EX-99.1 2 c00188exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1
AMERICAN REPROGRAPHICS COMPANY REPORTS RESULTS FOR FIRST QUARTER 2010
    EPS of $0.02 per share
 
    YTD Cash from Operating Activities of $9.5 million
 
    Gross Margin of 32.9%
 
    Company reaffirms annual forecast
WALNUT CREEK, California (May 4, 2010) — American Reprographics Company (NYSE: ARP) (the “Company”), the nation’s leading provider of reprographic services and technology, today reported its financial results for the first quarter ended March 31, 2010.
“As the commercial construction market struggles to find its feet, ARC continues to operate well,” said K. “Suri” Suriyakumar, Chairman, President and CEO. “While we expect to see signs of life in employment, vacancy rates and credit availability in 2010, such improvements in the general economy are likely to be in advance of any recovery in the AEC market. Thus we remain prepared for a challenging year, and confident in our ability to manage costs, generate cash, and explore new opportunities within our core competencies as we have done throughout the downturn.”
Net revenue for the first quarter of 2010 was $112.2 million and the Company’s gross margin was 32.9% for the three-month period ended March 31, 2010. Net income for the first quarter of 2010 was $717,000, or $0.02 per diluted share.
Jonathan Mather, Chief Financial Officer, said, “Revenue continues to be challenged by the softness in the U.S. AEC market, but we continue to implement incremental cost controls, produce healthy margins, and maintain a strong balance sheet.”
Outlook
The Company reaffirmed its forecast of annual earnings per share in 2010 to be in the range of $0.15 to $0.30 on a fully-diluted basis, and annual cash flow from operations in the range of $65 million to $80 million.

 

 


 

Teleconference and Webcast
American Reprographics Company will host a conference call and audio webcast today at 2:00 P.M. Pacific Time (5:00 P.M. Eastern Time) to discuss results for the Company’s first quarter 2010 and business outlook. The conference call can be accessed by dialing 877-591-4999. The conference ID number is 67958305.
A replay of this call will be available approximately one hour after the call for seven days following the call’s conclusion. To access the replay, dial 800-642-1687. The conference ID number is 67958305.
A Web archive will be made available at http://www.e-arc.com for approximately 90 days following the call’s conclusion.
About American Reprographics Company
American Reprographics Company is the leading reprographics company in the United States providing business-to-business document management technology and services to the architectural, engineering and construction, or AEC, industries. The Company provides these services to companies in non-AEC industries, such as technology, financial services, retail, entertainment, and food and hospitality, which also require sophisticated document management services. American Reprographics Company provides its core services through its suite of reprographics technology products, a network of hundreds of locally-branded reprographics service centers across the U.S., Canada and the U.K, on-site at more than 5,700 customer locations, and through UDS, a joint-venture company headquartered in Beijing, China. The Company’s service centers are arranged in a hub and satellite structure and are digitally connected as a cohesive network, allowing the provision of services both locally and nationally to more than 138,000 active customers.

 

 


 

Forward-Looking Statements
This press release contains forward-looking statements that are based on current opinions, estimates and assumptions of management regarding future events and the future financial performance of the Company. Words such as “anticipates,” “projects,” “expect” and similar expressions identify forward-looking statements and all statements other than statements of historical fact, including, but not limited to, any projections regarding earnings, revenues and financial performance of the Company, could be deemed forward-looking statements. We caution you that such statements are only predictions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Factors that could cause our actual results to differ materially from those set forth in the forward-looking statements include, but are not limited to, the current economic recession, general economic conditions and downturn in the architectural, engineering and construction industries specifically; our ability to streamline operations and reduce and/or manage costs; competition in our industry and innovation by our competitors; our failure to anticipate and adapt to future changes in our industry; our failure to take advantage of market opportunities and/or to complete acquisitions; our failure to manage acquisitions, including our inability to integrate and merge the business operations of the acquired companies or failure to retain key personnel and customers of acquired companies; our dependence on certain key vendors for equipment, maintenance services and supplies; damage or disruption to our facilities, our technology centers, our vendors or a majority of our customers; and our failure to continue to develop and introduce new services successfully. The foregoing list of risks and uncertainties is illustrative but is by no means exhaustive. For more information on factors that may affect our future performance, please review our periodic filings with the U.S. Securities and Exchange Commission, and specifically the risk factors set forth in our most recent reports on Form 10-K and Form 10-Q. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
Contacts:
     
David Stickney
  Joseph Villalta
VP of Corporate Communications
  The Ruth Group
Phone: 925-949-5100
  Phone: 646-536-7003

 

 


 

American Reprographics Company
Consolidated Balance Sheets

(Dollars in thousands, except per share data)
(Unaudited)
                 
    March 31,     December 31,  
    2010     2009  
Assets
               
Current assets:
               
Cash and cash equivalents
  $ 26,183     $ 29,377  
Accounts receivable, net
    59,108       53,919  
Inventories, net
    10,398       10,605  
Deferred income taxes
    5,664       5,568  
Prepaid expenses and other current assets
    9,567       7,011  
 
           
Total current assets
    110,920       106,480  
 
               
Property and equipment, net
    68,108       74,568  
Goodwill
    332,518       332,518  
Other intangible assets, net
    71,618       74,208  
Deferred financing costs, net
    3,698       4,082  
Deferred income taxes
    26,880       26,987  
Other assets
    2,020       2,111  
 
           
Total assets
  $ 615,762     $ 620,954  
 
           
 
               
Liabilities and Stockholders’ Equity
               
Current liabilities:
               
Accounts payable
  $ 23,055     $ 23,355  
Accrued payroll and payroll-related expenses
    11,186       8,804  
Accrued expenses
    24,317       24,540  
Current portion of long-term debt and capital leases
    57,006       53,520  
 
           
Total current liabilities
    115,564       110,219  
 
               
Long-term debt and capital leases
    206,952       220,711  
Other long-term liabilities
    9,214       8,000  
 
           
Total liabilities
    331,730       338,930  
 
           
 
               
Commitments and contingencies
               
 
               
Stockholders’ equity:
               
American Reprographics Company stockholders’ equity:
               
Preferred stock, $0.001 par value, 25,000,000 shares authorized; zero and zero shares issued and outstanding
           
Common stock, $0.001 par value, 150,000,000 shares authorized; 46,117,752 and 46,112,653 shares issued and 45,670,098 and 45,664,999 shares outstanding in 2010 and 2009, respectively
    46       46  
Additional paid-in capital
    91,478       89,982  
Retained earnings
    201,678       200,961  
Accumulated other comprehensive loss
    (7,470 )     (7,273 )
 
           
 
    285,732       283,716  
Less cost of common stock in treasury, 447,654 shares in 2010 and 2009
    7,709       7,709  
 
           
Total American Reprographics Company stockholders’ equity
    278,023       276,007  
Noncontrolling interest
    6,009       6,017  
 
           
Total stockholders’ equity
    284,032       282,024  
 
           
Total liabilities and stockholders’ equity
  $ 615,762     $ 620,954  
 
           

 

 


 

American Reprographics Company
Consolidated Statements of Operations

(Dollars in thousands, except per share data)
(Unaudited)
                 
    Three Months Ended  
    March 31,  
    2010     2009  
 
               
Reprographics services
  $ 76,257     $ 99,769  
Facilities management
    22,403       26,865  
Equipment and supplies sales
    13,501       12,849  
 
           
Total net sales
    112,161       139,483  
Cost of sales
    75,310       87,504  
 
           
Gross profit
    36,851       51,979  
Selling, general and administrative expenses
    27,131       30,966  
Amortization of intangible assets
    2,636       2,983  
 
           
Income from operations
    7,084       18,030  
Other income, net
    (43 )     (59 )
Interest expense, net
    5,888       5,796  
 
           
Income before income tax provision
    1,239       12,293  
Income tax provision
    530       4,758  
 
           
Net income
    709       7,535  
Income attributable to noncontrolling interest
    8       12  
 
           
Net income attributable to American Reprographics Company
  $ 717     $ 7,547  
 
           
 
               
Earnings per share attributable to American Reprographics Company shareholders:
               
Basic
  $ 0.02     $ 0.17  
 
           
Diluted
  $ 0.02     $ 0.17  
 
           
 
               
Weighted average common shares outstanding:
               
Basic
    45,150,483       45,089,794  
Diluted
    45,356,871       45,100,225  

 

 


 

American Reprographics Company
Non-GAAP Measures
Reconciliation of cash flows provided by operating activities to EBIT and EBITDA

(Dollars in thousands)
(Unaudited)
                 
    Three Months Ended March 31,  
    2010     2009  
 
               
Cash flows provided by operating activities
  $ 9,468     $ 22,276  
Changes in operating assets and liabilities
    5,083       1,922  
Non-cash (expenses) income, including depreciation and amortization
    (13,842 )     (16,663 )
Income tax provision
    530       4,758  
Interest expense
    5,888       5,796  
Net loss attributable to the noncontrolling interest
    8       12  
 
               
 
           
EBIT
    7,135       18,101  
Depreciation and amortization
    11,656       12,715  
Stock-based compensation
    1,461       933  
 
           
 
               
EBITDA
  $ 20,252     $ 31,749  
 
           
American Reprographics Company
Non-GAAP Measures
Reconciliation of net income attributable to ARC to EBIT and EBITDA

(Dollars in thousands)
(Unaudited)
                 
    Three Months Ended March 31,  
    2010     2009  
 
               
Net income attributable to ARC
  $ 717     $ 7,547  
Interest expense, net
    5,888       5,796  
Income tax provision
    530       4,758  
 
           
EBIT
    7,135       18,101  
Depreciation and amortization
    11,656       12,715  
Stock-based compensation
    1,461       933  
 
           
EBITDA
  $ 20,252     $ 31,749  
 
           

 

 


 

Non-GAAP Measures
EBIT, EBITDA and related ratios presented in this report are supplemental measures of our performance that are not required by or presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These measures are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, income from operations, or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating, investing or financing activities as a measure of our liquidity.
EBIT represents net income before interest and taxes. EBITDA represents net income before interest, taxes, depreciation, amortization and stock-based compensation. EBIT margin is a non-GAAP measure calculated by dividing EBIT by net sales. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by net sales.
We present EBIT, EBITDA and related ratios because we consider them important supplemental measures of our performance and liquidity. We believe investors may also find these measures meaningful, given how our management makes use of them. The following is a discussion of our use of these measures.
We use EBIT and EBITDA to measure and compare the performance of our operating segments. Our operating segments’ financial performance includes all of the operating activities except for debt and taxation which are managed at the corporate level for U.S. operating segments. As a result, EBIT is the best measure of divisional profitability and the most useful metric by which to measure and compare the performance of our operating segments. We also use EBIT to measure performance for determining operating segment-level compensation and use EBITDA to measure performance for determining consolidated-level compensation. We also use EBIT and EBITDA to evaluate potential acquisitions and to evaluate whether to incur capital expenditures.
EBIT, EBITDA and related ratios have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are as follows:
       
 
  They do not reflect our cash expenditures, or future requirements for capital expenditures and contractual commitments;
 
  They do not reflect changes in, or cash requirements for, our working capital needs;
 
  They do not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments on our debt;
 
  Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
 
  Other companies, including companies in our industry, may calculate these measures differently than we do, limiting their usefulness as comparative measures.
Because of these limitations, EBIT, EBITDA, and related ratios should not be considered as measures of discretionary cash available to us to invest in business growth or to reduce our indebtedness. We compensate for these limitations by relying primarily on our GAAP results and using EBIT, EBITDA and related ratios only as supplements. For more information, see our interim Condensed Consolidated Financial Statements and related notes on our 2010 first quarter report on Form 10-Q. Additionally, please refer to our 2009 Annual Report on Form 10-K.
In our calculation of EBITDA for the three months ended March 31, 2010 and 2009 we excluded stock-based compensation expense of $1.5 million and $0.9 million, respectively, as we believe this presentation facilitates a meaningful comparison of our operating results. Additionally, the exclusion of stock-based compensation to arrive at EBITDA is consistent with the definition of EBITDA in our amended credit and guaranty agreement, therefore we believe this information is useful to investors in assessing our ability to meet our debt covenants.

 

 


 

American Reprographics Company
Consolidated Statements of Cash Flows

(Dollars in thousands)
(Unaudited)
                 
    Three Months Ended  
    March 31,  
    2010     2009  
Cash flows from operating activities
               
Net income
  $ 709     $ 7,535  
Adjustments to reconcile net income to net cash provided by operating activities:
               
Allowance for accounts receivable
    261       1,249  
Depreciation
    9,020       9,732  
Amortization of intangible assets
    2,636       2,983  
Amortization of deferred financing costs
    384       331  
Stock-based compensation
    1,461       933  
Deferred income taxes
    274       1,412  
Other noncash items, net
    (194 )     23  
Changes in operating assets and liabilities, net of effect of business acquisitions:
               
Accounts receivable
    (5,419 )     (2,425 )
Inventory
    156       686  
Prepaid expenses and other assets
    (2,515 )     3,575  
Accounts payable and accrued expenses
    2,695       (3,758 )
 
           
Net cash provided by operating activities
    9,468       22,276  
 
           
Cash flows from investing activities
               
Capital expenditures
    (1,217 )     (1,979 )
Payments for businesses acquired, net of cash acquired and including other cash payments associated with the acquisitions
          (588 )
Other
    551       163  
 
           
Net cash used in investing activities
    (666 )     (2,404 )
 
           
Cash flows from financing activities
               
Proceeds from stock option exercises
    16        
Excess tax benefit related to stock-based compensation
    3        
Payments on long-term debt agreements and capital leases
    (11,202 )     (15,878 )
Net borrowings (repayments) under revolving credit facility
    (814 )      
Payment of loan fees
          (44 )
 
           
Net cash used in financing activities
    (11,997 )     (15,922 )
 
           
Effect of foreign currency translation on cash balances
    1       (16 )
 
           
Net change in cash and cash equivalents
    (3,194 )     3,934  
Cash and cash equivalents at beginning of period
    29,377       46,542  
 
           
Cash and cash equivalents at end of period
  $ 26,183     $ 50,476  
 
           
 
               
Supplemental disclosure of cash flow information
               
Noncash investing and financing activities
               
Noncash transactions include the following:
               
Capital lease obligations incurred
  $ 1,930     $ 5,253  
Issuance of subordinated notes in connection with the acquisition of businesses
  $     $ 246  
Accrued liabilities in connection with acquisition of businesses
  $     $ 333  
Net (loss) gain on derivative
  $ (313 )   $ 435