ARC Document Solutions Inc (ARC, Financial), a leading provider of digital printing and document-related services, announced its financial results for the third quarter ended September 30, 2023, on November 2, 2023. The company reported net sales of $71.1 million, a slight decrease of 2.8% compared to the third quarter of 2022. Despite the decrease in sales, the company's strategic services posted healthy sales growth, with new customers continuing to invest in visual communications and demand for scanning coming from every industry served.
Financial Performance
ARC's gross margin for the quarter slightly increased to 34.0% from 33.9% in the same period last year. The company reported net income attributable to ARC of $3.2 million, with diluted earnings per share at $0.07. Despite the lower sales, the company's margins, earnings, and cash flows remained resilient.
Business Line Performance
In Q3 2023, Digital Printing sales decreased by 2.5% compared to the prior year, while MPS sales decreased by 4.3% year-over-year. On the other hand, Scanning and Digital Imaging sales increased by 4.4% year-over-year, primarily due to growing demand for paper-to-digital document conversions. Equipment and Supplies sales decreased by 8.0% year-over-year.
Operating Cash Flow and EBITDA
The company generated $8.7 million in cash from operating activities, compared to $14.9 million in Q3 2022. EBITDA and adjusted EBITDA decreased due to lower sales during the third quarter of 2023, compared to the same period in 2022.
Future Outlook
Despite the challenging macro conditions, ARC's management remains confident in generating growth opportunities, sustaining cash flow, and consistently providing shareholder value in the foreseeable future. The company's next quarterly cash dividend of $0.05 will be paid on November 30, 2023, with a record date of October 31, 2023.
ARC Document Solutions will hold a conference call with investors and analysts on Thursday, November 2, 2023, to discuss the results of the Company’s third quarter of 2023.
Explore the complete 8-K earnings release (here) from ARC Document Solutions Inc for further details.