Insurance Auto Auctions Reports Q4 Net Earnings Increase of 51%
15 February 2000
Insurance Auto Auctions Reports Fourth Quarter Net Earnings Increase of 51% Vs. Prior Year -- Fourth Quarter Net Earnings Increased 51%, EPS Up 45%
-- 1999 Net Earnings Up 70%, Before Special Charges
-- Sixth Consecutive Quarter of 45% Plus Earnings Growth
SCHAUMBURG, Ill., Feb. 15 -- Insurance Auto Auctions, Inc.
, today reported fourth quarter net earnings climbed 51 percent
to $3.4 million, or 29 cents per diluted share, from $2.3 million, or 20 cents
per share, for the same quarter a year ago. The fourth quarter marks the 6th
consecutive quarter of 45 percent plus earnings growth for the company. For
the year, earnings per diluted share increased to $1.18 versus $0.70 for the
prior year, before special charges, an increase of 69 percent.
For the quarter ended December 31, 1999, net sales increased 7 percent to
$78.0 million compared with $73.1 million in the fourth quarter of 1998.
Gross profit for the quarter increased 12 percent to $20.3 million, up from
$18.0 million for the same quarter a year ago. Earnings from operations for
the quarter rose 40 percent to $5.6 million from $4.0 million for the same
quarter a year ago.
"The Company's profitability increased significantly from the fourth
quarter of the prior year as a result of the continued roll out of our gross
profit enhancement initiatives," said Christopher Knowles, chief executive
officer. "We also continued to focus on our strategy of providing additional
value-added services to our customers, such as our new appraisal service
offering, creating incremental revenues that are not directly related to the
number of units processed."
"In addition, we introduced our new Internet online auction in January,"
Knowles continued. "We have received encouraging responses from our customer
base and believe it is the 'best of class' Internet auction in our industry.
Our plan is to expand our Internet auction to all sites by mid-year and to
continue to enhance it and add features which will benefit our supplier
customers and salvage buyers. We expect to be industry leaders in e-business
initiatives."
Strong Earnings Growth in 1999
For the year ended December 31, 1999, net earnings increased 70 percent to
$13.7 million, or $1.18 per diluted share, as compared with $8.1 million,
before special charges, or $0.70 per share, for 1998. Earnings from
operations increased to $23.9 million, up from $15.6 million for the prior
year, before special charges.
Net sales for the year were $317.4 million compared with $287.1 million in
1998, an increase of 11 percent. For the year ended December 31, 1999,
purchase agreements represented 28 percent of all vehicles sold, down from
30 percent for the same period in 1998. At the same time, percent of sale
units increased from 9 percent in 1998 to 16 percent in 1999. "This shift to
percent of sale is consistent with our plans," commented Knowles.
Gross profit for the year was $83.4 million, up 19 percent from 1998.
"Our growth in gross profit reflects our efforts to offer services which are
revenue-producing for IAA and which also provide enhanced salvage returns for
our supplier customers (primarily automobile insurance companies). This
growth was a primary focus for us in 1999 and will continue to be a focus in
2000, along with geographic expansion through acquisitions and greenfields and
the expansion into new businesses such as appraisal and towing," Knowles
added.
About Insurance Auto Auctions, Inc.
Insurance Auto Auctions, Inc., founded in 1982, a leader in automotive
total loss and specialty salvage services in the United States, provides
insurance companies with cost-effective, turnkey solutions to process and sell
total-loss and recovered-theft vehicles. This is a $3 billion per year
industry. The company currently has 50 auction sites across the United
States.
This press release contains forward-looking information that is subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected, expressed, or implied by such forward-looking
information. In some cases, you can identify forward looking statements by
our use of words such as "may, will, should, anticipates, believes, expects,
plans, future, intends, could, estimate, predict, potential or contingent,"
the negative of these terms or other similar expressions. 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, Form 10-K for the
fiscal year ended December 31, 1998, or subsequent quarterly reports. Among
these risks are legislative acts, changes in the market value of salvage,
competition, quality and quantity of inventory available from suppliers, and
dependence on key insurance company suppliers.
For additional information regarding Insurance Auto Auctions free of
charge via fax, dial 1-800-PRO-INFO and use the company's stock symbol,
"IAAI."
Additional information about Insurance Auto Auctions, Inc. is available on
the World Wide Web at http://www.iaai.com
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Month Periods Year Ended
Ended December 31, December 31,
(Unaudited)
1999 1998 1999 1998
Net Sales:
Vehicle sales $49,554,000 $46,523,000 $204,785,000 $191,312,000
Fee income 28,414,000 26,535,000 112,606,000 95,751,000
77,968,000 73,058,000 317,391,000 287,063,000
Cost and expenses:
Cost of sales 57,707,000 55,023,000 233,949,000 216,754,000
Direct operating
expenses 13,723,000 13,106,000 55,741,000 50,885,000
Amortization of
acquisition
costs 949,000 946,000 3,797,000 3,779,000
Special charges -- -- -- 1,564,000
Earnings from
operations 5,589,000 3,983,000 23,904,000 14,081,000
Other (income)
expense:
Interest expense 491,000 495,000 1,970,000 2,055,000
Interest (income) (355,000) (208,000) (1,271,000) (797,000)
Earnings before
income taxes 5,453,000 3,696,000 23,205,000 12,823,000
Income taxes 2,044,000 1,444,000 9,500,000 5,642,000
Net earnings $3,409,000 $2,252,000 $13,705,000 $7,181,000
Earnings per share:
Basic $.29 $.20 $1.20 $.63
Diluted $.29 $.20 $1.18 $.63
Weighted average shares
outstanding:
Basic 11,572,000 11,325,000 11,467,000 11,316,000
Effect of
dilutive
securities -
stock options 184,000 95,000 156,000 121,000
Diluted 11,756,000 11,420,000 11,623,000 11,437,000
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31, December 31,
1999 1998
ASSETS
Current assets:
Cash and cash equivalents. $18,886,000 $11,682,000
Short-term investments 18,481,000 11,138,000
Accounts receivable, net 40,188,000 37,415,000
Inventories 11,998,000 11,229,000
Other current assets 1,655,000 1,676,000
Total current assets 91,208,000 73,140,000
Property and equipment, at cost, net 27,458,000 22,312,000
Deferred income taxes 4,338,000 2,976,000
Other assets, principally goodwill, net 125,128,000 129,115,000
$248,132,000 $227,543,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $135,000 $216,000
Accounts payable 33,216,000 30,939,000
Accrued liabilities 6,306,000 6,097,000
Income taxes 1,226,000 582,000
Total current liabilities 40,883,000 37,834,000
Long-term debt, excluding current
installments 20,180,000 20,315,000
Accumulated postretirement benefits
obligation 3,178,000 3,485,000
Deferred income taxes 8,605,000 7,154,000
Total liabilities 72,846,000 68,788,000
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 11,575,010 and 11,327,169 shares
as of December 31, 1999 and
December 31, 1998, respectively 12,000 11,000
Additional paid-in capital 134,996,000 132,171,000
Retained earnings 40,278,000 26,573,000
Total shareholders' equity 175,286,000 158,755,000
$248,132,000 $227,543,000
