakumar. "Continuing implementation delays in large MPS contracts and the reduction of large-format printing pressured sales in the third quarter. While we expect conditions to improve in 2016, and while the progress in AIM, document management services, and color printing are helping to offset declines in other areas, we are revising our 2015 outlook to account for current circumstances."
Jorge Avalos, Chief Financial Officer for ARC Document Solutions said, "Our financial performance, improved capital structure, and the use of our deferred tax assets to significantly reduce our current cash taxes continue to produce strong cash flows from operations. Despite moderating sales performance, we continue to aggressively reduce our debt, improve our balance sheet, and generate strong free cash flows."
To read the whole press release, including more details financial reports, click here: http://seekingalpha.com/pr/15242336-arc-document-solutions-reports-results-for-third-quarter-2015