OPENLANE(US:KAR)2021-05-04 16:00Financial Performance - Total revenues for the three months ended March 31, 2021, were $581.6 million, a decrease of 10% compared to $645.5 million for the same period in 2020[104] - Net income for the three months ended March 31, 2021, was $50.9 million, significantly up from $2.8 million in the same period of 2020[104] - For the three months ended March 31, 2021, total revenue from ADESA decreased by $51.2 million, or 9%, to $515.8 million compared to $567.0 million for the same period in 2020[116] - The number of vehicles sold decreased by 13%, with on-premise vehicle sales down by 25% and off-premise vehicle sales up by 3%[117] - Gross profit for ADESA increased by $2.6 million, or 1%, to $198.9 million, representing 38.6% of revenue, compared to 34.6% for the same period in 2020[119] - AFC revenue decreased by $12.7 million, or 16%, to $65.8 million, primarily due to a 17% decrease in loan transactions[123] - Cash flow from operations for the three months ended March 31, 2021, was $164.5 million, a significant improvement compared to $(49.2) million for the same period in 2020[129] - The company reported a net income of $50.9 million for the three months ended March 31, 2021, with Adjusted EBITDA of $123.2 million[151] - Adjusted EBITDA for the three months ended March 31, 2021, was $123.2 million, an increase from $67.5 million in the same period of 2020[152] - Operating cash flow was $164.5 million for the three months ended March 31, 2021, compared to cash used of $49.2 million for the same period in 2020[153] Expenses and Costs - Auction fees decreased to $235.5 million from $255.3 million, while service revenue fell to $187.6 million from $236.2 million[104] - Selling, general and administrative expenses for ADESA decreased by $12.2 million, or 8%, to $140.2 million, primarily due to reductions in various expense categories[121] - Interest expense decreased by $7.1 million, or 19%, to $30.9 million due to a lower average interest rate and reduced corporate debt[107] - The provision for credit losses decreased to 1.0% of average managed receivables for the three months ended March 31, 2021, down from 3.3% for the same period in 2020[125] Market and Operational Insights - The company expects the total addressable market for dealer-to-dealer transactions to expand to 15 million units from approximately 5 million units in 2019[97] - The COVID-19 pandemic has caused significant volatility and uncertainty in the whole car auction industry, impacting future volume estimates[97] - The company implemented various measures to mitigate the impact of COVID-19, including suspending non-essential services and temporarily halting quarterly dividends[89] - The company acquired Auction Frontier, LLC for $80 million in cash, with an additional $15 million contingent on certain terms, enhancing its auction technology capabilities[158] Cash and Liquidity - As of March 31, 2021, the company had $180.4 million in available cash held by foreign subsidiaries, with minimal expected taxes upon repatriation[132] - The company believes its liquidity sources are sufficient to meet operating needs and capital requirements for the foreseeable future[141] - The company managed total finance receivables of $1,984.4 million as of March 31, 2021, an increase from $1,911.0 million at December 31, 2020[145] - The company had $935.7 million outstanding on Term Loan B-6 as of March 31, 2021, with an interest rate of 2.38%[136] - The company has a $950 million Term Loan B-6 and a $325 million Revolving Credit Facility, with no borrowings outstanding on the Revolving Credit Facility as of March 31, 2021[137] Foreign Currency and Interest Rate Exposure - Fluctuations in foreign currency exchange rates contributed an increase of $5.6 million in revenue from the European exchange rate and $3.8 million from the Canadian exchange rate[111] - Foreign currency losses on intercompany loans were approximately $2.2 million for the three months ended March 31, 2021, compared to $0.4 million in 2020[163] - A hypothetical 100 basis point increase in short-term rates would have resulted in an increase in interest expense of approximately $1.1 million for the three months ended March 31, 2021[166] - The company entered into three pay-fixed interest rate swaps with an aggregate notional amount of $500 million, bearing a weighted average interest rate of 1.44%[165] - The interest rate swaps have a five-year term, maturing on January 23, 2025[165] - A 1% change in the month-end Canadian exchange rate for Q1 2021 would have impacted foreign currency losses on intercompany loans by $0.9 million and net income by $0.6 million[163] - Currency exposure from U.K., Continental Europe, and Mexican operations is not material to the results of operations[163]