ARC Document Solutions, Inc. (NYSE:ARC) Q1 2022 Earnings Conference Call May 4, 2022 5:00 PM ET Company Participants David Stickney - IR Suri Suriyakumar - CEO Dilo Wijesuriya - COO Jorge Avalos - CFO Conference Call Participants Operator Good day. My name is Savannah and I will be your conference operator for today. At this time, I would like to welcome everyone to the ARC Q1 2022 Earnings Report. [Operator Instructions] Thank you. And I would now like to turn the conference over to David Stickney. Please ...

ARC Document Solutions, Inc. (NYSE:ARC) Q4 2021 Results Conference Call February 23, 2022 5:00 PM ET Company Participants David Stickney - IR Suri Suriyakumar - CEO Dilo Wijesuriya - COO Jorge Avalos - CFO Conference Call Participants Alan Weber - Robotti Advisors Robert Shapiro - Singular Research Mike Hughes - SGF Capital Operator Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference operator today. At this time, I would like to welcome everyone to the ARC Q4 and ...

ARC Document Solutions, Inc. (NYSE:ARC) Q3 2021 Earnings Conference Call November 4, 2021 5:00 PM ET Company Participants David Stickney - VP, Corp. Communications & Investor Relations Suri Suriyakumar - Chairman, President & CEO Dilo Wijesuriya - COO Jorge Avalos - CFO Operator Good day and thank you for standing by. Welcome to the ARC Third Quarter 2021 Earnings Report. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. ...

Financial Performance - The Company recorded an income tax provision of $1.3 million and $2.9 million for pretax income of $4.4 million and $9.2 million for the three and nine months ended September 30, 2021, resulting in effective tax rates of 29.3% and 32.2% respectively[59]. - The Company has a valuation allowance of $2.2 million against certain deferred tax assets as of September 30, 2021, which may be adjusted based on future conditions[62]. - The Company is involved in legal proceedings that may seek substantial damages, but does not currently believe these will materially affect its financial condition[73]. Assets and Liabilities - As of September 30, 2021, the Company assessed potential impairments of its long-lived assets and concluded that there was no impairment[53]. - The Company has $119.8 million in amortizable other intangible assets as of September 30, 2021, with a net carrying amount of $355 thousand after accumulated amortization[56]. - The estimated future amortization expense for other intangible assets is projected to be $30 thousand for the remainder of 2021 and $103 thousand for 2022[57]. - Cash equivalents were reported at $13.5 million as of September 30, 2021, compared to $13.2 million as of December 31, 2020[80]. - The carrying amount of borrowings under the 2021 Credit Agreement was $47.5 million as of September 30, 2021, with fair value also determined to be $47.5 million[81]. Financing and Credit Agreements - The Company entered into a Credit Agreement on April 22, 2021, providing for revolving loans up to $70 million, maturing on April 22, 2026[63]. - As of September 30, 2021, the Company's borrowing availability under the revolving loan commitment was $20.3 million after deducting outstanding letters of credit and loans[64]. - The Company maintains a Total Leverage Ratio not to exceed 2.75 to 1.00 and a Fixed Charge Coverage Ratio of at least 1.15 to 1.00 as per the 2021 Credit Agreement[69]. Dividends and Stock Compensation - The Company declared a quarterly cash dividend of $0.02 per share in July 2021, resulting in a dividend payable of $841 thousand as of September 30, 2021[70]. - Stock-based compensation expense was $0.5 million for the three months and $1.2 million for the nine months ended September 30, 2021, compared to $0.4 million and $1.3 million for the same periods in 2020[78]. - As of September 30, 2021, total unrecognized compensation cost related to unvested stock-based payments totaled $2.8 million, expected to be recognized over approximately 2.3 years[78]. Stock Options and Incentive Plans - The Company granted options to acquire a total of 0.7 million shares and 0.9 million shares of restricted stock awards during the nine months ended September 30, 2021[77]. - The Company is authorized to issue up to 3.5 million shares under the 2021 Incentive Plan, with an additional 6,132,593 shares available from the previous plans[75]. - As of September 30, 2021, 2.6 million shares remained available for issuance under the 2021 Incentive Plan[75]. - Stock options generally vest over a period of three to four years from the date of award[76]. - The Company allows for cashless exercises of vested outstanding options[76]. Fair Value of Financial Instruments - The fair value of financial instruments approximates their carrying amounts due to the short maturity of cash equivalents[80].

Start Time: 17:00 January 1, 0000 5:17 PM ET ARC Document Solutions, Inc. (NYSE:ARC) Q2 2021 Earnings Conference Call August 03, 2021, 17:00 PM ET Company Participants Suri Suriyakumar - Chairman, President and CEO Dilo Wijesuriya - COO Jorge Avalos - CFO David Stickney - VP Corporate Communications and IR Conference Call Participants Alan Weber - Robotti Advisors Operator Good day and thank you for standing by. Welcome to the ARC Q2 2021 Earnings Report. At this time, all participants are in a listen-only ...

[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]