Q1 2021 ARC Document Solutions Inc Earnings Call

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Good day and thank you for standing by welcome to the Arc document solutions Q1, 2021 earnings report.

At this time all participants are in listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.

I would now like to hand, the conference over to David Stickney, Vice President Corporate Communications and Investor Relations. Sir. Please go ahead.

Thank you Lee and welcome everyone on the call with me today, our CRE and <unk>, our CEO and our Chief operating officer dealer with just area and George <unk>, Our Chief Financial Officer.

Our first quarter results for 2021 were published earlier today and our press release, the press release and other company materials are available from our Investor Relations pages on arc document solutions website at IR Dot E Dash AARC Dot Com, Inc.

Today's earnings announcement arc offered expanded supplemental disclosures to provide shareholders and analysts with additional information in advance of our quarterly conference call. The.

And the disclosures are largely historical and will not be read on today's call. Please.

Please note that today's call will contain forward looking statements that fall within the safe Harbor provisions of the private Securities Litigation Reform Act of $19 95.

Such statements are only predictions based on information as of today May four 2021, and actual results may differ materially as a result of risks and uncertainties that we highlight and our quarterly and annual and SEC filings.

This call will also contain references to certain non-GAAP measures, which are reconciled in today's press release and in our form 8-K filings I'll now turn the call over to our chairman President and CEO Suri <unk> Kumar sorry.

Thank you David and welcome everyone.

It has been motor and a year operating under the pandemic, but the business conditions have been flawed.

And they have been.

Any other year.

Update beating expectations in 2020, we knew we were headed from a rough start.

And the 21.

And we communicated as much to you last earnings call.

All things considered I am pleased that the company remained resilient and responsive in the face of the brand and makes the effect in January.

And as well as the week of payable in February.

Thankfully Mark two came back strongly and we established our momentum.

And extended.

Disruptions in January and February we are confident that our sales and EBITDA would have been consistent with our fourth quarter performance.

Sales and margin reflected the pent up demand from our existing customer.

As well as from our aggressive marketing efforts throughout the quarter.

Hello.

And later in the call.

Construction activity finally got off the ground and has been increasing I would assume as indicated by forecast and sales data from the AIA and building trade organization.

The push to get students back and core reinvigorated the education market.

The new well established customer base.

Retailer and GDP is not increasingly the reopening of the economy.

And can and will give them the right as businesses and recognize how right.

From work from home or hybrid looking at England to have 100% digital access to document.

The increase in activity drove solid margin and as I noted earlier, the momentum and continued into the second quarter.

While the majority of flow sales.

And we'll be attributed to the construction industry.

And the majority of flow and new sales continue to come from outside the E&P market. After eight years of sales, reflecting an 80 20 split in sales between customers and architecture engineering and construction.

Auto vertical industries.

We are announcing and PD shift to a more diverse mix of business.

At the end of the first quarter, our sales ratio was from 70% construction related business and 30 from other industries and we expect that trend to continue.

I wouldn't even venture to say that we are continuing to increase our non COVID-19.

In the light duties, we are confident that we can meet or exceed oven and exploration for the new normal of 10 million plus.

EBITDA per quarter.

In closing I want to continue emphasizing our long term commitment to our shareholder Doug Wilder and dividend program and share repurchases as well and our commitment to a strong capital structure.

As noted in our press release of April 26, we replaced our former credit facility with a free.

Similar agreement that featured favorable terms and flexibility to continue building shareholder value why all of our dividend program and opportunistic share repurchase.

And the new facility should comfortably see us through for the next five years.

With that as a summary, and I'll turn the call over to deal to provide glidden and effective deal.

Thank you assuming EBITDA, that's kicked shutdowns in the U K, Canada, and several states as well as the harsh weather conditions during the past quarter.

And the adjusted operating condition and focused on the immediate needs of our customers. During this period.

Hello, and the quarter, we continued to strategize and execute our non marketing plan.

And as customers work from home we are continuing.

Connecting with them, while the E marketing programs and social media.

Most customers are looking for a new and improved ways to manage their print requirement.

Technology enabled things services are key and we continue to pay attention to what our customers need.

And we're very happy to see the government stimulus package called the education industrial vignette.

And you'll probably educational customers are taking advantage of the funds will get their schools ready to reopen.

But leads to consult design and free high quality graphics on short notice has enabled us to secure multiple graphic order.

Our success to diversifying of our customer verticals is continuing and.

It is clear that they build customer vertical has a need for high quality printing scanning of document and managed print services.

Of our marketing campaigns are helping us to reach a wider audience and communicate our bits up services.

So that there'd be no blog articles email marketing and social force here.

The thing is to reach a larger audience.

And retail manufacturing advertising media.

And stick with us cities and counties are somewhat and new customer vertical.

Have successfully engaged with our digital print services.

And somebody mentioned, we have seen nearly 60% of new business being secured from non construction vertical.

We believe that as companies come out of the Lockdown and COVID-19 restrictions ease.

Arc as well put that to secure new markets and grow our sales.

As a specific example, most customers are looking at ways to digitize that paper documents and convert to digital and data for easy online access.

And the office all been working from home.

Yes, there's some day.

Neat and all our phone service centers have been expanded to offer scanning services.

The capital requirements for this effort.

And our very low and.

Cross trained and Keith neighbor and keeps us to a minimum.

Offerings like this.

And our ability to offer multiple services.

Same customer from the same service center and make us unique in the marketplace.

Our sales and production staff are doing a tremendous job and I did decline.

And helping customers with EBITDA.

Net changing needs.

Positive customer service and a can do attitude is something we are proud of at arc.

We are maintaining an efficient cost structure, and then and efficient operation to maintain healthy margin for the company.

We continue to focus on maintaining a healthy.

Facebook environment that arc and continue to focus on top of that.

From a customer.

And our team at arc is a best in the industry and we will continue to execute on our strategy.

With that I will hand over to George for a financial update George.

Thank you Jerome while our topline referred from circumstances, we Couldnt control our Bottomline results remained strong throughout the quarter.

Gross margin stayed above 30%.

Leverage the efficiency of our cost structure, our EBITDA margin of 14, 2%.

130 basis points increase over prior year reflects the strength and sustainability of our operations and profitability even during a quarter when sales were low and likewise our earnings per share were in line with prior year's performance at two one.

And we have demonstrated over the past four quarters <unk> ability to generate cash flow from operations remains very strong at more than $5 million for the quarter, a $2 $5 million increase as compared to Q1 of 2020.

Our cash balance remained at approximately $50 million, despite paying down our debt by $5 million and the quarter and our leverage ratio net of cash is below one and all time low despite a year of dealing with the pandemic.

Our performance clearly had a big row and negotiating a new credit facility.

Which went into effect on April 22nd of this year, we were able to maintain the low interest rate and favorable terms, we put back and put in place back in 2017.

Kept the flexibility that allowed us to pursue returning value to our shareholders and best of all the new deals secure the strength of our capital structure for another five years.

And the and preparing for the future was the impetus for the new credit line.

We are not only excited about the momentum we have going into the second quarter.

But also at the potential for arc and the year that head.

Our market expansion efforts are bearing fruit the design and construction industry appear poised for a return to growth and demand is building across the board and economic restrictions begin to ease.

We are well positioned to take advantage of all of it.

I will turn the call back to Suri Terry.

Thanks George.

We are now available for our own and it's Christian.

At this time, if you would like to ask a question. Please press star one on your telephone keypad again to ask a question simply press star one on your telephone keypad.

And then if you have any questions and please press star one on your telephone keypad.

And there are no question at this time presenters. Please continue.

Thank you Lee and thank you everyone and for your attention. This afternoon and we appreciate your continued interest and arc document solutions and we look forward to talking with you next quarter take care have a good evening bye bye.

Thank you ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect.

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