ARC Document Solutions reported Q4 2020 and Full Year 2020 Results

Yesterday, ARC Document Solutions, the largest “reprographics” company in the U.S. (if not the world) reported its Q4 2020 and Full Year 2020 results.

 

On full year basis, ARC’s Sales dropped $93.0 million (24.32%) from year 2019 to year 2020, but, in spite of that huge drop, ARC’s “Earnings Attributable to ARC” dropped only $500,000.  That, to me, is remarkable performance.

	SALES
					2020 to 2019	2020 to 2019
	Period	2018	2019	2020	$ change	% change
	Q1	$     97.71	$      97.10	$      88.40	$    (8.70)	-8.96%
	Q2	$  104.19	$      98.90	$      64.30	$  (34.60)	-34.98%
	1st H	$  201.90	$    196.00	$    152.70	$  (43.30)	-22.09%
	Q3	$  100.47	$      94.10	$      72.40	$  (21.70)	-23.06%
	9 Mo	$  302.37	$    290.10	$    225.10	$  (65.00)	-28.88%
	Q4	$     98.40	$      92.30	$      64.30	$  (28.00)	-30.34%
	Year	$  400.77	$    382.40	$    289.40	$  (93.00)	-24.32%
	ADJUSTED NET INCOME ATTRIBUTABLE TO ARC
		2018	2019	2020
	Year	$       8.50	$         6.80	$         6.30

I’ve been involved in the “Reprographics” Industry for over 50 years by now.  Year 2020 was one of the weirdest years, EVER, due to the impact of the Covid-19 virus. You would be hard pressed to find any reprographics company – anywhere in the U.S. or the world – that did not experience an incredibly difficult and challenging year.  

 

For most reprographers, and, apparently, ARC was no different, the year broke down like this:

 

·      Q1 2020 – off slightly

·      Q2 2020 – deeply off

·      Q3 2020 – somewhat of a minor rebound

·      Q4 2020 – deeply off again

 

The “typical” reprographics company operates several different business segments, among them:

 

·      A/E/C reprographics services

·      On-Site (FM/MPS) Services

·      Wide-Format Color services

·      Some also offer Equipment, Equipment Service and Supplies

 

In Year 2020, the impact on these separate business segments looked like this:

 

·      A/E/C reprographics services was significantly down for the year, as some projects were delayed or put off and as architects and engineers worked from home rather than having everyone come in to the office.  Last time I looked (which was recently), the AIA ABI Billing Index has been south of 50 for nine consecutive months.

 

·      On-Site (FM/MPS) services were very hard hit because the customers who use this service are typically architects, engineers and construction companies, and because most of the revenue is generated from customer team members printing to imaging devices located at the A/E/C firms office.  Since architects and engineers were working for home a lot of 2020, the volume of OSS/MPS/FM revenue was well off in 2020.

 

·      Wide-Format Color services, well, the results of this segment were good for some and awful for others.  Retailers, restauranteurs, entertainment venues, etc. cut back spending on display (advertising and promotional) graphics, but virtually all businesses and government agencies and schools had to spend on signage/graphics related to Covid-19.

 

·      Those companies who are in the business of selling/leasing/renting and servicing wide-format equipment and media and supplies, well, they too, suffered a down year for that business, similar to the reasons given for A/E/C reprographics services and On-Site services.