Reprographics 101

(more than you ever wanted to know about the reprographics industry)

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  • Allegra, Network, franchisor of Signs Now, American Speedy Printing Centers, Zippy Print and Insty Prints, acquires Signs By Tomorrow

    The article that I mention below is not the Press Release that announced the acquisition, but, rather, it is an article by Cary Sherburne of whattheythink.com, based on Sherburne’s interview of a couple of Allegra’s management team members.

    The purchase price was not disclosed.

    I’m posting a link to Sherburnes’s article because, nowadays, many reprographers across the U.S. are competing with sign companies for display graphics printing services.

    In the article (which will appear on your screen if you click on “continue reading”) mentions the average “per store” sales revenues of Signs Now and Signs By Tomorrow, at “just over $400,000 and just shy of $400,000”, respectively, which I found interesting – – inasmuch as I’m always interested in comparing revenues of different types of companies involved in reprographics, printing, display graphics, etc.

    Gerhardt and Marcantonio on Allegra’s Acquisition of Signs by Tomorrow

    By Cary Sherburne (Feb 1, 2012)

    Cary Sherburne, WhatTheyThink’s Senior Editor, had a few questions for Allegra’s Carl Gerhardt and Mike Marcantonio about this acquisition. Here’s what they had to say.

    Continue Reading…

  • AMERICAN REPROGRAPHICS (ARC) Announces Closing of New Asset Based Credit Facility

    PRESS RELEASE FROM THE ISSUING COMPANY:

    ARC Announces Closing of New Asset Based Credit Facility

    WALNUT CREEK, CA — (Marketwire) — 01/30/12 —

    ARC (NYSE: ARC), the nation’s leading document solutions company for the architecture, engineering, and construction (AEC) industry, today announced that it has closed a new asset based senior secured credit facility with Wells Fargo Bank, National Association that was arranged by Wells Fargo Capital Finance, LLC. The committed size of the new facility is $50 million and includes a $10 million “accordion” provision that may be used to increase the borrowing capacity to $60 million. The initial term of the facility is four and a half years and has no financial covenants unless there is less than $10 million of excess availability. The new facility replaces ARC’s existing and undrawn $50 million revolving credit line.

    “We were very pleased to close this facility with Wells Fargo. I’m gratified that they share our confidence in the future of ARC and its strategy for moving forward,” said K. “Suri” Suriyakumar, Chairman, President and CEO of ARC. “They have been big supporters over the past year as we have strengthened the capital structure of ARC and built a platform on which to grow.”

    The interest rate for the facility is set by an availability-based grid starting at LIBOR plus 175 basis points, 25 basis points lower than the Company’s previous revolving credit facility.

    “This is a great deal for ARC,” said John E.D. Toth, ARC’s CFO. “It provides us with a strong capital structure to execute the growth of our operations. The Wells Fargo team was very thoughtful in working with us to put together this facility. They appreciated our financial strength, our ability to continually generate positive cash flow regardless of the macro environment, and the unique aspects of our business model. They’ve been an outstanding partner in the past and have stepped up to the plate for us again. The new facility allows us greater flexibility and far fewer constraints should we choose to use it tactically or in pursuit of our overall corporate strategy.”

    About ARC (NYSE: ARC)

    ARC (American Reprographics Company) is the nation’s leading document solutions company providing business-to-business document management technology and services primarily to the architectural, engineering and construction, or ‘AEC’ industries. The Company also provides document management services to companies in non-AEC industries, such as technology, financial services, retail, entertainment, and food and hospitality.

    ARC provides its services through its suite of technology products, a network of hundreds of service centers around the world, and on-site at more than 5,500 customer locations. The Company’s service centers are digitally connected as a cohesive network, allowing the provision of services both locally and nationally to more than 120,000 active customers.

    Contact:

    David Stickney

    ARC

    Phone: 925-949-5114

  • Associated Builders and Contractors Chief Economist’s Outlook for 2012

    In December, ABC’s Chief Economist released a PowerPoint presentation file that contains his “outlook” for 2012.

    First, his bio…..

    Anirban Basu Chief Economist Associated Builders and Contractors

    Anirban Basu is Associated Builders and Contractors (ABC) chief economist. His primary responsibility is to provide ABC members with timely, comprehensive analyses on important trends in the U.S. commercial and industrial construction industry. He produces ABC’s Construction Backlog Indicator (CBI) which is based on a monthly survey of various ABC members and measures work to be performed by contractors to assess the health of the construction industry.

    In addition, he produces the one-page, economic news report Construction Economic Update, with analysis of one or a combination of the following federal government economic indicators including construction spending, employment, producer price index and gross domestic product. Basu also writes a monthly article for Construction Executive magazine.

    Basu is Chairman and CEO of Sage Policy Group, Inc., an economic and policy consulting firm in Baltimore, Maryland. He is one of the Mid-Atlantic region’s most recognizable economists, in part because of his consulting work on behalf of numerous clients, including prominent developers, bankers, brokerage houses, energy suppliers and law firms.

    Basu has Bachelor of Science degree in foreign service from Georgetown University in Washington, D.C. He received a master of public policy degree from Harvard University’s John F. Kennedy School of Government in 1992, and a Master of Arts degree in mathematical economics from the University of Maryland in 1998. Additionally, Basu received a juris doctor degree from the University Of Maryland School Of Law in 2003, and is a member of the Maryland bar.

    Second, Mr. Basu’s presentation contains a number of slides, among them, projections for construction industry activity.

    One of those slides contains projections for 2.6% growth in “Non-Residential” Construction. (This particular slide’s source is the U.S. Census Bureau).

    In 2012, growth is anticipated in these sectors: Power, Manufacturing, Healthcare, Commercial, Office, Lodging, Religious, Amusement and Recreation, Conservation and development, and Water Supply

    In 2012, this sector, Sewage and waste disposal, is expected to be flat.

    In 2012, these sectors are expected to decline: Education, Highway and street, Public safety and Transportation.

    Here’s a link to the PowerPoint presentation file:

    http://tinyurl.com/8yzo2ov

  • Do Cities and Counties in your state post plans and specs for construction project on their own, self-operated web-sites?

    And, if they do, what information can you learn from what they post, and how can you benefit from knowing that information?

    This morning, I visited the eBidBoard operated by the City of San Diego, CA.

    I looked at a few of the projects posted on the City’s eBidBoard, just to see what type of information is provided, and to learn how one accesses plans and specs for the City’s construction projects.

    Below, I’ve posted links to a couple of the projects currently up on the City’s eBidBoard. If you click on these links, you will see that the City provides:

    a) a way to download plans and specs for its projects

    b) a listing of companies who have registered for its projects; those who have registered typically include: general contractors, sub-contractors, material suppliers and planrooms

    I could be wrong about this, but it does not appear that one can order “hard-copy” plans and specs through the City’s eBidBoard, and, if I’m right about that, that means that, when someone downloads the plan and spec files, one would then have to submit those files to a reprographer to produce “hard-copy” (unless, of course, the company downloading files has “in-house” printing equipment; some do.)

    Therefore, why not do two things with the information provided about who’s registered for a project?

    1) if you see a company who is not on your customer list, why not call them and ask them if they need “hard-copy” and offer to do that for them?

    2) Put into your prospecting database the companies who appear on the list; they might not need “hard-copy” for the current project, but maybe in the future they will.

    And, if you are a San Diego area Reprographer, why not try to convince the City to promote, on the City’s eBidBoard, your company as the one to go to when hard-copy prints are needed? Perhaps offer to pay the City a commission on the volume of printing you do for orders generated off the City’s eBidBoard. After all, cities and counties are strapped for cash.

    Link to information re: Pump Station project

    http://tinyurl.com/7k7ptlv

    Link to information re: School Improvements project

    http://tinyurl.com/89eza7a

  • Jacobs Engineering (NYSE: JEC) reports improved revenues

    Below, is a note from Morningstar Research to investors about Jacobs Engineering, received in my e-mail in-box on January 28, 2012.

    Jacobs Engineering JEC reported fiscal first-quarter results, with revenue increasing almost 12% from the same period last year and operating margins improving almost 100 basis points to 5.4%. This is the third quarter the company experienced top-line improvement, which we attribute primarily to a higher volume of technical services Jacobs provided to oil sands, petrochemical, and mining projects. We think the healthier activity level in these markets paints a positive picture for Jacobs, a company traditionally active in the oil and gas upstream production and downstream processing arena. Through the well-timed Aker acquisition, Jacobs also gained some momentum in the metals and mining field, which should attract additional growth opportunities. We think Jacobs is on the right track to deliver better performance in 2012 than 2011 despite some headwinds in the infrastructure and government support service markets. The company ended the quarter with almost $14.5 billion of backlog, as its higher services backlog offset the lower construction workload. We continue to believe that real revenue growth will not pick up steam until projects move from the feasibility study and planning phase to the construction phase, which we think will be a 2013-14 story. Compared with the service backlog, which typically carries a better near-term gross margin but generally a shorter duration, the construction management backlog represents Jacobs’ potential in intermediate revenue growth for the next few years (although construction projects may have lower or more volatile margin profiles). In the next few quarters, we would look for Jacobs to move toward adding to its construction workload, which will be a stronger sign that the engineering and construction industry is finally in the recovery mode. In the meantime, the thawing of energy, petrochemical, and mining project pipelines should provide some much needed opportunities for most engineering and construction companies in our coverage universe in 2012.
 Min Tang-Varner, CFA

  • Reprographers, how much time and effort do you put into promoting and selling “scanning-only” services?

    From a current “string” of comments in the IRgA Group on LinkedIn:

    Two weeks ago, Mike Cully (of AIR Graphics) posted this comment…..

    Kudos to the IRgA President Bob Roperti for his recent letter in the News Digest…

    “Bob has eloquently sumed up exactly where our industry is today. Having had the good fortune to have breathed in the sweet smell of ammonia for over thirty years, it is now time for this generation of Reprographers to find our new direction and know that we will succeed.”

    On January 26th, Niro Perera (of ARC) posted this comment

    “I would also add Document Digitization/archival solutions. Companies like Iron Mountain are dominating, but we have the technology and know how to convert paper documents to smart searchable digital content. Customizing solutions for medium to large sized customers can be lucrative.”

    Our friend, Niro, is correct, companies in the Reprographics Industry do have the technology, knowledge and wherewithal (and have already made investments necessary) to offer scanning (archival) solutions.

    Certainly, one “target group” for scanning-only services consists of the many government agencies, all around the country (and internationally as well, considering our overseas reprographer associates).

    Some government agencies put out requests for bids and requests for proposals for scanning services, but, in order to enter those competitions, you have to know that those competitions exist! Before the advent of the Internet, government procurement departments used to go out and find vendors to complete for their procurements. But, after the Internet became widely used for procurements, government procurement departments (sadly) leave it up to vendors to “find” procurement opportunities. (I call that being lazy.) It takes a lot of time to research government procurement opportunities …. and you’re never going to find all of the ones that are opportunities for you, no matter how much time and effort you put into your research.

    Take, for example, a scanning-only services RFP/Bid opportunity that happened around 2003 in one of my former company’s markets (Orlando, FL). Just last week, I found out about this particular RFP/Bid. I don’t recall that my former company submitted a proposal/bid for this opportunity. (Shame on us for not knowing about it!)

    After you find an opportunity, if it is an “RFP’ opportunity, you’re going to have to describe your services and detail your work process, if you’re going to convince the government agency procurement department that your company “is the obvious choice”.

    For educational purposes, I’ve stored in my Google Docs library a copy of a document that contains all of the documents associated with a “scanning-only” RFP procurement completed by Seminole County Government (Florida). This particular document includes the “award,” the RFP and the Proposal submitted by the winning vendor (including pricing.) Note the detailed write-up of the work to be done.

    Link to document:

    http://tinyurl.com/7vx348n

    Develop your scanning-only target list! And, happy hunting!

  • Reprographers, how do you compete with “free” ???

    In the recent Survey of Reprographers conducted by Reprographics 101, we asked several questions about e-planroom services.

    According to the “survey results”…..

    39 out of 44 Reprographers indicated that they offer e-planroom services.

    29 out of 44 Reprographers indicated that they believe that offering an e-planroom service is essential to their business and to their customers.

    16 Reprographers indicated that they “charge” for e-planroom services.

    Only 3 Reprographers indicated that they “give away” e-planroom services (i.e., for free) in return for the opportunity to print.

    23 Reprographers indicated that they do both – charge for e-planroom services and provide e-planroom services for free

    20 Reprographers indicated that they either don’t make a profit on e-planroom services or they don’t know if they do or not.

    In the survey, we also asked a question about “threats/risks” to Reprographers, and a couple of survey participants indicated that “Blue Book” is a threat/risk. So, I decided to look up Blue Book, and found that BB offers a “free”, evidently fully-supported e-planroom service. I would imagine that BB targets contractors for this free e-planroom service.

    Here’s some information about Blue Book’s free e-planroom service:

    Delivering Your Project Documents Quickly, 
Securely and Free!

    How It Works…

    The BB-Bid Private Online Plan Room is an easy and secure way to share project documents with the vendors you choose at no charge. Because the BB-Bid Private Online Plan Room is hosted by The Blue Book, there’s no need to worry about acquiring the right technology or purchasing a dedicated server.

    The BB-Bid Private Online Plan Room is fast becoming the most actively used private plan room in the industry. Over 200 Blue Book Construction Professionals nationwide and an internal team of Support Specialists are educating local contractors and suppliers – every day – to help simplify their workflow with cost-saving online tools like the BB-Bid Private Online Plan Room.

    How You Benefit…

    BB-Bid can simplify your bidding process and help you save time and money distributing your project documents by providing:


    Control and Security

    • One location for your plans puts you in control of document revisions

    • Access to your project documents is through private invitation only

    • Reporting feature lets you track Plan Room activity

    Functionality and Support

    • You can deliver documents directly from your desktop with SyncWare, The Blue Book’s new, free desktop application, as well as via FTP, email or on CD

    • The Blue Book will convert any file format to the industry standard PDF

    • The Blue Book staff will name and index the files based on the title block

    Takeoff and Markup

    • You and your vendors have access to Vu360, The Blue Book’s new, free viewer with complete web browsing capability

    • Invited vendors can take measurements and markup documents online

    • You can easily share markups and respond to RFIs

    Featuring…

    Two New Tools to Help Manage Your Project Documents…

    SnycWare

    – A free software application that works directly with the BB-Bid Private Online Plan Room. SyncWare enables you to upload, share and control your documents right from your desktop

    Vu360

    – The Blue Book’s own free viewer is now integrated within the BB-Bid Private Online Plan Room. This allows your invited vendors to take measurements and markup documents online, while enabling you to share markups easily with your project team.

    How To Get Started…

    Just fill out the information below and a Blue Book Product Support Specialist will contact you as soon as possible to provide a brief walk-through of this service. Or call 888-303-2243 to speak with a Specialist today!

    http://www.thebluebook.com/plan_room.shtml

  • RR Donnelly, an offset printer, facing much of the same challenges that Reprographers are facing?

    I don’t like to clutter Reprographics 101 with too many articles about companies who are not in the reprographics industry, but I found this article – about R.R. Donnelly & Sons Company (NYSE: RRD), one of the largest offset printing companies in the world – to be quite interesting.

    This article was written by an “investor-type” person; the article is directed at RRD from an “investment” perspective (to, or not to). What prompted the author to write the article was the plunge in RRD’s stock price – stock price was $14.41 on January 14th, and, today, RRD is right around $11.49. That’s a pretty serious plunge. The author does not think there will be a rebound in RRD’s stock price, at least in the near term. In his article, he “looks under the hood.”

    The reason why I decided to share this information with my Reprographics 101 blog-visitors: the author makes some interesting comments, which, I think, are somewhat related to what’s been happening in the “reprographics business and industry.”

    In today’s post, I’m going to share just some of the stuff that Michael Terry wrote, but, at the end of the post, I’ve provided a link to the full article. (There are lots of interesting graphics, charts and tables in the full article.)

    Okay, here we go…..

    An Open Book: Inside R.R. Donnelley’s Capital Structure

    by: Michael Terry / January 25, 2012 | from http://www.seekingalpha.com

    Company Description:

    R.R. Donnelley & Sons Company provides premedia, printing, logistics and business process outsourcing products and services to leading clients in virtually every private and public sector. Donnelley conducts operations through two reportable segments, U.S. Print and Related Services (74% of 9Mo 2011 Sales) and the International segment (26% of 9Mo 2011 Sales).

    Summary:

    R.R. Donnelley is the largest player in a declining industry. The company is attempting to transition the business into the digital age while expanding their traditional business to meet the needs of their customer base (and prospective customers). I view Donnelley as a levered company with pressure on every one of their business lines – pressure which will only increase going forward. With that said, the company currently generates a decent amount of cash flow (north of $600MM TTM) and free cash flow (north of $400MM TTM) which it has used for capital expenditures, acquiring businesses and doing share repurchases. The company has also been opportunistic about issuing debt (in June of 2011 they issued $600MM in notes and used the proceeds to buy back some of their outstanding debt). Ultimately, if the company were viewed in isolation, it would resemble a mature company. Unfortunately, the industry is in a secular state of decline, which is different than being a mature industry.

    Industry Background:

    The printing industry is a fragmented and mature industry undergoing a transformational change ad the digital age has been thrust upon it. The company stated industry challenges very well in their last 10Q, which I will summarize here:

    The print and related services industry, in general, continues to have excess capacity and remains highly competitive. Despite some consolidation in recent years, the printing industry remains highly fragmented. Across the company’s range of products and services, competition is based primarily on price, in addition to quality and the ability to service the special needs of customers.

    Technological changes, including the electronic distribution of documents and data, online distribution and hosting of media content, advances in digital printing, print-on-demand and Internet technologies, continue to impact the market for the company’s products and services.

    As a substitute for print, the impact of digital technologies has been felt mainly in directories, forms and statement printing, as electronic communication and transaction technology has eliminated or reduced the role of many traditional paper forms. Electronic substitution has continued to accelerate in directory printing in part driven by environmental concerns and cost pressures at key customers. In addition, rapid growth in the adoption of e-books is having an increasing impact on consumer print book volume, though only a limited impact on educational and specialty books.

    In other words, the company is operating in an industry undergoing significant change and is currently price based – which means very little ability to raise prices. Taking out costs can only achieve so much.

    (Extracted from commentary later on in the article):

    Rather than replace existing equipment as it depreciates, the company has acquired new/bolt-on businesses (more information regarding acquisition activity can be found in the company’s 10Q cited earlier). As is obvious from the company’s acquisitions over the last two years, RRD recognizes the changing landscape of the printing industry and is in the midst of diversifying their business and transitioning to the “digital age”. This, when done properly is shareholder friendly in the near and longer term while it is negative to the debt portion of the capital structure as it is typically cash and debt financed.

    Conclusion:

    In conclusion, an investment in the company is an investment in an industry in decline. While the company is the largest player in the space, I do not see a catalyst to drive prices higher. If choosing my spot within the capital structure, I would be buying into shorter maturity debt.

    If you want to read the full article that Michael Terry wrote, you can access that article at this link:

    http://tinyurl.com/7l9qf9t

  • Upcoming Reprographics Bid/RFP Opportunity – Denver International Airport

    Unfortunately, this Bid/RFP opportunity will only be available to reprographics companies who are “certified” as Minority and/or Women Owned Businesses.

    To Reprographers out in the Denver, CO area, you need to lobby your elected representatives to open up reprographics services Bid/RFP opportunities to “all” qualified vendors!

    In this day and age, when government agencies ARE SUPPOSED TO BE dedicated to finding ways to save taxpayer dollars, it is, to me unconscionable for government agencies, who spend taxpayer dollars, to limit competition on Bid/RFP opportunities (of any kind) to “only” M/WBE certified vendors.

    Suggest to your elected representatives – and to the agency purchasing goods and services – that, if they have to offer an advantage to M/WBE vendors, that advantage should be a “bid preference” rather than a total lockout of non-certified vendors.

    For example, the City of Orlando (FL), in its prior procurements of reprographics services, provided for a “bid preference” for MBE certified vendors. That bid preference was equal to 5% of the total bid. If a non-certified vendor bid, say, $100,000, then a certified vendor’s bid, to win the bid, would have to come in at or under $104,999. Although I don’t like the “bid preference” method, at least it does not unfairly “lock out” all from competing for the work.

    Upcoming RFP/Bid Opportunity, posted on Jan 6, 2012:

    Denver International Airport – Business Services

    Project: STRP (Parsons); Printing, Binding & Reprographics Services

    Description: Provide Printing, Binding and Reprographics Services for the STRP Project (this will be a Direct Solicitation to only M/WBE firms.)

    Anticipated Date: April 12, 2012

    Projected Value: $20,000.

    http://business.flydenver.com/bizops/forecasts.asp

  • A colony on the moon – Go Newt!

    I promised “no politics” on Reprographics 101.

    I just wanted to share this one with my blog-visitors, as it was funnier than a Dilbert cartoon strip.

    There was yet another Republican debate, last night in Jacksonville, FL; look at what was said (it made me laugh out loud.)

    “About an hour later, Romney pounced when the topic turned to Gingrich’s proposal for a permanent American colony on the moon – an issue of particular interest to engineers and others who live on Florida’s famed Space Coast.”

    “A career businessman before he became a politician, Romney said: ‘If I had a business executive come to me and say I want to spend a few hundred billion dollars to put a colony on the moon, I’d say, `You’re fired.’”

    To Speaker Gingrich ….. “when, under your Presidency, the U.S. has established a colony on the moon, would you, when you are finally out of office, please kindly use your power as a “historian” to convince Congress to pass a law authorizing Freddie Mac and Fannie Mae to give me a 125% loan-to-value mortgage on my condo on the moon?” And, please kindly make sure that the colony has a nice white-sandy beach!