(DEALERTRACK LOGO)
CONTACT:
Liz Zale
DealerTrack, Inc.
(516) 734-3758
liz.zale@dealertrack.com
Jen Malloy
RF|Binder Partners
(212) 994-7542
jen.malloy@rfbinder.com
DEALERTRACK HOLDINGS REPORTS FOURTH QUARTER
AND 2005 FINANCIAL RESULTS
REVENUE UP MORE THAN 70 PERCENT FOR THE QUARTER AND THE YEAR
PROVIDES 2006 FINANCIAL GUIDANCE
LAKE SUCCESS, NY, MARCH 14, 2006 - DealerTrack Holdings, Inc. (NASDAQ: TRAK)
today reported financial results for the fourth quarter and year ended December
31, 2005.
RESULTS FOR FOURTH QUARTER 2005
GAAP RESULTS
- - Revenue for the quarter was $33.4 million, a 75 percent increase from $19.1
million for the fourth quarter of 2004.
- - GAAP net income for the quarter was $0.7 million, an 89 percent decrease from
$6.3 million for the fourth quarter of 2004. GAAP results for the fourth
quarter 2005 and 2004 include a net (provision for) benefit from income taxes
of ($1.2) million and $4.4(1) million, respectively.
(1) Tax benefit includes a reversal of a deferred tax valuation allowance in
the amount of $4.7 million.
- - GAAP diluted net income per share for the quarter was $0.02, consistent with
$0.02 per share for the fourth quarter of 2004.
Fourth quarter 2005 results reflect $0.6 million of expenses relating to the
initial public offering and the repayment of credit facilities, $0.5 million of
deferred tax expense resulting from a change in effective tax rate, and $0.4
million in discretionary bonuses.
(DEALERTRACK LOGO)
NON-GAAP RESULTS
- - EBITDA(2) for the quarter was $7.8 million, a 55 percent increase from $5.0
million for the fourth quarter of 2004.
(2) EBITDA is a non-GAAP financial measure that represents GAAP net income
before interest, taxes, depreciation and amortization. Refer to Attachment 4,
which reconciles GAAP net income to EBITDA.
- - Cash net income(3) for the quarter was $3.7 million, a 2 percent increase
from $3.6 million for the fourth quarter of 2004. The provision for income
taxes included in these amounts was $1.2 million and $0.3 million,
respectively.
(3) Cash net income is a non-GAAP financial measure that represents GAAP net
income before non-cash stock-based compensation charges (net of taxes),
amortization of acquired identifiable intangibles (net of taxes), and benefit
related to reversal of a tax valuation allowance. Refer to Attachment 4,
which reconciles GAAP net income to cash net income.
- - Diluted cash net income per share for the quarter was $0.12, up from $0.01
per share for the fourth quarter of 2004.
Diluted cash net income per share and diluted net income per share were each
calculated in accordance with the two-class method under FASB Statement 128, and
each calculation assumes 8,394,814 weighted average diluted common shares
outstanding for the quarter ended December 31, 2005.
ANNUAL RESULTS FOR 2005
GAAP RESULTS
- - Revenue for the year was $120.2 million, an increase of 72 percent from $70.0
million for 2004.
- - GAAP net income for the year was $4.5 million, a decrease of 60 percent from
$11.3 million for 2004. GAAP results for 2005 and 2004 include a net
(provision for) benefit from income taxes of ($4.1) million and $3.6(4)
million, respectively.
(4) Tax benefit includes a reversal of a deferred tax valuation allowance in
the amount of $4.7 million.
- - GAAP diluted net income per share for the year was $0.12, an increase from
$0.02 per share for 2004.
NON-GAAP RESULTS
- - EBITDA for the year was $32.6 million, an increase of 75 percent from $18.6
million for 2004.
- - Cash net income for the year was $16.8 million, an increase of 24 percent
from $13.6 million for 2004. The provision for income taxes included in these
amounts was $4.1 million and $1.1 million, respectively.
- - Diluted cash net income per share for the year was $0.47, an increase from
$0.02 per share for 2004.
Diluted cash net income per share and diluted net income per share were each
calculated in accordance with the two-class method under FASB Statement 128, and
each calculation assumes 3,188,180 weighted average diluted common shares
outstanding for the year ended December 31, 2005.
(DEALERTRACK LOGO)
"In what is traditionally the weakest quarter of the year for new car sales,
strong transaction volume and growth in our subscription services revenue led to
excellent operating results for the fourth quarter," said Mark O'Neil,
DealerTrack's chairman and chief executive officer. "As planned, we are
benefiting from ongoing growth in the number of financing sources and automobile
dealers who participate on the DealerTrack network, expanding our product
offerings, increasing market penetration of our subscription products, and
realizing financial and other contributions from acquisitions completed during
2005."
O'Neil continued, "Overall, 2005 was a great year for DealerTrack. We met our
financial objectives while continuing to make investments that create
opportunities for future growth. We believe that DealerTrack has become the
automotive retailing industry's leading end-to-end sales and finance solution.
And to cap it off, in December we successfully completed our initial public
offering, which provided us with over $100 million in cash after the repayment
of $43.5 million in credit facilities. Our focus on execution and innovation has
positioned us well for 2006 and beyond."
BUSINESS STATISTICS
There were 21,155 active dealers in the DealerTrack network as of December 31,
2005, a 10 percent increase from 19,150 a year earlier. The number of active
financing sources in the DealerTrack network as of December 31, 2005 reached 201
(including eight captives), up 84 percent from 109 a year earlier. Transactions
processed in the network for the fourth quarter were approximately 12.8 million,
a 53 percent increase from approximately 8.4 million for the fourth quarter of
2004. Transactions processed in the network for 2005 were approximately 52.5
million, a 54 percent increase from approximately 34.0 million for 2004. The
number of revenue-generating subscriptions in the network as of December 31,
2005 was 14,473, an 88 percent increase from 7,705 for 2004.
Since the end of 2005, DealerTrack has further expanded its product offerings
with the launch of SalesMaker(TM), a profit management system that integrates
and enhances prior versions of DealerTrack's sales and financing tools; the
launch of DealWatch(TM) and ExactID(TM), two new compliance products; and the
introduction of the DealerTrack Aftermarket Network, an industry first that will
offer dealers free access to a web-based network of aftermarket product and
service providers. In addition, DealerTrack continued its successful strategy of
acquiring valuable technology and leveraging it across the DealerTrack
distribution channel through the acquisition of the assets of DealerWire, a
provider of inventory solutions, in February 2006.
DealerTrack also provided guidance for its 2006 financial performance.
GUIDANCE FOR 2006 ANNUAL PERFORMANCE
EXPECTED GAAP RESULTS
- - Revenue for the year is expected to be between $149 million and $154 million.
(DEALERTRACK LOGO)
- - GAAP net income for the year is expected to be between $15 million and $16
million.
EXPECTED NON-GAAP RESULTS
- - EBITDA for the year is expected to be between $44 million and $46 million.
- - Cash net income for the year is expected to be between $25 million and $26
million.
GUIDANCE FOR 1ST QUARTER OF 2006 PERFORMANCE
EXPECTED GAAP RESULTS
- - Revenue for the first quarter is expected to be between $35 million and $36
million.
- - Net income for the first quarter is expected to be between $2.5 million and
$2.8 million.
- - Diluted net income per share for the first quarter is expected to be between
$0.07 and $0.08, assuming 36.8 million weighted average diluted common shares
for the quarter.
EXPECTED NON-GAAP RESULTS
- - EBITDA for the first quarter is expected to be between $9.0 million and $9.5
million.
- - Cash net income for the first quarter is expected to be between $5.3 million
and $5.6 million.
- - Diluted cash net income per share for the first quarter is expected to be
between $0.14 and $0.15, assuming 36.8 million weighted average diluted
common shares for the quarter.
"We expect strong revenue growth for 2006, driven by a combination of higher
transaction volume and solid growth in our subscription business," concluded
O'Neil. "Our growth strategy for 2006 remains consistent: we expect to continue
to add automobile dealers, financing sources and other third parties to our
network; to expand new product offerings; and to cross-sell to our existing
dealer base. Additionally, we expect to continue our strategy of acquiring
products and technology that can be leveraged through our distribution channel
to increase operating efficiencies for our dealer and financing source
customers."
DealerTrack will host a conference call to discuss its 2005 results, 2006
guidance and other matters on March 15, 2006, at 10:00 a.m. Eastern Time. The
conference call will be webcast live on the Internet at
HTTP://IR.DEALERTRACK.COM/RELEASES_FINANCIAL.CFM. A replay will be available on
the DealerTrack website until March 29, 2006. In addition, a live audio of the
call will be accessible to the public by calling 800-819-9193 (domestic) or
913-981-4911 (international); no access code is necessary. Callers should dial
in approximately 5-10 minutes before the call begins.
Results for the first quarter of 2006 are expected to be announced in May.
(DEALERTRACK LOGO)
NON-GAAP FINANCIAL MEASURES
In this release, the Company's EBITDA and cash 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. EBITDA
represents GAAP earnings excluding interest, taxes, depreciation and
amortization expenses. Cash net income represents net income excluding
stock-based compensation expense (net of taxes), amortization of acquired
intangibles (net of taxes), and the reversal of a benefit related to a tax
valuation allowance. EBITDA and cash net income are presented because management
believes 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. Management believes the EBITDA and cash net income information is
useful to investors for these reasons. EBITDA and cash 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 EBITDA and cash net income is GAAP net income and has provided a
reconciliation of EBITDA to GAAP net income, and cash net income to GAAP net
income, in Attachment 4 to this press release.
ABOUT DEALERTRACK (WWW.DEALERTRACK.COM)
DealerTrack is a leading provider of on-demand software and data solutions for
the automotive retail industry in the United States. DealerTrack utilizes the
Internet to link automotive dealers with banks, finance companies, credit unions
and other financing sources, and other service and information providers, such
as the major credit reporting agencies. DealerTrack has established a network of
active relationships with over 21,000 automotive dealers, including over 80% of
all franchised dealers; more than 200 financing sources, including the 20
largest independent financing sources in the United States and nine captive
financing sources; and a number of other service and information providers to
the automotive retail industry. DealerTrack's credit application processing
product enables dealers to automate and accelerate the indirect automotive
financing process by increasing the speed of communications between these
dealers and their financing sources. DealerTrack's integrated subscription-based
software products and services enable automotive dealer customers to receive
valuable consumer leads, compare various financing and leasing options and
programs, sell insurance and other aftermarket products, document compliance
with certain laws and execute financing contracts electronically.
(DEALERTRACK LOGO)
SAFE HARBOR FOR FORWARD-LOOKING AND CAUTIONARY STATEMENTS
Certain statements in this press release are "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements include the Company's expected
financial performance in the first quarter of 2006 and for fiscal year 2006, the
Company's plans to add new automobile dealer and financing sources, expand
product offerings and continue cross-selling its existing customer base, as well
as to complete additional acquisitions. 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: increased competitive
pressure from other industry participants and the inability to execute any
element of DealerTrack's business strategy, including selling additional
products and services to existing and new customers; risks associated with
DealerTrack's systems and networks, including security breaches and events
beyond DealerTrack's control; the impact of the automotive retail industry on
DealerTrack's business; the impact of Federal and state legislation on
DealerTrack's business; DealerTrack's success in expanding its customer base and
product and service offerings, as well as in pursuing, completing and
integrating acquisitions and strategic alliances; and the impact of some vendors
of software products for automotive dealers making it more difficult for our
customers to use our products and services. Other factors which could materially
affect such forward-looking statements can be found in DealerTrack's filings
with the Securities and Exchange Commission, including the risk factors included
in DealerTrack's Registration Statement on Form S-1 (File No. 333-126944).
Investors, potential investors and other readers are urged to consider these
factors carefully in evaluating the forward-looking statements and are cautioned
not to place undue reliance on such forward-looking statements. The
forward-looking statements made herein are only made as of the date of this
press release and we undertake no obligation to publicly update such
forward-looking statements to reflect subsequent events or circumstances.
(DEALERTRACK LOGO)
(1) ACTUAL RESULTS - THREE-MONTH PERIOD
DEALERTRACK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
DECEMBER 31,
------------------------------
2005 2004
----------- -----------
Net revenue(1) $ 33,375 $ 19,101
----------- -----------
Cost of revenue (2) 13,210 7,935
Product development 1,981 655
Selling, general and administration 15,895 8,579
----------- -----------
Total operating costs and expenses 31,086 17,169
Income from operations 2,289 1,932
Interest expense, net 403 37
----------- -----------
Income before provision for income taxes 1,886 1,895
(Provision for) benefit from income taxes (1,204) 4,421
----------- -----------
Net income $ 682 $ 6,316
=========== ===========
Basic net income per share applicable to
common stockholders $ 0.03 $ 0.25
Diluted net income per share applicable to
common stockholders $ 0.02 $ 0.02
Weighted average shares outstanding 7,296,886 96,806
Weighted average shares outstanding
assuming dilution 8,394,814 1,562,455
================================================================================
(1) Related party revenue $ 7,526 $ 4,956
(2) Related party cost of revenue $ 664 $ 787
EBITDA (Non-GAAP) (a) $ 7,794 $ 5,027
EBITDA margin (Non-GAAP) (b) 23% 26%
Cash net income (Non-GAAP) (c) $ 3,675 $ 3,620
Diluted cash net income per share
(Non-GAAP) $ 0.12 $ 0.01
</Table>
- ----------
(a) See Reconciliation Data in Attachment 4.
(b) Represents EBITDA as a percentage of revenue.
(c) See Reconciliation Data in Attachment 4.
(DEALERTRACK LOGO)
(2) ACTUAL RESULTS - TWELVE-MONTH PERIOD
DEALERTRACK HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(ALL AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<Table>
<Caption>
TWELVE MONTHS ENDED
DECEMBER 31,
------------------------------
2005 2004
----------- -----------
Net revenue(1) $ 120,219 $ 70,044
----------- -----------
Cost of revenue (2) 50,132 29,665
Product development 5,566 2,256
Selling, general and administration 54,690 30,401
----------- -----------
Total operating costs and expenses 110,388 62,322
Income from operations 9,831 7,722
Interest expense, net 1,303 61
----------- -----------
Income before provision for income taxes 8,528 7,661
(Provision for) benefit from income taxes (4,060) 3,592
----------- -----------
Net income $ 4,468 $ 11,253
=========== ===========
Basic net income per share applicable to
common stockholders $ 0.17 $ 0.45
Diluted net income per share
applicable to common stockholders $ 0.12 $ 0.02
Weighted average shares outstanding 2,290,439 40,219
Weighted average shares outstanding
assuming dilution 3,188,180 1,025,248
================================================================================
(1) Related party revenue $ 29,021 $ 19,070
(2) Related party cost of revenue $ 3,216 $ 3,306
EBITDA (Non-GAAP) (a) $ 32,594 $ 18,595
EBITDA margin (Non-GAAP) (b) 27% 27%
Cash net income (Non-GAAP) (c) $ 16,820 $ 13,573
Diluted cash net income per share
(Non-GAAP) $ 0.47 $ 0.02
</Table>
- ----------
(a) See Reconciliation Data in Attachment 4.
(b) Represents EBITDA as a percentage of revenue.
(c) See Reconciliation Data in Attachment 4.
(DEALERTRACK LOGO)
(3) CONDENSED CONSOLIDATED BALANCE SHEET
DEALERTRACK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
DECEMBER 31, DECEMBER 31,
2005 2004
-------- --------
ASSETS
Cash and cash equivalents $103,264 $ 21,753
Accounts receivable, net 19,279 8,634
Prepaid expenses and other current assets 4,812 11,030
-------- --------
Total current assets 127,355 41,417
Property, plant and equipment, net 4,885 2,849
Software and website development costs, net 8,769 3,423
Intangible assets, net 39,550 15,474
Goodwill 34,200 12,781
Other assets 5,856 737
-------- --------
Total assets $220,615 $ 76,681
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 22,140 $ 15,072
Deferred revenue 3,267 2,416
Capital leases payable 387 539
-------- --------
Total current liabilities 25,794 18,027
Long-term liabilities 8,150 6,429
-------- --------
Total liabilities 33,944 24,456
-------- --------
Redeemable convertible participating preferred stock -- 72,226
Total stockholders' equity (deficit) 186,671 (20,001)
-------- --------
Total liabilities, redeemable convertible participating
preferred stock and stockholders' equity (deficit) $220,615 $ 76,681
======== ========
</Table>
- ----------
Note: Certain reclassifications have been made to prior period amounts to
conform to the current period presentation.
(DEALERTRACK LOGO)
(4) RECONCILIATION DATA
DEALERTRACK HOLDINGS, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP EBITDA
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
DECEMBER 31,
---------------------
2005 2004
------- -------
GAAP net income $ 682 $ 6,316
Interest income (176) (24)
Interest expense 579 61
Provision for (benefit from) income taxes 1,204 (4,421)
Depreciation and amortization 1,189 1,075
Amortization of acquired identifiable intangibles 4,316 2,020
------- -------
EBITDA (Non-GAAP) $ 7,794 $ 5,027
======= =======
</Table>
<Table>
<Caption>
TWELVE MONTHS ENDED
DECEMBER 31,
-----------------------
2005 2004
-------- --------
GAAP net income $ 4,468 $ 11,253
Interest income (282) (54)
Interest expense 1,585 115
Provision for (benefit from) income taxes 4,060 (3,592)
Depreciation and amortization 4,166 4,349
Amortization of acquired identifiable intangibles 18,597 6,524
-------- --------
EBITDA (Non-GAAP) $ 32,594 $ 18,595
======== ========
</Table>
(DEALERTRACK LOGO)
(4) RECONCILIATION DATA - (CONTINUED)
DEALERTRACK HOLDINGS, INC.
RECONCILIATION OF GAAP NET INCOME TO NON-GAAP CASH NET INCOME
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
THREE MONTHS ENDED
DECEMBER 31,
--------------------
2005 2004
------- -------
GAAP net income $ 682 $ 6,316
Non-cash stock-based compensation charges, net of taxes 403 250
Amortization of acquired identifiable intangibles, net of taxes 2,590 1,733
Benefit related to reversal of tax valuation allowance -- (4,679)
------- -------
Cash net income (Non-GAAP) $ 3,675 $ 3,620
======= =======
</Table>
<Table>
<Caption>
TWELVE MONTHS ENDED
DECEMBER 31,
----------------------
2005 2004
-------- --------
GAAP net income $ 4,468 $ 11,253
Non-cash stock-based compensation charges, net of taxes 1,194 1,401
Amortization of acquired identifiable intangibles, net of taxes 11,158 5,598
Benefit related to reversal of tax valuation allowance -- (4,679)
-------- --------
Cash net income (Non-GAAP) $ 16,820 $ 13,573
======== ========
</Table>
(DEALERTRACK LOGO)
(4) RECONCILIATION DATA - (CONTINUED)
DEALERTRACK HOLDINGS, INC.
RECONCILIATION OF FORWARD-LOOKING GAAP NET INCOME
TO FORWARD-LOOKING NON-GAAP EBITDA
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
YEAR ENDING
DECEMBER 31, 2006
-----------------------
Expected Range
-----------------------
GAAP net income $ 15,000 $ 16,000
Interest income (2,000) (2,000)
Interest expense -- --
Provision for income taxes 10,000 11,000
Depreciation and amortization 7,000 7,000
Amortization of acquired identifiable intangibles 14,000 14,000
-------- --------
EBITDA (Non-GAAP) $ 44,000 $ 46,000
======== ========
</Table>
<Table>
<Caption>
THREE MONTHS ENDING
MARCH 31, 2006
---------------------
Expected Range
---------------------
GAAP net income $ 2,500 $ 2,800
Interest income (700) (700)
Interest expense -- --
Provision for income taxes 1,800 2,000
Depreciation and amortization 1,500 1,500
Amortization of acquired identifiable intangibles 3,900 3,900
------- -------
EBITDA (Non-GAAP) $ 9,000 $ 9,500
======= =======
</Table>
(DEALERTRACK LOGO)
(4) RECONCILIATION DATA - (CONTINUED)
DEALERTRACK HOLDINGS, INC.
RECONCILIATION OF FORWARD-LOOKING GAAP NET INCOME TO
FORWARD-LOOKING NON-GAAP CASH NET INCOME
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<Table>
<Caption>
TWELVE MONTHS ENDING
DECEMBER 31, 2006
--------------------
Expected Range
--------------------
GAAP net income $15,000 $16,000
Non-cash stock-based compensation charges, net of taxes 2,000 2,000
Amortization of acquired identifiable intangibles, net of taxes 8,000 8,000
------- -------
Cash net income (Non-GAAP) $25,000 $26,000
======= =======
</Table>
<Table>
<Caption>
THREE MONTHS ENDING
MARCH 31, 2006
------------------
Expected Range
------------------
GAAP net income $2,500 $2,800
Non-cash stock-based compensation charges, net of taxes 500 500
Amortization of acquired identifiable intangibles, net of taxes 2,300 2,300
------ ------
Cash net income (Non-GAAP) $5,300 $5,600
====== ======
</Table>
(DEALERTRACK LOGO)
(5) SUMMARY OF BUSINESS STATISTICS (UNAUDITED)
<Table>
<Caption>
DEALERTRACK HOLDINGS, INC.
YEAR ENDED YEAR ENDED QUARTER ENDED QUARTER ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2005 2004 2005 2004
---------- ---------- ---------- ----------
Active dealers in the network as of
end of period (a) 21,155 19,150 21,155 19,150
Active financing sources in the
network as of end of period (b) 201 109 201 109
Transactions processed (c) 52,474,635 33,964,195 12,843,883 8,407,658
Product subscriptions as of
end of period (d) 14,473 7,705 14,473 7,705
</Table>
- ----------
(a) We consider a dealer to be active as of a date if the dealer completed at
least one revenue-generating transaction in our network during the most
recently ended calendar month.
(b) We consider a financing source to be active in our network as of a date if
it is accepting credit application data electronically from dealers in our
network.
(c) Represents revenue generating transactions processed in our network in a
given period. We have changed this key metric for 2005 to exclude certain
credit bureau transactions for which revenue is subject to a maximum. Under
this presentation, transactions processed for the quarter ended March 31,
June 30, and September 30, 2005 are 11,570,776, 13,451,747 and 14,608,229,
respectively.
(d) Represents revenue generating subscriptions in our network at the end of a
given period.