Slide 1: Q4 2019 & Annual Earnings Slides
Q4 2019 & Annual Earnings Slides February 18, 2020
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: 2019 Highlights
2019 Highlights Revenues Highlights Fundamentals $2,781.9 $2,442.8 352.9 • Revenue growth +14% (7% excluding • Repurchased $119.7 million of KAR 340.9 purchased vehicle sales) stock in Q3 2019 • Authorized share repurchase of up to • Operating Adjusted EPS -17% KAR 2,101.9 2,429.0 • Adjusted EBITDA
Slide 4: 2020 Outlook
2020 Outlook ANNUAL GUIDANCE (in millions, except per share amounts) 2020 Low 2020 High 2019 Net income from continuing operations $126.0 $139.3 $92.4 Add back: Income tax expense $53.0 $59.7 $37.7 Interest expense, net of interest income $155.0 $155.0 $186.4 Depreciation and amortization $194.0 $19
Slide 5: Capital Allocation Framework Priorities
Clear Shareholder Friendly Capital Allocation Framework Strategic Share PRIORITIES Capex Dividends Investments Repurchases • Historically ~25% of • 40%-50% of FCF • Targeted acquisitions • Tool for managing cash Adjusted EBITDA, plus • Highlights consistency & • Complementary and leverage strategic
Slide 6: December 31, 2019 Leverage
December 31, 2019 Leverage (US$ in millions) Balance Maturity Term Loan B-6 (Adjusted LIBOR + 2.25%) $948 2026 Revolving Credit Facility (Adjusted LIBOR + 1.75%) & Lines of Credit 19 2024 Senior Notes (Fixed 5.125%) 950 2025 Finance Leases 27 Total 1,944 Less: Available Cash (431) Net Debt $1,513 Ne
Slide 7: Fourth Quarter Results
WAN AUCTION SERVICES. Fourth Quarter Results
Slide 8: KAR Q4 2019 Highlights
KAR Q4 2019 Highlights ($ in millions, except per share amounts) Q4 Q4 KAR Highlights* 2019 2018 $55.1M acquisitions, including $37.7M of purchased Total operating revenues $671.3 $593.8 vehicle sales Gross profit** $276.4 $261.5 % of revenue 41.2% 44.0% 46.7% in Q4 2019, excluding purchased vehicle
Slide 9: ADESA Q4 2019 Highlights
ADESA Q4 2019 Highlights ($ in millions, except RPU) ADESA Q4 2019 Q4 2018 Highlights* Auction fees and services revenue $504.0 $475.3 Purchased vehicle sales $79.3 $33.2 Includes $37.7M from acquisitions Total ADESA Revenue $583.3 $508.5 $55.1M acquisitions, including $37.7M of purchased vehicle sa
Slide 10: AFC Q4 2019 Highlights
AFC Q4 2019 Highlights ($ in millions, except for revenue per loan transaction) Q4 Q4 AFC 2019 2018 Highlights* Interest and fee income $86.0 $84.2 Other revenue $2.8 $3.5 Provision for credit losses ($9.8) ($10.8) Warranty contract revenue $9.0 $8.4 PWI revenue Total AFC revenue $88.0 $85.3 -1% rev
Slide 11: Year-to-Date Results
WAN AUCTION SERVICES. Year-to-Date Results
Slide 12: KAR Year Ended December 31, 2019 Highlights
KAR Year Ended December 31, 2019 Highlights ($ in millions, except per share amounts) YTD YTD KAR Highlights* 2019 2018 $193.0M acquisitions, including $131.7M of Total operating revenues $2,781.9 $2,442.8 purchased vehicle sales Gross profit** $1,164.8 $1,121.3 % of revenue 41.9% 45.9% 46.8% in 201
Slide 13: ADESA Year Ended December 31, 2019 Highlights
ADESA Year Ended December 31, 2019 Highlights ($ in millions, except RPU) ADESA YTD 2019 YTD 2018 Highlights* Auction fees and services revenue $2,133.5 $1,985.1 Purchased vehicle sales $295.5 $116.8 Includes $131.7M from acquisitions Total ADESA Revenue $2,429.0 $2,101.9 $193.0M acquisitions, inclu
Slide 14: AFC Year Ended December 31, 2019 Highlights
AFC Year Ended December 31, 2019 Highlights ($ in millions, except for revenue per loan transaction) YTD YTD AFC 2019 2018 Highlights* Interest and fee income $342.1 $327.3 Other revenue $10.9 $13.1 Provision for credit losses ($35.3) ($32.9) Warranty contract revenue $35.2 $33.4 PWI revenue Total A
Slide 15: Historical Data
AUCTION SERVICES. HISTORICAL DATA
Slide 16: ADESA Revenue
ADESA Revenue 1Q18 2Q18 3Q18 4Q18 2018 1Q19 2Q19 3Q19 4Q19 2019 Auction Fees & $502.7 $511.1 $496.0 $475.3 $1,985.1 $541.9 $553.1 $534.5 $504.0 $2,133.5 Services Revenue Purchased Vehicle $25.4 $27.2 $31.0 $33.2 $116.8 $57.8 $79.3 $79.1 $79.3 $295.5 Sales Total ADESA $528.1 $538.3 $527.0 $508.5 $2,1
Slide 17: ADESA Metrics - Annual
ADESA Metrics - Annual 2019 2018 2017 2016 2015 Revenue2 $2,429.0 $2,101.9 $1,937.5 $1,765.3 $1,427.8 Total Volume 3,784 3,472 3,180 2,885 2,465 Online Only Volume (N.A.) 1,533 1,304 938 743 592 Total Online Volume %3 58% 54% 46% 42% 40% Physical Conversion % (N.A.) 62.8% 61.6% 60.4% 58.0% 58.3% Dea
Slide 18: ADESA Metrics - Quarter
ADESA Metrics - Quarter 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 Revenue2 $583.3 $613.6 $632.4 $599.7 $508.5 $527.0 $538.3 $528.1 Total Volume 887 957 994 945 811 876 907 878 Online Only Volume (N.A.) 355 396 416 367 306 343 346 309 Total Online Volume %3 59% 59% 59% 57% 54% 54% 54% 52% Physical Conv
Slide 19: AFC Metrics - Annual
AFC Metrics - Annual 2019 2018 2017 2016 2015 Revenue $352.9 $340.9 $301.3 $286.8 $268.4 Loan Transaction Units (LTU) 1,783 1,760 1,688 1,718 1,607 Revenue per Loan Transaction, $178 $175 $159 $148 $150 Excluding “Warranty Contract Revenue” Ending Managed Finance Receivables $2,115.2 $2,014.8 $1,912
Slide 20: AFC Metrics - Quarter
AFC Metrics - Quarter 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 Revenue $88.0 $88.3 $86.7 $89.9 $85.3 $85.4 $85.1 $85.1 Loan Transaction Units (LTU) 443 442 437 461 428 433 435 464 Revenue per Loan Transaction, Excluding “Warranty Contract $178 $180 $178 $177 $180 $177 $177 $166 Revenue” Ending Manage
Slide 21: AFC Provision for Credit Losses - Annual
AFC Provision for Credit Losses - Annual 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Ending Managed $2,115.2 $2,014.8 $1,912.6 $1,792.2 $1,641.0 $1,371.1 $1,107.6 $1,004.2 $883.2 $771.6 $613.0 $506.6 $847.9 Receivables Average Managed $2,059.9 $1,959.8 $1,802.2 $1,732.5 $1,474.9
Slide 22: AFC Provision for Credit Losses - Quarterly
AFC Provision for Credit Losses - Quarterly 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 Ending Managed $2,115.2 $2,110.4 $2,070.1 $1,989.1 $2,014.8 $1,979.7 $1,958.6 $1,933.2 Receivables Average Managed $2,112.8 $2,090.3 $2,029.6 $2,002.0 $1,997.3 $1,969.2 $1,945.9 $1,922.9 Receivables Provision for $9.
Slide 23: Appendix
AUCTION SERVICES. APPENDIX
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as
Slide 25: Q4 2019 Adjusted EBITDA Reconciliation
Q4 2019 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended December 31, 2019 ADESA AFC Corporate Consolidated Net income (loss) from continuing $35.0 $31.4 ($51.1) $15.3 operations Add back: Income taxes 13.3 9.7 (13.7) 9.3 Interest expense, net of interest income 0.5 15.1 22.7 38.3 D
Slide 26: Q4 2018 Adjusted EBITDA Reconciliation
Q4 2018 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended December 31, 2018 ADESA AFC Corporate Consolidated Net income (loss) from continuing $38.1 $29.5 ($52.5) $15.1 operations Add back: Income taxes 11.1 8.7 (18.0) 1.8 Interest expense, net of interest income 0.1 16.3 34.8 51.2 D
Slide 27: YTD 2019 Adjusted EBITDA Reconciliation
YTD 2019 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2019 ADESA AFC Corporate Consolidated Net income (loss) from continuing $174.3 $120.0 ($201.9) $92.4 operations Add back: Income taxes 67.3 41.9 (71.5) 37.7 Interest expense, net of interest income 2.3 63.7 120.4 186.4 D
Slide 28: YTD 2018 Adjusted EBITDA Reconciliation
YTD 2018 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2018 ADESA AFC Corporate Consolidated Net income (loss) from continuing $203.3 $112.0 ($197.7) $117.6 operations Add back: Income taxes 69.1 35.4 (70.2) 34.3 Interest expense, net of interest income 1.0 59.3 127.0 187.3
Slide 29: Operating Adjusted Net Income from Continuing Operations per Share Reconciliation
Operating Adjusted Net Income from Continuing Operations per Share Reconciliation ($ in millions, except per share amounts), (unaudited) Three Months ended Year ended December 31, December 31, 2019 2018 2019 2018 Net income $19.8 $67.3 $188.5 $328.0 Less: Income from discontinued operations (4.5) (5