Openlane, Inc. · NYSE:OPLN
Openlane — KAR Auction Services — Corporate Update (November 2014)
31 slides from Openlane's corporate update, Nov 25, 2014
Slide 1: KAR Auction Services, Inc. Corporate Update
KAR Auction Services, Inc. Corporate Update November 2014
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 Proven and Resilient Growth through a Diversified Business Mix Attractive Financial Model Generating Significant Free Cash Mult
Slide 4: Leading Provider of Vehicle Auction Services in North America
Leading Provider of Vehicle Auction Services in North America 2013 Revenue by Segment 2013 Adj. EBITDA by Segment(1) AFC 10% AFC 22% ADESA 3.7mm vehicles sold in 2013 42% IAAI ADESA 38% 52% Revenue $2,173mm Adj. EBITDA $538mm % margin 24.8% IAAI 36% Whole Car Auctions Salvage Vehicle Auctions Vehicl
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 275 Million units Used Vehicle Removed from New Vehicle Sales Transactions in Operation 17 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 ~$545 / vehicle* ~$460 / 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 9.7 9.5 9
Slide 8: ADESA.com: Clear Leader in Private Label Sales for Manufacturers
ADESA.com: Clear Leader in Private Label Sales for Manufacturers Current Private Label Sales 8
Slide 9: Off-lease "Auction Funnel"
Off-lease “Auction Funnel” Auction Inventory Gross Fees Margin % ~$100 Higher “Online Only” – Private Label ~2-3 days “Online Only” – Open ~2-3 days ADESA In-lane buyer or Online buyer Competitors ~$695 Lower 9
Slide 10: 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 11.0 collision repair 258 264 10.5 251 244 10.0 9.5 Increasing vehicle complexity and technology content 2003 2004 2005 200
Slide 11: 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 $146 $159 $156 $157 − Short-term (30-60 days) secured financing $117 Grow portfolio Consistent credit sta
Slide 12: Financial Overview
Financial Overview | Ad AUCTION SERVICES.
Slide 13: Historical Financial Performance
Historical Financial Performance Revenue Gross Profit ($ in millions) ($ in millions) $2,173 $941 $1,963 $851 $876 $1,736 $1,823 $1,886 $225 $734 $815 $169 $194 $94 $136 $830 $610 $716 $553 $700 $1,089 $1,076 $1,017 $1,053 $1,118 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 ADESA IAA AFC Visibl
Slide 14: Third Quarter 2014 Performance
Third Quarter 2014 Performance Revenue Gross Profit* $700 $589 $600 $534 $300 $261 $500 $250 $238 $400 $200 $300 ($mm) ($mm) $150 $200 $100 $100 10% $0 $50 10% $0 Q3 2013 Q3 2014 Q3 2013 Q3 2014 Adjusted EBITDA Adjusted Net Income Per Share $0.50 $200 $0.40 $149 $150 $131 $0.29 ($mm) $0.25 $100 $50
Slide 15: September 30, 2014 Leverage
September 30, 2014 Leverage (US$ in millions) 9/30/2014 Maturity Term Loan B-1 $646.2 2017 Term Loan B-2* 1,110.8 2021 Revolving Credit Facility 0.0 2019 Capital Leases 36.7 ** Total 1,793.7 Less: Available Cash (148.6) Net Debt $1,645.1 Net Debt /Adjusted EBITDA 2.8X * Includes unamortized debt dis
Slide 16: Attractive Financial Model Generating Significant Free Cash Flow
Attractive Financial Model Generating Significant Free Cash Flow Adjusted EBITDA less Capital Expenditures Key Takeaways ($ in millions) $442 Significant free cash flow $396 $401 $398 $360 High margin and low capital intensity business $264 model (1) 2008 2009 2010 2011 2012 2013 Successfully
Slide 17: Key Investment Highlights
Key Investment Highlights Poised to Benefit from Positive Cyclical Trends – Expected Increases in Forward Volumes Established Market Leader Across Core Businesses Proven and Resilient Growth through a Diversified Business Mix Attractive Financial Model Generating Significant Free Cash Mult
Slide 18: Appendix
KAR AUCTION SERVICES. V4i\ x apes KA AUCTION SERVICES.
Slide 19: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as
Slide 20: 2008 Adjusted EBITDA Reconciliation
2008 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2008 ADESA IAA AFC Corporate Consolidated Net income (loss) $52.5 $9.2 ($151.3) ($126.6) ($216.2) Add back: Income taxes 33.7 6.3 10.2 (81.6) (31.4) Interest expense, net of interest income – 0.2 – 213.2 213.4 Depreciation a
Slide 21: 2009 Adjusted EBITDA Reconciliation
2009 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2009 ADESA IAA AFC Corporate Consolidated Net income (loss) $94.4 $25.8 $19.1 ($116.1) $23.2 Add back: Income taxes 56.0 16.2 8.4 (69.5) 11.1 Interest expense, net of interest income 0.5 1.4 – 170.3 172.2 Depreciation and am
Slide 22: 2010 Adjusted EBITDA Reconciliation
2010 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2010 ADESA IAA AFC Corporate Consolidated Net income (loss) $80.1 $44.7 $38.4 ($93.6) $69.6 Add back: Income taxes 43.6 26.7 21.1 (64.2) 27.2 Interest expense, net of interest income 0.9 2.3 7.2 130.9 141.3 Depreciation and
Slide 23: 2011 Adjusted EBITDA Reconciliation
2011 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2011 ADESA IAA AFC Corporate Consolidated Net income (loss) $55.8 $65.5 $57.2 ($106.3) $72.2 Add back: Income taxes 17.9 36.1 29.6 (65.8) 17.8 Interest expense, net of interest income 0.7 2.1 12.0 128.0 142.8 Depreciation an
Slide 24: 2012 Adjusted EBITDA Reconciliation
2012 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2012 ADESA IAA AFC Corporate Consolidated Net income (loss) $38.4 $56.5 $64.1 ($67.0) $92.0 Add back: Income taxes 14.5 33.7 46.0 (34.6) 59.6 Interest expense, net of interest income 0.8 1.4 15.0 101.9 119.1 Depreciation and
Slide 25: 2013 Adjusted EBITDA Reconciliation
2013 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2013 ADESA IAA AFC Corporate Consolidated Net income (loss) $50.2 $56.6 $76.1 ($115.2) $67.7 Add back: Income taxes 40.1 32.8 40.2 (31.6) 81.5 Interest expense, net of interest income 0.6 0.8 16.7 86.2 104.3 Depreciation and
Slide 26: Q3 2013 Adjusted EBITDA Reconciliation
Q3 2013 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended September 30, 2013 ADESA IAA AFC Corporate Consolidated Net income (loss) $14.5 $13.8 $18.8 ($24.3) $22.8 Add back: Income taxes 9.1 8.4 12.0 (9.9) 19.6 Interest expense, net of interest income – 0.2 4.6 21.0 25.8 Depreciation
Slide 27: Q3 2014 Adjusted EBITDA Reconciliation
Q3 2014 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended September 30, 2014 ADESA IAA AFC Corporate Consolidated Net income (loss) $22.3 $19.1 $20.0 ($13.9) $47.5 Add back: Income taxes 13.4 11.0 12.1 (8.1) 28.4 Interest expense, net of interest income 0.1 – 4.7 15.4 20.2 Depreciati
Slide 28: LTM Adjusted EBITDA Reconciliation
LTM Adjusted EBITDA Reconciliation ($ in millions) (unaudited) Twelve months Three months ended ended December 31, March 31, June 30, September 30, September 30, 2013 2014 2014 2014 2014 Net income (loss) ($17.6) $20.7 $50.8 $47.5 $101.4 Add back: Income taxes 22.0 9.8 30.1 28.4 90.3 Interest expens
Slide 29: Adjusted Net Income Per Share Reconciliation
Adjusted Net Income Per Share Reconciliation ($ in millions, except per share amounts) Year ended December 31, 2013 2012 2011 2010 2009 Net income $67.7 $92.0 $72.2 $69.6 $23.2 (1) Loss on modification/extinguishment of debt, net of tax 3.2 – 33.2 20.3 – (2) Swap termination, net of tax – – 9.0 – –
Slide 30: Adjusted Net Income Per Share Reconciliation (Q3 2014 & Q3 2013)
Adjusted Net Income Per Share Reconciliation (Q3 2014 & Q3 2013) ($ in millions, except per share amounts) Three Months ended September 30, 2014 2013 Net income $47.5 $22.8 (1) Loss on extinguishment/modification of debt, net of tax – – (3) Stepped up depreciation and amortization expense, net of ta
Slide 31: 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 modification/extinguishment of debt totaling $5.4 mil
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