Reprographics 101

See immediately prior post.

The entry deadline for submitting your guess at ARC’s Q1 2009 revenues has been extended to May 1, 2009.

This post is another brief follow-up to previous posts about ARC’s stock price. (ALSO, IF YOU WANT TO ENTER A CONTEST AND WIN A PRIZE WORTH $100, READ THIS ENTIRE POST.)

In one of my previous posts, I suggested that there are at least two ways to make money in the reprographics business: (1) earn money from owning a profitable reprographics company, (2) earn money by owning a piece of another reprographics company (if you buy low and sell for more than you paid for it, of course.) In another previous post, when ARC’s stock price was at $2.68 per share, I said “it does feel like ARC’s stock is definitely undervalued.”

For anyone who bought 20,000 shares of ARC stock (NYSE: ARP) when ARC fell to $2.54 per share, which was only a few weeks ago, those 20,000 shares, at the price per-share ARC closed at on Thursday April 9th, were worth $44,400 more. (Investment $50,800, Value $95,200, Increase in value $44,400.) Of course, only “realized” gains count. For what goes up can come down.

When ARC’s stock price fell to $2.54 per share, that computed a market-cap of $116 million for “all of” ARC. (ARC paid $100 mil for Ridgways alone!)

Now that ARC’s stock price has “rebounded” to $4.76 per share, that computes to a market-cap of just over $217 million.

The “big question”, now, is what will happen to ARC’s price-per-share when ARC releases its Q1 2009 results? Will it go up? Will it go down? Will it stay where it now is?

(Figures below are per information published on Google Finance):

ARC’s Q4 2007 Total Revenues were $174 mil
ARC’s Q4 2008 Total Revenues were $154 mil
Equates to a drop of 11.5%

ARC’s Q1 2008 Total Revenues were $187 mil
What will ARC’s Q1 2009 Total Revenues be? (see “Contest” immediately below)

CONTEST!

Prize: Contest Winner will receive a $100 gift certificate at his/her favorite restaurant. (After the Contest Winner has been determined, I will e-mail the Contest Winner to find out his/her favorite restaurant and I will make arrangements for the gift certificate.)

Contest Entry Deadline: April 21, 2009. (Deadline extended to May 1, 2009)

How to Enter Contest: If you want to participate in this Contest, you must e-mail me (at joel.salus@mac.com) with your guess at ARC’s Q1 2009 Total Revenues no later than 11:59 pm on April 21, 2009. Only one guess (only one entry) per participant! (Contest Entry Deadline extended to May 1, 2009.)

How Contest Winner Will Be Determined: The person who comes closest to ARC’s actual Q1 2009 Total Revenues, will be the Contest Winner. The Winner will be determined when ARC announces its Q1 2009 Total Revenues.

Eligibility for this Contest: Only persons who are, or who were, actively employed in the reprographics industry (reprographers and vendors included) are eligible for this contest.

Not Eligible for this Contest: Employees of ARC (this includes employees, officers and directors of ARC) are not eligible.

On March 31st, 2009, Tanner Bechtel posted an excellent article on his blog-site.

That article is entitled “Call for the Project CIO”.

Do yourself a favor, visit his site and read that post.

Tanner’s blog-site is located at this web-address: http://www.tannerbechtel.com

After reading Tanner’s article, do yourself another favor; for firms you do business with who do not have a Project CIO, figure out how you can position your company to offer Project CIO-like services.

IRGA Members recently received an e-mail from OCE in which OCE announced that it would be introducing its new Plotwave 300 system at the IRGA Convention in Pittsburgh.

Although I’ve not yet read the OCE Plotwave 300 brochure (or technical specifications), it looks like this system is OCE’s response to the KIP 3000 (now KIP 3100 system) ….. finally!

A black & white only system (which shares the radiant fusing technology found on OCE’s other lower-end systems), this is the first OCE system I know of that has a scanner on top of the print engine …… so, finally, a “single footprint” (space saver) system from OCE.

One cannot help but think that OCE’s “logic” behind the development of this “single footprint” system was driven by significant placements of KIP’s 3000 series systems (KIP 3000 and KIP 3100), which are also single foot print systems. (Xerox has also had single footprint systems for quite some time by now.)

KIP’s success must have seriously eroded OCE’s market share of low-end system placements. If the OCE Plotwave 300’s operating performance (and speed and other features) stacks up well against KIP’s 3000 series and similar models from Xerox, then OCE should be in a position to recapture some of that lost market share, provided, of course, that the OCE Plotwave 300 is competitively priced. OCE has long been known for very reliable wide-format multifunction systems, and I would bet that the Plotwave 300 will likewise be a very reliable performer.

The “funny thing” about this new system ….. at least to me, and I do have a weird sense of humor …… is that the KIP 3000 system was introduced on the market when the A/E/C business was hot and heavy, when customer offices were packed with people and space for equipment was hard to come by. When times were hot and heavy, a single footprint system was very appealing to firms that could not afford to give up the space required for a double-footprint system. It took OCE a few years to respond with its first single-foot print system; and, now, OCE’s new system is coming to market at a time when many (probably the majority of) A/E/C firms have lots of vacant space in their offices.

As of April 9th, my blog-site has been visited by 127 “unique” visitors.

My blog-site has been accessed by visitors from 10 different countries (U.S., Canada and eight countries in Europe.)

My blog-site has been accessed by visitors from 29 states in the U.S.

Please kindly refer my blog-site to your friends and associates in the reprographics community. You never can tell when I’ll finally post something that’s good information.

To those of you who have let friends know about my blog-site, thank you, much appreciated.

Very recently (in a Press Release dated 26 Feb 2009, but which I just found posted on SP’s web-site), Service Point Solutions, S.A. issued what I would characterize, based on the comments made by SP in that press release, as a rather “rosey” report on its full year 2008 results.

However, after looking a bit closer, it doesn’t sound to me like things are as “rosey” as the report seems to indicate.

SP’s revenues for the full year 2008 – 237.7 mil Euros
SP’s revenues for the full year 2007 – 213.7 mil Euros

On the surface, SP’s full year revenues, 2008 vs. 2007, increased by 11.2%.
But, since SP was very active in acquisitions in 2007 and 2008, the real questions, I think most investors and reprographics industry people would ask and want to know, are a) how much of that revenue increase, 2008 vs. 2007, was attributable to “acquired revenues” and, more importantly, b) if you removed the acquired revenues, did SP’s “organic” revenues (meaning non-acquired revenues) actually decline, 2007 vs. 2008?

I did not see any comparison of Q4 2008 vs. Q4 2007 revenues, but, by extrapolation (difference between full year numbers and y-t-d through Q3 numbers), it looks to me, like this:

SP’s revenues for Q4 2008 – 63.3 mil Euros
SP’s revenues for Q4 2007 – 57.9 mil Euros

On the surface, SP’s Q4 revenues, 2008 vs. 2007, increased by 9.4%.
But, again, since SP was very active in acquisitions in 2007 and 2008, the real questions, I think, are a) how much of that revenue increase, Q4 2008 vs. Q4 2007, was attributable to “acquired revenues” and, more importantly, if you removed the acquired revenues, did SP’s “organic” revenues (meaning non-acquired revenues) actually decline, Q4 2007 vs. Q4 2008?

Again, if you subtract out the effect of acquired revenues, could it be that SP’s organic revenues actually declined – and declined by 10% or more – Q4 2007 vs. Q4 2008?

SP also reported:
Net Profit, full year 2008 – 2.5 mil Euros
Net Profit, through Q3 2008 – 2.6 mil Euros (this was reported in a previous Press Release)
Does this not mean that SP incurred a Q4 2008 loss, albeit minor, of .1 mil Euros?

Service Point’s most recent Press Release (the one dated 26 Feb 2009) says this:….
“the fourth quarter of 2008 was the best quarter of the year and shows, compared to the same period in 2007, a growth of 9.4% in revenues and confirmation of the effectiveness of measures implemented and the strength of recurrent revenues.”

My opinion (and question) about that statement: If Q4 2008 was the best quarter of 2008, how could that have been the best quarter of 2008 if, in fact, SP lost money in that quarter?

SP files its detailed financial reports with the SEC-like organization in Spain. I don’t read Spanish, and I have not seen SP’s detailed SEC-like reports. I have read ARC’s 10-K (for 2008), and I have read ARC’s press releases since the end of 2008. There does appear to be a difference in transparency, U.S public company reporting vs. Spanish public company reporting.

If anyone knows of an analyst’s report on SP for 2008, please direct me to that report.

The other day, while reviewing and compiling very detailed information about “the typical phases” in a design/development/construction (an A/E/C) project, I came across this description:

SIX PHASES OF A PROJECT:

* ENTHUSIASM

* DISILLUSIONMENT

* PANIC

* SEARCH FOR THE GUILTY

* PUNISHMENT OF THE INNOCENT

* PRAISE & HONORS FOR THE NON- PARTICIPANTS

Check out “How Bad Is It” (authored by Robert A Murray) published in the March edition of the Architectural Record …… here’s the address for that article:

http://archrecord.construction.com/news/economy/archive/0903howbad-1.asp

When I first started my blog-site, I did admit that I’m a bit challenged, technologically speaking.

Only because a friend (who visited my blog-site) asked me …. “hey, I wanted to post a comment about a post you did, but I was unable to post my comment” ….. did I realize that “posting comments” was a feature that I had to “turn on.”

So, that’s now “turned on” (at least I think it is), and, for those of you who wish to post comments, have at it.

I created and began posting on my blog about one month ago. Since that time, I’ve received quite a number of e-mails (from friends and acquaintances) in the industry asking me …. “what are you doing?”

Knowing that I will likely get other e-mails asking that same question, I decided it would be appropriate for me to do a post about what I’m doing; this to avoid people from having to ask that question.

First, I guess I should tell you what I’m not doing:

I am NOT involved in the reprographics business, in any way shape or form in the U.S., at least not at the present time. On the day I retired from NGI, I agreed to a Covenant-Not-To-Compete. My CNTC lasts (a long, long time) until mid-December 2012. My CNTC covers the U.S. and Canada. With regard to the U.S., my CNTC does not cover “all” of the U.S., but it does cover most, if not all, of the medium and larger cities and market areas in the U.S.

Secondly, what I am doing:

a) being “semi-retired”, I’m spending a bit less time at the office than I used to when I was working “very” full time. I maintain a small office in a high-rise office building in downtown St Petersburg – that gets me out of the house every day and that gets me into a “work mode.”

b) I’m reading more than ever before; continuing my reprographics business and industry research and education (that’s my hobby), and I also read books about other stuff, mostly fiction, but sometimes non-fiction.

c) I’m a consultant to – a team member of – a reprographics enterprise that operates businesses in six different Eastern/Central European countries; all of the countries were formerly under communist rule. The young man who’s the Managing Director of that company is absolutely brilliant; highly passionate, aggressive, very focused, amazingly organized, definitely a strategic thinker and planner at the highest level, and he’s a natural leader. [Yes, I’m in awe of someone who is that young (38) and who is already THAT accomplished.] He has assembled an outstanding, very smart, (and also young) management team. If his enterprise was based in the U.S., I have no doubt that his enterprise’s sales would easily be 5 times what they are now, and they are not a small company. I’m generally in Europe two weeks out of every month. Six different countries (I haven’t been to all of them), six different languages, six different currencies, and, yes, they follow the metric system. Not to mention that there are cultural differences as well.

Thirdly, as to inquiries I’ve received from reprographers in the U.S. (and Canada) about consulting services (mine):

Inasmuch as my time commitment to the Eastern/Central European reprographics enterprise I’m working for is quite substantial, I am, until that commitment changes, not available to provide consulting services to any other company, except for one exception. If a U.S. or Canadian reprographer is interested in considering my for an “advisory board” position, I might consider such a position, a) provided that the time commitment is not substantial and b) provided that your company’s location would not violate the geographic restrictions in my CNTC.

Finally, when in the U.S., I’m mostly in the Tampa Bay Area (that’s where St Petersburg is), but we also have a small condo in Boston, so I do spend time in that area. I’m always up for debates and discussions about the reprographics business and industry – and I enjoy seeing industry friends – so, if you find that you’re going to be in the Tampa Bay Area or in Boston, let me know; breakfast, lunch or dinner on me.

One last item: For those of you who are located in the Boston area or who visit Boston, I recommend B&G Oysters on Tremont Street in the South End area of Boston (right adjacent to the Back Bay area.) B&G Oysters is a fabulous seafood restaurant (always lots of fresh oysters on hand), and my beautiful daughter, Cassidy, is the Chef. If you go to the restaurant, make sure to ask for Cassidy, tell her I sent you (and I should tell you that she’s rather shy and that always pisses her off.)