Openlane, Inc. · NYSE:OPLN
Openlane — Investor Day (November 2024)
43 slides from Openlane's investor day presentation, Nov 19, 2024
Slide 1: Investor Update
Investor Update November 19, 2024 Make Wholesale Easy 1
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements contained in this presentation include, and OPENLANE may make related oral, "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In particular, statements made that are not historical facts (including b
Slide 3: Agenda
Agenda Opening Remarks Itunu Orelaru - Head, Investor Relations Strategy & Investment Highlights Peter Kelly - Chief Executive Officer AFC Overview, Strategy and Financial Reporting Improvements Will Mitchell - President, AFC Brad Lakhia - EVP and Chief Financial Officer Questions & Answers Peter Ke
Slide 4: Strategy & Investment Highlights
Strategy & Investment Highlights Peter Kelly Chief Executive Officer Investor Make Update Remarketing, Wholesale 2024 Simplified Easy 4
Slide 5: We make wholesale easy so our customers can be more successful
OUR PURPOSE We make wholesale easy so our customers can be more successful Remarketing, Investor Update Simplified 2024 5
Slide 6: Marketplace Segment Finance Segment
Marketplace Segment Finance Segment Remarketing, Make Investor Wholesale Update Simplified 2024 Easy 6
Slide 7: How We Make Wholesale Easy
How We Make Wholesale Easy Best Best Best Customer Marketplace Technology Experience More buyers and sellers and the Leveraging data, technology & AI Ease of use, dedicated human largest selection of inventory to promote trust and help dealers support and solutions that quickly generates the best ou
Slide 8: OPENLANE Investment Highlights
OPENLANE Investment Highlights Digital marketplace leader for wholesale used vehicles Large TAM with meaningful opportunities for growth Clear strategy to accelerate innovation & product pipeline Cash flow positive with ability to invest & deliver shareholder value Secular & cyclical fundamental sup
Slide 9: AFC Overview & Strategy
AFC Overview & Strategy Will Mitchell President, AFC Remarketing, Make Investor Wholesale Update Simplified 2024 Easy 9
Slide 10: AFC Floorplan Business
AFC Floorplan Business Finance Statistics 1.6M 14K 1.4K 90+ Loan Transaction Unique independent Approved Locations and Units in 2023 dealers in 2023 inventory sources service areas Products & Capabilities Hybrid Physical / Non-Auction Title Principal Lien Daily Digital Model Purchases Processing Pas
Slide 11: Highly Digital Floorplan Lifecycle
Highly Digital Floorplan Lifecycle Finance Manage Purchase1 Account Application Underwriting Floorplan Lifecycle Payoff Add Ancillary Vehicle Services NOTE: 1 Includes both auction and non-auction purchases, such as consumer trade-ins Investor Update 2024 11
Slide 12: Competitive Advantage Rooted in Customer-Centricity
Competitive Advantage Rooted in Customer-Centricity Service delivery Seasoned model underwriting strategy People Growth Risk Centralize AI risk models transactional tasks & scoring Relationship Focus Business on Proactive risk dealer’s lot mitigation Investor Update 2024 12
Slide 13: Complementary Digital Transformation Fueling Growth
Complementary Digital Transformation Fueling Growth Automating & Centralizing Service Delivery Enhanced Risk Field Tasks Model Management Repurposing field time to focus Creating an omnichannel Incorporating proprietary risk on growth & risk activities experience for dealers models into operational
Slide 14: AFC Fuels OPENLANE Marketplace
AFC Fuels OPENLANE Marketplace Leverage Add liquidity Deliver integrated Generate independent dealer to marketplace product & service strong cash flow relationships to fuel incremental offerings to fund OPENLANE to promote buyer transactions to increase innovation marketplace attach rate & growth In
Slide 15: AFC Financial Reporting Improvements
AFC Financial Reporting Improvements Brad Lakhia EVP & Chief Financial Officer Remarketing, Make Investor Wholesale Update Simplified 2024 Easy 15
Slide 16: AFC Investment Highlights
AFC Investment Highlights Industry-leading Leading market position and management team customer growth with ~14,000 37 unique independent dealers years Disciplined and differentiated High mix of fee revenue & limited risk management leading to low exposure to interest rate risk provision for credit
Slide 17: AFC Financial Reporting Improvement Overview
AFC Financial Reporting Improvement Overview Goals & Desired Outcomes Better Insights Enhanced Reporting Easier Valuation Improved understanding More transparent, simplified Easier and more of AFC’s business, information consistent with accurate ability for competitive strengths other financing comp
Slide 18: AFC | Historical Focus
AFC | Historical Focus ($ in millions, except for revenue per loan transaction) Finance Segment 2023 Interest income $248.4 Fee income $183.3 Other revenue $12.3 Provision for credit losses ($50.6) Total Finance revenue $393.4 Gross profit1 $327.5 % of revenue1 83.2% SG&A $49.8 Other (income) expens
Slide 19: Key AFC Metrics | Volume
Key AFC Metrics | Volume Historical Updated Loan Transactions 1 Floorplans Originated2 Floorplans Curtailed3 Total Loan Transactions NOTE: 1 Historical loan transactions include both loans paid off and loans extended, or curtailed. 2 Floorplans Originated is defined as new loans created. 3 Floorplan
Slide 20: Key AFC Metrics | Balance Sheet
Key AFC Metrics | Balance Sheet Historical Updated Receivables Delinquent % to Limited Total Managed Receivables Total Assets Intangible Assets Tangible Assets Total Parent Equity Tangible Parent Equity Investor Update 2024 20
Slide 21: Key AFC Metrics | Income Statement
Key AFC Metrics | Income Statement Historical Updated Provision for Credit Losses1 Total Finance Revenue (Fee + Interest) Operating Profit Finance Interest Expense Adjusted EBITDA Net Finance Margin Finance Provision for Credit Losses1 Operating Profit (calculation change) Adjusted EBITDA (no change
Slide 22: Investor Derived Performance Metrics based on Enhanced AFC Disclosures
Investor Derived Performance Metrics based on Enhanced AFC Disclosures Return on Tangible Shareholder’s Equity (ROTCE) Return on Equity (ROE) Return on Assets (ROA) Tangible Common Equity to Tangible Assets Debt to Equity Operating Leverage Investor Update 2024 22
Slide 23: AFC MD&A | Income Statement Presentation Updates
AFC MD&A | Income Statement Presentation Updates Historical MD&A Disclosure Go Forward MD&A Disclosure Adding AFC’s Interest Finance revenue Finance-related revenue (Dollars in millions except per loan transaction) 2023 Expense as a discrete item (Dollars in millions, Unaudited) 2023 Interest revenu
Slide 24: AFC MD&A | Performance Metrics & Balance Sheet
AFC MD&A | Performance Metrics & Balance Sheet Go Forward Disclosure Dollars in millions, Unaudited 2022 2023 Total receivables managed $2,389.1 $2,274.1 Average receivables managed1 $2,599.7 $2,359.2 Portfolio Allowance for credit losses $21.5 $23.0 Performance Allowance for credit losses2 0.9% 1.0
Slide 25: OPENLANE | Consolidated Updates
OPENLANE | Consolidated Updates Go Forward Disclosure Historical Disclosure Operating Revenues Operating Revenues (Dollars in millions, Unaudited) 2023 (Dollars in millions) 2023 Auction Fees $395.3 Auction Fees $395.3 Service Revenue $619.7 Service Revenue $619.7 Purchased Vehicle Sales $236.7 Movi
Slide 26: Strong Net Finance Margin Yields
Strong Net Finance Margin Yields High Mix of Fee Revenue & Limited Exposure to Interest Rate Risk 13.6% 10.9% LTM Peer Metric4 9.7% 5 Year Peer Average 2019 2020 2021 2022 2023 2024 LTM Revenue Yield1 17.3% 15.2% 13.9% 14.8% 18.8% 19.4% Interest Expense Yield2 3.1% 2.1% 1.9% 3.0% 5.5% 5.8% Net Finan
Slide 27: Industry Leading Loss Management
Industry Leading Loss Management Credit Loss Rate 2.8% LTM Peer 2.5% 5 Year Peer Average Metric1 2.1% 2.1% 2.3% 1.7% Target Range 0.4% 1.5% to 2.0% 0.2% 2019 2020 2021 2022 2023 2024 LTM NOTE: Data as of Q3 LTM 2024, based on public filings. Historically low Finance Provision for Credit Losses in 20
Slide 28: Comparably Lower Relative Leverage Enhances Returns
Comparably Lower Relative Leverage Enhances Returns 2.4 5 Year Peer Average 2.1 2.0 1.9 1.9 2.0 LTM Peer Metric1 1.8 1.6 2019 2020 2021 2022 2023 2024 LTM NOTE: Data as of Q3 LTM 2024, based on public filings. Debt to Equity for AFC is defined as AFC Gross Obligations Collateralized by Finance Recei
Slide 29: Exceptional Portfolio Returns
Exceptional Portfolio Returns Strong Return on Tangible Common Equity 21.4% 21.4% 22.1% 20.9% 19.9% 20.9% 5 Year Peer Average 15.9% LTM Peer 13.8% Metric1 2019 2020 2021 2022 2023 2024 LTM NOTE: Data as of Q3 LTM 2024, based on public filings. Return on Tangible Common Equity is defined as Net Incom
Slide 30: High Return on Assets
High Return on Assets 4.8% 4.7% 4.5% 4.3% 4.3% 3.2% 2.1% 5 Year Peer Average 2.3% LTM Peer Metric1 2019 2020 2021 2022 2023 2024 LTM NOTE: Data as of Q3 LTM 2024, based on public filings. Return on Assets is defined as Net Income divided by Average Total Assets. 1 LTM Peer Metric is the median of ou
Slide 31: Access to Efficient, Robust, Non-Recourse Financing
Access to Efficient, Robust, Non-Recourse Financing Recently refinanced U.S. and Canadian securitization programs ● Committed & competitive capital ● Fees maintained and improved ● Maturity managed in coordination with other OPENLANE debt and facility maturities U.S. Program Canadian Program Facilit
Slide 32: AFC Investment Highlights
AFC Investment Highlights Industry-leading Leading market position and management team customer growth with ~14,000 37 unique independent dealers years Disciplined and differentiated High mix of fee revenue & limited risk management leading to low exposure to interest rate risk provision for credit
Slide 33: AFC Customer Testimonial Video
AFC Customer Testimonial Video Remarketing, Make Investor Wholesale Update Simplified 2024 Easy 33
Slide 34: Q&A
Q&A Remarketing, Make Investor Wholesale Update Simplified 2024 Easy 34
Slide 35: Thank You
Thank You Make Investor Wholesale Update 2024 Easy 35
Slide 36: Reference & Additional Supporting Materials
Reference & Additional Supporting Materials Remarketing, Make Investor Wholesale Update Simplified 2024 Easy 36
Slide 37: Auto Finance/Consumer Metric Disclosure Benchmarking
Auto Finance/Consumer Metric Disclosure Benchmarking Enterprise P / 2025E Operating Value1 EPS1 P /BV 1 P / TBV 1 ROA 2 ROE 3 ROTCE 4 Leverage5 4.3% 14.6% 22.1% 13.7% Bread Financial $3.7B 6.9x 0.7x 1.0x 1.4% 10.5% 14.1% 26.6% Credit 2.4% 11.3% 11.3% $11.2B 10.3x 3.5x 3.5x 17.8% Acceptance Synchrony
Slide 38: Commercial Finance Metric Disclosure Benchmarking
Commercial Finance Metric Disclosure Benchmarking Enterprise P / 2025E Operating Value1 EPS1 P /BV1 P / TBV1 ROA2 ROE3 ROTCE4 Leverage5 4.3% 14.6% 22.1% 13.7% AerCap $61.1B 8.0x 1.1x 1.3x 3.5% 15.3% 18.5% 14.6% Trinity Industries $8.4B 18.5x 2.7x 3.4x 2.1% 14.7% 17.8% NM6 Ryder $13.5B 10.6x 2.0x 4.3
Slide 39: Metric Definition
Metric Definition Metric Definition Receivables Delinquent1 Receivables Delinquent divided by Total Receivables Managed Return on Tangible Shareholders’ Net Income divided by Average Tangible Parent Equity Equity (ROTCE) Return on Equity Net Income divided by Average Total Parent Equity Return on As
Slide 40: AFC Historical Data Reconciliation
AFC Historical Data Reconciliation ($ in millions, Unaudited) 20194 20204 2021 2022 2023 2024 LTM Finance receivables (gross) $2,115.2 $1,911.0 $2,529.0 $2,416.6 $2,305.0 $2,211.5 Accrued interest and fees $25.6 $18.4 $22.2 $27.5 $30.9 $27.0 Total receivables managed $2,089.6 $1,892.6 $2,506.8 $2,38
Slide 41: AFC Historical Data Reconciliation (Continued)
AFC Historical Data Reconciliation (Continued) ($ in millions, Unaudited) 20195 20205 2021 2022 2023 2024 LTM Yields Interest revenue1 8.3% 6.5% 6.6% 7.8% 10.5% 10.6% Fee and other revenue1 9.0% 8.7% 7.3% 7.0% 8.3% 8.8% Total Finance revenue1 17.3% 15.2% 13.9% 14.8% 18.8% 19.4% Finance interest expe
Slide 42: AFC Historical Data Reconciliation (Continued)
AFC Historical Data Reconciliation (Continued) ($ in millions, Unaudited) 20196 20206 2021 2022 2023 2024 LTM Obligations collateralized by finance $1,474.4 $1,282.8 $1,707.4 $1,697.0 $1,645.4 $1,549.2 receivables (gross) Unamortized securitization issuance costs ($13.2) ($21.6) ($15.1) ($19.4) ($13
Slide 43: YTD 2023 Adjusted EBITDA Reconciliation
YTD 2023 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2023 Marketplace Finance Consolidated Income (loss) from continuing operations ($277.5) $122.7 ($154.8) Add back: Income taxes (40.4) 48.7 8.3 Interest expense, net of interest income 21.7 130.6 152.3 Depreciation and am