ARC Document Solutions, Inc. (NYSE:ARC) Q2 2019 Earnings Conference Call - Final Transcript

Aug 06, 2019 • 05:00 pm ET

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ARC Document Solutions, Inc. (NYSE:ARC) Q2 2019 Earnings Conference Call - Final Transcript

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Operator
Operator

Good afternoon. My name is Bonita, and I will be your conference operator today. At this time, I would like to welcome everyone to the ARC Q2 2019 Earnings Report. [Operator Instructions] Thank you. I would now like to turn the call over to David Stickney, Vice President of Investor Relations. Sir, please go ahead.

Executive
David Stickney

Thank you, Bonita, and welcome, everyone. On the call with me are Suri Suriyakumar, our Chairman, President and Chief Executive Officer; Dilo Wijesuriya, our Chief Operating Officer; and Jorge Avalos, our Chief Financial Officer. Our second 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 Document 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, August 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.

Executive
Suri Suriyakumar

Thank you, David, and good afternoon, everyone. With softness in the markets across the board, a slowing trend in housing and declines in the latest Architectural Billing Index, it wasn't surprising that the second quarter challenged ARC's forecast for 2019. Revenue performance was also affected by a significant drop in international equipment and supplies sales, which accounted for half of our overall decline.

While many of our new initiatives are producing positive results, the ongoing erosion in print volumes is affecting our ability to sustain growth. The erosion in print revenues has multiple facets to it. First, technology as we know is reducing print volumes. Second, our customer sensitivity to environmental issues encourages alternatives to print. Third, the industry consolidation upends procurement and administration practices. Fourth, of course, our customers are always trying to reduce the cost of print. We have seen these trends affecting us for some time but they're becoming harder to predict as the impact of one of them often exaggerates the other.

For example, while the technology has always been about creating greater efficiencies, today, it is -- not only disrupts workflows but it also changes customers' behavior, encourages them to aggressively focus on sustainability goals, all at the same time. Factors like this create a constantly changing sales environment and continue to move the industry away from traditional uses of print. ARC has always adapted to change in the market to protect its cash flows and its profitability. This is amply demonstrated by our performance in the second quarter. But as I have pointed out, the industry is going through yet another change, and we must re-examine our assumptions and our value to