Openlane, Inc. · NYSE:OPLN
Openlane — KAR Auction Services — Q2 2017 Earnings Presentation
26 slides from Openlane's earnings presentation, Aug 8, 2017
Slide 1: Q2 2017 & Year-to-Date Earnings Slides
Q2 2017 & Year-to-Date Earnings Slides August 8, 2017
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: Q2 2017 Highlights
Q2 2017 Highlights 3 Revenues Highlights Fundamentals KAR • Revenue growth +9% • Adjusted EBITDA +13% • Operating Adjusted EPS +18% • Adjusted EBITDA margin grew to 26% from 25% in prior year • Diversified and complementary business services model • Leveraging unique data and analytic capabilities •
Slide 4: 2017 Outlook
2017 Outlook 4 KAR Auction Services has updated its previous outlook for the extinguishment of debt associated with the May 2017 debt refinancing as well as a decrease in cash taxes and expects Net Income Per Share, Operating Adjusted Net Income Per Share and Adjusted EBITDA above the midpoint of th
Slide 5: Key Operating Metrics
Key Operating Metrics 5 2Q17 2Q16 ADESA Physical Vehicles Sold Growth1 1% 3% Online Only Vehicles Sold Growth 24% 29% Physical RPU Growth 1% 8% IAA Vehicles Sold Growth (includes HBC) 11% 6% Inventory Growth (excludes HBC) 9% 11% RPU Growth (includes HBC) 2% 1% AFC LTU Growth -1% 10% Provision for C
Slide 6: Capital Allocation Framework
Capital Allocation Framework Over $700M Returned to Shareholders 2015 – 2017 6 Priorities Historically ~18% - 20% of Adjusted EBITDA, plus strategic investments Technology ~50% Physical ~50% 45% - 50% of FCF Highlights consistency & strength of free cash flow Acquisitions that leverage w
Slide 7: KAR Q2 2017 Highlights
KAR Q2 2017 Highlights 7 ($ in millions, except per share amounts) KAR Q2 2017 Q2 2016 Highlights* Total operating revenues $858.0 $788.5 Gross profit** $376.3 $340.9 SG&A $154.6 $146.9 +$4.4M acquired SG&A EBITDA $195.5 $194.2 Adjusted EBITDA $223.5 $197.1 Net income $57.2 $61.8 Net income per shar
Slide 8: ADESA Q2 2017 Highlights
ADESA Q2 2017 Highlights 8 ($ in millions, except RPU) ADESA Q2 2017 Q2 2016 Highlights* Revenue $489.2 $450.8 +11% volume, +$18.2M acquisitions Gross profit** $210.5 $191.6 % of revenue 43.0% 42.5% SG&A $85.2 $80.6 +$4.4M acquired SG&A EBITDA $123.3 $109.2 Adjusted EBITDA $130.6 $115.7 % of revenue
Slide 9: Used Vehicle Value Indices
Increased industry (commercial) volumes are driving wholesale prices higher (ADESA) Revenue per unit sold has increased as used vehicle prices decline as a result of increased commercial mix (ADESA) Declining used car values increase likelihood of total losses (IAA) YoY Index Change Age 1Q17 2
Slide 10: IAA Q2 2017 Highlights
IAA Q2 2017 Highlights 10 ($ in millions) IAA Q2 2017 Q2 2016 Highlights* Revenue $298.7 $264.8 +11% volume, -$3.2M HBC, -$1.2M GBP currency Gross profit** $117.2 $97.5 % of revenue 39.2% 36.8% SG&A $27.5 $26.5 EBITDA $90.2 $71.0 Adjusted EBITDA $90.5 $71.4 % of revenue 30.3% 27.0% Vehicles sold 580
Slide 11: IAA Q2 2017 Gross Profit
IAA Q2 2017 Gross Profit 11 ($ in millions) IAA HBC Total IAA HBC Total Revenue $288.5 $10.2 $298.7 $251.4 $13.4 $264.8 Cost of Services** 172.6 8.9 181.5 154.9 12.4 167.3 Gross Profit $115.9 $1.3 $117.2 $96.5 $1.0 $97.5 % of Revenue 40.2% 12.7% 39.2% 38.4% 7.5% 36.8% * For a more complete explanati
Slide 12: AFC Q2 2017 Highlights
($ in millions, except for revenue per loan transaction) AFC Q2 2017 Q2 2016 Highlights* Interest and fee income $70.0 $67.7 Other revenue $3.0 $2.6 Provision for credit losses ($11.4) ($5.5) Other service revenue $8.5 $8.1 Total AFC revenue $70.1 $72.9 -4% revenue per LTU Gross profit** $48.6 $51.8
Slide 13: AFC Provision for Credit Losses
AFC Provision for Credit Losses 13 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 3Q15 2Q15 Ending Managed Receivables $1,736.5 $1,760.7 $1,792.2 $1,785.4 $1,738.6 $1,705.5 $1,641.0 $1,529.6 $1,476.9 Average Managed Receivables $1,748.6 $1,776.5 $1,788.8 $1,762.0 $1,722.1 $1,673.3 $1,585.3 $1,503.3 $1,416.4 Pro
Slide 14: Year-to-Date Slides
KAR Year-to-Date Slides AUCTION SERVICES.
Slide 15: KAR Six Months Ended June 30, 2017 Highlights
KAR Six Months Ended June 30, 2017 Highlights 15 ($ in millions, except per share amounts) KAR YTD 2017 YTD 2016 Highlights* Total operating revenues $1,724.6 $1,546.8 Gross profit** $741.7 $667.2 SG&A $312.0 $288.0 +$13.3M acquired SG&A EBITDA $403.5 $376.7 Adjusted EBITDA $434.1 $386.6 Net income
Slide 16: ADESA Six Months Ended June 30, 2017 Highlights
ADESA Six Months Ended June 30, 2017 Highlights 16 ($ in millions, except RPU) ADESA YTD 2017 YTD 2016 Highlights* Revenue $987.2 $865.6 +13% volume, +$66.6M acquisitions Gross profit** $417.6 $368.0 % of revenue 42.3% 42.5% SG&A $172.5 $157.2 +13.3M acquired SG&A EBITDA $240.0 $206.3 Adjusted EBITD
Slide 17: IAA Six Months Ended June 30, 2017 Highlights
IAA Six Months Ended June 30, 2017 Highlights 17 ($ in millions) IAA YTD 2017 YTD 2016 Highlights* Revenue $596.1 $534.4 +11% volume, -$4.3M HBC, -$3.2M GBP currency Gross profit** $225.5 $193.6 +$0.8M HBC % of revenue 37.8% 36.2% SG&A $53.4 $52.2 EBITDA $173.0 $141.5 Adjusted EBITDA $174.3 $142.5 %
Slide 18: IAA Six Months Gross Profit
IAA Six Months Ended June 30, 2017 Gross Profit 18 ($ in millions) IAA HBC Total IAA HBC Total Revenue $573.1 $23.0 $596.1 $507.1 $27.3 $534.4 Cost of Services** 350.8 19.8 370.6 315.9 24.9 340.8 Gross Profit $222.3 $3.2 $225.5 $191.2 $2.4 $193.6 % of Revenue 38.8% 13.9% 37.8% 37.7% 8.8% 36.2% * For
Slide 19: AFC Six Months Ended June 30, 2017 Highlights
($ in millions, except for revenue per loan transaction) AFC YTD 2017 YTD 2016 Highlights* Interest and fee income $141.3 $137.1 Other revenue $5.9 $5.0 Provision for credit losses ($22.5) ($11.0) Other service revenue $16.6 $15.7 -5% revenue per LTU Total AFC revenue $141.3 $146.8 Gross profit** $9
Slide 20: Appendix
KAR ; AUCTION Appendix SERVICES.
Slide 21: EBITDA and Adjusted EBITDA Definitions
EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as described in the company's
Slide 22: Q2 2017 Adjusted EBITDA Reconciliation
22 Q2 2017 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2017 ADESA IAA AFC Corporate Consolidated Net income (loss) $53.7 $37.3 $20.3 ($54.1) $57.2 Add back: Income taxes 33.8 20.6 12.5 (33.0) 33.9 Interest expense, net of interest income (0.1) – 10.5 29.5 39.9 Deprecia
Slide 23: Q2 2016 Adjusted EBITDA Reconciliation
23 Q2 2016 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2016 ADESA IAA AFC Corporate Consolidated Net income (loss) $46.2 $25.2 $23.0 ($32.6) $61.8 Add back: Income taxes 27.1 15.1 14.0 (18.5) 37.7 Interest expense, net of interest income – – 8.2 27.5 35.7 Depreciation
Slide 24: YTD 2017 Adjusted EBITDA Reconciliation
24 YTD 2017 Adjusted EBITDA Reconciliation ($ in millions) Six Months ended June 30, 2017 ADESA IAA AFC Corporate Consolidated Net income (loss) $105.0 $69.5 $41.2 ($89.3) $126.4 Add back: Income taxes 62.8 38.6 24.3 (57.7) 68.0 Interest expense, net of interest income – – 20.8 59.3 80.1 Depreciatio
Slide 25: YTD 2016 Adjusted EBITDA Reconciliation
25 YTD 2016 Adjusted EBITDA Reconciliation ($ in millions) Six Months ended June 30, 2016 ADESA IAA AFC Corporate Consolidated Net income (loss) $85.5 $50.1 $47.0 ($60.1) $122.5 Add back: Income taxes 50.4 30.0 28.6 (34.6) 74.4 Interest expense, net of interest income 0.1 – 16.0 48.3 64.4 Depreciati
Slide 26: Operating Adjusted Net Income per Share Reconciliation
26 Operating Adjusted Net Income per Share Reconciliation ($ in millions, except per share amounts) 2017 2016 2017 2016 Net income $57.2 $61.8 $126.4 $122.5 Acquired amortization expense (1) 25.7 24.6 50.9 46.6 Loss on extinguishment of debt (2) 27.5 – 27.5 4.0 Income taxes (3) (19.8) (9.2) (27.4) (