ari network services, inc. annual shareholders’ meeting state of the business presentation
DESCRIPTION
ARI Network Services, Inc. Annual Shareholders’ Meeting State of the Business Presentation. ARI Basics + Update on Recent Changes Financial Results Report Card Strategy Overview and Outlook. December 17, 2009. - PowerPoint PPT PresentationTRANSCRIPT
www.arinet.com
ARI Network Services, Inc.Annual Shareholders’ Meeting
State of the Business Presentation
December 17, 2009
1. ARI Basics + Update on Recent Changes2. Financial Results 3. Report Card4. Strategy Overview and Outlook
www.arinet.com
ARI Network Services, Inc.Annual Shareholders’ Meeting
State of the Business Presentation
1. ARI Basics + Update on Recent Changes2. Financial Results 3. Report Card4. Strategy Overview and Outlook
www.arinet.com
“Be recognized as the leader in creating, marketing and supporting the best solutions that enhance revenue or reduce costs for our customers”
Mission
www.arinet.com
EnhanceEnhance your revenue
ReduceReduce your cost
IncreaseIncrease your customers’ satisfaction
Brand Promise
www.arinet.com
Core Values - PRIDE
PEOPLE ORIENTED
We promote a fun, team oriented environment where people are invested in and respected
RAPID INNOVATION
We expect to be known as the innovator in every market we serve. We expect all employees to be innovative in every aspect of their work
INITIATIVE
We expect employees to make personal decisions to strive for something beyond the status quo
DELIVERY AND EXECUTION
We take pride in doing what we say we are going to do
EMBRACE THE CUSTOMER
We exist to serve our customers. We expect all employees to keep the customers’ interests central in every aspect of their work
www.arinet.com
1981 Founded to provide electronic publishing services to the agriculture industry
1996 Evolved to equipment industry focus providing parts and service catalogs
2005 Expanded to technology-enabled marketing services
2007 Expanded e-commerce and professional services business with OC-Net acquisition
2009 Acquired Channel Blade Technologies and Powersports Outsourcing Group
20,000+ dealers 150+ distributors 100+ manufacturers 100+ catalogs 9+ market segments 100+ countries Solid Financials Public Company
HeadquartersMilwaukee, Wisconsin
Intl. Sales/SupportThe Netherlands
Development & Marketing Services
Cypress, California
Marine/RV Sales/SupportVirginia Beach, VA
ARI at a Glance
ARI F&I ServicesSchenectady, New York
www.arinet.com
Appliance
Outdoor Power
Powersports
Agriculture
Marine
Primary Markets
RV
www.arinet.com
Partial Manufacturer List
www.arinet.com
High Level Product Categories
SearchEngineSmart
MailSmart
ePro Mobile
Footsteps
WebsiteSmartPro
Lead Storm
eXceleratePro 2
www.arinet.com
Electronic Parts Catalogs
PartSmart® CD/DVDPartSmart Web™
PartSmart Data Manager/PublisherPartStream™
eCommerce Websites
WebsiteSmart Pro®
PartSmart Cart™eXcelerate Pro™
Custom Web Services
Lead Generation
SearchEngineSmart™
MailSmart
Lead Management
Footsteps™
All Solutions Training services
ARI Product Solutions
www.arinet.com
Generates Parts Sales on any Website
Integrates with Existing Website Shopping Carts
Customizable Application Appearance to Match Website Branding
Search by Part Number or Model Hierarchy
Dynamic Presentation of Content
Over 75 Parts Catalogs Available
www.arinet.com
Full Featured CRM
Channel Lead Tool
Accepts Leads from Multiple Sources
Allows for Workflow by Role
Analytics and Full Reporting
Easily Generated Marketing Campaigns
Promotes Lead Nurturing throughout Customer Lifecycle
www.arinet.com
Ensures website is seen on all the major search engines
Customer chooses relevant keywords
Customer selects geographic coverage desired
ARI ensures site is advertised within those parameters
Numerous reports available to determine campaign effectiveness
Campaign can be changed at any time
Ad dollars are stretched based on results!
www.arinet.com
Roy W. Olivier, President & CEO
Technology Management and Sales Experience
MSI, ProQuest, Pacific Telesis
Experienced Management Team
Brian Dearing, Board Chairman
Technology and Marketing Experience
GEIS, Sterling Commerce
Mike Tenpas, VP – Global Sales and Marketing
Management, Sales & Marketing Experience
Norlight Telecom, Dealership Mgt.
Robert Hipp, CTO
Technology Management Experience
OC-Net
Darin Janecek, VP - Finance
M&A and Public Accounting Experience
Johnson Controls, Deloitte & Touche
www.arinet.com
Dealers Choice Award for WebsiteSmart Pro - 2007Awarded by Power Equipment Trade Magazine
Small Business Success Stories - 2006Awarded by Corporate Report Wisconsin
Editor's Choice Award for WebsiteSmart - 2006Awarded by Powersports Business Magazine
IQ Award Technology/Internet Category - 2005Awarded by The Small Business Times and Wisconsin Technology Council
Editor's Choice Award for SearchEngineSmart - 2009Awarded by Powersports Business Magazine
Awards and Honors
82 of Top 100 Marine Dealers use ARI services - 2009As designated by Boating Industry Magazine
Dealers Choice Award for Footsteps - 2009Awarded by Power Equipment Trade Magazine
Best Dealer Website of the Year: MarineMax.com - 2009Awarded by National Marine Manufacturers Association
e!nnovate’s Technical Knock-Out Award - 2005Awarded by e!nnovate, WE Energies and The Business Journal
www.arinet.com
Channel Blade Acquisition
• #1 in OEM and dealer websites for marine industry– ~75 manufacturers– 1,600+ dealer locations – 4,400+ end users
• Products Include:– Footsteps – CRM and Lead Generation Platform– E-Pro 1 – Dealer Website Platform– E-Pro 2 – OEM Website Platform
• Historic Results– 5.8M leads managed for CBT dealers since inception– $189B retail sales by CBT dealers since inception
www.arinet.com
PSOG Acquisition
• Outsourced F&I Services• Potential long-term opportunity for ARI
– 52% of 2.8M Powersports units sold each year financed at dealership– About 50% of dealerships do not have an in-house F&I professional– Profit-sharing business model – dealer pays only if program is successful
www.arinet.com
ARI Network Services, Inc.Annual Shareholders’ Meeting
State of the Business Presentation
1. ARI Basics + Update on Recent Changes2. Financial Results 3. Report Card4. Strategy Overview and Outlook
www.arinet.com
FY09 vs. FY08
• Revenue up 4% in a down economy
• Additional costs due to April acquisitions
• Operating income held steady
Statement of Income(dollars in thousands, except per share data)
FY 2009 FY 2008 YOY
Revenue 17,637$ 16,917$ 4.3%
Operating income 767 821 (55)$
Operating margin 4.3% 4.9% -0.6 pps
Pretax income 547 793 (247)$
Pretax profit margin 3.1% 4.7% -1.6 pps
Net income (1) (2) 424 1,383 (959)$
Profit margin 2.4% 8.2% -5.8 pps
EBITDA (1) 2,739 2,386 353$
EBITDA margin 15.5% 14.1% +1.4 pps
Earnings per shareBasic 0.06$ 0.21$ (0.15)$ Diluted 0.06$ 0.20$ (0.14)$
www.arinet.com
Q1-2010 vs. Q1-2009
• Revenue up 31% in a down economy
- Marketing services up 3x - acquisition + internal growth
- Additional costs due to integrating April acquisitions
• Operating income up 16%
Statement of Income(dollars in thousands, except per share data)
FY 2010 FY 2009Actual Actual YOY
Revenue 5,470$ 4,169$ 31.2%
Operating income 339 291 49$
Operating margin 6.2% 7.0% -0.8 pps
Net income 162 256 (94)$
Profit margin 3.0% 6.1% -3.1 pps
EBITDA 963 728 235$
EBITDA margin 17.6% 17.5% +0.1 pps
Earnings per shareBasic 0.02$ 0.04$ (0.02)$ Diluted 0.02$ 0.04$ (0.02)$
www.arinet.com
Financial Results: Revenue Growth
FY2005 FY2006 FY2007 FY2008 FY2009 Q1-2010
$13.7M $14.0M $15.4M $16.9M $17.6M $5.5TTM = $18.9M
FY2009: Revenue growth continued10% Compounded Annual Growth Rate
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
$16.0
$18.0
$20.0
FY2005 FY2006 FY2007 FY2008 FY2009 Q1-2010
Revenue in millions
www.arinet.com
Financial Results: Operating Income
6th Profitable Year in a Row
FY2005 FY2006 FY2007 FY2008 FY2009 Q1-2010
$2.1M $2.1M $0.2M $0.8M $0.8M $0.3MTTM = $0.8M
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
2005 2006 2007 2008 2009 Q1-2010
Fiscal Year
Operating Income
www.arinet.com
Financial Results: EBITDA
FY2005 FY2006 FY2007 FY2008 FY2009 Q1-2010
$3.0M $3.2M $1.7M $2.4M $2.7M $1.0
TTM = $3.0M
EBITDA
* A reconciliation of EBITDA to net income is posted on our website, www.arinet.com, under “Company/Investors”
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
2005 2006 2007 2008 2009 Q1-2010
Fiscal Year
EBITDA
www.arinet.com
Financial Results: Net Income
FY2005 FY2006 FY2007 FY2008 FY2009 Q1-2010
$2.8M $3.2M $0.1M $1.4M $424K $162K
TTM = $330K
Net Income
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
2005 2006 2007 2008 2009 Q1-2010
Fiscal Year
Net Income
www.arinet.com
ARI Network Services, Inc.Annual Shareholders’ Meeting
State of the Business Presentation
1. ARI Basics + Update on Recent Changes2. Financial Results 3. Report Card4. Strategy Overview and Outlook
www.arinet.com
Valuation
$7 million Market Capitalization; 19.6 P-E Ratio; $12 million Enterprise value: 4.1 multiple of TTM EBITDA
Price as of December 15, 2009, Net Income & EBITDA as of October 31, 2009
1 Year % Change
-40%
-20%
0%
20%
40%
60%
80%
100%
12/15/2008 3/16/2009 6/15/2009 9/14/2009 12/14/2009
ARIS
NASDAQ
DOW
Closing Prices
Dec 15, 2008
Dec 15, 2009 % Change
ARIS $0.65 $0.90 38%
NASDAQ $1,508.34 $2,201.05 46%
DOW $8,564.53 $10,452.00 22%
www.arinet.com
FY09 Report Card
Key Initiatives for Last Year (FY09)
1. Simplify Business
2. Target our Development Efforts
3. Move the ARI Culture Forward
4. Product Road Maps
5. Improve Internal Processes
6. Define Sales Strategy
7. Acquisitions
8. Organic Revenue Initiatives
www.arinet.com
Key Initiatives Progress
1. Simplify Business:• Outsourced CD Processing• Outsourced Manual Data Conversion• Consolidation of Publishing & Development• Organizational Structure – Clear lines of Reporting
2. Target our Development Efforts :• Clarified Development Team’s Focus
– Four Teams: » ARI Products» Professional Services» Website Development» Application Development Support (Temp)
www.arinet.com
Key Initiatives Progress
3. Move the ARI Culture Forward :• Vision and Values (PRIDE)
• Senior Leadership and Director Level
• Creating a Culture of Accountability
• Invested in People & Training
• Headquarters Move
• Renewed Excitement
• Contemporary “feel”
• Focus on Innovation (New Products)
www.arinet.com
Key Initiatives Progress
4. Product Road Maps : • Product Steering Committee
– Narrow/Deep Focus on current Verticals– Must help ARI customers move Products/Services
• Product Management Team Formed
• Launched New Product Development Process
• Launched Two New Products– PartStream– Search Engine Smart
www.arinet.com
Key Initiatives Progress
5. Improve Internal Processes : • New Product Steering Committee
• New departmental budgeting process and accountability
• Agile development process
• Improved Order Processing
www.arinet.com
Key Initiatives Progress
6. Sales Strategy : • Deployed New Sales Structure and Process
• Account Manager Implementation
• Dedicated Catalog Sales Team
• Vertical Focus on Marine with Channel Blade Team
• More Markets
• Narrow/Deep Industry Focus
• 18% NCV Growth over FY08
www.arinet.com
Key Initiatives Progress
7. Acquisitions: • Integrated Info Access Acquisition
• Acquired and began integration of Channel Blade
• Acquired F&I Business
www.arinet.com
Key Initiatives Progress
8 FY09 Revenue Initiatives
• 4 out of the 8 Initiatives generated the following results:
– $1.2M in NCV in FY09
– $515K in Revenue in FY09
• Resulting in additional focus on Organic Revenue Initiatives for FY10
www.arinet.com
ARI Network Services, Inc.Annual Shareholders’ Meeting
State of the Business Presentation
1. ARI Basics + Update on Recent Changes2. Financial Results 3. Report Card4. Strategy Overview and Outlook
www.arinet.com
Strategy Summary
Short Term (2010): Growth Initiatives
• Focus on organic growth initiatives to drive incremental growth
• Integrate Channel Blade acquisition (Cross sell)
• Develop F&I business• Refine organization and
processes
Medium Term (2010-11): New products, markets
• Evaluate and enter new markets
• Continue to develop new products and product extensions
• Add additional acquisitions where they make sense to expand customer base, vertical markets, and/or product categories
Long Term (2011+):
• Drive sustained long-term earnings growth from prior phases
• Execute and deliver new revenue categories
• Leverage additional capital capacity
www.arinet.com
FY10 Key Performance Indicators
• Achieve Sales Objectives– Increased Team Activity/Productivity– Cross Sell Channel Blade/ARI Products– Add new Customers
• Products– Execute on Product Road Maps– Create scalable “global” platforms
• Hire/Retain the Best People– Continue to invest in Training/Skill Development– Focus on recruiting leadership excellence at all levels
• Customer Retention– Improve Customer Service/Satisfaction– Improve IT Infrastructure– Improved Average Revenue per Customer
• Cost Control– Complete Acquisition Integration plan– Drive down overall cost structure
www.arinet.com
Q & AQ & A
www.arinet.com
Thank You!Thank You!