(November 06, 2008) American Reprographics Company , the nation's leading provider of reprographics services and technology, today reported its financial results for the third quarter ended September 30, 2008.
Net revenue for the third quarter of 2008 was $174.6 million, compared to $176.2 million in the third quarter of 2007, a decrease of 0.9%. The Company's gross margin for the third quarter was 40.1% compared to 41.2% in the same period in 2007.
Net income for the third quarter of 2008 was $15.1 million, or $0.33 per diluted share. This compares to net income for the third quarter of 2007 of $15.9 million, or $0.35 per diluted share. In the third quarter of 2008, the Company benefitted from income tax credits earned for the years 2005 through 2007. These prior year credits added $1.4 million to net income, or $0.03 per fully diluted share.
Revenue for the first nine months of 2008 was $547.0 million, compared to $514.2 million for the same period in 2007. Net income for the first nine months of 2008 was $52.4 million, or $1.15 per diluted share, compared to net income of $52.4 million, or $1.14 per diluted share for the same period in 2007.
"The company continues to perform very well under challenging circumstances," said K. "Suri" Suriyakumar, Chairman, President and Chief Executive Officer. "ARC is focusing on two critical areas to weather the unprecedented storms in our economy. The first is financial discipline, and the second is cash; both of which we have in abundance. We have generated more than $95 million of cash flow from operations to date, and we expect to finish the year with more than $100 million. This is the true measure of a company's ability to perform in difficult economic conditions. Our ability to generate cash, combined with our sound capital structure, will allow us to operate through this environment and position ourselves for strong growth when the market turns around."
"While the economic and business environment has been volatile, our business model is flexible, and we are focusing on protecting our margins and earnings," said Jonathan Mather, Chief Financial Officer. "We remain closely focused on our cash collections, which resulted in another quarter of DSO at 50 days. With five acquisitions completed in the third quarter, we continue to make good use of our capital structure to acquire market share. Despite the dilutive effect of our initial operations in China where the gross margin is currently 16%, we continue to produce a healthy gross margin for the company overall by managing our expenses and closely controlling costs."
On September 25, 2008, American Reprographics Company lowered its annual revenue forecast from $720-$760 million to $700-$710 million, and its earnings per share of $1.52-$1.60 to $1.36-$1.40, on expectations of significant declines in non-residential construction activity due to severe restrictions on available credit. Today, management reaffirmed the Company's annual revenue and earnings per share forecast of $700-$710 million, with earnings per share of $1.36-$1.40.
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