Openlane, Inc. · NYSE:OPLN
Openlane — KAR Holdings — Deutsche Bank 2008 Leveraged Finance Conference
29 slides from Openlane's conference presentation, Sep 25, 2008
Slide 1: Deutsche Bank 2008 Leveraged Finance Conference
Deutsche Bank 2008 Leveraged Finance Conference September 24, 2008
Slide 2: Auction industry volume is down, but ADESA same store sales are up
Although auction industry volume is down through June, ADESA’s same store sales are up. Auction Industry Sales Volume by Seller Type - Same-store Basis (Year-to-Date Through June) -17.1% -2.4% 13.8% -2.8% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% Dealer Manufacturer Fleet/Lease Total 4.
Slide 3: Repos are at all-time highs
Repos are at all-time highs. Repossessions (000s of Units) 1,004 1,078 1,185 1,183 1,197 1,267 1,113 1,235 1,376 1,428 1,506 1,494 1,521 1,643 1,000 1,200 1,400 1,600 1,800 New Used
Slide 4: Auction market captures shifts in consumer preferences
High prices for compact cars and low prices for full-size trucks are a reflection of the auction market's ability to instantaneously capture shifts in consumer preferences Year-on-Year % Change in Average AuctionNet Price by Model Class - July 23.1% 4.9% -13.3% -13.7% -16.7% -22.9% -24.4% -24.8% -8.
Slide 5: KAR Holdings Company Overview
KAR Holdings, Inc. Total 2007 Revenue: $1,589 million Total 2007 PF Adjusted EBITDA: $405 million ADESA Auctions 2007 Revenue: $965 million Company Overview ($ in millions) IAAI Salvage 2007 Revenue: $483 million Used vehicle auctioneer Remarkets used vehicles from large institutions and dealers Sal
Slide 6: Company History - ADESA
Company History- ADESA 1989 1990 – 1991 1992 1994 1995 1996 – 1999 2000 2001 – 2003 2004 2005 – 2006 First ADESA Auction Acquired Automotive Finance Corporation (AFC) 1996 - Acquired/ opened 13 used vehicle auctions 1990 - Acquired 4 used vehicle auctions IPO (NASDAQ:SOLD) ALLETE completes acquisiti
Slide 7: Company History - IAAI
1982 1991 1992-1993 1994-1995 1996-1999 2000-2002 2003-2004 2005 2006 Company History- IAAI 2007 Los Angeles Auto Salvage incorporates Changes name to Insurance Auto Auctions, Inc; IPO in Nov. 1991 1994-1995 Acquired 25 salvage sites and started 2 greenfield sites 2003-2004 Acquired 5 salvage sites
Slide 8: Broad Geographic Footprint
Broad Geographic Footprint Broad geographic footprint positions the Company as the preferred auction & floorplan financing provider for its customers. The Company has the largest combined network of Used Car and Salvage Auctions in N.A. ADESA Auctions —62 auction sites IAAI Salvage —149 auction site
Slide 9: Leading Market Positions
Leading Market Positions North American Used Vehicle Auction Market – 9.5 Million Units North American Salvage Auction Market – 3.2 Million Units Source: GVR Report and Company estimates Copart 37% Insurance Auto Auctions 35% Independents 28% Manheim 51% ADESA 19% Independents 30%
Slide 10: ADESA Auctions
ADESA Auctions Auctions strive to maximize the auction sales price for sellers by effectively and efficiently transferring the vehicles, paperwork and funds as quickly as possible OEM 20% Fleet/Lease 23% Second largest whole car vehicle auctioneer in the U.S. and the largest in Canada • Operates 62
Slide 11: IAAI Salvage
IAAI Salvage Percentage of Claims Resulting in Total Loss One of only two salvage auctioneers with a national footprint • Serves all top 75 U.S. metropolitan markets Hybrid auction format, combining Internet and live auctions: • Leads to higher proceeds for suppliers • Increases international buyers
Slide 12: AFC
AFC Facilitates growth of vehicle sales at auction and allows ADESA and IAAI to have larger role in entire vehicle redistribution industry. Provides floorplan financing to independent dealers • 30 to 60 day loan terms • Serves over 800 auctions Market leader- In a market of 43,000 registered dealers
Slide 13: Major Initiatives
Major Initiatives Market Share Improvement Domestic Expansion E-Business Improved Earnings through Cost Savings and Operations Initiatives Stabilize performance of AFC
Slide 14: Market Share Improvement
Market Share Improvement Significant institutional customer wins Site expansions & improvements in meeting customer needs Improved business information systems to enhance customer reporting Increased dealer consignment sales
Slide 15: Domestic Expansion
Domestic Expansion Relocations of capacity-constrained facilities: • Dallas (used car) • Phoenix (used car) • Kansas City (used car) • Toronto (salvage) Acquisitions of independent used vehicle auctions Acquisitions of independent salvage auctions • Reduce customer towing costs • Ease capacity const
Slide 16: ADESA E-Business
ADESA E-Business Improve upstream and mid-stream product offerings via: • Centralization of e-business operations • Develop new e-business technology • Upgrade and add personnel Significant new customers • 2008 wins include Nissan and Chrysler • Targets include Mercedes, Hyundai, and Kia New feature
Slide 17: Cost Savings
Cost Savings Implementing consistent used car auction operating practices • 27 of 62 sites completed to date • Operational audit team in place to verify compliance Improved technology to support auction operations • Reduced administrative effort and elimination of redundant processes • Improved cust
Slide 18: Stabilize AFC Performance
Stabilize AFC Performance Focus on improving credit quality • Tightening credit underwriting standards • Reducing curtailment exceptions Increasing focus on collections & resolution of A/R Reducing headcount to match current volume Closing offices in non-strategic locations
Slide 19: KAR Holdings Consolidated Financial Summary
KAR Holdings Consolidated Financial Summary
Slide 20: Long-Term Debt Structure
Long-Term Debt Structure (millions of US dollars) Description 6/30/2008 Rate Maturity Term B Loan - Hedged* 800.0 $ 5.34% + 225 Term B Loan - Unhedged 749.3 Libor + 225 Senior Credit Facility 1,549.3 $ Floating Rate Senior Notes 150.0 $ Libor + 400 Fixed Rate Senior Notes 450.0 8.75% Senior Subordin
Slide 21: Consolidated Balance Sheet
Consolidated Balance Sheet (millions of US dollars) 12/31/2007 6/30/2008 Cash $221 $160 Other current assets Total current assets PP&E and Other assets 3,629 3,695 Total Assets 4,531 4,609 Current liabilities Long-term debt 2,566 2,559 Other non-current liabilities* Total Equity 1,014 1,010 Total Li
Slide 22: De-leveraging Initiatives
De-leveraging Initiatives Increased profitability through cost savings initiatives Acquisitions at attractive multiples Securitization of the AFC rental portfolio Sale/leaseback of owned ADESA property
Slide 23: Financial Highlights - Consolidated
Financial Highlights - Consolidated Q2 Revenue Q2 Operating Profit YTD Revenue YTD Operating Profit Results for ADESA and IAAI prior to the April 20, 2007 merger transactions have been combined to illustrate the effect of the merger transactions as if they had occurred on January 1, 2007. $400 $0 $1
Slide 24: Financial Highlights – ADESA Auctions
Financial Highlights – ADESA Auctions YTD Revenue YTD Operating Profit YTD Revenue YTD Operating Profit 8% 20% Results for ADESA and IAAI prior to the April 20, 2007 merger transactions have been combined to illustrate the effect of the merger transactions as if they had occurred on January 1, 2007.
Slide 25: Financial Highlights - IAAI
Financial Highlights - IAAI YTD Revenue YTD Operating Profit $243 $291 $0 $200 $400 YTD Revenue YTD Operating Profit 20% Results for ADESA and IAAI prior to the April 20, 2007 merger transactions have been combined to illustrate the effect of the merger transactions as if they had occurred on Januar
Slide 26: Financial Highlights - AFC
Financial Highlights - AFC YTD Operating Profit YTD Revenue $74 $64 $0 $90 YTD Operating Profit $24 $37 $0 $40 14% 35% YTD Revenue
Slide 27: Appendix: Discussion of Non-GAAP Measures
Appendix Discussion of Non-GAAP Measures: EBITDA, Adjusted EBITDA and Adjusted EBITDA per the Credit Agreement – The Company’s management believes that EBITDA is a useful supplement and meaningful indicator of earnings performance to be used by its investors, financial analysts and others to analyze
Slide 28: Adjusted EBITDA Reconciliation Twelve Months Ended June 30, 2008
Adjusted EBITDA Reconciliation For the Twelve Months Ended June 30, 2008 Three Months Ended Twelve Months Ended (In millions) September 30, 2007 December 31, 2007 March 31, June 30, June 30, Net income (loss) ($8.6) ($34.3) ($3.2) $6.2 ($39.9 ) Add back: Income taxes 3.7 (16.5) (3.7) 4.8 (11.7 ) Int
Slide 29: Adjusted EBITDA Reconciliation Year Ended December 31, 2007
Adjusted EBITDA Reconciliation For the Year Ended December 31, 2007 Three Months Ended Year Ended (In millions) March 31, June 30, September 30, 2007 December 31, 2007 December 31, 2007 Net income (loss) $38.4 ($7.3) ($8.6) ($34.3) ($11.8) Add back: discontinued operations 0.1 -- -- -- 0.1 Income (l
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