UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | |||||
FORM | |||||
CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Date of Report: | |||||||||||||||||
(Date of earliest event reported) | |||||||||||||||||
(Exact name of registrant as specified in its charter) | |||||||||||||||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification Number) | |||||||||||||||
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(Address of principal executive offices) | (Zip Code) | ||||||||||||||||
(Registrant's telephone number, including area code) | |||||||||||||||||
Not Applicable (Former Name or Former Address, if changed since last report) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Dated: May 3, 2023 | ARC DOCUMENT SOLUTIONS, INC. By: /s/ Jorge Avalos Jorge Avalos Chief Financial Officer |
Exhibit Index | ||||||||
Exhibit No. | Description | |||||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Financial Highlights: | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
(All dollar amounts in millions, except EPS) | 2023 | 2022 | ||||||
Net sales | $ | 68.9 | $ | 69.5 | ||||
Gross margin | 33.3 | % | 32.3 | % | ||||
Net income attributable to ARC | $ | 1.9 | $ | 2.0 | ||||
Adjusted net income attributable to ARC | $ | 2.2 | $ | 2.0 | ||||
Earnings per share - Diluted | $ | 0.04 | $ | 0.05 | ||||
Adjusted earnings per share - Diluted | $ | 0.05 | $ | 0.05 | ||||
Cash provided by operating activities | $ | 3.8 | $ | 2.9 | ||||
EBITDA | $ | 8.2 | $ | 8.6 | ||||
Adjusted EBITDA | $ | 8.7 | $ | 9.1 | ||||
Capital expenditures | $ | 2.3 | $ | 1.2 | ||||
Debt & finance leases (including current) | $ | 64.8 | $ | 74.7 |
In millions | 1Q 2023 | FYE 2022 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | ||||||||||||||
Total net revenue | $ | 68.9 | $ | 286.0 | $ | 68.8 | $ | 73.1 | $ | 74.6 | $ | 69.5 |
In millions | 1Q 2023 | FYE 2022 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | ||||||||||||||
Digital Printing | $ | 41.4 | $ | 174.8 | $ | 42.0 | $ | 44.7 | $ | 46.2 | $ | 41.9 | ||||||||
MPS | $ | 19.0 | $ | 75.8 | $ | 18.5 | $ | 19.4 | $ | 19.2 | $ | 18.7 | ||||||||
Scanning and Digital Imaging | $ | 4.6 | $ | 17.4 | $ | 4.1 | $ | 4.8 | $ | 4.3 | $ | 4.2 | ||||||||
Equipment and supplies | $ | 3.9 | $ | 18.1 | $ | 4.3 | $ | 4.3 | $ | 4.8 | $ | 4.7 |
In millions unless otherwise indicated | 1Q 2023 | FYE 2022 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | ||||||||||||||
Gross profit | $ | 22.9 | $ | 96.0 | $ | 23.2 | $ | 24.8 | $ | 25.5 | $ | 22.4 | ||||||||
Gross margin | 33.3 | % | 33.6 | % | 33.6 | % | 33.9 | % | 34.2 | % | 32.3 | % |
In millions | 1Q 2023 | FYE 2022 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | ||||||||||||||
Selling, general and administrative expenses | $ | 19.5 | $ | 77.5 | $ | 19.2 | $ | 19.1 | $ | 19.9 | $ | 19.4 |
In millions unless otherwise indicated | 1Q 2023 | FYE 2022 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | ||||||||||||||
Net income attributable to ARC – GAAP | $ | 1.9 | $ | 11.1 | $ | 2.1 | $ | 3.7 | $ | 3.3 | $ | 2.0 | ||||||||
Adjusted net income attributable to ARC | $ | 2.2 | $ | 12.0 | $ | 2.6 | $ | 3.7 | $ | 3.7 | $ | 2.0 | ||||||||
Earnings per share attributable to ARC | ||||||||||||||||||||
Diluted EPS – GAAP | $ | 0.04 | $ | 0.26 | $ | 0.05 | $ | 0.09 | $ | 0.08 | $ | 0.05 | ||||||||
Adjusted diluted EPS | $ | 0.05 | $ | 0.28 | $ | 0.06 | $ | 0.09 | $ | 0.08 | $ | 0.05 |
In millions | 1Q 2023 | FYE 2022 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | ||||||||||||||
Cash provided by operating activities | $ | 3.8 | $ | 37.2 | $ | 10.8 | $ | 14.9 | $ | 8.6 | $ | 2.9 |
In millions | 1Q 2023 | FYE 2022 | 4Q 2022 | 3Q 2022 | 2Q 2022 | 1Q 2022 | ||||||||||||||
EBITDA | $ | 8.2 | $ | 39.1 | $ | 8.9 | $ | 10.8 | $ | 10.9 | $ | 8.6 | ||||||||
Adjusted EBITDA | $ | 8.7 | $ | 40.9 | $ | 9.3 | $ | 11.2 | $ | 11.3 | $ | 9.1 |
Three Months Ended | ||||||||
March 31, | ||||||||
Sales from Services and Product Lines as a Percentage of Net Sales | 2023 | 2022 | ||||||
Digital Printing | 60.0 | % | 60.4 | % | ||||
MPS | 27.5 | % | 26.8 | % | ||||
Scanning and Digital Imaging | 6.7 | % | 6.0 | % | ||||
Equipment and supplies sales | 5.7 | % | 6.8 | % |
ARC Document Solutions, Inc. | ||||||||
Consolidated Balance Sheets | ||||||||
(In thousands, except per share data) | ||||||||
(Unaudited) | ||||||||
March 31, | December 31, | |||||||
Current assets: | 2023 | 2022 | ||||||
Cash and cash equivalents | $ | 49,803 | $ | 52,561 | ||||
Accounts receivable, net of allowances for accounts receivable of $2,013 and $1,947 | 39,423 | 38,748 | ||||||
Inventory | 9,204 | 8,610 | ||||||
Prepaid expenses | 3,665 | 4,018 | ||||||
Other current assets | 3,143 | 3,540 | ||||||
Total current assets | 105,238 | 107,477 | ||||||
Property and equipment, net of accumulated depreciation of $230,906 and $231,913 | 38,748 | 40,214 | ||||||
Right-of-use assets from operating leases | 29,066 | 28,163 | ||||||
Goodwill | 121,051 | 121,051 | ||||||
Other intangible assets, net | 198 | 208 | ||||||
Deferred income taxes | 6,998 | 7,993 | ||||||
Other assets | 2,170 | 2,209 | ||||||
Total assets | $ | 303,469 | $ | 307,315 | ||||
Current liabilities: | ||||||||
Accounts payable | $ | 23,207 | $ | 22,972 | ||||
Accrued payroll and payroll-related expenses | 8,671 | 11,235 | ||||||
Accrued expenses | 15,137 | 16,882 | ||||||
Current operating lease liabilities | 10,060 | 9,924 | ||||||
Current portion of finance leases | 10,615 | 11,558 | ||||||
Total current liabilities | 67,690 | 72,571 | ||||||
Long-term operating lease liabilities | 24,014 | 23,339 | ||||||
Long-term debt and finance leases | 54,160 | 54,916 | ||||||
Other long-term liabilities | 133 | 199 | ||||||
Total liabilities | 145,997 | 151,025 | ||||||
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; 52,268 and 51,400 shares issued and 43,636 and 43,101 shares outstanding | 52 | 51 | ||||||
Additional paid-in capital | 134,510 | 132,952 | ||||||
Retained earnings | 44,231 | 44,416 | ||||||
Accumulated other comprehensive loss | (4,138) | (4,187) | ||||||
174,655 | 173,232 | |||||||
Less cost of common stock in treasury, 8,632 and 8,299 shares | 18,994 | 18,877 | ||||||
Total ARC Document Solutions, Inc. shareholders’ equity | 155,661 | 154,355 | ||||||
Noncontrolling interest | 1,811 | 1,935 | ||||||
Total equity | 157,472 | 156,290 | ||||||
Total liabilities and equity | $ | 303,469 | $ | 307,315 |
ARC Document Solutions, Inc. | ||||||||
Consolidated Statements of Operations | ||||||||
(In thousands, except per share data) | ||||||||
(Unaudited) | Three Months Ended | |||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Net sales | $ | 68,918 | $ | 69,488 | ||||
Cost of sales | 45,993 | 47,039 | ||||||
Gross profit | 22,925 | 22,449 | ||||||
Selling, general and administrative expenses | 19,482 | 19,355 | ||||||
Amortization of intangible assets | 11 | 35 | ||||||
Income from operations | 3,432 | 3,059 | ||||||
Other income, net | (11) | (25) | ||||||
Interest expense, net | 456 | 430 | ||||||
Income before income tax provision | 2,987 | 2,654 | ||||||
Income tax provision | 1,160 | 798 | ||||||
Net income | 1,827 | 1,856 | ||||||
Loss attributable to the noncontrolling interest | 113 | 116 | ||||||
Net income attributable to ARC Document Solutions, Inc. shareholders | $ | 1,940 | $ | 1,972 | ||||
Earnings per share attributable to ARC Document Solutions, Inc. shareholders: | ||||||||
Basic | $ | 0.05 | $ | 0.05 | ||||
Diluted | $ | 0.04 | $ | 0.05 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 42,552 | 42,064 | ||||||
Diluted | 43,764 | 43,739 |
ARC Document Solutions, Inc. | ||||||||
Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
(Unaudited) | Three Months Ended | |||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 1,827 | $ | 1,856 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Allowance for credit losses | 98 | 72 | ||||||
Depreciation | 4,652 | 5,394 | ||||||
Amortization of intangible assets | 11 | 35 | ||||||
Amortization of deferred financing costs | 16 | 15 | ||||||
Stock-based compensation | 494 | 451 | ||||||
Deferred income taxes | 962 | 735 | ||||||
Deferred tax valuation allowance | 43 | 8 | ||||||
Other non-cash items, net | (75) | (50) | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (698) | (1,390) | ||||||
Inventory | (583) | (867) | ||||||
Prepaid expenses and other assets | 3,258 | 3,213 | ||||||
Accounts payable and accrued expenses | (6,181) | (6,541) | ||||||
Net cash provided by operating activities | 3,824 | 2,931 | ||||||
Cash flows from investing activities | ||||||||
Capital expenditures | (2,255) | (1,242) | ||||||
Other | 92 | 88 | ||||||
Net cash used in investing activities | (2,163) | (1,154) | ||||||
Cash flows from financing activities | ||||||||
Proceeds from stock option exercises | 1,036 | 288 | ||||||
Proceeds from issuance of common stock under Employee Stock Purchase Plan | 29 | 20 | ||||||
Share repurchases | (117) | (281) | ||||||
Payments on finance leases | (3,183) | (4,033) | ||||||
Borrowings under revolving credit facilities | 42,000 | 38,000 | ||||||
Payments under revolving credit facilities | (42,000) | (39,250) | ||||||
Dividends paid | (2,122) | (2,108) | ||||||
Net cash used in financing activities | (4,357) | (7,364) | ||||||
Effect of foreign currency translation on cash balances | (62) | 32 | ||||||
Net change in cash and cash equivalents | (2,758) | (5,555) | ||||||
Cash and cash equivalents at beginning of period | 52,561 | 55,929 | ||||||
Cash and cash equivalents at end of period | $ | 49,803 | $ | 50,374 | ||||
Supplemental disclosure of cash flow information | ||||||||
Noncash investing and financing activities | ||||||||
Finance lease obligations incurred | $ | 1,485 | $ | 1,689 | ||||
Operating lease obligations incurred | $ | 3,365 | $ | 1,147 | ||||
ARC Document Solutions, Inc. Net Sales by Product Line (In thousands) (Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Service sales | ||||||||
Digital Printing | $ | 41,379 | $ | 41,947 | ||||
MPS | 19,016 | 18,654 | ||||||
Scanning and Digital Imaging | 4,594 | 4,169 | ||||||
Total service sales | 64,989 | 64,770 | ||||||
Equipment and Supplies Sales | 3,929 | 4,718 | ||||||
Total net sales | $ | 68,918 | $ | 69,488 |
ARC Document Solutions, Inc. Non-GAAP Measures Reconciliation of cash flows provided by operating activities to EBITDA and Adjusted EBITDA (In thousands) (Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Cash flows provided by operating activities | $ | 3,824 | $ | 2,931 | ||||
Changes in operating assets and liabilities | 4,204 | 5,585 | ||||||
Non-cash expenses, including depreciation and amortization | (6,201) | (6,660) | ||||||
Income tax provision | 1,160 | 798 | ||||||
Interest expense, net | 456 | 430 | ||||||
Loss attributable to the noncontrolling interest | 113 | 116 | ||||||
Depreciation and amortization | 4,663 | 5,429 | ||||||
EBITDA | 8,219 | 8,629 | ||||||
Stock-based compensation | 494 | 451 | ||||||
Adjusted EBITDA | $ | 8,713 | $ | 9,080 |
ARC Document Solutions, Inc. Non-GAAP Measures Reconciliation of net income attributable to ARC Document Solutions, Inc. to EBITDA and Adjusted EBITDA (In thousands) (Unaudited) | ||||||||
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Net income attributable to ARC Document Solutions, Inc. | $ | 1,940 | $ | 1,972 | ||||
Interest expense, net | 456 | 430 | ||||||
Income tax provision | 1,160 | 798 | ||||||
Depreciation and amortization | 4,663 | 5,429 | ||||||
EBITDA | 8,219 | 8,629 | ||||||
Stock-based compensation | 494 | 451 | ||||||
Adjusted EBITDA | $ | 8,713 | $ | 9,080 |
ARC Document Solutions, Inc. Non-GAAP Measures Reconciliation 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 | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Net income attributable to ARC Document Solutions, Inc. | $ | 1,940 | $ | 1,972 | ||||
Deferred tax valuation allowance and other discrete tax items | 234 | 6 | ||||||
Adjusted net income attributable to ARC Document Solutions, Inc. | $ | 2,174 | $ | 1,978 | ||||
Actual: | ||||||||
Earnings per share attributable to ARC Document Solutions, Inc. shareholders: | ||||||||
Basic | $ | 0.05 | $ | 0.05 | ||||
Diluted | $ | 0.04 | $ | 0.05 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 42,552 | 42,064 | ||||||
Diluted | 43,764 | 43,739 | ||||||
Adjusted: | ||||||||
Earnings per share attributable to ARC Document Solutions, Inc. shareholders: | ||||||||
Basic | $ | 0.05 | $ | 0.05 | ||||
Diluted | $ | 0.05 | $ | 0.05 | ||||
Weighted average common shares outstanding: | ||||||||
Basic | 42,552 | 42,064 | ||||||
Diluted | 43,764 | 43,739 |
Cover Page |
May 03, 2023 |
---|---|
Cover [Abstract] | |
Document Type | 8-K |
Document Period End Date | May 03, 2023 |
Entity Registrant Name | ARC Document Solutions, Inc. |
Entity Incorporation, State or Country Code | DE |
Entity File Number | 001-32407 |
Entity Tax Identification Number | 20-1700361 |
Entity Address, Address Line One | 12657 Alcosta Blvd, Suite 200 |
Entity Address, City or Town | San Ramon |
Entity Address, State or Province | CA |
Entity Address, Postal Zip Code | 94583 |
City Area Code | (925) |
Local Phone Number | 949-5100 |
Written Communications | false |
Soliciting Material | false |
Pre-commencement Tender Offer | false |
Pre-commencement Issuer Tender Offer | false |
Title of 12(b) Security | Common Stock, par value $0.001 per share |
Trading Symbol | ARC |
Security Exchange Name | NYSE |
Entity Emerging Growth Company | false |
Amendment Flag | false |
Entity Central Index Key | 0001305168 |
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