Lake Success, N.Y. – DealerTrack Holdings, Inc. reported financial results for the fourth quarter and year ended December 31, 2011.
GAAP Results for the Fourth Quarter 2011
- Revenue for the quarter was $91.3 million, as compared to $62.0 million for the fourth quarter of 2010.
- GAAP net income for the quarter was $32.9 million, as compared to a GAAP net loss of ($26.4) million for the fourth quarter of 2010.
- Diluted GAAP net income per share for the quarter was $0.76, as compared to a GAAP net loss of ($0.65) for the fourth quarter of 2010.
GAAP net income for the fourth quarter 2011 was positively impacted by a $26.8 million (net of tax), or $0.62 per share, non-cash gain related to the sale of ALG and a $2.8 million, or $0.06 per share, non-cash tax benefit related to a reversal in the valuation allowance against the company’s net U.S. deferred tax assets including disposed deferred tax liabilities. GAAP net loss for the fourth quarter 2010 was negatively impacted by a $28.4 million, or $0.70 per share, non-cash tax expense related to an increase in the valuation allowance against the company’s net U.S. deferred tax assets.
Non-GAAP Results for the Fourth Quarter 2011
- Adjusted EBITDA for the quarter was $17.4 million, as compared to $14.5 million for the fourth quarter of 2010.
- Including the add-back of stock-based compensation expense, adjusted EBITDA was $20.3 million in the fourth quarter, compared to $17.0 million for the fourth quarter of 2010.
- Adjusted net income for the quarter was $10.3 million, as compared to $7.8 million for the fourth quarter of 2010.
- Diluted adjusted net income per share for the quarter was $0.24, as compared to $0.19 for the fourth quarter of 2010.
GAAP Results for the Year Ended December 31, 2011
- Revenue for the year was $353.3 million, as compared to $243.8 million for 2010.
- GAAP net income for the year was $65.1 million, as compared to a GAAP net loss of ($27.8) million for 2010.
- Diluted GAAP net income per share for the year was $1.53, as compared to a GAAP net loss of $(0.69) per share for 2010.
GAAP net income for 2011 was positively impacted by a $26.8 million (net of tax), or $0.63 per share, non-cash gain related to the sale of ALG and a $25.1 million, or $0.59 per share, non-cash tax benefit related to a reversal in the valuation allowance against the company’s net U.S. deferred tax assets including disposed deferred tax liabilities. GAAP net income for 2010 was negatively impacted by a $28.4 million, or $0.70 per share, non-cash tax expense related to an increase in the valuation allowance against the company’s net U.S. deferred tax assets.
Non-GAAP Results for the Year Ended December 31, 2011
- Adjusted EBITDA for the year was $74.4 million, as compared to $42.1 million for 2010.
- Including the add-back of stock-based compensation expense, adjusted EBITDA was $85.9 million in 2011, compared to $53.3 million in 2010.
- Adjusted net income for the year was $43.4 million, as compared to $21.9 million for 2010.
- Diluted adjusted net income per share for the year was $1.02, as compared to $0.53 per share for 2010.
Guidance for 2012 Annual Performance
DealerTrack’s revenue and GAAP and non-GAAP earnings guidance for the full year 2012 is as follows:
Expected GAAP Results
- Revenue for the year is expected to be between $365.0 million and $372.0 million, representing approximately 13% to 15% growth on a pro forma basis after adjusting 2011 revenue to reflect the dispositions of Chrome and ALG.
- GAAP net income for the year is expected to be between $33.0 million and $36.0 million.
- Diluted GAAP net income per share for the year is expected to be between $0.75 and $0.81.
Expected Non-GAAP Results
- Including the add-back of stock-based compensation expense of approximately $13.0 million, adjusted EBITDA for the year is expected to be between $91.0 million and $95.0 million.
- Adjusted net income for the year is expected to be between $44.0 million and $47.0 million.
- Diluted adjusted net income per share for the year is expected to be between $0.99 and $1.06.
Diluted GAAP net income and adjusted net income per share guidance for the year is based on an estimated 44.3 million diluted weighted average shares outstanding. The guidance assumes that new car sales by franchised dealers will be approximately 13.5 million units and used car sales by franchised dealers will be approximately 14.0 million units for 2012.
Mark F. O’Neil, chairman and chief executive officer of DealerTrack, commented, “We are pleased with our strong continued year-over-year growth in the fourth quarter, capping what was an excellent year for DealerTrack. Over the course of 2011 we made significant progress in increasing the number of transactions processed by DealerTrack and average transaction revenue per car sold. This progress was further impacted by healthy auto credit and car sales trends throughout the year. Our subscription business continues to grow, and we believe we have considerable opportunities to expand our average monthly subscription spend per dealer. In our view, we are entering 2012 in a very strong position to continue to grow revenue at a multiple of auto industry growth, and to improve profitability margins while continuing to invest in long-term growth opportunities.”
Non-GAAP Financial Measures
The non-GAAP measures of adjusted EBITDA and adjusted net income disclosures are not presented in accordance with generally accepted accounting principles (GAAP) and are not intended to be used in lieu of GAAP presentations of net income. Adjusted EBITDA is a non-GAAP financial measure that represents GAAP net income (loss) excluding interest, taxes, depreciation and amortization expenses, stock-based compensation, contra-revenue and may exclude certain items such as: impairment charges, restructuring charges, impact of acquisition-related activity (including contingent consideration changes, compensation expense and professional service fees), realized gains or (losses) on securities, gains or losses on sales of subsidiaries, and certain other non-recurring items.
All stock-based compensation expense is now excluded from the calculation of the Adjusted EBITDA non-GAAP measure. This reduces the comparability with prior periods. This non-cash expense was included in the previous presentation.
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 may also exclude certain items such as: impairment charges, restructuring charges, impact of acquisition-related activity (including contingent consideration changes, compensation expense and professional service fees), realized gains or (losses) on sales of securities, gains or losses on sales of subsidiaries, adjustments to deferred tax asset valuation allowances and certain other non-recurring items. These adjustments to net income, which are shown before taxes, are adjusted for their tax impact.
Adjusted EBITDA and adjusted net income are presented because management believes that they provide additional information with respect to the performance of our fundamental business activities and are also frequently used by securities analysts, investors and other interested parties in the evaluation of comparable companies. Adjusted EBITDA and adjusted net income are also presented because the purchase accounting treatment of acquisitions can have a negative impact on our GAAP results because the depreciation and amortization expenses associated with acquired assets, in particular intangibles which tend to have a relatively short useful life, can be substantial in the first several years following an acquisition. As a result, we monitor our adjusted EBITDA and adjusted net income and other business statistics as a measure of operating performance in addition to net income and the other measures included in our consolidated financial statements. Management believes the adjusted EBITDA and adjusted net income information is useful to investors for these reasons. Adjusted EBITDA and adjusted net income are non‑GAAP financial measures and should not be viewed as an alternative to GAAP measures of performance. Management believes the most directly comparable GAAP financial measure for adjusted EBITDA and adjusted net income is GAAP net income (loss) and has provided a reconciliation of adjusted EBITDA to GAAP net income (loss) and adjusted net income to GAAP net income (loss) in Attachment 4 to this press release.
About DealerTrack (www.dealertrack.com)
DealerTrack’s web-based software solutions and services enhance efficiency and profitability for all major segments of the automotive retail industry, including dealers, lenders, OEMs, third party retailers, agents and aftermarket providers. DealerTrack operates the largest online credit application network in the United States and Canada. DealerTrack’s Dealer Management System (DMS) provides dealers with easy-to-use tools and real-time data access to enhance their efficiency. DealerTrack’s Inventory solution offerings provide vehicle inventory management and merchandising solutions to help dealers drive higher in-store and online traffic with state-of-the-art, real-time listings — designed to accelerate used-vehicle turn rates and increase dealer profits. DealerTrack’s Sales and Finance solutions allow dealers to streamline the entire sales process as they structure deals from a single integrated platform. Our Compliance offering helps dealers meet legal and regulatory requirements, and protect their assets. DealerTrack also offers processing solutions for the automotive industry, including digital retailing, electronic motor vehicle registration and titling applications, paper title storage, and digital document services.
Safe Harbor for Forward-Looking and Cautionary Statements
Statements in this press release regarding DealerTrack’s expected 2012 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 auto dealerships; increased competitive pressure from other industry participants, including Open Dealer Exchange, RouteOne, CUDL, Finance Express and AppOne; the impact of some vendors of software products for automotive dealers making it more difficult for DealerTrack’s customers to use DealerTrack’s solutions and services; security breaches, interruptions, failures and/or other errors involving DealerTrack’s systems or networks; the failure or inability to execute any element of DealerTrack’s business strategy, including selling additional products and services to existing and new customers; DealerTrack’s success in implementing an ERP system; the volatility of DealerTrack’s stock price; new regulations or changes to existing regulations; the integration of recent acquisitions and the expected benefits, as well as the integration and expected benefits of any future acquisitions that DealerTrack may pursue; DealerTrack’s success in expanding its customer base and product and service offerings, the impact of recent economic trends, and difficulties and increased costs associated with raising additional capital; the impairment of intangible assets, such as trademarks and goodwill; and other risks listed in DealerTrack’s reports filed with the Securities and Exchange Commission (SEC), including its most recent Annual Report on Form 10-K. These filings can be found on DealerTrack’s website at www.dealertrack.com and the SEC’s website at www.sec.gov. Forward-looking statements included herein speak only as of the date hereof and DealerTrack disclaims any obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances, except as required by law.