American Reprographics Company (ARC) provides blue print technologies to contractor and governments. Their 'PlanWell' service allows all the engineers to work on blue prints electronically, whereas in the past, changes required a reprinting by all parties. ARP is the only truly national organization with offices in >280 locations in North America.
ARP was founded by a couple life long friends with backgrounds in scientific engineering and banking. Some of the company's initial financing was done by Code Hennessy and Simmons and the IPO was primarily underwritten by William Blair & Company.
In 2006, cash flow was 67% of EBITDA. Growth and acquisitions were funded entirely from cash flow.
ARP is seeking relationships with national customers to provide blue prints for the construction of new locations of the national customer.
EBITDA margins grew to 24.6% in 2006. The number would have been higher, but ARP acquires companies with lower margins and then seeks to improve the acquired operations and increase its margins. By way of example: If an acquired company had EBITDA margins of 8%, ARP could:
EBITDA margin expansion of acquired companies is a significant source of growth. Also, the average margin for the company will be lower than if it acquired no companies.
The company acquired 14 companies in 2005 and 16 companies in 2006. In the past 10 years it has acquired more than 100 companies.
In October 2007 it announced digital expansion into China where it hopes to become the industry standard.
It also is discovering what it hopes will be a new business segment. ARP is providing services to Boeing Company (BA) and stated there is expanding demand within Boeing.
The industry is highly fragmented with some 300,000 firms with average annual sales of $1.5 million and 20 to 25 employees. By contrast ARP had sales of $592 million in 2006 and has >4,000 employees.
Document Management- store, organize, print and track project documents
Document Distrobution and Logistics- packaging prints and delivering documents to multiple locations within tight time constraints
Print on demand- place equiptment at customer's facilities
On-site services- any combination of the services above
No customer accounted for more than 2% or revenues in 2006
46% of 2006 revenues were derived in the state of California
Boeing Company (BA) is using a new application from ARP