ARC Document Solutions, Inc. has reported its financial results for the second quarter ended June 30, 2018. Among the highlights were that net sales were $104.2 million, a 1.9% increase compared to the second quarter of 2017. However adjusted EBITDA dropped $800,000 during that same period year to year.
Management Commentary
"We made definitive progress toward our strategic objectives in the second quarter, delivering growth in three out of four business lines," said Suri Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "Traditional project printing was the primary driver of sales as we continued to protect print revenues, and when coupled with our constant focus on managing costs, we added seventy basis points of improvement to our consolidated gross margin. With half of the year ahead of us, we have already achieved the lower end of our previously-announced annual EPS forecast."
"While the print market will continue to challenge us, we feel well-positioned to gain market share as our investments in sales and marketing take hold," said Mr. Suriyakumar. "Considering our current performance and our expectations for the remainder of the year, we're pleased to upgrade to our annual forecast, bringing ARC's annual EPS range to 12 to 17 cents."
"In the face of a shrinking print market, we were gratified to deliver year-over-year growth for the first time in three years, especially with the improvements in gross margin and operating cash flows that came with it," said Jorge Avalos, Chief Financial Officer. "The exceptional increase in medical costs we predicted for the second quarter had a negative impact of $1.4 million on EBITDA and they decreased earnings per share by 2.1 cents, but despite these pressures, our results for the quarter were solid and we expect them to be sustainable for the balance of the year."
2018 Second Quarter Supplemental Information:
Net sales were $104.2 million, a 1.9% increase compared to the second quarter of 2017.
Days sales outstanding were 52 in Q2 2018 and 52 in Q2 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 second quarter has grown to approximately 10,390, a net gain of approximately 560 locations over Q2 2017.
Outlook
The outlook for ARC Document Solutions 2018 fully-diluted annual adjusted earnings per share has been upgraded to a range of $0.12 to $0.17 from its previous range of $0.10 to $0.16; 2018 annual cash provided by operating activities remains unchanged and is projected to be in the range of $44 to $50 million, as is the company's 2018 annual adjusted EBITDA, which is forecast to be in the range of $48 to $54 million.