SAN RAMON, CA / ACCESSWIRE / November 6, 2019 / 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 third quarter ended September 30, 2019.
Management announced changes to ARC's business offerings that will drive more than $10 million in annualized cost savings by year-end 2019. The impact to future sales is expected to be minimal.
Cost savings were accomplished by:
Eliminating underperforming business initiatives and related sales & marketing costs
Optimization of regional organization structure and labor force
System and equipment upgrades to increase operating efficiency
The majority of the savings will contribute directly to the improvement of the company's adjusted EBITDA. While these actions will support the company's most recent forecast for 2019, the material result of these changes will be evident in 2020.
'Continuing pressure on our topline revenue has forced us to optimize the way we offer our services to the market,' said Suri Suriyakumar, CEO of ARC Document Solutions. 'We cannot control the market or change how our customers are using our services, but we can certainly adapt quickly to protect our cash flows and the financial well-being of the company.'
'Our business has been constantly challenged by emerging trends in the marketplace, but we are not being pressured from the loss of customers, a lack of relevant services, or from our competition. We have what our clients want and need, but they are simply not consuming it in the volume we've seen historically,' said Mr. Suriyakumar. 'Our pivot to color and non-traditional uses of our print services will help expand our addressable market, but the optimization of our sales, marketing and workforce is important to make the most of what we already have.'
'Our year-to-date cash flows are on par with our performance in 2018,'said Jorge Avalos, Chief Financial Officer. 'Also notable in the quarter was our ability to maintain our gross margins despite the drop in sales. Our operations team remained nimble and responsive even in the midst of our reconfiguration, the optimization exercise, and systems upgrades.'
2019 Third Quarter Supplemental Information:
Net sales were $94.1 million, a 6.3% decrease compared to the third quarter of 2018.
Days sales outstanding were 55 in Q3 2019 and 56 in Q3 2018.
Architectural, engineering, construction and building owner/operators (AEC/O) customers comprised approximately 79% of total net sales, while customers outside of construction made up approximately 21% of total net sales.
Total number of MPS locations at the end of the third quarter grew to approximately 10,800, a net gain of approximately 300 locations over Q3 2018.
Adjusted EBITDA excludes stock-based compensation expense and restructuring expense.
Three Months Ended
Nine Months Ended
Sales from Services and Product Lines as a Percentage of Net Sales
Equipment and supplies sales
Based on the financial results for the first nine months of the year, management maintained its annual forecast for 2019. The Company anticipates fully-diluted annual adjusted earnings per share to be in the range of $0.14 to $0.18; annual cash provided by operating activities is projected to be in the range of $45 million to $50 million; and annual adjusted EBITDA is forecast to be in the range of $49 million to $54 million.
Teleconference and Webcast
ARC Document Solutions will hold a conference call with investors and analysts on Wednesday, November 6, 2019, at 2 P.M. Pacific Time (5 P.M. Eastern Time) to discuss results for the Company's 2019 third quarter. To access the live audio call, (877) 823-7014. International callers may join the conference by dialing (647) 689-4066. The conference code is 3379417. A live webcast will also be made available on the investor relations page of ARC Document Solution's website at http://ir.e-arc.com. A replay of the webcast will be available on the website following the call's conclusion.
About ARC Document Solutions (NYSE: ARC)
ARC Document Solutions distributes Documents and Information to facilitate communication for design, engineering and construction professionals, real estate managers and developers, facilities owners, and a variety of similar disciplines. The Company provides cloud and mobile solutions, professional services, and hardware to help its customers around the world reduce costs and increase efficiency, improve information access and control, and communicate faster, easier, and better. Follow ARC at www.e-arc.com.
This press release contains forward-looking statements that are based on current opinions, estimates and assumptions of management regarding future events and the future financial performance of the Company. Words and phrases such as 'forecast', 'help expand our addressable market', and 'material result of these changes will be evident,' and similar expressions identify forward-looking statements and all statements other than statements of historical fact, including, but not limited to, any projections regarding earnings, revenues and financial performance of the Company, could be deemed forward-looking statements. We caution you that such statements are only predictions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. In addition to matters affecting the construction, managed print services, document management or reprographics industries, or the economy generally, factors that could cause actual results to differ from expectations stated in forward-looking statements include, among others, the factors described in the caption entitled 'Risk Factors' in Item 1A in ARC Document Solution's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, Quarterly Reports on Form 10-Q, and other periodic filings and prospectuses. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
VP Corporate Communications & Investor Relations
ARC Document Solutions, Inc.