Insurance Auto Auctions Announces Improved Third Quarter Results
WESTCHESTER, Ill.--Nov. 9, 2005--Insurance Auto Auctions, Inc., a leading provider of automotive salvage and claims processing services in the United States, announced record vehicle returns during the third quarter. These results were driven by increased buying activity as a result of IAA's live auctions with internet bidding.The Company recorded revenues for the quarter of $68.1 million compared to $60.8 million in the third quarter of 2004. Fee income in the third quarter increased to $58.1 million versus $53.3 million in the third quarter of last year. IAA reported EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) of $11.0 million during the quarter compared to $9.0 million in the year ago period. EBITDA is a non-GAAP measure that the Company uses as a primary measurement of its financial results because it is indicative of the relative strength of the Company's operating performance. A table reconciling this measure to the appropriate GAAP measurement is included in the Form 8-K that the Company filed today.
"We were pleased to deliver another outstanding quarter, which included higher sales and EBITDA results compared to the prior year," said Tom O'Brien, CEO. "These improvements were driven by our ability to generate an average per unit selling price that was more than $300 higher than it was only two years ago, producing a significantly better return for both our insurance company suppliers and IAA. Our combined offering of live auctions and industry leading Internet bidding capability has generated continued buying activity growth and, consequently, much higher average selling prices."
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. The Company currently has 80 sites across the United States.
Forward-Looking Statements
The statements in this release should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included in our Form 10-Q for the quarter ended September 25, 2005, that we filed with the Securities and Exchange Commission on November 9, 2005. The statements contained in this release that are not historical facts are forward-looking statements. Forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially form those projected, expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by use of words such as "may," "will," "should," "anticipates," "predict," "projects," "targeting," "potential," "or "contingent," the negative of these terms, or other similar expressions. Our actual results could differ materially from those discussed in or implied by forward-looking statements for various reasons, including those discussed in "Factors that Could Affect Future Results" in our Management's Discussion and Analysis of Financial Condition and Results of Operations in our Form 10-Q for the quarter ended September 25, 2005. You should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publish, update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
Additional information about Insurance Auto Auctions, Inc. is available on the World Wide Web at www.iaai.com
Financial Tables Follow...
INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands)
(unaudited)
THREE MONTHS
---------------------------------------
SUCCESSOR PREDECESSOR
------------------- -------------------
June 27, 2005 - June 28, 2004 -
September 25, 2005 September 26, 2004
------------------- -------------------
Revenues:
Fee income $58,087 $53,250
Vehicle sales 10,056 7,502
------------------- -------------------
68,143 60,752
Cost of Sales
Branch cost 42,456 40,157
Vehicle cost 8,643 6,229
------------------- -------------------
51,099 46,386
Gross profit 17,044 14,366
Operating expense:
Selling, general and
administrative 10,182 9,239
Loss (gain) on sale of
property and equipment 351 (606)
Merger costs - -
------------------- -------------------
10,533 8,633
Earnings (loss) from
operations 6,511 5,733
Other (income) expense
Interest expense 6,350 362
Other income (140) (19)
------------------- -------------------
Earnings (loss) before income
taxes 301 5,390
Income taxes (206) 2,036
------------------- -------------------
Net earnings (loss) $507 $3,354
=================== ===================
NINE MONTHS
---------------------------------------------------------
SUCCESSOR PREDECESSOR
------------------ --------------------------------------
May 26, 2005 - December 27, 2004 December 29, 2003 -
September 25, 2005 - May 25, 2005 September 26, 2004
------------------ ----------------- --------------------
Revenues:
Fee income $77,329 $103,203 $155,091
Vehicle sales 13,175 17,242 22,853
------------------ ----------------- --------------------
90,504 120,445 177,944
Cost of Sales
Branch cost 56,937 72,554 118,150
Vehicle cost 11,295 14,640 19,400
------------------ ----------------- --------------------
68,232 87,194 137,550
Gross profit 22,272 33,251 40,394
Operating
expense:
Selling,
general and
administrative 13,582 15,822 26,076
Loss (gain) on
sale of
property and
equipment 368 (896) (626)
Merger costs 5,021 15,741 -
------------------ ----------------- --------------------
18,971 30,667 25,450
Earnings
(loss) from
operations 3,301 2,584 14,944
Other (income)
expense
Interest
expense 8,992 567 1,248
Other income (181) (2,442) (40)
------------------ ----------------- --------------------
Earnings
(loss) before
income taxes (5,510) 4,459 13,736
Income taxes (1,517) 4,899 5,426
------------------ ----------------- --------------------
Net earnings
(loss) $(3,993) $(440) $8,310
================== ================= ====================
INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands except per share amounts)
SUCCESSOR PREDECESSOR
------------- -------------
September 25, December 26,
2005 2004
------------- -------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $31,678 $13,325
Accounts receivable, net 41,876 50,443
Inventories 15,696 14,498
Income taxes receivable 3,889 -
Deferred income taxes 4,629 4,693
Other current assets 4,657 1,613
------------- -------------
Total current assets 102,425 84,572
------------- -------------
Property and equipment, net 72,215 74,684
Deferred income taxes 14,417 6,481
Intangible assets, net 131,944 1,747
Goodwill 189,249 137,494
Other assets 10,552 482
------------- -------------
$520,802 $305,460
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $30,102 $38,505
Accrued liabilities 20,489 13,513
Obligations under capital leases 426 1,094
Income taxes payable - 1,067
Obligations under line of credit - 6,000
Current installments of long-term debt 862 7,512
------------- -------------
Total current liabilities 51,879 67,691
------------- -------------
Deferred income taxes 51,463 20,729
Other liabilities 6,973 4,353
Obligations under capital leases 412 661
Senior notes 150,000 -
Long-term debt, excluding current
installments 114,138 9,375
------------- -------------
Total liabilities 374,865 102,809
------------- -------------
Shareholders' equity:
Preferred stock, par value of $.001 per
share (predecessor)
Authorized 5,000,000 shares; none issued - -
Common stock, par value of $.001 per
share (predecessor)
Authorized 20,000,000 shares; 12,709,758
shares issued and 11,569,156 outstanding
as of December 26, 2004
None outstanding as of September 25, 2005 - 12
Common stock, par value of $.01 per
share (successor)
100 shares authorized, issued and
outstanding - -
Additional paid-in capital 149,930 151,793
Treasury stock, 906,480 shares at
December 26, 2004 (predecessor) - (9,637)
Deferred compensation related to
restricted stock - (4,343)
Accumulated other comprehensive loss - (186)
Retained earnings (loss) (3,993) 65,012
------------- -------------
Total shareholders' equity 145,937 202,651
------------- -------------
$520,802 $305,460
============= =============
INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
SUCCESSOR PREDECESSOR
------------------ -------------------------------
Nine Months
Ended
May 26, 2005 - December 27, 2004 September 26,
September 25, 2005 - May 25, 2005 2004
------------------ ----------------- -------------
Cash flows from
operating
activities:
Net earnings (loss) $(3,993) $(440) $8,310
Adjustments to
reconcile net
earnings(loss) to
net cash provided by
operating activities:
Depreciation and
amortization 6,340 5,464 9,724
(Gain) loss on
disposal of
fixed assets 368 (896) (626)
Deferred
compensation
related to
restricted stock - 4,343 350
Deferred income
taxes (787) (1,448) -
Tax benefit
related to
employee stock
compensation 678 8,394 -
Changes in assets
and liabilities
(excluding
effects of acquired
companies):
(Increase)
decrease in:
Accounts
receivable,
net 14,314 (5,312) 2,075
Income tax
receivable (1,270) (2,618) -
Inventories (726) (472) 365
Other current
assets (2,524) (520) 330
Other assets 887 (827) (1,437)
Increase
(decrease) in:
Accounts
payable (15,122) 6,719 2,999
Accrued
liabilities (5,448) 12,279 3,770
Income taxes - (1,067) 3,464
------------------ ----------------- -------------
Total
adjustments (3,290) 24,039 21,014
------------------ ----------------- -------------
Net cash provided
(used) by
operating
activities (7,283) 23,599 29,324
------------------ ----------------- -------------
Cash flows from
investing
activities:
Purchase of IAAI,
Inc. (356,753) - -
Capital
expenditures (5,904) (8,221) (17,645)
Payments made in
connection with
acquisitions, net
of cash acquired (271) (600) (1,912)
Proceeds from
disposal of
property and
equipment 225 1,391 1,268
------------------ ----------------- -------------
Net cash used in
investing
activities (362,703) (7,430) (18,289)
Cash flows from
financing
activities:
Proceeds from
issuance of common
stock - 905 682
Contributed capital 143,600 - -
Proceeds from
short-term
borrowings - 3,000 -
Payment of
financing and
other fees (13,530) - -
Principal payments
on long-term debt (22,125) (3,762) (5,660)
Purchase of
treasury stock - (1) (1,504)
Principal payments
on capital leases (303) (614) (2,229)
Issuance of senior
notes 150,000 - -
Issuance of term
loan 115,000 - -
------------------ ----------------- -------------
Net cash provided
(used) by financing
activities 372,642 (472) (8,711)
Net increase in cash 2,656 15,697 2,324
Cash at beginning of
period 29,022 13,325 15,486
------------------ ----------------- -------------
Cash at end of
period $31,678 $29,022 $17,810
================== ================= =============
Supplemental
disclosures of cash
flow information:
Cash paid or
refunded during
the period for:
Interest 1,987 689 1,376
================== ================= =============
Income taxes
paid 147 1,654 2,028
================== ================= =============
Income taxes
refunded 5,111 26 1,011
================== ================= =============
Non-cash
transactions:
Options exchanged
in merger
transaction $5,653 $- $-
================== ================= =============