ARC Reports Q4 2011 and Full-Year 2011 Results

Okay, this afternoon, after the close of the stock market, ARC reported its results for Q4 2011 and for the full-year 2011.

You can access ARC’s earnings release at this link:

http://tinyurl.com/7mcz4bz

If you visit seekingalpha.com tomorrow morning – and enter the letters, ARC - you’ll be able to access a copy of the transcript of the “earnings call” that ARC held this afternoon. (Or, you can listen to a replay of the earnings call, if you were unable to listen in on the live call today. I find earnings calls to be interesting, for they allow you to listen to management speak about results and listen to analysts ask questions (some analysts ask “clueless” questions, and I find that amusing.)

For Q4 2011. ARC’s Q4 Sales came in at $101.846 mil (considering market conditions, not bad, and higher than what analyst were expecting.)

This table reflects ARC’s quarterly and annual sales for the years 2008 through 2011:

Sales	2008	2009	2010	2011
	millions	millions	millions	millions
Q1	$187.44	$139.48	$112.16	$106.50
Q2	$184.94	$131.05	$115.09	$109.59
Q3	$174.59	$119.35	$109.42	$104.79
Q4	$154.02	$111.66	$104.97	$101.85
-Full Year	$700.99	$501.55	$441.64	$422.73

This table reflects the change in ARC’s sales, a) on a year-over-year basis and b) on a cumulative basis; (2009 vs. 2008, 2010 vs. 2008, 2011 vs. 2008, respectively):

change: year-over-year	-28.45%	-11.94%	-4.28%
change: cumulative	-28.45%	-37.00%	-39.70%

Okay, now let’s take a look at ARC’s 2011 results compared to the 2011 results expected by Reprographers, according to a survey we completed in January 2012.

I need to mention that some Reprographers realized “peak” sales in 2007, while others (including ARC) realized “peak” sales in 2008.

In our recent survey of Reprographers, completed in January 2011, we asked Reprographers to compare their 2007 sales with their expected 2011 sales results, and the table below reflects the responses we received. As you can see, 25 out of 43 Reprographers (58% of survey participants) indicated that their 2011 sales were expected to come in at 30 to 50+% less than their 2007 sales. ARC’s cumulative sales decline, 2008 to 2011, at around 40%, falls almost right smack in the middle of that.

Regarding total sales, 2011 vs. 2007, please complete this statement: We expect that our total sales for 2011 will be:
Answer Options	Response Percent	Response Count
50% or more lower	18.6%	8
40 to 49% lower	18.6%	8
30 to 39% lower	20.9%	9
20 to 29% lower	9.3%	4
10 to 19% lower	4.7%	2
1 to 9% lower	0.0%	0
About the same	7.0%	3
1 to 9% higher	2.3%	1
10 to 19% higher	7.0%	3
20 to 29% higher	7.0%	3
30 to 39% higher	0.0%	0
40 to 49% higher	2.3%	1
50% or more higher	2.3%	1
answered question		43
skipped question		0

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Blog Publisher’s further comments:

As one of the tables shows, 2009 was a disastrous year for Reprographers; I hope our industry never-ever-again has a year like that one!

Since 2008, ARC’s sales have declined every year, both on a quarterly basis and on an annual basis. However, the pace of decline has slowed down, and, I for one, am predicting that ARC’s 2012 sales will show an increase (over year 2011) rather than a continued decline. That’s not just my prediction for ARC, but for all Reprographers, meaning for the industry “as a whole.” Inasmuch as I still have many friends who own reprographics companies, I surely hope my prediction comes true!

Because of the ‘Great Recession’s” impact on the A/E/C Industry and, thusly, on the Reprographics Industry, most Reprographers have pushed hard into services that are purchased by businesses outside of the A/E/C Industry; one of those services, for example, is “large-format display graphics color”. While there’s lots of competition for that type of work, Reprographers are making headway with their large-format display graphics businesses – Reprographers are very experienced at dealing with “large” documents, both printing and finishing. Some Reprographers, including ARC, have pushed into the “managed-print-services” (MPS) business, beyond A/E/C. Some will have success with their MPS initiatives, but others might end up having little or no success; MPS requires financial resources that some Reprographers simply do not have, and MPS requires people who know how to complete in-depth analyses and proposals; not all Reprographers have team members experienced with that. Some Reprographers will not even attempt to push into the MPS business. On the A/E/C front, quite a number of A/E/C Industry customers, General Contractors (GC’s) in particular, have found ways to print less (fewer sets of plan and spec documents) “per project”. That was not just driven by cost, it was also driven by technology developments that, today, make it easier for A/E/C project participants to distribute electronic files, rather than printing everything that they used to print. However, as the A/E/C Industry recovers – and, at some point, rest assured that there will be a very robust A/E/C Industry recovery – it may well be that A/E/C customers may resume printing (per project) as much as they used to print in the past. We really don’t know, yet, how that’s going to play out.

For all that managed to make it to the end of this post, thanks for reading it, and I hope you have a great 2012.