Tuesday, November 15, 2011

American Reprographics Co (ARC) - Strategy and Direction - Commonly Asked Questions About ARC’s Transition Strategy

As I previously mentioned in a post on Reprographics 101 on November 8th, 2011, ARC’s management team (Suri, Dilo and John Toth) participated in, and presented at, the JP Morgan “Ultimate Services Conference” on November 9, 2011.

Conferences like this one enable a public-company’s management team to promote investment in a company’s stock (and corporate notes) to financial analysts and investors (both institutional investors and mutual fund managers). One of the primary factors that influences a company’s stock price is “demand” - - - if demand (for a company’s stock) is weak, the stock price has little chance to improve - - - if demand is strong, the stock price has a great chance to grow.

Inasmuch as the word “reprographics” is not a well known word - - - and, in fact, when in my early years in the reprographics industry I could not find a single dictionary that contained a definition of “reprographics” - - - it is vitally important for a company (in this case, ARC) to put out to the investment community as much information as possible about the industry and business, so that the investment community will not only completely understand the word, “reprographics”, but will also be able to get a good grasp (or, better, a great grasp) on the “strategy” (or multiple strategies) a company (in this case, ARC) is following to ensure that its revenues will grow in the future, especially since there’s been so much talk about the prospect of “print” declining, as more and more documents are shared, transferred and viewed “electronically”, rather than always being printed to paper.

At the conference ARC participated in and presented at, ARC issued a document titled, Strategy and Direction - Commonly Asked Questions About ARC’s Transition Strategy”.

In my opinion, ARC, in its Strategy document, put forth a very compelling story as to why a prospective investor should consider investing in ARC’s shares (or as to why a current investor should consider holding onto ARC shares, if not increasing its investment in ARC shares). The Strategy document put forth 12 of the most frequently asked questions about ARC and its business strategy - - - and provided answers to these most frequently asked questions.

Here’s a link to the “Strategy” document:


Repeating what I said in an earlier post on Reprographics 101, I’ve placed a copy of the other presentation document ARC released at the JP Morgan conference – this one titled, “ARC: Investor Overview” - in my Google Docs library, and here’s a link you can click on to access that document:


One final comment.

Question #3 in the “Strategy” document was this one: “Do you expect a return to the same revenue levels that you have seen in the past?”

ARC’s first response to this question was, “Absolutely.” And, ARC went on to elaborate on its answer.

I think most reprographers, ARC included, are aware that A/E/C customers are printing less “per project” than they used to. Traditionally (and, this was certainly the case before the Great Recession set in), A/E/C customers printed lots (LOTS!) of sets of plans and specs for “bidding”, as well as a good amount of sets for “permitting” and for “coordination.” During the Great Recession (and this was setting in even before the Great Recession started), A/E/C customers pulled back on the number of sets they printed. Many reprographers think that’s “here to stay”, that A/E/C customers, in the future, will not print as many sets as they used to print. At every reprographics industry conference I’ve been to during the past three years, that very topic has been the subject of heated debate. Personally, I think that’s here to stay; there are a variety of factors that, I think, reinforce that particular position on the future of reprographics for the A/E/C world. But, that’s not to say that ARC’s A/E/C set-printing revenues will not, at some point in the future, get back to, or, quite possibly, even surpass what ARC’s revenues were in the past from A/E/C project set-printing. ARC aptly points out (in its Strategy document) that it is well-positioned to increase its share of the overall A/E/C market. If and as ARC’s market-share grows, its revenues from A/E/C set-printing will grow, even if overall (total) market demand for A/E/C set-printing does not increase (or does not rebound to the level it was in the past). ARC is well-positioned to take business away from smaller reprographers. As I’ve pointed out in past articles on Reprographics 101, ReproMAX and RSA are going to have to come up with a strategy for “national” deals; for, if they do not, their larger customers are subject to being swept off their members’ plates …. and onto ARC’s plate.

All-in-all, I think ARC did a fantastic job putting together its Strategy (Q&A) document.

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