"We achieved double digit growth in managed print services and color, we saw more growth in archiving and information management and our construction document hyperlinking services, and there was great interest and new placements around the country for our PlanWell SmartScreens," Mr. Suriyakumar continued. "Our robust margin expansion led to strong earnings performance, and strong cash generation provided the means to aggressively reduce our senior debt in the same fashion we established in the first two quarters of the year, improving both our capital structure and our debt ratios."
The Company also announced that it has entered into a commitment letter with Wells Fargo Bank to refinance the Company's existing line of credit and its current "Term B" loan facility with a new secured credit facility containing "tranche A" revolving loans and "Term A" loans expected to be syndicated primarily to commercial banking institutions active in the "pro rata" bank market. The closing of the new loan facility is subject to the satisfaction of various conditions, including the receipt of commitments from the proposed lenders and the negotiation of definitive documentation. The Company expects the interest rate of the new five-year Term A facility to be at or near LIBOR plus 250 basis points. The Company expects to close the new loan facility before the end of the fourth quarter.
2014 Third Quarter Supplemental Information:
Net sales were $106.8 million, a 5.5% increase compared to the third quarter of 2013.
Days sales outstanding in Q3 2014 were 54, compared to 52 days in Q3 2013.
AEC customers comprised approximately 77% of our total net sales, while non-AEC customers made up approximately 23% of our total net sales.
Total number of Onsite Services contracts at the end of the third quarter was approximately 8,330, an increase of nearly 630 contracts from the beginning of the year.
Adjusted EBITDA is EBITDA net of the impact of loss on extinguishment of debt, 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 Nine Months Ended
September 30, September 30,
------------------ ------------------
Services and Product Line 2014 2013 2014 2013
-------- -------- -------- --------
Onsite Services 32.7% 30.6% 31.8% 29.6%
Traditional Reprographics 26.4% 28.5% 27.4% 29.1%
Color Services 21.4% 20.4% 21.2% 20.7%
Digital Services 7.9% 8.2% 8.0% 8.3%
Equipment and Supplies Sales 11.6% 12.3% 11.6% 12.3%
Outlook:
ARC Document Solutions has revised its outlook upward for annual adjusted earnings per share in 2014 from $0.19 to $0.23 to be in the range of $0.24 to $0.27 on a fully diluted basis. The outlook for annual cash flow from operations has been narrowed from $51 million to $56 million to be in the range of $52 million to $54 million. The outlook for annual adjusted EBITDA has been revised upward from $69 million to $73 million to be in the range of $71 million to $74 million.
Teleconference and Webcast:
ARC Document Solutions 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 third quarter of 2014. To access the live audio call, dial 888-461-2024. International callers may join the conference by dialing 719-325-2144. The conference ID number is 1208767. A live webcast will also be made available on the investor relations page of ARC Document Solutions' website at www.e-arc.com.
A replay of the call will be available for five days after the call's conclusion. To access the replay, dial 888-203-1112. International callers may access the replay by dialing 719-457-0820. The conference ID number is 1208767. The webcast will also be made available at www.e-arc.com for approximately 90 days following the call's conclusion.
About ARC Document Solutions (NYSE: ARC)
ARC Document Solutions is a leading document solutions company serving businesses of all types, with an emphasis on the non-residential segment of the architecture, engineering and construction industries. The Company helps more than 90,000 customers reduce costs and increase efficiency in the use of their documents, improve document access and control, and offers a wide variety of ways to print, produce, and store documents. ARC provides its solutions onsite in more than 8,000 of its customers' offices, offsite in service centers around the world, and digitally in the form of proprietary software and web applications. For more information please visit 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 "expect," "confident," "assume," "intent," 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, 2013, 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.
