Dealertrack Technologies, Inc. Reports Fourth Quarter and Full Year 2012 Financial Results

Dealertrack Technologies, Inc. Reports Fourth Quarter and Full Year 2012 Financial Results

Full year revenue increased 15% on an organic basis

LAKE SUCCESS, N.Y.--(BUSINESS WIRE)-- Dealertrack Technologies, Inc. (NAS: TRAK) today reported financial results for the fourth quarter and year ended December 31, 2012.

GAAP Results for the Fourth Quarter 2012

• Revenue for the quarter was $101.8 million, as compared to $91.3 million for the fourth quarter of 2011.

• GAAP net income for the quarter was $0.5 million, as compared to GAAP net income of $32.9 million for the fourth quarter of 2011.

• Diluted GAAP net income per share for the quarter was $0.01, as compared to GAAP net income per share of $0.76 for the fourth quarter of 2011.

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.

Non-GAAP Results for the Fourth Quarter 2012

• Adjusted EBITDA for the quarter was $25.8 million, as compared to $20.3 million for the fourth quarter of 2011.

• Adjusted net income for the quarter was $13.7 million, as compared to $10.3 million for the fourth quarter of 2011.

• Diluted adjusted net income per share for the quarter was $0.31, as compared to $0.24 for the fourth quarter of 2011.

GAAP Results for the Year Ended December 31, 2012

• Revenue for the year was $388.9 million, as compared to $353.3 million for 2011.

• GAAP net income for the year was $20.5 million, as compared to $65.1 million for 2011.

• Diluted GAAP net income per share for the year was $0.46, as compared to $1.53 for 2011.

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.

Non-GAAP Results for the Year Ended December 31, 2012

• Adjusted EBITDA for the year was $97.3 million, as compared to $85.9 million for 2011.

• Adjusted net income for the year was $49.1 million, as compared to $43.4 million for 2011.

• Diluted adjusted net income per share for the year was $1.12, as compared to $1.02 for 2011.

Mark F. O'Neil, chairman and chief executive officer of Dealertrack Technologies, commented, "We had a strong finish to 2012 with full-year revenue that was significantly above our original expectations and exceeded $100 million for the first time on a quarterly basis. With a broad suite of technology solutions for auto dealers, we believe we are making progress helping dealers transform auto retailing through an integrated suite of software. As we continue to realize this vision, we believe the business momentum we generated in 2012 will carry us into 2013 and beyond."

Guidance for 2013

Dealertrack's guidance for 2013, which does not include the impact of the pending acquisition of Casey & Casey NPS, Inc., is as follows:

Expected GAAP Results

• Revenue for the year is expected to be between $447.0 million and $456.0 million, an increase of 15% to 17% from 2012.

• GAAP net income for the year is expected to be between $10.0 million and $13.0 million.

• Diluted GAAP net income per share for the year is expected to be between $0.22 and $0.29.

Expected Non-GAAP Results

• Adjusted EBITDA for the year is expected to be between $111.0 millionand $115.0 million.

• Adjusted net income for the year is expected to be between $54.0 millionand $57.0 million.

• Diluted adjusted net income per share for the year is expected to be between $1.19 and $1.26.

Diluted GAAP net income and adjusted net income per share guidance for the year is based on an estimated 45.4 million diluted weighted average shares outstanding. The guidance assumes that new car sales by franchised dealers will be approximately 15.2 million units and used car sales by franchised dealers will be approximately 15.0 million units in 2013.

Conference Call

Dealertrack will host a conference call to discuss its fourth quarter and full year 2012 results and other matters on February 25, 2013 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 March 11, 2013.

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 certain items, as applicable, 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 on sales of previously impaired securities, gains or losses on sales or disposals of subsidiaries and other assets, rebranding expense 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 the fourth quarter of 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, contra-revenue, and certain items, as applicable, 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 on sales of previously impaired securities, gains or losses on sales or disposals of subsidiaries and other assets, adjustments to deferred tax asset valuation allowances, non-cash interest expense, rebranding expense and certain other non-recurring items. These adjustments to net income (loss), which are shown before taxes, are adjusted for their tax impact at their applicable statutory rates.

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 Technologies (www.dealertrack.com)

Dealertrack Technologies' 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. In addition to the industry's largest online credit application network, connecting more than 19,000 dealers with more than 1,200 lenders, Dealertrack Technologies delivers the industry's most comprehensive solution set for automotive retailers, including Dealer Management System (DMS),Inventory, Sales and F&I, Interactive, and Registration and Titling solutions. For more information visit www.dealertrack.com.

Safe Harbor for Forward-Looking and Cautionary Statements

Statements in this press release regarding Dealertrack's expected 2013 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.