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KAR Auction Services, Inc. Reports Fourth Quarter And Full Year 2011 Results

Stocks in this article: KAR

Earnings Conference Call Information

KAR Auction Services, Inc. will be hosting an earnings conference call and webcast on Tuesday, February 28, 2012 at 11:00 a.m. EST (10:00 am CST). The call will be hosted by KAR Auction Services, Inc.’s Chief Executive Officer, Jim Hallett and Executive Vice President and Chief Financial Officer, Eric Loughmiller. The conference call may be accessed by calling 1-888-329-8877 and entering participant passcode 2922148, while the live web cast will be available at the investor relations section of www.karauctionservices.com. Supplemental financial information for KAR Auction Services’ fourth quarter and full year 2011 results is available at the investor relations section of www.karauctionservices.com under the financial postings page.

A replay of the call will be available for two weeks via telephone starting approximately 30 minutes after the completion of the call. The replay may be accessed by calling 1-888-203-1112 and entering pass code 2922148. The archive of the web cast will also be available following the call and will be available at the investor relations section of www.karauctionservices.com for a limited time.

About KAR Auction Services, Inc.

KAR Auction Services, Inc. (NYSE: KAR) is the holding company for ADESA, Inc., (“ADESA”), Insurance Auto Auctions, Inc., (“IAA”) and Automotive Finance Corporation (“AFC”). ADESA is a leading provider of wholesale used vehicle auctions with 69 North American locations and its subsidiary OPENLANE provides a leading Internet automotive auction platform. Insurance Auto Auctions is a leading salvage vehicle auction company with 160 sites across North America. Automotive Finance Corporation is a leading provider of floorplan financing to independent and franchise used vehicle dealers with 103 sites across North America. Together, KAR Auction Services provides a unique, comprehensive, end-to-end solution for our customers’ remarketing needs. Visit karauctionservices.com for additional information.

Forward Looking Statements

Certain statements contained in this release include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and which are subject to certain risks, trends and uncertainties. In particular, statements made that are not historical facts may be forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and similar expressions identify forward-looking statements. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the Company’s Securities and Exchange Commission filings. The Company does not undertake any obligation to update any forward-looking statements.

   

KAR Auction Services, Inc. Condensed Consolidated Statements of Income( In millions) ( Unaudited)

 

Three Months Ended December 31,

Year Ended December 31,

2011   2010 2011   2010
Operating revenues
ADESA Auction Services $ 250.3 $ 254.8 $ 1,017.4 $ 1,075.9
IAA Salvage Services 186.3 152.0 700.1 610.4
AFC   43.2   36.4     168.8     136.3  

Total operating revenues

  479.8   443.2     1,886.3     1,822.6  
 
Operating expenses

Cost of services (exclusive of depreciation and amortization)

269.0 253.8 1,035.2 1,007.3
Selling, general and administrative 106.9 97.5 389.4 375.2
Depreciation and amortization   48.3   44.0     179.8     171.3  
Total operating expenses   424.2   395.3     1,604.4     1,553.8  
 
Operating profit 55.6 47.9 281.9 268.8
 
Interest expense 30.8 35.1 143.1 141.4
Other (income) expense, net 1.3 0.6 (4.7 ) (2.1 )
Loss on extinguishment of debt   --   7.4     53.5     32.7  
 
Income before income taxes 23.5 4.8 90.0 96.8
 
Income taxes   9.0   (2.5 )   17.8     27.2  
 
Net income $ 14.5 $ 7.3   $ 72.2   $ 69.6  
 
Net income per share
Basic $ 0.11 $ 0.05   $ 0.53   $ 0.52  
Diluted $ 0.11 $ 0.05   $ 0.52   $ 0.51  
 
   

KAR Auction Services, Inc. Condensed Consolidated Balance Sheets (In millions) ( Unaudited)

 
December 31, December 31,
2011 2010
 
Cash and cash equivalents $ 97.4 $ 119.1
Restricted cash 8.2 8.6
Trade receivables, net of allowances 297.4 271.9
Finance receivables, net of allowances 132.7 126.2
Finance receivables securitized, net of allowances 741.5 635.7
Other current assets   96.0   93.2
Total current assets 1,373.2 1,254.7
 
Goodwill 1,679.5 1,554.1

Customer relationships, net of accumulated amortization

694.0 712.6
Intangible and other assets 345.7 323.1
Property and equipment, net of accumulated depreciation   686.7   680.5
Total assets $ 4,779.1 $ 4,525.0

 

Current liabilities, excluding current maturities of debt and

obligations collateralized by finance receivables

$ 500.0 $ 446.7
Obligations collateralized by finance receivables 610.3 520.1
Current maturities of debt   85.9   --
Total current liabilities 1,196.2 966.8
 
Long-term debt 1,816.9 1,875.7
Other non-current liabilities 422.8 437.9
Stockholders’ equity   1,343.2   1,244.6
Total liabilities and stockholders’ equity $ 4,779.1 $ 4,525.0
 

KAR Auction Services, Inc. EBITDA and Adjusted EBITDA Measures

EBITDA and Adjusted EBITDA Measures EBITDA and Adjusted EBITDA as presented herein are supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). They are not measurements of our financial performance under GAAP and should not be considered as substitutes for net income (loss) or any other performance measures derived in accordance with GAAP.

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 our senior secured credit agreement covenant calculations. Management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors about one of the principal measures of performance used by our creditors. In addition, management uses Adjusted EBITDA to evaluate our performance and to evaluate results relative to incentive compensation targets. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of the results as reported under GAAP. These measures may not be comparable to similarly titled measures reported by other companies.

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