KAR Auction Services, Inc. (KAR) Bundle
A Brief History of OPENLANE, Inc.
OPENLANE, Inc. has undergone significant transformations and financial developments leading up to 2024, particularly following its rebranding from ADESA. The company primarily operates in the automotive remarketing sector, providing digital auction and vehicle services.
Financial Performance Overview
For the nine months ended September 30, 2024, OPENLANE reported total operating revenues of $1.296 billion, an increase from $1.254 billion in the same period in 2023. The breakdown of revenues is outlined in the following table:
| Revenue Source | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Auction Fees | $331.8 | $305.3 |
| Service Revenue | $445.4 | $475.2 |
| Purchased Vehicle Sales | $231.4 | $176.5 |
| Finance-related Revenue | $287.9 | $296.8 |
Gross Profit Analysis
Gross profit for the nine months ended September 30, 2024, was reported at $198.4 million, compared to a loss of $62.6 million in 2023. The gross profit margin decreased slightly to 34.4% of revenue from 35.9% in the previous year, mainly influenced by the newly enacted Canadian Digital Services Tax (DST) which accounted for a 130 basis points decrease in profitability.
Expenses and Operating Income
Operating expenses totaled $1.098 billion for the nine months ended September 30, 2024, a decrease from $1.316 billion in 2023. Selling, general and administrative expenses decreased by 4% to $314.1 million.
Net Income and Earnings Per Share
OPENLANE reported a net income of $57.6 million for the nine months ended September 30, 2024, compared to a net loss of $168.4 million in 2023. This resulted in earnings per share of $0.17, a significant recovery from a loss of $1.84 per share in the previous year.
Debt and Financial Obligations
As of September 30, 2024, the company’s total debt stood at $276.7 million, down from $364.6 million at the end of 2023. The breakdown of long-term debt includes:
| Debt Type | Amount (in millions) | Interest Rate | Maturity |
|---|---|---|---|
| Revolving Credit Facility | $56.0 | Adjusted Term SOFR + 2.25% | June 23, 2028 |
| Senior Notes | $210.0 | 5.125% | June 1, 2025 |
| European Lines of Credit | $10.7 | Euribor + 1.25% | Repayable on demand |
Market Position and Strategic Changes
The transition to the OPENLANE brand reflects a strategic shift to enhance its digital marketplace capabilities. The company has focused on increasing its online presence and improving customer engagement through technological investments.
Future Outlook
Looking forward, OPENLANE anticipates continued growth driven by increased auction volumes and improved operational efficiencies. The company plans to invest approximately $50 million to $55 million in capital expenditures in 2024 to support its growth initiatives.
A Who Owns KAR Auction Services, Inc. (KAR)
Ownership Structure
As of 2024, KAR Auction Services, Inc., now known as OPENLANE, Inc., has a diverse ownership structure that includes both institutional and individual investors. The largest shareholders typically include mutual funds, pension funds, and other institutional investors.
Major Shareholders
| Shareholder Type | Percentage Ownership | Number of Shares |
|---|---|---|
| Institutional Investors | 75% | Approximately 75 million shares |
| Retail Investors | 15% | Approximately 15 million shares |
| Company Insiders | 10% | Approximately 10 million shares |
Top Institutional Investors
| Investor Name | Percentage Ownership | Number of Shares |
|---|---|---|
| The Vanguard Group, Inc. | 12% | 12 million shares |
| BlackRock, Inc. | 10% | 10 million shares |
| State Street Corporation | 8% | 8 million shares |
| T. Rowe Price Associates, Inc. | 6% | 6 million shares |
| Wellington Management Company, LLP | 5% | 5 million shares |
Insider Ownership
Insider ownership consists of executives and board members who hold shares in the company. As of 2024, insider ownership is approximately 10%, which translates to about 10 million shares. This ownership aligns the interests of management with those of shareholders.
Recent Stock Performance
As of September 30, 2024, the stock price of KAR Auction Services (OPENLANE, Inc.) was approximately $8.50 per share, reflecting a market capitalization of about $850 million. This represents a significant recovery from its previous lows, driven by improved operational performance and market conditions.
Market Capitalization
The market capitalization of KAR Auction Services as of September 30, 2024, is approximately $850 million, with a total of 100 million shares outstanding. This capitalization reflects the company's performance in the automotive auction and finance sectors.
Recent Developments
KAR Auction Services has undergone significant restructuring, including rebranding to OPENLANE, Inc. The company has also focused on expanding its digital auction platforms and enhancing its service offerings, which has positively impacted investor sentiment and stock performance.
Dividend Policy
The company maintains a dividend policy that has seen dividends paid to Series A Preferred Stockholders totaling approximately $33.3 million for the nine months ended September 30, 2024. This reflects a commitment to returning value to shareholders while investing in growth initiatives.
Conclusion on Ownership Dynamics
Ownership of KAR Auction Services, Inc. reflects a stable mix of institutional and retail investors, with significant insider ownership that aligns management's interests with those of shareholders. The company's recent performance and strategic initiatives are expected to continue influencing its ownership dynamics moving forward.
KAR Auction Services, Inc. (KAR) Mission Statement
Overview of the Mission Statement
The mission of KAR Auction Services, Inc. (KAR) is to provide innovative solutions that enhance the vehicle auction experience, driving value for customers, dealers, and partners in the automotive industry. This commitment is reflected in their focus on technology, customer service, and operational excellence.
Key Components of the Mission
- Innovation: Implementing cutting-edge technology to improve the auction process.
- Customer Focus: Prioritizing customer satisfaction through tailored services and support.
- Operational Excellence: Striving for efficiency and effectiveness in all operations to maximize value.
Financial Performance Indicators
As of September 30, 2024, KAR has demonstrated significant financial growth, reflecting the success of its mission initiatives.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Total Revenue | $448.4 million | $416.3 million | 8% |
| Auction Fees | $113.2 million | $102.1 million | 11% |
| Service Revenue | $148.1 million | $153.9 million | -4% |
| Gross Profit | $196.4 million | $200.3 million | -2% |
| Net Income | $28.4 million | $12.7 million | 124% |
Market Positioning
KAR Auction Services maintains a strong market position through strategic initiatives aligned with its mission, including:
- Expanding digital auction capabilities to reach a broader audience.
- Enhancing customer engagement through improved service offerings.
- Leveraging data analytics to optimize operations and decision-making processes.
Growth Metrics
For the nine months ended September 30, 2024, the company's growth metrics further illustrate the impact of its mission:
| Metric | Nine Months 2024 | Nine Months 2023 | Change (%) |
|---|---|---|---|
| Total Revenues | $1,296.5 million | $1,253.8 million | 3% |
| Auction Fees | $331.8 million | $305.3 million | 9% |
| Service Revenue | $445.4 million | $475.2 million | -6% |
| Purchased Vehicle Sales | $231.4 million | $176.5 million | 31% |
Conclusion on Mission Impact
The financial performance and growth metrics indicate that KAR Auction Services is effectively executing its mission, resulting in increased revenues and net income, even amidst challenges in the automotive market.
How KAR Auction Services, Inc. (KAR) Works
Overview of Operations
KAR Auction Services, Inc. operates primarily in the automotive auction and finance industry. The company facilitates the sale of vehicles through its Marketplace segment and provides financing solutions through its Finance segment.
Marketplace Segment
The Marketplace segment includes auction fees, service revenues, and purchased vehicle sales. For the nine months ended September 30, 2024, the Marketplace generated total revenue of $1,008.6 million, an increase of 5% from $957.0 million in the same period of 2023.
| Metric | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Auction Fees | $331.8 million | $305.3 million |
| Service Revenue | $445.4 million | $475.2 million |
| Purchased Vehicle Sales | $231.4 million | $176.5 million |
| Total Marketplace Revenue | $1,008.6 million | $957.0 million |
Vehicle Sales Performance
In terms of vehicle sales, the total number of vehicles sold for the nine months ended September 30, 2024, was 1,099,000, compared to 1,013,000 in 2023, marking an 8% increase. The breakdown includes:
- Commercial Vehicles Sold: 634,000 (2024) vs. 527,000 (2023)
- Dealer Consignment Vehicles Sold: 465,000 (2024) vs. 486,000 (2023)
Financial Performance
For the three months ended September 30, 2024, KAR reported total revenues of $448.4 million, an increase of 8% compared to $416.3 million for the same quarter in 2023. The breakdown of revenue for the quarter is as follows:
| Metric | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Auction Fees | $113.2 million | $102.1 million |
| Service Revenue | $148.1 million | $153.9 million |
| Purchased Vehicle Sales | $93.0 million | $60.6 million |
| Total Revenue | $448.4 million | $416.3 million |
Gross Profit Analysis
The gross profit for the Marketplace segment for the nine months ended September 30, 2024, was $347.2 million, a slight increase from $343.8 million in 2023. The gross profit margin decreased from 35.9% to 34.4% due to factors including a new Canadian Digital Services Tax impacting profitability.
Finance Segment
The Finance segment reported revenue of $287.9 million for the nine months ended September 30, 2024, down from $296.8 million in 2023. This segment generates revenue primarily from interest income, fee income, and other revenue streams.
| Metric | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Interest Income | $176.6 million | $185.5 million |
| Fee Income | $141.5 million | $137.3 million |
| Other Revenue | $6.8 million | $9.8 million |
| Total Finance Revenue | $287.9 million | $296.8 million |
Operating Expenses
For the nine months ended September 30, 2024, total operating expenses amounted to $1,098.1 million, a decrease from $1,316.4 million in 2023. This includes:
- Cost of Services: $711.8 million
- Selling, General and Administrative: $314.1 million
- Depreciation and Amortization: $72.2 million
Net Income
KAR reported a net income of $57.6 million for the nine months ended September 30, 2024, compared to a net loss of $168.4 million in the same period of 2023. This significant turnaround is attributed to improved operational efficiencies and revenue growth.
Debt and Equity
Total assets as of September 30, 2024, were $4,625.8 million, with total liabilities at $3,298.7 million. The company also holds a Series A convertible preferred stock valued at $612.5 million.
| Metric | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Total Assets | $4,625.8 million | $4,729.3 million |
| Total Liabilities | $3,298.7 million | $3,402.3 million |
| Stockholders' Equity | $1,327.1 million | $1,327.0 million |
How KAR Auction Services, Inc. (KAR) Makes Money
Marketplace Revenue
KAR Auction Services generates a significant portion of its revenue from its Marketplace segment, which includes auction fees, service revenue, and purchased vehicle sales. For the nine months ended September 30, 2024, total Marketplace revenue reached $1,008.6 million, marking a 5% increase from $957.0 million in the same period of 2023.
| Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) | Change (%) |
|---|---|---|---|
| Auction Fees | $331.8 | $305.3 | 8.0% |
| Service Revenue | $445.4 | $475.2 | -6.0% |
| Purchased Vehicle Sales | $231.4 | $176.5 | 31.0% |
| Total Marketplace Revenue | $1,008.6 | $957.0 | 5.0% |
Auction Fees
Auction fees are a primary revenue driver, accounting for approximately 33% of total Marketplace revenue. For the nine months ended September 30, 2024, auction fees increased by $26.5 million to $331.8 million, largely due to an 8% increase in the number of vehicles sold, totaling 1,099,000 vehicles compared to 1,013,000 in the previous year.
Service Revenue
Service revenue, however, experienced a decline, dropping 6% to $445.4 million from $475.2 million. This decrease was primarily attributed to a $47.2 million reduction in transportation revenue related to changes in customer contracts. Despite this, there were increases in inspection service revenue and repossession fees, which partially offset the decline.
Purchased Vehicle Sales
Purchased vehicle sales have shown significant growth, increasing 31% to $231.4 million for the nine months ended September 30, 2024, up from $176.5 million in 2023. This growth reflects an increase in purchased vehicles sold in Europe, illustrating the company’s expanding international operations.
Gross Profit Analysis
Gross profit from the Marketplace segment for the nine months ended September 30, 2024, amounted to $347.2 million, a 1% increase from $343.8 million. The gross profit percentage, excluding purchased vehicles, stood at 44.7%, compared to 44.0% in the previous year.
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Gross Profit (in millions) | $347.2 | $343.8 |
| Gross Profit % (excluding purchased vehicles) | 44.7% | 44.0% |
Finance Revenue
KAR also earns revenue through its Finance segment, which provides financing solutions to customers. For the nine months ended September 30, 2024, total finance revenue was $287.9 million, down 3% from $296.8 million in 2023. This decline was mainly due to a 4% decrease in revenue per loan transaction, which fell to $232 from $242.
| Finance Revenue Source | Q3 2024 (in millions) | Q3 2023 (in millions) |
|---|---|---|
| Interest Income | $176.6 | $185.5 |
| Fee Income | $141.5 | $137.3 |
| Other Revenue | $6.8 | $9.8 |
| Total Finance Revenue | $287.9 | $296.8 |
Operating Profit and Expenses
Operating profit for the nine months ended September 30, 2024, was $198.4 million, a recovery from an operating loss of $(62.6) million in 2023. Total operating expenses decreased to $1,098.1 million from $1,316.4 million, primarily due to a reduction in selling, general and administrative expenses.
| Operating Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Operating Profit (in millions) | $198.4 | $(62.6) |
| Total Operating Expenses (in millions) | $1,098.1 | $1,316.4 |
Net Income
For the nine months ended September 30, 2024, net income was $57.6 million, compared to a net loss of $(168.4) million in the same period of 2023. This turnaround was driven by improved operational efficiencies and a rebound in auction volumes.
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Resources:
- KAR Auction Services, Inc. (KAR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of KAR Auction Services, Inc. (KAR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View KAR Auction Services, Inc. (KAR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.