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CDK Global Reports Third Quarter Fiscal 2019 Results

ASC 606 Third Quarter Results

  • Revenues of $602.1 million
  • GAAP net earnings attributable to CDK of $99.8 million and adjusted EBITDA of $222.5 million
  • GAAP diluted earnings attributable to CDK per share of $0.80 and adjusted diluted earnings attributable to CDK per share of $0.98
  • Maintains revenue and adjusted EPS guidance ranges; tightens adjusted EBITDA range             

ASC 605 Third Quarter Results

  • Revenues increase 4% to $600.7 million
  • GAAP net earnings attributable to CDK increase 1% to $96.6 million and adjusted EBITDA increases 4% to $218.3 million
  • GAAP diluted earnings attributable to CDK per share increase 8% to $0.77 and adjusted diluted earnings attributable to CDK per share increase 9% to $0.95

HOFFMAN ESTATES, Ill., April 30, 2019 (GLOBE NEWSWIRE) -- CDK Global, Inc. (CDK) today announced financial results for its fiscal 2019 third quarter ended March 31, 2019.

Effective July 1, 2018 we have adopted ASU 2014-09 “Revenue from Contracts with Customers” and related ASUs (“ASC 606”), using the modified retrospective transition approach. We will not recast historical information and will report financial results in fiscal 2019 under both standards for the transition year for comparability purposes.

Third Quarter Fiscal 2019 Results

Year-over-year highlights are below:

Third Quarter Fiscal 2019 Results   ASC 606   ASC 605
Revenues   $602.1 million   up 4% to $600.7 million
Earnings before income taxes   $137.5 million   down 1% to $133.3 million
Adjusted earnings before income taxes   $166.4 million   down 5% to $162.2 million
Diluted earnings attributable to CDK per share   $0.80   up 8% to $0.77
Adjusted diluted earnings attributable to CDK per share   $0.98   up 9% to $0.95
Net earnings attributable to CDK   $99.8 million   up 1% to $96.6 million
Margin  16.6% down 60 bps to 16.1%
Adjusted EBITDA   $222.5 million   up 4% to $218.3 million
Margin  37.0% down 20 bps to 36.3%

“We had a good third quarter, and I’m pleased with the positive momentum in the business we’re seeing as we deliver on our commitment to provide great automotive experiences for our customers,” said Brian Krzanich, president and chief executive officer. “We’re transforming the way we deliver value to, interact with, and grow with our customers, and I’m excited about the opportunities ahead for us.”

The non-GAAP (adjusted) results and guidance presented in this press release represent non-GAAP financial measures.  Reconciliations of these measures to the appropriate GAAP measures are provided in the tables at the end of this press release.  Comparisons of results provided in this press release reflect year-over-year comparisons on an ASC 605 basis. 

Impacts to the Third Quarter:

  • Foreign exchange rates: Growth in revenues was negatively impacted by 2 percentage points, while earnings before income taxes was negatively impacted by 1 percentage point, by foreign exchange rates.
     
  • Tax rate: The GAAP effective tax rate for the third quarter of fiscal 2019 was 26.0% under ASC 606 and 26.1% under ASC 605, compared to 27.6% in last year’s third quarter.  The adjusted effective tax rate for the third quarter of fiscal 2019 was 25.7% under ASC 606 and 25.7% under ASC 605, compared to 29.6% in last year’s third quarter.             

CDK Segment Information

CDK North America: Retail Solutions North America (“RSNA”)

ASC 606

  • Revenues of $450.6 million 
  • GAAP earnings before income taxes of $181.0 million; adjusted earnings before income taxes of $192.9 million      
  • Pretax margins of 40.2%; adjusted pretax margins of 42.8%

ASC 605

  • Revenues increased 11% to $452.4 million
  • GAAP earnings before income taxes increased 6% to $181.1 million; adjusted earnings before income taxes increased 4% to $193.0 million
  • Pretax margins declined 170 bps to 40.0%; adjusted pretax margins declined 240 bps to 42.7%, primarily due to a shift in revenue mix and dis-synergies from acquisitions and higher incentive compensation, partially offset by operating leverage on subscription revenue growth and operating efficiencies associated with the business transformation plan

CDK North America: Advertising North America (“ANA”)

ASC 606

  • Revenues of $60.4 million
  • GAAP earnings before income taxes of $3.9 million; adjusted earnings before income taxes of $4.4 million    
  • Pretax margins of 6.5%; adjusted pretax margins of 7.3%     

ASC 605

  • Revenues decreased 18% to $60.6 million
  • GAAP earnings before income taxes decreased 57% to $4.1 million; adjusted earnings before income taxes decreased 55% to $4.6 million
  • Pretax margins decreased 600 bps to 6.8%; adjusted pretax margins decreased 630 bps to 7.6%, primarily due to lower volume-based benefits as a result of lower revenues

CDK International (“CDKI”)

ASC 606

  • Revenues of $91.1 million 
  • GAAP earnings before income taxes of $27.8 million; adjusted earnings before income taxes of $28.0 million   
  • Pretax margins of 30.5%; adjusted pretax margins of 30.7% 

ASC 605

  • Revenues decreased 6% to $87.7 million, and increased 1% on a constant currency basis
  • GAAP earnings before income taxes decreased 11% to $23.3 million; adjusted earnings before income taxes decreased 14% to $23.5 million, and decreased 8% on a constant currency basis
  • Pretax margins decreased 160 bps to 26.6%; adjusted pretax margins declined 240 bps to 26.8%, primarily due to timing of certain other revenues and investments related to strategic growth initiatives, somewhat offset by scale from increased revenue per site

Fiscal 2019 Guidance

                      Fiscal 2019 Guidance   ASC 606
  Revenues   $2.32 billion - $2.35 billion
  Diluted earnings attributable to CDK per share   $2.70 - $2.80
  Adjusted diluted earnings attributable to CDK per share   $3.70 - $3.80
  Net earnings attributable to CDK   $330 million - $345 million
  Adjusted EBITDA   $860 million - $875 million

           

We maintain our revenue guidance range of $2.32 billion - $2.35 billion, our GAAP diluted earnings per share range of $2.70 - $2.80, and adjusted diluted earnings per share at the higher end of the $3.70 - $3.80 range. We have tightened our GAAP net earnings attributable to CDK range to $330 million - $345 million, and adjusted EBITDA range to $860 million - $875 million. 

Tax Rate

We maintain our estimated fiscal 2019 GAAP effective tax rate of 26.0% - 27.0% on an ASC 606 basis, compared to 24.1% in fiscal 2018, driven by changes related to the Tax Cuts and Jobs Act.  We maintain our estimated fiscal 2019 adjusted effective tax rate guidance range of 25.0% - 26.0% on an ASC 606 basis, compared to 29.1% in fiscal 2018. 

Website Schedules

Other financial information, including financial statements and supplementary schedules presented on a GAAP and adjusted basis, and the schedule of quarterly revenues and pretax earnings by reportable segment have been updated for the third quarter of fiscal 2019 and will be posted to the CDK Investor Relations website, http://investors.cdkglobal.com, in the “Financial Information” section.

Webcast and Conference Call

An analyst conference call will be held today, Tuesday, April 30, 2019 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 the CDK Investor Relations website, http://investors.cdkglobal.com, and click on the webcast icon. An accompanying slide 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 financial news releases, current financial information, SEC filings and Investor Relations presentations are accessible at the same website.

About CDK Global

With more than $2 billion in revenues, CDK Global (CDK) is a leading global provider of integrated information technology and digital marketing solutions to the automotive retail and adjacent industries. Focused on enabling end-to-end automotive commerce, CDK Global provides solutions to dealers in more than 100 countries around the world, serving approximately 30,000 retail locations and most automotive manufacturers. CDK solutions automate and integrate all parts of the dealership and buying process from targeted digital advertising and marketing campaigns to the sale, financing, insuring, parts supply, repair and maintenance of vehicles. Visit cdkglobal.com.



CDK Global, Inc.
Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)

  Three Months Ended   Nine Months Ended
  March 31,   March 31,
  2019   2018   2019   2018
Revenues $ 602.1     $ 576.6     $ 1,747.0     $ 1,704.0  
               
Expenses:              
  Cost of revenues 305.8     295.0     897.3     893.5  
  Selling, general and administrative expenses 123.8     121.7     344.8     357.6  
  Restructuring expenses 0.6     2.5     21.6     16.6  
Total expenses 430.2     419.2     1,263.7     1,267.7  
               
Operating earnings 171.9     157.4     483.3     436.3  
               
  Interest expense (35.4 )   (24.1 )   (101.9 )   (70.6 )
  Other income, net 1.0     1.7     5.2     9.4  
               
Earnings before income taxes 137.5     135.0     386.6     375.1  
               
  Provision for income taxes (35.8 )   (37.2 )   (101.7 )   (88.0 )
               
Net earnings 101.7     97.8     284.9     287.1  
Less: net earnings attributable to noncontrolling interest 1.9     1.7     5.8     5.7  
Net earnings attributable to CDK $ 99.8     $ 96.1     $ 279.1     $ 281.4  
               
               
Net earnings attributable to CDK per common share:              
Basic $ 0.80     $ 0.71     $ 2.20     $ 2.05  
Diluted $ 0.80     $ 0.71     $ 2.19     $ 2.03  
               
Weighted-average common shares outstanding:              
Basic 124.0     134.6     126.8     137.2  
Diluted 124.8     135.8     127.7     138.5  

Effective July 1, 2018, the Company adopted ASC 606 using the modified retrospective approach.  The comparative information has not been restated and continues to be reported under the accounting standards in effect for the period presented.


CDK Global, Inc.
Consolidated Balance Sheets
(In millions)
(Unaudited)

  March 31,   June 30,
  2019   2018
Assets      
Current assets:      
  Cash and cash equivalents $ 306.8     $ 804.4  
  Accounts receivable, net of allowances 436.3     374.6  
  Other current assets 155.7     188.3  
    Total current assets 898.8     1,367.3  
       
Property, plant and equipment, net 133.3     131.9  
Other assets 280.5     165.5  
Goodwill 1,588.4     1,217.2  
Intangible assets, net 264.8     126.5  
    Total assets $ 3,165.8     $ 3,008.4  
       
Liabilities and Stockholders' Deficit      
Current liabilities:      
  Current maturities of long-term debt and capital lease obligations $ 268.5     $ 45.2  
  Accounts payable 50.3     50.5  
  Accrued expenses and other current liabilities 219.0     198.0  
  Accrued payroll and payroll-related expenses 84.3     85.7  
  Short-term deferred revenues 132.8     169.0  
    Total current liabilities 754.9     548.4  
       
Long-term debt and capital lease obligations 2,649.3     2,575.5  
Long-term deferred revenues 68.7     110.4  
Deferred income taxes 98.4     56.7  
Other liabilities 69.9     64.7  
    Total liabilities 3,641.2     3,355.7  
       
Stockholders' Deficit:      
  Preferred stock      
  Common stock 1.6     1.6  
  Additional paid-in-capital 673.5     679.8  
  Retained earnings 1,084.9     753.0  
  Treasury stock, at cost (2,248.1 )   (1,810.7 )
  Accumulated other comprehensive income/(loss) (2.4 )   11.5  
    Total CDK stockholders' deficit (490.5 )   (364.8 )
Noncontrolling interest 15.1     17.5  
    Total stockholders' deficit (475.4 )   (347.3 )
    Total liabilities and stockholders' deficit $ 3,165.8     $ 3,008.4  

Effective July 1, 2018, the Company adopted ASC 606 using the modified retrospective approach.  The comparative information has not been restated and continues to be reported under the accounting standards in effect for the period presented.


CDK Global, Inc.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)

  Nine Months Ended
  March 31,
  2019   2018
Cash Flows from Operating Activities:      
Net earnings $ 284.9     $ 287.1  
Adjustments to reconcile net earnings to cash flows provided by operating activities:      
Depreciation and amortization 71.4     58.6  
Impairment of intangible and long-lived assets 18.2      
Deferred income taxes 20.5     (8.8 )
Stock-based compensation expense 15.0     27.9  
Other 7.4     2.7  
Changes in operating assets and liabilities, net of effect from acquisitions of businesses:      
Increase in accounts receivable (45.5 )   (20.1 )
(Increase) decrease in other assets (31.6 )   10.1  
Decrease in accounts payable (3.6 )   (13.6 )
Increase in accrued expenses and other liabilities 2.5     2.9  
Net cash flows provided by operating activities 339.2     346.8  
       
Cash Flows from Investing Activities:      
Capital expenditures (39.2 )   (36.9 )
Capitalized software (32.7 )   (27.3 )
Proceeds from sale of property, plant and equipment 7.4      
Acquisitions of businesses, net of cash acquired (513.0 )   (12.8 )
Contributions to investments (10.0 )    
Proceeds from investments 0.4     0.8  
Net cash flows used in investing activities (587.1 )   (76.2 )
       
Cash Flows from Financing Activities:      
Proceeds from long-term debt 1,090.0      
Repayments of long-term debt and capital lease obligations (801.7 )   (34.8 )
Dividends paid to stockholders (56.6 )   (60.4 )
Repurchases of common stock (444.3 )   (438.3 )
Proceeds from exercises of stock options 3.0     8.2  
Withholding tax payments for stock-based compensation awards (15.8 )   (10.3 )
Dividend payments to noncontrolling owners (8.2 )   (7.4 )
Payments of deferred financing costs (4.4 )   (0.4 )
Acquisition-related payments (6.9 )   (3.0 )
Net cash flows used in financing activities (244.9 )   (546.4 )
       
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (7.3 )   15.4  
       
Net change in cash. cash equivalents and restricted cash (500.1 )   (260.4 )
       
Cash, cash equivalents, and restricted cash, beginning of period 817.1     734.0  
       
Cash, cash equivalents, and restricted cash, end of period $ 317.0     $ 473.6  

Effective July 1, 2018, the Company adopted ASC 606 using the modified retrospective approach.  The comparative information has not been restated and continues to be reported under the accounting standards in effect for the period presented.

During the first quarter of fiscal year 2019, the company adopted ASU 2016-18 retrospectively and as a result included restricted cash with cash and cash equivalents when reconciling the beginning of the period and end of the period total amounts presented on the Condensed Consolidated Statements of Cash Flows. Prior year amounts have been reclassified to conform to current year presentation.


CDK Global, Inc.
Consolidated Adjusted Financial Information
(In millions, except per share amounts)
(Unaudited)

As described below under the Non-GAAP Financial Measures section of this press release, effective July 1, 2018, we began incorporating amortization of acquired intangible assets within our calculations of adjusted earnings before income taxes, adjusted provision for income taxes, adjusted net earnings attributable to CDK, and adjusted diluted net earnings attributable to CDK per share. Also, effective October 1, 2018, we began incorporating impairment of intangible assets within our calculations of adjusted earnings before income taxes, adjusted provision for income taxes, adjusted net earnings attributable to CDK, adjusted diluted net earnings attributable to CDK per share, and adjusted EBITDA. Information for the three and nine months ended March 31, 2018 has been restated to conform to the new presentation.

Effective July 1, 2018, the Company adopted ASC 606 using the modified retrospective approach. The tables below present fiscal 2019 consolidated adjusted financial information on both an ASC 606 and an ASC 605 basis. The comparative information has not been restated and continues to be reported under the accounting standards in effect for the period presented.

  Three Months Ended           Nine Months Ended        
  March 31,       March 31,        
  2019   2018   ASC 605
Change
  2019   2018   ASC 605
Change
  ASC
606
  ASC 605   $   %   ASC
606
  ASC 605   $   %
Revenues $ 602.1     $ 600.7     $ 576.6     $ 24.1     4  %   $ 1,747.0     $ 1,767.1     $ 1,704.0     $ 63.1     4  %
Impact of exchange rates 7.7     7.7                 13.1     13.8              
Constant currency revenues (a) $ 609.8     $ 608.4     $ 576.6     $ 31.8     6  %   $ 1,760.1     $ 1,780.9     $ 1,704.0     $ 76.9     5  %
                                       
Earnings before income taxes $ 137.5     $ 133.3     $ 135.0     $ (1.7 )   (1 )%   $ 386.6     $ 391.4     $ 375.1     $ 16.3     4  %
Margin 22.8 %   22.2 %   23.4 %   -120 bps
          22.1 %   22.1 %   22.0 %   10 bps
       
Impairment of intangible assets                     14.9     14.9              
Restructuring expenses 0.6     0.6     2.5             21.6     21.6     16.6          
Other business transformation expenses 6.1     6.1     10.5             15.0     15.0     40.1          
Total stock-based compensation 8.2     8.2     6.9             15.0     15.0     27.9          
Amortization of acquired intangible assets 5.4     5.4     4.0             14.4     14.4     11.8          
Transaction and integration-related expenses 2.3     2.3     9.5             6.4     6.4     13.2          
Officer transition expense 1.2     1.2                 6.4     6.4     0.6          
Legal and other expenses related to regulatory
and competition matters
5.1     5.1     2.4             14.4     14.4     5.4          
Tax matters indemnifications loss/(gain)                             (0.4 )        
Adjusted earnings before income taxes (a) $ 166.4     $ 162.2     $ 170.8     (8.6 )   (5 )%   $ 494.7     $ 499.5     $ 490.3     $ 9.2     2  %
Adjusted margin 27.6 %   27.0 %   29.6 %   -260 bps
          28.3 %   28.3 %   28.8 %   -50 bps
       
Impact of exchange rates 2.1     1.9                 4.1     4.2              
Constant currency adjusted earnings before income taxes (a) $ 168.5     $ 164.1     $ 170.8     $ (6.7 )   (4 )%   $ 498.8     $ 503.7     $ 490.3     $ 13.4     3  %


  Three Months Ended           Nine Months Ended        
  March 31,       March 31,        
  2019   2018   ASC 605 Change   2019   2018   ASC 605 Change
  ASC
606
  ASC 605   $   %   ASC
606
  ASC 605   $   %
Provision for income taxes $ 35.8     $ 34.8     $ 37.2     $ (2.4 )   (6 )%   $ 101.7     $ 103.0     $ 88.0     $ 15.0     17  %
Effective tax rate 26.0 %   26.1 %   27.6 %           26.3 %   26.3 %   23.5 %        
Income tax effect of pre-tax adjustments 5.9     5.9     11.1             24.7     24.7     35.3          
Excess tax (expense)/benefit from stock-based
compensation
0.4     0.4     1.4             1.1     1.1     5.0          
Pre spin-off filed tax return adjustment                             0.4          
Impact of U.S tax reform 0.6     0.6     0.8             (2.8 )   (2.8 )   14.9          
Adjusted provision for income taxes (a) $ 42.7     $ 41.7     $ 50.5     $ (8.8 )   (17 )%   $ 124.7     $ 126.0     $ 143.6     $ (17.6 )   (12 )%
Adjusted effective tax rate 25.7 %   25.7 %   29.6 %           25.2 %   25.2 %   29.3 %        


  Three Months Ended           Nine Months Ended        
  March 31,       March 31,        
  2019   2018   ASC 605 Change   2019   2018   ASC 605 Change
  ASC
606
  ASC 605   $   %   ASC
606
  ASC 605   $   %
Net earnings $ 101.7     $ 98.5     $ 97.8     $ 0.7     1  %   $ 284.9     $ 288.4     $ 287.1     $ 1.3      %
Less: net earnings attributable to noncontrolling interest 1.9     1.9     1.7             5.8     5.8     5.7          
Net earnings attributable to CDK 99.8     96.6     96.1     0.5     1  %   279.1     282.6     281.4     1.2      %
Impairment of intangible assets                     14.9     14.9              
Restructuring expenses (b) 0.6     0.6     2.4             21.5     21.5     16.3          
Other business transformation expenses(b) 6.1     6.1     10.4             15.0     15.0     39.9          
Total stock-based compensation 8.2     8.2     6.8             15.0     15.0     27.8          
Amortization of acquired intangible assets (b) 5.4     5.4     3.9             14.2     14.2     11.6          
Transaction and integration-related expenses 2.3     2.3     9.5             6.4     6.4     13.2          
Officer transition expense 1.2     1.2                 6.4     6.4     0.6          
Legal and other expenses related to regulatory
and competition matters (b)
5.1     5.1     2.4             14.3     14.3     5.4          
Tax matters indemnifications loss/(gain)                             (0.4 )        
Income tax effect on pre-tax adjustments (5.9 )   (5.9 )   (11.1 )           (24.7 )   (24.7 )   (35.3 )        
Excess tax expense/(benefit) from stock-based
compensation
(0.4 )   (0.4 )   (1.4 )           (1.1 )   (1.1 )   (5.0 )        
Pre spin-off filed tax return adjustment                             (0.4 )        
Impact of U.S tax reform (0.6 )   (0.6 )   (0.8 )           2.8     2.8     (14.9 )        
Adjusted net earnings attributable to CDK (a) $ 121.8     $ 118.6     $ 118.2     $ 0.4      %   $ 363.8     $ 367.3     $ 340.2     $ 27.1     8  %


  Three Months Ended           Nine Months Ended        
  March 31,       March 31,        
  2019   2018   ASC 605 Change   2019   2018   ASC 605 Change
  ASC
606
  ASC 605   $   %   ASC
606
  ASC 605   $   %
Diluted earnings attributable to CDK per share $ 0.80     $ 0.77     $ 0.71     $ 0.06     8  %   $ 2.19     $ 2.21     $ 2.03     $ 0.18     9  %
Impairment of intangible assets                     0.12     0.12              
Restructuring expenses (b)         0.02             0.17     0.17     0.12          
Other business transformation expenses(b) 0.05     0.05     0.08             0.12     0.12     0.29          
Total stock-based compensation 0.07     0.07     0.05             0.12     0.12     0.20          
Amortization of acquired intangible assets 0.04     0.04     0.03             0.11     0.11     0.08          
Transaction and integration-related expenses 0.02     0.02     0.07             0.05     0.05     0.11          
Officer transition expense 0.01     0.01                 0.05     0.05              
Legal and other expenses related to regulatory
and competition matters (b)
0.04     0.04     0.01             0.11     0.11     0.04          
Tax matters indemnifications loss/(gain)                                      
Income tax effect of pre-tax adjustments (0.05 )   (0.05 )   (0.08 )           (0.19 )   (0.19 )   (0.26 )        
Excess tax expense/(benefit) from stock-based
compensation
        (0.01 )           (0.01 )   (0.01 )   (0.04 )        
 Pre spin-off filed tax return adjustment                                      
Impact of U.S tax reform         (0.01 )           0.02     0.02     (0.11 )        
Adjusted diluted earnings attributable to CDK per share (a) $ 0.98     $ 0.95     $ 0.87     $ 0.08     9  %   $ 2.85     $ 2.88     $ 2.46     $ 0.42     17  %
                                       
Weighted-average common shares outstanding:                                      
Diluted 124.8     124.8     135.8             127.7     127.7     138.5          


  Three Months Ended       Nine Months Ended        
  March 31,       March 31,        
  2019   2018   ASC 605 Change   2019   2018   ASC 605 Change
  ASC
606
  ASC 605   $   %   ASC
606
  ASC 605   $   %
Net earnings attributable to CDK $ 99.8     $ 96.6     $ 96.1     $ 0.5     1  %   279.1     $ 282.6     $ 281.4     $ 1.2      %
Margin 16.6 %   16.1 %   16.7 %   -60 bps
          16.0 %   16.0 %   16.5 %   -50 bps
       
Net earnings attributable to noncontrolling interest 1.9     1.9     1.7             5.8     5.8     5.7          
Provision for income taxes 35.8     34.8     37.2             101.7     103.0     88.0          
Interest expense 35.4     35.4     24.1             101.9     101.9     70.6          
Depreciation and amortization 26.1     26.1     19.6             71.4     71.4     58.6          
Impairment of intangible assets                     14.9     14.9              
Restructuring expenses 0.6     0.6     2.5             21.6     21.6     16.6          
Other business transformation expenses 6.1     6.1     10.4             15.0     15.0     39.9          
Total stock-based compensation 8.2     8.2     6.9             15.0     15.0     27.9          
Transaction and integration-related expenses 2.3     2.3     9.5             6.4     6.4     13.2          
Officer transition expense 1.2     1.2                 6.4     6.4     0.6          
Legal and other expenses related to regulatory
and competition matters
5.1     5.1     2.4             14.4     14.4     5.4          
Tax matters indemnifications loss/(gain)                             (0.4 )        
Adjusted EBITDA (a) $ 222.5     $ 218.3     $ 210.4     $ 7.9     4  %   653.6     $ 658.4     $ 607.5     $ 50.9     8  %
Adjusted margin 37.0 %   36.3 %   36.5 %   -20 bps
          37.4 %   37.3 %   35.7 %   160 bps
       


  Nine Months Ended
  March 31,
  2019   2018
Net cash flows provided by operating activities $ 339.2     $ 346.8  
Capital expenditures (39.2 )   (36.9 )
Capitalized software (32.7 )   (27.3 )
Change in restricted cash 2.5     (4.3 )
Free cash flow (a) $ 269.8     $ 278.3  

(a) Refer to the Non-GAAP Financial Measures section of this earnings release for additional information on our non-GAAP adjustments.

(b)  The portion of expense related to noncontrolling interest has been removed from restructuring expenses, amortization of acquired intangible assets and legal and other expenses related to regulatory and competition matters for the three and nine months ended March 31, 2019, and from restructuring expenses, amortization of acquired intangible assets, other business transformation expenses and stock-based compensation expenses for the three and nine months ended March 31, 2018.


CDK Global, Inc.
Segment Adjusted Financial Data
(In millions)
(Unaudited)

As described below under the Non-GAAP Financial Measures section of this press release, effective July 1, 2018, we began incorporating additional adjustments within our calculations of adjusted earnings before income taxes, where management has deemed it appropriate to better reflect our underlying operations. In the first quarter of fiscal 2019, the Company revised segment reporting to reclassify the assets and liabilities and operating results of the April 2018 acquisition of Progressus Media LLC to the Retail Solutions North America ("RSNA") segment. The results were previously reported in the Advertising North America ("ANA") segment. GAAP and Adjusted segment information for the three and nine months ended, March 31, 2019 has been restated to conform to the new presentations.

Effective July 1, 2018, the Company adopted ASC 606 using the modified retrospective approach.  The tables below present fiscal 2019 segment financial data on both an ASC 606 and an ASC 605 basis. The comparative information has not been restated and continues to be reported under the accounting standards in effect for the period presented.

  Segment Revenues    
  Three Months Ended           Nine Months Ended        
  March 31,   ASC 605
Change
  March 31,   ASC 605
Change
  2019   2018     2019   2018  
  ASC
606
  ASC 605   $   %   ASC
606
  ASC 605   $   %
CDK North America:                                      
RSNA (a) $ 450.6     $ 452.4     $ 409.3     $ 43.1     11  %   1,308.6     $ 1,310.6     $ 1,209.0     $ 101.6     8  %
ANA (b) 60.4     60.6     74.2     (13.6 )   (18 )%   196.7     197.4     230.8     (33.4 )   (14 )%
CDK International (c) 91.1     87.7     93.1     (5.4 )   (6 )%   241.7     259.1     264.2     (5.1 )   (2 )%
Total $ 602.1     $ 600.7     $ 576.6     $ 24.1     4  %   $ 1,747.0     $ 1,767.1     $ 1,704.0     $ 63.1     4  %


...
  Segment Adjusted Earnings before Income Taxes
  Three Months Ended           Nine Months Ended