WALNUT CREEK, CA - American Reprographics Company (the "Company" or "ARC"), the nation's leading provider of reprographic services and technology, today reported its financial results for the third quarter ended September 30, 2009.
"The Company continues to perform very well despite the ongoing challenges in the end market," said K. "Suri" Suriyakumar, Chairman, President and CEO. "At $19.6 million, our quarterly cash flow from operations remained extraordinarily healthy, and at 19.5%, our EBITDA margin reiterates our ability to remain flexible and available to pursue growth opportunities. We were also gratified to see a stabilizing trend in daily sales continue through the end of the quarter. Knowing how well positioned ARC is in the current environment, we will continue to focus on the future by putting the building blocks in place for new opportunities and new revenue streams as the economy recovers."
Net revenue for the third quarter of 2009 was $119.4 million and gross margin was 34.5%. ARC reported a net loss of income for the third quarter of 2009 of $27.6 million, or a loss of $0.61 per diluted share, which included a goodwill impairment charge of $37.4 million based on its annual goodwill impairment assessment conducted as of September 30, 2009 (see description below). Adjusted to exclude the period's goodwill impairment, an impairment of long-lived assets, and a possible one-time charge associated with our amended credit agreement, net income for the third quarter of 2009 was $2.9 million, or $0.06 per diluted share.
Net revenue for the nine-month period ended September 30, 2009 was $389.9 million and gross margin was 36.5%. ARC reported a net loss for the first nine months of 2009 of $13.7 million, or a loss of $0.30 per diluted share. Adjusted to exclude the impairments and possible one-time charge for the third quarter, net income for the first nine months of 2009 was $16.8 million, or $0.37 per diluted share.
Jonathan Mather, Chief Financial Officer, said, "Our capital structure is showing continual improvement as we make aggressive use of our positive cash flow to reduce our debt. To date, including the pre-payment of $36 million we made as a part of amending our credit agreement in early October, we have addressed more than $90 million of our debt obligations."
Impairment of Goodwill, Long-Lived Assets and Certain One-Time Charges
The Company assesses goodwill for impairment at least annually as of September 30, or more frequently if events and circumstances indicate that goodwill might be impaired. Based on our annual assessment, we recorded a $37.4 million impairment as of September 30, 2009. ARC also recorded an impairment charge of approximately $781,000 against certain of its long-lived assets. In addition, there is a possible one-time charge of $700,000 to $1.3 million related to the Company's interest swap transaction incurred in connection with the Company's amended credit agreement which may be recorded in the financial statements for third quarter of 2009. The Company will not be required to make any current or future cash expenditures as a result of the impairments. The impairments and any one-time charge will be reflected in the Company's unaudited financial statements included in the Company's Form 10-Q for the third quarter of 2009 to be filed with the U.S. Securities and Exchange Commission.
The Company reaffirmed its revised annual earnings per share and cash flow from operations forecast for 2009, excluding any one-time financing charge arising from the amendment to its credit agreement in October 2009, and the impairments recorded in the third quarter of 2009. EPS for the full year of 2009 is forecast to be in the range of $0.27 to $0.33 on a fully-diluted basis. Cash flow from operations for the same period is projected to be in the range of $70 million to $90 million.