Market Overview - Wall Street's winning streak continues, driven by positive trade news and strong economic data, with the S&P 500 reaching a record high following a significant trade deal between the United States and Japan, which lowers tariffs and opens up $550 billion in new investments [1] - Retail sales exceeded expectations in June, and jobless claims decreased, indicating a robust labor market and steady consumer spending despite ongoing tariff concerns [1][9] Trade Negotiations and Economic Environment - Progress in trade negotiations with the U.K., Indonesia, and the Philippines, along with positive signals from China and the EU, creates an encouraging backdrop for equities [2] - The current earnings season is contributing to market momentum, suggesting that focusing on relative price strength can help investors identify leading stocks [2] Stock Recommendations - Recommended stocks based on relative price strength include Western Digital Corporation (WDC), Flowserve Corporation (FLS), OPENLANE, Inc. (KAR), AngloGold Ashanti plc (AU), and Jabil Inc. (JBL) [3][9] - These stocks are outperforming their peers, supported by strong relative price strength metrics [9] Relative Price Strength Strategy - Earnings growth and valuation multiples are crucial for assessing a stock's potential returns and its performance relative to peers [4] - Investors are advised to avoid underperforming stocks and focus on those that are outperforming their respective industries or benchmarks [5] Screening Parameters - Stocks are screened based on relative price changes over 12 weeks, 4 weeks, and 1 week, as well as positive current-quarter estimate revisions [8] - Stocks that have shown better performance than the S&P 500 over the last 1 to 3 months and have solid fundamentals are considered for investment [6] Company Profiles - **Western Digital Corporation (WDC)**: Market cap of $23.4 billion, expected EPS growth of 2,465% year-over-year for fiscal 2025, with a trailing four-quarter earnings surprise of approximately 7.3% [11][12] - **Flowserve Corporation (FLS)**: Market cap not specified, expected EPS growth rate of 14.2% over three to five years, with a 22.1% year-over-year growth estimate for 2025 [13][14] - **OPENLANE, Inc. (KAR)**: Market cap of $2.7 billion, expected EPS growth of 17.7% year-over-year for 2025, shares up 44% in a year [14][15] - **AngloGold Ashanti plc (AU)**: Market cap of $21.8 billion, expected EPS growth of 125.8% year-over-year for 2025, shares up 89% in a year [16] - **Jabil Inc. (JBL)**: Market cap not specified, expected EPS growth rate of 16.6% over three to five years, with a 10.6% year-over-year growth estimate for 2025 [17][18]

Momentum investing revolves around the idea of following a stock's recent trend in either direction. In "long context," investors will be essentially be "buying high, but hoping to sell even higher." With this methodology, taking advantage of trends in a stock's price is key; once a stock establishes a course, it is more than likely to continue moving that way. The goal is that once a stock heads down a fixed path, it will lead to timely and profitable trades.Even though momentum is a popular stock characte ...

Core Insights - OPENLANE, Inc. is set to release its second quarter 2025 financial results on August 6, 2025, before market opening [1] - The earnings conference call will take place on the same day at 8:30 a.m. ET, hosted by CEO Peter Kelly and CFO Brad Herring [2] - A live webcast of the call will be available on the investor relations section of OPENLANE's website, with an archive for replay afterward [3] Company Overview - OPENLANE, Inc. operates in the global wholesale used vehicle industry, providing technology-driven remarketing solutions [4] - The company offers an integrated platform that supports whole car sales, financing, logistics, and related services, aimed at reducing risk and improving transaction transparency [4] - OPENLANE is headquartered in Carmel, Indiana, with a workforce spread across the United States, Canada, Europe, Uruguay, and the Philippines [4]

Core Viewpoint - OPENLANE (KAR) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling actions that affect stock prices [4]. OPENLANE's Earnings Outlook - For the fiscal year ending December 2025, OPENLANE is expected to earn $0.98 per share, which remains unchanged from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for OPENLANE has increased by 0.3%, reflecting a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 (Strong Buy) stocks historically generating an average annual return of +25% since 1988 [7]. - OPENLANE's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Viewpoint - OPENLANE reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.24 per share, and showing an increase from $0.19 per share a year ago, indicating a 29.17% earnings surprise [1][2] Financial Performance - The company achieved revenues of $460.1 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 5.99%, compared to $416.3 million in the same quarter last year [2] - OPENLANE has exceeded consensus revenue estimates four times over the last four quarters [2] Stock Performance - OPENLANE shares have declined approximately 2.5% since the beginning of the year, while the S&P 500 has decreased by 4.7% [3] - The stock's immediate price movement will largely depend on management's commentary during the earnings call [3] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.25 on revenues of $447.04 million, and for the current fiscal year, it is $0.97 on revenues of $1.77 billion [7] - The estimate revisions trend for OPENLANE is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Automotive - Original Equipment industry, to which OPENLANE belongs, is currently ranked in the bottom 25% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact OPENLANE's stock performance [5]

[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section provides the unaudited consolidated financial statements and management's detailed analysis of the company's financial condition and operational results [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) Presents OPENLANE, Inc.'s unaudited consolidated financial statements for Q1 2025, covering income, balance sheets, cash flows, and related notes [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) OPENLANE reported Q1 2025 total operating revenues of **$460.1 million**, a **7.0% increase**, with operating profit nearly doubling to **$51.7 million** and diluted EPS rising to **$0.18** Consolidated Income Statement Highlights (Q1 2025 vs Q1 2024) | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total operating revenues | $460.1M | $429.9M | +7.0% | | Operating profit | $51.7M | $36.8M | +40.5% | | Net income | $36.9M | $18.5M | +99.5% | | Net income per share - diluted | $0.18 | $0.05 | +260.0% | [Consolidated Statements of Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive income for Q1 2025 significantly increased to **$41.3 million**, driven by higher net income and a positive foreign currency translation gain Comprehensive Income (Q1 2025 vs Q1 2024) | Metric (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net income | $36.9 | $18.5 | | Foreign currency translation gain (loss) | $4.4 | $(9.5) | | **Comprehensive income** | **$41.3** | **$9.0** | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets were **$4,806.4 million**, up from **$4,622.3 million** at year-end 2024, with increases in cash, receivables, liabilities, and stockholders' equity Balance Sheet Summary | Metric (in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $220.5 | $143.0 | | Total current assets | $3,045.6 | $2,851.5 | | Total assets | $4,806.4 | $4,622.3 | | Total current liabilities | $2,720.7 | $2,565.5 | | Total liabilities | $2,821.5 | $2,667.1 | | Total stockholders' equity | $1,372.4 | $1,342.7 | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations increased to **$122.6 million** in Q1 2025, with reduced cash usage in investing and financing activities, resulting in a **$72.8 million** net cash increase Cash Flow Summary (Q1 2025 vs Q1 2024) | Cash Flow Activity (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $122.6 | $100.2 | | Net cash used by investing activities | $(31.9) | $(39.7) | | Net cash used by financing activities | $(18.9) | $(63.6) | | **Net increase (decrease) in cash** | **$72.8** | **$(8.0)** | [Condensed Notes to Consolidated Financial Statements](index=9&type=section&id=Condensed%20Notes%20to%20Consolidated%20Financial%20Statements) These notes detail OPENLANE's operations as a digital used vehicle marketplace, accounting policies, and significant post-quarter events like a new **$250 million** share repurchase and property sale - OPENLANE is a digital marketplace for used vehicles, connecting sellers and buyers in North America and Europe. The company facilitates transactions and provides ancillary services like financing (through AFC), logistics, and reconditioning[26](index=26&type=chunk)[29](index=29&type=chunk)[33](index=33&type=chunk) - The company's operations are organized into two reportable segments: Marketplace (wholesale marketplaces) and Finance (inventory-secured financing via AFC)[82](index=82&type=chunk) - Subsequent to the quarter end, on April 30, 2025, the company sold excess property in Montreal for net cash proceeds of approximately **$42 million**[90](index=90&type=chunk) - On April 30, 2025, the board approved a new share repurchase authorization of up to **$250 million** through December 31, 2026, replacing the previous program[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial results, noting a **7% revenue increase** to **$460.1 million**, significant operating profit growth, and strong liquidity to meet upcoming debt obligations [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Consolidated revenue increased **7%** to **$460.1 million** in Q1 2025, with operating profit up **40.5%** to **$51.7 million**, driven by Marketplace performance and reduced finance expenses Consolidated Results Overview (Q1 2025 vs Q1 2024) | Metric (in millions) | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total operating revenues | $460.1 | $429.9 | +7.0% | | Operating profit | $51.7 | $36.8 | +40.5% | | Income from continuing operations | $36.9 | $18.5 | +99.5% | - Interest expense decreased by **44%** to **$4.0 million** due to lower borrowings on lines of credit[109](index=109&type=chunk) - The effective tax rate for Q1 2025 was **30.0%**, compared to **36.6%** for Q1 2024. The company maintains a valuation allowance against its U.S. net deferred tax asset[111](index=111&type=chunk)[112](index=112&type=chunk) [Marketplace Results](index=27&type=section&id=Marketplace%20Results) Marketplace segment revenue grew **10%** to **$351.2 million** in Q1 2025, with operating profit more than doubling to **$12.0 million**, despite a slight decrease in total vehicles sold Marketplace Segment Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Marketplace revenue | $351.2M | $318.3M | +10.3% | | Operating profit | $12.0M | $4.8M | +150.0% | | Total vehicles sold | 363,000 | 372,000 | -2.4% | | - Commercial vehicles | 191,000 | 222,000 | -14.0% | | - Dealer consignment vehicles | 172,000 | 150,000 | +14.7% | - Auction fees per vehicle sold increased **17%** to **$345**, reflecting vehicle mix and price increases[118](index=118&type=chunk) - Provision for credit losses in the Marketplace segment decreased **86%** to **$0.3 million** due to risk reduction initiatives[124](index=124&type=chunk) [Finance Results](index=29&type=section&id=Finance%20Results) Finance segment revenue decreased **2%** to **$108.9 million** in Q1 2025, but operating profit increased **24%** to **$39.7 million** due to lower interest expense and reduced credit loss provisions Finance Segment Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Total Finance revenue | $108.9M | $111.6M | -2.4% | | Operating profit | $39.7M | $32.0M | +24.1% | | Finance provision for credit losses | $9.0M | $13.6M | -33.8% | | Annualized provision as % of avg. receivables | 1.5% | 2.4% | -0.9 p.p. | - The decrease in finance interest expense was due to a lower average interest rate on securitization obligations[130](index=130&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=31&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of March 31, 2025, the company maintained strong liquidity with **$220.5 million** cash and **$403.9 million** available credit, sufficient to meet obligations including upcoming senior note maturity Liquidity Position | Metric (in millions) | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $220.5 | $105.2 | | Working capital | $324.9 | $384.6 | | Amounts available under Revolving Credit Facilities | $403.9 | $307.6 | - The company has **$210.0 million** of **5.125%** senior notes due June 1, 2025, which are classified as current debt[149](index=149&type=chunk) - Capital expenditures are expected to be approximately **$50 million to $55 million** for fiscal year 2025[171](index=171&type=chunk) [EBITDA and Adjusted EBITDA](index=34&type=section&id=EBITDA%20and%20Adjusted%20EBITDA) This section reconciles non-GAAP EBITDA and Adjusted EBITDA to net income, with consolidated Adjusted EBITDA reaching **$82.8 million** in Q1 2025 Adjusted EBITDA Reconciliation (Consolidated) | Metric (in millions) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Income from continuing operations | $36.9 | $18.5 | | EBITDA | $106.4 | $92.8 | | **Adjusted EBITDA** | **$82.8** | **$74.8** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign currency and interest rate fluctuations, with minimal impact on Q1 2025 net income due to low variable rate debt activity - A hypothetical **1%** change in the month-end Canadian dollar exchange rate for Q1 2025 would have impacted net income by **$0.1 million**[178](index=178&type=chunk) - A hypothetical **1%** change in the month-end euro exchange rate for Q1 2025 would have impacted net income by **$0.5 million**[178](index=178&type=chunk) - A hypothetical **100 basis point** increase in short-term interest rates would have had no significant impact on interest expense for Q1 2025 due to minimal borrowings on the Revolving Credit Facilities[180](index=180&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The principal executive and financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the period[181](index=181&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[182](index=182&type=chunk) [PART II—OTHER INFORMATION](index=39&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, other disclosures, and an index of exhibits filed with the report [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings, which management does not expect to have a material adverse effect on its financial condition or results - Management does not expect ongoing litigation to have a material adverse effect on the company's financials[184](index=184&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This section refers investors to the detailed risk factors in the Annual Report on Form 10-K, with no new risk factors disclosed in this quarterly report - The report directs investors to the risk factors detailed in the Annual Report on Form 10-K for the year ended December 31, 2024[186](index=186&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales occurred; the company repurchased **2,900 shares** for **$0.1 million**, with a new **$250 million** share repurchase authorization approved in April 2025 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Approx. Value Remaining (end of period) | | :--- | :--- | :--- | :--- | | Jan 2025 | 0 | $ - | $100.0M | | Feb 2025 | 0 | $ - | $100.0M | | Mar 2025 | 2,900 | $19.98 | $99.9M | - In April 2025, the board approved a new share repurchase authorization of up to **$250 million** through December 31, 2026, which replaces the prior program[188](index=188&type=chunk) [Other Information](index=40&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted, terminated, or modified Rule 10b5-1 trading plans or other trading arrangements during Q1 2025 - No directors or executive officers adopted or modified Rule 10b5-1 trading plans in Q1 2025[189](index=189&type=chunk) [Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with the quarterly report, including agreements, certifications, and interactive data files - The exhibit index lists all documents filed with the report, such as credit agreements, employment contracts, and required certifications[192](index=192&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)

Financial Data and Key Metrics Changes - OpenLane reported consolidated revenue of $460 million, a 7% increase year-over-year, marking the fourth consecutive quarter of revenue growth [28][29] - Adjusted EBITDA reached $83 million, an 11% increase compared to the previous year [29][30] - Cash flow from operations was $123 million, demonstrating strong cash generation capabilities [7][35] Business Line Data and Key Metrics Changes - In the Marketplace segment, total volumes decreased by 2%, primarily due to a 14% decline in commercial volumes, which was offset by a 15% increase in dealer volumes [30][31] - Marketplace revenue increased by 10% to $351 million, with auction fee revenue rising by 14% [31][32] - The Finance segment contributed $46 million in adjusted EBITDA, reflecting a 15% increase year-over-year, despite a 2% decline in revenues due to lower interest rates [34][35] Market Data and Key Metrics Changes - Approximately 30% of the U.S. dealer-to-dealer market is digital, indicating significant potential for market share gains as the industry shifts from physical to digital [15][15] - New lease originations increased for the eighth consecutive quarter, providing a positive tailwind for future growth [11][12] Company Strategy and Development Direction - OpenLane's growth strategy focuses on making wholesale easy by enhancing marketplace offerings, technology, and customer experience [9][10] - The company aims to capitalize on the anticipated recovery of commercial off-lease volumes starting in 2026 [11][12] - A new $250 million share repurchase authorization was approved, signaling confidence in long-term growth and shareholder value [9][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in OpenLane's ability to navigate uncertainties related to tariffs and maintain 2025 guidance [22][26] - The company is actively planning for multiple scenarios regarding potential tariff impacts, viewing them as a mix of positives and negatives [23][24] - OpenLane's asset-light model and strong cash flows position it well for continued growth and profitability [25][37] Other Important Information - The company has made significant investments in technology and marketing, which are expected to drive future growth [10][30] - OpenLane's NPS scores improved across all geographies, indicating enhanced customer satisfaction [18][73] Q&A Session Summary Question: Current dynamic with respect to tariffs and used environment - Management noted that Q1 performance was strong before any pull-ahead activity related to tariffs, with increased retail activity observed in late March [40][42] Question: Dealer volume growth attribution - Management attributed the 15% dealer volume growth to better brand awareness and strategic investments made in the U.S. market [43][44] Question: Percentage of vehicles transacted in Canada exported to the U.S. - Management estimated that 10% to 20% of vehicles sold in Canada are purchased by exporters for the U.S. market, with most vehicles not subject to tariffs [54][56] Question: AFC provisioning drop - Management explained that the strong risk management practices at AFC contributed to improved provisioning, with expectations to remain in the 1.5% to 2% range going forward [58][62] Question: Key measures to gain share in independent industry volumes - Management confirmed ongoing investments in the dealer-to-dealer business and emphasized the importance of digital transformation in gaining market share [66][71] Question: Auction fees per vehicle sold - Management highlighted a 14% increase in auction fee revenue, driven by pricing strategies and volume growth, with no significant pricing changes in the U.S. market during the quarter [77][90]

Financial Data and Key Metrics Changes - OpenLane reported consolidated revenue of $460 million, a 7% increase year-over-year, marking the fourth consecutive quarter of top-line growth [26][35] - Adjusted EBITDA reached $83 million, an 11% increase compared to the previous year, reflecting strong operating leverage and scalability of the digital business model [27][35] - Cash flow from operations was $123 million, demonstrating strong cash generation capabilities [33][35] Business Line Data and Key Metrics Changes - In the marketplace segment, total volumes decreased by 2%, primarily due to a 14% decline in commercial volumes, which was offset by a 15% increase in dealer volumes [28][29] - Marketplace revenue increased by 10% to $351 million, with auction fee revenue rising by 14% [29] - The finance segment contributed $46 million in adjusted EBITDA, a 15% increase year-over-year, despite a 2% decline in revenues due to lower interest rates [32] Market Data and Key Metrics Changes - Approximately 30% of the U.S. dealer-to-dealer market is digital, indicating significant potential for market share gains as the industry shifts from physical to digital [13] - New lease originations increased for the eighth consecutive quarter, providing a positive tailwind for future growth [9] Company Strategy and Development Direction - OpenLane's growth strategy focuses on making wholesale easy by enhancing marketplace offerings, technology, and customer experience [7][8] - The company aims to capture opportunities in the commercial off-lease market expected to recover in 2026, leveraging strong customer relationships and system integrations [9][10] - A new $250 million share repurchase authorization signals confidence in the company's long-term growth and shareholder value [7][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in OpenLane's positioning for long-term growth despite market uncertainties, including potential impacts from tariffs [19][20] - The company is maintaining its 2025 adjusted EBITDA guidance of $290 million to $310 million, reflecting a disciplined approach to navigating the current environment [24][25] Other Important Information - OpenLane's technology and innovation efforts are self-funded, with a focus on enhancing customer experience and operational efficiency [14][16] - The company has seen improvements in customer satisfaction metrics, with all transactional NPS scores improving year-over-year [16] Q&A Session Summary Question: Current dynamic with respect to tariffs and used environment - Management noted that strong Q1 performance was established before any pull-ahead activity related to tariffs, with increased retail activity observed in late March [38][41] Question: Dealer volume growth attribution - Management attributed the 15% dealer volume growth to increased brand awareness and investments in go-to-market strategies [42][44] Question: Vehicle export percentage from Canada - Approximately 10% to 20% of vehicles sold in Canada are purchased by exporters for the U.S. market, with most vehicles not subject to tariffs [53][56] Question: AFC provisioning drop - Management explained that the drop in provisioning was due to strong risk management and improving credit loss metrics, with expectations to remain in the 1.5% to 2% range [60][62] Question: Key measures to gain share in independent industry volumes - Management confirmed ongoing investments in the dealer-to-dealer business and emphasized the importance of digital transformation in gaining market share [66][70] Question: Auction fees per vehicle sold - Auction fee revenue increased by 14%, driven by pricing adjustments and volume growth, with management indicating a healthy pricing environment [78][81]

Q1 2025 Financial Performance - Total operating revenues increased to $460.1 million, compared to $429.9 million in Q1 2024[9] - Income from continuing operations rose to $36.9 million, significantly higher than the $18.5 million reported in Q1 2024[9] - Adjusted EBITDA reached $82.8 million, up from $74.8 million in the same period last year[9] - Income from continuing operations per share – diluted increased to $0.18, compared to $0.05 in Q1 2024[9] Marketplace Segment Highlights - Total Marketplace revenue increased to $351.2 million, up from $318.3 million in Q1 2024[10] - Auction fees increased to $125.2 million, compared to $109.9 million in Q1 2024[10] - Purchased vehicle sales increased to $85.7 million, compared to $58.2 million in Q1 2024[10] - Adjusted gross profit increased to $126.7 million, with an adjusted gross profit percentage of 47.7%[10] Finance Segment Highlights - Total Finance revenue decreased slightly to $108.9 million, compared to $111.6 million in Q1 2024[12] - Net Finance margin increased to $81.3 million, compared to $79.0 million in Q1 2024[12] - Total loan transaction units increased to 434,000, compared to 424,000 in Q1 2024[12] - Total receivables managed increased to $2,327.8 million, compared to $2,284.4 million in Q1 2024[12] 2025 Financial Guidance - The company projects income from continuing operations to be between $100 million and $114 million[4] - Adjusted EBITDA is projected to be between $290 million and $310 million[4] - Income from continuing operations per share – diluted is expected to be between $0.38 and $0.48[4]

EBITDA and Adjusted EBITDA Measures Defines and reconciles EBITDA and Adjusted EBITDA, key non-GAAP performance metrics for financial evaluation [Reconciliation of EBITDA and Adjusted EBITDA](index=2&type=section&id=Reconciliation%20of%20EBITDA%20and%20Adjusted%20EBITDA) Defines and reconciles EBITDA and Adjusted EBITDA, with Q1 2025 consolidated Adjusted EBITDA at **$82.8 million** and trailing twelve months at **$301.4 million** - EBITDA is defined as net income plus interest, taxes, depreciation, and amortization. Adjusted EBITDA further adjusts for items like non-cash stock compensation, securitization interest, and severance, as described in the company's credit agreements[2](index=2&type=chunk)[3](index=3&type=chunk) Adjusted EBITDA Reconciliation for Three Months Ended March 31, 2025 vs 2024 (in millions) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | **Income from continuing operations** | **$36.9** | **$18.5** | | EBITDA | $106.4 | $92.8 | | **Adjusted EBITDA** | **$82.8** | **$74.8** | | Marketplace Adjusted EBITDA | $37.1 | $35.1 | | Finance Adjusted EBITDA | $45.7 | $39.7 | Adjusted EBITDA Reconciliation for Twelve Months Ended March 31, 2025 (in millions) | Metric | Amount (in millions) | | :--- | :--- | | Net income | $128.3 | | EBITDA | $410.4 | | **Adjusted EBITDA from continuing operations** | **$301.4** | Consolidated Financial Results Details OPENLANE's Q1 2025 financial performance, highlighting significant revenue growth and profitability improvements [Overview of Consolidated Results](index=5&type=section&id=Overview%20of%20OPENLANE%20Results) OPENLANE's Q1 2025 revenue grew **7%** to **$460.1 million**, with operating profit up **40.5%** and net income nearly doubling Consolidated Results of Operations (in millions, except per share amounts) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Total operating revenues | $460.1 | $429.9 | | Operating profit | $51.7 | $36.8 | | Net income | $36.9 | $18.5 | | Diluted EPS | $0.18 | $0.05 | - Interest expense decreased by **44%** to **$4.0 million**, primarily due to lower borrowings on lines of credit[11](index=11&type=chunk) - Other income was **$5.0 million**, a significant swing from a **$0.5 million** expense in the prior year, mainly due to **$3.3 million** in foreign currency gains on intercompany balances[12](index=12&type=chunk) - The effective tax rate for Q1 2025 was **30.0%**, down from **36.6%** in Q1 2024[13](index=13&type=chunk) - Changes in Canadian dollar and euro exchange rates negatively impacted revenue by a combined **$9.0 million** and operating profit by **$1.9 million** compared to the prior year[16](index=16&type=chunk) Segment Results Analyzes Marketplace and Finance segment performance, detailing revenue drivers and profit contributions [Marketplace Segment Results](index=7&type=section&id=Marketplace%20Results) Marketplace revenue grew **10%** to **$351.2 million** in Q1 2025, with operating profit more than doubling to **$12.0 million** Marketplace Segment Performance (in millions, except vehicle counts) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Total Marketplace revenue | $351.2 | $318.3 | | Gross profit | $108.7 | $101.8 | | Operating profit | $12.0 | $4.8 | | Total vehicles sold | 363,000 | 372,000 | - The **2%** decrease in total vehicles sold was comprised of a **14%** decrease in commercial volumes, offset by a **15%** increase in dealer consignment volumes[19](index=19&type=chunk) - Auction fees per vehicle sold increased by **17%** to **$345**, reflecting a favorable mix of vehicles and price increases[20](index=20&type=chunk) - Service revenue decreased by **$9.9 million**, primarily due to the sale of the automotive key business in 2024[21](index=21&type=chunk) - Provision for credit losses decreased by **86%** to **$0.3 million** due to initiatives implemented to reduce risk[26](index=26&type=chunk) [Finance Segment Results](index=9&type=section&id=Finance%20Results) Finance revenue decreased **2%** to **$108.9 million** in Q1 2025, with operating profit up **24%** to **$39.7 million** Finance Segment Performance (in millions) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | Total Finance revenue | $108.9 | $111.6 | | Net Finance margin | $81.3 | $79.0 | | Operating profit | $39.7 | $32.0 | | Total receivables managed | $2,327.8 | $2,284.4 | - The annualized finance provision for credit losses as a percentage of average receivables managed decreased to **1.5%** in Q1 2025 from **2.4%** in Q1 2024[28](index=28&type=chunk)[34](index=34&type=chunk) - Finance interest expense decreased by **15%** to **$27.6 million**, attributable to a **~1.5%** decrease in the average interest rate on securitization obligations[32](index=32&type=chunk) - The Net Finance Margin percentage remained stable at approximately **13.9%** compared to **13.8%** in the prior year[33](index=33&type=chunk) Liquidity and Capital Resources Assesses the company's cash position and capital management, focusing on cash flow activities and available liquidity [Summary of Cash Flows](index=11&type=section&id=Summary%20of%20Cash%20Flows) Liquidity improved in Q1 2025, with cash and equivalents doubling to **$220.5 million** and operating cash flow increasing to **$122.6 million** Liquidity Position (in millions) | Metric | Mar 31, 2025 (in millions) | Mar 31, 2024 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $220.5 | $105.2 | | Working capital | $324.9 | $384.6 | | Available under Revolving Credit Facilities | $403.9 | $307.6 | Summary of Cash Flows for Three Months Ended March 31 (in millions) | Cash Flow Activity | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $122.6 | $100.2 | | Net cash used by investing activities | $(31.9) | $(39.7) | | Net cash used by financing activities | $(18.9) | $(63.6) | - The increase in operating cash flow was primarily due to changes in operating assets and liabilities related to the timing of collections and disbursements for marketplace sales[40](index=40&type=chunk) - Net cash used in financing activities decreased substantially, from **$63.6 million** in Q1 2024 to **$18.9 million** in Q1 2025, mainly due to lower repayments on lines of credit and obligations collateralized by finance receivables[43](index=43&type=chunk)[44](index=44&type=chunk)