Revenue, EBITDA and Cash EPS Exceed Company's Estimates LAKE
SUCCESS, N.Y., May 8 /PRNewswire-FirstCall/ -- DealerTrack
Holdings, Inc. (NASDAQ:TRAK) today reported financial results for
the three months ended March 31, 2006. Financial highlights for the
quarter included the following: GAAP Results for First Quarter of
2006 * Revenue for the quarter was $37.9 million, a 63 percent
increase from $23.3 million for the first quarter of 2005. * GAAP
net income for the quarter was $3.4 million, a 66 percent increase
from $2.1 million for the first quarter of 2005. GAAP net income
for the first quarter of 2006 includes stock-based compensation
expense, net of tax, of $0.7 million. $0.4 million of this amount
is related to the adoption of SFAS 123(R). * GAAP diluted net
income per share for the quarter was $0.09, compared with $0.04 for
the first quarter of 2005. Non-GAAP Results for First Quarter of
2006 * EBITDA for the quarter was $10.7 million, a 62 percent
increase from $6.6 million for the first quarter of 2005. * Cash
net income for the quarter was $6.6 million, a 93 percent increase
from $3.4 million for the first quarter of 2005. * Diluted cash net
income per share for the quarter was $0.18, a significant increase
from $0.06 for the first quarter of 2005. EBITDA is a non-GAAP
financial measure that represents GAAP net income before interest,
taxes, depreciation and amortization. Cash net income is a non-GAAP
financial measure that represents GAAP net income before non-cash
stock-based compensation charges (net of taxes), and amortization
of acquired identifiable intangibles (net of taxes). Please see
"Non-GAAP Financial Measures" for a further discussion of EBITDA,
cash net income and diluted cash net income, and refer to
Attachment 4 of this press release for a reconciliation of non-GAAP
financial measures to GAAP financial measures. "Our results for our
first full quarter as a public company exceeded our expectations,"
said Mark O'Neil, DealerTrack's chairman and chief executive
officer. "We are pleased with the continued growth in both
transaction and subscription revenue. Transaction volume for the
sub-prime market sector was unusually robust in the final weeks of
the quarter, which we believe partly reflects the ongoing trend
toward electronic filing of tax returns and the use of those
refunds for vehicle purchases. With revenue stronger than forecast,
we were able to produce excellent bottom-line results." Business
Statistics There were 21,794 active dealers in the DealerTrack
network as of March 31, 2006, an 8 percent increase from 20,109 a
year earlier. The number of active financing sources in the
DealerTrack network as of March 31, 2006, was 214 (including nine
captives), up 95 percent from 110 a year ago. Transactions
processed through the DealerTrack network for the first quarter
were approximately 15.7 million, a 36 percent increase from
approximately 11.6 million transactions processed through the
network for the first quarter of 2005. The number of subscriptions
in the network as of March 31, 2006, was 16,438, a 67 percent
increase from 9,825 a year earlier. The average number of
subscriptions per dealer in the network was 0.75, a 54 percent
increase from 0.49 in the first quarter of 2005. Other First
Quarter Activity Strategic highlights of the first quarter included
the introduction of several new products. We launched
SalesMaker(TM), a profit management system that integrates and
enhances prior versions of DealerTrack's sales and financing tools,
and two new compliance products -- DealWatch(TM) and ExactID(TM). A
total of eight providers have been signed to the DealerTrack
Aftermarket Network(TM), an extension of the DealerTrack platform
that will connect dealers with aftermarket product and service
providers. The company also acquired the assets of DealerWire(R), a
provider of inventory analytics solutions that we believe will
further enhance DealerTrack's end-to-end sales and finance solution
and its value proposition for dealers. DealerWire is a recent
example of our strategy of acquiring technology that positions us
to significantly grow revenue. Following the end of the first
quarter, DealerTrack announced its acquisition of the assets of
Global Fax L.L.C., a leading provider of business process
outsourcing solutions to the automotive finance industry. Global
Fax's services include document scanning, storage, data entry and
retrieval. O'Neil commented, "By adding Global Fax's capabilities
to our existing eContracting solution, we can now enable our
financing source customers to receive 100 percent of their retail
automotive contracts in a digital format. This streamlines their
contract processing operations and facilitates a completely digital
back-end process. We believe this holistic contracting solution
creates greater efficiencies for our financing source and dealer
customers." DealerTrack also updated guidance for its 2006
financial performance, which includes the impact of the Global Fax
acquisition. Expected GAAP Results for full year 2006 * Revenue for
2006 is expected to be between $155 million and $160 million. *
GAAP net income for 2006 is expected to be between $16 million and
$17 million. * GAAP diluted net income per share for 2006 is
expected to be between $0.43 and $0.46, based on a weighted average
of 36.7 million diluted common shares outstanding for 2006.
Expected Non-GAAP Results * EBITDA for the year is expected to be
between $46 million and $48 million. * Cash net income for the year
is expected to be between $26 million and $27 million. * Diluted
cash net income per share is expected to be between $0.71 and
$0.74, based on a weighted average of 36.7 million diluted common
shares outstanding for 2006. O'Neil concluded, "We continue to
execute well within our integrated business model. Organic growth
is the primary driver of the business, with strategic acquisitions
also adding new products and services that we can leverage using
our network. We are steadily adding dealers, financing sources and
other third parties to our network, expanding our product
offerings, and successfully cross-selling to more of our dealer
customers. As indicated by the completion of the DealerWire and
Global Fax transactions, there are still numerous opportunities for
DealerTrack to acquire complementary businesses and technology that
can be leveraged for the benefit of our dealer and financing source
customers, and ultimately our stockholders." DealerTrack will host
a conference call to discuss its first quarter results and
expectations for 2006 performance, the Global Fax transaction, and
other matters on Tuesday, May 9, 2006, at 8:30 a.m. Eastern Time.
The conference call will be webcast live on the Internet at
http://ir.dealertrack.com/releases_financial.cfm. A replay will be
available on the DealerTrack website until May 23, 2006. In
addition, a live audio of the call will be accessible to the public
by calling 800-500-0311 (domestic) or 719-457-2698 (international);
no access code is necessary. Callers should dial in approximately
10 minutes before the call begins. Non-GAAP Financial Measures In
this release, the Company's EBITDA and cash 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. EBITDA represents GAAP earnings
excluding interest, taxes, depreciation and amortization expenses.
Cash net income represents net income excluding stock-based
compensation expense (net of taxes), and amortization of acquired
intangibles (net of taxes). EBITDA and cash net income are
presented because management believes 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. Management believes the EBITDA and cash
net income information is useful to investors for these reasons.
EBITDA and cash 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 EBITDA and cash net income is GAAP net income
and has provided a reconciliation of EBITDA to GAAP net income, and
cash net income to GAAP net income, in Attachment 4 to this press
release. About DealerTrack (http://www.dealertrack.com/)
DealerTrack (NASDAQ:TRAK) is a leading provider of on-demand
software and data solutions for the U.S. automotive retail
industry. The company's online credit application processing
product automates and accelerates the automotive financing process,
while its integrated subscription-based software enables dealers to
receive consumer leads, compare financing and leasing options, sell
insurance and other aftermarket products, document compliance, and
execute financing contracts electronically. Over 21,000 dealers,
with more than 85% of all franchised dealers; more than 225
financing sources, including nine captives and the 20 largest U.S.
independents; and other service and information providers are
active in the DealerTrack network. Safe Harbor for Forward-Looking
and Cautionary Statements Statements in this press release
regarding DealerTrack's expected 2006 performance, the development
and expansion of DealerTrack's products and services, the
likelihood and benefits of the DealerWire and Global Fax
acquisitions, the demand for DealerTrack's products, DealerTrack's
organic growth, 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. Factors that might cause such a
difference include: increased competitive pressure from other
industry participants, the 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 expanding its customer base and product and service
offerings; ability to expand or retain the Global Fax customer
base; ability to integrate Global Fax's current operations and
business; the impact of the automotive retail industry on
DealerTrack's business; the impact of some vendors of software
products for automotive dealers making it more difficult for our
customers to use our products and services, and other risks listed
in the Company's reports filed with the SEC, including
DealerTrack's 2005 Form 10-K. These filings can be found on
DealerTrack's website at http://www.dealertrack.com/ and the SEC's
website at http://www.sec.gov/. Forward-looking statements included
herein speak only as of the date hereof and the Company 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. (1) Actual
Results - Three-Month Period DEALERTRACK HOLDINGS, INC.
Consolidated Statements of Operations (All amounts in thousands,
except per share data) (Unaudited) Three Months Ended March 31,
2006 2005 Net revenue(1) $ 37,935 $ 23,271 Cost of revenue (2)
15,119 8,403 Product development 2,202 767 Selling, general and
administration 15,969 10,485 33,290 19,655 Total operating costs
and expenses Income from operations 4,645 3,616 Interest income,
net 891 13 Income before provision for income taxes 5,536 3,629
Provision for from income taxes (2,100) (1,560) Net income $ 3,436
$ 2,069 Basic net income per share applicable to common
stockholders $ 0.10 $ 0.08 Diluted net income per share applicable
to common stockholders $ 0.09 $ 0.04 Weighted average shares
outstanding 35,268,289 513,771 Weighted average shares outstanding
assuming dilution (a) 36,718,023 1,139,458 (1) Related party
revenue $ 9,252 $ 6,152 (2) Related party cost of revenue $ 847 $
782 EBITDA (Non-GAAP) (b) $ 10,715 $ 6,627 EBITDA margin (Non-GAAP)
(c) 28% 28% Cash net income (Non-GAAP) (b) $ 6,623 $ 3,430 Diluted
cash net income per share (Non-GAAP) (a) $ 0.18 $ 0.06 (a) Diluted
net income per share and diluted cash net income per share for
first quarter of 2005 were each calculated in accordance with the
two- class method under FASB Statement 128, and each calculation
assumes 1.1 million weighted average diluted common shares
outstanding for the quarter ended March 31, 2005. (b) See
Reconciliation Data in Attachment 4. (c) Represents EBITDA as a
percentage of revenue. (2) Condensed Consolidated Balance Sheet
DEALERTRACK HOLDINGS, INC. Condensed Consolidated Balance Sheet
(Dollars in thousands) (Unaudited) March 31, December 31, 2006 2005
ASSETS Cash, cash equivalents and short-term investments $100,148
$103,264 Accounts receivable, net 18,705 19,279 Prepaid expenses
and other current assets 4,626 4,812 Total current assets 123,479
127,355 Property, plant and equipment, net 5,862 4,885 Software and
website development costs, net 10,704 8,769 Intangible assets, net
38,960 39,550 Goodwill 36,755 34,200 Other assets 7,127 5,856 Total
assets $222,887 $220,615 LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 16,580 $ 22,140 Deferred
revenue 4,128 3,267 Capital leases payable 275 387 Total current
liabilities 20,983 25,794 Long-term liabilities 9,500 8,150 Total
liabilities 30,483 33,944 Total stockholders' equity 192,404
186,671 Total liabilities and stockholders' equity $222,887
$220,615 (3) Summary Cash Flow Information DEALERTRACK HOLDINGS,
INC. Summary Cash Flow Information (Dollars in thousands)
(Unaudited) Three Months Ended March 31, 2006 2005 Net cash
provided by (used in) operating activities $ 4,488 $(1,846) Net
cash used in investing activities (a) $(67,812) $(2,062) Net cash
provided by financing activities $ 611 $ 840 (a) For the three
months ended March 31, 2006, net cash used in investing activities
includes $59.6 million in net purchases of auction rate securities
that are invested in tax-exempt and tax-advantaged securities. (4)
Reconciliation Data DEALERTRACK HOLDINGS, INC. Reconciliation of
GAAP Net Income to Non-GAAP EBITDA (Dollars in thousands)
(Unaudited) Three Months Ended March 31, 2006 2005 GAAP net income
$3,436 $2,069 Interest income (963) (53) Interest expense 72 40
Provision for income taxes 2,100 1,560 Depreciation and
amortization 1,892 891 Amortization of acquired identifiable
intangibles 4,178 2,120 EBITDA (Non-GAAP) $10,715 $6,627
DEALERTRACK HOLDINGS, INC. Reconciliation of GAAP Net Income to
Non-GAAP Cash Net Income (Dollars in thousands) (Unaudited) Three
Months Ended March 31, 2006 2005 GAAP net income $3,436 $2,069
Non-cash stock-based compensation charges, net of taxes (a) 722 153
Amortization of acquired identifiable intangibles, net of taxes
2,465 1,208 Cash net income (Non-GAAP) $6,623 $3,430 (a) Includes
charges related to employee stock options, employee stock purchases
and restricted common stock. (4) Reconciliation Data (continued)
DEALERTRACK HOLDINGS, INC. Reconciliation of Forward-looking GAAP
Net Income to Forward-looking Non-GAAP EBITDA (Dollars in millions)
(Unaudited) Year Ending December 31, 2006 Expected Range GAAP net
income $16 $17 Interest income (2) (2) Interest expense --- ---
Provision for income taxes 11 12 Depreciation and amortization 7 7
Amortization of acquired identifiable intangibles 14 14 EBITDA
(Non-GAAP) $46 $48 DEALERTRACK HOLDINGS, INC. Reconciliation of
Forward-looking GAAP Net Income to Forward-looking Non-GAAP Cash
Net Income (Dollars in millions) (Unaudited) Year Ending December
31, 2006 Expected Range GAAP net income $16 $17 Non-cash
stock-based compensation charges, net of taxes 2 2 Amortization of
acquired identifiable intangibles, net of taxes 8 8 Cash net income
(Non-GAAP) $26 $27 (5) Summary of Business Statistics (Unaudited)
DEALERTRACK HOLDINGS, INC. Three months ended March 31, December
31, March 31, 2006 2005 2005 Active dealers in the network as of
end of period (a) 21,794 21,155 20,109 Active financing sources in
the network as of end of period (b) 214 201 110 Transactions
processed (c) 15,710,636 12,843,883 11,570,776 Product
subscriptions as of end of period (d) 16,438 14,473 9,825 (a) We
consider a dealer to be active as of a date if the dealer completed
at least one revenue-generating transaction in our network during
the most recently ended calendar month. (b) We consider a financing
source to be active in our network as of a date if it is accepting
credit application data electronically from dealers in our network.
(c) Represents revenue generating transactions processed in the
DealerTrack and dealerAccess networks at the end of a given period.
(d) Represents revenue generating subscriptions in the DealerTrack
network at the end of a given period. DEALERTRACK HOLDINGS, INC.
Three months ended March December September June March 31, 31, 30,
30, 31, 2006 2005 2005 2005 2005 Transaction revenue (in thousands)
$24,540 $20,779 $23,171 $21,010 $17,677 Subscription revenue (in
thousands) $11,631 $10,800 $ 9,535 $ 7,074 $ 4,980 Other revenue
(in thousands) $ 1,764 $ 1,796 $ 1,673 $ 1,109 $ 614 Average
transaction price (a) $ 1.56 $ 1.62 $ 1.59 $ 1.56 $ 1.53 Average
subscription price (b) $ 251 $ 263 $ 262 $ 223 $ 189 (a)
Calculation includes revenue from ALG and NAT transactions that
were not processed within the DealerTrack or dealerAccess networks.
(b) Calculation includes revenue for Chrome and ALG subscriptions
that were outside of the DealerTrack network. CONTACT: Liz Zale
DealerTrack, Inc. (516) 734-3758 Jen Malloy RF|Binder Partners
(212) 994-7542 DATASOURCE: DealerTrack Holdings, Inc. CONTACT: Liz
Zale, DealerTrack, Inc., +1-516-734-3758, ; Jen Malloy, RF|Binder
Partners, +1-212-994-7542, Web site: http://www.dealertrack.com/
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