ARC - Earnings call transcript Q1 2018 | Arc Document Solutions, Inc.

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Operator

Good day, everyone. And welcome to the ARC Document Solutions' First Quarter Financial Results and Webcast. Today's conference is being recorded. And at this time, I'd like to turn the conference over to David Stickney, Vice President Investor Relations. Please go ahead, sir.

David Stickney

Yolanda. you, Thank everyone. And welcome,

Officer. call Chairman, with our Suri the Chief today Operating me and Chief our Financial our President Avalos, Wijesuriya, and Suriyakumar, Executive Officer; On Jorge are Officer; Chief Dilo

in and of Our first quarter the from company the release. for are Solutions call will and results non-GAAP and turn in in XXXX Securities filing. X, contain our statements Form of certain highlight materially other X-K Investor press and Safe SEC uncertainties measures, are to our on to references May a note Chairman, quarterly in ARC website Harbor earlier release of as over and Document which Please and were risks This within release provisions on The Suri? may today's contain information Act materials press published our Suri are results Suriyakumar. today that that call available Relations our pages today's now press actual Reform ir.e-arc.com. also statements only Private today, I'll based call that Litigation forward-looking will Such reconciled annual we as fall XXXX, the XXXX. CEO, predictions differ at President filings. of a result

Suri Suriyakumar

David. you, afternoon, everyone. And Thank good

execution In growing of months we of is during X% year, Management the we the in the Document strategy declined And as I our look just this quarter our process. transformation. deliver, built few CDIM revenue in especially first and confidence our grow the last on Construction, to of expressing opened technology print quarter and ago, that call year, protecting revenues. Information our ARC's the on this of which year-over-year. a means is year to Just my comments area throughout end on beginning result This XXXX based fourth

first since In fact, business XXXX. unit growth the largest in we our for time a posted CDIM,

a delivered driven ARC's in Our printing. by print increase and renewed X.X% business project primarily CDIM, increase focus on in

As we pursued this business interactively, product remained stable. sales

more projects. winning We are

the high detail the SG&A gross investments in the right operations Jorge our We challenged few our we turn traditional margins our offer medical costs bottom traditional million excess With of still to extraordinarily more and well the margin, our more ever impacted quarter. our to These Despite in a our around. our remain it focus prudent to and and growth hard with in the beating EBITDA. the have $X costs in will costs our take business. this lines progress more note performance are of place. business MPS revenues working AIM more print in Both the associated is this But and mindful in clearly appear is felt are important that we in we of minutes. in results, were all costs just said, a our not business. and during

have those support where demonstrating investment. potential, are their hesitate commensurate or eliminate shrink not with will continue business to and we the but ahead lines in of how we business the several we have continue stay To changes progress make environment Over our quarters, watched to our and ever the developed has past changing growth will and products strong to services out and results played to that costs strategy produce to an curve. failed ensure we

the feeling of am rest these I year in we and for our guidance mind, upbeat With about the points are maintaining XXXX.

earnings to $X.XX. forecast per share at Our remain will $X.XX of

this to adjusted the $XX operations be to as a from EBITDA. for of our $XX we of million I discussion, will range then questions. will a on Dilo million expect Jorge, to brief to our in taking cash With with for to flow over some range further additional are finances we operations color overview $XX before and turn for million and We backdrop Dilo? call conduct your of guiding the $XX million a

Dilo Wijesuriya

very Thank you, with efforts were CDIM services. Suri. We our our pleased in growing

Over to reduction the from print years due been a past revenue sector. construction challenged has in few the CDIM

reduction attribute and our from market continues success we existing share this prevail, to While new to our sales securing customers. protecting

a revenue CDIM our that reminder, service to As construction printing, printing print. services includes relate and segment color from digital

and to is market a there While ARC's to construction from strategy win our cloud remains services documents maybe offering repeat service. by great primary print quality services. customer moving mobile, expand for our business and and

North XXX to Our ARC's is easy do centers it in America. make our service for business with goal customers to

printing to product popular momentum color offices. Environmental graphics gain signage Safety to at continue construction to value are services be of project in newly renovated a customers. sites. our Our continue becoming and

new customers technology. We our flow and and using introduce services, cloud the communicate platform. as their using to and support services our document to hybrid well and continue design technology ARC to their print by AEC who solutions continue can technology a customers with as offer all construction company mobile is as and SKYSITE to information information only print central

placed we facility requirements to continue gain customers both for The our momentum. launched to of needs. capture our We are well customer the new services

continue We finding technologies on information. valuable how to use our to on the to their reduce time customers educate mobile spent

needs. and and their our meet customers focused services Our ability on are to specialty technology in and solutions are to deliver sales their consult teams with professionals print

Our large team quarters. the be in in is will large build customers out MPS a prospects. several of to adding pipeline We global coming rolling that succeeded services continuing even strong

usage offices distribute within customers' they print our to channels to information. drop continue digital organically as However, move their to

Supply offset at coming in to mostly on Chinese working volume. customers and services large our sales both are division. from Equipment decline are the providing small and We additional

the performance year. Archival X% but base. segment a sales and We during in expect small in management had a flat on information services this sales, drop

line this launching business a are new where adventure. our As reminder we facility is a

revenue throughout year. We the this gain expect to [aligned] strength

from existing additional and new customers Our marketing of share. market revenue as efforts we continue growth push to improve secure the

services present when be and we the a continually they to is need. goal customers have Our remind offer our of many

We good win are and quality are continue social business, to repeat in key service customers. business marketing to In to programs customer our our from very accomplish and media, powerful [happening] engage this. referrals the

prices. in have Our months business beneficial in capacity manufacturing the printing recent -- that investments seen In large few new accounts. stabilize hope also can we have both price the reducing securing last maintaining the pricing and print their many new been hardware converters existing of to of paper paper. the fulfills with they down for country volumes print indication these critical service of needs is many the the This increased Like our that of to been even increases the though key the competitors customers. results another passing course have customers. our of ARC around This in shrink are continuing cost

to more While attention we our retain we our are excited. contests, employees building the market outstanding and also outreach surveys, the satisfaction the industry. leader encourage service, motivate stick and to We In tight conduct and staff. keep and our programs, it to is we up the labor in executive improving skit to inspired programs current employees pay our essential performance keep quality that and with

continuing With call with build share you sales turn provide continue the operations, Our the to update over Jorge? best what ARC. the that and we do in I'll and to on financial update. for new Jorge market be to strategy to is

Jorge Avalos

in for to Equipment our Dilo. Overall Supply just X% sales Thanks and declined year-over-year, quarter the sales. due declines primarily

due which that massed revenue. encouraging Suri see than our during of regards made our to, to transformation, they X.X% to makes a great high medical in it margins, of alluded increase was more terms were to front. XX% we With strides as period. on In our costs that also CBIM total But the exceptionally

After insurance comes adequate XX on million. effect. year-over-year in insurance on earnings XX between $X.XX these XX.X% a of medical we increased Despite impact the year gross heavy that margin over into medical basis high note increased per with fairly This cost we which, stop-loss than basis in If expect by points. of costs, second sold medical self-insured SG&A, by represented would as evenly points. year-over-year We not points are costs decline more operating claims margins costs goods but increase for share. basis the a split prior I our gross impact partially and during of continue just medical moderation have anticipate our stop-loss XXX all-in-all to of resulted negative and margins should $X.X quarter.

debt costs were higher Earnings of balance the in the during of Cash to million rise marketing, to in to year-over-year anticipated sheet almost and costs quarter ended working first and quarter and of the by entirely $X than of share nearly the hit also the per the operating more the of negatively period sales down line on in our tune pay for from $XX.X While made senior EBITDA driven impacted item. medical payables. the expected continue this SG&A we first We by portion affected $X.XX in to the during cash medical new activities be that we -- to SG&A were attributed capital changes the adjusted the and specifically, investments claims $XX for claims. were timing the the period. flows can due quarter million million with

years performance to to usual the to our Our long-term we don't investors XXXX our expect anticipate and expect play be of and year in with this out this second the we cash represented past reverse as the flows. over exception. trend XXXX several have any seen strong We half forecast, by end

modeling estimates for the for the it remembering rate new effective Act XX% is to you Finally, that tax will year, for of Tax year. our lower those worth Reform the

historical losses of Our also million at $XX than more our disposal. remain operating

In company. not as to growth our will to taxes cash restore reiterate closing, control Suri's So material will for regarding years. the next the we I several be comments costs ability

of have despite ARC times of times our at and our in challenges hasn't or changed, thought we the the have costs are part that evolution strategy. good our managing experienced We bad DNA in our and this marketplace always

the keeping our that capable a Suri? make to clear our is developing generation, willing know we to growth remaining the sales and that not continue result, past prudent initiatives relentless opportunities focused for and approach on are on feel as continuing move managing we we investments ARC while highlighted technology While and in of. business will years forward. show forward performance to print savings eye all preserving By strategy confident with to deliver sharp opportunities cash have compromise we sales beginning a moving several costs, our for is

Suri Suriyakumar

we now. Thank are Operator, questions you, to take our ready Jorge. listener's

Operator

with Please Instructions] go come first from FBR. Certainly. [Operator Riley question Aman will Our Gulani ahead. B.

Aman Gulani

more you traditional I for was color would question the that will it services what is my be driver primary first the was CDIM the or in the business reprographics? guess in like like business, say digital the growth

Suri Suriyakumar

would Dilo to basically, reprographics, like traditional actually you that. add on It's to

Dilo Wijesuriya

flow. revenue reprographics coming information the the are which construction is business new of from documents the most related traditional Yes, of side primarily and

to see mention have to want the you is I quarter the you that may notice thing in if first that, growth since last quarter about the reducing drop Another in but of year. you a we second revenue been

a sales part on us year. So has print eliminate to it organization specialized been of that seems last loss that have are line the we And the the since helping CDIM. which construction about services strategy focuses related revenue in

year on good job hope this segment. So seen obviously growth to we to a will and a have that continue service we do

Aman Gulani

For the customer. win a business MPS you mentioned you did large

to So the coming will that how be take in up? in a long ramp seeing quarters locations increase we does and

Suri Suriyakumar

that global usually leases because needs period dictated return the by Usually while in expire rollout client, receive is type and customers they us. especially equipment the secure the MPS to of have may client, primarily certain from they again

my three we in of quarters have is rollout these should wins the be able some within place. So to we that that next hope new

Aman Gulani

about gears just and talking switching then the transition. And

until think Just in your opinion, completed your digital? quarters of transition sort more you you to how many

Suri Suriyakumar

are enough ongoing big now? little It's start transformation that actually a remind transformation our for to talking quarters. said is revenues like into me gather digital I the We XX -- us. So really us in months would into momentum starting about quantifying The and previous are to an David for it. about not we

David Stickney

Certainly.

Suri Suriyakumar

have in the the So to XX we that marketing XX the year into we months, sales about perspective had from perspective are built last the XX organization the effectively we et cetera. team being infrastructure, say sales months about and clearly and

quarters So I'd David we Yeah. Stickney another would five four, - A still think. have

Aman Gulani

measures share. you then market color more that? from on And gain a question to more taking give that your you plans take last exactly are What you market mentioned Can bit more share? me, to

Suri Suriyakumar

Sure.

the technology we obviously of is revenue said or previous on in revenue we on so on are investing been marketing what the and the quarters saying, have is been technology we there But On side. are we revenue the going really our doing knew -- and as side this I the four call my What -- three everybody side in investing on investing side. well, while. out the focusing have we in course for were last print a also both print services

additional So the like on marketing Dilo which all different comments, our provide. then marketing we're social additional to the customers reaching out the media also and customers. we on making his means And sure said services web, know in front our

starting see, are getting from orders but is who to we We print necessarily traditional are customers construction not not customers customers traditional also also related. our our which

different mouth -- communication art of referrals as other work in refer customer focus of our our on is on presence customers involved give are to to part great and all because business reaching we in galleries get web. who the So us fundamentals, for it's another customers good because word color people other example, to related us just And and well. the do museums, out quality, good service,

So a last are repeat once services have in the the years -- that very in the same of customer focus business focused we couple they taking to on base. experience, have repeat the good we services, sales our additional teams customer. winning And extra introduced same from

teams related So that. if printing, construction forth -- so and focus are us services construction are and they give our signage, archiving at we better getting on we

to So business we and focus list. are share the those our of criteria the additional that market same customer some on from gain improve

Dilo Wijesuriya

which I we our on or driving months not let's driving printing so focus would as So in it of XX hard were are the in that last is what business we that short say because say technology.

are we the impact equal technology. giving Now to both

drive we can While the print technology is being business erosion built, print we the so in earnings. to minimize are trying also

Aman Gulani

the Got then one in just it. back actually I'll and more That's helpful. question jump had I queue.

when competitors the terms do are primary business, you your of comes it who MPS business? In say to MPS your

Suri Suriyakumar

are competitors There multiple on multiple fronts.

know example mean example you so the easiest For simplest and I -- is manufacturers.

us compete through us presence they with to different their themselves manufacturers level with manufacturers compete the all service a So one dealers, dealers, large level dealers then In at lower -- a levels. clients. have have nationwide in compete manufacturers and larger they

the off one. global global accounts, United that's with MPS globally, to and manufacturers which we actually comes it because has when a So team with across States addressing manufacturer compete those accounts the are actually direct compete we do smaller that also clients who have regional reprographers and have other we we then market in space, are providers other so then And who on and nature. each

short multiple So my in there people. manufacturers answer be especially are accounts. the But large would of these most time,

Operator

[Operator Instructions] go Advisors. with from ahead. Our Weber next Please question Robotti will Alan come

Alan Weber

first question My MPS. the on is

so, keep adding year think the business Because roughly to you kind additional yet floundered much and you the talk down. how revenue can of of XXX I level million of revenues public to kind customers or last revenue's that win been have have have about you flat? in

Suri Suriyakumar

two This Alan. addressed excellent, levels. at yes, Yes, can

of who groups are of order the customers, or smaller would two three, One regional small [major], are customers a and customers two or group inside machine services. locally customers. We these have either managed print

be regular regions sales there our we So manufacturers, be and people out foot mostly. in selling, selling are who again would dealers would

that's one we which through generate. So bucket can

I installations think did Dilo, about, about did we last MPS quarter many we XXX? probably have how

Dilo Wijesuriya

About XXX.

Suri Suriyakumar

new XXX installations. to XXX

from the are bucket are additional the globe. So second global which means is the clients then nationwide the new these clients And new across are which largest revenue. installations MPS or revenues from These draw we who clients.

large have these engineering whom companies, multiyear are we with So contracts. construction companies

segment detail, gets Jorge is that X%. let on print of affected will X% a sometimes bad overall some and is overall the closer say more X% business managed there quarterly and combination I X%. mean print to I'd to around have be quarters be could required. some slightly it a services less than this are on and we might in basis, a in what answer So little quarter quarters X% a X%, I'll

So focus is [largely we've those out color because large And is multinational volumes customers. the would getting] our to clients, of more is number certain that the get and how the course projects customers these some one of sign. it's is to placements number doing in depending there could on that from what been to quarters many with increasing challenge that and new a there on is we one add that? XXX selling range numbers. other XXX the clients focusing you of the comes there, of like or Jorge small clients revenues of out The range That often lumps, larger affected. XXX

Jorge Avalos

million in numbers take in customers, are end that well that our somewhere we if a okay, a attrition customers a range X% the from X you XXX so revenue mentioned say million in existing site To as customers so existing year you get that technically more well. just million, our that have around million, means just and hey Suri specific little that will -- a dropping so X we of around normal plus dropped ended X are will project that, MPS year. small Plus math

when things of So combine at you you're the million to those range million business. two $XX new $X then looking

project comes starts that new a easy, customer, there. been machines of out, in our replace it's Some fairly new

obviously and move enterprise enterprise customers of while from a trying part Suri of add our type markets ago, try and revenues. what customers, to alluded get comes of in local it from that also some and bigger other a The needle in focusing little to our the that it's some really those way

you. that question for hopefully the answers So

Alan Weber

always I'd margin? then the And -- medical some medical were will is, so costs others. through SG&A. why have the few thought costs gross One go just that impacting of

Jorge Avalos

sales hits that's your staff. so between labor direct the for labor I cover that split is to portion that provide that is between Hence, of for relates employees, the type back are, medical direct labor SG&A SG&A employees employees the mean split we portion our your why it hit employees, is we up the right, would end up direct that benefits labor, that Because two where staff, groups. cost

Alan Weber

And be capital then will capital for you the on spending seeing about leases? can much talk and how year, what you're

Jorge Avalos

cash $X.X to million us In $X.X that a quarterly a -- regards quarter. first million million, being bit a capital be $X at quarter that range, it for first will leases, call on to were CapEx. million in on the were CapEx in the we $X million $X in little cash our we For basis. over Anticipate we

in be for that will the year. balance We to $X the million range million $X of

may average You on that following quarter. million have to that come one will up quarter we but in quarter million spikes the will range be But down. per then $X $X

Alan Weber

business my last gain the guess I for and the you, since of enabling change you market CDIM, on seen terms just has And leaving business the you the not have competitors struggled share? question the any in is, some of to

Dilo Wijesuriya

Not really.

companies business. and But about the customers we our just your answer on, Occasionally with much the the too seen of of on shrinking we in much too effect on do going don't of our hear question, there. seeking size some some drive haven't to are about our we We business. the service getting but we intelligence focus negative can competitors focus out of quality much what and out operate see we is of out that don't are small have competitor companies that that we side. But to rather competitors level -- than

Suri Suriyakumar

which have One Dilo that large of which said, is footprint. we us the add will the very fact to things a I what helps

parallely us. those only to serviced single want contract multiple invoice do service in are who multiple in places, or want single by or who can a like able locations, customers be companies customers So price -- to be projects single a a

I So the competition huge people the -- tougher, for a the no but there we competing agree with is have, difference isn't are there's the but same in market Dilo, of landscape business. question and

Operator

no see queue. telephone questions further currently our I And in Instructions] [Operator

David Stickney

to this And Good with talking joining Solutions. much, look Thank you us next appreciate ARC night. forward Yolanda. gentlemen We evening. and very We in interest continued you Thanks. you again thank time. ladies your for Document

Operator

will today's again once all That for conference. you conclude participation. Thank your

You may now disconnect.

Arc Document Solutions (ARC) 1 May 182018 Q1 Earnings call transcript