Openlane, Inc. · NYSE:OPLN

Openlane — KAR Auction Services — Bank of America Merrill Lynch 2012 New York Auto Summit

31 slides from Openlane's conference presentation, Apr 4, 2012

  1. Slide 1: Bank of America Merrill Lynch 2012 New York Auto Summit

    Bank of America Merrill Lynch 2012 New York Auto Summit April 4, 2012

  2. 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

  3. Slide 3: Non-GAAP Financial Measures

    Non-GAAP Financial Measures EBITDA, Adjusted EBITDA, free cash flow, adjusted net income and adjusted net income per share, 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 acco

  4. Slide 4: Leading Provider of Vehicle Auction Services in North America

    Leading Provider of Vehicle Auction Services in North America 2011 Revenue: $1,886mm 2011 Adj. EBITDA: $487mm1 ~3.1mm Vehicles Sold in 2011 2011 Revenue2: $1,186mm 2011 Revenue: $700mm 2011 Adj. EBITDA2: $334mm 2011 Adj. EBITDA: $212mm  Top 2 whole car auction position  Top 2 salvage vehicle aucti

  5. Slide 5: Leader in Whole Car and Salvage Auction Markets

    Leader in Whole Car and Salvage Auction Markets Whole Car Market Share Salvage Market Share Other Copart Other Manheim ADESA IAAI 5 Source: North American market share based on company estimates.

  6. Slide 6: Vehicle Remarketing Life Cycle

    Vehicle Remarketing Life Cycle Vehicles in Operation 270 Million units Used Vehicle New Vehicle Registrations Transactions in Removed from North America Operation 12 Million units 10- 15 Million units ~ 40 Million units Salvage Auctions 3 - 4 Million units NAAA Used Vehicle (Whole Car) Dealer Trades

  7. Slide 7: 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 Auct

  8. Slide 8: North American Wholesale Volume Forecasts

    North American Wholesale Volume Forecasts (1) Units Sold (Millions) 11.0 10.5 10.0 10.0 9.7 9.5 9.5 10.0 9.5 9.5 9.5 9.4 9.5 9.3 9.7 9.5 9.5 9.5 9.5 9.1 9.5 9.4 9.0 9.3 8.6 8.9 8.4 8.4 8.5 8.3 Peak to trough -23% 8.4 8.0 8.4 8.0 7.7 8.1 7.9 7.5 7.7 7.8 7.0 Manheim Kontos TME * Manheim - Manheim Cons

  9. Slide 9: Comprehensive End-to-End Remarketing Solutions

    Comprehensive End-to-End Remarketing Solutions Before Auction At Auction After Auction  Recovery  Secured storage  Floorplan Financing administration (AFC) (PAR/RDN)  Inspections  Post-Sale  Towing /  Body Inspections Transportation  Mechanical  Reporting  Vehicle Tracking  Detailing (Auc

  10. Slide 10: OPENLANE Integration Update

    OPENLANE Integration Update  Integrated ADESA/OPENLANE sales teams  One voice to the customer  Positive feedback from customers  Single sign-on for ADESA Dealerblock and OPENLANE  ADESA vehicles to be posted to OPENLANE  Dealerblock integrated into OPENLANE  CarsArrive rolled out to 7 sites 

  11. Slide 11: Established Relationships with Vehicle Providers & Buyers

    Established Relationships with Vehicle Providers & Buyers  The Company does business with major suppliers of whole car and salvage vehicles  Average relationship of over ten years with top ten vehicle suppliers  Largest customer less than 3% of 2011 consolidated revenue  Registered whole car and

  12. Slide 12: IAA – Providing the Advantage in Salvage Auto Auctions

    IAA – Providing the Advantage in Salvage Auto Auctions • Leading seller of total loss vehicles • Largest facility footprint in N.A. Overview • Live and “live on-line” model • Revenue + 15% 2011 • Adjusted EBITDA +14% Growth • Volume +9% • Approximately 50% of units sold on-line Technology • Integrat

  13. Slide 13: AFC – Disciplined Growth

    AFC – Disciplined Growth • Complements KAR’s offerings • Fee driven business Overview • Retain title as collateral • Revenue 2011 • Margins • Adjusted EBITDA Growth • Loan Transactions • $883M at 12/31/11 • 99% current Portfolio • $750M committed liquidity* • $610M drawn 13 * U.S. & Cdn facility com

  14. Slide 14: Fourth Quarter Performance

    Fourth Quarter Performance Revenue Gross Profit* $500 $443 $480 $400 $300 $300 $189 $211 ($mm) ($mm) $200 $200 $100 $100 42.7% 44.2% 43.9% $0 $0 Q4 2010 Q4 2011 Q4 2010 Q4 2011 Adjusted EBITDA Adjusted Net Income Per Share $0.60 $150 $103 $112 $0.40 $100 ($mm) $0.21 $50 23.2% 23.4% $0.20 $0.20 $0 $0

  15. Slide 15: Consolidated Annual Financial Highlights

    Consolidated Annual Financial Highlights Revenue Gross Profit* $2,000 $1,736 $1,823 $1,886 $1,500 $815 $851 $1,000 $900 $734 ($mm) ($mm) $600 $500 $300 $0 42.3% 44.7% 44.2% 45.1% $0 2009 2010 2011 2009 2010 2011 Adjusted EBITDA Adjusted Net Income Per Share $600 $475 $487 $1.50 $426 $1.16 $400 $1.05

  16. Slide 16: Attractive 2011 Adjusted EBITDA Margins

    Attractive 2011 Adjusted EBITDA Margins (US$ in millions) $500 $487.2 $400 $300 $232.2 $211.7 $200 $101.9 $100 60.4% 30.2% 22.8% 25.8% $0 AFC IAAI ADESA KAR* * KAR adjusted EBITDA includes holding company 16

  17. Slide 17: Significant Free Cash Flow Generation

    Significant Free Cash Flow Generation (1) (US$ in millions) $300 (4) $238 (3) $253 (2) $200 $184 $100 $0 2009 2010 2011 Annual Free Cash Flow as a % of revenues 10.6 % 13.1% 13.4% (1) Free cash flow represents Adjusted EBITDA less capital expenditures, adjusted cash interest paid and cash taxes paid

  18. Slide 18: December 31, 2011 Capital Structure

    December 31, 2011 Capital Structure (US$ in millions) 12/31/2011 Maturity Term Loan Facilities $1,683.9 2017 Revolving Credit Facility $68.9 2016 Floating Rate Notes 150.0 2014 Capital Leases 27.3 * Total 1,930.1 Less: Available Cash (52.7) Net Debt $1,877.4 Net Debt /Adjusted EBITDA 3.85X * Various

  19. Slide 19: KAR's Diverse Business Model – Adjusted EBITDA Contribution by Segment

    KAR’s Diverse Business Model – Adjusted EBITDA Contribution by Segment* $396M** $394M $426M $475M $487M 100% 11% 10% 15% 19% 22% 80% 30% 30% 25% 35% 39% 60% 40% 60% 53% 59% 50% 20% 42% 0% 2007 2008 2009 2010 2011 ADESA IAA AFC *Percentage calculations exclude holding company. 19 ** Represents pro fo

  20. Slide 20: 2011 Accomplishments

    2011 Accomplishments • Revenue Growth • Gross Margins • Adjusted EBITDA • Reduced net debt prior to OPENLANE(1) Capital • Benefits from new Term Loan B Structure • U.S. & Canadian Securitizations • Dealer consignment Strategic • IAA non-insurance vehicles Initiatives • OPENLANE integration (1) Follo

  21. Slide 21: Appendix

    Appendix 21

  22. Slide 22: 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

  23. Slide 23: 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

  24. Slide 24: 2008 Adjusted EBITDA Reconciliation

    2008 Adjusted EBITDA Reconciliation Year Ended December 31, 2008 (Dollars in millions) ADESA IAAI AFC Corporate Consolidated Net Income (Loss) $52.5 $9.2 $(151.3) $(126.6) $(216.2) Add back: Income Taxes 33.7 6.3 10.2 (81.6) (31.4) Interest Expense, Net of Interest Income – 0.2 – 213.2 213.4 Depreci

  25. Slide 25: 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

  26. Slide 26: 2010 Adjusted EBITDA Reconciliation

    2010 Adjusted EBITDA Reconciliation Year Ended December 31, 2010 (Dollars in millions) ADESA IAAI AFC Corporate Consolidated Net Income (Loss) $80.1 $44.7 $38.4 $(93.6) $69.6 Add back: Income Taxes 43.6 26.7 21.1 (64.2) 27.2 Interest Expense, Net of Interest Income 0.9 2.3 7.2 130.9 141.3 Depreciati

  27. Slide 27: 2011 Adjusted EBITDA Reconciliation

    2011 Adjusted EBITDA Reconciliation Year Ended December 31, 2011 (Dollars in millions) ADESA IAA AFC Corporate Consolidated Net Income (Loss) $55.8 $65.5 $57.2 $(106.3) $72.2 Add back: Income Taxes 17.9 36.1 29.6 (65.8) 17.8 Interest Expense, Net of Interest Income 0.7 2.1 12.0 128.0 142.8 Depreciat

  28. Slide 28: LTM Adjusted EBITDA Reconciliation

    LTM Adjusted EBITDA Reconciliation Twelve Months Three Months Ended Ended March 31, June 30, September 30, December 31, December 31, 2011 2011 2011 2011 2011 (Dollars in millions) (Unaudited) Net income (loss) $39.8 ($14.3) $32.2 $14.5 $72.2 Add back: Income taxes 1.0 (6.9) 14.7 9.0 17.8 Interest ex

  29. Slide 29: Q4 2010 Adjusted EBITDA Reconciliation

    Q4 2010 Adjusted EBITDA Reconciliation Three Months Ended December 31, 2010 (Dollars in millions) ADESA IAA AFC Corporate Consolidated Net Income (Loss) $8.1 $11.4 $11.2 $(23.4) $7.3 Add back: Income Taxes 4.9 5.2 3.7 (16.3) (2.5) Interest Expense, Net of Interest Income 0.1 0.6 2.1 32.2 35.0 Deprec

  30. Slide 30: Q4 2011 Adjusted EBITDA Reconciliation

    Q4 2011 Adjusted EBITDA Reconciliation Three Months Ended December 31, 2011 (Dollars in millions) ADESA IAA AFC Corporate Consolidated Net Income (Loss) $(2.0) $15.9 $15.0 $(14.4) $14.5 Add back: Income Taxes 3.0 7.2 7.3 (8.5) 9.0 Interest Expense, Net of Interest Income 0.2 0.5 3.5 26.5 30.7 Deprec

  31. Slide 31: Adjusted Net Income Per Share Reconciliation

    Adjusted Net Income Per Share Reconciliation Three Months Ended Year Ended December 31, December 31, (In millions, except per share amounts ) 2011 2010 2011 2010 Net income $ 14.5 $ 7.3 $ 72.2 $ 69.6 Loss on extinguishment of debt, net of tax (1) - 4.6 33.2 20.3 (2) Swap termination, net of tax - -

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