Slide 1: Q4 2015 & Year-to-Date Earnings Slides
KAR Auction Services, Inc. Q4 2015 & Year-to-Date Earnings Slides February 17, 2016
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: Fourth Quarter and YTD 2015 Highlights
Fourth Quarter and YTD 2015 Highlights 3 Summary • Revenue +12% • Adjusted EBITDA +9% • Operating Adjusted EPS +11% • In 2015, returned $379.5 million to shareholders; retired approximately 5.3 million shares • Net Debt / Adjusted EBITDA of 2.78X ADESA Q4 • Volume +12% • Revenue +13% • Adjusted EBIT
Slide 4: KAR Q4 2015 Highlights
KAR Q4 2015 Highlights 4 (in millions, except per share amounts) KAR Q4 2015 Q4 2014 Highlights* Total operating revenues 682.2$ 606.0$ -$13.6M CAD currency , Acquistions +$26.6M Gross profit** 281.4$ 261.8$ SG&A $ 128.5 $ 113.8 +$3.9M acquired SG&A, +$3.4M ADESA compensation expense, +$2.5M ADESA i
Slide 5: ADESA Q4 2015 Highlights
ADESA Q4 2015 Highlights 5 ADESA Q4 2015 Q4 2014 Highlights* Revenue $ 352.4 $ 310.5 +12% volume, +2% RPU (net of -$9.7M CAD currency), +$14.8M acquisitions Gross profit** 144.6$ 129.6$ Gross profit % 41.0% 41.7% SG&A $ 69.3 $ 63.2 +$3.4M compensation expense, +$2.8M acquired SG&A , +$2.5M incentive
Slide 6: IAA Q4 2015 Highlights
IAA Q4 2015 Highlights 6 ($ in millions) IAA Q4 2015 Q4 2014 Highlights* Revenue $ 261.6 $ 229.6 +16% volume, -2% RPU (net of -$3.2M CAD currency) +$11.8M HBC Gross profit** 88.6$ 84.2$ +$1.3M HBC Gross profit % 33.9% 36.7% HBC -1.10%, Purchase contract vehicles -0.8% SG&A $ 25.5 $ 25.2 +$1.4M telec
Slide 7: AFC Q4 2015 Highlights
AFC Q4 2015 Highlights 7 AFC Q4 2015 Q4 2014 Highlights* Revenue 68.2$ 65.9$ +9% LTUs, +4% in "Other service revenue", -5% revenue per LTU (net of -$0.7M CAD currency) Other service revenue 7.1$ 6.8$ Provision for credit losses (5.5)$ (2.7)$ Gross profit** 48.2$ 48.0$ Gross profit % 70.7% 72.8% SG&A
Slide 8: ADESA Incremental Operating Profit Margin Analysis
ADESA Incremental Operating Profit Margin Analysis 8 Reported Impact of Acquisitions ADESA Excluding Acquisitions Q4 2015 Revenue $352.4 $14.8 $337.6 Operating Profit $52.9 $0.9 $52.0 Operating Profit % 15.0% 6.1% 15.4% Q4 2014 Revenue $310.5 Operating Profit $45.2 Operating Profit % 14.6% Q4 2015 R
Slide 9: 2016 Capital Allocation Actions
9 2016 Capital Allocation Actions Completed ASR; Retired an Additional 800K Shares in January 2016 Increased Annual Dividend 7% to $1.16 Per Share Announced Intent to Acquire Brasher’s Auto Auctions Increased Revolving Credit Facility $300M to $550M
Slide 10: Brasher's Acquisition
10 Brasher’s Acquisition Announced Intent to acquire Brasher’s Auto Auctions on Feb 17, 2016 8 locations in Western U.S. – Sacramento, Salt Lake City, Portland, Idaho, Northwest, Fresno, San Jose, Reno Purchase price - ~$283M; Asset Purchase 2015 volume ~190K units; strong mix of dealer cons
Slide 11: Year-to-Date Slides
KAR Year-to-Date Slides AUCTION SERVICES.
Slide 12: KAR YTD 2015 Highlights
KAR YTD 2015 Highlights 12 KAR YTD 2015 YTD 2014 Highlights* Total operating revenues 2,639.6$ 2,364.5$ -$48.7M CAD currency, Acquistions +$65.0M Gross profit** 1,142.1$ 1,045.7$ SG&A $ 502.0 $ 471.4 +$9.7M ADESA compensation expense, +$9.6M acquired SG&A, +$4.9M ADESA incentive compensation expense
Slide 13: ADESA YTD 2015 Highlights
ADESA YTD 2015 Highlights 13 ADESA YTD 2015 YTD 2014 Highlights* Revenue $ 1,376.8 $ 1,218.5 +12% volume, +1% RPU (net of -$35.1M CAD currency), +$39.2M acquisitions Gross profit** 590.9$ 525.1$ Gross profit % 42.9% 43.1% SG&A $ 276.6 $ 259.9 +$9.7M compensation expense, +$7.4M acquired SG&A , +$4.9
Slide 14: IAA YTD 2015 Highlights
IAA YTD 2015 Highlights 14 ($ in millions) IAA YTD 2015 YTD 2014 Highlights* Revenue $ 994.4 $ 895.9 +14% volume, -2% RPU (net of -$11.2M CAD currency) +$25.8M HBC Gross profit** 360.8$ 340.2$ +$2.3M HBC Gross profit % 36.3% 38.0% HBC -0.7%, N.A. Purchase cars -0.6% SG&A $ 98.1 $ 98.8 -$5.1M stock-b
Slide 15: AFC YTD 2015 Highlights
AFC YTD 2015 Highlights 15 AFC YTD 2015 YTD 2014 Highlights* Revenue 268.4$ 250.1$ +11% LTUs, +9% in "Other service revenue", -3% revenue per LTU ( net of -$2.4M CAD currency) Other service revenue 27.9$ 25.5$ Provision for credit losses (16.0)$ (12.3)$ Gross profit** 190.4$ 180.4$ Gross profit % 70
Slide 16: ADESA Incremental Operating Profit Margin Analysis
ADESA Incremental Operating Profit Margin Analysis 16 Reported Impact of Acquisitions ADESA Excluding Acquisitions 2015 Revenue 1,376.8$ 39.2$ 1,337.6$ Operating Profit 228.1$ 2.9$ 225.2$ Operating Profit % 16.6% 7.4% 16.8% 2014 Revenue 1,218.5$ Operating Profit 185.0$ Operating Profit % 15.2% 2015
Slide 17: Acquired Amortization Expense
Acquired Amortization Expense 17 (in millions, except per share amounts) Q1 Q2 Q3 Q4 YTD 2015 Acquired amortization expense, pre-tax 21.1$ 21.8$ 22.4$ 22.3$ 87.5$ Acquired amortization expense, net of tax $ 12.9 $ 13.8 $ 14.3 $ 14.3 55.1$ Acquired amortization expense per share - diluted, net of tax
Slide 18: Appendix
KAR ; AUCTION Appendix SERVICES.
Slide 19: 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 20: Q4 2015 Adjusted EBITDA Reconciliation
Q4 2015 Adjusted EBITDA Reconciliation 20 ($ in millions) Three Months ended December 31, 2015 ADESA IAA AFC Corporate Consolidated Net income (loss) $25.1 $23.3 $21.4 ($21.5) $48.3 Add back: Income taxes 13.9 11.1 13.4 (11.5) 26.9 Interest expense, net of interest income (0.3) – 6.9 17.2 23.8 Depre
Slide 21: Q4 2014 Adjusted EBITDA Reconciliation
Q4 2014 Adjusted EBITDA Reconciliation 21 ($ in millions) Three Months ended December 31, 2014 ADESA IAA AFC Corporate Consolidated Net income (loss) $23.9 $18.5 $19.9 ($12.0) $50.3 Add back: Income taxes 7.5 12.4 13.9 (6.4) 27.4 Interest expense, net of interest income 0.1 – 4.9 15.8 20.8 Depreciat
Slide 22: 2015 Adjusted EBITDA Reconciliation
2015 Adjusted EBITDA Reconciliation 22 ($ in millions) Year ended December 31, 2015 ADESA IAA AFC Corporate Consolidated Net income (loss) $109.2 $92.8 $83.2 ($70.6) $214.6 Add back: Income taxes 62.3 52.4 51.3 (40.1) 125.9 Interest expense, net of interest income 0.1 – 24.1 66.6 90.8 Depreciation a
Slide 23: 2014 Adjusted EBITDA Reconciliation
2014 Adjusted EBITDA Reconciliation 23 ($ in millions) Year ended December 31, 2014 ADESA IAA AFC Corporate Consolidated Net income (loss) $86.4 $79.7 $76.6 ($73.4) $169.3 Add back: Income taxes 43.2 48.4 48.6 (44.5) 95.7 Interest expense, net of interest income 0.6 0.2 18.7 66.4 85.9 Depreciation a
Slide 24: Adjusted Net Income Per Share Reconciliation
Adjusted Net Income Per Share Reconciliation 24 ($ in millions, except per share amounts) 2015 2014 2015 2014 Net income $48.3 $50.3 $214.6 $169.3 Loss on extinguishment of debt, net of tax(1) – – – 19.3 Stepped up depreciation and amortization expense, net of tax(2) 7.0 7.2 27.2 28.6 Stock-based co
Slide 25: Operating Adjusted Net Income Per Share Reconciliation
Operating Adjusted Net Income Per Share Reconciliation 25 ($ in millions, except per share amounts) 2015 2014 2015 2014 Net income $48.3 $50.3 $214.6 $169.3 Acquired amortization expense, net of tax (1) 14.3 13.8 55.1 54.5 Loss on extinguishment of debt, net of tax (2) – – – 19.3 Operating adjusted