ARC Document Solutions Inc (ARC) 2024 Q2 法說會逐字稿

Thank you for standing by. My name is John, and I'll be your conference operator for today. At this time, I'd like to welcome everyone to the ARC Document Solutions second quarter 2024 earnings report. (Operator Instructions).

謝謝你的支持。我叫約翰，今天我將擔任你們的會議操作員。現在，我歡迎大家閱讀 ARC Document Solutions 2024 年第二季財報。（操作員說明）。

I'd now like to turn the call over to David Stickney, Vice President of Investor Relations. Please go ahead.

我現在想將電話轉給投資者關係副總裁 David Stickney。請繼續。

Thank you, John, and welcome, everyone. On the call with me today are 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 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.

謝謝約翰，歡迎大家。今天與我通話的是我們的執行長兼董事長 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)。我們今天早些時候在新聞稿中公佈了 2024 年第二季業績。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, August 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. Any non-GAAP measures discussed today are reconciled in our press release and Form 8-K filing.

請注意，今天的電話會議將包含前瞻性陳述，並且僅基於截至 2024 年 8 月 7 日的資訊所做出的預測。由於我們在季度和年度 SEC 文件中強調的風險和不確定性，實際結果可能會存在重大差異。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。

Before reviewing our second quarter results, we should note that the company has disclosed its receipt of a non-binding proposal outlining a going private transaction at a purchase price of $3.25 per share in cash. The proposal was submitted by an acquisition group consisting of our C-suite and a private investor.

在回顧第二季業績之前，我們應該注意到，該公司已披露收到一份不具約束力的提案，該提案概述了以每股 3.25 美元現金的購買價格進行私有化交易。該提案是由我們的最高管理層和私人投資者組成的收購小組提交的。

In response to the proposal, a special committee of our Board of Directors, consisting entirely of independent disinterested directors was formed to review and evaluate the proposed transaction and continues to carefully consider it with the assistance of its independent financial and legal advisers.

為了回應該提議，我們的董事會成立了一個完全由獨立無利害關係的董事組成的特別委員會，以審查和評估擬議的交易，並在獨立財務和法律顧問的協助下繼續仔細考慮。

No assurances can be given regarding the terms and details of any transaction that any proposal made by the acquisition group regarding a transaction will be accepted by the special committee, that definitive documentation relating to any such transaction will be executed or that a transaction will be consummated in accordance with that documentation, if at all.

關於任何交易的條款和細節，不能保證收購集團就交易提出的任何建議將被特別委員會接受、與任何此類交易相關的最終文件將被執行或交易將被完成根據該文件（如果有的話） 。

For further information, we direct you to the 8-K Form 13D and the press release available on ARC's Investor Relations website at ir.e-arc.com. No additional information has been released nor will be on this call. We will now continue with our customary remarks.

如需了解更多信息，請參閱 8-K 13D 表格和 ARC 投資者關係網站 ir.e-arc.com 上的新聞稿。本次電話會議尚未發布任何其他信息，也不會發布任何其他信息。我們現在將繼續我們的慣例發言。

And at this point, I'll turn the call over to our Chairman and CEO, Suri Suriyakumar. Suri?

此時，我將把電話轉給我們的董事長兼執行長 Suri Suriyakumar。蘇瑞？

Thank you, David, and good afternoon, everyone. Net sales continued to grow in the second quarter as did our gross margin and adjusted earnings per share. The execution of our strategic objectives were once again responsible for our success despite uncertain business conditions caused by the high interest rates and the weakness in commercial construction due to excess supply.

謝謝大衛，大家下午好。第二季淨銷售額持續成長，毛利率和調整後每股盈餘也持續成長。儘管高利率導致商業環境不確定，供應過剩導致商業建築疲軟，但策略目標的執行再次為我們的成功奠定了基礎。

Our strategic sales focus drove top line growth with digital color printing making an outsized contribution to our overall success despite the decrease in digital plan printing. Scanning and archiving continued to grow at a healthy pace as expected. On-site services sales fell slightly, but we continue to believe it will provide a steady base of sales with upside potential in the future.

儘管數位平版印刷有所減少，但我們的策略銷售重點推動了數位彩色印刷的收入成長，為我們的整體成功做出了巨大貢獻。正如預期的那樣，掃描和歸檔繼續以健康的速度增長。現場服務銷售額略有下降，但我們仍然相信它將提供穩定的銷售基礎，並在未來具有上升潛力。

While we saw an incremental uptick in equipment and supplies, we believe that buying habits have stabilized as customers have adjusted to a new high interest rate environment. With an increase in sales and our ability to leverage our workforce and our 2008 costs, we exceeded our own expectations in gross margins growing by 30 basis points year-over-year.

雖然我們看到設備和供應量增加，但我們相信，隨著客戶適應新的高利率環境，購買習慣已經穩定。隨著銷售額的成長以及我們利用勞動力和 2008 年成本的能力，我們的毛利率年增了 30 個基點，超出了我們自己的預期。

Throughout the past several quarters, we also made several investments in our sales force and in new marketing programs. While these quarterly SG&A costs were not inconsequential, putting new initiatives on trial to boost sales must be part of our growth efforts, and we were generally pleased with the results.

在過去的幾個季度中，我們也對銷售團隊和新的行銷計劃進行了多項投資。雖然這些季度銷售管理費用並非無關緊要，但嘗試新措施以促進銷售必須成為我們成長努力的一部分，而且我們總體上對結果感到滿意。

Our performance in the first half of the year has been gratifying, and it is a testament to our strategic decisions and the company's execution. While we expect difficult market conditions to continue in the second half of the year, we remain focused on our long-term objectives.

我們上半年的業績是可喜的，這是我們策略決策和公司執行力的證明。雖然我們預計下半年市場狀況將持續困難，但我們仍專注於我們的長期目標。

For more details about our activities in the second quarter, I'll now ask Dilo and Jorge for their comments. Dilo?

有關我們第二季度活動的更多詳細信息，我現在將詢問 Dilo 和 Jorge 的評論。迪洛？

Thank you, Suri. The momentum we built in the first quarter has continued demonstrating solid sales growth in the second quarter achieving nearly 4% growth under the current volatile economic condition is commendable. I want to extend my appreciation to our staff who remain committed to our company's transformation and the execution of our business plan for the year.

謝謝你，蘇瑞。我們在第一季建立的動能持續展現出穩健的銷售成長，在當前動盪的經濟情勢下，第二季實現了近4%的成長，值得稱讚。我要向我們的員工表示感謝，他們仍然致力於公司的轉型和今年業務計劃的執行。

While interest rates and uncertain political climates have pressured some of our customers, I believe that companies with good strategies and a relentless focus on quality and customer service will continue to secure new market share and growth. ARC remains steadfast in executing our fundamental strategies to keep the company healthy and growing.

雖然利率和不確定的政治氣候給我們的一些客戶帶來了壓力，但我相信，擁有良好策略並不懈地關注品質和客戶服務的公司將繼續獲得新的市場份額和成長。ARC 堅定不移地執行我們的基本策略，以維持公司的健康和發展。

Our color digital printing services were the key driver of our sales improvement and easily offset the decline in Black and White plan printing. Both regular and new customers leveraged our services for brand promotion, new product launches, trade shows and entertainment events.

我們的彩色數位印刷服務是我們銷售成長的關鍵驅動力，並且輕鬆抵消了黑白平面印刷的下降。老客戶和新客戶都利用我們的服務進行品牌推廣、新產品發布、貿易展覽和娛樂活動。

Our efforts to diversify customer verticals continue to yield impressive results and those following us on social media we'll see how we bring custom ideas to life with wider and graphics.

我們為客戶垂直領域多元化所做的努力繼續取得令人印象深刻的成果，那些在社交媒體上關注我們的人將看到我們如何透過更廣泛的圖形將客製化創意變為現實。

The market for digital color is becoming increasingly competitive with many traditional print companies transitioning to digital printing. However, ARC stands out with our extensive footprint, comprehensive service offerings and a seasoned management team characterized by a can do mindset.

隨著許多傳統印刷公司轉向數位印刷，數位彩色市場的競爭變得越來越激烈。然而，ARC 憑藉我們廣泛的業務範圍、全面的服務以及經驗豐富、敢於嘗試的管理團隊而脫穎而出。

Our construction plant printing segment continues to face challenges due to the higher interest rates, which have led to cancellations and delays in new construction projects. Our strategy is to maintain our current customer base, and we prepare to take on new projects as the economy improves and interest rates decline.

由於利率上升，我們的建築工廠印刷部門繼續面臨挑戰，導致新建築項目取消和延誤。我們的策略是維持現有的客戶群，並準備好隨著經濟的改善和利率的下降而開展新項目。

While plant printing is important, we are not reliant on this recovery. The transformation initiatives we implemented several years ago are proving successful as evidenced by our results. Our document scanning services have provided a notable boost in revenue. We are building our reputation by delivering projects on time with high digital accuracy.

雖然植物印刷很重要，但我們並不依賴這種復甦。正如我們的結果所證明的那樣，我們幾年前實施的轉型措施被證明是成功的。我們的文件掃描服務顯著增加了收入。我們透過按時交付具有高數字準確性的專案來建立我們的聲譽。

Our dual sales approach, targeting enterprise customers and offering low volume scanned by the box services continues to be effective. Our strong online presence, supported by positive reviews and the ease with which our customers can find us is helping to organically grow our reputation as one of the best scanning providers in the country.

我們針對企業客戶並提供小批量掃描盒服務的雙重銷售方式仍然有效。我們強大的線上影響力，加上正面的評價以及客戶可以輕鬆找到我們的支持，正在幫助我們有機地提高我們作為全國最佳掃描提供者之一的聲譽。

While NPS sales have slighted during the quarter, it has stabilized over the past two years. Meanwhile, the Equipment and Supply segment experienced nominal growth. We anticipate further positive results as the general economy shows signs of recovery. Our international division including Canada, the UK and India have also delivered strong growth by adopting similar strategies to expand customer verticals and implement services that we have introduced in the US.

雖然本季 NPS 銷售額略有下降，但在過去兩年中已趨於穩定。與此同時，設備和供應部門經歷了名義成長。隨著整體經濟出現復甦跡象，我們預計將取得進一步積極成果。我們的國際部門（包括加拿大、英國和印度）也透過採用類似的策略來擴展客戶垂直領域並實施我們在美國推出的服務，實現了強勁成長。

We are optimistic about delivering continued strong sales results in the coming quarters. While we experienced gross margin pressure in the first quarter, we reversed the decline with a [30] basis point improvement in the second quarter. Our ability to manage labor and operational cost efficiently combined with subdued inflationary pressures drove the gains.

我們對未來幾季持續強勁的銷售業績持樂觀態度。雖然我們在第一季經歷了毛利率壓力，但我們在第二季以 [30] 個基點的改善扭轉了下降趨勢。我們有效管理勞動力和營運成本的能力，加上通膨壓力減弱，推動了收益的成長。

Our operational and sales headcount remained stable, providing us with adequate capacity to deliver excellent value to our customers. Our marketing efforts are ongoing, supported by effective demand generation programs. We use social media, Google and e-mail marketing strategies to attract more visitors to our website and capture warm leads.

我們的營運和銷售人員數量保持穩定，使我們有足夠的能力為客戶提供卓越的價值。在有效的需求產生計劃的支持下，我們的行銷工作正在進行中。我們使用社交媒體、Google和電子郵件行銷策略來吸引更多訪客造訪我們的網站並捕獲潛在客戶。

As always, our focus remains on strong business fundamentals. Our seasoned management team is unmatched, and we are united in our direction. Regardless of economic conditions, we are confident in our winning solutions that prioritize delivering value and making it easy and enjoyable for our customers to do business with us.

一如既往，我們的重點仍然是強大的業務基礎。我們經驗豐富的管理團隊是無與倫比的，我們在我們的方向上團結一致。無論經濟狀況如何，我們對我們的成功解決方案充滿信心，這些解決方案優先考慮提供價值並讓我們的客戶輕鬆愉快地與我們開展業務。

I'll now ask Jorge to give you an update of our financial results. Jorge?

我現在請喬治向您提供我們財務業績的最新資訊。豪爾赫？

Thank you, Dilo. As our financial results show, we continue to drive progress on the top line with strategic business sales, while taking advantage of opportunities to improve our margins. In the second quarter, our revenue increases came primarily from color and scanning as we've pointed out. But with inflationary pressures easy, we were better able to leverage our labor and our overhead costs and our gross margins improved by 30 basis points.

謝謝你，迪洛。正如我們的財務表現所示，我們持續透過策略性業務銷售推動營收進步，同時利用機會提高利潤率。正如我們所指出的，第二季我們的營收成長主要來自彩色和掃描。但由於通膨壓力較小，我們能夠更好地利用我們的勞動力和管理成本，我們的毛利率提高了 30 個基點。

SG&A costs rose due to our continuing investments in sales and marketing and also included $900,000 related to the previously disclosed take private proposal. Lower cash flows from operations year-over-year was the outlier for the quarter, but it was due to the timing of sales collections. We won and completed a number of large projects in late May and June of this year, while this benefited sales, collections for those projects extended into July and hence muted the increase in operating cash we normally see in the second quarter.

由於我們在銷售和行銷方面的持續投資，SG&A 成本有所上升，其中還包括與先前揭露的私有化提案相關的 90 萬美元。營運現金流量年減是本季的異常情況，但這是由於銷售回款的時間安排所致。我們在今年 5 月下旬和 6 月贏得併完成了一些大型項目，這有利於銷售，這些項目的收款延續到 7 月，從而抑制了我們通常在第二季度看到的營運現金的增長。

We are confident that cash flows from operations will continue to improve in the third and fourth quarters, just as it did last year. Of note, we achieved more than 60% of our 2023 cash flows in the second half of the year, and we anticipate a similar performance in 2024.

我們有信心第三季和第四季的營運現金流將繼續改善，就像去年一樣。值得注意的是，我們在下半年實現了 2023 年現金流量的 60% 以上，預計 2024 年也會有類似的表現。

Our strong capital structure remains intact, as does our commitment to return shareholder value. As such, our plan to issue a $0.05 quarterly dividend remains unchanged. We were pleased to build on the progress we made in the first quarter, and we believe we can continue to build on this success for the balance of the year. With that as a summary of our financial results, I'll turn the call back to Suri. Suri?

我們強大的資本結構保持不變，我們對回報股東價值的承諾也保持不變。因此，我們發放 0.05 美元季度股息的計劃保持不變。我們很高興能夠在第一季度取得的進展的基礎上再接再厲，我們相信我們可以在今年餘下的時間裡繼續在這一成功的基礎上再接再厲。以此作為我們財務表現的摘要，我會將電話轉回給蘇瑞。蘇瑞？

Thank you, Jorge. Operator, we are now ready to take questions from our listeners.

謝謝你，豪爾赫。接線員，我們現在準備好回答聽眾的問題。

(Operator Instructions).

（操作員說明）。

Greg Burns, Sidoti.

格雷格·伯恩斯，西多蒂。

Good afternoon. When you look at demand, the demand you're seeing in color printing, have you seen any changes in terms of buying decisions, willingness to spend? Like what is the outlook for that market look like for the balance of the year, given a more uncertain macro environment that we're seeing now?

午安.當您觀察需求時，您在彩色列印中看到的需求，您是否看到購買決策和消費意願方面有任何變化？鑑於我們現在看到的宏觀環境更加不確定，今年餘下時間該市場的前景如何？

And then, when we think about the growth opportunity for you there, obviously, you're still a relatively smaller part of the overall market. So do you still feel like you can grow even if maybe the overall market spend rates decline? Thank you.

然後，當我們考慮您在那裡的成長機會時，顯然，您仍然是整個市場中相對較小的一部分。那麼，即使整體市場支出率下降，您仍然覺得自己可以成長嗎？謝謝。

Dilo, do you like to take that?

迪洛，你喜歡接受這個嗎？

Yeah. So we haven't seen any -- first question is you want to know whether there is any slowdown in your spending opportunities from customers and so forth. No, we haven't seen very much as of this point. Because as you said, we are relatively a smaller organization and a growing organization in this big digital Print market.

是的。所以我們還沒有看到任何——第一個問題是你想知道你的客戶消費機會是否有任何放緩等。不，到目前為止我們還沒有看到太多。因為正如您所說，在這個龐大的數位印刷市場中，我們相對來說是一個較小的組織，也是一個不斷成長的組織。

So therefore, we are actually canvassing to different types of customers. As we are canvassing to medium regional types of customers because of our footprint capabilities and our ability to do projects anywhere in the US with more project management services and so forth.

因此，我們實際上是在向不同類型的客戶遊說。由於我們的足跡能力以及我們透過更多專案管理服務在美國任何地方開展專案的能力等，我們正在遊說中等區域類型的客戶。

So we haven't seen any significant slowdown or drop in spending by many of the marketing customers, but obviously, some of these big macro market news that we hear in the last, what, three, four weeks have been maybe alluding to that, but we haven't seen that.

因此，我們沒有看到許多行銷客戶的支出出現任何顯著放緩或下降，但顯然，我們過去聽到的一些重大宏觀市場新聞，三、四週可能暗示了這一點，但我們還沒有看到這一點。

With regard to the growth opportunities, we are certainly positive about our color growth. Again, as I mentioned, that we are not one of those companies who has one or two massive locations that do thousands and millions of prints. We are not that. We are that on-demand, short run, high-quality print company that has a sizable footprint all across where we provide that high-touch service.

就成長機會而言，我們對色彩成長當然持樂觀態度。正如我所提到的，我們不是那種擁有一兩個大型印刷地點、可印刷數以百萬計的印刷品的公司之一。我們不是那樣的。我們是一家按需、短版、高品質的印刷公司，在提供高品質服務的地方擁有相當大的足跡。

So we are continuing to focus our sales reps to continue to focus on the -- our core competencies where we know there is a significant mark-to-market out there. There is a significant demand from customers out there for companies like us. So we feel still strong about our future growth.

因此，我們將繼續專注於我們的銷售代表，繼續專注於我們的核心能力，我們知道那裡有重要的行銷能力。客戶對像我們這樣的公司有很大的需求。因此，我們對未來的成長仍然充滿信心。

Okay. And then in terms of your more traditional plan printing, did the decline slow there at all? What is the where is that market at? And I guess, obviously, interest rates will help it out, but can you just maybe give us a little bit more insight into where that business currently is at and what trajectory it's on?

好的。那麼就您更傳統的計劃印刷而言，下降速度是否有所放緩？那個市場在什麼地方？我想，顯然，利率會有所幫助，但您能否讓我們更深入地了解該業務目前的狀況以及發展軌跡？

Yeah. So the plan paper printing is continuing to be the same, right? I haven't seen a much change in the last three, four quarters. I mean, the same trends has been there. We've seen a couple of projects slowing down or getting delayed. But with regard to the plan paper usage, there is still a lull in that market. And I attribute that quite a bit to the higher interest rates that we're currently experiencing. Someday down the line, couple of quarters down the line that when we see some easement in interest rates, some of that work is going to come back, right?

是的。那麼紙張印刷計畫將繼續保持不變，對嗎？過去三、四個季度我沒有看到太大的變化。我的意思是，同樣的趨勢也一直存在。我們已經看到一些項目放緩或延遲。但就計劃紙張的使用而言，該市場仍然處於平靜狀態。我將這很大程度上歸因於我們目前正在經歷的更高的利率。有一天，幾個季度後，當我們看到利率有所放鬆時，一些工作將會回來，對嗎？

The homebuilding, home construction, some of the tenant improvement work, they will all come back to some level. But some of the secular changes that we see in the plan paper printing, I don't think it's going to come back. Those things will continue to be moving to digital workflows. So, while the business is somewhat now getting stabilized, but I think the same headwinds will be there for a while.

住宅建設、房屋建設、一些租戶改善工作，它們都會回到某種水平。但我們在計劃紙印刷中看到的一些長期變化，我認為它不會回來。這些事情將繼續轉向數位工作流程。因此，雖然業務現在有所穩定，但我認為同樣的阻力將持續一段時間。

Okay. And then in terms of your more traditional plan printing, the decline slow there at all? What is the -- where is that market at? And I guess, obviously, interest rates will help it out, but can you just maybe give us a little bit more insight into where that business currently is at and what trajectory is on?

好的。那麼就您更傳統的計劃印刷而言，下降速度是否緩慢？那個市場在哪裡？我想，顯然，利率會有所幫助，但您能否讓我們更深入地了解該業務目前的狀況以及發展軌跡？

Yeah. So the plan paper printing is continuing to be the same, right? I haven't seen a much change in the last three, four quarters. I mean, the same trend has been there. We've seen a couple of projects slowing down or getting delayed. But with regard to the plan paper usage, there is still a lull in that market. And I attribute that quite a bit to the higher interest rates that we're currently experiencing -- someday down the line a couple of quarters down the line that when we see some easement in interest rates some of that work is going to come back, right?

是的。那麼紙張印刷計畫將繼續保持不變，對吧？過去三、四個季度我沒有看到太大的變化。我的意思是，同樣的趨勢也一直存在。我們已經看到一些項目放緩或延遲。但就計劃用紙的使用而言，該市場仍處於平靜狀態。我將這很大程度上歸因於我們目前正在經歷的利率上升——幾個季度後的某一天，當我們看到利率有所放鬆時，一些工作將會回來，正確的？

The homebuilding, home construction, some of the tenant improvement work. They have all come back to some level. But some of the secular changes that we see in the plan paper printing, I don't think it's going to come back. Those things will continue to be moving to digital workflows. So, while the business is somewhat now getting stabilized, but I think the same headwinds will be there for a while.

房屋建造、房屋建造、一些租戶的改善工作。他們都回到了某種程度。但我們在計劃紙印刷中看到的一些長期變化，我認為它不會回來。這些事情將繼續轉向數位工作流程。因此，雖然業務現在有所穩定，但我認為同樣的阻力將持續一段時間。

Okay. And then in terms of margins, obviously, very, very nice improvement in the margins this quarter. How should we think about that going forward relative to you balancing, continuing to invest for growth against maybe driving some operating leverage in the model? Is this maybe -- it was just a strong quarter and maybe we see a step back in the coming quarters? How should we think about margin progression from here?

好的。然後就利潤率而言，顯然本季的利潤率有了非常非常好的改善。我們應該如何考慮未來相對於你的平衡，繼續投資以促進成長，也許會推動模型中的一些營運槓桿？這是否可能——這只是一個強勁的季度，也許我們會在未來幾季看到倒退？從這裡開始我們該如何考慮利潤的進展？

I mean the way -- I'll break it up into two points. From a gross margin perspective, with the easing of inflationary pressures, coupled with the increase in revenue, then we're better able to leverage our labor and our overhead. So, we feel good about our prospects as we move later in the year. I mean would we be able to repeat 35% gross margins, maybe not in regards to pending as you know, we have seasonality in sales, for example, fourth quarters are typically lower. But when we look at it from a year-over-year perspective, we have -- we feel we have a good chance of been in that range.

我的意思是方式——我將把它分成兩點。從毛利率的角度來看，隨著通膨壓力的緩解，加上收入的增加，我們能夠更好地利用我們的勞動力和管理費用。因此，當我們在今年稍後採取行動時，我們對我們的前景感到樂觀。我的意思是，我們是否能夠重複 35% 的毛利率，也許不是如您所知，我們的銷售有季節性，例如，第四季通常較低。但當我們從逐年的角度來看時，我們覺得我們很有可能處於這個範圍內。

Now, the second part of your question in regards to the investments and the impact on our margins, those investments are coming in sales and marketing, which flow through your SG&A. And the levels that you see in the second quarter is a good gauge to use as a predictor moving forward, absent the $900,000 in transaction fees related to the proposed go-private transaction. Does that make sense?

現在，你問題的第二部分是關於投資以及對我們利潤率的影響，這些投資來自銷售和行銷，這些投資流經你的SG&A。在沒有與擬議的私有化交易相關的 90 萬美元交易費用的情況下，您在第二季度看到的水平是一個很好的指標，可以用作未來的預測指標。這樣有道理嗎？

Yes. No, that's helpful. All right. I'll pass it along. Thank you.

是的。不，這很有幫助。好的。我會把它傳遞下去。謝謝。

Yes, no problem

是的，沒問題

David Marsh, Singular Research.

大衛馬什，奇異研究。

Hey guys. Thank you very much for taking the questions.

嘿夥計們。非常感謝您接受提問。

Sure.

當然。

So yes, if I could start, it doesn't -- it looks like the share count actually ticked up a bit. Just wondered -- I know repurchasing shares had been a priority if the market opportunity was there. Wondering if this go-private transaction kind of supersedes your ability to repurchase any shares.

所以，是的，如果我可以開始的話，它不會——看起來股票數量實際上增加了一點。只是想知道——我知道如果市場機會存在的話，回購股票是當務之急。想知道這種私有化交易是否會取代您回購任何股票的能力。

The quick answer is, yes, it does.

快速的回答是，是的，確實如此。

Okay. And so it looks like you took some cash and maybe paid down a little bit of debt in the quarter. Am I reading that right? And then what would be the kind of priority uses of cash going forward as you evaluate this transaction?

好的。因此，看起來您在本季度拿了一些現金，並且可能還清了一些債務。我讀得對嗎？那麼，當您評估這筆交易時，未來現金的優先用途是什麼？

In regards to -- we're looking at the business just as a go-forward basis as running business as usual. So, same thing we did last year, we used more of our cash to purchase equipment versus using capital leases.

關於－我們將業務視為與往常一樣經營業務的前進基礎。因此，就像我們去年所做的一樣，我們使用更多的現金來購買設備，而不是使用資本租賃。

As you can see from our financials, we did that in 2023 because interest rates were high, and I don't want to pay 9% interest to acquire equipment, and we've continued that strategy moving in here into 2024. So, no change in our strategies that we've had over the last couple of years.

正如您從我們的財務數據中看到的那樣，我們在2023 年就這樣做了，因為利率很高，我不想支付9% 的利息來購買設備，我們將繼續這一策略，並將其延續到2024 年。因此，過去幾年我們的策略並沒有改變。

Okay. So this proposal, obviously, management is an involved party or some portion of the management teams involved party in the proposal. But -- again, going back to your comment, looking at the business more as just kind of a continuing operation as a public company, are you seeing any opportunities for acquisitions that would either get you into a new business line or a new geography that you're not already in that might be compelling here as we're starting to see some kind of disruption in the overall financial markets?

好的。所以這個提案，顯然，管理階層是提案的參與者或管理團隊的一部分。但是，再次回到您的評論，將業務更多地視為上市公司的持續運營，您是否看到任何收購機會，可以讓您進入新的業務線或新的地理位置，當我們開始看到整個當金融市場出現某種混亂時，您還沒有意識到這一點可能很引人注目嗎？

So I'll take that one. So in terms of acquisitions, we've not had anything in pipeline. We've always said that we'll be opportunistic about it. Something pops up, it pops up, but we never had anything in the pipeline or neither did we -- we’re in consideration to do anything.

所以我會接受那個。因此，就收購而言，我們還沒有任何計劃。我們總是說我們會抓住機會。有些東西突然出現了，它突然出現了，但我們從來沒有任何計劃，或者說我們也沒有——我們正在考慮做任何事情。

With regard to the go private transaction, it's now completely assigned to the special committee appointed by the Board. They are independent directors. They'll do whatever they have to do from a legal and SEC perspective. We just run the business as usual, business as usual here. And then nothing -- no acquisitions or any other thoughts, we just come across our table, if that comes. And if it merits a review, we will do so.

至於私有化交易，目前已完全交由董事會任命的特別委員會處理。他們是獨立董事。他們會從法律和 SEC 的角度做任何他們必須做的事情。我們只是照常營業，這裡照常營業。然後什麼都沒有——沒有收購或任何其他想法，我們只是碰到我們的桌子，如果有的話。如果值得審查，我們就會這樣做。

Okay. That's pretty helpful. Just -- I'm sorry. I'm probably repeating the previous caller's question. I apologize if I do. Jorge, I think you said $900,000 in expense related to the evaluation of the Go Private transaction in the quarter. Is that right? Are they right? -- SG&A line?

好的。這很有幫助。只是——對不起。我可能是在重複前一個來電者的問題。如果我這樣做的話我會道歉。Jorge，我想您說的是與本季私有化交易評估相關的 90 萬美元費用。是這樣嗎？他們是對的嗎？ -- SG&A 線？

That is correct on both points.

這兩點都是正確的。

Okay. So as we go forward, that essentially the demonstrably lower presumably. Is that a fair assessment?

好的。因此，當我們繼續前進時，這基本上可能會顯著降低。這是一個公平的評價嗎？

We just don't know, and it's something we can't comment on.

我們只是不知道，而且我們無法對此發表評論。

That's completely up to the special committee. They have white powers to do whatever they have to do to evaluate the proposal. They'll do whatever they are supposed to do as an independent committee, full of independent directors. We have no control over that.

這完全取決於特別委員會。他們擁有白人權力，可以採取一切必要措施來評估該提案。作為一個由獨立董事組成的獨立委員會，他們將做他們應該做的一切。我們對此無法控制。

Okay, guys. Thanks very much for taking the questions. I’ll pass it along.

好吧，夥計們。非常感謝您提出問題。我會把它傳遞出去。

Glenn Primack, Lisa Investment Group.

格倫·普里馬克，麗莎投資集團。

Hi. Good afternoon everyone. Digging a little deeper on the increased marketing expense, is that going towards a specific program, like the scanning or is that -- can you just touch on like what's specific programs you're really going after with the extra dollars there?

你好。大家下午好。更深入地挖掘一下增加的行銷費用，是為了一個特定的項目，例如掃描，還是——你能簡單談談你用額外的錢真正想要的具體項目是什麼嗎？

Yes. So there's no -- I can attribute it to a very specific program, Glenn. It's the extra spend that we've seen year-over-year for the second quarter, there's a component for that goes into head count. We've added a couple of sales -- new sales consultants specially experienced consultants who are good in digital color, white format color printing.

是的。所以沒有——我可以將其歸因於一個非常具體的程序，格倫。這是我們在第二季度看到的同比額外支出，其中有一部分涉及人員數量。我們增加了幾位銷售人員——新的銷售顧問，特別是經驗豐富的顧問，他們擅長數位彩色、白色格式彩色印刷。

So we've added them in specific geographical markets, very strategic locations for. So some amount is in head count. And the rest of it is -- we just launched a new website. I hope you've got a chance to see that. The new ARC website is on -- we launched a new red color website a couple of months ago. And we are just focusing on some really strong SEO programs, driving traffic into the website, using keywords and so forth.

因此，我們將它們添加到特定的地理市場，非常具有戰略意義的位置。因此，一定數量是在人數中。剩下的就是——我們剛剛推出了一個新網站。我希望你有機會看到這一點。新的 ARC 網站已上線——幾個月前我們推出了一個新的紅色網站。我們只是專注於一些真正強大的搜尋引擎優化程序，增加網站流量，使用關鍵字等等。

A little bit of spending on Google advertising as well, not a heap or lot, no big investments compared to last year. But we've been very focused on organic driven marketing programs. E-mail marketing programs are going as well. So the spend is primarily the headcount. And obviously, our sales have grown, especially on the color side. So there is an increased payment of commissions. But the rest of it is on the marketing programs.

在Google廣告上也有一點支出，不是很多或很多，與去年相比沒有大的投資。但我們一直非常關注有機驅動的行銷計劃。電子郵件行銷計劃也在進行中。因此，支出主要是人員數量。顯然，我們的銷售額有所成長，尤其是在顏色方面。因此，佣金的支付會增加。但其餘的都在行銷計劃上。

All right. Great. So on the sales side, you probably got some payback off of that -- experienced people that you're putting in these different locations versus a newbie. Is that safe to assume?

好的。偉大的。因此，在銷售方面，您可能會從中得到一些回報 - 您將經驗豐富的人員放置在這些不同的位置，而不是新手。這樣假設安全嗎？

Yes. So usually, it takes a couple of months or even for experienced people to get comfortable with the company and get used to the systems and start soliciting. So yes, definitely, they are early stages of delivering. Some takes a little bit more extra time. So there are different stages. While the goal is to make them all successful very quickly.

是的。因此，通常情況下，有經驗的人需要幾個月的時間來適應公司並習慣系統並開始招募客戶。所以，是的，毫無疑問，它們正處於交付的早期階段。有些需要更多的額外時間。所以有不同的階段。雖然目標是讓他們都很快成功。

Yes. And it's no doubt that you and Jorge will measure everything anyways.

是的。毫無疑問，無論如何，你和豪爾赫都會測量一切。

Every time, Glenn, every time.

每一次，格倫，每一次。

I love that. That's it for me. I can't wait to go check out the new website and (technical difficulty) relatively new website.

我喜歡那個。對我來說就是這樣。我迫不及待地想查看新網站和（技術難度）相對較新的網站。

Thank you.

謝謝。

And that does conclude the question-and-answer session. I would like to turn the call back over to Mr. David Stickney for closing remarks.

問答環節到此結束。我想將電話轉回給大衛·史蒂克尼先生做總結發言。

As usual, we appreciate your continuing interest in ARC, and we encourage you to reach out with any questions about our progress. You can always check our Investor Relations website at ir.e-arc.com. For more information, we look forward to talking with you soon. Take care. Bye-bye.

像往常一樣，我們感謝您對 ARC 的持續關注，並鼓勵您對我們的進展提出任何疑問。您可以隨時查看我們的投資者關係網站：ir.e-arc.com。如需了解更多信息，我們期待盡快與您交談。小心。再見。

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

女士們、先生們，今天的電話會議到此結束。感謝您的參與。您現在可以斷開連線。