Insurance Auto Auctions (NASDAQ:IAAI)
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Insurance Auto Auctions Announces Second Quarter Results
SCHAUMBURG, Ill., July 23 /PRNewswire-FirstCall/ -- Insurance Auto Auctions,
Inc. (NASDAQ:IAAI), a leading provider of automotive salvage and claims
processing services in the United States, today reported higher net earnings
for the quarter ended June 27, 2004. The Company recorded net earnings of $2.6
million, or $0.22 per diluted share, versus net earnings of $1.3 million, or
$0.11 per diluted share, for the same quarter a year ago. Revenues for the
quarter were $60.0 million compared with $53.3 million in the second quarter of
2003. Fee income in the second quarter increased to $51.8 million versus $43.1
million in the second quarter of last year.
"For the second consecutive quarter we are pleased to announce financial
results that exceeded our expectations," said Tom O'Brien, CEO. "Our overall
goal has been to drive customer service and continued improvements in our
operating model, and we were able to accomplish that goal during the quarter.
We continued to increase our market share for the second quarter, demonstrated
by a double-digit growth in volumes sold. We also continue to generate higher
average returns for our customers compared to the prior year. Our business
model focuses on providing our customers with live auctions complemented with
an Internet bidding capability, which we believe offers the optimal solution
for both our insurance company suppliers and our buyers."
Providing an update on the Company's technology platform, O'Brien said,
"Following the completion of our system development last year, we remain
focused on using our new IT system to create further efficiencies and drive
additional visibility for both the management team and our customers. One
particular area of focus was the rollout of our recently developed real-time
bidding platform, I-bid LIVE(SM), to a number of our major branches. Following
a successful testing period in the early part of the quarter, we were able to
fully roll it out into ten branches by the end of the second quarter. We plan
to complete the rollout of I-bid LIVE by the end of the year."
The Company also continued its expansion strategy with the addition of a new
greenfield facility in El Paso, Texas and a strategic acquisition in Jackson,
Mississippi. "The two new branches are both strategically located and cost
effective for IAA, meeting our stringent expansion requirements," said O'Brien.
"However, we do not foresee making many expansion announcements in the third
and fourth quarters, focusing instead on the rollout of our real-time bidding
platform throughout our network of branches and continuing to focus on our
customers."
O'Brien concluded, "In our industry, the volumes in the third and fourth
quarters are typically lower than those in the first half of the year. That
said, our improved cost structure combined with recent market share gains give
us reason to anticipate improved year-over-year earnings results. Assuming no
material changes in current volume and pricing expectations, we anticipate
earnings per share to be approximately 75 to 80 cents for the full year,
representing a significant improvement over the prior year. As this expected
year-over-year improvement indicates, we are pleased with the progress we have
made in making IAA a stronger company overall, both operationally and
competitively, and look forward to updating our shareholders on our continued
progress in the quarters ahead."
Investors' Conference Call
The Company previously announced that it will hold its second quarter 2004
investors' conference call on Friday, July 23 at 11:00 a.m. Eastern Time. To
participate by phone, please dial 877-307-4802 and ask to be connected to the
Insurance Auto Auctions earnings conference call. Investors may also access
the call over the Internet by visiting the Company's Web site at
http://www.iaai.com/ . A replay will be available until midnight EDT on July
30, 2004. To listen to the replay, please dial 800-642-1687 and enter
conference reservation code 8739045 when prompted.
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 77 sites across the
United States.
Safe Harbor Statement
This Report contains forward-looking statements that are 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
statements. In some cases, you can identify forward-looking statements by use
of words such as "may, will, should, anticipates, believes, expects, plans,
future, intends, could, estimate, predict, projects, targeting, 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
on Form 10-K for the fiscal year ended December 28, 2003 and subsequent
quarterly reports. You should not place undue reliance on any forward-looking
statements. Except as expressly required by the federal securities laws, the
Company undertakes no obligation to publish, update or revise any
forward-looking statements, whether as a result of new information, future
events, changed circumstances or any other reason.
Additional information about Insurance Auto Auctions, Inc. is available on the
World Wide Web at http://www.iaai.com/ .
Financial Tables Follow ...
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(dollars in thousands except per share amounts)
Three Month Periods Ended Six Month Periods Ended
June 27, June 29, June 27, June 29,
2004 2003 2004 2003
(Unaudited) (Unaudited)
Revenues:
Vehicle sales $8,225 $10,192 $15,352 $23,496
Fee income 51,777 43,146 101,841 85,882
60,002 53,338 117,193 109,378
Cost of sales:
Vehicle cost 7,187 9,425 13,171 21,196
Branch cost 39,598 32,845 77,993 65,809
46,785 42,270 91,164 87,005
Gross profit 13,217 11,068 26,029 22,373
Operating expense:
Selling, general
and administrative 8,357 7,509 16,837 14,677
Business
transformation
costs - 921 - 1,718
Earnings from
operations 4,860 2,638 9,192 5,978
Other (income) expense:
Interest expense 410 503 887 558
Other income (29) (43) (41) (122)
Earnings before
income taxes 4,479 2,178 8,346 5,542
Provision for
income taxes 1,824 898 3,390 2,286
Net earnings $2,655 $1,280 $4,956 $3,256
Earnings per share:
Basic $.23 $.11 $.43 $.28
Diluted $.22 $.11 $.42 $.27
Weighted average
shares outstanding:
Basic 11,545 11,517 11,541 11,784
Effect of dilutive
securities - stock
options 286 60 243 77
Diluted 11,831 11,577 11,784 11,861
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(dollars in thousands except per share amounts)
June 27, December 28,
2004 2003
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $17,628 $15,486
Accounts receivable, net 45,440 48,375
Inventories 13,393 13,602
Other current assets 2,961 3,099
Total current assets 79,422 80,562
Property and equipment, net 64,838 60,187
Deferred income taxes 10,205 9,788
Intangible assets, net 1,837 2,101
Goodwill, net 135,812 135,062
Other assets 477 93
$292,591 $287,793
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $36,288 $35,005
Accrued liabilities 13,794 13,195
Short-term borrowings - -
Obligations under capital leases 2,205 2,822
Income taxes 1,410 -
Current installments of long-term debt 7,547 7,547
Total current liabilities 61,244 58,569
Deferred income taxes 19,227 17,748
Other liabilities 3,130 3,612
Obligation under capital leases 1,069 1,891
Long-term debt, excluding current installments 13,114 16,887
Total liabilities 97,784 98,707
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; 12,425,708 shares
issued and 11,618,499 outstanding as of
June 27, 2004; and 12,325,482 shares issued
and 11,518,273 outstanding as of
December 28, 2003 12 12
Additional paid-in capital 146,217 145,856
Treasury stock, 807,209 shares (8,012) (8,012)
Deferred compensation related
to restricted stock (777) (892)
Accumulated other comprehensive income (loss) (335) (625)
Retained earnings 57,702 52,747
Total shareholders' equity 194,807 189,086
$292,591 $287,793
INSURANCE AUTO AUCTIONS, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(dollars in thousands)
Six Months Ended
June 27, June 29,
2004 2003
(unaudited)
Cash flows from operating activities:
Net earnings $4,956 $3,256
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 6,522 4,870
Loss (Gain) on disposal of fixed assets (19) (31)
Loss on change in fair market value of
derivative unhedged portion - (307)
Deferred compensation related to
restricted stock 114 -
Changes in assets and liabilities
(excluding effects of acquired
companies):
(Increase) decrease in:
Accounts receivable, net 2,935 7,370
Inventories 209 985
Other current assets 137 917
Other assets (1,117) (754)
Increase (decrease) in:
Accounts payable 1,282 (3,336)
Accrued liabilities 407 (684)
Income taxes, net 2,470 1,383
Total adjustments 12,940 10,412
Net cash provided by operating activities 17,896 13,669
Cash flows from investing activities:
Capital expenditures (11,105) (6,498)
Proceeds from disposal of
property and equipment 200 44
Payments made in connection with
acquisitions, net of cash acquired - (7,863)
Net cash used in investing activities (10,905) (14,317)
Cash flows from financing activities:
Proceeds from issuance of common stock 361 227
Proceeds from term loan - 30,000
Principal payments on long-term debt (3,772) (1,896)
Purchase of treasury stock - (8,012)
Principal payments - capital leases (1,438) (1,191)
Net cash provided (used) by financing activities (4,849) 19,128
Net increase (decrease) in cash and
cash equivalents 2,142 18,480
Cash and cash equivalents at
beginning of period 15,486 10,027
Cash and cash equivalents at end of period $17,628 $28,507
Supplemental disclosures of
cash flow information:
Cash paid or refunded during the period for:
Interest $1,025 $647
Income taxes paid $2,026 $797
Income taxes refunded $1,011 $1,250
Non-cash financing activities:
Property and equipment additions
resulting from capital leases $- $3,375
DATASOURCE: Insurance Auto Auctions, Inc.
CONTACT: Scott Pettit, Chief Financial Officer of Insurance Auto
Auctions, Inc., +1-847-839-4040; or Chris Kettmann, General Inquiries,
+1-312-553-6716, for Insurance Auto Auctions, Inc.
Web site: http://www.iaai.com/