ARC Document Solutions Inc (ARC) 2023 Q2 法說會逐字稿

Good afternoon. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the ARC Document Solutions 2023 Second Quarter Earnings report conference call. (Operator Instructions) Mr. David Stickney, Vice President of Investor Relations, you may begin your conference.

下午好。我叫艾比，今天我將擔任你們的會議操作員。現在，我歡迎大家參加 ARC Document Solutions 2023 年第二季度收益報告電話會議。 （操作員指示） 投資者關係副總裁 David Stickney 先生，您可以開始會議了。

Thanks, Abby, and welcome, everyone. On the call with me today are Suri Suriyakumar, our CEO and Chairman; our President and Chief Operating Officer, Dilo Wijesuriya; and Jorge Avalos, our Chief Financial Officer. Our second quarter results for 2023 were publicized earlier today in a press release. The press release and other company materials are available from our Investor Relations pages on ARC Document Solutions website at ir.e-arc.com. Please note that today's call will contain forward-looking statements and are only predictions based on information as of today, August 2, 2023, and actual results may differ materially as a result of risks and uncertainties that we highlight in our quarterly and annual SEC filings. Any non-GAAP measures discussed today are reconciled in our press release and Form 8-K filing. I'll turn the call over to our Chairman and CEO, Suri Suriyakumar. Suri?

謝謝艾比，歡迎大家。今天與我通話的是我們的首席執行官兼董事長 Suri Suriyakumar；我們的總裁兼首席運營官 Dilo Wijesuriya；以及我們的首席財務官豪爾赫·阿瓦洛斯 (Jorge Avalos)。我們今天早些時候在新聞稿中公佈了 2023 年第二季度業績。新聞稿和其他公司材料可從 ARC Document Solutions 網站 ir.e-arc.com 的投資者關係頁面獲取。請注意，今天的電話會議將包含前瞻性陳述，並且僅是基於截至2023 年8 月2 日的信息的預測，由於我們在季度和年度SEC 備案文件中強調的風險和不確定性，實際結果可能存在重大差異。今天討論的任何非 GAAP 措施均在我們的新聞稿和 8-K 表格文件中進行了調整。我會將電話轉給我們的董事長兼首席執行官 Suri Suriyakumar。蘇瑞？

Thank you, David. Good afternoon, and thank you for joining us. Today, I'm happy to report a strong quarter in terms of net earnings despite the softening of overall sales driven by the current market conditions. Our business model continues to prove its effectiveness in leveraging sales, generating cash and creating opportunities for future growth. During the second quarter, we experienced healthy demand in digital color printing and growth of more than 20% in scanning. These 2 service lines continue to show healthy demand as retail markets make a comeback, customers in this segment are investing more in color to aggressively compete for their share of the business. While the corporate clients, including state and federal institutions are increasingly using visual communications to articulate their values to both customers and employees. Scanning continues to show high demand as customers continue converting their legacy information to create digital access.

謝謝你，大衛。下午好，感謝您加入我們。今天，我很高興地報告儘管當前市場狀況導致整體銷售疲軟，但本季度淨利潤仍表現強勁。我們的商業模式不斷證明其在利用銷售、創造現金和創造未來增長機會方面的有效性。第二季度，我們對數字彩色打印的需求強勁，掃描需求增長超過 20%。隨著零售市場的複蘇，這兩條服務線繼續顯示出健康的需求，該細分市場的客戶正在加大對色彩的投資，以積極爭奪自己的業務份額。而包括州和聯邦機構在內的企業客戶越來越多地使用視覺傳達來向客戶和員工表達他們的價值觀。隨著客戶不斷轉換其遺留信息以創建數字訪問，掃描繼續顯示出很高的需求。

Construction-related printing, on the other hand, (inaudible) the volatile conditions in construction due to interest rate hikes, and we have seen -- interest rate hikes we have seen to date and there are no obvious catalysts to change these conditions in the months ahead. This is where our diversification into new and growing industry segments has allowed us to become less dependent on planned printing revenues. At this point, we think it's likely that the plan printing will suffer the same effects of slowing construction activity through the end of the year.

另一方面，與建築相關的印刷（聽不清）由於加息而導致建築業的狀況不穩定，我們已經看到了迄今為​​止我們所看到的加息，並且沒有明顯的催化劑來改變這些狀況未來幾個月。這就是我們向新的和不斷增長的行業領域的多元化，使我們能夠減少對計劃印刷收入的依賴。目前，我們認為計劃印刷可能會在年底前受到建築活動放緩的同樣影響。

While the timing of this trend will make it harder to drive overall sales in the last half of the year, we feel strongly that we can maintain strong profitability and cash flows in 2023 and drive sales growth in 2024 with the support of a strong pipeline with some large projects scheduled to ramp up later this year. As always, cash flows remained healthy, supporting our commitment to return shareholder value via an annual dividend and continuing stock purchases. With that as a background for the quarter, I'll now turn over the call to Dilo and Jorge for a more detailed review. Dilo?

雖然這一趨勢的時機將使推動下半年整體銷售變得更加困難，但我們強烈認為，在強大的管道支持下，我們可以在2023 年保持強勁的盈利能力和現金流，並推動2024 年的銷售增長一些大型項目計劃於今年晚些時候啟動。一如既往，現金流保持健康，支持我們通過年度股息和持續股票購買回報股東價值的承諾。以此作為本季度的背景，我現在將把電話轉給 Dilo 和 Jorge，以進行更詳細的審查。迪洛？

Thank you, Suri. We understand that the business conditions ahead might be challenging. But I want to assure you that we at ARC are well prepared and focused on maintaining our strong fundamentals to do well in the coming quarters. During the second quarter, we prioritized key business fundamentals that have proven successful for us. We executed our sales opportunities well, and we took pride in delighting our customers with exceptional work we delivered.

謝謝你，蘇瑞。我們知道未來的商業環境可能充滿挑戰。但我想向您保證，我們 ARC 已做好充分準備，並致力於保持強勁的基本面，以便在未來幾個季度取得良好的業績。在第二季度，我們優先考慮了已證明對我們來說成功的關鍵業務基礎。我們很好地把握了銷售機會，並以我們交付的出色工作讓客戶滿意而感到自豪。

Making it easy and enjoyable for our customers to do business with us has always been at the core of our execution plans. Despite tough market conditions, we are pleased to report that several of our key business lines showed year-over-year growth. Notably, our digital color traffic services continue to perform well. We witnessed rising demand as our customers recognize the importance of elevating their brand presence and accelerating their marketing efforts. By assisting them beyond graphics printing, we create immersive environments that captivate audiences ultimately expanding their brand presence.

讓客戶輕鬆愉快地與我們開展業務一直是我們執行計劃的核心。儘管市場條件嚴峻，我們很高興地報告，我們的幾個關鍵業務線仍呈現同比增長。值得注意的是，我們的數字色彩流量服務繼續表現良好。隨著客戶認識到提升品牌影響力和加快營銷力度的重要性，我們見證了需求的不斷增長。通過在圖形打印之外為他們提供幫助，我們創造了身臨其境的環境，吸引觀眾，最終擴大他們的品牌影響力。

The big growth story for the quarter however, is in document scanning and archiving. We saw an impressive double-digit increase, reflecting the confidence our customers have in our services and technology. With the recent completion of our Phase 2 expansion of equipment and facilities in our scanning centers, we are now better equipped to deliver services more rapidly for our customers and has already helped us in addressing a healthy backlog of work. On-site printing services remained relatively steady and equipment supply sales are down significantly as capital constraints and lending rates remain high.

然而，本季度最大的增長在於文檔掃描和歸檔。我們看到了令人印象深刻的兩位數增長，反映出客戶對我們的服務和技術的信心。隨著最近完成掃描中心設備和設施的第二階段擴建，我們現在能夠更好地為客戶提供更快的服務，並已經幫助我們解決了大量積壓的工作。由於資金緊張和貸款利率居高不下，現場打印服務保持相對穩定，設備供應銷售大幅下降。

As a technology-driven print and document scanning company, staying ahead of customer trends is crucial for us. Adopting the latest technology-driven printers allows us to deliver high-quality print output, sets us apart from the competition and ensures our customers receive the best possible service. We have been refreshing portions of our digital color equipment in a disciplined way to ensure we have competitive advantages in our market as our market evolves. These upgrades have been factored into our CapEx and cash flow projections for the year.

作為一家技術驅動的打印和文檔掃描公司，保持領先於客戶趨勢對我們至關重要。採用最新技術驅動的打印機使我們能夠提供高質量的打印輸出，使我們在競爭中脫穎而出，並確保我們的客戶獲得最好的服務。我們一直在以嚴格的方式更新部分數字彩色設備，以確保隨著市場的發展，我們在市場中擁有競爭優勢。這些升級已計入我們今年的資本支出和現金流預測中。

With regard to our sales pipeline, we have made good progress during the first half of the year. We have improved our win loss ratio and the overall value of new projects we have borne is higher than last year's. As Suri mentioned, we have some good projects in the pipeline that will start to ramp up later this year. The size of our sales force remains the same as we double down on our marketing efforts. Our divisional management teams have shown commendable results by improving gross profit year-over-year.

就我們的銷售渠道而言，上半年我們取得了良好的進展。我們的盈虧比有所改善，新承接項目的整體價值高於去年。正如蘇瑞提到的，我們正在醞釀一些好的項目，這些項目將於今年晚些時候開始啟動。我們的銷售隊伍規模保持不變，但我們加大了營銷力度。我們的部門管理團隊通過毛利潤逐年提高，取得了令人稱讚的成果。

Our focus on operational fundamentals such as good material and labor management as well as cost-efficient processes has contributed to a 60 basis point improvement in gross margins. Our demand gen and online marketing activities are ongoing, yielding good customer leads via our website and social channels. By showcasing our completed projects capabilities, we are successfully attracting new customers. At ARC, we believe that our success lies not only in our business strategies, but also in the dedication and motivation of our staff. We recently implemented the program to support our employees who engage in community volunteer programs. This initiative reflects our commitment to making a positive impact in society and fostering a motivated and inspired workforce. All of these efforts are in support of our strategy to transform our addressable market, meet it needs and delight our customers with outstanding service. We are confident that this strategy remains the most direct path for the company's growth as we head to the end of 2023 and approach 2024. Jorge?

我們對運營基礎的關注，例如良好的材料和勞動力管理以及具有成本效益的流程，使毛利率提高了 60 個基點。我們的需求生成和在線營銷活動正在進行中，通過我們的網站和社交渠道產生良好的客戶線索。通過展示我們已完成的項目能力，我們成功吸引了新客戶。在ARC，我們相信我們的成功不僅取決於我們的業務戰略，還取決於我們員工的奉獻和積極性。我們最近實施了該計劃，以支持參與社區志願者計劃的員工。這一舉措體現了我們致力於對社會產生積極影響並培養一支積極主動、富有靈感的員工隊伍的承諾。所有這些努力都是為了支持我們的戰略，即轉變我們的目標市場、滿足其需求並以卓越的服務取悅我們的客戶。我們相信，隨著 2023 年底和 2024 年的臨近，這一戰略仍然是公司增長的最直接路徑。Jorge？

Thank you, Dilo. As we've heard, overall sales dropped 3%, but grew in our most important strategic areas. Despite the overall sales drop of $2.2 million, gross profit was down just $360,000 and gross margins improved by 60 basis points. The margin expansion was achieved due to our efficient and flexible cost structure. We exerted our usual discipline over SG&A controlling variable costs, which helped drive a $360,000 increase in adjusted net income. EPS also increased, up at penny year-over-year at $0.09. Adjusted EBITDA for the quarter was essentially flat. By contrast, cash flow from operations was up more than $2.5 million year-to-date and was assisted by strong performance in our accounts receivable collections.

謝謝你，迪洛。正如我們所知，整體銷售額下降了 3%，但我們最重要的戰略領域卻實現了增長。儘管整體銷售額下降了 220 萬美元，但毛利潤僅下降了 36 萬美元，毛利率提高了 60 個基點。利潤率的擴大得益於我們高效、靈活的成本結構。我們在 SG&A 控制可變成本方面發揮了一貫的紀律，這有助於推動調整後淨利潤增加 360,000 美元。每股收益也有所增長，同比上漲 0.09 美元。本季度調整後 EBITDA 基本持平。相比之下，今年迄今為止，運營現金流量增加了 250 萬美元以上，這得益於我們應收賬款催收的強勁表現。

As many of our investors know, our strong cash flows allow us to acquire or upgrade equipment for 3 primary reasons: To improve operational efficiencies, to maintain a competitive advantage or it should increase capacity to serve a new market or an expand in existing ones. Our overall equipment budget for 2023 remains unchanged for the remainder of the year at approximately $3 million to $4 million per quarter. But with high interest rates, we are choosing to use more cash as compared to finance leases. As a result, lease payments will continue to drop and overall interest expense of approximately $450,000 per quarter will remain unchanged.

正如我們的許多投資者所知，我們強勁的現金流使我們能夠出於三個主要原因購買或升級設備：提高運營效率、保持競爭優勢或增加服務新市場或擴大現有市場的能力。我們 2023 年的總體設備預算在今年剩餘時間內保持不變，為每季度約 300 萬至 400 萬美元。但由於利率較高，與融資租賃相比，我們選擇使用更多現金。因此，租賃付款額將繼續下降，每季度約 450,000 美元的總體利息支出將保持不變。

As we've stated repeatedly, the primary use of excess cash is to return shareholder value. And in the second quarter, we paid out $2.1 million in quarterly cash dividends, and we used $1.7 million during the quarter to repurchase shares. If we maintain this trend and at this time, it appears we will, we will have returned more than 50% of our adjusted free cash flow to shareholders by the end of 2023. In summary, we are optimistic about our growth prospects based on our pipeline. While sales may lag a bit behind the improvements to our bottom line, the solid EPS and cash flows we expect for the balance of the year will position us well for 2024. With that, I'll turn the call back to Suri. Suri?

正如我們反復指出的，多餘現金的主要用途是回報股東價值。在第二季度，我們支付了 210 萬美元的季度現金股息，並在本季度使用了 170 萬美元回購股票。如果我們保持這一趨勢，那麼到 2023 年底，我們將向股東返還超過 50% 的調整後自由現金流。總而言之，我們對我們的增長前景感到樂觀，因為我們的增長前景管道。雖然銷售額可能會稍微落後於我們利潤的改善，但我們預計今年剩餘時間的穩健每股收益和現金流將為我們在 2024 年奠定良好的基礎。因此，我將把電話轉回 Suri。蘇瑞？

Thank you, Jorge. Operator, we are now available for our listeners' questions.

謝謝你，豪爾赫。接線員，我們現在可以回答聽眾的問題。

(Operator Instructions) Your first question comes from the line of Greg Burns from Sidoti.

（操作員說明）您的第一個問題來自 Sidoti 的 Greg Burns。

When we look at the digital printing, what is the split in revenue between digital color graphics and construction-related printing. And what are the relative growth rates of those 2 segments. I'm just trying to get a sense of kind of maybe when the secular growth of the digital printing might be enough to offset some of the cyclical headwinds you're seeing on the construction side of the business?

當我們審視數字印刷時，數字彩色圖形和建築相關印刷之間的收入分配是多少。這兩個細分市場的相對增長率是多少？我只是想了解一下，也許數字印刷的長期增長何時足以抵消您在業務建設方面看到的一些週期性逆風？

Yes. So Greg, on the digital printing side, 50% of the revenue is from digital color graphic services and the other 50% is coming from traditional plan printing services. So currently, on the -- when you take the digital color segment. That segment is definitely a growth segment, and we continue to grow in that market in the services and the customers are continuing to get busier, and that will continue to grow, as we've seen in the last couple of quarters. Plan printing services are definitely under some stress with the current market conditions, what we see out there. And that segment has been, as you know, that we dropped last quarter. Even this quarter, we had a drop. And I think that will continue for the next couple of quarters until we see some kind of stabilization in the interest rates and so forth. But when it comes to the growth areas, primarily on the digital printing side, we continue to see good market conditions, good customer interactions with us. Budgets are still fairly good. And we continue to -- we will see that uptick in the coming quarters.

是的。所以格雷格，在數字印刷方面，50%的收入來自數字彩色圖形服務，另外50%來自傳統的平面印刷服務。目前，當你採用數字色彩部分時。該細分市場絕對是一個增長的細分市場，我們在該市場的服務中繼續增長，客戶繼續變得更加忙碌，並且正如我們在過去幾個季度所看到的那樣，這一市場將繼續增長。從我們所看到的當前市場狀況來看，計劃打印服務肯定面臨著一些壓力。如您所知，我們上個季度放棄了該細分市場。即使在本季度，我們的業績也有所下降。我認為這種情況將在接下來的幾個季度持續下去，直到我們看到利率等出現某種程度的穩定。但當談到增長領域時，主要是在數字印刷方面，我們繼續看到良好的市場狀況以及良好的客戶與我們的互動。預算還是比較可觀的。我們將在未來幾個季度看到這種增長。

Okay. Great. And then to that point about the digital print market. Can you just talk about maybe the verticals where you're seeing the most growth or if you're seeing weakness in any specific verticals? And then maybe if you could share any other metrics around lead gen, the number of leads you're generating, conversion or any other kind of pipeline metrics that might give us a sense of the demand environment.

好的。偉大的。然後是關於數字印刷市場的問題。您能否談談您看到增長最快的垂直行業，或者您是否看到任何特定垂直行業的弱點？然後，也許您可​​以分享有關潛在客戶開發的任何其他指標、您正在生成的潛在客戶數量、轉化率或任何其他類型的管道指標，這些指標可能會讓我們了解需求環境。

The digital -- on the digital graphics color, many of the customer verticals are continuing to grow. There's not a single segment of the business that is not growing because most of the customers are continuing to market, continue to take part in trade shows. They are renovating their offices to accommodate the new staff coming in. So some of the significant wins that we had during the second quarter came from different verticals. We got a significant large win from a bank completely renovating their office space. We got a large hotel chain renovating their vacation type of hotels significantly. Lots of school districts are continuing to revamp their internal graphics of schools. We saw -- we've seen many malls, many retail malls upgrading their locations to attract new tenants and also protect the tenants that they have as well. So when it comes to digital color graphics, the types of customers that are engaged with us, type of customers who are spending money are continuing to be -- we have a very good customer base continuing to do well with us.

數字——在數字圖形色彩方面，許多垂直客戶正在持續增長。沒有一個業務部門沒有增長，因為大多數客戶都在繼續營銷，繼續參加貿易展覽。他們正在翻新辦公室，以適應新員工的加入。因此，我們在第二季度取得的一些重大勝利來自不同的垂直領域。我們從一家完全翻新其辦公空間的銀行那裡獲得了重大勝利。我們有一家大型連鎖酒店對他們的度假型酒店進行了重大改造。許多學區正在繼續改造學校的內部圖形。我們看到——我們看到許多購物中心、許多零售商場升級其位置以吸引新租戶並保護現有租戶。因此，當談到數字彩色圖形時，與我們合作的客戶類型、花錢的客戶類型仍然是——我們擁有非常好的客戶群，並且繼續與我們合作良好。

One segment that is continuing to be a little sluggish is the technology companies, the larger technology companies coming out of their bad times, some of their expenditure has been curtailed. Budgets have reduced a bit. So I think in the next couple of quarters when conditions improve in the market, we should see the technology companies coming back again. But otherwise, the rest of the markets that we are marketing to are continuing to do well, and we are happy about -- happy with the results we see from our marketing activity.

持續有點低迷的一個領域是科技公司，大型科技公司走出了低迷時期，他們的一些支出已經被削減。預算減少了一些。因此，我認為在接下來的幾個季度，當市場狀況改善時，我們應該會看到科技公司再次回歸。但除此之外，我們營銷的其他市場繼續表現良好，我們對營銷活動取得的結果感到高興。

I think your second question was about our digital marketing campaigns. We -- as I said, look, we are really doubling down on the sales and marketing activities among those customers. And we see a growth in our inbound lead program as well. I mean just rough numbers year-over-year, we just had that meetings last week. We've seen about a 40% growth in our leads year-over-year as well. So we continue to perform well in the inbound leads, and it is really helping our sales organization to be out there to take in the leads and converting them into an actual court and then to a final win. So overall, happy with the marketing program as well.

我認為你的第二個問題是關於我們的數字營銷活動。正如我所說，我們確實在這些客戶中加倍開展銷售和營銷活動。我們也看到我們的入站潛在客戶計劃有所增長。我的意思是，只是同比的粗略數字，我們上周剛剛舉行了會議。我們的銷售線索同比也增長了約 40%。因此，我們在入站線索方面繼續表現良好，這確實有助於我們的銷售組織抓住線索並將其轉化為實際的法庭，然後取得最終的勝利。總的來說，我對營銷計劃也很滿意。

Okay. Great. And then just lastly, I know you were kind of in the market buying back stock this past quarter. What's your -- I guess, what are your plans going forward in terms of capital allocation between the dividend and stock and maybe any other priorities you might have?

好的。偉大的。最後，我知道上個季度您在市場上回購了股票。我想，您在股息和股票之間的資本分配方面有何計劃，以及您可能有的其他優先事項？

Yes. When we look at the dividend, we've been pretty consistent, $0.05 a quarter, $2 million a quarter, roughly $8 million a year. So we don't anticipate changing that. What we did do this year is get more aggressive with the stock buyback as we communicated today, we used about $1.7 million for stock buyback. So when you crunch the numbers there, roughly 50% plus of our excess free cash flows are being used to return shareholder value. And as I just mentioned, we know the number for dividend, the delta would be on the stock.

是的。當我們看股息時，我們非常一致，每季度 0.05 美元，每季度 200 萬美元，每年大約 800 萬美元。所以我們預計不會改變這一點。正如我們今天所傳達的，我們今年所做的就是更加積極地進行股票回購，我們使用了約 170 萬美元用於股票回購。因此，當你仔細計算那裡的數字時，我們大約 50% 以上的超額自由現金流被用於回報股東價值。正如我剛才提到的，我們知道股息的數字，增量將在股票上。

Your next question comes from the line of David Marsh from Singular Research.

您的下一個問題來自 Singular Research 的 David Marsh。

Just first one to follow up on the question about leads and your comment, Dilo, about kind of 40% growth in leads year-over-year. Can you just talk about conversion, what the typical cycle is for conversion and what percentage of those leads that you have been successful in converting into new business in the last couple of quarters?

這是第一個跟進有關潛在客戶的問題和您的評論的人，Dilo，關於潛在客戶同比增長 40%。您能談談轉化嗎？典型的轉化週期是怎樣的，以及在過去幾個季度中您成功轉化為新業務的潛在客戶的百分比是多少？

Yes. So as I said in my earlier commentary, we are continuing really doubling down on our digital marketing activity. And the leads that we see year-over-year has picked up as well. And since we offer about almost 22, 23 types of services, we get a variety of leads from each different type of services. So our marketing programs really cater, go after the specific segment of buyers with a certain service. That's how we market. We don't just do one e-mail or one market for all prospects, we try and segment and go after it. So the leads that we receive are very diversified pool of leads that we get. The close rate for different services and the time it takes to close for different services are very different. For example, we get quite a bit of document scanning leads, and those leads can close within a couple of weeks because once we inspect, we have standard pricing. We get that converted real quickly. A small digital format type of work for marketing purposes and so forth, we closed them quickly because those are ready to go basically.

是的。因此，正如我在之前的評論中所說，我們正在繼續加倍努力進行數字營銷活動。我們看到的領先地位也逐年上升。由於我們提供大約 22、23 種服務，因此我們從每種不同類型的服務中獲得了各種潛在客戶。因此，我們的營銷計劃確實迎合了特定的買家群體，並提供了某種服務。這就是我們的營銷方式。我們不僅僅為所有潛在客戶發送一封電子郵件或一個市場，我們還嘗試對其進行細分並進行跟踪。因此，我們收到的潛在客戶是非常多樣化的。不同服務的關閉率以及不同服務關閉所需的時間有很大差異。例如，我們獲得了大量的文檔掃描線索，這些線索可以在幾週內關閉，因為一旦我們檢查，我們就有標准定價。我們很快就得到了轉換。出於營銷目的等目的的小型數字格式工作，我們很快就關閉了它們，因為這些基本上已經準備好了。

Some of the larger projects like enterprise type of scanning opportunities where some public institute or a big company has HIPAA-related documents, those type of leads require a little bit more conversation, back and forth inspections and so forth. So they may take maybe a couple of months for us to make that close, part of it, some of the larger color opportunities that require a complete rehaul of their office will take a couple of weeks to a month, 1.5 months for us to close. And some of the leads that are not -- that we don't win, right? There's -- some of it is getting pushed back due to the budgetary requirements. Once the customer understands what it truly cost, they might punt it down for a couple of quarters and say, okay, let's pick back up in the new year, right? So some of the deals that we don't win are -- sometimes it's below our margins, and we don't want to perform at that type of work.

一些較大的項目，例如企業類型的掃描機會，其中一些公共機構或大公司擁有 HIPAA 相關文檔，這些類型的線索需要更多的對話、來回檢查等。因此，我們可能需要幾個月的時間才能關閉，其中一部分需要徹底改造其辦公室的一些較大的色彩機會將需要幾周到一個月的時間，我們需要 1.5 個月的時間才能關閉。有些領先優勢不是——我們不會贏，對吧？由於預算要求，其中一些計劃被推遲。一旦客戶了解了它的真正成本，他們可能會押注幾個季度，然後說，好吧，讓我們在新的一年裡重新開始吧？因此，我們沒有贏得的一些交易有時低於我們的利潤，而我們不想從事此類工作。

Some of the local competition probably might go at a number that we are not comfortable. But overall, our leads that we receive, the quality of the leads are good. Our sales engagement of those leads are good. The speed to get in front of a lead is also good. So overall, there are -- always we look for ways of improving. Right now, we are currently focusing on improving our win rate. We want to challenge ourselves to improve our win rates. So that's a third quarter challenge that we have taken upon ourselves among our senior leadership in the sales side. How do we win more? But overall, things are going well on the marketing side.

一些當地的競爭可能會以我們不舒服的數字進行。但總的來說，我們收到的潛在客戶的質量都很好。我們對這些潛在客戶的銷售參與度很好。領先領先者的速度也不錯。總的來說，我們總是在尋找改進的方法。目前，我們的重點是提高勝率。我們想挑戰自己以提高勝率。這是我們銷售方面的高級領導層面臨的第三季度挑戰。我們怎樣才能贏得更多？但總體而言，營銷方面進展順利。

That's really very helpful. Jorge, I want to turn to the balance sheet for a minute. I mean, obviously, you guys did a great job on the working capital front. Inventory levels are down at pretty historically low levels for the last couple of years. I mean, is this sustainable like inventory level going forward? I mean -- or do you think that you're going to have to commit perhaps a little bit of capital going forward to grow inventories if some of the -- particularly if some of the construction work comes back?

這確實非常有幫助。豪爾赫，我想談談資產負債表。我的意思是，顯然，你們在營運資金方面做得很好。過去幾年，庫存水平降至相當低的歷史水平。我的意思是，這是否像未來的庫存水平一樣可持續？我的意思是——或者你是否認為，如果其中一些——特別是如果一些建築工作恢復的話，你可能必須投入一點資金來增加庫存？

The quick answer is, this is our new level and it's sustainable. I mean it might vary a little bit up or down between quarters, but not dramatically.

簡單的回答是，這是我們的新水平，而且是可持續的。我的意思是，每個季度之間可能會有一點上下變化，但不會太大。

That's certainly very good news from a working capital management perspective. And then just touching again on the leases. How much exactly do you expect would roll off on the finance leases this year?

從營運資金管理的角度來看，這無疑是一個非常好的消息。然後再次談到租賃。您預計今年的融資租賃具體會減少多少？

Roughly, we'll pay down roughly $12 million worth of leases, we will probably add somewhere in the $6 million to $8 million range. So if you just do the math there, in that $4 million range. Does that make sense?

粗略地說，我們將支付大約 1200 萬美元的租金，我們可能會增加 600 萬至 800 萬美元的租金。所以如果你算一下，在 400 萬美元的範圍內。那有意義嗎？

Yes, it does. And I guess when you mentioned in your remarks, I guess, the interest rate being higher, you just -- your interest expense is going to remain kind of steady.

是的，它確實。我想當你在講話中提到利率更高時，你的利息支出將保持穩定。

Yes. If you're modeling now, use the same interest rate, I know that's the beauty about our company, right? You hear all this rising interest rates, they're doubling but we essentially don't have any bank debt because I use my excess cash to pay down the revolver. So we really just have those capital leases, as you just mentioned, are dropping. So our interest expense will be around $450,000 a quarter, about $1.6 million a year. I think very few companies could say that in this environment, that their interest expense is going to stay flat year-over-year, and we anticipate that will be this year and next year.

是的。如果你現在做模特，使用相同的利率，我知道這就是我們公司的美妙之處，對吧？你聽說利率不斷上漲，翻了一番，但我們基本上沒有任何銀行債務，因為我用多餘的現金來償還左輪手槍。因此，正如您剛才提到的，我們實際上只是資本租賃正在下降。因此，我們每季度的利息支出約為 45 萬美元，每年約為 160 萬美元。我認為很少有公司可以說在這種環境下，他們的利息支出將同比持平，我們預計今年和明年都會如此。

Right. No, that's definitely a very strong point for the company, I would concur. And just lastly, I just wanted to talk about the share count a little bit. The basic share count ticked up a little bit sequentially, diluted ticked down a little bit with the share repurchase activity. Could you just give us a little bit of guidance in terms of how to think about that going forward? Will those 2 numbers sort of continue to kind of merge closer to one another? Is that the way we should think about that? Or is there something else there?

正確的。不，我同意這對公司來說絕對是一個非常強的點。最後，我只想談談份額計數。基本股數量連續小幅上升，稀釋股數隨著股票回購活動略有下降。您能給我們一些關於如何思考未來的指導嗎？這兩個數字會繼續相互融合嗎？我們應該這樣思考嗎？或者還有其他什麼東西嗎？

It's really hard to answer that question because the product of how close they are, it's really dependent on what the stock price is. Depending on what the stock price is will dictate if outstanding options and restricted starts are dilutive or not dilutive. When they're dilutive, while then they get out of the equation and your basic and your diluted shares are closer together. So like I said, it's -- from my perspective, I want the stock price to keep going up and up and that delta to be greater. But what I could tell you is that we're committing to continuing our buyback of shares in the open market. We bought back over $0.5 million here in the second quarter. We're going to keep attacking that number in third quarter, fourth quarter and into next year. I can't commit on a specific number, but what I could commit to you is that we're committed as an organization to drive that number down.

確實很難回答這個問題，因為它們的接近程度實際上取決於股價。根據股票價格的不同，將決定未償還期權和受限啟動是否具有稀釋性。當它們具有稀釋性時，它們就脫離了等式，您的基本股和稀釋後的股票更加接近。就像我說的，從我的角度來看，我希望股價繼續上漲，並且三角洲更大。但我可以告訴你的是，我們承諾繼續在公開市場回購股票。我們第二季度在這裡回購了超過 50 萬美元。我們將在第三季度、第四季度和明年繼續攻擊這個數字。我無法承諾具體數字，但我可以向您承諾的是，我們作為一個組織致力於降低該數字。

And what can -- are you able to disclose the average per share repurchase price during the quarter?

您能透露本季度的平均每股回購價格嗎？

Yes, it was $3 -- a little under $3.

是的，是 3 美元——略低於 3 美元。

(Operator Instructions) Your next question comes from the line of Glenn Primack from Lisa Investment Group.

（操作員說明）您的下一個問題來自 Lisa Investment Group 的 Glenn Primack。

I have a couple of quick ones. I really like that no increase in interest expense, by the way, Jorge. First, on the Bipartisan Infrastructure Bill. Do you think you'll see any projects starting to flow in your inbound in the next 12 months?

我有幾個快速的。順便說一句，豪爾赫，我真的很喜歡利息支出不增加。首先，關於兩黨基礎設施​​法案。您認為在接下來的 12 個月內您會看到任何項目開始流入您的項目嗎？

Yes, definitely. We've seen the infrastructure funding come back to certain states for certain projects. And I'll just give you one good example is that there's a brand-new chip plant being built in Boise, Idaho. So we have a piece of that. So similarly, we've also seen some of our larger customers like AECOM, who are taking part or have been awarded significant sized projects in airport renovations, new infrastructure spending as well. So I think this is just the beginning. Things are just trying to roll down from (inaudible) back to the states and -- for certain projects. So I think in the next year, 2 years, there will be a lot more work coming down to those large contractors.

當然是。我們已經看到基礎設施資金回到某些州用於某些項目。我舉一個很好的例子，愛達荷州博伊西正在建設一座全新的芯片工廠。所以我們有一部分。同樣，我們也看到了一些像 AECOM 這樣的大客戶，他們正在參與或已經獲得了機場翻新、新基礎設施支出等大型項目。所以我認為這只是一個開始。對於某些項目，事情只是試圖從（聽不清）回到各州。所以我認為在接下來的一年、兩年裡，那些大型承包商將會承擔更多的工作。

That's great. Second quick one. I don't know if you track trade shows as a market segment. And so, is it typically stronger in the first half of the year or the back half of the year?

那太棒了。第二快的。我不知道您是否將貿易展覽視為一個細分市場。那麼，通常是上半年更強還是下半年更強？

Usually, the first quarter is a big first quarter, second quarter is a big trade show period, then again, September through end of October is another period. But those are for the major national shows that takes place in Vegas, Florida or the larger organizations. But one of the things that we've noticed since the pandemic is that regional trade shows are very popular, right? So there are smaller shows, very condensed. It's market-driven. And there are more shows regionally than at a national level, while the national levels are picking up. So when it comes to trade shows, we don't typically -- right now, think about, okay, if there is a trade show season for us, trade show season is every month because every city, every region, every big hotel, every big convention center, there's something going on every month, every week per se. So that's where we see good opportunities. We just had to hunt for that business. But unlike in the past, there's more activity happening at the trade show market.

通常，第一季度是一個重要的第一季度，第二季度是一個重要的貿易展覽期，然後，九月到十月底是另一個時期。但這些都是針對在佛羅里達州維加斯或較大組織舉辦的全國性大型演出。但自大流行以來我們注意到的一件事是區域貿易展非常受歡迎，對吧？所以有一些較小的節目，非常緊湊。這是市場驅動的。地區層面的演出數量多於國家層面的演出數量，而國家層面的演出數量也在不斷增加。因此，當談到貿易展覽時，我們現在通常不會考慮，好吧，如果我們有一個貿易展覽季節，那麼每個月都有貿易展覽季節，因為每個城市、每個地區、每個大酒店，每個大型會議中心每個月、每週都會舉辦一些活動。這就是我們看到的良好機會。我們只需要尋找那個生意。但與過去不同的是，貿易展覽市場上發生了更多的活動。

Okay. And then do you think you're at an advantage in that market just because you have the national presence to print for some segment of the economy that's having a big show, let's say, in Vegas and then like some follow-up thing in Atlanta, and you want all the printing of the boards and everything else to be consistent?

好的。然後你是否認為你在這個市場上處於優勢，僅僅因為你在全國范圍內為某些經濟領域印刷，這些經濟領域正在舉辦一場大型演出，比如說在拉斯維加斯，然後在亞特蘭大進行一些後續活動，並且您希望電路板的所有印刷和其他所有內容都保持一致？

We believe that we have a leg up, but that doesn't mean there's no competition. There's fierce competition when it comes to trade show work because there are well-established companies around the country who has done this work for a long time. But when it comes to quick turnaround, high quality and to get the work done locally in the mines, there's nobody -- no better person -- company better than ours. So we market to that specific types of features and benefits that we can provide. And we feel that we have a good chance.

我們相信我們有優勢，但這並不意味著沒有競爭。貿易展覽工作的競爭非常激烈，因為全國各地都有長期從事這項工作的知名公司。但是，當談到快速周轉、高質量以及在礦山本地完成工作時，沒有人（沒有比我們更好的人）公司比我們更好了。因此，我們針對我們可以提供的特定類型的功能和優勢進行營銷。我們覺得我們有很好的機會。

All right. And then the last one, which I don't know, maybe answer or not, but does the -- scanning product line, does that have a higher gross margin than the reported gross margin?

好的。最後一個，我不知道，也許回答或不回答，但掃描產品線的毛利率是否比報告的毛利率更高？

Since we performed the scanning work within our same service center, we don't report the gross margin separated by product line. But overall, all of our product lines have a very similar gross margin line. So we have -- so that's how we would -- I would like you to think about the margins.

由於我們在同一服務中心進行掃描工作，因此我們不報告按產品線劃分的毛利率。但總體而言，我們所有的產品線都有非常相似的毛利率線。所以我們——所以這就是我們的方式——我希望你們考慮一下利潤。

There are no further questions at this time. Mr. David Stickney, I turn the call back over to you.

目前沒有其他問題。大衛·斯蒂克尼先生，我將電話轉回給您。

Thanks, Abby, and thanks, everyone, for your interest this evening. We very much appreciate your continued interest in the company and in stock, and we look forward to talking with you next quarter about it and to tell you about our progress. Thanks so much. Take care. Have a good night. Bye-bye.

謝謝艾比，謝謝大家今晚的關注。我們非常感謝您對公司和股票的持續關注，我們期待在下個季度與您討論此事並告訴您我們的進展。非常感謝。小心。祝你晚安。再見。

This concludes today's conference call. You may now disconnect.

今天的電話會議到此結束。您現在可以斷開連接。