-- Second Quarter Earnings Increase 22%
-- Six Month Earnings Increase 32%
-- Detroit Salvage Company Acquired
-- Online "Interactive" Internet Auction Implementation On Schedule
SCHAUMBURG, Ill., July 26 /PRNewswire/ -- Insurance Auto Auctions, Inc.
(Nasdaq: IAAI), a leading provider of automotive salvage and claims processing
services in the United States, today announced net earnings for the quarter
ended June 30, 2000 of $5.2 million, or $0.44 per diluted share, compared with
$4.3 million, or $0.37 per diluted share, for the second quarter of 1999, an
increase of 22% in net earnings and a 19% increase in diluted earnings per
share.
Net revenues for the three months ended June 30, 2000 increased to
$84.3 million versus $82.5 million for the same period a year ago. Gross
profit for the quarter increased to $24.2 million, an increase of 7% from
$22.7 million for the same quarter a year ago. "Despite a slower than planned
start up in the towing business due to high fuel costs and staffing
challenges, we were able to meet our goals for the quarter," commented
Christopher Knowles, CEO. "The increase in gross profit resulted from a
combination of higher volumes and an increase in gross profit per unit as
compared to last year."
For the second quarter of 2000, the percent of sale method "Percentage
Plus" accounted for 24% of total units sold versus 15% in 1999, while the
Purchase Agreement method of sale accounted for 26% of total units sold in
2000, compared to 29% for the same period last year. Revenue from vehicle
sales, which reflects the gross proceeds from the sale of purchase agreement
vehicles, decreased as a result of the decline in the number of purchase
agreement vehicles sold, reflecting the conversion of purchase agreement
contracts to the preferred Percentage Plus contract type. Revenues from
Purchase Agreement vehicles are recorded at the selling price for the vehicle
whereas revenues for Percentage Plus and Fixed Fee Consignment vehicles are
recorded as fee income only. This change in mix, while having a negative
impact on overall revenues, had a positive impact on fee income and on
earnings from operations.
The increase in fee income of 19% reflects the increase in Percentage Plus
vehicles sold, the continued roll out of the other gross profit enhancement
initiatives as well as selected fee increases. As stated above, only the fees
earned on flat fee consignment and Percentage Plus vehicles are reflected in
Net revenues. Gross proceeds from the sale of all vehicles, regardless of
contract type, increased to $176.7 million in the second quarter of 2000 from
$163.7 million in the comparable period in 1999.
Six-Month Results Improve Sharply
In the first six months of 2000, net earnings increased 32 percent to
$9.4 million, or 79 cents per diluted share, as compared with $7.1 million, or
62 cents per share, for the same period a year ago. Earnings from operations
increased to $15.9 million, up from $12.9 million for the same period a year
ago.
Net revenues for the six months ended June 30, 2000 were $171.2 million
versus $162.4 million for the six months ended June 30, 1999. This included a
15% increase in fee income versus the prior year. Gross auction proceeds
increased to $352.4 million in the year 2000 from $329.7 million in the
comparable period in 1999. For the first half of 2000, Percentage Plus
accounted for 21% of total units sold versus 15% in 1999, while the purchase
agreement method of sale accounted for 27% and 29% of total units sold for the
six months ended June 30, 2000 and 1999, respectively.
Gross profit for the first six months was $47.3 million, an increase of
11% from $42.6 million for the same quarter a year ago.
Detroit Acquisition
The company also announced its third acquisition in 2000. Auto City
Auction Recovery ("ACAR"), a Detroit, Michigan salvage pool operation has been
purchased by IAA and will be integrated into the company's existing operations
in the Detroit marketplace. IAA's Detroit facility, with minimal renovations,
will be able to accommodate the additional volumes from the acquisition.
Paul Lamoreaux, the owner of ACAR, will join the IAA team and will assist
the company in the integration of ACAR into IAA's Detroit operation and the
continued growth of IAA in Michigan and the Midwest. "We are extremely
pleased that Paul and his organization have joined IAA," Knowles commented.
"ACAR is IAA's third acquisition in 2000, clearly indicating we are, once
again, back on the expansion track." The previous acquisitions included two
facilities in Wisconsin and two facilities in South Carolina.
"Funding for this acquisition, as well as for the other two acquisitions
that we have made in 2000, came from internal cash flows," commented Stephen
Green, Vice President - Finance, CFO. "Cash flows this year continue to be
strong."
"Interactive" Internet Auction
Launched in January 2000, the roll out of the Company's online Auction
Center ( http://www.iaai-bid.comSM ) has now been substantially completed. "With
IAA's proprietary Internet auction system now implemented on schedule, we can
now begin to focus our efforts and resources on making enhancements to this
important system and on aggressively promoting its use throughout the United
States," added Knowles. "We continue to believe that our Internet Auction
format is the best in our industry."
About Insurance Auto Auctions, Inc.
Insurance Auto Auctions, Inc., founded in 1982, a leader in automotive
total loss and specialty salvage services in the United States, provides
insurance companies with cost-effective, turnkey solutions to process and sell
total-loss and recovered-theft vehicles. The Company currently has 54 auction
sites across the United States.
This press release contains forward-looking information that is subject to
certain risks, trends and uncertainties that could cause actual results to
differ materially from those projected, expressed, or implied by such forward-
looking information. In some cases, you can identify forward looking
statements by our use of words such as "may, will, should, anticipates,
believes, expects, plans, future, intends, could, estimate, predict, potential
or contingent," the negative of these terms or other similar expressions. 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, Form 10-K for the fiscal year ended December 31, 1999. Among these
risks are legislative acts, changes in the market value of salvage,
competition, quality and quantity of inventory available from suppliers,
availability of suitable acquisition candidates and dependence on key
insurance company suppliers.
For additional information regarding Insurance Auto Auctions free of
charge via fax, dial 1-800-PRO-INFO and use the Company's stock symbol,
"IAAI."
Additional information about Insurance Auto Auctions, Inc. is available on
the World Wide Web at http://www.iaai.com .
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Month Periods Six Month Periods
Ended June 30, Ended June 30,
(Unaudited) (Unaudited)
2000 1999 2000 1999
Net revenues:
Vehicle sales $50,845,000 $54,411,000 $105,809,000 $105,669,000
Fee income 33,431,000 28,120,000 65,427,000 56,740,000
84,276,000 82,531,000 171,236,000 162,409,000
Costs and expenses:
Cost of sales 60,089,000 59,836,000 123,944,000 119,777,000
Direct
operating
expenses 14,409,000 14,199,000 29,427,000 27,823,000
Amortization
of acquisition
costs 985,000 949,000 1,933,000 1,899,000
Earnings from
operations 8,793,000 7,547,000 15,932,000 12,910,000
Other (income)expense:
Interest expense 457,000 493,000 921,000 987,000
Interest income (470,000) (326,000) (881,000) (551,000)
Earnings before
income taxes 8,806,000 7,380,000 15,892,000 12,474,000
Income taxes 3,611,000 3,123,000 6,516,000 5,364,000
Net earnings $5,195,000 $4,257,000 $9,376,000 $7,110,000
Earnings per share:
Basic $.45 $.37 $.81 $.62
Diluted $.44 $.37 $.79 $.62
Weighted average
shares outstanding:
Basic 11,634,000 11,421,000 11,610,000 11,381,000
Effect of
dilutive
securities -
stock options 252,000 179,000 218,000 114,000
Diluted 11,886,000 11,600,000 11,828,000 11,495,000
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
June 30, December 31,
2000 1999
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $31,448,000 $27,186,000
Short-term investments 8,615,000 6,845,000
Accounts receivable, net 41,580,000 40,188,000
Inventories 11,692,000 11,998,000
Other current assets 2,283,000 1,655,000
Total current assets 95,618,000 87,872,000
Property and equipment, net 31,403,000 27,458,000
Investments in marketable securities 4,162,000 3,336,000
Deferred income taxes 4,493,000 4,338,000
Other assets, principally goodwill, net 129,536,000 125,128,000
$265,212,000 $248,132,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $41,000 $135,000
Accounts payable 37,932,000 33,216,000
Accrued liabilities 6,822,000 6,306,000
Income taxes 1,617,000 1,226,000
Total current liabilities 46,412,000 40,883,000
Long-term debt, excluding
current installments 20,160,000 20,180,000
Accumulated postretirement
benefits obligation 3,087,000 3,178,000
Deferred income taxes 9,493,000 8,605,000
Total liabilities 79,152,000 72,846,000
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 11,684,091
and 11,575,010 and shares as of
June 30, 2000 and December 31, 1999,
respectively 12,000 12,000
Additional paid-in capital 136,394,000 134,996,000
Retained earnings 49,654,000 40,278,000
Total shareholders' equity 186,060,000 175,286,000
$265,212,000 $248,132,000
SOURCE Insurance Auto Auctions, Inc.
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Related links:
http://www.iaai.com
CONTACT:
Steve Green, Chief Financial Officer of
Insurance Auto Auctions, Inc., 847-839-4156, or General
Inquiries, Jeff Wilhoit, 312-640-6757, or Media Inquiries, Tim
Grace, 312-274-2240, of The Financial Relations Board
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