
KAR Auction Services Reports Fourth Quarter and Full Year 2013 Results
For Immediate Release
Analyst inquiries:
Jonathan Peisner
(317) 249-4390
jonathan.peisner@karauctionservices.com
Media inquiries:
Darci Valentine
(317) 249-4414
darci.valentine@karauctionservices.com
KAR Auction Services, Inc. Reports Fourth Quarter and Full Year 2013 Results
Board Announces Quarterly Dividend of $0.25 per Common Share
Carmel, IN, February 18, 2014 — KAR Auction Services, Inc. (NYSE: KAR), today reported its fourth quarter financial results for the period ended December 31, 2013. For the fourth quarter of 2013, the company reported revenue of $540.6 million as compared with revenue of $493.7 million for the fourth quarter of 2012, an increase of 9%. Adjusted EBITDA for the quarter ended December 31, 2013 increased 9% to $131.2 million, as compared with Adjusted EBITDA of $119.9 million for the quarter ended December 31, 2012. The company reported a net loss for the fourth quarter of 2013 of $17.6 million, or $0.13 per diluted share, as compared with net income of $22.9 million, or $0.16 per diluted share in the fourth quarter of 2012. The net loss for the fourth quarter of 2013 was primarily the result of non-cash profit interest expense, which is not deductible for income tax purposes. Adjusted net income per share for the quarter ended December 31, 2013 decreased 4% to $0.26 versus adjusted net income per share of $0.27 for the quarter ended December 31, 2012.
For the year ended December 31, 2013, the company reported revenue of $2,173.3 million as compared with revenue of $1,963.4 million for the year ended December 31, 2012, an increase of 11%. Adjusted EBITDA for the year ended December 31, 2013 increased 8% to $538.2 million as compared with Adjusted EBITDA of $500.2 million for the year ended December 31, 2012. Primarily due to the impact of non-cash profit interest expense, net income for the year ended December 31, 2013 decreased 26% to $67.7 million, or $0.48 per diluted share, as compared with net income of $92.0 million, or $0.66 per diluted share for the year ended December 31, 2012. Adjusted net income per share for the year ended December 31, 2013 increased 11% to $1.19 versus adjusted net income per share of $1.07 for the year ended December 31, 2012.
Impact of Superstorm Sandy
Adjusted net income for the years ended December 31, 2013 and December
31, 2012, exclude net losses of $8.0 million ($13.5 million pre-tax) and
$5.4 million ($9.1 million pre-tax), respectively, due to costs
incurred for processing vehicles damaged in Superstorm Sandy. These net
losses are also excluded from Adjusted EBITDA in accordance with the
definitions in our Credit Agreement. These losses are net of auction
services revenue realized upon the sale of the vehicles. The
significantly higher tow costs incurred in order to respond to the
requirements of our customers, increased occupancy costs due to the
leasing of temporary locations to process Superstorm Sandy vehicles and
increased labor costs for the temporary work force brought into the New
York and New Jersey area resulted in a net loss on the processing of the
Superstorm Sandy vehicles.
KAR’s Board of Directors also announced a cash dividend today of $0.25 per share on the company’s common stock. The dividend is payable on April 3, 2014, to stockholders of record as of the close of business on March 26, 2014.
2014 Outlook
KAR Auction Services, Inc. expects 2014 Adjusted EBITDA of $580 – $600
million. The company also expects net income per share of $1.01 – $1.12
and adjusted net income per share of $1.31 – $1.42. The company expects
its 2014 effective tax rate to be approximately 40%. 2014 adjusted net
income per share represents GAAP net income per diluted share excluding
excess depreciation and amortization and stock-based compensation, both
resulting from the 2007 merger, net of taxes. Additionally, the company
expects 2014 cash taxes of approximately $105 – $115 million, cash
interest expense on corporate debt of approximately $68 million and
capital expenditures of approximately $105 million. This would result in
free cash flow before dividend payments of approximately $302 to $312
million or $2.12 – $2.19 per share. Earnings Conference Call Information
KAR Auction Services, Inc. will be hosting an earnings conference call
and webcast on Wednesday, February 19, 2014 at 11:00 a.m. EST (10:00
a.m. 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- 800-289-0462 and entering participant passcode 627391
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 2013
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 8265530. 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 65 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 164 sites across the United States and Canada. Automotive Finance
Corporation is a leading provider of floorplan financing to independent
and franchise used vehicle dealers with 105 sites across the United
States and Canada. 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.
To view the entire release, including condensed consolidated statements of income and balance sheets, click here.