Reprographics 101

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  • Blueprinting companies were once extremely profitable businesses: a look back in time

    I’m a history buff and a nostalgia buff, and I’d like to thank John Scher Zeller, grandson of Max Scher, for sharing some of his grandfather’s balance sheets with me, so that I can share this, what I think is very interesting information, with visitors to Reprographics 101.

    John’s grandfather, Max Scher, who was an immigrant, founded Max Scher Blueprints in 1922. Max Scher Blueprints was located in downtown Washington, DC.

    Max, habitually prepared a balance sheet (assets and liabilities) at the beginning of each year; these balance sheets reflected his “net worth.” I would have liked to have been able to share Max Scher Blueprints’ income statements, but, unfortunately, those are not in John’s archives.

    Let’s start with the balance sheet prepared in January 1923, which was not long after Max founded his blueprinting company. In this balance sheet, you will see a debt to C.F. Pease & Co. That company manufactured blueprinting machines. “Real” blueprinting machines, the ones that made blueprints using a wet-chemical process and that produced white lines on blue paper.

    Financial Statement – 1923

    Cash

    $4,642

    Liberty Bonds

    $50

    2nd Trust Notes

    $4,468

    Dep on 16th St Apartment

    $250

    Half-interest in 2 stores

    $1,500

    Stock Investments

    $300

    Blue Print Plant

    $2,565

    Total Assets

    $13,775

    Note to C.F. Pease & Co.

    $(765)

    Note to Guaranty Savings Bank

    $(240)

    Net Worth

    $12,770

    According to dollartimes.com, $12,770 in 1923 had the same buying power as $165,616 in 2011.

    Okay, let’s now move forward to the year 1947. (That’s the year that John Scher Zeller was born (and the same year that I was born.)

    By this time, Max’s balance sheet shows that he owns 909 12th Street, N.W. (Washington, DC). Apparently, it was sometime during 1939 when Max purchased 909 12th Street. When I first met John Scher Zeller back around 1977, Max Scher Blueprints was still located at 909 12th Street. [ABC Imaging’s first location (and its name, back then, was American Blueprinting Company), was only one block away, over on 11th Street, N.W., but the Falsafi’s (brothers Medi and Mir) did not found ABC until 1982.] John moved the business out of 909 12th Street when he and Gary Rowley (Rowley’s Blueprint Service) merged their companies; that merger happened in 1979. Note that, by 1947, Max Scher’s net worth, adjusted for inflation, had climbed to over $4 million!

    Financial Statement – 1947

    Cash

    $34,000

    U.S. Government Bonds

    $227,175

    Stock Investments

    $35,000

    Property – Davenport St, NW, Wash, DC

    $40,000

    Property – 909 12th St NW, Wash, DC

    $20,000

    Blue Print Plant

    $12,000

    Annuity, NY Life

    $55,000

    Total Assets

    $423,175

    Total Liabilities

    $(5,049)

    Net Worth

    $418,126

    According to dollartimes.com, $418,126 in 1947 had the same buying power as $4,262,532 in 2011.

    Although I don’t have Max Scher’s income statements, I did see some of them years ago, around the time that John and I first met. Max Scher Blueprints, as I recall, was an extremely profitable company. Those were back in the days when most blueprinting companies did only blueprinting. Xerox machines had not yet been invented. I don’t recall when “Photostat” machines first appeared in the marketplace, but I’m sure that Max Scher Blueprints added that service not long after Photostat machines came on the market. (John said, this morning via e-mail, that he thinks his grandfather first added Photostat machines sometime in the 1930’s). Today, you’d be hard-pressed to find any reprographics company that, pound-for-pound (percentage-wise), is as profitable as was Max Scher Blueprints was back then.

    Here’s a link to the collection of Max Scher’s balance sheets:

    http://tinyurl.com/7vu8ntw

    And, here’s a link to Max Scher’s business card! (note that this was back when phone numbers had only four numbers and a prefix that was in letters, in this case, NA-3738. (The first family phone number I can remember was TU-1530; that’s from when I was 2 years old.)

    http://tinyurl.com/6uoxfab

  • How would you like to have the opportunity to scan 15,000,000 pages? !!!

    Well, someone’s going to have that opportunity!

    Unfortunately, unless you knew about this procurement and submitted a proposal, you won’t have the opportunity to provide scanning services to the LAUSD, at least not this time around.

    The deadline for Proposals was October 31st.

    Proposals are now in the process of being considered. This morning, I checked with the LAUSD purchasing people and was informed that LAUSD has not yet made an award.

    I will be checking the web-address they gave me so that I can post the name of the company that LAUSD awarded the contract to.

    I have requested “copies of all of the proposals” that were submitted, but it will be a while before I have (and am able to post) copies of the proposals that LAUSD received.

    Here’s more about this RFP:

    LOS ANGELES CALIFORNIA UNIFIED SCHOOL DISTRICT (LAUSD)

    SCANNING AND ARCHIVING, DOCUMENT CONTROL AND OTHER RELATED SERVICES

    RFP R-12012

    Schedule:

    RELEASE OF RFP: October 4, 2011

    SUBMITTALS DUE AT FACILITIES CONTRACTS: October 31, 2011, before 3:00 P.M.

    CONTRACT BEGIN DATE (tentative): December 2011

    ADDRESS FOR SUBMITTALS

    Los Angeles Unified School District Facilities Division Services Facilities Contracts 333 South Beaudry Avenue, 22nd Floor Los Angeles, CA 90017

    I’ve posted three documents in my Google Docs library:

    1. the RFP document

    http://tinyurl.com/7jowcke

    2. the Excel file proposers had to complete with pricing offered

    http://tinyurl.com/6p7c5bu

    3. the Q&A document issued for this RFP

    http://tinyurl.com/83brtvj

    From that Q&A document, check out this question and response:

    QUESTIONS AND ANSWERS DATED OCTOBER 26, 2011

    Question:

    #3. Looking over this RFP, we are wondering about the quantities of documents, records, drawings needing to be scanned. It’s difficult for us to respond without knowing this figure. I want to say information is provided on page 7, but there is no specific mention of the amount of boxes or documents that make up this proposal. Is the Contractor supposed to just provide an estimate? I’d assume the District is looking for specific figures.

    Response:

    Pricing should be based on per sheet cost for scanning (regular and large format, for instance) and pricing for auxiliary services and materials. The pricing should not be based on a total project, as there will be multiple projects over the life of the Contract. There is no way for the District to tell at this time how many boxes or documents will ultimately be scanned. The current backlog of documents that may need to be scanned exceeds 15 million pages.

  • Two articles about November’s uptick in the HomeBuilder Sentiment Index

    Don’t jump up and down over November’s rise in the HomeBuilder Sentiment Index to 20 from October’s Index of 18. The “press” has a very aggravating way of “shouting out” about things that aren’t really worthy of shouting out about. Any reading below 50 indicates that HomeBuilders have a poor outlook! 20 is waaaaay below 50!

    Separately, permits for residential construction rose 10.9 percent to a seasonally adjusted annual rate of 653,000 last month (October 2011), the Commerce Department said. However, new home construction fell 0.3 percent to annual rate of 628,000 units.

    Here are two articles about November’s HomeBuilder Sentiment Index:

    “Confidence Up Among US Homebuilders”

    Source: TheStreet.com

    Published on: Thursday, November 17, 2011

    Written by: Andrea Tse

    November saw a rare uptick in homebuilder sentiment that brought the index up from 18 in October to 20, its highest level since May 2010, although analysts find anything under 50 to indicate poor growth. The National Association of Home Builders (NAHB) tracks the index as a measure of future growth in homebuilding, and NAHB executives remark the numbers will stay low as long as issues like the high number of foreclosures, difficulty in securing construction financing and low buyer confidence persist. For more on this continue reading the following article from TheStreet.

    Homebuilder sentiment jumped in November, according to a report from the National Association of Home Builders.

    The NAHB’s housing market index came in at a reading of 20 for November, bringing the index to its highest level since May 2010. Economists were expecting the index to remain unchanged from the originally reported reading of 18 in October according to Thomson One Analytics.

    Still, the index remains well below 50, indicating that builders largely view the market as poor.

    “While this second solid monthly gain on the builder confidence scale is encouraging, the overall measure remains quite low due to the many challenges that home building continues to face with regard to the high number of foreclosures, the difficulties of obtaining construction financing and accurate appraisals, and the restrictive lending environment that is discouraging potential buyers,” said Bob Nielsen, NAHB chairman and a home builder from Reno, Nev.

    – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –

    “Home builder sentiment at 1-1/2-year high in November” (2011)

    WASHINGTON | Wed Nov 16, 2011 10:02am EST (Reuters)

    Home-builder sentiment scaled a 1-1/2-year high in November, a survey showed on Wednesday, but conditions remain very weak to signal a turnaround in the depressed housing market.

    The National Association of Home Builders/Wells Fargo Housing Market index rose three points to 20 this month, the highest level since May 2010. Economists polled by Reuters had expected the index to edge up to 18.

    A reading above 50 indicates that more builders view sales conditions as good than poor and the index has not been above that level since April 2006.

    “The overall measure remains quite low due to the many challenges that home building continues to face with regard to the high number of foreclosures, the difficulties of obtaining construction financing … and the restrictive lending environment that is discouraging potential buyers,” said NAHB Chairman Bob Nielsen.

    All of the index’s three components recorded gains in November. A measure of current sales conditions rose three points to 20, the highest level since May 2010, while a gauge of future sales expectations rose two points to 25. That was the highest reading since March.

    A measure of prospective buyers rose one point to 15 — highest since May 2010.

    (Reporting by Lucia Mutikani, Editing by Chizu Nomiyama)

  • AIA Issues Paper: Stalled Construction Projects and Financing (November 2011); and AIA announces development of a database of stalled projects

    The AIA released a very interesting paper (see title above), and I think this paper should be read by all who are involved in the A/E/C industry, including reprographers. The paper includes quite a number of charts and graphs, all of which should be of interest to reprographers who earn most of their living from serving firms in the A/E/C Industry.

    A lot of research went into the development of this paper. The information shared in this report serves as good “food for thought”. I suspect this is the AIA’s way of attempting to influence policymakers.

    The final paragraph in this document says this …..

    “Clearly, the economic recession and a weak recovery have generated less demand for commercial and institutional space. Equally clearly, though, difficulties in obtaining financing are currently delaying many otherwise viable projects, therefore holding back a recovery in these construction sectors. Until more credit is extended, the potential of nonresidential building construction to promote greater levels of economic growth will not be realized.”

    As I’ve pointed out in several articles I’ve posted on Reprographics 101 over the past two+ years, one of the major hurdles to increased A/E/C industry activity is the hurdle of obtaining financing for projects. Our government gave “easy money’ to get banks healthy. But what has our government done to push (or, should I say “force”) that money from banks to the real estate development sector? Other than funding stimulus projects (and stimulus projects were mostly transportation projects, and stimulus funding, for the most part, is over and done with), our government (and policymakers) have done squat!!!

    You can access the paper at this Internet address:

    http://tinyurl.com/c2z263l

    Also, I’d like to direct your attention to a project the AIA recently launched:

    AIA Launches Stalled Projects Database

    (from an article on aia.org in November 2011)

    A place where investors and architects and developers can connect

    The American Institute of Architects has launched its Stalled Projects Database, where industry leaders can connect with investors and re-start projects nationwide that make solid economic sense but which lack the financing needed to be finished.

    The site will be a tool to help bring the two sides together. The AIA announced its commitment to building this database earlier this year as a participating member at CGI America, the first conference of the Clinton Global Initiative solely dedicated to economic issues impacting the United States.

    By clicking on the gray box to the right on the top of the page, industry leaders can fill out a form and post information about their project. More than one project can be submitted. Industry leaders can also read about investors and find and make contacts.

    By clicking on that same grey box, investors can fill out a similar form that provides the basic details about their company and the kind of projects in which they are interested in investing. Investors are welcome to remain anonymous if they wish, though they must complete the form in order to peruse stalled projects listed in the database.

    Stalled Projects is an initiative of the AIA and is designed to help architects and their clients find a solution to the primary issue plaguing the design and construction industry – access to credit.

    The AIA makes no assurance as to the accuracy or legitimacy of any of the information entered by either investors/lenders or project owners. That is up to both sides to evaluate. Neither does the AIA rank the projects listed as to viability or any other criteria. We are simply acting as a forum for investors and architects/project owners/developers to meet and exchange information.

    The AIA commitment comes as the design and construction industry is plagued by a continuing dearth of credit for otherwise credit-worthy projects. Almost two-thirds of architects responding to a recent AIA survey reported at least one project that is stalled due to lack of financing, despite record low interest rates.

    The Clinton Global Initiative’s Chicago conference convened diverse stakeholders – including CEOs of American companies and international companies with U.S. operations, national and local government officials, and leaders from the nonprofit sector – to identify effective ways to strengthen U.S. industries, unlock capital for innovation and entrepreneurship, advance energy efficiency, build clean energy infrastructure, and train Americans for the 21st-century workforce.

    Topics covered during the meeting included education, green buildings, the healthcare workforce, manufacturing, rural development, service corps, small business growth, smart infrastructure and workforce training.

    You can access information – about the AIA’s development of a “database” of stalled projects – at this Internet address:

    http://www.aia.org/stalledprojects/

  • AIA ABI Index for October 2011 increases, but still below 50

    AIA ABI Index, recent “readings”:

    49.4 – October 2011

    46.9 – September 2011

    51.4 – August 2011

    45.1 – July 2011

    46.3 – June 2011

    47.2 – May 2011

    47.6 – April 2011

    50.5 – March 2011

    50.6 – February 2011

    50.0 – January 2011

    54.2 – December 2010

    52.0 – November 2010

    48.7 – October 2010

    50.4 – September 2010

    Prior to September 2010, the ABI Index had not been at 50 or above since December 2007.

    After a sharp dip in September 2011, the Architecture Billings Index (ABI) climbed nearly three points in October 2011. I’m not sure that Reprographers should rejoice over this development – the increase in the ABI from September to October – because the October index, at 49.4, is still below 50.

    The American Institute of Architects (AIA) reported the October ABI score was 49.4, following a score of 46.9 in September. This score reflects an overall decrease in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 57.3, up from a reading of 54.3 the previous month.

    “An increase in the billings index is always an encouraging sign,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “We’re seeing some regions and some construction sectors move into positive territory. But there continues to be a high level of volatility in the marketplace with architecture firms reporting a wide range of conditions from improving to uncertain to poor. It’s likely we will see a similar state of affairs in the coming months.”

    · Key October ABI highlights:

    · Regional averages: Northeast (51.7), South (49.1), Midwest (47.7), West (43.5)

    · Sector index breakdown: commercial / industrial (53.5), multi-family residential (51.3), institutional (47.3), mixed practice (42.0)

    · Project inquiries index: 57.3

    The ABI index increased to 49.4 in October from 46.9 in September. However, in spite of the increase from September to October, anything below 50 indicates contraction in demand for architects’ services.

    The ABI is considered a leading economic indicator of construction activity. According to the AIA, there is an “approximate nine to twelve month lag time between architecture billings and construction spending” on non-residential construction. So the recent surveys suggest further declines in CRE (commercial real estate) investment in 2012.

  • 2011 Managed Print Services (MPS) Market Size, Share and Forecast Study(ies) – from Photizo Group

    Because I’ve posted lots of stuff about the MPS business and industry – and about the opportunity for developing MPS business – in the past on Reprographics 101, I thought I’d mention that The Photizo Group has just released (for purchase) its most recent studies and forecasts for the MPS market.

    If anyone out there is willing to put up $19,450 towards the purchase of the North American MPS study, I’m willing to chip in the remaining $50 bucks! (Disclosure: I used to be frequent customer of Borders and Amazon, but, now, I get most of my books – free – at the public libraries in Boston and St Petersburg.)

    Photizo Group’s 2011 MPS Market Size, Share and Forecast Study – –

    You can buy them “by region” or you can go whole hog and buy the worldwide edition!

    Abstract: This report provides a comprehensive examination of the managed print services market opportunity, and the share position for the major competitors in the global market. It also examines the volume relative to the original equipment manufacturers (OEM) versus the channel.

    Questions it answers:
• How large is the market? This report addresses the size of the market in terms of both revenues and the number of devices under contract.
• Where will the opportunities be? The report provides a clear view into which markets and segments represent the greatest growth opportunity.
• Who is winning and who is losing? By analyzing share among vendors, clear trends emerge from the report in terms of who is winning, and who is losing in the MPS market.

    Photizo’s comprehensive pivot tables support the most complicated data dissections. Compare and evaluate revenue by country, vendor and MPS type at the same time. Watch a pre-recorded demo.
Included Deliverables:
-Report
-Slidedeck
-Pivot Tables

    2011 MPS Market Size, Share and Forecast Study; Pricing – – –

    North America

    $19,500.00

    Latin America

    $12,500.00

    Western Europe

    $19,500.00

    Asia Pacific

    $19,500.00

    Global Forecast (Includes all above)

    $71,000.00

    Contact:

    http://www.photizogroup.com/

  • eDevelopment's suite of software solutions for reprographers and AEC customers of reprographers (eDistribution, eCommunication, eShare)

    Very recently, I received an e-mail from Mark Langdon, President of Eastern Engineering Supply. Mark wanted to alert me to software solutions that he and his associates have developed and are already using (and offering to A/E/C customers) or currently have under development and will soon be using and offering to A/E/C customers.

    Mark’s e-mail to me was, I think, prompted by a post I did about the success ReproConnect has had with its eplanroom solution. While ReproConnect’s eplanroom solution is targeted at reprographers who want a very-easy-to-use eplanroom solution, one offering basic functions, Mark and his associates have developed (and are still working on) software solutions (for reprographers and for customers of reprographers) that go well-beyond basic eplanroom functions.

    Here’s Mark’s most recent e-mail to me:

    Joel-

    I’m back from Canada and had some time to retype the email you requested. If there’s anything you would like for me to change or add please let me know. I tried to add things that might be helpful to your followers. Specifically, the CDT certification process. I’m not sure how familiar you are with this certification but this might be a great future post for your blog. All of us in eDevelopment believe every reprographics firm needs to become certified.

    Below is a detailed description of who eDevelopment is and what we’ve been working on:

    eDevelopment is a software company that was started in 2010 by five companies in the reprographics industry. The five companies, in alphabetical order, are Alabama Graphics, Drexel Technologies, Duncan Parnell, Eastern Engineering Supply and Lynn Imaging.

    Blog-author’s notes: Before you go on to read the rest of this post, I want to make a couple of comments. (a) All five of the companies listed as participants in the company known as eDevelopment are members of ReproMAX. (b) Four of the companies listed as participants in eDevelopment – Drexel, Eastern Engineering, Lynn Imaging, and Alabama Graphics are also members of RSA. (c) I find this interesting (i.e., that these companies are members of ReproMAX and RSA), because RSA developed and distributes an eplanroom software solution called Plan Command, which these RSA members have apparently chosen not to promote or utilize and because ReproMAX developed and distributes eplanroom software known as DFS and “collaboration and communication” software solutions, the latter under the moniker, “cMAX”, which, likewise, these ReproMAX members have chosen not to promote or utilize. OBVIOUSLY, NOT ALL RSA members believe that Plan Command is the most appropriate solution for their A/E/C customers and NOT ALL REPROMAX members believe that DFS and cMAX are the most appropriate solutions for their A/E/C customers. (d) Since I’ve mentioned (in today’s post and in previous posts on Reprographics 101) ReproMAX and RSA and the software solutions they offer to their members and to their members’ customers and prospects, I guess, in order to be fair, that I should, once again, mention that ARC’s PlanWell Collaborate software solution is targeted at the same members, customers and prospects. There are, of course, other software solutions – directed at sharing, collaboration and distribution of documents and information related to A/E/C project-participants, solutions that have been developed by non-reprographers and non-reprographer associations, but I’m not going to mention any of those in this note. Okay, let’s go on ….

    eDevelopment currently has three different software packages in our portfolio. The three software packages are eShare, eDistribution and eCommunication. The order that I named all three plays a key role in how they fit into the life cycle of a project. All three of these software packages are managed by PLP Digital Systems. This means PLP has been responsible for the development of the software and will continue to be responsible for the development in the future.

    The first software in our portfolio is eShare. eShare is still in beta and has not been released to other reprographic shops, yet. Currently only the owners of eDevelopment are using eShare. This software is basically a FTP site on steroids with a lot more organization. This product is most beneficial during the design phase of a project but can also be used during the bid phase. More detail will be released on eShare shortly, when we release it to the reprographic industry. We expect to go live with this product in the first quarter of 2012.

    The second software in our portfolio is eDistribution. eDistribution has been around for ten years and was originally developed by Lynn Imaging. This software addresses the bid phase of a project. With eDistribution, ITB’s are distributed to multiple contractors at the same time, ensuring the project attracts the right contractors at a competitive price. eDistribution is available as a password-protected site for private projects, letting the contractor control who can bid on their projects. eDistribution allows you to send notifications, track communication and view various bid documents and download various bid documents. Whether the project is private or public, flexible and automated controls ensure all bidders have the latest information to accurately bid the project.

    The third and final software in our portfolio is eCommunication. eCommunication addresses the construction part of a project and is the signature product for eDevelopment. Most people in the reprographics industry know how many documents are involved during the bid phase but are not aware of the massive amount of documents and documentation involved in the construction phase. In the past, AEC firms would literally have rooms full of documents such as submittals, RFI’s, ASI’s, and Change Orders to name a few. As more and more companies move to the digital movement eCommunication allows every firm involved on a construction project to communicate in a timely manner. eCommunication takes all these documents and bundles them into a digital format that allows every contractor to track the process flow. Users receive relevant changes and actions that need attention via email notifications. Users can browse, view and download documents from the vault. Users can initiate submittals, RFI’s, ASI’s and CO’s and quickly search project logs. Many of the AEC firms currently using eCommunication tell us that the software can save them four hours a day. eCommunication is an excellent product to replace lost print revenues. It’s not uncommon to generate $5K to $30K in revenue per project from eCommunication. Revenue from eCommunication is generated by charging a percentage of the project. I would warn any of your bloggers that learning the construction process is not an easy process to learn. All five of the companies involved in eDevelopment have employees that are CDT certified. I would encourage all your bloggers to look into their local CSI chapter and learn about becoming CDT certified.

    All three of these products can be used as a stand-a-lone product or they can be used together. All three products have the ability to pull information from the same database. I attached some brochures for you to look at. Feel free to share these with your followers. However, I did not attach any literature for eShare since it’s still in beta.

    With eShare, eDistribution and eCommuncation we have the ability to take a project from concept to reality. When using all three products you have the ability to generate more revenue from a project than during the print days of the past. When a customer uses these products you also become more than a reprographer to your customer. You become a construction information manager. You are now a part of the construction team. How many reprographers are a true part of the construction team? With the three products mentioned above eDevelopment is well equipped for the AEC industry to go digital.

    Okay, that was the extent of Mark’s e-mail to me, and, to Mark, thank you for sharing this information with me and with folks who visit Reprographics 101. I very much appreciate the time you took to share this information, and I wish you and your associates great success with eDevelopment’s software solutions.


    Blog-readers, you can click on these links to access these documents, which are now hosted in my Google Docs library:

    Information about eDevelopment:

    http://tinyurl.com/bw2lv6p

    Information about eCommunication:

    http://tinyurl.com/bwtkty6

    Information about eDistribution:

    http://tinyurl.com/7f6zppx

    Literature about eShare is not yet ready for release.

  • Autodesk (ADSK) Q3 2012 – Transcript of “Earnings Call”

    Although AutoDesk’s business is not limited to the AEC Industry, AutoDesk certainly derives a significant portion of its revenues from firms and agencies involved in the AEC business and industry, and, for that very reason, I follow AutoDesk’s financial results, since “how AutoDesk does” has, in the past, been a good leading indicator for “how the reprographics industry will do.”

    AutoDesk released its Q3 2012 results the other day – strong results – and I just finished perusing my way through the Transcript of the “earnings call”, which is published at www.seekingalpha.com. (Date: November 15, 2011 at 5:00 p.m.) Below, I’m going to carve out and re-publish just some of what was said during the earnings call. I urge reprographers to read the entire transcript rather than just the stuff I’ve placed below. See way below for the Internet address of the full earnings call transcript. For those of you who are too lazy to read the entire transcript, I’ve placed, below, some of what was said during the earnings call:

    Carl Bass (AutoDesk’s CEO)

    Our strong revenue growth was driven by double-digit growth across all of our major geographies, with particular strength in Asia Pacific. All of our business segments performed well, driven by revenue from Suites. When combined with continued cost controls

    When combined with continued cost controls, we achieved solid growth in our non-GAAP operating margin, EPS and cash flow from operations. There were several areas of notable growth and achievement during the quarter, including 15% growth in total revenue, 36% growth in total Suites revenue; 28% growth in revenue from Asia Pacific, 21% growth in our PSEB segment, double-digit growth in both our AEC and manufacturing segments, 18% growth in maintenance billings, 360 basis point improvement in non-GAAP operating margin, 38% growth in non-GAAP EPS and 20% growth in cash flow from operations.

    This is only the second full quarter that our new design suites have been in the market, and they’re off to a terrific start. Our customers realize the significant value delivered in the suites, which is winning us new customers and motivating existing customers to migrate from point products and older suites to our new suites. Over the course of the next few years, we expect Suites to become the majority of our revenue mix.

    Two weeks from today, at our Autodesk University event, we’ll be unveiling our offering for entering the PLM market. As I said previously, we’ll be addressing the significant market opportunity with a very unique approach which will enable manufacturers as well as AEC and M&E companies to achieve the full promise of PLM for the first time.

    Our cloud-based approach will be easy-to-use, implement and deploy. It will be scalable, configurable and intuitive, which is a sharp contrast to the decades-old legacy technology in the market now. We think that customers are starving for this new kind of solution, and Autodesk succeeds in introducing this kind of disruptive technology.

    Speaking of cloud technology, we recently launched Autodesk Cloud, a collection of more than a dozen web-based capabilities. These services will enable customers to extend their desktops with greater mobility, while offering new viewing and sharing capabilities, and will provide more computing power, helping our users to better design, visualize and simulate their ideas.

    We also felt it would be helpful to share with you our initial thoughts about FY ’13. We are modeling revenue growth of at least 10% and non-GAAP operating margin improvement of approximately 200 basis points year-over-year. Our recent performance, coupled with our revenue outlook for FY ’13, reinforces our confidence in achieving our long-term target of growing revenue by 12% to 14% compounded annually and getting to 30% operating margins by the end of FY ’15.

    From the Question-and-Answer Session …..

    Brent Thill – UBS Investment Bank, Research Division

    Mark, if you could just talk about the guidance for next year, starting at 10%. Maybe if you could just start with your visibility. And for Carl, just on Europe, if you could give us just your view of what’s happening. You had decent growth, but obviously Asia-Pacific was outpacing it by quite a bit. So if you could compare and contrast that, that would be helpful.

    Mark J. Hawkins (AutoDesk’s CFO)

    Sure, Brent, glad to do so. Our 10% — at least 10%, and as we look at FY ’13, it’s based on a kind of a normal process. It is 5 quarters out, but we look very comprehensively with our sales team, with our channel partners. We have a lot of, obviously, data that we get that we factor into a rigorous plan. We feel like this is a solid projection. We feel confident in the guidance. And it’s kind of our normal process that we look at. And historically, in Q3, we typically give our fiscal year projection for the following year.

    Carl Bass (AutoDesk’s CEO)

    And Brent, we’ll update it as we get closer to the beginning of the fiscal year. On Europe, I think — I don’t think our experience is very different than what other companies are seeing and reporting, that I think it’s mixed across Europe. Certainly, Southern Europe is fairly weak. Northern and Central Europe is fairly strong, and I think there’s a lot of uncertainty about what’s going to go on in the Eurozone and in Brussels. Asia Pacific was really strong. It has continued to outpace both the Americas and Europe for a long time, and I expect it to continue to do so.

    Jay Vleeschhouwer – Griffin Securities, Inc., Research Division

    Okay. Just a couple of quick follow-ups. Earlier this year in Q1, you pointed to some weakness in your infrastructure business, and that may have been due just to some product timing. But could you comment on how that’s doing now? And then finally, also earlier this year, you made some changes in terms of your channel segmentation, with some airline-like platinum status and so forth. Could you talk about how those changes in your channel structure or certifications may have had any discernible incremental benefits thus far this year?

    Carl Bass

    Yes. So let me just go — let me just broaden your infrastructure question to the general AEC question. Two quarters ago, people were questioning a lot about the health of the AEC business and trying to extrapolate from there one thing or another. I tried to point out at the time something that remains true, has always been true, is that if you really want to understand how we serve architecture, engineering and construction, you have to look at the combination of what we report as AEC and PSEB. That one was particularly low in AEC 2 quarters ago. The other point I’ve made repeatedly is I try not to read too much into any one quarter’s number in one particular area. And my logic around that is we have a capacity constraint system with various incentives. And under that, you see behavior that goes on within a quarter. That’s not very controllable. Over time, when it becomes a trend, then you should take note of it, and we certainly do and try to do something about it. So overall, I’d say our AEC business is doing well. You can see it in the AEC number alone, as well as the fraction of the PSEB business. Along with that, infrastructure is doing well. There were some timing issues also that we brought up in 2 quarters ago. Had a lot to do with the introduction of suites, the introduction of the Infrastructure Suite in particular. Those are all things that came out later in the year in the U.S., as well as in other geographies and languages.

    Dennis Simson – Crédit Suisse AG, Research Division

    This is Dennis Simson for Phil. When you think about the FY ’13 revenue guidance, which segments out of federal, construction, manufacturing do you think will grow above or below that 10% average?

    Carl Bass

    I think if you want — generally, we don’t give any segment-by-segment forecasting. I think if you want to look back at historical trends and try to guess from there, Manufacturing has been the fastest and steadiest grower. I would expect that to continue. I see nothing to disrupt that trend. The big unknown, particularly as we start getting further out, is what happens in the worldwide economy around construction. We’re having really great pickup in the construction part of AEC. Business has certainly stabilized, and in parts of the world, it’s improving. So a little bit depends on something that my crystal ball is not that clear about, certainly towards the end of next year, what happens with the global AEC market.

    – – – – – – – – –

    You can access the full Transcript of the earnings call at this Internet address:

    http://seekingalpha.com/article/308199-autodesk-s-ceo-discusses-q3-2012-results-earnings-call-transcript

  • Staples' CEO Discusses Q3 2011 Results – Earnings Call Transcript

    Although this blog is about the reprographics business and industry, there are similarities between the reprographics industry and the office supplies industry, and, add to that the fact that Staples operates a fairly large “Copy & Print” business, considering the number of stores Staples operates and the geographic reach of Staples’ operations. Staples’ Copy & Print business, which is growing, definitely competes with all companies who offer small and large-format imaging services. In this post, I’m going to “bold type” (v.) comments made about Staples’ “Copy & Print” business, just to make sure that those comments stand out from the rest of the information.

    Staples Q3 2011 Hurt By Weak International Sales; Trims 2011 Outlook

    The Framingham, Massachusetts-based world’s largest office products company reported net income of $326.38 million or $0.47 per share for the third quarter, higher than $288.68 million or $0.40 per share in the prior-year quarter which included integration and restructuring costs of $5.64 million.

    On average, 17 analysts polled by Thomson Reuters expected earnings of $0.47 per share for the third quarter (Q3 2011). Analysts’ estimates typically exclude one-time items.

    Total sales for the quarter edged up 0.5 percent to $6.57 billion from $6.54 billion in the same quarter last year, but missed thirteen Wall Street analysts’ consensus estimate of $6.71 billion. Sales declined 1 percent in local currency.

    For fiscal year 2011, Staples lowered its adjusted earnings guidance to a range of $1.35 to $1.39 per share from the prior forecast range of $1.39 to $1.45 per share, but continues to expect sales growth in the low single-digits.

    The day before yesterday, Staples’ Management, and Financial Analysts who follow and report on Staples, participated in an “earnings call” and, yesterday, SeekingAlpha.com published a Transcript of the earnings call. Below, I’ve copied into this post some of the comments made during the earnings call.

    First up, Ronald L. Sargent – Chairman, Chief Executive Officer and Chairman of Executive Committee, handled the initial discussion about Staples’ US business, and, among the many comments he made, near the beginning of the Transcript, the CEO said this…..

    We saw strength in computers, technology peripherals and Copy & Print, while paper was down slightly. We also drove solid growth in other adjacent categories during the third quarter. Promotional products grew double-digits and achieved record sales for the quarter, and Print Solutions achieved high single-digit organic top line growth.

    Later on in the Transcript, the CEO said this …..

    Taking a look at our adjacent businesses, we had low single digit comps in Copy & Print during the third quarter. This reflects the benefits from investing in our sales force, as well as the recently expanded range of products and services offered in stores and on our website. And our EasyTech business also continues to comp above the house as customers took advantage of our $9.99 PC Tune Up promotion. North American Retail operating margin was 10.7% for the quarter, and that was up 12 basis points year-over-year. This reflects improved product margins as a result of more efficient marketing, partially offset by higher labor expense and investments in growth initiatives.

    We have big plans to drive traffic this holiday season. This year, we’ll have a wide assortment of the hottest new products and brands, including Kindle Fire, Nook tablet, Keurig coffee makers and a variety of gift products from Brookstone. We’re also now selling Apple products in our stores in Canada, including the iPad 2. We’re working to further increase awareness of our Copy & Print services by offering discounts on holiday cards, invitations and calendars. And we’re very excited to be partnering with Martha Stewart in launching a broad line of innovative and fashionable products early next year.

    During the third quarter, we opened 4 stores and we closed 3 stores, ending Q3 with 1,908 stores in North America. That’s 1,575 in the United States and 333 in Canada. We remain on track for net addition of 20 stores in North America for the full year. We continue to make progress with 150 store leases up for renewal this year as well. We’ve had a lot of success renegotiating rents, in many cases below our current rental rates. We also remain focused on increasing store productivity by continuing to invest in new growth ideas. Year-to-date, we’ve added over 375 mobile phone departments, bringing our total for the chain to about 450 at the end of the quarter, and we’re on track to add about 50 more of these by the end of the year. This year, we’ve also remodeled more than 60 copy centers. We’ve added 80 Copy & Print account managers and made great headway improving the quality of this $600 million business for the company.

    Michael A. Miles – President, Chief Operating Officer and President of Staples International, made this comment during his discussion of Staple’s European-operations results …..

    In Europe, our business turned negative in August, coinciding with the escalation of sovereign debt concerns. Europe office products declined 5% in local currency for the quarter after showing 2% growth in Q2. Delivery continues to outperform retail, with particular strength in Contract, which grew sales 2% in local currency versus last year. Our European Retail comps were down 12% for the quarter, with weakness across all markets other than Norway, where we had low single-digit positive comps.

    John J. Mahoney – Staples’ Vice-Chairman and Chief Financial Officer, made these comments during the Analyst Q&A session …..

    I’d just maybe add that, I think, Gary, as you take a look at our growth initiatives, the 3 big ones, the tech, the Copy & Print and the facilities and breakroom initiatives, facilities and breakroom, I think, we mentioned has now gotten to about $800 million and it’s growing mid-teens. We’re trying to invest in that as fast as we can, adding sales force, adding products, vendor relationships. And I think the dollars in sales growth are going to accelerate and hopefully soon will begin to offset some of the declines and some of the categories like computer media and software and some of those categories that customers are changing the way they access that product. Tech and Copy & Print similarly are beginning to get to the point where the critical mass is going to hopefully deliver strong sales growth, enough to carry the whole company as it gets bigger in total dollars. The challenge is how much can we absorb of some of the new things that we’re doing. And we’re trying to push the teams as hard as we can to take as much investment and absorb as much of both capital and P&L that will help drive those businesses and hopefully continue to transform Staples as a business.

    And, later on, Mr. Mahoney said …..

    Well, I think that’s absolutely the key is the mix towards services is driving a big chunk of the improvement. As we’ve seen over the last several quarters, Copy & Print and tech services grow substantially faster than the rest of the store, and as services is approaching 10% of our total sales at this point. So it’s probably the biggest driver. But we also continue to see good success with Staples branded products, which has higher margins. And I think we’ve been — as we’ve evolved our tech initiative, we’ve been less item-priced promotional with low-end PCs, and that’s helped our margin as well.

    You can read the full Transcript of Staples’ Q3 2011 Earnings Call at this Internet address …..

    http://seekingalpha.com/article/308035-staples-ceo-discusses-q3-2011-results-earnings-call-transcript

  • American Reprographics Co (ARC) – Strategy and Direction – Commonly Asked Questions About ARC’s Transition Strategy

    As I previously mentioned in a post on Reprographics 101 on November 8th, 2011, ARC’s management team (Suri, Dilo and John Toth) participated in, and presented at, the JP Morgan “Ultimate Services Conference” on November 9, 2011.

    Conferences like this one enable a public-company’s management team to promote investment in a company’s stock (and corporate notes) to financial analysts and investors (both institutional investors and mutual fund managers). One of the primary factors that influences a company’s stock price is “demand” – – – if demand (for a company’s stock) is weak, the stock price has little chance to improve – – – if demand is strong, the stock price has a great chance to grow.

    Inasmuch as the word “reprographics” is not a well known word – – – and, in fact, when in my early years in the reprographics industry I could not find a single dictionary that contained a definition of “reprographics” – – – it is vitally important for a company (in this case, ARC) to put out to the investment community as much information as possible about the industry and business, so that the investment community will not only completely understand the word, “reprographics”, but will also be able to get a good grasp (or, better, a great grasp) on the “strategy” (or multiple strategies) a company (in this case, ARC) is following to ensure that its revenues will grow in the future, especially since there’s been so much talk about the prospect of “print” declining, as more and more documents are shared, transferred and viewed “electronically”, rather than always being printed to paper.

    At the conference ARC participated in and presented at, ARC issued a document titled, “Strategy and Direction – Commonly Asked Questions About ARC’s Transition Strategy”.

    In my opinion, ARC, in its Strategy document, put forth a very compelling story as to why a prospective investor should consider investing in ARC’s shares (or as to why a current investor should consider holding onto ARC shares, if not increasing its investment in ARC shares). The Strategy document put forth 12 of the most frequently asked questions about ARC and its business strategy – – – and provided answers to these most frequently asked questions.

    Here’s a link to the “Strategy” document:

    http://tinyurl.com/cusmgd7

    Repeating what I said in an earlier post on Reprographics 101, I’ve placed a copy of the other presentation document ARC released at the JP Morgan conference – this one titled, “ARC: Investor Overview” – in my Google Docs library, and here’s a link you can click on to access that document:

    http://tinyurl.com/7vbguna

    One final comment.

    Question #3 in the “Strategy” document was this one: “Do you expect a return to the same revenue levels that you have seen in the past?”

    ARC’s first response to this question was, “Absolutely.” And, ARC went on to elaborate on its answer.

    I think most reprographers, ARC included, are aware that A/E/C customers are printing less “per project” than they used to. Traditionally (and, this was certainly the case before the Great Recession set in), A/E/C customers printed lots (LOTS!) of sets of plans and specs for “bidding”, as well as a good amount of sets for “permitting” and for “coordination.” During the Great Recession (and this was setting in even before the Great Recession started), A/E/C customers pulled back on the number of sets they printed. Many reprographers think that’s “here to stay”, that A/E/C customers, in the future, will not print as many sets as they used to print. At every reprographics industry conference I’ve been to during the past three years, that very topic has been the subject of heated debate. Personally, I think that’s here to stay; there are a variety of factors that, I think, reinforce that particular position on the future of reprographics for the A/E/C world. But, that’s not to say that ARC’s A/E/C set-printing revenues will not, at some point in the future, get back to, or, quite possibly, even surpass what ARC’s revenues were in the past from A/E/C project set-printing. ARC aptly points out (in its Strategy document) that it is well-positioned to increase its share of the overall A/E/C market. If and as ARC’s market-share grows, its revenues from A/E/C set-printing will grow, even if overall (total) market demand for A/E/C set-printing does not increase (or does not rebound to the level it was in the past). ARC is well-positioned to take business away from smaller reprographers. As I’ve pointed out in past articles on Reprographics 101, ReproMAX and RSA are going to have to come up with a strategy for “national” deals; for, if they do not, their larger customers are subject to being swept off their members’ plates …. and onto ARC’s plate.

    All-in-all, I think ARC did a fantastic job putting together its Strategy (Q&A) document.