Download Reducing the Cost of Risk

KAR Holdings, Inc.
Analyst Day
December 6, 2007
Forward-Looking Statements
This presentation includes forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks, trends, and
uncertainties that could cause actual results to differ materially
from those projected, expressed or implied by such forwardlooking statements. Many of these risk factors are outside of the
company’s control, and as such, they involve risks which are not
currently known to the company that could cause actual results to
differ materially from forecasted results. The forward-looking
statements in this document are made as of the date hereof and
the company does not undertake to update its forward-looking
statements.
2
AGENDA
• Industry Update - Tom Kontos
• Corporate Update - Eric Loughmiller
• Q&A
3
Used Vehicle Market
Conditions and Outlook
Tom Kontos
Executive Vice-President
Customer Strategies and Analytics
ADESA
December 2007
Copyright 2007 ADESA, Inc. All rights reserved. The information provided here was compiled by and is proprietary to ADESA,
Inc. It is for informational purposes only and its accuracy is not warranted. It is intended for the benefit of the named recipient,
and may not be relied upon or utilized for any other purpose or by any other person and may not be made available to any other
person without the express written permission of ADESA, Inc.
Copyright 2007 ADESA, Inc.
ADESA Analytical Services
Reports
Plus monthly postings on:
www.adesa.com/kontoskorner
Contact Tom Kontos
[email protected]
317/249-4235
5
Customer Strategies and
Analytics
Analytical
Services
•
•
•
•
•
•
Market and Peer
Group
Benchmarking
Studies
Impact of
Reconditioning
Dealer Surveys
Analysis of
Vehicles Resold
Comparative
Analysis
GVR, Pulse,
Market Trends
CRM/
Salesforce.com
•
•
•
•
Utilize robust
•
database of dealer
preferences and
demographics
Design target
•
marketing
campaigns
Train inside and
outside auction
•
personnel
Monitor use and
results
Dealer
Relations
Strengthen
•
relationships with
major automotive
retailers
Provide custom
studies, analytics, •
and strategies to
dealer groups
Share auction "best
practices" for
optimal inventory
management
Insight and
Trusted Business
Advice
Helping national
accounts make
better remarketing
decisions
Helping large
dealer groups
achieve economies
of scale and
optimize their used
vehicle inventory
management.
6
General Economy
Economic growth was slow in the first quarter & stronger than
expected in the 2nd & 3rd quarters. Growth rates are expected to
slow to below 2.0% during the current & next quarters.
Real GDP Growth Rates
8.0%
2000
2001
2002
2003
2004
2005
2006
2007
7.5%
7.0%
6.4%
Quarter-on-Quarter % Change
6.0%
4.9%
4.8%
5.0%
4.5%
4.0%
3.5%
3.0%
2.7%
2.7%
3.0%
2.4%
2.2%
2.1%
2.0%
3.8%
3.5%3.6%
3.1%
2.8%
2.6%
2.4%
2.1%
1.6%
1.2%
1.0%
1.2%
1.0%
1.2%
1.1%
0.6%
0.2%
0.0%
-0.5%
-1.0%
-0.5%
-1.4%
-2.0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
8
Unemployment remains fairly low, but is creeping up as
employment growth has slowed somewhat this year.
Unemployment Rate
7%
6%
5%
4.7%
4%
3%
2%
1%
Recession: March - November 2001
0%
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
9
Manufacturing has slowed as well.
ISM/Purchasing Managers' Index
70
65
60
55
50.9
50
Manufacturing Sector Breakeven Level (50.0)
45
Recession Warning Level (42.7)
40
35
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
10
Freight volumes have decreased significantly
from their peak volumes in 2005.
Truck Tonnage Index*
(2000 = 100)
120.0
115.0
110.5
110.0
105.0
100.0
95.0
90.0
85.0
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
*Seasonally adjusted. Three-month moving average.
11
Low savings rates indicate that
consumers are “spent-up, not pent-up.”
Personal Saving as a Percent of Disposable Income
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
12
Business investment is supplementing
consumer spending nicely.
Investment vs. Consumption
($Millions)
$1,450,000
$8,500,000
$1,400,000
$8,000,000
$1,350,000
$7,500,000
$1,300,000
$7,000,000
$1,250,000
$1,200,000
$6,500,000
$1,150,000
$6,000,000
$1,100,000
$5,500,000
$1,050,000
$1,000,000
Jan-00
$5,000,000
Jan-01
Jan-02
Jan-03
Non-residential Fixed Investment (Real)
Jan-04
Jan-05
Jan-06
Jan-07
Personal Consumption Expenditures (Real)
13
The soft housing market is a major reason for
slower GDP growth (worth about 1%pt).
Housing Starts
000s
2,400
2,200
2,000
1,800
1,600
1,400
1,229
1,200
1,000
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
14
Fuel prices remain at high levels, with no
relief in sight.
Fuel Prices
- National Average $4.00
$3.50
$3.444
$3.097
$3.00
$ per Gallon
$2.50
$2.00
$1.50
$1.00
$0.50
$0.00
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
15
Remarketing Industry
Supply
Fleet sales grew by 500,000 units between
2003 and 2005 and were steady in 2006.
Fleet Sales by Manufacturers
(Millions of Units)
Commercial Fleet
Rental
Total
'06 vs '05 Variance
Units
%
51,809
5.4%
-25,302
-1.2%
26,507
0.9%
3.5
3.06
3.04
3.0
2.77
2.59
2.54
2.54
2.5
2.08
2.05
1.94
2.0
1.77
1.71
1.68
1.5
1.0
1.01
0.96
0.92
0.83
0.83
0.77
0.5
0.0
2001
2002
2003
Commercial Fleet
2004
Rental
Total
2005
2006
17
(Commercial Fleet figures include government units.)
Rental fleet sales have continued to drop in 2007.
Commercial fleet sales are also down somewhat.
Domestics down
~236K; Japanese &
Koreans up ~90K
Fleet Sales by Manufacturers
- YTD Through October 3,000,000
2,581,052
2,500,000
Commercial Fleet
Rental
Total
'07 vs '06 Variance
Units
%
-17,686
-2.1%
-145,557
-8.4%
-163,243
-6.3%
2,417,809
2,000,000
1,723,138
1,577,581
1,500,000
1,000,000
857,914
840,228
500,000
0
2006
2007
Sales Volume
Commercial Fleet
Rental
Total
18
Lease penetration is now above the 25% level we
anticipated when interest rates started to rise.
Lease Penetration
(Personal Use* Leases as a Percent of Total New Vehicle Sales)
*"Personal use" leases are leases on vehicles used by businesses that are also used at least 20% of the time for personal use.
35.0%
30.5%
30.0%
27.5%
25.0%
19.3%
20.0%
15.0%
10.0%
5.0%
Oct-07
Jul-07
Apr-07
Jan-07
Oct-06
Jul-06
Apr-06
Jan-06
Oct-05
Jul-05
Apr-05
Jan-05
Oct-04
Jul-04
Apr-04
Jan-04
Oct-03
Jul-03
Apr-03
Jan-03
Oct-02
Jul-02
Apr-02
Jan-02
Oct-01
Jul-01
Apr-01
Jan-01
Oct-00
Jul-00
Apr-00
Jan-00
0.0%
19
Jan-04
Feb-04
Mar-04
Apr-04
May-04
Jun-04
Jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
Jan-05
Feb-05
Mar-05
Apr-05
May-05
Jun-05
Jul-05
Aug-05
Sep-05
Oct-05
Nov-05
Dec-05
Jan-06
Feb-06
Mar-06
Apr-06
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
PIN data corroborates that lease penetration
has grown since 2004.
PIN and CNW Lease Penetration Data
35.0%
30.0%
27.1%
25.0%
23.2%
20.0%
15.0%
10.0%
5.0%
0.0%
PIN
CNW
20
Lease origination volume began growing in
2004 and has strengthened since.
New Lease Volume
(Percent Change from Prior Year)
10%
7.3%
7.7%
7.8%
2005
2006
2007YTD Oct
5%
1.6%
0%
-5%
-5.6%
-10%
-11.8%
-15%
-16.7%
-20%
2001
2002
2003
2004
21
Fed data corroborates that leasing is
increasing.
Federal Reserve Board Consumer Leases Outstanding
($Millions)
$140,000
$120,000
$100,000
$80,000
$60,000
$40,000
$20,000
$0
Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07
22
The Consumer Price Index for lease payments
has come down over the last few years.
Lease Payment Consumer Price Index
(Dec 2001=100)
102.0
100.0
98.0
96.0
94.0
92.0
90.0
88.0
86.0
Jan-02
Jan-03
Jan-04
Jan-05
Source: U.S. Bureau of Labor Statistics. Data series began in January 2002.
Jan-06
Jan-07
23
More off-lease units will enter the market
beginning in 2007.
Consumer Leases and Off-Lease Volumes Returning for Wholesale Remarketing (Millions)
5.0
History
4.5
Projections
4.16
4.17
4.21
1.50
4.25
4.00
4.0
3.67
3.61
3.5
3.17
3.26
3.40
3.50
3.05
3.0
2.5
2.0
1.68
1.81
1.89
1.93
1.48
1.5
1.26
1.25
2005
2006
1.33
1.39
1.43
2007
2008
2009
1.64
1.0
0.5
0.0
2000
2001
2002
2003
2004
Consumer Leases
Off-Lease Volume Returning for Wholesale Remarketing
2010
2011
24
Decreases in program vehicles sales at auction have
been more than offset by increases in dealer
consignment, rental risk, off-lease and fleet units.
Auction Industry Sales Volume Trends by Seller Type - Same-store Basis
60,000
Increase/(Decrease) Versus Prior Year
40,000
20,000
0
(20,000)
(40,000)
(60,000)
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Dealer
Jun-07
Jul-07
Manufacturer
Aug-07
Sep-07
Fleet/Lease
Oct-07
Nov-07
Dec-07
25
As a result, auction volumes have increased modestly
on a year-to-date basis, though this has varied greatly
by month.
Auction Industry Sales Volume Trends by Month - Same-store Basis
10.0%
8.4%
7.5%
8.0%
6.0%
Year-on-Year % Change
4.2%
4.0%
3.2%
2.0%
1.1%
0.2%
0.0%
-2.0%
-2.2%
-2.9%
-4.0%
-3.7%
-5.1%
-6.0%
-6.2%
-8.0%
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
YTD
Total
26
Retail Vehicle Markets
Retail sales have been weak.
New and Used Vehicle Sales - U.S.
(000s of Units Sold)
YTD Through Oct
2007
2006
Increase/(Decrease)
Amount
%
New Vehicle Sales
13,584
13,930
(346)
-2.5%
Used Vehicle Sales
Franchised Dealers
Independent Dealers
Private Individuals
35,204
12,065
11,135
12,004
36,160
12,336
11,741
12,083
(956)
(271)
(606)
(80)
-2.6%
-2.2%
-5.2%
-0.7%
Total Vehicle Sales
48,787
50,090
(1,303)
-2.6%
Source: Automotive News Data Center, CNW Marketing/Research,
and ADESA Analytical Services.
28
Reasons for weak retail used vehicle sales:
• Used cars priced high relative to discounted new vehicles.
More price adjustment is necessary to jump start used
vehicle sales.
• Maturation of economic cycle/slower economic growth.
• More folks are upside down on their longer term vehicle
loans.
• Vehicle longevity has improved and more people own longer
lasting and lightly challenged trucks and SUVs.
• Lots of used vehicles were bought in 2005 during the
employee discount period, which brought lots of young
trade-ins to franchised dealerships. This brought forward
sales that would have otherwise occurred in 2006 or 2007.
• Hurricane-replacement vehicles were bought in late 2005 29as
well.
A mild recovery in used vehicle sales for
franchised dealers may be underway.
Retail Used Vehicle Sales Trends
30.0%
Year-on-Year % Change in Sales Volume
20.0%
10.0%
0.0%
-10.0%
-20.0%
-30.0%
-40.0%
Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar- Apr- May- Jun- Jul- Aug- Sep- Oct06
06
06
06
06
06
06
06
06
06
06
06
07
07
07
07
07
07
07
07
07
07
Franchised
Independent
Total Retail
30
New vehicle incentives have been relatively stable after
dropping in 2006. This is good news for vehicle remarketers.
Average New Vehicle Incentives According to Edmunds
$3,500
$3,000
$2,500
$2,174
$2,000
$1,500
$1,000
$500
$0
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
31
Used car prices are becoming more
competitive relative to new car prices.
Used Vehicle Price as a % of New Vehicle Price*
70.0%
65.0%
60.0%
55.8%
55.0%
50.0%
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
*Based on vehicles financed by domestic captive finance companies.
Jan-07
32
Retail used vehicle prices are coming down
faster than new vehicle prices.
Comparison of New and Used Vehicle Consumer Price Indices
2%
0%
-1%
-1.1%
-1.7%
-2%
-3%
-4%
New Vehicle CPI
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
Mar-07
Feb-07
Jan-07
Dec-06
Nov-06
Oct-06
Sep-06
Aug-06
Jul-06
Jun-06
May-06
Apr-06
Mar-06
Feb-06
-5%
Jan-06
Year-on-Year Percent Change
1%
Used Vehicle CPI
33
Wholesale Vehicle
Markets
Prices are up primarily due to low supply of
program units.
Year-on-Year Percent Change in Average Auction Prices
8.0%
6.0%
4.0%
Continued
firming/recovery
Price
softening
.
2.0%
0.0%
Supplydriven
recovery
-2.0%
Price firming
-4.0%
-6.0%
Inflection
Point - May
2003
-8.0%
-10.0%
2000
2001
2002
2003
2004
2005
2006
2007
35
Prices are strongest for the off-rental units
sold by manufacturers that are in short supply.
AuctionNet Price Trends by Sale Type
16.0%
13.5%
14.0%
Year-on-Year % Change in Average Price
12.0%
10.7%
11.3%
9.5%
10.0%
7.7%
8.0%
6.8%
6.3%
6.0%
4.7%
4.0%
4.0%
5.3%
3.6%
3.0%
3.3%
2.7%
2.0%
3.1%
5.8%
4.7%
3.1%
2.9%
4.0%
3.4%
4.6%
3.6%
1.6%
1.1%
2.0%
1.3%
0.0%
-1.0%
-2.0%
-2.2%
-4.0%
-3.5%
-6.0%
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Manufacturer
Jun-07
Fleet/Lease
Jul-07
Aug-07
Sep-07
Oct-07
Dealer Consignment
36
“Performance may vary” based on model
class as well.
Percent Change in Average AuctionNet Price by Model Class - 2007 vs. 2006 (YTD Oct)
4.4%
Fullsize Pickup
Midsize SUV
2.9%
2.7%
Fullsize Car
Compact Pickup
1.8%
Fullsize Van
1.8%
0.6%
Fullsize SUV
0.0%
All Segments
-0.7%
Mini Van
Luxury Car
-1.2%
-1.4%
Luxury SUV
-1.6%
Midsize Car
-1.7%
Compact Car
-1.9%
Sporty Car
Mini SUV
-4%
-3.2%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
37
In Summary:
• The macro economy is still
in slow-growth mode.
• Wholesale vehicle supply
will increase.
• Retail demand is weak.
• Anticipate softer wholesale
prices for remainder of
2007 and into 2008.
38
AGENDA
• Industry Update - Tom Kontos
• Corporate Update - Eric Loughmiller
• Q&A
39
Company Overview
($ in millions)
KAR Holdings, Inc.
Total 2006 PF Revenue: $1,453.0
Total 2006 PF Adjusted EBITDA: $381.6
ADESA Whole Car
2006 PF Revenue: $853.8
 Used vehicle auctioneer

Remarkets used
vehicles from large
institutions and
dealers
IAAI Salvage
2006 PF Revenue: $455.2
 Salvage vehicle auctioneer

Remarkets vehicles
deemed a total-loss by
insurance companies
Auction Sites:
57
Auction Sites:
Market Position:
Market Share:
#2
18%
Market Position:
Market Share:
137
#2
33%
Automotive Finance Corp.
(AFC)
2006 PF Revenue: $144.0
 Provides short-term
inventory-secured
financing, known as
floorplan financing, for
independent used vehicle
dealers in North America
Offices:
Market Position:
Market Share:
91
Leader
NA
Note: Pro forma to give effect to full year impact of recent acquisitions, buyer fee increases at IAAI standalone and certain cost savings from salvage combination.
40
Experienced and Committed
Management Team
Name
Position
Brian Clingen
Chairman and CEO
7
Jim Hallett
President and CEO
– ADESA Whole Car
32
President and CEO
– IAAI Salvage
16
Tom O’Brien
Years in Industry
Curt Phillips
President and CEO – AFC
9
John Nordin
EVP and CIO
4
Eric Loughmiller
EVP and CFO
1
Becca Polak
EVP, General Counsel & Secretary
2
41
Leading Market Positions
The Company operates the largest network of used and salvage vehicle auctions in
North America and is a leader in the independent dealer floorplan financing market
North American Whole Car Auction Market
North American Salvage Auction Market
ADESA
IAAI
18%
Independents
31%
Manheim
51%
Salvage
Independents /
Other
30%
33%
Copart
37%
After the top two players in each market, there is significant fragmentation
Source: GVR Report and Company estimates for 2006.
42
Broad Geographic Footprint
The Company is 1 of 2 whole car & salvage providers that has a broad N.A. footprint





































 








  














 



   

 
 
 




  








 
 







 









 







 





 




 

















•ADESA














 Own 45 whole car and 13 salvage
sites
 Operate 8 shared sites (whole car
and salvage)
Whole Car—57 auction sites
•IAAI Salvage—137 auction sites
•AFC—91 loan production offices

Broad geographic footprint positions the Company as the preferred auction &
floorplan financing provider for its’ customers
43
ADESA Whole Car
2006 Whole Car Suppliers
OEM
18%
OEM Captive
Finance 20%
2007 YTD Whole Car Suppliers
OEM
14%
Dealer
38%
OEM Captive
Finance 22%
Dealer
39%
Fleet/Lease 25%
Fleet/Lease 24%
Auctions strive to maximize the auction sales price for sellers by effectively and efficiently
transferring the vehicles, paperwork and funds as quickly as possible
44
IAAI Salvage
•
2006 Salvage Buyers
One of only two salvage auctioneers with a
national footprint
–
–
•
Serves 69 of top 75 U.S. metropolitan
markets
Rebuilders/
Resellers
25%–30%
Dismantlers
65%–70%
Hybrid auction format, combining Internet and live
auctions, leads to higher proceeds for suppliers
–
•
Operates 137 facilities in 43 states and 6
provinces in Canada
Recyclers
5%
Increases international buyers
Provides wide array of value-added total-loss
services that drive efficient vehicle remarketing
–
Tracking systems and real-time status reports through CSA Today
–
Vehicle inspection centers operated by insurance companies at salvage auction
sites
Auctions strive to maximize the auction sales price for insurance company sellers
and reduce their administrative costs and claim recovery cycle time
45
AFC
•
Specializes in providing floorplan financing to independent dealers
–
Typical loan terms are 30 to 60 days and are secured by vehicle
–
Significant portion of revenue from fees
•
Network of 91 loan production offices services over 600 auctions
•
Diverse customer base with no significant concentration
•
– Approximately 9,000 customers
Low credit risk
–
Centralized credit decisions using proprietary scoring model with additional corporate oversight
– Perfected security interest and personal guaranty from principals of independent dealers
Low-cost, reliable funding through bankruptcy-remote, off-balance sheet securitization conduit
•
–
Utilized to finance over 60% of receivables
2003
2004
2005
2006
Total A/R (principal)
$502.3
$552.9
$619.0
$736.2
>60 days to Total A/R
1.5%
1.1%
1.0%
0.6%
Net Write-offs
$14.6
$17.2
$17.3
$16.5
Net Write-offs to Total A/R
2.9%
3.1%
2.8%
2.2%
•
•
In excess of 95% of portfolio is current and has been so over the past five years
Net write-offs as a % of total A/R have trended downward over the past five years
Facilitates growth of vehicle sales at auction and allows ADESA to have
larger role in entire vehicle redistribution industry
46
Major Initiatives
 Project
Pride
 Salvage Integration
 Revitalized Whole Car Sales &
Organizational Structure
 Acquisitions & Relocations
 Cash Flow & Asset Monetization
47
Project Pride

Whole car initiative led by
management in tandem with
Synergetics

Over 40 teams reviewing every
aspect of auction operations
(staffing, vehicle flow, etc.)

Roll-out commenced Q4
48
Salvage Integration

30 Impact sites integrated to
date

Redundant corporate overhead
eliminated

U.S. to be completed in 2007
Canada integration in 2008

Develop shared sites with
ADESA Auctions

Offer AFC financing to qualified
buyers
49
Revitalized Whole Car Sales &
Organizational Structure
 Jim
Hallett back at ADESA. Culture shift:
Bureaucratic
Entrepreneurial
 Sales & operations revitalized with new
talent additions
 Team = Customer focused, with owner /
operator mindset
 Centralized E-business approach
Customers’ Response =
Vehicles to ADESA
50
Acquisitions & Relocations
 Acquisitions:
* Syracuse, NY
* Fargo, ND
* Sioux Falls, SD
* Quebec City

Relocations:
* Phoenix, AZ
– 2008
* Kansas City, KS – 2008
* Dallas, TX
– 2009
51
Cash Flow & Asset Monetization
 Operating
Cash Generated - $90M thru Q3
 Sale & Leaseback
 Canadian
Securitization
52
Investor Update
Financial Review
53
Transaction - Sources & Uses
$ in Millions
Sources
Amount
Uses
Revolver
$
Term Loan B
Notes
IAAI rollover equity
New sponsor cash equity contribution
Cash
1,565.0
1,025.0
272.4
790.0
6.4
Purchase of ADESA common equity
Repay debt - ADESA
Repay debt - IAAI
IAAI rollover equity
Fees and expenses
$
2,541.5
318.0
344.6
272.4
182.3
Total Sources
3,658.8
Total Uses
$
3,658.8
$
Amount
54
Long-Term Debt Structure
$ in Millions
Term B Loan - Hedged*
Term B Loan - Unhedged
Senior Credit Facility
$
Floating Rate Senior Notes
Fixed Rate Senior Notes
Senior Subordinated Notes
Senior Notes
$
Total Long-Term Debt**
Net Available Cash
Net Debt
$
$
$
$
800.0
761.1
1,561.1
5.34% + 225
Libor + 225
150.0
450.0
425.0
1,025.0
Libor + 400
8.75%
10.00%
2013
2014
2014
2015
2,586.1
-154.4
2,431.7
LTM Adjusted EBITDA at September 30, 2007
$
388.7 ***
Total Leverage Ratio (Net Debt)
6.3x
* 2-year hedge
** Excludes $34.5M capital lease obligation
*** As deemed per the Company's credit agreement
55
Balance Sheet
($ Millions)
Predecessor
ADESA
12/31/06
Successor
IAAI
12/31/06
9/30/07
(Unaudited)
Cash and cash equivalents
Other current assets
Total Current Assets
PP&E and other assets
Total Assets
Current liabilities, excluding
current maturities of debt
Current maturities of debt
Total Current Liabilities
Long-term debt
Other non-current liabilities
Stockholders' equity
Total Liabilities and Equity
$195.7
$512.8
708.5
$14.0
$95.8
109.8
$344.4
782.1
1,126.5
1,266.8
$1,975.3
478.7
$588.5
3,902.9
$5,029.4
$353.3
30.0
383.3
$56.9
2.2
59.1
$635.1
15.6
650.7
322.5
66.0
1,203.5
$1,975.3
342.6
48.5
138.3
$588.5
2,605.0
692.5
1,081.2
$5,029.4 56
KAR Holdings, Inc. Financial
Highlights - Consolidated
Q3 Revenue
$500
$400
$356
Q3 Adjusted EBITDA 1
$120
$100
$394
$200
11%
$100
($mm)
($mm)
$300
Q3 2007
$1,200
$1,074
$1,191
$600
11%
$0
YTD 2006
YTD 2007
($mm)
($mm)
$800
$200
Q3 2007
YTD Adjusted EBITDA 1
$1,000
$400
13%
Q3 2006
YTD Revenue
$1,400
$98
$80
$60
$40
$20
$0
$0
Q3 2006
$87
$350
$300
$250
$200
$150
$100
$50
$0
$273
$308
13%
YTD 2006
YTD 2007
As defined in the Company’s senior credit facility; however, 2006 results have been adjusted to eliminate pro
forma adjustments.
1
57
KAR Holdings, Inc. Financial Highlights Whole Car
YTD Revenue
$649
$720
$200
($mm)
($mm)
$800
YTD Adjusted EBITDA 1
$600
$150
$400
$100
$200
$50
11%
$0
YTD 2006
YTD 2007
$164
$179
9%
$0
YTD 2006
YTD 2007
As defined in the Company’s senior credit facility; however, 2006 results have been adjusted to eliminate pro
forma adjustments.
1
58
KAR Holdings, Inc. Financial Highlights IAAI
YTD Revenue
$400
$361
$200
$84
$100
$60
($mm)
($mm)
$300
$317
YTD Adjusted EBITDA 1
$50
$100
40%
14%
$0
$0
YTD 2006
YTD 2007
YTD 2006
YTD 2007
As defined in the Company’s senior credit facility; however, 2006 results have been adjusted to eliminate pro
forma adjustments.
1
59
KAR Holdings, Inc. Financial Highlights AFC
YTD Revenue
$120
$108
YTD Adjusted EBITDA 1
$110
$80
($mm)
($mm)
$80
$40
$73
$40
2%
3%
$0
$0
YTD 2006
1
$75
YTD 2007
As defined in the Company’s senior credit facility
YTD 2006
YTD 2007
60
Investment Highlights
• Stable Industry Fundamentals
• Recurring Revenue Stream
• Leading Market Positions with Broad Geographic Footprint
• Strong Competitive Position
• Consistent Historical Financial Performance
• Established Relationships with Vehicle Suppliers & Buyers
• Experienced and Committed Management Team
• Strong Cash Flow Generation
61
AGENDA
• Industry Update - Tom Kontos
• Corporate Update - Eric Loughmiller
• Q&A
62