ARC Document Solutions Inc (ARC) 2024 Q1 法說會逐字稿

Thank you for standing by. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q1 2024 ARC Document Solutions earnings report. (Operator Instructions) Thank you. I would now like to turn the conference over to David Stickney, Vice President of Investor Relations. You may begin.

謝謝你的支持。我叫帕姆，今天我將擔任你們的會議操作員。在此，我歡迎大家閱讀 ARC Document Solutions 2024 年第一季財報。（操作員說明）謝謝。我現在想將會議交給投資者關係副總裁 David Stickney。你可以開始了。

Thank you, Pam, 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.

謝謝你，帕姆，歡迎大家。今天與我通話的是我們的執行長兼董事長 Suri Suriyakumar；我們的總裁兼營運長 Dilo Wijesuriya；以及我們的財務長豪爾赫·阿瓦洛斯 (Jorge Avalos)。

Our first quarter results for 2024 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.

我們今天早些時候在新聞稿中公佈了 2024 年第一季業績。新聞稿和其他公司資料可從 ARC Document Solutions 網站 ir.e-arc.com 的投資者關係頁面取得。

Please note that today's call will contain forward-looking statements and are only predictions based on information as of today, May 7, 2024, and actual results may differ materially as a result of risks and uncertainties that we highlight in our quarterly and annual SEC filings.

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2024 年5 月7 日的資訊的預測，由於我們在季度和年度SEC 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。

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?

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執行長 Suri Suriyakumar。蘇瑞？

Thank you, David. I'm happy to report that our business transformation remains on track with nearly 3% increase in overall sales in the first quarter, along with an increase in earnings per share. We think the year is off to a good start, but the business conditions continue to remain tough.

謝謝你，大衛。我很高興地向大家報告，我們的業務轉型仍處於正軌，第一季整體銷售額成長了近 3%，每股盈餘也有所成長。我們認為今年有一個良好的開端，但商業環境仍然嚴峻。

Our strategic sales focus drove top-line growth, even while operating costs in the first quarter were pressured due to increased material and labor expenses. We believe color and scanning and archiving will continue to drive our momentum this year.

儘管第一季的營運成本因材料和勞動力支出增加而受到壓力，但我們的策略銷售重點推動了營收成長。我們相信彩色、掃描和歸檔將繼續推動我們今年的發展勢頭。

On site services will provide a steady base with some potential upside and continuous cross-selling. And plan printing and equipment and sales will continue to be pressurized by the high cost of capital. Despite some uncertainty percolating, up from macro events at home and around the world, many of our customers and markets are making their own way and not waiting for things to settle down.

現場服務將提供一個穩定的基礎，並具有一些潛在的優勢和持續的交叉銷售。而計劃印刷和設備銷售將繼續受到資金成本高企的壓力。儘管國內和世界各地的宏觀事件帶來了一些不確定性，但我們的許多客戶和市場正在走自己的路，而不是等待事情穩定下來。

Whether it is a stronger trade show presence of planned expansion of locations, a more aggressive local marketing at the store level or a new national campaign, our forward-looking customers are engaging in creative and compelling marketing, and we are in a perfect position to assist.

無論是計劃擴張的更強大的貿易展覽、商店層面更積極的本地營銷還是新的全國性營銷活動，我們有遠見的客戶都在參與創造性和引人注目的營銷，而我們處於完美的位置協助。

As a document scanning and archiving, and the desire to continue converting paper documents to digital files remains very high, in nearly every market we serve. While the benefits of digital archives are obvious under any circumstances, any uncertainty in the economy, disruption in business, or even natural disasters seem to increase the demand for scanning.

作為文件掃描和歸檔，在我們服務的幾乎每個市場中，繼續將紙本文件轉換為數位文件的願望仍然非常高。雖然數位檔案的好處在任何情況下都是顯而易見的，但經濟的任何不確定性、業務中斷甚至自然災害似乎都會增加掃描的需求。

We feel very strongly that we remain in the early stages of document conversion and retention and that there is a very long runway for this service line. As our performance for the quarter shows, we have potential to grow in 2024, but we have to work for it.

我們強烈感覺到，我們仍處於文件轉換和保留的早期階段，並且該服務線還有很長的路要走。正如我們本季的業績所顯示的那樣，我們有潛力在 2024 年實現成長，但我們必須為此努力。

That said, we are confident that we can continue to produce healthy margins and cash flows and remain committed to our 20% annual dividend and opportunistic share repurchases. To help explain some of the details about how we executed our plans, during the first quarter of 2024, I'll turn the call over to Dilo and Jorge for their comments. Dilo?

也就是說，我們有信心能夠繼續產生健康的利潤率和現金流，並繼續致力於 20% 的年度股息和機會性股票回購。為了幫助解釋有關我們如何執行計劃的一些細節，在 2024 年第一季度，我將把電話轉給 Dilo 和 Jorge，徵求他們的意見。迪洛？

Thank you, Suri. We are pleased with our first quarter results, especially in light of some of the economic uncertainty we experienced over the past few months. Our strategy of focusing on new key business lines and the efforts of our teams, rewarded us with nearly 3% growth in net sales for the period.

謝謝你，蘇瑞。我們對第一季的業績感到滿意，特別是考慮到過去幾個月我們經歷的一些經濟不確定性。我們專注於新的關鍵業務線的策略和團隊的努力為我們帶來了近 3% 的期內淨銷售額成長。

US, Canadian, UK, and other international locations, all had positive sales momentum. But every win we achieved was due to relentless focus and well-orchestrated execution by our teams. Little of our work was simply handed to us. We stayed focused on what we could control and worked hard to win every opportunity that came our way. Everyone was focused on delighting our customers and we did so.

美國、加拿大、英國和其他國際地區均呈現正面的銷售動能。但我們取得的每一次勝利都歸功於我們團隊的不懈專注和精心策劃的執行。我們的工作很少是簡單地交給我們的。我們始終專注於我們可以控制的事情，並努力贏得每一個出現在我們面前的機會。每個人都專注於讓我們的客戶滿意，而我們也做到了。

Despite the decline we've seen in capital spending in construction and design, many of the new business segments where as we serve, were resilient and continue to make sensible investments to fight for new business.

儘管我們看到建築和設計方面的資本支出有所下降，但我們所服務的許多新業務部門都具有彈性，並繼續進行明智的投資來爭取新業務。

Trade shows, sports and entertainment events, athletic programs in schools, retails and many other segments are pursuing growth initiatives with their marketing, and we don't see any customer slowing down in this area.

貿易展覽、體育和娛樂活動、學校體育項目、零售業和許多其他領域都在透過行銷尋求成長舉措，我們沒有看到任何客戶在這一領域放慢腳步。

Visually compelling color graphics communicate brand promise and add value to their marketing programs, so demand for these services remains high. As a result, our position in the visual marketing industry is getting stronger.

視覺上引人注目的彩色圖形傳達了品牌承諾並為其行銷計劃增加了價值，因此對這些服務的需求仍然很高。因此，我們在視覺行銷產業的地位越來越牢固。

Unlike the past, we are selling into more and more customer verticals with services and production solutions that deliver outsized benefits in a marketing budget. When such customers spent with us, they know they are getting greater value, whether they are spending a lot or a little. This is a true testament of our transformation.

與過去不同，我們正在向越來越多的垂直客戶銷售服務和生產解決方案，在行銷預算中帶來巨大的效益。當這些客戶在我們這裡消費時，他們知道他們正在獲得更大的價值，無論他們花多少錢。這是我們轉型的真實證明。

Our story is simple and defines our strategy. We help our clients grow their brands and marketing activities with customized color graphic, and we help optimize their document related workflows with scanning and on-site print management services. As a result, our addressable market has grown tremendously.

我們的故事很簡單，並定義了我們的策略。我們透過客製化彩色圖形幫助客戶發展他們的品牌和行銷活動，並透過掃描和現場列印管理服務來幫助優化他們的文件相關工作流程。因此，我們的目標市場大幅成長。

Looking at our individual business lines. Digital print services grew 3.3% and color led the wave. Our 140 digital print centers were well placed to help our clients to get what they want done, wherever they needed at a competitive cost and with a single point of contact.

看看我們的個人業務線。數位印刷服務成長了 3.3%，其中彩色印刷服務引領潮流。我們的 140 個數位印刷中心能夠幫助我們的客戶隨時隨地以具有競爭力的成本和單一聯繫點完成他們想要的工作。

In 2024, we improved our production capabilities and capacity with prudent investments in equipment and labor, and those investments are already showing returns in new business. Meanwhile, we are taking market share from vendors who print and ship from one location, outsource key parts of production or require outside expertise to get a job done.

2024年，我們透過對設備和勞動力的審慎投資，提高了生產能力和產能，這些投資已經在新業務中顯現出回報。同時，我們正在從一個地點列印和運輸、外包關鍵生產部分或需要外部專業知識來完成工作的供應商那裡奪取市場份額。

Customers who work with us, get everything they need in one place at a fair price, and without having to manage multiple vendors. Plan printing that is directly tied to the construction and design verticals, however, continue to be pressured. While there's still activity, future planning has slowed significantly.

與我們合作的客戶可以在一個地方以合理的價格獲得所需的一切，而無需管理多個供應商。然而，與建築和設計垂直領域直接相關的計劃列印仍然面臨壓力。雖然活動仍在進行，但未來的規劃已顯著放緩。

The Architectural Billing Index was down for all three months of the first quarter, and we saw a billing decline of more than 10% from our architectural clients for the period. Until interest rates start to come down, we will not see growth in this revenue segment.

第一季的三個月內，建築帳單指數都在下降，我們看到建築客戶的帳單在此期間下降了 10% 以上。在利率開始下降之前，我們不會看到該收入部門的成長。

That said, we are protecting our share of planned printing and expanding our customer base where possible. We fought back hard with color and scanning, so that this business line did not drag us into a revenue loss.

也就是說，我們正在保護我們計劃印刷的份額，並盡可能擴大我們的客戶群。我們用彩色和掃描進行了強有力的反擊，這樣這條業務線才沒有讓我們陷入收入損失。

On-site print services sales continue to decline, but the offering remains attractive to many of our customers. We continue to add new customers as well, and we expect to moderate the first quarter's drop over the next few quarters.

現場列印服務銷售額持續下降，但該服務對我們的許多客戶仍然具有吸引力。我們也持續增加新客戶，並預計在接下來的幾季中減緩第一季的下降。

By contrast, our document scanning revenue segment increased significantly in the first quarter, growing 23% year-over-year. The growth remained steady throughout all three months as we sped up clearing the backlogs in our production centers with the new capacity we've added last year. Our contract backlog for future quarters is promising.

相較之下，我們的文件掃描收入部分在第一季大幅成長，年增 23%。由於我們利用去年增加的新產能加快了生產中心積壓訂單的清理速度，整個三個月的成長保持穩定。我們未來幾季的合約儲備是有希望的。

There isn't a customer vertical that does not have intentions to improve access to their critical information. Whether that information is private or public, all clients are improving their digital workflows and getting paper converted to digital documents and the market remains robust.

沒有一個客戶垂直領域不打算改善對其關鍵資訊的存取。無論這些資訊是私人的還是公開的，所有客戶都在改進他們的數位工作流程，並將紙張轉換為數位文檔，市場仍然強勁。

As a result, there are many scanning companies in the market. But we are continuing to create more and more distance between us and them. Documents scanning is easy, but few companies are creating processes to capture information efficiently and at scale, as well as building technology to access information on demand the way ARC is.

因此，市場上出現了許多掃描公司。但我們和他們之間的距離卻不斷拉大。文件掃描很容易，但很少有公司能夠創建高效、大規模地捕獲資訊的流程，以及建立像 ARC 那樣按需存取資訊的技術。

We use webinars and customer white papers to both educate customers on how to organize and prepare to digitize large volumes of documents and how to select a responsible vendor who will not abandon them in the middle of a project, complexity, and size.

我們使用網路研討會和客戶白皮書來教育客戶如何組織和準備對大量文件進行數位化，以及如何選擇一個負責任的供應商，他們不會在專案、複雜性和規模中放棄它們。

Equipment and supply sales, a defensive revenue source for ARC, saw a drop of 3% year-over-year. Like construction printing, we will see moderation in this revenue segment as rates begin to ease. Our marketing activities are continuing to help us to secure new leads for our sales reps.

設備和供應品銷售是 ARC 的防禦性收入來源，較去年同期下降 3%。與建築印刷一樣，隨著費率開始下降，我們將看到該收入領域的放緩。我們的行銷活動繼續幫助我們為銷售代表爭取新的銷售線索。

Email marketing, online advertising, Google based SEO, keyword searches, and positive online customer reviews are helping us to open more doors. Our focus has been on organic marketing results and creating long term opportunities.

電子郵件行銷、線上廣告、基於Google的搜尋引擎優化、關鍵字搜尋和積極的線上客戶評論正在幫助我們打開更多的大門。我們的重點是有機行銷結果和創造長期機會。

With regard to profitability, most of our investments in hardware have been completed. During the last two quarters, we've also filled most of our sales vacancies and upgraded key positions in our color production team.

從獲利能力來看，我們硬體的投資已經完成了大部分。在過去的兩個季度中，我們也填補了大部分銷售職缺，並升級了色彩生產團隊的關鍵職位。

Our scanning operations also added additional headcount to get ahead of the production backlog and prepare for existing contract backlog. These moderate but important investments decreased our first quarter gross margin by a little more than 1% and may continue to put mild pressure on our profitability throughout the year.

我們的掃描作業還增加了額外的人員數量，以趕在生產積壓之前並為現有的合約積壓做好準備。這些溫和但重要的投資使我們第一季的毛利率下降了略多於 1%，並可能繼續對我們全年的獲利能力造成輕微壓力。

We are now focused on improving the skills of our new employees as we cross-train them to perform in several departments. They are very focused on employee retention and building a better future for them, so we can ensure a better future for ARC.

我們現在專注於提高新員工的技能，並對他們進行交叉培訓，使其能夠在多個部門工作。他們非常注重留住員工並為他們建立更美好的未來，因此我們可以確保 ARC 擁有更美好的未來。

These are very important strategy for our company as we continue to invest in training, community, diversity and wellness programs. At ARC, we know exactly where we are headed and how we will remain relevant to our customers while improving our long-term performance.

這些對我們公司來說是非常重要的策略，因為我們將繼續投資於培訓、社區、多元化和健康計劃。在 ARC，我們確切地知道我們的發展方向，以及我們如何在提高長期績效的同時保持與客戶的聯繫。

This past quarter, you witnessed several positive results of our strategic execution and foresight in an environment that certainly wasn't bad but had its share of challenges. No matter what lies ahead, our management teams around the company continue to be focused on becoming the best digital print company in the US while delivering significant value to the company's shareholders.

上個季度，您見證了我們的策略執行和遠見在一個當然不錯但也面臨挑戰的環境中取得的一些積極成果。無論未來發生什麼，我們公司的管理團隊都將繼續致力於成為美國最好的數位印刷公司，同時為公司股東創造巨大的價值。

I will now ask Jorge to give you an update on our financial results. Jorge?

我現在請喬治向您介紹我們財務表現的最新情況。喬治？

Thank you, Dilo. As we pointed out, we continue to transform the top line of the company. While things like interest rates, a slowdown in the economy, and global events can mute general progress, none of that stopped us from maintaining our forward momentum.

謝謝你，迪洛。正如我們所指出的，我們將繼續改造公司的營收。雖然利率、經濟放緩和全球事件等因素可能會削弱整體進展，但這些都沒有阻止我們保持前進的動力。

As Dilo outlined a moment ago, during the second half of last year, we began to make the prudent and necessary investments to drive future growth and secure a competitive position in the markets we serve. Equipment acquisitions were a part of that process. But hirings and ongoing inflationary labor costs were the driving force behind the 110 basis points decline in our gross margins.

正如 Dilo 剛才所概述的那樣，去年下半年，我們開始進行審慎和必要的投資，以推動未來的成長並確保在我們所服務的市場中的競爭地位。設備採購是流程的一部分。但招募和持續通膨的勞動成本是我們毛利率下降 110 個基點的驅動力。

The nature of the investment is long term. But ultimately our increase in expertise, efficiency and productivity will pay dividends in the future. Looking ahead at the rest of the year, our current labor expenses will not rise any dramatic way at all, but we don't expect to reduce them significantly either.

投資的性質是長期的。但最終，我們在專業知識、效率和生產力方面的提升將在未來帶來紅利。展望今年剩餘時間，我們目前的勞動成本不會大幅上升，但我們也不期望大幅減少。

As always, we will continuously look for ways to improve efficiencies and ways to reduce material and overhead costs. We may not be able to match last year's gross margins, but we do expect the decline in margins from the first quarter to moderate for the balance of the year.

一如既往，我們將不斷尋找提高效率的方法以及降低材料和管理成本的方法。我們可能無法達到去年的毛利率，但我們確實預計今年餘下的時間裡，第一季的毛利率下降幅度將會放緩。

SG&A for the quarter fell slightly due to reduced professional service expenses, partially offset by labor cost increases. Even so, operating income increased by $300,000 or 8.6%, outpacing our growth in sales. Earnings per share were $0.01 higher than prior year, and EBITDA was essentially flat.

由於專業服務費用減少，本季的銷售、管理費用略有下降，但部分被勞動成本增加所抵銷。即便如此，營業收入仍成長了 30 萬美元，即 8.6%，超過了銷售額的成長。每股收益比上年增加 0.01 美元，EBITDA 基本持平。

We continue to maintain a rock-solid capital structure. Our cash balance is more than $50 million. Our net debt is less than $10 million. Our leverage ratio net of cash is under 0.5 times. Our cash flow from operations came in at $3.7 million for the quarter, roughly in line with the prior year.

我們繼續保持堅如磐石的資本結構。我們的現金餘額超過 5000 萬美元。我們的淨債務不到 1000 萬美元。我們扣除現金後的槓桿率低於0.5倍。本季我們的營運現金流為 370 萬美元，與去年大致持平。

Consistent with historical trends, Q1 is our lowest quarter as cash flows from operations ramp up as we progress through the year. For the fourth year in a row, we plan to issue an annual dividend of $0.20, and we will continue to purchase our own stock in the open market. Our commitment to return in shareholder value is firmly in place.

與歷史趨勢一致，第一季是我們業績最低的季度，因為隨著全年的進展，營運現金流量不斷增加。我們計劃連續第四年派發 0.20 美元的年度股息，並且我們將繼續在公開市場購買我們自己的股票。我們對股東價值回報的承諾是堅定的。

To sum up the quarter, we are very happy with the start we had to 2024. Our strategic business lines are growing. Our pipeline is robust. We made the necessary investments to strengthen our operations and sales force and are taking steps to mitigate the impact of increased labor and material costs.

總結本季度，我們對 2024 年的開局感到非常滿意。我們的策略業務線正在不斷成長。我們的管道很強大。我們進行了必要的投資來加強我們的營運和銷售隊伍，並正在採取措施減輕勞動力和材料成本增加的影響。

At this point, I'll turn the call back to Suri. Suri?

此時，我會將電話轉回 Suri。蘇瑞？

Thank you Jorge. Operator, now we are ready for any questions from our listeners.

謝謝豪爾赫。接線員，現在我們已經準備好回答聽眾的任何問題。

(Operator Instructions) Gregory Burns, Sidoti & Company.

（操作員說明）Gregory Burns，Sidoti & Company。

Yeah, good afternoon. In the color printing portion of the business, can you give us any color around customer types? Are you having more -- greater traction with enterprise-type customers? Where are you seeing the growth in that market and then -- yeah, maybe we could just start there.

是的，下午好。在業務的彩色印刷部分，您能否為我們提供有關客戶類型的任何顏色？您是否對企業型客戶有更多、更大的吸引力？你在哪裡看到了這個市場的成長，然後——是的，也許我們可以從那裡開始。

Dilo, you'd like to take that?

迪洛，你願意接受嗎？

Yeah. Thanks, Greg. So the nice part about the color growth that we are seeing -- we saw in the first quarter is that there is no one special category of customers. Good part is that virtually almost all the verticals are continuing to grow. But if I summarize outside of what they are doing, why these customers are doing, it's all related to marketing activities.

是的。謝謝，格雷格。因此，我們在第一季看到的顏色成長的好處是，沒有特殊類別的客戶。好的一點是，幾乎所有垂直行業都在持續成長。但如果我總結一下他們在做什麼之外，這些客戶為什麼這樣做，這都與行銷活動有關。

The tradeshow business, sports stadiums, sports centers, events are continuing to flourish. And almost all of those events are all directly tied to large format color graphics. They are advertising, and they're making those events a lot more beautiful. We had so many opportunities in the sports arena, stadiums as well during this quarter.

貿易展覽業務、體育場、體育中心、活動持續蓬勃發展。幾乎所有這些事件都與大幅面彩色圖形直接相關。他們在做廣告，他們正在讓這些活動變得更美麗。本季我們在運動場和體育場有很多機會。

So overall, there's no one specific segment. Obviously, there are some very high-profile jobs that we did for sports stadiums and so forth, however, almost all the verticals are doing very well.

總的來說，沒有一個特定的細分市場。顯然，我們為體育場館等做了一些非常引人注目的工作，但是，幾乎所有垂直領域都做得很好。

Okay. And then, could you just maybe give us an idea of why maybe a customer choose you over someone else in the market? I know you highlighted that it's definitely a competitive market, but why does ARC win? And then maybe can you talk about your pipeline of opportunities there and your win rates. Are you happy with how you've been performing? Thank you.

好的。然後，您能否告訴我們為什麼客戶會選擇您而不是市場上的其他人？我知道您強調這絕對是一個競爭激烈的市場，但為什麼 ARC 會獲勝呢？然後也許你可以談談你在那裡的機會管道和你的獲勝率。您對自己的表現滿意嗎？謝謝。

So, one of the things that while there is spending from marketing activities from various customers, one of the things that we clearly see is that every client is very focused on making sure that their spend is valued properly, that they get the best value unlike in the past, right? So one of the key benefits that we've seen, the customers getting from ARC is the fact that our operating expenses, they keep it very, very low and that we are able to price it very competitively, especially when these customers have worked in multiple parts of the country because they may be designing from one area, but the project or the tradeshow might be in another city, completely far away from where they were.

因此，雖然不同客戶的行銷活動都有支出，但我們清楚地看到的一件事是，每個客戶都非常注重確保他們的支出得到正確評估，確保他們獲得最佳價值，這與過去，對嗎？因此，我們看到的客戶從 ARC 獲得的主要好處之一是我們的營運費用非常非常低，而且我們能夠以非常有競爭力的價格定價，特別是當這些客戶在全國多個地區，因為他們可能在一個地區進行設計，但項目或貿易展覽可能在另一個城市，距離他們所在的地方完全遙遠。

And many of them in the past used to print from their local print provider, and they would ship it all across the country and get it installed by someone else. So there was a lot of cost built into those type of projects. So with ARC, we have been able to completely eliminate that shipping expenses and some of the project management times and cost as well.

他們中的許多人過去曾經從當地的列印提供者進行列印，然後將其運送到全國各地並由其他人安裝。因此，此類專案需要投入大量成本。因此，透過 ARC，我們能夠完全消除運輸費用以及一些專案管理時間和成本。

So we've been able to win some of those work by being very smart in the way we price and also adding value to their workflow. So therefore, we are able to win some of the newer projects, especially on the larger projects by being able to produce that work right close to where the event is.

因此，我們透過非常聰明的定價方式並為他們的工作流程增加價值，贏得了其中一些工作。因此，我們能夠贏得一些較新的項目，特別是在較大的項目上，因為我們能夠在活動地點附近製作該作品。

With regard to the pipeline, pipeline is continuing to grow. And we have a very good mixture of local work, regional work, and some of the projects on national. As you know, we've been always focusing on trying to drive up our sales organization from very local business to more regional and then to go after some of the national work as well.

就管道而言，管道正在持續成長。我們很好地融合了地方工作、區域工作和一些國家計畫。如您所知，我們一直致力於將我們的銷售組織從非常本地化的業務提升到更多的區域性業務，然後也致力於一些全國性的工作。

So we are continuing, we are seeing some opportunity, sales reps are getting trained, marketing activities are bringing good opportunities at a regional and national level as well for sales teams. So from a pipeline backlog, the visibility we see for the rest of the year, is very, very good for the company.

因此，我們正在繼續，我們看到了一些機會，銷售代表正在接受培訓，行銷活動為區域和國家層面以及銷售團隊帶來了良好的機會。因此，從管道積壓來看，我們在今年剩餘時間看到的可見度對公司來說非常非常好。

Okay. And then just lastly, you didn't buy back much stock in the quarter. What's -- I know you have an authorization, but what's holding you back? And maybe how do you view your buyback and how you look to deploy that? Thank you.

好的。最後，您在本季沒有回購太多股票。什麼是──我知道你有授權，但是什麼阻礙了你呢？也許你如何看待你的回購以及你打算如何部署它？謝謝。

Yeah, during the first quarter, we ran into the same issue we ran into last year. If you see the numbers, we also didn't buy any back in the first quarter. And it's a timing issue, we file our 10-K at the end of or in the beginning of March. Our window closes a week before the quarter end, it just doesn't give us any time to buy back shares.

是的，在第一季度，我們遇到了去年遇到的相同問題。如果你看到這些數字，我們在第一季也沒有回購任何產品。這是一個時間問題，我們在 3 月底或月初提交 10-K。我們的窗口在季度末前一周關閉，這並沒有給我們任何時間回購股票。

How do we look at it for a full year? We're still committed to it. We're committed to, matching or exceeding what we did last year. That will just be backloaded in the second half of the year, same as it was last year.

我們如何看待全年的情況？我們仍然致力於此。我們致力於、達到或超過去年所做的事情。與去年一樣，這將在今年下半年重新加載。

Okay. Thank you.

好的。謝謝。

Glenn Primack of Lusa Investment Group. Please go ahead.

盧薩投資集團的格倫·普里馬克。請繼續。

Hi, good afternoon, guys. Two quick questions. The first one, have you seen over the past, like I don't know, 12 to 15 months. Any jobs come through in relation to the infrastructure investment Jobs Act?

嗨，大家下午好。兩個簡單的問題。第一個，你在過去見過嗎，我不知道，12到15個月。是否有與基礎設施投資就業法案相關的就業機會？

So we've been -- we don't we haven't seen much work for color, digital color services. But when it comes to plant printing, some of the chip manufacturing plants that are getting built in the country, we are very close to them. We have been enjoying some of the construction related printing work.

所以我們一直——我們沒有看到太多關於色彩、數位色彩服務的工作。但說到植物印刷，國內正在建造的一些晶片製造工廠，我們與他們非常接近。我們一直在享受一些與建築相關的印刷工作。

Okay, great. And I can't help but say this transformation has gone pretty well. So good job to you, Suri and Dilo. As you look forward, do you have any, let's just call it ARC artificial intelligence tools or services that you can begin to offer to the customer base or use internally?

好的，太好了。我不得不說，這種轉變進展得相當順利。蘇瑞和迪洛，幹得好。展望未來，您是否有任何（我們稱之為 ARC 人工智慧）工具或服務可以開始提供給客戶群或在內部使用？

We can use tools like that plan in, for example, scanning services and so on and so forth. We are exploring some of those, we in fact use the tools, but obviously in anything related to at the printing days, not a whole lot to do. But in terms of scanning and imaging and actually extracting information from their day, some productivity there.

我們可以在掃描服務等中使用類似該計劃的工具。我們正在探索其中的一些，實際上我們使用了這些工具，但顯然在與印刷時代相關的任何事情上，沒有太多事情要做。但就掃描和成像以及實際提取當天的資訊而言，那裡有一些生產力。

Sure. So like you might not see it from that customer perspective, but they need this stuff scanned in order to like a get the data to run models at their businesses. Is that fair?

當然。因此，您可能不會從客戶的角度看到它，但他們需要掃描這些內容，以便獲得資料來在他們的企業中運行模型。這樣公平嗎？

Yeah, exactly. Yes.

是的，完全正確。是的。

That's accurate.

這是準確的。

Go ahead and put the artificial intelligence on the website.

繼續將人工智慧放在網站上。

Thank you.

謝謝。

Robert Maltbie, Singular Research.

羅伯特·馬爾特比，奇異研究。

Hi, I'm as you can tell [Zaus Zikini] for Dave, Dave Marsh couldn't join us today. Functionality here is, now I think I have it.

嗨，我是戴夫的 [Zaus Zikini]，戴夫馬什今天無法加入我們。這裡的功能是，現在我想我已經有了。

So congrats on the solid quarter. It looks like you beat the estimates on the street. I know that's not the game short term, but the drug looks like a pretty good ramp. So congratulations to the team.

所以恭喜這個季度的穩健表現。看起來你的表現超出了街上的預期。我知道這不是短期的遊戲，但這種藥物看起來是一個相當不錯的斜坡。所以要祝賀團隊。

Thank you.

謝謝。

First question I have is that gross margins were flat sequentially and down year over year. Can you explain why and what can you do to expand them going forward?

我的第一個問題是，毛利率環比持平，但比去年同期下降。您能否解釋一下原因以及您可以採取哪些措施來擴展它們？

Yeah, from a year-over-year perspective, I mean, we talked a lot about the investments we did in the second half of the year to bolster not only our operating capabilities but our expertise and also adding new sales personnel into the organization.

是的，從同比的角度來看，我的意思是，我們談論了很多關於下半年所做的投資，這些投資不僅增強了我們的營運能力，而且增強了我們的專業知識，並為組織增加了新的銷售人員。

Some of these paid quick dividends. Those are more in the production area. Some of these investments are more long term. We're just trying to gain more expertise, getting more efficient over a period of time as we become more proficient, more knowledgeable in doing scanning and doing the color graphics that coupled with inflationary pressures on material and labor costs, drove our costs up. We did -- we were able to leverage our overhead with the increase in revenues, but ultimately resulted in a decline year over year in margins.

其中一些很快就得到了回報。那些更多的是在生產區域。其中一些投資是長期投資。我們只是想獲得更多的專業知識，隨著我們在掃描和彩色圖形方面變得更加熟練和知識淵博，在一段時間內變得更加高效，再加上材料和勞動力成本的通膨壓力，推高了我們的成本。我們做到了——我們能夠利用我們的管理費用來增加收入，但最終導致利潤率同比下降。

Now, first quarter is usually our softest quarter and we started off the year slower with our margin. So we fully expect on a sequential basis for our margins to increase. Additionally, we're doing other things. We've tried to improve efficiencies internally, looking at various vendors to reduce material costs that can have some other overhead costs.

現在，第一季通常是我們最疲軟的季度，我們的利潤率在年初有所放緩。因此，我們完全預期我們的利潤率會較上季成長。此外，我們還在做其他事情。我們試圖提高內部效率，尋找不同的供應商來降低可能產生其他間接費用的材料成本。

So just to name a few, there are some initiatives we have in place to hopefully mitigate the increase of the inflationary pressures and see a year over year return in our margins. With that said do we expect to match last year's gross margins, when we look at the balance of 2024 year over year, probably not, but we also expect to them for them to moderate and if you do not expect them to be 100 basis points below prior year as we as we progress through the year. Hopefully, that answers your question.

僅舉幾例，我們採取了一些舉措，希望能夠減輕通膨壓力的增加，並實現利潤率的逐年回報。話雖如此，當我們逐年審視 2024 年的餘額時，我們是否期望達到去年的毛利率，可能不會，但我們也期望毛利率會放緩，如果你不期望毛利率達到 100 個基點的話低於去年，因為我們在這一年中取得了進展。希望這能回答你的問題。

Yes. Thank you. And do you think the positive sales momentum realized in Q1 rather will continue throughout the year?

是的。謝謝。您認為第一季實現的積極銷售動能是否會持續全年？

Yeah, we hope to continue that obviously, our legacy plant printing segment will always be challenged is very hard to predict during the year, but how we will have strategic services that we've embarked on several years ago. As you've seen in the last quarter will continue to do well for us for our company.

是的，我們希望繼續這樣做，顯然，我們的傳統工廠印刷部門在這一年中將始終面臨挑戰，這一點很難預測，但我們將如何擁有幾年前就開始的策略服務。正如您在上個季度所看到的那樣，我們公司將繼續表現良好。

Yeah, great. And could you perhaps remind us a little bit about your, I guess, calculus on share repurchases as a cost of capital at versus other opportunities? When would you choose to repurchase shares?

很好。我想，您能否提醒我們一些關於股票回購作為資本成本與其他機會的計算？什麼時候會選擇回購股票？

I mean, we're opportunistic and we buy them on the open market where we've kind of said, since last year, we were holding the same. We spent about $12 million last year on returning shareholder value. $8 million of that roughly was coming from dividends and the other balance roughly $4 million was on stock repurchase or repurchasing our own stock in the open market.

我的意思是，我們是機會主義者，我們在公開市場上購買它們，我們已經說過，自去年以來，我們一直持有同樣的股票。去年我們花了約 1200 萬美元來回報股東價值。其中約 800 萬美元來自股息，其餘約 400 萬美元用於股票回購或在公開市場回購我們自己的股票。

And by and large, we plan to stick to that [mantra] coming into this year 2024. If you look at that as a percentage of our adjusted free cash flows, we spent over 75% of our adjusted free cash flows and returning shareholder value in '23. And we are -- we'll be in that similar range as we look at '24 for the full year.

總的來說，我們計劃在 2024 年繼續堅持這一[口號]。如果你將其視為我們調整後自由現金流的百分比，我們在 23 年花費了超過 75% 的調整後自由現金流並回報了股東價值。當我們展望 24 年全年時，我們將處於類似的範圍內。

As I mentioned earlier, slow start to the year just because timing-wise, we really didn't have an opportunity to repurchase shares. When you look at the timing of when we filed the K and when our window closes.

正如我之前提到的，今年開局緩慢只是因為時間上，我們確實沒有機會回購股票。當您查看我們提交 K 的時間以及我們的視窗關閉的時間。

Thank you. And finally, Paul has talked about AI and the benefits there in front from various perspectives. In terms of your operations, are you utilizing any AI or plan to and are realizing many strategic benefits.

謝謝。最後，Paul 從不同的角度談論了人工智慧以及前面的好處。就您的營運而言，您是否正在利用任何人工智慧或計劃來實現許多戰略利益。

And like I said in the in the previous one person who asked me the question, about AI. We use AI largely is basically in the scanning business, where we not only scan these documents in many of the customers when they want to extract information from these drawings, then be able to do that using AI and really AI driven optical character recognition that what we do.

就像我在上一位問我問題的人中所說的那樣，關於人工智慧。我們主要使用人工智慧基本上是在掃描業務中，我們不僅在許多客戶想要從這些圖紙中提取資訊時掃描這些文檔，然後能夠使用人工智慧和真正人工智慧驅動的光學字元識別來做到這一點我們的確是。

So for our facilities customers, we do that quite a bit in order to really extract be no billing information from growing and then be able to deliver it to them. But that's all in the scanning and facilities related business, obviously, in the printing business we don't utilize a whole lot of AI.

因此，對於我們的設施客戶，我們做了很多這樣的事情，以便真正從增長中提取無賬單信息，然後能夠將其交付給他們。但這都是掃描和設施相關業務，顯然，在印刷業務中我們並沒有使用大量人工智慧。

AI is part of the back office and trying to improve stuff. We use it in some of our marketing and so on. I'm exploring some ways to use it in the finance and accounting. So I guess the quick answer is yes, we are using AI and just like everybody else where we're exploring or we're analyzing it on a monthly, quarterly basis and see where we can utilize it to make ourselves more efficient.

人工智慧是後台的一部分，並試圖改進東西。我們在一些行銷等方面使用它。我正在探索在財務和會計中使用它的一些方法。所以我想快速的答案是肯定的，我們正在使用人工智慧，就像我們正在探索或每月、每季分析它的其他人一樣，看看我們可以在哪裡利用它來提高我們的效率。

Terrific. I'll go back. Thank you, gentlemen, for taking my questions and I'll go back into queue.

了不起。我會回去。先生們，謝謝你們提出我的問題，我將回到隊列中。

There are no more questions, I will now turn the conference back over to David for closing remarks.

沒有其他問題了，我現在將會議轉回給大衛做閉幕詞。

Thank you, Pam, and thank you everyone, for joining us this evening. We appreciate your continued interest in ARC and encourage you to reach out with any questions or requests for information. We look forward to speaking with you here next quarter and any time in between. Thanks so much. Have a great evening. Good night.

謝謝你，帕姆，也謝謝大家今晚加入我們。我們感謝您對 ARC 的持續關注，並鼓勵您提出任何問題或資訊請求。我們期待下個季度以及其間的任何時間與您交談。非常感謝。祝您有個美好的夜晚。晚安。

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

女士們、先生們，今天的電話會議到此結束。感謝大家的加入。您現在可以斷開連線。