Friday, March 26, 2010

New Article on about ARC (NYSE:ARP)

PAA Research, LLC, the company that operates the investment research web-site,, just posted, yesterday, a lengthy report; this report is based on the CEO of PAA's recent discussions with ARC management about ARC's current initiatives.

The title of the report is called:

􏰀 Conversations with ARP Management: Answering the BIM Question

You can access the full report at PAA's web-site.

Wednesday, March 24, 2010

AIA ABI Index - - - up slightly in February 2010

Courtesy of Reuters - -

2010-03-24, 04:16
NEW YORK, March 24 (Reuters) - A leading indicator of U.S. nonresidential construction spending recovered slightly but a measure of future projects dipped in February, partly because a ,lot of stimulus financing for building projects has yet to be awarded.

The Architecture Billings Index was up 2.3 points to 44.8 last month, according to the American Institute of Architects (AIA). A measure of inquiries for new projects fell 0.5 points to 52.0, after a 7-point drop in January.

'Funding dedicated for construction projects in the stimulus package has not yet been awarded, resulting in a bottleneck of potential projects that could help jumpstart the economy,' said AIA Chief Economist Kermit Baker.

Private sector projects continue to face 'a persistently rigid credit market,' Baker added.

All four U.S. geographic regions were below 50 in billings in January, with the Midwest highest at 49.4, as were all of the four construction sectors. Billings for apartment buildings dipped back below 50 after an uptick the prior month.

AIA's other categories include institutional architecture, commercial and industrial space, and the mixed-practice category, which often combines retail with other uses.

The AIA's billings index, begun in 1995, is considered a measure of construction spending nine to 12 months in the future.


Monday, March 22, 2010

Reprographics Industry revenue trends: digital services VS. prints-on-paper

Over the last several years, there's been a lot of discussion and debate over revenue trends in the reprographics industry. I don't see any need for me to do a full-blown article about that trend, because virtually all reprographers, if not all, are experiencing the trend.

The three sentences that immediately follow were copied from an e-mail I received, very recently, from a recently retired top-management-level reprographer ... in other words, from an "industry veteran."

"Saw an article in today’'s paper that said commercial and residential construction will continue to suffer. Add to that the fact that most of the info is going out digital these days and it is a double whammy. Last big project I tracked went out 75% digital (CD/DVD)’s at about 15% of the paper revenue, stunning top line difference!"

And, shortly after I received his e-mail, I saw Shaun Meany, President of The PEiR Group, announce a (very-related) webinar session on this subject: ..... "Are you able to get your customers to accept your charges for digital services? If not, then you should plan on attending our webinar "How to Justify Charging your Customers for Digital Services"!

Wednesday, March 17, 2010

Is Commercial Real Estate A Disaster?

I found this article posted on the web-site known as ……..…. …….. and it is a web-site for investors.

After reading the article, I wasn’t sure if it was good news, bad news, or no news. Don’t you just love articles that start with ----- “things look like they are going to improve”, ….. followed by a ….. “but, who really knows?”

Is Commercial Real Estate A Disaster?

Posted on 03/14/10 at 5:59pm by Swing Trader

Commercial real estate.

Upon hearing those words you are likely to immediately think of the negative implications: more defaults, more bank losses, next shoe to drop, derailed recovery..well, you get the idea.

But, will commercial real estate really have such a pernicious effect on the economy? Here are some facts about commercial real estate:
1) Commercial mortgages usually are from three to 10 years and at the end of the term the entire principal is due;
2) The Congressional Oversight Panel estimated that about $1.4 trillion in commercial real estate loans will reach maturity between 2010 and 2014, and nearly half are underwater;
3) Commercial real estate values have fallen more than 40% since 2007;
4) Losses in commercial real estate could be particularly destabilizing for smaller community and regional banks as they have higher percentages of commercial loans in their portfolios.

While these points are clearly worrisome, commercial real estate may not collapse for the following reasons:
1) Commercial real estate losses will not all hit at once in 2011, giving the market some time to improve its fundamentals, such as unemployment;
2) Borrowers, such as strip mall operators, may lose tenants during a recession, but may still have enough tenants to generate rental income and stay current on a loan;
3) Borrowers with commercial real estate loans often occupy at least part of the building they own and can weather the rough economy and wait for occupancies to increase;
4) Regional banks such as Marshall & Ilsley (NYSe: MI) and Synovus Financial (NYSE: SNV) have said they believe loan losses have peaked and credit trends have improved. These banks have already written off a bulk of their non-performing commercial loans and may return to profitability this year.

So, while commercial real estate remains in trouble, it may no be the total disaster that everyone expects it to be. As is often the case with the financial markets, when the consensus expects something to happen, the opposite usually occurs.

Commercial real estate will most likely improve along with the labor market. Thus, it will most likely be a slow recovery.

Monday, March 15, 2010

Former ReproMax executive has moved over to American Reprographics

Well, I just noticed that Tanner Bechtel, formerly a member of the management team of ReproMAX, has left ReproMax* and joined the American Reprographics team.

I don't know Tanner all that well and I don't particularly like to comment about people coming and going, changing companies, teams, etc, other than to mention that a change happened. I've met Tanner a couple of times in the past - and have read some of the articles on his blog - and I do know that friends within ReproMax spoke highly of him.

What I noticed, just today, was that at the very bottom of Tanner's web-site, it mentions this:
Tanner Bechtel, CSI CDT, serves as a Global Solutions Executive for American Reprographics Corporation (NYSE: ARP)

As a Global Solutions Executive with ARC, that means he's on the same team with one of my ex-NGI partners (Martha Korman Zumwalt)

Good luck and best wishes to you Tanner.

(* and, this probably happened months ago, but don't ever expect me to be swiftly up to date on personnel changes)

UPDATE: Well, apparently (based on input from someone who would know), Tanner changed horses around 6 months ago.

Sunday, March 14, 2010

Further to the January ABI Index ....

In the post just previous to this one, I mentioned a press release about the "January 2010" ABI Index.

The press release that I previously mentioned was not the "full" article that Kermit Baker (Chief Economist of the AIA) wrote.

The "full" article that Kermit wrote can be found at this Internet address:

Although the article is full of "bad news" for the current outlook in the Architecture Industry (and, therefore, for the Construction Industry), I encourage all of my colleagues in the Reprographics Industry to read the entire article that Kermit wrote. To not do that would be tantamount to burying your head in the sand. Also, keep following articles about the A/E/C Industry, because there will be, at some point, a turn in the other direction (and, what I really mean is a turn "up"); if you track what's going on, you will be ready for the turn up, even before it begins to affect your cash register.

Friday, March 5, 2010

Another "Ugh" ..... Significant Drop in Architecture Billings Index

Latest (January 2010) ABI Index .... from the AIA Press Release issued Feb 24, 2010

Significant Drop in Architecture Billings Index
Tight credit markets and weak demand for new projects continue to be main challenges for design and construction industry

For immediate release:
Washington, D.C. – February 24, 2010 – Beginning its third year of negative conditions, the Architecture Billings Index (ABI) had a drop of almost three points in January. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the January ABI rating was 42.5, down sharply from a revised reading of 45.4 in December. This score indicates a continued decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 52.5, down more than seven points.

* Every January the AIA research department uses a procedure from the Department of Commerce that re-estimates ABI data based on seasonal patterns, resulting in a recalibration of recent figures.

“Projects are being delayed or cancelled because lending institutions are placing unusually stringent equity requirements on new developments. This is even happening to financially sound companies with strong credit ratings,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “This serious situation is being compounded by a skittish bond market, decreased tax revenues for publicly financed projects and declining property values – all which serve as deterrents for construction activity. Until these factors are resolved, the design and construction industry -- which accounts for roughly 10 percent of GDP and is facing unemployment figures in excess of 20 percent -- will continue to face deteriorating market conditions.”

Key January ABI highlights:

Regional averages:
Midwest (48.0),
Northeast (45.7),
South (41.32),
West (40.5)

Sector index breakdown:
multi-family residential (50.1),
commercial / industrial (44.9),
institutional (43.1),
mixed practice (40.3)

Thursday, March 4, 2010

Service Point "Corporate" - Change in Management ???

On March 1, 2010, SP issued a press release to say that SP has hired a new “Group Managing Director.” (see below). The name of the new guy is “Tony” Foley.

When I checked Service Point’s corporate (Spain) web-site and hit the tab for the “management team” and the tab for the “board of directors”, I found no mention of Rafael Lopez-Aparicio Areilza.

When I checked Service Points’ UK web-site and hit the tab for board of directors (of the SP UK operation), I found Rafael listed there …. And it says this about Rafael:

“Rafael López-Aparicio Areilza - Global Operations Director since 2001 
Service Point Solutions, S.A.”

But, it may well be that the SP UK web-site has not been “updated” for the change in management. (Or, maybe, Rafael is still on the board of the SP UK operation.)

Note that on, Rafael is (still today) listed as the “CEO” of SP.

The “$64,000 questions” are …. is Rafael gone “completely” from SP, or is he still with SP, but simply, because of an oversight, no longer mentioned as a member of the management team or board?

If Rafael is gone from SP, let me be one of the first to congratulate him on his retirement from SP and on his terrific accomplishments as the former CEO of the 2nd largest reprographics enterprise in the world. He’s a good guy.


1 March 2010.- Service Point Solutions, S.A (ticker: SPS.MC) announces the hire of Anthony, or Tony, Foley, as the company’s Group Managing Director. In this newly created position, Tony will be responsible for the day-to-day management of Service Point’s business with primary focus on the development of the unified sales, marketing, service and customer policy put in place by the company in 2009 which prioritises the AEC, corporate, finance, education and public sector segments.

Before coming to work at Service Point, Tony was Senior Vice President of International Sales and Worldwide Operations at Quest Software, a company he joined in 2000. Under his leadership, the software maker’s international business jumped from $13mn to $320mn.

Before working at Quest, Tony headed up the Southern European business of Computer Associates between 1995 and 2000, where he coordinated sales and marketing policy, with a stint before that in General Electric in corporate and business development at GE Capital.

At Service Point Tony’s main mission is to boost the company’s multilocal strategy while speeding up development of the group’s integrated approach to customer, service and operational strategy.

Mirroring Service Point’s international footprint and the fact that of 90% of revenue is generated outside Spain, Tony will be based in London.

- - - - - - - - -

Joel's added note about Tony: I think I read somewhere that Tony previously worked for HP's large-format business. If that's true, then he does have at least some exposure to the reprographics industry.

CORRECTION: Rafael pointed out to me, in an e-mail on March 26th, that Tony (to the best of Rafael's knowledge) did not previously work for HP. Hmmm, I guess that means that Tony does not have any reprographics industry experience. In addition, Rafael's e-mail pointed out that Tony was brought in to lead SP's Sales effort. (I seriously hope someone gives Tony the short-course in reprographics; how the industry works, how businesses make money, blah, blah, blah.)

Monday, March 1, 2010

Service Point - Results for 2009 (and, by extrapolation, for Q4 2009)

I just noticed, this morning, that Service Point, I guess very recently, issued a press release covering its 2009 full-year sales and earnings.....

You can find that press release at this web address:

The lack of transparency in Spain-based, public-company-reporting continues to be very interesting.

SP’s press release does not mention anything specifically about Q4 2009 Sales (or Q4 2009 vs. Q4 2008 Sales), but, when you do the math to extrapolate what their Q4 2009 Sales were, you can see that Q4 2009 sales came in at 12.8% less than Q4 2008 Sales.

Considering the fact that Q3 2009 Sales came in at 18.3% less than Q3 2008 Sales, SP’s sales performance for Q4, comparatively speaking (Q4 vs. Q3) was not all that bad, trend-wise.

Q3 2009 Sales versus Q3 2008 Sales – off 18.3%
Q4 2009 Sales versus Q4 2008 Sales – off “only” 12.8%

Does this mean that SP has seen the worst of the current recession?

For the “full-year” 2009, SP reported:
Sales of 216.5 million Euro
Normalized Profit of .6 million Euro

For the first 9 months of 2009, SP previously reported:
Sales of 162.1 million Euro
Normalized Profit of 1.6 million Euro

Comparing the two sets of numbers above, it looks to me like SP lost 1.0 million Euro in Q4 2009.

Let’s do an ARC vs. SP comparison:

ARC’s numbers:
Sales decline: 2009 vs. 2008 – Sales decline was 28.4%
ARC Full-year 2009 Sales- $501.5 million Dollars
ARC Full-year 2009 Net Profit - $22.4** million Dollars
Net Profit as a Percentage of Sales – 4.5%**
(** Does not take into account charges for Goodwill Impairment or write-down of intangible assets, but does, I think, include the one-time charge ARC took for the credit restructuring completed in the Fall.)

Service Point’s numbers:
Sales decline: 2009 vs. 2008 – Sales decline was 8.9%
SP Full-year 2009 Sales – 215.5 million Euro
SP Full-year 2009 Net Profit - .6* million Euro
Net Profit as a Percentage of Sales – 0.3%*
[* Does not take into account any charges SP may have taken in 2009 (or for 2009) for Goodwill Impairment.]