-- Second Quarter Net Earnings Increased 70%
-- EPS Increased 68% to 37 Cents vs. 22 Cents for Prior Year
-- Six-Month Net Earnings Up 111%
-- 3rd and 4th Qtr Earnings Forecast Increased 15% to 20% Above Analysts'
Estimates
SCHAUMBURG, Ill., July 28 /PRNewswire/ -- Insurance Auto Auctions, Inc.
(Nasdaq: IAAI), citing continued margin improvements and increased volumes,
today reported second quarter net earnings climbed 70 percent to $4.3 million,
or 37 cents per share, from $2.5 million, or 22 cents per share, for the same
quarter a year ago. For the quarter ended June 30, 1999, net sales increased
9 percent to $82.5 million compared with $75.4 million in the second quarter
of 1998.
Earnings from operations for the quarter rose 53 percent to $7.5 million
from $4.9 million for the same quarter a year ago. Gross profit for the
quarter increased 19 percent to $22.7 million, up from $19.0 million for the
same quarter a year ago. Gross profit per unit for the quarter was
$183 per unit compared with $165 per unit for the same quarter a year ago, an
increase of 11 percent. Direct operating expenses per unit for the second
quarter were $115 per unit, slightly above a year earlier.
"Our second quarter earnings reflect not only the historical, seasonal
strength of the second quarter, but also the continuing impact of our strategy
to improve the profitability of our business and our customers' returns," said
Chris Knowles, chief executive officer. "We continue to roll out our
profitability enhancement initiatives and focus on marketing efforts to
increase sales volumes."
Six-Month Results Improve Sharply
In the first six months of 1999, net earnings increased 111 percent to
$7.1 million, or 62 cents per share, as compared with $3.4 million, including
special charges, or 30 cents per share, for the same period a year ago.
Earnings from operations increased to $12.9 million, up from $6.9 million for
the same period a year ago.
Net sales for the first six months of 1999 were $162.4 million compared
with $144.0 million for the first six months of 1998. Gross profit for the
first six months of 1999 was $42.6 million, up 20 percent from the same period
in 1998. Gross profit per unit for the first six months of 1999 was
$171 per unit compared with $154 per unit in the prior year, an increase of
11 percent. Direct operating expenses per unit increased to $111 for the
first six months of 1999, compared with $109 per unit for the same period in
1998.
Vehicle Sales Volume Increases
The volume of vehicles sold increased to 124,000 in the second quarter of
1999, up 8 percent from the 115,000 vehicles processed in the same period for
the previous year. The number of vehicles processed through purchase
agreements for the quarter ended June 30, 1999, represented 29 percent of all
vehicles sold, compared with 31 percent for the same period in 1998. For the
first six months of 1999, the volume of vehicles sold was 250,000, as compared
to 230,000 for the same period for the previous year. The number of vehicles
processed through purchase agreements for the six months ended June 30, 1999,
represented 29 percent of all vehicles sold, down from 31 percent for the same
period in 1998.
"Although the number of vehicles processed through purchase agreements
will continue to decline as a percentage of total vehicles sold, we continue
to believe the purchase agreement is important to our ability to provide our
customers with flexible, creative solutions required to meet their needs,"
Knowles commented.
Second Half Earnings Estimate
The company expects earnings per share for the third quarter ending
September 30, 1999, and the fourth quarter ending December 31, 1999, each to
be 15 to 20 percent above analyst's expectations of $0.20 and $0.25 per
diluted share, respectively. The change reflects the higher than anticipated
benefits from the company's efforts to increase the company's gross profit per
unit and customer returns and higher than forecasted sales volume.
Strategic Initiatives Under Way
The company continues to commit resources to identifying and developing
additional customer valued services, such as the recently announced appraisal
business, focusing on opportunities to add value to the insurance industry's
automobile claims process and reduce time and costs for these customers.
"We undertook these initiatives in our belief that the new services we offer
our customers are strategic to the direction of the industry and critical to
our future growth," Knowles said.
Founded in 1982, Insurance Auto Auctions, Inc. is the largest 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, particularly the second half earnings estimate,
contains forward-looking information that is subject to certain risks and
uncertainties that could cause actual results to differ materially from those
projected, expressed or implied by such forward-looking information. 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, 1998, or subsequent
quarterly reports. Among these risks are legislative acts, changes in the
market value of salvage, competition, quality and quantity of inventory
available from suppliers 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
Comparative Statistics
(rounded from actuals)
Three Months Ended Six Months Ended
June 30, June 30,
Increase Increase
1999 1998(Decrease) 1999 1998 (Decrease)
Total Vehicles 124,000 115,000 8% 250,000 230,000 9%
Per Unit:
Gross Profit $183 $165 11% $171 $154 11%
Direct Operating
Expenses $115 $114 1% $111 $109 2%
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)
1999 1998 1999 1998
Net Sales:
Vehicle sales $54,411,000 $51,894,000 $105,669,000 $99,063,000
Fee income 28,120,000 23,506,000 56,740,000 44,895,000
82,531,000 75,400,000 162,409,000 143,958,000
Cost and expenses:
Cost of sales 59,836,000 56,375,000 119,777,000 108,466,000
Direct operating
expenses 14,199,000 13,132,000 27,823,000 25,129,000
Amortization of
acquisition
costs 949,000 954,000 1,899,000 1,898,000
Special charges -- -- -- 1,564,000
Earnings from
operations 7,547,000 4,939,000 12,910,000 6,901,000
Other (income)expense:
Interest expense 493,000 537,000 987,000 1,064,000
Interest (income) (326,000) (222,000) (551,000) (396,000)
Earnings before
income taxes 7,380,000 4,624,000 12,474,000 6,233,000
Income taxes 3,123,000 2,127,000 5,364,000 2,867,000
Net earnings $4,257,000 $2,497,000 $7,110,000 $3,366,000
Earnings per share:
Basic $.37 $.22 $.62 $.30
Diluted $.37 $.22 $.62 $.30
Weighted average
shares outstanding:
Basic 11,421,000 11,312,000 11,381,000 11,309,000
Diluted 11,600,000 11,459,000 11,495,000 11,409,000
Insurance Auto Auctions, Inc.
and Subsidiaries
Condensed Consolidated Balance Sheets
June 30, December 31,
1999 1998
(Unaudited)
Assets
Current assets:
Cash and cash equivalents. $16,342,000 $11,682,000
Short-term investments 14,154,000 11,138,000
Accounts receivable, net 34,135,000 37,415,000
Inventories 11,432,000 11,229,000
Other current assets 1,828,000 1,676,000
Total current assets 77,891,000 73,140,000
Property and equipment, at cost, net 23,727,000 22,312,000
Deferred income taxes 3,504,000 2,976,000
Other assets, principally
goodwill, net 127,038,000 128,916,000
$232,160,000 $227,344,000
Liabilities and Shareholders' Equity
Current liabilities:
Current installments of
long-term debt $216,000 $216,000
Accounts payable 25,305,000 30,939,000
Accrued liabilities 6,367,000 6,097,000
Income taxes 1,715,000 582,000
Total current liabilities 33,603,000 37,834,000
Long-term debt, excluding
current installments 20,053,000 20,116,000
Accumulated postretirement
benefits obligation 3,345,000 3,485,000
Deferred income taxes 7,892,000 7,154,000
Total liabilities 64,893,000 68,589,000
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 11,466,358 and 11,327,169
shares as of June 30, 1999 and
December 31, 1998, respectively 11,000 11,000
Additional paid-in capital 133,571,000 132,171,000
Retained earnings 33,685,000 26,573,000
Total shareholders' equity 167,267,000 158,755,000
$232,160,000 $227,344,000
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, Norha Lee, 312-640-6689, or Analyst Inquiries, Alicia
DaCosta, 312-640-6780, or Media Inquiries, Bess Gallanis,
312-640-6727, all of The Financial Relations Board for Insurance
Auto Auctions, Inc.
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