Slide 1: Second Quarter 2020 Earnings Slides
Second Quarter 2020 Earnings Slides August 4, 2020
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 based on management’s current expectations, are not guarantees of future performance and are subject t
Slide 3: Business Trends Through Second Quarter
Business Trends Through Second Quarter April • Vehicles sold: 27% of April 2019 • Total revenue: 28% of April 2019 • Consolidated gross profit: Below 20% of revenue • Operating loss for the month May • Vehicles sold: 65% of May 2019 • Total revenue: 58% of May 2019 • Consolidated gross profit: 47% o
Slide 4: Second Quarter Summary
Second Quarter Summary ❑ Vehicles sold down 35% YoY o Consolidated revenue declined 42% ❑ Operations o 100% of transactions online o Ancillary services limited o Improved gross profit margin % o Reduced operating expenses as a result of reduced headcount ❑ Liquidity o Cash flow positive o Over $900M
Slide 5: Perpetual Convertible Preferred Stock
Perpetual Convertible Preferred Stock ❑June 2020 investment led by funds advised by Apax Partners, L.P. with participation by Periphas Capital, L.P. ❑$550M in newly issued perpetual convertible preferred stock ❑7.0% dividend; PIK for first 8 quarters ❑Converts to common at $17.75/share 5
Slide 6: June 30, 2020 Leverage
June 30, 2020 Leverage (US$ in millions) Balance Maturity Term Loan B-6 (Adjusted LIBOR + 2.25%) $943 2026 Revolving Credit Facility (Adjusted LIBOR + 1.75%) - 2024 Senior Notes (Fixed 5.125%) 950 2025 Finance Leases & Other 38 Total 1,931 Less: Available Cash* (879) Net Debt $1,052 Senior Secured N
Slide 7: Second Quarter Results
WANS AUCTION SERVICES« Second Quarter Results
Slide 8: KAR Q2 2020 Highlights
KAR Q2 2020 Highlights ($ in millions, except per share amounts) Q2 Q2 KAR Highlights* 2020 2019 Total operating revenues $419.0 $719.1 Gross profit** $183.9 $301.7 % of revenue 43.9% 42.0% 49.8% in Q2 2020, excluding purchased vehicle sales SG&A $112.3 $163.2 Q2 2020 includes goodwill/intangibles i
Slide 9: ADESA Q2 2020 Highlights
ADESA Q2 2020 Highlights ($ in millions, except RPU) ADESA Q2 2020 Q2 2019 Highlights* Auction fees and services revenue $312.6 $553.1 Purchased vehicle sales $49.6 $79.3 Total ADESA Revenue $362.2 $632.4 Decrease in vehicles sold and average revenue per vehicle sold Gross profit** $145.0 $239.5 45%
Slide 10: AFC Q2 2020 Highlights
AFC Q2 2020 Highlights ($ in millions, except for revenue per loan transaction) Q2 Q2 AFC 2020 2019 Highlights* Interest and fee income $65.1 $83.7 Other revenue $2.0 $2.6 Provision for credit losses ($19.0) ($8.4) Warranty contract revenue $8.7 $8.8 PWI revenue Total AFC revenue $56.8 $86.7 -35% re
Slide 11: Year-to-Date Results
WANS AUCTION SERVICES« Year-to-Date Results
Slide 12: KAR Six Months Ended June 30, 2020 Highlights
KAR Six Months Ended June 30, 2020 Highlights ($ in millions, except per share amounts) KAR YTD 2020 YTD 2019 Highlights* Total operating revenues $1,064.5 $1,408.7 Gross profit** $434.8 $597.4 % of revenue 40.8% 42.4% 46.3% YTD 2020, excluding purchased vehicle sales SG&A $274.7 $338.4 YTD 2020 inc
Slide 13: ADESA Six Months Ended June 30, 2020 Highlights
ADESA Six Months Ended June 30, 2020 Highlights ($ in millions, except RPU) ADESA YTD 2020 YTD 2019 Highlights* Auction fees and services revenue $804.1 $1,095.0 Operations shut down the last 2 weeks of March Purchased vehicle sales $125.1 $137.1 Includes $12.7M from acquisitions Total ADESA Revenue
Slide 14: AFC Six Months Ended June 30, 2020 Highlights
AFC Six Months Ended June 30, 2020 Highlights ($ in millions, except for revenue per loan transaction) YTD YTD AFC 2020 2019 Highlights* Interest and fee income $148.9 $170.6 Other revenue $4.7 $5.4 Provision for credit losses ($35.9) ($16.6) Warranty contract revenue $17.6 $17.2 PWI revenue Total A
Slide 15: Historical Data
AUCTION SERVICES. HISTORICAL DATA
Slide 16: ADESA Revenue & Gross Profit
ADESA Revenue & Gross Profit 3Q18 4Q18 2018 1Q19 2Q19 3Q19 4Q19 2019 1Q20 2Q20 Auction Fees & $496.0 $475.3 $1,985.1 $541.9 $553.1 $534.5 $504.0 $2,133.5 $491.5 $312.6 Services Revenue Purchased Vehicle $31.0 $33.2 $116.8 $57.8 $79.3 $79.1 $79.3 $295.5 $75.5 $49.6 Sales Total ADESA $527.0 $508.5 $2,
Slide 17: ADESA Metrics - Annual
ADESA Metrics - Annual 2019 2018 2017 2016 2015 Revenue2 $2,429.0 $2,101.9 $1,937.5 $1,765.3 $1,427.8 Total Volume 3,784 3,472 3,180 2,885 2,465 Online Only Volume (N.A.) 1,533 1,304 938 743 592 Total Online Volume %3 58% 54% 46% 42% 40% Physical Conversion % (N.A.) 62.8% 61.6% 60.4% 58.0% 58.3% Dea
Slide 18: ADESA Metrics - Quarter
ADESA Metrics - Quarter 2Q20 1Q20 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 Revenue2 $362.2 $567.0 $583.3 $613.6 $632.4 $599.7 $508.5 $527.0 $538.3 Total Volume 648 862 887 957 994 945 811 876 907 Online Only Volume (N.A.) 321 367 355 396 416 367 306 343 346 Total Online Volume %3 100% 63% 59% 59% 59% 57%
Slide 19: AFC Metrics - Annual
AFC Metrics - Annual 2019 2018 2017 2016 2015 Revenue $352.9 $340.9 $301.3 $286.8 $268.4 Loan Transaction Units (LTU) 1,783 1,760 1,688 1,718 1,607 Revenue per Loan Transaction, $178 $175 $159 $148 $150 Excluding “Warranty Contract Revenue” Ending Managed Finance Receivables $2,115.2 $2,014.8 $1,912
Slide 20: AFC Metrics - Quarter
AFC Metrics - Quarter 2Q20 1Q20 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 Revenue $56.8 $78.5 $88.0 $88.3 $86.7 $89.9 $85.3 $85.4 $85.1 Loan Transaction Units 420 448 443 442 437 461 428 433 435 (LTU) Revenue per Loan Transaction, Excluding $115 $155 $178 $180 $178 $177 $180 $177 $177 “Warranty Contract Re
Slide 21: AFC Provision for Credit Losses - Annual
AFC Provision for Credit Losses - Annual 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Ending Managed $2,115.2 $2,014.8 $1,912.6 $1,792.2 $1,641.0 $1,371.1 $1,107.6 $1,004.2 $883.2 $771.6 $613.0 $506.6 $847.9 Receivables Average Managed $2,059.9 $1,959.8 $1,802.2 $1,732.5 $1,474.9
Slide 22: AFC Provision for Credit Losses - Quarterly
AFC Provision for Credit Losses - Quarterly 2Q20 1Q20 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 Ending Managed $1,548.3 $1,954.8 $2,115.2 $2,110.4 $2,070.1 $1,989.1 $2,014.8 $1,979.7 $1,958.6 Receivables Average Managed $1,751.6 $2,035.0 $2,112.8 $2,090.3 $2,029.6 $2,002.0 $1,997.3 $1,969.2 $1,945.9 Receiv
Slide 23: Appendix
AUCTION SERVICES. APPENDIX
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as
Slide 25: Q2 2020 Adjusted EBITDA Reconciliation
Q2 2020 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2020 ADESA AFC Corporate Consolidated Net income (loss) from continuing ($4.4) $16.0 ($43.9) ($32.3) operations Add back: Income taxes 2.5 5.6 (12.7) (4.6) Interest expense, net of interest income 0.6 9.2 20.8 30.6 De
Slide 26: Q2 2019 Adjusted EBITDA Reconciliation
Q2 2019 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2019 ADESA AFC Corporate Consolidated Net income (loss) from continuing $50.5 $27.4 ($50.5) $27.4 operations Add back: Income taxes 21.8 11.3 (24.4) 8.7 Interest expense, net of interest income 0.6 16.1 38.3 55.0 Depr
Slide 27: YTD 2020 Adjusted EBITDA Reconciliation
YTD 2020 Adjusted EBITDA Reconciliation ($ in millions) Six Months ended June 30, 2020 ADESA AFC Corporate Consolidated Net income (loss) from continuing $19.7 $40.6 ($89.8) ($29.5) operations Add back: Income taxes 11.3 13.7 (27.6) (2.6) Interest expense, net of interest income 1.2 22.7 43.9 67.8 D
Slide 28: YTD 2019 Adjusted EBITDA Reconciliation
YTD 2019 Adjusted EBITDA Reconciliation ($ in millions) Six Months ended June 30, 2019 ADESA AFC Corporate Consolidated Net income (loss) from continuing $92.9 $57.9 ($108.1) $42.7 operations Add back: Income taxes 37.7 22.1 (44.6) 15.2 Interest expense, net of interest income 1.0 33.0 76.9 110.9 De
Slide 29: Operating Adjusted Net Income from Continuing Operations per Share Reconciliation
Operating Adjusted Net Income from Continuing Operations per Share Reconciliation ($ in millions, except per share amounts), (unaudited) Three Months ended Six Months ended June 30, June 30, 2020 2019 2020 2019 Net income (loss) ($32.3) $55.6 ($29.5) $133.4 Less: Income from discontinued operations