TechWeb

DealerTrack Holdings, Inc., Reports Second Quarter 2012 Financial Results

Aug 07, 2012 (04:08 PM EDT)
URL: http://www.techweb.com/show-press-release/X917004/dealertrack-holdings-inc-reports-second-quarter-2012-financial-results.html

Updates 2012 Guidance based on Results and 1st Auto Transport Directory Acquisition

LAKE SUCCESS, N.Y., Aug. 7, 2012 /PRNewswire/ -- DealerTrack Holdings, Inc. (Nasdaq: TRAK) today reported financial results for the second quarter ended June 30, 2012.

(Logo: http://photos.prnewswire.com/prnh/20101028/DEALERTRACKLOGO )

GAAP Results for the Second Quarter 2012

  • Revenue for the quarter was $96.4 million, as compared to $89.1 million for the second quarter of 2011.
  • GAAP net income for the quarter was $5.9 million, as compared to $2.2 million for the second quarter of 2011.
  • Diluted GAAP net income per share for the quarter was $0.13, as compared to $0.05 for the second quarter of 2011.

    GAAP net income includes a $3.5 million, or $0.08 per share, gain (net of taxes) from the sale of certain Chrome branded assets that were not contributed to our Chrome Data joint venture.

Non-GAAP Results for the Second Quarter 2012

  • Adjusted EBITDA for the quarter was $25.0 million, as compared to $24.3 million for the second quarter of 2011.
  • Adjusted net income for the quarter was $13.7 million, as compared to $10.8 million for the second quarter of 2011.
  • Diluted adjusted net income per share for the quarter was $0.31, as compared to $0.25 for the second quarter of 2011.

GAAP Results for the Six Months Ended June 30, 2012

  • Revenue for the six months was $188.0 million, as compared to $166.2 million for the same period in 2011.
  • GAAP net income for the six months was $22.9 million, as compared to $26.9 million for the same period in 2011.  
  • Diluted GAAP net income per share for the six months was $0.52, as compared to $0.64 for the same period in 2011.  

    GAAP net income includes a $3.5 million, or $0.08 per share, gain (net of taxes) from the sale of certain Chrome branded assets that were not contributed to our Chrome Data joint venture.  GAAP net income for 2011 was positively impacted by a $23.5 million, or $0.56 per share, non-cash reduction in the valuation allowance against the company's net U.S. deferred tax assets.  

Non-GAAP Results for the Six Months Ended June 30, 2012

  • Adjusted EBITDA for the six months was $44.5 million, as compared to $39.8 million for the same period in 2011.
  • Adjusted net income for the six months was $23.2 million, as compared to $18.3 million for the same period in 2011.
  • Diluted adjusted net income per share for the six months was $0.53, as compared to $0.43 for the same period in 2011.

Updated Guidance for 2012 

DealerTrack updated its annual guidance based on second quarter results and the acquisition of 1st Auto Directory Transport as follows:

Expected GAAP Results

  • Revenue for the year is expected to be between $381.0 million and $385.0 million, an increase from prior guidance of between $375.0 million and $382.0 million.
  • GAAP net income for the year is expected to be between $24.5 million and $26.5 million, a decrease from prior guidance of between $27.0 million and $30.0 million.
  • Diluted GAAP net income per share for the year is expected to be between $0.55 and $0.60, a decrease from prior guidance of between $0.61 and $0.68 per share.

Expected Non-GAAP Results

  • Adjusted EBITDA for the year is expected to be between $96.0 million and $98.0 million, an increase from prior guidance of between $94.0 million and $97.0 million.
  • Adjusted net income for the year is expected to be between $47.5 million and $49.5 million, an increase from prior guidance of between $46.0 million and $49.0 million.
  • Diluted adjusted net income per share for the year is expected to be between $1.07 and $1.12, an increase from prior guidance of between $1.04 and $1.11.

The updated guidance assumes no change in our SAAR expectations for the full year. New car sales by franchised dealers are expected to be approximately 14.2 million units and used car sales by franchised dealers are expected to be approximately 14.0 million units for 2012.  Diluted GAAP net income and adjusted net income per share guidance for the year continue to be based on an estimated 44.3 million diluted weighted average shares outstanding.  Our updated guidance assumes an effective tax rate of 39% to 40% for the full year, an increase from prior guidance of 37% to 38%.

Mark F. O'Neil, chairman and chief executive officer of DealerTrack, commented, "We are pleased with the results we achieved in the second quarter. In addition to organic growth in our transaction and subscription businesses in the quarter, we are excited to further broaden our market opportunity with the addition of 1st Auto Transport Directory. We believe this acquisition will enable us to drive further increases in monthly subscription fees from dealerships while helping dealers improve their overall efficiency and profitability. We are increasing our revenue guidance and non-GAAP earnings guidance in 2012 to reflect the acquisition of 1st Auto Transport Directory."

Conference Call

DealerTrack will host a conference call to discuss its second quarter 2012 results and other matters on August 7, 2012 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 replay will be available on the DealerTrack website until August 31, 2012.

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, and contra-revenue and may exclude certain items 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 or losses on sales of securities, gains or losses on sales or disposals of subsidiaries and other assets, and certain other non-recurring items. 

All stock-based compensation expense is excluded from the calculation of the adjusted EBITDA non-GAAP measure. This may reduce the comparability with prior periods. This non-cash expense was included in presentations prior to fourth quarter 2011.

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, and 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, basis difference amortization, and professional service fees), realized gains or losses on sales of securities, gains or losses on sales or disposals of subsidiaries and other assets, adjustments to deferred tax asset valuation allowances, non-cash interest expense 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 this press release.

About DealerTrack (www.dealertrack.com)

DealerTrack's 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, agents, and aftermarket providers. DealerTrack, whose solution set for dealers is the industry's most comprehensive, operates the largest online credit application network in the United States, connecting over 18,000 dealers with more than 1,200 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, accelerate used-vehicle turn rates, and increase 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 processing and other solutions for the automotive industry, including a web-based network for arranging vehicle transportation and shipping, electronic motor vehicle registration and titling applications, paper title storage, and digital document services. For more information visit: www.dealertrack.com.

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, the benefits of the 1st Auto Transport Directory 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.

Three-Month Period

DEALERTRACK HOLDINGS, INC.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)






Three Months Ended


June 30,


2012


2011





Net revenue

$             96,396


$             89,051

Cost of revenue

53,712


48,565

Product development

2,944


3,118

Selling, general and administrative

34,067


31,490

      Total operating expenses

90,723


83,173

Income from operations

5,673


5,878

Interest expense, net

(3,024)


(128)

Other income (expense), net

(926)


92

Gain on disposal of subsidiary and sale of other assets

5,500


-

Earnings from equity method investment, net

145


-

Realized gain on securities

-


409

Income before provision for income taxes, net 

7,368


6,251

Provision for income taxes, net 

(1,443)


(4,085)

  Net income

$               5,925


$               2,166





Basic net income per share

$                 0.14


$                 0.05

Diluted net income per share

$                 0.13


$                 0.05

Weighted average common stock outstanding (basic) 

42,470


41,203

Weighted average common stock outstanding (diluted) 

43,957


42,550





Adjusted EBITDA - previous presentation (non-GAAP) (a)

$             21,655


$             21,270

Adjusted EBITDA margin - previous presentation (non-GAAP) (b)

22%


24%

Adjusted EBITDA (non-GAAP) (a)

$             25,037


$             24,305

Adjusted EBITDA margin (non-GAAP) (b)

26%


27%

Adjusted net income (non-GAAP) (a)

$             13,714


$             10,835

Diluted adjusted net income per share (non-GAAP)

$                 0.31


$                 0.25





Stock-based compensation expense was classified as follows:  




  Cost of revenue

$                   590


$                   425

  Product development

206


187

  Selling, general and administrative

2,586


2,414


$               3,382


$               3,026





(a)     See Reconciliation Data.




(b)     Represents adjusted EBITDA as a percentage of net revenue.






 

Six-Month Period

DEALERTRACK HOLDINGS, INC.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)






Six Months Ended


June 30,


2012


2011





Net revenue

$          188,013


$          166,242

Cost of revenue

106,862


92,992

Product development

5,938


6,471

Selling, general and administrative

68,195


61,975

      Total operating expenses

180,995


161,438

  Income from operations

7,018


4,804

Interest expense, net

(3,951)


(46)

Other income (expense), net

(850)


99

Gain on disposal of subsidiary and sale of other assets

33,193


-

Earnings from equity method investment, net

308


-

Realized gain on securities

-


409

Income before (provision for) benefit from income taxes, net 

35,718


5,266

(Provision for) benefit from income taxes, net 

(12,832)


21,628

  Net income

$             22,886


$             26,894





Basic net income per share

$                 0.54


$                 0.66

Diluted net income per share

$                 0.52


$                 0.64

Weighted average common stock outstanding (basic) 

42,286


41,036

Weighted average common stock outstanding (diluted) 

43,839


42,280





Adjusted EBITDA - previous presentation (non-GAAP) (a)

$             37,744


$             33,948

Adjusted EBITDA margin - previous presentation (non-GAAP) (b)

20%


20%

Adjusted EBITDA (non-GAAP) (a)

$             44,456


$             39,798

Adjusted EBITDA margin (non-GAAP) (b)

24%


24%

Adjusted net income (non-GAAP) (a)

$             23,158


$             18,325

Diluted adjusted net income per share (non-GAAP)

$                 0.53


$                 0.43





Stock-based compensation expense was classified as follows:  




    Cost of revenue

$               1,225


$                   852

    Product development

420


372

    Selling, general and administrative

5,067


4,744


$               6,712


$               5,968





(a)     See Reconciliation Data.




(b)     Represents adjusted EBITDA as a percentage of net revenue.








 

DEALERTRACK HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)













June 30,
2012


December 31,
2011






ASSETS





Cash and cash equivalents 


$          216,151


$             78,709

Marketable securities


37,871


46

Customer funds 


2,521


1,097

Customer funds receivable


22,336


18,695

Accounts receivable, net


37,761


37,588

Deferred tax assets


9,246


9,171

Prepaid expenses and other current assets 


26,946


23,011

    Total current assets


352,832


168,317






Marketable securities - long-term


27,678


-

Property and equipment, net


21,374


21,637

Software and website development costs, net


37,905


37,341

Investments


130,145


89,000

Intangible assets, net


80,893


96,441

Goodwill


192,914


200,840

Deferred tax assets, net


32,433


34,421

Other assets - long-term


15,940


12,356

    Total assets


$          892,114


$          660,353






LIABILITIES AND STOCKHOLDERS' EQUITY





Accounts payable and accrued expenses


$             34,431


$             41,194

Customer funds payable


24,857


19,792

Deferred revenue


8,576


9,115

Deferred tax liabilities


3,448


3,443

Capital leases payable


144


255

    Total current liabilities


71,456


73,799

Long-term liabilities


259,593


91,798

    Total liabilities


331,049


165,597

Total stockholders' equity


561,065


494,756

    Total liabilities and stockholders' equity 


$          892,114


$          660,353






DEALERTRACK HOLDINGS, INC.

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)






Six Months Ended


June 30, 


2012


2011

Operating activities:




Net income

$    22,886


$    26,894

Adjustments to reconcile net income to net cash provided by operating activities:




  Depreciation and amortization

24,927


24,739

  Deferred tax provision (benefit)

11,389


(23,707)

  Stock-based compensation expense

6,712


5,968

  Provision for doubtful accounts and sales credits

3,831


3,331

  Earnings from equity method investment, net

(308)


-

  Deferred compensation

75


100

  Stock-based compensation windfall tax benefit

(4,108)


(1,890)

  Gain on disposal of subsidiary and sale of other assets

(33,193)


-

  Realized gain on securities

-


(409)

  Amortization of debt issuance costs and debt discount

2,981


91

  Change in contingent consideration

(900)


-

  Change in fair value of warrant

1,000


-

  Amortization of deferred interest

164


-

  Changes in operating assets and liabilities, net of effects of acquisitions:




  Accounts receivable

(7,223)


(11,583)

  Prepaid expenses and other current assets

478


(4,086)

  Other assets — long-term

4,092


1,362

  Accounts payable and accrued expenses

(6,130)


(8,237)

  Deferred rent

7


67

  Deferred revenue

613


1,427

  Other liabilities — long-term

(743)


147

Net cash provided by operating activities

26,550


14,214





Consolidated Statements of Cash Flows (continued)





Six Months Ended


June 30, 


2012


2011

Investing activities:




Capital expenditures

(4,340)


(5,571)

Capitalized software and website development costs

(9,223)


(9,657)

Proceeds from sale of Chrome-branded asset

5,500


-

Purchases of marketable securities

(70,175)


-

Proceeds from sales and maturities of marketable securities 

4,500


2,485

Cash contributed for equity method investment

(1,750)


-

Payment for acquisition of businesses, net of acquired cash

-


(128,311)

Net cash used in investing activities

(75,488)


(141,054)





Financing activities:




Principal payments on capital lease obligations and financing arrangements

(445)


(299)

Proceeds from the exercise of employee stock options

5,075


4,386

Proceeds from employee stock purchase plan

376


340

Proceeds from issuance of senior convertible notes

200,000


-

Payments for debt issuance costs

(7,723)


(1,909)

Payments for convertible note hedges

(43,940)


-

Proceeds from issuance of warrants

29,740


-

Purchases of treasury stock

(742)


(441)

Stock-based compensation windfall tax benefit

4,108


1,890

    Net cash provided by financing activities

186,449


3,967





Net increase (decrease) in cash and cash equivalents

137,511


(122,873)

Effect of exchange rate changes on cash and cash equivalents

(69)


371

Cash and cash equivalents, beginning of period

78,709


192,563

Cash and cash equivalents, end of period

$    216,151


$    70,061









Supplemental disclosure:




Cash paid for:




    Income taxes

$    2,041


$    4,465

    Interest

260


32

Non-cash investing and financing activities:




    Non-cash consideration issued for investment in Chrome Data Solutions

42,301


-

    Accrued capitalized hardware, software and fixed assets

1,364


1,004

    Assets acquired under capital leases and financing arrangements

725


34

    Capitalized stock-based compensation

-


67

    Deferred compensation reversal to equity

75


100









DEALERTRACK HOLDINGS, INC.

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA

(Dollars in thousands)

(Unaudited)






Three Months Ended


June 30, 


2012


2011





GAAP net income

$  5,925


$  2,166

Interest income

(184)


(84)

Interest expense - cash

988


212

Interest expense - non-cash

2,220


-

Provision for income taxes, net

1,443


4,085

Depreciation of property and equipment and amortization of
  capitalized software and website costs

6,295


5,286

Amortization of acquired identifiable intangibles 

6,653


7,708

EBITDA (non-GAAP) 

23,340


19,373

   Adjustments:




  Gain on disposal of subsidiary and sale of other assets

(5,500)


-

  Acquisition-related and other professional fees 

538


886

  Contra-revenue

996


1,114

  Integration and other related costs (including amounts related to
    stock-based compensation)

221


306

  Acquisition-related contingent consideration changes and
    compensation expense, net

(220)


-

  Amortization of equity method investment basis difference

996


-

  Rebranding expense

284


-

  Change in fair value of warrant

1,000


-

  Realized gain on securities

-


(409)

Adjusted EBITDA - previous presentation (non-GAAP)

$  21,655


$  21,270

  Stock-based compensation (excluding amounts included in
    integration and other related costs)

3,382


3,035

Adjusted EBITDA (non-GAAP)

$  25,037


$  24,305





DEALERTRACK HOLDINGS, INC.

Reconciliation of GAAP Net Income to Non-GAAP Adjusted EBITDA

(Dollars in thousands)

(Unaudited)






Six Months Ended


June 30, 


2012


2011





GAAP net income

$  22,886


$  26,894

Interest income

(414)


(198)

Interest expense - cash

1,442


244

Interest expense - non-cash

2,923


-

Provision for (benefit from) income taxes, net

12,832


(21,628)

Depreciation of property and equipment and amortization of
  capitalized software and website costs

11,395


10,171

Amortization of acquired identifiable intangibles 

13,532


14,568

EBITDA (non-GAAP) 

64,596


30,051

   Adjustments:




  Gain on disposal of subsidiary and sale of other assets

(33,193)


-

  Acquisition-related and other professional fees 

737


1,216

  Contra-revenue

2,098


2,057

  Integration and other related costs (including amounts related to
    stock-based compensation)

221


958

  Acquisition-related contingent consideration changes and
    compensation expense, net

(42)


75

  Amortization of equity method investment basis difference

1,993


-

  Rebranding expense

334


-

  Change in fair value of warrant

1,000


-

  Realized gain on securities

-


(409)

Adjusted EBITDA - previous presentation (non-GAAP)

$ 37,744


$ 33,948

  Stock-based compensation (excluding amounts included in
    integration and other related costs)

6,712


5,850

Adjusted EBITDA (non-GAAP)

$  44,456


$  39,798





DEALERTRACK HOLDINGS, INC.

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income

(Dollars in thousands)

(Unaudited)






Three Months Ended


June 30, 


2012


2011





GAAP net income

$     5,925


$     2,166

Adjustments:




  Deferred tax asset valuation allowance (non-taxable)

-


1,001

  Amortization of acquired identifiable intangibles

6,653


7,708

  Stock-based compensation (excluding integration and
    other related costs)

3,382


3,035

  Gain on disposal of subsidiary and sale of other assets

(5,500)


-

  Contra-revenue

996


1,114

  Integration and other related costs (including amounts related to
    stock-based compensation)

221


306

  Interest expense - non-cash (not tax-impacted)

2,220


-

  Amortization of equity method investment basis difference

996


-

  Acquisition-related and other professional fees 

538


886

  Acquisition-related contingent consideration changes and
    compensation expense, net

(220)


-

  Rebranding expense

284


-

  Realized gain on securities (non-taxable)

-


(409)

  Accelerated depreciation of certain technology assets 

929


-

  Change in fair value of warrant

1,000


-

  Tax impact of adjustments (a)

(3,710)


(4,972)

  Adjusted net income (non-GAAP)

$   13,714


$   10,835





(a)   The tax impact of adjustments for the three months ended June 30, 2012, are based on a U.S. statutory tax rate of 37.4%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 37.3% and 36.8%, respectively. The tax impact of adjustments for the three months ended June 30, 2011, are based on a U.S. statutory tax rate of 38.3% 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 38.2% and 37.9%, respectively.

DEALERTRACK HOLDINGS, INC.

Reconciliation of GAAP Net Income to Non-GAAP Adjusted Net Income

(Dollars in thousands)

(Unaudited)






Six Months Ended


June 30, 


2012


2011





GAAP net income

$   22,886


$   26,894

Adjustments:




  Deferred tax asset valuation allowance (non-taxable)

-


(23,547)

  Amortization of acquired identifiable intangibles

13,532


14,568

  Stock-based compensation (excluding integration and
    other related costs)

6,712


5,850

  Gain on disposal of subsidiary and sale of other assets

(33,193)


-

  Contra-revenue

2,098


2,057

  Integration and other related costs (including amounts related to
    stock-based compensation)

221


958

  Interest expense - non-cash (not tax-impacted)

2,923


-

  Amortization of equity method investment basis difference

1,993


-

  Acquisition-related and other professional fees 

737


1,216

  Acquisition-related contingent consideration changes and
    compensation expense, net

(42)


75

  Rebranding expense

334


-

  Realized gain on securities

-


(409)

  Accelerated depreciation of certain technology assets 

929


-

  Change in fair value of warrant

1,000


-

  Amended state tax returns impact (non-taxable)

-


32

  Tax impact of adjustments (a)

3,028


(9,369)

  Adjusted net income (non-GAAP)

$   23,158


$   18,325





(a)   The tax impact of adjustments for the six months ended June 30, 2012, are based on a U.S. statutory tax rate of 37.4%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 37.3% and 36.9%, respectively. The tax impact of adjustments for the six months ended June 30, 2011, are based on a U.S. statutory tax rate of 38.3% 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 37.9% and 37.9%, respectively.

DEALERTRACK HOLDINGS, INC.

Reconciliation of Forward-looking GAAP Net Income to Forward-looking Non-GAAP Adjusted EBITDA

(Dollars in millions)

(Unaudited)






Year Ending December 31, 2012


Expected Range





GAAP net income

$                 24.5


$                 26.5

Interest, net

10.2


10.2

Income taxes, net

16.2


17.2

Amortization of basis difference from joint venture

4.0


4.0

Depreciation and amortization

24.0


23.0

Amortization of acquired identifiable intangibles 

28.0


28.0

EBITDA (non-GAAP) 

106.9


108.9

   Adjustments:




     Non-recurring costs (a)

5.0


5.0

     Realized gains

(33.2)


(33.2)

     Contra-revenue

4.0


4.0

Adjusted EBITDA - previous presentation (non-GAAP)

$                 82.7


$                 84.7

Stock-based compensation (excluding amounts included in
  integration and other related costs)

13.3


13.3

Adjusted EBITDA - (non-GAAP)

$                 96.0


$                 98.0





(a)  Includes certain professional fees, integration and other related costs, acquisition-related compensation 

expense, rebranding and fair value adjustments.





DEALERTRACK HOLDINGS, INC.

Reconciliation of Forward-looking GAAP Net Income to Forward-looking Non-GAAP Adjusted Net Income

(Dollars in millions)

(Unaudited)


Year Ending December 31, 2012


Expected Range





GAAP net income 

$                 24.5


$                 26.5

Adjustments:




Stock-based compensation 

13.3


13.3

Amortization of acquired identifiable intangibles 

28.0


28.0

   Amortization of basis difference from joint venture

4.0


4.0

Non-cash interest expense (not tax-impacted)

7.6


7.6

Non-recurring costs (a)

6.5


6.5

Realized gains, net of taxes

(19.6)


(19.6)

Contra-revenue

4.0


4.0

Tax impact of adjustments (b)

(20.8)


(20.8)

Adjusted net income (non-GAAP)

$                 47.5


$                 49.5





(a)  Includes certain professional fees, integration and other related costs, acquisition-related compensation

expense, rebranding, 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.  





DEALERTRACK HOLDINGS, INC.

Summary of Business Statistics (Unaudited)

Three months ended












Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,

2012


2012


2011


2011


2011











Active U.S. dealers (a) 

18,638


18,345


17,543


17,629


17,660

Active U.S. lenders (b) 

1,212


1,165


1,120


1,103


1,062

Transactions processed (in thousands) (c) 

22,562


21,751


18,769


19,772


19,135

Active U.S. lender to dealer relationships (d) 

177,570


172,075


164,776


161,400


157,591

Subscribing dealers (e)

16,280


16,143


16,003


15,860


14,488











(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 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)      Represents revenue-generating transactions processed in the U.S. DealerTrack, DealerTrack Aftermarket Services, DealerTrack Processing Solutions and DealerTrack Canada networks at the end of a given period.

(d)     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.  2011 results are recalculated to reflect an improved methodology of accumulating relationships. As previously reported:
December 31, 2011 - 151,126, September 30, 2011 - 150,514, June 30, 2011 - 149,398.

(e)     Represents the number of dealerships with one or more active subscriptions on the U.S. DealerTrack or DealerTrack Canada networks at the end of a given period.


DEALERTRACK HOLDINGS, INC.

Summary of Business Statistics (Unaudited)

Three months ended


Jun 30,


Mar 31,


Dec 31,


Sep 30,


Jun 30,

2012


2012


2011


2011


2011











Transaction revenue (in thousands)

$ 57,433


$ 54,079


$ 47,541


$ 50,411


$ 48,505

Subscription revenue (in thousands)

$ 33,932


$ 33,231


$ 38,779


$ 39,261


$ 34,716

Other revenue (in thousands)

$   5,031


$   4,307


$   4,939


$   6,121


$   5,830

Average transaction price (a)

$     2.59


$     2.53


$     2.58


$     2.60


$     2.58

Transaction revenue per car sold (b)

$     6.12


$     8.61


$     7.17


$     6.20


$     5.73

Average monthly subscription revenue per subscribing dealership (c)

$      697


$      690


$      813


$      834


$      807

Average monthly subscription revenue per subscribing dealership (excluding Chrome & ALG) (d)

$      697


$      690


$      690


$      684


$      649





















(a)  Represents the average revenue earned per transaction processed in the U.S. DealerTrack, DealerTrack Aftermarket, DealerTrack Processing Solutions and DealerTrack Canada networks during a given period.  Revenue used in calculation adds back transaction related contra-revenue.

(b)  Represents transaction revenue (includes contra-revenue) divided by our estimate of total new and used car sales for the period in the U.S. and Canada.

(c)  Revenue used in the calculation adds back subscription related contra-revenue.

(d)  Excludes subscription revenue from Chrome and ALG.











TRAK-E

SOURCE DealerTrack Holdings, Inc.