MILWAUKEE (March 21, 2013) — ARI Network Services Inc., which recently acquired 50 Below Sales & Marketing Inc., a provider of eCommerce websites to the tire and wheel aftermarket, reported fiscal second-quarter net income of $4,000, which plummeted 93.4 percent from $61,000 in the year-ago period.
Net sales jumped 35.9 percent to $7.5 million for the period ended Jan. 31, primarily as a result of the acquisition, the company said.
ARI acquired the assets of the retail division of 50 Below last November, which included more than 3,500 dealer websites, more than doubling the size of ARI's website business and making websites the company's largest source of revenue.
The Milwaukee-based company reported a loss from operations of $566,000 during the quarter vs. an operating income in the year-ago quarter of $170,000. The loss stems primarily from the acquisition-related fees as well as ongoing integration activities, ARI said. Total operating expenses for the quarter increased 55 percent to $6.3 million for the quarter due primarily from the addition of the Ready2Ride and 50 Below operations, the company said. About $625,000 of the expenses involved acquisition-related legal and professional fees.
To help pay down the debt used to finance the acquisitions, ARI said it has entered into definitive agreements with various accredited investors in a private placement of approximately $4.8 million of common shares at a price of $1.50 per share. In addition, the company will issue to investors warrants to purchase 1,066,667 shares of common stock. The warrants have an exercise price of $2 per share and are exercisable for five years, according to the firm.
New institutional investors accounted for the majority of the financing, it added, and existing investors made up the remainder.
"50 Below integration activities are well underway; this acquisition will be a game changer for ARI," said Roy W. Olivier, ARI president and CEO. "The integration of 50 Below into ARI makes us one of the leading providers of websites to the powersports market, and the addition of Ready2Ride's aftermarket fitment data to our product offering makes ARI one of the most comprehensive providers of eCommerce solutions to the powersports industry. This acquisition also provides us with a footprint in the automotive aftermarket industry with more than 2,000 wheel and tire dealer websites."
"While our operating results will be affected over the remainder of fiscal 2013 from the acquisition-related legal and professional fees as well as ongoing integration activities, we anticipate significant year-over-year revenue growth from these acquisitions. We expect both the Ready2Ride and 50 Below acquisitions to be accretive to earnings in fiscal 2014 and anticipate additional revenue growth next year as well," said CFO Darin Janecek
ARI said it now has more than 22,000 equipment dealers, 140 manufacturers and 195 distributors worldwide for its eCommerce websites marketed to the automotive tire and wheel aftermarket, powersports, medical equipment and pool and spa industries.
The company also recently announced that 50 Below upgraded its mobile website platform for tire and wheel dealers. Mobile sites allow user-friendly access to dealer websites from smartphones without requiring users to download a special application, ARI said. “This upgrade enhances the mobile shopping experience end-to-end with new layout and streamlined navigation options, including an optimized tire guide driven by vehicle fitment that will help independent tire and wheel dealers increase traffic, service and sales.
“In addition, a drop-down menu and automatic geo-locator will allow visitors to easily find the closest multi-location dealership, as well as display location-specific content.” the company added.