CARMEL, Ind., Sept. 20, 2021 /PRNewswire/ -- KAR Auction
Services, Inc. d/b/a KAR Global (NYSE: KAR), a leading global
wholesale used vehicle digital marketplace operator, today
announced that as a result of the continued disruption caused by
the chip shortage and the corresponding lack of visibility into
used vehicle volumes in its marketplaces, the company is
withdrawing its previously provided financial outlook for fiscal
2021. The company expects $95 million
to $100 million of Adjusted EBITDA
for the third quarter 2021 and expects approximately 2.6 million
vehicles sold in 2021. Due to the market uncertainty, the company
does not intend to provide fourth quarter expectations at this
time.
The company will host a conference call today at 5:30 p.m. ET to discuss its updated outlook in
advance of the Analyst Day event. The conference call may be
accessed by calling 1 (844) 778-4145 and entering participant
passcode 1354858, with the live webcast available on the company's
website at ir.karglobal.com (an archived version of the webcast
will be available for a limited time). A telephone replay will be
available for two weeks and can be accessed by calling 1 (855)
859-2056 and entering passcode 1354858.
Analyst Day
The company's previously announced virtual
Analyst Day will be held tomorrow, Tuesday,
September 21, 2021, at 11:00 a.m.
ET and is expected to conclude at 2:00 p.m. ET. An interactive Q&A session will
follow the presentations. The virtual event will be available in
its entirety through a live webcast at ir.karglobal.com, and a
replay will be made available after the event for a limited
time.
During the event, the company will discuss the current market
outlook and provide an in-depth review of its strategic direction,
operating model, financial performance and long-term roadmap,
including the following:
- KAR is a digital marketplace business, with industry leading
digital platforms supported by a coast-to-coast network of
facilities dedicated to preparing vehicles for sale.
- KAR expects to see a cyclical recovery in commercial volumes
that will positively impact its business.
- KAR expects to grow dealer-to-dealer channel volumes,
principally through gaining share via its digital platforms.
- KAR expects to continue to maintain strong cost discipline
through a more digital operating model.
The company will also discuss the following long-term
targets:
- 4.25 million vehicles sold in 2025
- Revenue of $3.4 to $3.5 billion in 2025
- $750 to $800 million in Adjusted EBITDA for 2025
- Approximately $1.5 billion in
cash from operations for the period 2021 through 2025
"Although the current operating environment is challenged due to
semiconductor shortage related impacts on used vehicle volumes in
our marketplaces, we are excited for future opportunities once our
markets recover. We expect that we will deliver significant growth
in volumes, profitability and cash flow as we progress through the
next four years," said Peter Kelly,
Chief Executive Officer.
About KAR
KAR Auction Services, Inc. d/b/a KAR Global
(NYSE: KAR) 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 3.1 million units
valued at over $40 billion through
our auctions in 2020. Our integrated physical, online and mobile
marketplaces reduce risk, improve transparency and streamline
transactions for customers in about 75 countries. Headquartered in
Carmel, Indiana, KAR Global has
employees across the United
States, Canada,
Mexico, Uruguay, United
Kingdom and Europe. For
more information and the latest KAR Global news, go to
www.karglobal.com and follow us on Twitter @KARspeaks.
Forward-Looking Statements
This release includes
forward-looking statements as that term is defined in the Private
Securities Litigation Reform Act of 1995. In particular, statements
made in this release that are not historical facts (including but
not limited to expectations, estimates, assumptions and/or
projections regarding our growth opportunities and strategies,
total addressable market, industry volumes, competitive position,
operational and product strategies, cost savings, 2021 guidance,
2025 targets and the impact of the COVID-19 pandemic) may be
forward-looking statements. Words such as "should," "may," "will,"
"anticipate," "expect," "project," "target," "intend," "plan,"
"believe," "seek," "estimate" and similar expressions identify
forward-looking statements. The forward-looking statements
contained in this release are based on management's current
assumptions, expectations and/or beliefs, are not guarantees of
future performance and are subject to substantial risks,
uncertainties and changes 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, but are not limited to,
those discussed in the section entitled "Risk Factors" in our
Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 18, 2021, and those described from time
to time in our reports filed with the Securities and Exchange
Commission. Many of these risk factors are outside of our control,
and as such, they involve risks which are not currently known that
could cause actual results to differ materially from those
discussed or implied herein. The forward-looking statements in this
release are made as of the date on which they are made and we do
not undertake to update any forward-looking statements.
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
as presented herein are supplemental measures of our performance
that are not required by, or presented in accordance with,
generally accepted accounting principles in the United States ("GAAP"). These are not
measurements of our financial performance under GAAP and should not
be considered as substitutes for net income (loss) or any other
performance measures derived in accordance with GAAP. Management
believes that these measures provide investors additional
meaningful methods to evaluate certain aspects of the company's
results period over period and for the other reasons set forth
below.
EBITDA is defined as net income (loss), plus interest expense
net of interest income, income tax provision (benefit),
depreciation and amortization. Adjusted EBITDA is EBITDA adjusted
for the items of income and expense and expected incremental
revenue and cost savings as described in our senior secured credit
agreement covenant calculations. Management believes that the
inclusion of supplementary adjustments to EBITDA applied in
presenting Adjusted EBITDA is appropriate to provide additional
information to investors about one of the principal measures of
performance used by our creditors. In addition, management uses
EBITDA and Adjusted EBITDA to evaluate our performance.
EBITDA and Adjusted EBITDA have limitations as analytical tools,
and should not be considered in isolation or as a substitute for
analysis of the results as reported under GAAP. These measures may
not be comparable to similarly titled measures reported by other
companies.
The third quarter 2021 expectation for Adjusted EBITDA is a
forward-looking non-GAAP financial measure. We have not reconciled
this non-GAAP financial measure to its most directly comparable
GAAP measure of net income (loss) due to the inherent difficulty
and impracticability of predicting certain amounts required by GAAP
with a reasonable degree of accuracy. Accordingly, a reconciliation
is not available without unreasonable effort.
The 2025 Adjusted EBITDA target is a forward-looking non-GAAP
financial measure. The following table reconciles EBITDA and
Adjusted EBITDA to net income for the 2025 financial outlook
presented:
2025
Outlook
(in millions),
(unaudited)
|
Low
|
High
|
Net income
|
$275
|
$310
|
Add back:
|
|
|
Income tax
expense
|
150
|
165
|
Interest expense, net
of interest income
|
145
|
145
|
Depreciation and
amortization
|
210
|
210
|
EBITDA
|
780
|
830
|
Total
addbacks, net
|
(30)
|
(30)
|
Adjusted
EBITDA
|
$750
|
$800
|
Analyst
Inquiries:
|
Media
Inquiries:
|
Mike
Eliason
|
Tobin
Richer
|
(317)
249-4559
|
(317)
665-0366
|
mike.eliason@karglobal.com
|
tobin.richer@karglobal.com
|
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SOURCE KAR Auction Services