[PART I—FINANCIAL INFORMATION](index=6&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the reporting period [Condensed Consolidated Financial Statements](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for ARC Document Solutions, Inc. as of June 30, 2021, and for the three and six months then ended, including balance sheets, statements of operations, comprehensive income, equity, and cash flows, along with accompanying notes detailing accounting policies and specific financial items Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2021 (in thousands) | December 31, 2020 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $107,837 | $108,747 | | **Total Assets** | $330,250 | $345,438 | | **Total Current Liabilities** | $75,058 | $76,247 | | **Total Liabilities** | $174,455 | $191,102 | | **Total Equity** | $155,795 | $154,336 | Condensed Consolidated Statements of Operations Highlights (Unaudited) | Metric (in thousands, except per share data) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $68,799 | $64,319 | $130,529 | $152,744 | | **Gross Profit** | $22,792 | $20,445 | $41,579 | $48,042 | | **Income from Operations** | $4,187 | $2,682 | $5,904 | $5,344 | | **Net Income Attributable to ARC** | $2,574 | $1,461 | $3,363 | $2,144 | | **Diluted EPS** | $0.06 | $0.03 | $0.08 | $0.05 | Condensed Consolidated Statements of Cash Flows Highlights (Unaudited) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $16,889 | $26,255 | | **Net cash used in investing activities** | $(1,334) | $(2,501) | | **Net cash (used in) provided by financing activities** | $(18,364) | $5,438 | | **Net change in cash and cash equivalents** | $(2,578) | $29,006 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes to the unaudited condensed consolidated financial statements, including accounting policies, new credit agreements, and stock-based compensation information Net Sales by Principal Service/Product (in thousands) | Service/Product | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **CDIM** | $43,089 | $41,070 | $80,523 | $90,230 | | **MPS** | $18,005 | $16,233 | $35,340 | $43,541 | | **AIM** | $3,286 | $2,653 | $6,310 | $6,253 | | **Equipment and supplies sales** | $4,419 | $4,363 | $8,356 | $12,720 | | **Total Net Sales** | $68,799 | $64,319 | $130,529 | $152,744 | - The company entered into a new Credit Agreement on April 22, 2021, providing for revolving loans up to **$70 million** and maturing on April 22, 2026. As of June 30, 2021, borrowing availability was **$19.1 million**[63](index=63&type=chunk)[64](index=64&type=chunk) - On April 29, 2021, shareholders approved the 2021 Incentive Plan. As of June 30, 2021, total unrecognized compensation cost related to unvested stock-based payments was **$3.2 million**, expected to be recognized over a weighted-average period of approximately **2.4 years**[74](index=74&type=chunk)[77](index=77&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance for Q2 and H1 2021, highlighting a 7.0% year-over-year increase in Q2 net sales due to recovering economic activity post-pandemic, covering operational results by segment, noting growth in CDIM, MPS, and AIM in Q2, and improved gross margins due to a reconfigured cost structure, while detailing its strong liquidity position with **$52.4 million** in cash and reduced total debt, and the successful refinancing of its credit facility [COVID-19 Pandemic Impact](index=21&type=section&id=COVID-19%20Pandemic) This section outlines the company's strategic adaptations and liquidity measures taken in response to the COVID-19 pandemic and acknowledges ongoing uncertainties - The company transformed its business during Q2 2020 to adapt to the pandemic by reconfiguring operations and its cost structure to serve new customer needs[92](index=92&type=chunk) - Actions taken to improve liquidity in response to the pandemic include reducing working capital, postponing capital expenditures, reducing operating costs, and cutting discretionary spending[94](index=94&type=chunk) - While Q2 2021 sales increased as pandemic effects subsided, uncertainty remains regarding COVID-19 variants and their potential impact on future results[91](index=91&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) This section details the company's financial performance, including net sales, gross profit, net income, and Adjusted EBITDA, highlighting improvements driven by economic recovery and cost structure reconfiguration Financial Performance Summary (in millions) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | % Change | | :--- | :--- | :--- | :--- | | **Total Net Sales** | $68.8 | $64.3 | 7.0% | | **Gross Profit** | $22.8 | $20.4 | 11.5% | | **Net Income Attributable to ARC** | $2.6 | $1.5 | 76.2% | | **Adjusted EBITDA** | $11.1 | $10.7 | 3.7% | - Net sales for Q2 2021 increased **7.0% YoY**, primarily due to increasing economic activity as negative effects of the COVID-19 pandemic subsided. For H1 2021, net sales decreased **14.5%** compared to H1 2020, which included stronger pre-pandemic results[102](index=102&type=chunk) - Gross margin for Q2 2021 increased to **33.1%** from **31.8%** in Q2 2020. This improvement was driven by the leverage provided by the new, reconfigured operating cost structure implemented in 2020[108](index=108&type=chunk)[109](index=109&type=chunk) - Net interest expense decreased by **$0.6 million** in Q2 2021 and **$1.0 million** in H1 2021 compared to the prior year periods, due to continued pay-down of long-term debt and lower LIBOR rates[112](index=112&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) This section reviews the company's cash position, working capital, and debt obligations, emphasizing its strong liquidity and the successful refinancing of its credit facility Key Liquidity Metrics (in thousands) | Metric | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $52,372 | $54,950 | | **Working capital** | $32,779 | $32,500 | | **Total debt obligations** | $83,646 | $97,236 | - The company's cash and cash equivalents stood at **$52.4 million** as of June 30, 2021, of which **$16.0 million** was held in foreign countries[134](index=134&type=chunk) - On April 22, 2021, the company entered into a new **$70 million** Credit Agreement maturing in 2026. As of June 30, 2021, borrowing availability was **$19.1 million**, and the company was in compliance with all covenants[145](index=145&type=chunk)[146](index=146&type=chunk)[149](index=149&type=chunk) [Critical Accounting Policies](index=32&type=section&id=Critical%20Accounting%20Policies) This section discusses the company's critical accounting policies, including the annual goodwill impairment test and the valuation allowance for deferred tax assets - The annual goodwill impairment test as of September 30, 2020, determined that goodwill was not impaired. The fair value of reporting units with goodwill exceeded their carrying values by more than **50%**[158](index=158&type=chunk)[161](index=161&type=chunk) - The company maintains a valuation allowance of **$2.2 million** against certain deferred tax assets as of June 30, 2021, based on its assessment of whether it is more likely than not that these assets will be realized[166](index=166&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that this item is not applicable for the reporting period - Not applicable[169](index=169&type=chunk) [Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation conducted by management, including the CEO and CFO, the company's disclosure controls and procedures were deemed effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2021, the company's disclosure controls and procedures were effective[171](index=171&type=chunk) - No changes to internal control over financial reporting occurred during the six months ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, internal controls[172](index=172&type=chunk) [PART II—OTHER INFORMATION](index=34&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section covers other required disclosures, including legal proceedings, risk factors, equity security sales, and a list of exhibits [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings arising from its business operations, has established accruals for probable and estimable losses, and management does not currently believe the ultimate resolution will have a material adverse effect on its financial results or condition - The company is involved in legal proceedings from the ordinary course of business and has accrued for potential losses that are probable and reasonably estimable[173](index=173&type=chunk) - Management does not currently believe the ultimate resolution of any ongoing legal matters will have a material adverse effect on its results of operations, financial condition, or cash flows[173](index=173&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section directs readers to the company's Annual Report on Form 10-K for the year ended December 31, 2020, for a detailed discussion of risk factors - For information on risk factors, the report refers to "Part I - Item 1A. Risk Factors" of the Annual Report on Form 10-K for the year ended December 31, 2020[174](index=174&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides details on the company's stock repurchase activities, noting the Board of Directors has authorized a stock repurchase program for up to **$15.0 million** of its common stock, effective through March 31, 2023 Issuer Purchases of Equity Securities (Q2 2021) | Period | Total Shares Purchased (in thousands) | Average Price Paid per Share ($) | | :--- | :--- | :--- | | April 1 - April 30, 2021 | — | — | | May 1 - May 31, 2021 | 264 | $2.07 | | June 1 - June 30, 2021 | 115 | $2.22 | - The company's Board of Directors approved a stock repurchase program authorizing the purchase of up to **$15.0 million** of its outstanding common stock through March 31, 2023[176](index=176&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, which include Sarbanes-Oxley Act certifications from the Principal Executive Officer and Principal Financial Officer, as well as XBRL data files - The exhibits filed with this report include certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, along with XBRL instance documents[178](index=178&type=chunk)

Financial Data and Key Metrics Changes - The company reported an EBITDA margin of 14.2%, which is a 130 basis point increase compared to the prior year, indicating improved operational efficiency [14] - Earnings per share remained consistent with the previous year's performance at $0.021 [14] - Cash flow from operations exceeded $5 million for the quarter, representing a $2.5 million increase compared to Q1 of 2020 [14] - The cash balance was approximately $50 million, despite a $5 million debt repayment during the quarter [14] Business Line Data and Key Metrics Changes - The sales ratio shifted to 70% from construction-related business and 30% from other industries, indicating a diversification in revenue sources [8] - Nearly 60% of new business was secured from non-construction verticals, showcasing the company's successful market expansion efforts [11] Market Data and Key Metrics Changes - Construction activity has been increasing, supported by forecasts and sales data from the AIA and building trade organizations [7] - The education market has been revitalized due to government stimulus packages, leading to increased opportunities for the company [10] Company Strategy and Development Direction - The company is committed to diversifying its customer verticals and has successfully engaged with new sectors such as retail, manufacturing, and health [11] - The focus on technology-enabled print services is crucial as customers seek improved ways to manage their print requirements [10] - The company aims to maintain a strong capital structure while returning value to shareholders through dividends and share repurchases [9] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in meeting or exceeding a new normal of $10 million plus EBITDA per quarter, driven by a recovery in sales momentum [8] - The company is well-positioned to take advantage of market expansion as economic restrictions ease, with a positive outlook for the design and construction industry [15] Other Important Information - The company replaced its former credit facility with a new agreement featuring favorable terms, ensuring financial flexibility for the next five years [9] - The management emphasized the importance of maintaining a healthy work environment and high service levels for customers [13] Q&A Session Summary - No specific questions or answers were documented in the provided content, indicating that the call concluded without a Q&A segment [16][17]

Financial Data and Key Metrics Changes - The company experienced a sales drop of over $90 million due to the pandemic but managed to align its cost structure with a new revenue model, resulting in strong earnings and unprecedented cash generation [6][8] - Annual earnings per share matched 2019 levels, and cash flow from operations increased year-over-year, surpassing $50 million [8][18] - Adjusted EBITDA reached nearly $45 million, with an EBITDA margin of 15.5%, a 260-basis-point increase from the prior year [8][17] Business Line Data and Key Metrics Changes - The education sector continued to order distancing and signage, while the construction vertical utilized plan printing services [11][12] - Large color projects for signage and merchandising remained active, although NPS and equipment sales were impacted due to reduced office activity [13] - The company enhanced its scanning operations to meet increased demand for digital document conversion [12] Market Data and Key Metrics Changes - The pandemic led to a significant decline in revenue, but the company adapted by focusing on non-construction-oriented businesses, which are expected to continue growing [9][16] - Economic lockdowns in key markets like California and New York City affected operations, but a return to normalcy is anticipated with the rollout of vaccination programs [14] Company Strategy and Development Direction - The company aims to maintain a diversified customer portfolio and has shifted its marketing efforts towards non-construction markets [16] - Strategic controls implemented during the pandemic are expected to continue benefiting the company as it seeks to grow market share [14][15] - The management is confident in the company's strategic vision and plans to leverage its broad service portfolio to adapt to changing market conditions [15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by the pandemic but expressed confidence in the company's ability to adapt and grow [9][15] - The expectation for 2021 is a recovery in sales as offices and schools reopen, leading to improved business conditions compared to 2020 [24] Other Important Information - The company resumed its dividend program and increased its quarterly dividend by 100% within two months, reflecting a strong financial position [6][19] - Cash on the balance sheet exceeded $50 million, and the company reduced its leverage ratio to 1.3 times net of U.S. cash, indicating a stronger capital structure [19] Q&A Session Summary Question: What is the outlook for topline revenue in 2021? - Management indicated that the 2020 topline is viewed as a new baseline, and they expect 2021 to be better due to improving conditions and the return of some legacy business [22][23][24]

Part I [Business](index=6&type=section&id=Item%201.%20Business) ARC Document Solutions provides a comprehensive suite of document distribution and graphic production services, primarily targeting the architectural, engineering, construction, and building owner/operator (AEC/O) industry - The company's core service offerings include: **Offsite Services**, **Specialized Color Printing**, **Managed Print Services (MPS)**, **Archive and Information Management (AIM)**, **Web-Based Document Management Applications**, and **Equipment and Supplies Sales**[17](index=17&type=chunk)[18](index=18&type=chunk)[19](index=19&type=chunk) - ARC serves over **45,000 customers**, with no single customer accounting for more than 2% of overall revenue, and is the largest document solutions provider to the AEC/O market in North America[20](index=20&type=chunk)[22](index=22&type=chunk) - A significant portion of the company's revenue is geographically concentrated, with approximately **32% of total revenue in 2020 derived from California**[26](index=26&type=chunk)[58](index=58&type=chunk) - As of December 31, 2020, the company employed approximately **1,750 people**[29](index=29&type=chunk) - Key competitive strengths include **strong domain expertise in the AEC/O market**, extensive customer relationships, a wide variety of specialized printing capabilities, a large service center footprint, and a unique combination of onsite, offsite, and cloud-based offerings[36](index=36&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from the COVID-19 pandemic, high dependency on the cyclical AEC/O industry, revenue concentration in California, and high fixed costs making earnings sensitive to revenue fluctuations - The **COVID-19 pandemic** has adversely affected and is expected to continue to adversely affect the company's financial condition and results of operations[49](index=49&type=chunk)[50](index=50&type=chunk) - The business is highly dependent on the **AEC/O industry**, which accounted for approximately **69% of net sales in 2020**, and a downturn in this industry could significantly harm revenue and profitability[57](index=57&type=chunk) - A significant portion of overall costs are fixed (estimated at **36% in 2020**), making earnings highly sensitive to changes in revenue[63](index=63&type=chunk) - The company faces risks related to its debt, including **restrictive covenants** in its Credit Agreement, where a substantial downturn could cause a breach of financial ratios, leading to default[54](index=54&type=chunk)[83](index=83&type=chunk)[84](index=84&type=chunk) - The common stock is subject to market price volatility and risks **delisting from the NYSE** if the average closing price falls below $1.00 over 30 consecutive trading days[89](index=89&type=chunk)[93](index=93&type=chunk) [Unresolved Staff Comments](index=18&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[94](index=94&type=chunk) [Properties](index=18&type=section&id=Item%202.%20Properties) As of year-end 2020, ARC operated 148 service centers globally, occupying approximately 1.0 million square feet, with the vast majority of facilities being leased - The company operated **148 service centers** at the end of 2020, with 126 in the U.S. and 22 internationally[94](index=94&type=chunk) - Total occupied space was approximately **1.0 million square feet** as of December 31, 2020[94](index=94&type=chunk) - Nearly all service centers and administrative facilities are leased[94](index=94&type=chunk) [Legal Proceedings](index=19&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine legal proceedings from normal business operations and does not expect their resolution to have a material adverse effect on its financial condition - The company is involved in routine legal proceedings from the conduct of its business[96](index=96&type=chunk) - Accruals are made for probable and reasonably estimable losses, and management does not currently anticipate a material adverse effect from these matters[96](index=96&type=chunk) [Mine Safety Disclosures](index=19&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[97](index=97&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=20&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) ARC's common stock trades on the NYSE, a quarterly cash dividend of $0.01 per share was declared, and a $15.0 million stock repurchase program is active - The company's common stock is listed on the NYSE under the symbol **"ARC"**[98](index=98&type=chunk) - A quarterly cash dividend of **$0.01 per share** was declared in December 2020[100](index=100&type=chunk) Issuer Purchases of Equity Securities (Q4 2020) | Period | Total Shares Purchased (thousands) | Average Price Paid per Share ($) | Dollar Value Remaining in Program (thousands) | | :--- | :--- | :--- | :--- | | Nov 2020 | 114 | 1.34 | 10,551 | | Dec 2020 | 467 | 1.39 | 9,901 | - The Board of Directors approved a stock repurchase program authorizing up to **$15.0 million** in purchases through March 31, 2023[102](index=102&type=chunk) [Selected Financial Data](index=20&type=section&id=Item%206.%20Selected%20Financial%20Data) This item is not applicable to the company for this reporting period - Not applicable[103](index=103&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The COVID-19 pandemic caused a 24.3% sales decline to $289.5 million in 2020, but net income more than doubled to $6.2 million due to significant cost reductions and improved liquidity [COVID-19 Pandemic Impact](index=23&type=section&id=COVID-19%20Pandemic) The pandemic negatively impacted demand and profitability, prompting significant cost-saving measures while the company maintained essential business operations at reduced volumes - The pandemic caused a decline in demand for products and services starting in late March 2020, negatively impacting sales and profitability[113](index=113&type=chunk) - Mitigation efforts included reducing working capital, suspending share repurchases and dividends for a portion of 2020, postponing capital expenditures, and reducing operating and discretionary costs[116](index=116&type=chunk) - As an essential business serving infrastructure, housing, and healthcare, the company kept almost all of its **148 service centers** open at reduced volumes[117](index=117&type=chunk) [Results of Operations (2020 vs. 2019)](index=24&type=section&id=Results%20of%20Operations) Net sales fell 24.3% to $289.5 million in 2020, but significant SG&A reductions and a lower effective tax rate contributed to a rise in net income to $6.2 million Consolidated Results of Operations | Financial Metric (In millions) | 2020 | 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total net sales** | **$289.5** | **$382.4** | **$(92.9)** | **(24.3)%** | | CDIM | $175.5 | $205.5 | $(30.0) | (14.6)% | | MPS | $79.3 | $123.3 | $(44.0) | (35.7)% | | AIM | $12.3 | $14.1 | $(1.8) | (12.7)% | | Equipment and Supplies | $22.3 | $39.5 | $(17.2) | (43.5)% | | **Gross profit** | **$92.9** | **$125.2** | **$(32.3)** | **(25.8)%** | | **SG&A expenses** | **$79.0** | **$107.3** | **$(28.2)** | **(26.3)%** | | **Net income attributable to ARC** | **$6.2** | **$3.0** | **$3.2** | **105.2%** | | **Adjusted EBITDA** | **$44.8** | **$49.4** | **$(4.6)** | **(9.3)%** | - The decline in MPS sales was primarily driven by office employees working from home, significantly reducing print volumes in customers' offices[124](index=124&type=chunk) - Gross margin decreased by only 60 basis points to **32.1%** despite the large sales drop, aided by cost savings and a reduction in lower-margin Equipment and Supplies sales[128](index=128&type=chunk) - The increase in net income was largely driven by a significant decrease in the income tax provision, as 2019 included a large tax expense related to expired nonqualified stock options[136](index=136&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=Liquidity%20and%20Capital%20Resources) The company demonstrated strong liquidity management in 2020, increasing its cash to $55.0 million and generating $54.5 million in operating cash flow while reducing debt and capital expenditures Key Liquidity Metrics | Metric (In thousands) | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $54,950 | $29,425 | | Working capital | $32,500 | $20,008 | | Total debt obligations | $97,236 | $106,157 | - Cash flows from operations increased to **$54.5 million** in 2020 from $52.8 million in 2019, reflecting sustained profitability and active management of working capital[151](index=151&type=chunk)[152](index=152&type=chunk) - Capital expenditures were significantly reduced to **$6.4 million** in 2020 from $12.9 million in 2019 as a cash preservation measure during the pandemic[153](index=153&type=chunk) - As of Dec 31, 2020, the company had **$22.8 million** available for borrowing under its revolving credit facility[160](index=160&type=chunk)[164](index=164&type=chunk) [Critical Accounting Policies](index=35&type=section&id=Critical%20Accounting%20Policies) Key accounting policies involve significant estimates for goodwill impairment, revenue recognition, leases, and income taxes, with no goodwill impairment found in 2020 - The annual goodwill impairment test as of September 30, 2020, indicated **no impairment**, with the fair values of the two reporting units with goodwill exceeding their carrying values by more than 100%[168](index=168&type=chunk)[171](index=171&type=chunk) - Revenue is recognized when control transfers to the customer, which for most services like CDIM and AIM, occurs at the point of delivery of the physical or digital documents[175](index=175&type=chunk)[176](index=176&type=chunk) - The company maintains a valuation allowance of **$2.1 million** against certain deferred tax assets as of December 31, 2020, for which realization is not more likely than not[181](index=181&type=chunk)[262](index=262&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - Not applicable[184](index=184&type=chunk) [Financial Statements and Supplementary Data](index=38&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The company's audited consolidated financial statements and accompanying notes are included in Part IV, Item 15 of this Annual Report on Form 10-K - The full financial statements and supplementary data are filed as part of the report, beginning on page F-1[185](index=185&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=38&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[185](index=185&type=chunk) [Controls and Procedures](index=39&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls, procedures, and internal control over financial reporting were effective as of December 31, 2020 - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2020[187](index=187&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2020, based on the COSO framework (2013)[188](index=188&type=chunk) - No changes in internal control over financial reporting occurred during the fourth quarter of 2020 that materially affected, or are reasonably likely to materially affect, internal controls[190](index=190&type=chunk) [Other Information](index=39&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[190](index=190&type=chunk) Part III [Directors, Compensation, Security Ownership, and Accountant Fees](index=40&type=section&id=Item%2010%2C%2011%2C%2012%2C%2013%2C%2014) Information for Items 10-14 is incorporated by reference from the company's 2021 Proxy Statement, to be filed within 120 days of the fiscal year-end - Information regarding Directors, Executive Officers, and Corporate Governance (Item 10) is incorporated by reference from the 2021 Proxy Statement[192](index=192&type=chunk) - Information regarding Executive Compensation (Item 11) is incorporated by reference from the 2021 Proxy Statement[193](index=193&type=chunk) - Information regarding Security Ownership (Item 12), Certain Relationships (Item 13), and Principal Accountant Fees (Item 14) is incorporated by reference from the 2021 Proxy Statement[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) Part IV [Exhibits, Financial Statement Schedules](index=41&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements and all exhibits filed with the report, including debt agreements, incentive plans, and Sarbanes-Oxley certifications - The filing includes the Consolidated Financial Statements and Notes to Consolidated Financial Statements[198](index=198&type=chunk) - A list of exhibits is provided, including the Sixth Amendment to the Credit Agreement (Exhibit 10.40) and various executive employment agreements and stock plans[201](index=201&type=chunk)[204](index=204&type=chunk) - Certifications by the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are filed as exhibits[205](index=205&type=chunk) [Financial Statements and Notes](index=48&type=section&id=Financial%20Statements%20and%20Notes) The consolidated financial statements present ARC's financial position and results of operations, with key notes detailing goodwill, debt, leases, and income taxes [Report of Independent Registered Public Accounting Firm](index=49&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The company's financial statements received unqualified audit opinions for 2020 and 2019, with Revenue Recognition and Goodwill Impairment identified as Critical Audit Matters for 2020 - Armanino LLP audited the 2020 financial statements and issued an **unqualified opinion**[225](index=225&type=chunk) - Deloitte & Touche LLP audited the 2019 financial statements and issued an **unqualified opinion**[220](index=220&type=chunk) - The 2020 audit identified two **Critical Audit Matters (CAMs)**: Revenue Recognition and Goodwill Impairment, due to the complexity and judgment involved[229](index=229&type=chunk)[230](index=230&type=chunk)[233](index=233&type=chunk) [Notes to Consolidated Financial Statements](index=58&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail significant revenue concentration in California, a goodwill balance of $121.1 million with no impairment, total debt of $97.2 million, and total lease liabilities of $88.0 million - Sales in California represented approximately **32% of total sales** in 2020, and purchases from the three largest vendors comprised approximately **53% of total inventory and supplies purchases** (Note 2)[256](index=256&type=chunk)[257](index=257&type=chunk) - The carrying amount of goodwill was **$121.1 million** as of December 31, 2020, with **no impairment** recorded during the year (Note 3)[305](index=305&type=chunk)[309](index=309&type=chunk) - Total lease liabilities were **$88.0 million** as of December 31, 2020, composed of $45.7 million for operating leases and $42.2 million for finance leases (Note 7)[330](index=330&type=chunk)[332](index=332&type=chunk) - The company had federal net operating loss carryforwards of approximately **$79.6 million** as of December 31, 2020 (Note 8)[351](index=351&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________________ Form 10-Q _______________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-32407 _____________________________________ ...

ARC Document Solutions, Inc. (NYSE:ARC) Q3 2020 Earnings Conference Call November 4, 2020 5:00 PM ET Company Participants David Stickney - Vice President, Corp Communications and Investor Relations Suri Suriyakumar - Chairman, President and Chief Executive Officer Dilo Wijesuriya - Chief Operating Officer Jorge Avalos - Chief Financial Officer Conference Call Participants Ben Andrews - Andrews Capital Glenn Primack - Primestor Asset Operator Ladies and gentlemen, thank you for standing by, and welcome to th ...

Financial Data and Key Metrics Changes - The company generated $10.7 million in EBITDA on approximately $64 million in sales during Q2 2020, indicating a sustainable operating model moving forward [12][21] - Cash flow from operations for the second quarter was $23.5 million, which is over $7 million higher than the previous year [21] - The gross margin for the quarter was nearly 32%, with an EBITDA margin of 16.6%, reflecting a 200 basis point improvement from Q2 2019 [21] Business Line Data and Key Metrics Changes - The company has restructured its operations to focus on graphics and imaging services, on-site print services, and digital services, adapting to new customer needs due to the pandemic [18][19] - Significant changes were made to sales and marketing, operations, and technology to align with the new business environment [11][15] Market Data and Key Metrics Changes - The pandemic has permanently altered customer behavior, leading to a shift towards digital solutions and remote work, which has impacted traditional revenue streams [8][9] - The company is positioned to capture new market opportunities in sectors such as healthcare, education, and retail, which have increased demand for signage and document management services [16][52] Company Strategy and Development Direction - The company is undergoing a transformation to reengineer its business model, focusing on new revenue opportunities that are more sustainable than historical lines [10][12] - The strategy includes maintaining gross margins above 30% and improving EBITDA margins while strengthening cash flows and the balance sheet [20][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to adapt to the post-pandemic environment, emphasizing the importance of agility and responsiveness to customer needs [14][19] - The management team acknowledged the challenges posed by the pandemic but highlighted the successful implementation of cost reductions and operational changes [11][21] Other Important Information - The company increased its cash balance from $38.1 million on March 31, 2020, to $58.4 million on June 30, 2020, all generated from operations without incurring additional debt [21] - The company deferred approximately $3 million in capital lease payments, which will be paid back over the lease terms [70][72] Q&A Session Summary Question: What will the company look like going forward? - Management indicated that the company has reengineered itself to generate consistent EBITDA and cash flow, with a base revenue expectation of around $55 million per quarter [25][26] Question: What is the plan for returning cash to shareholders? - Management stated that dividends were temporarily put on hold due to the pandemic, but they are open to reinstating them if business conditions remain stable [32][73] Question: How is the company positioned in the current market? - Management noted that smaller competitors are likely to be weakened, providing an opportunity for the company to gain market share [50][52] Question: What is the company's approach to acquisitions? - Management expressed that it is unlikely to pursue acquisitions at this time, focusing instead on organic growth opportunities [78] Question: How will the company report on new business segments? - Management acknowledged that while operational changes are being made, reporting on new revenue lines may lag due to SEC requirements [65]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________________ Form 10-Q _______________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | --- | --- | --- | --- | |--------------------------------------------------|-------------------------------- ...

ARC Document Solutions, Inc. (NYSE:ARC) Q1 2020 Earnings Conference Call May 5, 2020 5:00 PM ET Company Participants David Stickney - Vice President Corporate Communications and Investor Relations Suri Suriyakumar - Chairman, President and Chief Executive Officer Dilo Wijesuriya - Chief Operating Officer Jorge Avalos - Chief Financial Officer Conference Call Participants Operator Ladies and gentlemen, thank you for standing by, and welcome to the ARC 2020 Q1 Earnings Report Conference call. [Operator Instru ...