Insurance Auto Auctions Posts EPS Increase of 67%
28 April 1999
Insurance Auto Auctions Posts EPS Increase of 67%; Q1 EPS of $0.25 Vs. $0.15 Excluding Special Charges for Prior Year New site in Raleigh-Durham, N.C. Announced
Highlights:
* EPS of $0.25 for first quarter versus $0.15 excluding special charges
for prior year
* EPS of $0.25 for first quarter versus $0.08 including special charges
for prior year
* First-quarter revenue growth of 17%
* Gross profit per unit for first quarter up $15 per unit
* Volume of vehicles sold up 10% versus prior year
SCHAUMBURG, Ill., April 28 -- Insurance Auto Auctions, Inc.
, a leading provider of automotive salvage and claims processing
services in the United States, today announced that a 10-percent increase in
same-store growth and a gross profit improvement of $15 per unit drove
substantial gains in net sales and net earnings for the quarter ended March
31, 1999.
First-Quarter Review
Net earnings for the quarter ended March 31, 1999, were $2.8 million, or
$0.25 per share, compared with $869,000, or $0.08 per share, for the first
quarter a year ago. The first-quarter net earnings of $0.25 per share
compares to the prior year's $0.15 per share, excluding special charges, or a
67-percent increase.
For the quarter, earnings from operations grew to $5.4 million, an
increase of 52 percent, versus $3.5 million in earnings from operations,
excluding special charges, in the first quarter of 1998. Net sales increased
17 percent to $79.9 million compared with $68.6 million for the first quarter
of 1998. Gross profit for the quarter jumped to $19.9 million, an increase of
21 percent from $16.5 million for the same quarter a year ago. Gross profit
per unit for first quarter 1999 was $158 per unit compared with $143 per unit
in the prior year, an increase of 10 percent.
Gross Profit per Unit Improves
"We are very pleased with our first-quarter results. A combination of
factors has produced these earnings. In the fourth quarter, we had record
'units in' that carried into first-quarter sales due primarily to an increase
in same-store sales, severe winter storms in select areas and charity business
that increased our inventories. In addition, our gross profit improvement
initiatives are being implemented more quickly than planned, including the
roll out of a variety of vehicle enhancement services which have increased
selling prices and have improved our profit margins and finally, our continued
focus on price management, which we started in the second quarter of last
year," said Christopher G. Knowles, chief executive officer. "It is too early
in the second quarter to ascertain the sustainability of this increased
performance over already projected significant growth for the remainder of the
year," added Knowles.
"Additionally, the improvement in gross profit per unit this quarter
reflects the focus our sales organization has placed on converting more of our
unit mix to our percent of sale agreements. Percent-of-sale agreement units
represented 14 percent of all unit volume during the first quarter as compared
with 6 percent for the same period a year ago. This product offering helps
increase selling prices of vehicles by applying the services that will net the
best return for the customer and ourselves," Knowles continued.
Volume Increases
The volume of vehicles sold increased to 126,000 in the first quarter of
1999, up 10 percent from 115,000 vehicles processed in the same period for the
previous year. For the quarter, purchase agreement units represented 28
percent of all unit volume versus 30 percent for the first quarter of last
year.
Commitment to Market Expansion
"We are pleased to announce the addition of a new greenfield in the
Raleigh-Durham market servicing both Raleigh/Durham and Greensboro, N.C.,"
commented Knowles. "The site is scheduled to begin accepting business by the
end of the second quarter and has approximately 20 acres of land with an
annual capacity of about 20,000 units. This new location will help increase
our market share in North Carolina, broaden our capabilities to support our
customers in the rapidly growing southeast markets of Raleigh/Durham and
Greensboro and give IAA the opportunity to deliver on-site services such as
vehicle inspection, digital imaging and other vehicle enhancements. Through
strategic acquisitions and new site development, we will continue to take
advantage of market expansion opportunities in markets where we can add
value," concluded Knowles. The addition of this location brings the company's
total to 51 auction sites.
Founded in 1982, Insurance Auto Auctions, Inc. is a leading provider of
automotive and specialty salvage services in the United States, providing
insurance companies with cost-effective, turnkey solutions to process and sell
total-loss and recovered-theft vehicles, a $3 billion per year industry. The
company currently has 51 auction sites across the United States.
This press release contains forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from
those discussed or implied herein. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998. Among these risks are legislative acts, weather conditions, market
value of salvage declining, management changes, outcome of litigation,
competition, quality and quantity of inventory available from suppliers, and
dependence on key insurance company suppliers.
Comparative Statistics
(rounded from actuals)
Three months ended
March 31,
Increase
1999 1998 (Decrease)
Total Vehicles Sold 126,000 115,000 10%
Per Unit:
Gross Profit $158 $143 10%
Direct Operating Expenses $108 $104 4%
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Month Periods
Ended March 31,
(Unaudited)
1999 1998
Net Sales:
Vehicle sales $51,258,000 $47,169,000
Fee income 28,620,000 21,389,000
Total 79,878,000 68,558,000
Cost and expenses:
Cost of sales 59,941,000 52,092,000
Direct operating expenses 13,624,000 11,997,000
Amortization of
acquisition costs 950,000 942,000
Special charges - 1,564,000
Earnings from operations 5,363,000 1,963,000
Other (income)expense:
Interest expense 494,000 528,000
Interest income (225,000) (174,000)
Earnings before income taxes 5,094,000 1,609,000
Income taxes 2,241,000 740,000
Net earnings $2,853,000 $869,000
Earnings per share:
Basic $.25 $.08
Diluted $.25 $.08
Weighted average shares outstanding:
Basic 11,338,000 11,307,000
Diluted 11,410,000 11,380,000
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents $19,804,000 $11,682,000
Short-term investments 8,385,0000 11,138,000
Accounts receivable, net 38,802,000 37,415,000
Inventories 12,739,000 11,229,000
Other current assets 1,716,000 1,676,000
Total current assets 81,446,000 73,140,000
Property and equipment, at cost, net 22,965,000 22,312,000
Deferred income taxes 3,063,000 2,976,000
Other assets, principally
goodwill, net 127,987,000 128,916,000
Total $235,461,000 $227,344,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $216,000 $216,000
Accounts payable 34,145,000 30,939,000
Accrued liabilities 5,908,000 6,097,000
Income taxes 2,600,000 582,000
Total current liabilities 42,869,000 37,834,000
Long-term debt, excluding
current installments 20,085,000 20,116,000
Accumulated postretirement
benefits obligation 3,429,000 3,485,000
Deferred income taxes 7,390,000 7,154,000
Total liabilities 73,773,000 68,589,000
Shareholders' equity:
Preferred stock, par value of $.001 per share
Authorized 5,000,000 shares; none issued - -
Common stock, par value of
$.001 per share
Authorized 20,000,000 shares;
issued and outstanding
11,341,358 and 11,327,169 shares as
of March 31, 1999 and December 31, 1998,
respectively 11,000 11,000
Additional paid-in capital 132,249,000 132,171,000
Retained earnings 29,428,000 26,573,000
Total shareholders' equity 161,688,000 158,755,000
Total $235,461,000 $227,344,000
