OPENLANE(KAR) - 2025 Q1 - Quarterly Results

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 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][3] 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 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] - 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] - The effective tax rate for Q1 2025 was 30.0%, down from 36.6% in Q1 2024[13] - 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] Segment Results Analyzes Marketplace and Finance segment performance, detailing revenue drivers and profit contributions Marketplace Segment Results 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] - Auction fees per vehicle sold increased by 17% to $345, reflecting a favorable mix of vehicles and price increases[20] - Service revenue decreased by $9.9 million, primarily due to the sale of the automotive key business in 2024[21] - Provision for credit losses decreased by 86% to $0.3 million due to initiatives implemented to reduce risk[26] Finance Segment Results 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][34] - 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] - The Net Finance Margin percentage remained stable at approximately 13.9% compared to 13.8% in the prior year[33] 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 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] - 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][44]