Where are We Headed? Seeking Insight in ARC's SEC Filings, Info from AIA and ABC

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Excellent Article

Thank you Ed, this is a comprehensive, interesting and all around excellent article. I got a great deal out of this, and I thank you for writing it.

Steve Kozle 246 days ago

Indexes definitely not as helpful today as they were in the past

Certain indicators, such as the AIA ABI Index and data from the ABC regarding construction spending, used to help guide reprographer expectations as to the volume of plan and spec printing work they might expect to see, shortly or down the road, but I’m afraid that, nowadays, much of that data has become at least somewhat irrelevant, at least for predicting revenue activity for reprographers. And, that’s because of the effect that “digitization” has had on the way A/E/C firms conduct business. (And, the trend towards “digitization” is growing, not declining.) By “digitization”, I mean the use of “digital techniques and processes” that reduce (or eliminate) the need to print hard-copy. A couple of decades ago, whenever A/E/C activity went up or down, reprographer revenues went up or down, and the ups and downs were proportionate. That’s totally untrue today. The A/E/C Industry recovered from the Great Recession, building activity in many parts of the U.S. is outstanding. Yet, I’m still hearing from many reprographer friends – in different parts of the country, that their revenues are still quite a bit below what their revenues were in peak times (2006/7). Point being, the Indexes are definitely not as helpful, guidance-wise, as they used to be. Finally, for those of you who consider ARC’s growth in the number of MPS deals it has is a true sign of “growth”, growth in the number of MPS deals is not necessarily indicative of “overall” revenue growth. If an ARC MPS deal is nothing more than the placement of a $2,000 plotter at a construction job site, consider that if that plotter had not been placed at the job site, the prints would be done at a reprographer’s shop. Many MPS deals are very much for the convenience of the customer, but that convenience-MPS does not necessarily generate revenue growth. True revenue growth comes from selling additional services to existing customers and from converting someone else’s customers to your camp. I suspect that many of ARC’s MPS deals are for customers who were already customers of ARC.

Joel Salus 258 days ago

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