ARC Document Solutions, Inc. (NYSE:ARC) Q1 2019 Earnings Conference Call - Final Transcript

May 06, 2019 • 05:00 pm ET

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ARC Document Solutions, Inc. (NYSE:ARC) Q1 2019 Earnings Conference Call - Final Transcript

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Operator
Operator

Good afternoon. My name is Cheryl and I will be your conference operator today. At this time, I would like to welcome everyone to the ARC Q1 2019 Earnings Report Conference Call. All lines have been placed on-mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) Thank you.

David Stickney, Vice President, Corporate Communications and Investor Relations, you may begin your conference.

Executive
David Stickney

Thank you, Cheryl and welcome, everyone. On the call with me today, are Suri Suriyakumar, our Chairman, President and Chief Executive Officer; Dilo Wijesuriya, our Chief Operating Officer; and Jorge Avalos. our Chief Financial Officer. Our first quarter results for 2019 were publicized earlier today in a press release. The press release and other company materials are available from our Investor Relations pages on ARC Documents Solutions' website at ir.e-arc.com.

Please note that today's call will contain forward-looking statements that fall within the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are only predictions based on information as of today, May 6, 2019 and actual results may differ materially as a result of risks and uncertainties that we highlight in our quarterly and annual SEC filings. This call will also contain references to certain non-GAAP measures, which are reconciled in today's press release and in our Form 8-K filing.

I'll now turn the call over to our Chairman, President and CEO, Suri Suriyakumar. Suri?

Executive
Suri Suriyakumar

Excuse me. Thank you, David and good afternoon, everyone. While, we had a short quarter to start with, we made the most of it. With one less day of sales in the period, we still managed to grow our EBITDA, expand our gross margins and improve our cash flow over last year. Our performance was no accident, considering we did all this on a small decline in consolidated sales and higher SG&A and cost.

Our first quarter sales performance featured double digit growth in AIM and the strong showing in equipment and supplies sales, particularly in China. CDIM took a small step back from the growth trajectory we established in 2018. But as we have discussed in the past, we don't expect to overcome continuing print declines all at once. This quarter, macroeconomic conditions, a little bit of weather and as noted, one less day in the period added up to a decline in this part of our business. None of these things were impossible obstacles in themselves. But taken together, they slowed us, but did not stop our progress.

Likewise, in MPS, we continue to increase the acquisition of regional clients in our traditional market and explore new industries where our offering can make a difference. However, we are not capturing the national contracts we have seen in the past nor do we expect to. The landscape for larger companies continues to change as a result of the economic and technological drivers, not to mention dramatically increased M&A activity. To put that in perspective, more than 1,000 E&C companies