Update: Below is a post we published on Reprographics 101 on July 16th, right after ARC issued a Press Release that talked about its "estimated results"for Q2 2020. A couple of weeks after ARC issued those estimates, ARC published its actual Q2 2020 results. ARC's actual results were a good bit better than it initially estimated they would be.
MANAGEMENT ALSO REVEALS THAT ARC MOVED SWIFTLY TO RIGHT-SIZE ITS BUSINESS AND EXPENSES BECAUSE OF THE COVID-19 PANDEMIC.
Q2 2018Sales - $104.2(per prior 10Q)
Q2 2019Sales – $ 98.9(per prior 10Q)
Q2 2020Sales – $ 63.0Million (per ARC estimate furnished in the press release below)
ARC estimates that its Q2 2020 Sales will be approximately 36% off its Q2 2019 Sales.
FROM A PRESS RELEASE DATED JULY 15th…….
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“ARC SUCCESSFULLY RE-ENGINEERS COMPANY FOR POST-COVID ERA
Smaller, leaner company expected to produce second quarter EBITDA of approximately $10 million and cash flow from operations above $20 million in spite of reduced sales of approximately $63 million due to COVID-19 shutdowns
SAN RAMON, CA – (DATE) – ARC Document Solutions, Inc. (NYSE: ARC), a leading document solutions provider to a wide variety of industries, today said it has successfully re-engineered the Company to create opportunities for growth and strong margins in a post-COVID-19 era.
“While the impact of COVID-19 has been devastating to our industry and the markets we serve, we saw this as an opportunity to transform our business into a smaller but stronger company with potential for new growth and similar, if not better margins,” said Suri Suriyakumar, Chairman, President and CEO of ARC. “We have reimagined our business for a post-COVID era that includes offerings that range well beyond the construction vertical and our historical print segments, and we have aggressively removed costs related to segments of businesses that are no longer relevant to our existing customers.”
“We have also reconfigured our operating structure and costs to serve new customer needs today and in the future,” said Mr. Suriyakumar. “This will allow us to improve our EBITDA margins, continue to strengthen our cash position, and address a level of sales that is smaller, but has greater potential than our legacy business.”
Specifically, management reported that after reconfiguring its operations and cost structure, it expects second quarter adjusted EBITDA of approximately $10 million and cash flow from operations is expected to be more than $20 million.
Management anticipates pandemic-reduced sales of approximately $63 million.
ARC executives will be available for comment during the company’s second quarter earnings report scheduled for August 4, 2020, after the market close. The earnings call will provide additional details on ARC's financial and operational performance for the period, and updates to current market conditions.”
BLOG PUBLISHER’S COMMENT:
On Friday JUNE 26, 2020, I posted this article on the blog: “What Will the Full Impact of Covid-19 Be” (link):
And, in that article, I put forth a projection of what I thought ARC’s Q2 2020 Sales would be:
“There is only one publicly-held company in the reprographics industry – ARC Document Solutions (NYSE: ARC). Based on actual sales numbers I’ve received from larger players in my industry for April and May and what I’m now hearing about June, I’m estimating that ARC’s Q2 2020 Sales will come in at around 40% off ARC’s Q2 2019 Sales.”
So, I was off by 4 percentage points.
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