ARC Document Solutions, Inc. (NYSE:ARC) Q3 2018 Earnings Conference Call - Final Transcript

Nov 07, 2018 • 05:00 pm ET

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ARC Document Solutions, Inc. (NYSE:ARC) Q3 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
Suri Suriyakumar

the market, and we are happy with the direction we have established.

By combining our progress in sales with a relentless focus on managing cost, we delivered a strong gross margin and drove a meaningful increase in our EBITDA during the quarter. As noted in our earnings release today, our performance has also driven a solid improvement in earnings per share and adjusted EBITDA as well as an upgrade in our annual forecast for the second time this year. We now expect ARC's annual EPS to be in the range of $0.15 to $0.18 and adjusted EBITDA to be in the range of $52 million to $55 million. We remain confident in our operating cash flow forecast as we enter the fourth quarter, and so we are maintaining our guidance of $44 million to $50 million.

With that as an introduction, I'll turn the call over to Dilo for a deeper dive into our operations for the quarter. Dilo?

Executive
Dilo Wijesuriya

Thank you, Suri. We are extremely happy with our sales performance in the third quarter. All our business lines grew year-over-year. As I have communicated during our past several calls, we are continuing to focus on the key fundamentals of offering exceptional customer experience while aggressively focusing on acquiring new market share.

Construction-related print services demonstrated strong growth in the period. While the past several quarters have shown significant improvement, our results in the third quarter were impressive. We attribute our success to executing on the basics, winning new projects, securing new print customers and servicing them at a competitive price. When we win a new project, we not only secure the construction printing, but we are also securing color, scanning and other technology services from the same client. Our sales reps are continuing to sell deep and wide into each account. Our customers are busy designing and building new projects, and we continue to take advantage of the improved mark conditions -- market conditions to increase our performance.

Color Services are continuing to prove their value. In the past, customers used our high-quality print services primarily to produce their marketing proposals and presentation materials. While this business segment remains very strong, we are seeing more adoption of color and environmental graphics in their offices and workplaces. Customers need strong project management and execution skills from their suppliers to perform such work. Our nationwide network of Riot Centers and their expertise are helping us to penetrate this multibillion-dollar market.

Our MPS business grew nominally in the third quarter. Some of the larger account wins we had earlier in the year are being deployed, while the new acquisition of local MPS customers remains an important focus for the sales teams.

As Suri alluded to earlier, Abacus, our print and fleet management software, also had a new release last month, and its features continue to benefit our customers to build a secure print environment in their offices while assisting them to reduce internal print cost. While these successes are notable, print volumes continue