CDK Reports First Quarter Fiscal 2016 Results

GAAP Revenues Are Flat to a Year Ago; Adjusted Revenues Rise 2%, 5% on a Constant Currency BasisGAAP Net Earnings Increase 51%; Adjusted Net Earnings Increase 14%Confirms Forecasted Fiscal 2016 Adjusted Revenue Growth of 4% to 5% andAdjusted Net Earnings Growth of Over 25%HOFFMAN ESTATES, Ill., Nov. 3, 2015 (GLOBE NEWSWIRE) — CDK Global, Inc. (Nasdaq:CDK) today announced its first quarter fiscal 2016 financial results and confirmed its outlook for fiscal 2016. Highlights are below:“I am pleased with CDK’s solid results for the first quarter. CDK achieved these results while executing our business transformation plan aimed at balanced organic revenue growth and significantly increased earnings, which we believe is the optimal business model for delivering long-term value to both our shareholders and clients,” said Steve Anenen, President and Chief Executive Officer, CDK.“We are confirming our full year forecasts, although we anticipate challenges in the second quarter due to continued pressure from unfavorable foreign exchange rates and year-over-year comparisons,” said Al Nietzel, Chief Financial Officer, CDK.Growth in revenues and earnings before income taxes for the quarter were negatively impacted 3 and 4 percentage points, respectively, from unfavorable foreign exchange rates in the “As Adjusted” results above. The adjusted effective tax rate in the first quarter of fiscal 2016 was 36.0% compared to 31.1% in last year’s first quarter due to a fiscal 2015 nonrecurring income tax benefit primarily related to foreign operations. Fiscal 2016 results have been adjusted to exclude costs related to the business transformation plan. Fiscal 2015 results have been adjusted for certain non-GAAP items for comparability to fiscal 2016. Please refer to the tables at the end of this release for a reconciliation of the “As Reported” results to the “As Adjusted” results. All comparisons throughout the remainder of this release are on an “As Adjusted” basis.Automotive Retail North AmericaAutomotive Retail North America revenues grew 6% for the first quarter, 4% organically, and 7% on a constant currency basis compared to last year’s first quarter. Pretax earnings increased 12%, or 14% on a constant currency basis. Pretax margin expanded 170 basis points driven by scale from increased revenues, operating efficiencies from lower headcount and a more favorable geographic labor mix, partially offset by increased hosting costs. The pretax margin also benefited from severance charges in last year’s first quarter that did not recur, as well as the release of a vendor-related obligation.Automotive Retail InternationalAutomotive Retail International revenues declined 9% entirely due to unfavorable foreign exchange rates compared to last year’s first quarter. On a constant currency basis, revenues grew 4%. Pretax earnings increased 13%, or 25% on a constant currency basis. Pretax margin expanded 350 basis points balanced between scale from increased revenues and nonrecurring items.Digital MarketingDigital Marketing revenues grew 1% for the first quarter compared to last year’s first quarter. Pretax earnings grew 30% and pretax margin expanded 230 basis points primarily from increased operating efficiencies from lower headcount and labor-related costs.Fiscal 2016 ForecastThe fiscal 2016 growth forecasts that follow are based on fiscal 2015 results adjusted for certain non-GAAP items for comparability to fiscal 2016 as shown in our fiscal 2015 year-end earnings press release and presented at the end of this release. On this adjusted basis, the forecast that follows is unchanged:Adjusted revenues – we anticipate 4% to 5% growth from $2,017.3 million in fiscal 2015Adjusted earnings before income taxes – we anticipate at least 25% growth from the adjusted $333.3 million in fiscal 2015Adjusted pretax margin – we anticipate at least 300 basis points of expansion from the adjusted 16.5% in fiscal 2015Adjusted EBITDA margin – we anticipate at least 300 basis points of expansion from the adjusted 22.9% in fiscal 2015Adjusted net earnings attributable to CDK – we anticipate over 25% growth from the adjusted $210.5 million in fiscal 2015Adjusted diluted net earnings attributable to CDK per share – we anticipate over 25% growth from the adjusted $1.30 in fiscal 2015Fluctuations in foreign exchange rates are anticipated to negatively impact growth in revenues and earnings before taxes about 2 percentage points and 2 to 3 percentage points, respectively, for the second quarter. For the fiscal year, this impact is anticipated to be 1 to 2 percentage points on revenues and about 2 percentage points on earnings before income taxes. This forecast includes approximately $45 million of additional EBITDA from execution on our business transformation plan, and as a result, earnings growth and margin expansion is heavily weighted to the second half of the fiscal year. As a result, we continue to anticipate growth for the second quarter will be below the growth forecasted for the full year.Effective Tax RateThere is no change to CDK’s anticipated adjusted effective tax rate for fiscal 2016 of 35.5% to 36.0% compared with 34.5% in fiscal 2015. The fiscal 2015 adjusted effective tax rate excludes the impact of separation costs which were primarily non-deductible and the $4.6 million increase to income tax expense related to the tax law change for bonus depreciation.Separation from ADPCDK Global, Inc. began operating as a public company on October 1, 2014 following its spin-off from ADP on September 30, 2014.Website SchedulesOther financial information, including financial statements and supplementary schedules presented on an “As Reported” and “As Adjusted” basis, and the schedule of quarterly revenues and pretax earnings by reportable segment have been updated for the first quarter of fiscal 2016 and will be posted to the CDK Investor Relations website, http://investors.cdkglobal.com, in the “Financial Information” section.Webcast and Conference CallAn analyst conference call will be held today, Tuesday, November 3, 2015 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 CDK’s Investor Relations website, http://investors.cdkglobal.com, and click on the webcast icon. A 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’s news releases, current financial information, SEC filings and Investor Relations presentations are accessible at the same website.About CDK GlobalWith more than $2 billion in revenues, CDK GlobalTM is the largest global provider of integrated information technology and digital marketing solutions to the automotive retail industry and adjacencies. CDK Global provides solutions in more than 100 countries around the world, serving more than 27,000 retail locations and most automotive manufacturers. CDK Global’s solutions automate and integrate critical workflow processes from pre-sale targeted advertising and marketing campaigns to the sale, financing, insurance, parts supply, repair and maintenance of vehicles, with an increasing focus on utilizing data analytics and predictive intelligence. Visit cdkglobal.com 

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