false000130516800013051682024-08-072024-08-07

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: August 7, 2024
(Date of earliest event reported)
ARC Document Solutions, Inc.
(Exact name of registrant as specified in its charter)
Delaware001-3240720-1700361
(State or other jurisdiction
of incorporation)		(Commission File Number)(IRS Employer
Identification Number)
12657 Alcosta Blvd, Suite 200  San RamonCA94583
(Address of principal executive offices)(Zip Code)

(925)949-5100
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareARCThe New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 



Item 2.02. Results of Operations and Financial Condition

On August 7, 2024, ARC Document Solutions, Inc. (the “Company”) issued a press release reporting its financial results for the second quarter of the fiscal year ending December 31, 2024. A copy of the press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.


Item 9.01. Financial Statements and Exhibits

(d) Exhibits
           
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)



SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: August 7, 2024
ARC DOCUMENT SOLUTIONS, INC.
By:  /s/ Jorge Avalos                    
     Jorge Avalos
     Chief Financial Officer



Exhibit Index
Exhibit No.Description
  
104
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ARC Reports Growth in Overall Sales and Improvements in Gross Margin for Q2 2024

SAN RAMON, CA – (August 7, 2024) – ARC Document Solutions, Inc. (NYSE: ARC), a leading provider of digital printing and document-related services, today reported its financial results for the second quarter ended June 30, 2024.
Financial Highlights:
Three Months EndedSix Months Ended
June 30,June 30,
(All dollar amounts in millions, except EPS)2024202320242023
Net sales$75.1 $72.4 $145.9 $141.3 
Gross margin35.1 %34.8 %33.7 %34.0 %
Net income attributable to ARC$3.2 $4.0 $5.6 $6.0 
Adjusted net income attributable to ARC$3.3 $4.1 $5.9 $6.2 
Earnings per share - diluted$0.07 $0.09 $0.13 $0.14 
Adjusted earnings per share - diluted$0.08 $0.09 $0.14 $0.14 
Cash provided by operating activities$6.4 $10.3 $10.1 $14.2 
EBITDA$9.1 $10.6 $17.0 $18.8 
Adjusted EBITDA$9.8 $11.1 $18.3 $19.8 
Capital expenditures$3.8 $2.2 $6.9 $4.5 
Debt & finance leases (including current)$59.9 $62.8 

Management Commentary:
“The execution of our strategic objectives were, once again, responsible for our success in the second quarter, despite uncertain business conditions caused by the high interest rates and the weakness in commercial construction due to excess supply,” said Suri Suriyakumar, Chairman and CEO of ARC Document Solutions. “While we expect these conditions to continue in the second half of the year, we remain focused on our long-term objectives during these difficult market conditions.”
“Our digital color print services have been the key drivers of our success in Q2, and we are optimistic about delivering continued strong sales results in the coming quarters,” said Dilo Wijesuriya, President and COO. “The transformation initiatives we implemented several years ago are proving successful, as evidenced by our results.”

“Sales were strong in the period, and we reversed the year-over-year decline in gross margin we experienced in the first quarter,” said Jorge Avalos, Chief Financial Officer. “A number of large projects were completed in the last month of the second quarter, pushing collections into Q3, which temporarily muted our operating cash flow performance. We are confident that cash flows will improve in the third and fourth quarters, just as they did last year.”

2024 Second Quarter Supplemental Information:
Net sales were $75.1 million, a 3.8% increase compared to the second quarter of 2023.
Cash & cash equivalents on the consolidated balance sheet in the second quarter 2024 were $49.9 million.
ARC’s next quarterly cash dividend of $0.05 will be paid on August 30, 2024 with a record date of July 31, 2024.
Days sales outstanding were 50 in Q2 2024 and 48 in Q2 2023.
The number of MPS locations have declined slightly year over year to approximately 10,400 as of June 30, 2024, representing a net decrease of approximately 150 locations compared to June 30, 2023.








Net Revenue
In millions2Q 20241Q 2024FYE 20234Q 20233Q 20232Q 2023
Total net revenue$75.1 $70.8 $281.2 $68.9 $71.1 $72.4 
In the second quarter 2024, net sales increased 3.8%, compared to the same period in 2023. The increase in net sales was primarily driven by the growth of sales in Digital Printing and Scanning and Digital Imaging sales. Growth for the period was partially offset by a small decline in MPS sales.
Revenue by Business Lines
In millions
2Q 2024 (1)
1Q 2024FYE 20234Q 2023
3Q 2023 (1)
2Q 2023
Digital Printing$46.8 $42.7 $170.1 $40.9 $43.5 $44.2 
MPS$18.7 $18.6 $74.8 $18.2 $18.6 $19.0 
Scanning and Digital Imaging$5.7 $5.7 $20.3 $5.5 $5.0 $5.3 
Equipment and supplies$4.0 $3.8 $16.0 $4.3 $3.9 $3.9 
1.Column does not foot due to rounding.
In the second quarter 2024, Digital Printing sales increased 5.8% compared to prior year. Year-over-year sales saw healthy increases in digital color graphic printing from new and existing customers. This growth was partially offset by a decrease in digital plan printing sales which we continue to attribute to less construction activity and subsequent lower spending due to high interest rates.
In the second quarter 2024, MPS sales decreased 1.2% year-over-year. MPS sales have remained in a narrow band between $18 million to $19 million per quarter for more than two years, strongly implying fewer employees in the workplace will continue to constrain onsite print volumes relative to historical averages.
In the second quarter 2024, Scanning and Digital Imaging sales increased 7.4% year-over-year. The increase in sales of our Scanning and Digital Imaging services continues to be driven by growing demand for paper-to-digital document conversions and digital archives to replace long-term warehoused paper document storage. We believe that demand for our Scanning and Digital Imaging services will continue to grow in the future.
In the second quarter 2024, Equipment and Supplies sales increased 1.4% year-over-year. Equipment and Supplies sales remained relatively flat year-over-year, as buying habits have stabilized as customers have adjusted to a high interest rate environment.
Gross Profit
In millions unless otherwise indicated2Q 20241Q 2024FYE 20234Q 20233Q 20232Q 2023
Gross profit$26.4 $22.8 $94.4 $22.2 $24.1 $25.2 
   Gross margin35.1 %32.2 %33.6 %32.2 %34.0 %34.8 %
In the second quarter 2024, gross profit and gross margin were $26.4 million, and 35.1%, respectively, a year-over-year margin increase of 30 basis points driven by the increase in sales, and our ability to leverage our work force and overhead costs.
Selling, General and Administrative Expenses
In millions 2Q 20241Q 2024FYE 20234Q 20233Q 20232Q 2023
Selling, general and administrative expenses
$21.3 $19.1 $76.3 $18.6 $19.3 $19.0 
Selling, general and administrative expenses increased by $2.3 million or 12.2% year-over-year. The increase is primarily due to greater commissions based on a higher level of sales, as well as continuing investments in sales staff and marketing initiatives. Of note, selling, general and administrative expenses for the three months ended June 30, 2024 also include $0.9 million in costs related to the previously disclosed take-private proposal summarized below under “Non-Binding Proposal.”



Net Income and Earnings Per Share
In millions unless otherwise indicated2Q 20241Q 2024FYE 20234Q 20233Q 20232Q 2023
Net income attributable to ARC – GAAP$3.2 $2.5 $8.2 $(0.9)$3.2 $4.0 
Adjusted net income attributable to ARC $3.3 $2.6 $11.8 $2.4 $3.2 $4.1 
Earnings per share attributable to ARC
   Diluted EPS – GAAP$0.07 $0.06 $0.19 $(0.02)$0.07 $0.09 
   Adjusted diluted EPS$0.08 $0.06 $0.27 $0.05 $0.07 $0.09 
Year-over-year net income attributable to ARC and earnings per share decreased during the second quarter of 2024. The decrease was driven primarily by higher selling, general and administrative expenses, as described above.
Cash Provided by Operating Activities
In millions 2Q 20241Q 2024FYE 20234Q 20233Q 20232Q 2023
Cash provided by operating activities$6.4 $3.7 $36.6 $13.7 $8.7 $10.3 
The year-over-year decrease in cash flows from operations during the second quarter of 2024 was primarily due to timing of receivable collections resulting from of an increase in sales occurring later in the period.
EBITDA
In millions 2Q 20241Q 2024FYE 20234Q 20233Q 20232Q 2023
EBITDA$9.1 $7.9 $31.9 $3.7 $9.4 $10.6 
Adjusted EBITDA $9.8 $8.6 $38.1 $8.3 $10.0 $11.1 
Year-over-year EBITDA and Adjusted EBITDA decreased due to higher selling, general and administrative expenses, as described above.
Three Months EndedSix Months Ended
June 30,June 30,
Sales from Services and Product Lines as a Percentage of Net Sales2024202320242023
Digital Printing62.3 %61.1 %61.3 %60.5 %
MPS24.9 %26.2 %25.6 %26.9 %
Scanning and Digital Imaging7.5 %7.3 %7.8 %7.0 %
Equipment and supplies sales5.3 %5.4 %5.3 %5.6 %
Non-Binding Proposal
As previously disclosed, we received a non-binding proposal on April 8, 2024 from our Chairman and Chief Executive Officer, Kumarakulasingam Suriyakumar, outlining Mr. Suriyakumar’s intent to explore and evaluate a potential acquisition of all of the outstanding shares of our common stock, $0.001 per share (“common stock”), not already owned by Mr. Suriyakumar in a going-private transaction at a purchase price of $3.25 per share in cash (the “Proposed Transaction”). On June 27, 2024, Mr. Suriyakumar, Dilantha Wijesuriya, our President and Chief Operating Officer, Jorge Avalos, our Chief Financial Officer, Rahul Roy, our Chief Technology Officer, Sujeewa Sean Pathiratne, a private investor, and certain entities affiliated with such persons (collectively, the “Acquisition Group”) agreed in principle that they will work with each other to negotiate and consummate the Proposed Transaction. The Acquisition Group currently beneficially owns approximately 19.6% of our outstanding shares of common stock.

In response to the proposal, on April 8, 2024, a special committee of our board of directors consisting entirely of independent, disinterested directors (the “Special Committee”) was formed to review and evaluate the Proposed Transaction. The Special Committee continues to carefully consider the Proposed Transaction with the assistance of its independent financial and legal advisors. No assurances can be given regarding the terms and details of any transaction, that any proposal made by the Acquisition Group regarding a transaction will be accepted by the Special Committee, that definitive documentation relating to any such transaction will be executed, or that a transaction will be consummated in accordance with that documentation, if at all.




Teleconference and Webcast
ARC Document Solutions will hold a conference call with investors and analysts on Wednesday, August 7, 2024, at 2 P.M. Pacific Time (5 P.M. Eastern Time) to discuss results of the Company’s second quarter of 2024. To access the live conference call outlining ARC’s 2024 second quarter results, dial (800) 715-9871. International callers may join the conference by dialing +1 (646) 307-1963. The conference code is 1511143 and will be required to dial into the call. A live webcast will also be made available at: https://events.q4inc.com/attendee/383771751 or on the Company's investor relations website at http://ir.e-arc.com. A replay of the webcast will be available on the website following the call's conclusion.

About ARC Document Solutions (NYSE: ARC)
ARC partners with top brands around the world to tell their stories through visually compelling graphics. We use advanced digital printing technology, sustainable materials, and innovative techniques to bring their vision to life. ARC also provides other digital printing and scanning services to a wide variety of industries all over North America and in select markets around the world. 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, and on the Company’s operations. Words and phrases such as, “conditions to continue in the second half of the year,” “focused on our long-term objectives” and “optimistic about delivering continued strong sales results in the coming quarters,” 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, digital printing 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 section titled "Part I - Item 1A. Risk Factors" of ARC Document Solution's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, 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.

Contact Information:
David Stickney
VP Corporate Communications & Investor Relations
925-949-5114



ARC Document Solutions, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
June 30,December 31,
Current assets:20242023
Cash and cash equivalents$49,911 $56,093 
Accounts receivable, net of allowances for accounts receivable of $1,823 and $1,857
41,516 35,775 
Inventory9,218 8,818 
Prepaid expenses4,943 3,988 
Other current assets4,410 3,978 
Total current assets109,998 108,652 
Property and equipment, net of accumulated depreciation of $226,206 and $229,122
42,840 40,925 
Right-of-use assets from operating leases34,253 32,838 
Goodwill121,051 121,051 
Other intangible assets, net138 162 
Deferred income taxes2,405 4,383 
Other assets1,896 2,113 
Total assets$312,581 $310,124 
Current liabilities:
Accounts payable$26,667 $24,175 
Accrued payroll and payroll-related expenses8,897 9,401 
Accrued expenses18,010 18,787 
Current operating lease liabilities10,325 9,924 
Current portion of finance leases7,431 8,870 
Total current liabilities71,330 71,157 
Long-term operating lease liabilities28,401 27,357 
Long-term debt and finance leases52,457 53,366 
Deferred income taxes254 52 
Other long-term liabilities2,442 2,467 
Total liabilities154,884 154,399 
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; 53,111 and 52,526 shares issued and 43,248 and 42,783 shares outstanding
53 52 
Additional paid-in capital137,888 136,460 
Retained earnings45,522 44,144 
Accumulated other comprehensive loss(4,514)(4,200)
178,949 176,456 
Less cost of common stock in treasury, 9,863 and 9,743 shares
22,727 22,390 
Total ARC Document Solutions, Inc. stockholders’ equity156,222 154,066 
Noncontrolling interest1,475 1,659 
Total equity157,697 155,725 
Total liabilities and equity$312,581 $310,124 



ARC Document Solutions, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)Three Months EndedSix Months Ended
June 30,June 30,
2024202320242023
Net sales$75,114 $72,350 $145,906 $141,268 
Cost of sales48,726 47,174 96,711 93,167 
Gross profit26,388 25,176 49,195 48,101 
Selling, general and administrative expenses21,342 19,013 40,413 38,495 
Amortization of intangible assets10 10 20 21 
Income from operations5,036 6,153 8,762 9,585 
Other income, net(35)(15)(71)(26)
Interest expense, net331 447 641 903 
Income before income tax provision4,740 5,721 8,192 8,708 
Income tax provision1,605 1,734 2,693 2,894 
Net income3,135 3,987 5,499 5,814 
Loss attributable to the noncontrolling interest24 31 113 144 
Net income attributable to ARC Document Solutions, Inc. stockholders$3,159 $4,018 $5,612 $5,958 
Earnings per share attributable to ARC Document Solutions, Inc. stockholders
Basic $0.07 $0.09 $0.13 $0.14 
Diluted $0.07 $0.09 $0.13 $0.14 
Weighted average common shares outstanding:
Basic 42,342 42,801 42,267 42,673 
Diluted 43,067 43,614 43,061 43,679 




















ARC Document Solutions, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)Three Months EndedSix Months Ended
June 30,June 30,
2024202320242023
Cash flows from operating activities
Net income$3,135 $3,987 $5,499 $5,814 
Adjustments to reconcile net income to net cash provided by operating activities:
Allowance for credit losses59 131 156 229 
Depreciation3,954 4,363 7,994 9,015 
Amortization of intangible assets10 10 20 21 
Amortization of deferred financing costs18 16 35 32 
Stock-based compensation691 529 1,342 1,023 
Deferred income taxes1,429 1,583 2,270 2,545 
Deferred tax valuation allowance(180)6 (121)49 
Other non-cash items, net(280)(82)(335)(157)
Changes in operating assets and liabilities:
Accounts receivable(3,718)920 (6,004)222 
Inventory49 260 (446)(323)
Prepaid expenses and other assets1,418 1,284 3,829 4,542 
Accounts payable and accrued expenses(193)(2,678)(4,146)(8,859)
Net cash provided by operating activities6,392 10,329 10,093 14,153 
Cash flows from investing activities
Capital expenditures(3,844)(2,241)(6,919)(4,496)
Other152 99 218 191 
Net cash used in investing activities(3,692)(2,142)(6,701)(4,305)
Cash flows from financing activities
Proceeds from stock option exercises 24 45 28 1,081 
Proceeds from issuance of common stock under Employee Stock Purchase Plan27 31 59 60 
Share repurchases(282)(1,691)(337)(1,808)
Payments on finance leases(2,363)(3,011)(4,915)(6,194)
Borrowings under revolving credit facilities40,000 40,000 80,000 82,000 
Payments under revolving credit facilities(40,000)(40,000)(80,000)(82,000)
Payment of deferred financing costs— (23)— (23)
Dividends paid(2,111)(2,145)(4,219)(4,267)
Net cash used in financing activities(4,705)(6,794)(9,384)(11,151)
Effect of foreign currency translation on cash balances (113)(130)(190)(192)
Net change in cash and cash equivalents(2,118)1,263 (6,182)(1,495)
Cash and cash equivalents at beginning of period52,029 49,803 56,093 52,561 
Cash and cash equivalents at end of period$49,911 $51,066 $49,911 $51,066 
Supplemental disclosure of cash flow information
Noncash investing and financing activities
Finance lease obligations incurred$1,499 $997 $2,605 $2,482 
Operating lease obligations incurred$2,228 $1,010 $6,463 $4,375 









ARC Document Solutions, Inc.
Net Sales by Product Line
(In thousands)
(Unaudited)
 Three Months EndedSix Months Ended
June 30,June 30,
2024202320242023
Service sales
Digital Printing$46,766 $44,218 $89,491 $85,597 
MPS18,728 18,958 37,312 37,974 
Scanning and Digital Imaging5,651 5,260 11,322 9,854 
Total service sales71,145 68,436 138,125 133,425 
Equipment and Supplies Sales3,969 3,914 7,781 7,843 
Total net sales$75,114 $72,350 $145,906 $141,268 

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 EndedSix Months Ended
June 30,June 30,
2024202320242023
Cash flows provided by operating activities$6,392 $10,329 $10,093 $14,153 
Changes in operating assets and liabilities2,444 214 6,767 4,418 
Non-cash expenses, including depreciation and amortization(5,701)(6,556)(11,361)(12,757)
Income tax provision1,605 1,734 2,693 2,894 
Interest expense, net331 447 641 903 
Loss attributable to the noncontrolling interest24 31 113 144 
Depreciation and amortization3,964 4,373 8,014 9,036 
EBITDA9,059 10,572 16,960 18,791 
Stock-based compensation691 529 1,342 1,023 
Adjusted EBITDA$9,750 $11,101 $18,302 $19,814 
See Non-GAAP Financial Measures discussion below.


ARC Document Solutions, Inc.
Non-GAAP Measures
Reconciliation of net income attributable to ARC Document Solutions, Inc. to EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
 Three Months EndedSix Months Ended
June 30,June 30,
2024202320242023
Net income attributable to ARC Document Solutions, Inc.$3,159 $4,018 $5,612 $5,958 
Interest expense, net331 447 641 903 
Income tax provision1,605 1,734 2,693 2,894 
Depreciation and amortization3,964 4,373 8,014 9,036 
EBITDA9,059 10,572 16,960 18,791 
Stock-based compensation691 529 1,342 1,023 
Adjusted EBITDA$9,750 $11,101 $18,302 $19,814 
See Non-GAAP Financial Measures discussion below.




ARC Document Solutions, Inc.
Non-GAAP Measures
Reconciliation of net income attributable to ARC Document Solutions, Inc. to unaudited adjusted net income attributable to ARC Document Solutions, Inc.
(In thousands, except per share data)
(Unaudited)
 Three Months EndedSix Months Ended
June 30,June 30,
2024202320242023
Net income attributable to ARC Document Solutions, Inc.$3,159 $4,018 $5,612 $5,958 
Deferred tax valuation allowance and other discrete tax items170 33 277 267 
Adjusted net income attributable to ARC Document Solutions, Inc.$3,329 $4,051 $5,889 $6,225 
Actual:
Earnings per share attributable to ARC Document Solutions, Inc. stockholders:
Basic$0.07 $0.09 $0.13 $0.14 
Diluted$0.07 $0.09 $0.13 $0.14 
Weighted average common shares outstanding:
Basic42,342 42,801 42,267 42,673 
Diluted43,067 43,614 43,061 43,679 
Adjusted:
Earnings per share attributable to ARC Document Solutions, Inc. stockholders:
Basic$0.08 $0.09 $0.14 $0.15 
Diluted$0.08 $0.09 $0.14 $0.14 
Weighted average common shares outstanding:
Basic42,342 42,801 42,267 42,673 
Diluted43,067 43,614 43,061 43,679 
See Non-GAAP Financial Measures discussion below.


Non-GAAP Financial Measures
EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, adjusted net income and adjusted earnings per share 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, net income margin, diluted earnings per share 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. We have presented these measures 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.
EBITDA represents net income before interest, taxes, depreciation and amortization. We calculate EBITDA margin by dividing EBITDA by net sales.
We use EBITDA and EBITDA margin to measure and compare the performance of our operating divisions. Our operating divisions’ financial performance includes all of the operating activities except debt and taxation which are managed at the corporate level for U.S. operating divisions. We use EBITDA and EBITDA margin to compare the performance of our operating divisions and to measure performance for determining consolidated-level compensation. In addition, we use EBITDA and EBITDA margin to evaluate potential acquisitions and potential capital expenditures.
EBITDA and EBITDA margin 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 EBITDA margin only as supplements.
Our presentation of adjusted net income and adjusted EBITDA 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.
Specifically, we have presented adjusted net income attributable to ARC and adjusted earnings per share attributable to ARC stockholders for the three and six months ended June 30, 2024 to reflect the exclusion of changes in the valuation allowances related to certain deferred tax assets and other discrete tax items. We believe this presentation helps facilitate our investors understanding of our results of operations and allows them to make meaningful comparisons of our operating results for the three and six months ended June 30, 2024 against the corresponding periods in 2023. We believe these changes were the result of items which are not indicative of our actual operating performance.
We have presented Adjusted EBITDA for the three and six months ended June 30, 2024 to exclude stock-based compensation expense. We calculated Adjusted EBITDA margin by dividing Adjusted EBITDA by net sales. The adjustment to exclude stock-based compensation expense from EBITDA 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 and ability to access our credit facility.

v3.24.2.u1
Cover Page
Aug. 07, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Aug. 07, 2024
Entity Registrant Name ARC Document Solutions, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-32407
Entity Tax Identification Number 20-1700361
Entity Address, Address Line One 12657 Alcosta Blvd, Suite 200
Entity Address, City or Town San Ramon
Entity Address, State or Province CA
Entity Address, Postal Zip Code 94583
City Area Code (925)
Local Phone Number 949-5100
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.001 per share
Trading Symbol ARC
Security Exchange Name NYSE
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001305168
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