Okay, we just opened up the presentation. We're gonna let give everyone a couple seconds here to get in from the lobby, and then we'll get started. Hey, should we be on the camera, and then, or come off? You can, you can come off. You can go off for now and then just come back in Q&A. All right, let's get, let's get going. My name is Greg Burns. I'm the analyst at Sidoti covering ARC Document Solutions. I'm really happy to have the company presenting here for us this morning. From the company, we have Dilo Wijesuriya, the company's President and COO; Jorge Avalos, the company's CFO; and David Stickney, who heads up their IR program. David's gonna run through a presentation, then we'll get to as much Q&A that we have time for at the end. If you do have a question, please enter it through the function in Zoom, and I will ask the guys as many of those as we can get to. So with that, I'll hand it over to David. Well, thanks, Greg. I appreciate it. I'm gonna go ahead and turn my video off here just so I don't use up bandwidth while we're looking at the presentation. First of all, thanks for your interest in our document solutions. In this presentation, I'll be taking you through the things we do for our customers, a review of our markets and business model, and why we think you should consider investing in ARC. This presentation contains forward-looking statements that you should evaluate by reviewing our risk factors, reconciliations to GAAP numbers, and other information in our SEC filings. Before we begin, we should also note that the company has disclosed its receipt of a non-binding proposal outlining a going-private transaction at a purchase price of $3.25 per share in cash. The proposal was submitted by an acquisition group consisting of ARC's C-suite and a private investor. In response to the proposal, a special committee of our board of directors, consisting entirely of independent, disinterested directors, was formed to review and evaluate the proposed transaction, and continues to carefully consider it with the assistance of its independent financial and legal advisors. No assurances can be given regarding the terms and details of any transaction, or that a transaction will be consummated at all. In fact, the reason we're doing this conference is because we're moving forward as a public company with the assumption that we will be a public company. That's what we're required to do, and that's why we're here today. For further information, we direct you to the 8-K, Form 13D, and press release available on ARC's investor relations website at ir.e-arc.com. No additional information has been released since the dates of those filings, nor will it be today. ARC partners with top brands around the world to tell their stories with compelling graphics of all kinds, making us an excellent partner in visual marketing. We also optimize document workflow in our customers' offices or on their job sites. This includes digitizing existing documents to provide easy access and making on-site printing more efficient. We use advanced digital printing technology to facilitate both services. We specialize in customized, short-run, quick-turnaround work at a very high level of quality. The more complex the project is, the better suited we are to handle it. It's an important distinction that separates us from large commercial printers on the one hand, or walk-in shops like FedEx, Kinko's on the other. Digital printing is what ties our services together. It's the backbone of our graphic production and the key to our office printing and scanning services. Whether we're helping a client reinforce their brand in an office decor project or scanning and indexing employee records, our ability to deliver the printed document or its digital counterpart, whenever and wherever it's needed, is the cornerstone of our business. We've got some examples to illustrate what we're talking about. We support the marketing campaigns of retail brands, universities, healthcare providers, and companies of all sizes and in locations all over the world. Lululemon, a retailer with more than 300 retail centers in North America, uses ARC to print and install merchandising and brand graphics throughout their network of stores. We consult on the design, procure print materials, satisfy permitting and installation requirements, and use our regional digital print centers to fulfill their campaigns. They use ARC as a one-stop shop for end-to-end visual marketing solutions throughout the country. We frequently enjoy recurring work from customers who produce multiple marketing campaigns each year. Creative interior designs and office graphics play a significant role in attracting and retaining good talent. Large corporations, such as Google, Walmart, and Netflix, upgrade their workspaces with environmental graphics to inspire and motivate employees, and smaller companies also recognize the need to create environments that help bring their staff together in person. Of note, we also do much the same thing in schools, gyms, and other environments where people visit or work on a regular basis. We print, install, and maintain these environments on behalf of our clients from our regional print centers around the country. Construction professionals obviously need plans to build their projects, and we print them by the thousands. But they also use colorful graphics on the job site to market to new tenants, improve aesthetics in the area, and install as part of interior design requirements. In addition to graphics, ARC provides critical safety and informational signage, and we also supply temporary barriers for rent or for sale to enclose spaces under renovation, usually featuring marketing and promotional graphics for the property owner or builder. Turner Construction, for example, uses ARC for all their construction safety signs throughout North America, in addition to our plan printing services. Companies with multiple offices improve and optimize their internal print networks or outsource them entirely to us using ARC equipment and technology. Our work is based on a Service Level Agreement. We place our equipment in our customers' offices, and they pay for what they use once they hit their base minimum. Worley is one of the largest engineering companies in the world, and we provided and manage office printers for the entire firm in more than 100 locations, including ongoing project sites. Our software, Abacus, helps Worley to reduce costs, track expenses, and improve document workflow through their, throughout their organization. In all, we manage more than 20,000 devices for its clients under our on-site print management program. ARC's patented scanning software can extract information from any size document and can be applied to a warehouse full of paper records for a large company or a single box of documents for a local business. Pfizer recently scanned their employees' records using our HIPAA-compliant document scanning centers and improved their access to critical information. We organized, digitized, and ran proprietary optical character recognition software to index more than 5 million individual documents. Once digitized and made searchable, we uploaded the new digital documents to their employee management system for easy access. On the face of it, what our customers ask us to do seems simple: print a graphic at a certain size and put it up, or scan a document and give it back. But the reality is radically different. A job is often successful not because we print great images, although we do, but because we sweat the details, like understanding the location, environment, longevity of the job, and local regulations, or the available time to install graphics or capture data to prevent business disruptions. Customers begin working with ARC for many reasons, including our technology, customer service, and reputation, but they stay with us because of our ability to manage complexity, handle logistics, and visual communications consulting. ARC's 140 service centers are strategically located in major metropolitan areas in North America and in select locations around the world to support the wide variety of our clients. We serve more than 50 industry verticals, up from just 15 industry categories in 2019. Some of the largest are featured here on this slide. To print 1 million safety graphics in two weeks for the Chicago Public Schools as they reopened from the pandemic, 15 of our service centers, from California to Ohio, collaborated to get them there. To install new terminal signage for Southwest in LAX and Love Field in Texas, multiple ARC service centers in each state coordinated to supply different aspects of the project. By contrast, to scan the corporate records of Duke Energy in Charlotte, North Carolina, we opened a purpose-built facility to get the job done. Our network is flexible, scalable, highly efficient, and deeply integrated. Day to day, most service centers act as our sales and operations hubs for a local market. Most of our clients can order services from their local service center and have work printed and delivered from a service center across the country in a few hours, saving time and shipping expenses. The customers we work for vary enormously in type and size, and more than 90% of our revenue comes from recurring work from our existing customers. In fact, our customers have been with us on average for 10 years and are remarkably loyal, coming back again and again with both account-based work and new projects. Reading the tens of thousands of online and Google reviews, it's easy to see why. Importantly, however, customer concentration is not a risk. No single customer represents more than 2% of our overall revenue. By generating interest across all of our markets via our corporate marketing efforts, qualifying and nurturing leads, and then distributing them to an appropriate market, customer acquisition is more efficient and less costly than at any point in our history. Our demand gen programs are driven by our website, email, events, and social media channels. Leads are managed through a common CRM system with custom dashboards to identify cross-selling services and identifying additional customers within the same account. Our revenues break down into four main categories. 62% of our revenue is generated from digital printing, roughly 1/2 of which is color printing used for visual marketing, with the other 1/2 primarily black and white and typically generated by plan printing on the construction site. Color is growing in the mid-single-digit range, while black and white has been challenged by high interest rates that have constrained construction work, 25% of the business comes from our on-site printing services, categorized as Managed Print Services, or MPS, on our financial statements. We think this line will be consistent at recent levels, with work from home now a permanent part of the culture. Scanning and digital imaging generates 8% of our revenue, but its growth is explosive. We increased sales by $8 million since 2020, and as of Q2 of 2024, it's grown more than 15% year-over-year. Paper documents are everywhere, and we believe there is a long runway for this service line. Equipment and supplies, which makes up the remaining 5%, is an extension of our on-site print management service. When we sell equipment, we often set up recurring service that adds value to the customer and dollars to the invoice. These large purchases, like the construction driving plan printing, have been constrained by the high cost of capital. Since 2019, our earnings have increased more than 22%, and we continue to demonstrate strong sales leverage, as you can see here on the table. We were far more capital-intensive just a few years ago, largely because we needed to support our on-site printing business with significant equipment purchases each year. Today, our customers are far less concerned with shiny new machines and run fewer of them. In addition to the decline in capital spending, further changes we've made over the past three years to optimize our cost structure and diversify our market have increased our efficiency dramatically. The numbers speak for themselves. In 2023, on 3.3% revenue growth, we grew EPS by nearly 23%. We have leveraged our costs, decreased our need for spending, and we are confident in our ability to sustain the efficiency of our cost structure into the future. With the increase in profitability, our cash flows from operations have also increased. By contrast, we have moderated our cash outflows from investing and financing activities as we pay off historical finance leases, and our need for capital to operate the business has stabilized, as we noted a moment ago. To put this in perspective, a few years ago, we were acquiring $30 million of new equipment each year using cash CapEx or capital leases. Today, we're opportunistic with regard to equipment and other acquisitions and have decreased spending by more than $10 million. We've paid down $110 million of debt in the past six years. With more than $49 million on the balance sheet and just $40 million on the revolver, we consider ourselves essentially debt-free. Today, we actively manage the revolver during each quarter by using available cash to pay it down, thus virtually eliminating the interest cost during the period. Our net debt-to-EBITDA ratio was a comfortable 0.27 in 2023, and relative to other companies who are highly sensitive to interest rate increases, we are enormously stable. Due to our low debt levels and the way we manage our capital structure, our interest expense will remain consistent at approximately $1.8 million annually. There are many reasons why you might consider investing in ARC Document Solutions. Among them are the return of shareholder value via an attractive dividend program. Revenue growth via market diversification and strong sales in our strategic business lines. Cash continues to grow, while at the same time, financing outflows are decreasing as finance lease payments decline. We are a low-risk investment. Debt net of cash is insignificant, and historic net operating losses are effectively eliminating cash taxes at the federal and state levels for the next several years. These are among the strongest arguments for investing in ARC, and we hope you'll consider them. For your convenience, key assumptions and considerations for building a financial model are also included on this slide. As a quick summary of our performance in Q2, net sales grew by 3.8%, driven by strong sales in color and scanning. For your information, top-line growth does not require growth in planned printing and equipment and supply sales. We just need them to stabilize. We increased margin by 30 basis points, quickly reversing a Q1 decrease, but SG&A rose from sales and marketing investments and $900,000 related to the take-private proposal. Operating cash flow was lower than normal due to the timing of receivables, but we expect it to increase in Q3 and Q4, as it did last year. The balance sheet remains strong, leverage remains low, and the dividend remains above 6% in terms of yield. Detailed results are available via our website, which currently hosts our Q2 2024 earnings press release, 10-Q, and webcast. We welcome your questions and appreciate your interest in ARC. Please don't hesitate to reach me using the contact information shown on the screen, and we invite you to follow us on social media to get a feel for what we do, how we do it, and what our customers think of our work. With that, Greg, that wraps it up for the proposal. Great. We're happy to entertain questions. Great. Thanks, David. Maybe we could just start with the recent performance this quarter. You know, you saw some top-line growth, and I think that was, like you said, it was driven by color and scanning. So maybe you could just talk about the market dynamics there. Has color and scanning reached enough scale where, on a go-forward basis, they can offset maybe any declines you see in some of the more challenged parts, like, of your business, like black-and-white printing? You know, how should we think about the growth trajectory of the business going forward? David, do you want me to take that, David? Yeah, so Greg, can you hear me? Absolutely. All right. Greg, you can hear me, correct? Yes. So I think our second quarter results truly shows exactly what we have been saying as a company for the last so many, so many quarters about, you know, while the MPS and the large format black and white to plan printing, you know, is challenged, you know, it has to stabilize at some point. But however, we are not waiting for that. We've been focusing on the areas that our customers need our services, and where there's a lot of more potential for us to grow, and that is definitely in, you know, marketing, visual color, and document scanning. You know, the growth that you saw in the second quarter, you know, it's somewhat sustainable as we go forward because for a couple of reasons. First one is, you know, coming out of COVID after a couple of years, you know, a lot of companies, whether they are small, medium, or large customers, they are continuing to market their brand, you know, getting their products out, you know, going for conventions. I mean, convention spaces are all fully booked for several years. All the large convention centers, the mid convention centers, and so forth. A lot of companies are coming out with their product releases, and marketing activities is strong, and I think it's going to continue to strong. The entertainment events, whether it's sporting entertainments, you know, musical entertainments, a lot of events are continuing to take place. You know, county shows. A lot of activities is happening in the market, and, and everything is, you know, visual color. There's a lot of color going to be there. So we feel that we as a company are definitely will be get benefit out of that with our 140 locations all across the country, and a good sales team that we have, and a marketing program will definitely continue to do well in the digital color. Document scanning is another area where every company pretty much is looking at ways and means of, you know, reducing their paper, paper usage, as well as converting paper to a digital workflow so that they can access that information very quickly, especially for most employees are still on hybrid workloads, right? So those two segments will continue to help us grow. As the interest rates do slow down or come down, there will be a- it'll take some time, but there will be some positive activity in the construction segment. And when that happens, there's going to be some better results on the large format, you know, plan printing side as well. And I think we'll be able to continue to sustain and, you know, may and have a positive sales growth in the next for the foreseeable future. All right, thanks. Just quickly on the traditional plan printing. I know there's a secular dynamic of digitization there, so there's probably, like, a longer term decline, but there's also a cyclical element going on right now. So, I am assuming it's not gonna rebound to where it was previously, but, you know, maybe we could build off of a lower level if interest rates improve. How far off of the prior peak is that business now? Like, what is the delta between where it was prior to the most recent downturn to now? Yeah, and- Maybe, maybe I'll take that one, Dilo, or you wanna- No, go ahead. In regards to that, I mean, after we go through a cycle like COVID or previous, with the other one, new base, then we had the whole high interest rates, the kind of way we look at it is a new base gets established, Greg, right? And looking back at old historical levels, it, it's just not relevant, right, with all the secular changes that have happened in that industry. So, you know, as Dilo mentioned, if interest rates go down, could there be a temporary bump, due to that? For sure. Now, do we see it as a strategic growth area for the short term and foreseeable future? Not really. Right. Okay, and then, in terms of the color printing opportunity, it doesn't sound like you're seeing any slowdown, but has any of the more, you know, more uncertain economic data or anything more recently, you know, changed buying behaviors? Are you seeing, you know, sales cycles extend pricing, any pricing or more competitive pressures in that market? On specifically on the color side, Greg? Color, yes. Yeah. Yeah. Not really. We have not seen any major changes in pricing policy, per se. Obviously, there's competition as well. When we deal with smaller and smaller customers and smaller volume of printing, there's definitely price is an issue. The larger the project, price is pretty much secondary. The main what customers are looking for is on-time delivery and, you know, pretty much on-time delivery and highest quality, right? So that's what we have been focusing on. Yes, there's always negotiations going on when it comes to, you know, any kind of pricing and so forth, but we as a company, you know, we due to the relationships and also due to the fact that we are in 140 locations, we focus on showing the customer how their project costs can be reduced because we don't have to print from one location and transport it out to all across the country. We can print very, very, very close to where the project is, and then eliminate some of the shipping costs. So some of those ancillary costs, we are able to take it away from the customer, and you know, continue to be a more competitive compared to the competition. Okay. And you talked about the fact that you don't have much customer concentration, but I mean, historically you've had vertical concentration. So could you just maybe talk about how that's changed as you've grown in the color printing market? And is there any specific verticals where you have particular strength in color printing, and are there any that are growing faster than others? Yes. So, in the last 3 years, if I see that, if I can report the trends, we have gone from about, you know, 15 to 17 primary verticals. Now, we are tracking 53 customer verticals. The segments that are continuing to show promise is definitely entertainment, you know, sporting events, conventions, education. When I say education, higher education, universities, colleges, their sports stadiums, and so forth, and retail. Those are the, you know, 5, 6 verticals that we see a lot of promise, and there's a lot of activity, as we go as well. We track, you know, you know, multiple verticals, and we are in a very concentratedly marketing to those verticals, specifically about what they can do, what those verticals do, and what we can provide for them as well. Okay, then maybe could you talk about, you know, how you're gaining share in the color printing market? You're, you're still... It's still a very large addressable market, and relative-- you're, you know, a relatively small player in that market still. So, you know, how are you able to gain market share and, and grow that business? Yeah, there are multiple ways. The first primary way that we have been securing very quality leads is through referrals because our customers are providing referrals to us. You know, also, this marketing community, a lot of people change jobs within that marketing and agency community as well. So the relationship, they take it to another location, another new company, and we are able to secure or engage with that company as well. So having a good reputation is helpful, you know, for newer referrals as well. The second area that we are focusing heavily is our online marketing activity. We use social channels to continue to show what we do for our customers, right? We show projects. Every project we do for a customer, we'd always, you know, push that information out through social because customers get inspired by looking at what did the other customers do for certain events and so forth. So, that's the second way. The third way that we do our marketing activity is heavy on getting customers to come to our offices. We do shop tours, we call them shop tours. We invite customers to come over because a lot of designers and architects, they like to come and feel the material, see how things are fabricated, right? So shop tours are helping us quite a bit as well. So those are the primary ways that we do it. Obviously, our 100 sales reps in the country are the closers of business. Our marketing engine pretty much pushes all the leads on a daily basis to them, and they take it to the finish line. Okay, maybe you could just talk about customer segments within color, in terms of maybe what percentage of that business is to small businesses, what percent medium, and what percent enterprise. Because when I look at your capabilities, your global reach, the technology, and the service level that you can provide, I would assume, you know, you're an attractive partner for enterprise customers like Lululemon, you highlighted. So could you just talk about the revenue mix within color, between in regards to the size of the businesses you're serving and your opportunity to maybe move upstream? Yeah. So if I take the revenue, you know, the revenue—I would say about over 70% of our revenue comes from regional and large customers, you know, like banks, the larger universities, the Lululemons, and so forth. They're about 70%. When I take the customer count, about 70% of the customer count is small to medium businesses as well. So we have a very highly high concentrated customer base all across, so that we are not, all of our dollars don't come from a few customers. So that's the nice part. We always win one job, the first job from a customer, and then work our way into all the other offices around the country as well, because always the business doesn't start at a global level and work our way down. We always start at a local level and then work our way up to a national opportunity with customers. So that's the strategy that we follow. Okay, and then, Jorge, maybe a couple financial questions before we wrap up here. Sure. But the margins, you know, it was a really strong margin quarter, this last quarter. Maybe could you talk about your view on the gross margins going forward and then also operating leverage? Because you've been investing, I think rightly so, in some of your growth areas like color and scanning, and that's depressed, you know, maybe the earnings leverage. But, you know, how should we think about that going forward when we might see a little bit more flow through to the bottom line? Yes. One of the things we were dealing with, you know, last year and even in the beginning part of this year, was the inflationary pressures, right? And what that causes on our labor as well as our material costs. I think what you saw here in the second quarter is kind of two dynamics: the easing of the inflationary pressures, right? You know, now we're overlapping last year with the increases mostly coming last year. Now we're starting to lap those periods, so a little bit more stable there. And then the increase in revenue, right? And once we increase our revenue, the way we run our company and the way we try to maximize our margins is by using all our resources to provide all the services we do to our customers. What I mean by that is, that same service center that does the color work will also do the black-and-white work, which will also be where we house our AIM centers for scanning, and also help support our MPS business. So with the increase in revenue, we're able to better leverage our labor and our facility costs, our indirect costs. And with the easing of the inflationary pressures, then you see the impact on our margins going up. Now, what we foresee for the future, you know, depends, you know, partly to do with what happens to the top line. But assuming revenue is increasing, then we have an opportunity to keep building on our margins or at least, you know, maintain our margins. Okay. I know you're, you know, you didn't wanna talk about the go private, but I- t here was one question that maybe you could answer, is in terms of the timing. Is there a timeframe set on when a decision needs to be made, or is it an open-ended process? It is an open-ended process. There's no specific timing. All right, great. All right, we're at the end of our timeframe here, so, if you have any parting comments you wanted to leave us with, we could do that now, and then we'll wrap it up. I think that's pretty much it for us. I mean, we, the questions were good, and I think we covered most of the main topics in the presentation. If you- I'll go ahead and just make sure that this is up on the screen for the last minute here. If you have further questions with regard to anything you heard today or any questions you might have with regard to what we'll be doing in the future, by all means, drop me an email at this address here or reach out to me on the phone, and we're happy to get back to you with any information we can help you with. That's it for us. All right, great. Thanks, guys. Thank you. Take care. Take care, everybody.