CDK Global, Inc.
Q4 2015 Earnings Call Transcript

Published: 29 Jul 2015

[Operator:]

Good day, ladies and gentlemen. And welcome to the CDK Global Fourth Quarter Fiscal Year 2015 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Ms. Elena Rosellen. You may begin.

[Elena Rosellen:]

Thank you. I am here today with Steve Anenen, CDK’s President and Chief Executive Officer; and Al Nietzel, CDK’s Chief Financial Officer. Thank you for joining us for our fiscal 2015 earnings call and webcast. Steve will begin the call with the highlights for the year and then provide an update on the execution of our business transformation plan we laid out at our Investor Day last month. Al will then take you through the details of the full year and fourth quarter result and provide our forecast for fiscal 2016. We also noted in this morning’s press release that we will be posting financial schedules to our Investor Relations website updated for the fourth quarter of fiscal 2015. Additionally, we are providing P&L for all of the quarters of fiscal 2014 and 2015, reflecting the revisions with respect to hardware lease accounting and the non-controlling interest in our CVR business made in our third quarter. I also want to point out that in this morning’s press release and in our slide presentation, we have shown both the GAAP results, as well as the adjusted results for the quarters in order to present both periods on a comparable basis. Additionally, throughout today’s call, when Steve and Al reference financial amounts those are as adjusted amounts. A reconciliation of GAAP to non-GAAP financial measures is included in this morning’s press release and is available on the Investor Relations section of our website. And finally, we anticipate filing our 10-K in the next few weeks. Before we get started, I would like to remind everyone that remarks made during this conference call will contain forward-looking statements. These statements involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including those risks details in our filings with the SEC. With that, I’ll now turn the call over to Steve.

[Steve Anenen:]

Thank Elena. Hi, everyone, and thank you for joining us this morning. We closed our first fiscal year as a public company and delivered very good results. On a comparable basis with fiscal 2014, adjusted revenues grew 6%, 8% on a constant currency basis, adjusted pretax earnings grew 17% and adjusted pretax margin expanded 170 basis points, adjusted EBITDA margin increased 190 basis points to 23.5% for the year. I'm pleased with these results. In a few minutes, Al will provide more details on our financial performance for the year and the fourth quarter. But before he does that, I will update you on our progress as we continue to execute our business transformation plan to deliver significant earnings growth and margin expansion over the next three years. Just last month at our Investor Day, we announced a plan to transform CDK through balanced organic revenue growth and significantly increase earnings. Our goals are currently focused on margin expansion and our strategy will result in a strong financial profile. We will deliver additional EBITDA dollars of $250 million to $275 million over the next three fiscal years and achieve a 35% EBITDA margin in fiscal 2018. We will deliver these results by executing against two key pillars, driving operational excellence, while delivering organic revenue growth. CDK's transformation is centered on driving operational excellence and that will be the focus of my comments to you this morning. To remind you, driving operational excellence comprises three work streams, streamlining the organization, simplifying the business and pricing, and engaging with clients more efficiently. We are 30 days into the planning phase of these work streams, which we expect to complete over the next couple of months. We've already begun the execution phase on certain work streams, but for the most part, execution will begin in this year's second and third fiscal quarters. So, what do we accomplished in the first 30 days, we are developing detailed blueprints, roadmaps and business cases in order to create detailed implementation plans and the teams are being staffed. With respect to engaging clients more efficiently, we have begun execution on optimizing our sales process. Specifically, we have redefined the sales force roles and account coverage by merging ARNA and Digital sales teams at the regional leadership levels. We have stratified account coverage to utilize inside sales and technology to service smaller accounts and to expand the account to sales ratio. This has resulted in reduced headcount and will provide annual cost savings of at least $7 million. We begin to execute our strategic sourcing and procurement initiative as well. Through this initiative, we have taken a very close and hard look at our vendor relationships, and we are actively pursuing opportunities to consolidate and where appropriate change suppliers of products and services across the business. We expect our actions on this front to generate over $5 million of cost savings in fiscal 2016. These are very good starts towards our transformation plan. Additionally, we are driving hard on consolidating operations, including implementation of hub and spoke model for consolidating our facility footprint and better scale our labor base in lower cost geographies where appropriate, both here and abroad. We are not ready to disclose the details but we are well underway on this most critical work stream. In terms of R&D optimization, we are currently focused on the core dealer management system and efforts to ensure our clients are using our latest technology solutions. We are creating the inventory for DMS migration opportunities and developing migration path for a pilot program that will ultimately allow us the sunset legacy solutions. In terms of pricing simplification, we are identifying areas for increasing the discipline around discounting and price bands and tools to ensure compliance. We’re also working towards simplifying our contracting process and reducing complexities in how we engage with clients and prospects. Keep in mind there are interdependencies with other work streams which makes it difficult at this time to provide further details. We have baked in just north of $45 million of additional EBITDA dollars in fiscal 2016 from these work streams. I am pleased with our progress thus far. We're taking significant strides towards delivering against our increased EBITDA goals and strengthening the business while improving our client experience. So with that, I will now turn it over to Al to take you through our results for the year and for the fourth quarter and then our fiscal 2016 forecast.

[Al Nietzel:]

Thanks Steve and good morning everyone. CDK posted very good results for fiscal 2015. As you’ve heard me say each quarter, this was a transition year for CDK and we have shown numerous pro forma adjustments in order to make things comparable on a year-over-year basis with 2014. We have also established our stand-alone public company accounting and reporting processes over the last nine months. In doing so, we have made some minor adjustments and how we report certain items after our separation versus how these items were addressed on a historical carve-out basis. None of these adjustments were material for we deem them to be appropriate for the presentation of our financials. Keeping that in mind, my comments for the fiscal 2015 results as well as for our fiscal ‘16 forecast will largely be on these as adjusted non-GAAP basis. Now, let’s move to the results for the full year 2015. As Steve mentioned, total revenue growth of 6% nearly all organic or 8% on a constant currency basis. Our exposure is to the euro, Canadian dollar and pound sterling. And as we've covered previously, framing my comments on revenues are the KPIs related to recurring revenues that we provide in the earnings release which are also defined in our SEC filings. The ARNA segment revenues grew a strong 8% led by both increased site penetration for our dealer management solution or DMS of 4% and an increase in the average revenue per DMS client site of 3%. For ARI, revenue growth of 2% resulted from increased revenues per DMS client site primarily from additional users per client. Site counts and ARI were down slightly on a year-over-year basis due to the somewhat economic -- the challenging economic landscape, primarily in southern Europe. This was partially offset by the performance within the U.K. and Asia-Pac. For our digital segment, revenues grew 11%, driven primarily by higher revenue per website and increased advertising spend. Moving from revenues down to cost, stand-alone public company costs were in line with our expectations and totaled $30 million for fiscal 2015. And these costs are predominantly reported within SG&A and the P&L. $22 million of the $30 million is reported within the other segment and the other $8 million is reported within ARNA, primarily related to hosting. Looking at the P&L, our cost of revenues on an as reported basis increased 6% from a year ago primarily due to increased cost per ad placement to support growth in our digital marketing business and increased cost associated with the migration of hosting facilities that support both ARNA and the digital segments. Cost of revenues includes R&D which continue to represent about 8% of revenues. SG&A on an as reported basis increased 5%, entirely due to the stand-alone public company costs I just mentioned. You also saw in our release restructuring expenses of $2.4 million for fiscal 2015. This represents employee-related costs incurred in connection with our business transformation plan. This and other fourth quarter costs of $1.9 million for consulting and other fees associated with the transformation program are shown as pro forma adjustments on our non-GAAP tables. We will be tracking and reporting these costs to you each quarter. Moving on from costs, adjusted net earnings before income taxes grew nicely at 17% and was negatively impacted by about 2 percentage points from the unfavorable exchange rates. Adjusted pre-tax margins expanded 170 basis points for the year, totaling 17.5%, with all business segments contributing to this margin improvement. ARNA’s pretax margin advanced to 150 basis points to 30%. ARI’s margin expanded 110 basis points to 15% and Digital’s margin expanded 300 basis points to 10% for the year. Adjusted EBITDA margin expanded 190 basis points for the year to 23.5%. And finally, growth in adjusted net earnings and adjusted diluted earnings per share attributable to CDK was strong at 16% and 15% respectively. Our cash balance at June 30th was little low over $408 million and we repurchased 1.1 million shares during the year for $51 million. And our operating cash flow was $268 million for the year. Overall, very good results for the fiscal year. With that, I will now touch on the fourth quarter results, which are essentially in line with our expectations. Total year-over-year revenue growth for the fourth quarter was 2%, or 5% on a constant currency basis. The April acquisition within our computer vehicle registration business, which is reported within the ARNA segment, contributed one point of growth for the quarter to the total business. The ARNA segment had a strong quarter with 8% percent revenue growth, 6% organic, driven primarily by increased DMS site penetration and an increase in the average revenue per DMS client site. ARI revenues grew in the quarter from increased users per site, but this was partially offset by one-time revenue reductions. Digital Marketing revenues declined 2% for the fourth quarter, as we discussed last quarter we expected year-over-year growth challenges in the fourth quarter. This was due to the strength in last year’s fourth quarter from an increase in OEM budgets for advertising spend and the anticipated decline in the number of client websites, resulting from changes to certain OEM programs with respect to exclusivity. We also spoke last quarter about the anticipated pressure on the year-over-year comps for earnings and margin growth in the fourth quarter, as a direct result of the favorable items in last year's fourth quarter. As such, adjusted earnings before income taxes for the fourth quarter declined 5%, and was negatively impacted above three percentage points from unfavorable foreign exchange rates. Adjusted pre-tax margins declined 110 basis points to 14.6%, again due to these favorable items in last year’s fourth quarter that did not recur this year. And adjusted net earnings and diluted earnings per share attributable to CDK both declined 10%. So while the favorable items in last year's fourth quarter created significant year-over-year pressures, the underlying business is performing well as evidenced by our strong full year results. Looking now at our forecast for 2016, the year-over-year comparisons are again on an as adjusted basis. The schedules in our earnings release and on our website provide detailed to the as adjusted items. You will see that the earnings components for our fiscal year forecast are off a revised base of 2015. This is important to recognize and understand. The pro forma schedules that we have shown all year were developed to present 2015 and 2014 on a comparable basis. Now that we are in fiscal 2016, we have revised the pro forma adjustments schedules for ‘15 to be comparable to ’16. Clearly, my preference would be not to do these pro formas, but they are the most effective way for us to present both periods on a comparable basis. And the primary add-on items in the pro forma schedules are centrally stand-alone public company costs and interest expense. Back to the forecast for 2016. We anticipate growth in adjusted revenues of 4% to 5% from the adjusted $2.017 billion in fiscal 2015. This includes a 1 to 2 point drag from foreign exchange rates, which we expect to occur in the first half of the fiscal year. We anticipate at least 25% growth in adjusted earnings before income taxes from the adjusted $330.5 million in 2015. We anticipate at least 300 basis points of expansion in both adjusted pre-tax and adjusted EBITDA margin from 16.4 and 22.9 respectively in fiscal 2015. As Steve mentioned earlier, this forecast includes about $45 million of incremental EBITDA from our transformation plans. Also in conjunction with the transformation plan, we expect to incur $60 million to $65 million of restructuring and other charges during fiscal 2016. About $10 million will be incurred in the first half of the year, with the remainder in the second half of the year. These charges will be presented on a non-GAAP basis and are not included in our earnings forecast. The effective tax rate for fiscal 2016 is anticipated to be 35.5% to 36%, compared with the adjusted 34.6% in fiscal 2015. The fiscal 2016 adjusted effective tax rate is in line with the normalized ETR we have previously communicated. We also anticipate over 25% growth in adjusted net earnings from the adjusted $208.2 million in fiscal 2015. And we anticipate over 25% growth in adjusted diluted earnings per share attributable to CDK from a $1.29 in fiscal 2015. No further share repos are assumed in the forecast beyond what is needed to buyback shares to offset dilution from employee equity programs, and we continue to evaluate our return on capital strategy to provide the greatest long-term value to our shareholders. Next, I would like to provide some directional comments regarding the quarterly skewing. I already mentioned the expected FX headwinds of 1 to 2 points for the full year. This is skewed to the first half of the year based on current rates, with the first and second quarters being impacted by 3% and 2 percentage points respectively, for both adjusted revenues and adjusted pretax earnings. We had a favorable mix of upgrade installations in last year’s first quarter, which benefited earn by about $5 million. This is expected to create pressure in the year-over-year comps for the first quarter and fiscal 2016. We also continue to expect pressure in digital marketing revenues for the first half of the year due to the lower website counts. Considering the negative impact from all of these items, unfavorable foreign exchange, unfavorable upgrade mix, and pressure from lower websites, we anticipate revenue growth in the first half of fiscal 2016 will be below the low end of the full year forecast range of 4% to 5%. These items also anticipate to negatively impact pretax earnings. In addition, net earnings growth in the first quarter of fiscal 2016 will be negatively impacted by a higher effective tax rate of 35.5% to 36%, compared with the lower 31.3% in the first quarter of fiscal 2015. As a result, we anticipate net earnings growth of 6% to 9% in the first half of the year. The grow-over challenges including unfavorable FX and lower website counts lessened in the second half of the year as the business continues to grow. The additional EBITDA dollars from our transformation plan are anticipated to be delivered primarily in the second half of the fiscal year, as the first half of the year is focused on developing and rolling out the detailed execution plans. So considering our expectations for the first half of the fiscal year, along with the full year forecast, revenue growth, earnings growth, and margin expansion are heavily weighted to the second half of the year. In summary, this forecast represents the first stage of delivering against our transformation plan, 4% to 5% topline growth, over 25% earnings growth, and at least 300 basis points of margin expansion. We know we have a lot of work ahead of us. We are also excited and believe we are on the right track. Our transformation plan is the right thing for this business and will make us better and stronger serving our clients and the industry. With that, I will turn it back to the operator. And Steve and I will be happy to take your questions.

[Operator:]

[Operator Instructions] And our first question comes from the line of Ian Zaffino with Oppenheimer. Your line is now open.

[Ian Zaffino:]

Hi. Great. A question would be on the FX side of it. Is there anything you could do to potentially offset some of that? I mean, is there any kind of clauses in your contracts or any ability maybe for you to take price in some of those markets? And then also, are those markets actually strong enough for you to actually be able to take price if you could? Thanks.

[Al Nietzel:]

Yes. Two things, Ian. Number one is the FX exposure we have clearly is really just on translation is how it works for CDK. The Canadian dollar, the euro, and the pound are the ones that are most susceptible. We build clients in local currencies. We don’t do them in US denominations generally. So we don’t other than that normal contractual clauses we have with pricing actions and so forth. We kind of are where we are with respect to the exposures that we do have on the FX front.

[Ian Zaffino:]

Okay. And thank you. If you guys could comment about the market and the strength that you’re seeing over there or not seeing.

[Steve Anenen:]

Yes. This is Steve. The markets are improving both in Continental Europe, particularly as the second half of this last year we’ve seen increased car sales and I think a resurgence of consumers back into the marketplace buying as the marketplace get better. UK has been a strong market for us and continues to be, along with obviously the Middle East and certain areas. South Africa continues to do well and the Middle East -- I mean, I am sorry, the Asian markets have done well for us over the last year and continue to do so, although obviously there is a lot of concern around the markets in China. But that being said, I would say there is a recovery in the marketplace and it’s going pretty well.

[Ian Zaffino:]

Perfect. Thank you so much.

[Operator:]

Thank you. And our next question comes from the line of Gary Prestopino with Barrington Research. Your line is now open.

[Gary Prestopino:]

Hi, good morning, everyone.

[Steve Anenen:]

Hi, Gary.

[Gary Prestopino:]

Steve, just some clarification on one of the initiatives that you’re going to do here to get the margin expansion. You talked about pricing discipline around discounting and simplifying contract processing. Are you -- did you guys in the field, your sales people in the field have a lot of leeway in discounting or setting price that would get a deal for your company and you’re going to basically centralize that and keep -- try to keep pricing at a fixed level, where there isn’t a lot of discounting out there from the field?

[Steve Anenen:]

I think what we’re really trying to do is we tied our pricing models a lot closer to margin delivered by bundle and that was the first step. So we simplified the price book. We bundled if you will in a pricing area that will provide us we think a little bit more transparency around where the value drivers are in the solutions that we have. That being said, probably fair to say that there was a lot more capabilities of the local sales rep to discount in the past, we’re going to tighten that up and take it to a point where more centralization of what the appropriate bands are for pricing. And I think it will give us some blip so. And that we’re putting in if you will the check and balances to make sure that we hold to what we’re trying to accomplish.

[Al Nietzel:]

And I think the only other comment Gary would be is, I think Steve kind of mentioned is that it’s the narrowing of the discount band is what we had. There was a fairly wide range of spread on products that we feel are tremendously valuable to the dealers and those are the ones where we want to garner as much value as possible. So it’s narrowing the band.

[Gary Prestopino:]

Okay. And other thing that I just picked on you said bundling, Steve. Are you going to start bundling and what -- move from A la carte to a one price auction for the layered aspect that attached to the DMS or are you still going to sell those more on an A la carte basis?

[Steve Anenen:]

Yes. Gary, where we’re at is, obviously and I think I have said it in a couple meetings were -- a lot of what we’re doing is embedding work stream, workflow with applications that work in concert with one another. As a result of that, you move more towards the bundling with those workflows. And I think that’s how we’ll be going to the market. So we’re evaluating it today. And as we go forward, it will be more on that Yelp than A la carte.

[Gary Prestopino:]

And then if you could just comment on what your people are seeing out in the field domestically. And now we had a question on Europe of what are some key takeaways here because the industry continues to do really well. I’m just trying to get a pulse of what the dealers are feeling out there.

[Steve Anenen:]

Yes. I think from my conversations with those that are on the frontline, I think there is still a lot of optimism in the marketplace. I think there is dealerships that are doing well, particularly in the areas of the service end. The new car sales are driving a lot of volume. And as a result, I think the optimism amongst our organization is there. They're looking for ways that we can add value through using our applications in order to drive better decision processes within the dealerships. And then lastly I’d say, as dealers become confident in their ability to scale operations, many of them are continuing to look for ways that they might be able to expand their enterprises through acquisitions. And I think the acquisition front is still out there and we benefit sometimes as a result of those acquisitions.

[Gary Prestopino:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of Stephanie Davis with JPMorgan. Your line is now open.

[Stephanie Davis:]

Hey, guys. Thanks for taking my call.

[Al Nietzel:]

Hi, Stephanie.

[Steve Anenen:]

Hi, Stephanie.

[Stephanie Davis:]

For fiscal year '16 guidance, it implies about 220 bps expansion on the prior base, which of course account for the new capital structure for the company status and shift to adjusted revenue. But using that 35% EBITDA margin target, it suggested pretty significant ramp up to 2018. Could you walk us through how to think about this ramp and any step functions to call out?

[Al Nietzel:]

Yes. I’ll start. This is Al. And then -- and I know Steve will jump in. I mean, what we’re undertaking, Stephanie, what we really tried to outline during Investor Day is really a transformation. And when Steve talked about the three specific work streams was streamlining the odd, simplifying pricing, and engaging our clients. Some of the things that we’re undertaking are just taking time to implement because of the significance of them, particularly, as we look at some of the more substantive programs with the workforce and so forth. So, as Steve said, we’re going through major planning and execution. Some of the phases are little further long than others. But the benefits of them are really going to start kicking-in in the second half of this year and beyond. And so, we are acutely aware of what it means to us in terms of the cadence of the margin expansion, but we have a goal and we are heads down pushing toward it.

[Steve Anenen:]

Yeah. The only other comment, Stephanie, I’d make is, it’s the bawl way that you create if you will, starting in the second half of fiscal 2016 and then it starts to accelerate as the work streams come on. And it’s a holistic across the entire enterprise, not only here in the states, but throughout the international business as well. So everyone of the segments is going to have meaningful margin expansion as we go out. So we set the goal at 35% and we think we can get there and we've got everybody heads down working on those work streams to be able to kick them off at the appropriate time.

[Al Nietzel:]

And Stephanie, just one other comment is, the viewer or the audience shouldn't -- and shouldn't expect that it’s going to all happen in 2018. We have very rigorous plan that we are outlining, that will deliver meaningful results to this year, as you can see by the 300 plus basis points of margin expansion and then that second half exit rate is going to benefit 2017 as well. So it's not -- we know what we have ahead of us, but its making out the way till 2018 to see it. It’s going to becoming all along the way.

[Stephanie Davis:]

It makes sense, make sense, so backend loaded but want to see in ’18. Now shipping gears to recent acquisition of your public competitor. Could you comment on what sort of initial changes you may have seen in the competitive environment?

[Steve Anenen:]

I think it’s still a bit pretty mature to really speculate. We haven't -- it's been just a little bit too short, but we haven't really seeing all that much difference in their behavior. We’ve competed with them in the past and I anticipate we’ll watch it very closely, see if there's any change in movement, but there are formidable competitor and we've got great solutions that lineup very well with them and we’ll continue doing what we do well and delivering value to our clients.

[Stephanie Davis:]

All right. Thank you, guys. That’s all I have.

[Operator:]

Thank you. And we do have time for one more question. Our last question comes from the line of Brian Essex with Morgan Stanley. Your line is now open.

[Brian Essex:]

Hi. Good morning. And thank you for squeezing me in.

[Al Nietzel:]

Hi, Brian.

[Steve Anenen:]

Hi, Brian.

[Brian Essex:]

Just, hi. I guess, I just had a question on cash flow and as we go into next year, how you might anticipate so many impacts on the cash flow side, particularly cash flow from operation? You did a pretty good job I think growing cash flow through pretty substantial their transition, but just wondering how might look that cash flow going forward?

[Al Nietzel:]

I mean, Brian, we’re expecting again a nice steady improvement in our cash from operations and I think you should expect to see that going forward. In terms of some of the disclosures we just had about some of the transformation-related expenses. As we think about both our cash flow, as well as our commitment to bring our cash balance down to a $250 million level. We’re balancing all of those levers and as we articulated, we're committed to returning any of that excess cash we have to shareholders in forma of either dividend or buybacks. And we’re going to be no likely stepping that up in order to get to $408 that we’re holding as a cash balance now down to the 250 level that we've committed to. Recognizing that we know there is going to be some cash needs as it relates to some of the transformation activities, but again I would expect -- you should expect us to see improvements -- solid improvements in cash from operations. And as we said, we’re going to provide that back to the shareholders and our return to capital strategy.

[Brian Essex:]

Okay. And then it seems where you’ve gone through kind of a period of accelerated R&D and product development over the past couple of years. Any sense of where you are in that trajectory? And is that potential area for saving as we kind of exit this fiscal year?

[Steve Anenen:]

I think the real key for us there is clearly it's a technology play where this marketplace, as we see the blurring of the lines between the brick and mortar and the digital Internet page. We've got it continually to invest -- continue to invest in that area. Therefore we’re -- I think we’re about 8% of revenues or thereabout. And as I think going forward, we’ll continue to invest heavily but what we’re going to do as I try to mention as look at some of the older legacy applications and platforms. So we might have ways, that we can migrate our clients and sunset that and get some bliss, so we can reinvest dollars appropriately into the newer offerings. So that's how I have you think about it Brian.

[Brian Essex:]

Got it. That kind of ducktails into following ahead as it’s sunset of legacy solutions, any sense of what the install base there looks like? How much of an opportunity that is? And how that, I guess, might be proceed by customers as you sunset those solutions and maybe advise them to migrate to the kind of higher end platform?

[Steve Anenen:]

All of it is being evaluated right now. We have opportunity in that space primarily probably in the international front, especially in Europe but that being said. We just launched our latest product online drive there and it’s got great market reception. So we’ll move that market as that market gets its legs around the European base. That being said in North America, there are some applications and some older products that are out there that we want to make sure we’ve got a clear migration path. So we want to make it as easy as possible to be able to migrate themselves. We've got focused effort on it. We’ll do some piloting and we’ll make sure it’s as easy as possible for our clienteles. We will retain as many of them as possible so. But clearly, it's early in our discussions around how we are going to set that forth but it is part of the strategy.

[Brian Essex:]

Any sense, are this just basically subscription solutions, or are they legacy licensed solutions that you would migrate over and how might that be received by some of the customers or the on-premise or maybe SaaS based will be easier to migrate?

[Al Nietzel:]

Well. I don't know if any of them are easy to migrate, Brian. But as part of the transformation plan that we've outlined, reducing the number of versions of existing platforms and solutions is a key part of our go-forward strategy to free up dollars to invest the way Steve described in some of the changes emerging in the market, also making our organization more efficient and making the client experience better. Migrations are never easy. We've been down this path before and it’s something that we manage with a little bit of a one foot on the gas pedal and one foot on the break to make sure that we don't create too much client disruption. But we do what we can to make it as easy for them to move to our best platform and our best solution.

[Steve Anenen:]

Streamlining the organization, Brian, will require us to try to move everybody to the most current technology and that’s to their benefit, as well as to ours and that's really what our focus is. We’ve moved many of them to our drive platform already, but there are still some danglers out there that we want to make sure we treat them well and migrate them more appropriate.

[Brian Essex:]

Got it. Thank you.

[Operator:]

Thank you. I would now like to turn the call back to Steve Anenen for closing remarks.

[Steve Anenen:]

Great. Thank you. I think you can tell from our comments that we are pleased with the results in fiscal 2015. We improved our earnings and our margin outlook each quarter this year and we delivered very good results. We returned to $108 million to our shareholders through cash dividends totaling $58 million and $50 million for the repurchase of over 1 million CDK shares. We have 8.9 million shares remaining on our current repurchase authorization. And I'm confident that we have entered fiscal 2016 from a position of strength. We are moving forward and our entire management team is engaged and committed to execute against our transformation plan to drive a CDK that is more efficient and easier to do business with. No doubt about it, there's a lot of heavy lifting to be done but we’re up for it. And keep in mind, we will deliver significant earnings growth and margin expansion while growing the business which is, we believe the most optimal business model for delivering long-term value. It's really an exciting time to be part of CDK. Thank you for listening today. Have a great day.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a wonderful day.