November 7, 2018: ARC Document Solutions, Inc. today reported its financial results for the third quarter ended September 30, 2018.
"I am pleased to announce another successful quarter," said Suri Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "As I've mentioned previously this year, we continue to make steady progress toward our strategic objectives to protect print revenues in spite of the market's inherent challenges, while investing in technology initiatives that further strengthen our position in the construction and real estate space. Our decision to invest in the business last year has paid solid dividends, and the print market and its use of technology continues to evolve in our favor. We have strengthened our revenue base and expanded our share in most of the major markets where we operate."
"These achievements, combined with our relentless focus on managing costs, have allowed us to deliver strong gross margins and a meaningful increase in EBITDA during the quarter. Our performance has also driven a gratifying improvement in earnings per share, as well as an upgrade in our annual forecast for the second time this year," Mr. Suriyakumar said. "We expect ARC's annual EPS to be in the range of 15 to 18 cents, and adjusted EBITDA to end the year in the range of $52 to $55 million."
"ARC delivered strong nancial performance despite increased medical costs compared to the prior year," said Jorge Avalos, Chief Financial Officer of ARC Document Solutions. "As expected, this year's self-insurance costs began to moderate as our stop-loss insurance took effect, but the company still had to overcome medical claim costs that were approximately $600,000 higher than they were in 2017. It's a testament to our performance during the quarter that we still delivered a year-over-year increase of more than $2 million to our adjusted EBITDA. We are also affirming our annual forecast for cash flows from operations, having generated over $30 million year-to-date, and with quarterly trends in line with our expectations."
2018 Third Quarter Supplemental Information:
Net sales were $100.5 million, a 4.2% increase compared to the third quarter of 2017.
Days sales outstanding were 56 in Q3 2018 and 55 in Q3 2017.
Architectural, engineering, construction and building owner/operators (AEC/O) customers comprised approximately 79% of our total net sales, while customers outside of construction made up approximately 21% of our total net sales.
Total number of MPS locations at the end of the third quarter has grown to approximately 10,500, a net gain of approximately 500 locations over Q3 2017.
Adjusted EBITDA excludes goodwill impairment, loss on extinguishment and modification of debt, and stock-based compensation expense.
Outlook
The outlook for ARC Document Solutions' 2018 fully-diluted annual adjusted earnings per share has been upgraded to a range of $0.15 to $0.18, from its previous range of $0.12 to $0.17. The Company's 2018 forecast for annual adjusted EBITDA also has been upgraded to $52 to $55 million, from its previous range of $48 to $54 million. ARC's 2018 annual cash provided by operating activities remains unchanged and is projected to be in the range of $44 to $50 million.