Openlane, Inc. · NYSE:OPLN
Openlane — KAR Global — Investor Day (June 2022)
56 slides from Openlane's investor day presentation, Jun 14, 2022
Slide 1: KAR Global Investor Update
KAR GLOBAL Investor Update // June 14, 2022
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. In particular, statements made in this presentation that are not historical facts (including but not limited to expectations, estimates, a
Slide 3: Investor Update
KAR GLOBAL Investor Update // June 14, 2022
Slide 4: Transformation
Transformation KAR GLOBAL | INVESTOR UPDATE 4
Slide 5: How Does 2022 Divestiture Help Transform KAR?
How Does 2022 Divestiture Help Transform KAR? Accelerates digital marketplace strategy Simplifies business and enables faster, more nimble operations Sharpens focus and investments on highest growth customer solutions Enhances financial profile and enables higher margin, accelerated growth KAR GLOBA
Slide 6: The New KAR: A Simplified Business Model
The New KAR: A Simplified Business Model Marketplace Floorplan business business KAR GLOBAL | INVESTOR UPDATE 6
Slide 7: 2021 – 2025 Projected Growth
2021 – 2025 Projected Growth 13% $500M 20% >$700M Revenue Adjusted EBITDA Adjusted EBITDA Cash generated 1 (2025) 2 CAGR CAGR from operations (2022-2025) 1 Revenue excludes purchased vehicles; margins calculated on total revenue less purchased vehicle revenue 2 Full year 2021 excludes realized inves
Slide 8: KAR GLOBAL: Positioned for Growth & Success
KAR GLOBAL: Positioned for Growth & Success #1 digital platform for off-lease remarketing Co-leader in growing digital dealer-to-dealer market Clear market share leader in Canadian wholesale A top floorplan business with expanding product roadmap Largest SaaS platform for processing repossessions Gr
Slide 9: Opportunity Innovation Growth
Opportunity Innovation Growth KAR GLOBAL | INVESTOR UPDATE 9
Slide 10: Opportunity
Opportunity KAR GLOBAL | INVESTOR UPDATE 10
Slide 11: Our vision: world's greatest digital marketplace for used vehicles
- OUR VISION IS TO BUILD - The world’s greatest digital marketplace for used vehicles KAR GLOBAL | INVESTOR UPDATE 11
Slide 12: Opportunity for Growth: Medium & Long-Term Drivers
Opportunity for Growth: Medium & Long-Term Drivers A large addressable Increasing digital Deep digital talent market in North adoption across the with track record of America and abroad industry innovation and growth KAR GLOBAL | INVESTOR UPDATE 12
Slide 13: Opportunity for Growth: Near-Term Challenges Persist
Opportunity for Growth: Near-Term Challenges Persist Production shortages Volume may be slower Economic uncertainty caused by supply than originally and inflation create chain disruption anticipated additional risk KAR GLOBAL | INVESTOR UPDATE 13
Slide 14: A Large Addressable Market Exists
A Large Addressable Market Exists ~ 60M Retail used (40M) and > 100K Industry marketplace wholesale (20M) vehicle participants: dealers and transactions annually other commercial sellers and buyers Source: VIO and Retail amounts: Experian, IHS, National Automobile Dealer’s Association, DesRosiers Au
Slide 15: Digital Volume Continues to Grow
Digital Volume Continues to Grow % of Lease Returns Sold Upstream* Estimated North American Digital Dealer-to- Dealer as a % of Total Addressable Market** 88% 12.8% 66% 250,000 51% 4.4% 0 1Q 2019 1Q 2021 1Q 2022 1Q 2019 1Q 2022 Volume Conversion *OPENLANE data; KAR analysis **ACV, Eblock, KAR data;
Slide 16: Meaningful Opportunity for KAR's Digital Capabilities
Meaningful Opportunity for KAR’s Digital Capabilities Early adopter of digital; Off-Lease 2-4M higher conversion rates Source: VIO and Retail amounts: Experian, IHS, National Automobile Dealer’s Association, DesRosiers Automotive Consultants and management estimates. Wholesale amounts: National Auto
Slide 17: Meaningful Opportunity for KAR's Digital Capabilities
Meaningful Opportunity for KAR’s Digital Capabilities Largest wholesale Dealer-to-Dealer ~10M segment; still in early stages of digital evolution Source: VIO and Retail amounts: Experian, IHS, National Automobile Dealer’s Association, DesRosiers Automotive Consultants and management estimates. Whole
Slide 18: Current KAR Model Opportunity Segments
Current KAR Model Opportunity Segments Off-Lease 2-4M Current KAR model contemplates continued growth in volume, market share and revenue across Dealer-to-Dealer ~10M these segments Source: VIO and Retail amounts: Experian, IHS, National Automobile Dealer’s Association, DesRosiers Automotive Consult
Slide 19: Meaningful Opportunity for KAR's Digital Capabilities
Meaningful Opportunity for KAR’s Digital Capabilities Predominantly physical channel today, with Repossessions ~2M opportunity for a more digital future Source: VIO and Retail amounts: Experian, IHS, National Automobile Dealer’s Association, DesRosiers Automotive Consultants and management estimates
Slide 20: Meaningful Opportunity for KAR's Digital Capabilities
Meaningful Opportunity for KAR’s Digital Capabilities Evolving segment with potential new wholesale Retail (Used) ~40M intersections and opportunity Source: VIO and Retail amounts: Experian, IHS, National Automobile Dealer’s Association, DesRosiers Automotive Consultants and management estimates. Wh
Slide 21: Innovation
Innovation KAR GLOBAL | INVESTOR UPDATE 21
Slide 22: Our purpose: make wholesale easy
- OUR PURPOSE IS TO - “Make wholesale easy so our customers can be more successful” KAR GLOBAL | INVESTOR UPDATE 22
Slide 23: KAR's Digital Platforms Deliver Better Outcomes
KAR’s Digital Platforms Deliver Better Outcomes Digital Sales Digital Sales are are Faster More Profitable *core inventory <$10,000 KAR GLOBAL | INVESTOR UPDATE 23
Slide 24: KAR is De-Risking Digital Transactions
KAR is De-Risking Digital Transactions KAR GLOBAL | INVESTOR UPDATE 24
Slide 25: KAR is Consolidating Platforms to Simplify The Marketplace
KAR is Consolidating Platforms to Simplify The Marketplace 2022 2023 Combined BacklotCars and Combined ADESA.ca and CARWAVE marketplace in US TradeRev marketplace in Canada KAR GLOBAL | INVESTOR UPDATE 25
Slide 26: KAR is Enabling the Network Effect
KAR is Enabling the Network Effect Private Off-Lease Labels Open Dealer-to-Dealer Marketplace KAR GLOBAL | INVESTOR UPDATE 26
Slide 27: KAR is Enabling the Network Effect
KAR is Enabling the Network Effect Private Off-Lease Labels Open Dealer-to-Dealer Marketplace Repossessions Physical Auction KAR GLOBAL | INVESTOR UPDATE 27
Slide 28: KAR is Enabling the Network Effect
KAR is Enabling the Network Effect Private Off-Lease Labels Open Dealer-to-Dealer Marketplace Repossessions Physical Auction KAR GLOBAL | INVESTOR UPDATE 28
Slide 29: KAR is Helping Dealers Compete in a Digital Retail World
KAR is Helping Dealers Compete in a Digital Retail World Trade-in at Home Guaranteed Offer Suite of dealer tools to assist with lead Ongoing partnership providing pricing gen, pricing and trade-in remarketing and trade-in remarketing solutions KAR GLOBAL | INVESTOR UPDATE 29
Slide 30: AFC Lien Pay Program
KAR is Helping Dealers Compete in a Digital World AFC “Lien Pay” Program Fee-generating product that helps dealers source inventory direct from consumers or through trade-ins, and close retail deals KAR GLOBAL | INVESTOR UPDATE 30
Slide 31: Innovation
Innovation KAR GLOBAL | INVESTOR UPDATE 31
Slide 32: Growth
Growth KAR GLOBAL | INVESTOR UPDATE 32
Slide 33: Adjusted EBITDA: 2021, Projected 2022 and 2025
ADJUSTED EBITDA 2 Full Year 2021 Projected 2022 Projected 2025 $238 $265 $500 Million Million Million 2 Full year 2021 excludes realized investment gains KAR GLOBAL | INVESTOR UPDATE 33
Slide 34: 2021 – 2025 Projected Growth
2021 – 2025 Projected Growth 13% 1 20% Revenue CAGR Adjusted EBITDA CAGR 2 1 Revenue excludes purchased vehicles; margins calculated on total revenue less purchased vehicle revenue 2 Full year 2021 excludes realized investment gains KAR GLOBAL | INVESTOR UPDATE 34
Slide 35: >$700M Cash Generated from Operations
>$700M Cash Generated from Operations (2022-2025E) KAR GLOBAL | INVESTOR UPDATE 35
Slide 36: Financial Model Highlights
Financial Model Highlights High-growth Lower cost Growth & improved Attractive digital marketplace operating model profitability cash flows business KAR GLOBAL | INVESTOR UPDATE 36
Slide 37: Financial Model Highlights
Financial Model Highlights High-growth digital marketplace business KAR GLOBAL | INVESTOR UPDATE 37
Slide 38: Marketplace Business: Off-lease
Marketplace Business: Off-lease $101M 1 2021 Revenue 94% The top industry platform 2021 Gross Profit % of Revenue 1 supporting ~80% of North America’s off-lease inventory 13% 1 2021-2025E Revenue CAGR 1 Revenue excludes purchased vehicles; margins calculated on total revenue less purchased vehicle r
Slide 39: Marketplace Business: Digital Dealer-to-Dealer
Marketplace Business: Digital Dealer-to-Dealer $229M 1 2021 Revenue 48% A leader in the 2021 Gross Profit % of Revenue 1 fast-growing digital dealer-to-dealer segment 30% 1 2021-2025E Revenue CAGR 1 Revenue excludes purchased vehicles; margins calculated on total revenue less purchased vehicle reven
Slide 40: Marketplace Business: ADESA Canada
Marketplace Business: ADESA Canada $195M 1 2021 Revenue 63% The clear leader in the 2021 Gross Profit % of Revenue 1 Canadian wholesale marketplace 3% 1 2021-2025E Revenue CAGR 1 Revenue excludes purchased vehicles; margins calculated on total revenue less purchased vehicle revenue KAR GLOBAL | INVE
Slide 41: Marketplace Business: Services
Marketplace Business: Services $336M 2021 Revenue 1 15% Comprehensive service 2021 Gross Profit % of Revenue 1 offerings that support our marketplaces and deliver an easier customer 7% experience 2021-2025E Revenue CAGR 1 1 Revenue excludes purchased vehicles; margins calculated on total revenue les
Slide 42: Marketplace Business: International - Europe
Marketplace Business: International - Europe $79M 1 2021 Revenue 60% Growing UK & 2021 Gross Profit % of Revenue 1 EU digital footprint with large addressable market 7% 1 2021-2025E Revenue CAGR 1 Revenue excludes purchased vehicles; margins calculated on total revenue less purchased vehicle revenue
Slide 43: Summary of Marketplace Business Growth
Summary of Marketplace Business Growth 14% 1 34% 2 Revenue CAGR Adjusted EBITDA CAGR (2021-2025E) (2021-2025E) 1 Revenue excludes purchased vehicles; margins calculated on total revenue less purchased vehicle revenue 2 Full year 2021 excludes realized investment gains KAR GLOBAL | INVESTOR UPDATE 43
Slide 44: Floorplan Business Growth Drivers: 2021-2025
Floorplan Business Growth Drivers: 2021-2025 Projected % Fee Based AFC Revenue Anticipated 2025 Trends >55% • Potential risk profile increase, but expected below pre-pandemic levels 51% • Risk offset through increased loan transaction volume • Continued digitization and automation of operations • Ne
Slide 45: Summary of Floorplan Business Growth
Summary of Floorplan Business Growth $289M 11% 5% Revenue Revenue CAGR Adjusted EBITDA CAGR (2021) (2021-2025E) (2021-2025E) KAR GLOBAL | INVESTOR UPDATE 45
Slide 46: Financial Model Highlights: Lower cost operating model
Financial Model Highlights Lower cost operating model KAR GLOBAL | INVESTOR UPDATE 46
Slide 47: Reducing & Reallocating Costs to Accelerate Growth
Reducing & Reallocating Costs to Accelerate Growth Current Year Future Years $30M Ongoing focus in key areas: • Sizing organization for market conditions & growth Reduction in Run-Rate SG&A by • Allocating resources to strategic growth initiatives EOY 2022 • Platform consolidation • Global shared se
Slide 48: Financial Model Highlights: Growth & improved profitability
Financial Model Highlights Growth & improved profitability KAR GLOBAL | INVESTOR UPDATE 48
Slide 49: Financial Summary: 2021 to 2025E
Financial Summary: 2021 to 2025E ($ Millions) 2021 2025E Auction Fees & Service Revenues $941 ~$1,550 Floorplan Business Revenues $289 ~$450 Purchase Vehicle Revenues $221 ~$300 Total Revenue $1,451 ~$2,300 Gross Profit $658 ~$1,050 SG&A $421 D&A $110 Operating Profit $127 ~$475 Adjusted EBITDA (exc
Slide 50: Financial Model Highlights: Attractive cash flows
Financial Model Highlights Attractive cash flows KAR GLOBAL | INVESTOR UPDATE 50
Slide 51: Managing Capital for Growth and Shareholder Value
Managing Capital for Growth and Shareholder Value Capital Allocation Priorities • Organic investment in core businesses >$700M • Investment in strategic growth • Return capital to shareholders Cash generated from operations (2022-2025E) • $78 million of KAR stock repurchased since the close of the t
Slide 52: 2021-2025 Key Growth Drivers
2021-2025 Key Growth Drivers Off-Lease Dealer-to-Dealer Cost Management Cyclical recovery drives Capture share through Continuous focus and revenue increases ongoing shift to digital prioritization to support growth KAR GLOBAL | INVESTOR UPDATE 52
Slide 53: KAR: Investment Highlights
KAR: Investment Highlights Leader in digital marketplaces for wholesale used cars Large, expanding TAM with meaningful opportunities for growth Clear strategy to accelerate innovation and growth Projected 20% earnings growth CAGR Cash flow positive with ability to invest and deliver stockholder valu
Slide 54: Q&A
SS Q&A GLOBAL. // June 14, 2022
Slide 55: Non-GAAP Reconciliations
Non-GAAP Reconciliations The 2022 and 2025 projections for Adjusted EBITDA are forward-looking non-GAAP financial measures. We have not reconciled these non-GAAP financial measures to the most directly comparable GAAP measure of net income (loss) due to the inherent difficulty and impracticability o
Slide 56: Proforma Net Debt
Proforma Net Debt March 31, 2022 (US$ in millions) Actual Proforma Proforma Balance Adjustments Balance ADESA US Physical Auctions Sale Proceeds (Net of Taxes and Fees) $1,650 Term Loan B-6 (Adjusted LIBOR + 2.25%) $926 ($926) $0 Revolving Credit Facility (Adjusted LIBOR + 1.75%) $101 ($101) $0 Seni