CDK Global, Inc. (NASDAQ:CDK) today announced financial results for
its fiscal 2020 fourth quarter and year ended June 30, 2020.
“We exceeded our expectations during the
quarter, even given the challenges that faced the industry and the
support we gave our customers, highlighting the strength and
resilience of our business model," said Brian Krzanich, CDK chief
executive officer. "CDK is leading the digital transformation that
was accelerated within the industry by the COVID-19 pandemic and we
continued to bring integrated and accurate digital solutions to our
dealers.”
“We delivered $450 million in revenue for the
quarter, with about 82% from subscription-based recurring revenue.
Our annual results came in at the high end or exceeded our
guidance,” said Joe Tautges, CDK chief financial officer. “We came
through the quarter in a much better position than expected and our
underlying business remains strong. Our investment strategy
continues to provide the solutions and capabilities necessary to
deliver solid revenue growth.”
Fourth Quarter and Fiscal 2020
Results
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CDK Global,
Inc. |
|
Q4 2020 |
|
Change from Q4
2019 |
|
FY 2020 |
|
Change from
2019 |
|
|
($ million except per
share) |
|
|
|
|
|
|
|
|
|
|
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|
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|
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GAAP Revenues |
|
$ |
449.6 |
|
|
-8 |
% |
|
$ |
1,960.1 |
|
|
+2 |
% |
|
|
GAAP Earnings before income taxes |
|
74.8 |
|
|
+476 |
% |
|
424.2 |
|
|
+40 |
% |
|
|
Non-GAAP Adjusted earnings before income taxes |
|
110.7 |
|
|
-19 |
% |
|
522.0 |
|
|
-7 |
% |
|
|
GAAP Diluted earnings attributable to CDK per share |
|
0.37 |
|
|
+129 |
% |
|
1.70 |
|
|
+73 |
% |
|
|
Non-GAAP Adjusted diluted earnings attributable to CDK per
share |
|
0.67 |
|
|
-24 |
% |
|
3.17 |
|
|
-5 |
% |
|
|
GAAP Net earnings attributable to CDK |
|
45.6 |
|
|
+129 |
% |
|
207.5 |
|
|
+67 |
% |
|
|
GAAP Net earnings attributable to CDK margin |
|
10.1 |
% |
|
4180 bps |
|
10.6 |
% |
|
410 bps |
|
|
Non-GAAP Adjusted EBITDA |
|
169.8 |
|
|
-12 |
% |
|
750.9 |
|
|
-3 |
% |
|
|
Non-GAAP Adjusted EBITDA margin |
|
37.8 |
% |
|
-190 bps |
|
38.3 |
% |
|
-220 bps |
|
|
|
|
|
|
|
|
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|
The non-GAAP (adjusted) results and guidance
presented in this press release represent non-GAAP financial
measures. Reconciliations of these measures to the most directly
comparable GAAP measures are provided in the tables at the end of
this press release.
Fourth Quarter Highlights:
- New products and enhancements launched to help dealers
transition to digital retailing
- Six quarters in a row with year-over-year site growth in North
America Auto
- Highest sales month over last two years in North America Auto
in June
- Fortellis Platform achieves 12 million transaction
milestone
- CDK releases updated data on market trends for Auto, Marine and
Powersports
- Financial impacts related to COVID-19 come in at low end of
expected range
Impacts to the Fourth Quarter and Fiscal
2020:
- Foreign exchange rates: Growth in revenues was negatively
impacted by 1 percentage point by foreign exchange rates for both
the quarter and full year, and the percentage growth in adjusted
earnings before income taxes was negatively impacted by 1
percentage point for the quarter and for the full year remained
unchanged by foreign exchange rates.
- Tax rate: The GAAP effective tax rate for the quarter was
18.2%, compared to 116.6% in last year’s fourth quarter. The
adjusted effective tax rate for the quarter was 25.2%, compared to
19.2% in last year’s fourth quarter. The GAAP effective tax rate
for the full year of fiscal 2020 was 28.4% compared to 20.5% last
year. The adjusted effective tax rate for the full year of
fiscal 2020 was 24.3% compared to 23.7% last year.
CDK Segment Information - North
America
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CDK North
America |
|
Q4 2020 |
|
Change from Q4
2019 |
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FY 2020 |
|
Change from 2019 |
|
|
|
($
million) |
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|
|
|
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|
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|
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|
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|
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Revenues |
|
376.7 |
|
|
-8 |
% |
|
1,639.0 |
|
|
+3 |
% |
|
|
|
GAAP Earnings before income taxes |
|
130.2 |
|
|
+193 |
% |
|
587.6 |
|
|
+14 |
% |
|
|
|
GAAP Earnings before income taxes margin |
|
34.6 |
% |
|
2370 bps |
|
35.9 |
% |
|
340 bps |
|
|
|
Non-GAAP Adjusted earnings before income taxes |
|
141.8 |
|
|
-16 |
% |
|
647.1 |
|
|
-6 |
% |
|
|
|
Non-GAAP Adjusted earnings before income taxes margin |
|
37.6 |
% |
|
-390 bps |
|
39.5 |
% |
|
-360 bps |
|
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CDK Segment Information -
International
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CDK
International |
|
Q4 2020 |
|
Change from Q4
2019 |
|
FY 2020 |
|
Change from 2019 |
|
|
|
($
million) |
|
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|
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Revenues |
|
72.9 |
|
|
-9 |
% |
|
321.1 |
|
|
— |
% |
|
|
|
Constant currency revenues |
|
75.6 |
|
|
-6 |
% |
|
330.6 |
|
|
+3 |
% |
|
|
|
GAAP Earnings before income taxes |
|
2.9 |
|
|
-86 |
% |
|
58.1 |
|
|
-25 |
% |
|
|
|
GAAP Earnings before income taxes margin |
|
4.0 |
% |
|
-2220 bps |
|
18.1 |
% |
|
-590 bps |
|
|
|
Non-GAAP Adjusted earnings before income taxes |
|
17.3 |
|
|
-18 |
% |
|
73.1 |
|
|
-6 |
% |
|
|
|
Non-GAAP Adjusted earnings before income taxes margin |
|
23.7 |
% |
|
-280 bps |
|
22.8 |
% |
|
-140 bps |
|
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Website Schedules
Other financial information, including financial
statements and supplementary schedules presented on a GAAP and
adjusted basis, and the schedule of quarterly revenues and pretax
earnings by reportable segment have been updated for the fourth
quarter and year ended June 30, 2020 and will be posted to the
CDK Investor Relations website, https://investors.cdkglobal.com, in
the “Financial Information” section.
Webcast and Conference Call
An analyst conference call will be held today,
Tuesday, August 4, 2020 at 4:00 p.m. CT. A live webcast of the call
will be available on a listen-only basis. To listen to the webcast,
go to the CDK Investor Relations website,
https://investors.cdkglobal.com, and click on the webcast icon. An
supplemental slide presentation will be available to download and
print about 30 minutes before the webcast at the CDK Investor
Relations website at https://investors.cdkglobal.com. CDK financial
news releases, current financial information, SEC filings and
Investor Relations presentations are accessible at the same
website.
About CDK Global
With $2 billion in revenues,
CDK Global (NASDAQ:CDK) is a leading global provider of
integrated information technology solutions to the automotive
retail and adjacent industries. Focused on enabling end-to-end
automotive commerce, CDK Global provides solutions to
dealers in more than 100 countries around the world, serving
approximately 30,000 retail locations and most automotive
manufacturers. CDK solutions automate and integrate all parts
of the dealership and buying process, including the acquisition,
sale, financing, insuring, parts supply, repair and maintenance of
vehicles. Visit cdkglobal.com.
CDK Global,
Inc.Consolidated Statements of
Operations(In millions, except per share amounts)
|
Three Months Ended |
|
Fiscal Year Ended |
|
June 30, |
|
June 30, |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues |
$ |
449.6 |
|
|
|
$ |
488.6 |
|
|
|
$ |
1,960.1 |
|
|
|
$ |
1,914.8 |
|
|
|
|
|
|
|
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|
|
Expenses: |
|
|
|
|
|
|
|
Cost of revenues |
240.8 |
|
|
|
236.6 |
|
|
|
966.5 |
|
|
|
899.8 |
|
|
Selling, general and administrative expenses |
100.6 |
|
|
|
122.2 |
|
|
|
429.9 |
|
|
|
444.7 |
|
|
Restructuring expenses |
14.2 |
|
|
|
7.9 |
|
|
|
14.2 |
|
|
|
28.0 |
|
|
Litigation provision |
— |
|
|
|
90.0 |
|
|
|
— |
|
|
|
90.0 |
|
|
Total expenses |
355.6 |
|
|
|
456.7 |
|
|
|
1,410.6 |
|
|
|
1,462.5 |
|
|
|
|
|
|
|
|
|
|
Operating earnings |
94.0 |
|
|
|
31.9 |
|
|
|
549.5 |
|
|
|
452.3 |
|
|
|
|
|
|
|
|
|
|
Interest expense |
(35.1 |
) |
|
|
(37.2 |
) |
|
|
(144.3 |
) |
|
|
(139.1 |
) |
|
Loss from equity method investment |
(2.7 |
) |
|
|
(17.0 |
) |
|
|
(2.7 |
) |
|
|
(17.0 |
) |
|
Other income, net |
18.6 |
|
|
|
2.4 |
|
|
|
21.7 |
|
|
|
7.7 |
|
|
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|
|
|
|
|
|
Earnings (Loss) before income
taxes |
74.8 |
|
|
|
(19.9 |
) |
|
|
424.2 |
|
|
|
303.9 |
|
|
|
|
|
|
|
|
|
|
Provision for income taxes |
(13.6 |
) |
|
|
23.2 |
|
|
|
(120.4 |
) |
|
|
(62.2 |
) |
|
|
|
|
|
|
|
|
|
Net earnings (loss) from
continuing operations |
61.2 |
|
|
|
3.3 |
|
|
|
303.8 |
|
|
|
241.7 |
|
|
Net earnings (loss) from
discontinued operations |
(14.4 |
) |
|
|
(156.3 |
) |
|
|
(89.3 |
) |
|
|
(109.8 |
) |
|
Net earnings (loss) |
46.8 |
|
|
|
(153.0 |
) |
|
|
214.5 |
|
|
|
131.9 |
|
|
Less: net earnings attributable to noncontrolling interest |
1.2 |
|
|
|
2.1 |
|
|
|
7.0 |
|
|
|
7.9 |
|
|
Net earnings (loss)
attributable to CDK |
$ |
45.6 |
|
|
|
$ |
(155.1 |
) |
|
|
$ |
207.5 |
|
|
|
$ |
124.0 |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
attributable to CDK per share - basic: |
|
|
|
|
|
|
|
Continuing operations |
$ |
0.49 |
|
|
|
$ |
0.01 |
|
|
|
$ |
2.44 |
|
|
|
$ |
1.86 |
|
|
Discontinued operations |
$ |
(0.12 |
) |
|
|
$ |
(1.29 |
) |
|
|
$ |
(0.73 |
) |
|
|
$ |
(0.87 |
) |
|
Total net earnings (loss)
attributable to CDK per share - basic |
$ |
0.37 |
|
|
|
$ |
(1.28 |
) |
|
|
$ |
1.71 |
|
|
|
$ |
0.99 |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
attributable to CDK per share - diluted: |
|
|
|
|
|
|
|
Continuing operations |
$ |
0.49 |
|
|
|
$ |
0.01 |
|
|
|
$ |
2.43 |
|
|
|
$ |
1.85 |
|
|
Discontinued operations |
$ |
(0.12 |
) |
|
|
$ |
(1.28 |
) |
|
|
$ |
(0.73 |
) |
|
|
$ |
(0.87 |
) |
|
Total net earnings (loss)
attributable to CDK per share - diluted |
$ |
0.37 |
|
|
|
$ |
(1.27 |
) |
|
|
$ |
1.70 |
|
|
|
$ |
0.98 |
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
Basic |
121.7 |
|
|
|
121.6 |
|
|
|
121.6 |
|
|
|
125.5 |
|
|
Diluted |
122.1 |
|
|
|
122.4 |
|
|
|
122.1 |
|
|
|
126.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CDK Global, Inc.
Consolidated Balance Sheets(In millions)
|
June 30, |
|
June 30, |
|
2020 |
|
2019 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
$ |
215.7 |
|
|
|
$ |
311.4 |
|
|
Accounts receivable, net of allowances |
300.0 |
|
|
|
290.4 |
|
|
Other current assets |
169.9 |
|
|
|
164.8 |
|
|
Current assets held for sale |
— |
|
|
|
220.5 |
|
|
Total current assets |
685.6 |
|
|
|
987.1 |
|
|
Property, plant and equipment,
net |
109.1 |
|
|
|
144.8 |
|
|
Other assets |
475.7 |
|
|
|
284.9 |
|
|
Goodwill |
1,348.5 |
|
|
|
1,356.3 |
|
|
Intangible assets, net |
235.2 |
|
|
|
225.9 |
|
|
Total assets |
$ |
2,854.1 |
|
|
|
$ |
2,999.0 |
|
|
|
|
|
|
Liabilities and
Stockholders' Deficit |
|
|
|
Current liabilities: |
|
|
|
Current maturities of long-term debt and finance lease
liabilities |
$ |
20.7 |
|
|
|
$ |
270.8 |
|
|
Accounts payable |
39.4 |
|
|
|
38.0 |
|
|
Accrued expenses and other current liabilities |
223.8 |
|
|
|
178.5 |
|
|
Litigation liability |
57.0 |
|
|
|
90.0 |
|
|
Accrued payroll and payroll-related expenses |
78.0 |
|
|
|
89.2 |
|
|
Short-term deferred revenues |
107.9 |
|
|
|
124.8 |
|
|
Current liabilities held for sale |
— |
|
|
|
48.9 |
|
|
Total current liabilities |
526.8 |
|
|
|
840.2 |
|
|
Long-term debt and capital
finance lease liabilities |
2,655.1 |
|
|
|
2,659.4 |
|
|
Long-term deferred
revenues |
52.8 |
|
|
|
68.4 |
|
|
Deferred income taxes |
78.4 |
|
|
|
80.5 |
|
|
Other liabilities |
121.7 |
|
|
|
65.0 |
|
|
Total liabilities |
3,434.8 |
|
|
|
3,713.5 |
|
|
|
|
|
|
Stockholders' Deficit: |
|
|
|
Preferred stock |
— |
|
|
|
— |
|
|
Common stock |
1.6 |
|
|
|
1.6 |
|
|
Additional paid-in-capital |
687.9 |
|
|
|
688.5 |
|
|
Retained earnings |
1,045.5 |
|
|
|
911.6 |
|
|
Treasury stock, at cost |
(2,305.2 |
) |
|
|
(2,324.6 |
) |
|
Accumulated other comprehensive loss |
(25.9 |
) |
|
|
(6.7 |
) |
|
Total CDK stockholders' deficit |
(596.1 |
) |
|
|
(729.6 |
) |
|
Noncontrolling interest |
15.4 |
|
|
|
15.1 |
|
|
Total stockholders' deficit |
(580.7 |
) |
|
|
(714.5 |
) |
|
Total liabilities and stockholders' deficit |
$ |
2,854.1 |
|
|
|
$ |
2,999.0 |
|
|
|
Effective July 1, 2019, the Company adopted ASC 842, Leases,
using the modified retrospective transition method. In accordance
with this transition method, comparative information has not been
restated and continues to be reported under the accounting
standards in effect for the period presented.
The Digital Marketing Business is presented as discontinued
operations and prior year amounts associated with the Digital
Marketing Business have been reclassified as such. On April 21,
2020, the Company completed its sale of the Digital Marketing
Business to Sincro LLC, a newly formed company owned by Ansira
Partners, Inc. ("Ansira"), which is a subsidiary of Advent
International. Refer to Form 10-K, Item 8 of Part II, "Financial
Statements and Supplementary Data - Note 4 - Discontinued
Operations." for more information.
CDK Global, Inc.
Consolidated Statements of Cash Flows(In
millions)
|
Years Ended June 30, |
|
2020 |
|
2019 |
Cash Flows from
Operating Activities: |
|
|
|
Net earnings |
$ |
214.5 |
|
|
|
$ |
131.9 |
|
|
Less: net earnings(loss) from
discontinued operations |
(89.3 |
) |
|
|
(109.8 |
) |
|
Net earnings from continuing
operations |
303.8 |
|
|
|
241.7 |
|
|
Adjustments to reconcile net
earnings from continuing operations to cash flows provided by
operating activities: |
|
|
|
Depreciation and amortization |
99.6 |
|
|
|
89.8 |
|
|
Asset impairment |
— |
|
|
|
19.3 |
|
|
Loss from equity method investment |
2.7 |
|
|
|
17.0 |
|
|
Deferred income taxes |
4.9 |
|
|
|
(5.1 |
) |
|
Stock-based compensation expense |
19.6 |
|
|
|
30.5 |
|
|
Other |
27.9 |
|
|
|
11.1 |
|
|
Changes in assets and
liabilities, net of effect from acquisitions of business: |
|
|
|
Change in accounts receivable |
(19.0 |
) |
|
|
(20.1 |
) |
|
Change in other assets |
(32.7 |
) |
|
|
(49.2 |
) |
|
Change in accounts payable |
(3.7 |
) |
|
|
(1.6 |
) |
|
Change in accrued expenses and other liabilities |
(32.6 |
) |
|
|
105.1 |
|
|
Net cash flows provided by
operating activities, continuing operations |
370.5 |
|
|
|
438.5 |
|
|
Net cash flows provided by
operating activities, discontinued operations |
4.6 |
|
|
|
44.6 |
|
|
Net cash flows provided by
operating activities |
375.1 |
|
|
|
483.1 |
|
|
|
|
|
|
Cash Flows from
Investing Activities: |
|
|
|
Capital expenditures |
(23.5 |
) |
|
|
(54.4 |
) |
|
Capitalized software |
(58.5 |
) |
|
|
(37.9 |
) |
|
Proceeds from sale of
property, plant and equipment |
— |
|
|
|
7.4 |
|
|
Acquisitions of businesses,
net of cash acquired |
— |
|
|
|
(513.0 |
) |
|
Investment in certificates of
deposit |
(12.0 |
) |
|
|
— |
|
|
Proceeds from maturities of
certificate of deposit |
12.0 |
|
|
|
— |
|
|
Purchases of investments |
(20.0 |
) |
|
|
(17.0 |
) |
|
Proceeds from investments |
— |
|
|
|
0.4 |
|
|
Net cash flows used in
investing activities, continuing operations |
(102.0 |
) |
|
|
(614.5 |
) |
|
Net cash flows used in
investing activities, discontinued operations |
(6.3 |
) |
|
|
(8.7 |
) |
|
Net cash flows used in
investing activities |
(108.3 |
) |
|
|
(623.2 |
) |
|
|
|
|
|
Cash Flows from
Financing Activities: |
|
|
|
Proceeds from long-term
debt |
15.0 |
|
|
|
1,100.0 |
|
|
Repayments of long-term debt
and finance lease liabilities |
(271.2 |
) |
|
|
(806.5 |
) |
|
Dividends paid to
stockholders |
(72.9 |
) |
|
|
(74.8 |
) |
|
Repurchases of common
stock |
— |
|
|
|
(524.1 |
) |
|
Proceeds from exercise of
stock options |
6.2 |
|
|
|
5.0 |
|
|
Withholding tax payments for
stock-based compensation awards |
(6.2 |
) |
|
|
(15.8 |
) |
|
Dividend payments to
noncontrolling owners |
(6.7 |
) |
|
|
(10.3 |
) |
|
Payments of deferred financing
costs |
(3.7 |
) |
|
|
(11.7 |
) |
|
Acquisition-related
payments |
(5.3 |
) |
|
|
(10.8 |
) |
|
Net cash flows used in
financing activities, continuing operations |
(344.8 |
) |
|
|
(349.0 |
) |
|
Net cash flows used in
financing activities, discontinued operations |
(1.1 |
) |
|
|
— |
|
|
Net cash flows used in
financing activities |
(345.9 |
) |
|
|
(349.0 |
) |
|
Effect of exchange rate
changes on cash, cash equivalents, and restricted cash |
(9.8 |
) |
|
|
(6.9 |
) |
|
Net change in cash, cash
equivalents, and restricted cash |
(88.9 |
) |
|
|
(496.0 |
) |
|
Cash, cash equivalents, and
restricted cash, beginning of period |
321.1 |
|
|
|
817.1 |
|
|
Cash, cash equivalents, and
restricted cash, end of period |
$ |
232.2 |
|
|
|
$ |
321.1 |
|
|
The Digital Marketing Business is presented as discontinued
operations and prior year amounts associated with the Digital
Marketing Business have been reclassified as such. On April 21,
2020, the Company completed its sale of the Digital Marketing
Business to Sincro LLC, a newly formed company owned by Ansira
Partners, Inc. ("Ansira"), which is a subsidiary of Advent
International. Refer to Form 10-K, Item 8 of Part II, "Financial
Statements and Supplementary Data - Note 4 - Discontinued
Operations." for more information.
CDK Global, Inc.Consolidated Adjusted
Financial Information(In millions, except per share
amounts)(Unaudited)
As described below under the Non-GAAP Financial Measures section
of this press release, we incorporated the following additional
adjustments within our calculations of non-GAAP financial measures
where management has deemed it appropriate to better reflect our
underlying operations. These adjustments are inconsistent in amount
and frequency and do not directly reflect our underlying
operations. Therefore, management believes that excluding such
information provides us with a better understanding of our ongoing
operating performance across periods. Prior period information has
been revised to conform to the current period presentation.
Fiscal 2020 Modifications to Our Adjustments:
- Effective July 1, 2019, we modified our presentation of
adjusted earnings before income taxes, adjusted provision for
income taxes, adjusted net earnings attributable to CDK, adjusted
diluted earnings attributable to CDK per share, and adjusted EBITDA
to include adjustments for the business process modernization
program.
- Effective January 1, 2020, we modified our presentation of
adjusted provision for income taxes, adjusted net earnings
attributable to CDK, adjusted diluted earnings attributable to CDK
per share to include an adjustment for the income tax effect of a
change in CDK’s assertion that foreign earnings are no longer
considered indefinitely reinvested.
- Effective April 1, 2020, we modified our presentation of
adjusted earnings before income taxes, adjusted provision for
income taxes, adjusted net earnings attributable to CDK, adjusted
diluted earnings attributable to CDK per share, and adjusted EBITDA
to include our plan to restructure the CDKI segment to reduce costs
and improve margins.
- Effective April 21, 2020, we modified our presentation of
adjusted earnings before income taxes, adjusted provision for
income taxes, adjusted net earnings attributable to CDK, adjusted
diluted earnings attributable to CDK per share, and adjusted EBITDA
to include net adjustments related to the loss from an equity
method investment.
The Digital Marketing Business is presented as discontinued
operations and prior year amounts associated with the Digital
Marketing Business have been reclassified as such. On April 21,
2020, the Company completed its sale of the Digital Marketing
Business to Sincro LLC, a newly formed company owned by Ansira
Partners, Inc. ("Ansira"), which is a subsidiary of Advent
International. Refer to Form 10-K, Item 8 of Part II, "Financial
Statements and Supplementary Data - Note 4 - Discontinued
Operations." for more information.
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
Fiscal Year Ended |
|
|
|
|
|
June 30, |
|
Change |
|
June 30, |
|
Change |
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
Revenues (a) |
$ |
449.6 |
|
|
$ |
488.6 |
|
|
|
$ |
(39.0 |
) |
|
|
(8 |
)% |
|
$ |
1,960.1 |
|
|
$ |
1,914.8 |
|
|
$ |
45.3 |
|
|
|
2 |
% |
Impact of exchange rates |
3.5 |
|
|
— |
|
|
|
|
|
|
|
10.7 |
|
|
— |
|
|
|
|
|
Constant currency revenues (a)
(b) |
$ |
453.1 |
|
|
$ |
488.6 |
|
|
|
$ |
(35.5 |
) |
|
|
(7 |
)% |
|
$ |
1,970.8 |
|
|
$ |
1,914.8 |
|
|
$ |
56.0 |
|
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (Loss) before
income taxes (a) |
$ |
74.8 |
|
|
$ |
(19.9 |
) |
|
|
$ |
94.7 |
|
|
|
476 |
% |
|
$ |
424.2 |
|
|
$ |
303.9 |
|
|
$ |
120.3 |
|
|
|
40 |
% |
Margin |
16.6 |
% |
|
(4.1 |
)% |
|
2070 bps |
|
|
|
|
|
|
|
21.6 |
% |
|
15.9 |
% |
|
570 bps |
|
|
|
|
|
|
Total stock-based compensation (a) |
6.8 |
|
|
16.5 |
|
|
|
|
|
|
|
19.6 |
|
|
30.5 |
|
|
|
|
|
Amortization of acquired intangible assets (a) |
4.1 |
|
|
4.1 |
|
|
|
|
|
|
|
16.1 |
|
|
15.3 |
|
|
|
|
|
Transaction and integration-related expenses (a) |
1.7 |
|
|
7.5 |
|
|
|
|
|
|
|
10.2 |
|
|
13.2 |
|
|
|
|
|
Legal and other expenses related to regulatory and competition
matters |
2.8 |
|
|
96.8 |
|
|
|
|
|
|
|
19.4 |
|
|
111.2 |
|
|
|
|
|
Business process modernization program |
4.1 |
|
|
— |
|
|
|
|
|
|
|
16.1 |
|
|
— |
|
|
|
|
|
Restructuring expenses (a) |
14.2 |
|
|
7.9 |
|
|
|
|
|
|
|
14.2 |
|
|
28.0 |
|
|
|
|
|
Other business transformation expenses (a) |
— |
|
|
6.1 |
|
|
|
|
|
|
|
— |
|
|
20.9 |
|
|
|
|
|
Impairment of intangible assets |
— |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
14.9 |
|
|
|
|
|
Officer transition expense |
— |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
6.4 |
|
|
|
|
|
Net adjustments related to loss from equity method investment |
2.2 |
|
|
— |
|
|
|
|
|
|
|
2.2 |
|
|
— |
|
|
|
|
|
ELEAD joint venture agreement termination |
— |
|
|
17.0 |
|
|
|
|
|
|
|
— |
|
|
17.0 |
|
|
|
|
|
Adjusted earnings
before income taxes (a) (b) |
$ |
110.7 |
|
|
$ |
136.0 |
|
|
|
$ |
(25.3 |
) |
|
|
(19 |
)% |
|
$ |
522.0 |
|
|
$ |
561.3 |
|
|
$ |
(39.3 |
) |
|
|
(7 |
)% |
Adjusted margin |
24.6 |
% |
|
27.8 |
% |
|
-320 bps |
|
|
|
|
|
|
|
26.6 |
% |
|
29.3 |
% |
|
-270 bps |
|
|
|
|
|
|
Impact of exchange rates |
0.8 |
|
|
— |
|
|
|
|
|
|
|
2.6 |
|
|
— |
|
|
|
|
|
Constant currency adjusted
earnings before income taxes (a) (b) |
$ |
111.5 |
|
|
$ |
136.0 |
|
|
|
$ |
(24.5 |
) |
|
|
(18 |
)% |
|
$ |
524.6 |
|
|
$ |
561.3 |
|
|
$ |
(36.7 |
) |
|
|
(7 |
)% |
|
Three Months Ended |
|
|
|
|
|
Fiscal Year Ended |
|
|
|
|
|
June 30, |
|
Change |
|
June 30, |
|
Change |
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
Provision for income taxes (a) |
$ |
13.6 |
|
|
$ |
(23.2 |
) |
|
|
$ |
36.8 |
|
|
159 |
% |
|
$ |
120.4 |
|
|
|
$ |
62.2 |
|
|
|
$ |
58.2 |
|
|
|
94 |
% |
Effective tax rate |
18.2 |
% |
|
116.6 |
% |
|
|
|
|
|
28.4 |
% |
|
20.5 |
% |
|
|
|
|
Income tax effect of pre-tax adjustments |
9.0 |
|
|
34.5 |
|
|
|
|
|
|
|
23.6 |
|
|
|
58.8 |
|
|
|
|
|
|
Income tax effect for foreign earnings previously deemed
indefinitely reinvested |
5.3 |
|
|
— |
|
|
|
|
|
|
|
(3.4 |
) |
|
|
— |
|
|
|
|
|
|
Change in valuation allowance |
— |
|
|
14.8 |
|
|
|
|
|
|
|
(14.8 |
) |
|
|
14.8 |
|
|
|
|
|
|
Impact of U.S. tax reform act |
— |
|
|
— |
|
|
|
|
|
|
|
1.2 |
|
|
|
(2.8 |
) |
|
|
|
|
|
Adjusted provision for
income taxes (a) (b) |
$ |
27.9 |
|
|
$ |
26.1 |
|
|
|
$ |
1.8 |
|
|
7 |
% |
|
$ |
127.0 |
|
|
|
$ |
133.0 |
|
|
|
$ |
(6.0 |
) |
|
|
(5 |
)% |
Adjusted effective tax rate |
25.2 |
% |
|
19.2 |
% |
|
|
|
|
|
24.3 |
% |
|
23.7 |
% |
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
Fiscal Year Ended |
|
|
|
|
|
June 30, |
|
Change |
|
June 30, |
|
|
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
Net earnings (loss) |
$ |
46.8 |
|
|
|
$ |
(153.0 |
) |
|
|
$ |
199.8 |
|
|
|
131 |
% |
|
$ |
214.5 |
|
|
|
$ |
131.9 |
|
|
|
$ |
82.6 |
|
|
63 |
% |
Less: net earnings
attributable to noncontrolling interest |
1.2 |
|
|
|
2.1 |
|
|
|
|
|
|
|
7.0 |
|
|
|
7.9 |
|
|
|
|
|
|
Net earnings(loss)
attributable to CDK |
$ |
45.6 |
|
|
|
$ |
(155.1 |
) |
|
|
$ |
200.7 |
|
|
|
129 |
% |
|
$ |
207.5 |
|
|
|
$ |
124.0 |
|
|
|
$ |
83.5 |
|
|
67 |
% |
Net loss from discontinued operations |
14.4 |
|
|
|
156.3 |
|
|
|
|
|
|
|
89.3 |
|
|
|
109.8 |
|
|
|
|
|
|
Total stock-based compensation (a) (c) |
6.8 |
|
|
|
16.5 |
|
|
|
|
|
|
|
19.6 |
|
|
|
30.5 |
|
|
|
|
|
|
Amortization of acquired intangible assets (a) (c) |
4.1 |
|
|
|
4.0 |
|
|
|
|
|
|
|
15.8 |
|
|
|
15.0 |
|
|
|
|
|
|
Transaction and integration-related expenses (a) |
1.7 |
|
|
|
7.5 |
|
|
|
|
|
|
|
10.2 |
|
|
|
13.2 |
|
|
|
|
|
|
Legal and other expenses related to regulatory and competition
matters (c) |
2.7 |
|
|
|
96.7 |
|
|
|
|
|
|
|
19.3 |
|
|
|
111.0 |
|
|
|
|
|
|
Business process modernization program |
4.1 |
|
|
|
— |
|
|
|
|
|
|
|
16.1 |
|
|
|
— |
|
|
|
|
|
|
Restructuring expenses (a) (c) |
14.2 |
|
|
|
7.9 |
|
|
|
|
|
|
|
14.2 |
|
|
|
27.9 |
|
|
|
|
|
|
Other business transformation expenses (a) (c) |
— |
|
|
|
6.1 |
|
|
|
|
|
|
|
— |
|
|
|
20.9 |
|
|
|
|
|
|
Impairment of intangible assets |
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
14.9 |
|
|
|
|
|
|
Officer transition expense |
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
6.4 |
|
|
|
|
|
|
Net adjustments related to loss from equity method investment |
2.2 |
|
|
|
— |
|
|
|
|
|
|
|
2.2 |
|
|
|
— |
|
|
|
|
|
|
ELEAD joint venture agreement termination |
— |
|
|
|
17.0 |
|
|
|
|
|
|
|
— |
|
|
|
17.0 |
|
|
|
|
|
|
Income tax effect of pre-tax adjustments |
(9.0 |
) |
|
|
(34.5 |
) |
|
|
|
|
|
|
(23.6 |
) |
|
|
(58.8 |
) |
|
|
|
|
|
Income tax effect for foreign earnings previously deemed
indefinitely reinvested |
(5.3 |
) |
|
|
— |
|
|
|
|
|
|
|
3.4 |
|
|
|
— |
|
|
|
|
|
|
Change in valuation allowance |
— |
|
|
|
(14.8 |
) |
|
|
|
|
|
|
14.8 |
|
|
|
(14.8 |
) |
|
|
|
|
|
Impact of U.S. tax reform act |
— |
|
|
|
— |
|
|
|
|
|
|
|
(1.2 |
) |
|
|
2.8 |
|
|
|
|
|
|
Adjusted net earnings
attributable to CDK (b) |
$ |
81.5 |
|
|
|
$ |
107.6 |
|
|
|
$ |
(26.1 |
) |
|
|
(24 |
)% |
|
$ |
387.6 |
|
|
|
$ |
419.8 |
|
|
|
$ |
(32.2 |
) |
|
(8 |
)% |
|
Three Months Ended |
|
|
|
|
|
Fiscal Year Ended |
|
|
|
|
|
June 30, |
|
Change |
|
June 30, |
|
Change |
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
Diluted (loss) earnings attributable to CDK per
share |
$ |
0.37 |
|
|
|
$ |
(1.27 |
) |
|
|
$ |
1.64 |
|
|
129 |
% |
|
$ |
1.70 |
|
|
|
$ |
0.98 |
|
|
|
$ |
0.72 |
|
|
73 |
% |
Net loss from discontinued operations |
0.12 |
|
|
|
1.28 |
|
|
|
|
|
|
|
0.73 |
|
|
|
0.87 |
|
|
|
|
|
|
Total stock-based compensation (a) (c) |
0.06 |
|
|
|
0.13 |
|
|
|
|
|
|
|
0.16 |
|
|
|
0.24 |
|
|
|
|
|
|
Amortization of acquired intangible assets (a) |
0.03 |
|
|
|
0.03 |
|
|
|
|
|
|
|
0.13 |
|
|
|
0.12 |
|
|
|
|
|
|
Transaction and integration-related expenses (a) |
0.01 |
|
|
|
0.06 |
|
|
|
|
|
|
|
0.08 |
|
|
|
0.10 |
|
|
|
|
|
|
Legal and other expenses related to regulatory and competition
matters |
0.02 |
|
|
|
0.79 |
|
|
|
|
|
|
|
0.15 |
|
|
|
0.88 |
|
|
|
|
|
|
Business process modernization program |
0.03 |
|
|
|
— |
|
|
|
|
|
|
|
0.13 |
|
|
|
— |
|
|
|
|
|
|
Restructuring expenses (a) (c) |
0.12 |
|
|
|
0.07 |
|
|
|
|
|
|
|
0.12 |
|
|
|
0.22 |
|
|
|
|
|
|
Other business transformation expenses (a) (c) |
— |
|
|
|
0.05 |
|
|
|
|
|
|
|
— |
|
|
|
0.17 |
|
|
|
|
|
|
Impairment of intangible assets |
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
0.12 |
|
|
|
|
|
|
Officer transition expense |
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
0.05 |
|
|
|
|
|
|
Net adjustments related to loss from equity method investment |
0.02 |
|
|
|
— |
|
|
|
|
|
|
|
0.02 |
|
|
|
— |
|
|
|
|
|
|
ELEAD joint venture agreement termination |
— |
|
|
|
0.14 |
|
|
|
|
|
|
|
— |
|
|
|
0.13 |
|
|
|
|
|
|
Income tax effect of pre-tax adjustments |
(0.07 |
) |
|
|
(0.28 |
) |
|
|
|
|
|
|
(0.19 |
) |
|
|
(0.46 |
) |
|
|
|
|
|
Income tax effect for foreign earnings previously deemed
indefinitely reinvested |
(0.04 |
) |
|
|
— |
|
|
|
|
|
|
|
0.03 |
|
|
|
— |
|
|
|
|
|
|
Decrease in valuation allowance |
— |
|
|
|
(0.12 |
) |
|
|
|
|
|
|
0.12 |
|
|
|
(0.12 |
) |
|
|
|
|
|
Impact of U.S. tax reform act |
— |
|
|
|
— |
|
|
|
|
|
|
|
(0.01 |
) |
|
|
0.02 |
|
|
|
|
|
|
Adjusted diluted earnings attributable to CDK per share
(b) |
$ |
0.67 |
|
|
|
$ |
0.88 |
|
|
|
$ |
(0.21 |
) |
|
(24 |
)% |
|
$ |
3.17 |
|
|
|
$ |
3.32 |
|
|
|
$ |
(0.15 |
) |
|
(5 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
122.1 |
|
|
|
122.4 |
|
|
|
|
|
|
|
122.1 |
|
|
|
126.4 |
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
Fiscal Year Ended |
|
|
|
|
|
June 30, |
|
Change |
|
June 30, |
|
Change |
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
Net (loss) earnings attributable to CDK |
$ |
45.6 |
|
|
$ |
(155.1 |
) |
|
|
$ |
200.7 |
|
|
129 |
% |
|
$ |
207.5 |
|
|
$ |
124.0 |
|
|
$ |
83.5 |
|
|
67 |
% |
Margin |
10.1 |
% |
|
(31.7 |
)% |
|
4180 bps |
|
|
|
|
|
10.6 |
% |
|
6.5 |
% |
|
410 bps |
|
|
|
|
Net earnings attributable to noncontrolling interest |
1.2 |
|
|
2.1 |
|
|
|
|
|
|
|
7.0 |
|
|
7.9 |
|
|
|
|
|
Net loss from discontinued operations |
14.4 |
|
|
156.3 |
|
|
|
|
|
|
|
89.3 |
|
|
109.8 |
|
|
|
|
|
Provision for income taxes (a) |
13.6 |
|
|
(23.2 |
) |
|
|
|
|
|
|
120.4 |
|
|
62.2 |
|
|
|
|
|
Interest expense |
35.1 |
|
|
37.2 |
|
|
|
|
|
|
|
144.3 |
|
|
139.1 |
|
|
|
|
|
Depreciation and amortization (a) |
27.0 |
|
|
24.7 |
|
|
|
|
|
|
|
99.6 |
|
|
89.8 |
|
|
|
|
|
Total stock-based compensation (a) |
6.8 |
|
|
16.5 |
|
|
|
|
|
|
|
19.6 |
|
|
30.5 |
|
|
|
|
|
Transaction and integration-related expenses (a) |
1.7 |
|
|
7.5 |
|
|
|
|
|
|
|
10.2 |
|
|
13.2 |
|
|
|
|
|
Legal and other expenses related to regulatory and competition
matters |
2.8 |
|
|
96.8 |
|
|
|
|
|
|
|
19.4 |
|
|
111.2 |
|
|
|
|
|
Business process modernization program |
4.1 |
|
|
— |
|
|
|
|
|
|
|
16.1 |
|
|
— |
|
|
|
|
|
Restructuring expenses (a) |
14.2 |
|
|
7.9 |
|
|
|
|
|
|
|
14.2 |
|
|
28.0 |
|
|
|
|
|
Other business transformation expenses (a) |
— |
|
|
6.1 |
|
|
|
|
|
|
|
— |
|
|
20.9 |
|
|
|
|
|
Impairment of intangible assets |
— |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
14.9 |
|
|
|
|
|
Officer transition expense |
— |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
6.4 |
|
|
|
|
|
Net adjustments related to loss from equity method investment |
3.3 |
|
|
— |
|
|
|
|
|
|
|
3.3 |
|
|
— |
|
|
|
|
|
ELEAD joint venture termination |
— |
|
|
17.0 |
|
|
|
|
|
|
|
— |
|
|
17.0 |
|
|
|
|
|
Adjusted EBITDA
(b) |
$ |
169.8 |
|
|
$ |
193.8 |
|
|
|
$ |
(24.0 |
) |
|
(12 |
)% |
|
$ |
750.9 |
|
|
$ |
774.9 |
|
|
$ |
(24.0 |
) |
|
(3 |
)% |
Adjusted margin |
37.8 |
% |
|
39.7 |
% |
|
-190 bps |
|
|
|
|
|
38.3 |
% |
|
40.5 |
% |
|
-220 bps |
|
|
|
|
|
Fiscal Year Ended |
|
June 30, |
|
2020 |
|
2019 |
Net cash flows provided by operating activities |
$ |
375.1 |
|
|
|
$ |
483.1 |
|
|
Net cash flows provided by
operating activities - discontinued operations |
(4.6 |
) |
|
|
(44.6 |
) |
|
Capital expenditures |
(23.5 |
) |
|
|
(54.4 |
) |
|
Capitalized software |
(58.5 |
) |
|
|
(37.9 |
) |
|
Change in restricted cash |
(6.8 |
) |
|
|
(3.0 |
) |
|
Free cash flow from
continuing operations (a) (b) |
$ |
281.7 |
|
|
|
$ |
343.2 |
|
|
|
(a) Excludes amounts attributable to discontinued
operations.
(b) Refer to the Non-GAAP Financial Measures section of this
press release for additional information on our non-GAAP
adjustments.
(c) The portion of expense related to noncontrolling interest
has been removed from amortization of acquired intangible assets
for the three months and fiscal year ended June 30, 2020, and from
restructuring expenses, amortization of acquired intangible assets,
and legal and other expenses related to regulatory and competition
matters for the three months and fiscal year ended June 30,
2019.
CDK Global, Inc.Segment Adjusted
Financial Data(In millions)(Unaudited)
As described below under the Non-GAAP Financial Measures section
of this press release, we incorporated additional adjustments
within our calculations of non-GAAP financial measures where
management has deemed it appropriate to better reflect our
underlying operations. These adjustments are inconsistent in amount
and frequency and do not directly reflect our underlying
operations. Therefore, management believes that excluding such
information provides us with a better understanding of our ongoing
operating performance across periods. Prior period information has
been revised to conform to the current period presentation.
Fiscal 2020 Modifications to Our Adjustments:
- Effective July 1, 2019, we modified our presentation of
adjusted earnings before income taxes to include adjustments for
the business process modernization program.
- Effective April 1, 2020, we modified our presentation of
adjusted earnings before income taxes to include our plan to
restructure the CDKI segment to reduce costs and improve
margins.
- Effective April 21, 2020, we modified our presentation of
adjusted earnings before income taxes to include net adjustments
related to the loss from an equity method investment.
The Digital Marketing Business is presented as discontinued
operations and prior year amounts associated with the Digital
Marketing Business have been reclassified as such. On April 21,
2020, the Company completed its sale of the Digital Marketing
Business to Sincro LLC, a newly formed company owned by Ansira
Partners, Inc. ("Ansira"), which is a subsidiary of Advent
International. Refer to Form 10-K, Item 8 of Part II, "Financial
Statements and Supplementary Data - Note 4 - Discontinued
Operations." for more information.
|
Segment Revenues |
|
Three Months Ended |
|
Fiscal Year Ended |
|
June 30, |
|
Change |
|
June 30, |
|
Change |
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CDK North America (a) |
$ |
376.7 |
|
|
$ |
408.5 |
|
|
$ |
(31.8 |
) |
|
|
(8 |
)% |
|
$ |
1,639.0 |
|
|
$ |
1,593.0 |
|
|
$ |
46.0 |
|
|
|
3 |
% |
CDK International (b) |
72.9 |
|
|
80.1 |
|
|
(7.2 |
) |
|
|
(9 |
)% |
|
321.1 |
|
|
321.8 |
|
|
(0.7 |
) |
|
|
— |
% |
Total |
$ |
449.6 |
|
|
$ |
488.6 |
|
|
$ |
(39.0 |
) |
|
|
(8 |
)% |
|
$ |
1,960.1 |
|
|
$ |
1,914.8 |
|
|
$ |
45.3 |
|
|
|
2 |
% |
|
Segment Adjusted Earnings before Income Taxes |
|
Three Months Ended |
|
Fiscal Year Ended |
|
June 30, |
|
Change |
|
June 30, |
|
Change |
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
CDK North America (a) |
$ |
141.8 |
|
|
$ |
169.5 |
|
|
$ |
(27.7 |
) |
|
|
(16 |
)% |
|
$ |
647.1 |
|
|
$ |
686.4 |
|
|
$ |
(39.3 |
) |
|
|
(6 |
)% |
Margin |
37.6 |
% |
|
41.5 |
% |
|
-390 bps |
|
|
|
|
|
|
39.5 |
% |
|
43.1 |
% |
|
-360 bps |
|
|
|
|
|
CDK International (b) |
17.3 |
|
|
21.2 |
|
|
(3.9 |
) |
|
|
(18 |
)% |
|
73.1 |
|
|
$ |
77.8 |
|
|
(4.7 |
) |
|
|
(6 |
)% |
Margin |
23.7 |
% |
|
26.5 |
% |
|
-280 bps |
|
|
|
|
|
|
22.8 |
% |
|
24.2 |
% |
|
-140 bps |
|
|
|
|
|
Other (c) |
(48.4 |
) |
|
(54.7 |
) |
|
6.3 |
|
|
|
12 |
% |
|
(198.2 |
) |
|
(202.9 |
) |
|
4.7 |
|
|
|
2 |
% |
Total |
$ |
110.7 |
|
|
$ |
136.0 |
|
|
$ |
(25.3 |
) |
|
|
(19 |
)% |
|
$ |
522.0 |
|
|
$ |
561.3 |
|
|
$ |
(39.3 |
) |
|
|
(7 |
)% |
Margin |
24.6 |
% |
|
27.8 |
% |
|
-320 bps |
|
|
|
|
|
|
26.6 |
% |
|
29.3 |
% |
|
-270 bps |
|
|
|
|
|
(a) The table below presents a reconciliation of: (i) revenues
to constant currency revenues; and (ii) earnings before income
taxes to constant currency adjusted earnings before income taxes
for the CDK North America segment.
CDK North
America |
Three Months Ended |
|
Fiscal Year Ended |
|
June 30, |
|
Change |
|
June 30, |
|
Change |
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
Revenues |
$ |
376.7 |
|
|
$ |
408.5 |
|
|
$ |
(31.8 |
) |
|
|
(8 |
)% |
|
$ |
1,639.0 |
|
|
$ |
1,593.0 |
|
|
$ |
46.0 |
|
|
3 |
% |
Impact of exchange rates |
0.8 |
|
|
— |
|
|
|
|
|
|
1.2 |
|
|
— |
|
|
|
|
|
Constant currency revenues
(d) |
$ |
377.5 |
|
|
$ |
408.5 |
|
|
$ |
(31.0 |
) |
|
|
(8 |
)% |
|
$ |
1,640.2 |
|
|
$ |
1,593.0 |
|
|
$ |
47.2 |
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income
taxes |
$ |
130.2 |
|
|
$ |
44.4 |
|
|
$ |
85.8 |
|
|
|
193 |
% |
|
$ |
587.6 |
|
|
$ |
517.5 |
|
|
$ |
70.1 |
|
|
14 |
% |
Margin % |
34.6 |
% |
|
10.9 |
% |
|
2370 bps |
|
|
|
|
|
|
35.9 |
% |
|
32.5 |
% |
|
340 bps |
|
|
|
|
Transaction and integration-related costs |
0.8 |
|
|
7.4 |
|
|
|
|
|
|
8.7 |
|
|
11.2 |
|
|
|
|
|
Amortization of acquired intangible assets |
3.9 |
|
|
3.9 |
|
|
|
|
|
|
15.3 |
|
|
14.6 |
|
|
|
|
|
Legal and other expenses related to regulatory and competition
matters |
2.8 |
|
|
96.8 |
|
|
|
|
|
|
19.4 |
|
|
111.2 |
|
|
|
|
|
Business process modernization program |
4.1 |
|
|
— |
|
|
|
|
|
|
16.1 |
|
|
— |
|
|
|
|
|
Impairment of intangible assets |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
14.9 |
|
|
|
|
|
ELEAD joint venture agreement termination |
— |
|
|
17.0 |
|
|
|
|
|
|
— |
|
|
17.0 |
|
|
|
|
|
Adjusted earnings before income taxes (d) |
$ |
141.8 |
|
|
$ |
169.5 |
|
|
$ |
(27.7 |
) |
|
|
(16 |
)% |
|
$ |
647.1 |
|
|
$ |
686.4 |
|
|
$ |
(39.3 |
) |
|
|
(6 |
)% |
Adjusted margin % |
37.6 |
% |
|
41.5 |
% |
|
-390 bps |
|
|
|
|
|
39.5 |
% |
|
43.1 |
% |
|
-360 bps |
|
|
|
|
|
Impact of exchange rates |
0.4 |
|
|
— |
|
|
|
|
|
|
0.7 |
|
|
— |
|
|
|
|
|
Constant currency adjusted
earnings before income taxes (d) |
$ |
142.2 |
|
|
$ |
169.5 |
|
|
$ |
(27.3 |
) |
|
|
(16 |
)% |
|
$ |
647.8 |
|
|
$ |
686.4 |
|
|
$ |
(38.6 |
) |
|
|
(6 |
)% |
(b) The table below presents a reconciliation of: (i) revenues
to constant currency revenues; and (ii) earnings before income
taxes to constant currency earnings before income taxes for the CDK
International segment.
CDK
International |
Three Months Ended |
|
Fiscal Year Ended |
|
June 30, |
|
Change |
|
June 30, |
|
Change |
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
Revenues |
$ |
72.9 |
|
|
$ |
80.1 |
|
|
$ |
(7.2 |
) |
|
(9 |
)% |
|
$ |
321.1 |
|
|
$ |
321.8 |
|
|
$ |
(0.7 |
) |
|
|
— |
% |
Impact of exchange rates |
2.7 |
|
|
— |
|
|
|
|
|
|
9.5 |
|
|
— |
|
|
|
|
|
Constant currency revenues
(d) |
$ |
75.6 |
|
|
$ |
80.1 |
|
|
$ |
(4.5 |
) |
|
(6 |
)% |
|
$ |
330.6 |
|
|
$ |
321.8 |
|
|
$ |
8.8 |
|
|
|
3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before income
taxes |
$ |
2.9 |
|
|
$ |
21.0 |
|
|
$ |
(18.1 |
) |
|
(86 |
)% |
|
$ |
58.1 |
|
|
$ |
77.1 |
|
|
$ |
(19.0 |
) |
|
|
(25 |
)% |
Margin % |
4.0 |
% |
|
26.2 |
% |
|
-2220 bps |
|
|
|
|
|
|
18.1 |
% |
|
24.0 |
% |
|
-590 bps |
|
|
|
|
|
|
Restructuring expenses |
14.2 |
|
|
— |
|
|
|
|
|
|
14.2 |
|
|
— |
|
|
|
|
|
Amortization of acquired intangible assets |
0.2 |
|
|
0.2 |
|
|
|
|
|
|
0.8 |
|
|
0.7 |
|
|
|
|
|
Adjusted earnings
before income taxes (d) |
$ |
17.3 |
|
|
$ |
21.2 |
|
|
$ |
(3.9 |
) |
|
(18 |
)% |
|
$ |
73.1 |
|
|
$ |
77.8 |
|
|
$ |
(4.7 |
) |
|
|
(6 |
)% |
Adjusted Margin % |
23.7 |
% |
|
26.5 |
% |
|
-280 bps |
|
|
|
|
|
|
22.8 |
% |
|
24.2 |
% |
|
-140 bps |
|
|
|
|
|
|
Impact of exchange rates |
0.5 |
|
|
— |
|
|
|
|
|
|
2.0 |
|
|
— |
|
|
|
|
|
Constant currency earnings
before income taxes (d) |
$ |
17.8 |
|
|
$ |
21.2 |
|
|
$ |
(3.4 |
) |
|
(16 |
)% |
|
$ |
75.1 |
|
|
$ |
77.8 |
|
|
$ |
(2.7 |
) |
|
|
(3 |
)% |
(c) The table below presents a reconciliation of loss before
income taxes to constant currency adjusted loss before income taxes
for the Other segment.
Other |
Three Months Ended |
|
Fiscal Year Ended |
|
June 30, |
|
Change |
|
June 30, |
|
Change |
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
Loss before income taxes |
$ |
(58.3 |
) |
|
$ |
(85.3 |
) |
|
$ |
27.0 |
|
|
32 |
% |
|
$ |
(221.5 |
) |
|
$ |
(290.7 |
) |
|
$ |
69.2 |
|
|
24 |
% |
Total stock-based compensation |
6.8 |
|
|
16.5 |
|
|
|
|
|
|
19.6 |
|
|
30.5 |
|
|
|
|
|
Transaction and integration-related expenses |
0.9 |
|
|
0.1 |
|
|
|
|
|
|
1.5 |
|
|
2.0 |
|
|
|
|
|
Net adjustments related to loss from equity method investment |
2.2 |
|
|
— |
|
|
|
|
|
|
2.2 |
|
|
— |
|
|
|
|
|
Restructuring expenses |
— |
|
|
7.9 |
|
|
|
|
|
|
— |
|
|
28.0 |
|
|
|
|
|
Other business transformation expenses |
— |
|
|
6.1 |
|
|
|
|
|
|
— |
|
|
20.9 |
|
|
|
|
|
Officer transition expense |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
6.4 |
|
|
|
|
|
Adjusted loss before
income taxes (d) |
$ |
(48.4 |
) |
|
$ |
(54.7 |
) |
|
$ |
6.3 |
|
|
12 |
% |
|
$ |
(198.2 |
) |
|
$ |
(202.9 |
) |
|
$ |
4.7 |
|
|
2 |
% |
Impact of exchange rates |
(0.1 |
) |
|
— |
|
|
|
|
|
|
(0.1 |
) |
|
— |
|
|
|
|
|
Constant currency adjusted
loss before income taxes (d) |
$ |
(48.5 |
) |
|
$ |
(54.7 |
) |
|
$ |
6.2 |
|
|
11 |
% |
|
$ |
(198.3 |
) |
|
$ |
(202.9 |
) |
|
$ |
4.6 |
|
|
2 |
% |
(d) Refer to the Non-GAAP Financial Measures section of this
earnings release for additional information on our non-GAAP
adjustments.
CDK Global, Inc.Revenue
Disaggregation(In millions)(Unaudited)
The following supplemental table presents segment revenues by
revenue category from continuing operations for the three months
and fiscal year ended, June 30, 2020 and 2019:
|
|
|
Three Months Ended |
|
Fiscal Year Ended |
|
June 30, |
|
Change |
|
June 30, |
|
Change |
|
2020 |
|
2019 |
|
$ |
|
% |
|
2020 |
|
2019 |
|
$ |
|
% |
CDK North America: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription |
$ |
305.1 |
|
|
$ |
328.4 |
|
|
$ |
(23.3 |
) |
|
|
(7 |
)% |
|
$ |
1,306.0 |
|
|
$ |
1,283.3 |
|
|
$ |
22.7 |
|
|
|
2 |
% |
On-site license and installation |
3.3 |
|
|
1.8 |
|
|
1.5 |
|
|
|
83 |
% |
|
10.8 |
|
|
7.9 |
|
|
2.9 |
|
|
|
37 |
% |
Transaction |
34.4 |
|
|
44.0 |
|
|
(9.6 |
) |
|
|
(22 |
)% |
|
155.0 |
|
|
162.5 |
|
|
(7.5 |
) |
|
|
(5 |
)% |
Other |
33.9 |
|
|
34.3 |
|
|
(0.4 |
) |
|
|
(1 |
)% |
|
167.2 |
|
|
139.3 |
|
|
27.9 |
|
|
|
20 |
% |
Total CDK North America |
$ |
376.7 |
|
|
$ |
408.5 |
|
|
$ |
(31.8 |
) |
|
|
(8 |
)% |
|
$ |
1,639.0 |
|
|
$ |
1,593.0 |
|
|
$ |
46.0 |
|
|
|
3 |
% |
CDK International: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription* |
$ |
61.8 |
|
|
$ |
60.0 |
|
|
$ |
1.8 |
|
|
|
3 |
% |
|
$ |
253.5 |
|
|
$ |
239.4 |
|
|
$ |
14.1 |
|
|
|
6 |
% |
On-site license and installation* |
7.8 |
|
|
15.1 |
|
|
(7.3 |
) |
|
|
(48 |
)% |
|
46.7 |
|
|
65.0 |
|
|
(18.3 |
) |
|
|
(28 |
)% |
Other |
3.3 |
|
|
5.0 |
|
|
(1.7 |
) |
|
|
(34 |
)% |
|
20.9 |
|
|
17.4 |
|
|
3.5 |
|
|
|
20 |
% |
Total CDK International |
$ |
72.9 |
|
|
$ |
80.1 |
|
|
$ |
(7.2 |
) |
|
|
(9 |
)% |
|
$ |
321.1 |
|
|
$ |
321.8 |
|
|
$ |
(0.7 |
) |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CDK Total: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Subscription* |
$ |
366.9 |
|
|
$ |
388.4 |
|
|
$ |
(21.5 |
) |
|
|
(6 |
)% |
|
$ |
1,559.5 |
|
|
$ |
1,522.7 |
|
|
$ |
36.8 |
|
|
|
2 |
% |
Total On-site license and installation* |
11.1 |
|
|
16.9 |
|
|
(5.8 |
) |
|
|
(34 |
)% |
|
57.5 |
|
|
72.9 |
|
|
(15.4 |
) |
|
|
(21 |
)% |
Total Transaction |
34.4 |
|
|
44.0 |
|
|
(9.6 |
) |
|
|
(22 |
)% |
|
155.0 |
|
|
162.5 |
|
|
(7.5 |
) |
|
|
(5 |
)% |
Total Other |
37.2 |
|
|
39.3 |
|
|
(2.1 |
) |
|
|
(5 |
)% |
|
188.1 |
|
|
156.7 |
|
|
31.4 |
|
|
|
20 |
% |
Total |
$ |
449.6 |
|
|
$ |
488.6 |
|
|
$ |
(39.0 |
) |
|
|
(8 |
)% |
|
$ |
1,960.1 |
|
|
$ |
1,914.8 |
|
|
$ |
45.3 |
|
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*During the fourth quarter of fiscal 2020, the Company
determined that certain revenue within the CDKI segment categorized
as Subscription should be applied to On-site license and
installation. As a result, for the three months and year ended June
30, 2019, the Company has reclassified $5.2 million and $17.9
million of revenue to conform to the current year presentation.
This reclassification did not impact the Consolidated Statements of
Operations.
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.
|
September 30, 2018 (a) |
|
December 31, 2018 (a) |
|
March 31, 2019 (a) |
|
June 30, 2019 (a) |
|
September 30, 2019 |
|
December 31, 2019 |
|
March 31, 2020 |
|
June 30, 2020 |
CDK North
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automotive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DMS Customer Sites (b) |
8,920 |
|
|
8,888 |
|
|
8,936 |
|
|
8,946 |
|
|
8,957 |
|
|
8,974 |
|
|
8,948 |
|
|
8,951 |
|
Avg Revenue Per Site (c) |
$ |
8,271 |
|
|
$ |
8,835 |
|
|
$ |
8,684 |
|
|
$ |
8,750 |
|
|
$ |
8,723 |
|
|
$ |
8,858 |
|
|
$ |
9,009 |
|
|
$ |
8,034 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjacencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DMS Customer Sites (b) |
5,613 |
|
|
5,665 |
|
|
5,713 |
|
|
5,735 |
|
|
5,775 |
|
|
5,802 |
|
|
5,793 |
|
|
5,768 |
|
Avg Revenue Per Site (c) |
$ |
1,650 |
|
|
$ |
1,705 |
|
|
$ |
1,722 |
|
|
$ |
1,720 |
|
|
$ |
1,733 |
|
|
$ |
1,764 |
|
|
$ |
1,784 |
|
|
$ |
1,661 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total CDK North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DMS Customer Sites (b) |
14,533 |
|
|
14,553 |
|
|
14,649 |
|
|
14,681 |
|
|
14,732 |
|
|
14,776 |
|
|
14,741 |
|
|
14,719 |
|
Avg Revenue Per Site (c) |
$ |
5,714 |
|
|
$ |
6,067 |
|
|
$ |
5,972 |
|
|
$ |
6,003 |
|
|
$ |
5,984 |
|
|
$ |
6,076 |
|
|
$ |
6,171 |
|
|
$ |
5,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CDK
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DMS Customer Sites (b) |
13,187 |
|
|
13,167 |
|
|
12,988 |
|
|
13,098 |
|
|
12,973 |
|
|
12,858 |
|
|
12,847 |
|
|
12,722 |
|
Avg Revenue Per site (c) |
$ |
1,378 |
|
|
$ |
1,399 |
|
|
$ |
1,454 |
|
|
$ |
1,487 |
|
|
$ |
1,519 |
|
|
$ |
1,554 |
|
|
$ |
1,575 |
|
|
$ |
1,417 |
|
(a) Average revenue per Dealer Management System (DMS) customer
site has been updated for fiscal 2019 to reflect budgeted foreign
exchange rates for fiscal 2020.
(b) DMS Customer Sites - We track the number of retail customer
sites with an active DMS that sell vehicles in the automotive and
adjacent markets as an indicator of our opportunity set for
generating subscription revenue. We consider a DMS to be active if
we have billed a subscription fee for that solution during each
applicable month presented in the table. 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.
(c) Average Revenue Per DMS Customer Site - Average revenue per
DMS customer site is an indicator of the scope of adoption of our
solutions by DMS customers, and we monitor changes in this metric
to measure the effectiveness of our strategy to deepen our
relationships with our current customer base through upgrading and
expanding solutions. We calculate average revenue per DMS customer
site by dividing revenue generated from our solutions, in an
applicable quarterly period by the average number of DMS customer
sites in the same period. The metric excludes subscription revenue
generated by customers not included in our DMS customer site count
as well as subscription revenue related to certain installation and
training activities that is deferred then recognized as revenue
over the life of the contract. Revenue underlying this metric
is based on budgeted foreign exchange rates. When we discuss growth
in average revenue per DMS customer site, revenue for the
comparable prior period has been adjusted to reflect budgeted
foreign exchange rates for the current period.
Non-GAAP Financial Measures
We disclose certain financial measures for our consolidated and
operating segment results on both a GAAP and a non-GAAP (adjusted)
basis. The non-GAAP financial measures disclosed should be viewed
in addition to, and not as an alternative to, results prepared in
accordance with GAAP. Our use of each of the following
non-GAAP financial measures may differ from similarly titled
non-GAAP financial measures presented by other companies, and other
companies may not define these non-GAAP financial measures, or
reconcile them to the comparable GAAP financial measures, in the
same way.
Non-GAAP Financial Measure |
Comparable GAAP Financial Measure |
Adjusted earnings before income taxes |
Earnings (Loss) before income taxes |
Adjusted provision for income
taxes |
Provision for income
taxes |
Adjusted net earnings
attributable to CDK |
Net (loss) earnings
attributable to CDK |
Adjusted diluted earnings
attributable to CDK per share |
Diluted (loss) earnings
attributable to CDK per share |
Adjusted EBITDA |
Net (loss) earnings
attributable to CDK |
Adjusted EBITDA margin |
Net (loss) earnings
attributable to CDK margin |
Constant currency
revenues |
Revenues |
Constant currency adjusted
earnings before income taxes |
(Loss) Earnings before income
taxes |
Free cash flow from continuing
operations |
Net cash flows provided by
operating activities |
We use adjusted earnings before income taxes, adjusted provision
for income taxes, adjusted net earnings attributable to CDK,
adjusted diluted earnings attributable to CDK per share, adjusted
EBITDA and adjusted EBITDA margin internally to evaluate our
performance on a consistent basis, because those measures adjust
for the impact of certain items that we believe do not directly
reflect our underlying operations. By adjusting for these items we
believe we have more precise inputs for use as factors in (i) our
budgeting process, (ii) making financial and operational decisions,
(iii) evaluating ongoing segment and overall operating performance
on a consistent period-to-period basis and relative to our
competitors, (iv) target leverage calculations, (v) debt covenant
calculations, and (vi) determining incentive-based
compensation.
We believe our non-GAAP financial measures are helpful to users
of the financial statements because they (i) provide investors with
meaningful supplemental information regarding financial performance
by excluding certain items, (ii) permit investors to view
performance using the same tools that management uses, and (iii)
otherwise provide supplemental information that may be useful to
investors in evaluating our ongoing operating results on a
consistent basis. We believe that the presentation of these
non-GAAP financial measures, when considered in addition to the
corresponding GAAP financial measures and the reconciliations to
those measures disclosed below, provides investors with a better
understanding of the factors and trends affecting our business than
could be obtained absent these disclosures.
We incorporated additional adjustments within our calculations
of non-GAAP financial measures where management has deemed it
appropriate to better reflect our underlying operations. These
adjustments are inconsistent in amount and frequency and do not
directly reflect our underlying operations. Therefore, management
believes that excluding such information provides us with a better
understanding of our ongoing operating performance across periods.
Prior period information has been revised to conform to the new
presentation.
Adjusted Earnings before Income Taxes
Management has excluded the following items from adjusted
earnings before income taxes for the periods presented:
- Total stock-based compensation expense included within Cost of
revenues and Selling, general and administrative expenses.
- Amortization of acquired intangible assets consists of
amortization of intangible assets such as customer lists, purchased
software, and trademarks acquired in connection with business
combinations. Although we exclude amortization of acquired
intangible assets from our non-GAAP measure, we believe that it is
important for the users of the financial statements to understand
that the associated intangible assets contribute to revenue
generation.
- Transaction and integration-related expenses include: (i)
legal, accounting, outside service fees, and other costs incurred
in connection with assessment and integration of acquisitions and
other strategic business opportunities; and (ii) post-close
adjustments to acquisition-related contingent consideration,
reported within Cost of revenues and Selling, general and
administrative expenses.
- Legal and other expenses, including litigation provision,
related to regulatory and competition matters included within
Selling, general and administrative expenses, and Litigation
provision.
- Business process modernization program designed to improve the
way we do business for our customers through best-in-class product
offerings, process, governance and systems. The Business Process
Modernization Program will include a comprehensive redesign in the
way we go to market, including the quoting, contracting,
fulfilling, and invoicing processes, and systems and tools used by
the Company. The investment to implement this holistic business
reform, including the design and implementation of a new enterprise
resource planning ("ERP") system will be completed over a
three-year time horizon. The expense is included within Cost of
revenues and Selling, general and administrative expenses.
- Restructuring expense in fiscal 2019 related to other business
transformation expenses incurred in connection with our business
transformation plan. Restructuring expense in fiscal 2020 related
to the restructuring plan for the CDKI segment, which was adopted
by the Company on May 2, 2020. These charges are included within
Cost of revenues and Selling, general and administrative
expenses.
- Other business transformation expenses incurred in connection
with our business transformation plan and included within cost of
revenues and Selling, general and administrative expenses.
- Net adjustments related to loss from equity method investment
included certain portions of Ansira earnings attributable to the
equity interest owned by CDK reported within Loss from equity
method investment
- Loss related to ELEAD joint venture contract termination
included within Loss from equity method investment
Adjusted Provision for Income taxes
Management has excluded the following items from adjusted
provision for income taxes for the periods presented:
- Income tax effect of pre-tax adjustments described above.
- Recognition of income tax expense for cumulative withholding
tax associated with historical foreign earnings that are no longer
considered indefinitely reinvested as of March 31, 2020. The change
in assertion was made in the third quarter in response to the
uncertainty related to the COVID-19 pandemic and its potential
impact on CDK’s liquidity needs. In the fourth quarter of fiscal
2020, an adjustment was made to true up the estimate recorded in
the third quarter of fiscal 2020.
- In fiscal 2019, decrease in valuation allowance associated with
a deferred tax asset for a capital loss carryforward which the
Company expected to utilize in connection with the plan to divest
the Digital Marketing Business. In fiscal 2020, based on new
information about the plan for the sale the valuation allowance was
restored.
- In fiscal 2020, a one-time tax benefit of $1.2 million for an
adjustment of an accrual for foreign withholding taxes related to
undistributed earnings and in fiscal 2019, a one-time tax expense
of $3.4 million from a revaluation of deferred tax assets
associated with executive compensation as a result of the Tax
Reform Act offset by $0.6 million tax benefit due to a true-up to
the one-time transition tax initially recorded in fiscal 2018 as a
result of the Tax Reform Act.
Adjusted Net Earnings Attributable to CDK and Adjusted Diluted
Net Earnings Attributable to CDK per Share
For each respective presentation, management has excluded loss
(earnings) from discontinued operations, net of taxes associated
with the Company's plan to divest Digital Marketing Business, in
addition to 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 diluted net earnings
attributable to CDK per share.
The portion of expense related to noncontrolling interest of
$0.1 million, has been removed from legal and other expenses
related to regulatory and competition matters during the three
months ended June 30, 2020. The portion of expense related to
noncontrolling interest of $0.3 million and $0.1 million has been
removed from amortization of acquired intangible assets and legal
and other expenses related to regulatory and competition matters,
respectively, during the fiscal year ended June 30, 2020. The
portion of expense related to noncontrolling interest of $0.1
million and $0.1 million has been removed from amortization of
acquired intangible assets and legal and other expenses related to
regulatory and competition matters, respectively, during the three
months ended June 30, 2019. The portion of expense related to
noncontrolling interest of $0.1 million, $0.3 million, and $0.2
million has been removed from restructuring expenses, amortization
of acquired intangible assets and legal and other expenses related
to regulatory and competition matters, respectively, during the
fiscal year ended June 30, 2019.
Adjusted EBITDA
Management has excluded the following items from net earnings
attributable to CDK in order to calculate adjusted EBITDA for the
periods presented:
- Net earnings attributable to noncontrolling interest included
within the financial statements.
- Net loss from discontinued operations included within the
financial statements.
- Provision for income taxes included within the financial
statements.
- Interest expense included within the financial statements.
- Depreciation and amortization included within the financial
statements.
- Total stock-based compensation expense included within cost of
revenues and Selling, general and administrative expenses.
- Transaction and integration-related expenses include: (i)
legal, accounting, outside service fees, and other costs incurred
in connection with assessment and integration of acquisitions and
other strategic business opportunities; and (ii) post-close
adjustments to acquisition-related contingent consideration,
reported within Cost of revenues and Selling, general and
administrative expenses.
- Legal and other expenses, including litigation provision,
related to regulatory and competition matters included within
Selling, general and administrative expenses.
- Business process modernization program designed to improve the
way we do business for our customers through best-in-class product
offerings, process, governance and systems and included within Cost
of revenues and Selling, general and administrative expenses.
- Restructuring expense in fiscal 2019 relate to other business
transformation expenses incurred in connection with our business
transformation plan. Restructuring expense in fiscal 2020 related
to the restructuring plan for the CDKI segment, which was adopted
by the Company on May 2, 2020. These charges are included within
Cost of revenues and Selling, general and administrative
expenses.
- Other business transformation expenses incurred in connection
with our business transformation plan and included within Cost of
revenues and Selling, general and administrative expenses.
- Impairment of intangible assets consists of the write-off of
certain intangible assets within the CDKNA segment and is reported
within cost of revenues.
- Officer transition expense includes severance expense in
connection with officer departures reported within Selling, general
and administrative expenses.
- Net adjustments related to loss from equity method investment
included certain portions of Ansira earnings attributable to the
equity interest owned by CDK reported within Loss from equity
method investment
- Loss related to ELEAD joint venture contract termination
included within Loss from equity method investment
Free Cash Flow
We also review free cash flow from continuing operations as a
measure of our ability to generate additional cash from our
business operations. Free cash flow from continuing operations is
defined as cash flow from operating activities less net cash flows
used in operating activities attributable to discontinued
operations, amounts paid for capital expenditures and capitalized
software and change in restricted cash. Free cash flow from
continuing operations should be considered in addition to, rather
than as a substitute for consolidated net income as a measure of
our performance and net cash provided by operating activities as a
measure of our liquidity.
The change in restricted cash is funds held for clients before
remittance to agencies for titling and registration services on
behalf of those clients. Funds receivable was $40.7 million and
$32.3 million as of June 30, 2020 and June 30, 2019,
respectively.
Constant Currency
We use constant currency revenues and constant currency adjusted
earnings before income taxes to review revenues and adjusted
earnings before income taxes for our consolidated and operating
segment results 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 were translated into U.S.
dollar using the average monthly exchange rates for the comparable
prior period. As a result, constant currency results neutralize the
effects of foreign currency.
Safe Harbor for Forward-Looking Statements
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements, other than statements of historical fact,
including: the Company’s business outlook; other plans; objectives;
forecasts; goals; beliefs; business strategies; future events;
business conditions; results of operations; financial position and
business outlook and trends; 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:
the Company’s expectations regarding the potential impacts on the
Company’s business of the outbreak of the COVID-19 pandemic; the
Company’s success in obtaining, retaining and selling additional
services to customers; the pricing of the Company’s products and
services; overall market and economic conditions, including
interest rate and foreign currency trends, and technology trends;
adverse global economic conditions and credit markets and
volatility in the countries in which we do business; auto sales and
related industry changes; competitive conditions; changes in
regulation; changes in technology, security breaches,
interruptions, failures and other errors involving the Company’s
systems; availability of skilled technical
employees/labor/personnel; the impact of new acquisitions and
divestitures; employment and wage levels; availability of capital
for the payment of debt service obligations or dividends or the
repurchase of shares; any changes to the Company’s credit ratings
and the impact of such changes on financing costs, rates, terms,
debt service obligations, access to capital market and working
capital needs; the impact of the Company’s indebtedness, access to
cash and financing, and ability to secure financing, or financing
at attractive rates; the onset of or developments in litigation
involving contract, intellectual property, competition,
shareholder, and other matters, and governmental investigations;
and the ability of the Company’s significant stockholders and their
affiliates to significantly influence the Company’s decisions or
cause it to incur significant costs.
There may be other factors that may cause the Company’s actual
results, performance or achievements to differ materially from
those expressed in, or implied by, the forward-looking statements.
The Company gives no assurances that any of the events anticipated
by the forward-looking statements will occur or, if any of them do,
what impact they will have on its results of operations and
financial condition. You should carefully read the factors
described in the Company’s reports filed with the Securities and
Exchange Commission ("SEC"), including those discussed under "Part
I, Item 1A. Risk Factors" in its most recent Annual Report on Form
10-K for a description of certain risks that could, among other
things, cause the Company’s actual results to differ from any
forward-looking statements contained herein. These filings can be
found on the Company’s website at https://investors.cdkglobal.com
and the SEC's website at www.sec.gov.
All forward-looking statements speak only as of the date of this
press release even if subsequently made available by the Company on
its website or otherwise. The Company disclaims any obligation to
update or revise any forward-looking statements that may be made to
reflect new information or future events or circumstances that
arise after the date made or to reflect the occurrence of
unanticipated events, other than as required by law.
Investor Relations Contact:Julie Schlueter
847.485.4643 julie.schlueter@cdk.com |
Media Contact:Roxanne
Pipitone847.485.4423roxanne.pipitone@cdk.com |
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