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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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20-8744739
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading symbol
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Name of each exchange on which registered
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Common Stock, par value $0.01 per share
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KAR
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2019
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2018
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2019
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2018
|
||||||||
Operating revenues
|
|
|
|
|
|
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||||||||
ADESA Auction Services
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$
|
613.6
|
|
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$
|
527.0
|
|
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$
|
1,845.7
|
|
|
$
|
1,593.4
|
|
AFC
|
88.3
|
|
|
85.4
|
|
|
264.9
|
|
|
255.6
|
|
||||
Total operating revenues
|
701.9
|
|
|
612.4
|
|
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2,110.6
|
|
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1,849.0
|
|
||||
Operating expenses
|
|
|
|
|
|
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||||||||
Cost of services (exclusive of depreciation and amortization)
|
410.9
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|
|
330.7
|
|
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1,222.2
|
|
|
989.2
|
|
||||
Selling, general and administrative
|
158.9
|
|
|
154.7
|
|
|
497.3
|
|
|
460.1
|
|
||||
Depreciation and amortization
|
46.4
|
|
|
41.4
|
|
|
138.6
|
|
|
129.8
|
|
||||
Total operating expenses
|
616.2
|
|
|
526.8
|
|
|
1,858.1
|
|
|
1,579.1
|
|
||||
Operating profit
|
85.7
|
|
|
85.6
|
|
|
252.5
|
|
|
269.9
|
|
||||
Interest expense
|
37.9
|
|
|
49.0
|
|
|
150.0
|
|
|
138.7
|
|
||||
Other income, net
|
(2.0
|
)
|
|
(3.0
|
)
|
|
(5.2
|
)
|
|
(3.8
|
)
|
||||
Loss on extinguishment of debt
|
2.2
|
|
|
—
|
|
|
2.2
|
|
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—
|
|
||||
Income from continuing operations before income taxes
|
47.6
|
|
|
39.6
|
|
|
105.5
|
|
|
135.0
|
|
||||
Income taxes
|
13.2
|
|
|
8.7
|
|
|
28.4
|
|
|
32.5
|
|
||||
Income from continuing operations
|
34.4
|
|
|
30.9
|
|
|
77.1
|
|
|
102.5
|
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||||
Income from discontinued operations, net of income taxes
|
0.9
|
|
|
46.6
|
|
|
91.6
|
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|
158.2
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|
||||
Net income
|
$
|
35.3
|
|
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$
|
77.5
|
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$
|
168.7
|
|
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$
|
260.7
|
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Net income per share - basic
|
|
|
|
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||||||||
Income from continuing operations
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$
|
0.26
|
|
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$
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0.23
|
|
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$
|
0.58
|
|
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$
|
0.76
|
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Income from discontinued operations
|
0.01
|
|
|
0.35
|
|
|
0.69
|
|
|
1.18
|
|
||||
Net income
|
$
|
0.27
|
|
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$
|
0.58
|
|
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$
|
1.27
|
|
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$
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1.94
|
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Net income per share - diluted
|
|
|
|
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||||||||
Income from continuing operations
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$
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0.26
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|
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$
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0.23
|
|
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$
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0.58
|
|
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$
|
0.76
|
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Income from discontinued operations
|
0.01
|
|
|
0.34
|
|
|
0.68
|
|
|
1.16
|
|
||||
Net income
|
$
|
0.27
|
|
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$
|
0.57
|
|
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$
|
1.26
|
|
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$
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1.92
|
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Dividends declared per common share
|
$
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0.19
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$
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0.35
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$
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0.89
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$
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1.05
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Three Months Ended September 30,
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Nine Months Ended September 30,
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||||||||||||
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2019
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2018
|
|
2019
|
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2018
|
||||||||
Net income
|
$
|
35.3
|
|
|
$
|
77.5
|
|
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$
|
168.7
|
|
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$
|
260.7
|
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Other comprehensive income (loss)
|
|
|
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||||||||
Foreign currency translation gain (loss)
|
(10.8
|
)
|
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6.3
|
|
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5.7
|
|
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(12.0
|
)
|
||||
Comprehensive income
|
$
|
24.5
|
|
|
$
|
83.8
|
|
|
$
|
174.4
|
|
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$
|
248.7
|
|
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September 30,
2019 |
|
December 31,
2018 |
||||
Assets
|
|
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|
||||
Current assets
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|
|
|
||||
Cash and cash equivalents
|
$
|
508.6
|
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$
|
277.1
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Restricted cash
|
23.3
|
|
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27.6
|
|
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Trade receivables, net of allowances of $9.9 and $8.7
|
510.2
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454.6
|
|
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Finance receivables, net of allowances of $14.8 and $14.0
|
2,095.6
|
|
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2,000.8
|
|
||
Other current assets
|
120.0
|
|
|
100.6
|
|
||
Current assets, discontinued operations
|
—
|
|
|
453.5
|
|
||
Total current assets
|
3,257.7
|
|
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3,314.2
|
|
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Other assets
|
|
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|
||||
Goodwill
|
1,810.3
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1,676.9
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|
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Customer relationships, net of accumulated amortization of $624.1 and $587.0
|
218.3
|
|
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227.4
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|
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Other intangible assets, net of accumulated amortization of $270.9 and $255.3
|
295.6
|
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|
272.4
|
|
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Operating lease right-of-use assets
|
366.4
|
|
|
—
|
|
||
Other assets
|
28.3
|
|
|
31.0
|
|
||
Non-current assets, discontinued operations
|
—
|
|
|
1,053.3
|
|
||
Total other assets
|
2,718.9
|
|
|
3,261.0
|
|
||
Property and equipment, net of accumulated depreciation of $517.1 and $467.5
|
603.1
|
|
|
631.0
|
|
||
Total assets
|
$
|
6,579.7
|
|
|
$
|
7,206.2
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
718.5
|
|
|
$
|
691.3
|
|
Accrued employee benefits and compensation expenses
|
83.2
|
|
|
72.8
|
|
||
Accrued interest
|
21.8
|
|
|
7.9
|
|
||
Other accrued expenses
|
211.6
|
|
|
132.8
|
|
||
Income taxes payable
|
1.2
|
|
|
0.7
|
|
||
Dividends payable
|
24.5
|
|
|
46.5
|
|
||
Obligations collateralized by finance receivables
|
1,428.4
|
|
|
1,445.3
|
|
||
Current maturities of long-term debt
|
27.0
|
|
|
13.1
|
|
||
Current liabilities, discontinued operations
|
—
|
|
|
214.4
|
|
||
Total current liabilities
|
2,516.2
|
|
|
2,624.8
|
|
||
Non-current liabilities
|
|
|
|
||||
Long-term debt
|
1,863.0
|
|
|
2,654.3
|
|
||
Deferred income tax liabilities
|
130.4
|
|
|
125.3
|
|
||
Operating lease liabilities
|
361.1
|
|
|
—
|
|
||
Other liabilities
|
73.2
|
|
|
71.6
|
|
||
Non-current liabilities, discontinued operations
|
—
|
|
|
266.0
|
|
||
Total non-current liabilities
|
2,427.7
|
|
|
3,117.2
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
||||
Stockholders' equity
|
|
|
|
||||
Preferred stock, $0.01 par value:
|
|
|
|
||||
Authorized shares: 100,000,000
|
|
|
|
|
|
||
Issued shares: none
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value:
|
|
|
|
||||
Authorized shares: 400,000,000
|
|
|
|
|
|
||
Issued and outstanding shares:
|
|
|
|
|
|
||
September 30, 2019: 128,762,506
|
|
|
|
|
|
||
December 31, 2018: 132,887,029
|
1.3
|
|
|
1.3
|
|
||
Additional paid-in capital
|
1,024.0
|
|
|
1,131.9
|
|
||
Retained earnings
|
655.7
|
|
|
392.3
|
|
||
Accumulated other comprehensive loss
|
(45.2
|
)
|
|
(61.3
|
)
|
||
Total stockholders' equity
|
1,635.8
|
|
|
1,464.2
|
|
||
Total liabilities and stockholders' equity
|
$
|
6,579.7
|
|
|
$
|
7,206.2
|
|
|
Common
Stock
Shares
|
|
Common
Stock
Amount
|
|
Additional
Paid-In
Capital
|
|
Retained Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
|||||||||||
Balance at June 30, 2019
|
133.4
|
|
|
$
|
1.3
|
|
|
$
|
1,140.8
|
|
|
$
|
644.9
|
|
|
$
|
(34.4
|
)
|
|
$
|
1,752.6
|
|
Net income
|
|
|
|
|
|
|
35.3
|
|
|
|
|
35.3
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
(10.8
|
)
|
|
(10.8
|
)
|
|||||||||
Issuance of common stock under stock plans
|
0.2
|
|
|
|
|
(1.3
|
)
|
|
|
|
|
|
(1.3
|
)
|
||||||||
Surrender of RSUs for taxes
|
—
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
(0.1
|
)
|
||||||||
Repurchase and retirement of common stock
|
(4.8
|
)
|
|
|
|
(119.7
|
)
|
|
|
|
|
|
(119.7
|
)
|
||||||||
Stock-based compensation expense
|
|
|
|
|
4.3
|
|
|
|
|
|
|
4.3
|
|
|||||||||
Cash dividends declared to stockholders ($0.19 per share)
|
|
|
|
|
|
|
(24.5
|
)
|
|
|
|
(24.5
|
)
|
|||||||||
Balance at September 30, 2019
|
128.8
|
|
|
$
|
1.3
|
|
|
$
|
1,024.0
|
|
|
$
|
655.7
|
|
|
$
|
(45.2
|
)
|
|
$
|
1,635.8
|
|
|
Common
Stock
Shares
|
|
Common
Stock
Amount
|
|
Additional
Paid-In
Capital
|
|
Retained Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
|||||||||||
Balance at December 31, 2018
|
132.9
|
|
|
$
|
1.3
|
|
|
$
|
1,131.9
|
|
|
$
|
392.3
|
|
|
$
|
(61.3
|
)
|
|
$
|
1,464.2
|
|
Cumulative effect adjustment for adoption of
ASC Topic 842, net of tax |
|
|
|
|
|
|
1.1
|
|
|
|
|
1.1
|
|
|||||||||
Net income
|
|
|
|
|
|
|
168.7
|
|
|
|
|
168.7
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
5.7
|
|
|
5.7
|
|
|||||||||
Issuance of common stock under stock plans
|
0.9
|
|
|
|
|
4.1
|
|
|
|
|
|
|
4.1
|
|
||||||||
Surrender of RSUs for taxes
|
(0.2
|
)
|
|
|
|
(10.5
|
)
|
|
|
|
|
|
(10.5
|
)
|
||||||||
Repurchase and retirement of common stock
|
(4.8
|
)
|
|
|
|
(119.7
|
)
|
|
|
|
|
|
(119.7
|
)
|
||||||||
Stock-based compensation expense
|
|
|
|
|
16.4
|
|
|
|
|
|
|
16.4
|
|
|||||||||
Distribution of IAA
|
|
|
|
|
|
|
213.2
|
|
|
10.4
|
|
|
223.6
|
|
||||||||
Dividends earned under stock plan
|
|
|
|
|
1.8
|
|
|
(1.8
|
)
|
|
|
|
—
|
|
||||||||
Cash dividends declared to stockholders ($0.89 per share)
|
|
|
|
|
|
|
(117.8
|
)
|
|
|
|
(117.8
|
)
|
|||||||||
Balance at September 30, 2019
|
128.8
|
|
|
$
|
1.3
|
|
|
$
|
1,024.0
|
|
|
$
|
655.7
|
|
|
$
|
(45.2
|
)
|
|
$
|
1,635.8
|
|
|
Common
Stock Shares |
|
Common
Stock Amount |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Loss |
|
Total
|
|||||||||||
Balance at June 30, 2018
|
134.2
|
|
|
$
|
1.3
|
|
|
$
|
1,213.6
|
|
|
$
|
341.1
|
|
|
$
|
(43.5
|
)
|
|
$
|
1,512.5
|
|
Net income
|
|
|
|
|
|
|
77.5
|
|
|
|
|
77.5
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
6.3
|
|
|
6.3
|
|
|||||||||
Issuance of common stock under stock plans
|
0.4
|
|
|
|
|
5.8
|
|
|
|
|
|
|
5.8
|
|
||||||||
Surrender of RSUs for taxes
|
—
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
(0.1
|
)
|
||||||||
Stock-based compensation expense
|
|
|
|
|
6.6
|
|
|
|
|
|
|
6.6
|
|
|||||||||
Cash dividends declared to stockholders ($0.35 per share)
|
|
|
|
|
|
|
(47.1
|
)
|
|
|
|
(47.1
|
)
|
|||||||||
Balance at September 30, 2018
|
134.6
|
|
|
$
|
1.3
|
|
|
$
|
1,225.9
|
|
|
$
|
371.5
|
|
|
$
|
(37.2
|
)
|
|
$
|
1,561.5
|
|
|
Common
Stock
Shares
|
|
Common
Stock
Amount
|
|
Additional
Paid-In
Capital
|
|
Retained Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
|||||||||||
Balance at December 31, 2017
|
134.3
|
|
|
$
|
1.3
|
|
|
$
|
1,251.8
|
|
|
$
|
257.0
|
|
|
$
|
(25.2
|
)
|
|
$
|
1,484.9
|
|
Cumulative effect adjustment for adoption of
ASC Topic 606, net of tax |
|
|
|
|
|
|
(3.0
|
)
|
|
|
|
(3.0
|
)
|
|||||||||
Net income
|
|
|
|
|
|
|
260.7
|
|
|
|
|
260.7
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(12.0
|
)
|
|
(12.0
|
)
|
|||||||||
Issuance of common stock under stock plans
|
1.4
|
|
|
|
|
14.2
|
|
|
|
|
|
|
14.2
|
|
||||||||
Surrender of RSUs for taxes
|
(0.2
|
)
|
|
|
|
(10.1
|
)
|
|
|
|
|
|
(10.1
|
)
|
||||||||
Repurchase and retirement of common stock
|
(0.9
|
)
|
|
|
|
(50.0
|
)
|
|
|
|
|
|
(50.0
|
)
|
||||||||
Stock-based compensation expense
|
|
|
|
|
18.1
|
|
|
|
|
|
|
18.1
|
|
|||||||||
Dividends earned under stock plans
|
|
|
|
|
1.9
|
|
|
(1.9
|
)
|
|
|
|
—
|
|
||||||||
Cash dividends declared to stockholders ($1.05 per share)
|
|
|
|
|
|
|
(141.3
|
)
|
|
|
|
(141.3
|
)
|
|||||||||
Balance at September 30, 2018
|
134.6
|
|
|
$
|
1.3
|
|
|
$
|
1,225.9
|
|
|
$
|
371.5
|
|
|
$
|
(37.2
|
)
|
|
$
|
1,561.5
|
|
|
Nine Months Ended September 30,
|
||||||
|
2019
|
|
2018
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
168.7
|
|
|
$
|
260.7
|
|
Net income from discontinued operations
|
(91.6
|
)
|
|
(158.2
|
)
|
||
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
138.6
|
|
|
129.8
|
|
||
Provision for credit losses
|
28.9
|
|
|
25.6
|
|
||
Deferred income taxes
|
2.5
|
|
|
(0.1
|
)
|
||
Amortization of debt issuance costs
|
9.6
|
|
|
8.0
|
|
||
Stock-based compensation
|
14.6
|
|
|
15.3
|
|
||
Loss (gain) on disposal of fixed assets
|
0.1
|
|
|
(0.1
|
)
|
||
Loss on extinguishment of debt
|
2.2
|
|
|
—
|
|
||
Other non-cash, net
|
7.8
|
|
|
(2.6
|
)
|
||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
||||
Trade receivables and other assets
|
(41.3
|
)
|
|
(158.3
|
)
|
||
Accounts payable and accrued expenses
|
51.0
|
|
|
206.8
|
|
||
Net cash provided by operating activities - continuing operations
|
291.1
|
|
|
326.9
|
|
||
Net cash provided by operating activities - discontinued operations
|
156.7
|
|
|
238.2
|
|
||
Investing activities
|
|
|
|
||||
Net increase in finance receivables held for investment
|
(119.0
|
)
|
|
(90.2
|
)
|
||
Acquisition of businesses (net of cash acquired)
|
(120.7
|
)
|
|
(23.3
|
)
|
||
Purchases of property, equipment and computer software
|
(127.6
|
)
|
|
(82.7
|
)
|
||
Net cash used by investing activities - continuing operations
|
(367.3
|
)
|
|
(196.2
|
)
|
||
Net cash used by investing activities - discontinued operations
|
(37.4
|
)
|
|
(37.9
|
)
|
||
Financing activities
|
|
|
|
||||
Net increase in book overdrafts
|
9.2
|
|
|
8.5
|
|
||
Net increase in borrowings from lines of credit
|
17.5
|
|
|
—
|
|
||
Net (decrease) increase in obligations collateralized by finance receivables
|
(25.0
|
)
|
|
6.0
|
|
||
Proceeds from long-term debt
|
947.6
|
|
|
—
|
|
||
Payments for debt issuance costs/amendments
|
(13.7
|
)
|
|
—
|
|
||
Payments on long-term debt
|
(1,746.6
|
)
|
|
(8.0
|
)
|
||
Payments on capital leases
|
(12.2
|
)
|
|
(11.0
|
)
|
||
Payments of contingent consideration and deferred acquisition costs
|
(0.5
|
)
|
|
(7.4
|
)
|
||
Issuance of common stock under stock plans
|
4.1
|
|
|
14.2
|
|
||
Tax withholding payments for vested RSUs
|
(10.5
|
)
|
|
(10.1
|
)
|
||
Repurchase and retirement of common stock
|
(119.7
|
)
|
|
(50.0
|
)
|
||
Dividends paid to stockholders
|
(139.8
|
)
|
|
(141.2
|
)
|
||
Cash transferred to IAA
|
(50.9
|
)
|
|
—
|
|
||
Net cash used by financing activities - continuing operations
|
(1,140.5
|
)
|
|
(199.0
|
)
|
||
Net cash provided by (used by) financing activities - discontinued operations
|
1,317.6
|
|
|
(6.7
|
)
|
||
Effect of exchange rate changes on cash
|
7.0
|
|
|
(4.9
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
227.2
|
|
|
120.4
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
304.7
|
|
|
303.5
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
531.9
|
|
|
$
|
423.9
|
|
Cash paid for interest, net of proceeds from interest rate caps
|
$
|
120.0
|
|
|
$
|
120.7
|
|
Cash paid for taxes, net of refunds - continuing operations
|
$
|
27.8
|
|
|
$
|
47.5
|
|
Cash paid for taxes, net of refunds - discontinued operations
|
$
|
40.1
|
|
|
$
|
49.4
|
|
•
|
"we," "us," "our" and "the Company" refer, collectively, to KAR Auction Services, Inc. and all of its subsidiaries;
|
•
|
"ADESA" or "ADESA Auctions" refer, collectively, to ADESA, Inc., a wholly-owned subsidiary of KAR Auction Services, and ADESA, Inc.'s subsidiaries, including Openlane, Inc. (together with Openlane, Inc.'s subsidiaries, "Openlane"), Nth Gen Software Inc. ("TradeRev"), ADESA Remarketing Limited (formerly known as GRS Remarketing Limited ("GRS" or "ADESA Remarketing Limited")) and ADESA Europe (formerly known as CarsOnTheWeb ("COTW"));
|
•
|
"AFC" refers, collectively, to Automotive Finance Corporation, a wholly-owned subsidiary of ADESA, and Automotive Finance Corporation's subsidiaries and other related entities, including PWI Holdings, Inc.;
|
•
|
"Credit Agreement" refers to the Amended and Restated Credit Agreement, dated March 11, 2014, as amended on March 9, 2016, May 31, 2017 and September 19, 2019, among KAR Auction Services, as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and JPMorgan Chase Bank N.A., as administrative agent;
|
•
|
"Credit Facility" refers to the $950 million, senior secured term loan B-6 facility due September 19, 2026 ("Term Loan B-6") and the $325 million, senior secured revolving credit facility due September 19, 2024 (the "Revolving Credit Facility"), the terms of which are set forth in the Credit Agreement;
|
•
|
"IAA" refers, collectively, to Insurance Auto Auctions, Inc., formerly a wholly-owned subsidiary of KAR Auction Services, and Insurance Auto Auctions, Inc.'s subsidiaries and other related entities, including HBC Vehicle Services Limited ("HBC"). See Note 3;
|
•
|
"KAR Auction Services" refers to KAR Auction Services, Inc. and not to its subsidiaries;
|
•
|
"Senior notes" refers to the 5.125% senior notes due 2025 ($950 million aggregate principal outstanding at September 30, 2019);
|
•
|
"Term Loan B-4" refers to the senior secured term loan B-4 facility, the terms of which are set forth in the Credit Agreement;
|
•
|
"Term Loan B-5" refers to the senior secured term loan B-5 facility, the terms of which are set forth in the Credit Agreement; and
|
•
|
"2017 Revolving Credit Facility" refers to the $350 million, senior secured revolving credit facility, the terms of which are set forth in the Credit Agreement.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating revenues
|
$
|
—
|
|
|
$
|
321.1
|
|
|
$
|
723.6
|
|
|
$
|
991.6
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
—
|
|
|
202.4
|
|
|
446.1
|
|
|
610.2
|
|
||||
Selling, general and administrative
|
—
|
|
|
31.3
|
|
|
94.5
|
|
|
96.1
|
|
||||
Depreciation and amortization
|
—
|
|
|
24.3
|
|
|
43.9
|
|
|
73.1
|
|
||||
Total operating expenses
|
—
|
|
|
258.0
|
|
|
584.5
|
|
|
779.4
|
|
||||
Operating profit
|
—
|
|
|
63.1
|
|
|
139.1
|
|
|
212.2
|
|
||||
Interest expense
|
—
|
|
|
0.1
|
|
|
2.7
|
|
|
0.5
|
|
||||
Other income, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
||||
Income from discontinued operations before income taxes
|
—
|
|
|
63.0
|
|
|
136.4
|
|
|
212.4
|
|
||||
Income taxes
|
(0.9
|
)
|
|
16.4
|
|
|
44.8
|
|
|
54.2
|
|
||||
Income from discontinued operations
|
$
|
0.9
|
|
|
$
|
46.6
|
|
|
$
|
91.6
|
|
|
$
|
158.2
|
|
|
June 28,
2019
|
|
December 31, 2018
|
||||
Assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
50.9
|
|
|
$
|
60.0
|
|
Trade receivables, net
|
284.7
|
|
|
311.0
|
|
||
Other current assets
|
83.6
|
|
|
82.5
|
|
||
Goodwill
|
536.8
|
|
|
536.8
|
|
||
Customer relationships, net
|
62.2
|
|
|
74.8
|
|
||
Other intangible assets, net
|
87.5
|
|
|
86.2
|
|
||
Operating lease right-of-use assets
|
655.2
|
|
|
—
|
|
||
Other assets
|
13.3
|
|
|
10.3
|
|
||
Property and equipment, net
|
241.4
|
|
|
345.2
|
|
||
Total assets, discontinued operations
|
$
|
2,015.6
|
|
|
$
|
1,506.8
|
|
Liabilities
|
|
|
|
||||
Accounts payable
|
$
|
115.8
|
|
|
$
|
129.0
|
|
Accrued employee benefits and compensation expenses
|
19.0
|
|
|
29.6
|
|
||
Other accrued expenses
|
120.9
|
|
|
53.6
|
|
||
Income taxes payable
|
—
|
|
|
2.2
|
|
||
Long-term debt
|
1,274.8
|
|
|
—
|
|
||
Deferred income tax liabilities
|
63.7
|
|
|
63.1
|
|
||
Operating lease liabilities
|
633.0
|
|
|
—
|
|
||
Other liabilities
|
12.0
|
|
|
202.9
|
|
||
Total liabilities, discontinued operations
|
$
|
2,239.2
|
|
|
$
|
480.4
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
PRSUs
|
$
|
2.6
|
|
|
$
|
3.3
|
|
|
$
|
7.5
|
|
|
$
|
8.4
|
|
RSUs
|
1.7
|
|
|
2.4
|
|
|
7.1
|
|
|
6.8
|
|
||||
Service options
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
||||
Total stock-based compensation expense
|
$
|
4.3
|
|
|
$
|
5.7
|
|
|
$
|
14.6
|
|
|
$
|
15.3
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income from continuing operations
|
$
|
34.4
|
|
|
$
|
30.9
|
|
|
$
|
77.1
|
|
|
$
|
102.5
|
|
Weighted average common shares outstanding
|
131.2
|
|
|
134.5
|
|
|
132.5
|
|
|
134.5
|
|
||||
Effect of dilutive stock options and restricted stock awards
|
1.2
|
|
|
1.1
|
|
|
1.3
|
|
|
1.2
|
|
||||
Weighted average common shares outstanding and potential common shares
|
132.4
|
|
|
135.6
|
|
|
133.8
|
|
|
135.7
|
|
||||
Net income from continuing operations per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.26
|
|
|
$
|
0.23
|
|
|
$
|
0.58
|
|
|
$
|
0.76
|
|
Diluted
|
$
|
0.26
|
|
|
$
|
0.23
|
|
|
$
|
0.58
|
|
|
$
|
0.76
|
|
|
September 30, 2019
|
|
Net Credit Losses
Three Months Ended
September 30, 2019
|
|
Net Credit Losses
Nine Months Ended
September 30, 2019
|
||||||||||
|
Total Amount of:
|
|
|
||||||||||||
(in millions)
|
Receivables
|
|
Receivables
Delinquent
|
|
|
||||||||||
Floorplan receivables
|
$
|
2,097.7
|
|
|
$
|
15.6
|
|
|
$
|
8.6
|
|
|
$
|
24.8
|
|
Other loans
|
12.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total receivables managed
|
$
|
2,110.4
|
|
|
$
|
15.6
|
|
|
$
|
8.6
|
|
|
$
|
24.8
|
|
|
December 31, 2018
|
|
Net Credit Losses
Three Months Ended
September 30, 2018
|
|
Net Credit Losses
Nine Months Ended
September 30, 2018
|
||||||||||
|
Total Amount of:
|
|
|
||||||||||||
(in millions)
|
Receivables
|
|
Receivables
Delinquent
|
|
|
||||||||||
Floorplan receivables
|
$
|
2,001.9
|
|
|
$
|
15.9
|
|
|
$
|
7.1
|
|
|
$
|
21.3
|
|
Other loans
|
12.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total receivables managed
|
$
|
2,014.8
|
|
|
$
|
15.9
|
|
|
$
|
7.1
|
|
|
$
|
21.3
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Obligations collateralized by finance receivables, gross
|
$
|
1,443.2
|
|
|
$
|
1,464.7
|
|
Unamortized securitization issuance costs
|
(14.8
|
)
|
|
(19.4
|
)
|
||
Obligations collateralized by finance receivables
|
$
|
1,428.4
|
|
|
$
|
1,445.3
|
|
|
Interest Rate*
|
|
Maturity
|
|
September 30,
2019 |
|
December 31,
2018 |
||||||
Term Loan B-4
|
Adjusted LIBOR
|
|
+ 2.25%
|
|
March 11, 2021
|
|
$
|
—
|
|
|
$
|
704.4
|
|
Term Loan B-5
|
Adjusted LIBOR
|
|
+ 2.50%
|
|
March 9, 2023
|
|
—
|
|
|
1,031.5
|
|
||
Term Loan B-6
|
Adjusted LIBOR
|
|
+ 2.25%
|
|
September 19, 2026
|
|
950.0
|
|
|
—
|
|
||
Revolving credit facility
|
Adjusted LIBOR
|
|
+ 1.75%
|
|
September 19, 2024
|
|
—
|
|
|
—
|
|
||
Senior notes
|
|
|
5.125%
|
|
June 1, 2025
|
|
950.0
|
|
|
950.0
|
|
||
European lines of credit
|
Euribor
|
|
+ 1.25%
|
|
Repayable upon demand
|
|
17.5
|
|
|
—
|
|
||
Canadian line of credit
|
CAD Prime
|
|
+ 0.50%
|
|
Repayable upon demand
|
|
—
|
|
|
—
|
|
||
Total debt
|
|
|
|
|
|
|
1,917.5
|
|
|
2,685.9
|
|
||
Unamortized debt issuance costs/discounts
|
|
|
|
|
|
(27.5
|
)
|
|
(18.5
|
)
|
|||
Current portion of long-term debt
|
|
|
|
|
|
|
(27.0
|
)
|
|
(13.1
|
)
|
||
Long-term debt
|
|
|
|
|
|
|
$
|
1,863.0
|
|
|
$
|
2,654.3
|
|
•
|
In August 2017, we entered into two interest rate caps with an aggregate notional amount of $800 million to manage our exposure to interest rate movements on our variable rate Credit Facility when three-month LIBOR exceeded 2.0%. The interest rate cap agreements each had an effective date of September 30, 2017 and each matured on September 30, 2019. We paid an aggregate amount of approximately $1.0 million for the caps in August 2017.
|
•
|
In March 2017, we entered into two interest rate caps with an aggregate notional amount of $400 million to manage our exposure to interest rate movements on our variable rate Credit Facility when three-month LIBOR exceeded 2.0%. The interest rate cap agreements each had an effective date of March 31, 2017 and each matured on March 31, 2019. We paid an aggregate amount of approximately $0.7 million for the caps in April 2017.
|
|
|
Asset Derivatives
|
||||||||||
|
|
September 30, 2019
|
|
December 31, 2018
|
||||||||
Derivatives Not Designated as Hedging Instruments
|
|
Balance Sheet Location
|
|
Fair Value
|
|
Balance Sheet Location
|
|
Fair Value
|
||||
2017 Interest rate caps
|
|
Other assets
|
|
$
|
—
|
|
|
Other assets
|
|
$
|
5.2
|
|
|
Three Months Ended September 30, 2019
|
|
Nine Months Ended September 30, 2019
|
||||
Operating lease cost
|
$
|
15.9
|
|
|
$
|
45.3
|
|
Finance lease cost:
|
|
|
|
||||
Amortization of right-of-use assets
|
$
|
3.4
|
|
|
$
|
10.8
|
|
Interest on lease liabilities
|
0.3
|
|
|
1.0
|
|
||
Total finance lease cost
|
$
|
3.7
|
|
|
$
|
11.8
|
|
|
Nine Months Ended September 30, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows related to operating leases
|
$
|
44.3
|
|
Operating cash flows related to finance leases
|
1.0
|
|
|
Financing cash flows related to finance leases
|
20.5
|
|
|
Right-of-use assets obtained in exchange for lease obligations:
|
|
||
Operating leases
|
80.4
|
|
|
Finance leases
|
13.7
|
|
|
September 30, 2019
|
||
Operating Leases
|
|
||
Operating lease right-of-use assets
|
$
|
366.4
|
|
Other accrued expenses
|
$
|
33.7
|
|
Operating lease liabilities
|
361.1
|
|
|
Total operating lease liabilities
|
$
|
394.8
|
|
Finance Leases
|
|
||
Property and equipment, gross
|
$
|
91.9
|
|
Accumulated depreciation
|
(70.4
|
)
|
|
Property and equipment, net
|
$
|
21.5
|
|
Other accrued expenses
|
$
|
12.0
|
|
Other liabilities
|
14.6
|
|
|
Total finance lease liabilities
|
$
|
26.6
|
|
Weighted Average Remaining Lease Term
|
|
||
Operating leases
|
11.0 years
|
|
|
Finance leases
|
2.1 years
|
|
|
Weighted Average Discount Rate
|
|
||
Operating leases
|
6.1
|
%
|
|
Finance leases
|
5.1
|
%
|
|
Operating
Leases |
|
Finance Leases
|
||||
2019 (excluding the nine months ended September 30, 2019)
|
$
|
14.3
|
|
|
$
|
13.2
|
|
2020
|
55.9
|
|
|
4.9
|
|
||
2021
|
52.9
|
|
|
8.6
|
|
||
2022
|
50.3
|
|
|
1.7
|
|
||
2023
|
48.2
|
|
|
0.1
|
|
||
Thereafter
|
328.1
|
|
|
—
|
|
||
Total lease payments
|
549.7
|
|
|
28.5
|
|
||
Less imputed interest
|
(154.9
|
)
|
|
(1.9
|
)
|
||
Total
|
$
|
394.8
|
|
|
$
|
26.6
|
|
|
September 30,
2019 |
|
December 31,
2018 |
||||
Foreign currency translation loss
|
$
|
(45.2
|
)
|
|
$
|
(61.3
|
)
|
Accumulated other comprehensive loss
|
$
|
(45.2
|
)
|
|
$
|
(61.3
|
)
|
|
ADESA
Auctions |
|
AFC
|
|
Holding
Company |
|
Consolidated
|
||||||||
Operating revenues
|
$
|
613.6
|
|
|
$
|
88.3
|
|
|
$
|
—
|
|
|
$
|
701.9
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
386.2
|
|
|
24.7
|
|
|
—
|
|
|
410.9
|
|
||||
Selling, general and administrative
|
121.7
|
|
|
5.9
|
|
|
31.3
|
|
|
158.9
|
|
||||
Depreciation and amortization
|
37.2
|
|
|
2.6
|
|
|
6.6
|
|
|
46.4
|
|
||||
Total operating expenses
|
545.1
|
|
|
33.2
|
|
|
37.9
|
|
|
616.2
|
|
||||
Operating profit (loss)
|
68.5
|
|
|
55.1
|
|
|
(37.9
|
)
|
|
85.7
|
|
||||
Interest expense
|
1.1
|
|
|
15.7
|
|
|
21.1
|
|
|
37.9
|
|
||||
Other (income) expense, net
|
(1.3
|
)
|
|
(0.1
|
)
|
|
(0.6
|
)
|
|
(2.0
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2.2
|
|
|
2.2
|
|
||||
Intercompany expense (income)
|
6.0
|
|
|
(1.3
|
)
|
|
(4.7
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations before income taxes
|
62.7
|
|
|
40.8
|
|
|
(55.9
|
)
|
|
47.6
|
|
||||
Income taxes
|
16.3
|
|
|
10.1
|
|
|
(13.2
|
)
|
|
13.2
|
|
||||
Net income (loss) from continuing operations
|
$
|
46.4
|
|
|
$
|
30.7
|
|
|
$
|
(42.7
|
)
|
|
$
|
34.4
|
|
Total assets
|
$
|
3,713.9
|
|
|
$
|
2,505.5
|
|
|
$
|
360.3
|
|
|
$
|
6,579.7
|
|
|
ADESA
Auctions
|
|
AFC
|
|
Holding
Company
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
527.0
|
|
|
$
|
85.4
|
|
|
$
|
—
|
|
|
$
|
612.4
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
307.8
|
|
|
22.9
|
|
|
—
|
|
|
330.7
|
|
||||
Selling, general and administrative
|
111.8
|
|
|
8.1
|
|
|
34.8
|
|
|
154.7
|
|
||||
Depreciation and amortization
|
31.9
|
|
|
2.3
|
|
|
7.2
|
|
|
41.4
|
|
||||
Total operating expenses
|
451.5
|
|
|
33.3
|
|
|
42.0
|
|
|
526.8
|
|
||||
Operating profit (loss)
|
75.5
|
|
|
52.1
|
|
|
(42.0
|
)
|
|
85.6
|
|
||||
Interest expense
|
0.5
|
|
|
15.0
|
|
|
33.5
|
|
|
49.0
|
|
||||
Other (income) expense, net
|
(1.9
|
)
|
|
(0.1
|
)
|
|
(1.0
|
)
|
|
(3.0
|
)
|
||||
Intercompany expense (income)
|
6.9
|
|
|
(0.9
|
)
|
|
(6.0
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations before income taxes
|
70.0
|
|
|
38.1
|
|
|
(68.5
|
)
|
|
39.6
|
|
||||
Income taxes
|
19.0
|
|
|
9.0
|
|
|
(19.3
|
)
|
|
8.7
|
|
||||
Net income (loss) from continuing operations
|
$
|
51.0
|
|
|
$
|
29.1
|
|
|
$
|
(49.2
|
)
|
|
$
|
30.9
|
|
Total assets
|
$
|
3,171.7
|
|
|
$
|
2,395.5
|
|
|
$
|
298.2
|
|
|
$
|
5,865.4
|
|
|
ADESA
Auctions |
|
AFC
|
|
Holding
Company |
|
Consolidated
|
||||||||
Operating revenues
|
$
|
1,845.7
|
|
|
$
|
264.9
|
|
|
$
|
—
|
|
|
$
|
2,110.6
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
1,149.8
|
|
|
72.4
|
|
|
—
|
|
|
1,222.2
|
|
||||
Selling, general and administrative
|
370.2
|
|
|
19.5
|
|
|
107.6
|
|
|
497.3
|
|
||||
Depreciation and amortization
|
110.2
|
|
|
7.6
|
|
|
20.8
|
|
|
138.6
|
|
||||
Total operating expenses
|
1,630.2
|
|
|
99.5
|
|
|
128.4
|
|
|
1,858.1
|
|
||||
Operating profit (loss)
|
215.5
|
|
|
165.4
|
|
|
(128.4
|
)
|
|
252.5
|
|
||||
Interest expense
|
2.8
|
|
|
49.0
|
|
|
98.2
|
|
|
150.0
|
|
||||
Other (income) expense, net
|
(4.5
|
)
|
|
(0.3
|
)
|
|
(0.4
|
)
|
|
(5.2
|
)
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2.2
|
|
|
2.2
|
|
||||
Intercompany expense (income)
|
23.9
|
|
|
(4.1
|
)
|
|
(19.8
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations before income taxes
|
193.3
|
|
|
120.8
|
|
|
(208.6
|
)
|
|
105.5
|
|
||||
Income taxes
|
54.0
|
|
|
32.2
|
|
|
(57.8
|
)
|
|
28.4
|
|
||||
Net income (loss) from continuing operations
|
$
|
139.3
|
|
|
$
|
88.6
|
|
|
$
|
(150.8
|
)
|
|
$
|
77.1
|
|
|
ADESA
Auctions
|
|
AFC
|
|
Holding
Company
|
|
Consolidated
|
||||||||
Operating revenues
|
$
|
1,593.4
|
|
|
$
|
255.6
|
|
|
$
|
—
|
|
|
$
|
1,849.0
|
|
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Cost of services (exclusive of depreciation and amortization)
|
921.0
|
|
|
68.2
|
|
|
—
|
|
|
989.2
|
|
||||
Selling, general and administrative
|
328.9
|
|
|
23.6
|
|
|
107.6
|
|
|
460.1
|
|
||||
Depreciation and amortization
|
94.4
|
|
|
13.6
|
|
|
21.8
|
|
|
129.8
|
|
||||
Total operating expenses
|
1,344.3
|
|
|
105.4
|
|
|
129.4
|
|
|
1,579.1
|
|
||||
Operating profit (loss)
|
249.1
|
|
|
150.2
|
|
|
(129.4
|
)
|
|
269.9
|
|
||||
Interest expense
|
1.7
|
|
|
43.2
|
|
|
93.8
|
|
|
138.7
|
|
||||
Other (income) expense, net
|
(2.4
|
)
|
|
(0.1
|
)
|
|
(1.3
|
)
|
|
(3.8
|
)
|
||||
Intercompany expense (income)
|
26.6
|
|
|
(2.1
|
)
|
|
(24.5
|
)
|
|
—
|
|
||||
Income (loss) from continuing operations before income taxes
|
223.2
|
|
|
109.2
|
|
|
(197.4
|
)
|
|
135.0
|
|
||||
Income taxes
|
58.0
|
|
|
26.7
|
|
|
(52.2
|
)
|
|
32.5
|
|
||||
Net income (loss) from continuing operations
|
$
|
165.2
|
|
|
$
|
82.5
|
|
|
$
|
(145.2
|
)
|
|
$
|
102.5
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Operating revenues
|
|
|
|
|
|
|
|
||||||||
U.S.
|
$
|
565.6
|
|
|
$
|
519.4
|
|
|
$
|
1,726.4
|
|
|
$
|
1,569.1
|
|
Foreign
|
136.3
|
|
|
93.0
|
|
|
384.2
|
|
|
279.9
|
|
||||
|
$
|
701.9
|
|
|
$
|
612.4
|
|
|
$
|
2,110.6
|
|
|
$
|
1,849.0
|
|
•
|
our ability to effectively maintain or update information and technology systems;
|
•
|
our ability to implement and maintain measures to protect against cyber-attacks;
|
•
|
significant current competition and the introduction of new competitors;
|
•
|
competitive pricing pressures;
|
•
|
our ability to successfully implement our business strategies or realize expected cost savings and revenue enhancements;
|
•
|
our ability to meet or exceed customers' expectations, as well as develop and implement information systems responsive to customer needs;
|
•
|
business development activities, including greenfields, acquisitions and integration of acquired businesses;
|
•
|
costs associated with the acquisition of businesses or technologies;
|
•
|
fluctuations in consumer demand for and in the supply of used, leased and salvage vehicles and the resulting impact on auction sales volumes, conversion rates and loan transaction volumes;
|
•
|
any losses of key personnel;
|
•
|
our ability to obtain land or renew/enter into new leases at commercially reasonable rates;
|
•
|
decreases in the number of used vehicles sold at physical auctions;
|
•
|
changes in the market value of vehicles auctioned;
|
•
|
trends in new and used vehicle sales and incentives, including wholesale used vehicle pricing;
|
•
|
the ability of consumers to lease or finance the purchase of new and/or used vehicles;
|
•
|
the ability to recover or collect from delinquent or bankrupt customers;
|
•
|
economic conditions including fuel prices, commodity prices, foreign exchange rates and interest rate fluctuations;
|
•
|
trends in the vehicle remarketing industry;
|
•
|
trends in the number of commercial vehicles being brought to auction, in particular off-lease volumes;
|
•
|
changes in the volume of vehicle production, including capacity reductions at the major original equipment manufacturers;
|
•
|
laws, regulations and industry standards, including changes in regulations governing the sale of used vehicles and commercial lending activities;
|
•
|
our ability to maintain our brand and protect our intellectual property;
|
•
|
the costs of environmental compliance and/or the imposition of liabilities under environmental laws and regulations;
|
•
|
weather, including increased expenses as a result of catastrophic events;
|
•
|
general business conditions;
|
•
|
our substantial amount of debt;
|
•
|
restrictive covenants in our debt agreements;
|
•
|
our assumption of the settlement risk for vehicles sold;
|
•
|
litigation developments;
|
•
|
our self-insurance for certain risks;
|
•
|
interruptions to service from our workforce;
|
•
|
any impairment to our goodwill or other intangible assets;
|
•
|
changes in effective tax rates;
|
•
|
the taxable nature of the spin-off of our former salvage auction business;
|
•
|
changes to accounting standards; and
|
•
|
other risks described from time to time in our filings with the SEC.
|
•
|
The ADESA Auctions segment serves a domestic and international customer base through live and online auctions and through 74 whole car auction facilities in North America that are developed and strategically located to draw professional sellers and buyers together and allow the buyers to inspect and compare vehicles remotely or in person. Through ADESA.com, powered by Openlane technology, ADESA offers comprehensive private label remarketing solutions to automobile manufacturers, captive finance companies and other institutions to offer vehicles via the Internet prior to arrival at the physical auction. Vehicles at ADESA's auctions are typically sold by commercial fleet operators, financial institutions, rental car companies, new and used vehicle dealers and vehicle manufacturers and their captive finance companies to franchise and independent used vehicle dealers. ADESA also provides value-added ancillary services including inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services. ADESA also includes TradeRev, an online automotive remarketing system where dealers can launch and participate in real-time vehicle auctions at any time, ADESA Remarketing Limited, an online whole car vehicle remarketing business in the United Kingdom and ADESA Europe (formerly known as CarsOnTheWeb), an online wholesale vehicle auction marketplace in Continental Europe.
|
•
|
The AFC segment provides short-term, inventory-secured financing, known as floorplan financing, primarily to independent used vehicle dealers. At September 30, 2019, AFC conducted business at 122 locations in the United States and Canada. The Company also sells vehicle service contracts through Preferred Warranties, Inc. ("PWI").
|
|
Three Months Ended September 30,
|
||||||
(Dollars in millions except per share amounts)
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
||||
ADESA
|
$
|
613.6
|
|
|
$
|
527.0
|
|
AFC
|
88.3
|
|
|
85.4
|
|
||
Total revenues
|
701.9
|
|
|
612.4
|
|
||
Cost of services*
|
410.9
|
|
|
330.7
|
|
||
Gross profit*
|
291.0
|
|
|
281.7
|
|
||
Selling, general and administrative
|
158.9
|
|
|
154.7
|
|
||
Depreciation and amortization
|
46.4
|
|
|
41.4
|
|
||
Operating profit
|
85.7
|
|
|
85.6
|
|
||
Interest expense
|
37.9
|
|
|
49.0
|
|
||
Other income, net
|
(2.0
|
)
|
|
(3.0
|
)
|
||
Loss on extinguishment of debt
|
2.2
|
|
|
—
|
|
||
Income from continuing operations before income taxes
|
47.6
|
|
|
39.6
|
|
||
Income taxes
|
13.2
|
|
|
8.7
|
|
||
Net income from continuing operations
|
34.4
|
|
|
30.9
|
|
||
Income from discontinued operations
|
0.9
|
|
|
46.6
|
|
||
Net income
|
$
|
35.3
|
|
|
$
|
77.5
|
|
Net income from continuing operations per share
|
|
|
|
||||
Basic
|
$
|
0.26
|
|
|
$
|
0.23
|
|
Diluted
|
$
|
0.26
|
|
|
$
|
0.23
|
|
|
Three Months Ended September 30,
|
||||||
(Dollars in millions, except per vehicle amounts)
|
2019
|
|
2018
|
||||
ADESA revenue
|
$
|
613.6
|
|
|
$
|
527.0
|
|
Cost of services*
|
386.2
|
|
|
307.8
|
|
||
Gross profit*
|
227.4
|
|
|
219.2
|
|
||
Selling, general and administrative
|
121.7
|
|
|
111.8
|
|
||
Depreciation and amortization
|
37.2
|
|
|
31.9
|
|
||
Operating profit
|
$
|
68.5
|
|
|
$
|
75.5
|
|
Vehicles sold
|
957,000
|
|
|
876,000
|
|
||
Physical auction vehicles sold in North America
|
526,000
|
|
|
522,000
|
|
||
Online only vehicles sold in North America
|
396,000
|
|
|
343,000
|
|
||
Vehicles sold in Europe
|
35,000
|
|
|
11,000
|
|
||
Dealer consignment mix at physical auctions
|
43
|
%
|
|
44
|
%
|
||
Conversion rate at North American physical auctions
|
62.8
|
%
|
|
62.9
|
%
|
||
Physical auction revenue per vehicle sold, excluding purchased vehicles
|
$
|
893
|
|
|
$
|
850
|
|
Online only revenue per vehicle sold, excluding purchased vehicles
|
$
|
151
|
|
|
$
|
126
|
|
|
Three Months Ended September 30,
|
||||||
(Dollars in millions except volumes and per loan amounts)
|
2019
|
|
2018
|
||||
AFC revenue
|
|
|
|
||||
Interest and fee income
|
$
|
85.5
|
|
|
$
|
80.7
|
|
Other revenue
|
2.7
|
|
|
3.4
|
|
||
Provision for credit losses
|
(8.9
|
)
|
|
(7.3
|
)
|
||
Warranty contract revenue
|
9.0
|
|
|
8.6
|
|
||
Total AFC revenue
|
88.3
|
|
|
85.4
|
|
||
Cost of services*
|
24.7
|
|
|
22.9
|
|
||
Gross profit*
|
63.6
|
|
|
62.5
|
|
||
Selling, general and administrative
|
5.9
|
|
|
8.1
|
|
||
Depreciation and amortization
|
2.6
|
|
|
2.3
|
|
||
Operating profit
|
$
|
55.1
|
|
|
$
|
52.1
|
|
Loan transactions
|
442,000
|
|
|
433,000
|
|
||
Revenue per loan transaction, excluding "Warranty contract revenue"
|
$
|
180
|
|
|
$
|
177
|
|
|
Three Months Ended September 30,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Selling, general and administrative
|
$
|
31.3
|
|
|
$
|
34.8
|
|
Depreciation and amortization
|
6.6
|
|
|
7.2
|
|
||
Operating loss
|
$
|
(37.9
|
)
|
|
$
|
(42.0
|
)
|
|
Nine Months Ended September 30,
|
||||||
(Dollars in millions except per share amounts)
|
2019
|
|
2018
|
||||
Revenues
|
|
|
|
||||
ADESA
|
$
|
1,845.7
|
|
|
$
|
1,593.4
|
|
AFC
|
264.9
|
|
|
255.6
|
|
||
Total revenues
|
2,110.6
|
|
|
1,849.0
|
|
||
Cost of services*
|
1,222.2
|
|
|
989.2
|
|
||
Gross profit*
|
888.4
|
|
|
859.8
|
|
||
Selling, general and administrative
|
497.3
|
|
|
460.1
|
|
||
Depreciation and amortization
|
138.6
|
|
|
129.8
|
|
||
Operating profit
|
252.5
|
|
|
269.9
|
|
||
Interest expense
|
150.0
|
|
|
138.7
|
|
||
Other income, net
|
(5.2
|
)
|
|
(3.8
|
)
|
||
Loss on extinguishment of debt
|
2.2
|
|
|
—
|
|
||
Income from continuing operations before income taxes
|
105.5
|
|
|
135.0
|
|
||
Income taxes
|
28.4
|
|
|
32.5
|
|
||
Net income from continuing operations
|
$
|
77.1
|
|
|
$
|
102.5
|
|
Income from discontinued operations
|
91.6
|
|
|
158.2
|
|
||
Net income
|
$
|
168.7
|
|
|
$
|
260.7
|
|
Net income from continuing operations per share
|
|
|
|
||||
Basic
|
$
|
0.58
|
|
|
$
|
0.76
|
|
Diluted
|
$
|
0.58
|
|
|
$
|
0.76
|
|
|
Nine Months Ended September 30,
|
||||||
(Dollars in millions, except per vehicle amounts)
|
2019
|
|
2018
|
||||
ADESA revenue
|
$
|
1,845.7
|
|
|
$
|
1,593.4
|
|
Cost of services*
|
1,149.8
|
|
|
921.0
|
|
||
Gross profit*
|
695.9
|
|
|
672.4
|
|
||
Selling, general and administrative
|
370.2
|
|
|
328.9
|
|
||
Depreciation and amortization
|
110.2
|
|
|
94.4
|
|
||
Operating profit
|
$
|
215.5
|
|
|
$
|
249.1
|
|
Vehicles sold
|
2,897,000
|
|
|
2,661,000
|
|
||
Physical auction vehicles sold in North America
|
1,635,000
|
|
|
1,629,000
|
|
||
Online only vehicles sold in North America
|
1,179,000
|
|
|
998,000
|
|
||
Vehicles sold in Europe
|
83,000
|
|
|
34,000
|
|
||
Dealer consignment mix at physical auctions
|
40
|
%
|
|
43
|
%
|
||
Conversion rate at North American physical auctions
|
64.2
|
%
|
|
62.6
|
%
|
||
Physical auction revenue per vehicle sold, excluding purchased vehicles
|
$
|
883
|
|
|
$
|
836
|
|
Online only revenue per vehicle sold, excluding purchased vehicles
|
$
|
149
|
|
|
$
|
120
|
|
|
Nine Months Ended September 30,
|
||||||
(Dollars in millions except volumes and per loan amounts)
|
2019
|
|
2018
|
||||
AFC revenue
|
|
|
|
||||
Interest and fee income
|
$
|
256.1
|
|
|
$
|
243.1
|
|
Other revenue
|
8.1
|
|
|
9.6
|
|
||
Provision for credit losses
|
(25.5
|
)
|
|
(22.1
|
)
|
||
Warranty contract revenue
|
26.2
|
|
|
25.0
|
|
||
Total AFC revenue
|
264.9
|
|
|
255.6
|
|
||
Cost of services*
|
72.4
|
|
|
68.2
|
|
||
Gross profit*
|
192.5
|
|
|
187.4
|
|
||
Selling, general and administrative
|
19.5
|
|
|
23.6
|
|
||
Depreciation and amortization
|
7.6
|
|
|
13.6
|
|
||
Operating profit
|
$
|
165.4
|
|
|
$
|
150.2
|
|
Loan transactions
|
1,340,000
|
|
|
1,332,000
|
|
||
Revenue per loan transaction, excluding "Warranty contract revenue"
|
$
|
178
|
|
|
$
|
173
|
|
|
Nine Months Ended September 30,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Selling, general and administrative
|
$
|
107.6
|
|
|
$
|
107.6
|
|
Depreciation and amortization
|
20.8
|
|
|
21.8
|
|
||
Operating loss
|
$
|
(128.4
|
)
|
|
$
|
(129.4
|
)
|
(Dollars in millions)
|
September 30,
2019 |
|
December 31,
2018 |
|
September 30,
2018 |
||||||
Cash and cash equivalents
|
$
|
508.6
|
|
|
$
|
277.1
|
|
|
$
|
401.3
|
|
Restricted cash
|
23.3
|
|
|
27.6
|
|
|
22.6
|
|
|||
Working capital
|
741.5
|
|
|
450.3
|
|
|
615.3
|
|
|||
Amounts available under Credit Facility*
|
325.0
|
|
|
350.0
|
|
|
350.0
|
|
|||
Cash flow from operations for the nine months ended
|
291.1
|
|
|
|
|
326.9
|
|
*
|
There were related outstanding letters of credit totaling approximately $27.7 million, $32.9 million and $32.4 million at September 30, 2019, December 31, 2018 and September 30, 2018, respectively, which reduced the amount available for borrowings under the revolving credit facility.
|
|
Three Months Ended September 30, 2019
|
||||||||||||||
(Dollars in millions)
|
ADESA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||
Net income (loss) from continuing operations
|
$
|
46.4
|
|
|
$
|
30.7
|
|
|
$
|
(42.7
|
)
|
|
$
|
34.4
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Income taxes
|
16.3
|
|
|
10.1
|
|
|
(13.2
|
)
|
|
13.2
|
|
||||
Interest expense, net of interest income
|
0.8
|
|
|
15.6
|
|
|
20.8
|
|
|
37.2
|
|
||||
Depreciation and amortization
|
37.2
|
|
|
2.6
|
|
|
6.6
|
|
|
46.4
|
|
||||
Intercompany interest
|
2.4
|
|
|
(1.3
|
)
|
|
(1.1
|
)
|
|
—
|
|
||||
EBITDA
|
103.1
|
|
|
57.7
|
|
|
(29.6
|
)
|
|
131.2
|
|
||||
Intercompany charges
|
3.6
|
|
|
—
|
|
|
(3.6
|
)
|
|
—
|
|
||||
Non-cash stock-based compensation
|
1.6
|
|
|
0.3
|
|
|
2.6
|
|
|
4.5
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2.2
|
|
|
2.2
|
|
||||
Acquisition related costs
|
2.0
|
|
|
—
|
|
|
0.7
|
|
|
2.7
|
|
||||
Securitization interest
|
—
|
|
|
(13.3
|
)
|
|
—
|
|
|
(13.3
|
)
|
||||
Severance
|
0.6
|
|
|
0.1
|
|
|
0.2
|
|
|
0.9
|
|
||||
Foreign currency gains/losses
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
||||
Other
|
1.3
|
|
|
(0.1
|
)
|
|
0.2
|
|
|
1.4
|
|
||||
Total addbacks
|
9.1
|
|
|
(13.0
|
)
|
|
1.9
|
|
|
(2.0
|
)
|
||||
Adjusted EBITDA
|
$
|
112.2
|
|
|
$
|
44.7
|
|
|
$
|
(27.7
|
)
|
|
$
|
129.2
|
|
|
Three Months Ended September 30, 2018
|
||||||||||||||
(Dollars in millions)
|
ADESA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||
Net income (loss) from continuing operations
|
$
|
51.0
|
|
|
$
|
29.1
|
|
|
$
|
(49.2
|
)
|
|
$
|
30.9
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Income taxes
|
19.0
|
|
|
9.0
|
|
|
(19.3
|
)
|
|
8.7
|
|
||||
Interest expense, net of interest income
|
0.1
|
|
|
14.9
|
|
|
32.7
|
|
|
47.7
|
|
||||
Depreciation and amortization
|
31.9
|
|
|
2.3
|
|
|
7.2
|
|
|
41.4
|
|
||||
Intercompany interest
|
3.6
|
|
|
(0.9
|
)
|
|
(2.7
|
)
|
|
—
|
|
||||
EBITDA
|
105.6
|
|
|
54.4
|
|
|
(31.3
|
)
|
|
128.7
|
|
||||
Intercompany charges
|
3.3
|
|
|
—
|
|
|
(3.3
|
)
|
|
—
|
|
||||
Non-cash stock-based compensation
|
2.5
|
|
|
0.6
|
|
|
2.7
|
|
|
5.8
|
|
||||
Acquisition related costs
|
1.3
|
|
|
—
|
|
|
0.2
|
|
|
1.5
|
|
||||
Securitization interest
|
—
|
|
|
(12.9
|
)
|
|
—
|
|
|
(12.9
|
)
|
||||
Severance
|
0.9
|
|
|
0.5
|
|
|
—
|
|
|
1.4
|
|
||||
IAA allocated costs
|
—
|
|
|
—
|
|
|
1.4
|
|
|
1.4
|
|
||||
Other
|
0.5
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
||||
Total addbacks
|
8.5
|
|
|
(11.8
|
)
|
|
1.0
|
|
|
(2.3
|
)
|
||||
Adjusted EBITDA
|
$
|
114.1
|
|
|
$
|
42.6
|
|
|
$
|
(30.3
|
)
|
|
$
|
126.4
|
|
|
Nine Months Ended September 30, 2019
|
||||||||||||||
(Dollars in millions)
|
ADESA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||
Net income (loss) from continuing operations
|
$
|
139.3
|
|
|
$
|
88.6
|
|
|
$
|
(150.8
|
)
|
|
$
|
77.1
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Income taxes
|
54.0
|
|
|
32.2
|
|
|
(57.8
|
)
|
|
28.4
|
|
||||
Interest expense, net of interest income
|
1.8
|
|
|
48.6
|
|
|
97.7
|
|
|
148.1
|
|
||||
Depreciation and amortization
|
110.2
|
|
|
7.6
|
|
|
20.8
|
|
|
138.6
|
|
||||
Intercompany interest
|
13.5
|
|
|
(4.1
|
)
|
|
(9.4
|
)
|
|
—
|
|
||||
EBITDA
|
318.8
|
|
|
172.9
|
|
|
(99.5
|
)
|
|
392.2
|
|
||||
Intercompany charges
|
10.4
|
|
|
—
|
|
|
(10.4
|
)
|
|
—
|
|
||||
Non-cash stock-based compensation
|
5.6
|
|
|
1.2
|
|
|
8.3
|
|
|
15.1
|
|
||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
2.2
|
|
|
2.2
|
|
||||
Acquisition related costs
|
4.8
|
|
|
—
|
|
|
5.5
|
|
|
10.3
|
|
||||
Securitization interest
|
—
|
|
|
(41.9
|
)
|
|
—
|
|
|
(41.9
|
)
|
||||
Severance
|
4.2
|
|
|
0.1
|
|
|
1.4
|
|
|
5.7
|
|
||||
Foreign currency gains/losses
|
(1.1
|
)
|
|
—
|
|
|
0.1
|
|
|
(1.0
|
)
|
||||
IAA allocated costs
|
—
|
|
|
—
|
|
|
2.3
|
|
|
2.3
|
|
||||
Other
|
2.9
|
|
|
—
|
|
|
0.2
|
|
|
3.1
|
|
||||
Total addbacks
|
26.8
|
|
|
(40.6
|
)
|
|
9.6
|
|
|
(4.2
|
)
|
||||
Adjusted EBITDA
|
$
|
345.6
|
|
|
$
|
132.3
|
|
|
$
|
(89.9
|
)
|
|
$
|
388.0
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||
(Dollars in millions)
|
ADESA
|
|
AFC
|
|
Corporate
|
|
Consolidated
|
||||||||
Net income (loss) from continuing operations
|
$
|
165.2
|
|
|
$
|
82.5
|
|
|
$
|
(145.2
|
)
|
|
$
|
102.5
|
|
Add back:
|
|
|
|
|
|
|
|
||||||||
Income taxes
|
58.0
|
|
|
26.7
|
|
|
(52.2
|
)
|
|
32.5
|
|
||||
Interest expense, net of interest income
|
0.9
|
|
|
43.0
|
|
|
92.2
|
|
|
136.1
|
|
||||
Depreciation and amortization
|
94.4
|
|
|
13.6
|
|
|
21.8
|
|
|
129.8
|
|
||||
Intercompany interest
|
15.6
|
|
|
(2.1
|
)
|
|
(13.5
|
)
|
|
—
|
|
||||
EBITDA
|
334.1
|
|
|
163.7
|
|
|
(96.9
|
)
|
|
400.9
|
|
||||
Intercompany charges
|
11.0
|
|
|
—
|
|
|
(11.0
|
)
|
|
—
|
|
||||
Non-cash stock-based compensation
|
6.9
|
|
|
1.7
|
|
|
7.3
|
|
|
15.9
|
|
||||
Acquisition related costs
|
3.7
|
|
|
—
|
|
|
1.5
|
|
|
5.2
|
|
||||
Securitization interest
|
—
|
|
|
(37.0
|
)
|
|
—
|
|
|
(37.0
|
)
|
||||
Severance
|
3.3
|
|
|
0.5
|
|
|
—
|
|
|
3.8
|
|
||||
IAA allocated costs
|
—
|
|
|
—
|
|
|
3.9
|
|
|
3.9
|
|
||||
Other
|
2.0
|
|
|
—
|
|
|
—
|
|
|
2.0
|
|
||||
Total addbacks
|
26.9
|
|
|
(34.8
|
)
|
|
1.7
|
|
|
(6.2
|
)
|
||||
Adjusted EBITDA
|
$
|
361.0
|
|
|
$
|
128.9
|
|
|
$
|
(95.2
|
)
|
|
$
|
394.7
|
|
|
Three Months Ended
|
|
Twelve
Months
Ended
|
||||||||||||||||
(Dollars in millions)
|
December 31,
2018
|
|
March 31,
2019
|
|
June 30,
2019
|
|
September 30,
2019
|
|
September 30,
2019
|
||||||||||
Net income (loss)
|
$
|
67.3
|
|
|
$
|
77.8
|
|
|
$
|
55.6
|
|
|
$
|
35.3
|
|
|
$
|
236.0
|
|
Less: Income from discontinued operations
|
52.2
|
|
|
62.5
|
|
|
28.2
|
|
|
0.9
|
|
|
143.8
|
|
|||||
Income from continuing operations
|
$
|
15.1
|
|
|
$
|
15.3
|
|
|
$
|
27.4
|
|
|
$
|
34.4
|
|
|
$
|
92.2
|
|
Add back:
|
|
|
|
|
|
|
|
|
|
||||||||||
Income taxes
|
1.8
|
|
|
6.5
|
|
|
8.7
|
|
|
13.2
|
|
|
30.2
|
|
|||||
Interest expense, net of interest income
|
51.2
|
|
|
55.9
|
|
|
55.0
|
|
|
37.2
|
|
|
199.3
|
|
|||||
Depreciation and amortization
|
42.6
|
|
|
44.3
|
|
|
47.9
|
|
|
46.4
|
|
|
181.2
|
|
|||||
EBITDA
|
110.7
|
|
|
122.0
|
|
|
139.0
|
|
|
131.2
|
|
|
502.9
|
|
|||||
Non-cash stock-based compensation
|
4.5
|
|
|
6.6
|
|
|
4.0
|
|
|
4.5
|
|
|
19.6
|
|
|||||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
2.2
|
|
|
2.2
|
|
|||||
Acquisition related costs
|
2.1
|
|
|
3.9
|
|
|
3.7
|
|
|
2.7
|
|
|
12.4
|
|
|||||
Securitization interest
|
(14.5
|
)
|
|
(14.8
|
)
|
|
(13.8
|
)
|
|
(13.3
|
)
|
|
(56.4
|
)
|
|||||
(Gain)/Loss on asset sales
|
0.4
|
|
|
0.5
|
|
|
0.4
|
|
|
0.8
|
|
|
2.1
|
|
|||||
Severance
|
1.9
|
|
|
3.7
|
|
|
1.1
|
|
|
0.9
|
|
|
7.6
|
|
|||||
Foreign currency gains/losses
|
3.7
|
|
|
(0.6
|
)
|
|
—
|
|
|
(0.4
|
)
|
|
2.7
|
|
|||||
IAA allocated costs
|
1.3
|
|
|
1.4
|
|
|
0.9
|
|
|
—
|
|
|
3.6
|
|
|||||
Other
|
0.4
|
|
|
0.2
|
|
|
0.6
|
|
|
0.6
|
|
|
1.8
|
|
|||||
Total addbacks
|
(0.2
|
)
|
|
0.9
|
|
|
(3.1
|
)
|
|
(2.0
|
)
|
|
(4.4
|
)
|
|||||
Adjusted EBITDA
|
$
|
110.5
|
|
|
$
|
122.9
|
|
|
$
|
135.9
|
|
|
$
|
129.2
|
|
|
$
|
498.5
|
|
|
Nine Months Ended September 30,
|
||||||
(Dollars in millions)
|
2019
|
|
2018
|
||||
Net cash provided by (used by):
|
|
|
|
||||
Operating activities - continuing operations
|
$
|
291.1
|
|
|
$
|
326.9
|
|
Operating activities - discontinued operations
|
156.7
|
|
|
238.2
|
|
||
Investing activities - continuing operations
|
(367.3
|
)
|
|
(196.2
|
)
|
||
Investing activities - discontinued operations
|
(37.4
|
)
|
|
(37.9
|
)
|
||
Financing activities - continuing operations
|
(1,140.5
|
)
|
|
(199.0
|
)
|
||
Financing activities - discontinued operations
|
1,317.6
|
|
|
(6.7
|
)
|
||
Effect of exchange rate on cash
|
7.0
|
|
|
(4.9
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
$
|
227.2
|
|
|
$
|
120.4
|
|
•
|
an increase in cash used for acquisitions of approximately $97.4 million;
|
•
|
an increase in cash used for capital expenditures of approximately $44.9 million; and
|
•
|
a net increase in finance receivables held for investment of approximately $28.8 million.
|
•
|
an increase in net payments on debt. The Company used net cash provided by financing activities from discontinued operations (cash received from IAA in the separation) to prepay approximately $1.3 billion of its term loan debt in the second quarter of 2019. In addition, in the third quarter of 2019, the Company refinanced the outstanding Term Loan B-4 and Term Loan B-5 and repaid the remaining amount on the 2017 Revolving Credit Facility with the new Term Loan B-6;
|
•
|
an increase in common stock repurchases of approximately $69.7 million;
|
•
|
an increase in cash transferred to IAA in connection with the separation of $50.9 million; and
|
•
|
a net decrease in the obligations collateralized by finance receivables of approximately $31.0 million;
|
•
|
a $17.5 million increase in borrowings from lines of credit.
|
•
|
On November 5, 2019, the Company announced a cash dividend of $0.19 per share that is payable on January 3, 2020, to stockholders of record at the close of business on December 20, 2019.
|
•
|
On August 6, 2019, the Company announced a cash dividend of $0.19 per share that was paid on October 3, 2019, to stockholders of record at the close of business on September 20, 2019.
|
•
|
On May 7, 2019, the Company announced a cash dividend of $0.35 per share that was paid on June 17, 2019, to stockholders of record at the close of business on June 3, 2019.
|
•
|
On February 19, 2019, the Company announced a cash dividend of $0.35 per share that was paid on April 4, 2019, to stockholders of record at the close of business on March 22, 2019.
|
•
|
On November 6, 2018, the Company announced a cash dividend of $0.35 per share that was paid on January 4, 2019, to stockholders of record at the close of business on December 20, 2018.
|
•
|
Approximately $1,280.4 million of the Company's term loans were repaid in the first six months of 2019, most of which resulted from the receipt of cash from IAA in connection with the spin-off in June 2019. In addition, in September 2019, we amended our Credit Agreement to, among other things, refinance Term Loan B-4 and Term Loan B-5 with the new Term Loan B-6. The maturity date of the new Term Loan B-6 is September 2026. The reduction in debt also reduces the expected interest payments that were included in the table of contractual obligations.
|
•
|
Operating and capital lease obligations were reduced as a result of the separation of IAA in June 2019. Operating lease obligations also change in the ordinary course of business. We lease most of our facilities, as well as other property and equipment under operating leases. Future operating lease obligations will continue to change if renewal options are exercised and/or if we enter into additional operating lease agreements.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (2)
(Dollars in millions)
|
||||||
July 1 - July 31
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
119.7
|
|
August 1 - August 31
|
|
4,753,300
|
|
|
25.18
|
|
|
4,753,300
|
|
|
—
|
|
||
September 1 - September 30
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Total
|
|
4,753,300
|
|
|
$
|
25.18
|
|
|
4,753,300
|
|
|
|
|
(1)
|
In October 2016, the board of directors authorized a repurchase of up to $500 million of the Company’s outstanding common stock, par value $0.01 per share, through October 26, 2019. Repurchases may be made in the open market or through privately negotiated transactions, in accordance with applicable securities laws and regulations, including pursuant to repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The timing and amount of any repurchases is subject to market and other conditions.
|
(2)
|
In October 2019, the board of directors authorized a repurchase of up to $300 million of the Company’s outstanding common stock, par value $0.01 per share, through October 30, 2021. Repurchases may be made in the open market or through privately negotiated transactions, in accordance with applicable securities laws and regulations, including pursuant to repurchase plans designed to comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The timing and amount of any repurchases is subject to market and other conditions.
|
a)
|
Exhibits—the exhibit index below is incorporated herein by reference as the list of exhibits required as part of this report.
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1
|
|
+
|
|
8-K
|
|
001-34568
|
|
2.1
|
|
6/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
|
10-Q
|
|
001-34568
|
|
3.1
|
|
8/3/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
|
8-K
|
|
001-34568
|
|
3.1
|
|
11/4/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
|
8-K
|
|
001-34568
|
|
4.1
|
|
5/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
|
S-1/A
|
|
333-161907
|
|
4.15
|
|
12/10/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1a
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/12/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1b
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/9/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1c
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
5/31/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
10.1d
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
9/20/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
*
|
|
S-8
|
|
333-164032
|
|
10.1
|
|
12/24/2009
|
|
|
|
10.3
|
|
*
|
|
S-4
|
|
333-148847
|
|
10.15
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.15
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5a
|
|
*
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/20/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5b
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.5b
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5c
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.5c
|
|
2/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
*
|
|
8-K
|
|
001-34568
|
|
10.5
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.7
|
|
2/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8a
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.13
|
|
2/19/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8b
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.8b
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8c
|
|
*
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9a
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.9a
|
|
2/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9b
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.9b
|
|
2/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9c
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.9c
|
|
2/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.13
|
|
5/4/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.13
|
|
2/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.12
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
10.13
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.13
|
|
2/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14a
|
|
^
|
|
S-4
|
|
333-148847
|
|
10.32
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14b
|
|
|
|
S-4
|
|
333-148847
|
|
10.33
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14c
|
|
|
|
S-4
|
|
333-148847
|
|
10.34
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14d
|
|
^
|
|
S-4
|
|
333-148847
|
|
10.35
|
|
1/25/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14e
|
|
|
|
10-K
|
|
001-34568
|
|
10.19e
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14f
|
|
|
|
10-K
|
|
001-34568
|
|
10.19f
|
|
2/28/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
^
|
|
10-K
|
|
001-34568
|
|
10.15
|
|
2/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16a
|
|
^
|
|
10-K
|
|
001-34568
|
|
10.16
|
|
2/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16b
|
|
|
|
10-Q
|
|
001-34568
|
|
10.16b
|
|
5/10/2017
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
10.16c
|
|
^
|
|
10-K
|
|
001-34568
|
|
10.16c
|
|
2/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17a
|
|
|
|
8-K
|
|
333-148847
|
|
10.3
|
|
9/9/2008
|
|
|
|
|
|
|
|
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|
|
10.17b
|
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|
|
8-K
|
|
333-148847
|
|
10.11
|
|
9/9/2008
|
|
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|
|
|
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|
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|
|
10.18a
|
|
|
|
8-K
|
|
333-148847
|
|
10.4
|
|
9/9/2008
|
|
|
|
|
|
|
|
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|
|
|
|
|
10.18b
|
|
|
|
8-K
|
|
333-148847
|
|
10.12
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
10.19a
|
|
|
|
8-K
|
|
333-148847
|
|
10.5
|
|
9/9/2008
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19b
|
|
|
|
8-K
|
|
333-148847
|
|
10.13
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
10.20a
|
|
|
|
8-K
|
|
333-148847
|
|
10.6
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20b
|
|
|
|
8-K
|
|
333-148847
|
|
10.14
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
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|
10.21a
|
|
|
|
8-K
|
|
333-148847
|
|
10.7
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
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|
|
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|
|
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|
10.21b
|
|
|
|
8-K
|
|
333-148847
|
|
10.15
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
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|
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|
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|
10.22a
|
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|
|
8-K
|
|
333-148847
|
|
10.8
|
|
9/9/2008
|
|
|
|
|
|
|
|
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|
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|
10.22b
|
|
|
|
8-K
|
|
333-148847
|
|
10.16
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
10.23a
|
|
|
|
8-K
|
|
333-148847
|
|
10.10
|
|
9/9/2008
|
|
|
|
|
|
|
|
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|
10.23b
|
|
|
|
8-K
|
|
333-148847
|
|
10.18
|
|
9/9/2008
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
10.24a
|
|
|
|
10-Q
|
|
333-148847
|
|
10.21
|
|
11/13/2008
|
|
|
|
|
|
|
|
|
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|
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|
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|
|
10.24b
|
|
|
|
10-Q
|
|
333-148847
|
|
10.22
|
|
11/13/2008
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
10.25
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26a
|
|
*
|
|
DEF 14A
|
|
001-34568
|
|
Appendix A
|
|
4/29/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26b
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.24b
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
10.27a
|
|
*
|
|
S-8
|
|
333-164032
|
|
10.3
|
|
12/24/2009
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
|
|
10.27b
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.60
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
10.27c
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.61
|
|
8/4/2010
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
10.27d
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.26d
|
|
11/7/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
10.28a
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.62
|
|
8/4/2010
|
|
|
|
|
|
|
|
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|
10.28b
|
|
*
|
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|
X
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
10.29
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.29
|
|
8/7/2019
|
|
|
|
|
|
|
|
|
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|
|
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|
|
10.30
|
|
*
|
|
S-1/A
|
|
333-161907
|
|
10.65
|
|
12/4/2009
|
|
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|
|
|
|
|
|
|
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|
|
|
10.31
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.29a
|
|
5/6/2015
|
|
|
|
|
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|
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|
|
10.32
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.30
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.33
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.33
|
|
2/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.34
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.33
|
|
2/21/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.35
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.35
|
|
2/21/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.36
|
|
*
|
|
8-K
|
|
001-34568
|
|
10.2
|
|
12/17/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.37
|
|
*
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
3/3/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.38
|
|
*
|
|
10-Q
|
|
001-34568
|
|
10.32
|
|
5/6/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.39
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.34
|
|
2/18/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.40
|
|
*
|
|
10-K
|
|
001-34568
|
|
10.38
|
|
2/24/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.41
|
|
|
|
8-K
|
|
001-34568
|
|
10.1
|
|
6/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.42
|
|
|
|
8-K
|
|
001-34568
|
|
10.2
|
|
6/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.43
|
|
|
|
8-K
|
|
001-34568
|
|
10.3
|
|
6/28/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
|||||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing
Date
|
|
Filed
Herewith
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
|
The following materials from KAR Auction Services, Inc.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Income for the three and nine months ended September 30, 2019 and 2018; (ii) the Consolidated Balance Sheets as of September 30, 2019 and December 31, 2018; (iii) the Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 2019 and 2018; (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018; and (v) the Condensed Notes to Consolidated Financial Statements.
|
|
|
|
|
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104
|
|
|
Cover page Interactive Data File, formatted in iXBRL (contained in Exhibit 101).
|
|
|
|
|
|
|
|
|
|
X
|
+
|
Certain information has been excluded from this exhibit because it is not material and would likely cause competitive harm to the registrant if publicly disclosed.
|
|
|
^
|
Portions of this exhibit have been redacted pursuant to a request for confidential treatment filed separately with the Secretary of the Securities and Exchange Commission pursuant to Rule 406 under the Securities Act of 1933, as amended.
|
|
|
*
|
Denotes management contract or compensation plan, contract or arrangement.
|
|
|
KAR Auction Services, Inc.
|
|
|
(Registrant)
|
|
|
|
Date:
|
November 6, 2019
|
/s/ ERIC M. LOUGHMILLER
|
|
|
Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial and
Accounting Officer)
|
KAR AUCTION SERVICES, INC.
|
|
|
|
By: /s/ James P. Hallett
|
By: /s/ Rebecca C. Polak
|
Name: James P. Hallett
Title: Chief Executive Officer |
Name: Rebecca C. Polak
|
|
|
1.
|
Notwithstanding any provision of the Plan to the contrary, each Participant whose Account following the Spin-Off is credited with IAA Units shall have the option to make a one-time election, in his or her sole discretion, to reinvest all or a portion of such IAA Units into (a) non-stock compensation pursuant to Section 6.2 of the Plan (the “Cash Election”), (b) KAR Units in accordance with Section 6.3 of the Plan (the “Company Stock Election”), or (c) a combination of the Cash Election and the Company Stock Election. Such election must be made within ninety (90) days following the completion of the Spin-Off, pursuant to an Election Form and in accordance with procedures established by the Administrator. Upon making such election, the Participant’s account shall be reduced by the number of IAA Units with respect to which an election has been made and shall be credited with (i) cash in amount equal to the IAA Value of IAA Units with respect to which a Cash Election has been made, as of the date of such Cash Election and (ii) a number of KAR Units with a Fair Market Value equal to the IAA Value
|
2.
|
“IAA Value” shall mean “Fair Market Value”; provided, however, that any references to “Company Stock” in the definition of “Fair Market Value” shall instead refer to common stock of IAA.
|
3.
|
Except as modified by this Amendment, the Plan is hereby confirmed in all respects.
|
1)
|
I have reviewed this Quarterly Report on Form 10-Q of KAR Auction Services, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5)
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ JAMES P. HALLETT
|
James P. Hallett
Chief Executive Officer
|
1)
|
I have reviewed this Quarterly Report on Form 10-Q of KAR Auction Services, Inc.;
|
2)
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3)
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4)
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5)
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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a)
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all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b)
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any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ ERIC M. LOUGHMILLER
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Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
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1)
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The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
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2)
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the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ JAMES P. HALLETT
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James P. Hallett
Chief Executive Officer
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1)
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The report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and
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2)
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the information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ ERIC M. LOUGHMILLER
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Eric M. Loughmiller
Executive Vice President and Chief Financial Officer
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