GAAP Revenues Rise 1%; Adjusted Revenues
Rise 3%, 6% on a Constant Currency Basis GAAP
Net Earnings Increase 61%; Adjusted Net Earnings Increase
23% Fiscal 2016 Forecast is in-line with
Prior Forecast Despite Certain Items Anticipated in Second Half;
Adjusted Revenues to Rise 4% to 5% and Adjusted Net Earnings to
Grow Approximately 23%
CDK Global, Inc. (Nasdaq:CDK) today announced its second quarter
fiscal 2016 financial results and updated its outlook for fiscal
2016. Highlights are below:
Second Quarter Fiscal 2016
Results |
|
As
Reported |
|
As Adjusted |
|
Revenues |
|
up 1% to $520.1 million |
|
up 3% to $520.1 million |
|
Earnings before income taxes |
|
up 39% to $106.8 million |
|
up 21% to $111.1 million |
|
Net earnings attributable to CDK |
|
up 61% to $68.2 million |
|
up 23% to $70.0 million |
|
Diluted net earnings attributable to CDK per
share |
|
up 65% to $0.43 per share |
|
up 26% to $0.44 per share |
|
EBITDA margin |
|
n/m |
|
up 290 bps to 27.3% |
|
|
|
|
|
|
“I am pleased with CDK’s results for the quarter
which exceeded our expectations,” said Steve Anenen, chief
executive officer, CDK. “We realized certain benefits from our
business transformation plan sooner than anticipated and are on
track to deliver against our transformation targets for the year.
We continue to focus on operational excellence and putting our
dealers at the center of everything we do.”
“We announced a $1 billion return of capital
plan during the quarter and entered into an accelerated share
repurchase agreement (ASR). Additionally, we increased the
quarterly cash dividend as part of our commitment to return cash to
our shareholders,” said Al Nietzel, chief financial officer,
CDK.
Discussion of Results
Growth in both revenues and earnings before
income taxes for the quarter was negatively impacted 3 percentage
points by unfavorable foreign exchange rates in the “As Adjusted”
results above. Fiscal 2016 results have been adjusted to exclude
costs related to the business transformation plan and a net gain
associated with an indemnification receivable. Fiscal 2015 results
have been adjusted for certain non-GAAP items for comparability to
fiscal 2016. Please refer to the tables at the end of this release
for a reconciliation of the "As Reported" results to the "As
Adjusted" results. All comparisons throughout the remainder of this
release are on an "As Adjusted" basis.
Automotive Retail North America
Automotive Retail North America revenues grew 5%
for the second quarter, 4% organically, and 7% on a constant
currency basis compared to last year’s second quarter. Pretax
earnings increased 20%, or 22% on a constant currency basis. Pretax
margin expanded 400 basis points primarily due to scale from
increased revenues and operating efficiencies driven by execution
of the business transformation plan resulting in lower
labor-related costs. The pretax margin also benefited from a
reserve established in last year’s second quarter for a
vendor-related obligation that was released in this year’s first
quarter. These benefits were partially offset by increased hosting
costs in the quarter.
Automotive Retail International
Automotive Retail International revenues
declined 5% entirely due to unfavorable foreign exchange rates
compared to last year’s second quarter. On a constant
currency basis, revenues grew 5%. Pretax earnings increased 3% for
the second quarter, or 14% on a constant currency basis. Pretax
margin expanded 160 basis points primarily due to scale from
increased revenues and from execution of the business
transformation plan, partially offset by an accrual true-up that
benefited last year’s second quarter.
Digital Marketing
Digital Marketing revenues grew 2% for the
second quarter, 3% on a constant currency basis compared to last
year’s second quarter. The quarter continued to be impacted by a
lower client website count of 12% compared with a year ago. Pretax
earnings increased 4%, or 7% on a constant currency basis. Pretax
margin expanded 10 basis points due to increased operating
efficiencies from the business transformation plan resulting in
lower labor-related costs. These benefits were partially offset by
a higher mix of lower margin advertising revenues versus
subscription-based website revenues in the quarter as well as
increased hosting costs.
Addition to CDK Leadership Team
Dan Flynn has joined the CDK leadership team as
Corporate Vice President of Business Transformation, reporting to
Brian MacDonald, president and member of CDK’s Board of Directors.
Dan comes to CDK from Hertz Corporation where he led company-wide,
Lean Six Sigma-based process improvement initiatives and will have
responsibility for leading the execution of CDK’s business
transformation plan. Dan will work closely with the CDK
leadership team to operationalize our global workstream
efforts.
Mr. MacDonald said, "I am very pleased to have
Dan join the CDK leadership team. Dan has considerable process and
operational experience and has achieved much success in leading
projects similar to our transformation plan. Having attained his
Six Sigma Green Belt certification, Dan is well-equipped to lead
CDK’s business transformation plan to simplify and streamline our
processes.”
Fiscal 2016 Forecast
We anticipate a year-over-year negative impact
to earnings and margins during the second half of fiscal 2016 due
to:
- Expenses relating to the CEO transition plan which are expected
to total $9 to $10 million, with $8 to $9 million to be recorded in
the third quarter.
- Anticipate negative impact to growth in earnings before income
taxes of approximately 10 and 3 percentage points, respectively,
for the third quarter and full year
- Same impacts are anticipated to net earnings growth in the
third quarter and full year
- Anticipate negative impact to pretax margin of 150 to 170 basis
points for the third quarter, and 40 to 50 basis points for the
full year
- Anticipate negative impact to EBITDA margin of 80 to 90 basis
points for the third quarter, and 20 to 30 basis points for the
full year
- Higher than anticipated negative impact from fluctuations in
foreign exchange rates. Current estimates for fiscal 2016 are
below:
- Impact to revenues of $40 to $50 million, or 2 to 3 percentage
points, for the full year
- Impact to earnings before income taxes of approximately $12
million, or 3 percentage points for the full year
- Increased interest expense from the term loan entered into in
December 2015 to fund the ASR.
- Anticipate negative impact of approximately $0.01 of earnings
per share attributable to CDK for the full year due to
approximately $3 million of additional interest expense
Partially
offsetting the impact of the above items to earnings per share
is:
- The execution of the ASR agreement which resulted in an initial
delivery of 4.3 million shares to CDK during the second quarter.
This is anticipated to contribute approximately $0.02 of earnings
per share attributable to CDK for the full year, with a $0.01 per
share contribution in both the third and fourth quarters. We
anticipate settlement of the remaining shares of the ASR in the
fourth quarter.
The forecast continues to include additional
EBITDA of $45 million attributable to the execution of our business
transformation plan, of which about $30 million is anticipated in
the second half of the fiscal year.
The fiscal 2016 growth forecasts below are
in-line with our prior forecasts despite the items noted above.
Fiscal 2016 results have been adjusted to exclude costs related to
the business transformation plan and a net gain associated with an
indemnification receivable. Fiscal 2015 results were adjusted for
certain non-GAAP items for comparability to fiscal 2016 as shown in
our fiscal 2015 year-end earnings press release and presented at
the end of this release. On this adjusted basis, the forecast is as
follows:
- Revenues – we anticipate 4% to 5% growth from $2,017.3 million
in fiscal 2015
- Earnings before income taxes – we anticipate approximately 25%
growth from the $333.3 million in fiscal 2015
- Pretax margin – we anticipate at least 300 basis points of
expansion from the 16.5% in fiscal 2015
- EBITDA margin – we anticipate at least 300 basis points of
expansion from the 22.9% in fiscal 2015
- Net earnings attributable to CDK – we anticipate approximately
23% growth from the $210.5 million in fiscal 2015
- Diluted net earnings attributable to CDK per share – we
anticipate over 25% growth from the $1.30 in fiscal 2015
Effective Tax Rate
There is no change to CDK's anticipated adjusted
effective tax rate for fiscal 2016 of 35.5% to 36.0% compared with
34.5% in fiscal 2015. The fiscal 2015 adjusted effective tax rate
excludes the impact of separation costs which were primarily
non-deductible and the $4.6 million increase to income tax expense
related to the tax law change for bonus depreciation. The fiscal
2015 adjusted effective tax rate is lower than the anticipated
fiscal 2016 effective tax rate due to a non-recurring tax benefit
in the first quarter of fiscal 2015 associated with a valuation
allowance adjustment.
Separation from ADP
CDK began operating as a public company on
October 1, 2014 following its spin-off from ADP on September 30,
2014.
Website Schedules
Other financial information, including financial
statements and supplementary schedules presented on an “As
Reported” and “As Adjusted” basis, and the schedule of quarterly
revenues and pretax earnings by reportable segment have been
updated for the second quarter of fiscal 2016 and will be posted to
the CDK Investor Relations website, http://investors.cdkglobal.com,
in the “Financial Information” section.
Webcast and Conference Call
An analyst conference call will be held today,
Wednesday, February 3, 2016 at 7:30 a.m. CT. A live webcast of the
call will be available on a listen-only basis. To listen to the
webcast go to CDK’s Investor Relations website,
http://investors.cdkglobal.com, and click on the webcast icon. A
presentation will be available to download and print about 60
minutes before the webcast at the CDK Investor Relations website at
http://investors.cdkglobal.com. CDK’s financial news releases,
current financial information, SEC filings and Investor Relations
presentations are accessible at the same website.
About CDK Global
With more than $2 billion in revenues,
CDK Global is a leading global provider of integrated
information technology and digital marketing solutions to the
automotive retail industry and adjacencies. CDK Global provides
solutions in more than 100 countries around the world, serving more
than 27,000 retail locations and most automotive
manufacturers. CDK Global’s solutions automate and integrate
critical workflow processes from pre-sale targeted advertising and
marketing campaigns to the sale, financing, insurance, parts
supply, repair and maintenance of vehicles, with an increasing
focus on utilizing data analytics and predictive
intelligence. Visit cdkglobal.com.
CDK Global, Inc. |
Consolidated and Combined Statements of
Operations |
(In millions, except per share amounts) |
(Unaudited) |
|
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Revenues |
$ |
520.1 |
|
|
$ |
517.0 |
|
|
|
$ |
1,034.7 |
|
|
$ |
1,034.0 |
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
Cost of revenues |
301.2 |
|
|
323.3 |
|
|
612.0 |
|
|
634.8 |
|
Selling, general and administrative
expenses |
105.8 |
|
|
105.9 |
|
|
203.2 |
|
|
216.4 |
|
Restructuring expenses |
1.8 |
|
|
— |
|
|
3.7 |
|
|
— |
|
Separation costs |
— |
|
|
3.3 |
|
|
— |
|
|
34.0 |
|
Total
expenses |
408.8 |
|
|
432.5 |
|
|
818.9 |
|
|
885.2 |
|
|
|
|
|
|
|
|
|
Operating earnings |
111.3 |
|
|
84.5 |
|
|
215.8 |
|
|
148.8 |
|
|
|
|
|
|
|
|
|
Interest expense |
(9.5 |
) |
|
(9.0 |
) |
|
(18.8 |
) |
|
(10.1 |
) |
Other income, net |
5.0 |
|
|
1.6 |
|
|
5.6 |
|
|
2.9 |
|
|
|
|
|
|
|
|
|
Earnings before income
taxes |
106.8 |
|
|
77.1 |
|
|
202.6 |
|
|
141.6 |
|
|
|
|
|
|
|
|
|
Provision for income taxes |
(37.1 |
) |
|
(32.7 |
) |
|
(71.7 |
) |
|
(56.2 |
) |
|
|
|
|
|
|
|
|
Net earnings |
69.7 |
|
|
44.4 |
|
|
130.9 |
|
|
85.4 |
|
Less: net earnings
attributable to noncontrolling interest |
1.5 |
|
|
2.0 |
|
|
3.7 |
|
|
4.0 |
|
Net earnings
attributable to CDK |
$ |
68.2 |
|
|
$ |
42.4 |
|
|
|
$ |
127.2 |
|
|
$ |
81.4 |
|
|
|
|
|
|
|
|
|
Net earnings
attributable to CDK per common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.43 |
|
|
$ |
0.26 |
|
|
|
$ |
0.80 |
|
|
$ |
0.51 |
|
Diluted |
$ |
0.43 |
|
|
$ |
0.26 |
|
|
|
$ |
0.80 |
|
|
$ |
0.50 |
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding: |
|
|
|
|
|
|
|
Basic |
158.7 |
|
(a) |
160.7 |
|
|
158.9 |
|
(a) |
160.7 |
|
Diluted |
159.7 |
|
(a) |
161.8 |
|
|
160.0 |
|
(a) |
161.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The weighted-average common shares outstanding for the three
and six months ended December 31, 2015 reflect a reduction of 1.0
million shares that were inadvertently issued and distributed at
the spin-off to ADP with respect to certain unvested ADP equity
awards. For additional information on this matter, refer to Note 1
- Basis of Presentation in our unaudited condensed consolidated and
combined financial statements for the quarterly period ended
September 30, 2015 filed on Form 10-Q.
CDK Global, Inc. |
Consolidated Balance Sheets |
(In millions) |
(Unaudited) |
|
|
December 31, |
|
June 30, |
|
2015 |
|
2015 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
347.5 |
|
|
$ |
408.2 |
|
Accounts receivable, net of
allowances |
378.9 |
|
|
314.6 |
|
Other current assets |
190.7 |
|
|
162.4 |
|
Total
current assets |
917.1 |
|
|
885.2 |
|
|
|
|
|
Property, plant and
equipment, net |
101.4 |
|
|
100.0 |
|
Other assets |
223.3 |
|
|
224.1 |
|
Goodwill |
1,187.3 |
|
|
1,209.9 |
|
Intangible assets,
net |
86.9 |
|
|
99.3 |
|
Total
assets |
$ |
2,516.0 |
|
|
$ |
2,518.5 |
|
|
|
|
|
Liabilities and
Equity |
|
|
|
Current
liabilities: |
|
|
|
Current maturities of long-term
debt and capital lease obligations |
$ |
26.4 |
|
|
$ |
13.0 |
|
Accounts payable |
13.4 |
|
|
21.7 |
|
Accrued expenses and other current
liabilities |
159.2 |
|
|
154.4 |
|
Accrued payroll and payroll-related
expenses |
71.0 |
|
|
123.2 |
|
Short-term deferred revenues |
173.4 |
|
|
186.1 |
|
Total
current liabilities |
443.4 |
|
|
498.4 |
|
|
|
|
|
Long-term debt and
capital lease obligations |
1,202.2 |
|
|
971.1 |
|
Long-term deferred
revenues |
157.7 |
|
|
162.9 |
|
Deferred income
taxes |
71.8 |
|
|
58.2 |
|
Other liabilities |
45.1 |
|
|
43.8 |
|
Total
liabilities |
1,920.2 |
|
|
1,734.4 |
|
|
|
|
|
Equity: |
|
|
|
Preferred stock |
— |
|
|
— |
|
Common stock |
1.6 |
|
|
1.6 |
|
Additional paid-in-capital |
629.6 |
|
|
686.5 |
|
Retained earnings |
167.8 |
|
|
81.2 |
|
Treasury stock, at cost |
(240.6 |
) |
|
(50.7 |
) |
Accumulated other comprehensive
income |
19.8 |
|
|
51.6 |
|
Total CDK
stockholders' equity |
578.2 |
|
|
770.2 |
|
Noncontrolling
interest |
17.6 |
|
|
13.9 |
|
Total
equity |
595.8 |
|
|
784.1 |
|
Total
liabilities and equity |
$ |
2,516.0 |
|
|
$ |
2,518.5 |
|
|
CDK Global, Inc.Segment Financial
Data(In millions)(Unaudited)
During the three months ended September 30, 2015, the Company
began to report segment revenues and earnings before income taxes
using actual foreign exchange rates. Previously, the Company's
revenues and earnings before income taxes for each segment were
adjusted to reflect budgeted foreign exchange rates, which resulted
in reconciling items for foreign exchange so as to present segment
results on a consistent basis without the impact of fluctuations in
foreign currency exchange rates. Segment information for the three
and six months ended December 31, 2014 has been updated to
conform to the new presentation and the effect of foreign exchange
now resides within reportable segment revenues and earnings before
income taxes.
|
Adjusted Segment Revenues |
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
December 31, |
|
Change |
|
Constant Currency |
|
December 31, |
|
Change |
|
Constant Currency |
|
2015 |
|
2014 |
|
$ |
|
% |
|
% |
|
2015 |
|
2014 |
|
$ |
|
% |
|
% |
Automotive Retail North
America (a) |
$ |
333.6 |
|
|
$ |
316.3 |
|
|
$ |
17.3 |
|
|
5 |
% |
|
7 |
% |
|
$ |
665.8 |
|
|
$ |
629.9 |
|
|
$ |
35.9 |
|
|
6 |
% |
|
7 |
% |
Automotive Retail
International (b) |
78.8 |
|
|
82.9 |
|
|
(4.1 |
) |
|
(5 |
)% |
|
5 |
% |
|
157.0 |
|
|
168.6 |
|
|
(11.6 |
) |
|
(7 |
)% |
|
4 |
% |
Digital Marketing
(c) |
107.7 |
|
|
105.1 |
|
|
2.6 |
|
|
2 |
% |
|
3 |
% |
|
211.9 |
|
|
208.7 |
|
|
3.2 |
|
|
2 |
% |
|
2 |
% |
Total |
$ |
520.1 |
|
|
$ |
504.3 |
|
|
$ |
15.8 |
|
|
3 |
% |
|
6 |
% |
|
$ |
1,034.7 |
|
|
$ |
1,007.2 |
|
|
$ |
27.5 |
|
|
3 |
% |
|
6 |
% |
|
Adjusted Segment Earnings before Income
Taxes |
|
|
|
Three Months Ended |
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
December 31, |
|
Change |
|
Constant Currency |
|
December 31, |
|
Change |
|
Constant Currency |
|
2015 |
|
2014 |
|
$ |
|
% |
|
% |
|
2015 |
|
2014 |
|
$ |
|
% |
|
% |
Automotive Retail North
America (a) |
$ |
109.7 |
|
|
$ |
91.3 |
|
|
$ |
18.4 |
|
|
20 |
% |
|
22 |
% |
|
$ |
212.1 |
|
|
$ |
182.7 |
|
|
$ |
29.4 |
|
|
16 |
% |
|
18 |
% |
Margin |
32.9 |
% |
|
28.9 |
% |
|
|
400 bps |
|
|
|
|
|
|
|
31.9 |
% |
|
29.0 |
% |
|
|
290
bps |
|
|
|
|
|
|
Automotive Retail
International (b) |
15.9 |
|
|
15.4 |
|
|
0.5 |
|
|
3 |
% |
|
14 |
% |
|
30.1 |
|
|
28.0 |
|
|
2.1 |
|
|
8 |
% |
|
19 |
% |
Margin |
20.2 |
% |
|
18.6 |
% |
|
|
160 bps |
|
|
|
|
|
|
|
19.2 |
% |
|
16.6 |
% |
|
|
260
bps |
|
|
|
|
|
|
Digital Marketing
(c) |
11.6 |
|
|
11.2 |
|
|
0.4 |
|
|
4 |
% |
|
7 |
% |
|
22.1 |
|
|
19.3 |
|
|
2.8 |
|
|
15 |
% |
|
18 |
% |
Margin |
10.8 |
% |
|
10.7 |
% |
|
|
10
bps |
|
|
|
|
|
|
|
10.4 |
% |
|
9.2 |
% |
|
|
120 bps |
|
|
|
|
|
|
Other (d) |
(26.1 |
) |
|
(25.8 |
) |
|
(0.3 |
) |
|
1 |
% |
|
2 |
% |
|
(53.8 |
) |
|
(56.9 |
) |
|
3.1 |
|
|
(5 |
)% |
|
(5 |
)% |
Total |
$ |
111.1 |
|
|
$ |
92.1 |
|
|
$ |
19.0 |
|
|
21 |
% |
|
24 |
% |
|
$ |
210.5 |
|
|
$ |
173.1 |
|
|
$ |
37.4 |
|
|
22 |
% |
|
26 |
% |
Margin |
21.4 |
% |
|
18.3 |
% |
|
|
310
bps |
|
|
|
|
|
|
|
20.3 |
% |
|
17.2 |
% |
|
|
310 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The table below presents a reconciliation of revenues to
adjusted revenues and earnings before income taxes to adjusted
earnings before income taxes for the Automotive Retail North
America (ARNA) segment and includes the constant currency effect of
adjusted revenues and adjusted earnings before income taxes.
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Revenues |
$ |
333.6 |
|
|
$ |
329.0 |
|
|
$ |
665.8 |
|
|
$ |
656.7 |
|
Internet sales leads revenues |
— |
|
|
(12.7 |
) |
|
— |
|
|
(26.8 |
) |
Adjusted
revenues (e) |
$ |
333.6 |
|
|
$ |
316.3 |
|
|
$ |
665.8 |
|
|
$ |
629.9 |
|
Impact of exchange rates |
3.9 |
|
|
— |
|
|
8.3 |
|
|
— |
|
Constant currency
adjusted revenues (e) |
$ |
337.5 |
|
|
$ |
316.3 |
|
|
$ |
674.1 |
|
|
$ |
629.9 |
|
|
|
|
|
|
|
|
|
Earnings before
income taxes |
$ |
109.7 |
|
|
$ |
91.8 |
|
|
$ |
212.1 |
|
|
$ |
186.3 |
|
Stand-alone public company
costs |
— |
|
|
— |
|
|
— |
|
|
(2.1 |
) |
Internet sales leads earnings |
— |
|
|
(0.5 |
) |
|
— |
|
|
(1.5 |
) |
Adjusted
earnings before income taxes (e) |
$ |
109.7 |
|
|
$ |
91.3 |
|
|
$ |
212.1 |
|
|
$ |
182.7 |
|
Impact of exchange rates |
1.5 |
|
|
— |
|
|
3.3 |
|
|
— |
|
Constant currency
adjusted earnings before income taxes (e) |
$ |
111.2 |
|
|
$ |
91.3 |
|
|
$ |
215.4 |
|
|
$ |
182.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) The table below presents a reconciliation of revenues and
earnings before income taxes for the Automotive Retail
International (ARI) segment on a constant currency basis.
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Revenues |
$ |
78.8 |
|
|
$ |
82.9 |
|
|
$ |
157.0 |
|
|
$ |
168.6 |
|
Impact of exchange rates |
8.2 |
|
|
— |
|
|
19.0 |
|
|
— |
|
Constant currency
revenues (e) |
$ |
87.0 |
|
|
$ |
82.9 |
|
|
$ |
176.0 |
|
|
$ |
168.6 |
|
|
|
|
|
|
|
|
|
Earnings before
income taxes |
$ |
15.9 |
|
|
$ |
15.4 |
|
|
$ |
30.1 |
|
|
$ |
28.0 |
|
Impact of exchange rates |
1.6 |
|
|
— |
|
|
3.2 |
|
|
— |
|
Constant currency
earnings before income taxes (e) |
$ |
17.5 |
|
|
$ |
15.4 |
|
|
$ |
33.3 |
|
|
$ |
28.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c) The table below presents a reconciliation of earnings (loss)
before income taxes to adjusted earnings before income taxes for
the Digital Marketing (DM) segment and includes the constant
currency effect of revenues and adjusted earnings before income
taxes.
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Revenues |
$ |
107.7 |
|
|
$ |
105.1 |
|
|
$ |
211.9 |
|
|
$ |
208.7 |
|
Impact of exchange rates |
0.4 |
|
|
— |
|
|
0.9 |
|
|
— |
|
Constant currency
revenues (e) |
$ |
108.1 |
|
|
$ |
105.1 |
|
|
$ |
212.8 |
|
|
$ |
208.7 |
|
|
|
|
|
|
|
|
|
Earnings (loss)
before income taxes |
$ |
11.6 |
|
|
$ |
(4.4 |
) |
|
$ |
22.1 |
|
|
$ |
3.7 |
|
Accelerated trademark
amortization |
— |
|
|
15.6 |
|
|
— |
|
|
15.6 |
|
Adjusted
earnings before income taxes (e) |
$ |
11.6 |
|
|
$ |
11.2 |
|
|
$ |
22.1 |
|
|
$ |
19.3 |
|
Impact of exchange rates |
0.4 |
|
|
— |
|
|
0.6 |
|
|
— |
|
Constant currency
adjusted earnings before income taxes (e) |
$ |
12.0 |
|
|
$ |
11.2 |
|
|
$ |
22.7 |
|
|
$ |
19.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) The table below presents a reconciliation of loss before
income taxes to adjusted loss before income taxes for the Other
segment and includes the constant currency effect of adjusted
earnings before income taxes.
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
2015 |
|
2014 |
|
2015 |
|
2014 |
Loss before
income taxes |
$ |
(30.4 |
) |
|
$ |
(25.7 |
) |
|
$ |
(61.7 |
) |
|
$ |
(76.4 |
) |
Separation costs |
— |
|
|
3.3 |
|
|
— |
|
|
34.0 |
|
Stand-alone public company
costs |
— |
|
|
(3.4 |
) |
|
— |
|
|
(11.6 |
) |
Trademark royalty fee |
— |
|
|
— |
|
|
— |
|
|
5.7 |
|
Stock-based compensation |
— |
|
|
— |
|
|
— |
|
|
(0.4 |
) |
Interest expense |
— |
|
|
— |
|
|
— |
|
|
(8.2 |
) |
Restructuring expenses |
1.8 |
|
|
— |
|
|
3.7 |
|
|
— |
|
Other business transformation
expenses |
5.1 |
|
|
— |
|
|
6.8 |
|
|
— |
|
Tax matters indemnification gain,
net |
(2.6 |
) |
|
— |
|
|
(2.6 |
) |
|
— |
|
Adjusted loss
before income taxes (e) |
$ |
(26.1 |
) |
|
$ |
(25.8 |
) |
|
$ |
(53.8 |
) |
|
$ |
(56.9 |
) |
Impact of exchange rates |
(0.1 |
) |
|
— |
|
|
— |
|
|
— |
|
Constant currency
adjusted earnings before income taxes (e) |
$ |
(26.2 |
) |
|
$ |
(25.8 |
) |
|
$ |
(53.8 |
) |
|
$ |
(56.9 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) Refer to the Non-GAAP Financial Measures section of this
earnings release for additional information on our non-GAAP
adjustments.
CDK Global, Inc.Consolidated and
Combined Adjusted Financial Information(In
millions)(Unaudited)
|
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
Change |
|
December 31, |
|
Change |
|
2015 |
|
2014 |
|
$ |
|
% |
|
2015 |
|
2014 |
|
$ |
|
% |
Revenues |
$ |
520.1 |
|
|
$ |
517.0 |
|
|
$ |
3.1 |
|
|
1 |
% |
|
$ |
1,034.7 |
|
|
$ |
1,034.0 |
|
|
$ |
0.7 |
|
|
— |
% |
Internet sales leads revenues |
— |
|
|
(12.7 |
) |
|
|
|
|
|
|
— |
|
|
(26.8 |
) |
|
|
|
|
|
Adjusted
revenues (a) |
$ |
520.1 |
|
|
$ |
504.3 |
|
|
$ |
15.8 |
|
|
3 |
% |
|
$ |
1,034.7 |
|
|
$ |
1,007.2 |
|
|
$ |
27.5 |
|
|
3 |
% |
Impact of exchange rates |
12.5 |
|
|
— |
|
|
|
|
|
|
|
28.2 |
|
|
— |
|
|
|
|
|
|
Constant currency
adjusted revenues (a) |
$ |
532.6 |
|
|
$ |
504.3 |
|
|
$ |
28.3 |
|
|
6 |
% |
|
1,062.9 |
|
|
1,007.2 |
|
|
$ |
55.7 |
|
|
6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes |
$ |
106.8 |
|
|
$ |
77.1 |
|
|
$ |
29.7 |
|
|
39 |
% |
|
$ |
202.6 |
|
|
$ |
141.6 |
|
|
$ |
61.0 |
|
|
43 |
% |
Separation costs |
— |
|
|
3.3 |
|
|
|
|
|
|
— |
|
|
34.0 |
|
|
|
|
|
Accelerated trademark
amortization |
— |
|
|
15.6 |
|
|
|
|
|
|
— |
|
|
15.6 |
|
|
|
|
|
Stand-alone public company
costs |
— |
|
|
(3.4 |
) |
|
|
|
|
|
— |
|
|
(13.7 |
) |
|
|
|
|
Trademark royalty fee |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
5.7 |
|
|
|
|
|
Stock-based compensation |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
(0.4 |
) |
|
|
|
|
Interest expense |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
(8.2 |
) |
|
|
|
|
Restructuring expenses |
1.8 |
|
|
— |
|
|
|
|
|
|
3.7 |
|
|
— |
|
|
|
|
|
Other business transformation
expenses |
5.1 |
|
|
— |
|
|
|
|
|
|
6.8 |
|
|
— |
|
|
|
|
|
Tax matters indemnification gain,
net |
(2.6 |
) |
|
— |
|
|
|
|
|
|
(2.6 |
) |
|
— |
|
|
|
|
|
Internet sales leads earnings |
— |
|
|
(0.5 |
) |
|
|
|
|
|
— |
|
|
(1.5 |
) |
|
|
|
|
Adjusted
earnings before income taxes (a) |
$ |
111.1 |
|
|
$ |
92.1 |
|
|
$ |
19.0 |
|
|
21 |
% |
|
$ |
210.5 |
|
|
$ |
173.1 |
|
|
$ |
37.4 |
|
|
22 |
% |
Adjusted margin % |
21.4 |
% |
|
18.3 |
% |
|
|
310
bps |
|
|
|
|
20.3 |
% |
|
17.2 |
% |
|
|
310
bps |
|
|
|
Impact of exchange rates |
3.4 |
|
|
— |
|
|
|
|
|
|
7.1 |
|
|
— |
|
|
|
|
|
Constant currency
adjusted earnings before income taxes (a) |
$ |
114.5 |
|
|
$ |
92.1 |
|
|
$ |
22.4 |
|
|
24 |
% |
|
$ |
217.6 |
|
|
$ |
173.1 |
|
|
$ |
44.5 |
|
|
26 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
income taxes |
$ |
37.1 |
|
|
$ |
32.7 |
|
|
$ |
4.4 |
|
|
13 |
% |
|
$ |
71.7 |
|
|
$ |
56.2 |
|
|
$ |
15.5 |
|
|
28 |
% |
Income tax effect of pre-tax
adjustments |
2.1 |
|
|
5.0 |
|
|
|
|
|
|
3.3 |
|
|
6.7 |
|
|
|
|
|
Income tax expense due to bonus
depreciation law change |
— |
|
|
(4.6 |
) |
|
|
|
|
|
— |
|
|
(4.6 |
) |
|
|
|
|
Pre spin-off filed tax return
adjustment |
0.4 |
|
|
— |
|
|
|
|
|
|
0.4 |
|
|
— |
|
|
|
|
|
Adjusted
provision for income taxes (a) |
$ |
39.6 |
|
|
$ |
33.1 |
|
|
$ |
6.5 |
|
|
20 |
% |
|
$ |
75.4 |
|
|
$ |
58.3 |
|
|
$ |
17.1 |
|
|
29 |
% |
Adjusted effective tax rate |
35.6 |
% |
|
35.9 |
% |
|
|
|
|
|
35.8 |
% |
|
33.7 |
% |
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
Change |
|
December 31, |
|
Change |
|
2015 |
|
2014 |
|
$ |
|
% |
|
2015 |
|
2014 |
|
$ |
|
% |
Net
earnings |
$ |
69.7 |
|
|
$ |
44.4 |
|
|
$ |
25.3 |
|
|
57 |
% |
|
$ |
130.9 |
|
|
$ |
85.4 |
|
|
$ |
45.5 |
|
|
53 |
% |
Less: net earnings
attributable to noncontrolling interest |
1.5 |
|
|
2.0 |
|
|
|
|
|
|
3.7 |
|
|
4.0 |
|
|
|
|
|
Net earnings
attributable to CDK |
68.2 |
|
|
42.4 |
|
|
25.8 |
|
|
61 |
% |
|
127.2 |
|
|
81.4 |
|
|
45.8 |
|
|
56 |
% |
Separation costs |
— |
|
|
3.3 |
|
|
|
|
|
|
— |
|
|
34.0 |
|
|
|
|
|
Accelerated trademark
amortization |
— |
|
|
15.6 |
|
|
|
|
|
|
— |
|
|
15.6 |
|
|
|
|
|
Stand-alone public company
costs |
— |
|
|
(3.4 |
) |
|
|
|
|
|
— |
|
|
(13.7 |
) |
|
|
|
|
Trademark royalty fee |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
5.7 |
|
|
|
|
|
Stock-based compensation |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
(0.4 |
) |
|
|
|
|
Interest expense |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
(8.2 |
) |
|
|
|
|
Restructuring expenses |
1.8 |
|
|
— |
|
|
|
|
|
|
3.7 |
|
|
— |
|
|
|
|
|
Other business transformation
expenses |
5.1 |
|
|
— |
|
|
|
|
|
|
6.8 |
|
|
— |
|
|
|
|
|
Tax matters indemnification gain,
net |
(2.6 |
) |
|
— |
|
|
|
|
|
|
(2.6 |
) |
|
— |
|
|
|
|
|
Internet sales leads earnings |
— |
|
|
(0.5 |
) |
|
|
|
|
|
— |
|
|
(1.5 |
) |
|
|
|
|
Income tax effect of pre-tax
adjustments |
(2.1 |
) |
|
(5.0 |
) |
|
|
|
|
|
(3.3 |
) |
|
(6.7 |
) |
|
|
|
|
Income tax expense due to bonus
depreciation law change |
— |
|
|
4.6 |
|
|
|
|
|
|
— |
|
|
4.6 |
|
|
|
|
|
Pre spin-off filed tax return
adjustment |
(0.4 |
) |
|
— |
|
|
|
|
|
|
(0.4 |
) |
|
— |
|
|
|
|
|
Adjusted net
earnings attributable to CDK (a) |
$ |
70.0 |
|
|
$ |
57.0 |
|
|
$ |
13.0 |
|
|
23 |
% |
|
$ |
131.4 |
|
|
$ |
110.8 |
|
|
$ |
20.6 |
|
|
19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings
attributable to CDK per common share (a): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.44 |
|
|
$ |
0.35 |
|
|
|
|
26 |
% |
|
$ |
0.83 |
|
|
$ |
0.69 |
|
|
|
|
20 |
% |
Diluted |
$ |
0.44 |
|
|
$ |
0.35 |
|
|
|
|
26 |
% |
|
$ |
0.82 |
|
|
$ |
0.69 |
|
|
|
|
19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic (b) |
158.7 |
|
|
160.7 |
|
|
|
|
|
|
158.9 |
|
|
160.7 |
|
|
|
|
|
Diluted (b) |
159.7 |
|
|
161.8 |
|
|
|
|
|
|
160.0 |
|
|
161.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes |
$ |
106.8 |
|
|
$ |
77.1 |
|
|
$ |
29.7 |
|
|
39 |
% |
|
$ |
202.6 |
|
|
$ |
141.6 |
|
|
$ |
61.0 |
|
|
43 |
% |
Interest expense |
9.5 |
|
|
9.0 |
|
|
|
|
|
|
18.8 |
|
|
10.1 |
|
|
|
|
|
Depreciation and amortization |
14.7 |
|
|
29.5 |
|
|
|
|
|
|
28.7 |
|
|
43.4 |
|
|
|
|
|
Separation costs |
— |
|
|
3.3 |
|
|
|
|
|
|
— |
|
|
34.0 |
|
|
|
|
|
Stand-alone public company
costs |
— |
|
|
(3.4 |
) |
|
|
|
|
|
— |
|
|
(13.7 |
) |
|
|
|
|
Trademark royalty fee |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
5.7 |
|
|
|
|
|
Total stock-based compensation |
7.0 |
|
|
8.0 |
|
|
|
|
|
|
12.8 |
|
|
13.4 |
|
|
|
|
|
Restructuring expenses |
1.8 |
|
|
— |
|
|
|
|
|
|
3.7 |
|
|
— |
|
|
|
|
|
Other business transformation
expenses |
4.6 |
|
|
— |
|
|
|
|
|
|
6.2 |
|
|
— |
|
|
|
|
|
Tax matters indemnification gain,
net |
(2.6 |
) |
|
— |
|
|
|
|
|
|
(2.6 |
) |
|
— |
|
|
|
|
|
Internet sales leads earnings |
— |
|
|
(0.5 |
) |
|
|
|
|
|
— |
|
|
(1.5 |
) |
|
|
|
|
Adjusted EBITDA
(a) |
$ |
141.8 |
|
|
$ |
123.0 |
|
|
$ |
18.8 |
|
|
15 |
% |
|
$ |
270.2 |
|
|
$ |
233.0 |
|
|
$ |
37.2 |
|
|
16 |
% |
Adjusted margin % |
27.3 |
% |
|
24.4 |
% |
|
|
290
bps |
|
|
|
|
26.1 |
% |
|
23.1 |
% |
|
|
300
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Refer to the Non-GAAP Financial Measures section of this
earnings release for additional information on our non-GAAP
adjustments.
(b) The weighted-average common shares outstanding for the three
and six months ended December 31, 2015 reflect a reduction of 1.0
million shares that were inadvertently issued and distributed at
the spin-off to ADP with respect to certain unvested ADP equity
awards. For additional information on this matter, refer to Note 1
- Basis of Presentation in our unaudited condensed consolidated and
combined financial statements for the quarterly period ended
September 30, 2015 filed on Form 10-Q.
CDK Global, Inc.Consolidated and
Combined Adjusted FY2015 Financial Information and FY2016
Guidance(In millions, except per share
amounts)(Unaudited)
|
(b) |
|
(c) |
|
|
|
|
|
FY2015 |
|
Adjustments |
|
FY2015 |
|
FY2016E |
Revenues |
$ |
2,063.5 |
|
|
$ |
— |
|
|
$ |
2,063.5 |
|
|
|
Internet
sales leads revenues |
(46.2 |
) |
|
— |
|
|
(46.2 |
) |
|
|
Adjusted revenues (a) |
$ |
2,017.3 |
|
|
$ |
— |
|
|
$ |
2,017.3 |
|
|
|
Growth % |
|
|
|
|
|
|
4 - 5% |
|
|
|
|
|
|
|
|
Earnings before income
taxes |
$ |
299.9 |
|
|
$ |
— |
|
|
$ |
299.9 |
|
|
|
Separation costs |
34.6 |
|
|
— |
|
|
34.6 |
|
|
|
Accelerated trademark
amortization |
15.6 |
|
|
— |
|
|
15.6 |
|
|
|
Stand-alone public company
costs |
— |
|
|
(16.8 |
) |
|
(16.8 |
) |
|
|
Trademark royalty fee |
— |
|
|
5.7 |
|
|
5.7 |
|
|
|
Stock-based compensation |
— |
|
|
(0.4 |
) |
|
(0.4 |
) |
|
|
Interest expense |
— |
|
|
(8.2 |
) |
|
(8.2 |
) |
|
|
Restructuring expenses |
2.4 |
|
|
— |
|
|
2.4 |
|
|
|
Other business transformation
expenses |
1.9 |
|
|
— |
|
|
1.9 |
|
|
|
Tax matters indemnification
loss |
1.1 |
|
|
— |
|
|
1.1 |
|
|
|
Internet
sales leads earnings |
(2.5 |
) |
|
— |
|
|
(2.5 |
) |
|
|
Adjusted earnings before income taxes (a) |
$ |
353.0 |
|
|
$ |
(19.7 |
) |
|
$ |
333.3 |
|
|
|
|
|
|
|
|
|
|
|
Growth % |
|
|
|
|
|
|
approximately 25% |
|
|
|
|
|
|
|
|
Adjusted margin % |
17.5 |
% |
|
|
|
16.5 |
% |
|
|
Growth |
|
|
|
|
|
|
at least 300 bps |
|
|
|
|
|
|
|
|
Provision for income
taxes |
$ |
113.6 |
|
|
$ |
— |
|
|
$ |
113.6 |
|
|
|
Income tax effect of pre-tax
adjustments |
14.0 |
|
|
(7.6 |
) |
|
6.4 |
|
|
|
Tax law change - bonus
depreciation |
(4.6 |
) |
|
— |
|
|
(4.6 |
) |
|
|
Pre spin-off filed tax return
adjustment |
(0.5 |
) |
|
— |
|
|
(0.5 |
) |
|
|
Adjusted provision for
income taxes (a) |
$ |
122.5 |
|
|
$ |
(7.6 |
) |
|
$ |
114.9 |
|
|
|
Adjusted effective tax
rate |
34.7 |
% |
|
|
|
34.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
(b) |
|
(c) |
|
|
|
|
|
FY2015 |
|
Adjustments |
|
FY2015 |
|
FY2016E |
Net earnings |
$ |
186.3 |
|
|
$ |
— |
|
|
$ |
186.3 |
|
|
|
Less: net earnings
attributable to noncontrolling interest |
7.9 |
|
|
— |
|
|
7.9 |
|
|
|
Net earnings
attributable to CDK |
178.4 |
|
|
— |
|
|
178.4 |
|
|
|
Separation costs |
34.6 |
|
|
— |
|
|
34.6 |
|
|
|
Accelerated trademark
amortization |
15.6 |
|
|
— |
|
|
15.6 |
|
|
|
Stand-alone public company
costs |
— |
|
|
(16.8 |
) |
|
(16.8 |
) |
|
|
Trademark royalty fee |
— |
|
|
5.7 |
|
|
5.7 |
|
|
|
Stock-based compensation |
— |
|
|
(0.4 |
) |
|
(0.4 |
) |
|
|
Interest expense |
— |
|
|
(8.2 |
) |
|
(8.2 |
) |
|
|
Restructuring expenses |
2.4 |
|
|
— |
|
|
2.4 |
|
|
|
Other business transformation
expenses |
1.9 |
|
|
— |
|
|
1.9 |
|
|
|
Tax matters indemnification
loss |
1.1 |
|
|
— |
|
|
1.1 |
|
|
|
Internet sales leads earnings |
(2.5 |
) |
|
— |
|
|
(2.5 |
) |
|
|
Income tax effect of pre-tax
adjustments |
(14.0 |
) |
|
7.6 |
|
|
(6.4 |
) |
|
|
Tax law change - bonus
depreciation |
4.6 |
|
|
— |
|
|
4.6 |
|
|
|
Pre
spin-off filed tax return adjustment |
0.5 |
|
|
— |
|
|
0.5 |
|
|
|
Adjusted net earnings attributable to CDK (a) |
$ |
222.6 |
|
|
$ |
(12.1 |
) |
|
$ |
210.5 |
|
|
|
|
|
|
|
|
|
|
|
Growth % |
|
|
|
|
|
|
approximately 23% |
|
|
|
|
|
|
|
|
Adjusted diluted net earnings attributable to CDK per share
(a) |
$ |
1.38 |
|
|
|
|
$ |
1.30 |
|
|
|
Weighted-average diluted shares outstanding |
161.6 |
|
|
|
|
161.6 |
|
|
|
Growth % |
|
|
|
|
|
|
over 25% |
|
|
|
|
|
|
|
|
Earnings before income
taxes |
$ |
299.9 |
|
|
$ |
— |
|
|
$ |
299.9 |
|
|
|
Interest
expense |
28.8 |
|
|
— |
|
|
28.8 |
|
|
|
Depreciation and amortization |
76.5 |
|
|
— |
|
|
76.5 |
|
|
|
Separation costs |
34.6 |
|
|
— |
|
|
34.6 |
|
|
|
Stand-alone public company costs |
— |
|
|
(16.8 |
) |
|
(16.8 |
) |
|
|
Trademark
royalty fee |
— |
|
|
5.7 |
|
|
5.7 |
|
|
|
Total
stock-based compensation |
30.4 |
|
|
— |
|
|
30.4 |
|
|
|
Restructuring expenses |
2.4 |
|
|
— |
|
|
2.4 |
|
|
|
Other
business transformation expenses |
1.9 |
|
|
— |
|
|
1.9 |
|
|
|
Tax
matters indemnification loss |
1.1 |
|
|
— |
|
|
1.1 |
|
|
|
Internet
sales leads earnings |
(2.5 |
) |
|
— |
|
|
(2.5 |
) |
|
|
Adjusted EBITDA (a) |
$ |
473.1 |
|
|
$ |
(11.1 |
) |
|
$ |
462.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted margin % |
23.5 |
% |
|
|
|
22.9 |
% |
|
at least 300 bps |
|
(a) Refer to the Non-GAAP Financial Measures section of this
earnings release for additional information on our non-GAAP
adjustments.
Fiscal 2015 Results
(b) Amounts in this column represent fiscal 2015 results
presented on the same basis as fiscal 2014 results as presented
under "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in Item 7 of our Annual Report on Form
10-K for the fiscal year ended June 30, 2015.
Fiscal 2015 Baseline for Fiscal 2016 Guidance
(c) Amounts in this column represent adjustments necessary to
our fiscal 2015 results for presentation on the same basis as our
fiscal 2016 forecast for the purpose of providing guidance.
CDK Global, Inc.Performance
Metrics(Unaudited)
CDK management regularly reviews the following key performance
measures to evaluate business results and make operating and
strategic decisions. These measures are intended to provide
directional information regarding trends in our recurring
subscription revenues. The following table summarizes these
measures for recurring subscription revenues in our segments:
|
For the three months ended |
|
September 30,2014 (a) |
|
December 31,2014 (a) |
|
March 31,2015 (a) |
|
June 30,2015 (a) |
|
September 30, 2015 |
|
December 31, 2015 |
ARNA |
|
|
|
|
|
|
|
|
|
|
|
Automotive |
|
|
|
|
|
|
|
|
|
|
|
DMS
Client Sites (b) |
9,014 |
|
|
9,140 |
|
|
9,167 |
|
|
9,190 |
|
|
9,181 |
|
|
9,210 |
|
Avg
Revenue Per Site (c) |
$ |
6,543 |
|
|
$ |
6,572 |
|
|
$ |
6,831 |
|
|
$ |
6,662 |
|
|
$ |
6,998 |
|
|
$ |
7,038 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjacencies |
|
|
|
|
|
|
|
|
|
|
|
DMS
Client Sites (b) |
4,673 |
|
|
4,823 |
|
|
4,959 |
|
|
5,029 |
|
|
5,096 |
|
|
5,178 |
|
Avg
Revenue Per Site (c) |
$ |
1,524 |
|
|
$ |
1,507 |
|
|
$ |
1,536 |
|
|
$ |
1,522 |
|
|
$ |
1,551 |
|
|
$ |
1,554 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
ARNA |
|
|
|
|
|
|
|
|
|
|
|
DMS
Client Sites (b) |
13,687 |
|
|
13,963 |
|
|
14,126 |
|
|
14,219 |
|
|
14,277 |
|
|
14,388 |
|
Avg
Revenue Per Site (c) |
$ |
4,829 |
|
|
$ |
4,829 |
|
|
$ |
4,983 |
|
|
$ |
4,849 |
|
|
$ |
5,057 |
|
|
$ |
5,069 |
|
|
|
|
|
|
|
|
|
|
|
|
|
ARI |
|
|
|
|
|
|
|
|
|
|
|
DMS
Client Sites (b) |
13,437 |
|
|
13,422 |
|
|
13,294 |
|
|
13,218 |
|
|
13,208 |
|
|
13,267 |
|
Avg
Revenue Per Site (c) |
$ |
1,101 |
|
|
$ |
1,097 |
|
|
$ |
1,119 |
|
|
$ |
1,133 |
|
|
$ |
1,151 |
|
|
$ |
1,219 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Digital
Marketing |
|
|
|
|
|
|
|
|
|
|
|
Websites (d) |
7,809 |
|
|
7,783 |
|
|
7,448 |
|
|
7,028 |
|
|
6,946 |
|
|
6,871 |
|
Avg
Revenue Per Website (e) |
$ |
3,202 |
|
|
$ |
3,301 |
|
|
$ |
3,333 |
|
|
$ |
3,449 |
|
|
$ |
3,548 |
|
|
$ |
3,665 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Average revenue per DMS client site and average revenue per
website have been updated for fiscal 2015 to reflect budgeted
foreign exchange rates for fiscal 2016.
(b) Dealer Management System (DMS) Client Sites - We track the
number of client sites that have an active DMS. Consistent with our
strategy of growing our Automotive Retail client base, we view the
number of client sites purchasing our DMS solutions as an indicator
of market penetration for our Automotive Retail segments. Our DMS
client site count includes retailers with an active DMS that sell
vehicles in the automotive and adjacent markets. Adjacent markets
include heavy truck dealerships that provide vehicles to the
over-the-road trucking industry; recreation dealerships in the
motorcycle, marine and recreational vehicle industries; and heavy
equipment dealerships in the agriculture and construction equipment
industries. We consider a DMS to be active if we have billed a
subscription fee for that solution during the most recently ended
calendar month.
(c) Average Revenue Per DMS Client Site - Average revenue
per Automotive Retail DMS client site is an indicator of the
adoption of our solutions by DMS clients, and we monitor changes in
this metric to measure the effectiveness of our strategy to deepen
our relationships with our current client base through upgrading
and expanding solutions and increasing transaction volumes. We
calculate average revenue per DMS client site by dividing the
monthly applicable revenue generated from our solutions in a period
by the average number of DMS client sites in the period. Revenue
underlying this metric is based on budgeted foreign exchange rates.
Average revenue per DMS client site for the quarterly periods in
fiscal 2015 has been adjusted to reflect budgeted foreign exchange
rates for fiscal 2016.
(d) Websites - For the Digital Marketing segment, we track the
number of websites that we host and develop for our OEM and
automotive retail clients as an indicator of business activity. The
number of websites as of a specified date is the total number of
full function dealer websites or portals that are currently
accessible.
(e) Average Revenue Per Website - We monitor changes in our
average revenue per website as an indicator of the relative depth
of our relationships in our Digital Marketing segment. We calculate
average revenue per website by dividing the monthly revenue
generated from our Digital Marketing solutions in a period,
excluding OEM advertising revenues, by the average number of client
websites in the period. Revenue underlying this metric is based on
budgeted foreign exchange rates. Average revenue per website for
the quarterly periods in fiscal 2015 has been adjusted to reflect
budgeted foreign exchange rates for fiscal 2016.
Non-GAAP Financial Measures
We use certain adjusted results to evaluate our operating
performance. In addition, we use adjusted EBITDA, among other
measures, as an input to determine incentive-based compensation.
Our non-GAAP adjustments principally relate to expenses and
benefits that impact comparability of the underlying GAAP measures.
We believe our non-GAAP measures provide relevant and useful
information for users of the financial statements because they
provide insight into our ongoing operating results. Adjusted
revenues, adjusted earnings before income taxes, adjusted provision
for income taxes, adjusted net earnings attributable to CDK,
adjusted basic and diluted earnings attributable to CDK per share,
and adjusted EBITDA reflect the adjustments enumerated in the
footnotes below. EBITDA is calculated as earnings before income
taxes adjusted to exclude interest expense, depreciation, and
amortization. Because adjusted results are not measures of
performance that are calculated in accordance with GAAP, they
should not be considered in isolation from, or as a substitute for,
other metrics that are calculated in accordance with GAAP.
Management has excluded revenues related to the Internet sales
leads business, which was part of the ARNA segment and was sold on
May 21, 2015, from adjusted revenues.
Management has excluded the following items from adjusted
earnings before income taxes:
- Earnings before income taxes related to the Internet sales
leads business, which was part of the ARNA segment and was sold on
May 21, 2015.
- Incremental costs incurred for the three and six months ended
December 31, 2014 that were directly attributable to the
spin-off from ADP.
- Accelerated amortization recognized during the three and six
months ended December 31, 2014 in the DM segment for the
Cobalt trademark related to the change in useful life.
- Incremental costs associated with the formation of corporate
departments as a stand-alone public company, incremental
stock-based compensation expenses incurred for staff additions to
build out corporate functions and director compensation costs, and
interest expense related to indebtedness incurred with the
spin-off. These costs were incurred in the three and six months
ended December 31, 2015 and have been reflected as adjustments
in the three and six months ended December 31, 2014 to present
these periods on a comparable basis.
- Elimination of the royalty paid to ADP for the utilization of
the ADP trademark during the six months ended December 31,
2014, prior to our spin-off from ADP, as there is no comparable
royalty after the spin-off.
- Restructuring expenses recognized in connection with our
business transformation plan for the three and six months ended
December 31, 2015. Other business transformation expenses are
included within cost of revenues and selling, general and
administrative expenses and were incurred in connection with our
business transformation plan for the three and six months ended
December 31, 2015.
- Net gain recorded within other income, net associated with an
indemnification receivable from ADP for pre spin-off tax periods in
accordance with the tax matters agreement.
Management has excluded the following items from adjusted
provision for income taxes:
- Income tax effect of pre-tax adjustments described above,
including separation costs for the three and six months ended
December 31, 2014, which were partially tax deductible, and
the tax effect of the Internet sales leads business.
- Adjustment recognized during the three and six months ended
December 31, 2014 to deferred taxes related to the bonus
depreciation to which ADP is entitled under the tax law and in
accordance with the tax matters agreement to claim additional tax
depreciation for assets associated with our business for tax
periods prior to our spin-off from ADP.
- Net income tax benefit to adjust the liability for pre spin-off
tax returns related to the tax matters indemnification gain, net
noted above.
Management has excluded the items described above for adjusted
earnings before income taxes and adjusted provision for income
taxes from adjusted net earnings attributable to CDK and adjusted
basic and diluted earnings attributable to CDK per share.
Management has excluded the following items from adjusted
EBITDA:
- Interest expense included within the financial statements for
the periods presented.
- Depreciation and amortization included within the financial
statements for the periods presented, including the accelerated
amortization attributable to the Cobalt trademark recognized during
the three and six months ended December 31,
2014.
- Incremental costs incurred for the three and six months ended
December 31, 2014 that were directly attributable to the
spin-off from ADP.
- Incremental costs associated with the formation of corporate
departments as a stand-alone public company and incremental
stock-based compensation expenses incurred for staff additions to
build out corporate functions and director compensation costs.
These costs were incurred in the three and six months ended
December 31, 2015 and have been reflected as adjustments in
the three and six months ended December 31, 2014 to present
these periods on a comparable basis.
- Elimination of the royalty paid to ADP for the utilization of
the ADP trademark during the six months ended December 31,
2014, prior to our spin-off from ADP, as there is no comparable
royalty after the spin-off.
- Total stock-based compensation expense recognized for the
periods presented.
- Restructuring expenses recognized in connection with our
business transformation plan for the three and six months ended
December 31, 2015. Other business transformation expenses are
included within cost of revenues and selling, general and
administrative expenses and were incurred in connection with our
business transformation plan for the three and six months ended
December 31, 2015. Other business transformation expenses
exclude $0.5 million and $0.6 million of accelerated depreciation
expense for the three and six months ended December 31, 2015,
respectively.
- Net gain recorded within other income, net associated with an
indemnification receivable from ADP for pre spin-off tax periods in
accordance with the tax matters agreement.
- Earnings before income taxes related to the Internet sales
leads business, which was part of the ARNA segment and was sold on
May 21, 2015.
We also review certain non-GAAP measures, namely adjusted
revenues and adjusted earnings before income taxes, on a constant
currency basis to understand underlying business trends. To present
these results on a constant currency basis, current period results
for entities reporting in currencies other than the U.S. dollar are
translated into U.S. dollar using the average monthly exchange rate
for the comparable prior period. As a result, constant currency
results neutralize the effects of foreign currency.
Forward-Looking Statements
This document contains "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements, other than statements of
historical facts, including forecasts for CDK’s fiscal year ending
June 30, 2016, statements concerning CDK’s business transformation
plan, other plans, objectives, goals, beliefs, business strategies,
future events, business conditions, results of operations,
financial position and business outlook, business trends, intention
to make share repurchases and to declare and pay future dividends
and other information, may be forward-looking statements. Words
such as "might," "will," "may," “could,” "should," "estimates,"
"expects," "continues," "contemplates," "anticipates," "projects,"
"plans," "potential," "predicts," "intends," "believes,"
"forecasts," "future," "assumes," and variations of such words or
similar expressions are intended to identify forward-looking
statements. These statements are based on management’s expectations
and assumptions and are subject to risks and uncertainties that may
cause actual results to differ materially from those expressed or
implied by these forward-looking statements.
Factors that could cause actual results to
differ materially from those contemplated by the forward-looking
statements include: CDK’s success in obtaining, retaining and
selling additional services to clients; the pricing of CDK’s
products and services; overall market and economic conditions,
including interest rate and foreign currency trends; competitive
conditions; auto sales and advertising and related industry
changes; employment and wage levels; changes in regulation; changes
in technology, security breaches, interruptions, failures and other
errors involving CDK’s systems; availability of capital for the
payment of debt service obligations or dividends or the repurchase
of shares; availability of skilled technical
employees/labor/personnel; the impact of new acquisitions and
divestitures; CDK’s ability to timely and effectively implement its
business transformation plan; and the ability of CDK’s significant
stockholders and their affiliates to significantly influence CDK’s
decisions. The statements in this document are made as of the date
of this document, even if subsequently made available by CDK on its
website or otherwise. CDK disclaims any obligation to update any
forward-looking statements, whether as a result of new information,
future events or otherwise. These risks and uncertainties, along
with the risk factors discussed in CDK’s reports filed with the
Securities and Exchange Commission (SEC), including those discussed
under "Part I, Item 1A. Risk Factors" in CDK’s Annual Report on
Form 10-K for the fiscal year ended June 30, 2015 and its most
recent Quarterly Report on Form 10-Q should be considered in
evaluating any forward-looking statements contained herein. These
filings can be found on CDK’s website at www.cdkglobal.com and the
SEC’s website at www.sec.gov.
Investor Relations Contacts:
Elena Rosellen
973.588.2511
elena.rosellen@cdk.com
Jennifer Gaumond
847.485.4424
jennifer.gaumond@cdk.com
Media Contact:
Kyle Donash
847.485.4335
kyle.donash@cdk.com
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