Highlights:
-- Net earnings for 4th quarter excluding special charges up 70%
-- 4th-quarter earnings from operations, excluding special charges, up 59%
-- 4th-quarter net earnings per share at $0.13 vs. $0.01 a year ago
-- Net earnings, excluding special charges, for 12 months up 26%
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, reported net earnings for the quarter ended
December 31, 1997, of $1.5 million or 13 cents per share, compared with
$71,000, or $0.01 per share including special charges for the fourth quarter,
a year ago.
For the year ended December 31, 1997, earnings from operations before
interest and income taxes, excluding the special charge, were $11 million, up
22 percent from the $9 million, excluding special charges, for the same period
1996. Net earnings, excluding the special charge, were $4.9 million, or $0.43
per share, for 1997, compared with $3.9 million, excluding special charges, or
$0.34 per share, for 1996, an increase of 26 percent.
Earnings from operations before interest and taxes were $3.1 million in
the 1997 fourth quarter, an increase of 59 percent from the $2.0 million,
excluding special charges, in the fourth quarter a year ago. Net earnings
were $1.5 million, or $0.13 per share, for fourth quarter 1997, compared with
$866,000, excluding special charges, or $0.08 per share, for fourth quarter
1996, an increase of 70 percent. Net sales for the fourth quarter 1997 were
$64.1 million compared with $64.4 million for the fourth quarter 1996. Gross
profit for fourth quarter 1997 was $14.9 million, an increase of 8% from the
fourth quarter of 1996. Gross profit per unit for the fourth quarter of 1997
was $139 per unit compared to the $128 per unit in the similar 1996 period, an
increase of 9 percent.
"While our revenues have decreased because of the shift from purchase
agreements to consignment contracts, our profitability and earnings have shown
improvement thanks to our ability to achieve better margins and cost
containment," said James P. Alampi, president and chief executive officer.
Net sales for the year ended December 31, 1997 were $259.3 million, an
8 percent decrease from $281.9 million for the year ago due to the decrease in
purchase agreement units. Gross profit per unit of $135 for the year ended
December 31, 1997 was 2 percent higher than for the comparable period of 1996.
For the quarter, purchase agreement units represented 30 percent of all unit
volume, the same as for the fourth quarter of last year.
New Focus on Growth
"We spent 1997 getting our infrastructure in place and as planned have
begun to focus on growth again," said Alampi. "We announced yesterday the
acquisition of Auto Disposal Company (ADC) adding two new strong pools in the
Southeast region, one in the Birmingham, Ala., area and another in Athens,
Ala., near the Tennessee border.
"Additionally, we approved another new company-owned site in a major
metropolitan area in the Southeast," he added. "We believe that continued
development of new service offerings will be very important to our future
growth. We also added Ron Hope as Vice President, Business Development to our
senior leadership team to concentrate on new businesses and service offerings
that can be absorbed into our current operations or complement them," he
continued. "Since we believe the services we offer our customers are
strategic to the direction of the company, we have made an investment in
retaining McKinsey & Co., leaders in consulting to the insurance industry, to
assist us in identifying and developing additional customer-valued services."
New Web Site in Operation
"We have also developed a new Web site that provides a number of benefits
to our vehicle providers, insurance customers and buyers," said Alampi. "We
intend to use this site to deliver a series of new services and product
offerings."
Expenses Decrease 3% for 1997
Direct operating expenses per unit increased to $101 per unit for fourth
quarter 1997 from $100 per unit in fourth quarter 1996. Direct operating
expenses for 1997 were $101 per unit, or 3 percent less than the $104 per unit
in the same period of 1996.
Same Store Comparison
There were no significant acquisitions or new facility startups during
1997, the company said. The volume of vehicles sold decreased to 107,000 in
the fourth quarter of 1997, down 1 percent from the 108,000 vehicles processed
in the same period for the previous year. For the year ended December 31,
1997, the volume of vehicles processed decreased to 440,000, down 1 percent
from the same period the previous year. The number of vehicles processed
through purchase agreements for the year ended December 31, 1997, represented
30 percent of all vehicles sold, compared with 33 percent for the comparable
period in 1996.
The company also reported that Bradley Scott, chairman of the board of the
company, is a defendant in a law suit arising out of his alleged promise to
share the proceeds from the sale of his stock in Los Angeles Auto Salvage,
Inc., a corporate predecessor of the company, with a former business
associate. Scott believes he is entitled to indemnification from the company
for any amounts he might pay as a result of the adjudication or settlement of
the lawsuit. The company does not believe that Scott has any right to
indemnification and intends to defend vigorously any claim that may be
asserted. Trial of the lawsuit is scheduled to begin sometime after Feb. 26,
1998.
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 forty-eight 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,
1996 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 Auction, 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
1997 1996 (Decrease) 1997 1996 (Decrease)
Total Vehicles 107,000 108,000 (1)% 440,000 443,000 (1)%
Per Unit:
Gross Profit $139 $128 9% $135 $133 2%
Direct Operating
Expenses $101 $100 1% $101 $104 (3)%
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements Of Operations
Three Month Periods Year Ended
Ended December 31, December 31,
(Unaudited)
1997 1996 1997 1996
Net Sales:
Vehicle sales $43,492,000 $44,182,000 $175,733,000 $201,104,000
Fee income 20,567,000 20,173,000 83,592,000 80,789,000
64,059,000 64,355,000 259,325,000 281,893,000
Cost and expenses:
Cost of sales 49,133,000 50,576,000 199,983,000 223,144,000
Direct operating
expenses 10,833,000 10,816,000 44,599,000 46,016,000
Amortization of
acquisition costs 950,000 981,000 3,790,000 3,777,000
Special charges - 1,395,000 750,000 1,395,000
Earnings (loss)
from operations 3,143,000 587,000 10,203,000 7,561,000
Other (income)expense:
Interest expense 627,000 720,000 2,700,000 3,009,000
Interest (income) (212,000) (258,000) (821,000) (890,000)
Earnings (loss)
before income
taxes 2,728,000 125,000 8,324,000 5,442,000
Income taxes (benefit) 1,254,000 54,000 3,829,000 2,340,000
Net earnings (loss) $1,474,000 $71,000 $4,495,000 $3,102,000
Net earnings (loss)
per common and common
equivalent shares
outstanding $.13 $.01 $.40 $.27
Weighted average common and
common equivalent shares
outstanding 11,412,000 11,337,000 11,337,000 11,333,000
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
December 31, December 31,
1997 1996
ASSETS
Current assets:
Cash, cash equivalents
& short-term investments $9,634,000 $5,888,000
Accounts receivable, net 28,992,000 34,371,000
Inventories 11,762,000 10,162,000
Income taxes - 1,391,000
Other current assets 1,868,000 2,239,000
Total current assets 52,256,000 54,051,000
Property and equipment,
at cost, net 20,778,000 21,596,000
Deferred income taxes 2,603,000 2,222,000
Other assets, principally
goodwill, net 131,435,000 136,157,000
$207,072,000 $214,026,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments
of long-term debt $2,034,000 $2,571,000
Accounts payable 16,319,000 18,014,000
Accrued liabilities 7,698,000 11,801,000
Income taxes 497,000 -
Total current liabilities 26,548,000 32,386,000
Long-term debt,
excluding current
installments 24,077,000 30,843,000
Deferred income taxes 5,235,000 4,208,000
Total liabilities 55,860,000 67,437,000
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
11,299,561 and 11,282,838 shares
as of December 31, 1997 and
December 31, 1996, respectively 11,000 11,000
Additional paid-in capital 131,807,000 131,681,000
Retained earnings 19,394,000 14,897,000
Total shareholders' equity 151,212,000 146,589,000
$207,072,000 $214,026,000
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, 847-839-4132; or Jim Berger, General Inquiries,
312-640-6689, Janine Warell, Analyst Inquiries, 312-640-6775, or
Laura Kuhlmann-Doerer, Media Inquiries, 312-640-6727, all of The
Financial Relations Board
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