-- Third Quarter Net Earnings Increased 104%, EPS Up 93%
-- Nine-Month Net Earnings Up 78%, Before Special Charges
-- Internet Based On-line Auction to be Expanded in December
-- Fifth Consecutive Quarter of 50% Plus Earnings Growth
SCHAUMBURG, Ill., Oct. 27 /PRNewswire/ -- Insurance Auto Auctions, Inc.
(Nasdaq: IAAI), today reported third quarter net earnings climbed 104 percent
to $3.2 million, or 27 cents per diluted share, from $1.6 million, or 14 cents
per share, for the same quarter a year ago. This quarter marks the 5th
consecutive quarter of 50% plus earnings growth for the company. For the
nine-month period, earnings per share before special charges increased to
89 cents versus 51 cents, an increase of 75%. The company also announced the
planned introduction of an Internet based on-line auction capability in
December 1999.
For the quarter ended September 30, 1999, net sales increased 10 percent
to $77.0 million compared with $70.0 million in the third quarter of 1998.
Gross profit for the quarter increased 22 percent to $20.5 million, up from
$16.8 million for the same quarter a year ago. Gross profit per unit for the
quarter was $173 per unit compared with $146 per unit for the same quarter a
year ago, an increase of 18 percent. Direct operating expenses per unit for
the third quarter were $119 per unit versus $110 for the same period a year
earlier. Earnings from operations for the quarter rose 69 percent to
$5.4 million from $3.2 million for the same quarter a year ago.
"In the third quarter, we continued to improve the profitability of our
company while providing attractive returns to our customers," said Chris
Knowles, chief executive officer. "Gross profit per unit increased
significantly as a result of the continued roll out of our profitability
enhancement initiatives. We continue to find many profitable opportunities to
provide value-added services to our customers and anticipate continued margin
expansion as we implement these important initiatives."
Nine-Month Results Improve Sharply
In the first nine months of 1999, net earnings increased 78 percent to
$10.3 million, or 89 cents per diluted share, as compared with $5.8 million,
before special charges, or 51 cents per share, for the same period a year ago.
Earnings from operations increased to $18.3 million, up from $11.7 million,
before special charges, for the same period a year ago.
Net sales for the first nine months of 1999 were $239.4 million compared
with $214.0 million for the first nine months of 1998. Gross profit for the
first nine months of 1999 was $63.2 million, up 21 percent from the same
period in 1998. Gross profit per unit for the first nine months of 1999 was
$171 per unit compared with $152 per unit in the prior year, an increase of
13 percent. Direct operating expenses per unit increased to $114 for the
first nine months of 1999, compared with $110 per unit for the same period in
1998, an increase of 4%.
Vehicle Sales Volume Increases
The volume of vehicles sold increased to 119,000 in the third quarter of
1999, up 3 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 September 30, 1999, represented 28 percent of
all vehicles sold, compared with 30 percent for the same period in 1998. For
the first nine months of 1999, the volume of vehicles sold was 369,000, as
compared to 345,000 for the same period for the previous year.
On-line Internet Auctions
One of the strategic initiatives the company has focused on is the
development of an Internet based on-line auction capability for the auction of
salvage vehicles. In December 1999, the company plans to expand its Internet
based on-line auction capability in selected regions of the country.
Knowles commented, "I am excited with the potential of Internet based
on-line auctions. The company has employed an on-line auction in its
specialty division for over a year. For the first nine months of this year,
over half of the specialty units were sold via the Internet. Our expanded
on-line auction includes significant new functionality specifically designed
to meet the requirements of our buyers and increase returns to our insurance
customers."
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. This is a $3 billion per year
industry. The company currently has 50 auction sites across the United
States.
This press release 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. 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, 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 Nine months ended
September 30, September 30,
Increase Increase
1999 1998 (Decrease) 1999 1998 (Decrease)
Total Vehicles
Sold 119,000 115,000 3% 369,000 345,000 7%
Per Unit:
Gross Profit $173 $146 18% $171 $152 13%
Direct
Operating
Expenses $119 $110 8% $114 $110 4%
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
Three Month Periods Nine Month Periods
Ended September 30, Ended September 30,
(Unaudited) (Unaudited)
1999 1998 1999 1998
Net Sales:
Vehicle
sales $49,562,000 $45,726,000 $155,231,000 $144,789,000
Fee income 27,452,000 24,321,000 84,192,000 69,216,000
77,014,000 70,047,000 239,423,000 214,005,000
Cost and expenses:
Cost of
sales 56,465,000 53,265,000 176,242,000 161,731,000
Direct
operating
expenses 14,195,000 12,650,000 42,018,000 37,779,000
Amortization
of acquisition
costs 949,000 935,000 2,848,000 2,833,000
Special charges -- -- -- 1,564,000
Earnings from
operations 5,405,000 3,197,000 18,315,000 10,098,000
Other (income) expense:
Interest
expense 492,000 496,000 1,479,000 1,560,000
Interest
(income) (365,000) (193,000) (916,000) (589,000)
Earnings
before income
taxes 5,278,000 2,894,000 17,752,000 9,127,000
Income taxes 2,092,000 1,331,000 7,456,000 4,198,000
Net earnings $3,186,000 $1,563,000 $10,296,000 $4,929,000
Earnings per share:
Basic $.28 $.14 $.90 $.44
Diluted $.27 $.14 $.89 $.43
Weighted average
shares outstanding:
Basic 11,530,000 11,320,000 11,432,000 11,313,000
Diluted 11,830,000 11,474,000 11,605,000 11,432,000
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 30, December 31,
1999 1998
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents. $13,777,000 $11,682,000
Short-term investments 19,718,000 11,138,000
Accounts receivable, net 35,619,000 37,415,000
Inventories 12,263,000 11,229,000
Other current assets 2,263,000 1,676,000
Total current assets 83,640,000 73,140,000
Property and equipment, at cost, net 24,292,000 22,312,000
Deferred income taxes 3,637,000 2,976,000
Other assets, principally
goodwill, net 126,074,000 128,916,000
$237,643,000 $227,344,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of
long-term debt $216,000 $216,000
Accounts payable 27,756,000 30,939,000
Accrued liabilities 6,118,000 6,097,000
Income taxes 692,000 582,000
Total current liabilities 34,782,000 37,834,000
Long-term debt, excluding current
installments 20,020,000 20,116,000
Accumulated postretirement
benefits obligation 3,261,000 3,485,000
Deferred income taxes 8,260,000 7,154,000
Total liabilities 66,323,000 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
11,568,300 and 11,320,419 shares
as of September 30,1999 and
December 31, 1998, respectively 12,000 11,000
Additional paid-in capital 134,439,000 132,171,000
Retained earnings 36,869,000 26,573,000
Total shareholders' equity 171,320,000 158,755,000
$237,643,000 $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, Mark Johnson, 312-640-6689, 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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