ARC Document Solutions(US:ARC)2024-05-07 20:06Financial Performance - Net sales for Q1 2024 were $70.8 million, a 2.7% increase compared to $68.9 million in Q1 2023[4] - Net sales for Q1 2024 reached $70,792, an increase of 2.5% compared to $68,918 in Q1 2023[21] - Net income attributable to ARC increased to $2.5 million in Q1 2024, up from $1.9 million in Q1 2023, resulting in diluted earnings per share of $0.06[11] - Net income attributable to ARC Document Solutions, Inc. stockholders for Q1 2024 was $2,453, up 26.4% from $1,940 in Q1 2023[25] - Earnings per share attributable to ARC Document Solutions, Inc. stockholders were $0.06 for both basic and diluted shares in Q1 2024, compared to $0.05 and $0.04 respectively in Q1 2023[27] Sales Performance - Digital Printing sales rose by 3.3% year-over-year, driven by growth in digital color graphic printing, while MPS sales decreased by 2.3%[6][7] - Scanning and Digital Imaging sales surged by 23.4% year-over-year, reflecting increased demand for paper-to-digital conversions[7] Margins and Profitability - Gross margin decreased to 32.2% in Q1 2024 from 33.3% in Q1 2023, primarily due to inflationary pressures on labor and material costs[9] - Gross profit for Q1 2024 was $22,807, slightly down from $22,925 in Q1 2023, resulting in a gross margin of 32.2%[21] - Adjusted EBITDA for Q1 2024 was $8,552, a decrease of 1.8% compared to $8,713 in Q1 2023[24] Cash Flow and Capital Expenditures - Cash provided by operating activities was $3.7 million in Q1 2024, slightly down from $3.8 million in Q1 2023[12] - Cash and cash equivalents at the end of Q1 2024 were $52,029, down from $56,093 at the end of Q1 2023[22] - Capital expenditures increased to $3.1 million in Q1 2024, compared to $2.3 million in Q1 2023[2] - The company incurred capital expenditures of $3,075 in Q1 2024, up from $2,255 in Q1 2023, indicating increased investment in growth[22] Assets and Liabilities - Total current assets decreased to $107,271 in 2024 from $108,652 in 2023, primarily due to changes in accounts receivable and inventory[20] - Total liabilities decreased to $152,828 in 2024 from $154,399 in 2023, reflecting a reduction in current liabilities[20] Stock and Dividends - The company plans to continue purchasing its own stock in 2024, supported by cash flows in line with the prior year[3] - The next quarterly cash dividend of $0.05 will be paid on May 31, 2024[4] EBITDA and Adjusted Metrics - EBITDA is used to measure and compare the performance of operating divisions, calculated by dividing EBITDA by net sales[29] - Adjusted net income and adjusted EBITDA are presented to facilitate meaningful comparisons to historical performance, reflecting unique measures taken due to unprecedented market changes[31] - Adjusted EBITDA for the three months ended March 31, 2024, excludes stock-based compensation expense, calculated by dividing Adjusted EBITDA by net sales[33] - Limitations of EBITDA include not reflecting cash expenditures, working capital needs, and significant interest expenses[30] - The company believes that adjusted earnings per share for the three months ended March 31, 2024, helps investors understand operational results compared to the same period in 2023[32] - EBITDA and related ratios should not be considered as measures of discretionary cash available for business growth or debt reduction[31] - The adjustments made in the financial presentations are aimed at providing clarity on actual operating performance[32] - The company emphasizes that other companies may calculate EBITDA differently, which limits comparability[30] - The presentation of adjusted metrics is intended to assist investors in assessing financial performance and credit facility access[33] - The company relies primarily on GAAP results while using EBITDA and EBITDA margin as supplementary measures[31]