WALNUT CREEK, Calif.,
Feb. 21, 2017 /PRNewswire/ -- ARC Document Solutions, Inc.
(NYSE: ARC), a leading document solutions provider to design,
engineering, construction, and facilities management professionals,
today reported its financial results for the fourth quarter
and full year ended December 31, 2016.
Financial
Highlights:
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December
31,
|
December
31,
|
(All dollar
amounts in millions, except EPS)
|
2016
|
2015
|
2016
|
2015
|
Net Sales
|
$
|
98.6
|
|
$
|
104.5
|
|
$
|
406.3
|
|
$
|
428.7
|
|
Gross
Margin
|
30.8
|
%
|
33.8
|
%
|
32.8
|
%
|
34.6
|
%
|
Net income (loss)
attributable to ARC
|
$
|
2.6
|
|
$
|
3.1
|
|
$
|
(47.9)
|
|
$
|
97.0
|
|
Adjusted net income
attributable to ARC
|
$
|
2.6
|
|
$
|
3.2
|
|
$
|
13.1
|
|
$
|
16.8
|
|
Earnings (loss) per
share - Diluted
|
$
|
0.06
|
|
$
|
0.06
|
|
$
|
(1.04)
|
|
$
|
2.04
|
|
Adjusted earnings per
share - Diluted
|
$
|
0.06
|
|
$
|
0.07
|
|
$
|
0.28
|
|
$
|
0.35
|
|
Cash provided by
operating activities
|
$
|
19.1
|
|
$
|
16.9
|
|
$
|
53.1
|
|
$
|
60.0
|
|
EBITDA
|
$
|
13.6
|
|
$
|
15.1
|
|
$
|
(14.5)
|
|
$
|
68.2
|
|
Adjusted
EBITDA
|
$
|
14.3
|
|
$
|
15.9
|
|
$
|
62.3
|
|
$
|
72.2
|
|
Capital
Expenditures
|
$
|
(4.5)
|
|
$
|
(2.7)
|
|
$
|
(12.1)
|
|
$
|
(14.2)
|
|
Debt & Capital
Leases (including current), net of unamortized deferred financing
fees
|
|
|
$
|
157.2
|
|
$
|
171.4
|
|
Management Commentary
"ARC's transformation continues. Our 24-to-36-month plan is on
track to both accelerate our technology services sales and protect
our core print revenue," said K. "Suri" Suriyakumar, Chairman,
President and CEO of ARC Document Solutions. "In spite of the
disruptions we made while reconfiguring sales and operations in the
second half of 2016, we met or exceeded our revised financial
performance goals for the year."
Management issued its 2017 forecast for diluted annual adjusted
earnings per share to be in the range of $0.24 to $0.29; annual adjusted cash provided by
operating activities is projected to be in the range of
$49 to $54 million; and annual
adjusted EBITDA is forecast to be in the range of $58 million to $63 million.
"As reflected by our forecast for 2017, we expect the disruption
from the changes we've made to soften sales in the first half of
the year, and prudent investments in our overall sales and
marketing structure will likely mute our full-year financial
performance," Mr. Suriyakumar said. "I remain excited about our
potential, and strongly believe the changes we are making will
deliver results in the near future."
"Even during a year of transition we maintained a strong gross
margin, and we were quick to exert control over costs to improve
our performance on lower sales volume," said Jorge Avalos, Chief Financial Officer of ARC
Document Solutions. "We generated more than $50 million in cash flows from operations in
2016, which allowed us to pay down $22
million of Term A debt, and repurchase more than
five million dollars of stock in the
open market. Even if we experience sales disruptions early
this year, we still anticipate continuing strong cash flow for
2017."
2016 Fourth Quarter Supplemental Information:
Net sales were $98.6 million, a
5.7% decrease compared to the fourth quarter of 2015.
Days sales outstanding in Q4 2016 were 55, compared to 52 days
in Q4 2015.
Architectural, engineering, construction and building
owner/operators (AEC/O) customers comprised approximately 77% of
our total net sales, while customers outside of construction made
up approximately 23% of our total net sales.
Total number of MPS locations at the end of the third quarter
has grown to approximately 9,400, a net gain of approximately 400
locations over Q4 2015. This information reflects the reduction of
approximately 200 locations associated with a large client that did
not renew their MPS engagement with us at the end of 2015.
Adjusted EBITDA excludes loss on extinguishment of debt,
goodwill impairment, the impact of trade secret litigation costs,
stock-based compensation expense, and restructuring expense.
Sales from
Services and Product Lines as a Percentage of Net
Sales
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
December
31,
|
|
December
31,
|
Services and Product
Line
|
2016
|
2015
|
|
2016
|
2015
|
CDIM
|
51.5
|
%
|
50.7
|
%
|
|
52.3
|
%
|
51.6
|
%
|
MPS
|
32.2
|
%
|
33.8
|
%
|
|
32.4
|
%
|
33.6
|
%
|
AIM
|
3.5
|
%
|
3.2
|
%
|
|
3.5
|
%
|
3.1
|
%
|
Equipment and
supplies sales
|
12.8
|
%
|
12.3
|
%
|
|
11.8
|
%
|
11.7
|
%
|
Outlook
ARC Document Solutions anticipates 2017 fully-diluted annual
adjusted earnings per share to be in the range of $0.24 to $0.29; 2017 annual adjusted cash provided by
operating activities is projected to be in the range of
$49 to $54 million; and 2017 annual
adjusted EBITDA is forecast to be in the range of $58 million
to $63 million.
Teleconference and Webcast
ARC Document Solutions will hold a conference call with
investors and analysts on Tuesday, February
21, 2017, at 2 P.M. Pacific
Time (5 P.M. Eastern Time) to
discuss results for the company's 2016 fourth quarter and fiscal
year. To access the live audio call, dial 888-539-3679.
International callers may join the conference by dialing
719-325-2244. The conference ID number is 8445562. A live webcast
will also be made available on the investor relations page of ARC
Document Solution's website at ir.e-arc.com. The webcast of the
call will be available at www.e-arc.com for approximately 90 days
following the call's conclusion.
About ARC Document Solutions (NYSE: ARC)
ARC Document Solutions distributes Documents and Information to
facilitate communication for design, engineering and construction
professionals, real estate managers and developers, facilities
owners, and a variety of similar disciplines. The Company provides
cloud and mobile solutions, professional services, and hardware to
help its customers around the world reduce costs and increase
efficiency, improve information access and control, and communicate
faster, easier, and better. Follow ARC at www.e-arc.com.
Forward-Looking Statements
This press release contains forward-looking statements that are
based on current opinions, estimates and assumptions of management
regarding future events and the future financial performance of the
Company. Words and phrases such as " plan is on track," "forecast,"
"expect," "believe," "anticipate," "outlook," and similar
expressions identify forward-looking statements and all statements
other than statements of historical fact, including, but not
limited to, any projections regarding earnings, revenues and
financial performance of the Company, could be deemed
forward-looking statements. We caution you that such statements are
only predictions and are subject to certain risks and uncertainties
that could cause actual results to differ materially from those
contained in the forward-looking statements. In addition to matters
affecting the construction, managed print services, document
management or reprographics industries, or the economy generally,
factors that could cause actual results to differ from expectations
stated in forward-looking statements include, among others, the
factors described in the caption entitled "Risk Factors" in Item 1A
in ARC Document Solution's Annual Report on Form 10-K for the
fiscal year ended December 31, 2015, Quarterly Reports on Form
10-Q, and other periodic filings and prospectuses. The Company
undertakes no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise, except as required by law.
ARC Document
Solutions, Inc.
|
Consolidated
Balance Sheets
|
(In thousands,
except per share data)
|
(Unaudited)
|
|
December
31,
|
December
31,
|
Current
assets:
|
2016
|
2015
|
Cash and cash
equivalents
|
$
|
25,239
|
|
$
|
23,963
|
|
Accounts receivable,
net of allowances for accounts receivable of $2,060 and
$2,094
|
59,735
|
|
60,085
|
|
Inventories,
net
|
18,184
|
|
16,972
|
|
Prepaid
expenses
|
3,861
|
|
4,555
|
|
Other current
assets
|
4,785
|
|
4,131
|
|
Total current
assets
|
111,804
|
|
109,706
|
|
Property and
equipment, net of accumulated depreciation of $201,192 and
$202,457
|
60,735
|
|
57,590
|
|
Goodwill
|
138,688
|
|
212,608
|
|
Other intangible
assets, net
|
13,202
|
|
17,946
|
|
Deferred income
taxes
|
72,963
|
|
74,196
|
|
Other
assets
|
2,185
|
|
2,492
|
|
Total
assets
|
$
|
399,577
|
|
$
|
474,538
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$
|
24,782
|
|
$
|
23,989
|
|
Accrued payroll and
payroll-related expenses
|
12,219
|
|
12,118
|
|
Accrued
expenses
|
16,138
|
|
19,194
|
|
Current portion of
long-term debt and capital leases
|
13,773
|
|
14,374
|
|
Total current
liabilities
|
66,912
|
|
69,675
|
|
Long-term debt and
capital leases
|
143,400
|
|
157,018
|
|
Deferred income
taxes
|
30,296
|
|
35,933
|
|
Other long-term
liabilities
|
2,148
|
|
2,778
|
|
Total
liabilities
|
242,756
|
|
265,404
|
|
Commitments and
contingencies
|
|
|
Stockholders'
equity:
|
|
|
ARC Document
Solutions, Inc. stockholders' equity:
|
|
|
Preferred stock, $0.001
par value, 25,000 shares authorized; 0 shares issued and
outstanding
|
—
|
|
—
|
|
Common stock, $0.001
par value, 150,000 shares authorized; 47,428 and 47,130
shares issued and 45,988 and 47,029 shares
outstanding
|
47
|
|
47
|
|
Additional paid-in
capital
|
117,749
|
|
115,089
|
|
Retained
earnings
|
41,822
|
|
89,687
|
|
Accumulated other
comprehensive loss
|
(3,793)
|
|
(2,097)
|
|
|
155,825
|
|
202,726
|
|
Less cost of common
stock in treasury, 1,440 and 101 shares
|
5,909
|
|
612
|
|
Total ARC Document
Solutions, Inc. stockholders' equity
|
149,916
|
|
202,114
|
|
Noncontrolling
interest
|
6,905
|
|
7,020
|
|
Total
equity
|
156,821
|
|
209,134
|
|
Total liabilities and
equity
|
$
|
399,577
|
|
$
|
474,538
|
|
ARC Document
Solutions, Inc.
|
Consolidated
Statements of Operations
|
(In thousands,
except per share data)
|
(Unaudited)
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December
31,
|
December
31,
|
|
2016
|
2015
|
2016
|
2015
|
Service
sales
|
$
|
85,947
|
|
$
|
91,593
|
|
$
|
358,341
|
|
$
|
378,638
|
|
Equipment and
supplies sales
|
12,611
|
|
12,946
|
|
47,980
|
|
50,027
|
|
Total net
sales
|
98,558
|
|
104,539
|
|
406,321
|
|
428,665
|
|
Cost of
sales
|
68,174
|
|
69,238
|
|
273,078
|
|
280,541
|
|
Gross
profit
|
30,384
|
|
35,301
|
|
133,243
|
|
148,124
|
|
Selling, general and
administrative expenses
|
23,462
|
|
26,877
|
|
100,214
|
|
107,280
|
|
Amortization of
intangible assets
|
1,128
|
|
1,336
|
|
4,833
|
|
5,642
|
|
Goodwill
impairment
|
—
|
|
—
|
|
73,920
|
|
—
|
|
Restructuring
expense
|
—
|
|
—
|
|
7
|
|
89
|
|
Income from
operations
|
5,794
|
|
7,088
|
|
(45,731)
|
|
35,113
|
|
Other income,
net
|
(18)
|
|
(18)
|
|
(72)
|
|
(99)
|
|
Loss on
extinguishment of debt
|
52
|
|
89
|
|
208
|
|
282
|
|
Interest expense,
net
|
1,461
|
|
1,499
|
|
5,996
|
|
6,974
|
|
Income (loss) before
income tax provision (benefit)
|
4,299
|
|
5,518
|
|
(51,863)
|
|
27,956
|
|
Income tax provision
(benefit)
|
1,520
|
|
2,334
|
|
(4,364)
|
|
(69,432)
|
|
Net income
(loss)
|
2,779
|
|
3,184
|
|
(47,499)
|
|
97,388
|
|
Income attributable to noncontrolling
interest
|
(155)
|
|
(123)
|
|
(366)
|
|
(348)
|
|
Net income (loss)
attributable to ARC Document Solutions, Inc.
shareholders
|
$
|
2,624
|
|
$
|
3,061
|
|
$
|
(47,865)
|
|
$
|
97,040
|
|
Earnings (loss) per
share attributable to ARC Document Solutions, Inc.
shareholders:
|
|
|
|
|
Basic
|
$
|
0.06
|
|
$
|
0.07
|
|
$
|
(1.04)
|
|
$
|
2.08
|
|
Diluted
|
$
|
0.06
|
|
$
|
0.06
|
|
$
|
(1.04)
|
|
$
|
2.04
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
45,567
|
|
46,722
|
|
45,932
|
|
46,631
|
|
Diluted
|
46,274
|
|
47,400
|
|
45,932
|
|
47,532
|
|
ARC Document
Solutions, Inc.
Non-GAAP Measures
Reconciliation of
cash flows provided by operating activities to EBITDA and Adjusted
EBITDA
(In
thousands)
(Unaudited)
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December
31,
|
December
31,
|
|
2016
|
2015
|
2016
|
2015
|
Cash flows provided
by operating activities
|
$
|
19,096
|
|
$
|
16,864
|
|
$
|
53,142
|
|
$
|
59,981
|
|
Changes in operating
assets and liabilities, net of effect of business
acquisitions
|
(6,058)
|
|
(2,338)
|
|
3,918
|
|
4,905
|
|
Non-cash expenses,
including depreciation, amortization and restructuring
|
(10,259)
|
|
(11,342)
|
|
(104,559)
|
|
32,502
|
|
Income tax provision
(benefit)
|
1,520
|
|
2,334
|
|
(4,364)
|
|
(69,432)
|
|
Interest expense,
net
|
1,461
|
|
1,499
|
|
5,996
|
|
6,974
|
|
Income attributable to noncontrolling
interest
|
(155)
|
|
(123)
|
|
(366)
|
|
(348)
|
|
Depreciation and
amortization
|
8,014
|
|
8,171
|
|
31,751
|
|
33,661
|
|
EBITDA
|
13,619
|
|
15,065
|
|
(14,482)
|
|
68,243
|
|
Loss on
extinguishment of debt
|
52
|
|
89
|
|
208
|
|
282
|
|
Goodwill
impairment
|
—
|
|
—
|
|
73,920
|
|
—
|
|
Trade secret
litigation costs (1)
|
—
|
|
—
|
|
—
|
|
34
|
|
Restructuring expense
(2)
|
—
|
|
—
|
|
7
|
|
89
|
|
Stock-based
compensation
|
620
|
|
773
|
|
2,693
|
|
3,512
|
|
Adjusted
EBITDA
|
$
|
14,291
|
|
$
|
15,927
|
|
$
|
62,346
|
|
$
|
72,160
|
|
|
(1) On
February 1, 2013, we filed a civil complaint against a competitor
and a former employee in the Superior Court of California for
Orange County, which alleged, among other claims, the
misappropriation of ARC trade secrets; namely, proprietary customer
lists that were used to communicate with ARC customers in an
attempt to unfairly acquire their business. In prior litigation
with the competitor based on related facts, in 2007 the competitor
entered into a settlement agreement and stipulated judgment, which
included an injunction. We instituted this suit to stop the
defendant from using similar unfair business practices against us
in the Southern California market. The case proceeded to trial in
May 2014, and a jury verdict was entered for the defendants. In the
first quarter of 2015, we entered into a settlement and paid the
defendant. Legal fees associated with the litigation were recorded
as selling, general and administrative expense.
|
|
(2) In October 2012,
we initiated a restructuring plan which included the closure or
downsizing of the Company's service center locations, as well as a
reduction in headcount. Restructuring expenses in 2016 and 2015
primarily consist of revised estimated lease termination and
obligation costs resulting from facilities closed in
2013.
|
|
ARC Document
Solutions, Inc.
Non-GAAP Measures
Reconciliation of
net income (loss) attributable to ARC to unaudited adjusted net
income attributable to ARC
(In thousands,
except per share data)
(Unaudited)
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December
31,
|
December
31,
|
|
2016
|
2015
|
2016
|
2015
|
Net income (loss)
attributable to ARC Document Solutions, Inc.
shareholders
|
$
|
2,624
|
|
$
|
3,061
|
|
$
|
(47,865)
|
|
$
|
97,040
|
|
Loss on
extinguishment of debt
|
52
|
|
89
|
|
208
|
|
282
|
|
Goodwill
impairment
|
—
|
|
—
|
|
73,920
|
|
—
|
|
Restructuring
expense
|
—
|
|
—
|
|
7
|
|
89
|
|
Trade secret
litigation costs
|
—
|
|
—
|
|
—
|
|
34
|
|
Income tax benefit
related to above items
|
(24)
|
|
(33)
|
|
(13,419)
|
|
(158)
|
|
Deferred tax
valuation allowance and other discrete tax items
|
(94)
|
|
41
|
|
247
|
|
(80,513)
|
|
Unaudited adjusted
net income attributable to ARC Document Solutions, Inc.
|
$
|
2,558
|
|
$
|
3,158
|
|
$
|
13,098
|
|
$
|
16,774
|
|
|
|
|
|
|
Actual:
|
|
|
|
|
Earnings (loss) per
share attributable to ARC Document Solutions, Inc.
shareholders:
|
|
|
|
|
Basic
|
$
|
0.06
|
|
$
|
0.07
|
|
$
|
(1.04)
|
|
$
|
2.08
|
|
Diluted
|
$
|
0.06
|
|
$
|
0.06
|
|
$
|
(1.04)
|
|
$
|
2.04
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
45,567
|
|
46,722
|
|
45,932
|
|
46,631
|
|
Diluted
|
46,274
|
|
47,400
|
|
45,932
|
|
47,532
|
|
|
|
|
|
|
Adjusted:
|
|
|
|
|
Earnings per
share attributable to ARC Document Solutions, Inc.
shareholders:
|
|
|
|
|
Basic
|
$
|
0.06
|
|
$
|
0.07
|
|
$
|
0.29
|
|
$
|
0.36
|
|
Diluted
|
$
|
0.06
|
|
$
|
0.07
|
|
$
|
0.28
|
|
$
|
0.35
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
45,567
|
|
46,722
|
|
45,932
|
|
46,631
|
|
Diluted
|
46,274
|
|
47,400
|
|
46,561
|
|
47,532
|
|
ARC Document Solutions, Inc.
Non-GAAP
Measures
Reconciliation of
net income (loss) attributable to ARC Document Solutions, Inc.
shareholders to EBITDA and Adjusted EBITDA
(In
thousands)
(Unaudited)
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December
31,
|
December
31,
|
|
2016
|
2015
|
2016
|
2015
|
Net income (loss)
attributable to ARC Document Solutions, Inc.
shareholders
|
$
|
2,624
|
|
$
|
3,061
|
|
$
|
(47,865)
|
|
$
|
97,040
|
|
Interest expense,
net
|
1,461
|
|
1,499
|
|
5,996
|
|
6,974
|
|
Income tax provision
(benefit)
|
1,520
|
|
2,334
|
|
(4,364)
|
|
(69,432)
|
|
Depreciation and
amortization
|
8,014
|
|
8,171
|
|
31,751
|
|
33,661
|
|
EBITDA
|
13,619
|
|
15,065
|
|
(14,482)
|
|
68,243
|
|
Loss on
extinguishment of debt
|
52
|
|
89
|
|
208
|
|
282
|
|
Goodwill
impairment
|
—
|
|
—
|
|
73,920
|
|
—
|
|
Trade secret
litigation costs
|
—
|
|
—
|
|
—
|
|
34
|
|
Restructuring
expense
|
—
|
|
—
|
|
7
|
|
89
|
|
Stock-based
compensation
|
620
|
|
773
|
|
2,693
|
|
3,512
|
|
Adjusted
EBITDA
|
$
|
14,291
|
|
$
|
15,927
|
|
$
|
62,346
|
|
$
|
72,160
|
|
ARC Document
Solutions, Inc.
Net Sales by Product Line
(In
thousands)
(Unaudited)
|
|
|
Three Months
Ended
|
Twelve Months
Ended
|
|
December
31,
|
December
31,
|
|
2016
|
2015
|
2016
|
2015
|
Service
Sales
|
|
|
|
|
CDIM
|
$
|
50,758
|
|
$
|
52,987
|
|
$
|
212,511
|
|
$
|
221,174
|
|
MPS
|
31,729
|
|
35,310
|
|
131,811
|
|
144,244
|
|
AIM
|
3,460
|
|
3,296
|
|
14,019
|
|
13,220
|
|
Total services
sales
|
85,947
|
|
91,593
|
|
358,341
|
|
378,638
|
|
Equipment and
supplies sales
|
12,611
|
|
12,946
|
|
47,980
|
|
50,027
|
|
Total net
sales
|
$
|
98,558
|
|
$
|
104,539
|
|
$
|
406,321
|
|
$
|
428,665
|
|
Non-GAAP Financial Measures
EBITDA and related ratios presented in this report are
supplemental measures of our performance that are not required by
or presented in accordance with accounting principles generally
accepted in the United States of
America ("GAAP"). These measures are not measurements of our
financial performance under GAAP and should not be considered as
alternatives to net income, income from operations, or any other
performance measures derived in accordance with GAAP or as an
alternative to cash flows from operating, investing or financing
activities as a measure of our liquidity.
EBITDA represents net income before interest, taxes,
depreciation and amortization. EBITDA margin is a non-GAAP measure
calculated by dividing EBITDA by net sales.
We have presented EBITDA and related ratios because we consider
them important supplemental measures of our performance and
liquidity. We believe investors may also find these measures
meaningful, given how our management makes use of them. The
following is a discussion of our use of these measures.
We use EBITDA to measure and compare the performance of our
operating segments. Our operating segments' financial performance
includes all of the operating activities except debt and taxation
which are managed at the corporate level for U.S. operating
segments. We use EBITDA to compare the performance of our operating
segments and to measure performance for determining
consolidated-level compensation. In addition, we use EBITDA to
evaluate potential acquisitions and potential capital
expenditures.
EBITDA and related ratios have limitations as analytical tools,
and should not be considered in isolation, or as a substitute for
analysis of our results as reported under GAAP. Some of these
limitations are as follows:
- They do not reflect our cash expenditures, or future
requirements for capital expenditures and contractual
commitments;
- They do not reflect changes in, or cash requirements for, our
working capital needs;
- They do not reflect the significant interest expense, or the
cash requirements necessary, to service interest or principal
payments on our debt;
- Although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA does not reflect any cash
requirements for such replacements; and
- Other companies, including companies in our industry, may
calculate these measures differently than we do, limiting their
usefulness as comparative measures.
Because of these limitations, EBITDA and related ratios should
not be considered as measures of discretionary cash available to us
to invest in business growth or to reduce our indebtedness. We
compensate for these limitations by relying primarily on our GAAP
results and using EBITDA and related ratios only as
supplements.
Our presentation of adjusted net income and adjusted EBITDA over
certain periods is an attempt to provide meaningful comparisons to
our historical performance for our existing and future investors.
The unprecedented changes in our end markets over the past several
years have required us to take measures that are unique in our
history and specific to individual circumstances. Comparisons
inclusive of these actions make normal financial and other
performance patterns difficult to discern under a strict GAAP
presentation. Each non-GAAP presentation, however, is explained in
detail in the reconciliation tables above. For more information,
see our 2015 Annual Report on Form 10-K.
Specifically, we have presented adjusted net income attributable
to ARC and adjusted earnings per share attributable to ARC
shareholders for the three and twelve months ended
December 31, 2016 and 2015 to reflect the exclusion of loss on
extinguishment of debt, goodwill impairment, restructuring expense,
trade secret litigation costs, and changes in the valuation
allowances related to certain deferred tax assets and other
discrete tax items. This presentation facilitates a meaningful
comparison of our operating results for the three and twelve months
ended December 31, 2016 and 2015. We believe these charges
were the result of the then current macroeconomic environment, our
capital restructuring, or other items which are not indicative of
our actual operating performance.
We have presented adjusted EBITDA for the three and twelve
months ended December 31, 2016 and 2015 to exclude loss on
extinguishment of debt, goodwill impairment, trade secret
litigation costs, restructuring expense, and stock-based
compensation expense. The adjustment of EBITDA for these items is
consistent with the definition of adjusted EBITDA in our credit
agreement; therefore, we believe this information is useful to
investors in assessing our financial performance.
ARC Document
Solutions
Consolidated Statements of Cash
Flows (In
thousands) (Unaudited)
|
Three Months
Ended
December
31,
|
Twelve Months
Ended
December
31,
|
|
2016
|
2015
|
2016
|
2015
|
Cash flows from
operating activities
|
|
|
|
|
Net income
(loss)
|
$
|
2,779
|
|
$
|
3,184
|
|
$
|
(47,499)
|
|
$
|
97,388
|
|
Adjustments to
reconcile net income (loss) to net cash provided by operating
activities:
|
|
|
|
|
Allowance for
accounts receivable
|
274
|
|
48
|
|
918
|
|
340
|
|
Depreciation
|
6,886
|
|
6,835
|
|
26,918
|
|
28,019
|
|
Amortization of
intangible assets
|
1,128
|
|
1,336
|
|
4,833
|
|
5,642
|
|
Amortization of
deferred financing costs
|
101
|
|
129
|
|
445
|
|
589
|
|
Goodwill
impairment
|
—
|
|
—
|
|
73,920
|
|
—
|
|
Stock-based
compensation
|
620
|
|
773
|
|
2,693
|
|
3,512
|
|
Deferred income
taxes
|
1,307
|
|
1,952
|
|
(4,711)
|
|
10,173
|
|
Deferred tax
valuation allowance
|
67
|
|
213
|
|
51
|
|
(80,669)
|
|
Loss on early
extinguishment of debt
|
52
|
|
89
|
|
208
|
|
282
|
|
Other non-cash items,
net
|
(176)
|
|
(33)
|
|
(716)
|
|
(390)
|
|
Changes in operating
assets and liabilities, net of effect of business
acquisitions:
|
|
|
|
|
Accounts
receivable
|
991
|
|
4,366
|
|
(1,294)
|
|
729
|
|
Inventory
|
1,606
|
|
808
|
|
(1,590)
|
|
(967)
|
|
Prepaid expenses and
other assets
|
(404)
|
|
(645)
|
|
109
|
|
2,296
|
|
Accounts payable and
accrued expenses
|
3,865
|
|
(2,191)
|
|
(1,143)
|
|
(6,963)
|
|
Net cash provided by
operating activities
|
19,096
|
|
16,864
|
|
53,142
|
|
59,981
|
|
Cash flows from
investing activities
|
|
|
|
|
Capital
expenditures
|
(4,517)
|
|
(2,728)
|
|
(12,097)
|
|
(14,245)
|
|
Other
|
259
|
|
75
|
|
1,101
|
|
589
|
|
Net cash used in
investing activities
|
(4,258)
|
|
(2,653)
|
|
(10,996)
|
|
(13,656)
|
|
Cash flows from
financing activities
|
|
|
|
|
Proceeds from stock
option exercises
|
22
|
|
112
|
|
98
|
|
673
|
|
Proceeds from
issuance of common stock under Employee Stock Purchase
Plan
|
24
|
|
28
|
|
120
|
|
111
|
|
Share
repurchases
|
—
|
|
—
|
|
(5,297)
|
|
(204)
|
|
Contingent
consideration on prior acquisitions
|
(118)
|
|
(54)
|
|
(571)
|
|
(413)
|
|
Early extinguishment
of long-term debt
|
(6,000)
|
|
(3,625)
|
|
(22,000)
|
|
(14,500)
|
|
Payments on long-term
debt agreements and capital leases
|
(3,339)
|
|
(7,287)
|
|
(12,990)
|
|
(27,329)
|
|
Net borrowings
(repayments) under revolving credit facilities
|
950
|
|
—
|
|
950
|
|
(1,888)
|
|
Payment of deferred
financing costs
|
—
|
|
—
|
|
(106)
|
|
(25)
|
|
Payment of hedge
premium
|
—
|
|
—
|
|
—
|
|
(632)
|
|
Net cash used in
financing activities
|
(8,461)
|
|
(10,826)
|
|
(39,796)
|
|
(44,207)
|
|
Effect of foreign
currency translation on cash balances
|
(778)
|
|
(246)
|
|
(1,074)
|
|
(791)
|
|
Net change in cash
and cash equivalents
|
5,599
|
|
3,139
|
|
1,276
|
|
1,327
|
|
Cash and cash
equivalents at beginning of period
|
19,640
|
|
20,824
|
|
23,963
|
|
22,636
|
|
Cash and cash
equivalents at end of period
|
$
|
25,239
|
|
$
|
23,963
|
|
$
|
25,239
|
|
$
|
23,963
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Noncash financing
activities:
|
|
|
|
|
Capital lease
obligations incurred
|
$
|
6,603
|
|
$
|
3,490
|
|
$
|
18,948
|
|
$
|
13,157
|
|
Contingent
liabilities in connection with the acquisition of
businesses
|
$
|
—
|
|
$
|
—
|
|
$
|
75
|
|
$
|
—
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/arc-document-solutions-meets-or-exceeds-revised-financial-guidance-for-full-year-2016-300411064.html
SOURCE ARC Document Solutions, Inc.