CDK Global, Inc. (Nasdaq:CDK) today announced its second quarter
fiscal 2018 financial results and raised fiscal 2018 earnings per
share guidance.
Second Quarter Fiscal 2018 Results
Year-over-year highlights are below:
|
|
|
|
|
|
|
Second Quarter Fiscal
2018 Results |
|
GAAP |
|
Adjusted |
|
Revenues |
|
up 3% to $561.7
million |
|
up 3% to $561.7
million |
|
Earnings before income
taxes |
|
up 1% to $120.3
million |
|
up 7% to $161.4
million |
|
Net earnings attributable
to CDK |
|
up 26% to $104.0
million |
|
up 20% to $119.7
million |
|
Diluted net earnings
attributable toCDK per share |
|
up 36% to $0.75 per
share |
|
up 30% to $0.87 per
share |
|
Margin |
|
Net earnings attributable
toCDK margin up 340 bps to18.5% |
|
EBITDA margin up 350 bps
to36.3% |
|
|
|
|
|
|
“Second quarter revenue results were in line
with our expectations while earnings results were slightly better
than anticipated. Adjusted EBITDA margin expanded 350 basis
points to 36.3% in the quarter, enabled by our focus on our
transformation plan and other cost saving actions,” said Brian
MacDonald, chief executive officer. “In addition to our
continued pursuit of efficiency, we are focused on revenue
initiatives that we believe will improve our revenue growth
trajectory while we continue to work towards our transformation
goals and EBITDA margin targets.”
Please refer to the tables at the end of this
release for a reconciliation of the GAAP results to the non-GAAP
results, which we refer to as our adjusted results throughout the
body of this press release. Results below reflect year-over-year
comparisons.
As described below under the Non-GAAP Financial
Measures section at the end of this press release, effective July
1, 2017, we began incorporating additional adjustments within our
calculations of certain adjusted financial measures, including
adjusted net earnings attributable to CDK, adjusted EBITDA and
adjusted EBITDA margin. Each adjusted growth rate is shown
against a comparably calculated fiscal 2017 figure.
Impacts to the Second Quarter:
- Foreign exchange rates: Growth in revenues was positively
impacted by 2 percentage points while earnings before income taxes
were positively impacted by 1 percentage point by foreign exchange
rates.
- Tax rate: The GAAP effective tax rate for the second quarter of
fiscal 2018 was 11.7% compared to 29.7% in last year’s second
quarter. The adjusted effective tax rate for the second
quarter of fiscal 2018 was 24.3% compared to 33.1% in last year’s
second quarter.
CDK Segment Information
CDK North America: Retail Solutions North
America
- Revenues increased 1% to $398.1 million.
- GAAP earnings before income taxes increased 14% to $162.3
million; adjusted earnings before income taxes increased 18% to
$167.5 million. On a constant currency basis, earnings before
income taxes increased 17%.
- GAAP pretax margin expanded 470 bps to 40.8%; adjusted pretax
margin expanded 600 bps to 42.1%. Margin expansion was
primarily driven by revenue and operating efficiencies associated
with the business transformation plan.
CDK North America: Advertising North America
- Revenues decreased 2% to $76.8 million.
- Earnings before income taxes decreased 4% to $9.4 million.
- Pretax margin declined 30 bps to 12.2% primarily due to a shift
in revenue mix.
CDK International
- Revenues increased 14% to $86.8 million. On a constant
currency basis, revenues increased 8%.
- Earnings before income taxes increased 23% to $22.6 million. On
a constant currency basis, earnings before income taxes increased
18%.
- Pretax margin expanded 190 bps to 26.0% primarily due to scale
from increased revenues and operating efficiencies associated with
the business transformation plan.
Fiscal 2018 Guidance
|
|
|
|
|
|
|
Fiscal 2018
Guidance |
|
GAAP |
|
Adjusted |
|
|
|
|
|
|
|
Revenues |
|
up 3.0% - 4.0% |
|
up 3.0% - 4.0% |
|
|
|
|
|
|
|
Diluted net
earnings attributableto CDK per share |
|
$2.65 - $2.75 |
|
$3.23 - $3.28 |
|
up 33.0% - 38.0% |
up 25.0% - 27.0% |
|
Margin |
|
Net earnings attributable
to CDKmargin 16.0% - 17.0% |
|
EBITDA margin 35.0% -
36.0% |
|
|
|
|
|
|
We maintain our revenue guidance for the fiscal
year. We have raised our earnings per share outlook for the
fiscal year to $2.65-$2.75 from $2.37-$2.47 on a GAAP basis.
We have raised our adjusted earnings per share outlook for the
fiscal year to $3.23-$3.28 from $2.95-$3.00, including
approximately $0.23 associated with the ongoing benefits of the Tax
Cuts and Jobs Act (the “Tax Reform Act”). We currently expect
EBITDA margin to be at the high end of the provided guidance range
in fiscal 2018.
Tax Rate
We have revised our tax rate expectations to
include the impact of the Tax Reform Act for fiscal 2018. We
anticipate our GAAP effective tax rate for fiscal 2018 will be
25%-26% compared to 30.5% for fiscal 2017. The adjusted
effective tax rate for fiscal 2018 is expected to be 29.0%-30.0%
compared to 34.2% for fiscal 2017. In light of the Tax Reform
Act, and subject to finalization of our accounting for the Tax
Reform Act, we anticipate our future annual adjusted effective tax
rate will be approximately three to four points lower than fiscal
2018.
Website Schedules
Other financial information, including financial
statements and supplementary schedules presented on a GAAP and
adjusted basis, and the schedule of quarterly revenues and pretax
earnings by reportable segment have been updated for the second
quarter of fiscal 2018 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,
Tuesday, January 30, 2018 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 the CDK Investor Relations website,
http://investors.cdkglobal.com, and click on the webcast icon.
An accompanying slide 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 financial
news releases, current financial information, SEC filings and
Investor Relations presentations are accessible at the same
website.
About CDK Global
With more than $2 billion in revenues,
CDK Global (Nasdaq:CDK) is a leading global provider of
integrated information technology and digital marketing solutions
to the automotive retail and adjacent industries. Focused on
enabling end-to-end automotive commerce, CDK Global provides
solutions to dealers in more than 100 countries around the world,
serving approximately 28,000 retail locations and most automotive
manufacturers. CDK solutions automate and integrate all parts
of the dealership and buying process from targeted digital
advertising and marketing campaigns to the sale, financing,
insuring, parts supply, repair and maintenance of
vehicles. Visit cdkglobal.com.
CDK Global,
Inc.Consolidated Statements of
Operations(In millions, except per share
amounts)(Unaudited)
|
|
Three Months Ended |
|
Six Months Ended |
|
December 31, |
|
December 31, |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Revenues |
$ |
561.7 |
|
|
$ |
547.8 |
|
|
$ |
1,127.4 |
|
|
$ |
1,098.5 |
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
Cost of
revenues |
290.8 |
|
|
303.2 |
|
|
598.5 |
|
|
618.3 |
|
Selling, general
and administrative expenses |
122.2 |
|
|
110.9 |
|
|
235.9 |
|
|
224.6 |
|
Restructuring
expenses |
7.6 |
|
|
2.3 |
|
|
14.1 |
|
|
3.4 |
|
Total
expenses |
420.6 |
|
|
416.4 |
|
|
848.5 |
|
|
846.3 |
|
|
|
|
|
|
|
|
|
Operating earnings |
141.1 |
|
|
131.4 |
|
|
278.9 |
|
|
252.2 |
|
|
|
|
|
|
|
|
|
Interest
expense |
(23.2 |
) |
|
(12.3 |
) |
|
(46.5 |
) |
|
(23.0 |
) |
Other income
(expense), net |
2.4 |
|
|
(0.2 |
) |
|
7.7 |
|
|
1.6 |
|
|
|
|
|
|
|
|
|
Earnings before income
taxes |
120.3 |
|
|
118.9 |
|
|
240.1 |
|
|
230.8 |
|
|
|
|
|
|
|
|
|
Provision for
income taxes |
(14.1 |
) |
|
(35.3 |
) |
|
(50.8 |
) |
|
(68.0 |
) |
|
|
|
|
|
|
|
|
Net earnings |
106.2 |
|
|
83.6 |
|
|
189.3 |
|
|
162.8 |
|
Less: net earnings
attributable to noncontrolling interest |
2.2 |
|
|
0.9 |
|
|
4.0 |
|
|
3.2 |
|
Net earnings
attributable to CDK |
$ |
104.0 |
|
|
$ |
82.7 |
|
|
$ |
185.3 |
|
|
$ |
159.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to CDK per common share: |
|
|
|
|
|
|
|
Basic |
$ |
0.76 |
|
|
$ |
0.56 |
|
|
$ |
1.34 |
|
|
$ |
1.07 |
|
Diluted |
$ |
0.75 |
|
|
$ |
0.55 |
|
|
$ |
1.33 |
|
|
$ |
1.06 |
|
|
|
|
|
|
|
|
|
Weighted-average common
shares outstanding: |
|
|
|
|
|
|
|
Basic |
136.9 |
|
|
148.7 |
|
|
138.5 |
|
|
149.5 |
|
Diluted |
138.2 |
|
|
149.9 |
|
|
139.8 |
|
|
150.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CDK Global,
Inc.Consolidated Balance Sheets(In
millions)(Unaudited)
|
|
|
|
|
December 31, |
|
June 30, |
|
2017 |
|
2017 |
Assets |
|
|
|
Current assets: |
|
|
|
Cash and cash
equivalents |
$ |
443.6 |
|
|
$ |
726.1 |
|
Accounts
receivable, net of allowances |
407.3 |
|
|
372.1 |
|
Other current
assets |
195.3 |
|
|
180.6 |
|
Total current
assets |
1,046.2 |
|
|
1,278.8 |
|
|
|
|
|
Property, plant and
equipment, net |
140.8 |
|
|
135.0 |
|
Other assets |
175.0 |
|
|
184.1 |
|
Goodwill |
1,216.1 |
|
|
1,181.2 |
|
Intangible assets,
net |
111.9 |
|
|
104.0 |
|
Total
assets |
$ |
2,690.0 |
|
|
$ |
2,883.1 |
|
|
|
|
|
Liabilities and
(Deficit) Equity |
|
|
|
Current
liabilities: |
|
|
|
Current
maturities of long-term debt and capital lease obligations |
$ |
45.9 |
|
|
$ |
46.5 |
|
Accounts
payable |
17.7 |
|
|
38.9 |
|
Accrued expenses
and other current liabilities |
226.1 |
|
|
188.7 |
|
Accrued payroll
and payroll-related expenses |
64.4 |
|
|
106.2 |
|
Short-term
deferred revenues |
178.0 |
|
|
172.3 |
|
Total current
liabilities |
532.1 |
|
|
552.6 |
|
|
|
|
|
Long-term debt and
capital lease obligations |
2,103.9 |
|
|
2,125.2 |
|
Long-term deferred
revenues |
122.6 |
|
|
136.1 |
|
Deferred income
taxes |
54.6 |
|
|
65.9 |
|
Other liabilities |
64.8 |
|
|
60.1 |
|
Total
liabilities |
2,878.0 |
|
|
2,939.9 |
|
|
|
|
|
(Deficit) Equity: |
|
|
|
Preferred
stock |
— |
|
|
— |
|
Common
stock |
1.6 |
|
|
1.6 |
|
Additional
paid-in-capital |
671.7 |
|
|
608.6 |
|
Retained
earnings |
597.7 |
|
|
452.7 |
|
Treasury stock,
at cost |
(1,512.1 |
) |
|
(1,144.7 |
) |
Accumulated
other comprehensive income |
32.1 |
|
|
8.0 |
|
Total CDK
stockholders' deficit |
(209.0 |
) |
|
(73.8 |
) |
Noncontrolling
interest |
21.0 |
|
|
17.0 |
|
Total
deficit |
(188.0 |
) |
|
(56.8 |
) |
Total
liabilities and (deficit) equity |
$ |
2,690.0 |
|
|
$ |
2,883.1 |
|
|
CDK Global,
Inc.Consolidated Statements of Cash
Flows(In millions)(Unaudited)
|
|
Six Months Ended |
|
December 31, |
|
2017 |
|
2016 |
Cash Flows from
Operating Activities: |
|
|
|
Net earnings |
$ |
189.3 |
|
|
$ |
162.8 |
|
Adjustments to
reconcile net earnings to cash flows provided by operating
activities: |
|
|
|
Depreciation and amortization |
39.0 |
|
|
34.4 |
|
Deferred
income taxes |
(12.1 |
) |
|
5.0 |
|
Stock-based compensation expense |
21.0 |
|
|
20.5 |
|
Other |
1.2 |
|
|
2.4 |
|
Changes in operating
assets and liabilities, net of effect from acquisitions of
businesses: |
|
|
|
Increase
in accounts receivable |
(33.2 |
) |
|
(2.2 |
) |
Increase
in other assets |
(6.1 |
) |
|
(7.6 |
) |
Decrease
in accounts payable |
(21.0 |
) |
|
(11.3 |
) |
Decrease
in accrued expenses and other liabilities |
(26.1 |
) |
|
(30.6 |
) |
Net cash flows provided
by operating activities |
152.0 |
|
|
173.4 |
|
|
|
|
|
Cash Flows from
Investing Activities: |
|
|
|
Capital
expenditures |
(28.4 |
) |
|
(29.7 |
) |
Proceeds from sale of
property, plant and equipment |
— |
|
|
0.5 |
|
Capitalized
software |
(17.7 |
) |
|
(10.0 |
) |
Acquisitions of
businesses, net of cash acquired |
(12.8 |
) |
|
— |
|
Contributions to
investments |
— |
|
|
(0.6 |
) |
Proceeds from
investments |
0.8 |
|
|
4.0 |
|
Net cash flows used in
investing activities |
(58.1 |
) |
|
(35.8 |
) |
|
|
|
|
Cash Flows from
Financing Activities: |
|
|
|
Proceeds from long-term
debt |
— |
|
|
400.0 |
|
Repayments of long-term
debt and capital lease obligations |
(23.2 |
) |
|
(13.5 |
) |
Dividends paid to
stockholders |
(40.2 |
) |
|
(40.6 |
) |
Repurchases of common
stock |
(315.4 |
) |
|
(350.0 |
) |
Proceeds from exercises
of stock options |
3.8 |
|
|
5.1 |
|
Withholding tax
payments for stock-based compensation awards |
(9.6 |
) |
|
(10.5 |
) |
Dividend payments to
noncontrolling owners |
— |
|
|
(3.0 |
) |
Payments of deferred
financing costs |
(0.4 |
) |
|
(2.0 |
) |
Acquisition-related
payments |
(1.9 |
) |
|
(6.2 |
) |
Net cash flows used in
financing activities |
(386.9 |
) |
|
(20.7 |
) |
|
|
|
|
Effect of exchange rate
changes on cash and cash equivalents |
10.5 |
|
|
(8.4 |
) |
|
|
|
|
Net change in cash and
cash equivalents |
(282.5 |
) |
|
108.5 |
|
|
|
|
|
Cash and cash
equivalents, beginning of period |
726.1 |
|
|
219.1 |
|
|
|
|
|
Cash and cash
equivalents, end of period |
$ |
443.6 |
|
|
$ |
327.6 |
|
|
CDK Global, Inc.Segment Financial
Data(In millions)(Unaudited)
As described below under the Non-GAAP Financial Measures section
of this press release, effective July 1, 2017, we began
incorporating additional adjustments within our calculations of
adjusted earnings before income taxes, where management has deemed
it appropriate to better reflect our underlying operations. Segment
information for the three and six months ended December 31, 2016
has been restated to conform to the new presentation.
|
|
|
Segment Revenues |
|
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
Change |
|
December 31, |
|
Change |
|
2017 |
|
2016 |
|
$ |
|
% |
|
2017 |
|
2016 |
|
$ |
|
% |
CDK North America: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Solutions North America: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription revenue |
$ |
326.4 |
|
|
$ |
313.4 |
|
|
$ |
13.0 |
|
|
4 |
% |
|
$ |
653.0 |
|
|
$ |
629.7 |
|
|
$ |
23.3 |
|
|
4 |
% |
Transaction revenue |
39.1 |
|
|
42.7 |
|
|
(3.6 |
) |
|
(8 |
)% |
|
82.8 |
|
|
89.6 |
|
|
(6.8 |
) |
|
(8 |
)% |
Other
revenue |
32.6 |
|
|
37.7 |
|
|
(5.1 |
) |
|
(14 |
)% |
|
63.9 |
|
|
69.9 |
|
|
(6.0 |
) |
|
(9 |
)% |
Total
Retail Solutions North America (a) |
$ |
398.1 |
|
|
$ |
393.8 |
|
|
$ |
4.3 |
|
|
1 |
% |
|
$ |
799.7 |
|
|
$ |
789.2 |
|
|
$ |
10.5 |
|
|
1 |
% |
Advertising North America (b) |
76.8 |
|
|
78.1 |
|
|
(1.3 |
) |
|
(2 |
)% |
|
156.6 |
|
|
155.6 |
|
|
1.0 |
|
|
1 |
% |
CDK
International (c) |
86.8 |
|
|
75.9 |
|
|
10.9 |
|
|
14 |
% |
|
171.1 |
|
|
153.7 |
|
|
17.4 |
|
|
11 |
% |
Total |
$ |
561.7 |
|
|
$ |
547.8 |
|
|
$ |
13.9 |
|
|
3 |
% |
|
$ |
1,127.4 |
|
|
$ |
1,098.5 |
|
|
$ |
28.9 |
|
|
3 |
% |
|
|
|
|
Segment Adjusted Earnings before Income
Taxes |
|
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
Change |
|
December 31, |
|
Change |
|
2017 |
|
2016 |
|
$ |
|
% |
|
2017 |
|
2016 |
|
$ |
|
% |
CDK North America: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail
Solutions North America (a) |
$ |
167.5 |
|
|
$ |
142.3 |
|
|
25.2 |
|
|
18 |
% |
|
$ |
325.2 |
|
|
$ |
287.8 |
|
|
$ |
37.4 |
|
|
13 |
% |
Margin |
42.1 |
% |
|
36.1 |
% |
|
600 bps |
|
|
|
|
|
40.7 |
% |
|
36.5 |
% |
|
420 bps |
|
|
|
|
Advertising North America (b) |
9.4 |
|
|
9.8 |
|
|
(0.4 |
) |
|
(4 |
)% |
|
20.0 |
|
|
21.3 |
|
|
(1.3 |
) |
|
(6 |
)% |
Margin |
12.2 |
% |
|
12.5 |
% |
|
-30 bps |
|
|
|
|
|
12.8 |
% |
|
13.7 |
% |
|
-90 bps |
|
|
|
|
CDK International
(c) |
22.6 |
|
|
18.3 |
|
|
4.3 |
|
|
23 |
% |
|
44.0 |
|
|
35.2 |
|
|
8.8 |
|
|
25 |
% |
Margin |
26.0 |
% |
|
24.1 |
% |
|
190 bps |
|
|
|
|
|
25.7 |
% |
|
22.9 |
% |
|
280 bps |
|
|
|
|
Other (d) |
(38.1 |
) |
|
(19.5 |
) |
|
(18.6 |
) |
|
(95 |
)% |
|
(77.5 |
) |
|
(50.0 |
) |
|
(27.5 |
) |
|
(55 |
)% |
Total |
$ |
161.4 |
|
|
$ |
150.9 |
|
|
$ |
10.5 |
|
|
7 |
% |
|
$ |
311.7 |
|
|
$ |
294.3 |
|
|
$ |
17.4 |
|
|
6 |
% |
Margin |
28.7 |
% |
|
27.5 |
% |
|
120 bps |
|
|
|
|
|
27.6 |
% |
|
26.8 |
% |
|
80 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The table below presents a reconciliation of revenues to
constant currency revenues and earnings before income taxes to
constant currency adjusted earnings before income taxes for the
Retail Solutions North America (RSNA) segment.
|
Retail
Solutions North America |
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
December 31, |
|
Change |
|
December 31, |
|
Change |
|
2017 |
|
2016 |
|
$ |
|
% |
|
2017 |
|
2016 |
|
$ |
% |
Revenues |
$ |
398.1 |
|
|
$ |
393.8 |
|
|
$ |
4.3 |
|
|
1 |
% |
|
$ |
799.7 |
|
|
$ |
789.2 |
|
|
$ |
10.5 |
|
1 |
% |
Impact of
exchange rates |
(1.3 |
) |
|
— |
|
|
|
|
|
|
(2.3 |
) |
|
— |
|
|
|
|
Constant currency
revenues (e) |
$ |
396.8 |
|
|
$ |
393.8 |
|
|
$ |
3.0 |
|
|
1 |
% |
|
$ |
797.4 |
|
|
$ |
789.2 |
|
|
$ |
8.2 |
|
1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes |
$ |
162.3 |
|
|
$ |
142.3 |
|
|
$ |
20.0 |
|
|
14 |
% |
|
$ |
318.5 |
|
|
$ |
287.8 |
|
|
$ |
30.7 |
|
11 |
% |
Margin
% |
40.8 |
% |
|
36.1 |
% |
|
470 bps |
|
|
|
|
39.8 |
% |
|
36.5 |
% |
|
330 bps |
|
|
Acquisition and integration-related expenses |
3.1 |
|
|
— |
|
|
|
|
|
|
3.7 |
|
|
— |
|
|
|
|
Legal and
regulatory expenses related tocompetition matters |
2.1 |
|
|
— |
|
|
|
|
|
|
3.0 |
|
|
— |
|
|
|
|
Adjusted
earnings before income taxes |
$ |
167.5 |
|
|
$ |
142.3 |
|
|
$ |
25.2 |
|
|
18 |
% |
|
$ |
325.2 |
|
|
$ |
287.8 |
|
|
$ |
37.4 |
|
13 |
% |
Margin
% |
42.1 |
% |
|
36.1 |
% |
|
600 bps |
|
|
|
|
40.7 |
% |
|
36.5 |
% |
|
420 bps |
|
|
Impact of
exchange rates |
(0.6 |
) |
|
— |
|
|
|
|
|
|
(1.1 |
) |
|
— |
|
|
|
|
Constant currency
earnings beforeincome taxes (e) |
$ |
166.9 |
|
|
$ |
142.3 |
|
|
$ |
24.6 |
|
|
17 |
% |
|
$ |
324.1 |
|
|
$ |
287.8 |
|
|
$ |
36.3 |
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(b) There are no non-GAAP adjustments to revenues and earnings
before income taxes for the Advertising North America (ANA) segment
including constant currency.
(c) There are no non-GAAP adjustments to revenues and earnings
before income taxes for the CDK International (CDKI) segment. The
table below presents a reconciliation of revenues to constant
currency revenues and earnings before income taxes to constant
currency earnings before income taxes for the CDKI segment.
|
CDK
International |
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
December 31, |
|
Change |
|
December 31, |
|
Change |
|
2017 |
|
2016 |
|
$ |
|
% |
|
2017 |
|
2016 |
|
$ |
% |
Revenues |
$ |
86.8 |
|
|
$ |
75.9 |
|
|
$ |
10.9 |
|
|
14 |
% |
|
$ |
171.1 |
|
|
$ |
153.7 |
|
|
$ |
17.4 |
|
11 |
% |
Impact of
exchange rates |
(5.2 |
) |
|
— |
|
|
|
|
|
|
(7.2 |
) |
|
— |
|
|
|
|
Constant currency
revenues (e) |
$ |
81.6 |
|
|
$ |
75.9 |
|
|
$ |
5.7 |
|
|
8 |
% |
|
$ |
163.9 |
|
|
$ |
153.7 |
|
|
$ |
10.2 |
|
7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes |
$ |
22.6 |
|
|
$ |
18.3 |
|
|
$ |
4.3 |
|
|
23 |
% |
|
$ |
44.0 |
|
|
$ |
35.2 |
|
|
$ |
8.8 |
|
25 |
% |
Margin
% |
26.0 |
% |
|
24.1 |
% |
|
190 bps |
|
|
|
|
25.7 |
% |
|
22.9 |
% |
|
280 bps |
|
|
Impact of
exchange rates |
(1.0 |
) |
|
— |
|
|
|
|
|
|
(1.7 |
) |
|
— |
|
|
|
|
Constant currency
earnings before income taxes (e) |
$ |
21.6 |
|
|
$ |
18.3 |
|
|
$ |
3.3 |
|
|
18 |
% |
|
$ |
42.3 |
|
|
$ |
35.2 |
|
|
$ |
7.1 |
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(d) The table below presents a reconciliation of loss before
income taxes to constant currency adjusted loss before income taxes
for the Other segment.
|
Other |
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
Change |
|
December 31, |
|
Change |
|
2017 |
|
2016 |
|
$ |
|
% |
|
2017 |
|
2016 |
|
$ |
|
% |
Loss before
income taxes |
$ |
(74.0 |
) |
|
$ |
(51.5 |
) |
|
$ |
(22.5 |
) |
|
(44 |
)% |
|
$ |
(142.4 |
) |
|
$ |
(113.5 |
) |
|
$ |
(28.9 |
) |
|
(25 |
)% |
Restructuring expenses |
7.6 |
|
|
2.3 |
|
|
|
|
|
|
14.1 |
|
|
3.4 |
|
|
|
|
|
Other
business transformation expenses |
14.4 |
|
|
19.0 |
|
|
|
|
|
|
29.6 |
|
|
39.6 |
|
|
|
|
|
Total
stock-based compensation |
12.9 |
|
|
10.7 |
|
|
|
|
|
|
21.0 |
|
|
20.5 |
|
|
|
|
|
Officer
transition expense |
0.6 |
|
|
— |
|
|
|
|
|
|
0.6 |
|
|
— |
|
|
|
|
|
Tax
matters indemnifications loss (gain) |
0.4 |
|
|
— |
|
|
|
|
|
|
(0.4 |
) |
|
— |
|
|
|
|
|
Adjusted loss
before income taxes |
$ |
(38.1 |
) |
|
$ |
(19.5 |
) |
|
$ |
(18.6 |
) |
|
(95 |
)% |
|
$ |
(77.5 |
) |
|
$ |
(50.0 |
) |
|
$ |
(27.5 |
) |
|
(55 |
)% |
Impact of
exchange rates |
— |
|
|
— |
|
|
|
|
|
|
(0.4 |
) |
|
— |
|
|
|
|
|
Constant currency
adjusted loss before income taxes (e) |
$ |
(38.1 |
) |
|
$ |
(19.5 |
) |
|
$ |
(18.6 |
) |
|
(95 |
)% |
|
$ |
(77.9 |
) |
|
$ |
(50.0 |
) |
|
$ |
(27.9 |
) |
|
(56 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(e) Refer to the Non-GAAP Financial Measures section of this
earnings release for additional information on our non-GAAP
adjustments.
CDK Global, Inc.Consolidated Adjusted
Financial Information(In millions, except per share
amounts)(Unaudited)
As described below under the Non-GAAP Financial Measures section
of this press release, effective July 1, 2017, we began
incorporating additional adjustments within our calculations of
adjusted earnings before income taxes, adjusted provision for
income taxes, adjusted net earnings attributable to CDK, adjusted
diluted net earnings attributable to CDK per share, adjusted
EBITDA, and adjusted EBITDA margin where management has deemed it
appropriate to better reflect our underlying operations.
Information for the three and six months ended December 31, 2016
has been restated to conform to the new presentation.
|
|
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
Change |
|
December 31, |
|
Change |
|
2017 |
|
2016 |
|
$ |
|
% |
|
2017 |
|
2016 |
|
$ |
|
% |
Revenues |
$ |
561.7 |
|
|
$ |
547.8 |
|
|
$ |
13.9 |
|
|
3 |
% |
|
$ |
1,127.4 |
|
|
$ |
1,098.5 |
|
|
$ |
28.9 |
|
|
3 |
% |
Impact of
exchange rates |
(6.5 |
) |
|
— |
|
|
|
|
|
|
(9.5 |
) |
|
— |
|
|
(9.5 |
) |
|
|
Constant currency
revenues (a) |
$ |
555.2 |
|
|
$ |
547.8 |
|
|
$ |
7.4 |
|
|
1 |
% |
|
$ |
1,117.9 |
|
|
$ |
1,098.5 |
|
|
$ |
19.4 |
|
|
2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes |
$ |
120.3 |
|
|
$ |
118.9 |
|
|
$ |
1.4 |
|
|
1 |
% |
|
$ |
240.1 |
|
|
$ |
230.8 |
|
|
$ |
9.3 |
|
|
4 |
% |
Margin |
21.4 |
% |
|
21.7 |
% |
|
-30 bps |
|
|
|
|
|
21.3 |
% |
|
21.0 |
% |
|
30 bps |
|
|
|
Restructuring expenses |
7.6 |
|
|
2.3 |
|
|
|
|
|
|
14.1 |
|
|
3.4 |
|
|
|
|
|
Other
business transformation expenses(b) |
14.4 |
|
|
19.0 |
|
|
|
|
|
|
29.6 |
|
|
39.6 |
|
|
|
|
|
Total
stock-based compensation |
12.9 |
|
|
10.7 |
|
|
|
|
|
|
21.0 |
|
|
20.5 |
|
|
|
|
|
Acquisition and integration-related expenses |
3.1 |
|
|
— |
|
|
|
|
|
|
3.7 |
|
|
— |
|
|
|
|
|
Officer
transition expense |
0.6 |
|
|
— |
|
|
|
|
|
|
0.6 |
|
|
— |
|
|
|
|
|
Legal and
regulatory expenses related tocompetition matters |
2.1 |
|
|
— |
|
|
|
|
|
|
3.0 |
|
|
— |
|
|
|
|
|
Tax
matters indemnifications loss/(gain),net |
0.4 |
|
|
— |
|
|
|
|
|
|
(0.4 |
) |
|
— |
|
|
|
|
|
Adjusted
earnings before income taxes (a) |
$ |
161.4 |
|
|
$ |
150.9 |
|
|
10.5 |
|
|
7 |
% |
|
$ |
311.7 |
|
|
$ |
294.3 |
|
|
$ |
17.4 |
|
|
6 |
% |
Adjusted
margin |
28.7 |
% |
|
27.5 |
% |
|
120 bps |
|
|
|
|
|
27.6 |
% |
|
26.8 |
% |
|
80 bps |
|
|
|
Impact of
exchange rates |
(1.6 |
) |
|
— |
|
|
|
|
|
|
(3.2 |
) |
|
— |
|
|
|
|
|
Constant currency
adjusted earnings beforeincome taxes (a) |
$ |
159.8 |
|
|
$ |
150.9 |
|
|
$ |
8.9 |
|
|
6 |
% |
|
$ |
308.5 |
|
|
$ |
294.3 |
|
|
$ |
14.2 |
|
|
5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for
income taxes |
$ |
14.1 |
|
|
$ |
35.3 |
|
|
$ |
(21.2 |
) |
|
(60 |
)% |
|
$ |
50.8 |
|
|
$ |
68.0 |
|
|
$ |
(17.2 |
) |
|
(25 |
)% |
Effective
tax rate |
11.7 |
% |
|
29.7 |
% |
|
|
|
|
|
21.2 |
% |
|
29.5 |
% |
|
|
|
|
Income
tax effect of pre-tax adjustments |
10.6 |
|
|
11.6 |
|
|
|
|
|
|
22.0 |
|
|
23.1 |
|
|
|
|
|
Excess
tax benefit from stock-basedcompensation |
0.1 |
|
|
3.0 |
|
|
|
|
|
|
3.6 |
|
|
8.7 |
|
|
|
|
|
Pre
spin-off filed tax return adjustment |
0.4 |
|
|
— |
|
|
|
|
|
|
0.4 |
|
|
— |
|
|
|
|
|
Impact of
U.S. tax reform act |
14.1 |
|
|
— |
|
|
|
|
|
|
14.1 |
|
|
— |
|
|
|
|
|
Adjusted
provision for income taxes (a) |
$ |
39.3 |
|
|
$ |
49.9 |
|
|
$ |
(10.6 |
) |
|
(21 |
)% |
|
$ |
90.9 |
|
|
$ |
99.8 |
|
|
$ |
(8.9 |
) |
|
(9 |
)% |
Adjusted
effective tax rate |
24.3 |
% |
|
33.1 |
% |
|
|
|
|
|
29.2 |
% |
|
33.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings |
$ |
106.2 |
|
|
$ |
83.6 |
|
|
$ |
22.6 |
|
|
27 |
% |
|
$ |
189.3 |
|
|
$ |
162.8 |
|
|
$ |
26.5 |
|
|
16 |
% |
Less: net earnings
attributable tononcontrolling interest |
2.2 |
|
|
0.9 |
|
|
|
|
|
|
4.0 |
|
|
3.2 |
|
|
|
|
|
Net earnings
attributable to CDK |
104.0 |
|
|
82.7 |
|
|
21.3 |
|
|
26 |
% |
|
185.3 |
|
|
159.6 |
|
|
25.7 |
|
|
16 |
% |
Restructuring expenses (c) |
7.5 |
|
|
2.3 |
|
|
|
|
|
|
13.9 |
|
|
3.4 |
|
|
|
|
|
Other
business transformation expenses(b) (c) |
14.3 |
|
|
19.0 |
|
|
|
|
|
|
29.5 |
|
|
39.6 |
|
|
|
|
|
Total
stock-based compensation |
12.9 |
|
|
10.7 |
|
|
|
|
|
|
21.0 |
|
|
20.5 |
|
|
|
|
|
Acquisition and integration-relatedexpenses |
3.1 |
|
|
— |
|
|
|
|
|
|
3.7 |
|
|
— |
|
|
|
|
|
Officer
transition expense |
0.6 |
|
|
— |
|
|
|
|
|
|
0.6 |
|
|
— |
|
|
|
|
|
Legal and
regulatory expenses related tocompetition matters |
2.1 |
|
|
— |
|
|
|
|
|
|
3.0 |
|
|
— |
|
|
|
|
|
Tax
matters indemnifications loss/(gain),net |
0.4 |
|
|
— |
|
|
|
|
|
|
(0.4 |
) |
|
— |
|
|
|
|
|
Income
tax benefit on pre-tax adjustments |
(10.6 |
) |
|
(11.6 |
) |
|
|
|
|
|
(22.0 |
) |
|
(23.1 |
) |
|
|
|
|
Excess
tax benefit from stock-basedcompensation |
(0.1 |
) |
|
(3.0 |
) |
|
|
|
|
|
(3.6 |
) |
|
(8.7 |
) |
|
|
|
|
Pre
spin-off filed tax return adjustment |
(0.4 |
) |
|
— |
|
|
|
|
|
|
(0.4 |
) |
|
— |
|
|
|
|
|
Impact of
U.S. tax reform act |
(14.1 |
) |
|
— |
|
|
|
|
|
|
(14.1 |
) |
|
— |
|
|
|
|
|
Adjusted net
earnings attributable toCDK (a) |
$ |
119.7 |
|
|
$ |
100.1 |
|
|
$ |
19.6 |
|
|
20 |
% |
|
$ |
216.5 |
|
|
$ |
191.3 |
|
|
$ |
25.2 |
|
|
13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings attributable to CDKper share |
$ |
0.75 |
|
|
$ |
0.55 |
|
|
$ |
0.20 |
|
|
36 |
% |
|
$ |
1.33 |
|
|
$ |
1.06 |
|
|
$ |
0.27 |
|
|
25 |
% |
Restructuring expenses |
0.06 |
|
|
0.02 |
|
|
|
|
|
|
0.10 |
|
|
0.02 |
|
|
|
|
|
Other
business transformation expenses(b) |
0.10 |
|
|
0.13 |
|
|
|
|
|
|
0.21 |
|
|
0.26 |
|
|
|
|
|
Total
stock-based compensation |
0.09 |
|
|
0.07 |
|
|
|
|
|
|
0.15 |
|
|
0.14 |
|
|
|
|
|
Acquisition and integration-related expenses |
0.03 |
|
|
— |
|
|
|
|
|
|
0.03 |
|
|
— |
|
|
|
|
|
Officer
transition expense |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
Legal and
regulatory expenses related tocompetition matters |
0.02 |
|
|
— |
|
|
|
|
|
|
0.02 |
|
|
— |
|
|
|
|
|
Tax
matters indemnifications loss/(gain),net |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
Income
tax effect of pre-tax adjustments |
(0.08 |
) |
|
(0.08 |
) |
|
|
|
|
|
(0.16 |
) |
|
(0.15 |
) |
|
|
|
|
Excess
tax benefit from stock-basedcompensation |
— |
|
|
(0.02 |
) |
|
|
|
|
|
(0.03 |
) |
|
(0.06 |
) |
|
|
|
|
Pre
spin-off filed tax return adjustment |
— |
|
|
— |
|
|
|
|
|
|
— |
|
|
— |
|
|
|
|
|
Impact of
U.S. tax reform act |
(0.10 |
) |
|
— |
|
|
|
|
|
|
(0.10 |
) |
|
— |
|
|
|
|
|
Adjusted
diluted earnings attributable toCDK per share |
$ |
0.87 |
|
|
$ |
0.67 |
|
|
$ |
0.20 |
|
|
30 |
% |
|
$ |
1.55 |
|
|
$ |
1.27 |
|
|
$ |
0.28 |
|
|
22 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average common
sharesoutstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted |
138.2 |
|
|
149.9 |
|
|
|
|
|
|
139.8 |
|
|
150.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
December 31, |
|
Change |
|
December 31, |
|
Change |
|
2017 |
|
2016 |
|
$ |
|
% |
|
2017 |
|
2016 |
|
$ |
|
% |
Net earnings
attributable to CDK |
$ |
104.0 |
|
|
$ |
82.7 |
|
|
$ |
21.3 |
|
|
26 |
% |
|
$ |
185.3 |
|
|
$ |
159.6 |
|
|
$ |
25.7 |
|
|
16 |
% |
Margin |
18.5 |
% |
|
15.1 |
% |
|
340 bps |
|
|
|
|
|
16.4 |
% |
|
14.5 |
% |
|
190 bps |
|
|
|
|
Net
earnings attributable to noncontrollinginterest |
2.2 |
|
|
0.9 |
|
|
|
|
|
|
4.0 |
|
|
3.2 |
|
|
|
|
|
Provision
for income taxes |
14.1 |
|
|
35.3 |
|
|
|
|
|
|
50.8 |
|
|
68.0 |
|
|
|
|
|
Interest
expense |
23.2 |
|
|
12.3 |
|
|
|
|
|
|
46.5 |
|
|
23.0 |
|
|
|
|
|
Depreciation and amortization |
19.5 |
|
|
17.3 |
|
|
|
|
|
|
39.0 |
|
|
34.4 |
|
|
|
|
|
Total
stock-based compensation |
12.9 |
|
|
10.7 |
|
|
|
|
|
|
21.0 |
|
|
20.5 |
|
|
|
|
|
Restructuring expenses |
7.6 |
|
|
2.3 |
|
|
|
|
|
|
14.1 |
|
|
3.4 |
|
|
|
|
|
Other
business transformation expenses |
14.4 |
|
|
18.2 |
|
|
|
|
|
|
29.5 |
|
|
38.0 |
|
|
|
|
|
Acquisition and integration-related expenses |
3.1 |
|
|
— |
|
|
|
|
|
|
3.7 |
|
|
— |
|
|
|
|
|
Officer
transition expense |
0.6 |
|
|
— |
|
|
|
|
|
|
0.6 |
|
|
— |
|
|
|
|
|
Legal and
regulatory expenses related tocompetition matters |
2.1 |
|
|
— |
|
|
|
|
|
|
3.0 |
|
|
— |
|
|
|
|
|
Tax
matters indemnifications loss/(gain), net |
0.4 |
|
|
— |
|
|
|
|
|
|
(0.4 |
) |
|
— |
|
|
|
|
|
Adjusted EBITDA
(a) |
$ |
204.1 |
|
|
$ |
179.7 |
|
|
$ |
24.4 |
|
|
14 |
% |
|
$ |
397.1 |
|
|
$ |
350.1 |
|
|
$ |
47.0 |
|
|
13 |
% |
Adjusted
margin |
36.3 |
% |
|
32.8 |
% |
|
350 bps |
|
|
|
|
|
35.2 |
% |
|
31.9 |
% |
|
330 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
December 31, |
|
2017 |
|
2016 |
Net cash flows provided
by operating activities |
$ |
152.0 |
|
|
$ |
173.4 |
|
Capital
expenditures |
(28.4 |
) |
|
(29.7 |
) |
Capitalized
software |
(17.7 |
) |
|
(10.0 |
) |
Free cash flow
(a) |
$ |
105.9 |
|
|
$ |
133.7 |
|
|
|
|
|
|
|
|
|
(a) Refer to the Non-GAAP Financial Measures section of this
earnings release for additional information on our non-GAAP
adjustments.
(b) Stock-based compensation expense has been removed from
business transformation expense for the three and six months ended
December 31, 2016. Refer to the Non-GAAP Financial Measures
section of this press release for additional information on changes
to our non-GAAP adjustments.
(c) The portion of expense related to noncontrolling interest
has been removed from restructuring expenses and business
transformation expense for the three and six months ended
December 31, 2017.
CDK Global, Inc.Consolidated Fiscal
2018 Guidance(In millions, except per share
amounts)(Unaudited)
As described below under the Non-GAAP Financial Measures section
of this press release, effective July 1, 2017, we began
incorporating additional adjustments within our calculations of
adjusted earnings before income taxes, adjusted provision for
income taxes, adjusted net earnings attributable to CDK, adjusted
diluted net earnings attributable to CDK per share, adjusted EBITDA
and adjusted EBITDA margin where management has deemed it
appropriate to better reflect our underlying operations. The table
below includes these adjustments for fiscal 2017 for purposes of
calculating and presenting the fiscal 2018 guidance.
|
|
Fiscal 2017 |
|
Fiscal 2018 |
|
Actuals |
|
Point Estimate (a) |
|
Guidance |
Revenues |
$ |
2,220.2 |
|
|
$ |
2,295.0 |
|
|
Increase 3 - 4% |
|
|
|
|
|
|
Earnings before
income taxes |
$ |
435.3 |
|
|
$ |
507.0 |
|
|
|
Restructuring expenses |
18.4 |
|
|
27.0 |
|
|
|
Other
business transformation expenses (b) |
78.1 |
|
|
53.0 |
|
|
|
Total
stock-based compensation |
55.4 |
|
|
40.0 |
|
|
|
Acquisition and integration-related expenses |
0.7 |
|
|
6.0 |
|
|
|
Officer
transition expense (b) |
0.7 |
|
|
1.0 |
|
|
|
Legal and
regulatory expenses related to competition matters |
— |
|
|
12.0 |
|
|
|
Tax
matters indemnifications gain |
— |
|
|
(1.0 |
) |
|
|
Adjusted
earnings before income taxes (c) |
$ |
588.6 |
|
|
$ |
645.0 |
|
|
|
|
|
|
|
|
|
Provision for
income taxes |
$ |
132.8 |
|
|
$ |
128.0 |
|
|
|
Effective
tax rate |
30.5 |
% |
|
25.2 |
% |
|
25 -
26% |
Income
tax effect of pre-tax adjustments |
55.5 |
|
|
42.0 |
|
|
|
Excess
tax benefit from stock-based compensation |
13.1 |
|
|
5.0 |
|
|
|
Pre
spin-off filed tax return adjustment |
— |
|
|
1.0 |
|
|
|
Impact of
U.S tax reform act |
— |
|
|
14.0 |
|
|
|
Adjusted
provision for income taxes (c) |
$ |
201.4 |
|
|
$ |
190.0 |
|
|
|
Adjusted effective tax rate |
34.2 |
% |
|
29.5 |
% |
|
29 -
30% |
|
|
|
|
|
|
Net
earnings |
$ |
302.5 |
|
|
$ |
379.0 |
|
|
|
Less: net earnings
attributable to noncontrolling interest |
6.9 |
|
|
9.0 |
|
|
|
Net earnings
attributable to CDK |
$ |
295.6 |
|
|
$ |
370.0 |
|
|
|
Restructuring expenses |
18.4 |
|
|
27.0 |
|
|
|
Other
business transformation expenses (b) |
78.1 |
|
|
53.0 |
|
|
|
Total
stock-based compensation |
55.4 |
|
|
40.0 |
|
|
|
Acquisition and integration-related expenses |
0.7 |
|
|
6.0 |
|
|
|
Officer
transition expense (b) |
0.7 |
|
|
1.0 |
|
|
|
Legal and
regulatory expenses related to competition matters |
— |
|
|
12.0 |
|
|
|
Tax
matters indemnifications gain |
— |
|
|
(1.0 |
) |
|
|
Income
tax effect of pre-tax adjustments |
(55.5 |
) |
|
(42.0 |
) |
|
|
Excess
tax benefit from stock-based compensation |
(13.1 |
) |
|
(5.0 |
) |
|
|
Pre
spin-off filed tax return adjustment |
— |
|
|
(1.0 |
) |
|
|
Impact of
U.S tax reform act |
— |
|
|
(14.0 |
) |
|
|
Adjusted net
earnings attributable to CDK (c) |
$ |
380.3 |
|
|
$ |
446.0 |
|
|
|
|
|
|
|
|
|
Diluted net
earnings attributable to CDK per common share |
$ |
1.99 |
|
|
$ |
2.69 |
|
|
$2.65
- 2.75 |
Growth
% |
|
|
|
|
Increase 33 - 38% |
Restructuring expenses |
0.12 |
|
|
0.20 |
|
|
|
Other
business transformation expenses (b) |
0.54 |
|
|
0.39 |
|
|
|
Total
stock-based compensation |
0.37 |
|
|
0.29 |
|
|
|
Acquisition and integration-related expenses |
— |
|
|
0.05 |
|
|
|
Officer
transition expense (b) |
— |
|
|
0.01 |
|
|
|
Legal and
regulatory expenses related to competition matters |
— |
|
|
0.09 |
|
|
|
Tax
matters indemnifications gain |
— |
|
|
(0.01 |
) |
|
|
Income
tax effect of pre-tax adjustments |
(0.37 |
) |
|
(0.31 |
) |
|
|
Excess
tax benefit from stock-based compensation |
(0.08 |
) |
|
(0.04 |
) |
|
|
Pre
spin-off filed tax return adjustment |
— |
|
|
(0.01 |
) |
|
|
Impact of
U.S tax reform act |
— |
|
|
(0.10 |
) |
|
|
Adjusted
diluted net earnings attributable to CDK per commonshare
(c) |
$ |
2.57 |
|
|
$ |
3.25 |
|
|
$3.23
- 3.28 |
Growth
% |
|
|
|
|
Increase 25 - 27% |
|
|
|
|
|
|
|
|
Fiscal 2017 |
|
Fiscal 2018 |
|
Actuals |
|
Full Year |
|
|
Full Year PointEstimate (a) |
|
Guidance |
Revenues |
$ |
2,220.2 |
|
|
$ |
2,295.0 |
|
|
|
|
|
|
|
|
|
Net earnings
attributable to CDK |
$ |
295.6 |
|
|
$ |
370.0 |
|
|
Increase 24 - 27 % |
Margin |
13.3 |
% |
|
16.1 |
% |
|
16% -
17% |
Net
earnings attributable to noncontrolling interest |
6.9 |
|
|
9.0 |
|
|
|
Provision
for income taxes |
132.8 |
|
|
128.0 |
|
|
|
Interest
expense |
57.2 |
|
|
99.0 |
|
|
|
Depreciation and amortization |
70.3 |
|
|
81.0 |
|
|
|
Total
stock-based compensation |
55.4 |
|
|
40.0 |
|
|
|
Restructuring expenses |
18.4 |
|
|
27.0 |
|
|
|
Other
business transformation expenses |
75.6 |
|
|
53.0 |
|
|
|
Acquisition and integration-related expenses |
0.7 |
|
|
6.0 |
|
|
|
Officer
transition expense |
0.7 |
|
|
1.0 |
|
|
|
Legal and
regulatory expenses related to competition matters |
— |
|
|
12.0 |
|
|
|
Tax
matters indemnifications gain |
— |
|
|
(1.0 |
) |
|
|
Adjusted EBITDA
(c) |
$ |
713.6 |
|
|
$ |
825.0 |
|
|
Increase 13 - 16 % |
Adjusted
margin |
32.1 |
% |
|
35.9 |
% |
|
35% -
36% |
|
|
|
|
|
|
|
|
(a) The point estimates are arbitrary amounts within the
guidance ranges provided and are not meant to represent CDK's
forecast of actual results. They are used solely to provide a means
to reconcile each non-GAAP guidance range to the most directly
comparable GAAP measure in dollars and percentages, where
applicable.
(b) Stock-based compensation expense has been removed from
business transformation expense and officer transition expense.
Refer to the Non-GAAP Financial Measures section of this press
release for additional information on changes to our non-GAAP
adjustments.
(c) Refer to the Non-GAAP Financial Measures section of this
press release for additional information on our non-GAAP
adjustments.
CDK Global, Inc.Performance
Metrics(Unaudited)
CDK management regularly reviews the following key performance
measures to evaluate business results and make operating and
strategic decisions. These measures are intended to provide
directional information regarding trends in our recurring
subscription revenues. The following table summarizes these
measures for recurring subscription revenues in our segments:
|
|
|
|
|
|
|
|
|
September 30,2016 (a) |
|
December 31,2016 (a) |
|
March 31,2017 (a) |
|
June 30,2017 (a) |
|
September 30,2017 |
|
December 31,2017 |
RSNA |
|
|
|
|
|
|
|
|
|
|
|
Automotive |
|
|
|
|
|
|
|
|
|
|
|
DMS
Customer Sites (b) |
9,232 |
|
|
9,184 |
|
|
9,157 |
|
|
9,081 |
|
|
9,020 |
|
|
9,029 |
|
Avg
Revenue Per Site (c) |
$ |
7,803 |
|
|
$ |
7,875 |
|
|
$ |
7,975 |
|
|
$ |
8,070 |
|
|
$ |
8,285 |
|
|
$ |
8,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjacencies |
|
|
|
|
|
|
|
|
|
|
|
DMS
Customer Sites (b) |
5,380 |
|
|
5,415 |
|
|
5,523 |
|
|
5,530 |
|
|
5,523 |
|
|
5,577 |
|
Avg
Revenue Per Site (c) |
$ |
1,556 |
|
|
$ |
1,569 |
|
|
$ |
1,575 |
|
|
$ |
1,578 |
|
|
$ |
1,602 |
|
|
$ |
1,600 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
RSNA |
|
|
|
|
|
|
|
|
|
|
|
DMS
Customer Sites (b) |
14,612 |
|
|
14,599 |
|
|
14,680 |
|
|
14,611 |
|
|
14,543 |
|
|
14,606 |
|
Avg
Revenue Per Site (c) |
$ |
5,507 |
|
|
$ |
5,538 |
|
|
$ |
5,570 |
|
|
$ |
5,616 |
|
|
$ |
5,750 |
|
|
$ |
5,814 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Websites (d) |
6,625 |
|
|
6,789 |
|
|
6,931 |
|
|
6,879 |
|
|
6,858 |
|
|
6,817 |
|
|
|
|
|
|
|
|
|
|
|
|
|
CDKI |
|
|
|
|
|
|
|
|
|
|
|
DMS
Customer Sites (b) |
13,373 |
|
|
13,424 |
|
|
13,419 |
|
|
13,477 |
|
|
13,496 |
|
|
13,559 |
|
Avg
Revenue Per Site (c) |
$ |
1,181 |
|
|
$ |
1,199 |
|
|
$ |
1,226 |
|
|
$ |
1,249 |
|
|
$ |
1,266 |
|
|
$ |
1,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Average revenue per Dealer Management System (DMS) customer
site has been updated for fiscal 2017 to reflect the change in
reportable segments and budgeted foreign exchange rates for fiscal
2018.
(b) DMS Customer Sites - We track the number of retail customer
sites with an active DMS that sell vehicles in the automotive and
adjacent markets as an indicator of our opportunity set for
generating subscription revenue. We consider a DMS to be active if
we have billed a subscription fee for that solution during the most
recently ended calendar month. Adjacent markets include heavy truck
dealerships that provide vehicles to the over-the-road trucking
industry, recreation dealerships in the motorcycle, marine, and
recreational vehicle industries, and heavy equipment dealerships in
the agriculture and construction equipment industries.
(c) Average Revenue Per DMS Customer Site - Average revenue per
DMS customer site is an indicator of the adoption of our solutions
by DMS customers, and we monitor changes in this metric to measure
the effectiveness of our strategy to deepen our relationships with
our current customer base through upgrading and expanding
solutions. We calculate average revenue per DMS customer site by
dividing revenue generated from our solutions, including revenue
generated from websites, in an applicable period by the average
number of DMS customer sites in the same period. The metric
excludes subscription revenue generated by customers not included
in our DMS customer site count as well as subscription revenue
related to certain installation and training activities that is
deferred then recognized as revenue over the life of the contract.
Revenue underlying this metric is based on budgeted foreign
exchange rates. When we discuss growth in average revenue per DMS
customer site, revenue for the comparable prior period has been
adjusted to reflect budgeted foreign exchange rates for the current
period.
(d) Websites - For the RSNA segment, we track the number of
websites that we host and develop for our OEM and automotive retail
customers as an indicator of business activity, regardless of
whether or not the website is tied to a DMS customer site. The
number of websites as of a specified date is the total number of
full function dealer websites or portals that are currently
accessible as of the end of the most recent calendar month.
Non-GAAP Financial Measures
We disclose certain financial measures for our consolidated and
operating segment results on both a GAAP and a non-GAAP (adjusted)
basis. The non-GAAP financial measures disclosed should be viewed
in addition to, and not as an alternative to, results prepared in
accordance with GAAP. Our use of each of the following
non-GAAP financial measures may differ from similarly titled
non-GAAP financial measures presented by other companies, and other
companies may not define these non-GAAP financial measures, or
reconcile them to the comparable GAAP financial measures, in the
same way.
|
Non-GAAP Financial Measure |
Comparable GAAP Financial Measure |
Adjusted earnings
before income taxes |
Earnings before income
taxes |
Adjusted provision for
income taxes |
Provision for income
taxes |
Adjusted net earnings
attributable to CDK |
Net earnings
attributable to CDK |
Adjusted diluted
earnings attributable to CDK per share |
Diluted earnings
attributable to CDK per share |
Adjusted EBITDA |
Net earnings
attributable to CDK |
Adjusted EBITDA
margin |
Net earnings
attributable to CDK margin |
Constant currency
revenues |
Revenues |
Constant currency
adjusted earnings before income taxes |
Earnings before income
taxes |
|
|
We use adjusted earnings before income taxes, adjusted provision
for income taxes, adjusted net earnings attributable to CDK,
adjusted diluted earnings attributable to CDK per share, adjusted
EBITDA and adjusted EBITDA margin internally to evaluate our
performance on a consistent basis, because the measures adjust for
the impact of certain items that we believe do not directly reflect
our underlying operations. By adjusting for these items we believe
we have more precise inputs for use as factors in (i) our budgeting
process, (ii) making financial and operational decisions, (iii)
evaluating ongoing segment and overall operating performance on a
consistent period-to-period basis, (iv) target leverage
calculations, (v) debt covenant calculations, and (vi) determining
incentive-based compensation.
We believe our non-GAAP financial measures are useful for users
of the financial statements because they (i) provide investors with
meaningful supplemental information regarding financial performance
by excluding certain items, (ii) permit investors to view
performance using the same tools that management uses, and (iii)
otherwise provide supplemental information that may be useful to
investors in evaluating our ongoing operating results on a
consistent basis. We believe that the presentation of these
non-GAAP financial measures, when considered together with the
corresponding GAAP financial measures and the reconciliations to
those measures disclosed below, provides investors with a fuller
understanding of the factors and trends affecting our business than
could be obtained absent these disclosures.
Effective July 1, 2017, we began incorporating additional
adjustments within our calculations of adjusted earnings before
income taxes, adjusted provision for income taxes, adjusted net
earnings attributable to CDK, adjusted diluted net earnings
attributable to CDK per share, adjusted EBITDA, and adjusted EBITDA
margin where management has deemed it appropriate to better reflect
our underlying operations. For fiscal 2018, management modified
fiscal year ended June 30, 2017 adjustments for (i) business
transformation expenses and (ii) officer transition expense to
remove stock-based compensation expense of $2.5 million and $3.1
million, respectively and excluded certain legal and regulatory
expenses related to the competition matter from adjusted earnings
before income taxes. There was no stock-based compensation expense
included in business transformation expenses for the three and six
months ended December 31, 2016.
Adjusted Earnings before Income Taxes
Management has excluded the following items from adjusted
earnings before income taxes for the periods presented:
- Restructuring expenses recognized in connection with our
business transformation plan.
- Other business transformation expenses included within cost of
revenues and selling, general and administrative expenses.
- Total stock-based compensation expense included within cost of
revenues and selling, general and administrative expenses.
- Acquisition and integration-related expenses that include
legal, accounting, other professional fees, and other integration
costs incurred in connection with our closed and pending
acquisitions included within selling, general and administrative
expenses.
- Officer transition expense includes severance expense in
connection with officer departures included within selling, general
and administrative expenses for the periods presented.
- Legal and regulatory expenses related to competition matters
included within selling, general and administrative expenses.
- Net loss/(gain) recorded within other income, net associated
with an indemnification receivable from ADP for pre spin-off tax
periods in accordance with tax matters agreement.
Adjusted Provision for Income taxes
Management has excluded the following items from adjusted
provision for income taxes for the periods presented:
- Income tax effect of pre-tax adjustments described above.
- Excess tax benefit derived from stock-option exercises and
vesting of restricted stock in order to align the adjustments for
this measure with our adjustments for total stock-based
compensation in other measures.
- Net income tax benefit associated with a tax refund, offset by
a pretax loss to establish a liability to ADP for the tax refund in
accordance with the tax-matters agreement.
- As a result of the Tax reform Act, an estimated one-time tax
benefit of $22.6 million from the revaluation of the Company's net
deferred tax liability partially offset by a one-time expense of
$8.5 million associated with undistributed foreign earnings.
Adjusted Net Earnings Attributable to CDK and Adjusted Diluted
Net Earnings Attributable to CDK per Share
For each respective presentation, management has excluded the
items described above for adjusted earnings before income taxes and
adjusted provision for income taxes from adjusted net earnings
attributable to CDK and adjusted basic and diluted net earnings
attributable to CDK per share.
The portion of expense related to noncontrolling interest of
$0.1 million and $0.2 million has been removed from restructuring
expenses for the three months ended and six months ended
December 31, 2017, respectively. Additionally, $0.1 million
related to noncontrolling interest has been removed from other
business transformation expenses three months ended and six months
ended December 31, 2017.
Adjusted EBITDA
Management has excluded the following items from net earnings
attributable to CDK in order to calculate adjusted EBITDA for the
periods presented:
- Net earnings attributable to noncontrolling interest included
within the financial statements.
- Provision for income taxes included within the financial
statements.
- Interest expense included within the financial statements.
- Depreciation and amortization included within the financial
statements.
- Total stock-based compensation expense included within cost of
revenues and selling, general and administrative expenses.
- Restructuring expenses recognized in connection with our
business transformation plan.
- Other business transformation expenses included within cost of
revenues and selling, general and administrative expenses. Other
business transformation expenses excludes depreciation expense of
$0.8 million for the three months ended December 31, 2016 and
$0.1 million and $1.6 million for the six months ended
December 31, 2017 and 2016, respectively.
- Acquisition and integration-related expenses that include
legal, accounting, other professional fees, and other integration
costs incurred in connection with our closed and pending
acquisitions included within selling, general and administrative
expenses.
- Officer transition expense includes severance expense in
connection with officer departures included within selling, general
and administrative expenses for the periods presented.
- Legal and regulatory expenses related to competition matters
included within selling, general and administrative expenses.
- Net loss/(gain) recorded within other income, net associated
with an indemnification receivable from ADP for pre spin-off tax
periods in accordance with tax matters agreement.
Free Cash Flow
We also review free cash flow to measure our ability to generate
additional cash from our business operations. Free cash flow is
defined as cash flow from operating activities less amounts paid
for capital expenditures and capitalized software. Free cash flow
should be considered in addition to, rather than as a substitute
for consolidated net income as a measure of our performance and net
cash provided by operating activities as a measure of our
liquidity.
Constant Currency
We review revenues and adjusted earnings before income taxes for
our consolidated and operating segment results on a constant
currency basis to understand underlying business trends. To present
these results on a constant currency basis, current period results
for entities reporting in currencies other than the U.S. dollar
were translated into U.S. dollar using the average monthly exchange
rates for the comparable prior period. As a result, constant
currency results neutralize the effects of foreign currency.
Safe Harbor for Forward-Looking
Statements
This press release contains "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements, other than statements of
historical fact, including: the Company’s business outlook,
forecasted GAAP and adjusted results for the fiscal year ending
June 30, 2018, and an estimated post-tax reform normalized annual
adjusted effective tax rate; the Company’s objectives for its
multi-year business transformation plan; other plans; objectives;
forecasts; goals; beliefs; business strategies; future events;
business conditions; results of operations; financial position and
business outlook and trends; and other information, may be
forward-looking statements. Words such as "might," "will," "may,"
"could," "should," "estimates," "expects," "continues,"
"contemplates," "anticipates," "projects," "plans," "potential,"
"predicts," "intends," "believes," "forecasts," "future,"
"assumes," and variations of such words or similar expressions are
intended to identify forward-looking statements. These statements
are based on management's expectations and assumptions and are
subject to risks and uncertainties that may cause actual results to
differ materially from those expressed, or implied by, these
forward-looking statements.
Factors that could cause actual results to
differ materially from those contemplated by the forward-looking
statements include: the Company’s success in obtaining, retaining
and selling additional services to customers; the pricing of
products and services; overall market and economic conditions,
including interest rate and foreign currency trends, and technology
trends; adverse global economic conditions and credit markets and
volatility in the countries in which we do business; auto sales and
advertising and related industry changes; competitive conditions;
changes in regulation (including future interpretations,
assumptions and regulatory guidance related to the Tax Cuts and
Jobs Act); changes in technology, security breaches, interruptions,
failures and other errors involving CDK systems; availability of
skilled technical employees/labor/personnel; the impact of new
acquisitions and divestitures; employment and wage levels;
availability of capital for the payment of debt service obligations
or dividends or the repurchase of shares; any changes to the
Company’s credit ratings and the impact of such changes on
financing costs, rates, terms, debt service obligations, access to
capital market and working capital needs; the impact of the
Company’s indebtedness, access to cash and financing, and ability
to secure financing, or financing at attractive rates; litigation
involving contract, intellectual property, competition,
shareholder, and other matters, and governmental investigations;
the Company’s ability to timely and effectively implement its
transformation plan; and the ability of the Company’s significant
stockholders and their affiliates to significantly influence the
Company’s decisions or cause it to incur significant costs.
There may be other factors that may cause the
Company’s actual results, performance or achievements to differ
materially from those expressed in, or implied by, the
forward-looking statements. CDK gives no assurances that any
of the events anticipated by the forward-looking statements will
occur or, if any of them do, what impact they will have on its
results of operations and financial condition. You should carefully
read the factors described in the Company’s reports filed with
the Securities and Exchange Commission ("SEC"), including
those discussed under "Part I, Item 1A. Risk Factors" in its most
recent Annual Report on Form 10-K and its most recent Quarterly
Report on Form 10-Q for a description of certain risks that could,
among other things, cause the Company’s actual results to
differ from any forward-looking statements contained herein. These
filings can be found on the CDK website at
www.cdkglobal.com and the SEC's website
at www.sec.gov.
All forward-looking statements speak only as of
the date of this press release even if subsequently made available
by CDK on its website or otherwise. CDK disclaims any obligation to
update or revise any forward-looking statements that may be made to
reflect new information or future events or circumstances that
arise after the date made or to reflect the occurrence of
unanticipated events, other than as required by law.
Investor Relations Contact: Katie Coleman
847.485.4650
katherine.coleman@cdk.com |
Media
Contact: David Webster, Aberdeen
Strategies 469.222.3667
david.webster@aberdeenstrategies.com |
CDK Global (NASDAQ:CDK)
Historical Stock Chart
From Apr 2024 to May 2024
CDK Global (NASDAQ:CDK)
Historical Stock Chart
From May 2023 to May 2024