Openlane, Inc. · NYSE:OPLN
Openlane — KAR Auction Services — Corporate Update (May 2015)
29 slides from Openlane's corporate update, May 27, 2015
Slide 1: KAR Auction Services, Inc. Corporate Update May 2015
KAR Auction Services, Inc. Corporate Update May 2015
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: Key Investment Highlights
Key Investment Highlights Poised to Benefit from Positive Cyclical Trends – Expected Increases in Forward Volumes Established Market Leader Across Core Businesses Multiple Avenues for Continued Organic and Acquisition Expansion Attractive Financial Model Generating Significant Free Cash Pr
Slide 4: Leading Provider of Vehicle Auction Services in North America
Leading Provider of Vehicle Auction Services in North America 2014 Revenue by Segment 2014 Adj. EBITDA by Segment(1) AFC 10% AFC 21% ADESA ADESA 3.9mm vehicles sold in 2014 42% IAA 52% 38% Revenue $2,365mm Adj. EBITDA $599mm % margin 25.3% IAA 37% Whole Car Auctions Salvage Vehicle Auctions Vehicle
Slide 5: The North American Car Parc: Vehicle Remarketing is a Large and Growing Market
The North American Car Parc: Vehicle Remarketing is a Large and Growing Market Vehicles in Salvage Auctions Operation 3-4 Million Units 276 Million units Used Vehicle Removed from New Vehicle Sales Transactions in Operation 18 Million Units North America 13 Million Units ~ 45 Million units Consumer-
Slide 6: 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 Finance Arms Independent Dealers Commercial Fleet Customers Revenue: Revenue: Wholesale Dealers Financial Institutions ~$555 / vehicle* ~$465 / vehicle
Slide 7: Poised to Benefit from Volume Recovery in Whole Car
Poised to Benefit from Volume Recovery in Whole Car Positive Demand Drivers North American Whole Car Auction Volume & New Vehicle Sales (Units in millions) 2013 was inflection point for whole 12 20 car auction volumes U.S. Seasonally Adjusted Annual Rate (“SAAR”) (units in millions) 10.0 9.9 10.1
Slide 8: Off-lease "Auction Funnel"
Off-lease “Auction Funnel” Revenue Inventory Gross Per Unit Margin % ~$100 Higher “Online Only” – Private Label ~2-3 days “Online Only” – Open ~2-3 days ADESA In-lane buyer or Online buyer Competitors ~$700 Lower 8
Slide 9: Continued Positive Salvage Market Fundamentals
Continued Positive Salvage Market Fundamentals Positive Demand Drivers Large Aging North American Car Parc Increased use of alternative parts in 269 271 271 270 271 272 275 276 11.5 collision repair 258 264 11.0 251 10.5 244 10.0 9.5 Increasing vehicle complexity and 9.0 technology content 2003
Slide 10: AFC Presents a Significant Competitive Advantage for KAR
AFC Presents a Significant Competitive Advantage for KAR AFC Highlights Revenue Per Loan Transaction(2) Portfolio managed to short duration with strong underwriting and control environment $159 $156 $157 $155 $146 − Short-term (30-60 days) secured financing Grow portfolio Consistent credit sta
Slide 11: Financial Overview
Financial Overview | Ad AUCTION SERVICES.
Slide 12: Historical Financial Performance
Historical Financial Performance Revenue Gross Profit ($ in millions) ($ in millions) $2,365 $2,173 $250 $1,046 $1,886 $1,963 $225 $876 $941 $1,823 $815 $851 $136 $169 $194 $896 $830 $610 $700 $716 $1,076 $1,017 $1,053 $1,118 $1,219 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 ADESA IAA AFC Vis
Slide 13: First Quarter 2015 Performance
First Quarter 2015 Performance Revenue Gross Profit* $700 $632 $600 $584 $500 $400 ($mm) ($mm) $300 $300 $259 $280 $200 $200 44.2% $100 $100 44.4% 44.3% $0 $0 Q1 2014 Q1 2015 Q1 2014 Q1 2015 Adjusted EBITDA Adjusted Net Income Per Share $0.60 $200 $147 $162 $0.40 $0.41 $0.42 $150 ($mm) $100 $0.20 $5
Slide 14: March 31, 2015 Leverage
March 31, 2015 Leverage (US$ in millions) 3/31/2015 Maturity Term Loan B-1 $643.5 2017 Term Loan B-2* 1,106.4 2021 Revolving Credit Facility - 2019 Capital Leases 36.7 ** Total 1,786.6 Less: Available Cash (84.3) Net Debt $1,702.3 Net Debt /Adjusted EBITDA 2.77X * Includes unamortized debt discount
Slide 15: Capital Allocation Framework
Capital Allocation Framework Strategic Dividends Investments Qtrly dividend of Priority for free $300 Million $0.27 per share cash flow 45% - 50% of free New geographies Two year cash flow / technologies authorization Highlights strength Increases Tool for managing of free cash flo
Slide 16: Key Investment Highlights
Key Investment Highlights Poised to Benefit from Positive Cyclical Trends – Expected Increases in Forward Volumes Established Market Leader Across Core Businesses Multiple Avenues for Continued Organic and Acquisition Expansion Attractive Financial Model Generating Significant Free Cash Pr
Slide 17: Appendix
KAR AUCTION SERVICES. V4i\ x apes KA AUCTION SERVICES.
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as
Slide 19: 2010 Adjusted EBITDA Reconciliation
2010 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2010 ADESA IAA AFC Corporate Consolidated Net income (loss) $80.1 $44.7 $38.4 ($93.6) $69.6 Add back: Income taxes 43.6 26.7 21.1 (64.2) 27.2 Interest expense, net of interest income 0.9 2.3 7.2 130.9 141.3 Depreciation and
Slide 20: 2011 Adjusted EBITDA Reconciliation
2011 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2011 ADESA IAA AFC Corporate Consolidated Net income (loss) $55.8 $65.5 $57.2 ($106.3) $72.2 Add back: Income taxes 17.9 36.1 29.6 (65.8) 17.8 Interest expense, net of interest income 0.7 2.1 12.0 128.0 142.8 Depreciation an
Slide 21: 2012 Adjusted EBITDA Reconciliation
2012 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2012 ADESA IAA AFC Corporate Consolidated Net income (loss) $38.4 $56.5 $64.1 ($67.0) $92.0 Add back: Income taxes 14.5 33.7 46.0 (34.6) 59.6 Interest expense, net of interest income 0.8 1.4 15.0 101.9 119.1 Depreciation and
Slide 22: 2013 Adjusted EBITDA Reconciliation
2013 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2013 ADESA IAA AFC Corporate Consolidated Net income (loss) $50.2 $56.6 $76.1 ($115.2) $67.7 Add back: Income taxes 40.1 32.8 40.2 (31.6) 81.5 Interest expense, net of interest income 0.6 0.8 16.7 86.2 104.3 Depreciation and
Slide 23: 2014 Adjusted EBITDA Reconciliation
2014 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2014 ADESA IAA AFC Corporate Consolidated Net income (loss) $86.4 $79.7 $76.6 ($73.4) $169.3 Add back: Income taxes 43.2 48.4 48.6 (44.5) 95.7 Interest expense, net of interest income 0.6 0.2 18.7 66.4 85.9 Depreciation and
Slide 24: Q1 2014 Adjusted EBITDA Reconciliation
Q1 2014 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended March 31, 2014 ADESA IAA AFC Corporate Consolidated Net income (loss) $15.8 $20.6 $17.9 ($33.6) $20.7 Add back: Income taxes 8.9 11.9 10.9 (21.9) 9.8 Interest expense, net of interest income 0.3 0.1 4.5 19.2 24.1 Depreciation
Slide 25: Q1 2015 Adjusted EBITDA Reconciliation
Q1 2015 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended March 31, 2015 ADESA IAA AFC Corporate Consolidated Net income (loss) $22.5 $25.0 $21.0 ($14.0) $54.5 Add back: Income taxes 14.9 15.3 12.8 (8.4) 34.6 Interest expense, net of interest income 0.1 – 5.1 15.7 20.9 Depreciation a
Slide 26: LTM Adjusted EBITDA Reconciliation
LTM Adjusted EBITDA Reconciliation ($ in millions) (unaudited) Twelve months Three months ended ended June 30, September 30, December 31, March 31, March 31, 2014 2014 2014 2015 2015 Net income (loss) $50.8 $47.5 $50.3 $54.5 $203.1 Add back: Income taxes 30.1 28.4 27.4 34.6 120.5 Interest expense, n
Slide 27: Adjusted Net Income Per Share Reconciliation
Adjusted Net Income Per Share Reconciliation ($ in millions, except per share amounts) Year ended December 31, 2014 2013 2012 2011 2010 Net income $169.3 $67.7 $92.0 $72.2 $69.6 (1) Loss on modification/extinguishment of debt, net of tax 19.3 3.2 – 33.2 20.3 (2) Swap termination, net of tax – – – 9.
Slide 28: Adjusted Net Income Per Share Reconciliation (Q1 2015 & Q1 2014)
Adjusted Net Income Per Share Reconciliation (Q1 2015 & Q1 2014) ($ in millions, except per share amounts) Three Months ended March 31, 2015 2014 Net income (loss) $54.5 $20.7 (1) Loss on extinguishment/modification of debt, net of tax – 20.6 (3) Stepped up depreciation and amortization expense, net
Slide 29: Adjusted Net Income – Explanatory Footnotes
Adjusted Net Income – Explanatory Footnotes (1) In 2010 and 2011, there were losses on extinguishments of debt totaling $32.7 million ($20.3 million net of tax) and $53.5 million ($33.2 million net of tax), respectively. We incurred a loss on the extinguishment/modification of debt totaling $30.3 mi