UNITED STATES SECURITIES AND EXCHANGE COMMISSION Table of Contents (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-34568 KAR Auction Services, Inc. (Exact name of Registr ...

KAR Auction Services, Inc. (NYSE:KAR) Q1 2021 Results Conference Call May 5, 2021 8:30 AM ET Company Participants Mike Eliason - Treasurer and VP, IR Jim Hallett - Executive Chairman Peter Kelly - CEO Eric Loughmiller - CFO Conference Call Participants Ryan Brinkman - JP Morgan John Murphy - Bank of America Craig Kennison - Baird Daniel Imbro - Stephens Inc. Bob Labick - CJS Securities Operator Ladies and gentlemen, thank you for standing by, and welcome to the KAR Auction Services Quarter 1 2021 Earnings C ...

First Quarter 2021 Earnings Slides May 4, 2021 Forward-Looking Statements This presentation includes forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward looking statements are based on management's current expectations, are not guarantees of future performance and are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially from those projected, expressed or implied by such forward-looking st ...

FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-34568 KAR Auction Services, Inc. (Exact name of Registrant as specified in its charter) Delaware 20-8744739 (State or other jurisdiction of incorporation ...

Q4 2020 & Annual Earnings Slides February 16, 2021 Forward-Looking Statements This presentation includes forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward looking statements are based on management's current expectations, are not guarantees of future performance and are subject to certain risks, trends, and uncertainties that could cause actual results to differ materially from those projected, expressed or implied by such forward-lookin ...

KAR Auction Services, Inc. (NYSE:KAR) Q4 2020 Earnings Conference Call February 17, 2021 8:30 AM ET Company Participants Mike Eliason - Investor Relations Jim Hallett - CEO Eric Loughmiller - EVP and CFO Conference Call Participants Ryan Brinkman - JPMorgan John Murphy - Bank of America Merrill Lynch Craig Kennison - Robert W. Baird & Co. Stephanie Benjamin - Truist Securities Daniel Imbro - Stephens, Inc. Operator Good morning, ladies and gentlemen, and welcome to the KAR Auction Services, Incorporated Fou ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-34568 KAR Auction Services, Inc. (Exact name of Registrant as specified in its charter) Delaware 20-8744739 (State or other jurisdiction of incorporation or or ...

| --- | --- | --- | |-------|-------|-------| | | | | | | | | | | | | | | | | Disclaimer This presentation is for informational purposes only. Neither the company nor any of its affiliates or representatives makes any representation or warranty, expressed or implied, as to the accuracy or completeness of this presentation or any of the information contained herein. The company and its affiliates or representatives expressly disclaim to the fullest extent permitted by law any and all liability based, in whol ...

Financial Data and Key Metrics Changes - Revenue decreased by 15% year-over-year, with 9% less volume sold compared to the prior year [9] - Gross profit as a percentage of revenue increased to 44.5%, up 300 basis points from last year [9] - Gross profit was 52% of net revenue, compared to 47% the prior year [9][10] - The company has over $1.2 billion in cash and net leverage is down to 1.6 times [22] Business Line Data and Key Metrics Changes - TradeRev volumes grew by 22% in Q3, with September growth exceeding 30% [11] - OPENLANE and TradeRev saw growth in volumes sold, while services revenue declined year-over-year [9] - The company experienced increases in auction fee revenue per unit in all digital marketplaces except OPENLANE [9] Market Data and Key Metrics Changes - The wholesale marketplace faced a shortage of used car supply, impacting transaction volumes [16] - Off-lease vehicle transactions returned to normal levels, but the overall inventory shortage limited transactions [17] - Repossession volumes are expected to increase by 30% to 40% in 2021, as the industry anticipates a recovery in repo activity [18] Company Strategy and Development Direction - The company is focusing on a digital transformation, aiming to enhance its digital marketplace model [6][10] - The acquisition of BacklotCars is expected to significantly increase annual adjusted EBITDA by over $100 million within four years [13][14] - The company plans to simplify its reporting structure and metrics to better reflect its digital transformation [28][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a commitment to maintaining a lower cost structure even as volumes return to normal [10][24] - The company anticipates a strong retail used car market, despite facing challenges with supply [16] - Management noted that the pandemic has accelerated the shift towards online vehicle purchasing [12] Other Important Information - The company is divesting Preferred Warranties, Inc. for less than $30 million, as it was not core to its business [25][26] - The company plans to repurchase shares under its existing $300 million share repurchase authorization [23] Q&A Session Summary Question: What are the current operating metrics for BacklotCars? - BacklotCars is on a run rate of about 160,000 vehicles, with revenue estimated between $50 million to $70 million, operating at a modest loss [37] Question: How many physical facilities will be needed in the future? - The company believes physical locations remain critical for vehicle inspection and ancillary services, even as it transitions to a digital model [38] Question: What is the outlook for ancillary services? - There is optimism for strong ancillary services revenue, particularly as off-lease vehicles and repossessions increase [42] Question: What is the expected timeline for the integration of BacklotCars? - The integration will proceed as quickly as possible, with no specific timeline provided [71] Question: How will the company handle increased repo volumes? - The company has the capacity to process increased repo volumes and is looking forward to serving this segment [86]

PART I—FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The unaudited consolidated financial statements for the period ended September 30, 2020, detail the company's financial performance, position, and cash flows, accompanied by condensed notes [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) In Q3 2020, total operating revenues declined by 15.4% year-over-year, while income from continuing operations increased, contrasting with a significant decline in both for the nine-month period Consolidated Income Statement Highlights (in millions, except per share data) | Metric | Q3 2020 | Q3 2019 | YoY Change | Nine Months 2020 | Nine Months 2019 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | $593.6 | $701.9 | -15.4% | $1,658.1 | $2,110.6 | -21.4% | | **Operating Profit** | $86.4 | $85.7 | +0.8% | $122.5 | $252.5 | -51.5% | | **Income from Continuing Operations** | $47.1 | $34.4 | +36.9% | $17.6 | $77.1 | -77.2% | | **Net Income** | $47.1 | $35.3 | +33.4% | $17.6 | $168.7 | -89.6% | | **Diluted EPS from Continuing Operations** | $0.23 | $0.26 | -11.5% | $0.04 | $0.58 | -93.1% | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets increased to $6.91 billion as of September 30, 2020, primarily due to a significant rise in cash and cash equivalents, while total liabilities and stockholders' equity saw slight reductions Consolidated Balance Sheet Highlights (in millions) | Account | Sep 30, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | **Cash and cash equivalents** | $1,276.7 | $507.6 | | **Total current assets** | $3,674.6 | $3,244.5 | | **Total assets** | $6,909.9 | $6,581.2 | | **Total current liabilities** | $2,354.5 | $2,517.7 | | **Long-term debt** | $1,854.8 | $1,861.3 | | **Total liabilities** | $4,762.9 | $4,931.0 | | **Series A convertible preferred stock** | $540.0 | $— | | **Total stockholders' equity** | $1,607.0 | $1,650.2 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities increased for the nine months ended September 30, 2020, with investing activities providing cash and financing activities shifting from a large use to a provision of cash Cash Flow Summary - Continuing Operations (Nine Months Ended, in millions) | Activity | 2020 | 2019 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $431.9 | $291.1 | | **Net cash provided by (used by) investing activities** | $263.6 | $(367.3) | | **Net cash provided by (used by) financing activities** | $88.9 | $(1,140.5) | | **Net increase in cash, cash equivalents and restricted cash** | $770.5 | $227.2 | [Condensed Notes to Consolidated Financial Statements](index=12&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) These notes detail significant financial events and accounting policies, including a pending acquisition, the IAA spin-off, impairment charges, preferred stock issuance, and debt amendments - The company entered into an agreement to acquire BacklotCars, Inc. for **$425 million** in cash, expected to close in Q4 2020[47](index=47&type=chunk) - The financial results of the salvage auction business, IAA, which was spun-off on June 28, 2019, are accounted for as discontinued operations[48](index=48&type=chunk)[49](index=49&type=chunk) - A non-cash impairment charge of **$29.8 million** was recorded in Q2 2020, comprising **$25.5 million** for goodwill and **$4.3 million** for customer relationships in the ADESA Remarketing Limited reporting unit, due to the economic impact of COVID-19[69](index=69&type=chunk)[70](index=70&type=chunk) - In June 2020, the company issued **550,000 shares** of Series A Convertible Preferred Stock for an aggregate purchase price of approximately **$550 million**[90](index=90&type=chunk) - The company's two reportable business segments are ADESA Auctions (wholesale vehicle auctions) and AFC (floorplan financing for independent dealers)[103](index=103&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for Q3 and the first nine months of 2020, highlighting the COVID-19 impact, operational responses, segment performance, and strengthened liquidity [Impact of COVID-19](index=29&type=section&id=Impact%20of%20COVID-19) The company responded to COVID-19 by transitioning to all-digital auctions, implementing cost-saving measures, bolstering liquidity through preferred stock issuance, and utilizing government aid - Temporarily suspended physical sale operations on March 20, 2020, and transitioned to digital platforms like Simulcast-only and Simulcast+[118](index=118&type=chunk)[119](index=119&type=chunk) - Implemented significant cost-saving measures, including executive salary reductions, employee furloughs (approximately **11,000** initially), and suspension of the quarterly dividend[120](index=120&type=chunk)[143](index=143&type=chunk) - Strengthened liquidity by raising net proceeds of approximately **$528.2 million** from a convertible preferred stock issuance in June 2020[121](index=121&type=chunk) - Utilized government aid, recording approximately **$8.3 million** in employee retention credits under the CARES Act and **$14.3 million** under the Canada Emergency Wage Subsidy[121](index=121&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Consolidated revenue declined in Q3 and the nine-month period of 2020, while ADESA's operating profit increased due to digital sales efficiencies, contrasting with declines in the AFC segment ADESA Segment Performance - Q3 2020 vs Q3 2019 | Metric | Q3 2020 | Q3 2019 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $526.7M | $613.6M | -14% | | **Operating Profit** | $81.4M | $68.5M | +19% | | **Vehicles Sold** | 871,000 | 957,000 | -9% | | **Percentage of vehicles sold online** | 100% | 59% | +41 p.p. | | **Gross Profit % (excl. purchased vehicles)** | 49.3% | 42.5% | +6.8 p.p. | AFC Segment Performance - Q3 2020 vs Q3 2019 | Metric | Q3 2020 | Q3 2019 | YoY Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $66.9M | $88.3M | -24% | | **Operating Profit** | $38.2M | $55.1M | -31% | | **Loan Transactions** | 324,000 | 442,000 | -27% | | **Revenue per loan transaction** | $179 | $180 | -1% | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company significantly improved its liquidity to **$1.28 billion** by September 30, 2020, through preferred stock issuance and credit facility amendments, ensuring compliance with debt covenants - Cash and cash equivalents increased to **$1.28 billion** at September 30, 2020, including approximately **$528.2 million** in net proceeds from the June 2020 issuance of perpetual convertible preferred stock[191](index=191&type=chunk)[192](index=192&type=chunk) - The Credit Agreement was amended twice in 2020, first providing a financial covenant 'holiday' in May, then eliminating it in September as business conditions improved[196](index=196&type=chunk)[197](index=197&type=chunk) - AFC's U.S. and Canadian securitization facilities were amended in September 2020, extending their maturity dates to January 2024[209](index=209&type=chunk)[210](index=210&type=chunk) - The company was in compliance with its Consolidated Senior Secured Net Leverage Ratio covenant, which was **negative 0.6** at September 30, 2020, well below the maximum of **3.5**[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign currency fluctuations, mainly from Canadian operations, and interest rate changes on variable debt, mitigated by interest rate swaps - Foreign currency exposure is primarily from Canadian operations, with a **1%** decrease in the Canadian exchange rate estimated to impact net income by approximately **$0.3 million** for Q3 2020[238](index=238&type=chunk) - In January 2020, the company entered into interest rate swaps with an aggregate notional amount of **$500 million** to hedge against interest rate risk on its variable rate term loan[240](index=240&type=chunk) - A hypothetical **100 basis point** increase in short-term rates would have increased interest expense by approximately **$1.1 million** for Q3 2020, after accounting for the interest rate swaps[241](index=241&type=chunk) [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) As of September 30, 2020, the CEO and CFO concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the period[242](index=242&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[243](index=243&type=chunk) PART II—OTHER INFORMATION [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal disputes not expected to materially affect its financial condition, results of operations, or cash flows - The company is involved in ordinary course litigation which is not expected to have a material adverse effect on its financial condition or results[246](index=246&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section refers to previously disclosed risk factors, noting that the COVID-19 pandemic exacerbates many of these existing risks - The report directs readers to the risk factors in the 2019 Form 10-K and prior 2020 Form 10-Qs, stating that the COVID-19 pandemic exacerbates those risks[248](index=248&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No common stock was repurchased in Q3 2020, with the full **$300 million** authorized under the October 2019 share repurchase program remaining available - No shares of common stock were repurchased during the three months ended September 30, 2020[250](index=250&type=chunk) - As of September 30, 2020, the full **$300 million** authorized under the October 2019 share repurchase program was still available[250](index=250&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with the Form 10-Q, including amendments to credit agreements and certifications