July 18, 2016 — Brian MacDonald’s turn around plan for CDK Global appears to be off to a good start, according to preliminary results for its fourth quarter fiscal year earnings (ending June 30, 2016).
MacDonald, who was appointed president and CEO of CDK earlier this year, stepped up the company’s transformation plan that was initiated last summer at the urging of its activist investors. Read TBR’s analysis here: CDK’s Future? Is a Sale in the Cards?
The news has CDK’s stock price climbing at the market’s open this morning hitting its 52-week high of $58.93 (that’s also the stock’s highest price since the company’s IPO in 2014).
Below are the details of today’s release: (See the entire press release here).
- An increase year over year in net earnings attributable to CDK of 43% on an as reported basis and 69% on an as adjusted basis
- Exceeding the forecasted increase of 53% – 57% on an as adjusted basis
- An increase year over year in diluted net earnings attributable to CDK per share of 48% resulting in $0.37 per share on an as reported basis and an increase of 75% resulting in $0.49 per share on an as adjusted basis
- Exceeding the forecasted increase of approximately 57% or $0.44 per share on an as adjusted basis
- An increase year over year in earnings before income taxes of 31% on an as reported basis and an increase in adjusted EBITDA of 40%
- Exceeding the forecasted increase in adjusted EBITDA of 33% – 38%
- Pretax margin of 16.2% with 280 basis points of expansion on an as reported basis and adjusted EBITDA margin of 28.4% with 630 basis points of expansion
- Exceeding the forecasted adjusted EBITDA margin of approximately 27.8% and forecasted expansion of approximately 570 basis points
In other news, CDK reported earlier that 670 CDK customers renewed long-term contracts during the most recent quarter, including customers representing approximately 20% of its automotive Dealer Management System (DMS) customers.