ARC Document Solutions, Inc. (NYSE:ARC) Q4 2019 Earnings Conference Call - Final Transcript

Feb 25, 2020 • 05:00 pm ET


ARC Document Solutions, Inc. (NYSE:ARC) Q4 2019 Earnings Conference Call - Final Transcript


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Ladies and gentlemen, thank you for standing by, and welcome to the ARC Document Solutions Fourth Quarter and Full Year 2019 Earnings Report Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, David Stickney, Vice President of Investor Relations. Thank you. Please go ahead, sir.

David Stickney

Thank you, Chantelle, and welcome, everyone. On the call with me today are Suri Suriyakumar, Chairman, President and CEO; and Jorge Avalos, our Chief Financial Officer. Our Chief Operating Officer, Dilo Wijesuriya is traveling today and won't be joining us.

Our fourth quarter and full year 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

In today's earning announcement, ARC offered expanded supplemental disclosures to provide shareholders and analysts with additional information in advance of our quarterly conference call. The disclosures are largely historical, and other than the overview will not be read on today's call. Instead, we will offer a brief introductory remarks about the previous period and our expectations for 2020, before turning to the question-and-answer period.

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, February 25, 2020, 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?

Suri Suriyakumar

Thank you, David. Good afternoon, everyone, and thanks for joining us. As we stated earlier in our press release, 2019 challenged us to reconfigure our product and service portfolios to adapt to a transforming market. We accomplished that successfully and protected our cash flow from operations, which remain a steady source of strength and stability for the company.

Sales declined moderately in the U.S., but were adversely affected by the performance of our equipment and supplies business in China. Sales in this division rose early in the year, but fell dramatically late in the year, accounting for more than half of the decline in our overall revenue for the fourth quarter and more than 1/3 of our overall revenue decline for the year.

With regard to margins, the effects of our aggressive restructuring plan early in the third quarter had a significant and positive impact in the second half of the year. We also met our forecast for EPS and EBITDA, and I'm pleased to report that we exceeded our forecast for cash flow from operations.

Looking forward to 2020, we will maintain the same focus we established in 2019. We will continue to focus on protecting cash flows and profitability. We will use more of