LAKE SUCCESS, N.Y. — DealerTrack Holdings, Inc. reported financial results for the third quarter ended September 30, 2011.
GAAP Results for the Third Quarter 2011
- Revenue for the quarter was $95.8 million, as compared to $63.1 million for the third quarter of 2010.
- GAAP net income for the quarter was $5.4 million, as compared to $1.2 million for the third quarter of 2010.
- Diluted GAAP net income per share for the quarter was $0.13, as compared to $0.03 for the third quarter of 2010.
Non-GAAP Results for the Third Quarter 2011
- Adjusted EBITDA for the quarter was $23.0 million, as compared to $12.9 million for the third quarter of 2010.
- Adjusted net income for the quarter was $14.7 million, as compared to $6.6 million for the third quarter of 2010.
- Diluted adjusted net income per share was $0.34 for the quarter, as compared to $0.16 for the third quarter of 2010.
GAAP Results for the Nine Months Ended September 30, 2011
- Revenue for the nine months was $262.0 million, as compared to $181.8 million for the same period in 2010.
- GAAP net income for the nine months was $32.3 million, as compared to a GAAP net loss of $(1.4) million for the same period in 2010.
- Diluted GAAP net income per share for the nine months was $0.76, as compared to a GAAP net loss of $(0.03) per share for the same period in 2010.
GAAP net income for 2011 has been positively impacted by a $22.4 million, or $0.53 per share, non-cash reduction in the valuation allowance against the company’s net U.S. deferred tax assets.
Non-GAAP Results for the Nine Months Ended September 30, 2011
- Adjusted EBITDA for the nine months was $57.0 million, as compared to $27.6 million for the same period in 2010.
- Adjusted net income for the nine months was $33.2 million, as compared to $13.7 million for the same period in 2010.
- Diluted adjusted net income per share for the nine months was $0.78, as compared to $0.33 per share for the same period in 2010.
Guidance for 2011 Annual Performance
DealerTrack raises revenue and both GAAP and non-GAAP earnings guidance for the full year 2011 as follows:
Expected GAAP Results
- Revenue for the year is expected to be between $344.0 million and $347.0 million, compared to the previous estimate of between $336.0 million and $340.0 million.
- GAAP net income for the year is expected to be between $65.0 million and $67.0 million, compared to the previous estimate of between $24.5 and $27.0 million.
- Diluted GAAP net income per share for the year is expected to be between $1.53 and $1.58, compared to the previous estimate of between $0.57 and $0.63.
The revised GAAP earnings guidance reflects an expected pre-tax gain of approximately $47.5 million ($28.8 million net of tax, or $0.68 per share) to be recognized in the fourth quarter related to the sale of DealerTrack’s wholly owned subsidiary, ALG, Inc.
Expected Non-GAAP Results
- Adjusted EBITDA for the year is expected to be between $72.0 million and $75.0 million, compared to the previous estimate of between $66.0 million and $70.0 million.
- Adjusted net income for the year is expected to be between $40.0 million and $42.0 million, compared to the previous estimate of between $34.5 million and $37.0 million.
- Diluted adjusted net income per share for the year is expected to be between $0.94 and $0.99 compared to the previous estimate of between $0.81 and $0.86.
Diluted GAAP net income and adjusted net income per share guidance for the year are based on an assumed 42.4 million diluted weighted average shares outstanding, compared to a previous estimate of 42.8 million shares. The guidance assumes that new car sales will be approximately 12.8 million units and used car sales will be approximately 13.8 million units for 2011. The assumptions for car sales are unchanged from DealerTrack’s prior estimates. The revised guidance implies an adjusted EBITDA margin of approximately 21% for the full year, up from approximately 20%.
Mark O’Neil, chairman and chief executive officer of DealerTrack, commented, “We are very pleased with our record revenue and non-GAAP earnings results for the third quarter as our transaction businesses continue to benefit from the improvement in auto credit availability, an increase in car sales year over year, the addition of new lenders to our network, and the performance of DealerTrack Processing Solutions. Additionally, our subscription business benefitted from our recent eCarlist acquisition.”
DealerTrack will host a conference call to discuss its third quarter 2011 results and other matters on November 7, 2011 at 5:00 p.m. Eastern Time. The conference call will be webcast live on the Internet at http://ir.dealertrack.com/eventdetail.cfm?eventid=95733. In addition, a live audio of the call will be accessible to the public by calling 877-303-6648 (domestic) or 970-315-0443 (international); no access code is necessary. Callers should dial in approximately 10 minutes before the call begins. A replay will be available on the DealerTrack website until November 30, 2011.
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, contra-revenue and may exclude certain items such as: impairment charges, restructuring charges, acquisition-related compensation expense and professional service fees, realized gains or (losses) on securities and certain other non-recurring items. 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, acquisition-related compensation expense and professional service fees, realized gains or (losses) on securities, adjustments to the deferred tax asset valuation allowance 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 they provide additional information with respect to the performance of our fundamental business activities principally 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, as well as 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 nonGAAP 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 intuitive and high-value software solutions and services enhance efficiency and profitability for all major segments of the retail automotive industry, including dealers, lenders, OEMs, agents and aftermarket providers. DealerTrack, whose solution set for dealers is the industry’s most comprehensive, operates the largest online credit application network inthe United States, connecting over 17,000 dealers with more than 1,100 lenders. 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 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 — leading to accelerated used-vehicle turn rates and higher dealer profits. DealerTrack’s Sales and F&I solutions allow dealers to streamline the entire sales process as they structure deals from a single integrated platform. Its Compliance offering helps dealers meet legal and regulatory requirements, and protect their assets. DealerTrack also offers additional solutions for the automotive industry, including electronic motor vehicle registration and titling applications, paper title storage, and digital document services. DealerTrack’s family of companies also includesChrome Systems, a data provider to the auto industry. For more information, visit www.dealertrack.com.
Safe Harbor for Forward-Looking and Cautionary Statements
Statements in this press release regarding DealerTrack’s expected 2011 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.