Openlane, Inc. · NYSE:OPLN
Openlane — KAR Auction Services — Corporate Update (February 2014)
26 slides from Openlane's corporate update, February 2014
Slide 1: KAR Auction Services, Inc. Corporate Update February 2014
KAR Auction Services, Inc. Corporate Update February 2014
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 Operation 275 Million Salvage Auctions units 3-4 Million units Used Vehicle Transactions in Removed from New Vehicle Sales North America Operation 17 Million units ~ 45 Million 13 Million units 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: OPENLANE & ADESA: Clear Leader in Private Label Sales for Manufacturers
OPENLANE & ADESA: Clear Leader in Private Label Sales(1) for Manufacturers Current Private Label Sales (1) Private label sales held by manufacturers are limited to franchised dealers. 7
Slide 8: Off-lease "Auction Funnel"
Off-lease “Auction Funnel” Auction Inventory Gross Fees Margin % ~$120 Higher “Online Only” – Private Label ~2-3 days “Online Only” – Open ~2-3 days ADESA In-lane buyer or Online buyer Competitors ~$650 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 $117 Grow portfolio Consistent credit sta
Slide 11: Key Investment Highlights
Key Investment Highlights Poised to Benefit from Positive Cyclical Trends – Expected Increases in Forward Volumes Established Market Leader Across Core Businesses Proven and Resilient Growth through a Diversified Business Mix Attractive Financial Model Generating Significant Free Cash Flow f
Slide 12: Financial Overview
Financial Overview
Slide 13: Historical Financial Performance
Historical Financial Performance Revenue Gross Profit ($ in millions) ($ in millions) $2,173 $941 $851 $876 $1,886 $1,963 $225 $734 $815 $1,736 $1,823 $194 $136 $169 $94 $830 $610 $716 $553 $700 $1,089 $1,076 $1,017 $1,053 $1,118 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 ADESA IAA AFC Visibl
Slide 14: December 31, 2013 Leverage
December 31, 2013 Leverage (US$ in millions) 12/31/2013 Maturity Term Loan Facilities * $1,767.2 2017 Revolving Credit Facility 0.0 2016 Capital Leases 30.7 ** Total 1,797.9 Less: Available Cash (145.3) Net Debt $1,652.6 Net Debt /Adjusted EBITDA 3.07X * Includes unamortized debt discount ** Various
Slide 15: Attractive Financial Model Generating Significant Free Cash Flow for Debt Repayment and Dividend Payments
Attractive Financial Model Generating Significant Free Cash Flow for Debt Repayment and Dividend Payments Adjusted EBITDA less Capital Expenditures Key Takeaways ($ in millions) $442 $396 $401 $398 Significant free cash flow available to reduce $360 leverage and return cash to shareholders $264
Slide 16: Appendix
KAR AUCTION SERVICES. ay) 4 KAR AUCTION SERVICES.
Slide 17: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as
Slide 18: 2008 Adjusted EBITDA Reconciliation
2008 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2008 ADESA IAA AFC Corporate Consolidated Net income (loss) $52.5 $9.2 ($151.3) ($126.6) ($216.2) Add back: Income taxes 33.7 6.3 10.2 (81.6) (31.4) Interest expense, net of interest income – 0.2 – 213.2 213.4 Depreciation a
Slide 19: 2009 Adjusted EBITDA Reconciliation
2009 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2009 ADESA IAA AFC Corporate Consolidated Net income (loss) $94.4 $25.8 $19.1 ($116.1) $23.2 Add back: Income taxes 56.0 16.2 8.4 (69.5) 11.1 Interest expense, net of interest income 0.5 1.4 – 170.3 172.2 Depreciation and am
Slide 20: 2010 Adjusted EBITDA Reconciliation
2010 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2010 ADESA IAA AFC Corporate Consolidated Net income (loss) $80.1 $44.7 $38.4 ($93.6) $69.6 Add back: Income taxes 43.6 26.7 21.1 (64.2) 27.2 Interest expense, net of interest income 0.9 2.3 7.2 130.9 141.3 Depreciation and
Slide 21: 2011 Adjusted EBITDA Reconciliation
2011 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2011 ADESA IAA AFC Corporate Consolidated Net income (loss) $55.8 $65.5 $57.2 ($106.3) $72.2 Add back: Income taxes 17.9 36.1 29.6 (65.8) 17.8 Interest expense, net of interest income 0.7 2.1 12.0 128.0 142.8 Depreciation an
Slide 22: 2012 Adjusted EBITDA Reconciliation
2012 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2012 ADESA IAA AFC Corporate Consolidated Net income (loss) $38.4 $56.5 $64.1 ($67.0) $92.0 Add back: Income taxes 14.5 33.7 46.0 (34.6) 59.6 Interest expense, net of interest income 0.8 1.4 15.0 101.9 119.1 Depreciation and
Slide 23: 2013 Adjusted EBITDA Reconciliation
2013 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2013 ADESA IAA AFC Corporate Consolidated Net income (loss) $50.2 $56.6 $76.1 ($115.2) $67.7 Add back: Income taxes 40.1 32.8 40.2 (31.6) 81.5 Interest expense, net of interest income 0.6 0.8 16.7 86.2 104.3 Depreciation and
Slide 24: LTM Adjusted EBITDA Reconciliation
LTM Adjusted EBITDA Reconciliation ($ in millions) (unaudited) Twelve months Three months ended ended March 31, June 30, September 30, December 31, December 31, 2013 2013 2013 2013 2013 Net income (loss) $29.1 $33.4 $22.8 ($17.6) $67.7 Add back: Income taxes 17.0 22.9 19.6 22.0 81.5 Interest expense
Slide 25: Adjusted Net Income Per Share Reconciliation
Adjusted Net Income Per Share Reconciliation ($ 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 26: 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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