WALNUT CREEK, CA, Aug 03, 2010 (MARKETWIRE via COMTEX) --
American Reprographics Company (NYSE: ARP)
- EPS of $0.04 per share
- Quarterly Cash from Operating Activities of $18.3 million
- Gross Margin of 34.3%
- Company reaffirms annual forecast
American Reprographics Company (NYSE: ARP) (the "Company"), the nation's leading provider of reprographic services and technology, today reported its financial results for the second quarter ended June 30, 2010.
"We continue to manage our business aggressively, knowing the market conditions are likely to remain difficult throughout the year," said Mr. K. "Suri" Suriyakumar, Chairman, President and CEO. "We are scrutinizing our infrastructure, eliminating additional overhead costs as required, and pursuing opportunities in the marketplace with expanded offerings and new initiatives. While the construction market has not experienced some of the incremental improvements we've seen in the general economy, this is an opportune time to be addressing the productivity and efficiency our customers can achieve by using our services and technology."
Net revenue for the second quarter of 2010 was $115.1 million. The Company's gross margin was 34.3% for the three-month period ending June 30, 2010. Net income for the second quarter of 2010 was $1.7 million or $0.04 per diluted share.
Net revenue for the first six months of 2010 was $227.3 million. The Company's gross margin was 33.6% for the six-month period ending June 30, 2010. Net income for the first six months of 2010 was $2.4 million, or $0.05 per diluted share.
Jonathan Mather, Chief Financial Officer, said, "We are seeing revenue stabilization in key service lines relative to the large quarterly declines we saw in 2009. For example, large-format black and white printing revenues have remained essentially flat from first to second quarter. We saw an encouraging portion of new business in the U.S. is coming from our sales efforts in color, and once again, China had a strong quarter in equipment and supplies sales. While equipment sales can have a dilutive effect on our gross margin, quarter two gross margin improved from the first quarter by 140 basis points."
Outlook
The Company reaffirmed its 2010 annual EPS forecast of $0.15 to $0.30 on a fully-diluted basis, projecting annual cash flow from operations in the range of $65 million to $80 million. Management noted, however, that the Company's annual performance is likely to be on the lower side of its forecast for both EPS and cash flow from operations.
Teleconference and Webcast
American Reprographics Company will host a conference call and audio webcast today at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time) to discuss results for the Company's second quarter 2010 and business outlook. The conference call can be accessed by dialing 877-402-8179. The conference ID number is 88153097.
A replay of this call will be available approximately one hour after the call for seven days following the call's conclusion. To access the replay, dial 800-642-1687. The conference ID number is 88153097.
A Web archive will be made available at http://www.e-arc.com for approximately 90 days following the call's conclusion.
About American Reprographics Company
American Reprographics Company is the leading reprographics company in the United States providing business-to-business document management technology and services to the architectural, engineering and construction, or AEC industries. The Company provides these services to companies in non-AEC industries, such as technology, financial services, retail, entertainment, and food and hospitality, which also require sophisticated document management services. American Reprographics Company provides its core services through its suite of reprographics technology products, a network of hundreds of locally-branded reprographics service centers across the U.S., Canada and the U.K, on-site at more than 5,000 customer locations, and through UDS, a joint-venture company headquartered in Beijing, China. The Company's service centers are arranged in a hub and satellite structure and are digitally connected as a cohesive network, allowing the provision of services both locally and nationally to more than 138,000 active customers.
Forward-Looking Statements
This press release contains forward-looking statements that are based on current opinions and estimates of management regarding future events and the future financial performance of the Company. Words such as "forecast," "outlook," "will," and similar expressions identify forward-looking statements. We caution you that such statements are only predictions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Factors that could cause our actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to, the current economic recession and downturn in the architectural, engineering and construction industries specifically; our ability to successfully restructure our credit facilities; our ability to streamline operations and costs; competition in our industry and innovation by our competitors; our failure to anticipate and adapt to future changes in our industry; our failure to complete acquisitions, or failure to manage our acquisitions, including our inability to integrate and merge the business operations of the acquired companies or failure to retain key personnel and customers of acquired companies; our dependence on certain key vendors for equipment, maintenance services and supplies; damage or disruption to our facilities, our technology centers, our vendors or a majority of our customers; and our failure to continue to develop and introduce new services successfully. The foregoing list of risks and uncertainties is illustrative but is by no means exhaustive. For more information on factors that may affect our future performance, please review our periodic filings with the U.S. Securities and Exchange Commission, and specifically the risk factors set forth in our most recent reports on Form 10-K and Form 10-Q. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
American Reprographics Company
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
June 30, December 31,
----------- -----------
2010 2009
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 33,673 $ 29,377
Accounts receivable, net 59,376 53,919
Inventories, net 11,840 10,605
Deferred income taxes 5,640 5,568
Prepaid expenses and other current assets 8,984 7,011
----------- -----------
Total current assets 119,513 106,480
Property and equipment, net 63,313 74,568
Goodwill 333,024 332,518
Other intangible assets, net 69,022 74,208
Deferred financing costs, net 3,312 4,082
Deferred income taxes 26,897 26,987
Other assets 1,966 2,111
----------- -----------
Total assets $ 617,047 $ 620,954
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 24,296 $ 23,355
Accrued payroll and payroll-related expenses 14,510 8,804
Accrued expenses 24,420 24,540
Current portion of long-term debt and capital
leases 61,344 53,520
----------- -----------
Total current liabilities 124,570 110,219
Long-term debt and capital leases 195,385 220,711
Other long-term liabilities 9,650 8,000
----------- -----------
Total liabilities 329,605 338,930
----------- -----------
Commitments and contingencies
Stockholders' equity:
American Reprographics Company stockholders'
equity:
Preferred stock, $0.001 par value, 25,000,000
shares authorized; zero and zero shares issued
and outstanding -- --
Common stock, $0.001 par value, 150,000,000
shares authorized; 46,169,859 and 46,112,653
shares issued and 45,722,205 and 45,664,999
shares outstanding in 2010 and 2009, respectively 46 46
Additional paid-in capital 93,082 89,982
Retained earnings 203,357 200,961
Accumulated other comprehensive loss (7,397) (7,273)
----------- -----------
289,088 283,716
Less cost of common stock in treasury, 447,654
shares in 2010 and 2009 7,709 7,709
----------- -----------
Total American Reprographics Company
stockholders' equity 281,379 276,007
Noncontrolling interest 6,063 6,017
----------- -----------
Total stockholders' equity 287,442 282,024
----------- -----------
Total liabilities and stockholders' equity $ 617,047 $ 620,954
=========== ===========
American Reprographics Company
Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
2010 2009 2010 2009
---------- ---------- ---------- ----------
Reprographics services $ 78,453 $ 92,905 $ 154,710 $ 192,674
Facilities management 22,627 24,898 45,030 51,763
Equipment and supplies
sales 14,008 13,251 27,509 26,100
---------- ---------- ---------- ----------
Total net sales 115,088 131,054 227,249 270,537
Cost of sales 75,633 81,899 150,943 169,403
---------- ---------- ---------- ----------
Gross profit 39,455 49,155 76,306 101,134
Selling, general and
administrative expenses 28,169 30,039 55,300 61,005
Amortization of intangible
assets 2,557 2,914 5,193 5,897
---------- ---------- ---------- ----------
Income from operations 8,729 16,202 15,813 34,232
Other income, net (34) (38) (77) (97)
Interest expense, net 5,754 5,836 11,642 11,632
---------- ---------- ---------- ----------
Income before income tax
provision 3,009 10,404 4,248 22,697
Income tax provision 1,276 4,096 1,806 8,854
---------- ---------- ---------- ----------
Net income 1,733 6,308 2,442 13,843
(Income) loss attributable
to the noncontrolling
interest (54) (1) (46) 11
---------- ---------- ---------- ----------
Net income attributable to
American Reprographics
Company $ 1,679 $ 6,307 $ 2,396 $ 13,854
========== ========== ========== ==========
Earnings per share
attributable to American
Reprographics Company
shareholders:
Basic $ 0.04 $ 0.14 $ 0.05 $ 0.31
========== ========== ========== ==========
Diluted $ 0.04 $ 0.14 $ 0.05 $ 0.31
========== ========== ========== ==========
Weighted average common
shares outstanding:
Basic 45,196,318 45,116,358 45,173,527 45,103,150
Diluted 45,511,579 45,243,171 45,422,029 45,157,874
American Reprographics Company
Non-GAAP Measures
Reconciliation of cash flows provided by operating activities to EBIT
and EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2010 2009 2010 2009
-------- -------- -------- --------
Cash flows provided by operating
activities $ 18,278 $ 33,522 $ 27,746 $ 55,798
Changes in operating assets and
liabilities (3,806) (11,477) 1,277 (9,555)
Non-cash (expenses) income,
including depreciation and
amortization (12,739) (15,737) (26,581) (32,400)
Income tax provision 1,276 4,096 1,806 8,854
Interest expense 5,754 5,836 11,642 11,632
Net (income) loss attributable to
the noncontrolling interest (54) (1) (46) 11
-------- -------- -------- --------
EBIT 8,709 16,239 15,844 34,340
Depreciation and amortization 11,108 12,751 22,764 25,466
Stock-based compensation 1,457 1,228 2,918 2,161
-------- -------- -------- --------
EBITDA $ 21,274 $ 30,218 $ 41,526 $ 61,967
======== ======== ======== ========
American Reprographics Company
Non-GAAP Measures
Reconciliation of net income attributable to ARC to EBIT and EBITDA
(Dollars in thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Net income attributable to ARC $ 1,679 $ 6,307 $ 2,396 $ 13,854
Interest expense, net 5,754 5,836 11,642 11,632
Income tax provision 1,276 4,096 1,806 8,854
--------- --------- --------- ---------
EBIT 8,709 16,239 15,844 34,340
Depreciation and amortization 11,108 12,751 22,764 25,466
Stock-based compensation 1,457 1,228 2,918 2,161
--------- --------- --------- ---------
EBITDA $ 21,274 $ 30,218 $ 41,526 $ 61,967
========= ========= ========= =========
American Reprographics Company
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2010 2009 2010 2009
-------- -------- -------- --------
Cash flows from operating
activities
Net income $ 1,733 $ 6,308 $ 2,442 $ 13,843
Adjustments to reconcile net income
to net cash provided by operating
activities:
Allowance for accounts
receivable 56 1,294 317 2,543
Depreciation 8,551 9,837 17,571 19,569
Amortization of intangible
assets 2,557 2,914 5,193 5,897
Amortization of deferred
financing costs 386 324 770 655
Stock-based compensation 1,457 1,228 2,918 2,161
Excess tax benefit related to
stock-based compensation (35) (5) (38) (5)
Deferred income taxes (110) 259 164 1,671
Other noncash items, net (123) (114) (314) (91)
Changes in operating assets and
liabilities, net of effect of
business acquisitions:
Accounts receivable (365) 8,159 (5,784) 5,734
Inventory (1,441) 232 (1,285) 918
Prepaid expenses and other
assets 581 1,579 (1,934) 5,154
Accounts payable and accrued
expenses 5,031 1,507 7,726 (2,251)
-------- -------- -------- --------
Net cash provided by operating
activities 18,278 33,522 27,746 55,798
-------- -------- -------- --------
Cash flows from investing
activities
Capital expenditures (1,560) (1,945) (2,777) (3,924)
Payments for businesses acquired,
net of cash acquired
and including other cash payments
associated with the acquisitions - (333) - (921)
Other 294 279 845 442
-------- -------- -------- --------
Net cash used in investing
activities (1,266) (1,999) (1,932) (4,403)
-------- -------- -------- --------
Cash flows from financing
activities
Proceeds from stock option
exercises 109 17 125 17
Proceeds from issuance of common
stock under Employee Stock
Purchase Plan 16 46 16 46
Excess tax benefit related to
stock-based compensation 35 5 38 5
Payments on long-term debt
agreements and capital leases (10,394) (25,328) (21,596) (41,206)
Net borrowings (repayments) under
revolving credit facility 691 - (123) -
Payment of loan fees - - - (44)
-------- -------- -------- --------
Net cash used in financing
activities (9,543) (25,260) (21,540) (41,182)
-------- -------- -------- --------
Effect of foreign currency
translation on cash balances 21 147 22 131
-------- -------- -------- --------
Net change in cash and cash
equivalents 7,490 6,410 4,296 10,344
Cash and cash equivalents at
beginning of period 26,183 50,476 29,377 46,542
-------- -------- -------- --------
Cash and cash equivalents at end of
period $ 33,673 $ 56,886 $ 33,673 $ 56,886
======== ======== ======== ========
Supplemental disclosure of cash
flow information
Noncash investing and financing
activities
Noncash transactions include the
following:
Capital lease obligations
incurred $ 2,464 $ 4,470 $ 4,394 $ 9,723
Issuance of subordinated notes in
connection with the
acquisition of businesses $ - $ - $ - $ 246
Accrued liabilities in connection
with acquisition of businesses $ 500 $ 167 $ 500 $ 500
Net gain (loss) on derivative $ 139 $ 1,752 $ (174) $ 2,187
Contacts:
David Stickney
American Reprographics Company
Phone: 925-949-5100
Joseph Villalta
The Ruth Group
Phone: 646-536-7003
SOURCE: American Reprographics Company