UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No.
1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
DATE OF REPORT (DATE OF EARLIEST EVENT
REPORTED): November 5, 2014
DEALERTRACK TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware |
000-51653 |
52-2336218 |
(State or other jurisdiction of
incorporation) |
(Commission File Number) |
(IRS. Employer |
Identification No.) |
|
|
1111 Marcus Ave., Suite M04, Lake Success, NY |
11042 |
(Address of principal executive offices) |
(Zip Code) |
Registrant's telephone number, including
area code: (516) 734-3600
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
EXPLANATORY NOTE
Dealertrack Technologies, Inc. is
filing this Current Report on Form 8-K/A (Amendment No. 1) (“Amendment No. 1”) solely to amend certain
information included in Exhibit 99.1 furnished with the Current Report on Form 8-K filed by the registrant on November 5,
2014 (the “Original 8-K”), to include a revised Exhibit 99.1, and to correct a reference in Item 2.02 as
described below. In the press release filed as Exhibit 99.1 with the Original 8-K (the “Earnings
Release”), the figures listed in the “Summary of Business Statistics” table on page 12 of the Earnings
Release for “Subscribing dealers in U.S. and Canada as of end of the period” and “Average monthly
subscription revenue per subscribing dealership” for the three months ended (unaudited) September 30, 2014 were listed
as 24,004 and 1,377, respectively, when they should have been listed as 24,089 and 1,253, respectively. In the revised press
release attached as Exhibit 99.1 to this Amendment No. 1 the figures are correctly listed. Item 2.02 of the Original 8-K also
inadvertently referred to it being the financial information for the registrant for the second quarter of 2014 instead of the
third quarter of 2014. Item 2.02 below has been corrected to refer to the financial information for the registrant for the
third quarter of 2014.
All other information in the Earnings Release
and Original 8-K remains unchanged and does not otherwise reflect events occurring after the filing of the Original 8-K.
Item 2.02 Results of Operations and Financial Condition.
Attached hereto as Exhibit 99.1 and incorporated
by reference herein is financial information for the registrant for the third quarter of 2014 as presented in a press release attached
hereto as Exhibit 99.1. The information in this Current Report on Form 8-K is furnished under Item 2.02 - "Results of Operations
and Financial Condition." Such information, including the exhibits attached hereto, shall not be deemed "filed"
for any purpose, including for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that Section. The information in this Current Report on Form 8-K shall not
be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless
of any general incorporation language in such filing.
Item 9.01 |
Financial Statements and Exhibits. |
(d) Exhibits.
Exhibit No. |
|
Description |
|
|
|
99.1 |
|
Registrant’s Press Release dated November 5, 2014 |
99.2 |
|
Registrant’s November 2014 Investor Presentation* |
* Previously filed with the Original 8-K
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 10, 2014
|
Dealertrack Technologies, Inc. |
|
|
|
By: /s/ Eric D. Jacobs |
|
Eric D. Jacobs |
|
Executive Vice President, Chief Financial and
Administrative Officer |
Exhibit 99.1
![](tlogo.jpg)
MEDIA CONTACT:
Ken Engberg
kenneth.engberg@dealertrack.com
(516) 734-3692
INVESTOR CONTACT:
Paul Rybecky
investorrelations@dealertrack.com
(516) 734-3796
Dealertrack
Technologies Reports Third Quarter 2014 Financial Results
Reports 87% Year over Year Revenue Growth
Updates 2014 Revenue Guidance Based on
Solid Third Quarter Performance and Business Success
Lake Success, N.Y., November 5, 2014 – Dealertrack
Technologies, Inc. (NASDAQ: TRAK) today reported financial results for the third quarter ended September 30, 2014.
“As we continue on our journey to help transform how dealers
and consumers interact both online and in the showroom, we report record quarterly revenue and non-GAAP earnings,” said Mark
O’Neil, chairman and chief executive officer, Dealertrack Technologies. “We performed better than expected this quarter
in each revenue category, and we are optimistic about how several recently introduced subscription and advertising solutions will
contribute to our overall growth and revenue.”
According to O’Neil, “For the third quarter in a
row, we achieved organic growth of more than 20 percent. Based on this success, we are increasing our full year revenue and profitability
guidance to reflect our strong performance this quarter and growing confidence that our vision to transform automotive retailing
is resonating with and benefiting our clients. We are proud of our team’s execution and are inspired by the future our business
and the market holds.”
Third Quarter 2014 Earnings Overview
GAAP Results for the Third Quarter 2014
| § | Revenue for the quarter was $233.5 million, as compared to $124.6 million for 2013. |
| § | GAAP net income for the quarter was $2.1 million, as compared to GAAP net income of $5.8 million for 2013. |
| § | Diluted GAAP net income per share for the quarter was $0.04, as compared to diluted GAAP net income per share of $0.13 for
2013. |
Non-GAAP Results for the Third Quarter 2014
| § | Adjusted EBITDA for the quarter was $57.3 million, as compared to $32.6 million for 2013. |
| § | Adjusted net income for the quarter was $25.3 million, as compared to $17.6 million for 2013. |
| § | Diluted adjusted net income per share for the quarter was $0.46, as compared to $0.39 for 2013. |
GAAP Results for the Nine Months Ended September 30, 2014
| § | Revenue for the period was $617.1 million, as compared to $355.4 million for 2013. |
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| § | GAAP net loss for the period was $(10.9) million, as compared to GAAP net income of $9.6 million for 2013. |
| § | Diluted GAAP net loss per share for the period was $(0.21), as compared to diluted GAAP net income per share of $0.21 for 2013. |
The GAAP net loss for the nine months ended September 30, 2014
was negatively impacted by a $7.5 million, or $0.14 per share, non-cash charge (net of taxes) relating to certain changes in expected
asset use as Dealertrack integrates acquired solutions, and was positively impacted by a $6.8 million, or $0.13 per share, gain
(net of taxes) on the sale of our investment in TrueCar, Inc.
Non-GAAP Results for the Nine Months Ended September 30,
2014
| § | Adjusted EBITDA for the period was $137.9 million, as compared to $89.7 million for 2013. |
| § | Adjusted net income for the period was $59.2 million, as compared to $46.7 million for 2013. |
| § | Diluted adjusted net income per share for the period was $1.11, as compared to $1.04 for 2013. |
Updated Guidance for 2014
Dealertrack increased its 2014 annual revenue guidance and updated
profitability guidance, as follows:
Expected GAAP Results
| § | Revenue for the year is expected to be between $842.0 million and $848.0 million, an increase at the mid-point of the range
from prior guidance of between $829.0 million and $843.0 million. |
| § | GAAP net loss for the year is expected to be between $(11.0) million and $(9.0) million, a change at the mid-point of the range
from prior guidance of between $(12.0) million and $(7.0) million. |
| § | Diluted GAAP net loss per share for the year is expected to be between $(0.21) and $(0.17), a change at the mid-point of the
range from prior guidance of between $(0.23) and $(0.13) per share. |
Expected Non-GAAP Results
| § | Adjusted EBITDA for the year is expected to be between $190.0 million and $192.0 million, an increase at the
mid-point of the range from prior guidance of between $186.0 million and $190.0 million. |
| § | Adjusted net income for the year is expected to be between $82.5 million and $84.5 million, no change at the
mid-point of the range from prior guidance of between $81.0 million and $86.0 million. |
| § | Diluted adjusted net income per share for the year is expected to be between $1.50 and $1.54, an increase at the mid-point
of the range from prior guidance of $1.47 and $1.56 per share. |
Diluted GAAP net loss per share and diluted adjusted net income
per share guidance for 2014 continue to be based on an estimated diluted share count of 53 million and 55 million shares, respectively.
The guidance also continues to assume that new car sales by franchised dealers will be approximately 16.2 million units and used
car sales by franchised dealers will be approximately 15.9 million units in 2014.
Third Quarter Earnings Conference Call
Dealertrack will host a conference call to discuss its third
quarter 2014 results, as well as its 2014 guidance, on November 5, 2014, 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 webcast replay will be available on the Dealertrack Technologies, Inc. website at www.dealertrack.com.
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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 (loss). 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 items that we do not believe are indicative of our ongoing operating results.
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 items that we do not
believe are indicative of our ongoing operating results. 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 acquisition method of accounting 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, aftermarket providers and other service providers. In addition to the
industry's largest online credit application network, connecting more than 20,000 dealers with more than 1,500 lenders, Dealertrack
Technologies delivers the industry's most comprehensive solution set for automotive retailers, including Digital Marketing,
Dealer Management System (DMS), Inventory, F&I Solutions and Registration and Titling solutions.
For more information visit www.dealertrack.com.
![](tlogo.jpg)
Safe Harbor for Forward-Looking and Cautionary Statements
Statements in this press release regarding Dealertrack’s
expected 2014 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.
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 automotive dealerships; increased competitive pressure from other industry participants,
including AutoTrader, CDK Global (formerly ADP), Open Dealer Exchange, Reynolds and Reynolds, and RouteOne; 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.
![](tlogo.jpg)
DEALERTRACK TECHNOLOGIES, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
| |
Three Months Ended September 30, | | |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
Net revenue | |
$ | 233,520 | | |
$ | 124,582 | | |
$ | 617,095 | | |
$ | 355,423 | |
Cost of revenue | |
| 125,245 | | |
| 53,858 | | |
| 334,613 | | |
| 154,065 | |
Research and development | |
| 26,451 | | |
| 18,447 | | |
| 77,635 | | |
| 54,346 | |
Selling, general and administrative | |
| 72,689 | | |
| 45,365 | | |
| 214,812 | | |
| 131,720 | |
Total operating expenses | |
| 224,385 | | |
| 117,670 | | |
| 627,060 | | |
| 340,131 | |
Income (loss) from operations | |
| 9,135 | | |
| 6,912 | | |
| (9,965 | ) | |
| 15,292 | |
Interest expense, net | |
| (8,965 | ) | |
| (3,058 | ) | |
| (24,512 | ) | |
| (9,526 | ) |
Other income, net | |
| 123 | | |
| 419 | | |
| 961 | | |
| 547 | |
Gain on sale of investment | |
| — | | |
| — | | |
| 9,828 | | |
| — | |
Earnings from equity method investment, net | |
| 2,079 | | |
| 1,544 | | |
| 5,611 | | |
| 4,042 | |
Income (loss) before (provision for) benefit from income taxes, net | |
| 2,372 | | |
| 5,817 | | |
| (18,077 | ) | |
| 10,355 | |
(Provision for) benefit from income taxes, net | |
| (264 | ) | |
| (22 | ) | |
| 7,168 | | |
| (755 | ) |
Net income (loss) | |
$ | 2,108 | | |
$ | 5,795 | | |
$ | (10,909 | ) | |
$ | 9,600 | |
| |
| | | |
| | | |
| | | |
| | |
Basic net income (loss) per share | |
$ | 0.04 | | |
$ | 0.13 | | |
$ | (0.21 | ) | |
$ | 0.22 | |
Diluted net income (loss) per share | |
$ | 0.04 | | |
$ | 0.13 | | |
$ | (0.21 | ) | |
$ | 0.21 | |
Weighted average common stock outstanding (basic) | |
| 53,935 | | |
| 43,796 | | |
| 51,668 | | |
| 43,509 | |
Weighted average common stock outstanding (diluted) | |
| 55,829 | | |
| 45,757 | | |
| 51,668 | | |
| 45,109 | |
| |
| | | |
| | | |
| | | |
| | |
Adjusted EBITDA (non-GAAP) (a) | |
$ | 57,267 | | |
$ | 32,589 | | |
$ | 137,903 | | |
$ | 89,653 | |
Adjusted EBITDA margin (non-GAAP) (b) | |
| 25 | % | |
| 26 | % | |
| 22 | % | |
| 25 | % |
Adjusted net income (non-GAAP) (a) | |
$ | 25,316 | | |
$ | 17,646 | | |
$ | 59,230 | | |
$ | 46,708 | |
Shares used for diluted adjusted net income per share (c) | |
| 55,198 | | |
| 45,469 | | |
| 53,173 | | |
| 45,109 | |
Diluted adjusted net income per share (non-GAAP) | |
$ | 0.46 | | |
$ | 0.39 | | |
$ | 1.11 | | |
$ | 1.04 | |
| |
| | | |
| | | |
| | | |
| | |
Stock-based compensation expense was classified as follows: | |
| | | |
| | | |
| | |
Cost of revenue | |
$ | 274 | | |
$ | 244 | | |
$ | 799 | | |
$ | 834 | |
Research and development | |
| 793 | | |
| 599 | | |
| 2,298 | | |
| 1,850 | |
Selling, general and administrative | |
| 3,266 | | |
| 2,760 | | |
| 9,652 | | |
| 8,045 | |
| |
$ | 4,333 | | |
$ | 3,603 | | |
$ | 12,749 | | |
$ | 10,729 | |
(a) See Reconciliation Data.
(b) Represents adjusted EBITDA as a percentage of net revenue.
(c) For the three months ended September 30, 2014 and September
30, 2013, the share count used for computing diluted adjusted net income per share does not include 631 thousand shares and 288
thousand shares, respectively, related to our senior convertible notes, as a result of the related convertible note hedge.
For the nine months ended September 30, 2014, due to the net
loss, the share count used for computing diluted net loss per share is equal to the share count used for computing basic net loss
per share. For computing diluted adjusted net income per share, the share count used includes 1,505 thousand shares related to
options to purchase common stock and restricted common stock units.
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DEALERTRACK TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
| |
September 30, | | |
December 31, | |
| |
2014 | | |
2013 | |
ASSETS | |
| | | |
| | |
Cash and cash equivalents | |
$ | 141,123 | | |
$ | 122,373 | |
Marketable securities | |
| 5,116 | | |
| 10,589 | |
Customer funds and customer funds receivable | |
| 36,243 | | |
| 25,901 | |
Accounts receivable, net | |
| 100,197 | | |
| 48,349 | |
Deferred tax assets, net | |
| 22,874 | | |
| 6,331 | |
Prepaid expenses and other current assets | |
| 30,896 | | |
| 21,314 | |
Total current assets | |
| 336,449 | | |
| 234,857 | |
| |
| | | |
| | |
Property and equipment, net | |
| 84,164 | | |
| 31,866 | |
Investments – cost and equity | |
| 35,639 | | |
| 119,318 | |
Software and website development costs, net | |
| 84,549 | | |
| 62,513 | |
Intangible assets, net | |
| 550,023 | | |
| 136,754 | |
Goodwill | |
| 1,059,893 | | |
| 316,466 | |
Deferred tax assets, net | |
| 63,913 | | |
| 40,421 | |
Other assets – long-term | |
| 24,539 | | |
| 14,616 | |
Total assets | |
$ | 2,239,169 | | |
$ | 956,811 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
| | | |
| | |
Accounts payable and accrued liabilities | |
$ | 115,019 | | |
$ | 56,942 | |
Customer funds payable | |
| 36,243 | | |
| 25,901 | |
Deferred revenue | |
| 13,657 | | |
| 9,958 | |
Deferred tax liabilities | |
| 4,277 | | |
| 4,278 | |
Due to acquirees and notes payable | |
| 4,852 | | |
| 2,000 | |
Total current liabilities | |
| 174,048 | | |
| 99,079 | |
Long-term liabilities | |
| 967,289 | | |
| 256,508 | |
Total liabilities | |
| 1,141,337 | | |
| 355,587 | |
Total stockholders' equity | |
| 1,097,832 | | |
| 601,224 | |
Total liabilities and stockholders' equity | |
$ | 2,239,169 | | |
$ | 956,811 | |
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DEALERTRACK TECHNOLOGIES, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
| |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 | |
Operating activities: | |
| | | |
| | |
Net (loss) income | |
$ | (10,909 | ) | |
$ | 9,600 | |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | |
| | | |
| | |
Depreciation and amortization | |
| 98,468 | | |
| 44,913 | |
Deferred tax benefit | |
| (42,447 | ) | |
| (906 | ) |
Stock-based compensation expense | |
| 12,749 | | |
| 10,729 | |
Provision for doubtful accounts and sales credits | |
| 10,654 | | |
| 8,041 | |
Earnings from equity method investment, net | |
| (5,611 | ) | |
| (4,042 | ) |
Deferred compensation | |
| 134 | | |
| 134 | |
Stock-based compensation windfall tax benefit | |
| (10,963 | ) | |
| (5,644 | ) |
Gain on sale of investment | |
| (9,828 | ) | |
| — | |
Realized gain on sale of securities | |
| — | | |
| (362 | ) |
Amortization of debt issuance costs and debt discount | |
| 9,910 | | |
| 7,043 | |
Change in contingent consideration | |
| 700 | | |
| (500 | ) |
Forfeited customer deposits | |
| (755 | ) | |
| — | |
Amortization of deferred interest | |
| 84 | | |
| 946 | |
Changes in operating assets and liabilities, net of effects of acquisitions: | |
| | | |
| | |
Accounts receivable | |
| (23,426 | ) | |
| (21,835 | ) |
Prepaid expenses and other current assets | |
| (6,360 | ) | |
| (4,474 | ) |
Other assets – long-term | |
| 7,530 | | |
| 7,029 | |
Accounts payable and accrued liabilities | |
| (46,209 | ) | |
| (10,686 | ) |
Deferred rent | |
| 803 | | |
| 134 | |
Deferred revenue | |
| (946 | ) | |
| 987 | |
Other liabilities – long-term | |
| 1,811 | | |
| (325 | ) |
Net cash (used in) provided by operating activities | |
| (14,611 | ) | |
| 40,782 | |
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Consolidated Statements of Cash Flows (continued)
| |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 | |
Investing activities: | |
| | | |
| | |
Capital expenditures | |
| (24,683 | ) | |
| (11,060 | ) |
Capitalized software and website development costs | |
| (39,041 | ) | |
| (26,701 | ) |
Proceeds from sale of investment in TrueCar | |
| 92,518 | | |
| — | |
Purchases of marketable securities | |
| (5,150 | ) | |
| (27,393 | ) |
Proceeds from sales and maturities of marketable securities | |
| 10,539 | | |
| 46,237 | |
Return of equity method investment | |
| — | | |
| 102 | |
Payment for acquisition of businesses, net of acquired cash | |
| (555,906 | ) | |
| (21,121 | ) |
Net cash used in investing activities | |
| (521,723 | ) | |
| (39,936 | ) |
| |
| | | |
| | |
Financing activities: | |
| | | |
| | |
Proceeds from issuance of term loan B credit facility | |
| 575,000 | | |
| — | |
Principal payments on term loan B credit facility | |
| (26,438 | ) | |
| — | |
Payments for debt issuance costs | |
| (16,696 | ) | |
| — | |
Stock-based compensation windfall tax benefit | |
| 10,963 | | |
| 5,644 | |
Proceeds from stock purchase plan and exercise of stock options | |
| 18,795 | | |
| 8,207 | |
Purchases of treasury stock | |
| (4,863 | ) | |
| (935 | ) |
Proceeds from note receivable | |
| 500 | | |
| — | |
Payment of contingent consideration | |
| (250 | ) | |
| — | |
Principal payments on capital lease obligations and financing arrangements | |
| (78 | ) | |
| (99 | ) |
Repayment of a note payable | |
| — | | |
| (11,439 | ) |
Proceeds from government grants | |
| — | | |
| 210 | |
Net cash provided by financing activities | |
| 556,933 | | |
| 1,588 | |
| |
| | | |
| | |
Net increase in cash and cash equivalents | |
| 20,599 | | |
| 2,434 | |
Effect of exchange rate changes on cash and cash equivalents | |
| (1,849 | ) | |
| (529 | ) |
Cash and cash equivalents, beginning of period | |
| 122,373 | | |
| 143,811 | |
Cash and cash equivalents, end of period | |
$ | 141,123 | | |
$ | 145,716 | |
| |
| | | |
| | |
Supplemental disclosure: | |
| | | |
| | |
Cash paid for: | |
| | | |
| | |
Income taxes | |
$ | 10,129 | | |
$ | 3,607 | |
Interest | |
| 15,433 | | |
| 4,120 | |
Non-cash investing and financing activities: | |
| | | |
| | |
Accrued capitalized hardware, software and fixed assets | |
| 5,307 | | |
| 2,405 | |
Assets acquired under capital leases and financing arrangements | |
| 35 | | |
| 206 | |
Non-cash consideration issued for investment in Dealer.com | |
| 471,220 | | |
| — | |
Non-cash consideration issued for investment in ASR Pro | |
| 2,163 | | |
| — | |
![](tlogo.jpg)
DEALERTRACK TECHNOLOGIES, INC.
Reconciliation of GAAP Net Income to
Non-GAAP Adjusted EBITDA
(Dollars in thousands)
(Unaudited)
| |
Three Months Ended September 30, | | |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
GAAP net income (loss) | |
$ | 2,108 | | |
$ | 5,795 | | |
$ | (10,909 | ) | |
$ | 9,600 | |
Interest income | |
| (128 | ) | |
| (171 | ) | |
| (328 | ) | |
| (412 | ) |
Interest expense – cash | |
| 5,993 | | |
| 852 | | |
| 14,930 | | |
| 2,895 | |
Interest expense – non-cash | |
| 3,100 | | |
| 2,377 | | |
| 9,910 | | |
| 7,043 | |
Provision for (benefit from) income taxes, net | |
| 264 | | |
| 22 | | |
| (7,168 | ) | |
| 755 | |
Depreciation of property and equipment and amortization of capitalized software and website costs | |
| 13,468 | | |
| 8,331 | | |
| 36,004 | | |
| 22,077 | |
Amortization of acquired identifiable intangibles | |
| 20,828 | | |
| 7,761 | | |
| 62,464 | | |
| 22,836 | |
EBITDA (non-GAAP) | |
| 45,633 | | |
| 24,967 | | |
| 104,903 | | |
| 64,794 | |
Adjustments: | |
| | | |
| | | |
| | | |
| | |
Stock-based compensation | |
| 4,333 | | |
| 3,603 | | |
| 12,749 | | |
| 10,729 | |
Contra-revenue | |
| 1,375 | | |
| 1,069 | | |
| 3,907 | | |
| 3,804 | |
Acquisition-related and other professional fees | |
| 315 | | |
| 1,365 | | |
| 8,189 | | |
| 2,421 | |
Acquisition-related contingent consideration changes and compensation expense, net | |
| 1,654 | | |
| 57 | | |
| 3,597 | | |
| 686 | |
Integration and other related costs | |
| 3,410 | | |
| 1,023 | | |
| 12,744 | | |
| 3,389 | |
Gain on sale of investment | |
| — | | |
| — | | |
| (9,828 | ) | |
| — | |
Amortization of equity method investment basis difference | |
| 547 | | |
| 706 | | |
| 1,642 | | |
| 2,118 | |
Rebranding expense | |
| — | | |
| 155 | | |
| — | | |
| 2,068 | |
Realized gain on sale of previously impaired securities (non-taxable) | |
| — | | |
| (356 | ) | |
| — | | |
| (356 | ) |
Adjusted EBITDA (non-GAAP) | |
$ | 57,267 | | |
$ | 32,589 | | |
$ | 137,903 | | |
$ | 89,653 | |
![](tlogo.jpg)
DEALERTRACK TECHNOLOGIES, INC.
Reconciliation of GAAP Net Income to
Non-GAAP Adjusted Net Income
(Dollars in thousands)
(Unaudited)
| |
Three Months Ended September 30, | | |
Nine Months Ended September 30, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
| | |
| | |
| | |
| |
GAAP net income (loss) | |
$ | 2,108 | | |
$ | 5,795 | | |
$ | (10,909 | ) | |
$ | 9,600 | |
Adjustments: | |
| | | |
| | | |
| | | |
| | |
Interest expense – non-cash (not tax-impacted) | |
| 3,100 | | |
| 2,377 | | |
| 9,910 | | |
| 7,043 | |
Amortization of acquired identifiable intangibles | |
| 20,828 | | |
| 7,761 | | |
| 62,464 | | |
| 22,836 | |
Stock-based compensation | |
| 4,333 | | |
| 3,603 | | |
| 12,749 | | |
| 10,729 | |
Contra-revenue | |
| 1,375 | | |
| 1,069 | | |
| 3,907 | | |
| 3,804 | |
Gain on sale of investment | |
| — | | |
| — | | |
| (9,828 | ) | |
| — | |
Acquisition-related and other professional fees | |
| 315 | | |
| 1,365 | | |
| 8,189 | | |
| 2,421 | |
Acquisition-related contingent consideration changes and compensation expense, net | |
| 1,654 | | |
| 57 | | |
| 3,597 | | |
| 686 | |
Integration and other related costs (a) | |
| 3,593 | | |
| 1,023 | | |
| 13,616 | | |
| 3,632 | |
Rebranding expense | |
| — | | |
| 155 | | |
| — | | |
| 2,068 | |
Amortization of equity method investment basis difference | |
| 547 | | |
| 706 | | |
| 1,642 | | |
| 2,118 | |
Realized gain on sale of previously impaired securities (non-taxable) | |
| — | | |
| (356 | ) | |
| — | | |
| (356 | ) |
Amended state tax returns impact (non-taxable) | |
| — | | |
| (75 | ) | |
| — | | |
| (19 | ) |
Tax impact of adjustments (b) | |
| (12,537 | ) | |
| (5,834 | ) | |
| (36,107 | ) | |
| (17,854 | ) |
Adjusted net income (non-GAAP) | |
$ | 25,316 | | |
$ | 17,646 | | |
$ | 59,230 | | |
$ | 46,708 | |
(a) The adjustment for adjusted net income exceeds the adjustment
for adjusted EBITDA as a result of accelerated amortization charges relating to internally developed software, which are included
in the depreciation adjustment within the adjusted EBITDA reconciliation.
(b) The tax impact of adjustments for the three and nine months
ended September 30, 2014 are based on a blended tax rate of 38.5% applied to taxable adjustments other than gain on sale of investment
which is based on an effective tax rate of 31.0%. Additionally, the tax impact of adjustments for the nine months ended September
30, 2014 includes $1.8 million of incremental deferred taxes related to the acquisition of Dealer.com. The blended tax rates are
based upon the statutory tax rates of 38.7% and 26.5% applied to the adjustments for U.S. and Canada, respectively.
The tax impact of adjustments for the three and nine months
ended September 30, 2013 are based on a U.S. statutory tax rate of 37.2% 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 37.1% and 36.8%,
respectively, for the three and nine months ended September 30, 2013.
A reconciliation of GAAP to non-GAAP measures is included in
the investor presentation available on Dealertrack’s website, which also includes the impact of reconciled items on individual
income statement classifications.
![](tlogo.jpg)
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, 2014 | |
| |
Expected Range | |
| |
| | |
| |
GAAP net loss | |
$ | (11.0 | ) | |
$ | (9.0 | ) |
Interest, net | |
| 34.0 | | |
| 34.0 | |
Income taxes, net | |
| (7.0 | ) | |
| (5.7 | ) |
Amortization of basis difference from joint venture | |
| 2.2 | | |
| 2.2 | |
Depreciation and amortization | |
| 47.7 | | |
| 46.4 | |
Amortization of acquired identifiable intangibles | |
| 83.0 | | |
| 83.0 | |
EBITDA (non-GAAP) | |
| 148.9 | | |
| 150.9 | |
Adjustments: | |
| | | |
| | |
Stock-based compensation | |
| 17.0 | | |
| 17.0 | |
Gain on sale of investment | |
| (9.8 | ) | |
| (9.8 | ) |
Non-recurring costs (a) | |
| 28.9 | | |
| 28.9 | |
Contra-revenue | |
| 5.0 | | |
| 5.0 | |
Adjusted EBITDA (non-GAAP) | |
$ | 190.0 | | |
$ | 192.0 | |
(a) Includes certain professional fees, integration and other
related costs, acquisition-related compensation expense, and fair value adjustments.
Reconciliation of Forward-looking GAAP
Net Income to Forward-looking Non-GAAP Adjusted Net Income
(Dollars in millions)
(Unaudited)
| |
Year Ending December 31, 2014 | |
| |
Expected Range | |
| |
| | |
| |
GAAP net loss | |
$ | (11.0 | ) | |
$ | (9.0 | ) |
Adjustments: | |
| | | |
| | |
Stock-based compensation | |
| 17.0 | | |
| 17.0 | |
Amortization of acquired identifiable intangibles | |
| 83.0 | | |
| 83.0 | |
Amortization of basis difference from joint venture | |
| 2.2 | | |
| 2.2 | |
Non-cash interest expense (not tax-impacted) | |
| 14.0 | | |
| 14.0 | |
Gain on sale of investment | |
| (9.8 | ) | |
| (9.8 | ) |
Non-recurring costs (a) | |
| 28.9 | | |
| 28.9 | |
Contra-revenue | |
| 5.0 | | |
| 5.0 | |
Tax impact of adjustments (b) | |
| (46.8 | ) | |
| (46.8 | ) |
Adjusted net income (non-GAAP) | |
$ | 82.5 | | |
$ | 84.5 | |
(a) Includes certain professional fees, integration and other
related costs, acquisition-related compensation expense, accelerated depreciation and fair value adjustments.
(b) The tax impact of adjustments are based on a
blended tax rate of 37% applied to taxable adjustments.
![](tlogo.jpg)
DEALERTRACK TECHNOLOGIES, INC.
Summary of Business Statistics
Three months ended
(Unaudited)
| |
Sep 30, | | |
Jun 30, | | |
Mar 31, | | |
Dec 31, | | |
Sep 30, | |
| |
2014 | | |
2014 | | |
2014 | | |
2013 | | |
2013 | |
| |
| | |
| | |
| | |
| | |
| |
Transaction services revenue (in thousands) | |
$ | 87,157 | | |
$ | 87,381 | | |
$ | 77,735 | | |
$ | 70,338 | | |
$ | 73,514 | |
Subscription services revenue (in thousands) | |
$ | 94,803 | | |
$ | 91,485 | | |
$ | 61,969 | | |
$ | 49,107 | | |
$ | 45,223 | |
Advertising and other revenue (in thousands) | |
$ | 51,560 | | |
$ | 45,901 | | |
$ | 19,104 | | |
$ | 6,666 | | |
$ | 5,845 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Active dealers in our U.S. network as of end of the period (a) | |
| 20,334 | | |
| 20,670 | | |
| 20,719 | | |
| 20,046 | | |
| 20,238 | |
Active lenders in our U.S. network as of end of the period (b) | |
| 1,511 | | |
| 1,468 | | |
| 1,443 | | |
| 1,410 | | |
| 1,378 | |
Active lender to dealer relationships as of end of the period (c) | |
| 204,338 | | |
| 201,240 | | |
| 202,984 | | |
| 191,135 | | |
| 191,548 | |
Transactions processed (in thousands) (d) | |
| 31,391 | | |
| 30,669 | | |
| 28,560 | | |
| 24,471 | | |
| 27,172 | |
Average transaction price (e) | |
$ | 2.82 | | |
$ | 2.89 | | |
$ | 2.76 | | |
$ | 2.91 | | |
$ | 2.74 | |
Transaction revenue per car sold (f) | |
$ | 8.86 | | |
$ | 8.68 | | |
$ | 11.20 | | |
$ | 8.63 | | |
$ | 7.70 | |
Subscribing dealers in U.S. and Canada as of end of the period (g) | |
| 24,089 | | |
| 23,876 | | |
| 23,624 | | |
| 18,464 | | |
| 18,255 | |
Average monthly subscription revenue per subscribing dealership (h) | |
$ | 1,253 | | |
$ | 1,218 | | |
$ | 956 | | |
$ | 815 | | |
$ | 758 | |
Active dealerships on advertising platform as of end of the period (i) | |
| 8,143 | | |
| 7,031 | | |
| 7,053 | | |
| * | | |
| * | |
Average monthly advertising spend per dealer rooftop (j) | |
$ | 2,041 | | |
$ | 1,826 | | |
| 1,708 | | |
| * | | |
| * | |
| * | Historical amounts not applicable |
(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) 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.
(d) Represents revenue-generating transactions
processed in the U.S. Dealertrack, Dealertrack Aftermarket Services, Registration and Titling Solutions, Collateral Management
Solutions and Dealertrack Canada networks at the end of a given period.
(e) Represents the average revenue
earned per transaction processed in the U.S. Dealertrack, Dealertrack Aftermarket Services, Registration and Titling Solutions,
Collateral Management Solutions and Dealertrack Canada networks during a given period. Revenue used in the calculation adds back
(excludes) transaction related contra-revenue.
(f) Represents transaction services 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 (excludes) transaction
related contra-revenue.
![](tlogo.jpg)
(g) Represents the number of dealerships in the U.S. and Canada
with one or more active subscriptions at the end of a given period. Subscriptions to Dealertrack CentralDispatch have been excluded
as these customers include brokers and carriers in addition to dealers.
(h) Represents dealer-based subscription services revenue divided
by average subscribing dealers for a given period in the U.S. and Canada. Revenue used in the calculation adds back (excludes)
subscription related contra-revenue. In addition, subscribing dealers and subscription services revenue from Dealertrack CentralDispatch
have been excluded from the calculation as a majority of these customers are not dealers.
(i) We consider a dealership to be
active on our advertising platform as of a date if they incurred advertising spend in that month. The number of advertisers at
the end of the period may be impacted by the timing of manufacturer endorsed campaigns on behalf of their dealership base, for
which there were approximately 900 dealerships that were part of a short term campaign as of September 30, 2014.
(j) Represents advertising services
revenue divided by average active dealerships on our advertising platform for a given period commencing with the Dealer.com acquisition
on March 1, 2014.
TRAK-E ###
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