CARMEL, Ind.,– KAR Auction Services, Inc. (NYSE: KAR), today reported its fourth quarter financial results for the period ended December 31, 2019. For the fourth quarter of 2019, the company reported revenue from continuing operations of $671.3 million as compared with revenue from continuing operations of $593.8 million for the fourth quarter of 2018, an increase of 13%. Net income from continuing operations for the fourth quarter of 2019 increased 1% to $15.3 million, or $0.12 per diluted share, as compared with net income from continuing operations of $15.1 million, or $0.11 per diluted share, in the fourth quarter of 2018. Adjusted EBITDA from continuing operations for the quarter ended December 31, 2019 increased 10% to $122.0 million, as compared with Adjusted EBITDA from continuing operations of $110.5 million for the quarter ended December 31, 2018. Operating adjusted net income from continuing operations per diluted share decreased 10% to $0.19 for the quarter ended December 31, 2019, as compared with operating adjusted net income from continuing operations per diluted share of $0.21 for the quarter ended December 31, 2018. Included in the company’s consolidated results were operating losses from TradeRev of $19.8 million and $15.7 million for the three months ended December 31, 2019 and 2018, respectively. In addition, in the fourth quarter of 2019, net income from continuing operations per diluted share and operating adjusted net income from continuing operations per diluted share were negatively impacted by severance payments of $0.05 per diluted share and the increased tax rate over the prior fourth quarter of $0.05 per diluted share.
For the year ended December 31, 2019, the company reported revenue from continuing operations of $2,781.9 million as compared with revenue from continuing operations of $2,442.8 million for the year ended December 31, 2018, an increase of 14%. Net income from continuing operations for the year ended December 31, 2019 decreased 21% to $92.4 million, or $0.70 per diluted share, as compared with net income from continuing operations of $117.6 million, or $0.87 per diluted share, for the year ended December 31, 2018. Adjusted EBITDA from continuing operations for the year ended December 31, 2019 increased 1% to $510.0 million, as compared with Adjusted EBITDA from continuing operations of $505.2 million for the year ended December 31, 2018. Operating adjusted net income from continuing operations per diluted share decreased 17% to $1.04 for the year ended December 31, 2019, as compared with operating adjusted net income from continuing operations per diluted share of $1.26 for the year ended December 31, 2018. Included in the company’s consolidated results were operating losses from TradeRev of $71.5 million and $53.0 million for the year ended December 31, 2019 and 2018, respectively. In addition, in 2019, net income from continuing operations per diluted share and operating adjusted net income from continuing operations per diluted share were negatively impacted by severance payments of $0.08 per diluted share and the increased tax rate over the prior year of $0.06 per diluted share.
2020 Outlook
(in millions, except per share amounts) |
Annual |
Net income from continuing operations |
$126.0 – $139.3 |
Income tax expense |
$53.0 – $59.7 |
Interest expense, net of interest income |
$155.0 |
Depreciation and amortization |
$194.0 |
EBITDA |
$528.0 – $548.0 |
Adjusted EBITDA addbacks, net |
($8.0) |
Adjusted EBITDA |
$520.0 – $540.0 |
Capital expenditures |
$135.0 |
Cash taxes |
$65.0 |
Cash interest on corporate debt |
$90.0 |
Effective tax rate |
30% |
Net income from continuing operations per share – diluted |
$0.97 – $1.07 |
Operating adjusted net income per share |
$1.28 – $1.38 |
Weighted average diluted shares |
130 |
Earnings guidance does not contemplate future items such as business development activities, strategic developments (such as restructurings, spin-offs or dispositions of assets or investments), gains/losses associated with step acquisitions, contingent purchase price adjustments, significant expenses related to litigation and changes in applicable laws and regulations (including significant accounting and tax matters). The timing and amounts of these items are highly variable, difficult to predict, and of a potential size that could have a substantial impact on the company’s reported results for any given period. Prospective quantification of these items is generally not practicable. Forward-looking non-GAAP guidance excludes amortization expense associated with acquired intangible assets, as well as one-time charges, net of taxes. See reconciliations of the company’s guidance on pages 8 and 9.
Dividend Announcement
The company announced a cash dividend today of $0.19 per share on the company’s common stock. The dividend is payable on April 3, 2020, to stockholders of record as of the close of business on March 20, 2020.
Earnings Conference Call Information
KAR will be hosting an earnings conference call and webcast on Wednesday, February 19, 2020 at 8:30 a.m. EST (7:30 a.m. CST). The call will be hosted by KAR’s Chief Executive Officer and Chairman of the Board, Jim Hallett, and Executive Vice President and Chief Financial Officer, Eric Loughmiller. The conference call may be accessed by calling 1-844-778-4145 and entering participant passcode 9167894, while the live web cast will be available at the investors section of www.karglobal.com. Supplemental financial information for KAR’s fourth quarter 2019 results is available at the investors section of www.karglobal.com.
A replay of the call will be available for two weeks via telephone starting approximately 30 minutes after the completion of the call. The replay may be accessed by calling 1-855-859-2056 and entering passcode 9167894. The archive of the web cast will also be available following the call and will be available at the investors section of www.karglobal.com for a limited time.
About KAR
KAR Auction Services Inc. (NYSE: KAR), known as KAR Global, provides sellers and buyers across the global wholesale used vehicle industry with innovative, technology-driven remarketing solutions. KAR Global’s unique end-to-end platform supports whole car, financing, logistics and other ancillary and related services, including the sale of nearly 3.8 million units valued at approximately $40 billion through our auctions. Our integrated physical, online and mobile marketplaces reduce risk, improve transparency and streamline transactions for customers in more than 80 countries. Headquartered in Carmel, Indiana, KAR Global has approximately 15,000 employees across the United States, Canada, Mexico, U.K. and Europe. For more information go to www.KARglobal.com. For the latest KAR Global news, follow us on Twitter @KARSpeaks.
Forward Looking Statements
Certain statements contained in this release include “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and which are subject to certain risks, trends and uncertainties. In particular, statements made that are not historical facts may be forward-looking statements. Words such as “should,” “may,” “will,” “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” and similar expressions identify forward-looking statements. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the Company’s Securities and Exchange Commission filings. The Company does not undertake any obligation to update any forward-looking statements.