Q1 2022 ARC Document Solutions Inc Earnings Call

Getting documents out of boxes and into the cloud where anyone can reached impasse is becoming a necessity.

Regardless of the industry, we think the diversity in the market for scanning and document conversion services may even rival that of our printing.

All of this suggests an excellent environment to improve our sales.

Occupancy in a good position to capitalize on these advantages in 2022, and it's true in Brazilian gives us confidence in confronting what are the challenges lie ahead in the coming quarters.

To provide some of the details behind our optimism I'll turn the carload and.

And then George at this point of time for an operational and financial perspective.

Nino.

Thank you Suri vivo very pleased with the sales growth we achieved in quarter one.

We were able to execute well on the pipeline of opportunities and secured 12% growth year over year in our topline.

It maintained healthy daily sales throughout the period and <unk> sales for all four of our business lines.

During the month of March in order to a higher percentage of our large customers executing their plans to increase their works from offices.

However, the hybrid work model seems to remain very popular among many of our customers.

This new look pattern creates new opportunities for us as well as some challenges.

We are one of the few companies with a national footprint that offers comprehensive services to companies will continue to move to a paperless digital workflow as well as two companies that require information sharing using paper as a media.

<unk> nicely fits into the digital divide our farmer customers.

US additional opportunities that are gaining momentum is a need for scanning and digital imaging.

As customers cater to a hybrid workforce. It is essential that the important documents are converted to a digital data and hosted in our cloud platform.

The result is that our document scanning services continued to be of value to our customers.

Yes, expanding <unk> CASM centers and number of documents scanning capabilities to accommodate enterprise level documents can needs as well as small opportunities with divers can't bite the box service.

File documents scanning is done by many we bring special expertise to our customers for documents such an indexing using our domain experience and our own proprietary software.

Paper scanning is easy, but the ability to help customers with quick and easy search is complex and requires good technology and expertise.

Among the challenges we face is that customers are continuing to reduce our office footprint.

And the onsite print room concept is fast fading away.

While this puts pressure on printing volume at Darden at our customer site. It fits very well into our strategy to drive print volume through our service centers to leverage other equipment economies of scale and cross trained workforce.

As the needs of your spending evolve due to hybrid work schedules and digital workflows arc is in a great position to provide high quality outsource print services via our 140 digital print centers.

Our employees are fast skewed and service oriented, making it easy and convenient to shift print volumes from office to a production facility.

The drive to get employees back into office also plays to our strength.

Employers are re energizing their workspaces with modern graphic than building new pleasing work environment.

Our digital graphics, and our all our print program is helping our customers achieve these concepts.

Ox NPS program is also benefiting from changing business practices.

Unlike in the past.

We don't see customers using their capital to purchase print equipment for long term use.

Most especially our construction customers are moving to short term rentals of print equipment.

Our ability to supply bring capacity on.

And as needed basis is well suited to meet their needs.

Since we have a strong service organization, we continued to deploy the largely manufactured fleet our devices on short term rentals at the construction site.

The cost of raw materials, especially paper has been the challenge many management manufacturers have been reducing their production capacity of office and specialty paper, which are fixed price and availability.

Where possible we have been passing down these cost increases to our customers to maintain our margin.

In terms of building our base of new customers of our web digital and social media marketing activities continued to generate good results.

As customers work from home and search for new services of Abilene to showcase our product and services online is a very important component of our marketing and sales efforts.

Our sales opportunity pipeline are strong and we are confident that we will be able to strengthen our top line revenue during the coming year.

Finally, I am pleased to share with you that we received.

17000 online customer review last month.

Our average rating is full.

Dr 95 out of five making it clear that our employees' focus on maintaining a great customer experience is paying off as the growth of our market share.

With that as a summary of the company's operations I'll hand, it over to George for our financial update judge.

Thank you Hello, we continue to drive topline and Bottomline growth during the first quarter of 2020 to our sales growth was significant in every business line with scanning and imaging being the standout at 38%.

Overall growth helped us drive gross margins up by 190 basis points in spite of pressures from inflation supply chain issues, which manifested themselves primarily in the form of increased costs.

These increases were more than offset by our ability to leverage our infrastructure and cross trained workforce with the increase in sales.

We expect the current currency inflationary pressures to persist throughout the year.

But we do not expect them to dramatically affect our bottom line performance as those cost increases continue to be passed onto our customers.

Sales growth drove increased commissions bonuses and travel and like companies everywhere that are competing for talent. We also have selective increases in salaries to retain existing employees or attract new hires even so we were able to increase earnings before taxes by one.

$5 million.

Reflecting a 200 basis points increase in operating margin.

And our EPS more than doubled from two to <unk>.

Last year to nearly five this year.

As many of you know historical cash flows in the first quarter are at their lowest level of the year due to the timing of sales and bonus payments and this year was no different one.

One additional impact however was a conscious effort to increase inventory levels to account for the current supply chain disruption.

The last thing we want is the lack of materials to slow our sales momentum in the remaining quarters of the year.

As in past years, we expect cash flows to significantly ramp up as the year progresses.

Our cash flows from operation EBITDA had a slow start to the year growing just three 5%, but our confidence in achieving $40 million or more in EBITDA for the year remains intact.

The strength of our balance sheet remains evident as we ended the quarter with more than $50 million in cash and our leverage ratio net of cash.

Is at an all time low.

Finally, we remain.

Committed to returning shareholder value.

Spending $2 4 million during the first quarter, primarily via our quarterly dividend payment.

As we look ahead, we expect solid sales growth for the year.

Just as importantly, we expect margins to remain strong and earnings to continue to grow in summary, we expect our current success to continue throughout 2022.

I'll now turn the call back to Suri Jerry.

Thank you George operator, we are now available for our listeners questions.

Thank you.

A quick question sorry.

Hello, Todd.

I would like to compile the Q&A roster.

And again, that's all I wanted to ask a question.

And with no questions I will turn it back to David.

For closing remarks.

Thanks, Savannah, and thank you everyone for your interest in arc document solutions and for your attention. This afternoon. We look forward to speaking with you again next quarter have a great evening Goodnight.

I will now conclude today's conference. Thank you for your participation and you may now disconnect.

[music].

Sure.