Reprographics 101

Questions I think Financial Analysts should have asked ARC Management

February 27, 2011

Several “financial analysts” follow, and issue reports (for investors), on ARC and/or Service Point Solutions. Other “financial” people who follow ARC are investment analysts who work for institutional investors and mutual funds. Both ARC and SPS are players in the “reprographics” industry, and both are publicly-traded companies. (ARC trades on the NYSE; SPS trades on the Bolsa/Spanish Stock Exchange. In fact, ARC and SPS are the only publicly-traded companies who are players in the “reprographics” industry, at least that I’m aware of.)

Every quarter, ARC’s Chairman/CEO (Suri) and Chief Financial Officer (Jonathan) host “earnings calls”; these earnings calls give them the opportunity to talk about ARC’s recently released results (be it for a quarter or for the full year), enable them to talk about ARC’s sales and growth-strategy initiatives, and, after they’ve concluded their comments, financial analysts who participate in the earnings calls are allowed to ask questions, and ARC’s guys respond to those questions, as best they can, confidentiality considered. (Suri, for sure, does not want to reveal ARC’s plans and initiatives in great detail, for that would be “spilling all the beans”, and no CEO would want to, or should ever, do that. ARC’s competitors do listen to the earnings calls and do read the transcripts of the earnings calls.)

I don’t take the time to listen in on the “live” calls. But, I do read the “transcripts” of the earnings calls; they are prepared and posted on SeekingAlpha.com, and they are available for free (at www.seekingalpha.com)

I read the transcripts to find out what Suri and Jonathan said about ARC’s “results” and to find out what Suri says about ARC’s achievements and about ARC’s plans and initiatives going forward. I also find it very interesting to find out “what questions the financial analysts are asking” and to see how Suri responds to the questions he’s asked.

Every time I read a transcript of an ARC’s earnings call, I find myself asking, (a) do the financial analysts know what questions to ask?, and (b) when they get “this or that” response to questions they did ask, do they know what follow-up questions they should be asking? So, after reading the most recent earnings call transcript, I decided that I would compile a list of questions that I think analysts should have asked, either initially or as “follow-up” questions to responses that were given. I will also try, as best I can, to elaborate on my suggestions for questions.

A. Questions about “FM’s””

1) Question: What is ARC’s definition of an “FM”?

2) With respect to the newly added FM deals, what’s the “net new incremental” revenue expected from the “#” FM deals?

During the earnings call, Suri mentioned that ARC added another 100 FM’s. That’s an impressive number. But, in terms of “sales revenues”, what does that number really mean? If you speak to 10 different reprographers, you will get at least 3 different definitions of “what an FM is.”

A “staffed FM” is, typically speaking, where the reprographer has entered into a relationship with a customer whereby the reprographer will be providing equipment, one or more FM operators, supplies, consumables, service for the equipment and, very often, accounting for output generated on the equipment that’s provided. Some “staffed FM” relationships require (but some do not require) that the customer use the reprographer “exclusively” for reprographics orders than cannot be, or would best not be, accomplished “on-site” at the customer’s office. Typically, a “staffed FM” is a “larger” deal than would otherwise be the case with an “unstaffed FM” deal. (That’s not always the case, for some unstaffed FM’s could be considerably large in scope and in terms of revenues generated.) Some “staffed FM” deals include all of the imaging equipment on-site at the customer’s office, but some deals only include equipment for a “central print room.” In the latter case, a customer would still, on its own, provide all of the other equipment needed at its office. So, as you can see, the “scope” of a “staffed FM” can vary quite a lot.

An “unstaffed FM” is the same as I’ve explained above, with the exception that the reprographer does not provide “FM operators” to work at the customer’s office. Again, like a “staffed FM” deal, an “unstaffed FM” deal may or may not include a requirement that the customer use the FM-vendor-reprographer for “off-site” reprographics work. Some reprographers ask for exclusivity, but not all do. I have no idea what ARC asks for, or requires. (We always asked for exclusivity; we did not like to “share” our accounts with our competitors.)

Further “unstaffed FM’s” can be large deals or small deals, and sometimes the small deals are very small deals. Such as would be the case if the FM-vendor-reprographer is only going to be providing one small-format multifunction copier/printer, or one inexpensive large-format HP plotter, or one HP laser printer. Revenues for an “unstaffed” FM could easily range from as much as thousands of dollars per month to as little as $100 per month. Scope varies widely. Revenue opportunity varies very widely.

One other point is that, if a reprographer commits to doing an “FM” for a customer who was already a customer before the FM deal was signed, is the “FM” revenue going to replace some of the revenue the reprographer already had, or is the “FM” revenue going to be incremental (additional, new) revenue?

Some reprographers consider “FM’s” to be any deal where customers are going to pay “per copy”, “per sq foot”, in other words, for “output generated”. However, some reprographers consider equipment rentals and equipment leases to be “FM’s” (if they continue to own the equipment during the rental or lease term and even it output isn’t billed “per copy” or “per sq ft.”)

So, with respect to “adding 100 FM’s”, what’s that really mean in terms of revenues? Were those net new 100 FM’s big deals, medium deals, small deals?

B. Questions about “Global Solutions” deals (or “Premier Accounts” deals)”

1) Question: What is ARC’s definition of a “Global Solutions” (or “Premier Accounts”) deal?

2) With respect to the newly added “Global Solutions” deals, what’s the “net new incremental” revenue expected from the new, “#” “Global Solutions” deals?

My understanding of an “ARC” global solutions (or premier account) deal may be very different from ARC’s definition. My own personal definition is completely irrelevant.

During the earnings call, Suri talked about “global services”. According the transcript of the call posted on SeekingAlpha.com, Suri said this …..

“The first is global services, already a strong contributor to our top and bottom lines. Global services added nine new accounts to its roster in 2010 including AECOM, a $7 billion industry giant in design and engineering. These new customers represent $14 million of annualized revenue. In total, global services brought $46.8 million in sales, for 2010. We have exciting prospects in the pipeline for 2011 and we are targeting some of the largest companies in the design and engineering space as well as smaller, regional targets to help fill in the gaps.”

During my time as the COO of T-Square, which was in 1997, (T-Square was formerly an independent reprographer purchased by ARC in 2006 or 2007, can’t recall which year it was), T-Square had a “staffed FM” relationship with the largest A/E firm in the South Florida market. By the time I joined T-Square, that relationship was already more than 20 years old. That particular customer was “exclusive” to T-Square, meaning that that firm used only T-Square for its reprographics requirements, on-site and off-site. That firm had long been T-Squares largest account. A few years ago, that large A/E firm was acquired by DMJM. DMJM was/is the “core” of AECOM. T-Square’s relationship with that Miami A/E firm was still in place at the time ARC acquired T-Square. Also as to AECOM, it is my understanding, and of course I could be wrong about this (but I don’t think I am), that Ford Graphics (one of ARC’s operations in L.A.) has, for years, been providing services to AECOM’s huge DMJM office in L.A. In addition, a former ARC-insider mentioned to me, last year, that, when an existing customer of an ARC division commits to an ARC “global solutions” (premier accounts) deal, forward sales to that customer are counted as “global solutions” revenues, meaning that the revenues that were already being generated from the existing account are simply ‘transferred’ from the “division’s sales” to “global solutions’” sales.

So, where Suri said this, “these new customers represent $14 million of annualized revenue”, does the word “new” mean “new customers to ARC” or does the word “new” simply mean “customers newly committing to ARC global solutions deals, some of whom were already doing business with ARC?” Of the “nine” new Global Solutions customers, how many of those customers were already doing business with ARC before they signed on as “global solutions” accounts? Of the $14 million of annualized revenue, how much business was ARC already doing with those customers prior to those customers signing on as global solutions accounts? I would imagine the same questions could be asked about the $46.8 in sales reportedly generated by ARC’s global solutions accounts? If one has one “bucket” of customers, goes out and buys a second bucket and then pours some of its customers from the first bucket into the second bucket, what’s that really mean in terms of real growth?

Further, is a “global solutions” account a customer who has committed to use ARC “exclusively”? Or, is a global solutions account a customer who has been given “preferred pricing” and “preferred status” by ARC, but who is not required to use, nor has the intention of using, ARC exclusively? The other evening, when I asked a ReproMAX organization guy about that issue, he said, “our member companies continue to do business with many of ARC’s “global solutions” accounts; it varies by market area and it depends on customers’ local management decisions.

Don’t get me wrong. I applaud ARC’s efforts and initiatives to pursue larger customers. They are doing it the right way. It was a great idea for ARC to put together a team of people devoted to pursuing “national” account deals, and it’s the right approach to develop a national “account strategy” to pursue each and every large target. My questions have to do with the numbers put forth in the earnings call. So my question remains, and this is the question I think analysts should have asked, “with regard to the $14 million in annualized global solutions revenues, does that number represent “net new incremental” revenues? Or not? And, if not, what’s that number?”

C. Questions about Re-Branding and about Divisional management changes:

1) At the beginning of 2011, ARC rebranded all of its divisions (all of its locations throughout the U.S. and maybe even outside of the U.S.) with the ARC name. Early on, ARC maintained that it was beneficial to ARC’s business model that, post-acquisition, each acquired company continue to operate under its long-standing brand name (and ARC gave several reasons why that was a good idea). Given ARC’s rebranding initiative, does that mean that ARC feels that there will be no negative repercussions from discontinuing the use of the acquired companies’ brand names?

2) Some (maybe even several) ARC divisions are, by now, no longer managed by the former owner/managers who sold their businesses to ARC. Early on, and even after that, ARC said that it had or was retaining 90% of the owner/managers who sold their companies to ARC, and ARC explained that the benefit to ARC was that these people were the ones who built their companies and established and grew relationships with their customers, …. and that the latter was very important to ARC. Given the changes in management (at divisions where former owner/managers have departed), is it ARC’s position that the replacement of those owner/managers with ARC team members who have never before owned their own businesses presents minimal risk to ARC? Elaboration on that point would be useful.

3) Have their been any instances, yet, of former owner/managers, who previously sold their companies to ARC, coming back into the industry to join companies ARC competes with or to start up their own new companies to compete with ARC? If yes, please elaborate.

D. Questions about iShipDocs:

It’s my understanding that Mahil Maurice is the ARC team member who is Product Manager for ARC’s iShipDocs product. Mahil is a very smart young man, has a terrific personality and has a passion for what he’s involved in.

During the earnings call, Suri talked about iShipDocs. Pulled from the transcript on SeekingAlpha.com, here’s what Suri said …..

“iShipDocs generated more than $4 million in sales in 2010, and several of our larger customers are now insisting on its use over conventional shipping services. A new version of iShip Docs incorporating managed file transfer, storage and sharing services is schedule for the release in second quarter of 2011.”

Later on in the earnings call, one of the financial analysts (Brad Safalow) who follows ARC, asked Suri about iShipDocs. Here’s the “back and forth” (questions and answers), pulled from the transcript of the earnings call:

Brad Safalow – PAA Research

And then just on iShip Docs I want to make sure I understand that number correctly. Is the $4 million was that total revenue for the iShip Docs eco-system versus what you actually generated for ARC?

Suri Suriyakumar – ARC

Say that again? I didn’t quite understand the question.

Brad Safalow – PAA Research

The $4 million number you disclosed for iShip Docs in terms of revenues, was that revenues to ARC or just revenues of printing volumes on the platform – across the entire platform? Because I know – obviously, your network participates with our third-parties that also participate?

Suri Suriyakumar – ARC

Oh yeah, yeah exactly. So remember in our business model, Brad, everything is done inside ARC – at least 95%. We might actually sometimes use a third party vendor maybe when we are in Poland or Hungary or someplace like that. So this total $4 million is our revenues, out of which about 60% I would estimate to be print revenues. About 40% of that would be related to the digital shipping itself. So it is very attractive in terms of gross margins.

Brad Safalow – PAA Research

Do you have the – I guess I can extract – okay I got it. The total print revenues are simply if I take the 60% I can get to the total print revenues across the –

Suri Suriyakumar – ARC

Yeah.

Brad Safalow – PAA Research

Actually, I don’t know the royalty rate, but okay. I can try and work with that.

I think Brad Safalow did a good job getting to the main point he was apparently interested in getting to, which, I think, is best summed-up by this question (which would have been the question I would have asked Suri):

Regarding the more than $4 million in sales that iShipDocs generated in 2010, of which apparently 60% (approximately $2.4 million in sales) were revenues from “printing”, how much of that printing work represented “new” (meaning, incremental) printing revenues to ARC, as opposed to printing revenues that ARC would have had, anyway, even without iShipDocs?

With respect to the other 40% of iShipDocs revenues (approximately $1.6 million in sales), were those revenues purely attributable to iShipDocs “cloud” services, or were some of those revenues generated from fees/charges for the “ground delivery” service required to get the printed order to the recipient’s office?

(Please note: even when orders are submitted to the ARC’s iShipDocs cloud-printing-service, the ARC division on the receiving end of an order has to physically deliver the completed order to the recipient’s office. For many, many years, many reprographers use to offer “free” pick-up and delivery. But, most reprographers, including most ARC divisions prior to their purchase by ARC, charged for delivery of completed orders.)

So, all in all, my primary questions about iShipDocs revenues in 2010.

1) What portion of the $4 million in “total” iShipDocs revenues were just for the use of the iShipDocs software, network, cloud? (All printing charges and physical delivery charges excluded.)

2) What portion of the $4 million in “total” iShipDocs revenues were “new incremental” revenue to ARC (in other words, revenues that ARC would not have generated if it had not implemented iShipDocs?

If you have any comments, please post them (or you can e-mail them to me, if you would rather not use the comment-posting feature.)

Thank you for bearing with me; I realize this was a long, very-wordy post.
ARC may renew acquisition growth strategy during 2011

February 27, 2011

For Owners in the Reprographics business who are interested in selling their companies. When Suri (of ARC) was asked a question about ARC’s interest in looking at acquisitions, Suri’s response was “yes.” Due to the downturn in the A/E/C reprographics business, ARC has not, at least that I’m aware of, completed an acquisition of a reprographics company since 2008. Looks like ARC may resume that part of its growth strategy in 2011.

I say that because of a question Suri was asked during the ARC earnings call that took place on Feb 22^nd, 2011:

from “Questions ….. from Scott Schneeberger – Oppenheimer”

“And then the second being it seems a little bit early for you to be opportunistic with regard to doing tuck-ins. But you did mention that you’re putting your sales force aggressively out basically going after those smaller than you that may have struggled more. Is tuck-ins now part of the story there? Or is it more just grab their share directly, without the formal engagement? Thanks.”

from “Response from ….. Suri Suriyakumar – ARC

“Right. So to address your first question, Scott, obviously cost reductions is always mindful because we are continuing to fine-tune our operating costs. Now when you are talking about cost reductions, we close locations, branches – there can be two approaches. One is we close a branch because we simply want to cut cost, because we are compelled to cut cost, we want to reduce our operating costs. So we would just cut the branches. And we did some of that at the early stage, but we refrained from doing too much of that because we want to position the company for growth. Second reason we would close a branch is because of the technology transition which is going on, combined with the fact that we are becoming more and more with the single identity as one company. There is a lot of savings we can gain by centralizing the back offices, by centralizing some of the branches. So technology is driving that. We are seeing more and more customers employ technology. So we are starting to see benefits of that. So those kind of branch closures or consolidations we continue and we continue to do that aggressively because it actually makes us more efficient and reduces our costs and allows us to actually leverage our existing assets.”

“So that will continue. We don’t see any reason for drastic cut in branches yet and thanks to the high yield we have we feel like we have a stable debt structure so that we can focus on the growth and investing on technology. With regard to tuck-in acquisitions – absolutely. It’s more and more on our radar screen and we are watching it and we will continue to work on those, because we are constantly bumping into companies – either they are really lost a large amount of sales, finding it difficult to continue to operate, looking for the exit strategy. And most of these are private companies and where we find that we can provide an exit strategy for an existing owner, we will pick them up, because that wouldn’t be like a traditional acquisition, it would be much more attractive.”
The issue of “market share growth” in the reprographics industry

February 26, 2011

This article is “required reading” for financial analysts, institutional investors, mutual fund managers and other “non-reprographers” who are interested in the reprographics business and industry. For blog visitors who are reprographers, please don’t bother reading this post; you already know the points we’re going to make in this post.

Several years ago, not long after ARC went public, ARC developed its concept for selling to “national” (and, I would guess “international”) accounts, and, in conjunction with that, ARC established a team of business development/sales people and called those ARC team members the “Premier Accounts” sales team. Today, when I looked on Linkedin.com, I noticed that several of ARC’s team members use the term “Global Solutions” to describe their positions with ARC, instead of using the term “Premier Accounts”. (However, note that at least one person’s tag line – in an e-mail I received – still uses this title, “Executive Director, Premier Accounts.” Others use these titles, “Global Solutions Executive” and “Director, Global Solutions” and “Senior VP, Global Solutions.”) Collectively, people within ARC who refer to themselves as “Premier Accounts” or “Global Solutions” are members of the ARC sales team that pursues “national” and “international” accounts. For example, in the most recent “earnings call,” Suri mentioned that AECOM became a “Global Solutions” account during 2010. (I will make a comment about this later on in this post.) AECOM is a huge A/E firm. AECOM conducts operations out of offices in and around the country (and internationally as well.)

During ARC’s most recent earnings call, Suri talked about ARC’ s five main initiatives for 2011: He said, “The second initiative is our core business aimed squarely at gaining market share from competitors who are floundering or failing. Most of these competitors are 5 million to 10 million companies. In many cases, they are struggling with the loss of more than half their revenues. Armed with new tools, technology and buying power, we are reenergizing our local sales teams to target this market share.”

I’ve pointed out in previous posts that ReproMAX and RSA are both “national” in scope, but I also pointed out that those organizations are “associations” comprised of individual member (reprographics) companies. For that reason, the possibility of “ReproMAX” or “RSA” competing for large “national” accounts relies totally on ReproMAX’s ability and RSA’s ability (the management teams and boards of both of those associations) to bring together all of their respective individual member companies to agree on what’s offered in “national” proposals and, in conjunction with those proposals, to agree on “national” standards for service delivery and pricing. If I’m recalling these statistics correctly, ReproMAX and RSA both have over 100 individual member (reprographics) companies. Just a guess, but I would imagine that it is not an easy task, by any stretch of the imagination, to get 100 (or more) individual companies to agree on what’s going to be offered in a proposal to a large, national account. (Reportedly, the “collective annual sales” of all ReproMAX members combined exceeds ARC’s annual sales. I am not at liberty to reveal the exact number.)

Unlike RSA and ReproMAX, ABC Imaging is not an association; it is an “individual” company with its own locations across the U.S. (and a couple of locations outside of the U.S.). ABC’s national footprint is considerably smaller than ARC’s, but ABC has, even during the “Great Recession,” shown a willingness to expand to wherever its larger-account opportunities require it to go.

But, when you consider the sheer size of ARC and the extensive national footprint ARC created by rolling-up over 100 formerly independent reprographics companies in the U.S., ARC has a 1) size advantage (over ReproMAX , RSA and ABC Imaging), 2) a geographic advantage (over RSA and ABC Imaging, but not over ReproMAX), 3) a “national” sales team (I don’t recall hearing that RSA and ReproMAX have “national” sales team members; ABC Imaging might), and 4) the advantage of being able to come up with a definitive “account strategy” for a large, national prospect (or customer) without having to resort to negotiating a definitive account strategy with a whole host of different member companies, which would be the case with ReproMAX or RSA. This would not be a problem for ABC Imaging. This would also not be a problem for Service Point Solutions, but SPS’s geographic footprint in the U.S. is much smaller than ABC Imaging’s footprint.

While ARC does have certain advantages when competing for business (I mean, “deals”) with large, national accounts, ARC does not, in my opinion, have an advantage over the others when it comes to developing relationships with customers in individual market areas, nor does ARC, in my opinion, have an advantage over the others when it comes to service delivery. Many, many of the individual companies who belong to ReproMAX and RSA, and this would also be the case with ABC Imaging, are tenacious and relentless when it comes to developing (and maintaining) customer relationships, and when it comes to servicing the needs and requirements of their customers. Within each individual market area, “size does not matter” as much as “performance” matters. In this sense, independent reprographers may actually have an advantage over ARC-operations in their markets, simply because the owners of each independent company are at risk for their “net worths”, whereas ARC’s local managers do not have that risk. When everything is on the line, don’t (ever) underestimate the resilience and competitiveness of an, or any, independent reprographer.

All of the above relates to ARC’s stated objective to grow its “market share”; this implies that ARC, in order to move forward with this objective, will have to increase its market share in each and every “market area” in which ARC operates. Growth in “market share” is not easy, nor is it assured. Market share growth comes by taking away customers from independent reprographers ARC competes with. Independent reprographers aren’t going to make it easy for ARC to take away their customers, and, as I said earlier, independent reprographers may, in my opinion, have an advantage over ARC (see previous comment about that), individual market areas considered. Thomas Reprographics, NRI, ABC Imaging, C2 Reprographics, Duncan Parnell, Lynn Imaging, Service Point Solutions, CyberCopy, Gilmour Reproductions,, Astley-Gilbert, and Universal Reprographics, just to name a few, are formidable competitors in their respective markets.

Based on what I’ve read, so far, in reports issued by financial analysts who follow the reprographics industry (because of their interest in ARC and/or Service Point, the two publicly-held companies who are considered players in the reprographics industry), I’m not positive that “investors” and “financial analysts” have a good understanding of the issue of “price” in the reprographics industry. In the reprographics business (in the U.S.), “price is not the only factor” that customers consider when choosing which reprographer to do business with. Many A/E firms are “reimbursed” for a good portion of the reprographics services they purchase from reprographers. (ARC pointed that out in its IPO prospectus.) A/E firms who are reimbursed are less sensitive to price. (Any reprographer who sells “price” to an A/E firm that it is reimbursed for much, if not all, of the expenses that A/E firm incurs, should have his/her head examined! Doing so would be flat out dumb.) My very first customer, the senior partner of a large Architecture firm, told me that, my first year in the business (1970.) Construction companies and sub-contractors are concerned about “price”, but they will not accept poor quality or poor performance. So, even for them, price is not the only factor they consider. Non-A/E/C customers who buy color services (large-format or otherwise) are certainly concerned about price, but they, too, will not go with low price or lowest price if performance and/or poor quality is the trade-off.

All of the blah-blah-blah above was put forth in an effort to shed a bit more light – for the benefit of financial analysts, institutional investors, mutual fund managers and other “non-reprographers” who are interested in the reprographics business and industry – as to the issue of “market share” and the difficulty that any company, whether it be ARC, Service Point, ABC Imaging, Thomas, NRI, etc., faces in its efforts to grow by “increasing market share” (taking away business from competitors.) Short and sweet, “it ain’t easy.”
The U.S. Reprographics Industry needs a barometer of wide-format b/w A/E/C plan printing volume

February 25, 2011

Yesterday, I ran into someone I know who works for OCE “wide-format”. I asked him about OCE’s wide-format “black and white” click volume.

He said:

(1) On a U.S.-country-wide-basis, OCE’s wide-format “black & white click volume” in 2010 was 50% off its peak (peak, meaning, before the recession kicked in.)

(2) On a Florida-wide basis, OCE’s wide-format “black & white click volume” in 2010 was 70% off its peak.

“Click volume” = in the U.S, most OCE (and KIP and Xerox wide-format black & white, toner-based) printing systems record “square foot usage”.

In the U.S., OCE sells direct to customers and OCE also sells through “dealers”. Quite a number of reprographics companies are OCE wide-format printing systems dealers. It is my understanding that the “percentage” numbers, peak to 2010, that I mentioned above, are for systems OCE, itself, provides service for. The numbers would not, therefore, include the click volumes (square foot usage) of all OCE wide-format b/w systems in the U.S., because I seriously doubt that OCE’s reprographer/dealers, some of whom provide service on the systems they sell, lease, rent and “FM”, provide their click volume numbers to OCE.

Xerox and KIP are the other two equipment manufacturers who offer “wide-format black & white, toner-based, printing systems” on the U.S. market. (Yes, I know that there are other brands who offer wide-format, b/w, toner-based systems in the U.S., such as Ricoh, but OCE, KIP and Xerox systems probably add up to 90% of total market – click – volume.) I’ve not heard anything about the click volumes of KIP and Xerox systems in the U.S. Like OCE, KIP and Xerox sell direct to end-user customers and to dealers who sell to end-user customers.

To me, the absolute “best barometer” of “A/E/C plan printing” in the U.S. would be the “total click” volume (square foot usage) of “all” (well, maybe not all, but most of the) wide-format, black & white, toner-based printing systems, OCE + KIP + Xerox + all reprographers who are “servicing” dealers of OCE, KIP and Xerox equipment (and, as to reprographers who are “servicing” dealers, both IRgA members and non-members as well.)

How about the IRgA suggesting to the industry’s major equipment vendors, OCE, KIP and Xerox, that they report (to someone at the IRgA) their respective monthly “click volume” (square foot usage) numbers – for the wide-format, b/w, toner-based systems that they directly service?

And, how about the IRgA suggesting to all reprographers who are OCE, KIP and/or Xerox “servicing” dealers that they report (to someone at the IRgA) their monthly “click volume” (square foot usage) numbers – for the wide-format, b/w, toner-based systems that they directly service?

The compiling and publishing of those numbers would, in my opinion, be a fantastic way for reprographers to track trends (up and down) in “A/E/C plan printing” volumes. As I said, the “best barometer.”

The compilation would have to be done by someone who will keep totally confidential the individual numbers reported by OCE, KIP and Xerox and who will keep totally confidential the individual numbers reported by all of the servicing dealers. The number that would be published monthly would be the total U.S.-wide click volume (square foot usage) number, without any further breakdown.

This is the type of barometer that is very much needed for reprographers and for the reprographics industry as a whole.
Cisco Reaches 3,000-Customer Milestone in Digital Signage

February 25, 2011

SAN JOSE, Calif. (Feb 25, 2011) – Cisco today announced that more than 3,000 customers have deployed Cisco® Digital Signs technology. Recently named the new worldwide market-share leader in digital signage software by Frost & Sullivan in the firm’s forthcoming report, “World Digital Signage Systems Market,” Cisco joined the digital signage market in 2007 and has rapidly introduced innovations around digital signage scalability and reliability, network integration, and content development. To date, Cisco digital signage solutions are broadly deployed in 85 countries, with customers benefiting from Cisco technology across a variety of industries including retail, financial services, hospitality, education, health care, and sports and entertainment, among others.

To read the full press release, click on this link:

http://www.vadvert.co.uk/business/9872-cisco-reaches-3000-customer-milestone-in-digital-signage.html
January 2011 AIA ABI Index right at 50.0

February 24, 2011

January 2011 AIA ABI Index right at 50.0, down 3.9 points from December 2010.

Kind of like Humpty-Dumpty sittin’ on a wall …. which way will “it” fall?

Personally, I think Kermit should have fudged the numbers just a wee bit this month, either way, wouldn’t matter. When the number is above 50, that indicates demand is going to be rising; when the number is below 50, that means that demand is going to be declining. If the number is “right at” 50, WTF! does that mean?

Okay, here’s the press release…..

* Cautious optimism for design industry: AIA

NEW YORK, Feb 23 (Reuters) – A leading indicator of U.S. nonresidential construction activity weakened last month after two months of improving numbers, an architects’ trade group said on Wednesday.

The monthly Architecture Billings Index fell almost 4 points in January to 50.0, a level that indicates neither expansion nor contraction of demand for design services, the American Institute of Architects said.

The billings index is considered a predictor of construction spending about nine to 12 months in the future, since buildings are designed long before they are erected. The latest readings suggest an anticipated recovery in U.S. nonresidential construction may not gain traction this year.

A separate index of inquiries for new projects fell more than five points to 56.5, according to the AIA.

“This slowdown is indicative of what is likely to be a very gradual improvement in business conditions at architecture firms for the better part of this year,” said AIA chief economist Kermit Baker. “We’ve been taking a cautiously optimistic approach for the last several months and there is no reason at this point to change that outlook.”

The AIA’s billings index dropped below 50 in January 2008, indicating falling demand, and stayed below that mark until last November. The separate inquiries index only fell below 50 briefly in 2008. It is typically higher than the billings index, as prospective customers solicit bids from multiple architecture firms.

Comments about American Reprographics Company’s (ARC’s) recent earnings release and results

February 23, 2011

Just a “few” comments about ARC’s Q4 2010 and Full-year 2010 results. And, a few questions.

This is going to be a fairly long post, so please kindly bear with me. These comments are based on the numbers ARC reported and on my knowledge of, and experience in, the reprographics business and industry. So, yes, you can consider these comments to be my own personal opinion(s) about the numbers. Certainly, others in the reprographics industry may disagree with my opinions. And, I’m sure that financial analysts who follow (and/or report on) ARC may have opinions that differ from mine.

In the blah, blah, blah that follows, I’m not going to talk about earnings or earnings per share, EBIT, EBITDA, or cash flow. I’m going to talk about “sales”; well, at least mostly. I started writing this post before I read “the transcript of the earnings call” (on SeekingAlpha.com), and perhaps I should have held off on starting to write this post until I read that transcript…. to see what was said, what questions were asked, and what responses were given. Anyway, by now, I’ve read the transcript of the earnings call, and I’ve edited this post to take into consideration some of what I read in that transcript.

· On a year/over/year comparative basis, F/Y 2010 vs. F/Y 2009, ARC’s Total Sales were off 11.93%. That’s a very visible number, but, later on, I’d like to get “a bit more inside” the numbers.

I don’t think that (an 11.93% overall sales decline) should be a shock to anyone in the reprographics business, for, even at the beginning of 2010, conditions and trends were not pointing to 2010 being a year of recovery, just a year when, hopefully, things would begin to bottom out, so that a recovery could, at some point, begin.

But, just having said that, it does not look like things have yet bottomed out, at least for reprographers, and maybe not even for ARC. And, I say that in spite of signs that are pointing to 2011 being a year when the recovery for reprographers (resumption of growth, that is) will finally surface. As to the “signs”, there have been reports, already this year, that CMBS financing is happening again, that vacancy rates are dropping in some markets, that the AIA ABI Index has been +50 in recent times, and even economists at AGC and ABC are predicting that 2011 will show at least a plus over 2010.

Reprographics services are still the most significant contributor to ARC’s total sales and “reprographics services” are the heart and core of every reprographics company’s sales revenues.

· On a year/over/year comparative basis, F/Y 2010 vs. F/Y 2009, ARC’s Reprographics Services Sales were off 15.96%.

· On a quarter/over/quarter comparative basis, Q4 2010 vs. Q 3 2010, ARC’s Reprographics Services Sales were off 7.66%. Note that the decline in ARC’s “Total” Sales (QtoQ) was only 4.07%. What helped prevent ARC’s “Total” Sales from a worse percentage decline was the fact that ARC’s FM Sales decreased only slightly (1.06%) and ARC’s Equipment and Supply Sales increased by 9.65%.

· On a quarter/over/quarter comparative basis, Q4 2010 vs. Q 4 2009, ARC’s Reprographics Services Sales were off 11.46%. Note that the decline in ARC’s “Total” Sales was only 5.99%. What helped prevent ARC’s “Total” Sales from a worse percentage decline was the fact that ARC’s FM Sales actually increased slightly (.53%) and ARC’s Equipment and Supply Sales increased by 13.83%.

Before I get back to my “discussion” and “comments” about ARC’s Sales numbers, I want to first mention several things I’ve posted on the blog during the past 12 months; this, to give better perspective to some of the comments I’m going to later make, and some of the questions I’m later going to pose, about ARC’s Sales numbers. Please bear with me…..

In a post on November 2nd, I mentioned this…..

“ARC’s Q3 2010 press release said this, “Management noted that the Company acquired six new Global Services accounts since June, which are projected to generate more than $9 million in sales for 2011. The accounts were won primarily on the strength of ARC’s managed print services offering.””

In a post on July 25th, 2010, I mentioned this…..

“By now, most of the Fed stimulus money is in the AEC marketplace, not sitting on the sidelines waiting to be committed. ARC should benefit at least somewhat because of that.”

“ARC indicated in past Press Releases that it was going to be pushing hard into the “non” AEC reprographics marketplace. ARC established a sub-brand, “RIOT COLOR” and has been pushing into the color imaging marketplace. By now, I’m guessing that ARC has experienced at least some growth in revenues due to its non-AEC reprographics initiatives.”

“ARC has interests in businesses in China and India. ARC’s market share (of the total reprographics market) in those two extremely large nations has to be very small, considering the very short period of time that ARC has established its interests in those two countries. Which gives ARC the opportunity to grow its revenues in two large countries with enormous populations and huge demand for housing, hospitals, schools, universities, retail, office buildings, infrastructure improvements, etc. I’m guessing that ARC’s revenues and EPS will benefit from its interests in China and India.”

In a post on July 18th, 2010, I mentioned this…..

“ABC Imaging and PBSJ agree to FM print services deal

Washington, DC—July 16, 2010—ABC Imaging announced today it will provide on-site print services for PBSJ, a leading infrastructure engineering and architecture firm.”

“PBSJ operates more than 80 offices in the U.S. The Florida-based company has considerable expertise in a wide variety of engineering and architectural services in both the public and private sectors. PBSJ’s projects have included everything from theme parks to toll booths and its services range from hazardous waste management to structural engineering for bridges.”

Joel’s comment: PBSJ is a major-size Engineering firm, national in scope. ARC did business with PBSJ prior to ABC cementing a deal with PBSJ.

In a post on July 14th, 2010, I mentioned this…..

“ABC Imaging acquires Graphic Reproduction, San Francisco area industry leader

Washington, DC—July 12, 2010—ABC Imaging announced today that it has acquired Graphic Reproduction of Concord, CA. “

“Founded in 1959 Graphic Reproduction has a long tradition of being in the forefront of digital printing and reprographic technology. Like ABC Imaging, Graphic Reproduction combines innovative technology with core philosophies of high quality and rigorous customer service.”

“We are pleased to have the opportunity to be the new owners of Graphic Reproduction,” said Medi Falsafi, President and CEO of ABC Imaging. “Our two companies are very similar—we both value quality and we both want to provide our customers the best possible service with every job.”

“For ABC Imaging, the acquisition adds three production hubs in the San Francisco area. The largest Graphic Reproduction location, in Concord, CA, includes extensive production capability. The facility can print a full range of products using small, large, and wide format digital printers; 3D printers; and specialty printing and graphic arts equipment.”

Joel’s comment: ARC has significant operations in the San Francisco Bay Area; ARC started with Ford Graphics (San Fran) and then added BPS Reprographics to its fold (BPS was the largest reprographics company in the San Fran area and had been the market leader for many, many years.) ARC has also completed additional acquisitions in the San Fran Bay Area. ABC Imaging isn’t the only “larger” reprographics industry firm that’s established operations in the San Fran Bay Area within the past year or so; NRI, one of the largest reprographers in the Eastern part of the U.S., also established operations in the San Fran Bay area within the past 12-14 months. That adds to the “competitiveness” of the San Fran Bay area market.

In a post on May 12th, 2010, I mentioned this…..

“For those of you who like to follow what the larger players (in the reprographics industry are doing), here’s a press release ABC issued last week:”

Washington, DC—May 6, 2010—ABC Imaging announced today that HNTB has extended its contract with ABC Imaging to provide comprehensive printing services enterprise-wide for another three years.”

Joel’s comment: I would venture a guess that ARC and ReproMAX competed for HNTB’s big national FM business. Yet, ABC Imaging prevailed, renewing an important FM relationship with one of the country’s largest, national engineering firms.

In a post on May 12th, 2010, I mentioned this…..

“ABC Imaging wins Parsons Brinckerhoff FM contract for on-site print services

Washington, DC—November 25, 2009—“

“ABC Imaging announced today it has signed a letter of intent with Parsons Brinckerhoff (PB) to provide on-site print services at 16 PB offices in the U.S.”

“Parsons Brinckerhoff (PB), based in New York, NY, is one of the world’s oldest and largest engineering firms. The company specializes in the planning, design, and maintenance and operation of infrastructure world-wide.”

Joel’s comment: I have no idea who PB’s FM vendor was before ABC announced its deal with PB. I think, but am not positive, that PB was formerly an FM customer of ARC, perhaps coming over to ARC when the Louis Frey Company went BK several years ago. So, I guess the big question is, “prior to ABC announcing its deal with PB, was PB an ARC customer?”

“ABC Imaging awarded Perkins+Will firm-wide reprographics contract

Washington, DC—December 24, 2009—“

“Perkins+Will (P-W), an integrated design firm, serves clients from 21 offices around the world. The firm practices “architecture, interiors, branded environments, planning + strategies and urban design. Its clients include the aviation + transit, corporate + commercial + civic, healthcare, higher education, K-12 education, and science + technology markets.” Perkins+Will has chosen ABC Imaging to provide on-site in-house reprographic facilities management as well as off-site support to its architects, designers, and staff.”

Joel’s comment: As is the case with Parsons Brinckerhoff, I have no idea who P-W’s FM vendor was before ABC announced its deal with P-W. Was ARC the prior vendor at P-W?

Going a bit further …..

An industry acquaintance (who owns a reprographics company in a major market in the U.S.) recently said this to me, “we had a solid 2010, sales up over 15%!, and we did that in spite of the fact that construction is still way down in our market.” This company competes with an ARC division. How is this company growing its sales revenues when “total demand” for reprographics services is actually down in its market area? The big question is, who is losing market share to this competitor? For sure, someone is.

So, by now, perhaps you’re wondering, “why in the heck did Joel bring all of that previously posted blah-blah-blah into this post?”

Here’s why:

I am disappointed by ARC’s Sales numbers the past year and, even more importantly, I am disappointed by ARC’s Sales numbers the past 6 months.

First, consider the comments made by Suri, ARC’s CEO, in the earnings release just issued:

In the Q4 2010 earnings release announcement, Suri (the CEO) said…. “Our focus for 2010 was to generate strong cash flows from operations, aggressively reduce costs, and maintain a healthy capital structure. We were successful on all fronts,” said K. “Suri” Suriyakumar, Chairman, President and CEO of American Reprographics Company. “While revenue for the year was lower than expected, the economy continues to show signs of recovery and industry opinion seems clear that we are at the bottom of the cycle. However, non-residential construction continues to lag the general economy, and as recently as December, industry spending was at its lowest level in a decade. Therefore, we can expect the road to recovery to be bumpy, especially during the first half of 2011.”

“Yet that recovery opens up tremendous opportunities for the company. With a dominant position in the industry, significant operating leverage, strong cash flows and a stable capital structure, we are well-positioned to take advantage of growth in our end markets. In addition, our industry-leading technology solutions combined with the lower cost base we currently enjoy will allow us to augment our EBITDA margins. I remain confident in the health and strength of ARC, and its ability to thrive as the U.S. economy comes back.”

Second, take a quick look at this table:

A quick look at ARC’s Sales Results
and Sales Trend (in millions) (source: Google Finance)

Total Sales Revenues, by quarter
Q4 2009 – $ 111.66
Q1 2010 – $ 112.16
Q2 2010 – $ 115.09
Q3 2010 – $ 109.42
Q4 2010 – $ 105.00

Total Sales Revenues, by year
2006 – $ 591.84
2007 – $ 688.35
2008 – $ 700.99
2009 – $ 501.55
2010 – $ 441.60

Third, remember, and please consider, the “previous stuff” that I brought into this post from earlier posts on my blog.

And, fourth, consider:

1) When it comes to keeping costs in line with revenues, ARC, without question, earns (at least it does from me) an “all-star”, top of the rank, ranking. ARC is the probably the best “cost management” company I’ve ever come across in the reprographics industry. ARC’s management team is obviously focused on running a lean ship and knows exactly how to do that. Personally, I am aware of several cost cuts ARC made during the later part of 2010 to reduce compensation expenses. When a company grows by acquisition, it is common for the company, right at the time the acquisition is completed, to enter into extended employment agreements with certain management team members joining the company from the acquired companies. In Florida, several former management team members, from at least one company ARC acquired in 2007, left ARC’s employ during 2010. This has definitely reduced ARC’s expenses for higher-compensated people. It is likely that the same thing has happened elsewhere in the U.S.

2) By now, I expected to see some real traction from ARC’s RIOT COLOR business. Given the continuing decline in ARC’s “reprographics services” Sales revenues, either RIOT is not gaining much, if any, traction, or, if RIOT is gaining some or good traction (sales, I mean), then perhaps ARC’s Sales revenues from A/E/C Reprographics Services continued to deteriorate during the course of 2010? ARC’s Q2 2010 Sales were $115.09. ARC’s Q4 2010 Sales came in at $10 million less. While A/E/C business typically declines in the latter part of each year, non-A/E/C business (such would be the case with RIOT’s business) is generally less affected. When will RIOT sales begin to offset declines in A/E/C sales? As the old lady for Wendy’s said, “where’s the beef?”

3) By now, I expected to see some traction, even if only some, from ARC’s MPS sales initiatives. Given the continuing decline in ARC’s “reprographics services” Sales revenues, either MPS is not gaining much, if any, traction, or, if MPS is gaining some or good traction (sales, I mean), then perhaps ARC’s Sales revenues from A/E/C Reprographics Services continued to deteriorate during the course of 2010?. Sounds just like my comment about RIOT? Well, it is. Beyond that, if ARC is such a dominant player in the A/E/C reprographics business, how did ABC Imaging manage to score three very big “national” “FM” deals over the past 12-14 months? All three customers mentioned are very high-profile, well known A/E firms. Why did ARC not win those deals? Has ARC won any large FM or MPS deals in the past 6 months? If so, why no Press Releases about those deals? Service Point almost always issues Press Release’s about its big scores. Likewise with ABC Imaging. I did note that ARC scored a deal with AECOM. That’s a major score, for sure, because AECOM is huge. But, is AECOM’s business “all new” business to ARC? One of AECOM’s companies, this particular one located in Miami, has been doing business with the company ARC bought in that market for over 30 years. Another of AECOM’s companies, this particular one located in Los Angeles, has been doing business with another ARC-owned company for years. So, when Suri talks about the ARC Global Solutions team picking up (should I say, gaining) a huge customer (or several customers like that), is the revenue he mentions all “net new business”, or is some that revenue not new?

4) Over the past two years (maybe more) ARC has been continuously “right-sizing” its business. In the process of doing that, ARC has closed “stores” that were deemed non-essential and ARC has let go (I think) over 1,000 employees. Some of those employees left on their own, some were terminated. At one ARC division that I’m very, very familiar with, ARC regional management appears to have introduced a very different business model (for management and sales) than was previously employed by that division when it was an independent non-ARC-owned company. For example, the company’s “branch managers”, apparently, manage customer service and production operations and they also manage the sales team members who work out of that branch. Simply my own personal opinion, for this model to be highly effective from a “sales perspective”, the “branch manager” has to be a sales strategist, has to have an excellent understanding of the business and the market, and must understand how to support sales team members, especially with regard to bids, proposals, etc. Prior to changing to this business model, this company (should I refer to it as, this division) had a “Sales VP” who led and managed sales team members ‘cross market’ and had a “Chief Business Strategist” and had a “CEO”, all of whom were directly and heavily involved in sales strategy, relationship development, and, yes, sales. ARC paid a lot of money (a lot of money) for this division, but, today, this division is, from a “sales program, sales initiative perspective”, apparently operated completely differently from the way it was when it grew to be the largest reprographics company in Florida, and it is managed by completely different people, none of whom had previous ownership experience. ARC said many times, during its acquisition run, that it was important to its mission that it acquire and retain the owner/managers who built their companies into market leaders. I’m certainly not saying, nor am I implying, that former owners can’t be replaced by people who can pick up the baton and run with it, for certainly that ‘can’ happen. The big question, in my mind, is …… “can the new people assuming management roles replace the experience and savvy of the ones who departed?” And, “without losing anything?” If, previously, ARC felt it vitally important to retain the services of the former entrepreneurs and savvy people who built the companies that ARC bought, and if some or many of those people have been replaced by people who did not build those companies or own companies, then is ARC at risk on the “sales-side” of its business because of that? Has that been part of the reason that ARC’s sales of reprographics services have declined, or is the “recession” the only reason why ARC’s sales have declined?

5) Related to the paragraph above, I am positive that Medi, the CEO of ABC Imaging (and who is based in Washington, D.C) is absolutely “lovin-it” competing with the ARC owned company in that market, considering the fact that all of the previous former owners are gone from the scene (meaning, gone from the ARC owned company in that market area.) I would imagine that Bryan Thomas, Pres of Thomas Repro feels the same way about ARC in his “home” Dallas, TX market.

6) ARC conducts operations in India and China, and both of those very-huge countries are experiencing good A/E/C industry activity. When will ARC’s numbers begin to reflect the significant Sales revenue opportunities that both of those countries offer?

7) Stimulus-funded projects are on the wind-down. All reprographers have, to at least some extent, benefitted from the “reprographics work” required for those projects. As those projects wind-down, will ARC’s reprographics services revenues be adversely affected?

It basically boils down to this. The reprographics business has been affected by “depression like” conditions in the A/E/C industry. This has not been “just” a recession. Everybody knows that. Being the largest reprographics in the U.S. (and in the world), ARC’s sales have, quite obviously, been affected by the slowdown in the A/E/C industry. Everybody knows that as well. But, when I look at ARC’s Sales numbers (declines), quarter to quarter and year over year, I do wonder, …..”are the declines in sales totally attributable to the horrible conditions in the A/E/C industry, or is there something else going on, within the sales-side of ARC’s business, that’s contributing to, or exacerbating, the problem?” Is there a “sales strategy” problem at the division level, at the branch level? Is there a “sales execution” problem at the division level, at the branch level? Or, is the “recession” the only problem … and everything else is great?

If I can get around to it, I may do another post – related to this one – where I present a list of “the questions” that analysts should, in my opinion, have asked during the earnings call.

I welcome any comments about this post.

American Reprographics Company (NYSE: ARC) just released its Q4 2010 and Full-year 2010 Results

February 22, 2011

ARC closes out another difficult year with *profitable results for the full-year

From the Press Release just issued by ARC:

“Adjusted net income for 2010 was $1.3 million, or $0.03 per diluted share, *excluding the net effects of the Company’s goodwill impairment charge, the amortization impact related to the change in trade name as we consolidate various brands across our operating footprint, and the loss on early extinguishment of debt and interest rate swap related costs.”

“American Reprographics Company (NYSE: ARC) (the “Company”), the nation’s leading provider of reprographic services and technology, today reported its financial results for the full year and fourth quarter ended December 31, 2010.”

“Our focus for 2010 was to generate strong cash flows from operations, aggressively reduce costs, and maintain a healthy capital structure. We were successful on all fronts,” said K. “Suri” Suriyakumar, Chairman, President and CEO of American Reprographics Company. “While revenue for the year was lower than expected, the economy continues to show signs of recovery and industry opinion seems clear that we are at the bottom of the cycle. However, non-residential construction continues to lag the general economy, and as recently as December, industry spending was at its lowest level in a decade. Therefore, we can expect the road to recovery to be bumpy, especially during the first half of 2011.”

“Yet that recovery opens up tremendous opportunities for the company. With a dominant position in the industry, significant operating leverage, strong cash flows and a stable capital structure, we are well-positioned to take advantage of growth in our end markets. In addition, our industry-leading technology solutions combined with the lower cost base we currently enjoy will allow us to augment our EBITDA margins. I remain confident in the health and strength of ARC, and its ability to thrive as the U.S. economy comes back.”

A quick look at ARC’s Sales Results
and Sales Trend (in millions)
(source: Google Finance)

Total Sales Revenues, by quarter
Q4 2009 – $ 111.66
Q1 2010 – $ 112.16
Q2 2010 – $ 115.09
Q3 2010 – $ 109.42
Q4 2010 – $ 105.00

Total Sales Revenues, by year
2006 – $ 591.84
2007 – $ 688.35
2008 – $ 700.99
2009 – $ 501.55
2010 – $ 441.60

A quick look at ARC’s Gross Profits
and Gross Profits Trend (in millions)
(source: Google Finance)

Gross Profits, by quarter			% to Sales
Q4 2009 – $ 35.92			32.17%
Q1 2010 – $ 36.85			32.85%
Q2 2010 – $ 39.45			34.28%
Q3 2010 – $ 35.02			32.01%
Q4 2010 – $ 31.00			29.52%

Gross Profits, by year
2006 – $ 254.33			42.97%
2007 – $ 287.04			41.70%
2008 – $ 285.27			40.70%
2009 – $ 178.19			35.53%
2010 – $ 142.33			32.23%

C2 Repro adds another highly experienced person to its Management Team

February 22, 2011

Together Again, Brothers Eric and Evan Gaydon Join Regional Powerhouse C2 Reprographics

COSTA MESA, CA – – February 21, 2011 –

Evan Gaydon has joined C2 Reprographics as its director of sales. His brother Eric Gaydon, who joined the company in October of last year, has been appointed to the executive team at C2 Reprographics. Both men, natives of Tustin, are well-known in the Orange County reprographics industry.

As director of sales, Evan Gaydon will support the growth of the company’s expanding direct sales force with emphasis in the color segment. Evan comes to C2 after a distinguished career in sales at another large competitor, where he worked his way up from his first job in 1994 as a Xerox operator. He was promoted to assistant manager for DocuTech and digital publishing, then assistant manager of the Xerox department. After 10 years working in production, he says, “I talked my way into the sales department as the digital publishing specialist, then went on to become the color specialist and supported 20 sales reps. When the market took a downward turn I was promoted to sales lead, managing a seasoned team of five reps with a yearly base of $15 million in revenue.”

As a new member of C2’s executive team, Evan’s brother Eric, director of color operations, will lead the strategy of C2’s color growth globally and support the strategic direction of the firm. In his previous job of 18 years at a competing firm, where Evan also worked, he built the color and mounting department to an enterprise of $1 million per month in revenue. He has been recognized by the Xerox Corporation for “best eye for color in Southern California.”

Eric says he exerted no influence over Evan’s decision to join C2 Reprographics. “Evan always makes excellent decisions; he is very professional and always provides the best for his clients.”

Added C2 President and CEO Gary Crisp, “I couldn’t be more pleased with the addition of Eric and Evan Gaydon to the C2 family. Their significant industry knowledge, exceptional talent, strong work ethic, and relentless focus on superior customer service make them a perfect fit for C2.”

C2 Reprographics is Southern California’s largest independent reprographics company, with locations in Los Angeles, Orange, San Diego counties and the Inland Empire. It was founded in 2002 by owners Gary and Julie Crisp and backed by an alliance of local business executives. Among C2’s ongoing charitable beneficiaries are Camp Pendleton-based Marines serving in Iraq and Afghanistan, Catholic and public educational institutions, the University of Southern California Athletic Board, Canstruction Orange County, which collects canned food for food banks, and Human Options, a battered women’s shelter in Orange County. www.c2repro.com
Huge “managed-print-services” deal scored by OCE !!!

February 22, 2011

“Managed-Print-Services”…. hmmmm.

Before I take you to the OCE Press Release, a few comments …..

If I’m recalling this correctly, in 2010, ARC (American Reprographics Company) mentioned, for the first time, that it was going to venture into the “managed print services” business. Service Point Solutions recently announced two managed print services deals that it recently won. And, for the first time ever at an IRgA Convention, the business of “managed print services” was a topic at one of the breakout sessions at last year’s IRgA Convention. Actually, I think there were two different breakout sessions that covered “managed print services” at last year’s IRgA Convention. The upcoming IRgA Convention in Vegas will also have a breakout session devoted to the “managed print services” business. One could conclude from all of this that “the business of managed print services” offers opportunities for growth; if it did not, I seriously doubt that companies like OCE, Canon, Ricoh, Xerox, ARC, and many, many others as well, would be devoting so much time, effort and energy to this segment of the printing/imaging/reprographics business. On one occasion last year, ARC’s management mentioned, during an “earnings call”, that ARC had already scored several nationwide managed-print-services deals. There is fine line between the “FM” (OnSite Services) business and the “MPS” (Managed-Print-Services) business. This morning, PAA Research issued a report on ARC, and, in that report, PAA Research mentioned several statistics from its most recent survey of 20-25 U.S. Reprographers. Of those surveyed, still 35% do not offer “FM” services. A few years ago, I listened to an industry friend talk about his desire to get his company involved in offering “FM” services and the challenges was facing to put that in motion. Roll forward to the present. By now, his firm has pushed very well, very successfully, into the “FM” services business. He recruited the “right” people to run that business segment of his company, he provided the resources for that business segment, and he and his team developed strategies for both operations and sales. Nothing good ever comes without hard work. Rarely is risk not a factor. But, history shows that, most of the time, hard work and taking risks pays off. In my opinion, Reprographers who do not offer “FM” services are missing the boat. The same applies to Reprographers who are not exploring the opportunities in the managed-print-services-business.

Okay, let’s get to the OCE Press Release ……..

Océ signs worldwide contract with GDF SUEZ for printers and managed services

Venlo, The Netherlands, Tuesday, February 22, 201 –

Océ, an international leader in digital document management and delivery, today announced it has won a contract to supply the multinational utility company GDF SUEZ with over 9,000 multifunctional devices, plotters and supporting services over the coming years. The contract formalizes the business partnership between Océ and GDF SUEZ organizations in more than 20 countries around the world. The global business potential for Océ is estimated at over EUR 55 million.  

Building further on long-standing partnership  .

This new contract confirms a relationship of over 20 years between Océ and GDF SUEZ. The first international agreement between the two companies dates back to end-2005, when Océ’s sales organization in Belgium first won an order from Electrabel – the Belgium-based energy company and now a subsidiary of GDF SUEZ. This was followed by a first Europe-wide contract in 2007. Since then the relationship has grown to involve Océ Business Services, Digital Document Systems and Wide Format Printing Systems, all supplying specialized systems and services to GDF SUEZ.  

Contract underlines GDF SUEZ’s confidence in Océ.

The business partnership between Océ and GDF SUEZ was confirmed by a global tender for multifunctional devices, plotters and managed print services launched by GDF SUEZ in 2010. “The awarding of this contract underlines GDF SUEZ’s confidence in Océ to meet its total needs for printing systems and the related managed services”, said Noël Custers, Global Accounts Director for Océ. ”GDF SUEZ organizations around the world can now benefit from a pre-negotiated contract under which they can simply call off the required systems and services. As well as that the contract includes managed print services from local Océ organizations under a predefined Service Level Agreement. Overall the new contract will save the GDF SUEZ companies time and cost in fulfilling their printing needs, and give them the assurance of state-of-the-art systems and services.”   

The GDF SUEZ tender procedure was coordinated from its Paris head office, and was managed by a team of IT, Purchasing and Facility Management specialists from several of its Business Units and companies. On the Océ side the tender was handled as a global account management project, supervised by the company’s head office in Venlo (Netherlands) and involving representatives from its country organizations in Belgium, France and the Netherlands as well as Océ Direct Export.  

Océ draws on Canon office products in contact fulfillment  .

In fulfilling the GDF SUEZ contract Océ will draw on the office products of Canon, that completed an offer for Océ common shares outstanding in March 2010. The products to be supplied will include the Canon color and black & white multifunctional devices and other related products for the office segment. In combination with the contract execution by the industry-leading Océ sales and service organizations in the countries concerned, this further strengthens the proposition to GDF SUEZ and marks a further step in the integration of Océ and Canon.  

As well as regular maintenance to ensure that the agreed availability levels are consistently achieved, the Océ services include print workflow management and optimization to streamline customers’ document processes and cut printing costs.  

All printing requirements from a single source.

GDF SUEZ selected Océ for this contract primarily because of its satisfaction with the company’s performance on earlier contracts. This is based on the combination of a complete product range, allowing Océ to meet all printing requirements from a single source, and proven customer service and support. The latter includes the ability to support the implementation and roll-out at all GDF SUEZ locations, together with the assurance of continuing close customer support.   

Global roll-out with dedicated Océ support staff.

The new contract is the first for GDF SUEZ on such a broad international scale. Due to the size of the operation Océ has assigned dedicated staff to support its operating companies in the overall fulfillment and execution process. The implementation process started with a test phase in Belgium, France and Romania from August 2010, involving delivery of all the required products in those countries within tight deadlines. This was followed by kick-off meetings in Paris during October marking the official global roll-out of the project.

Congratulations to the OCE team members who scored this deal!

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