ARI Network Services announces 2013 fiscal third-quarter results

ARI Network Services — a Milwaukee, Wis.-based provider of website, software, and data solutions that help dealers, distributors, and manufacturers “Sell More Stuff!” — reported financial results June 11 for its third quarter of fiscal 2013 ended April 30, 2013.

Highlights for the quarter included:

Total revenue for the quarter was $8.2 million, a 44-percent increase over the third quarter of fiscal year 2012.
Recurring revenue for the quarter increased 60.1 percent to $7.7 million, or 93 percent of total revenue, from $4.8 million, or 83.7 percent of total revenue, for the same period in fiscal 2012.  
On Nov. 28, 2012, the Company acquired the assets of the retail division of 50 Below Sales & Marketing, Inc., a leading provider of eCommerce websites to the powersports, automotive tire and wheel aftermarket, and medical equipment industries. The 50 Below operation, which was purchased out of bankruptcy, generated an operating profit during the quarter, only the second quarter under ARI ownership.
On March 13, 2013, the Company announced that it entered into agreements with various accredited investors in a private placement of $4.8 million (3.2 million shares) of its common stock at a purchase price of $1.50 per share. The Company also issued warrants to purchase 1.1 million shares at a price per share of $2. The funds raised in the private placement were used to pay down a substantial portion of the Company’s outstanding debt.
On April 25, 2013, the Company announced that it closed new senior secured credit facilities with Silicon Valley Bank. The facilities include a $4.5-million term loan and a $3-million revolving credit facility. The proceeds from the transaction were used to pay down the remaining portion of the Company’s outstanding debt with Fifth Third Bank and with a shareholder.

Fiscal year 2013 third-quarter financials

ARI reported revenue of $8.2 million for the third quarter of fiscal 2013 versus $5.7 million for the same period last year, an increase of 44 percent. Recurring revenue comprised 93 percent of total revenue during the quarter versus 88.3 percent last quarter and 83.7 percent for the third quarter of fiscal year 2012.

Gross margin for the third quarter was 77.1 percent, versus 75.9 percent for the same period last year.

The company incurred a net loss of $571,000 or $.05 per share for the quarter ended April 30, 2013, compared to net income of $210,000 or $.03 per share for the same period last year, primarily due to a non-cash loss of $682,000 related to the early repayment of debt and a $420,000 impairment charge to a long-lived asset. 

Management discussion

Roy W. Olivier, president and chief executive officer of ARI, commented, “We are pleased with the progress we have made integrating our two fiscal 2013 acquisitions. We were able to generate a profit from the 50 Below operation in the second quarter of our ownership. For the most recent fiscal year prior to the acquisition ended July 31, 2012, the 50 Below operations lost approximately $4 million on $9-million revenue. Integration activities will continue over the next 9-12 months, and we expect the 50 Below operations, as well as our combined operations, to become increasingly more profitable.”

Olivier continued, “ARI is now one of the leading providers of websites in each of the markets we serve; we currently host and maintain more than 5,500 sites, and we expect this number to continue to grow. Our new AccessorySmart aftermarket parts lookup solution, which is a first of its kind in the powersports industry, continues to gain traction in the marketplace after its February launch. We have also launched significant improvements to our products aimed at the automotive wheel and tire aftermarket, a market for which we have significant growth expectations.”

Darin Janecek, chief financial officer of ARI, commented, “While our fiscal 2013 operating results continue to be affected by the various events and one-time charges that have occurred year-to-date, including two acquisitions, a $4.8-million private placement, and a debt refinancing and transition to a new banking partner, we do expect a return to profitability in the fourth quarter and anticipate further revenue growth and increased profitability in fiscal 2014.”

For more information, visit www.arinet.com.