WALNUT CREEK, CA--(Marketwired - Aug 2, 2016) - ARC Document Solutions, Inc. (
2016 Second Quarter Business Highlights:
- Net sales of $103.8 million vs. $113.4 million in Q2 2015
- Adjusted diluted earnings per share were $0.10 vs. $0.13 in Q2 2015
- Gross margin of 35.1% vs. 36.0% in Q2 2015 due to lower sales volume
- Cash flow from operations of $16.6 million vs. $16.9 million in Q2 2015
- Adjusted EBITDA of $18.1 million or 17.5%
- Approximately 581,000 shares of ARC common stock repurchased in the open market
- Revised 2016 forecast is for annual adjusted earnings per share to be in the range of $0.24 to $0.28; annual cash flow from operations to be in the range of $48 million to $52 million; and annual adjusted EBITDA is expected to be in the range of $59 million to $63 million.
| Financial Highlights: | ||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (All dollar amounts in millions, except EPS) | 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Net Sales | $ | 103.8 | $ | 113.4 | $ | 207.3 | $ | 217.7 | ||||||||
| Gross Margin | 35.1 | % | 36.0 | % | 33.8 | % | 35.3 | % | ||||||||
| Net (loss) income attributable to ARC | $ | (55.9 | ) | $ | 9.3 | $ | (53.3 | ) | $ | 13.7 | ||||||
| Adjusted Net Income attributable to ARC | $ | 4.8 | $ | 6.2 | $ | 7.5 | $ | 9.4 | ||||||||
| (Loss) earnings per share - Diluted | $ | (1.22 | ) | $ | 0.19 | $ | (1.15 | ) | $ | 0.29 | ||||||
| Adjusted earnings per share - Diluted | $ | 0.10 | $ | 0.13 | $ | 0.16 | $ | 0.20 | ||||||||
| Adjusted EBITDA | $ | 18.1 | $ | 21.6 | $ | 32.9 | $ | 38.4 | ||||||||
| Cash provided by operating activities | $ | 16.6 | $ | 16.9 | $ | 21.9 | $ | 22.2 | ||||||||
| Capital Expenditures | $ | 2.6 | $ | 4.1 | $ | 5.2 | $ | 7.6 | ||||||||
| Debt & Capital Leases (including current), net of unamortized deferred financing fees | $ | 164.9 | $ | 187.0 | ||||||||||||
Management Commentary
"Despite continuing drops in our traditional business, our new services continue to grow, led by year-over-year growth of nine percent in archiving and information management," said K. "Suri" Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "While our technology services have yet to offset declines related to printing services, our cash position remains strong as evidenced by our continuing ability to repurchase our shares and reduce our senior debt. Our capital structure is excellent, and we are confident in our ability to keep the company stable and productive during this transition."
"The type of transition ARC is going through is a tough one. The result is that we are changing at every level -- sales, operations, technology, and finance -- to balance the future needs of the market against what customers need today," Mr. Suriyakumar continued. "This is especially true given that the construction industry is slow in adopting technology. It is why I have emphasized in my previous discussions that we require 24 to 36 months to get on top of this transition."
"The company remains on sound financial footing while we work our way through the difficult sales comparison to last year," said Jorge Avalos, Chief Financial Officer of ARC Document Solutions. "Cash flow from operations is on par with last year's performance, the leverage ratio on our senior debt is below 2.5 times, and we continue to repurchase shares, all of which demonstrates our continuing focus on cash generation, debt pay-down, and returning value to our shareholders."
2016 Second Quarter Supplemental Information:
Net sales were $103.8 million, an 8.5% decrease compared to the second quarter of 2015.
Days sales outstanding in Q2 2016 were 53, compared to 54 days in Q2 2015.
Architectural, engineering, construction and building owner/operators (AEC/O) customers comprised approximately 77% of our total net sales, while customers outside of construction made up approximately 23% of our total net sales.
Total number of MPS locations at the end of the second quarter has grown to approximately 9,240, a gain of 520 locations over Q2 2015. This information reflects the reduction of approximately 200 locations associated with a large client that did not renew their MPS engagement with us at the end of 2015.
Adjusted EBITDA excludes loss on extinguishment of debt, goodwill impairment, the impact of trade secret litigation costs, stock-based compensation expense, and restructuring expense.
| Sales from Services and Product Lines as a Percentage of Net Sales | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| Services and Product Line | 2016 | 2015 | 2016 | 2015 | ||||||||
| CDIM | 52.9 | % | 51.9 | % | 52.3 | % | 52.2 | % | ||||
| MPS | 32.8 | % | 32.7 | % | 32.5 | % | 33.5 | % | ||||
| AIM | 3.5 | % | 3.0 | % | 3.6 | % | 2.8 | % | ||||
| Equipment and supplies sales | 10.8 | % | 12.4 | % | 11.6 | % | 11.5 | % | ||||
Outlook
ARC Document Solutions has revised is 2016 annual forecast and now anticipates annual adjusted earnings per share in 2016 to be in the range of $0.24 to $0.28 on a fully diluted basis, as compared to $0.30 to $0.35 previously. Annual cash flow from operations is now projected to be in the range of $48 million to $52 million, as compared to $55 million to $60 million previously. The Company's outlook for 2016 annual adjusted EBITDA is now expected to be in the range of $59 million to $63 million, as compared to $66 to $71 million previously.
Teleconference and Webcast
To access the live audio call, dial 888-329-8877. International callers may join the conference by dialing 719-457-2645. The conference ID number is 5777429. A live webcast will also be made available on the investor relations page of ARC Document Solution's website at ir.e-arc.com.
The webcast of the call will be available at www.e-arc.com for approximately 90 days following the call's conclusion. A telephone replay of the call also will be available for five days after the call's conclusion. To access the replay, please copy and paste the following URL into your browser http://bit.ly/29mPy39. The conference ID number is 5777429.
About ARC Document Solutions (
ARC Document Solutions distributes Documents and Information to facilitate communication for design, engineering and construction professionals, real estate managers and developers, facilities owners, and a variety of similar disciplines. The Company provides cloud and mobile solutions, professional services, and hardware to help its customers around the world reduce costs and increase efficiency, improve information access and control, and communicate faster, easier, and better. Follow ARC at www.e-arc.com
Forward-Looking Statements
This press release contains forward-looking statements that are based on current opinions, estimates and assumptions of management regarding future events and the future financial performance of the Company. Words such as "anticipates," "forecast," "project," "outlook," and similar expressions identify forward-looking statements and all statements other than statements of historical fact, including, but not limited to, any projections regarding earnings, revenues and financial performance of the Company, could be deemed 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. In addition to matters affecting the construction, managed print services, document management or reprographics industries, or the economy generally, factors that could cause actual results to differ from expectations stated in forward-looking statements include, among others, the factors described in the caption entitled "Risk Factors" in Item 1A in ARC Document Solution's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, Quarterly Reports on Form 10-Q, and other periodic filings and prospectuses. 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.
| ARC Document Solutions, Inc. | ||||||||||
| Consolidated Balance Sheets | ||||||||||
| (In thousands, except per share data) | ||||||||||
| (Unaudited) | ||||||||||
| June 30, | December 31, | |||||||||
| Current assets: | 2016 | 2015 | ||||||||
| Cash and cash equivalents | $ | 20,452 | $ | 23,963 | ||||||
| Accounts receivable, net of allowances for accounts receivable of $1,850 and $2,094 | 60,933 | 60,085 | ||||||||
| Inventories, net | 19,570 | 16,972 | ||||||||
| Prepaid expenses | 4,766 | 4,555 | ||||||||
| Other current assets | 4,347 | 4,131 | ||||||||
| Total current assets | 110,068 | 109,706 | ||||||||
| Property and equipment, net of accumulated depreciation of $206,584 and $202,457 | 57,754 | 57,590 | ||||||||
| Goodwill | 138,688 | 212,608 | ||||||||
| Other intangible assets, net | 15,580 | 17,946 | ||||||||
| Deferred income taxes | 76,019 | 74,196 | ||||||||
| Other assets | 2,372 | 2,492 | ||||||||
| Total assets | $ | 400,481 | $ | 474,538 | ||||||
| Current liabilities: | ||||||||||
| Accounts payable | $ | 22,148 | $ | 23,989 | ||||||
| Accrued payroll and payroll-related expenses | 11,811 | 12,118 | ||||||||
| Accrued expenses | 18,023 | 19,194 | ||||||||
| Current portion of long-term debt and capital leases | 14,863 | 14,374 | ||||||||
| Total current liabilities | 66,845 | 69,675 | ||||||||
| Long-term debt and capital leases | 150,059 | 157,018 | ||||||||
| Deferred income taxes | 29,412 | 35,933 | ||||||||
| Other long-term liabilities | 2,623 | 2,778 | ||||||||
| Total liabilities | 248,939 | 265,404 | ||||||||
| Commitments and contingencies | ||||||||||
| Stockholders' equity: | ||||||||||
| ARC Document Solutions, Inc. stockholders' 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; 47,390 and 47,130 shares issued and 46,008 and 47,029 shares outstanding | 47 | 47 | ||||||||
| Additional paid-in capital | 116,494 | 115,089 | ||||||||
| Retained earnings | 36,357 | 89,687 | ||||||||
| Accumulated other comprehensive loss | (2,653 | ) | (2,097 | ) | ||||||
| 150,245 | 202,726 | |||||||||
| Less cost of common stock in treasury, 1,382 and 101 shares | 5,709 | 612 | ||||||||
| Total ARC Document Solutions, Inc. stockholders' equity | 144,536 | 202,114 | ||||||||
| Noncontrolling interest | 7,006 | 7,020 | ||||||||
| Total equity | 151,542 | 209,134 | ||||||||
| Total liabilities and equity | $ | 400,481 | $ | 474,538 | ||||||
| ARC Document Solutions, Inc. | |||||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Service sales | $ | 92,581 | $ | 99,336 | $ | 183,216 | $ | 192,661 | |||||||||
| Equipment and supplies sales | 11,189 | 14,053 | 24,104 | 25,047 | |||||||||||||
| Total net sales | 103,770 | 113,389 | 207,320 | 217,708 | |||||||||||||
| Cost of sales | 67,378 | 72,530 | 137,191 | 140,828 | |||||||||||||
| Gross profit | 36,392 | 40,859 | 70,129 | 76,880 | |||||||||||||
| Selling, general and administrative expenses | 25,503 | 27,132 | 51,859 | 54,587 | |||||||||||||
| Amortization of intangible assets | 1,232 | 1,442 | 2,545 | 2,931 | |||||||||||||
| Goodwill impairment | 73,920 | -- | 73,920 | -- | |||||||||||||
| Restructuring expense | 5 | 11 | 7 | 85 | |||||||||||||
| (Loss) income from operations | (64,268 | ) | 12,274 | (58,202 | ) | 19,277 | |||||||||||
| Other income, net | (15 | ) | (30 | ) | (38 | ) | (56 | ) | |||||||||
| Loss on extinguishment of debt | 44 | 97 | 90 | 97 | |||||||||||||
| Interest expense, net | 1,526 | 1,939 | 2,972 | 3,796 | |||||||||||||
| (Loss) income before income tax (benefit) provision | (65,823 | ) | 10,268 | (61,226 | ) | 15,440 | |||||||||||
| Income tax (benefit) provision | (10,015 | ) | 811 | (8,046 | ) | 1,572 | |||||||||||
| Net (loss) income | (55,808 | ) | 9,457 | (53,180 | ) | 13,868 | |||||||||||
| Income attributable to the noncontrolling interest | (96 | ) | (200 | ) | (150 | ) | (175 | ) | |||||||||
| Net (loss) income attributable to ARC Document Solutions, Inc. shareholders | $ | (55,904 | ) | $ | 9,257 | $ | (53,330 | ) | $ | 13,693 | |||||||
| (Loss) earnings per share attributable to ARC Document Solutions, Inc. shareholders: | |||||||||||||||||
| Basic | $ | (1.22 | ) | $ | 0.20 | $ | (1.15 | ) | $ | 0.29 | |||||||
| Diluted | $ | (1.22 | ) | $ | 0.19 | $ | (1.15 | ) | $ | 0.29 | |||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 45,955 | 46,611 | 46,285 | 46,528 | |||||||||||||
| Diluted | 45,955 | 47,558 | 46,285 | 47,634 | |||||||||||||
| ARC Document Solutions, Inc. Non-GAAP Measures Reconciliation of cash flows provided by operating activities to EBITDA and Adjusted EBITDA (In thousands) (Unaudited) |
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| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Cash flows provided by operating activities | $ | 16,580 | $ | 16,864 | $ | 21,883 | $ | 22,152 | |||||||||
| Changes in operating assets and liabilities, net of effect of business acquisitions | 209 | 2,928 | 8,018 | 12,344 | |||||||||||||
| Non-cash expenses, including depreciation, amortization and goodwill impairment | (72,597 | ) | (10,335 | ) | (83,081 | ) | (20,628 | ) | |||||||||
| Income tax (benefit) provision | (10,015 | ) | 811 | (8,046 | ) | 1,572 | |||||||||||
| Interest expense, net | 1,526 | 1,939 | 2,972 | 3,796 | |||||||||||||
| Income attributable to the noncontrolling interest | (96 | ) | (200 | ) | (150 | ) | (175 | ) | |||||||||
| Depreciation and amortization | 7,890 | 8,520 | 15,880 | 17,075 | |||||||||||||
| EBITDA | (56,503 | ) | 20,527 | (42,524 | ) | 36,136 | |||||||||||
| Loss on extinguishment of debt | 44 | 97 | 90 | 97 | |||||||||||||
| Goodwill impairment | 73,920 | -- | 73,920 | -- | |||||||||||||
| Trade secret litigation costs(1) | -- | -- | -- | 34 | |||||||||||||
| Restructuring expense(2) | 5 | 11 | 7 | 85 | |||||||||||||
| Stock-based compensation | 651 | 921 | 1,423 | 2,004 | |||||||||||||
| Adjusted EBITDA | $ | 18,117 | $ | 21,556 | $ | 32,916 | $ | 38,356 | |||||||||
(1) On February 1, 2013, we filed a civil complaint against a competitor and a former employee in the Superior Court of California for Orange County, which alleged, among other claims, the misappropriation of ARC trade secrets; namely, proprietary customer lists that were used to communicate with ARC customers in an attempt to unfairly acquire their business. In prior litigation with the competitor based on related facts, in 2007 the competitor entered into a settlement agreement and stipulated judgment, which included an injunction. We instituted this suit to stop the defendant from using similar unfair business practices against us in the Southern California market. The case proceeded to trial in May 2014, and a jury verdict was entered for the defendants. In the first quarter of 2015, we entered into a settlement and paid the defendant. Legal fees associated with the litigation were recorded as selling, general and administrative expense.
(2) In October 2012, we initiated a restructuring plan which included the closure or downsizing of the Company's service center locations, as well as a reduction in headcount. Restructuring expenses in 2016 and 2015 primarily consist of revised estimated lease termination and obligation costs resulting from facilities closed in 2013.
| ARC Document Solutions, Inc. Non-GAAP Measures Reconciliation of net (loss) income attributable to ARC to unaudited adjusted net income attributable to ARC (In thousands, except per share data) (Unaudited) |
|||||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||||
| June 30, | June 30, | ||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||||
| Net (loss) income attributable to ARC Document Solutions, Inc. | $ | (55,904 | ) | $ | 9,257 | $ | (53,330 | ) | $ | 13,693 | |||||||
| Loss on extinguishment of debt | 44 | 97 | 90 | 97 | |||||||||||||
| Goodwill impairment | 73,920 | -- | 73,920 | -- | |||||||||||||
| Restructuring expense | 5 | 11 | 7 | 85 | |||||||||||||
| Trade secret litigation costs | -- | -- | -- | 34 | |||||||||||||
| Income tax benefit related to above items | (13,350 | ) | (42 | ) | (13,369 | ) | (84 | ) | |||||||||
| Deferred tax valuation allowance and other discrete tax items | 95 | (3,151 | ) | 203 | (4,407 | ) | |||||||||||
| Unaudited adjusted net income attributable to ARC Document Solutions, Inc. | $ | 4,810 | $ | 6,172 | $ | 7,521 | $ | 9,418 | |||||||||
| Actual: | |||||||||||||||||
| (Loss) earnings per share attributable to ARC Document Solutions, Inc. shareholders: | |||||||||||||||||
| Basic | $ | (1.22 | ) | $ | 0.20 | $ | (1.15 | ) | $ | 0.29 | |||||||
| Diluted | $ | (1.22 | ) | $ | 0.19 | $ | (1.15 | ) | $ | 0.29 | |||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 45,955 | 46,611 | 46,285 | 46,528 | |||||||||||||
| Diluted | 45,955 | 47,558 | 46,285 | 47,634 | |||||||||||||
| Adjusted: | |||||||||||||||||
| Earnings per share attributable to ARC Document Solutions, Inc. shareholders: | |||||||||||||||||
| Basic | $ | 0.10 | $ | 0.13 | $ | 0.16 | $ | 0.20 | |||||||||
| Diluted | $ | 0.10 | $ | 0.13 | $ | 0.16 | $ | 0.20 | |||||||||
| Weighted average common shares outstanding: | |||||||||||||||||
| Basic | 45,955 | 46,611 | 46,285 | 46,528 | |||||||||||||
| Diluted | 46,568 | 47,558 | 46,889 | 47,634 | |||||||||||||
ARC Document Solutions, Inc. Non-GAAP Measures Reconciliation of net (loss) income attributable to ARC Document Solutions, Inc. shareholders to EBITDA and Adjusted EBITDA (In thousands) (Unaudited) |
|||||||||||||||
| Three Months Ended | Six Months Ended | ||||||||||||||
| June 30, | June 30, | ||||||||||||||
| 2016 | 2015 | 2016 | 2015 | ||||||||||||
| Net (loss) income attributable to ARC Document Solutions, Inc. shareholders | $ | (55,904 | ) | $ | 9,257 | $ | (53,330 | ) | $ | 13,693 | |||||
| Interest expense, net | 1,526 | 1,939 | 2,972 | 3,796 | |||||||||||
| Income tax (benefit) provision | (10,015 | ) | 811 | (8,046 | ) | 1,572 | |||||||||
| Depreciation and amortization | 7,890 | 8,520 | 15,880 | 17,075 | |||||||||||
| EBITDA | (56,503 | ) | 20,527 | (42,524 | ) | 36,136 | |||||||||
| Loss on extinguishment of debt | 44 | 97 | 90 | 97 | |||||||||||
| Goodwill impairment | 73,920 | -- | 73,920 | -- | |||||||||||
| Trade secret litigation costs | -- | -- | -- | 34 | |||||||||||
| Restructuring expense | 5 | 11 | 7 | 85 | |||||||||||
| Stock-based compensation | 651 | 921 | 1,423 | 2,004 | |||||||||||
| Adjusted EBITDA | $ | 18,117 | $ | 21,556 | $ | 32,916 | $ | 38,356 | |||||||
| ARC Document Solutions, Inc. Net Sales by Product Line (In thousands) (Unaudited) |
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| Three Months Ended | Six Months Ended | |||||||||||||
| June 30, | June 30, | |||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||
| Service sales | ||||||||||||||
| CDIM | $ | 54,860 | $ | 58,835 | 108,525 | 113,477 | ||||||||
| MPS | 34,055 | 37,134 | 67,286 | 73,011 | ||||||||||
| AIM | 3,666 | 3,367 | 7,405 | 6,173 | ||||||||||
| Total service sales | 92,581 | 99,336 | 183,216 | 192,661 | ||||||||||
| Equipment and supplies sales | 11,189 | 14,053 | 24,104 | 25,047 | ||||||||||
| Total net sales | $ | 103,770 | $ | 113,389 | $ | 207,320 | $ | 217,708 | ||||||
Non-GAAP Financial Measures
EBITDA and related ratios presented in this report are supplemental measures of our performance that are not required by or presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). These measures are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, income from operations, or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating, investing or financing activities as a measure of our liquidity.
EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by net sales.
We have presented EBITDA and related ratios because we consider them important supplemental measures of our performance and liquidity. We believe investors may also find these measures meaningful, given how our management makes use of them. The following is a discussion of our use of these measures.
We use EBITDA to measure and compare the performance of our operating segments. Our operating segments' financial performance includes all of the operating activities except debt and taxation which are managed at the corporate level for U.S. operating segments. We use EBITDA to compare the performance of our operating segments and to measure performance for determining consolidated-level compensation. In addition, we use EBITDA to evaluate potential acquisitions and potential capital expenditures.
EBITDA and related ratios have limitations as analytical tools, and should not be considered in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows:
- They do not reflect our cash expenditures, or future requirements for capital expenditures and contractual commitments;
- They do not reflect changes in, or cash requirements for, our working capital needs;
- They do not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments on our debt;
- Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
- Other companies, including companies in our industry, may calculate these measures differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, EBITDA, and related ratios should not be considered as measures of discretionary cash available to us to invest in business growth or to reduce our indebtedness. We compensate for these limitations by relying primarily on our GAAP results and using EBITDA and related ratios only as supplements.
Our presentation of adjusted net income and adjusted EBITDA over certain periods is an attempt to provide meaningful comparisons to our historical performance for our existing and future investors. The unprecedented changes in our end markets over the past several years have required us to take measures that are unique in our history and specific to individual circumstances. Comparisons inclusive of these actions make normal financial and other performance patterns difficult to discern under a strict GAAP presentation. Each non-GAAP presentation, however, is explained in detail in the reconciliation tables above.
Specifically, we have presented adjusted net income attributable to ARC and adjusted earnings per share attributable to ARC shareholders for the three and six months ended June 30, 2016 and 2015 to reflect the exclusion of loss on extinguishment of debt, goodwill impairment, restructuring expense, trade secret litigation costs, and changes in the valuation allowances related to certain deferred tax assets and other discrete tax items. This presentation facilitates a meaningful comparison of our operating results for the three and six months ended June 30, 2016 and 2015. We believe these charges were the result of the then current macroeconomic environment, our capital restructuring, or other items which are not indicative of our actual operating performance.
We have presented adjusted EBITDA in the three and six months ended June 30, 2016 and 2015 to exclude loss on extinguishment of debt, goodwill impairment, trade secret litigation costs, restructuring expense and stock-based compensation expense. The adjustment of EBITDA for these items is consistent with the definition of adjusted EBITDA in our credit agreement; therefore, we believe this information is useful to investors in assessing our financial performance.
| ARC Document Solutions Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
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| Three Months Ended | Six Months Ended | |||||||||||||||||
| June 30, | June 30, | |||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||
| Cash flows from operating activities | ||||||||||||||||||
| Net (loss) income | $ | (55,808 | ) | $ | 9,457 | $ | (53,180 | ) | $ | 13,868 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||
| Allowance for accounts receivable | 249 | 156 | 320 | 182 | ||||||||||||||
| Depreciation | 6,658 | 7,078 | 13,335 | 14,144 | ||||||||||||||
| Amortization of intangible assets | 1,232 | 1,442 | 2,545 | 2,931 | ||||||||||||||
| Amortization of deferred financing costs | 115 | 161 | 233 | 322 | ||||||||||||||
| Goodwill impairment | 73,920 | -- | 73,920 | -- | ||||||||||||||
| Stock-based compensation | 651 | 921 | 1,423 | 2,004 | ||||||||||||||
| Deferred income taxes | (10,066 | ) | 3,847 | (8,317 | ) | 6,023 | ||||||||||||
| Deferred tax valuation allowance | (87 | ) | (3,257 | ) | (15 | ) | (4,791 | ) | ||||||||||
| Loss on early extinguishment of debt | 44 | 97 | 90 | 97 | ||||||||||||||
| Other non-cash items, net | (119 | ) | (110 | ) | (453 | ) | (284 | ) | ||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||||||
| Accounts receivable | (124 | ) | (2,111 | ) | (1,388 | ) | (6,633 | ) | ||||||||||
| Inventory | (1,199 | ) | (1,765 | ) | (2,767 | ) | (2,858 | ) | ||||||||||
| Prepaid expenses and other assets | (1,063 | ) | (282 | ) | (666 | ) | 1,717 | |||||||||||
| Accounts payable and accrued expenses | 2,177 | 1,230 | (3,197 | ) | (4,570 | ) | ||||||||||||
| Net cash provided by operating activities | 16,580 | 16,864 | 21,883 | 22,152 | ||||||||||||||
| Cash flows from investing activities | ||||||||||||||||||
| Capital expenditures | (2,645 | ) | (4,136 | ) | (5,150 | ) | (7,637 | ) | ||||||||||
| Other | 481 | 93 | 707 | 248 | ||||||||||||||
| Net cash used in investing activities | (2,164 | ) | (4,043 | ) | (4,443 | ) | (7,389 | ) | ||||||||||
| Cash flows from financing activities | ||||||||||||||||||
| Proceeds from stock option exercises | 19 | 16 | 30 | 561 | ||||||||||||||
| Proceeds from issuance of common stock under Employee Stock Purchase Plan | 31 | 31 | 70 | 58 | ||||||||||||||
| Share repurchases | (2,364 | ) | (204 | ) | (5,097 | ) | (204 | ) | ||||||||||
| Contingent consideration on prior acquisitions | (302 | ) | -- | (367 | ) | -- | ||||||||||||
| Early extinguishment of long-term debt | (4,600 | ) | (7,250 | ) | (9,000 | ) | (7,250 | ) | ||||||||||
| Payments on long-term debt agreements and capital leases | (3,220 | ) | (6,713 | ) | (6,341 | ) | (12,780 | ) | ||||||||||
| Net repayments under revolving credit facilities | -- | (760 | ) | -- | (1,744 | ) | ||||||||||||
| Payment of deferred financing costs | -- | (1 | ) | (30 | ) | (25 | ) | |||||||||||
| Payment of hedge premium | -- | -- | -- | (632 | ) | |||||||||||||
| Net cash used in financing activities | (10,436 | ) | (14,881 | ) | (20,735 | ) | (22,016 | ) | ||||||||||
| Effect of foreign currency translation on cash balances | (321 | ) | (65 | ) | (216 | ) | 53 | |||||||||||
| Net change in cash and cash equivalents | 3,659 | (2,125 | ) | (3,511 | ) | (7,200 | ) | |||||||||||
| Cash and cash equivalents at beginning of period | 16,793 | 17,561 | 23,963 | 22,636 | ||||||||||||||
| Cash and cash equivalents at end of period | $ | 20,452 | $ | 15,436 | $ | 20,452 | $ | 15,436 | ||||||||||
| Supplemental disclosure of cash flow information | ||||||||||||||||||
| Noncash investing and financing activities | ||||||||||||||||||
| Capital lease obligations incurred | $ | 5,742 | $ | 3,542 | $ | 8,607 | $ | 7,042 | ||||||||||
| Contingent liabilities in connection with acquisition of businesses | $ | -- | $ | -- | $ | 89 | $ | -- | ||||||||||
| Liabilities in connection with deferred financing fees | $ | 76 | $ | -- | $ | 76 | $ | -- | ||||||||||
Contact Information:
Contact Information:
David Stickney
VP Corporate Communications & Investor Relations
925-949-5114