OPENLANE, Inc. Reports Third Quarter 2023 Financial Results
CARMEL, Ind., Nov. 1, 2023 /PRNewswire/ -- OPENLANE, Inc. (NYSE: KAR), today reported its third quarter financial results for the period ended September 30, 2023.
"For the third consecutive quarter, OPENLANE delivered improved results including increased volumes, revenue and gross profit. And against an industry backdrop that remains challenged, our marketplace segment grew both commercial and dealer transactions while meaningfully contributing to OPENLANE's adjusted EBITDA performance," said Peter Kelly, CEO of OPENLANE. "We continue to simplify our company and the customer experience through our platform and brand consolidation to OPENLANE. And I remain very optimistic about the powerful combination of our asset-light, digital business model and the full OPENLANE team."
Third Quarter 2023 Financial Highlights
- Total revenue of $416 million, an increase of 6% year-over-year
- Income from continuing operations of $13 million
- Adjusted EBITDA of $68 million, with Marketplace contributing approximately 40%
- Marketplace volumes increased 8%
- $216 million of cash flow from operating activities year-to-date
2023 Guidance
The company's previously stated annual guidance for Adjusted EBITDA and operating adjusted net income from continuing operations per diluted share remains unchanged, while the company's other guidance measures have been updated as shown below.
Annual Guidance | |
Income (loss) from continuing operations (in millions) | ($172) - ($158) |
Adjusted EBITDA (in millions) | $250 - $270 |
Income (loss) from continuing operations per share - diluted * | ($1.98) - ($1.85) |
Operating adjusted net income from continuing operations per share - diluted | $0.60 - $0.70 |
* 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.
Share Repurchase Authorization
The board of directors authorized an increase in the size of the company's share repurchase program by an additional $20 million and an extension of the share repurchase program through December 31, 2024. With the increase, and giving effect to the company's previous repurchases, approximately $125 million remains available for repurchases under the share repurchase program.
Earnings Conference Call Information
OPENLANE will be hosting an earnings conference call and webcast on Wednesday, November 1, 2023 at 5:00 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 third quarter 2023 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 | Nine Months Ended | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Operating revenues | |||||||
Auction fees | $ 102.1 | $ 88.9 | $ 305.3 | $ 289.5 | |||
Service revenue | 153.9 | 159.2 | 475.2 | 444.0 | |||
Purchased vehicle sales | 60.6 | 45.8 | 176.5 | 137.9 | |||
Finance-related revenue | 99.7 | 99.1 | 296.8 | 275.2 | |||
Total operating revenues | 416.3 | 393.0 | 1,253.8 | 1,146.6 | |||
Operating expenses | |||||||
Cost of services (exclusive of depreciation and amortization) | 216.0 | 209.6 | 662.8 | 632.3 | |||
Selling, general and administrative | 107.4 | 109.1 | 326.6 | 352.1 | |||
Depreciation and amortization | 26.4 | 24.3 | 76.2 | 76.2 | |||
Goodwill and other intangibles impairment | — | — | 250.8 | — | |||
Total operating expenses | 349.8 | 343.0 | 1,316.4 | 1,060.6 | |||
Operating profit (loss) | 66.5 | 50.0 | (62.6) | 86.0 | |||
Interest expense | 39.4 | 32.3 | 116.5 | 83.8 | |||
Other (income) expense, net | 1.7 | 1.2 | (12.5) | 6.4 | |||
Loss on extinguishment of debt | — | 9.3 | 1.1 | 17.0 | |||
Income (loss) from continuing operations before income taxes | 25.4 | 7.2 | (167.7) | (21.2) | |||
Income taxes | 12.7 | 6.7 | 0.7 | (7.9) | |||
Income (loss) from continuing operations | 12.7 | 0.5 | (168.4) | (13.3) | |||
Income (loss) from discontinued operations, net of income taxes | — | (6.3) | — | 217.4 | |||
Net income (loss) | $ 12.7 | $ (5.8) | $ (168.4) | $ 204.1 | |||
Net income (loss) per share - basic | |||||||
Income (loss) from continuing operations | $ 0.01 | $ (0.09) | $ (1.84) | $ (0.30) | |||
Income (loss) from discontinued operations | — | (0.06) | — | 1.41 | |||
Net income (loss) per share - basic | $ 0.01 | $ (0.15) | $ (1.84) | $ 1.11 | |||
Net income (loss) per share - diluted | |||||||
Income (loss) from continuing operations | $ 0.01 | $ (0.09) | $ (1.84) | $ (0.30) | |||
Income (loss) from discontinued operations | — | (0.06) | — | 1.41 | |||
Net income (loss) per share - diluted | $ 0.01 | $ (0.15) | $ (1.84) | $ 1.11 | |||
OPENLANE, Inc. Condensed Consolidated Balance Sheets (In millions) (Unaudited) | |||
September 30, 2023 | December 31, 2022 | ||
Cash and cash equivalents | $ 110.3 | $ 225.7 | |
Restricted cash | 41.8 | 52.0 | |
Trade receivables, net of allowances | 340.0 | 270.7 | |
Finance receivables, net of allowances | 2,358.1 | 2,395.1 | |
Other current assets | 90.6 | 78.9 | |
Total current assets | 2,940.8 | 3,022.4 | |
Goodwill | 1,237.8 | 1,464.5 | |
Customer relationships, net of accumulated amortization | 121.1 | 135.9 | |
Operating lease right-of-use assets | 77.7 | 84.8 | |
Property and equipment, net of accumulated depreciation | 115.1 | 123.6 | |
Intangible and other assets | 236.8 | 288.6 | |
Total assets | $ 4,729.3 | $ 5,119.8 | |
Current liabilities, excluding obligations collateralized by finance receivables and current maturities of debt | $ 771.1 | $ 676.9 | |
Obligations collateralized by finance receivables | 1,695.3 | 1,677.6 | |
Current maturities of debt | 42.3 | 288.7 | |
Total current liabilities | 2,508.7 | 2,643.2 | |
Long-term debt | 201.4 | 205.3 | |
Operating lease liabilities | 72.4 | 79.7 | |
Other non-current liabilities | 28.7 | 60.8 | |
Temporary equity | 612.5 | 612.5 | |
Stockholders' equity | 1,305.6 | 1,518.3 | |
Total liabilities, temporary equity and stockholders' equity | $ 4,729.3 | $ 5,119.8 | |
OPENLANE, Inc. Condensed Consolidated Statements of Cash Flows (In millions) (Unaudited) | |||
Nine Months Ended September 30, | |||
2023 | 2022 | ||
Operating activities | |||
Net income (loss) | $ (168.4) | $ 204.1 | |
Net income from discontinued operations | — | (217.4) | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 76.2 | 76.2 | |
Provision for credit losses | 42.0 | 9.7 | |
Deferred income taxes | (26.8) | (4.3) | |
Amortization of debt issuance costs | 6.6 | 8.5 | |
Stock-based compensation | 13.1 | 22.6 | |
Contingent consideration adjustment | 1.3 | — | |
Net change in unrealized (gain) loss on investment securities | 0.4 | 6.5 | |
Investment and note receivable impairment | 11.0 | — | |
Goodwill and other intangibles impairment | 250.8 | — | |
Loss on extinguishment of debt | 1.1 | 17.0 | |
Other non-cash, net | 0.8 | 0.3 | |
Changes in operating assets and liabilities, net of acquisitions: | |||
Trade receivables and other assets | (94.0) | (24.1) | |
Accounts payable and accrued expenses | 104.7 | (149.1) | |
Visual performance / price development - Openlane
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