Insurance Auto Auctions Announces First Quarter Results
WESTCHESTER, Ill.--May 1, 20061, 2006--Insurance Auto Auctions, Inc., a leading provider of automotive salvage and claims processing services in the United States, today announced record vehicle returns for the first quarter 2006. These results were driven by increased buying activity as a result of IAA's live auctions combined with Internet bidding capability.The Company recorded revenues for the quarter of $77.7 million compared to $70.9 million in the first quarter of 2005, an increase of 10 percent year-over-year. Fee income in the first quarter increased to $66.8 million versus $61.1 million in the first quarter of last year. IAA reported Consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization), consistent with the definition in our senior credit agreement, of $14.3 million during the quarter. Consolidated 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.
"During the first quarter, we continued to experience rapid sales growth, solid profitability and excellent cash flow due to our ability to add many new buyers to our customer network, which has translated into the best returns in the industry for our suppliers," said Tom O'Brien, CEO. "We have stayed committed to our dual bidding strategy that combines live physical auctions with a real-time Internet bidding capability using our state-of-the-art I-bid LIVE product."
O'Brien added, "We have also identified several opportunities to expand our business through acquisitions and greenfields, which will support our ongoing commitment to improving our service offering and adding new buyers to our base, ultimately allowing us to provide even better returns to our suppliers. We once again made significant improvement on the expansion front during the quarter, including our acquisition of NW Penn Auction Sales/Warren County Salvage in Erie, Pennsylvania, which leverages the Company's existing regional coverage in this market. Since the close of the quarter we have also acquired Indiana Auto Storage Pool's two locations in Indiana and moved into a new, larger facility in Kansas City, Kansas. All four of these new facilities are already up-and-running on our technology platform and are allowing us to meet the demands of our growing buyer base."
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 83 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 Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 25, 2005, as amended. 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 "Risk Factors" in our Form 10-K for the year ended December 25, 2005, as amended. 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 BALANCE SHEETS
(dollars in thousands except per share amounts)
Successor Successor
--------------- ---------------
March 26, December 25,
2006 2005
--------------- ---------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $35,752 $25,882
Accounts receivable, net 50,226 46,920
Inventories 20,539 19,611
Income taxes receivable 2,723 2,732
Deferred income taxes 7,302 8,511
Other current assets 5,401 5,323
--------------- ---------------
Total current assets 121,943 108,979
--------------- ---------------
Property and equipment, net 78,188 77,231
Intangible assets, net 124,425 126,378
Goodwill 193,297 191,266
Other assets 10,683 11,006
--------------- ---------------
$528,536 $514,860
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $44,285 $38,022
Accrued liabilities 24,333 17,445
Obligations under capital leases 363 367
Current installments of long-term
debt 1,143 1,143
--------------- ---------------
Total current liabilities 70,124 56,977
--------------- ---------------
Deferred income taxes 38,066 37,582
Other liabilities 12,530 12,765
Obligations under capital leases 230 329
Senior notes 150,000 150,000
Long-term debt, excluding current
installments 112,896 113,183
--------------- ---------------
Total liabilities 383,846 370,836
--------------- ---------------
Shareholders' equity:
Common stock, par value of $.01 per
share 100 shares authorized, issued
and outstanding - -
Additional paid-in capital 150,628 149,458
Retained loss (5,938) (5,434)
--------------- ---------------
Total shareholders' equity 144,690 144,024
--------------- ---------------
$528,536 $514,860
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INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands)
Three Months Ended
-------------------------------
Successor Predecessor
--------------- ---------------
March 26, March 27,
2006 2005
--------------- ---------------
(unaudited)
Revenues:
Fee income $66,779 $61,100
Vehicle sales 10,874 9,843
--------------- ---------------
77,653 70,943
Cost of sales:
Branch cost 48,244 42,677
Vehicle cost 9,173 8,465
--------------- ---------------
57,417 51,142
--------------- ---------------
Gross profit 20,236 19,801
Operating expenses:
Selling, general and administrative 11,859 10,049
Loss (gain) on sale of property and
equipment 6 (32)
Loss related to flood 2,860 -
Merger costs - 1,233
--------------- ---------------
Earnings from operations 5,511 8,551
Other (income) expense:
Interest expense 6,452 419
Other income (123) (32)
--------------- ---------------
Earnings (loss) before income taxes (818) 8,164
Income taxes (314) 3,143
--------------- ---------------
Net (loss) earnings $(504) $5,021
=============== ===============
INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Three Months Ended
-------------------------------
Successor Predecessor
--------------- ---------------
March 26, March 27,
2006 2005
--------------- ---------------
(unaudited)
Cash flows from operating activities:
Net earnings (loss) $(504) $5,021
Adjustments to reconcile net earnings
(loss) to net cash provided by
operating activities:
Depreciation and amortization 4,933 3,203
(Gain) loss on disposal of fixed
assets 806 (32)
Share-based compensation expense 1,020 -
Deferred compensation related to
restricted stock - 695
Deferred income taxes 1,883 15
Tax benefit related to employee stock
compensation - 94
Changes in assets and liabilities
(excluding effects of acquired
companies):
(Increase) decrease in:
Accounts receivable, net (3,239) (726)
Income tax receivable 9 -
Inventories (928) (1,041)
Other current assets 22 (1,891)
Other assets 387 (80)
Increase (decrease) in:
Accounts payable 6,228 2,465
Accrued liabilities 6,368 (583)
Income taxes - 2,946
--------------- ---------------
Net cash provided by operating
activities 16,985 10,086
--------------- ---------------
Cash flows from investing activities:
Capital expenditures (4,418) (3,148)
Acquisition, net of cash acquired (2,519) -
Proceeds from disposal of property and
equipment 62 88
--------------- ---------------
Net cash used in investing
activities (6,875) (3,060)
--------------- ---------------
Cash flows from financing activities:
Proceeds from issuance of common stock - 749
Contributed capital 150 -
Proceeds from short-term borrowings - 3,000
Principal payments on long-term debt (287) (1,887)
Purchase of treasury stock - (1)
Principal payments on capital leases (103) (378)
--------------- ---------------
Net cash provided by (used in)
financing activities (240) 1,483
--------------- ---------------
Net increase in cash and cash
equivalents 9,870 8,509
Cash and cash equivalents at beginning
of period 25,882 13,325
--------------- ---------------
Cash and cash equivalents at end of
period $35,752 $21,834
=============== ===============
Supplemental disclosures of cash flow
information:
Interest paid $2,083 $370
=============== ===============
Income taxes paid $125 $154
=============== ===============
Income taxes refunded $1,950 $2
=============== ===============