Milwaukee-based ARI Network Services Inc. reported fiscal first quarter net income of $356,000, or 2 cents per share, down from $389,000, or 2 cents per share, in the first quarter of 2015.
Operating income was $768,000, down from $808,000 in the same quarter last year.
Revenue was $12.3 million, up from $11.7 million in the same period a year ago.
ARI provides sales software and marketing tools for dealers, distributors and manufacturers. The company incurred $140,000 in expenses during the first quarter related to its $10.3 million acquisition of Auction123 Inc. and its ongoing proxy contest.
Dallas-based private investment firm Park City Capital LLC, which owns 1 million shares of ARI stock, has nominated two of its own directors, which it hopes will be elected by shareholders to ARI’s board at the company’s Jan. 5 annual meeting. Park City and ARI have exchanged barbs in SEC filings over the past several weeks. Park City has questioned the track record of one of ARI’s director nominations and argues it is not driving enough shareholder value. ARI has accused Park City of “character assassination” and laid out its plan to continue growing through acquisition.
In an earnings conference call Thursday afternoon, ARI presinet and CEO Roy Olivier revealed that the company has been contacted by and engaged in discussions with more than 10 strategic and private equity firms over the past 24 months and has in some cases gone as far as discussing rough valuations of the company.
“I would like to reinforce that our entire management team and board believes that the period of delivering a superior return to shareholders and maximizing shareholder value is our primary report card,” Olivier said. “We are very proud to have delivered an average annual return to shareholders of 25 percent since I became CEO in 2008. We wake up every day with the intent of continuing that trend and are not close minded to any viable options that can help us achieve that.”
Regarding the first quarter earnings, Olivier said ARI is off to a good start for its fiscal year.
“We posted another record quarterly revenue performance and our recurring revenue growth continues to outpace our overall revenue growth,” he said. “When you combine this with the declines in churn we have achieved over the last couple of quarters, we are well-positioned to expand organic growth through the remainder of the fiscal year. This growth will also be complemented by the acquisition of Auction123, which we closed on November 1, 2016. Due to our strong earnings and cash flow performance in fiscal 2016, we were able to complete this acquisition with a combination of excess cash and senior debt. We expect Auction123 to add over $3 million to our fiscal 2017 revenue, and it will be immediately accretive to our margins. All things considered, we remain on track for another record year at ARI. ”