EX-99.1 2 v344341_ex99-1.htm EXHIBIT 99.1

 

 

MEDIA CONTACT:

Ken Engberg

kenneth.engberg@dealertrack.com

(516) 734-3692

 

INVESTOR CONTACT:

Garo Toomajanian

investorrelations@dealertrack.com

(888) 450-0478

 

Dealertrack Technologies, Inc. Reports First Quarter 2013 Financial Results

 

Increases 2013 Guidance to Reflect Acquisition of Casey & Casey

 

Lake Success, N.Y., May 8, 2013 – Dealertrack Technologies, Inc. (NASDAQ: TRAK) today reported financial results for the first quarter ended March 31, 2013.

 

GAAP Results for the First Quarter 2013

§Revenue for the quarter was $109.1 million, as compared to $91.6 million for the first quarter of 2012.
§GAAP net loss for the quarter was $(34,000), as compared to GAAP net income of $17.0 million for the first quarter of 2012.
§Diluted GAAP net loss per share for the quarter was $(0.00), as compared to GAAP net income per share of $0.39 for the first quarter of 2012.

 

GAAP net income for the first quarter of 2012 was positively impacted by $16.1 million (net of tax), or $0.37 per share, from a non-cash gain related to the contribution of Chrome to the Chrome Data Solutions, L.P. joint venture.

 

Non-GAAP Results for the First Quarter 2013

§Adjusted EBITDA for the quarter was $24.2 million, as compared to $19.4 million for the first quarter of 2012.
§Adjusted net income for the quarter was $12.0 million, as compared to $9.4 million for the first quarter of 2012.
§Diluted adjusted net income per share for the quarter was $0.27, as compared to $0.22 for the first quarter of 2012.

 

Mark F. O’Neil, chairman and chief executive officer of Dealertrack Technologies, Inc., commented, “We are off to a solid start for the year. Our focus on selling broader solutions to dealerships helped drive an increase in momentum for our subscription products in the first quarter, led by our dealer management system. At the same time, transaction revenue continues to increase faster than the growth in car sales as we derived more revenue per car sold through increased cross-selling. We are also making significant progress in a number of product initiatives that we believe will help us deliver strong growth and profitability in the years ahead.”

 

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Updated Guidance for 2013

Dealertrack updated its 2013 annual guidance to reflect the acquisition of Casey & Casey as follows:

 

Expected GAAP Results

§Revenue for the year is expected to be between $453.0 million and $462.0 million, an increase from prior guidance of between $447.0 million and $456.0 million.
§GAAP net income for the year is expected to be between $9.5 million and $12.5 million, a decrease from prior guidance of between $10.0 million and $13.0 million.
§Diluted GAAP net income per share for the year is expected to be between $0.21 and $0.28, a decrease from prior guidance of between $0.22 and $0.29 per share.

 

Expected Non-GAAP Results

§Adjusted EBITDA for the year is expected to be between $112.5 million and $116.5 million, an increase from prior guidance of between $111.0 million and $115.0 million.
§Adjusted net income for the year is expected to be between $55.0 million and $58.0 million, an increase from prior guidance of between $54.0 million and $57.0 million.
§Diluted adjusted net income per share for the year is expected to be between $1.21 and $1.28, an increase from prior guidance of between $1.19 and $1.26.

 

Diluted GAAP net income and adjusted net income per share guidance for the year continues to be based on an estimated 45.4 million diluted weighted average shares outstanding. The guidance also continues to assume that new car sales by franchised dealers will be approximately 15.2 million units and used car sales by franchised dealers will be approximately 15.0 million units in 2013.

 

Conference Call

 

Dealertrack will host a conference call to discuss its first quarter 2013 results on May 8, 2013 at 5:00 p.m. Eastern Time. The conference call will be webcast live on the Internet at ir.dealertrack.com. In addition, a live audio of the call will be accessible to the public by calling 877-303-6648 (domestic) or 970-315-0443 (international); no access code is necessary. Callers should dial in approximately 10 minutes before the call begins. A replay will be available on the Dealertrack Technologies, Inc. website until May 30, 2013.

 

Non-GAAP Financial Measures

 

The non-GAAP measures of adjusted EBITDA and adjusted net income disclosures are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended to be used in lieu of GAAP presentations of net income.  Adjusted EBITDA is a non-GAAP financial measure that represents GAAP net income (loss) excluding interest, taxes, depreciation and amortization expenses, stock-based compensation, contra-revenue and certain items, as applicable, such as:  impairment charges, restructuring charges, impact of acquisition-related activity (including contingent consideration changes, compensation expense, basis difference amortization, and professional service fees), realized gains on sales of previously impaired securities, gains or losses on sales or disposals of subsidiaries and other assets, rebranding expense and certain other non-recurring items.

 

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Adjusted net income is a non-GAAP financial measure that represents GAAP net income (loss) excluding stock-based compensation expense, the amortization of acquired identifiable intangibles, contra-revenue, and certain items, as applicable, such as: impairment charges, restructuring charges, impact of acquisition-related activity (including contingent consideration changes, compensation expense, basis difference amortization, and professional service fees), realized gains on sales of previously impaired securities, gains or losses on sales or disposals of subsidiaries and other assets, adjustments to deferred tax asset valuation allowances, non-cash interest expense, rebranding expense and certain other non-recurring items.  These adjustments to net income (loss), which are shown before taxes, are adjusted for their tax impact at their applicable statutory rates.

 

Adjusted EBITDA and adjusted net income are presented because management believes that they provide additional information with respect to the performance of our fundamental business activities and are also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies.  Adjusted EBITDA and adjusted net income are also presented because the purchase accounting treatment of acquisitions can have a negative impact on our GAAP results because the depreciation and amortization expenses associated with acquired assets, in particular intangibles which tend to have a relatively short useful life, can be substantial in the first several years following an acquisition. As a result, we monitor our adjusted EBITDA and adjusted net income and other business statistics as a measure of operating performance in addition to net income and the other measures included in our consolidated financial statements.  Management believes the adjusted EBITDA and adjusted net income information is useful to investors for these reasons.  Adjusted EBITDA and adjusted net income are non-GAAP financial measures and should not be viewed as an alternative to GAAP measures of performance.  Management believes the most directly comparable GAAP financial measure for adjusted EBITDA and adjusted net income is GAAP net income (loss) and has provided a reconciliation of adjusted EBITDA to GAAP net income (loss) and adjusted net income to GAAP net income (loss) in this press release.

 

About Dealertrack Technologies (www.dealertrack.com)

 

Dealertrack Technologies’ intuitive and high-value web-based software solutions and services enhance efficiency and profitability for all major segments of the automotive retail industry, including dealers, lenders, OEMs, third-party retailers, agents, and aftermarket providers. In addition to the industry’s largest online credit application network, connecting more than 19,000 dealers with more than 1,300 lenders, Dealertrack Technologies delivers the industry’s most comprehensive solution set for automotive retailers, including Dealer Management System (DMS), Inventory, Sales and F&I, Interactive, and Registration and Titling  solutions. For more information visit  www.dealertrack.com.

 

Safe Harbor for Forward-Looking and Cautionary Statements

 

Statements in this press release regarding Dealertrack’s expected 2013 performance based on both GAAP and non-GAAP measures, the long-term outlook for its business and all other statements in this release other than the recitation of historical facts are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). These statements involve a number of risks, uncertainties and other factors that could cause actual results, performance or achievements of Dealertrack to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.

 

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Factors that might cause such a difference include: economic trends that affect the automotive retail industry or the indirect automotive financing industry including the number of new and used cars sold; credit availability; reductions in auto dealerships; increased competitive pressure from other industry participants, including Open Dealer Exchange, RouteOne, CUDL, Finance Express and AppOne; the impact of some vendors of software products for automotive dealers making it more difficult for Dealertrack’s customers to use Dealertrack’s solutions and services; security breaches, interruptions, failures and/or other errors involving Dealertrack’s systems or networks; the failure or inability to execute any element of Dealertrack’s business strategy, including selling additional products and services to existing and new customers; Dealertrack’s success in implementing an ERP system; the volatility of Dealertrack’s stock price; new regulations or changes to existing regulations; the integration of recent acquisitions and the expected benefits, as well as the integration and expected benefits of any future acquisitions that Dealertrack may pursue; Dealertrack’s success in expanding its customer base and product and service offerings, the impact of recent economic trends, and difficulties and increased costs associated with raising additional capital; the impairment of intangible assets, such as trademarks and goodwill; and other risks listed in Dealertrack’s reports filed with the Securities and Exchange Commission (SEC), including its most recent Annual Report on Form 10-K. These filings can be found on Dealertrack’s website at www.dealertrack.com and the SEC’s website at www.sec.gov. Forward-looking statements included herein speak only as of the date hereof and Dealertrack disclaims any obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances, except as required by law.

 

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DEALERTRACK TECHNOLOGIES, INC.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2013   2012 
         
Net revenue  $109,059   $91,617 
Cost of revenue   63,188    53,150 
Product development   3,630    2,994 
Selling, general and administrative   41,490    34,128 
Total operating expenses   108,308    90,272 
Income from operations   751    1,345 
Interest expense, net   (3,240)   (927)
Other income , net   66    76 
Gain on disposal of subsidiary   -    27,693 
Earnings from equity method investment, net   1,219    163 
(Loss) income before benefit from (provision for) income taxes, net   (1,204)   28,350 
Benefit from (provision for) income taxes, net   1,170    (11,389)
Net (loss) income  $(34)  $16,961 
           
Basic net (loss) income per share  $(0.00)  $0.40 
Diluted net (loss) income per share  $(0.00)  $0.39 
Weighted average common stock outstanding (basic)   43,173    42,091 
Weighted average common stock outstanding (diluted)   43,173    43,720 
           
Adjusted EBITDA (non-GAAP) (a)  $24,229   $19,419 
Adjusted EBITDA margin (non-GAAP) (b)   22%   21%
Adjusted net income (non-GAAP) (a)  $12,036   $9,444 
Diluted adjusted net income per share (non-GAAP)  (c)  $0.27   $0.22 
           
Stock-based compensation expense was classified as follows:          
Cost of revenue  $692   $635 
Product development   168    214 
Selling, general and administrative   2,411    2,481 
   $3,271   $3,330 

 

(a)     See Reconciliation Data.

(b)     Represents adjusted EBITDA as a percentage of net revenue.

(c)     For the three months ended March 31, 2013, the diluted adjusted net income per share of approximately $0.27 is based on 44,624,000 diluted weighted average shares outstanding.

 

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DEALERTRACK TECHNOLOGIES, INC.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)

 

   March 31,
2013		   December 31,
2012		 
         
ASSETS          
Cash and cash equivalents  $131,577   $143,811 
Marketable securities   39,284    34,031 
Customer funds   3,540    1,999 
Customer funds receivable   22,613    14,077 
Accounts receivable, net   48,225    43,679 
Deferred tax assets, net   4,412    4,412 
Prepaid expenses and other current assets   24,439    19,142 
Total current assets   274,090    261,151 
           
Marketable securities - long-term   4,383    4,428 
Property and equipment, net   27,523    27,407 
Investments   122,927    122,808 
Software and website development costs, net   48,892    46,182 
Intangible assets, net   110,193    117,599 
Goodwill   270,062    270,646 
Deferred tax assets, net   44,316    43,611 
Other assets - long-term   14,790    16,684 
Total assets  $917,176   $910,516 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Accounts payable and accrued expenses  $39,295   $50,852 
Customer funds payable   26,153    16,076 
Deferred revenue   7,884    7,959 
Deferred tax liabilities   3,088    3,031 
Due to acquirees   11,281    11,124 
Total current liabilities   87,701    89,042 
Long-term liabilities   250,142    250,157 
Total liabilities   337,843    339,199 
Total stockholders' equity   579,333    571,317 
Total liabilities and stockholders' equity  $917,176   $910,516 

 

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DEALERTRACK TECHNOLOGIES, INC.

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2013   2012 
Operating activities:          
Net (loss) income  $(34)  $16,961 
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:          
Depreciation and amortization   13,897    11,979 
Deferred tax (benefit) provision   (1,158)   10,893 
Stock-based compensation expense   3,271    3,330 
Provision for doubtful accounts and sales credits   1,682    2,146 
Earnings from equity method investment, net   (1,219)   (163)
Deferred compensation   38    38 
Stock-based compensation windfall tax benefit   (3,587)   (2,943)
Amortization of deferred interest   279    26 
Amortization of debt issuance costs and debt discount   2,302    703 
Change in contingent consideration   (500)   (250)
Gain on sale of marketable securities   (11)   - 
Gain on disposal of subsidiary   -    (27,693)
Changes in operating assets and liabilities, net of effects of acquisitions:          
Accounts receivable   (6,339)   (6,742)
Prepaid expenses and other current assets   (2,186)   3,059 
Other assets — long-term   3,166    1,539 
Accounts payable and accrued expenses   (13,518)   (11,441)
Deferred rent   51    48 
Deferred revenue   (60)   527 
Other liabilities — long-term   (1,074)   (1,166)
Net cash (used in) provided by operating activities   (5,000)   851 

 

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Consolidated Statements of Cash Flows (continued)

 

   Three Months Ended 
   March 31, 
   2013   2012 
Investing activities:          
Capital expenditures   (2,027)   (1,695)
Capitalized software and website development costs   (5,296)   (3,665)
Purchases of marketable securities   (18,037)   - 
Proceeds from sales and maturities of marketable securities   12,539    - 
Cash contributed for equity method investment   -    (1,750)
Net cash used in investing activities   (12,821)   (7,110)
           
Financing activities:          
Principal payments on capital lease obligations and financing arrangements   (38)   (349)
Proceeds from stock purchase plan and exercise of stock options   3,109    3,662 
Proceeds from issuance of senior convertible notes   -    200,000 
Payments for debt issuance costs   -    (6,690)
Payments for convertible note hedges   -    (43,940)
Proceeds from the issuance of warrants   -    29,740 
Purchases of treasury stock   (678)   (657)
Stock-based compensation windfall tax benefit   3,587    2,943 
Net cash provided by financing activities   5,980    184,709 
           
Net (decrease) increase in cash and cash equivalents   (11,841)   178,450 
Effect of exchange rate changes on cash and cash equivalents   (393)   385 
Cash and cash equivalents, beginning of period   143,811    78,709 
Cash and cash equivalents, end of period  $131,577   $257,544 
           
           
Supplemental disclosure:          
Cash paid for:          
Income taxes  $702   $1,109 
Interest   1,646    217 
Non-cash investing and financing activities:          
Accrued capitalized hardware, software and fixed assets   2,224    1,879 
Assets acquired under capital leases and financing arrangements   34    725 
Non-cash consideration issued for investment in Chrome Data Solutions   -    42,301 

 

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DEALERTRACK TECHNOLOGIES, INC.

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA

(Dollars in thousands)

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2013   2012 
         
GAAP net (loss) income  $(34)  $16,961 
Interest income   (124)   (230)
Interest expense - cash   1,062    454 
Interest expense - non-cash   2,302    703 
(Benefit from) provision for income taxes, net   (1,170)   11,389 
Depreciation of property and equipment and amortization of capitalized software and website costs   6,581    5,100 
Amortization of acquired identifiable intangibles   7,316    6,879 
EBITDA (non-GAAP)   15,933    41,256 
Adjustments:          
Stock-based compensation   3,271    3,330 
Contra-revenue   1,354    1,102 
Acquisition-related and other professional fees   483    199 
Acquisition-related contingent consideration changes and compensation expense, net   35    178 
Integration and other related costs   799    - 
Gain on disposal of subsidiary   -    (27,693)
Rebranding expense   1,648    51 
Amortization of equity method investment basis difference   706    996 
Adjusted EBITDA (non-GAAP)  $24,229   $19,419 

 

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DEALERTRACK TECHNOLOGIES, INC.

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income

(Dollars in thousands)

(Unaudited)

 

   Three Months Ended 
   March 31, 
   2013   2012 
         
GAAP net (loss) income  $(34)  $16,961 
Adjustments:          
Interest expense - non-cash (not tax-impacted)   2,302    703 
Amortization of acquired identifiable intangibles   7,316    6,879 
Stock-based compensation   3,271    3,330 
Contra-revenue   1,354    1,102 
Gain on disposal of subsidiary   -    (27,693)
Acquisition-related and other professional fees   483    199 
Acquisition-related contingent consideration changes and compensation expense, net   35    178 
Integration and other related costs   799    - 
Rebranding expense   1,648    51 
Amortization of equity method investment basis difference   706    996 
Amended state tax returns impact (non-taxable)   56    - 
Tax impact of adjustments (a)   (5,900)   6,738 
Adjusted net income (non-GAAP)  $12,036   $9,444 

 

(a)   The tax impact of adjustments for the three months ended March 31, 2013 are based on a U.S. statutory tax rate of 38.2% applied to taxable adjustments other than amortization of acquired identifiable intangibles and stock-based compensation expense, which are based on a blended tax rate of 38.1% and 37.7%, respectively. The tax impact of adjustments for the three months ended March 31, 2012 are based on a U.S. statutory tax rate of 37.4% applied to taxable adjustments other than amortization of acquired identifiable intangibles and stock-based compensation expense, which are based on a blended tax rate of 37.3% and 37.0%, respectively.

 

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DEALERTRACK TECHNOLOGIES, INC.

Reconciliation of Forward-looking GAAP Net Income to Forward-looking Non-GAAP Adjusted EBITDA

(Dollars in millions)

(Unaudited)

 

   Year Ending December 31, 2013 
   Expected Range 
         
GAAP net income  $9.5   $12.5 
Interest, net   13.0    13.0 
Income taxes, net   5.8    7.7 
Amortization of basis difference from joint venture   2.8    2.8 
Depreciation and amortization   25.9    25.0 
Amortization of acquired identifiable intangibles   31.2    31.2 
EBITDA (non-GAAP)   88.2    92.2 
Adjustments:          
Stock-based compensation   15.1    15.1 
Non-recurring costs (a)   4.0    4.0 
Contra-revenue   5.2    5.2 
Adjusted EBITDA - (non-GAAP)  $112.5   $116.5 

 

 

(a)Includes certain professional fees, integration and other related costs, acquisition-related compensation expense, rebranding and fair value adjustments.

 

DEALERTRACK TECHNOLOGIES, INC.

Reconciliation of Forward-looking GAAP Net Income to Forward-looking Non-GAAP Adjusted Net Income

(Dollars in millions)

(Unaudited)

 

   Year Ending December 31, 2013 
   Expected Range 
         
GAAP net income  $9.5   $12.5 
Adjustments:          
Stock-based compensation   15.1    15.1 
Amortization of acquired identifiable intangibles   31.2    31.2 
Amortization of basis difference from joint venture   2.8    2.8 
Non-cash interest expense (not tax-impacted)   9.2    9.2 
Non-recurring costs (a)   4.0    4.0 
Contra-revenue   5.2    5.2 
Tax impact of adjustments (b)   (22.0)   (22.0)
Adjusted net income (non-GAAP)  $55.0   $58.0 

 

 

(a)Includes certain professional fees, integration and other related costs, acquisition-related compensation expense, rebranding, accelerated depreciation and fair value adjustments.
(b)The tax impact of adjustments are based on a blended tax rate of 38% applied to taxable adjustments.

 

A reconciliation of GAAP to non-GAAP measures is included in our investor presentation, which also includes the impact of reconciled items on individual income statement classifications.

 

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DEALERTRACK TECHNOLOGIES, INC.

Summary of Business Statistics (Unaudited)

Three months ended

 

   Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31, 
   2013   2012   2012   2012   2012 
                     
Active U.S. dealers (a)   20,041    19,067    19,107    18,638    18,345 
Active U.S. lenders (b)   1,291    1,261    1,237    1,212    1,165 
Transactions processed (in thousands) (c)   24,106    20,782    22,738    22,562    21,751 
Active U.S. lender to dealer relationships (d)   181,578    174,628    178,809    177,570    172,075 
Subscribing dealers (e)   17,832    17,619    16,421    16,280    16,143 

 

 

(a)      We consider a dealer to be active in our U.S. network as of a date if the dealer completed at least one revenue-generating credit application processing transaction using the U.S. Dealertrack network during the most recently ended calendar month. The number of active U.S. dealers is based on the number of dealer accounts as communicated by lenders on the U.S. Dealertrack network.

(b)     We consider a lender to be active in our U.S. network as of a date if it is accepting credit application data electronically from U.S. dealers in the U.S. Dealertrack network.

(c)      Represents revenue-generating transactions processed in the U.S. Dealertrack, Dealertrack Aftermarket Services, DealerTrack Processing Solutions and Dealertrack Canada networks at the end of a given period.

(d)     Each lender to dealer relationship represents a pair between an active U.S. lender and an active U.S. dealer at the end of a given period.

(e)     Represents the number of dealerships in the U.S. and Canada with one or more active subscriptions at the end of a given period.

 

DEALERTRACK TECHNOLOGIES, INC.

Summary of Business Statistics (Unaudited)

Three months ended

 

   Mar 31,   Dec 31,   Sep 30,   Jun 30,   Mar 31, 
   2013   2012   2012   2012   2012 
                     
Transaction revenue (in thousands)  $61,364   $54,589   $58,789   $57,493   $54,140 
Subscription revenue (in thousands)  $42,778   $42,212   $35,723   $33,932   $33,281 
Other revenue (in thousands)  $4,917   $4,974   $4,572   $4,971   $4,196 
Average transaction price (a)  $2.60   $2.67   $2.63   $2.59   $2.53 
Transaction revenue per car sold (b)  $8.99   $7.18   $6.47   $6.12   $8.61 
Average monthly subscription revenue per subscribing dealership (c) (d)  $737   $749   $694   $697   $691 

 

 

 

(a)  Represents the average revenue earned per transaction processed in the U.S. Dealertrack, Dealertrack Aftermarket, Dealertrack Processing Solutions and Dealertrack Canada networks during a given period.  Revenue used in calculation adds back transaction related contra-revenue.

(b)  Represents transaction revenue divided by our estimate of total new and used car sales for the period in the U.S. and Canada.  Revenue used in calculation adds back transaction related contra-revenue.

(c)  Revenue used in the calculation adds back subscription related contra-revenue.

(d)  Subscribing dealers and subscription revenue from Dealertrack CentralDispatch have been excluded from the calculation as a majority of these customers are not dealers.

 

TRAK-E ###

 

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