Slide 1: Third Quarter 2019 Earnings Slides
Third Quarter 2019 Earnings Slides November 5, 2019
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: Q3 2019 Highlights
Q3 2019 Highlights Revenues Highlights Fundamentals $701.9 $612.4 88.3 • Revenue growth +15% (7% excluding • Repurchased $119.7 million of KAR 85.4 purchased vehicles) stock in Q3 2019 • Authorized share repurchase of up to • Operating Adjusted EPS +9% KAR 527.0 613.6 • Adjusted EBITDA +2% $300 mill
Slide 4: 2019 Outlook
2019 Outlook ANNUAL GUIDANCE (in millions, except per share amounts) 2019 Low 2019 High Net income from continuing operations $101.8 $115.8 Add back: Income tax expense $39.0 $45.0 Interest expense, net of interest income $187.0 $187.0 Depreciation and amortization $185.0 $185.0 EBITDA $512.8 $532.8
Slide 5: Capital Allocation Priorities
Clear Shareholder Friendly Capital Allocation History Strategic Share PRIORITIES Capex Dividends Investments Repurchases • Historically ~20% of • 40%-50% of FCF • Targeted acquisitions • Tool for managing cash Adjusted EBITDA, plus • Highlights consistency & • Complementary and leverage strategic in
Slide 6: September 30, 2019 Leverage
September 30, 2019 Leverage (US$ in millions) Balance Maturity Term Loan B-6 (Adjusted LIBOR + 2.25%) $950 2026 Revolving Credit Facility (Adjusted LIBOR + 1.75%) & Lines of Credit 18 2024 Senior Notes (Fixed 5.125%) 950 2025 Capital Leases 27 Total 1,945 Less: Available Cash (428) Net Debt $1,517 N
Slide 7: Third Quarter Results
WAN AUCTION SERVICES. Third Quarter Results
Slide 8: KAR Q3 2019 Highlights
KAR Q3 2019 Highlights ($ in millions, except per share amounts) Q3 Q3 KAR Highlights* 2019 2018 Total operating revenues $701.9 $612.4 $54.8M acquisitions Gross profit** $291.0 $281.7 % of revenue 41.5% 46.0% SG&A $158.9 $154.7 TradeRev +$5.9M, $5.8M acquired SG&A EBITDA $131.2 $128.7 Adjusted EBIT
Slide 9: ADESA Q3 2019 Highlights
ADESA Q3 2019 Highlights ($ in millions, except RPU) ADESA Q3 2019 Q3 2018 Highlights* $54.8M acquisitions; includes an increase of $47.0M from Revenue $613.6 $527.0 purchased vehicles Gross profit** $227.4 $219.2 Increased purchased vehicles from COTW and ADESA % of revenue 37.1% 41.6% Assurance re
Slide 10: AFC Q3 2019 Highlights
AFC Q3 2019 Highlights ($ in millions, except for revenue per loan transaction) Q3 Q3 AFC 2019 2018 Highlights* Interest and fee income $85.5 $80.7 Other revenue $2.7 $3.4 Provision for credit losses ($8.9) ($7.3) Warranty contract revenue $9.0 $8.6 PWI revenue Total AFC revenue $88.3 $85.4 +2% reve
Slide 11: Year-to-Date Results
WAN AUCTION SERVICES. Year-to-Date Results
Slide 12: KAR Nine Months Ended September 30, 2019 Highlights
KAR Nine Months Ended September 30, 2019 Highlights ($ in millions, except per share amounts) YTD YTD KAR Highlights* 2019 2018 Total operating revenues $2,110.6 $1,849.0 $137.9M acquisitions Gross profit** $888.4 $859.8 % of revenue 42.1% 46.5% SG&A $497.3 $460.1 TradeRev +$19.8M, $16.5M acquired S
Slide 13: ADESA Nine Months Ended September 30, 2019 Highlights
ADESA Nine Months Ended September 30, 2019 Highlights ($ in millions, except RPU) YTD YTD ADESA Highlights* 2019 2018 $137.9M acquisitions; includes an increase of $129.9M from Revenue $1,845.7 $1,593.4 purchased vehicles Gross profit** $695.9 $672.4 Increased purchased vehicles from COTW and ADESA
Slide 14: AFC Nine Months Ended September 30, 2019 Highlights
AFC Nine Months Ended September 30, 2019 Highlights ($ in millions, except for revenue per loan transaction) YTD YTD AFC 2019 2018 Highlights* Interest and fee income $256.1 $243.1 Other revenue $8.1 $9.6 Provision for credit losses ($25.5) ($22.1) Warranty contract revenue $26.2 $25.0 PWI revenue T
Slide 15: Historical Data
AUCTION SERVICES. HISTORICAL DATA
Slide 16: ADESA Metrics - Annual
ADESA Metrics - Annual 2018 2017 2016 2015 2014 Revenue2 $2,101.9 $1,937.5 $1,765.3 $1,427.8 $1,271.0 Total Volume 3,472 3,180 2,885 2,465 2,198 Online Only Volume 1,304 938 743 592 495 Total Online Volume %3 54% 46% 42% 40% 38% Physical Conversion % (N.A.) 61.6% 60.4% 58.0% 58.3% 58.2% Dealer Consi
Slide 17: ADESA Metrics - Quarter
ADESA Metrics - Quarter 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 Revenue2 $613.6 $632.4 $599.7 $508.5 $527.0 $538.3 $528.1 $473.2 $477.1 Total Volume 957 994 945 811 876 907 878 744 788 Online Only Volume 396 416 367 306 343 346 309 237 241 Total Online Volume %3 59% 59% 57% 54% 54% 54% 52% 49%
Slide 18: AFC Metrics - Annual
AFC Metrics - Annual 2018 2017 2016 2015 2014 Revenue $340.9 $301.3 $286.8 $268.4 $250.1 Loan Transaction Units (LTU) 1,760 1,688 1,718 1,607 1,445 Revenue per Loan Transaction, Excluding “Warranty Contract $175 $159 $148 $150 $155 Revenue” Ending Managed Finance Receivables $2,014.8 $1,912.6 $1,792
Slide 19: AFC Metrics - Quarter
AFC Metrics - Quarter 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 Revenue $88.3 $86.7 $89.9 $85.3 $85.4 $85.1 $85.1 $81.8 $78.2 Loan Transaction Units 442 437 461 428 433 435 464 414 402 (LTU) Revenue per Loan Transaction, Excluding $180 $178 $177 $180 $177 $177 $166 $178 $174 “Warranty Contract Re
Slide 20: AFC Provision for Credit Losses - Annual
AFC Provision for Credit Losses - Annual 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Ending Managed $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 $1,959.8 $1,802.2 $1,732.5 $1,474.9 $1,208.4 $1,051.4 $925
Slide 21: AFC Provision for Credit Losses - Quarterly
AFC Provision for Credit Losses - Quarterly 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 Ending Managed $2,110.4 $2,070.1 $1,989.1 $2,014.8 $1,979.7 $1,958.6 $1,933.2 $1,912.6 $1,809.2 Receivables Average Managed $2,090.3 $2,029.6 $2,002.0 $1,997.3 $1,969.2 $1,945.9 $1,922.9 $1,860.9 $1,772.9 Receiv
Slide 22: Appendix
AUCTION SERVICES. APPENDIX
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as
Slide 24: Q3 2019 Adjusted EBITDA Reconciliation
Q3 2019 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended September 30, 2019 ADESA AFC Corporate Consolidated Net income (loss) from continuing $46.4 $30.7 ($42.7) $34.4 operations Add back: Income taxes 16.3 10.1 (13.2) 13.2 Interest expense, net of interest income 0.8 15.6 20.8 37.
Slide 25: Q3 2018 Adjusted EBITDA Reconciliation
Q3 2018 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended September 30, 2018 ADESA AFC Corporate Consolidated Net income (loss) from continuing $51.0 $29.1 ($49.2) $30.9 operations Add back: Income taxes 19.0 9.0 (19.3) 8.7 Interest expense, net of interest income 0.1 14.9 32.7 47.7
Slide 26: YTD 2019 Adjusted EBITDA Reconciliation
YTD 2019 Adjusted EBITDA Reconciliation ($ in millions) Nine Months ended September 30, 2019 ADESA AFC Corporate Consolidated Net income (loss) from continuing $139.3 $88.6 ($150.8) $77.1 operations Add back: Income taxes 54.0 32.2 (57.8) 28.4 Interest expense, net of interest income 1.8 48.6 97.7 1
Slide 27: YTD 2018 Adjusted EBITDA Reconciliation
YTD 2018 Adjusted EBITDA Reconciliation ($ in millions) Nine Months ended September 30, 2018 ADESA AFC Corporate Consolidated Net income (loss) from continuing $165.2 $82.5 ($145.2) $102.5 operations Add back: Income taxes 58.0 26.7 (52.2) 32.5 Interest expense, net of interest income 0.9 43.0 92.2
Slide 28: Operating Adjusted Net Income from Continuing Operations per Share Reconciliation
Operating Adjusted Net Income from Continuing Operations per Share Reconciliation ($ in millions, except per share amounts), (unaudited) Three Months ended Nine Months ended September 30, September 30, 2019 2018 2019 2018 Net income $35.3 $77.5 $168.7 $260.7 Less: Income from discontinued operations