false000130516800013051682024-02-282024-02-28

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 28, 2024
(Date of earliest event reported)
ARC Document Solutions, Inc.
(Exact name of registrant as specified in its charter)
Delaware001-3240720-1700361
(State or other jurisdiction
of incorporation)		(Commission File Number)(IRS Employer
Identification Number)
12657 Alcosta Blvd, Suite 200  San RamonCA94583
(Address of principal executive offices)(Zip Code)

(925)949-5100
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareARCThe New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 



Item 2.02. Results of Operations and Financial Condition

On February 28, 2024, ARC Document Solutions, Inc. (the “Company”) issued a press release reporting its financial results for the fourth quarter of the fiscal year ending December 31, 2023. A copy of the press release is furnished as Exhibit 99.1 and is incorporated by reference herein.

The information contained in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.



Item 9.01. Financial Statements and Exhibits

(d) Exhibits
           



SIGNATURE

      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February 28, 2024
ARC DOCUMENT SOLUTIONS, INC.
By:  /s/ Jorge Avalos                    
     Jorge Avalos
     Chief Financial Officer







ARC Reports Continuing Expansion of Strategic Services in Fourth Quarter and Full Year 2023
SAN RAMON, CA – (February 28, 2024) – ARC Document Solutions, Inc. (NYSE: ARC), a leading provider of digital printing and document-related services, today reported its financial results for the fourth quarter and full year ended December 31, 2023.
Financial Highlights:
Three Months EndedTwelve Months Ended
December 31,December 31,
(All dollar amounts in millions, except EPS)2023202220232022
Net sales$68.9 $68.8 $281.2 $286.0 
Gross margin32.2 %33.7 %33.6 %33.6 %
Net (loss) income attributable to ARC$(0.9)$2.1 $8.2 $11.1 
Adjusted net income attributable to ARC$2.4 $2.6 $11.8 $12.0 
(Loss) Earnings per share - Diluted$(0.02)$0.05 $0.19 $0.26 
Adjusted earnings per share - Diluted$0.05 $0.06 $0.27 $0.28 
Cash provided by operating activities$13.7 $10.8 $36.6 $37.2 
EBITDA$3.7 $8.9 $31.9 $39.1 
Adjusted EBITDA$8.3 $9.3 $38.1 $40.9 
Capital expenditures$3.0 $1.6 $10.8 $5.9 
Debt & finance leases (including current)$62.2 $66.5 
Management Commentary
“In a year where interest rates constrained capital spending and sentiment was mixed on the health of the economy, our ability to adapt and manage costs drove an increase in fourth quarter revenue, limited declines in annual revenue to less than two percent, and held gross margins steady for the year,” said Suri Suriyakumar, CEO of ARC Document Solutions. “Importantly, the changes we’ve made over the past several years to refine our strategic focus served us well in 2023 and positioned us well for ongoing success in 2024.”

“We grew our strategic business segments in each quarter of the year, with document scanning leading the way with year-over-year sales growth of 34% in the fourth quarter and 17% for the year. We also entered new markets for color services—significantly offsetting softness in construction plan printing—and maintained profitability in 2023,” said Dilo Wijesuriya, President and Chief Operating Officer. “Moving forward, our revenue performance in the fourth quarter serves as a clear indication of the positive direction our company is headed. Our emphasis on scanning and digital color printing is driving overall company expansion, and our management team in every market is 100 percent focused on achieving superior results in the coming year.”

“In 2023, we continued to optimize our costs while balancing our investment in our people and infrastructure, and we generated healthy cash flows from operations in the fourth quarter and the year,” said Jorge Avalos, Chief Financial Officer. “Shareholder returns reached an all-time high for the second year in a row as we used more than $12 million dollars to issue dividends and repurchase shares. We have every intention of repeating that performance in 2024. As for the site remediation issue, we don’t expect it to hamper our operations or our cash flows in a meaningful way in any given year of the project's execution.”


Fourth Quarter Overview
Demand for digital color printing across our customer base was robust for the first three quarters of the year and continued in the fourth quarter with year-end and holiday marketing promotions. Strength in this business line continued to offset weakness in black and white construction plan printing volume due to a lack of construction activity. With no significant letup in interest rates, capital spending constraints left our equipment and supply sales essentially flat year-over-year. Onsite print volumes moderated slightly in the fourth quarter, but we saw signs of stabilization as we successfully completed a number of multi-year contract renewals with large, enterprise-level customers. Demand for document scanning grew 34% year-over-year in the fourth quarter and helped ARC achieve 17% sales growth in this strategic sales category for the year. Economic inflation in the U.S., Canada, and abroad had a material effect on our business over the past year, primarily in the form of higher labor and material costs. Price increases in materials continue to be passed on to our customers. Supply chain disruptions, other than price increases, were largely resolved in 2023, and we remain reasonably protected from them due to the wide variety of suppliers we have developed over our history.



2023 Fourth Quarter Supplemental Information:
•Cash and cash equivalents on the consolidated balance sheet in the fourth quarter 2023 were $56.1 million.
•ARC’s next quarterly cash dividend of $0.05 will be paid on February 29, 2024 with a record date of January 31, 2024.
•Days sales outstanding were 47 days as of fourth quarter 2023, a decline of four days over the same period in the prior year.
•The number of MPS locations at the end of the fourth quarter was approximately 10,440.


Net Revenue
In millionsFYE 20234Q 20233Q 20232Q 20231Q 2023FYE 20224Q 2022
Total net revenue$281.2 $68.9 $71.1 $72.4 $68.9 $286.0 $68.8 
In the fourth quarter 2023, net revenue increased by $0.1 million compared to the fourth quarter of 2022. Net revenue for full-year 2023 decreased 1.7% or $4.8 million compared to the full year of 2022, primarily driven by the decrease in sales from digital construction plan printing and Equipment and Supplies, partially offset by the year-over-year increase in sales from Scanning and digital color printing.
Revenue by Business Line
In millionsFYE 20234Q 20233Q 20232Q 20231Q 2023FYE 20224Q 2022
Digital Printing$170.1 $40.9 $43.5 $44.2 $41.4 $174.8 $42.0 
MPS$74.8 $18.2 $18.6 $19.0 $19.0 $75.8 $18.5 
Scanning and Digital Imaging$20.3 $5.5 $5.0 $5.3 $4.6 $17.4 $4.1 
Equipment and Supplies$16.0 $4.3 $3.9 $3.9 $3.9 $18.1 $4.3 
For the fourth quarter 2023, Digital Printing sales decreased 2.5% compared to prior year, and for the full-year 2023 decreased 2.7% year-over-year. Year-over-year sales for the fourth quarter and full year 2023 increased in digital color graphic printing from new and existing customers, and we experienced continuing demand for digital color graphic printing across most of our customer base. This growth was offset by the decrease of sales in digital plan printing for construction, which we attribute to less activity and lower spending on new building projects due to increased costs of capital.
For the fourth quarter 2023, Managed Print Services (MPS) sales decreased 1.4% compared to prior year, and sales for full-year 2023 decreased 1.3% as compared to 2022. Fewer employees returning to the workplace after the pandemic has generally constrained onsite print volumes.
For the fourth quarter 2023, Scanning and Digital Imaging sales increased 33.7% compared to prior year, and sales for the full-year 2023 increased 17.0% as compared to the full year of 2022. The increase in sales was primarily attributable to growing demand for paper-to-digital document conversions used in day-to-day business operations, and the creation of digital archives to replace long-term warehoused paper document storage.
For the fourth quarter 2023, Equipment and Supplies sales decreased 0.7% compared to prior year, and sales for the full-year 2023 declined 11.5% as compared to the full year of 2022. The decrease was a result of reduced sales from our Chinese joint venture as the Chinese economy continues to be challenged. Equipment and Supplies sales continue to decline in the U.S. as well. We attribute the decrease in sales to our customers' reluctance to acquire equipment while interest rates remain high.
Gross Profit
In millions unless otherwise indicatedFYE 20234Q 20233Q 20232Q 20231Q 2023FYE 20224Q 2022
Gross profit$94.4 $22.2 $24.1 $25.2 $22.9 $96.0 $23.2 
   Gross margin33.6 %32.2 %34.0 %34.8 %33.3 %33.6 %33.7 %
Fourth quarter gross profit decreased by $1.0 million or 150 basis points as a result of the decline in high-margin digital plan printing sales. Despite a sales decrease of $4.8 million for the full-year 2023 as compared to the same period in 2022, gross profit decreased by just $1.6 million. Gross margin for the full-year 2023 remained flat at 33.6%, as compared to 2022. Gross margin stability during 2023 was driven by improved efficiency in our cost structure and a reduction in depreciation expense.



Selling, General and Administrative Expenses
In millions FYE 20234Q 20233Q 20232Q 20231Q 2023FYE 20224Q 2022
Selling, general and administrative expenses
$76.3 $18.6 $19.3 $19.0 $19.5 $77.5 $19.2 
Selling, general and administrative expenses in the fourth quarter 2023 decreased in absolute dollars year-over-year by $0.6 million or 3.1%, and decreased $1.2 million or 1.6% for the full year 2023, as compared to 2022. The decrease was primarily driven by lower commission and bonus accruals due to the decline in net sales and net income attributable to ARC.
Site Remediation Expense
We are currently involved in a site remediation obligation due to a former gas station that had been situated on a property we obtained as part of a business acquisition in the late 1990s. In 2020, the local County's Department of Environmental Health (CDEH), approved our remedial clean-up plan, hence a liability on an undiscounted basis for $0.6 million for costs attributable to our clean-up plan was established. Additional review conducted in the fourth quarter of 2023 identified certain potential risks arising out of a structure on a neighboring property. As a result, in December of 2023, the CDEH requested that an alternative remedial plan be developed and submitted by March 12, 2024, to address the structural aspects of the site. We are in the process of finalizing an alternative plan with the guidance and expertise of an environmental consulting firm engaged expressly for this purpose. The additional concerns identified in December 2023 require more complex remediation measures for a longer duration than those contained in the plan approved by the CDEH in 2020. In light of the expected increase in expenses associated with remediating the site we have increased the reserve by approximately $4.0 million, reflecting a total reserve on an undiscounted basis of $4.5 million as of December 31, 2023. We have accrued probable and reasonably estimable costs for the resolution of the obligation based upon types of remediation efforts currently anticipated, the volume of contaminants in the impacted areas, regulatory oversight, and other costs.
Net Income and Earnings Per Share
In millions unless otherwise indicatedFYE 20234Q 20233Q 20232Q 20231Q 2023FYE 20224Q 2022
Net income (loss) attributable to ARC – GAAP$8.2 $(0.9)$3.2 $4.0 $1.9 $11.1 $2.1 
Adjusted net income attributable to ARC $11.8 $2.4 $3.2 $4.1 $2.2 $12.0 $2.6 
Earnings (loss) per share attributable to ARC
   Diluted EPS – GAAP$0.19 $(0.02)$0.07 $0.09 $0.04 $0.26 $0.05 
   Adjusted diluted EPS$0.27 $0.05 $0.07 $0.09 $0.05 $0.28 $0.06 
Year-over-year, net income attributable to ARC and earnings per share in the fourth quarter of 2023 and for the full year 2023 as compared to 2022 decreased primarily due to the site remediation expense. Year-over year, adjusted net income attributable to ARC and adjusted earnings per share for the full year 2023 as compared to 2022, remained relatively flat despite the $4.8 million decline in net sales, primarily driven by lower selling, general and administrative expenses as noted above.
Cash Provided by Operating Activities
In millions FYE 20234Q 20233Q 20232Q 20231Q 2023FYE 20224Q 2022
Cash provided by operating activities$36.6 $13.7 $8.7 $10.3 $3.8 $37.2 $10.8 
The increase in cash flows from operations during the fourth quarter of 2023 as compared to the same period in 2022, was primarily due to improvement in collections. The decrease in cash flows from operations for the full-year 2023, compared to the same period in 2022, was primarily due to the decrease in net income, partially offset by the improvement in our collection of accounts receivable.
EBITDA
In millions FYE 20234Q 20233Q 20232Q 20231Q 2023FYE 20224Q 2022
EBITDA$31.9 $3.7 $9.4 $10.6 $8.2 $39.1 $8.9 
Adjusted EBITDA $38.1 $8.3 $10.0 $11.1 $8.7 $40.9 $9.3 


Decrease in EBITDA in the fourth quarter of 2023 as compared to the same period in 2022, is primarily due to the site remediation expense. The decrease in Adjusted EBITDA for the full year 2023 as compared to the same period in 2022, is largely attributable to lower sales in 2023.

Sales from Services and Product Lines as a Percentage of Net Sales
Three Months EndedTwelve Months Ended
December 31,December 31,
Services and Product Line2023202220232022
Digital Printing59.5 %61.0 %60.5 %61.1 %
MPS26.4 %26.8 %26.6 %26.5 %
Scanning and Digital Imaging7.9 %5.9 %7.2 %6.1 %
Equipment and Supplies sales6.2 %6.3 %5.7 %6.3 %

Teleconference and Webcast
ARC Document Solutions will hold a conference call with investors and analysts on Wednesday, February 28, 2024, at 2 P.M. Pacific Time (5 P.M. Eastern Time) to discuss the results of the Company's 2023 fourth quarter and fiscal year. To access the live conference call, dial (800) 715-9871. International callers may join the conference by dialing (647) 932-3411. The conference code is 1511143 and will be required to dial into the call. A live webcast will also be made available from the “Overview” and “Events & Presentation” pages of ARC Document Solution's investor relations website at http://ir.e-arc.com. A replay of the webcast will be available on the website following the call's conclusion.
About ARC Document Solutions (NYSE: ARC)
ARC partners with top brands around the world to tell their stories through visually compelling graphics. We use advanced digital printing technology, sustainable materials, and innovative techniques to bring their vision to life. ARC also provides other digital printing and scanning services to a wide variety of industries all over North America and in select markets around the world. Follow ARC at www.e-arc.com.
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, and on the Company’s operations. Words and phrases such as, “positioned us well for ongoing success,” “serves as a clear indication of the positive direction our company is headed,” “focused on achieving superior results in the coming year,” “intention of repeating that performance,” and, “we don’t expect it to hamper our operations or our cash flows in a meaningful way in any given year of the project's execution,” 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. In addition to matters affecting the construction, managed print services, digital printing industries, or the economy generally, factors that could cause actual results to differ from expectations stated in forward-looking statements include, among others, the factors described in the section titled "Part I - Item 1A. Risk Factors" of ARC Document Solution's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, Quarterly Reports on Form 10-Q, and other periodic filings and prospectuses. 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.
Contact Information:
David Stickney
VP Corporate Communications & Investor Relations
925-949-5114



ARC Document Solutions, Inc.
Consolidated Balance Sheets
(In thousands, except per share data)
(Unaudited)
December 31,December 31,
Current assets:20232022
Cash and cash equivalents$56,093 $52,561 
Accounts receivable, net of allowances for credit losses of $1,857 and $1,947
35,775 38,748 
Inventory8,818 8,610 
Prepaid expenses3,988 4,018 
Other current assets3,978 3,540 
Total current assets108,652 107,477 
Property and equipment, net of accumulated depreciation of $229,122 and $231,913
40,925 40,214 
Right-of-use assets from operating leases32,838 28,163 
Goodwill121,051 121,051 
Other intangible assets, net162 208 
Deferred income taxes, net4,383 7,993 
Other assets2,113 2,209 
Total assets$310,124 $307,315 
Current liabilities:
Accounts payable$24,175 $22,972 
Accrued payroll and payroll-related expenses9,401 11,235 
Accrued expenses18,787 16,882 
Current operating lease liabilities9,924 9,924 
Current portion of finance leases8,870 11,558 
Total current liabilities71,157 72,571 
Long-term operating lease liabilities27,357 23,339 
Long-term debt and finance leases53,366 54,916 
Deferred income taxes52 — 
Other long-term liabilities2,467 199 
Total liabilities154,399 151,025 
Commitments and contingencies    
Stockholders’ equity:
ARC Document Solutions, Inc. stockholders’ equity:
Preferred stock, $0.001 par value, 25,000 shares authorized; 0 shares issued and outstanding— — 
Common stock, $0.001 par value, 150,000 shares authorized; 52,526 and 51,400 shares issued and 42,783 and 43,101 shares outstanding
52 51 
Additional paid-in capital136,460 132,952 
Retained earnings44,144 44,416 
Accumulated other comprehensive loss(4,200)(4,187)
176,456 173,232 
Less cost of common stock in treasury, 9,743 and 8,299 shares
22,390 18,877 
Total ARC Document Solutions, Inc. stockholders’ equity154,066 154,355 
Noncontrolling interest1,659 1,935 
Total equity155,725 156,290 
Total liabilities and equity$310,124 $307,315 


ARC Document Solutions, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)Three Months EndedTwelve Months Ended
December 31,December 31,
2023202220232022
Service sales$64,625 $64,540 $265,160 $267,891 
Equipment and Supplies sales4,251 4,282 16,041 18,119 
Total net sales68,876 68,822 281,201 286,010 
Cost of sales46,725 45,633 186,800 190,013 
Gross profit22,151 23,189 94,401 95,997 
Selling, general and administrative expenses18,569 19,168 76,333 77,544 
Amortization of intangible assets10 10 41 97 
Site remediation expense4,000 — 4,000 — 
(Loss) income from operations(428)4,011 14,027 18,356 
Other income, net(25)(13)(67)(62)
Interest expense, net333 466 1,633 1,796 
(Loss) income before income tax provision(736)3,558 12,461 16,622 
Income tax provision125 1,456 4,387 5,832 
Net (loss) income(861)2,102 8,074 10,790 
(Income) loss attributable to noncontrolling interest(27)21 161 304 
Net (loss) income attributable to ARC Document Solutions, Inc. stockholders$(888)$2,123 $8,235 $11,094 
(Loss) earnings per share attributable to ARC Document Solutions, Inc. stockholders:
Basic$(0.02)$0.05 $0.19 $0.26 
Diluted$(0.02)$0.05 $0.19 $0.26 
Weighted average common shares outstanding:
Basic42,275 42,226 42,543 42,214 
Diluted43,092 42,882 43,484 43,280 







ARC Document Solutions
Consolidated Statements of Cash Flows		Three Months EndedTwelve Months Ended
(In thousands) (Unaudited)December 31,December 31,
2023202220232022
Cash flows from operating activities
Net (loss) income$(861)$2,102 $8,074 $10,790 
Adjustments to reconcile net income to net cash provided by operating activities:
Allowance for credit losses66 45 351 320 
Depreciation4,089 4,816 17,592 20,328 
Amortization of intangible assets10 10 41 97 
Amortization of deferred financing costs17 15 67 61 
Stock-based compensation610 442 2,232 1,773 
Deferred income taxes1,370 740 5,016 4,927 
Deferred tax valuation allowance(1,486)234 (1,326)264 
Other non-cash items, net85 (70)(262)(205)
Changes in operating assets and liabilities:
Accounts receivable4,751 2,685 2,783 (195)
Inventory(108)958 (243)62 
Prepaid expenses and other assets2,902 2,872 9,391 9,746 
Accounts payable and accrued expenses2,281 (4,020)(7,133)(10,741)
Net cash provided by operating activities13,726 10,829 36,583 37,227 
Cash flows from investing activities
Capital expenditures(3,024)(1,597)(10,752)(5,881)
Other96 97 363 307 
Net cash used in investing activities(2,928)(1,500)(10,389)(5,574)
Cash flows from financing activities
Proceeds from stock option exercises14 849 1,144 1,201 
Proceeds from issuance of common stock under Employee Stock Purchase Plan35 36 133 98 
Share repurchases(664)(776)(3,513)(2,106)
Distribution to noncontrolling interest— — — (3,908)
Payments on long-term debt agreements and finance leases(2,697)(3,148)(11,860)(14,736)
Borrowings under revolving credit facilities40,000 40,000 162,000 154,000 
Payments under revolving credit facilities(40,000)(42,500)(162,000)(160,250)
Payment of deferred financing costs— (6)(23)(6)
Dividends paid(2,119)(2,116)(8,518)(8,448)
Net cash used in financing activities(5,431)(7,661)(22,637)(34,155)
Effect of foreign currency translation on cash balances140 245 (25)(866)
Net change in cash and cash equivalents5,507 1,913 3,532 (3,368)
Cash and cash equivalents at beginning of period50,586 50,648 52,561 55,929 
Cash and cash equivalents at end of period$56,093 $52,561 $56,093 $52,561 
Supplemental disclosure of cash flow information:
Noncash financing activities:
Finance lease obligations incurred$2,620 $3,094 $7,764 $9,482 
Operating lease obligations incurred$7,408 $1,533 $14,478 $8,687 








ARC Document Solutions, Inc.
Net Sales by Product Line
(In thousands)
(Unaudited)
 Three Months EndedTwelve Months Ended
December 31,December 31,
2023202220232022
Service Sales
Digital Printing$40,948 $41,986 $170,083 $174,752 
MPS18,208 18,465 74,764 75,782 
Scanning and Digital Imaging5,469 4,089 20,313 17,357 
Total services sales
64,625 64,540 265,160 267,891 
Equipment and Supplies sales4,251 4,282 16,041 18,119 
Total net sales$68,876 $68,822 $281,201 $286,010 

ARC Document Solutions, Inc.
Non-GAAP Measures
Reconciliation of cash flows provided by operating activities to EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
Three Months EndedTwelve Months Ended
December 31,December 31,
2023202220232022
Cash flows provided by operating activities$13,726 $10,829 $36,583 $37,227 
Changes in operating assets and liabilities(9,826)(2,495)(4,798)1,128 
Non-cash expenses(662)(1,406)(6,078)(7,140)
Income tax provision125 1,456 4,387 5,832 
Interest expense, net333 466 1,633 1,796 
(Income) loss attributable to noncontrolling interest(27)21 161 304 
EBITDA3,669 8,871 31,888 39,147 
Site remediation expense4,000 — 4,000 — 
Stock-based compensation610 442 2,232 1,773 
Adjusted EBITDA$8,279 $9,313 $38,120 $40,920 
See Non-GAAP Financial Measures discussion below.

ARC Document Solutions, Inc.
Non-GAAP Measures
Reconciliation of net (loss) income attributable to ARC Document Solutions, Inc. stockholders to EBITDA and Adjusted EBITDA
(In thousands)
(Unaudited)
 Three Months EndedTwelve Months Ended
December 31,December 31,
2023202220232022
Net (loss) income attributable to ARC Document Solutions, Inc. stockholders$(888)$2,123 $8,235 $11,094 
Interest expense, net333 466 1,633 1,796 
Income tax provision125 1,456 4,387 5,832 
Depreciation and amortization4,099 4,826 17,633 20,425 
EBITDA3,669 8,871 31,888 39,147 
Site remediation expense4,000 — 4,000 — 
Stock-based compensation610 442 2,232 1,773 
Adjusted EBITDA$8,279 $9,313 $38,120 $40,920 
See Non-GAAP Financial Measures discussion below.


ARC Document Solutions, Inc.
Non-GAAP Measures
Reconciliation of net (loss) income attributable to ARC Document Solutions, Inc. stockholders to unaudited adjusted net income attributable to ARC Document Solutions, Inc.
(In thousands, except per share data)
(Unaudited)
 Three Months EndedTwelve Months Ended
December 31,December 31,
2023202220232022
Net (loss) income attributable to ARC Document Solutions, Inc. stockholders$(888)$2,123 $8,235 $11,094 
Site remediation expense4,000 — 4,000 — 
Income tax benefit related to above item(1,018)— (1,018)— 
Deferred tax valuation allowance and other discrete tax items270 495 567 905 
Unaudited adjusted net income attributable to ARC Document Solutions, Inc.$2,364 $2,618 $11,784 $11,999 
Actual:
(Loss) earnings per share attributable to ARC Document Solutions, Inc. stockholders:
Basic$(0.02)$0.05 $0.19 $0.26 
Diluted$(0.02)$0.05 $0.19 $0.26 
Weighted average common shares outstanding:
Basic42,275 42,226 42,543 42,214 
Diluted43,092 42,882 43,484 43,280 
Adjusted:
Earnings per share attributable to ARC Document Solutions, Inc. stockholders:
Basic$0.06 $0.06 $0.28 $0.28 
Diluted$0.05 $0.06 $0.27 $0.28 
Weighted average common shares outstanding:
Basic42,275 42,226 42,543 42,214 
Diluted43,092 42,882 43,484 43,280 
See Non-GAAP Financial Measures discussion below.


Non-GAAP Financial Measures
EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, adjusted net income and adjusted earnings per share 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 or GAAP. These measures are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income, net income margin, income from operations, diluted earnings per share or any other performance measures presented in accordance with GAAP or as an alternative to cash flows from operating, investing or financing activities as a measure of our liquidity. We have presented these measures 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.
EBITDA represents net income before interest, taxes, depreciation and amortization. EBITDA margin is a non-GAAP measure calculated by dividing EBITDA by net sales.
We use EBITDA and EBITDA margin to measure and compare the performance of our operating divisions. Our operating divisions financial performance includes all of the operating activities except debt and taxation which are managed at the corporate level for U.S. operating divisions. We use EBITDA and EBITDA margin to compare the performance of our operating divisions and to measure performance for determining consolidated-level compensation. In addition, we use EBITDA and EBITDA margin to evaluate potential acquisitions and potential capital expenditures.
EBITDA and EBITDA margin have limitations as analytical tools, and should not be considered 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, 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 EBITDA and EBITDA margin only as supplements.
Our presentation of adjusted net income and adjusted EBITDA is an attempt to provide meaningful comparisons to our historical performance for our existing and future investors. The unprecedented changes in our end markets over the past several years have required us to take measures that are unique in our history and specific to individual circumstances. Comparisons inclusive of these actions make normal financial and other performance patterns difficult to discern under a strict GAAP presentation. Each non-GAAP presentation, however, is explained in detail in the reconciliation tables above.
Specifically, we have presented adjusted net income attributable to ARC and adjusted earnings per share attributable to ARC stockholders for the three and twelve months ended December 31, 2023 and 2022 to reflect the exclusion of the site remediation expense and changes in the valuation allowances related to certain deferred tax assets and other discrete tax items. This presentation facilitates a meaningful comparison of our operating results for the three and twelve months ended December 31, 2023 and 2022. We believe these changes were the result of items which are not indicative of our actual operating performance.
We have presented adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022 to exclude the site remediation expense as it is not indicative of our ongoing operations. We have presented adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022 to exclude stock-based compensation expense, as it is consistent with the definition of adjusted EBITDA in our credit agreement; therefore, we believe this information is useful to investors assessing our financial performance. We calculate adjusted EBITDA margin by dividing adjusted EBITDA by net sales.

v3.24.0.1
Cover Page
Feb. 28, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Feb. 28, 2024
Entity Registrant Name ARC Document Solutions, Inc.
Entity Incorporation, State or Country Code DE
Entity File Number 001-32407
Entity Tax Identification Number 20-1700361
Entity Address, Address Line One 12657 Alcosta Blvd, Suite 200
Entity Address, City or Town San Ramon
Entity Address, State or Province CA
Entity Address, Postal Zip Code 94583
City Area Code (925)
Local Phone Number 949-5100
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, par value $0.001 per share
Trading Symbol ARC
Security Exchange Name NYSE
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001305168
ARC Document Solutions (NYSE:ARC)
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