Twelve Month Net Earnings Jump 60%
Highlights:
-- Net earnings up 53% for 4th quarter
-- 4th-quarter revenue growth of 14%
-- Volume of vehicles sold up 21% versus 4th quarter prior year
-- Net earnings for 12 months up 60%
-- Revenue growth of 11% for 12 months
SCHAUMBURG, Ill., Feb. 18 /PRNewswire/ -- Insurance Auto Auctions, Inc.
(Nasdaq: IAAI), a leading provider of automotive salvage and claims processing
services in the United States, today announced that strong same-store growth
and an increase in gross profit per unit drove significant gains in net
earnings for year ended December 31, 1998.
Fourth-Quarter Review
Net earnings for the quarter ended December 31, 1998, increased 53 percent
to $2.3 million, or 20 cents per share, from $1.5 million, or 13 cents per
share, for the same quarter a year ago.
Fourth-quarter earnings from operations before interest and taxes were
$4.0 million, up 32 percent from the $3.0 million in the same quarter a year
ago. Net sales for the quarter were $73.1 million compared with $64.1 million
for the same quarter a year ago. Gross profit increased 21 percent from
$14.9 million in the fourth quarter of 1997 to $18.0 million in the fourth
quarter of 1998. Gross profit per unit for the fourth quarter was $140 per
unit compared to the $139 per unit in the comparable 1997 period.
The volume of vehicles sold increased to 129,000 in the fourth quarter of
1998, up 21 percent from the 107,000 vehicles processed in the same period for
the previous year. For the quarter, purchase agreement units represented 28
percent of all unit volume versus 30 percent for the fourth quarter of last
year.
"Our strong fourth-quarter results were driven by a significant increase
in units sold primarily from an increase in same store sales, an increase in
our charity business and the sale of units from the flooding in Kansas and
Texas," said Chris Knowles, chief executive officer.
Earnings for Year Up Sharply
For the year ended December 31, 1998, earnings from operations before
interest and income taxes, excluding the special charge, were $15.6 million,
up 49 percent from the $10.5 million, excluding special charges, for the same
period 1997. Net earnings, excluding the special charge, were $8.0 million,
or $0.70 per diluted share, for 1998, compared with $4.9 million, excluding
special charges, or $0.43 per share, for 1997, an increase of 64 percent.
Net sales for the year were $287.1 million, an 11 percent increase from
$259.3 million for the same period a year ago. Gross profit per unit of $148
for the year ended December 31, 1998 was 10 percent higher than for the
comparable period of 1997. Direct operating expenses for 1998 were $107 per
unit, as compared to the $102 per unit in 1997.
For the year, the volume of vehicles processed increased to 474,000, up
8 percent from the previous year. The number of vehicles processed through
purchase agreements for the 1998 year, represented 30 percent of all vehicles
sold, the same as for 1997.
Focus on Customer Service
"The company continues to focus on providing the highest quality customer
service in the salvage services industry, of which a key component is our
continuing investment in new technologies and service programs to insure that
we provide the highest quality, valued added products and services to our
customers," Knowles said.
Strategic Transformation Continues
"We remain committed to transforming the company from principally salvage
to a broad based, growing service provider," Knowles continued. "The focus
will be on providing, under the total loss umbrella, products and services
with the objective of shortening the timeline for processing total loss
vehicles while significantly improving the underlying economics. We are
focusing on key new services in the coming year to help achieve these goals.
We are also refocusing on broadening our geographical market coverage through
acquisitions and new sites."
Founded in 1982, Insurance Auto Auctions, Inc. is a leading provider of
automotive and specialty salvage services in the United States, providing
insurance companies with cost-effective, turnkey solutions to process and sell
total-loss and recovered-theft vehicles, a $3 billion per year industry. The
company currently has 50 auction sites across the United States.
This press release contains forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from
those discussed or implied herein. Factors that could cause or contribute to
such differences include, but are not limited to, those discussed in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1997 and in subsequent Quarterly Reports. Among these risks are legislative
acts, weather conditions, market value of salvage declining, management
changes, outcome of litigation, competition, quality and quantity of inventory
available from suppliers, and dependence on key insurance company suppliers.
Additional information about Insurance Auto Auctions, Inc. is available on
the World Wide Web at http://www.iaai.com
Comparative Statistics
(rounded from actuals)
Three months ended Year ended
December 31 December 31
Increase Increase
1998 1997 (Decrease) 1998 1997 (Decrease)
Total Vehicles 129,000 107,000 21% 474,000 440,000 8%
Per Unit:
Gross Profit $140 $139 1% $148 $135 10%
Direct Operating
Expenses $102 $102 -- $107 $102 5%
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Month Periods Year Ended
Ended December 31, December 31,
(Unaudited)
1998 1997 1998 1997
Net Sales:
Vehicle sales $46,523,000 $43,492,000 $191,312,000 $175,733,000
Fee income 26,535,000 20,567,000 95,751,000 83,592,000
73,058,000 64,059,000 287,063,000 259,325,000
Cost and expenses:
Cost of sales 55,023,000 49,133,000 216,754,000 199,983,000
Direct operating
expenses 13,106,000 10,961,000 50,885,000 45,046,000
Amortization of
acquisition
costs 946,000 950,000 3,779,000 3,790,000
Special charges -- -- 1,564,000 750,000
Earnings from
operations 3,983,000 3,015,000 14,081,000 9,756,000
Other (income)
expense:
Interest expense 495,000 499,000 2,055,000 2,253,000
Interest (income) (208,000) (212,000) (797,000) (821,000)
Earnings before
income taxes 3,696,000 2,728,000 12,823,000 8,324,000
Income taxes 1,444,000 1,254,000 5,642,000 3,829,000
Net earnings $2,252,000 $1,474,000 $7,181,000 $4,495,000
Earnings per share:
Basic $.20 $.13 $.63 $.40
Diluted $.20 $.13 $.63 $.40
Weighted average shares
outstanding:
Basic 11,325,000 11,299,000 11,316,000 11,294,000
Diluted 11,420,000 11,412,000 11,437,000 11,337,000
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31, December 31,
1998 1997
ASSETS
Current assets:
Cash and cash equivalents $11,682,000 $25,972,000
Short-term investments 11,138,000 1,367,000
Accounts receivable, net 37,415,000 28,992,000
Inventories 11,229,000 11,762,000
Other current assets 1,676,000 1,868,000
Total current assets 73,140,000 69,961,000
Property and equipment,
at cost, net 22,312,000 20,778,000
Deferred income taxes 2,976,000 2,603,000
Other assets, principally
goodwill, net 128,916,000 131,435,000
$227,344,000 $224,777,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of
long-term debt $216,000 $2,034,000
Accounts payable 30,939,000 34,024,000
Accrued liabilities 6,097,000 7,698,000
Income taxes 582,000 497,000
Total current liabilities 37,834,000 44,253,000
Long-term debt, excluding
current installments 20,116,000 20,246,000
Accumulated postretirement
benefits obligation 3,485,000 3,831,000
Deferred income taxes 7,154,000 5,235,000
Total liabilities 68,589,000 73,565,000
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
11,327,169 and 11,299,561
shares as of December 31, 1998
and December 31, 1997,
respectively 11,000 11,000
Additional paid-in capital 132,171,000 131,809,000
Retained earnings 26,573,000 19,392,000
Total shareholders' equity 158,755,000 151,212,000
$227,344,000 $224,777,000
SOURCE Insurance Auto Auctions, Inc.
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Related links:
http://www.iaai.com
CONTACT:
Linda C. Larrabee, Sr. VP-CFO of Insurance
Auto Auctions, Inc., 847-839-4132; or General Inquiries, Norha
Lee, 312-640-6689, Analyst Inquiries, Tanya Hayward,
312-640-6732, or Media Inquiries, Bess Gallanis, 312-640-6737,
all of The Financial Relations Board
NOTE TO EDITORS: For additional information regarding Insurance
Auto Auctions free of charge via fax, dial 800-PRO-INFO and use
the company's stock symbol, "IAAI"
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