KAR Auction Services, Inc. Reports Third Quarter 2009 Results

• Press Release
• Source: KAR Auction Services, Inc.
• On 9:04 pm EST, Monday November 9, 2009

CARMEL, Ind.--(BUSINESS WIRE)--KAR Auction Services, Inc. today reported its third quarter financial results for the three months ended September 30, 2009. For the third quarter of 2009, the company reported revenue of $430.1 million as compared with third quarter 2008 revenue of $444.6 million, a decrease of 3%. Adjusted EBITDA increased 12% to $114.0 million in the third quarter of 2009, as compared with third quarter 2008 adjusted EBITDA of $101.8 million.

For the nine months ended September 30, 2009, the company reported revenue of $1,311.7 million as compared with revenue of $1,375.2 million for the nine months ended September 30, 2008, a decrease of 5%. Adjusted EBITDA decreased 3% to $326.2 million for the nine months ended September 30, 2009, as compared with adjusted EBITDA of $335.7 million for the nine months ended September 30, 2008.

Given the company has filed a Registration Statement on Form S-1 with the Securities and Exchange Commission and such registration statement has not yet been declared effective, the company does not intend to hold an earnings call at this time.

About KAR Auction Services, Inc.
KAR Auction Services, Inc. is the holding company for ADESA, Inc., a leading provider of wholesale used vehicle auctions whose operations span North America with 62 used vehicle sites, Insurance Auto Auctions, Inc., a leading salvage auto auction company whose operations span North America with 152 sites and Automotive Finance Corporation, a leading provider of floorplan financing to independent and franchised used vehicle dealers with 87 sites across North America.

KAR Auction Services, Inc.
EBITDA and Adjusted EBITDA Measures

EBITDA and Adjusted EBITDA Measures
EBITDA, Adjusted EBITDA and Adjusted EBITDA per the Credit Agreement, as presented herein, are supplemental measures of the Company’s performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States (“GAAP”). They are not measurements of the Company’s financial performance under GAAP and should not be considered as alternatives to revenues, net income (loss) or any other performance measures derived in accordance with GAAP or as alternatives to cash flow from operating activities as measures of the Company’s liquidity.

EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. The Company calculates Adjusted EBITDA and Adjusted EBITDA per the Credit Agreement by adjusting EBITDA for the items of income and expense and expected incremental revenue and cost savings as described in the Company’s $1,865 million credit agreement. 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 internal measures of performance used by the Company. Management uses the Adjusted EBITDA measure to evaluate the performance of the Company and to evaluate results relative to incentive compensation targets. Adjusted EBITDA per the Credit Agreement adds the pro forma impact of recent acquisitions, if applicable, to Adjusted EBITDA. This measure is used by the Company’s creditors in assessing debt covenant compliance and management believes its inclusion is appropriate to provide additional information to investors about certain covenants required pursuant to the Company’s senior secured credit facility and the notes. EBITDA, Adjusted EBITDA and Adjusted EBITDA per the Credit Agreement measures 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 following table reconciles EBITDA and Adjusted EBITDA to net income (loss) for the periods presented:

Certain of the Company’s loan covenant calculations require financial results for the most recent four consecutive fiscal quarters. The following table reconciles EBITDA, Adjusted EBITDA and Adjusted EBITDA per the Credit Agreement to net income (loss) for the periods presented:

KAR Auction Services, Inc.
Eric Loughmiller, 317-249-4254
Executive Vice President & Chief Financial Officer
eric.loughmiller@adesa.com