Automotive and Financial Results and KAR Auction Services and Public Companies and Transportation, Distribution & Logistics

Auto auctioneer KAR sees quarterly profit surge

February 24, 2011

The parent company of the Adesa auto auction company boosted revenue and profit in its fourth quarter, easily beating the forecast of Wall Street analysts.

Carmel-based KAR Auction Services Inc. announced Wednesday after U.S. markets closed that it pulled in profit of $7.3 million in the three months ended Dec. 31, a 38-percent jump from the $5.3 million it earned in the same quarter the prior year.

On a per-share basis, KAR earned 5 cents in each quarter, but its number of diluted shares grew by nearly 25 million in 2010.

Excluding debt payments, accounting charges and stock-based compensation resulting from KAR’s 2007 acquisition of Adesa, the company would have earned $27.5 million, compared with $16.3 million earned on that adjusted basis in the fourth quarter of 2009.

Adjusted earnings per share were 20 cents in the most recent quarter. On that basis, analysts expected KAR to earn 14 cents per share, according to a survey by Thomson Reuters.

KAR’s fourth-quarter revenue of $441.3 million also beat analysts’ forecasts, who were expecting $424.5 million. KAR’s revenue was 5.6 percent higher than in the fourth quarter of 2009.

For all of 2010, KAR earned $69.6 million, or 51 cents per share, compared with 2009 earnings of $23.2 million, or 21 cents per share.

For all of 2011, KAR predicted it would earn $1.20 to $1.25 per share, excluding the special charges from the 2007 merger. In 2010, adjusted earnings were $1.05 per share.

Adesa conducts used-vehicle auctions for car dealers at 70 locations in North America. KAR also owns Insurance Auto Auctions Inc., a salvage auto auction company with 159 North American locations, and Automotive Finance Corp., which provides car loans through used vehicles dealers at 88 North American locations.

Shares of KAR fell Wednesday by nearly 4 percent, closing at $14.45 apiece, before quarterly results were announced. The company’s stock price is still up nearly 5 percent so far this year.
 

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