Revenues Rise 7% to
$521.2 Million for the Quarter;
GAAP Net Earnings Decline 19%; Adjusted
Net Earnings Rise 36%
CDK Global, Inc. (Nasdaq:CDK) today announced its second quarter
fiscal 2015 financial results for the period ended December 31,
2014. Highlights are below:
| Second Quarter Fiscal 2015 Results |
|
As Reported |
|
As Adjusted |
| |
|
|
|
|
| Revenues |
|
7% to $521.2 million |
|
7% to $521.2 million |
| Earnings before income taxes |
|
(10)% to $75.2 million |
|
35% to $94.1 million |
| Net earnings |
|
(19)% to $42.5 million |
|
36% to $59.4 million |
| Diluted earnings per share |
|
(21)% to $0.26 per share |
|
37% to $0.37 per share |
"CDK reported strong financial results for the second quarter,
with positive contributions from each of our business segments,"
said Steve Anenen, President and Chief Executive Officer, CDK. "I
am also delighted by the interest in our new innovations showcased
at the recent National Automobile Dealers Association ("NADA") Expo
which we expect will drive future revenue growth. In addition, we
recently initiated a systematic analysis and review of our business
operations and announced an initial share repurchase authorization,
putting us solidly on the path to enhance long-term shareholder
value."
"Our performance and momentum have allowed us to raise our full
year earnings growth and margin forecasts representing the strength
in our business model, although we anticipate challenges in the
year-over-year comparisons for the second half of the year," said
Al Nietzel, Chief Financial Officer, CDK.
Growth in revenues and adjusted earnings before income taxes
were negatively impacted by about 1.5 and 2 percentage points,
respectively, due to unfavorable foreign exchange rates. Also
included in the above results is a $6.4 million pretax true-up of
the vacation accrual as of December 31, 2014 as this is a calendar
year employee benefit. On the "As Adjusted" basis, this contributed
9 points of adjusted earnings before income taxes and adjusted net
earnings growth, and over $0.02 cents per share. This item is
reported within "Selling, general, and administrative expenses" and
"Other" in segment financial data.
The above "As Adjusted" results exclude in fiscal 2015:
- $15.6 million pretax accelerated amortization of the Cobalt
trademark related to a change in useful life;
- $3.3 million of incremental costs incurred during the second
quarter of fiscal 2015 that are directly attributable to the
separation from ADP® (Nasdaq:ADP); and
- $4.6 million increase to income tax expense related to the tax
law change for bonus depreciation which ADP is entitled to
claim.
In order to present both periods on a comparable basis, the
above "As Adjusted" results include in fiscal 2014 amounts
representing certain incremental costs related to being an
independent public company in fiscal 2015 including interest
expense, stand-alone public company costs, and stock-based
compensation. 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 7% for the second
quarter compared to last year's second quarter. Pretax earnings
increased 13% and pretax margin improved 140 basis points due to
increased operating efficiencies, partially offset by a favorable
legal settlement in last year's second quarter.
Automotive Retail International
Automotive Retail International revenues increased 3% for the
second quarter compared to last year's second quarter. Pretax
earnings increased 20% and pretax margin improved 245 basis points
for the quarter due to the impact of expenses in last year's second
quarter to right-size the operations that did not recur this year
as well as increased operating efficiencies.
Digital Marketing
Digital Marketing revenues grew 17% for the second quarter
compared to last year's second quarter. Pretax earnings more than
doubled and pretax margin expanded over 500 basis points excluding
the $15.6 million accelerated amortization of the Cobalt trademark.
Pretax margin benefited from a favorable revenue mix, increased
operating efficiencies, and lower employee benefit costs compared
with a year ago.
Separation from ADP
CDK Global, Inc. began operating as a public company on October
1, 2014 following its spin-off from ADP on September 30,
2014.
Fiscal 2015 Forecast
CDK's fiscal 2015 forecast excludes the accelerated amortization
of the Cobalt trademark and costs in connection with the spin-off.
For comparability, fiscal 2014 results have also been adjusted to
exclude spin-off related one-time costs and include certain
incremental costs related to being an independent public company.
The reconciliations to GAAP measures are included in the schedules
within this press release.
As a result of expected pressure from unfavorable foreign
exchange rates, CDK has lowered its revenue growth forecast;
however, earnings growth and margin forecasts have been raised
based on the results through the first six months of the year. On
this adjusted basis, the forecast is as follows:
- Revenues – 6% to 7% growth from $1,973.6 million in fiscal
2014
- Adjusted earnings before income taxes – 13% to 14% growth from
the adjusted $303.7 million in fiscal 2014
- Adjusted pretax margin – approximately 100 basis points of
expansion from the adjusted 15.4% in fiscal 2014
- Adjusted EBITDA margin – approximately 100 basis points of
expansion from the adjusted 20.2% in fiscal 2014
- Adjusted net earnings – 9% to 10% growth from the adjusted
$205.9 million in fiscal 2014
- Adjusted diluted earnings per share – 8% to 9% growth from the
adjusted $1.28 in fiscal 2014
Effective Tax Rate
There is no change to CDK's anticipated adjusted effective tax
rate for fiscal 2015 of 34.5% to 35.0% compared to 32.2% in fiscal
2014. This is lower than fiscal 2015's anticipated normalized
effective tax rate of 36.5% to 37.0% due to a first quarter fiscal
2015 nonrecurring income tax benefit primarily related to foreign
operations. The higher adjusted effective tax rate for the year
compared to fiscal 2014 is anticipated to negatively impact
adjusted net earnings and adjusted diluted earnings per share by
approximately $8.5 million and $0.05, respectively, or about 4
percentage points of growth. The fiscal 2015 anticipated adjusted
effective tax rate and normalized effective tax rate both exclude
the impact of the $4.6 million increase to income tax expense in
the second quarter fiscal 2015 related to the tax law change for
bonus depreciation which ADP is entitled to claim.
Website Schedules
Other financial information, including financial statements and
supplementary schedules presented on an "As Reported" and "As
Adjusted" basis for all quarters of fiscal 2014, and the schedule
of quarterly revenues and pretax earnings by reportable segment
have been updated for the second quarter of fiscal 2015 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, Thursday,
February 5, 2015 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. Please note, this webcast will be
broadcast in two streams: Windows Media and Flash. Please check
your system at least 10 minutes prior to the webcast. 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 news releases, current
financial information, SEC filings and Investor Relations
presentations are accessible at the same website.
About CDK Global
With nearly $2 billion in revenues, CDK GlobalTM is
the largest 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 26,000 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. |
|
|
|
|
| Statements of
Consolidated and Combined Earnings |
|
| (In millions,
except per share amounts) |
|
|
|
|
(Unaudited) |
|
|
|
|
| |
|
|
| |
Three Months Ended
December 31, |
Six Months Ended December
31, |
| |
|
|
|
|
| |
2014 |
2013 |
2014 |
2013 |
| |
|
|
|
|
| Revenues |
$ 521.2 |
$ 487.3 |
$ 1,037.2 |
$ 968.8 |
| |
|
|
|
|
| Expenses: |
|
|
|
|
| Cost of revenues |
326.9 |
297.9 |
636.7 |
594.8 |
| Selling, general &
administrative expenses |
107.8 |
105.4 |
220.2 |
210.5 |
| Separation costs |
3.3 |
-- |
34.0 |
-- |
| Total
expenses |
438.0 |
403.3 |
890.9 |
805.3 |
| |
|
|
|
|
| Operating earnings |
83.2 |
84.0 |
146.3 |
163.5 |
| |
|
|
|
|
| Interest expense |
(9.0) |
(0.3) |
(10.1) |
(0.5) |
| Other income (expense),
net |
1.0 |
(0.1) |
1.7 |
-- |
| |
|
|
|
|
| Earnings before income
taxes |
75.2 |
83.6 |
137.9 |
163.0 |
| |
|
|
|
|
| Provision for income
taxes |
(32.7) |
(31.4) |
(56.3) |
(57.3) |
| |
|
|
|
|
| Net earnings |
$ 42.5 |
$ 52.2 |
$ 81.6 |
$ 105.7 |
| |
|
|
|
|
| |
|
|
|
|
| Net earnings per common
share: |
|
|
|
| Basic |
$ 0.26 |
$ 0.33 |
$ 0.51 |
$ 0.66 |
| Diluted |
$ 0.26 |
$ 0.33 |
$ 0.51 |
$ 0.66 |
| |
|
|
|
|
| Weighted-average common shares
outstanding |
|
|
| Basic (a) |
160.7 |
160.6 |
160.7 |
160.6 |
| Diluted (a) |
161.8 |
160.6 |
161.2 |
160.6 |
| |
|
|
|
|
| (a) On
September 30, 2014, ADP shareholders of record as of the close
of business on September 24, 2014 received one share of our
common stock for every three shares of ADP common stock held as of
the record date. For periods ended September 30, 2014 and
prior, basic and diluted earnings per share were computed using the
number of shares of our stock outstanding on September 30,
2014, the date on which our common stock was distributed to the
shareholders of ADP. The same number of shares was used to
calculate basic and diluted earnings per share because there were
no dilutive securities in those periods. |
| |
|
|
| CDK Global,
Inc. |
|
|
| Consolidated
and Combined Balance Sheets |
|
|
| (In
millions) |
|
|
|
(Unaudited) |
|
|
| |
|
|
| |
December 31, 2014 |
June 30, 2014 |
| Assets |
|
|
| Current assets: |
|
|
| Cash and cash equivalents |
$ 402.2 |
$ 402.8 |
| Accounts receivable, net of
allowance for doubtful accounts |
319.5 |
299.1 |
| Notes receivable from ADP and
its affiliates |
-- |
40.6 |
| Other current assets |
170.4 |
164.6 |
| Total current assets |
892.1 |
907.1 |
| |
|
|
| Property, plant and equipment, net |
106.5 |
109.9 |
| Other assets |
221.5 |
205.5 |
| Goodwill |
1,189.3 |
1,230.9 |
| Intangible assets, net |
105.8 |
133.8 |
| Total assets |
$ 2,515.2 |
$ 2,587.2 |
| |
|
|
| Liabilities and Stockholders' Equity |
|
|
| Current liabilities: |
|
|
| Current maturities of long-term
debt |
$ 12.5 |
$ -- |
| Accounts payable |
15.7 |
17.2 |
| Accrued expenses and other
current liabilities |
185.5 |
154.2 |
| Accrued payroll and
payroll-related expenses |
82.9 |
105.6 |
| Short-term deferred
revenues |
183.1 |
194.8 |
| Notes payable to ADP and its
affiliates |
-- |
21.9 |
| Total current
liabilities |
479.7 |
493.7 |
| |
|
|
| Long-term debt |
984.4 |
-- |
| Long-term deferred revenues |
184.3 |
182.8 |
| Deferred income taxes |
71.3 |
76.6 |
| Other liabilities |
44.7 |
43.9 |
| Total liabilities |
1,764.4 |
797.0 |
| |
|
|
| Stockholders' equity: |
|
|
| Preferred stock |
-- |
-- |
| Common stock |
1.6 |
-- |
| Additional paid-in-capital |
657.3 |
-- |
| Retained earnings |
23.1 |
-- |
| Net parent company
investment |
-- |
1,704.6 |
| Accumulated other comprehensive
income |
68.8 |
85.6 |
| Total stockholders' equity |
750.8 |
1,790.2 |
| |
|
|
| Total liabilities and stockholders'
equity |
$ 2,515.2 |
$ 2,587.2 |
| |
|
|
|
|
|
|
|
|
|
|
|
| CDK Global,
Inc. |
|
|
|
|
|
|
|
|
|
|
|
| Segment
Financial Data |
|
|
|
|
|
|
|
|
|
|
|
| (In
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| We use certain
adjusted results, among other measures, to evaluate our operating
performance in the absence of certain items for planning and
forecasting purposes. We believe that adjusted results provide
relevant and useful information because they allow investors to
view performance in a manner similar to the method used by us and
they improve our ability to understand our operating
performance. Adjusted earnings before income taxes for the
three and six months ended December 31, 2014 excludes
incremental costs incurred that were directly attributable to our
separation from ADP and accelerated trademark
amortization. Additionally, adjusted earnings before income
taxes for the three and six months ended December 31, 2013
reflects adjustments related to separation costs, stand-alone
public company costs, trademark royalty fee, stock-based
compensation, and interest expense, as further described in the
footnotes below, in order to show these amounts on a comparable
basis with the three and six months ended December 31,
2014. Because adjusted earnings before income taxes is not a
measure of performance that is calculated in accordance with
accounting principles generally accepted in the United States
("GAAP"), it should not be considered in isolation from, or as a
substitute for, other metrics that are calculated in accordance
with GAAP. |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
| |
Segment Revenues |
Adjusted Segment
Earnings before Income Taxes |
Adjusted Segment Margin |
| |
Three Months Ended
December 31, |
Change |
Three Months Ended
December 31, |
Change |
Three Months Ended
December 31, |
Change |
| |
2014 |
2013 |
$ |
% |
2014 |
2013 |
$ |
% |
2014 |
2013 |
BPS |
| Automotive Retail North America (a) |
$ 335.2 |
$ 313.7 |
$ 21.5 |
7% |
$ 90.5 |
$ 80.3 |
$ 10.2 |
13% |
27.0% |
25.6% |
140 |
| Automotive Retail International |
87.7 |
84.8 |
2.9 |
3% |
15.9 |
13.3 |
2.6 |
20% |
18.1% |
15.7% |
245 |
| Digital Marketing (b) |
105.3 |
89.7 |
15.6 |
17% |
11.4 |
4.8 |
6.6 |
138% |
10.8% |
5.4% |
548 |
| Other (c) |
-- |
-- |
-- |
n/a |
(22.4) |
(28.9) |
6.5 |
(22)% |
n/m |
n/m |
n/m |
| Foreign exchange |
(7.0) |
(0.9) |
(6.1) |
n/m |
(1.3) |
0.3 |
(1.6) |
n/m |
n/m |
n/m |
n/m |
| Total |
$ 521.2 |
$ 487.3 |
$ 33.9 |
7% |
$ 94.1 |
$ 69.8 |
$ 24.3 |
35% |
18.1% |
14.3% |
373 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
| |
Segment
Revenues |
Adjusted Segment
Earnings before Income Taxes |
Adjusted Segment
Margin |
| |
Six Months Ended December
31, |
Change |
Six Months Ended December
31, |
Change |
Six Months Ended December
31, |
Change |
| |
2014 |
2013 |
$ |
% |
2014 |
2013 |
$ |
% |
2014 |
2013 |
BPS |
| Automotive Retail North America (a) |
$ 662.9 |
$ 626.2 |
$ 36.7 |
6% |
$ 183.5 |
$ 156.8 |
$ 26.7 |
17% |
27.7% |
25.0% |
264 |
| Automotive Retail International |
174.1 |
169.8 |
4.3 |
3% |
28.5 |
24.5 |
4.0 |
16% |
16.4% |
14.4% |
194 |
| Digital Marketing (b) |
209.0 |
176.7 |
32.3 |
18% |
19.6 |
12.1 |
7.5 |
62% |
9.4% |
6.8% |
253 |
| Other (c) |
-- |
-- |
-- |
n/a |
(42.4) |
(46.6) |
4.2 |
n/m |
n/m |
n/m |
n/m |
| Foreign exchange |
(8.8) |
(3.9) |
(4.9) |
126% |
(1.7) |
0.5 |
(2.2) |
n/m |
n/m |
n/m |
n/m |
| Total |
$1,037.2 |
$ 968.8 |
$ 68.4 |
7% |
$ 187.5 |
$ 147.3 |
$ 40.2 |
27% |
18.1% |
15.2% |
287 |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| (a) The following
table provides a reconciliation of the most directly comparable
GAAP measure to adjusted earnings before income taxes for the
Automotive Retail North America segment: |
| |
Segment Earnings
before Income Taxes |
Segment Earnings
before Income Taxes |
|
|
|
|
|
|
|
| |
Three Months Ended
December 31, |
Six Months Ended December
31, |
|
|
|
|
|
|
|
| |
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
|
| Earnings before income taxes |
$ 90.5 |
$ 83.3 |
$ 183.5 |
$ 159.8 |
|
|
|
|
|
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| Stand-alone public company costs (d) |
-- |
(3.0) |
-- |
(3.0) |
|
|
|
|
|
|
|
| Adjusted earnings before income taxes |
$ 90.5 |
$ 80.3 |
$ 183.5 |
$ 156.8 |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| (b) The following
table provides a reconciliation of the most directly comparable
GAAP measure to adjusted earnings before income taxes for the
Digital Marketing segment: |
| |
Segment Earnings
before Income Taxes |
Segment Earnings
before Income Taxes |
|
|
|
|
|
|
|
| |
Three Months Ended
December 31, |
Six Months Ended December
31, |
|
|
|
|
|
|
|
| |
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
|
| Earnings before income taxes |
$ (4.2) |
$ 4.8 |
$ 4.0 |
$ 12.1 |
|
|
|
|
|
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| Accelerated trademark amortization
(e) |
15.6 |
-- |
15.6 |
-- |
|
|
|
|
|
|
|
| Adjusted earnings before income taxes |
$ 11.4 |
$ 4.8 |
$ 19.6 |
$ 12.1 |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| (c) The following
table provides a reconciliation of the most directly comparable
GAAP measure to adjusted earnings before income taxes for the Other
segment: |
| |
Segment Loss
before Income Taxes |
Segment Loss
before Income Taxes |
|
|
|
|
|
|
|
| |
Three Months Ended
December 31, |
Six Months Ended December
31, |
|
|
|
|
|
|
|
| |
2014 |
2013 |
2014 |
2013 |
|
|
|
|
|
|
|
| Loss before income taxes |
$ (25.7) |
$ (18.1) |
$ (76.4) |
$ (33.9) |
|
|
|
|
|
|
|
| Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
| Separation costs (f) |
3.3 |
-- |
34.0 |
-- |
|
|
|
|
|
|
|
| Stand-alone public company costs (d) |
-- |
(5.1) |
-- |
(6.0) |
|
|
|
|
|
|
|
| Trademark royalty fee (g) |
-- |
5.4 |
-- |
5.4 |
|
|
|
|
|
|
|
| Stock-based compensation (h) |
-- |
(2.4) |
-- |
(2.4) |
|
|
|
|
|
|
|
| Interest expense (i) |
-- |
(8.7) |
-- |
(9.7) |
|
|
|
|
|
|
|
| Adjusted loss before income taxes |
$ (22.4) |
$ (28.9) |
$ (42.4) |
$ (46.6) |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| (d) Represents
recurring costs that are expected to be incurred as a stand-alone
company incremental to the allocations of ADP costs included within
the historical financial statements for FY2014. |
| (e) Represents
accelerated amortization recognized in the Digital Marketing
segment for the Cobalt trademark related to the change in useful
life. |
|
| (f) Represents the
removal of separation costs incurred during FY2015 that were
directly related to our separation from ADP. |
|
|
| (g) Represents the
elimination of the royalty paid to ADP for the utilization of the
ADP trademark during the three months ended December 31, 2013 as
there was no comparable royalty paid in the three months ended
December 31, 2014 due to our separation from ADP. |
| (h) Represents
additional stock-based compensation expenses for staff additions to
build out corporate functions and director compensation costs. |
| (i) Represents
interest expense incurred in FY2015 related to long-term debt
issued in conjunction with the separation. |
|
|
|
| |
|
|
|
|
|
|
|
|
| CDK Global,
Inc. |
|
|
|
|
|
|
|
|
| Consolidated
and Combined Adjusted Financial Information |
| (In millions,
except per share amounts) |
|
|
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| We use certain
adjusted results, among other measures, to evaluate our operating
performance in the absence of certain items for planning and
forecasting purposes. We believe that adjusted results provide
relevant and useful information because they allow investors to
view performance in a manner similar to the method used by us and
they improve our ability to understand our operating
performance. Adjusted earnings before income taxes, adjusted
net earnings, adjusted basic and diluted earnings per share,
EBITDA, and adjusted EBITDA for the three and six months ended
December 31, 2014 exclude incremental costs incurred that were
directly attributable to our separation from ADP, accelerated
trademark amortization, the related income tax effect of the
pre-tax adjustments, and income tax expense associated with the tax
law change for bonus depreciation. Additionally, adjusted
earnings before income taxes, adjusted net earnings, adjusted basic
and diluted earnings per share, and adjusted EBITDA for the three
and six months ended December 31, 2013 reflect adjustments
related to separation costs, stand-alone public company costs,
trademark royalty fee, stock-based compensation, interest expense,
and the related tax benefit of these pre-tax adjustments, as
further described in the footnotes below, in order to show these
amounts on a comparable basis with the three and six months ended
December 31, 2014. EBITDA is calculated as earnings
before income taxes adjusted to exclude interest expense,
depreciation, and amortization. Because adjusted earnings
before income taxes, adjusted net earnings, adjusted basic and
diluted earnings per share, EBITDA, and adjusted EBITDA are not
measures of performance that are calculated in accordance with
accounting principles generally accepted in the United States
("GAAP"), they should not be considered in isolation from, or as a
substitute for, other metrics that are calculated in accordance
with GAAP. |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
Three Months Ended
December 31, |
Change |
Six Months Ended December
31, |
Change |
| |
2014 |
2013 |
$ |
% |
2014 |
2013 |
$ |
% |
| |
|
|
|
|
|
|
|
|
| Earnings before income taxes |
$ 75.2 |
$ 83.6 |
$ (8.4) |
(10)% |
$ 137.9 |
$ 163.0 |
$(25.1) |
(15)% |
| Adjustments: |
|
|
|
|
|
|
|
|
| Separation costs (a) |
3.3 |
-- |
|
|
34.0 |
-- |
|
|
| Accelerated trademark
amortization (b) |
15.6 |
-- |
|
|
15.6 |
-- |
|
|
| Stand-alone public company
costs (c) |
-- |
(8.1) |
|
|
-- |
(9.0) |
|
|
| Trademark royalty fee (d) |
-- |
5.4 |
|
|
-- |
5.4 |
|
|
| Stock-based compensation
(e) |
-- |
(2.4) |
|
|
-- |
(2.4) |
|
|
| Interest expense (f) |
-- |
(8.7) |
|
|
-- |
(9.7) |
|
|
| Adjusted earnings before income taxes |
$ 94.1 |
$ 69.8 |
$24.3 |
35% |
$ 187.5 |
$ 147.3 |
$ 40.2 |
27% |
| Adjusted margin percentage |
18.1% |
14.3% |
|
|
18.1% |
15.2% |
|
|
| |
|
|
|
|
|
|
|
|
| Provision for income taxes |
$ 32.7 |
$ 31.4 |
$ 1.3 |
4% |
$ 56.3 |
$ 57.3 |
$ (1.0) |
(2)% |
| Adjustments: |
|
|
|
|
|
|
|
|
| Tax effect of adjustments above
(g) |
6.6 |
(5.4) |
|
|
10.3 |
(6.0) |
|
|
| Tax law change - bonus
depreciation (h) |
(4.6) |
-- |
|
|
(4.6) |
-- |
|
|
| Adjusted provision for income taxes |
$ 34.7 |
$ 26.0 |
$ 8.7 |
33% |
$ 62.0 |
$ 51.3 |
$ 10.7 |
21% |
| Adjusted effective tax
rate |
36.9% |
37.2% |
|
|
33.1% |
34.8% |
|
|
| |
|
|
|
|
|
|
|
|
| Net earnings |
$ 42.5 |
$ 52.2 |
$ (9.7) |
(19)% |
$ 81.6 |
$ 105.7 |
$(24.1) |
(23)% |
| Adjustments: |
|
|
|
|
|
|
|
|
| Separation costs (a) |
3.3 |
-- |
|
|
34.0 |
-- |
|
|
| Accelerated trademark
amortization (b) |
15.6 |
-- |
|
|
15.6 |
-- |
|
|
| Stand-alone public company
costs (c) |
-- |
(8.1) |
|
|
-- |
(9.0) |
|
|
| Trademark royalty fee (d) |
-- |
5.4 |
|
|
-- |
5.4 |
|
|
| Stock-based compensation
(e) |
-- |
(2.4) |
|
|
-- |
(2.4) |
|
|
| Interest expense (f) |
-- |
(8.7) |
|
|
-- |
(9.7) |
|
|
| Tax effect of adjustments above
(g) |
(6.6) |
5.4 |
|
|
(10.3) |
6.0 |
|
|
| Tax law change - bonus
depreciation (h) |
4.6 |
-- |
|
|
4.6 |
-- |
|
|
| Adjusted net earnings |
$ 59.4 |
$ 43.8 |
$15.6 |
36% |
$ 125.5 |
$ 96.0 |
$ 29.5 |
31% |
| |
|
|
|
|
|
|
|
|
| Adjusted net earnings per common share: |
|
|
|
|
|
|
|
|
| Basic |
$ 0.37 |
$ 0.27 |
|
37% |
$ 0.78 |
$ 0.60 |
|
30% |
| Diluted |
$ 0.37 |
$ 0.27 |
|
37% |
$ 0.78 |
$ 0.60 |
|
30% |
| |
|
|
|
|
|
|
|
|
| Weighted-average common shares
outstanding: |
|
|
|
|
|
|
|
| Basic (i) |
160.7 |
160.6 |
|
|
160.7 |
160.6 |
|
|
| Diluted (i) |
161.8 |
160.6 |
|
|
161.2 |
160.6 |
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
Three Months Ended
December 31 |
Change |
Six Months Ended December
31 |
Change |
| |
2014 |
2013 |
$ |
% |
2014 |
2013 |
$ |
% |
| |
|
|
|
|
|
|
|
|
| Earnings before income taxes |
$ 75.2 |
$ 83.6 |
$ (8.4) |
(10)% |
$ 137.9 |
$ 163.0 |
$(25.1) |
(15)% |
| Adjustments: |
|
|
|
|
|
|
|
|
| Interest expense (j) |
9.0 |
0.3 |
|
|
10.1 |
0.5 |
|
|
| Depreciation and amortization
(k) |
33.6 |
17.0 |
|
|
51.7 |
33.5 |
|
|
| EBITDA |
$ 117.8 |
$ 100.9 |
$16.9 |
17% |
$ 199.7 |
$ 197.0 |
$ 2.7 |
1% |
| Adjustment: |
|
|
|
|
|
|
|
|
| Separation costs (a) |
3.3 |
-- |
|
|
34.0 |
-- |
|
|
| Stand-alone public company
costs (c) |
-- |
(8.1) |
|
|
-- |
(9.0) |
|
|
| Trademark royalty fee (d) |
-- |
5.4 |
|
|
-- |
5.4 |
|
|
| Stock-based compensation
(e) |
-- |
(2.4) |
|
|
-- |
(2.4) |
|
|
| Adjusted EBITDA |
$ 121.1 |
$ 95.8 |
$25.3 |
26% |
$ 233.7 |
$ 191.0 |
$ 42.7 |
22% |
| Adjusted margin % |
23.2% |
19.7% |
|
|
22.5% |
19.7% |
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| (a) Represents the
removal of separation costs incurred during FY2015 that were
directly related to our separation from ADP. |
| (b) Represents
accelerated amortization recognized in the Digital Marketing
segment for the Cobalt trademark related to the change in useful
life. |
| (c) Represents
recurring costs that are expected to be incurred as a stand-alone
company incremental to the allocations of ADP costs included within
the historical financial statements for FY2014. |
| (d) Represents the
elimination of the royalty paid to ADP for the utilization of the
ADP trademark during the three months ended December 31, 2013 as
there was no comparable royalty paid in the three months ended
December 31, 2014 due to our separation from ADP. |
| (e) Represents
additional stock-based compensation expenses for staff additions to
build out corporate functions and director compensation costs. |
| (f) Represents
interest expense incurred in FY2015 related to long-term debt
issued in conjunction with the separation. |
| (g) Represents the
tax effect of adjustments using the statutory rate of 38.4% for
FY2014 for U.S. transactions, which represent the majority of the
adjustments recorded. The separation costs (described in (a)
above) were partially tax deductible. The tax adjustment
included for the three and six months ended December 31, 2014
relates only to the tax deductible portion of separation
costs. |
| (h) Represents an
adjustment 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 the
separation. |
| (i) On
September 30, 2014, ADP shareholders of record as of the close
of business on September 24, 2014 received one share of our
common stock for every three shares of ADP common stock held as of
the record date. For periods ended September 30, 2014 and
prior, basic and diluted earnings per share were computed using the
number of shares of our stock outstanding on September 30,
2014, the date on which our common stock was distributed to the
shareholders of ADP. The same number of shares was used to
calculate basic and diluted earnings per share because there were
no dilutive securities in those periods. |
| (j) Represents
interest expense included within the financial statements for the
periods presented above. |
| (k) Represents
depreciation and amortization included within the financial
statements for the periods presented above, which includes the
accelerated amortization attributable to the Cobalt trademark. |
| |
|
|
|
| CDK Global,
Inc. |
|
|
|
| Combined
Adjusted FY2014 Financial Information |
| (In millions,
except per share amounts) |
|
|
|
(Unaudited) |
|
|
|
| |
|
|
|
| We use certain
adjusted results, among other measures to evaluate our operating
performance in the absence of certain items for planning and
forecasting purposes. We believe that adjusted results provide
relevant and useful information because they allow investors to
view performance in a manner similar to the method used by us and
they improve our ability to understand our operating
performance. Adjusted earnings before income taxes, adjusted
provision for income taxes, adjusted effective tax rate, adjusted
net earnings, adjusted basic and diluted earnings per share, and
adjusted EBITDA reflect adjustments related to separation costs,
stand-alone public company costs, trademark royalty fee,
stock-based compensation, interest expense, and the related tax
benefit of these pre-tax adjustments, as further described in the
footnotes below. EBITDA is calculated as earnings before income
taxes adjusted to exclude interest expense, depreciation, and
amortization. Because adjusted earnings before income taxes,
adjusted provision for income taxes, adjusted effective tax rate,
adjusted net earnings, adjusted basic and diluted earnings per
share, EBITDA, and adjusted EBITDA 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. |
| |
|
|
|
| |
FY2014 |
(a) |
FY2015E |
| |
|
|
|
| Revenues |
1,973.6 |
(b) |
|
| Growth % |
|
|
6 - 7% |
| |
|
|
|
| Earnings before income taxes |
343.6 |
(b) |
|
| Adjustments: |
|
|
|
| Stand-alone public company
costs |
(33.0) |
(c) |
|
| Trademark royalty fee |
16.6 |
(d) |
|
| Stock-based
compensation |
(6.6) |
(e) |
|
| Separation costs |
9.3 |
(f) |
|
| Interest expense |
(26.2) |
(g) |
|
| |
|
|
|
| |
|
|
|
| Adjusted earnings before income
taxes |
303.7 |
|
|
| Growth % |
|
|
13 - 14% |
| |
|
|
|
| Adjusted margin % |
15.4% |
|
|
| Growth |
|
|
100 bps |
| |
|
|
|
| Provision for income taxes |
116.7 |
(b) |
|
| Adjustments: |
|
|
|
| Tax benefit of adjustments
above |
(18.9) |
(h) |
|
| Adjusted provision for income taxes |
97.8 |
|
|
| Adjusted effective tax rate |
32.2% |
|
|
| |
|
|
|
| |
|
|
|
| Net earnings |
226.9 |
(b) |
|
| Adjustments: |
|
|
|
| Stand-alone public company
costs |
(33.0) |
(c) |
|
| Trademark royalty fee |
16.6 |
(d) |
|
| Stock-based
compensation |
(6.6) |
(e) |
|
| Separation costs |
9.3 |
(f) |
|
| Interest expense |
(26.2) |
(g) |
|
| Tax benefit of adjustments
above |
18.9 |
(h) |
|
| |
|
|
|
| |
|
|
|
| Adjusted net earnings |
205.9 |
|
|
| Growth % |
|
|
9 - 10% |
| |
|
|
|
| Adjusted basic and diluted earnings
per share |
1.28 |
(i)(j) |
|
| Total basic and diluted shares
outstanding |
160.6 million |
(j) |
|
| |
|
|
|
| Growth % |
|
|
8 - 9% |
| |
|
|
|
| Earnings before income taxes |
343.6 |
(b) |
|
| Adjustments: |
|
|
|
| Interest expense |
1.0 |
(b) |
|
| Depreciation and
amortization |
67.9 |
(b) |
|
| |
|
|
|
| EBITDA |
412.5 |
|
|
| Adjustments: |
|
|
|
| Stand-alone public company
costs |
(33.0) |
(c) |
|
| Trademark royalty
fee |
16.6 |
(d) |
|
| Stock-based
compensation |
(6.6) |
(e) |
|
| Separation costs |
9.3 |
(f) |
|
| |
|
|
|
| |
|
|
|
| Adjusted EBITDA |
398.8 |
|
|
| Adjusted margin % |
20.2% |
|
100 bps |
| |
|
|
|
| (a) Amounts in this
column have been adjusted to be presented on a comparable basis
with the FY2015 estimate. |
| (b) Amounts presented
in CDK's historical combined financial statements for the fiscal
year ended June 30, 2014 which were included in the Company's Form
10 filing dated September 18, 2014. |
| (c) Represents
recurring costs that are expected to be incurred as a stand-alone
company incremental to the allocations of ADP costs included within
the historical financial statements for FY2014. |
| (d) Represents the
elimination of the royalty paid to ADP for the utilization of the
ADP trademark during the period from October 1, 2013 through June
30, 2014 as there will be no comparable royalty paid in the same
period in FY2015 due to our separation from ADP. |
| (e) Represents
additional stock-based compensation expenses for staff additions to
build out corporate functions and director compensation costs. |
| (f) Represents the
removal of separation costs incurred during FY2014 that are
directly related to our separation from ADP. |
| (g) Represents
interest expense CDK will incur in FY2015 related to long-term debt
issued in conjunction with the separation. |
| (h) Represents the
tax effect of adjustments using the statutory tax rate of 38.4% for
FY2014 for U.S. transactions, which represent the majority of the
adjustments recorded. The separation costs (described in (f) above)
are not tax deductible and therefore there is no provision for
income taxes included for this adjustment. |
| (i) Computed using
adjusted net earnings shown above and total shares outstanding
described in (j) below. |
| (j) On
September 30, 2014, ADP shareholders of record as of the close
of business on September 24, 2014 received one share of our
common stock for every three shares of ADP common stock held as of
the record date. Basic and diluted earnings per share above
for FY2014 was computed using the number of shares of our stock
outstanding on September 30, 2014, the date on which our
common stock was distributed to the shareholders of ADP. The
same number of shares was used to calculate basic and diluted
earnings per share because there were no dilutive securities in
FY2014. |
| |
|
|
|
|
|
|
| CDK Global,
Inc. |
|
|
|
|
|
|
| Performance
Metrics |
|
|
|
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| CDK management
regularly reviews the following key performance measures in
evaluating our business results, identifying trends affecting our
business and making operating and strategic decisions. The
following table summarizes these measures for recurring
subscription revenues: |
| |
|
|
|
|
|
|
| |
|
| |
For the three
months ended |
| |
September 30,
2013 |
December 31,
2013 |
March 31, 2014 |
June 30, 2014 |
September 30,
2014 |
December 31,
2014 |
| ARNA |
|
|
|
|
|
|
| Automotive |
|
|
|
|
|
|
| DMS Client Sites (a) |
8,806 |
8,862 |
8,905 |
8,978 |
9,039 |
9,136 |
| Avg Revenue Per Site (b) |
6,285 |
6,379 |
6,586 |
6,447 |
6,640 |
6,691 |
| |
|
|
|
|
|
|
| Adjacencies |
|
|
|
|
|
|
| DMS Client Sites (a) |
4,462 |
4,503 |
4,571 |
4,600 |
4,653 |
4,831 |
| Avg Revenue Per Site (b) |
1,464 |
1,478 |
1,521 |
1,520 |
1,556 |
1,536 |
| |
|
|
|
|
|
|
| Total ARNA |
|
|
|
|
|
|
| DMS Client Sites (a) |
13,268 |
13,365 |
13,476 |
13,578 |
13,692 |
13,967 |
| Avg Revenue Per Site (b) |
4,669 |
4,741 |
4,881 |
4,789 |
4,915 |
4,914 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| ARI |
|
|
|
|
|
|
| DMS Client Sites (a) |
13,496 |
13,573 |
13,459 |
13,501 |
13,437 |
13,420 |
| Avg Revenue Per Site (b) |
1,179 |
1,181 |
1,183 |
1,208 |
1,235 |
1,228 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Digital Marketing |
|
|
|
|
|
|
| Websites (c) |
7,665 |
7,732 |
7,951 |
7,783 |
7,828 |
7,789 |
| Avg Revenue Per Website
(d) |
2,983 |
3,046 |
2,972 |
3,095 |
3,219 |
3,322 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| (a) 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. |
| (b) 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. |
| (c) 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. |
| (d) 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. |
Forward-Looking Statements
This document contains "forward-looking statements," including
forecasts for CDK Global's fiscal year ending June 30, 2015 and CDK
Global's intention to make share repurchases, within the meaning of
the Private Securities Litigation Reform Act of 1995. Statements
that are not historical in nature and which may be identified by
the use of words like "expects," "assumes," "projects,"
"anticipates," "estimates," "we believe," "could be" and other
words of similar meaning, are 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 Global's success in obtaining, retaining and selling additional
services to clients; the pricing of products and services; changes
in overall market and economic conditions, technology trends, and
auto sales and advertising trends; competitive conditions; changes
in regulations; changes in technology; security breaches,
interruptions, failures and/or other errors involving CDK Global's
systems or networks; availability of skilled technical personnel
and the impact of new acquisitions and divestitures. The statements
in this press release are made as of the date of this press
release, even if subsequently made available by CDK Global on its
website or otherwise. CDK Global 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
Global's reports filed with the Securities and Exchange Commission
(SEC), including those discussed under "Item 1A. Risk Factors" in
CDK Global's Registration Statement on Form 10 for the fiscal year
ended June 30, 2014 and its Form 10-Q for the fiscal quarter ended
September 30, 2014, should be considered in evaluating any
forward-looking statements contained herein. These filings can be
found on CDK Global's website at www.cdkglobal.com and the SEC's
website at www.sec.gov.
CONTACT: Investor Relations Contacts:
Elena Rosellen
973.588.2511
elena.rosellen@cdk.com
Jennifer Gaumond
847.485.4424
jennifer.gaumond@cdk.com
Media Contact:
Michelle Benko
847.485.4389
michelle.benko@cdk.com
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