ARC (NYSE: ARP) Q2 2010 Results

(From RTTNews) - American Reprographics Co. (ARP: News ) posted second quarter net income of $1.7 million or $0.04 per share, compared to $6.3 million or $0.14 per share in the previous year quarter.

On average, three analysts polled by Thomson Reuters expected the company to report earnings of $0.05 per share for the period. Analysts' estimate typically exclude special items.

Net revenue for the second quarter was $115.1 million, compared to $131.1 million in the previous year quarter. Three Wall Street analysts expected revenues of $115.76 million.

Looking forward, for the fiscal year 2010, the company reaffirmed its earnings per share forecast in the range of $0.15 to $0.30. Street analysts expect earnings of $0.19 per share.

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Joel's comments:

First and foremost; while the AEC Industry remains mired in what has to be called a depression, not a recession, ARC continues to post earnings, not losses. That, in itself, is quite a feat. What's behind that is a management team that is aggressively rooting out unnecessary costs and lowering costs, the latter whenever and wherever that's possible. ARC looks to be on track to post revenues of around $447-452 million for FY 2010. That's a far cry from the $700 million in revenues that ARC posted for FY 2010. And, it looks like ARC's 2010 revenues will come in about 10% lower than the $500 million in revenues ARC posted for FY 2009. In spite of that, ARC continues to earn a profit, and, based on ARC's performance though the first half of 2010, that looks assured for the remainder of 2010.

Second, I my predictions of ARC's Q2 2010 revenues and EPS were well off the mark. Quite frankly, I expected to see more of an uptick in AEC-related revenues, simply because the 2nd Quarter of each year is traditionally the strongest quarter of the year for AEC reprographers. And, I expected to see more of an impact from ARC's non-AEC color business initiatives. Given the fact that ARC's Q2 2010 revenues a) did benefit, at least somewhat, from ARC's non-AEC color business initiatives, b) did benefit, at least somewhat, from the two national MPS deals Suri mentioned, and c) did benefit, at least somewhat, from growth in ARC's Asian-region sales, ARC's revenues from its core AEC reprographics business are still, disappointingly, lagging where I expected them to be in Q2.

Third, I haven't seen anyone, meaning any of the analysts and economists who follow and report on the AEC industry, predict a robust 2nd half 2010. Just to the opposite, everything I've read points to a problematic 2nd half 2010 for the AEC industry. And, that points to a problematic 2nd half 2010 for the AEC reprographics industry. But, in spite of that, ARC will turn a profit for the 2nd half of 2010. ARC is continuing to position its operations to benefit from the upswing that will come .... eventually. Just when that upswing will happen is the BIG question.

Fourth, hard to say what affect, if any, ARC's Q2 2010 results will have on the price of ARC shares. Given Suri's comments that ARC has not yet been able to place a stake in the ground to say that ARC's recovery has begun and that that may not happen until we are into 2011, it is likely that the stock will remain in a "ho-hum" holding pattern for quite some time, maybe even for the remainder of 2010. (Disclosure: I have never, ever, been able to successfully predict any company's future stock price.)