WALNUT CREEK, CA - ARC Document Solutions, Inc. (NYSE: ARC), the nation's leading document solutions provider for the architecture, engineering, and construction (AEC) industry, today reported its financial results for the first quarter ended March 31, 2015.

2015 First Quarter Business Highlights:

• Revenue grew 3.9% year-over-year
• Adjusted earnings per share were $0.07 vs. $0.04 in Q1 2014
• Gross margin was 34.5%, a year-over-year increase of 70 basis points
• Adjusted cash flow from operations was $6.4 million vs. $8.1 million in Q1 2014; decrease largely due to timing of accounts receivable collections
• Adjusted EBITDA of $16.8 million; grew 4% in line with sales despite planned investments in SG&A
• Maintains 2015 fully-diluted annual adjusted earnings per share projected to be in the range of $0.37 to $0.41; annual adjusted cash provided by operating activities projected to be in the range of $61 to $66 million; and annual adjusted EBITDA to be in the range of $75 million to $80 million

Management Commentary

"Sales and gross margins continued to expand in the first quarter of 2015 thanks to approximately nine percent sales growth in both MPS and AIM, 2.4 percent growth in CDIM, and a business mix weighted to our more technology-enabled services," said K. Suri Suriyakumar, Chairman, President and CEO of ARC Document Solutions. "I'm also pleased to be reporting under our new revenue categories. Our financial presentation and our approach to the market are now closely aligned and will allow us to better demonstrate the company's value and potential to both customers and investors."

Jorge Avalos, ARC Document Solutions' Chief Financial Officer said, "Our adjusted EBITDA grew four percent, in line with our sales growth, despite our previously announced sales and marketing investments. The EBITDA increase was driven by our sales performance and a 70 basis point improvement in gross margin that resulted from our ability to leverage our fixed costs, strong cost controls, and higher margin sales. Our strong earnings performance benefited from the same achievements, as well as improvements in our capital structure. Adjusted cash flow from operations was affected by the timing of accounts receivables collections, but consistent with prior years, we expect to build toward our annual forecast in future quarters."

The company also introduced a new, supplemental format for reporting net sales by service and product line, replacing the five categories it reported in the past (Onsite Services, Traditional Reprographics, Color Services, Digital Services, and Equipment and Supplies). The new service sales categories, as have been noted in previous disclosures, are Managed Print Services (MPS), Archiving and Information Management (AIM), and Construction Document and Information Management (CDIM). Equipment and Supplies will remain a separate product category. A supplemental table appears below, containing quarter-over-quarter comparisons for the past eight quarters. ARC's forthcoming quarterly report on Form 10-Q will contain further information to provide additional information about the new reporting structure.

2015 First Quarter Supplemental Information:

Net sales were $104.3 million, a 3.9% increase compared to the first quarter of 2014. 

Days sales outstanding in Q1 2015 were 57, compared to 53 days in Q1 2014. 

AEC customers comprised approximately 78% of our total net sales, while non-AEC customers made up approximately 22% of our total net sales.

Total number of MPS contracts at the end of the first quarter was approximately 8,660, an increase of approximately 160 contracts from the end of 2014.

Adjusted EBITDA is EBITDA net of the impact of trade secret litigation costs, stock-based compensation expense, and restructuring expense.

Outlook:

ARC Document Solutions is maintaining its annual 2015 outlook. The company's fully diluted annual adjusted earnings per share outlook is expected to be in the range of $0.37 to $0.41. The outlook for annual adjusted cash provided by operating activities is projected to be in the range of $61 to $66 million; and annual adjusted EBITDA is projected to be in the range of $75 million to $80 million.