Insurance Auto Auctions Announces Q1 Net Earnings Increase
26 April 2000
Insurance Auto Auctions Announces First Quarter Net Earnings Increase of 47% vs. Prior Year
-- First Quarter Earnings Per Share Increased 40%
-- Online "Interactive" Internet Auction Rolled out to Nine Branches
-- Seventh Consecutive Quarter of 45% Plus Net Earnings Growth
SCHAUMBURG, Ill., April 26 Insurance Auto Auctions, Inc.
(Nasdaq: IAAI), a leading provider of automotive salvage and claims processing
services in the United States, today announced net earnings for the quarter
ended March 31, 2000 of $4.2 million, or $0.35 per diluted share, compared
with $2.9 million, or $0.25 per diluted share, for the first quarter of 1999,
an increase of 47% in net earnings and a 40% increase in earnings per share.
Net sales for the three months ended March 31, 2000 increased 9% to
$87.0 million versus $79.9 million for the same period a year ago. This
included a 7% increase in vehicle sales for cars sold under a purchase
agreement and a 12% increase in fee income versus the prior year. Gross
proceeds increased to $175.7 million in the first quarter of 2000 from
$166.0 million in the comparable period in 1999.
Gross profit for the quarter increased to $23.1 million, an increase of
16% from $19.9 million for the same quarter a year ago. "The increase in gross
profit resulted from higher volumes and an increase in gross profit per unit
as compared to the first quarter of the prior year, the result of the
continued roll out of our profitability enhancement initiatives," said
Christopher Knowles, chief executive officer.
For the first quarter of 2000, the percent of sale method (Percentage
Plus) accounted for 18% of total units sold versus 14% in 1999, while the
purchase agreement method of sale accounted for 28% of total units sold, the
same as for the prior year.
Online "Interactive" Internet Auction
Launched in January 2000, the Company's online Auction Center
( http://www.iaai-bid.com (SM)) now sells vehicles in 17% of the Company's branches.
"Our buyers have been very receptive to the open, interactive format of our
Auction Center," stated Knowles. "Our interactive bidding process works
differently than other salvage bidding processes in our industry and gives our
buyers more opportunities to raise their bids easily. A significant portion
of our Internet bids represent the second highest bid amount which
demonstrates the power of our unique interactive bidding process in increasing
sales prices for our insurance customers." The Company is aggressively
implementing online bidding throughout the United States with completion
scheduled for mid-year 2000.
Towing Now in 16 of Our 52 Facilities
Towing, which is one of the Company's new businesses, has now been
implemented in 16 of its 52 facilities. As previously announced, management
expects to enter the towing business in most of its facilities and expects to
be operational in at least 25 facilities by year-end 2000.
Appraisal Business Expanding Rapidly
IAA's new appraisal business, FastTrack(R), is receiving widespread
interest from insurers throughout the U.S. This new business offering is
fully operational in all facilities and, as with towing, brings to IAA fee
income not necessarily related to volume of units processed through auction.
"We are extremely pleased with the early acceptance of our FastTrack service
offering," added Knowles. "It is proving a valuable tool for insurers in cost
and timeline reduction."
Geographic Expansion
Geographic expansion through acquisition and the opening of greenfield
sites continues to be a priority for the Company. "We were pleased to have
acquired two facilities in Wisconsin in the first quarter in addition to
opening a new facility on Long Island," Knowles commented. The Company
expects to continue to expand its geographic coverage during the remainder of
2000.
About Insurance Auto Auctions, Inc.
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Month Periods
Ended March 31,
(Unaudited)
2000 1999
Net Sales:
Vehicle sales $ 54,964,000 $ 51,258,000
Fee income 31,996,000 28,620,000
86,960,000 79,878,000
Cost and expenses:
Cost of sales 63,855,000 59,941,000
Direct operating expenses 15,018,000 13,624,000
Amortization of acquisition costs 948,000 950,000
Earnings from operations 7,139,000 5,363,000
Other (income) expense:
Interest expense 464,000 494,000
Interest income (411,000) (225,000)
Earnings before income taxes 7,086,000 5,094,000
Income taxes 2,905,000 2,241,000
Net earnings $4,181,000 $2,853,000
Earnings per share:
Basic $.36 $.25
Diluted $.35 $.25
Weighted average shares outstanding:
Basic 11,586,000 11,338,000
Effect of dilutive
securities - stock options 200,000 72,000
Diluted 11,786,000 11,410,000
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
March 31, December 31,
2000 1999
ASSETS
Current assets:
Cash and cash equivalents $14,179,000 $18,886,000
Short-term investments 3,372,000 6,845,000
Accounts receivable, net 41,651,000 40,188,000
Inventories 12,107,000 11,998,000
Other current assets 2,058,000 1,655,000
Total current assets 73,367,000 79,572,000
Property and equipment, net 29,573,000 27,458,000
Other investments 17,360,000 11,636,000
Deferred income taxes 4,250,000 4,338,000
Other assets, principally goodwill, net 129,410,000 125,128,000
$253,960,000 $248,132,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $135,000 $135,000
Accounts payable 31,630,000 33,216,000
Accrued liabilities 6,860,000 6,306,000
Income taxes 3,374,000 1,226,000
Total current liabilities 41,999,000 40,883,000
Long-term debt, excluding
current installments 20,029,000 20,180,000
Accumulated postretirement
benefits obligation 3,131,000 3,178,000
Deferred income taxes 9,161,000 8,605,000
Total liabilities 74,320,000 72,846,000
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 11,591,246
and 11,575,010 and shares as of
March 31, 2000 and December 31, 1999,
respectively 12,000 12,000
Additional paid-in capital 135,169,000 134,996,000
Retained earnings 44,459,000 40,278,000
Total shareholders' equity 179,640,000 175,286,000
$253,960,000 $248,132,000