Openlane, Inc. · NYSE:OPLN
Openlane — KAR Auction Services — Q1 2018 Earnings Presentation
27 slides from Openlane's earnings presentation, May 8, 2018
Slide 1: First Quarter 2018 Earnings Slides
First Quarter 2018 Earnings Slides May 8, 2018
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: Q1 2018 Highlights
Q1 2018 Highlights Revenues Highlights Fundamentals $866.6 $950.5 • Revenue growth +10% • Diversified and complementary 85.1 71.2 337.3 • Operating Adjusted EPS +32% business services model 297.4 • Controlling SG&A KAR • Adjusted EBITDA +9% 528.1 498.0 • Adjusted EBITDA margin of 24.1% from 2017 201
Slide 4: 2018 Outlook
2018 Outlook ANNUAL GUIDANCE 2018 Low 2018 High 2017 Net income $329.0 $349.7 $362.0 Add back: Income tax expense $115.6 $122.9 $36.0 Interest expense, net of interest income $191.0 $191.0 $162.6 Depreciation and amortization $268.0 $268.0 $264.6 EBITDA $903.6 $931.6 $825.2 Total addbacks, net ($8.6
Slide 5: KAR Q1 2018 Highlights
KAR Q1 2018 Highlights ($ in millions, except per share amounts) Q1 Q1 KAR Highlights* 2018 2017 Total operating revenues $950.5 $866.6 $7.0M acquisitions Gross profit** $415.5 $365.4 % of revenue 43.7% 42.2% SG&A $187.4 $157.4 $16.3M acquired SG&A EBITDA $228.0 $208.0 Adjusted EBITDA $229.4 $210.6
Slide 6: ADESA Q1 2018 Highlights
ADESA Q1 2018 Highlights ($ in millions, except RPU) Q1 Q1 ADESA Highlights* 2018 2017 Revenue $528.1 $498.0 +$7.0M acquisitions Gross profit** $222.1 $207.1 % of revenue 42.1% 41.6% SG&A $108.8 $87.3 6% growth excluding $16.3M of acquired SG&A EBITDA $109.0 $116.7 Adjusted EBITDA $119.1 $125.0 5% d
Slide 7: IAA Q1 2018 Highlights
IAA Q1 2018 Highlights ($ in millions) Q1 Q1 IAA Highlights* 2018 2017 Revenue $337.3 $297.4 Gross profit** $130.6 $108.3 % of revenue 38.7% 36.4 % Excluding HBC 39.2% vs 37.4% prior year SG&A $30.5 $25.9 EBITDA $100.1 $82.8 Adjusted EBITDA $101.7 $83.8 % of revenue 30.2% 28.2% Vehicles sold 643,000
Slide 8: AFC Q1 2018 Highlights
AFC Q1 2018 Highlights ($ in millions, except for revenue per loan transaction) Q1 Q1 AFC 2018 2017 Highlights* Interest and fee income $81.9 $71.3 Other revenue $2.9 $2.9 Provision for credit losses ($7.7) ($11.1) Other service revenue $8.0 $8.1 PWI revenue Total AFC revenue $85.1 $71.2 +20% revenu
Slide 9: Historical Data Appendix
AUCTION SERVICES. HISTORICAL DATA
Slide 10: ADESA Metrics - Annual
ADESA Metrics - Annual 2017 2016 2015 2014 2013 Revenue2 $1,937.5 $1,765.3 $1,427.8 $1,271.0 $1,165.5 Total Volume 3,180 2,885 2,465 2,198 2,055 Online Only Volume 938 743 592 495 407 Total Online Volume % 46% 42% 40% 38% 35% Physical Conversion % (N.A.) 60.4% 58.0% 58.3% 58.2% 56.9% Dealer Consignm
Slide 11: ADESA Metrics - Quarter
ADESA Metrics - Quarter 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 Revenue2 $528.1 $473.2 $477.1 $489.2 $498.0 $442.3 $457.4 $450.8 $414.8 Total Volume 878 744 788 830 818 700 732 750 703 Online Only Volume 309 237 241 245 215 177 180 198 188 Total Online Volume % 52% 49% 46% 46% 44% 43% 41% 41% 4
Slide 12: Used Vehicle Value Indices - Quarterly
Used Vehicle Value Indices - Quarterly YoY Index Change Age 1Q17 2Q17 3Q17 4Q17 1Q18 Industry All +4.1% +3.7% +1.9% +2.3% +0.0% JCP/NADA 0-8 yrs -4.7% -4.5% -2.6% -0.1% +0.8% Black Book 2-6 yrs -5.9% -5.1% -3.5% -0.8% -0.9% RVI 2-5 yrs -6.1% -5.6% -2.7% +0.1% +0.1% • Increased industry (commercial)
Slide 13: IAA Metrics - Annual
IAA Metrics - Annual 2017 2016 2015 2014 2013 Revenue $1,219.2 $1,098.0 $994.4 $895.9 $830.0 Total Volume 2,369 2,184 1,970 1,732 1,616 Inventory Growth (North America) 3% 25% 14% 20% -3% Purchased Vehicle Mix % 5% 7% 7% 6% 7% Gross Profit $441.1 $390.0 $360.8 $340.2 $284.1 Gross Margin (IAA) 36.2%
Slide 14: IAA Metrics - Quarter
IAA Metrics - Quarter 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 Revenue $337.3 $335.4 $287.7 $298.7 $297.4 $302.6 $261.0 $264.8 $269.6 Total Volume 643 635 562 580 592 610 516 523 534 Inventory Growth (North 4% 3% 12% 9% 17% 25% 22% 11% 4% America) Purchased Vehicle Mix % 4% 4% 5% 5% 5% 6% 7% 6%
Slide 15: IAA Q1 2018 Gross Profit
IAA Q1 2018 Gross Profit ($ in millions) Three Months Ended Three Months Ended March 31, 2018 March 31, 2017 IAA HBC Total IAA HBC Total Revenue $327.6 $9.7 $337.3 $284.6 $12.8 $297.4 Cost of Services** $199.1 $7.6 $206.7 178.2 10.9 189.1 Gross Profit** $128.5 $2.1 $130.6 $106.4 $1.9 $108.3 % of Rev
Slide 16: AFC Metrics - Annual
AFC Metrics - Annual 2017 2016 2015 2014 2013 Revenue $301.3 $286.8 $268.4 $250.1 $224.7 Loan Transaction Units (LTU) 1,688 1,718 1,607 1,445 1,355 Revenue per Loan Transaction, $159 $148 $150 $155 $157 Excluding “Other Service Revenue” Ending Managed Finance Receivables $1,912.6 $1,792.2 $1,641.0 $
Slide 17: AFC Metrics - Quarter
AFC Metrics - Quarter 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 Revenue $85.1 $81.8 $78.2 $70.1 $71.2 $68.8 $71.2 $72.9 $73.9 Loan Transaction Units 464 414 402 416 456 417 426 422 454 (LTU) Revenue per Loan Transaction, Excluding $166 $178 $174 $148 $138 $145 $148 $154 $146 “Other Service Revenu
Slide 18: AFC Provision for Credit Losses - Annual
AFC Provision for Credit Losses - Annual 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Ending Managed $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 $1,802.2 $1,732.5 $1,474.9 $1,208.4 $1,051.4 $925.8 $798.8 $688.6 $516.4
Slide 19: AFC Provision for Credit Losses - Quarterly
AFC Provision for Credit Losses - Quarterly 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 Ending Managed $1,933.2 $1,912.6 $1,809.2 $1,736.5 $1,760.7 $1,792.2 $1,785.4 $1,738.6 $1,705.5 Receivables Average Managed $1,922.9 $1,860.9 $1,772.9 $1,748.6 $1,776.5 $1,788.8 $1,762.0 $1,722.1 $1,673.3 Receiv
Slide 20: Appendix
AUCTION SERVICES. APPENDIX
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as
Slide 22: Q1 2018 Adjusted EBITDA Reconciliation
Q1 2018 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended March 31, 2018 ADESA IAA AFC Corporate Consolidated Net income (loss) $54.2 $50.3 $25.7 ($40.2) $90.0 Add back: Income taxes 15.5 16.3 8.4 (13.8) 26.4 Interest expense, net of interest income 0.4 – 13.4 27.5 41.3 Depreciation
Slide 23: Q1 2017 Adjusted EBITDA Reconciliation
Q1 2017 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended March 31, 2017 ADESA IAA AFC Corporate Consolidated Net income (loss) $51.3 $32.2 $20.9 ($35.2) $69.2 Add back: Income taxes 29.0 18.0 11.8 (24.7) 34.1 Interest expense, net of interest income 0.1 – 10.3 29.8 40.2 Depreciation
Slide 24: Operating Adjusted Net Income per Share Reconciliation
Operating Adjusted Net Income per Share Reconciliation ($ in millions, except per share amounts), (unaudited) Three Months ended March 31, 2018 2017 Net income $90.0 $69.2 Acquired amortization expense 26.9 25.2 Income taxes (1) (6.1) (8.3) Operating adjusted net income $110.8 $86.1 Net income per s
Slide 25: Q1 2018 ADESA Incremental Operating Profit Margin Analysis
Q1 2018 ADESA Incremental Operating Profit Margin Analysis Incremental Operating Profit % ($ in millions) ADESA IMPACT OF REPORTED EXCLUDING ACQUISITIONS ACQUISITIONS Q1 2018 Revenue $528.1 $7.0 $521.1 Operating Profit $82.1 ($15.9) $98.0 Operating Profit % 15.5% (227.1%) 18.8% Q1 2017 Revenue $498.
Slide 26: Q1 2018 IAA Incremental Operating Profit Margin Analysis
Q1 2018 IAA Incremental Operating Profit Margin Analysis Incremental Operating Profit % ($ in millions) REPORTED Q1 2018 Revenue $337.3 Operating Profit $76.0 Operating Profit % 22.5% Q1 2017 Revenue $297.4 Operating Profit $59.2 Operating Profit % 19.9% Q1 2018 Reported Growth Reported Revenue Grow
Slide 27: Q1 2018 AFC Incremental Operating Profit Margin Analysis
Q1 2018 AFC Incremental Operating Profit Margin Analysis Incremental Operating Profit % ($ in millions) REPORTED Q1 2018 Revenue $85.1 Operating Profit $47.0 Operating Profit % 55.2% Q1 2017 Revenue $71.2 Operating Profit $34.3 Operating Profit % 48.2% Q1 2018 Reported Growth Reported Revenue Growth