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American Reprographics Company Posts 18.9M profit, Reaffirms Outlook

Friday, August 08, 2008

Press release from the issuing company

(August 07, 2008) American Reprographics Company, the nation's leading provider of reprographics services and technology, today reported its financial results for the second quarter ended June 30, 2008.

Net revenue for the second quarter of 2008 was $184.9 million, compared to $177.8 million in the second quarter of 2007, an increase of 4.0%. The Company's gross margin for the second quarter was 42.8% compared to 42.1% in the same period in 2007, and up from 42.5% in the first quarter of 2008.

Net income for the second quarter of 2008 was $18.9 million, or $0.42 per diluted share. This compares to net income for the second quarter of 2007 of $19.6 million, or $0.43 per diluted share. In the second quarter of 2007, the company benefitted from a one-time legal settlement, net of tax and associated expenses, of $1.4 million, or a $0.03 benefit per fully diluted share.

Revenue for the first six months of 2008 was $372.4 million, compared to $338 million for the same period in 2007. Net income for the first six months of 2008 was $37.4 million, or $0.82 per diluted share, compared to net income of $36.5 million, or $0.80 per diluted share.

"Our performance has been very positive in the face of a deteriorating market," said K. "Suri" Suriyakumar, Chairman, President and Chief Executive Officer. "While we were not surprised by the negative turn in the market, the erosion was much more significant than anyone envisioned earlier in the year. It is evident that the market turmoil is not restricted to housing or commercial construction, but has spilled over into the larger economy in light of the weakening credit conditions and the lack of confidence in the financial sector. In spite of these headwinds and the slower pace of acquisitions in the first half of the year, our core operating strengths, strong sales focus, and cost containment practices continue to deliver value to our customers and our shareholders. The best evidence of this is found in our strong gross margin performance."

"Commercial construction and non-AEC accounts continue to provide a solid base of business in spite of the general economic softness, and we continue to acquire market share through selective acquisitions and an aggressive sales stance," said Jonathan Mather, Chief Financial Officer. "By managing our costs and working capital closely, the company continues to generate strong cash flow from operations. Our year-to-date cash from operating activities is $61.5 million, compared to $45.4 million for the same period in 2007."

Outlook

"Earlier this year when we provided our sales and earnings guidance, our projection of revenue deterioration was primarily related to residential construction. Since then the financial markets have weakened significantly causing a slowdown in private investment, a key driver of non-residential construction. This slowdown, combined with uncertain economic conditions, is triggering project delays and cancellations. In spite of these adversities, we still believe the company's sales and earnings will be within the original annual range we projected due to our position in the market place and our operating strength," said Mr. Suriyakumar. "Thus 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 second 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 290916.

A Web archive will be made available at http://www.e-arc.com for approximately 90 days following the call's conclusion.

 

 

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