Openlane, Inc. · NYSE:OPLN
Openlane — KAR Auction Services — Goldman Sachs 21st Annual Global Retailing Conference (September 2014)
30 slides from Openlane's conference presentation, Sep 3, 2014
Slide 1: Goldman Sachs 21st Annual Global Retailing Conference
Goldman Sachs 21st Annual Global Retailing Conference September 3, 2013
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: 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 4: 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 5: 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 6: 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 7: ADESA.com: Clear Leader in Private Label Sales for Manufacturers
ADESA.com: Clear Leader in Private Label Sales for Manufacturers Current Private Label Sales 7
Slide 8: 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 ~$680 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 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 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 $146 $159 $156 $157 − Short-term (30-60 days) secured financing $117 Grow portfolio Consistent credit sta
Slide 11: Financial Overview
Financial Overview | Ad AUCTION SERVICES.
Slide 12: Historical Financial Performance
Historical Financial Performance Revenue Gross Profit ($ in millions) ($ in millions) $2,173 $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 13: Second Quarter 2014 Performance
Second Quarter 2014 Performance Revenue Gross Profit* $700 $600 $541 $586 $300 $263 $500 $250 $243 $400 $200 ($mm) ($mm) $300 $150 $200 $100 $100 $50 $0 $0 Q2 2013 Q2 2014 Q2 2013 Q2 2014 Adjusted EBITDA Adjusted Net Income Per Share $0.50 $180 $154 $0.42 $140 $0.34 ($mm) $120 $0.25 $60 $0.00 $0 Q2
Slide 14: June 30, 2014 Leverage
June 30, 2014 Leverage (US$ in millions) 6/30/2014 Maturity Term Loan B-1 $648.4 2017 Term Loan B-2* 1,114.5 2021 Revolving Credit Facility 0.0 2019 Capital Leases 33.1 ** Total 1,796.0 Less: Available Cash (215.1) Net Debt $1,580.9 Net Debt /Adjusted EBITDA 2.8X * Includes unamortized debt discount
Slide 15: Attractive Financial Model Generating Significant Free Cash Flow
Attractive Financial Model Generating Significant Free Cash Flow Adjusted EBITDA less Capital Expenditures Key Takeaways ($ in millions) $442 Significant free cash flow $396 $401 $398 $360 $264 High margin and low capital intensity business model (1) 2008 2009 2010 2011 2012 2013 Successfully
Slide 16: Key Investment Highlights
Key Investment Highlights Poised to Benefit from Positive Cyclical Trends – Expected Increases in Forward Volumes Established Market Leader Across Core Businesses Proven and Resilient Growth through a Diversified Business Mix Attractive Financial Model Generating Significant Free Cash Mult
Slide 17: Appendix
AUCTION SERVICES.
Slide 18: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as
Slide 19: 2008 Adjusted EBITDA Reconciliation
2008 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2008 ADESA IAA AFC Corporate Consolidated Net income (loss) $52.5 $9.2 ($151.3) ($126.6) ($216.2) Add back: Income taxes 33.7 6.3 10.2 (81.6) (31.4) Interest expense, net of interest income – 0.2 – 213.2 213.4 Depreciation a
Slide 20: 2009 Adjusted EBITDA Reconciliation
2009 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2009 ADESA IAA AFC Corporate Consolidated Net income (loss) $94.4 $25.8 $19.1 ($116.1) $23.2 Add back: Income taxes 56.0 16.2 8.4 (69.5) 11.1 Interest expense, net of interest income 0.5 1.4 – 170.3 172.2 Depreciation and am
Slide 21: 2010 Adjusted EBITDA Reconciliation
2010 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2010 ADESA IAA AFC Corporate Consolidated Net income (loss) $80.1 $44.7 $38.4 ($93.6) $69.6 Add back: Income taxes 43.6 26.7 21.1 (64.2) 27.2 Interest expense, net of interest income 0.9 2.3 7.2 130.9 141.3 Depreciation and
Slide 22: 2011 Adjusted EBITDA Reconciliation
2011 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2011 ADESA IAA AFC Corporate Consolidated Net income (loss) $55.8 $65.5 $57.2 ($106.3) $72.2 Add back: Income taxes 17.9 36.1 29.6 (65.8) 17.8 Interest expense, net of interest income 0.7 2.1 12.0 128.0 142.8 Depreciation an
Slide 23: 2012 Adjusted EBITDA Reconciliation
2012 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2012 ADESA IAA AFC Corporate Consolidated Net income (loss) $38.4 $56.5 $64.1 ($67.0) $92.0 Add back: Income taxes 14.5 33.7 46.0 (34.6) 59.6 Interest expense, net of interest income 0.8 1.4 15.0 101.9 119.1 Depreciation and
Slide 24: 2013 Adjusted EBITDA Reconciliation
2013 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2013 ADESA IAA AFC Corporate Consolidated Net income (loss) $50.2 $56.6 $76.1 ($115.2) $67.7 Add back: Income taxes 40.1 32.8 40.2 (31.6) 81.5 Interest expense, net of interest income 0.6 0.8 16.7 86.2 104.3 Depreciation and
Slide 25: Q2 2013 Adjusted EBITDA Reconciliation
Q2 2013 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2013 ADESA IAA AFC Corporate Consolidated Net income (loss) $17.3 $15.7 $16.9 ($16.5) $33.4 Add back: Income taxes 11.2 9.3 10.7 (8.3) 22.9 Interest expense, net of interest income 0.2 0.2 3.9 20.2 24.5 Depreciation a
Slide 26: Q2 2014 Adjusted EBITDA Reconciliation
Q2 2014 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2014 ADESA IAA AFC Corporate Consolidated Net income (loss) $24.4 $21.5 $18.8 ($13.9) $50.8 Add back: Income taxes 13.4 13.1 11.7 (8.1) 30.1 Interest expense, net of interest income 0.1 0.1 4.6 16.0 20.8 Depreciation
Slide 27: LTM Adjusted EBITDA Reconciliation
LTM Adjusted EBITDA Reconciliation ($ in millions) (unaudited) Twelve months Three months ended ended September 30, December 31, March 31, June 30, June 30, 2013 2013 2014 2014 2014 Net income (loss) $22.8 ($17.6) $20.7 $50.8 $76.7 Add back: Income taxes 19.6 22.0 9.8 30.1 81.5 Interest expense, net
Slide 28: Adjusted Net Income Per Share Reconciliation
Adjusted Net Income Per Share Reconciliation ($ 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 $23.2 (1) Loss on modification/extinguishment of debt, net of tax 3.2 – 33.2 20.3 – (2) Swap termination, net of tax – – 9.0 – –
Slide 29: Adjusted Net Income Per Share Reconciliation (Q2 2014 & Q2 2013)
Adjusted Net Income Per Share Reconciliation (Q2 2014 & Q2 2013) ($ in millions, except per share amounts) Three Months ended June 30, 2014 2013 Net income $50.8 $33.4 (1) Loss on extinguishment/modification of debt, net of tax – 1.0 (3) Stepped up depreciation and amortization expense, net of tax 7
Slide 30: 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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