ARI
NETWORK SERVICES ANNOUNCES FISCAL 2013 RESULTS
MILWAUKEE,
Oct. 29 -- ARI Network Services (ARIS), a leading provider of website,
software, and data solutions that help dealers, distributors, and manufacturers
Sell More Stuff!(TM), reported financial results today for its fiscal fourth
quarter and fiscal year ended July 31, 2013.
Highlights
For The Fiscal Fourth Quarter Included:
·
Revenues
for the fourth quarter of fiscal year 2013 were $8.5 million, a 44.0% increase
over the same period last year.
·
Recurring
revenues for the fourth quarter of fiscal year 2013 were $7.9 million, a 65.1%
increase over the fourth quarter of fiscal year 2012. As a percentage of total
revenues, recurring revenues in the fourth quarter were 93.6% in fiscal year
2013 versus 81.7% for the same period in fiscal year 2012.
·
EBITDA,
a non-GAAP measure, adjusted for non-cash charges, was $1.5 million in the
fourth quarter, an increase of 36.4% over the same period last year.
Highlights
For The Fiscal Year 2013 Included:
·
The
Company reported record revenues of $30.1 million, a 33.8% increase over fiscal
year 2012.
·
Recurring
revenues for the fiscal year 2013 were $27.0 million, a 44.3% increase over
fiscal year 2012. As a percentage of total revenues, recurring revenues were
89.7% in fiscal year 2013 versus 83.2% in fiscal year 2012.
·
EBITDA,
a non-GAAP measure, adjusted for non-cash charges, was $3.5 million in fiscal
year 2013, a decline of 19.5% from fiscal year 2012, which was related to costs
associated with the two fiscal year 2013 acquisitions.
·
On
August 17, 2012, the Company acquired substantially all of the assets of
Ready2Ride, Inc., the first-to-market and leading provider of aftermarket
fitment data to the powersports industry. The Company leveraged this data in
its February 2013 release of AccessorySmart(TM), a fitment driven parts lookup
solution, which won a Nifty 50 Award at the powersports industry's largest
trade show.
·
On
November 28, 2012, the Company acquired the assets of the retail division of 50
Below Sales and Marketing, Inc., a leading provider of eCommerce websites to
the powersports, automotive tire and wheel and durable medical equipment
industries. The 50 Below operation, which was purchased out of bankruptcy, is
already generating positive cash flow.
·
On
March 13, 2013, the Company announced that it entered into agreements with
various accredited investors in a private placement of 3.2 million shares ($4.8
million) of its common stock at a purchase price of $1.50 per share. The
Company also issued warrants to purchase 1.1 million shares, all but 214,000 of
which have been exercised to date. 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 $3.0 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 Financials
ARI
reported revenues of $30.1 million for fiscal year 2013 versus $22.5 million
for fiscal year 2012, an increase of 33.8%. Recurring revenue comprised 89.7%
of total revenue during fiscal year 2013 versus 83.2% in fiscal year 2012. The
increase in revenues was driven by the Company's November 2012 acquisition of
the assets of the retail division of 50 Below Sales and Marketing, Inc.
Overall
gross margin for fiscal year 2013 was 78.0%, versus 76.6% last year. The gross
margin improvement resulted from the Company's focus on higher margin,
recurring revenue streams and its continued shift away from one-time revenue
sources.
The
company incurred a net loss of $753,000 or ($0.08) per share for the year,
compared to net income of $1,055,000 or $0.13 per share last year. The loss
incurred in fiscal 2013 was driven by acquisition-related costs of
approximately $1,200,000, a non-cash loss on the fair market valuation of stock
warrants of $635,000, a non-cash loss of $682,000 related to the early
repayment of debt and a $420,000 non-cash impairment charge to a long-lived
asset. These charges were offset in part by a non-cash gain recognized on a
change in estimate of contingent liabilities of $180,000 and an income tax
benefit of $1,133,000.
Management
Discussion
Roy
W. Olivier, President and Chief Executive Officer of ARI, commented,
"Fiscal 2013 was a transformational year for ARI. We completed two
acquisitions, which provided us with a first-to-market opportunity in the
powersports industry and introduced ARI to several new markets -- aftermarket
wheel and tire and durable medical equipment.
We raised $4.5 million in a
private placement transaction that was used to reduce our post-acquisition debt
and are excited about our new relationship with Silicon Valley Bank, which we
believe will be a critical growth partner for the Company."
Mr.
Olivier continued, "Our acquisition of 50 Below in November 2012 was a
game changer for ARI. We posted record revenues in fiscal 2013, exceeding $30
million for the first time in the Company's history and now host and maintain
more than 5,500 websites.
ARI has proven time and time again that it is highly
capable of acquiring and efficiently integrating companies. The 50 Below
operation, which we acquired out of bankruptcy in November 2012, recorded an
operating loss of $3.4 million on revenues of $9.2 million for the trailing
twelve months ended October 31, 2012. By the quarter ended April 30, 2013, we had
already achieved positive cash flow and EBITDA for 50 Below, ahead of our
original expectations."
Darin
Janecek, Chief Financial Officer of ARI, commented, "ARI's overall
profitability was affected in fiscal year 2013 as a result of the one-time
acquisition-related costs and other non-cash charges. Excluding these charges,
ARI generated adjusted EBITDA of $1.5 million in the fourth fiscal quarter;
it's the first quarter since the acquisitions of both Ready2Ride and 50 Below
of year over year EBITDA growth, an indication that we are successfully
integrating the acquisitions.
Further, we continued to improve on two of our
most important growth metrics -- recurring revenue and churn. Recurring
revenues exceeded 90% of total revenue in the fourth fiscal quarter and our
overall rate of churn improved to 12.8% in fiscal year 2013 versus 13.4% last
year. The private placement and Silicon Valley Bank financing transactions
enabled us to improve our balance sheet substantially following the two
acquisitions, leaving us poised for continued growth as we head into fiscal
2014."
