Slide 1: Corporate Update November 2012
Corporate Update November 2012
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: 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
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
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 Sl eee eee ee ee Operation 271 Million Salvage Auctions units 3-4 Million units Used Vehicle Transactions in Removed from North America Operation ~42 Million 13 Million units units New Vehicle Sales 14 Million
Slide 6: ADESA – Well Positioned for Cyclical Recovery
ADESA – Well Positioned for Cyclical Recovery • #2 provider of whole car auction services in North America Overview • End-to-end remarketing solutions • High barriers to entry • Revenue +6% 2012 Q3 • Volume +14% • Cyclical recovery of commercial volumes • Industry leading technology Growth • Dealer
Slide 7: 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 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 Consulting/Goldman Sachs
Slide 8: Together with ADESA – The Market Leader with Online Closed Sale Programs
Together with ADESA – The Market Leader with Online Closed Sale Programs OPENLANE Closed Programs ADESA Closed Sale Programs (being migrated to OPENLANE technology platform) On a combined basis, ADESA / OPENLANE is the clear leader in online closed sales programs (“upstream remarketing”) 8
Slide 9: ADESA and OPENLANE – Strategic Rationale for the Combination
ADESA and OPENLANE – Strategic Rationale for the Combination Significantly Increased Customer Significantly Enhanced Marketplace Benefits Capabilities 9
Slide 10: 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
Slide 11: 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 +2% • Volume +5% 2012 Q3 • Approximately 50% of units sold on-line Technology • Integrated into major providers via D
Slide 12: AFC – Disciplined Growth
AFC – Disciplined Growth • Complements KAR’s offerings • Fee driven business Overview • Retain title as collateral • Revenue +17% 2012 Q3 • Loan Transactions +16% • $939M at 9/30/12 • 99% current Portfolio • $750M committed liquidity* • $634M drawn 12 * U.S. & Cdn facility commitments through June 2
Slide 13: Third Quarter 2012 Performance
Third Quarter 2012 Performance Revenue Gross Profit* $600 $300 $500 $449 $475 $400 $250 $202 $211 $200 $300 ($mm) ($mm) $150 $200 $100 44.9% 44.4% $100 $50 $0 $0 Q3 2011 Q3 2012 Q3 2011 Q3 2012 Adjusted EBITDA Adjusted Net Income Per Share $0.60 $150 $116 $117 $0.40 $0.23 ($mm) $100 $0.23 25.8% 24.7
Slide 14: September 30, 2012 Capital Structure
September 30, 2012 Capital Structure (US$ in millions) 9/30/2012 Maturity Term Loan Facilities $1,672.2 2017 Revolving Credit Facility $0.0 2016 Floating Rate Notes 150.0 2014 Capital Leases 30.4 * Total 1,852.6 Less: Available Cash (110.2) Net Debt $1,742.4 Net Debt /Adjusted EBITDA 3.54X * Various
Slide 15: Investment Summary: Diverse Business Model / Strong Free Cash Flow
Investment Summary: Diverse Business Model / Strong Free Cash Flow Adjusted EBITDA Contribution Free Cash Flow** By Segment* $426M $475M $487M 100% 10% 15% 19% 30% 35% $300 $238M $253M 39% $200 $184M 50% $100 60% 50% 42% $0 0% 2009 2010 2011 2009 2010 2011 10.6% 13.1% 13.4% Annual Free Cash Flow as
Slide 16: Appendix
Appendix 16
Slide 17: 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 18: 2009 Adjusted EBITDA Reconciliation
2009 Adjusted EBITDA Reconciliation Year Ended December 31, 2009 (Dollars in millions) ADESA IAA 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
Slide 19: 2010 Adjusted EBITDA Reconciliation
2010 Adjusted EBITDA Reconciliation Year Ended December 31, 2010 (Dollars in millions) 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 Depreciatio
Slide 20: 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
Slide 21: Q3 2011 Adjusted EBITDA Reconciliation
Q3 2011 Adjusted EBITDA Reconciliation Three Months Ended September 30, 2011 (Dollars in millions) ADESA IAA AFC Corporate Consolidated Net Income (Loss) $14.1 $9.7 $14.1 $(5.7) $32.2 Add back: Income Taxes 3.9 6.9 8.0 (4.1) 14.7 Interest Expense, Net of Interest Income 0.1 0.5 3.4 25.3 29.3 Depreci
Slide 22: Q3 2012 Adjusted EBITDA Reconciliation
Q3 2012 Adjusted EBITDA Reconciliation Three Months Ended September 30, 2012 (Dollars in millions) ADESA IAA AFC Corporate Consolidated Net Income (Loss) $5.6 $12.2 $18.8 $(17.4) $19.2 Add back: Income Taxes 4.6 7.7 10.9 (9.4) 13.8 Interest Expense, Net of Interest Income 0.1 0.3 3.8 25.6 29.8 Depre
Slide 23: LTM Adjusted EBITDA Reconciliation
LTM Adjusted EBITDA Reconciliation Twelve Months Three Months Ended Ended December 31, March 31, June 30, September 30, September 30, 2011 2012 2012 2012 2012 (Dollars in millions) (Unaudited) Net income (loss) $14.5 $26.0 $23.9 $19.2 $83.6 Add back: Income taxes 9.0 18.4 20.2 13.8 61.4 Interest exp
Slide 24: Adjusted Net Income Per Share Reconciliation (Q3 2012 & Q3 2011)
Adjusted Net Income Per Share Reconciliation (Q3 2012 & Q3 2011) Three Months Ended September 30, (In millions, except per share amounts) 2012 2011 Net income (loss) $ 19.2 $ 32.2 Stepped up depreciation and amortization expense, net of tax (1) 7.2 9.9 Stock-based compensation, net of tax (2) 6.3 (1
Slide 25: Free Cash Flow Calculation – Explanatory Footnotes
Free Cash Flow Calculation – Explanatory Footnotes (1) Free cash flow represents Adjusted EBITDA less capital expenditures, adjusted cash interest paid and cash taxes paid. (2) Cash paid for interest excludes interest paid for standby letters of credit of $0.6 million for the year ended December 31,