Openlane, Inc. · NYSE:OPLN
Openlane — KAR Auction Services — Q2 2019 Earnings Presentation
27 slides from Openlane's earnings presentation, Aug 6, 2019
Slide 1: Second Quarter 2019 Earnings Slides
Second Quarter 2019 Earnings Slides August 6, 2019
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 2019 Highlights
Q2 2019 Highlights Revenues Highlights Fundamentals $623.4 $719.1 86.7 • Revenue growth +15% (7% excluding 85.1 purchased vehicles) 632.4 • Operating Adjusted EPS -17% KAR 538.3 • Adjusted EBITDA -2% 2018 2019 • Revenue +17% • Off-lease supply driving volume growth • Total volume growth +10% • Reven
Slide 4: 2019 Outlook
2019 Outlook ANNUAL GUIDANCE (in millions, except per share amounts) 2019 Low 2019 High Net income from continuing operations $123.0 $137.0 Add back: Income tax expense $50.0 $56.0 Interest expense, net of interest income $192.0 $192.0 Depreciation and amortization $190.0 $190.0 EBITDA $555.0 $575.0
Slide 5: June 30, 2019 Leverage
June 30, 2019 Leverage (US$ in millions) Balance Maturity Term Loan B-4 (Adjusted LIBOR + 2.25%) $185 2021 Term Loan B-5 (Adjusted LIBOR + 2.50%) 271 2023 Revolving Credit Facility (Adjusted LIBOR + 2.00%) & Lines of Credit 93 2021 Senior Notes (Fixed 5.125%) 950 2025 Capital Leases 25 Total 1,524 L
Slide 6: Second Quarter Results
AUCTION SERVICES. Second Quarter Results
Slide 7: KAR Q2 2019 Highlights
KAR Q2 2019 Highlights ($ in millions, except per share amounts) Q2 Q2 KAR Highlights* 2019 2018 Total operating revenues $719.1 $623.4 $51.2M acquisitions Gross profit** $301.7 $293.2 % of revenue 42.0% 47.0% SG&A $163.2 $149.9 TradeRev +$7.1M, $6.1M acquired SG&A EBITDA $139.0 $142.8 Adjusted EBIT
Slide 8: ADESA Q2 2019 Highlights
ADESA Q2 2019 Highlights ($ in millions, except RPU) Q2 Q2 ADESA Highlights* 2019 2018 $51.2M acquisitions; includes an increase of $51.1M Revenue $632.4 $538.3 from purchased vehicles Gross profit** $239.5 $231.1 Increased purchased vehicles from COTW and ADESA % of revenue 37.9% 42.9% Assurance re
Slide 9: AFC Q2 2019 Highlights
AFC Q2 2019 Highlights ($ in millions, except for revenue per loan transaction) Q2 Q2 Highlights* AFC 2019 2018 Interest and fee income $83.7 $80.5 Other revenue $2.6 $3.3 Provision for credit losses ($8.4) ($7.1) Warranty contract revenue $8.8 $8.4 PWI revenue Total AFC revenue $86.7 $85.1 +1% reve
Slide 10: Year-to-Date Results
AUCTION SERVICES. Year-to-Date Results
Slide 11: KAR Six Months Ended June 30, 2019 Highlights
KAR Six Months Ended June 30, 2019 Highlights ($ in millions, except per share amounts) YTD YTD KAR Highlights* 2019 2018 Total operating revenues $1,408.7 $1,236.6 $83.1M acquisitions Gross profit** $597.4 $578.1 % of revenue 42.4% 46.7% SG&A $338.4 $305.4 TradeRev +$15.1M, $10.7M acquired SG&A EBI
Slide 12: ADESA Six Months Ended June 30, 2019 Highlights
ADESA Six Months Ended June 30, 2019 Highlights ($ in millions, except RPU) ADESA YTD 2019 YTD 2018 Highlights* $83.1M acquisitions; includes an increase of $82.9M Revenue $1,232.1 $1,066.4 from purchased vehicles Gross profit** $468.5 $453.2 Increased purchased vehicles from COTW and % of revenue 3
Slide 13: AFC Six Months Ended June 30, 2019 Highlights
AFC Six Months Ended June 30, 2019 Highlights ($ in millions, except for revenue per loan transaction) YTD YTD Highlights* AFC 2019 2018 Interest and fee income $170.6 $162.4 Other revenue $5.4 $6.2 Provision for credit losses ($16.6) ($14.8) Warranty contract revenue $17.2 $16.4 PWI revenue Total A
Slide 14: Historical Data
AUCTION SERVICES. HISTORICAL DATA
Slide 15: ADESA Metrics - Annual
ADESA Metrics - Annual 2018 2017 2016 2015 2014 Revenue2 $2,101.9 $1,937.5 $1,765.3 $1,427.8 $1,271.0 Total Volume 3,472 3,180 2,885 2,465 2,198 Online Only Volume 1,304 938 743 592 495 Total Online Volume %3 54% 46% 42% 40% 38% Physical Conversion % (N.A.) 61.6% 60.4% 58.0% 58.3% 58.2% Dealer Consi
Slide 16: ADESA Metrics - Quarter
ADESA Metrics - Quarter 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 Revenue2 632.4 $599.7 $508.5 $527.0 $538.3 $528.1 $473.2 $477.1 $489.2 Total Volume 994 945 811 876 907 878 744 788 830 Online Only Volume 416 367 306 343 346 309 237 241 245 Total Online Volume %3 59% 57% 54% 54% 54% 52% 49% 46% 4
Slide 17: AFC Metrics - Annual
AFC Metrics - Annual 2018 2017 2016 2015 2014 Revenue $340.9 $301.3 $286.8 $268.4 $250.1 Loan Transaction Units (LTU) 1,760 1,688 1,718 1,607 1,445 Revenue per Loan Transaction, Excluding “Warranty Contract $175 $159 $148 $150 $155 Revenue” Ending Managed Finance Receivables $2,014.8 $1,912.6 $1,792
Slide 18: AFC Metrics - Quarter
AFC Metrics - Quarter 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 Revenue $86.7 $89.9 $85.3 $85.4 $85.1 $85.1 $81.8 $78.2 $70.1 Loan Transaction Units 437 461 428 433 435 464 414 402 416 (LTU) Revenue per Loan Transaction, Excluding $178 $177 $180 $177 $177 $166 $178 $174 $148 “Warranty Contract Re
Slide 19: AFC Provision for Credit Losses - Annual
AFC Provision for Credit Losses - Annual 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Ending Managed $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 $1,959.8 $1,802.2 $1,732.5 $1,474.9 $1,208.4 $1,051.4 $925
Slide 20: AFC Provision for Credit Losses - Quarterly
AFC Provision for Credit Losses - Quarterly 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 Ending Managed $2,070.1 $1,989.1 $2,014.8 $1,979.7 $1,958.6 $1,933.2 $1,912.6 $1,809.2 $1,736.5 Receivables Average Managed $2,029.6 $2,002.0 $1,997.3 $1,969.2 $1,945.9 $1,922.9 $1,860.9 $1,772.9 $1,748.6 Receiv
Slide 21: Appendix
AUCTION SERVICES. APPENDIX
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as
Slide 23: Q2 2019 Adjusted EBITDA Reconciliation
Q2 2019 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2019 ADESA AFC Corporate Consolidated Net income (loss) from continuing $50.5 $27.4 ($50.5) $27.4 operations Add back: Income taxes 21.8 11.3 (24.4) 8.7 Interest expense, net of interest income 0.6 16.1 38.3 55.0 Depr
Slide 24: Q2 2018 Adjusted EBITDA Reconciliation
Q2 2018 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2018 ADESA AFC Corporate Consolidated Net income (loss) from continuing $60.0 $27.7 ($50.3) $37.4 operations Add back: Income taxes 23.5 9.3 (16.9) 15.9 Interest expense, net of interest income 0.4 14.7 32.3 47.4 Depr
Slide 25: YTD 2019 Adjusted EBITDA Reconciliation
YTD 2019 Adjusted EBITDA Reconciliation ($ in millions) Six Months ended June 30, 2019 ADESA AFC Corporate Consolidated Net income (loss) from continuing $92.9 $57.9 ($108.1) $42.7 operations Add back: Income taxes 37.7 22.1 (44.6) 15.2 Interest expense, net of interest income 1.0 33.0 76.9 110.9 De
Slide 26: YTD 2018 Adjusted EBITDA Reconciliation
YTD 2018 Adjusted EBITDA Reconciliation ($ in millions) Six Months ended June 30, 2018 ADESA AFC Corporate Consolidated Net income (loss) from continuing $114.2 $53.4 ($96.0) $71.6 operations Add back: Income taxes 39.0 17.7 (32.9) 23.8 Interest expense, net of interest income 0.8 28.1 59.5 88.4 Dep
Slide 27: Operating Adjusted Net Income from Continuing Operations per Share Reconciliation
Operating Adjusted Net Income from Continuing Operations per Share Reconciliation ($ in millions, except per share amounts), (unaudited) Three Months ended Six Months ended June 30, June 30, 2019 2018 2019 2018 Net income $55.6 $93.2 $133.4 $183.2 Less: Income from discontinued operations (28.2) (55