Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries ARC Reports Second Quarter Year-Over-Year Increases in Sales, Gross Margin, EPS and EBITDA By: ARC Document Solutions via AccessWire August 03, 2021 at 16:05 PM EDT SAN RAMON, CA / ACCESSWIRE / August 3, 2021 / ARC Document Solutions, Inc. (NYSE:ARC), a leading document solutions provider to professionals in the design, marketing, commercial real estate, construction and related fields, today reported its financial results for the second quarter ended June 30, 2021.Financial Highlights: Three Months Ended Six Months Ended June 30, June 30, (All dollar amounts in millions, except EPS) 2021 2020 2021 2020 Net sales $68.8 $64.3 $130.5 $152.7 Gross margin 33.1% 31.8% 31.9% 31.5%Net income attributable to ARC $2.6 $1.5 $3.4 $2.1 Adjusted net income attributable to ARC $2.6 $1.2 $3.6 $2.4 Earnings per share - Diluted $0.06 $0.03 $0.08 $0.05 Adjusted earnings per share - Diluted $0.06 $0.03 $0.08 $0.06 Cash provided by operating activities $11.5 $23.5 $16.9 $26.3 EBITDA $10.7 $10.3 $19.1 $21.2 Adjusted EBITDA $11.1 $10.7 $19.9 $22.1 Capital Expenditures $1.0 $1.5 $1.6 $2.6 Debt & finance leases (including current) $83.6 $122.8 Management Commentary:"We are pleased with our second quarter growth in sales and the improvements in gross margin, EPS and adjusted EBITDA that came with it," said Suri Suriyakumar, Chairman, President and CEO of ARC. "The diversity of our products and services continue to drive expansion into digital color production and the economic re-opening is bringing new vitality to our existing customers in the AEC market. Every major category of sales grew during the second quarter.""Our sales teams capitalized on new opportunities often driven by targeted marketing campaigns. We are watching closely how various industry verticals are responding to changing business conditions, and we are adapting quickly to build momentum for the second half of the year," said Mr. Suriyakumar."We have established a sustainable and efficient cost structure that leverages every new dollar of sales," said Jorge Avalos, Chief Financial Officer of ARC. "This is best demonstrated by our strong performance in the absence of temporary measures we made last year due to the pandemic's uncertainties. In particular, we were gratified to eliminate the temporary wage reductions we put in place in 2020 for the majority of our staff. We also managed inventory closely to avoid potential supply chain disruptions, and dealing with inflation was essentially a non-issue for the company as cost increases in our materials are built into the pricing of our services.""Cash flows from operations were healthy for the period, as they reflect the usual cyclical build we see in the first half of the year," said Mr. Avalos. "We are encouraged by the progress we made in the second quarter and look forward to continuing it in the last two quarters of the year."2021 Second Quarter Supplemental Information:Net sales were $68.8 million, a 7.0% increase compared to the second quarter of 2020.Cash & cash equivalents on the consolidated balance sheet in the second quarter 2021 were $52.4 million.Days sales outstanding were 50 in Q2 2021 as compared to 59 in Q2 2020.Architectural, engineering, construction and building owner/operators (AEC/O) customers comprised approximately 67% of total net sales, while customers outside of construction made up approximately 33% of total net sales.The number of managed print services (MPS) locations dropped by approximately 165 locations year over year to approximately 10,780 as of June 30, 2021.Net RevenueIn millions 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 Total net revenue $68.8 $61.7 $289.5 $64.3 $72.4 $64.3 For the second quarter 2021, net sales increased 7.0%, compared to the same period in 2020 primarily due to increasing year-over-year economic activity as the negative effects of the recent pandemic subsided. Sales in the second quarter also benefited from targeted marketing of services to address the changing graphic printing and scanning needs of customers.Revenue by Business LinesIn millions 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 CDIM $43.1 $37.4 $175.5 $38.2 $47.1 $41.1 MPS $18.0 $17.3 $79.3 $18.1 $17.6 $16.2 AIM $3.3 $3.0 $12.3 $3.1 $2.9 $2.7 Equipment and supplies $4.4 $3.9 $22.3 $4.9 $4.7 $4.4 For the second quarter 2021, construction document and information management (CDIM) sales increased 4.9% compared to prior year. As noted in previous quarters, the negative impact of the pandemic on CDIM has not been as pronounced as in other parts of our business due to the expansion of products and services beyond the construction vertical. During the second quarter, sales of these expanded services, primarily color graphics, have been driven by secular demands of businesses re-opening as opposed to sales of COVID-related products and services. Sales of construction and design-related services also grew during the period, coinciding with a resumption in building activity in most North American markets.For the second quarter 2021, MPS sales increased 10.9% year-over-year. MPS sales increased as work from home directives ended for some of our customers, which in turn, lead to increased demand for our services performed on site.For the second quarter 2021, archiving and information management (AIM) sales increased 23.9% year-over-year. Sales increases in AIM were driven by reasons similar to MPS, primarily attributable to the return of workers in offices and creating greater demand for scanning services.For the second quarter 2021, equipment and supplies sales increased 1.3% year-over-year. The increase is a reflection of the more favorable economic conditions in 2021 when compared to the second quarter of 2020. Equipment and supply sales from our Chinese joint venture declined due to continued constraints on capital spending in that country, but were offset by improvements in U.S. sales as the economy began to recover.Gross ProfitIn millions unless otherwise indicated 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 Gross profit $22.8 $18.8 $92.9 $20.7 $24.2 $20.4 Gross margin 33.1% 30.4% 32.1% 32.1% 33.4% 31.8% Gross profit increased 11.5% primarily due to the 7% growth in second quarter net sales coupled with the leverage gained from the permanent changes we made to our cost structure in 2020. Gross margin increased 130 basis points year-over-year.Selling, General and Administrative ExpensesIn millions 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 Selling,general and administrative expenses $18.5 $17.0 $79.0 $18.2 $19.2 $17.3 Selling, general and administrative (SG&A) expenses in the second quarter 2021 increased by 7.3% year-over-year driven by increased commissions and bonus payments related to improved sales and profitability for the period. Also notable during the second quarter was the normalization of payrolls as the Company eliminated temporary wage reductions for most employees put in place at the beginning of the pandemic.Net Income and Earnings Per ShareIn millions unless otherwise indicated 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 Net income attributable to ARC - GAAP $2.6 $0.8 $6.2 $1.3 $2.8 $1.5 Adjusted net income attributable to ARC $2.6 $0.9 $6.3 $1.0 $2.9 $1.2 Earnings per share attributable to ARC Diluted EPS - GAAP $0.06 $0.02 $0.14 $0.03 $0.07 $0.03 Adjusted diluted EPS $0.06 $0.02 $0.15 $0.02 $0.07 $0.03 The year-over-year increase in GAAP net income attributable to ARC for the second quarter of 2021 was driven by higher sales, improved gross profit, and significantly lower net interest expense as a result of debt pay downs and a decrease in LIBOR.Cash Provided by Operating ActivitiesIn millions 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 Cash provided by operating activities $ 11.5 $ 5.4 $ 54.5 $ 15.5 $ 12.8 $ 23.5 The year-over-year decrease in cash flows from operations during the second quarter of 2021 reflect normalized levels of cash generation and collectibles for the period, compared to the same period in 2020 when aggressive measures were implemented to manage working capital and preserve cash in response to the COVID-19 pandemic.EBITDAIn millions 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 EBITDA $10.7 $8.4 $43.2 $9.9 $12.1 $10.3 Adjusted EBITDA $11.1 $8.8 $44.8 $10.2 $12.5 $10.7 Increases in EBITDA and adjusted EBITDA in the second quarter of 2021 were driven primarily by the increase in sales. Three Months Ended Six Months Ended June 30, June 30, Sales from Services and Product Lines as a Percentage of Net Sales 2021 2020 2021 2020 CDIM 62.6% 63.9% 61.7% 59.1%MPS 26.2% 25.2% 27.1% 28.5%AIM 4.8% 4.1% 4.8% 4.1%Equipment and supplies sales 6.4% 6.8% 6.4% 8.3%OutlookDue to the economic uncertainty driven by the COVID-19 pandemic, ARC has not issued a full forecast for 2021, but has stated its confidence in generating at least $10 million in adjusted EBITDA per quarter for the balance of the year. Management will consider issuing a more complete forecast in the future if more reliable indicators become available.Teleconference and WebcastARC Document Solutions will hold a conference call with investors and analysts on Tuesday, August 3, 2021, at 2 P.M. Pacific Time (5 P.M. Eastern Time) to discuss results for the Company's 2021 second quarter. To access the live audio call, dial (833) 968-2212. International callers may join the conference by dialing (778) 560-2897. The conference code is 1237156 and will be required to dial in to the call. 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 provides a wide variety of document distribution and graphic production services to facilitate communication for professionals in the design, marketing, commercial real estate, construction and related fields. Follow ARC at www.e-arc.com.Forward-Looking StatementsThis 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, including forward-looking statements related to the impact of the COVID-19 pandemic on the Company's operations. Words and phrases such as "continue to drive expansion", "we are adapting quickly to build momentum for the second half of the year", "encouraged by the progress we made in the second quarter and look forward to continuing it in the last two quarters of the year", 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 section titled "Part I - Item 1A. Risk Factors " of ARC Document Solution's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, 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.Contact Information:David StickneyVP Corporate Communications & Investor Relations925-949-5114ARC Document Solutions, Inc.Consolidated Balance Sheets(In thousands, except per share data)(Unaudited) June 30, December 31, Current assets: 2021 2020 Cash and cash equivalents $52,372 $54,950 Accounts receivable, net of allowances for accounts receivable of $2,246 and $2,357 38,222 36,279 Inventory 9,287 9,474 Prepaid expenses 4,669 4,065 Other current assets 3,287 3,979 Total current assets 107,837 108,747 Property and equipment, net of accumulated depreciation of $226,453 and $219,834 48,961 57,830 Right-of-use assets from operating leases 33,993 37,859 Goodwill 121,051 121,051 Other intangible assets, net 392 515 Deferred income taxes 15,749 17,261 Other assets 2,267 2,175 Total assets $330,250 $345,438 Current liabilities: Accounts payable $20,057 $18,661 Accrued payroll and payroll-related expenses 12,160 10,088 Accrued expenses 16,288 17,783 Current operating lease liabilities 11,039 12,158 Current portion of finance leases 15,514 17,557 Total current liabilities 75,058 76,247 Long-term operating lease liabilities 29,694 33,561 Long-term debt and finance leases 68,132 79,679 Other long-term liabilities 1,571 1,615 Total liabilities 174,455 191,102 Commitments and contingencies Shareholders' equity: ARC Document Solutions, Inc. shareholders' equity: Preferred stock, $0.001 par value, 25,000 shares authorized; 0 shares issued and outstanding - - Common stock, $0.001 par value, 150,000 shares authorized;50,403 and 49,422 shares issued and 43,298 and 42,792 shares outstanding 50 49 Additional paid-in capital 128,524 127,755 Retained earnings 38,982 37,308 Accumulated other comprehensive loss (2,535) (2,787) 165,021 162,325 Less cost of common stock in treasury, 7,105 and 6,630 shares 15,682 14,657 Total ARC Document Solutions, Inc. shareholders' equity 149,339 147,668 Noncontrolling interest 6,456 6,668 Total equity 155,795 154,336 Total liabilities and equity $330,250 $345,438 ARC Document Solutions, Inc.Consolidated Statements of Operations(In thousands, except per share data)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net sales $68,799 $64,319 $130,529 $152,744 Cost of sales 46,007 43,874 88,950 104,702 Gross profit 22,792 20,445 41,579 48,042 Selling, general and administrative expenses 18,549 17,292 35,544 41,630 Amortization of intangible assets 56 471 131 1,068 Income from operations 4,187 2,682 5,904 5,344 Other income, net (12) (17) (23) (33)Interest expense, net 576 1,131 1,196 2,240 Income before income tax provision 3,623 1,568 4,731 3,137 Income tax provision 1,155 148 1,651 1,255 Net income 2,468 1,420 3,080 1,882 Loss attributable to the noncontrolling interest 106 41 283 262 Net income attributable to ARC Document Solutions, Inc. shareholders $2,574 $1,461 $3,363 $2,144 Earnings per share attributable to ARC Document Solutions, Inc. shareholders: Basic $0.06 $0.03 $0.08 $0.05 Diluted $0.06 $0.03 $0.08 $0.05 Weighted average common shares outstanding: Basic 42,304 42,672 42,284 43,154 Diluted 42,597 42,767 42,613 43,277 ARC Document Solutions, Inc.Consolidated Statements of Cash Flows(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Cash flows from operating activities Net income $2,468 $1,420 $3,080 $1,882 Adjustments to reconcile net income to net cash provided by operating activities: Allowance for accounts receivable 42 251 6 517 Depreciation 6,319 7,057 12,768 14,464 Amortization of intangible assets 56 471 131 1,068 Amortization of deferred financing costs 16 16 32 32 Stock-based compensation 404 416 743 920 Deferred income taxes 1,042 493 1,434 1,244 Deferred tax valuation allowance 43 (318) 103 (28)Other non-cash items, net (41) (14) (79) (32)Changes in operating assets and liabilities: Accounts receivable, net (1,355) 10,161 (1,859) 8,166 Inventory 504 915 214 1,942 Prepaid expenses and other assets 1,973 3,607 5,323 7,011 Accounts payable and accrued expenses 43 (994) (5,007) (10,931)Net cash provided by operating activities 11,514 23,481 16,889 26,255 Cash flows from investing activities Capital expenditures (986) (1,460) (1,554) (2,581)Other 89 7 220 80 Net cash used in investing activities (897) (1,453) (1,334) (2,501)Cash flows from financing activities Proceeds from issuance of common stock under Employee Stock Purchase Plan 12 20 26 40 Share repurchases (869) - (1,025) (2,432)Payments on finance leases (4,748) (1,698) (9,565) (6,300)Borrowings under revolving credit facilities 23,750 - 38,750 40,000 Payments under revolving credit facilities (25,000) - (45,000) (25,000)Payment of deferred financing costs (281) - (281) - Dividends paid (847) (427) (1,269) (870)Net cash (used in) provided by financing activities (7,983) (2,105) (18,364) 5,438 Effect of foreign currency translation on cash balances 278 298 231 (186)Net change in cash and cash equivalents 2,912 20,221 (2,578) 29,006 Cash and cash equivalents at beginning of period 49,460 38,210 54,950 29,425 Cash and cash equivalents at end of period $52,372 $58,431 $52,372 $58,431 Supplemental disclosure of cash flow information Noncash investing and financing activities Finance lease obligations incurred $1,220 $2,725 $2,094 $8,078 Operating lease obligations incurred $780 $146 $1,198 $3,644 ARC Document Solutions, Inc.Net Sales by Product Line(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 CDIM $43,089 $41,070 $80,523 $90,230 MPS 18,005 16,233 35,340 43,541 AIM 3,286 2,653 6,310 6,253 Equipment and supplies sales 4,419 4,363 8,356 12,720 Net sales $68,799 $64,319 $130,529 $152,744 ARC Document Solutions, Inc.Non-GAAP MeasuresReconciliation of cash flows provided by operating activities to EBITDA and Adjusted EBITDA(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Cash flows provided by operating activities $11,514 $23,481 $16,889 $26,255 Changes in operating assets and liabilities (1,165) (13,689) 1,329 (6,188)Non-cash expenses, including depreciation and amortization (7,881) (8,372) (15,138) (18,185)Income tax provision 1,155 148 1,651 1,255 Interest expense, net 576 1,131 1,196 2,240 Loss attributable to the noncontrolling interest 106 41 283 262 Depreciation and amortization 6,375 7,528 12,899 15,532 EBITDA 10,680 10,268 19,109 21,171 Stock-based compensation 404 416 743 920 Adjusted EBITDA $11,084 $10,684 $19,852 $22,091 ARC Document Solutions, Inc.Non-GAAP MeasuresReconciliation of net income attributable to ARC Document Solutions, Inc. to EBITDA and Adjusted EBITDA(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net income attributable to ARC Document Solutions, Inc. $2,574 $1,461 $3,363 $2,144 Interest expense, net 576 1,131 1,196 2,240 Income tax provision 1,155 148 1,651 1,255 Depreciation and amortization 6,375 7,528 12,899 15,532 EBITDA 10,680 10,268 19,109 21,171 Stock-based compensation 404 416 743 920 Adjusted EBITDA $11,084 $10,684 $19,852 $22,091 See Non-GAAP Financial Measures discussion below.ARC Document Solutions, Inc.Non-GAAP MeasuresReconciliation of net income attributable to ARC Document Solutions, Inc. to unaudited adjusted net income attributable to ARC Document Solutions, Inc.(In thousands, except per share data)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net income attributable to ARC Document Solutions, Inc. $2,574 $1,461 $3,363 $2,144 Deferred tax valuation allowance and other discrete tax items 68 (240) 199 259 Adjusted net income attributable to ARC Document Solutions, Inc. $2,642 $1,221 $3,562 $2,403 Actual: Earnings per share attributable to ARC Document Solutions, Inc. shareholders: Basic $0.06 $0.03 $0.08 $0.05 Diluted $0.06 $0.03 $0.08 $0.05 Weighted average common shares outstanding: Basic 42,304 42,672 42,284 43,154 Diluted 42,597 42,767 42,613 43,277 Adjusted: Earnings per share attributable to ARC Document Solutions, Inc. shareholders: Basic $0.06 $0.03 $0.08 $0.06 Diluted $0.06 $0.03 $0.08 $0.06 Weighted average common shares outstanding: Basic 42,304 42,672 42,284 43,154 Diluted 42,597 42,767 42,613 43,277 See Non-GAAP Financial Measures discussion below.Non-GAAP Financial MeasuresEBITDA and related ratios presented in this report are supplemental measures of our performance that are not required by or presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These measures are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, income from operations, or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating, investing or financing activities as a measure of our liquidity.EBITDA represents net income before interest, taxes, depreciation and amortization.We have presented EBITDA and related ratios because we consider them important supplemental measures of our performance and liquidity. We believe investors may also find these measures meaningful, given how our management makes use of them. The following is a discussion of our use of these measures.We use EBITDA to measure and compare the performance of our operating segments. Our operating segments' financial performance includes all of the operating activities except debt and taxation which are managed at the corporate level for U.S. operating segments. We use EBITDA to compare the performance of our operating segments and to measure performance for determining consolidated-level compensation. In addition, we use EBITDA to evaluate potential acquisitions and potential capital expenditures.EBITDA and related ratios have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows:They do not reflect our cash expenditures, or future requirements for capital expenditures and contractual commitments;They do not reflect changes in, or cash requirements for, our working capital needs;They do not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments on our debt;Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; andOther companies, including companies in our industry, may calculate these measures differently than we do, limiting their usefulness as comparative measures.Because of these limitations, EBITDA and related ratios should not be considered as measures of discretionary cash available to us to invest in business growth or to reduce our indebtedness. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and related ratios only as supplements.Our presentation of adjusted net income and adjusted EBITDA is an attempt to provide meaningful comparisons to our historical performance for our existing and future investors. The unprecedented changes in our end markets over the past several years have required us to take measures that are unique in our history and specific to individual circumstances. Comparisons inclusive of these actions make normal financial and other performance patterns difficult to discern under a strict GAAP presentation. Each non-GAAP presentation, however, is explained in detail in the reconciliation tables above.Specifically, we have presented adjusted net income attributable to ARC and adjusted earnings per share attributable to ARC shareholders for the three and six months ended June 30, 2021 and 2020 to reflect the exclusion of changes in the valuation allowances related to certain deferred tax assets and other discrete tax items. This presentation facilitates a meaningful comparison of our operating results for the three and six months ended June 30, 2021 and 2020.We have presented adjusted EBITDA for the three and six months ended June 30, 2021 and 2020 to exclude stock-based compensation expense. The adjustment of EBITDA is consistent with the definition of adjusted EBITDA in our credit agreement; therefore, we believe this information is useful to investors in assessing our financial performance.SOURCE: ARC Document SolutionsView source version on accesswire.com: https://www.accesswire.com/658115/ARC-Reports-Second-Quarter-Year-Over-Year-Increases-in-Sales-Gross-Margin-EPS-and-EBITDA Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
ARC Reports Second Quarter Year-Over-Year Increases in Sales, Gross Margin, EPS and EBITDA By: ARC Document Solutions via AccessWire August 03, 2021 at 16:05 PM EDT SAN RAMON, CA / ACCESSWIRE / August 3, 2021 / ARC Document Solutions, Inc. (NYSE:ARC), a leading document solutions provider to professionals in the design, marketing, commercial real estate, construction and related fields, today reported its financial results for the second quarter ended June 30, 2021.Financial Highlights: Three Months Ended Six Months Ended June 30, June 30, (All dollar amounts in millions, except EPS) 2021 2020 2021 2020 Net sales $68.8 $64.3 $130.5 $152.7 Gross margin 33.1% 31.8% 31.9% 31.5%Net income attributable to ARC $2.6 $1.5 $3.4 $2.1 Adjusted net income attributable to ARC $2.6 $1.2 $3.6 $2.4 Earnings per share - Diluted $0.06 $0.03 $0.08 $0.05 Adjusted earnings per share - Diluted $0.06 $0.03 $0.08 $0.06 Cash provided by operating activities $11.5 $23.5 $16.9 $26.3 EBITDA $10.7 $10.3 $19.1 $21.2 Adjusted EBITDA $11.1 $10.7 $19.9 $22.1 Capital Expenditures $1.0 $1.5 $1.6 $2.6 Debt & finance leases (including current) $83.6 $122.8 Management Commentary:"We are pleased with our second quarter growth in sales and the improvements in gross margin, EPS and adjusted EBITDA that came with it," said Suri Suriyakumar, Chairman, President and CEO of ARC. "The diversity of our products and services continue to drive expansion into digital color production and the economic re-opening is bringing new vitality to our existing customers in the AEC market. Every major category of sales grew during the second quarter.""Our sales teams capitalized on new opportunities often driven by targeted marketing campaigns. We are watching closely how various industry verticals are responding to changing business conditions, and we are adapting quickly to build momentum for the second half of the year," said Mr. Suriyakumar."We have established a sustainable and efficient cost structure that leverages every new dollar of sales," said Jorge Avalos, Chief Financial Officer of ARC. "This is best demonstrated by our strong performance in the absence of temporary measures we made last year due to the pandemic's uncertainties. In particular, we were gratified to eliminate the temporary wage reductions we put in place in 2020 for the majority of our staff. We also managed inventory closely to avoid potential supply chain disruptions, and dealing with inflation was essentially a non-issue for the company as cost increases in our materials are built into the pricing of our services.""Cash flows from operations were healthy for the period, as they reflect the usual cyclical build we see in the first half of the year," said Mr. Avalos. "We are encouraged by the progress we made in the second quarter and look forward to continuing it in the last two quarters of the year."2021 Second Quarter Supplemental Information:Net sales were $68.8 million, a 7.0% increase compared to the second quarter of 2020.Cash & cash equivalents on the consolidated balance sheet in the second quarter 2021 were $52.4 million.Days sales outstanding were 50 in Q2 2021 as compared to 59 in Q2 2020.Architectural, engineering, construction and building owner/operators (AEC/O) customers comprised approximately 67% of total net sales, while customers outside of construction made up approximately 33% of total net sales.The number of managed print services (MPS) locations dropped by approximately 165 locations year over year to approximately 10,780 as of June 30, 2021.Net RevenueIn millions 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 Total net revenue $68.8 $61.7 $289.5 $64.3 $72.4 $64.3 For the second quarter 2021, net sales increased 7.0%, compared to the same period in 2020 primarily due to increasing year-over-year economic activity as the negative effects of the recent pandemic subsided. Sales in the second quarter also benefited from targeted marketing of services to address the changing graphic printing and scanning needs of customers.Revenue by Business LinesIn millions 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 CDIM $43.1 $37.4 $175.5 $38.2 $47.1 $41.1 MPS $18.0 $17.3 $79.3 $18.1 $17.6 $16.2 AIM $3.3 $3.0 $12.3 $3.1 $2.9 $2.7 Equipment and supplies $4.4 $3.9 $22.3 $4.9 $4.7 $4.4 For the second quarter 2021, construction document and information management (CDIM) sales increased 4.9% compared to prior year. As noted in previous quarters, the negative impact of the pandemic on CDIM has not been as pronounced as in other parts of our business due to the expansion of products and services beyond the construction vertical. During the second quarter, sales of these expanded services, primarily color graphics, have been driven by secular demands of businesses re-opening as opposed to sales of COVID-related products and services. Sales of construction and design-related services also grew during the period, coinciding with a resumption in building activity in most North American markets.For the second quarter 2021, MPS sales increased 10.9% year-over-year. MPS sales increased as work from home directives ended for some of our customers, which in turn, lead to increased demand for our services performed on site.For the second quarter 2021, archiving and information management (AIM) sales increased 23.9% year-over-year. Sales increases in AIM were driven by reasons similar to MPS, primarily attributable to the return of workers in offices and creating greater demand for scanning services.For the second quarter 2021, equipment and supplies sales increased 1.3% year-over-year. The increase is a reflection of the more favorable economic conditions in 2021 when compared to the second quarter of 2020. Equipment and supply sales from our Chinese joint venture declined due to continued constraints on capital spending in that country, but were offset by improvements in U.S. sales as the economy began to recover.Gross ProfitIn millions unless otherwise indicated 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 Gross profit $22.8 $18.8 $92.9 $20.7 $24.2 $20.4 Gross margin 33.1% 30.4% 32.1% 32.1% 33.4% 31.8% Gross profit increased 11.5% primarily due to the 7% growth in second quarter net sales coupled with the leverage gained from the permanent changes we made to our cost structure in 2020. Gross margin increased 130 basis points year-over-year.Selling, General and Administrative ExpensesIn millions 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 Selling,general and administrative expenses $18.5 $17.0 $79.0 $18.2 $19.2 $17.3 Selling, general and administrative (SG&A) expenses in the second quarter 2021 increased by 7.3% year-over-year driven by increased commissions and bonus payments related to improved sales and profitability for the period. Also notable during the second quarter was the normalization of payrolls as the Company eliminated temporary wage reductions for most employees put in place at the beginning of the pandemic.Net Income and Earnings Per ShareIn millions unless otherwise indicated 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 Net income attributable to ARC - GAAP $2.6 $0.8 $6.2 $1.3 $2.8 $1.5 Adjusted net income attributable to ARC $2.6 $0.9 $6.3 $1.0 $2.9 $1.2 Earnings per share attributable to ARC Diluted EPS - GAAP $0.06 $0.02 $0.14 $0.03 $0.07 $0.03 Adjusted diluted EPS $0.06 $0.02 $0.15 $0.02 $0.07 $0.03 The year-over-year increase in GAAP net income attributable to ARC for the second quarter of 2021 was driven by higher sales, improved gross profit, and significantly lower net interest expense as a result of debt pay downs and a decrease in LIBOR.Cash Provided by Operating ActivitiesIn millions 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 Cash provided by operating activities $ 11.5 $ 5.4 $ 54.5 $ 15.5 $ 12.8 $ 23.5 The year-over-year decrease in cash flows from operations during the second quarter of 2021 reflect normalized levels of cash generation and collectibles for the period, compared to the same period in 2020 when aggressive measures were implemented to manage working capital and preserve cash in response to the COVID-19 pandemic.EBITDAIn millions 2Q 2021 1Q 2021 FYE 2020 4Q 2020 3Q 2020 2Q 2020 EBITDA $10.7 $8.4 $43.2 $9.9 $12.1 $10.3 Adjusted EBITDA $11.1 $8.8 $44.8 $10.2 $12.5 $10.7 Increases in EBITDA and adjusted EBITDA in the second quarter of 2021 were driven primarily by the increase in sales. Three Months Ended Six Months Ended June 30, June 30, Sales from Services and Product Lines as a Percentage of Net Sales 2021 2020 2021 2020 CDIM 62.6% 63.9% 61.7% 59.1%MPS 26.2% 25.2% 27.1% 28.5%AIM 4.8% 4.1% 4.8% 4.1%Equipment and supplies sales 6.4% 6.8% 6.4% 8.3%OutlookDue to the economic uncertainty driven by the COVID-19 pandemic, ARC has not issued a full forecast for 2021, but has stated its confidence in generating at least $10 million in adjusted EBITDA per quarter for the balance of the year. Management will consider issuing a more complete forecast in the future if more reliable indicators become available.Teleconference and WebcastARC Document Solutions will hold a conference call with investors and analysts on Tuesday, August 3, 2021, at 2 P.M. Pacific Time (5 P.M. Eastern Time) to discuss results for the Company's 2021 second quarter. To access the live audio call, dial (833) 968-2212. International callers may join the conference by dialing (778) 560-2897. The conference code is 1237156 and will be required to dial in to the call. 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 provides a wide variety of document distribution and graphic production services to facilitate communication for professionals in the design, marketing, commercial real estate, construction and related fields. Follow ARC at www.e-arc.com.Forward-Looking StatementsThis 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, including forward-looking statements related to the impact of the COVID-19 pandemic on the Company's operations. Words and phrases such as "continue to drive expansion", "we are adapting quickly to build momentum for the second half of the year", "encouraged by the progress we made in the second quarter and look forward to continuing it in the last two quarters of the year", 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 section titled "Part I - Item 1A. Risk Factors " of ARC Document Solution's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, 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.Contact Information:David StickneyVP Corporate Communications & Investor Relations925-949-5114ARC Document Solutions, Inc.Consolidated Balance Sheets(In thousands, except per share data)(Unaudited) June 30, December 31, Current assets: 2021 2020 Cash and cash equivalents $52,372 $54,950 Accounts receivable, net of allowances for accounts receivable of $2,246 and $2,357 38,222 36,279 Inventory 9,287 9,474 Prepaid expenses 4,669 4,065 Other current assets 3,287 3,979 Total current assets 107,837 108,747 Property and equipment, net of accumulated depreciation of $226,453 and $219,834 48,961 57,830 Right-of-use assets from operating leases 33,993 37,859 Goodwill 121,051 121,051 Other intangible assets, net 392 515 Deferred income taxes 15,749 17,261 Other assets 2,267 2,175 Total assets $330,250 $345,438 Current liabilities: Accounts payable $20,057 $18,661 Accrued payroll and payroll-related expenses 12,160 10,088 Accrued expenses 16,288 17,783 Current operating lease liabilities 11,039 12,158 Current portion of finance leases 15,514 17,557 Total current liabilities 75,058 76,247 Long-term operating lease liabilities 29,694 33,561 Long-term debt and finance leases 68,132 79,679 Other long-term liabilities 1,571 1,615 Total liabilities 174,455 191,102 Commitments and contingencies Shareholders' equity: ARC Document Solutions, Inc. shareholders' equity: Preferred stock, $0.001 par value, 25,000 shares authorized; 0 shares issued and outstanding - - Common stock, $0.001 par value, 150,000 shares authorized;50,403 and 49,422 shares issued and 43,298 and 42,792 shares outstanding 50 49 Additional paid-in capital 128,524 127,755 Retained earnings 38,982 37,308 Accumulated other comprehensive loss (2,535) (2,787) 165,021 162,325 Less cost of common stock in treasury, 7,105 and 6,630 shares 15,682 14,657 Total ARC Document Solutions, Inc. shareholders' equity 149,339 147,668 Noncontrolling interest 6,456 6,668 Total equity 155,795 154,336 Total liabilities and equity $330,250 $345,438 ARC Document Solutions, Inc.Consolidated Statements of Operations(In thousands, except per share data)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net sales $68,799 $64,319 $130,529 $152,744 Cost of sales 46,007 43,874 88,950 104,702 Gross profit 22,792 20,445 41,579 48,042 Selling, general and administrative expenses 18,549 17,292 35,544 41,630 Amortization of intangible assets 56 471 131 1,068 Income from operations 4,187 2,682 5,904 5,344 Other income, net (12) (17) (23) (33)Interest expense, net 576 1,131 1,196 2,240 Income before income tax provision 3,623 1,568 4,731 3,137 Income tax provision 1,155 148 1,651 1,255 Net income 2,468 1,420 3,080 1,882 Loss attributable to the noncontrolling interest 106 41 283 262 Net income attributable to ARC Document Solutions, Inc. shareholders $2,574 $1,461 $3,363 $2,144 Earnings per share attributable to ARC Document Solutions, Inc. shareholders: Basic $0.06 $0.03 $0.08 $0.05 Diluted $0.06 $0.03 $0.08 $0.05 Weighted average common shares outstanding: Basic 42,304 42,672 42,284 43,154 Diluted 42,597 42,767 42,613 43,277 ARC Document Solutions, Inc.Consolidated Statements of Cash Flows(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Cash flows from operating activities Net income $2,468 $1,420 $3,080 $1,882 Adjustments to reconcile net income to net cash provided by operating activities: Allowance for accounts receivable 42 251 6 517 Depreciation 6,319 7,057 12,768 14,464 Amortization of intangible assets 56 471 131 1,068 Amortization of deferred financing costs 16 16 32 32 Stock-based compensation 404 416 743 920 Deferred income taxes 1,042 493 1,434 1,244 Deferred tax valuation allowance 43 (318) 103 (28)Other non-cash items, net (41) (14) (79) (32)Changes in operating assets and liabilities: Accounts receivable, net (1,355) 10,161 (1,859) 8,166 Inventory 504 915 214 1,942 Prepaid expenses and other assets 1,973 3,607 5,323 7,011 Accounts payable and accrued expenses 43 (994) (5,007) (10,931)Net cash provided by operating activities 11,514 23,481 16,889 26,255 Cash flows from investing activities Capital expenditures (986) (1,460) (1,554) (2,581)Other 89 7 220 80 Net cash used in investing activities (897) (1,453) (1,334) (2,501)Cash flows from financing activities Proceeds from issuance of common stock under Employee Stock Purchase Plan 12 20 26 40 Share repurchases (869) - (1,025) (2,432)Payments on finance leases (4,748) (1,698) (9,565) (6,300)Borrowings under revolving credit facilities 23,750 - 38,750 40,000 Payments under revolving credit facilities (25,000) - (45,000) (25,000)Payment of deferred financing costs (281) - (281) - Dividends paid (847) (427) (1,269) (870)Net cash (used in) provided by financing activities (7,983) (2,105) (18,364) 5,438 Effect of foreign currency translation on cash balances 278 298 231 (186)Net change in cash and cash equivalents 2,912 20,221 (2,578) 29,006 Cash and cash equivalents at beginning of period 49,460 38,210 54,950 29,425 Cash and cash equivalents at end of period $52,372 $58,431 $52,372 $58,431 Supplemental disclosure of cash flow information Noncash investing and financing activities Finance lease obligations incurred $1,220 $2,725 $2,094 $8,078 Operating lease obligations incurred $780 $146 $1,198 $3,644 ARC Document Solutions, Inc.Net Sales by Product Line(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 CDIM $43,089 $41,070 $80,523 $90,230 MPS 18,005 16,233 35,340 43,541 AIM 3,286 2,653 6,310 6,253 Equipment and supplies sales 4,419 4,363 8,356 12,720 Net sales $68,799 $64,319 $130,529 $152,744 ARC Document Solutions, Inc.Non-GAAP MeasuresReconciliation of cash flows provided by operating activities to EBITDA and Adjusted EBITDA(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Cash flows provided by operating activities $11,514 $23,481 $16,889 $26,255 Changes in operating assets and liabilities (1,165) (13,689) 1,329 (6,188)Non-cash expenses, including depreciation and amortization (7,881) (8,372) (15,138) (18,185)Income tax provision 1,155 148 1,651 1,255 Interest expense, net 576 1,131 1,196 2,240 Loss attributable to the noncontrolling interest 106 41 283 262 Depreciation and amortization 6,375 7,528 12,899 15,532 EBITDA 10,680 10,268 19,109 21,171 Stock-based compensation 404 416 743 920 Adjusted EBITDA $11,084 $10,684 $19,852 $22,091 ARC Document Solutions, Inc.Non-GAAP MeasuresReconciliation of net income attributable to ARC Document Solutions, Inc. to EBITDA and Adjusted EBITDA(In thousands)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net income attributable to ARC Document Solutions, Inc. $2,574 $1,461 $3,363 $2,144 Interest expense, net 576 1,131 1,196 2,240 Income tax provision 1,155 148 1,651 1,255 Depreciation and amortization 6,375 7,528 12,899 15,532 EBITDA 10,680 10,268 19,109 21,171 Stock-based compensation 404 416 743 920 Adjusted EBITDA $11,084 $10,684 $19,852 $22,091 See Non-GAAP Financial Measures discussion below.ARC Document Solutions, Inc.Non-GAAP MeasuresReconciliation of net income attributable to ARC Document Solutions, Inc. to unaudited adjusted net income attributable to ARC Document Solutions, Inc.(In thousands, except per share data)(Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2021 2020 2021 2020 Net income attributable to ARC Document Solutions, Inc. $2,574 $1,461 $3,363 $2,144 Deferred tax valuation allowance and other discrete tax items 68 (240) 199 259 Adjusted net income attributable to ARC Document Solutions, Inc. $2,642 $1,221 $3,562 $2,403 Actual: Earnings per share attributable to ARC Document Solutions, Inc. shareholders: Basic $0.06 $0.03 $0.08 $0.05 Diluted $0.06 $0.03 $0.08 $0.05 Weighted average common shares outstanding: Basic 42,304 42,672 42,284 43,154 Diluted 42,597 42,767 42,613 43,277 Adjusted: Earnings per share attributable to ARC Document Solutions, Inc. shareholders: Basic $0.06 $0.03 $0.08 $0.06 Diluted $0.06 $0.03 $0.08 $0.06 Weighted average common shares outstanding: Basic 42,304 42,672 42,284 43,154 Diluted 42,597 42,767 42,613 43,277 See Non-GAAP Financial Measures discussion below.Non-GAAP Financial MeasuresEBITDA and related ratios presented in this report are supplemental measures of our performance that are not required by or presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These measures are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, income from operations, or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating, investing or financing activities as a measure of our liquidity.EBITDA represents net income before interest, taxes, depreciation and amortization.We have presented EBITDA and related ratios because we consider them important supplemental measures of our performance and liquidity. We believe investors may also find these measures meaningful, given how our management makes use of them. The following is a discussion of our use of these measures.We use EBITDA to measure and compare the performance of our operating segments. Our operating segments' financial performance includes all of the operating activities except debt and taxation which are managed at the corporate level for U.S. operating segments. We use EBITDA to compare the performance of our operating segments and to measure performance for determining consolidated-level compensation. In addition, we use EBITDA to evaluate potential acquisitions and potential capital expenditures.EBITDA and related ratios have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows:They do not reflect our cash expenditures, or future requirements for capital expenditures and contractual commitments;They do not reflect changes in, or cash requirements for, our working capital needs;They do not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments on our debt;Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; andOther companies, including companies in our industry, may calculate these measures differently than we do, limiting their usefulness as comparative measures.Because of these limitations, EBITDA and related ratios should not be considered as measures of discretionary cash available to us to invest in business growth or to reduce our indebtedness. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and related ratios only as supplements.Our presentation of adjusted net income and adjusted EBITDA is an attempt to provide meaningful comparisons to our historical performance for our existing and future investors. The unprecedented changes in our end markets over the past several years have required us to take measures that are unique in our history and specific to individual circumstances. Comparisons inclusive of these actions make normal financial and other performance patterns difficult to discern under a strict GAAP presentation. Each non-GAAP presentation, however, is explained in detail in the reconciliation tables above.Specifically, we have presented adjusted net income attributable to ARC and adjusted earnings per share attributable to ARC shareholders for the three and six months ended June 30, 2021 and 2020 to reflect the exclusion of changes in the valuation allowances related to certain deferred tax assets and other discrete tax items. This presentation facilitates a meaningful comparison of our operating results for the three and six months ended June 30, 2021 and 2020.We have presented adjusted EBITDA for the three and six months ended June 30, 2021 and 2020 to exclude stock-based compensation expense. The adjustment of EBITDA is consistent with the definition of adjusted EBITDA in our credit agreement; therefore, we believe this information is useful to investors in assessing our financial performance.SOURCE: ARC Document SolutionsView source version on accesswire.com: https://www.accesswire.com/658115/ARC-Reports-Second-Quarter-Year-Over-Year-Increases-in-Sales-Gross-Margin-EPS-and-EBITDA