161115 ARC Investor Overview v11 - s2.q4cdn.com...Investor Overview. We manage and distribute...

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Information is current to September 30, 2016 unless otherwise indicated Investor Overview

Transcript of 161115 ARC Investor Overview v11 - s2.q4cdn.com...Investor Overview. We manage and distribute...

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Information is current to September 30, 2016 unless otherwise indicated

Investor Overview

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We manage and distribute critical documents and information to facilitate

collaboration, decision-making, and compliance in construction.

No one offers more content solutions for architects, engineers, contractors,

or facilities managers.

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More than 90,000 customers from all over the world rely on ARC to connect their people and projects. We maintain exclusive document management agreements with 22 of the Top 100 firms in the industry.

And thousands more…

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Projects…involving project information,

construction drawings and documents, specialty color documents, and cloud

collaboration applications.

Archive & Facilities …related to all aspects

of business, including the documents used to manage and operate existing

buildings and other facilities.

Office…related to business management and

administration such as financial, contractual, compliance, marketing,

HR, and other activities.

Key Areas of Document Management3

Managed Print Services

MPSArchive & Facilities Information Management

AIM

Construction Document& Information Management

CDIM

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Solution Configurations

PROFESSIONAL SERVICES

• Outsourced document management • BIM services and support• Integrations with third-party software • Customized BI reports and analytics• Clash detection and collision reports• Software installation & support• Fleet & print optimization; rule-based printing, etc.• IT support and printer and driver management• Workflow Automation & Implementation• Retention policy implementation • Cloud-based Archive & Retrieval

HARDWARE

• SmartScreens• Tablet Computers• Plotters• MFD’s• Scanners• 3D Printers

Project Communication & Distribution • Print-as-a-Service • Print Cost RecoveryFacilities Information Management • Retention & Compliance Information Management

SOFTWARE & APPS

C O M P O N E N T S O F E A C H S O L U T I O N3

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• …eliminates unnecessary printing from document management

• …strip days and weeks from project schedules

• …makes it easy to search and retrieve documents from across the organization

• …reduces annual print costs per person from $250 up to $1,000

• …reduces all document-related costs by as much as 30%

ARC Document Solutions…

We save our largest customers millions of dollars per year.

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Financial Discussion

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CDIM Project50% Traditional Repro40% Color10% Digital Services

of Net RevenueApprox. Gross Margin: 37%-40%50%

AIM Archive & Facility95% Digitization5% Professional Services

of Net RevenueApprox. Gross Margin: 35%-38%4%

MPS Office40% National/Regional Customers60% Local Customers

of Net RevenueApprox. Gross Margin: 30%-35%33%

Equipment & SuppliesResaleDefensive business line

of Net RevenueApprox. Gross Margin: 18%-21%12%

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§ We are driving revenue generation toward a balance between new technology sales and protecting print revenues

§ Roughly one-third of sales represent contract-based, recurring revenue from MPS

§ Narrowing the offset in dollar-for-dollar declines in print by targeting market share growth and new technology services sales

§ ARC is in its fifth year of maintaining gross margin above 30%; gross margin expands when our mix is favorable, when we can leverage fixed costs and labor, and when we can benefit from targeted margin improvement exercises

Gross Margin

Revenue and Gross Margin Revenue ($mm)

$406 $407 $424 $429

$324.1 $307.8

$0

$100

$200

$300

$400

FY12 FY13 FY14 FY 15 YTD 15 YTD 16

30.4%

33.0%34.0%

34.6% 34.8%33.4%

24.0%

28.0%

32.0%

36.0%

FY12 FY13 FY14 FY15 YTD 15 YTD 16

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2016 YTD Performance: Challenge of change

§ 12-months into two-to-three year transformation from business dominated by print-based sales to balance of print & tech-based sales

§ Changes made in sales and operations drove revenue declines in the third quarter; some effects of disruption may persist over the short term

§ Secular print-based declines continue, but moderation possible with market share gains

§ Non-recurring events affecting YOY comparisons

§ Narrowing dollar-for-dollar offsets of sales declines and sales growth

$8mm2015 MPS Non-renewal

$2.5mmUK ColorLocation closure

$2.5mm2015 Chineseequip. sale

$3.4mmNet Organic

decline

2016 YTD Sales Decline: $16.4mm

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§ EBITDA grows from sales and gross margin improvements

§ Cash Flows grow from improved financial performance, deleveraging senior debt, and payment of minimal cash taxes thanks to more than $80mm in NOL's

§ Continued strong cash flows in 2016; on target for annual cash flows from operations of more than $45mm and free cash flow of more than $35mm

Adjusted EBITDA ($mm)

* Adjusted Free Cash Flow calculated from Adjusted Cash Flow from Operations

EBITDA and Free Cash Flows

60.568.2 72.3 72.2

56.248.1

$0.0

$25.0

$50.0

$75.0

FY12 FY13 FY14 FY15 YTD 15 YTD 16

38.547.3

54.061.2

44.3

34.0

$-$10 $20 $30 $40 $50 $60

FY12 FY13 FY14 FY15 YTD 15 YTD 16

Adjusted CFFO ($mm)

FCF/shr $0.40 $0.64 $0.86 $0.99

18.1

29.1

40.746.9

32.826.5

$-

$10

$20

$30

$40

$50

FY12 FY13 FY14 FY15 YTD 15 YTD 16

Annual Adjusted Free Cash Flow & FCF/share

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Uses of Cash

(All figures in millions unless otherwise noted) 2013 2014 2015 3Q '16Total Debt $219.7 203.9 172.9 160.1Senior Debt 196.0 173.0 143.0 $127.0

Delevering/Senior Debt Reduction

Stock Repurchase Program est. Feb 2016• 1.3 million shares repurchased in 2016 YTD at a purchase price of $5.3mm

• Plan authorizes the company to purchase up to $15 million of common stock through Dec. 31, 2017• The timing and amounts of any future purchases will considered on a quarter-to-quarter basis, and be based on

market conditions and other factors including price, regulatory requirements, and capital availability.• The company expects that the repurchase program will be funded by cash flows generated from its operations

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Twelve Months Ended Nine Months EndedDecember 31, September 30,

(All dollar amounts in millions, except EPS) 2015 2014 2016 2015

Net Revenue $ 428.7 $ 423.8 $ 307.8 $ 324.1

Gross Margin 34.6 % 34.0 % 33.4 % 34.8 %

Net income (loss) attributable to ARC $ 97 $ 7.3 $ (50.5) $ 94.0

Adjusted net income attributable to ARC $ 16.8 $ 11.8 $ 10.5 $ 13.6

Diluted earnings (loss) per share $ 2.04 $ 0.15 $ (1.10) $ 1.98

Adjusted diluted earnings per share $ 0.35 $ 0.25 $ 0.23 $ 0.29

Cash provided by operating activities $ 60.0 $ 50.0 $ 34.0 $ 43.1

Adjusted EBITDA $ 72.2 $ 72.3 $ 48.1 $ 56.2

Capital Expenditures $ (14.2 ) $ (13.3 ) $ 7.6 $ 11.5

Debt & Capital Leases (including current) $ 173 $ 204 $ 160.1 $ 180.4

Financial Highlights from 2015 & YTD 2016

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2016 Annual Guidance

Earnings Per Share: $0.24 - $0.28Cash from Operations: $48mm - $52mmEBITDA: $59mm - $63mm

2015 Key Metrics (in millions unless noted)

Revenue: $428.7Gross Margin: 34.6%Adj. EPS: $0.35Adj. EBITDA: $72.2Adj. CF from Ops: $61.2CapEx: $14.2Shares O/S: 47,532,000

For further information, please contact David Stickney, ARC’s VP of Corporate Communications & IR at 925-949-5114