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Inc. (KAR) filed Quarterly Report for the period ended 2010-06-30.
Adesa
Inc. has a market cap of $1.69 billion; its shares were traded at around $12.54 with a P/E ratio of 20.9 and P/S ratio of 1. KAR is in the portfolios of RS Investment Management, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC.
Highlight of Business Operations: Interest expense decreased $11.0 million, or 23%, to $35.9 million for the three months ended June 30, 2010, compared with interest expense of $46.9 million for the three months ended June 30, 2009. The decrease in interest expense was primarily the result of a $250.0 million prepayment on Term Loan B in the fourth quarter of 2009, a $225.6 million prepayment on the principal amount of the 10% senior subordinated notes in January 2010 and a $28.3 million repayment on Term Loan B in February 2010. In addition, a lower interest rate environment has reduced interest expense for our non-hedged variable rate debt instruments. Partially offsetting the decreases was an increase in interest expense at AFC of $1.8 million that has resulted from the adoption of Accounting Standards Update 2009-16 in 2010. Prior to the adoption of this guidance, this expense was recorded as a reduction of AFC revenue.
Other expense was $1.3 million for the three months ended June 30, 2010, compared with other income of $6.2 million for the three months ended June 30, 2009, representing a change of $7.5 million. The change in other (income) expense was primarily representative of foreign currency transaction losses for the three months ended June 30, 2010 versus foreign currency transaction gains for the three months ended June 30, 2009.
Revenue from ADESA increased $0.6 million, or less than 1%, to $280.1 million for the three months ended June 30, 2010, compared with $279.5 million for the three months ended June 30, 2009. The increase in revenue was primarily a result of a 4% increase in revenue per vehicle sold to over $560 for the three months ended June 30, 2010, partially offset by a 3% decrease in the number of vehicles sold for the three months ended June 30, 2010 as compared with the three months ended June 30, 2009.
Selling, general and administrative expenses for the ADESA segment increased $1.7 million, or 3%, to $54.0 million for the three months ended June 30, 2010, compared with the three months ended June 30, 2009, primarily due to a $1.8 million increase in stock-based compensation expense, a $1.7 million increase in marketing costs, a $1.1 million increase related to fluctuations in the Canadian exchange rate and a $1.4 million increase in travel, supplies and other expenses. The increases in selling, general and administrative were partially offset by a $2.6 million decrease in incentive compensation expense and a $1.7 million decrease in professional fees.
Revenue from IAAI increased $18.3 million, or 13%, to $157.3 million for the three months ended June 30, 2010, compared with $139.0 million for the three months ended June 30, 2009. The increase in revenue was primarily a result of an increase in fee revenue due to an increase in average selling price for vehicles sold at auction. For the three months ended June 30, 2010, total salvage vehicles sold declined less than 1%.
Selling, general and administrative expenses at IAAI increased $4.3 million, or 27%, to $20.0 million for the three months ended June 30, 2010, compared with $15.7 million for the three months ended June 30, 2009. The increase in selling, general and administrative expenses was attributable to increases in incentive compensation based on the performance of IAAI and stock-based compensation expense, as well as increased spending on professional fees, travel and severance related to our process improvement initiative.
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