ARC Document Services (ARC) recently reported results for Q1 2012. The commercial construction market remains soft, resulting in a 3% drop in overall revenue, despite a 10% increase in FM/MPS. Gross margins contracted slightly, as well. On the positive side, operating cash flows increased year-on-year, capex fell slightly despite new investments in growth, and ARC continues to trim net debt. The company reaffirmed guidance for operating cash flow, which is expected to range from $40-50 million.
Overall, the quarter was in line with expectations, though the softness in the commercial construction market may have surprised some. The company will continue to rationalize assets, keep costs low, open new markets and continue paying down debt. As the market strengthens in the years to come, the company is well positioned for very profitable growth.
Here is my original thesis on ARC.
Here is my original thesis on ARC.
Source: First quarter 2012 press release
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