WALNUT CREEK, CA -- (MARKET WIRE) -- 05/08/08 --
-- Revenue of $187.4 Million; Growth of 17.0%
-- Reports Net Income of $18.5 Million, or Fully Diluted EPS of $0.41
-- Reaffirms Full-Year Forecast: Revenue of $720-$760 million, EPS of
$1.52-$1.60
American Reprographics Company (NYSE: ARP), the nation's leading provider
of reprographics services and technology, today reported its financial
results for the first quarter ended March 31, 2008.
Net revenue for the first quarter of 2008 was $187.4 million, compared to
$160.2 million in the first quarter of 2007, an increase of 17.0%. The
Company's gross margin for the first quarter was 42.5% compared to 42.3% in
the same period in 2007, and up from 41.2% in the fourth quarter of 2007.
Net income for the first quarter of 2008 was $18.5 million, or $0.41 per
diluted share. This compares to net income for the first quarter of 2007 of
$16.8 million, or $0.37 per diluted share.
"I'm very pleased with our performance in the first quarter," said K.
"Suri" Suriyakumar, President and Chief Executive Officer. "Our performance
reinforces my belief that the company is well-positioned to operate
successfully even when the broader economy is softening. This has been
clearly established by our financial results during the past two quarters.
While the indications of a slowing construction market are unmistakable,
our continuing focus on sales and improving operational efficiencies, while
aggressively implementing cost cutting measures, should continue to serve
us well throughout the year."
"The trends in our business mix remain consistent with the bulk of our
sales being generated by non-residential construction," said Jonathan
Mather, Chief Financial Officer. "As the economy slows, however, we are
seeing a small increase in sales of our digital services, suggesting that
our offering is appealing to those customers who are trying to manage more
of their business more efficiently with less overhead and labor. Our
position as the industry leader and the strength of our technology
portfolio allow us to offer services that are compelling even in difficult
economic conditions, and sometimes because of them."
Outlook
"We have clear evidence in the results of our last two quarters that the
Company should be able to perform very well throughout the year," said Mr.
Suriyakumar. "As such, we are reaffirming our guidance for 2008 and expect
revenues to be in the range of $720 million to $760 million and that
earnings per share will be in the range of $ 1.52 to $1.60 on a fully
diluted basis."
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 2008 and business outlook. The
conference call can be accessed by dialing 201-689-8562.
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 201-612-7415. The account number to access the phone replay is 3055
and the conference ID number is 282260.
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 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 more than 300
locally-branded reprographics service centers across the U.S., and on-site
at their customers' locations. 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 140,000 active customers.
Forward-Looking Statements Disclaimer
This press release contains forward-looking statements that fall within the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995 regarding future events and the future financial performance of the
Company. Words such as "should," "outlook," "will," and similar expressions
also identify forward-looking statements. We wish to caution you that such
statements are only predictions and actual results may differ materially as
a result of risks and uncertainties that pertain to our business. These
risks and uncertainties include, among others:
-- The current residential downturn or a future general downturn in the
architectural, engineering and construction industries could diminish
demand for our products and services
-- Competition in our industry and innovation by our competitors may
hinder our ability to execute our business strategy and maintain our
profitability
-- Failure to anticipate and adapt to future changes in our industry
could harm our competitive position
-- Failure to complete acquisitions, or failure to manage our
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, could have a negative effect on our future
performance, results of operations and financial condition
-- Dependence on certain key vendors for equipment, maintenance services
and supplies, could make us vulnerable to supply shortages and price
fluctuations
-- Damage or disruption to our facilities, our technology centers, our
vendors or a majority of our customers could impair our ability to
effectively provide our services and may have a significant impact on our
revenues, expenses and financial condition
-- If we fail to continue to develop and introduce new services
successfully, our competitive positioning and our ability to grow our
business could be harmed.
The foregoing list of risks and uncertainties is illustrative but is by no
means exhaustive. For more information on factors that may affect future
performance, please review our SEC filings, specifically our annual report
on Form 10-K for the year ended December 31, 2007, and our quarterly
reports on Form 10-Q for the quarters ended March 31, 2007, June 30, 2007,
and September 30, 2007. These documents contain important risk factors that
could cause actual results to differ materially from those contained in our
projections or forward-looking statements. These forward-looking statements
are based on information as of May 8, 2008, and except as required by law,
the Company undertakes no obligation to update or revise any
forward-looking statements.
American Reprographics Company
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)
March 31, December 31,
----------- -----------
2008 2007
----------- -----------
Assets
Current assets:
Cash and cash equivalents $ 16,796 $ 24,802
Restricted cash - 937
Accounts receivable, net 106,894 97,934
Inventories, net 11,146 11,233
Deferred income taxes 5,792 5,791
Prepaid expenses and other current assets 10,346 10,234
----------- -----------
Total current assets 150,974 150,931
Property and equipment, net 86,881 84,634
Goodwill 386,657 382,519
Other intangible assets, net 84,471 86,349
Deferred financing costs, net 4,764 5,170
Deferred income taxes 12,261 10,710
Other assets 2,267 2,298
----------- -----------
Total assets $ 728,275 $ 722,611
=========== ===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 33,955 $ 35,659
Accrued payroll and payroll-related expenses 16,417 19,293
Accrued expenses 23,431 22,030
Current portion of long-term debt and capital
leases 62,128 69,254
----------- -----------
Total current liabilities 135,931 146,236
Long-term debt and capital leases 316,906 321,013
Other long-term liabilities 10,024 3,711
----------- -----------
Total liabilities 462,861 470,960
----------- -----------
Commitments and contingencies
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; 45,562,724 and 45,561,773
shares issued and outstanding 46 46
Additional paid-in capital 81,962 81,153
Deferred stock-based compensation (556) (673)
Retained earnings 197,590 179,092
Accumulated other comprehensive income (5,919) (258)
----------- -----------
273,123 259,360
Less cost of common stock in treasury, 447,654
shares in 2007 7,709 7,709
----------- -----------
Total stockholders' equity 265,414 251,651
----------- -----------
Total liabilities and stockholders' equity $ 728,275 $ 722,611
=========== ===========
American Reprographics Company
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2008 2007
----------- ------------
Reprographics services $ 142,496 $ 119,779
Facilities management 29,551 26,356
Equipment and supplies sales 15,396 14,079
----------- ------------
Total net sales 187,443 160,214
Cost of sales 107,840 92,435
----------- ------------
Gross profit 79,603 67,779
Selling, general and administrative expenses 39,521 34,234
Amortization of intangible assets 3,188 1,745
----------- ------------
Income from operations 36,894 31,800
Other income (202) -
Interest expense, net 7,146 5,161
----------- ------------
Income before income tax provision 29,950 26,639
Income tax provision 11,452 9,795
----------- ------------
Net income $ 18,498 $ 16,844
=========== ============
Earnings per share:
Basic $ 0.41 $ 0.37
=========== ============
Diluted $ 0.41 $ 0.37
=========== ============
Weighted average common shares outstanding:
Basic 45,045,038 45,344,317
Diluted 45,390,827 45,790,548
American Reprographics Company
Non-GAAP Measures
Reconciliation of Net Income to EBIT and EBITDA
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2008 2007
----------- -----------
Net income $ 18,498 $ 16,844
Interest expense, net 7,146 5,161
Income tax provision 11,452 9,795
----------- -----------
EBIT 37,096 31,800
Depreciation and amortization 12,117 8,358
----------- -----------
EBITDA $ 49,213 $ 40,158
=========== ===========
Three Months Ended
March 31,
2008 2007
----------- -----------
Cash flows provided by operating activities $ 20,348 $ 11,406
Changes in operating assets and liabilities 12,915 14,833
Non-cash (expenses) income, including
depreciation and amortization (14,765) (9,395)
Income tax provision 11,452 9,795
Interest expense 7,146 5,161
----------- -----------
EBIT 37,096 31,800
Depreciation and amortization 12,117 8,358
----------- -----------
EBITDA $ 49,213 $ 40,158
=========== ===========
Note 1. Non-GAAP Measures
EBIT and EBITDA and related ratios presented in this report are
supplemental measures of our performance that are not required by or
presented in accordance with 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 flow 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 and amortization. Amortization
does not include $0.9 million and $0.6 million of amortization of stock
based compensation, for the three months ended March 31, 2008 and 2007,
respectively. 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 and 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 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. 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 division-level compensation and use
EBITDA to measure performance for determining consolidated-level
compensation. We also use EBITDA as a metric to manage cash flow from our
operating segments to the corporate level and to determine the financial
health of each operating segment. As noted above, since debt and taxation
are managed at the corporate level, the cash flow from each operating
segment should be approximately equal to the corresponding EBITDA of each
operating segment, assuming no other changes to an operating segment's
balance sheet. As a result, we reconcile EBITDA to cash flow monthly as one
of our key internal controls. 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.
