We feel very strongly that we remain in the early stages of document conversion and retention, and that there is a very long runway for this service line. As our performance for the quarter shows, we have potential to grow in 2024, but we have to work for it. That said, we are confident that we can continue to produce healthy margins and cash flows, and remain committed to our 20% annual dividend and opportunistic share repurchases. To help explain some of the details about how we executed our plans during the first quarter of 2024, I'll turn the call over to Dilo and Jorge for their comments. Dilo?

Dilantha Wijesuriya: Thank you, Suri. We are pleased with our first quarter results, especially in light of some of the economic uncertainty we experienced over the past few months. Our strategy of focusing on new key business lines and the efforts of our teams rewarded us with nearly 3% growth in net sales for the period. U.S., Canadian, U.K., and other international locations all had positive sales momentum. But everything we achieved was due to relentless focus and well-orchestrated execution by our teams. Little of our work was simply handed to us. We stayed focused on what we could control, and worked hard to win every opportunity that came our way. Everyone was focused on delighting our customers, and we did so. Despite the decline we've seen in capital spending in construction and design, many of the new business segments, as we serve, were resilient and continue to make sensible investments to fight for new business.

Trade shows, sports and entertainment events, athletic programs in schools, retail, and many other segments are pursuing growth initiatives with their marketing, and we don't see any customers slowing down in this area. Visually compelling color graphics communicate brand promise and add value to their marketing programs, so demand for these services remains high. As a result, our position in the visual marketing industry is getting stronger. Unlike the past, we are selling into more and more customer verticals with services and production solutions that deliver outsized benefits in a marketing budget. When such customers spend with us, they know they are getting greater value, whether they are spending a lot or a little. This is a true testament of our transformation.

Our story is simple and defines our strategy. We help our clients grow their brands and marketing activities with customized color graphics, and we help optimize their document-related workflows with scanning and onsite print management services. As a result, our addressable market has grown tremendously. Looking at our individual business lines, digital print services grew 3.3% and color led the way. Our 140 digital print centers were well-placed to help our clients to get what they want done wherever they need it, at a competitive cost, and with a single point of contact. In 2024, we improved our production capabilities and capacity with prudent investments in equipment and labor, and those investments are already showing returns in new business.

Meanwhile, we are taking market share from vendors who print and ship from one location, outsource key parts of production, or require outside expertise to get a job done. Customers who work with us get everything they need in one place at a fair price, and without having to manage multiple vendors. Plant printing that is directly tied to the construction and design verticals, however, continue to be pressured. While there is still activity, future planning has slowed significantly. The architectural billing index was down for all three months of the first quarter, and we saw a billing decline of more than 10% from our architectural clients for the period. Until interest rates start to come down, we will not see growth in this revenue segment.

That said, we are protecting our share of plant printing and expanding our customer base where possible. We fought back hard with color and scanning so that this business line did not drag us into a revenue loss. On-site print services sales continue to decline, but the offering remains attractive to many of our customers. We continue to add new customers as well, and we expect to moderate the first quarter's drop over the next few quarters. By contrast, our document scanning revenue segment increased significantly in the first quarter, growing 23% year-over-year. The growth remains steady throughout all three months as we sped up clearing the backlog in our production centers with the new capacity we've added last year. Our contract backlog for future quarters is promising.

There isn't a customer vertical that does not have intentions to improve access to their critical information. Whether that information is private or public, all clients are improving their digital workflows and getting paper converted to digital documents, and the market remains robust. As a result, there are many scanning companies in the market, but we are continuing to create more and more distance between us and them. Document scanning is easy, but few companies are creating processes to capture information efficiently and at a scale, as well as building technology to access information on demand the way ARC is. We use webinars and customer white papers to both educate customers on how to organize and prepare to digitize large volumes of documents and how to select a responsible vendor who will not abandon them in the middle of a project's complexity and size.

Equipment and supply sales, a defensive revenue source for ARC, saw a drop of 3% year-over-year. Like construction printing, we will see moderation in the revenue segment as rates begin to ease. Our marketing activities are continuing to help us to secure new leads for our sales reps. Email marketing, online advertising, Google-based SEO, keyword searches, and positive online customer reviews are helping us to open more doors. Our focus has been on organic marketing results and creating long-term opportunities. With regard to profitability, most of our investments in hardware have been completed. During the last two quarters, we've also filled most of our sales vacancies and upgraded key positions in our color production team. Our scanning operations also added additional headcount to get ahead of the production backlog and prepare for existing contract backlog.

These moderate but important investments decreased our first quarter gross margin by a little more than 1% and may continue to put mild pressure on our profitability throughout the year. We are now focused on improving the skills of our new employees as we cross-train them to perform in several departments. We are very focused on employee retention and building a better future for them so we can ensure a better future for ARC. These are very important strategies for our company as we continue to invest in training, community, diversity, and wellness programs. At ARC, we know exactly where we are headed and how we will remain relevant to our customers while improving our long-term performance. This past quarter, you witnessed several positive results of our strategic execution and foresight in an environment that certainly wasn't bad, but had its share of challenges.

No matter what lies ahead, our management teams around the company continue to be focused on becoming the best digital print company in the U.S. while delivering significant value to the company's shareholders. I will now ask Jorge to give you an update on our financial results. Jorge?

Jorge Avalos: Thank you, Dilo. As we pointed out, we continue to transform the top line of the company. While things like interest rates, a slowdown in the economy, and global events can mute general progress, none of that stopped us from maintaining our forward momentum. As Dilo outlined a moment ago, during the second half of last year, we began to make the prudent and necessary investments to drive future growth and secure our competitive position in the markets we serve. Equipment acquisitions were a part of that process, but hiring and ongoing inflationary labor costs were the driving force behind the 110 basis points decline in our gross margins. The nature of the investment is long-term, but ultimately, our increase in expertise, efficiency, and productivity will pay dividends in the future.

Looking ahead at the rest of the year, our current labor expenses will not rise in a dramatic way at all, but we don't expect to reduce them significantly either. As always, we will continuously look for ways to improve efficiencies and ways to reduce material and overhead costs. We may not be able to match last year's gross margins, but we do expect the decline in margins from the first quarter to moderate for the balance of the year. SG&A for the quarter fell slightly due to reduced professional service expenses, partially offset by labor cost increases. Even so, operating income increased by $300,000, or 8.6%, outpacing our growth and sales. Earnings per share were a penny higher than prior year, and EBITDA was essentially flat. We continue to maintain a rock-solid capital structure.

Our cash balance is more than $50 million. Our net debt is less than $10 million. Our leverage ratio, net of cash, is under 0.5 times. Our cash flow from operations came in at $3.7 million for the quarter, roughly in line with the prior year. Consistent with historical trends, Q1 is our lowest quarter as cash flows from operations ramp up as we progress through the year. For the fourth year in a row, we plan to issue an annual dividend of $0.20, and we will continue to purchase our own stock in the open market. Our commitment to returning shareholder value is firmly in place. To sum up the quarter, we are very happy with the start we had to 2024. Our strategic business lines are growing. Our pipeline is robust. We made the necessary investments to strengthen our operations and sales force, and are taking steps to mitigate the impact of increased labor and material costs.

At this point, I'll turn the call back to Suri. Suri?

Kumarakulasingam Suriyakumar: Thank you, Jorge. Operator, now we are ready for any questions from our listeners.

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