Openlane, Inc. · NYSE:OPLN
Openlane — KAR Auction Services — Barclay's 2010 High Yield Bond and Loan Conference
33 slides from Openlane's conference presentation, Mar 26, 2010
Slide 1: KAR Auction Services
Exhibit 99.1 KAR Auction Services Barclay’s 2010 High Yield Bond and Loan Conference March 25, 2010
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward looking statements are subject to certain risks, trends, and uncertainties that could cause actual results to differ material
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA, Adjusted EBITDA and percentages or calculations using these measures, as presented herein, are supplemental measures of the company's performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United Stat
Slide 4: Leading Provider of Vehicle Auction Services in North America
Leading Provider of Vehicle Auction Services in North America 2009 Revenue: $1,730mm 2009 Adj. EBITDA: $426mm¹ ~3.3mm Vehicles Sold in 2009 2009 Revenue²: $1,177mm 2009 Revenue: $553mm 2009 Adj. EBITDA²: $335mm 2009 Adj. EBITDA: $147mm Top 2 whole car auction position Top 2 salvage vehicle auction p
Slide 5: Investment Highlights
Investment Highlights Leading provider of vehicle auction & related services in North America Highly concentrated industries with significant barriers to entry Comprehensive integrated services offering across entire vehicle remarketing spectrum Longstanding and diverse customer and buyer base Track
Slide 6: Strong Management Team with Track Record of Driving Value
Strong Management Team with Track Record of Driving Value Years in Name Position Industry Key Achievements Installed new management Brian Clingen Chairman 9 team Jim Hallett CEO, KAR Auction Services 33 Track record of organic and acquisitive market share Tom Caruso President & CEO, ADESA 29 expansi
Slide 7: Vehicle Remarketing Life Cycle
Vehicle Remarketing Life Cycle Vehicles in Operation 270 Million units Used Vehicle New Vehicle Registrations Transactions in Removed from 10-15 Million units North America Operation 12 Million units ~40 Million units Salvage Auctions 3 - 4 Million units Used Vehicle (Whole Car ) Auctions Dealer Tra
Slide 8: Vehicle Flow – Whole Car and Salvage Markets
Vehicle Flow – Whole Car and Salvage Markets Whole Car Consignors Whole Car Buyers Dealers Franchised Dealers OEMs and their Captive Independent Dealers Finance Arms Wholesale Dealers Commercial Fleet Customers Financial Institutions Rental Car Companies Seller Auction Fee Buyer Auction Fee Salvage
Slide 9: Stable Whole Car Auction Industry
Stable Whole Car Auction Industry North America Whole Car Auction Volume Stability (mm) 10.0 10.0 9.5 9.7 9.5 9.5 9.5 9.3 9.5 9.4 9.2 9.1 8.0 6.0 4.0 2.0 0.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 9 Source: National Auto Auction Association and KAR Auction Services, Inc. estimates
Slide 10: Consistently Growing U.S. Salvage Industry
Consistently Growing U.S. Salvage Industry Driven by Growth in Miles Driven… ..And Increasing Proportion of “Total Loss” (mm) Insurance Claims 16.0 3.0 3.0 3.0 3.0 3.0 2.9 2.9 2.9 14.3% 2.9 13.9% 2.8 14.0 13.5% 2.7 13.3% 2.6 2.7 13.0% 2.6 12.9% 2.5 12.0% 2.5 2.4 2.4 12.0 2.3 11.3% 2.2 2.2 10.6% 2.1
Slide 11: Leader in Whole Car and Salvage Auction Markets
Leader in Whole Car and Salvage Auction Markets Whole Car Market Share Salvage Market Share Other Other Copart Manheim ADESA IAAI No other competitor holds more than 3% whole car market share or 10% salvage market share 11 Source: Market share based on company estimates of vehicles sold as of 2009 y
Slide 12: Track Record of Market Share Expansion
Track Record of Market Share Expansion Whole Car Market Share Drivers of Growth 25% 22% Successful sales focus in whole car 20% 18% business 15% • Institutional 10% • Dealer 5% • e-Business 0% 2006 2009 Providing best venue for all remarketers Salvage Market Share • Co-located facilities • e-Busines
Slide 13: Differentiated Physical and Internet Presence in Whole Car and Salvage
Differentiated Physical and Internet Presence in Whole Car and Salvage Only company with significant presence in both internet and physical and whole car and salvage markets KAR’s unique presence in whole car and salvage markets affords customers channel optimization opportunities Internet, physical
Slide 14: Significant Barriers to Entry
Significant Barriers to Entry Large, established and diverse network KAR’s 215 Auction Locations 1 of buyers and sellers Local market knowledge and 2 relationships Significant IT and related infrastructure 3 investment 4 Coast to coast North American presence Expansive tracts of land with significan
Slide 15: Established Relationships with Vehicle Providers & Buyers
Established Relationships with Vehicle Providers & Buyers The Company does business with every major supplier of whole car and salvage vehicles Average relationship of over ten years with top ten vehicle suppliers Largest customer less than 4% of 2009 consolidated revenue Over 150,000 registered who
Slide 16: Comprehensive Services Offering Maximizes Revenue
Comprehensive Services Offering Maximizes Revenue Before Auction Site At Auction Site After Auction Recovery Secured storage Floorplan financing administration (AFC) Inspections (PAR) Post-Sale Body Towing / Inspections Transportation Mechanical Reporting Inspections and Detailing Collection and fun
Slide 17: AFC Business a Key Competitive Advantage with Good Returns
AFC Business a Key Competitive Advantage with Good Returns Provides competitive advantage by facilitating sales at whole car auctions Compliments KAR’s comprehensive service offerings Enables the company to establish relationships with new vehicle buyers Profitable, high margin business • Short dura
Slide 18: Strong Margins and Efficient Business Model
Strong Margins and Efficient Business Model Whole Car Adj. EBITDA Margin Key Drivers of Improvement 30.0% 26.3% 100.0% 24.5% Implementation of best practices at 25.0% whole car (PRIDE) 20.0% 90.0% 84.8% 15.0% Integration of ADESA’s and IAAI’s 81.5% 10.0% 80.0% salvage operations 5.0% Co-location of
Slide 19: Future Growth Strategy
Future Growth Strategy Continue market share gains at ADESA Continue margin expansion through operating efficiencies and growth in volume and revenue per vehicle Increase facility utilization through new services and specialty vehicle sales Bolt-on acquisitions and select greenfields and relocations
Slide 20: Financial Highlights
Financial Highlights Top line growth since 2007 driven by: • Stable industry volumes • Track record of organic and acquisition market share growth • Increasing revenue per unit High margin and low capital intensity business model generates significant free cash flow • History of high and growing mar
Slide 21: 2009 Consolidated Financial Highlights
2009 Consolidated Financial Highlights Revenue Gross Profit $2,000 $1,000 $1,771 $1,730 $1,750 $800 $718 $732 $1,500 $600 $1,250 $400 40.6% 42.3% $1,000 $200 2008 2009 2008 2009 Adjusted EBITDA $500 $394 $426 $400 $300 $200 $100 $0 2008 2009 21
Slide 22: Financial Highlights: Quarterly Revenue
Financial Highlights Quarterly Revenue (US$ in millions) ADESA IAAI $285.1 $291.2 $286.4 $288.3 $279.5 $270.8 $245.4 $260.7 $249.9 $142.1 $148.5 $135.4 $138.0 $139.0 $135.5 $140.6 $121.7 $124.3 Q4'07 Q1' 08 Q2' 08 Q3' 08 Q4' 08 Q1' 09 Q2' 09 Q3' 09 Q4' 09 Q4' 07 Q1' 08 Q2' 08 Q3' 08 Q4' 08 Q1' 09 Q2
Slide 23: Financial Highlights: Quarterly Adj. EBITDA
Financial Highlights Quarterly Adj. EBITDA (US$ in millions) ADESA IAAI $42.6 $76.3 $79.3 $77.8 $39.3 $36.3 $38.4 $72.7 $73.6 $36.7 $67.4 $31.9 $32.6 $55.6 $28.3 $51.7 $48.7 $22.0 Q4' 07 Q1' 08 Q2' 08 Q3' 08 Q4' 08 Q1' 09 Q2' 09 Q3' 09 Q4' 09 % Q4' 07 Q1' 08 Q2' 08 Q3' 08 Q4' 08 Q1' 09 Q2' 09 Q3' 09
Slide 24: Significant Cash Flow Generation
Significant Cash Flow Generation (US$ in millions) Operating Cash Flow Less Capital Expenditures $250 $185 $200 $150 $95 $100 $50 $0 2008 2009 % of Revenues 5.4% 10.7% 24
Slide 25: December 31, 2009 Capital Structure
December 31, 2009 Capital Structure (US$ in millions) 12/31/09 Maturity Available Cash $325.9 Term Loan Facilities 1,247.9 2013 Floating Rate Notes 150.0 2014 Fixed Rate Notes (8.75%) 450.0 2014 Senior Sub. Notes (10%) 425.0 2015 Total Consolidated Debt $2,272.9 Net Debt $1,947.0 Net Debt /Adjusted
Slide 26: Targeted Growth Outlook
Targeted Growth Outlook Industry Volume Growth Revenue / Vehicle Growth Market Share Expansion Selective Acquisitions Continued Operating Efficiencies Operating Leverage Debt Paydown / Re-investment Earnings Growth 26
Slide 27: Appendix
KAR AUCTION SERVICES Appendix 27
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is calculated by adjusting EBITDA for the items of income and expense and expected incremental revenue and
Slide 29: 2007 Adjusted EBITDA Reconciliation
2007 Adjusted EBITDA Reconciliation Year Ended December 31, 2007 (Dollars in millions) ADESA IAAI AFC Corporate Consolidated Net Income (Loss) $37.0 $2.2 $25.9 $(103.4) $(38.3) Add Back: ADESA 2007 Net Income 39.4 – 16.2 (28.7) 26.9 Add Back: ADESA 2007 Discontinued Ops 0.1 – – – 0.1 Add back: IAAI
Slide 30: 2007 Q4 Adjusted EBITDA Reconciliation
2007 Q4 Adjusted EBITDA Reconciliation Three Months Ended December 31, 2007 (Dollars in millions) ADESA IAAI AFC Corporate Consolidated Net Income (Loss) $(12.0) $(11.2) $6.8 $(17.9) $(34.3) Add back: Income Taxes (1.0) (5.5) 5.3 (15.3) (16.5) Interest Expense, Net of Interest Income (0.1) (0.1) – 5
Slide 31: 2008 Quarterly Adjusted EBITDA Reconciliations
2008 Quarterly Adjusted EBITDA Reconciliations Three Months Ended March 31, 2008 Three Months Ended June 30, 2008 (Dollars in millions) ADESA IAAI AFC Corporate Consolidated (Dollars in millions) ADESA IAAI AFC Corporate Consolidated Net Income (Loss) $16.8 $6.2 $8.5 $(34.7) $(3.2) Net Income (Loss)
Slide 32: 2009 Quarterly Adjusted EBITDA Reconciliations
2009 Quarterly Adjusted EBITDA Reconciliations Three Months Ended March 31, 2009 Three Months Ended June 30, 2009 (Dollars in millions) ADESA IAAI AFC Corporate Consolidated (Dollars in millions) ADESA IAAI AFC Corporate Consolidated Net Income (Loss) $20.7 $3.1 $0.6 $(27.9) $(3.5) Net Income (Loss)
Slide 33: 2009 Adjusted EBITDA Reconciliation
2009 Adjusted EBITDA Reconciliation Year Ended December 31, 2009 (Dollars in millions) ADESA IAAI AFC Corporate Consolidated Net Income (Loss) $94.4 $25.8 $19.1 $(116.1) $23.2 Add back: Income Taxes 56.0 16.2 8.4 (69.5) 11.1 Interest Expense, Net of Interest Income 0.5 1.4 – 170.3 172.2 Depreciation
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