Quarterly Business Highlights:
- Q2 Adjusted earnings per share of $0.10 vs. $0.04 in Q2 2013
- Q2 Gross margin of 36.0%; year-over-year increase of 200 basis points
- Q2 cash flow from operations increased to $14.0 million from $8.1 million for the same period last year
- Q2 Adjusted EBITDA margin of 19.1%; year-over-year increase of 160 basis points on higher sales and gross margin
- Term B Loan principal reduced by $16.5 million as of July 31, 2014; represents payments of $11.5 million more than required
- Maintains 2014 fully-diluted annual adjusted earnings per share outlook in the range $0.19 to $0.23; outlook for 2014 annual cash provided by operating activities in the range of $51-$56 million, and adjusted EBITDA in the range of $69-73 million
Financial Highlights:
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
(All dollar amounts in millions,
except EPS) 2014 2013 2014 2013
-------- -------- -------- --------
Net Revenue $ 109.0 $ 104.6 $ 209.4 $ 204.7
Gross Margin 36.0% 34.0% 34.9% 33.2%
Net Income attributable to ARC $ 4.5 $ 0.7 $ 5.9 $ 1.1
Adjusted Net Income attributable to
ARC $ 4.5 $ 1.6 $ 6.3 $ 2.2
Earnings per share - Diluted $ 0.10 $ 0.02 $ 0.13 $ 0.02
Adjusted earnings per share -
Diluted $ 0.10 $ 0.04 $ 0.13 $ 0.05
Adjusted EBITDA $ 20.9 $ 18.3 $ 37.0 $ 34.3
Cash provided by operating
activities $ 14.0 $ 8.1 $ 21.7 $ 20.0
Capital Expenditures $ 3.0 $ 4.4 $ 6.6 $ 10.0
Debt & Capital Leases (including
current) $ 210.8 $ 220.8
Management Commentary
"Our managed print services program continued to perform well in the second quarter, and the rest of the business is stabilizing," said K. "Suri" Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "With exceptional operational performance, we have been able to deliver a strong quarter, generate excellent cash flows, and create an opportunity to aggressively reduce our senior debt."
Chief Operating Officer, Dilo Wijesuriya, said, "We made significant gains with some of our largest prospects and clients during the quarter, and made good progress in placing our technology products and services. The construction market appears to be regaining some of its strength in certain markets, and that will help us in the coming quarters as we leverage the operational improvements we've made since the recession."
"Our revenue improvement was welcome particularly when combined with the fundamental increase in our margins. Ultimately our generation of free cash tells our story best during this period, growing 199% on a year-over-year basis for the quarter," said John Toth, Chief Financial Officer. "We continue to put a high priority on improving our credit quality, and leveraging the upgrade by S&P to pursue further improvements in our capital structure."
2014 Second Quarter Supplemental Information:
Net sales were $109.0 million, a 4.2% increase compared to the second quarter of 2013.
