Openlane, Inc. · NYSE:OPLN
Openlane — KAR Auction Services — Merger or Acquisition (February 2018)
18 slides from Openlane's merger presentation, Feb 28, 2018
Slide 1: KAR Pursues Separation of IAA Salvage Auction Business Unit
KAR Auction Services, Inc. KAR Auction Services, Inc. Pursues Separation of IAA Salvage Auction Business Unit February 28, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements contained in this presentation, including the statements regarding the anticipated separation of KAR into two independent companies, the expected timetable for completing the transaction and any other statements regarding events or developments that we b
Slide 3: Today's Presenters and Agenda
Today’s Presenters and Agenda Jim Hallett KAR Auction Services, Inc. Chief Executive Officer and Chairman of the Board of Directors Eric Loughmiller KAR Auction Services, Inc. Executive Vice President and Chief Financial Officer Agenda Opening Remarks Overview of Separation Questions and Answe
Slide 4: Rationale for Separation
Rationale for Separation Create two independent companies with distinct strengths well positioned for market leadership and continued growth Allow independent decisions on investments, acquisitions and capital expenditures to advance respective strategic priorities Enhance ability to address n
Slide 5: Transaction Details
Transaction Details Separation to create two independent, publicly traded companies Tax-free spin-off expected to close within the next twelve months Separation subject to final approval by KAR Board of Directors and market, regulatory, financing and other customary closing conditions Insura
Slide 6: Two Independent and Highly Attractive Businesses
Two Independent and Highly Attractive Businesses KAR (RemainCo) IAA (SpinCo) Chief Executive Officer and Chairman of the Chief Executive Officer: John Kett Board of Directors: Jim Hallett Leading provider of whole car auction services and Leading provider of salvage vehicle technology-enabled soluti
Slide 7: KAR (RemainCo) – Key Investment Highlights
KAR (RemainCo) – Key Investment Highlights Pure-play wholesale service provider with a leading market position in the I US and Canada II Continued growth through investments in digital and data analytics assets III Global and market expansion opportunity (RemainCo) Attractive financial profile with
Slide 8: KAR (RemainCo) – Market Fundamentals
KAR (RemainCo) – Market Fundamentals Whole Car Auction Volumes New Vehicle Lease Growth (Vehicles in mm) (Lease Originations in mm) 2013-2019E CAGR: 4.8% 4.5 11.5 11.3 4.0 11.1 3.7 10.6 3.2 9.9 2.5 2.3 9.2 8.7 44% 40% 2011 2012 2013 2014 2015 2016 40% 39% Wholesale Used Vehicle Values (ADESA Average
Slide 9: KAR (RemainCo) – Financial Profile
KAR (RemainCo) – Financial Profile Highlights Revenue Adj. EBITDA ($ in mm) ($ in mm) Visible and predictable top- $2,239 line growth $499 $2,052 $459 $1,696 History of $385 strong free cash flow generation Proven ability to expand operating margins 2015A 2016A 2017A 2015A 2016A 2017A Revenue
Slide 10: IAA (SpinCo) – Key Investment Highlights
IAA (SpinCo) – Key Investment Highlights Leading pure-play salvage auto auction company with ~40% North American I market share Benefits from increased miles driven, aging vehicle population, increased II accident frequency and rising total loss as a percentage of insurance claims Established relati
Slide 11: IAA (SpinCo) – Market Fundamentals
IAA (SpinCo) – Market Fundamentals Positive Industry Drivers Total Loss % of Total Claims Accident frequency benefits from rising miles driven, aging vehicle fleet and increasing driver 18.0% distractions 16.9% Accident severity increasing due to vehicle 15.6% complexity and technology content,
Slide 12: IAA (SpinCo) – Financial Profile
IAA (SpinCo) – Financial Profile Highlights Revenue Adj. EBITDA and Adj. EBITDAR ($ in mm) ($ in mm) Robust revenue growth with highly attractive $1,219 profitability $1,098 margins $994 $448 High free cash $376 $340 flow conversion $340 $289 $265 Reduces complexity of KAR business model and c
Slide 13: Key Takeaways
Key Takeaways Two industry-leading companies with distinct strengths and positioned to maximize value Key Takeaways Each company with resources and focus to capitalize on growth opportunities in their respective market segment Separation enhances Technology, innovation and data analytics capab
Slide 14: Appendix
Appendix
Slide 15: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA, EBITDAR, Adjusted EBITDA and Adjusted EBITDAR, as presented in the following reconciliations, are supplemental measures of performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States, or GAAP
Slide 16: KAR (RemainCo) – Adjusted EBITDA Reconciliations
KAR (RemainCo) – Adjusted EBITDA Reconciliations ($ in millions) 2015 2016 2017 Net income (loss) $121.8 $121.3 $196.0 Add back: Income taxes $73.5 $73.6 ($2.0) Interest expense, net of interest income $90.8 $138.4 $162.6 Depreciation and amortization $132.0 $152.7 $171.5 Intercompany interest ($37.
Slide 17: IAA (SpinCo) – Adjusted EBITDA Reconciliations
IAA (SpinCo) – Adjusted EBITDA Reconciliations ($ in millions) 2015 2016 2017 Net income (loss) $92.8 $101.1 $166.0 Add back: Income taxes $52.4 $59.3 $38.0 Interest expense, net of interest income – – – Depreciation and amortization $80.8 $87.9 $93.1 Intercompany interest $37.7 $37.8 $37.8 EBITDA $
Slide 18: IAA (SpinCo) – Adjusted EBITDAR Reconciliations
IAA (SpinCo) – Adjusted EBITDAR Reconciliations ($ in millions) 2015 2016 2017 Net income (loss) $92.8 $101.1 $166.0 Add back: Income taxes $52.4 $59.3 $38.0 Interest expense, net of interest income – – – Depreciation and amortization $80.8 $87.9 $93.1 Intercompany interest $37.7 $37.8 $37.8 Lease e
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