KAR Auction Services Reports Fourth Quarter and Full Year 2013 Results
For Immediate Release
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.
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.