CARMEL,
Ind., May 1, 2024 /PRNewswire/ -- OPENLANE, Inc.
(NYSE: KAR), today reported its first quarter financial results for
the period ended March 31, 2024.
"I am very pleased with OPENLANE's first quarter results and
believe they represent a compelling preview of the performance
OPENLANE is capable of delivering as the industry recovery
continues" said Peter Kelly, CEO of
OPENLANE. "The marketplace segment grew volumes by 13%, delivered
47% of total OPENLANE adjusted EBITDA and continued to take share
from physical auctions. Our finance segment was also a strong
contributor during the quarter. And as I look to the future, we are
advancing a robust pipeline of innovation that will further
differentiate our offerings and strengthen our ability to deliver
continued growth and improved financial performance."
First Quarter 2024 Financial Highlights
- Marketplace volumes increased 13% YoY
- Gross Merchandise Value (GMV) increased 17% to $7 billion YoY
- Income from continuing operations of $19
million
- Adjusted EBITDA of $75 million,
with Marketplace accelerating to 47% of total
- $100 million of cash flow from
operating activities
2024 Guidance
The company's previously stated annual
guidance remains unchanged.
|
Annual
Guidance
|
|
Income from continuing
operations (in millions)
|
$74 - $88
|
|
Adjusted EBITDA (in
millions)
|
$285 - $305
|
|
Income from continuing
operations per share - diluted *
|
$0.20 -
$0.30
|
|
Operating adjusted net
income from continuing operations per share - diluted
|
$0.77 -
$0.87
|
* The company uses the two-class method of calculating income
from continuing operations per diluted share. Under the two-class
method, income from continuing operations is adjusted for dividends
and undistributed earnings (losses) to the holders of the Series A
Preferred Stock, and the weighted average diluted shares do not
assume conversion of the preferred shares to common shares.
Earnings guidance does not contemplate future items such as
business development activities, strategic developments (such as
restructurings, spin-offs or dispositions of assets or
investments), contingent purchase price adjustments, significant
expenses related to litigation, tax adjustments and changes in
applicable laws and regulations (including significant accounting
and tax matters) and intangible impairments. The timing and amounts
of these items are highly variable, difficult to predict, and of a
potential size that could have a substantial impact on the
company's reported results for any given period. Prospective
quantification of these items is generally not practicable.
Operating adjusted net income from continuing operations per share
excludes amortization expense associated with acquired intangible
assets, as well as one-time charges, net of taxes. See
reconciliations of the company's guidance included below.
Earnings Conference Call Information
OPENLANE will be
hosting an earnings conference call and webcast on Wednesday, May 1, 2024 at 4:30 p.m. ET. The call will be hosted by OPENLANE
Chief Executive Officer Peter Kelly
and Chief Financial Officer Brad
Lakhia. The conference call may be accessed by calling
1-833-634-2155 and asking to join the OPENLANE call. A live webcast
will be available at the investor relations section of
corporate.openlane.com. Supplemental financial information for
OPENLANE's first quarter 2024 results is available at the investor
relations section of corporate.openlane.com.
The archive of the webcast will be available following the call
at the investor relations section of corporate.openlane.com for a
limited time.
About OPENLANE
OPENLANE, Inc. (NYSE: KAR), provides
sellers and buyers across the global wholesale used vehicle
industry with innovative, technology-driven remarketing solutions.
The company's unique end-to-end platform supports whole car,
financing, logistics and other ancillary and related services. Our
integrated marketplaces reduce risk, improve transparency and
streamline transactions for customers around the globe.
Headquartered in Carmel, Indiana,
the company has employees across the
United States, Canada,
Europe, Uruguay and the
Philippines. For more information and the latest company
news, visit corporate.openlane.com.
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," "can," "of the opinion," "confident," "is
set," "is on track," "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates," "continues," "outlook,"
initiatives," "goals," "opportunities" and similar expressions
identify forward-looking statements. Such statements are based on
management's current expectations, 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 but are not limited to risks and uncertainties
regarding the impact of adverse market, economic and geopolitical
conditions and those other matters disclosed in the company's
Securities and Exchange Commission filings, including those
discussed under the heading "Risk Factors" in the company's annual
and quarterly periodic reports. The company does not undertake any
obligation to update any forward-looking statements.
|
OPENLANE,
Inc.
Condensed
Consolidated Statements of Income
(In millions)
(Unaudited)
|
|
|
Three Months
Ended
March 31,
|
|
2024
|
|
2023
|
|
Operating
revenues
|
|
|
|
|
Auction fees
|
$
109.9
|
|
$
99.9
|
|
Service
revenue
|
150.2
|
|
165.6
|
|
Purchased vehicle
sales
|
58.2
|
|
55.5
|
|
Finance-related
revenue
|
98.0
|
|
99.6
|
|
Total operating
revenues
|
416.3
|
|
420.6
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
Cost of services
(exclusive of depreciation and amortization)
|
213.9
|
|
224.2
|
|
Selling, general and
administrative
|
108.7
|
|
108.0
|
|
Depreciation and
amortization
|
24.3
|
|
23.0
|
|
Total operating
expenses
|
346.9
|
|
355.2
|
|
|
|
|
|
Operating
profit
|
69.4
|
|
65.4
|
|
|
|
|
|
Interest
expense
|
39.7
|
|
38.3
|
|
Other (income) expense,
net
|
0.5
|
|
7.1
|
|
|
|
|
|
Income from continuing
operations before income taxes
|
29.2
|
|
20.0
|
|
|
|
|
|
Income taxes
|
10.7
|
|
7.3
|
|
|
|
|
|
Income from continuing
operations
|
18.5
|
|
12.7
|
|
Income from
discontinued operations, net of income taxes
|
—
|
|
—
|
|
Net income
|
$
18.5
|
|
$
12.7
|
|
|
|
|
|
Net income per share -
basic
|
|
|
|
|
Income from continuing
operations
|
$
0.05
|
|
$
0.01
|
|
Income from
discontinued operations
|
—
|
|
—
|
|
Net income per share -
basic
|
$
0.05
|
|
$
0.01
|
|
|
|
|
|
Net income per share -
diluted
|
|
|
|
|
Income from continuing
operations
|
$
0.05
|
|
$
0.01
|
|
Income from
discontinued operations
|
—
|
|
—
|
|
Net income per share -
diluted
|
$
0.05
|
|
$
0.01
|
|
OPENLANE,
Inc.
Condensed
Consolidated Balance Sheets
(In millions)
(Unaudited)
|
|
|
March
31,
2024
|
|
December
31,
2023
|
|
Cash and cash
equivalents
|
$
105.2
|
|
$
93.5
|
|
Restricted
cash
|
45.7
|
|
65.4
|
|
Trade receivables, net
of allowances
|
391.0
|
|
291.8
|
|
Finance receivables,
net of allowances
|
2,292.7
|
|
2,282.0
|
|
Other current
assets
|
123.7
|
|
109.2
|
|
Total current
assets
|
2,958.3
|
|
2,841.9
|
|
|
|
|
|
Goodwill
|
1,266.0
|
|
1,271.2
|
|
Customer relationships,
net of accumulated amortization
|
131.2
|
|
136.1
|
|
Operating lease
right-of-use assets
|
73.0
|
|
75.9
|
|
Property and equipment,
net of accumulated depreciation
|
163.5
|
|
169.8
|
|
Intangible and other
assets
|
226.4
|
|
231.4
|
|
Total assets
|
$
4,818.4
|
|
$
4,726.3
|
|
|
|
|
|
Current liabilities,
excluding obligations collateralized by
finance receivables and
current maturities of debt
|
$
856.1
|
|
$
692.3
|
|
Obligations
collateralized by finance receivables
|
1,597.2
|
|
1,631.9
|
|
Current maturities of
debt
|
120.4
|
|
154.6
|
|
Total current
liabilities
|
2,573.7
|
|
2,478.8
|
|
|
|
|
|
Long-term
debt
|
200.5
|
|
202.4
|
|
Operating lease
liabilities
|
67.4
|
|
70.4
|
|
Other non-current
liabilities
|
34.1
|
|
35.2
|
|
Temporary
equity
|
612.5
|
|
612.5
|
|
Stockholders'
equity
|
1,330.2
|
|
1,327.0
|
|
Total liabilities,
temporary equity and stockholders' equity
|
$
4,818.4
|
|
$
4,726.3
|
|
OPENLANE,
Inc.
Condensed
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
|
|
|
Three Months
Ended
March
31,
|
|
2024
|
|
2023
|
|
Operating
activities
|
|
|
|
|
Net income
|
$
18.5
|
|
$
12.7
|
|
Net income from
discontinued operations
|
—
|
|
—
|
|
Adjustments to reconcile
net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
24.3
|
|
23.0
|
|
Provision for credit
losses
|
15.8
|
|
14.3
|
|
Deferred income
taxes
|
(1.5)
|
|
0.2
|
|
Amortization of debt
issuance costs
|
2.2
|
|
2.2
|
|
Stock-based
compensation
|
6.6
|
|
3.6
|
|
Net change in unrealized
loss on investment securities
|
—
|
|
0.1
|
|
Investment and note
receivable impairment
|
—
|
|
11.0
|
|
Other non-cash,
net
|
0.1
|
|
0.7
|
|
Changes in operating
assets and liabilities, net of acquisitions:
|
|
|
|
|
Trade receivables and other
assets
|
(113.6)
|
|
(96.4)
|
|
Accounts payable and accrued
expenses
|
147.8
|
|
124.7
|
|
Net cash provided by
operating activities - continuing operations
|
100.2
|
|
96.1
|
|
Net cash provided by
operating activities - discontinued operations
|
—
|
|
—
|
|
Investing
activities
|
|
|
|
|
Net increase in finance
receivables held for investment
|
(26.4)
|
|
(1.7)
|
|
Purchases of property,
equipment and computer software
|
(12.9)
|
|
(12.0)
|
|
Investments in
securities
|
(0.4)
|
|
(0.2)
|
|
Proceeds from sale of
investments
|
—
|
|
0.3
|
|
Net cash used by
investing activities - continuing operations
|
(39.7)
|
|
(13.6)
|
|
Net cash provided by
investing activities - discontinued operations
|
—
|
|
7.0
|
|
Financing
activities
|
|
|
|
|
Net increase (decrease) in
book overdrafts
|
17.0
|
|
(0.5)
|
|
Net repayments
of lines of credit
|
(33.2)
|
|
(62.9)
|
|
Net decrease in obligations
collateralized by finance receivables
|
(32.8)
|
|
(41.0)
|
|
Payments for debt issuance
costs/amendments
|
(1.9)
|
|
(0.5)
|
|
Payments on finance
leases
|
(0.3)
|
|
(0.5)
|
|
Issuance of common stock
under stock plans
|
0.4
|
|
1.3
|
|
Tax withholding payments for
vested RSUs
|
(1.7)
|
|
(1.3)
|
|
Dividends paid on Series A
Preferred Stock
|
(11.1)
|
|
(11.1)
|
|
Net cash used by
financing activities - continuing operations
|
(63.6)
|
|
(116.5)
|
|
Net cash provided by
financing activities - discontinued operations
|
—
|
|
—
|
|
Net change in cash
balances of discontinued operations
|
—
|
|
—
|
|
Effect of exchange rate
changes on cash
|
(4.9)
|
|
1.1
|
|
Net decrease in
cash, cash equivalents and restricted cash
|
(8.0)
|
|
(25.9)
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
158.9
|
|
277.7
|
|
Cash, cash equivalents
and restricted cash at end of period
|
$
150.9
|
|
$
251.8
|
|
Cash paid for
interest
|
$
36.2
|
|
$
31.1
|
|
Cash paid for taxes,
net of refunds - continuing operations
|
$
15.4
|
|
$
12.0
|
|
Cash paid for taxes,
net of refunds - discontinued operations
|
$
0.2
|
|
$
—
|
OPENLANE, Inc.
Reconciliation of Non-GAAP Financial
Measures
EBITDA, Adjusted EBITDA, operating adjusted net income (loss)
and operating adjusted net income (loss) per share 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. Management believes that these measures
provide investors additional meaningful methods to evaluate certain
aspects of the company's results period over period and for the
other reasons set forth below.
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
EBITDA and Adjusted EBITDA to evaluate our performance.
Depreciation expense for property and equipment and amortization
expense of capitalized internally developed software costs relate
to ongoing capital expenditures; however, amortization expense
associated with acquired intangible assets, such as customer
relationships, software, tradenames and noncompete agreements are
not representative of ongoing capital expenditures, but have a
continuing effect on our reported results. Non-GAAP financial
measures of operating adjusted net income (loss) and operating
adjusted net income (loss) per share, in the opinion of the
company, provide comparability of the company's performance to
other companies that may not have incurred these types of non-cash
expenses or that report a similar measure. In addition, operating
adjusted net income (loss) and operating adjusted net income (loss)
per share may include adjustments for certain other charges.
EBITDA, Adjusted EBITDA, operating adjusted net income (loss)
and operating adjusted net income (loss) per share 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.
The following tables reconcile EBITDA and Adjusted EBITDA to
income (loss) from continuing operations for the periods
presented:
|
Three Months
Ended
March
31,
|
|
(in
millions), (unaudited)
|
2024
|
|
2023
|
|
Income from
continuing operations
|
$
18.5
|
|
$ 12.7
|
|
Add back:
|
|
|
|
|
Income taxes
|
10.7
|
|
7.3
|
|
Interest expense, net
of interest income
|
39.3
|
|
37.4
|
|
Depreciation and
amortization
|
24.3
|
|
23.0
|
|
EBITDA
|
92.8
|
|
80.4
|
|
Non-cash stock-based
compensation
|
7.0
|
|
3.8
|
|
Acquisition related
costs
|
0.3
|
|
0.3
|
|
Securitization
interest
|
(29.9)
|
|
(27.8)
|
|
Severance
|
1.7
|
|
0.5
|
|
Foreign currency
(gains)/losses
|
2.0
|
|
0.1
|
|
Net change in
unrealized (gains) losses on investment securities
|
—
|
|
0.1
|
|
Professional fees
related to business improvement efforts
|
0.8
|
|
0.7
|
|
Other
|
0.1
|
|
0.8
|
|
Total
addbacks/(deductions)
|
(18.0)
|
|
(21.5)
|
|
Adjusted
EBITDA
|
$
74.8
|
|
$ 58.9
|
|
Three Months Ended
March 31, 2024
|
|
(Dollars in
millions), (Unaudited)
|
Marketplace
|
|
Finance
|
|
Consolidated
|
|
Income (loss) from
continuing operations
|
$
(12.9)
|
|
$
31.4
|
|
$
18.5
|
|
Add back:
|
|
|
|
|
|
|
Income taxes
|
0.2
|
|
10.5
|
|
10.7
|
|
Interest expense, net
of interest income
|
6.7
|
|
32.6
|
|
39.3
|
|
Depreciation and
amortization
|
21.6
|
|
2.7
|
|
24.3
|
|
Intercompany
interest
|
9.9
|
|
(9.9)
|
|
—
|
|
EBITDA
|
25.5
|
|
67.3
|
|
92.8
|
|
Non-cash stock-based
compensation
|
5.2
|
|
1.8
|
|
7.0
|
|
Acquisition related
costs
|
0.3
|
|
—
|
|
0.3
|
|
Securitization
interest
|
—
|
|
(29.9)
|
|
(29.9)
|
|
Severance
|
1.4
|
|
0.3
|
|
1.7
|
|
Foreign currency
(gains)/losses
|
2.0
|
|
—
|
|
2.0
|
|
Professional fees
related to business improvement efforts
|
0.6
|
|
0.2
|
|
0.8
|
|
Other
|
0.1
|
|
—
|
|
0.1
|
|
Total
addbacks/(deductions)
|
9.6
|
|
(27.6)
|
|
(18.0)
|
|
Adjusted
EBITDA
|
$
35.1
|
|
$
39.7
|
|
$
74.8
|
The following table reconciles operating adjusted net income and
operating adjusted net income per diluted share to net income for
the periods presented:
|
Three Months
Ended
March
31,
|
|
(in millions,
except per share amounts), (unaudited)
|
2024
|
|
2023
|
|
Net income from
continuing operations (1)
|
$
18.5
|
|
$ 12.7
|
|
Acquired
amortization expense
|
9.3
|
|
7.4
|
|
Income
taxes (2)
|
(0.4)
|
|
(2.7)
|
|
Operating adjusted net
income from continuing operations
|
$
27.4
|
|
$ 17.4
|
|
|
|
|
|
Operating adjusted net
income from discontinued operations
|
$
—
|
|
$
—
|
|
|
|
|
|
Operating adjusted net
income
|
$
27.4
|
|
$ 17.4
|
|
|
|
|
|
Operating adjusted net
income from continuing operations per share - diluted
|
$
0.19
|
|
$ 0.12
|
|
Operating adjusted net
income from discontinued operations per share - diluted
|
—
|
|
—
|
|
Operating adjusted net
income per share - diluted
|
$
0.19
|
|
$ 0.12
|
|
|
|
|
|
Weighted average
diluted shares - including assumed conversion of preferred
shares
|
144.9
|
|
145.6
|
|
|
|
(1)
|
The Series A Preferred
Stock dividends and undistributed earnings allocated to
participating securities have not been included in the calculation
of operating adjusted net income and operating adjusted net income
per diluted share.
|
|
(2)
|
For the three months
ended March 31, 2024, acquired amortization expense was booked to
the applicable statutory rate. The deferred tax benefits of $52.5
million and $6.5 million associated with the goodwill and tradename
impairments in the second quarter of 2023, respectively, resulted
in the U.S. being in a net deferred tax asset position. Due to the
three-year cumulative loss related to U.S. operations, we currently
have a $38.3 million valuation allowance against the U.S. net
deferred tax asset. For the three months ended March 31, 2023, the
effective tax rate was used to determine the amount of income tax
on the adjustments to net income.
|
The following table reconciles EBITDA and Adjusted EBITDA to
income from continuing operations for the 2024 guidance
presented:
|
2024
Guidance
|
|
(in
millions), (unaudited)
|
Low
|
|
High
|
|
Income from
continuing operations
|
$
74
|
|
$
88
|
|
Add back:
|
|
|
|
|
Income taxes
|
49
|
|
59
|
|
Interest expense, net
of interest income
|
156
|
|
154
|
|
Depreciation and
amortization
|
106
|
|
104
|
|
EBITDA
|
385
|
|
405
|
|
Total
addbacks/(deductions), net
|
(100)
|
|
(100)
|
|
Adjusted
EBITDA
|
$
285
|
|
$
305
|
The following table reconciles operating adjusted net income
from continuing operations and operating adjusted net income from
continuing operations per diluted share to income from continuing
operations for the 2024 guidance presented:
|
2024
Guidance
|
|
(in millions,
except per share amounts), (unaudited)
|
Low
|
|
High
|
|
Income from continuing
operations
|
$
74
|
|
$
88
|
|
Acquired
amortization expense
|
38
|
|
38
|
|
Operating adjusted net
income from continuing operations
|
$
112
|
|
$
126
|
|
|
|
|
|
Operating adjusted net
income from continuing operations per share – diluted
|
$
0.77
|
|
$
0.87
|
|
|
|
|
|
Weighted average
diluted shares - including assumed conversion of preferred
shares
|
145
|
|
145
|
|
Analyst
Inquiries:
|
Media Inquiries:
|
|
Mike Eliason
|
Laurie
Dippold
|
|
(317) 249-4559
|
(317)
468-3900
|
|
mike.eliason@openlane.com
|
laurie.dippold@openlane.com
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/openlane-inc-reports-first-quarter-2024-financial-results-302133554.html
SOURCE OPENLANE