American Reprographics Company (ARC)
JPMorgan Ultimate Services Conference
November 9, 2011 2:45 p.m. ET
Suri Suriyakumar - Chairman, President & Chief Executive Officer
Dilo Wijesuriya - Chief Operating Officer
John Toth - Chief Financial Officer
Molly McGarrett - JPMorgan
Molly McGarrett - JPMorgan
Previous Statements by ARC
» American Reprographics CEO Discusses Q4 2011 Results - Earnings Call Transcript
» American Reprographics CEO Discusses Q3 2011 Results - Earnings Call Transcript
» American Reprographics Company's CEO Discusses Q2 2011 Results - Earnings Call Transcript
Great. So we will go ahead and get started. I am Molly McGarrett, I am a research associate here at JPMorgan on the business and education services team. And I would like to introduce this afternoon the team from American Reprographics. We have Chairman, President and CEO, Suri Suriyakumar, and CFO, John Toth; and COO, Dilo Wijesuriya. So I will hand it over to you guys.
Thanks, Molly. Good afternoon, guys. So four of you, it’s easy to talk to. It’s almost like an individual meeting. So going through this forward-looking statements, go past that. So the overview. Fundamentally, we are still the largest document solutions provider in our space, the biggest company by far. The industry we serve is known as AEC, architecture, engineering and construction companies. And we also provide similar to services to what you refer to non-AEC costumers. In other words who are not construction related.
But in the AEC segment, we are by far the largest company. The only national service provider. There are so many reprographers. Once upon a time we used to have as many as 3000 reprographers in the industry, much less now after this downturn. But we are the national service provider, times larger than the next largest competitor. About 200 locations and 43 states. 120,000 customers in more than 6000 facilities management contracts which means that those are actually services we provide for our customers in their offices. 200 locations on the ground. And then, acquired more than 140 companies since 1998. That has been our -- acquisition was a major part for our growth during the early years and strong historical performance.
So what we do. So fundamentally what we do is document management, what used to be known as reprographics. So if you go back 30 years or 35 years, people would have referred to us as blueprinters. And then in the last 10-15 years we were known as reprographers doing document management for the AEC industry. We still do the same thing though. We are just becoming more and more document control and document management. So what it means is this access to documents. Organization of documents, collaboration of documents and archival of documents. So that’s in a way, in the modern terminology, that’s where it’s going it’s becoming more digital.
So these are all indications as to how the industry is starting to kind of evolve. And of course documents logistics is a big part both digitally and also physical delivery is a key element. And print on demand, which means we will print onsite, offsite, large format, small format, black and white, color, managed print services, the whole range. On top of that we also have technology development and integration for the document solutions required for our AEC customers. So we do have a planned room. We distribute documents, manage documents. We use bidding tools. So there is a variety of technology tools to enable our customers to accomplish their goals faster and efficiently.
So as our customers evolve, like I said, the construction industry especially with this downturn is starting to use more digital technologies and starting to evolve. We are also becoming more and more content manager of the information and be able to provide that content to them. When they want them, where they want them, in whatever form they want them. Whether they need it in CDs, DVDs, printed copies or just digital files. We are able to provide the entire range of services there.
ARC provides a very critical role in construction and communication. For anyone of you who has not heard this before, I have constantly said this to my existing investors. So I always put in a small story. For example, to understand what we do in the industry, if an architect wants to give instructions let’s say to a construction company about doing a window in this building. You know he doesn’t send them an email saying that, hey, I want a window. You know 8X4 in this wall. He doesn’t send them an email or leave a voice mail.
He actually issues a drawing and the drawing will say what kind of window, what should the frame be. Should it would be wood, steel, aluminum? What should be the glass; what should be the tensile strength in the glass; how should it be secured; what should be the hinges. Should it be aluminum, steel. All the details he will put in a drawing and then he will communicate that to the contractor. So think about it like this. In the construction industry we have over 220 different trades. And how I explain that is the same guy who comes to install your carpets doesn’t do your plumbing, right, in your house.
The guy who does the plumbing won't do cabinetry. The cabinet guy won't do steel. Steel guy won't do the roofing. Roofing guys won't do plumbing. I mean it goes on and on and on. 200 different trades. So if you think about a new building when an architect is giving instructions, he has to give instructions or he has to issue drawings to all 200 trades. And that’s the only way they communicate. Because the architect doesn’t walk around saying, I want a five-foot wall here and I want it to be eight-feet wide. He won't say that. He will actually issue a drawing.