"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.
Sales from Services and Product Lines as a Percentage of Net Sales
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
Services and Product Line 2016 2015 2016 2015
-------- -------- -------- --------
CDIM 52.9% 51.9% 52.3% 52.2%
MPS 32.8% 32.7% 32.5% 33.5%
AIM 3.5% 3.0% 3.6% 2.8%
Equipment and supplies sales 10.8% 12.4% 11.6% 11.5%
Outlook
ARC Document Solutions has revised is 2016 annual forecast and now anticipates annual adjusted earnings per share in 2016 to be in the range of $0.24 to $0.28 on a fully diluted basis, as compared to $0.30 to $0.35 previously. Annual cash flow from operations is now projected to be in the range of $48 million to $52 million, as compared to $55 million to $60 million previously. The Company's outlook for 2016 annual adjusted EBITDA is now expected to be in the range of $59 million to $63 million, as compared to $66 to $71 million previously.
Teleconference and Webcast
To access the live audio call, dial 888-329-8877. International callers may join the conference by dialing 719-457-2645. The conference ID number is 5777429. A live webcast will also be made available on the investor relations page of ARC Document Solution's website at ir.e-arc.com.
The webcast of the call will be available at www.e-arc.com for approximately 90 days following the call's conclusion. A telephone replay of the call also will be available for five days after the call's conclusion. To access the replay, please copy and paste the following URL into your browser http://bit.ly/29mPy39. The conference ID number is 5777429.
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
Forward-Looking Statements
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 such as "anticipates," "forecast," "project," "outlook," 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, 2015, 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.
