KAR Auction Services, Inc. Reports Third Quarter 2019 Financial Results

KAR Announces Dividend of $0.19 per Common Share

Published

CARMEL, Ind., Nov. 5, 2019 /PRNewswire/ -- KAR Auction Services, Inc. (NYSE: KAR), today reported its third quarter financial results for the period ended September 30, 2019. For the third quarter of 2019, the company reported revenue from continuing operations of $701.9 million as compared with revenue from continuing operations of $612.4 million for the third quarter of 2018, an increase of 15%. Net income from continuing operations for the third quarter of 2019 increased 11% to $34.4 million, or $0.26 per diluted share, as compared with net income from continuing operations of $30.9 million, or $0.23 per diluted share, in the third quarter of 2018. Adjusted EBITDA from continuing operations for the quarter ended September 30, 2019 increased 2% to $129.2 million, as compared with Adjusted EBITDA from continuing operations of $126.4 million for the quarter ended September 30, 2018. Operating adjusted net income from continuing operations per diluted share increased 9% to $0.35 for the quarter ended September 30, 2019, as compared with operating adjusted net income from continuing operations per diluted share of $0.32 for the quarter ended September 30, 2018. Included in the company's consolidated results were operating losses from TradeRev of $18.8 million and $14.8 million for the three months ended September 30, 2019 and 2018, respectively.

For the nine months ended September 30, 2019, the company reported revenue from continuing operations of $2,110.6 million as compared with revenue from continuing operations of $1,849.0 million for the nine months ended September 30, 2018, an increase of 14%. Net income from continuing operations for the nine months ended September 30, 2019 decreased 25% to $77.1 million, or $0.58 per diluted share, as compared with net income from continuing operations of $102.5 million, or $0.76 per diluted share, in the first nine months of 2018. Adjusted EBITDA from continuing operations for the nine months ended September 30, 2019 decreased 2% to $388.0 million, as compared with Adjusted EBITDA from continuing operations of $394.7 million for the nine months ended September 30, 2018. Operating adjusted net income from continuing operations per diluted share decreased 19% to $0.85 for the nine months ended September 30, 2019, as compared with operating adjusted net income from continuing operations per diluted share of $1.05 for the nine months ended September 30, 2018. Included in the company's consolidated results were operating losses from TradeRev of $51.6 million and $37.3 million for the nine months ended September 30, 2019 and 2018, respectively.

"Though we experienced growth across our businesses in the third quarter, volume and margin pressures drove consolidated results lower than we anticipated," said Jim Hallett, chairman and CEO of KAR. "We are focused on stabilizing our cost structure and performance to drive sustainable growth and deliver long-term shareholder value."

2019 Outlook

KAR has updated its outlook as noted below.

(in millions, except per share amounts) AnnualGuidance
Net income from continuing operations $101.8 - $115.8
Income tax expense $39.0 - $45.0
Interest expense, net of interest income $187
Depreciation and amortization $185
EBITDA $512.8 - $532.8
Adjusted EBITDA addbacks, net ($2.8)
Adjusted EBITDA $510 - $530
Capital expenditures $160
Cash taxes $50
Cash interest on corporate debt $110
Effective tax rate 28%
Net income from continuing operations per share - diluted $0.77 - $0.87
Operating adjusted net income per share $1.12 - $1.22
Weighted average diluted shares 133

Earnings guidance does not contemplate future items such as business development activities, strategic developments (such as restructurings, spin-offs or dispositions of assets or investments), gains/losses associated with step acquisitions, contingent purchase price adjustments, significant expenses related to litigation and changes in applicable laws and regulations (including significant accounting and tax matters). The timing and amounts of these items are highly variable, difficult to predict, and of a potential size that could have a substantial impact on the company's reported results for any given period. Prospective quantification of these items is generally not practicable. Forward-looking non-GAAP guidance excludes amortization expense associated with acquired intangible assets, as well as one-time charges, net of taxes. See reconciliations of the company's guidance on pages 8 and 9.

Dividend AnnouncementThe company announced a cash dividend today of $0.19 per share on the company's common stock. The dividend is payable on January 3, 2020, to stockholders of record as of the close of business on December 20, 2019.

Earnings Conference Call InformationKAR will be hosting an earnings conference call and webcast on Wednesday, November 6, 2019 at 11:00 a.m. EST (10:00 a.m. CST). The call will be hosted by KAR's Chief Executive Officer and Chairman of the Board, Jim Hallett, and Executive Vice President and Chief Financial Officer, Eric Loughmiller. The conference call may be accessed by calling 1-844-778-4145 and entering participant passcode 4918547, while the live web cast will be available at the investors section of www.karglobal.com. Supplemental financial information for KAR's third quarter 2019 results is available at the investors section of www.karglobal.com.

A replay of the call will be available for two weeks via telephone starting approximately 30 minutes after the completion of the call. The replay may be accessed by calling 1-855-859-2056 and entering passcode 4918547. The archive of the web cast will also be available following the call and will be available at the investors section of www.karglobal.com for a limited time.

About KARKAR Auction Services, Inc. (NYSE: KAR), known as KAR Global, provides sellers and buyers across the global wholesale used vehicle industry with innovative, technology-driven remarketing solutions. KAR Global's unique end-to-end platform supports whole car, salvage, financing, logistics and other ancillary and related services, including the sale of nearly 3.5 million units valued at over $40 billion through our auctions. Our integrated physical, online and mobile marketplaces reduce risk, improve transparency and streamline transactions for customers in more than 70 countries. Headquartered in Carmel, Indiana, KAR Global has approximately 15,000 employees across the United States, Canada, Mexico, U.K. and Europe. For more information go to www.KARglobal.com. For the latest KAR Global news, follow us on Twitter @KARSpeaks.

Forward Looking StatementsCertain statements contained in this release include "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and which are subject to certain risks, trends and uncertainties. In particular, statements made that are not historical facts may be forward-looking statements. Words such as "should," "may," "will," "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," and similar expressions identify forward-looking statements. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include those matters disclosed in the Company's Securities and Exchange Commission filings. The Company does not undertake any obligation to update any forward-looking statements.

(in millions, except per share amounts) AnnualGuidance Analyst Inquiries: Media Inquiries:
Mike Eliason Gene Rodriguez Miller
Net income from continuing operations $101.8 - $115.8 (317) 249-4559 (317) 343-5243
Income tax expense $39.0 - $45.0 mike.eliason@karglobal.com gene.rodriguez@karglobal.com
Interest expense, net of interest income $187
Depreciation and amortization $185
EBITDA $512.8 - $532.8
Adjusted EBITDA addbacks, net ($2.8)
Adjusted EBITDA $510 - $530
Capital expenditures $160
Cash taxes $50
Cash interest on corporate debt $110
Effective tax rate 28%
Net income from continuing operations per share - diluted $0.77 - $0.87
Operating adjusted net income per share $1.12 - $1.22
Weighted average diluted shares 133

 

(in millions, except per share amounts) AnnualGuidance Analyst Inquiries: Media Inquiries: KAR Auction Services, Inc.
Mike Eliason Gene Rodriguez Miller Condensed Consolidated Statements of Income
Net income from continuing operations $101.8 - $115.8 (317) 249-4559 (317) 343-5243 (In millions) (Unaudited)
Income tax expense $39.0 - $45.0 mike.eliason@karglobal.com gene.rodriguez@karglobal.com
Interest expense, net of interest income $187 Three Months EndedSeptember 30, Nine Months EndedSeptember 30,
Depreciation and amortization $185 2019 2018 2019 2018
EBITDA $512.8 - $532.8 Operating revenues
Adjusted EBITDA addbacks, net ($2.8) ADESA Auction Services $ 613.6 $ 527.0 $ 1,845.7 $ 1,593.4
Adjusted EBITDA $510 - $530 AFC 88.3 85.4 264.9 255.6
Capital expenditures $160 Total operating revenues 701.9 612.4 2,110.6 1,849.0
Cash taxes $50
Cash interest on corporate debt $110 Operating expenses
Effective tax rate 28% Cost of services (exclusive of depreciation and amortization) 410.9 330.7 1,222.2 989.2
Net income from continuing operations per share - diluted $0.77 - $0.87 Selling, general and administrative 158.9 154.7 497.3 460.1
Operating adjusted net income per share $1.12 - $1.22 Depreciation and amortization 46.4 41.4 138.6 129.8
Weighted average diluted shares 133 Total operating expenses 616.2 526.8 1,858.1 1,579.1
Operating profit 85.7 85.6 252.5 269.9
Interest expense 37.9 49.0 150.0 138.7
Other income, net (2.0) (3.0) (5.2) (3.8)
Loss on extinguishment of debt 2.2 2.2
Income from continuing operations before income taxes 47.6 39.6 105.5 135.0
Income taxes 13.2 8.7 28.4 32.5
Income from continuing operations 34.4 30.9 77.1 102.5
Income from discontinued operations, net of income taxes 0.9 46.6 91.6 158.2
Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7
Net income per share - basic
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76
Income from discontinued operations 0.01 0.35 0.69 1.18
Net income $ 0.27 $ 0.58 $ 1.27 $ 1.94
Net income per share - diluted
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76
Income from discontinued operations 0.01 0.34 0.68 1.16
Net income $ 0.27 $ 0.57 $ 1.26 $ 1.92
Dividends declared per common share $ 0.19 $ 0.35 $ 0.89 $ 1.05

 

(in millions, except per share amounts) AnnualGuidance Analyst Inquiries: Media Inquiries: KAR Auction Services, Inc. KAR Auction Services, Inc.
Mike Eliason Gene Rodriguez Miller Condensed Consolidated Statements of Income Condensed Consolidated Balance Sheets
Net income from continuing operations $101.8 - $115.8 (317) 249-4559 (317) 343-5243 (In millions) (Unaudited) (In millions) (Unaudited)
Income tax expense $39.0 - $45.0 mike.eliason@karglobal.com gene.rodriguez@karglobal.com
Interest expense, net of interest income $187 Three Months EndedSeptember 30, Nine Months EndedSeptember 30, September 30, 2019 December 31,2018
Depreciation and amortization $185 2019 2018 2019 2018 Cash and cash equivalents $ 508.6 $ 277.1
EBITDA $512.8 - $532.8 Operating revenues Restricted cash 23.3 27.6
Adjusted EBITDA addbacks, net ($2.8) ADESA Auction Services $ 613.6 $ 527.0 $ 1,845.7 $ 1,593.4 Trade receivables, net of allowances 510.2 454.6
Adjusted EBITDA $510 - $530 AFC 88.3 85.4 264.9 255.6 Finance receivables, net of allowances 2,095.6 2,000.8
Capital expenditures $160 Total operating revenues 701.9 612.4 2,110.6 1,849.0 Other current assets 120.0 100.6
Cash taxes $50 Current assets, discontinued operations 453.5
Cash interest on corporate debt $110 Operating expenses Total current assets 3,257.7 3,314.2
Effective tax rate 28% Cost of services (exclusive of depreciation and amortization) 410.9 330.7 1,222.2 989.2
Net income from continuing operations per share - diluted $0.77 - $0.87 Selling, general and administrative 158.9 154.7 497.3 460.1 Goodwill 1,810.3 1,676.9
Operating adjusted net income per share $1.12 - $1.22 Depreciation and amortization 46.4 41.4 138.6 129.8 Customer relationships, net of accumulated amortization 218.3 227.4
Weighted average diluted shares 133 Total operating expenses 616.2 526.8 1,858.1 1,579.1 Operating lease right-of-use assets 366.4
Intangible and other assets 323.9 303.4
Operating profit 85.7 85.6 252.5 269.9 Non-current assets, discontinued operations 1,053.3
Property and equipment, net of accumulated depreciation 603.1 631.0
Interest expense 37.9 49.0 150.0 138.7 Total assets $ 6,579.7 $ 7,206.2
Other income, net (2.0) (3.0) (5.2) (3.8)
Loss on extinguishment of debt 2.2 2.2 Current liabilities, excluding obligations collateralized by finance receivables and current maturities of debt $ 1,060.8 $ 952.0
Obligations collateralized by finance receivables 1,428.4 1,445.3
Income from continuing operations before income taxes 47.6 39.6 105.5 135.0 Current maturities of debt 27.0 13.1
Current liabilities, discontinued operations 214.4
Income taxes 13.2 8.7 28.4 32.5 Total current liabilities 2,516.2 2,624.8
Income from continuing operations 34.4 30.9 77.1 102.5 Long-term debt 1,863.0 2,654.3
Income from discontinued operations, net of income taxes 0.9 46.6 91.6 158.2 Operating lease liabilities 361.1
Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7 Other non-current liabilities 203.6 196.9
Non-current liabilities, discontinued operations 266.0
Net income per share - basic Stockholders' equity 1,635.8 1,464.2
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76 Total liabilities and stockholders' equity $ 6,579.7 $ 7,206.2
Income from discontinued operations 0.01 0.35 0.69 1.18
Net income $ 0.27 $ 0.58 $ 1.27 $ 1.94
Net income per share - diluted
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76
Income from discontinued operations 0.01 0.34 0.68 1.16
Net income $ 0.27 $ 0.57 $ 1.26 $ 1.92
Dividends declared per common share $ 0.19 $ 0.35 $ 0.89 $ 1.05

 

(in millions, except per share amounts) AnnualGuidance Analyst Inquiries: Media Inquiries: KAR Auction Services, Inc. KAR Auction Services, Inc. KAR Auction Services, Inc.
Mike Eliason Gene Rodriguez Miller Condensed Consolidated Statements of Income Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows
Net income from continuing operations $101.8 - $115.8 (317) 249-4559 (317) 343-5243 (In millions) (Unaudited) (In millions) (Unaudited) (In millions) (Unaudited)
Income tax expense $39.0 - $45.0 mike.eliason@karglobal.com gene.rodriguez@karglobal.com
Interest expense, net of interest income $187 Three Months EndedSeptember 30, Nine Months EndedSeptember 30, September 30, 2019 December 31,2018 Nine Months EndedSeptember 30,
Depreciation and amortization $185 2019 2018 2019 2018 Cash and cash equivalents $ 508.6 $ 277.1 2019 2018
EBITDA $512.8 - $532.8 Operating revenues Restricted cash 23.3 27.6 Operating activities
Adjusted EBITDA addbacks, net ($2.8) ADESA Auction Services $ 613.6 $ 527.0 $ 1,845.7 $ 1,593.4 Trade receivables, net of allowances 510.2 454.6 Net income $ 168.7 $ 260.7
Adjusted EBITDA $510 - $530 AFC 88.3 85.4 264.9 255.6 Finance receivables, net of allowances 2,095.6 2,000.8 Net income from discontinued operations (91.6) (158.2)
Capital expenditures $160 Total operating revenues 701.9 612.4 2,110.6 1,849.0 Other current assets 120.0 100.6     Adjustments to reconcile net income to net cash provided by operating activities:
Cash taxes $50 Current assets, discontinued operations 453.5      Depreciation and amortization 138.6 129.8
Cash interest on corporate debt $110 Operating expenses Total current assets 3,257.7 3,314.2      Provision for credit losses 28.9 25.6
Effective tax rate 28% Cost of services (exclusive of depreciation and amortization) 410.9 330.7 1,222.2 989.2      Deferred income taxes 2.5 (0.1)
Net income from continuing operations per share - diluted $0.77 - $0.87 Selling, general and administrative 158.9 154.7 497.3 460.1 Goodwill 1,810.3 1,676.9      Amortization of debt issuance costs 9.6 8.0
Operating adjusted net income per share $1.12 - $1.22 Depreciation and amortization 46.4 41.4 138.6 129.8 Customer relationships, net of accumulated amortization 218.3 227.4      Stock-based compensation 14.6 15.3
Weighted average diluted shares 133 Total operating expenses 616.2 526.8 1,858.1 1,579.1 Operating lease right-of-use assets 366.4      Loss (gain) on disposal of fixed assets 0.1 (0.1)
Intangible and other assets 323.9 303.4  Loss on extinguishment of debt 2.2
Operating profit 85.7 85.6 252.5 269.9 Non-current assets, discontinued operations 1,053.3      Other non-cash, net 7.8 (2.6)
Property and equipment, net of accumulated depreciation 603.1 631.0      Changes in operating assets and liabilities, net of acquisitions:
Interest expense 37.9 49.0 150.0 138.7 Total assets $ 6,579.7 $ 7,206.2      Trade receivables and other assets (41.3) (158.3)
Other income, net (2.0) (3.0) (5.2) (3.8)      Accounts payable and accrued expenses 51.0 206.8
Loss on extinguishment of debt 2.2 2.2 Current liabilities, excluding obligations collateralized by finance receivables and current maturities of debt $ 1,060.8 $ 952.0 Net cash provided by operating activities - continuing operations 291.1 326.9
Obligations collateralized by finance receivables 1,428.4 1,445.3 Net cash provided by operating activities - discontinued operations 156.7 238.2
Income from continuing operations before income taxes 47.6 39.6 105.5 135.0 Current maturities of debt 27.0 13.1 Investing activities
Current liabilities, discontinued operations 214.4      Net increase in finance receivables held for investment (119.0) (90.2)
Income taxes 13.2 8.7 28.4 32.5 Total current liabilities 2,516.2 2,624.8      Acquisition of businesses (net of cash acquired) (120.7) (23.3)
     Purchases of property, equipment and computer software (127.6) (82.7)
Income from continuing operations 34.4 30.9 77.1 102.5 Long-term debt 1,863.0 2,654.3 Net cash used by investing activities - continuing operations (367.3) (196.2)
Income from discontinued operations, net of income taxes 0.9 46.6 91.6 158.2 Operating lease liabilities 361.1 Net cash used by investing activities - discontinued operations (37.4) (37.9)
Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7 Other non-current liabilities 203.6 196.9 Financing activities
Non-current liabilities, discontinued operations 266.0      Net increase in book overdrafts 9.2 8.5
Net income per share - basic Stockholders' equity 1,635.8 1,464.2      Net increase in borrowings from lines of credit 17.5
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76 Total liabilities and stockholders' equity $ 6,579.7 $ 7,206.2      Net (decrease) increase in obligations collateralized by finance receivables (25.0) 6.0
Income from discontinued operations 0.01 0.35 0.69 1.18  Proceeds from long term debt 947.6
Net income $ 0.27 $ 0.58 $ 1.27 $ 1.94  Payments for debt issuance costs/amendments (13.7)
     Payments on long-term debt (1,746.6) (8.0)
Net income per share - diluted      Payments on capital leases (12.2) (11.0)
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76      Payments of contingent consideration and deferred acquisition costs (0.5) (7.4)
Income from discontinued operations 0.01 0.34 0.68 1.16      Issuance of common stock under stock plans 4.1 14.2
Net income $ 0.27 $ 0.57 $ 1.26 $ 1.92      Tax withholding payments for vested RSUs (10.5) (10.1)
     Repurchase and retirement of common stock (119.7) (50.0)
Dividends declared per common share $ 0.19 $ 0.35 $ 0.89 $ 1.05      Dividends paid to stockholders (139.8) (141.2)
     Cash transferred to IAA (50.9)
Net cash used by financing activities - continuing operations (1,140.5) (199.0)
Net cash provided by (used by) financing activities - discontinued operations 1,317.6 (6.7)
Effect of exchange rate changes on cash 7.0 (4.9)
Net increase in cash, cash equivalents and restricted cash 227.2 120.4
Cash, cash equivalents and restricted cash at beginning of period 304.7 303.5
Cash, cash equivalents and restricted cash at end of period $ 531.9 $ 423.9
Cash paid for interest, net of proceeds from interest rate caps $ 120.0 $ 120.7
Cash paid for taxes, net of refunds - continuing operations $ 27.8 $ 47.5
Cash paid for taxes, net of refunds - discontinued operations $ 40.1 $ 49.4

KAR Auction Services, Inc.Reconciliation of Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, operating adjusted net income from continuing operations and operating adjusted net income from continuing operations per share as presented herein are supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States ("GAAP"). They are not measurements of our financial performance under GAAP and should not be considered as substitutes for net income (loss) or any other performance measures derived in accordance with GAAP. Management believes that these measures provide investors additional meaningful methods to evaluate certain aspects of the company's results period over period and for the other reasons set forth below.

EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings as described in our senior secured credit agreement covenant calculations. Management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors about one of the principal measures of performance used by our creditors. In addition, management uses EBITDA and Adjusted EBITDA to evaluate our performance.

Depreciation expense for property and equipment and amortization expense of capitalized internally developed software costs relate to ongoing capital expenditures; however, amortization expense associated with acquired intangible assets, such as customer relationships, software, tradenames and noncompete agreements are not representative of ongoing capital expenditures, but have a continuing effect on our reported results. Non-GAAP financial measures of operating adjusted net income from continuing operations and operating adjusted net income from continuing operations per share, in the opinion of the company, provide comparability of the company's performance to other companies that may not have incurred these types of non-cash expenses or that report a similar measure. In addition, operating adjusted net income from continuing operations and operating adjusted net income from continuing operations per share may include adjustments for certain other charges.

EBITDA, Adjusted EBITDA, operating adjusted net income from continuing operations and operating adjusted net income from continuing operations per share have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of the results as reported under GAAP. These measures may not be comparable to similarly titled measures reported by other companies.

The following table reconciles EBITDA and Adjusted EBITDA to net income for the periods presented:

(in millions, except per share amounts) AnnualGuidance Analyst Inquiries: Media Inquiries: KAR Auction Services, Inc. KAR Auction Services, Inc. KAR Auction Services, Inc. Three Months EndedSeptember 30, Nine Months EndedSeptember 30,
Mike Eliason Gene Rodriguez Miller Condensed Consolidated Statements of Income Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows (in millions), (unaudited) 2019 2018 2019 2018
Net income from continuing operations $101.8 - $115.8 (317) 249-4559 (317) 343-5243 (In millions) (Unaudited) (In millions) (Unaudited) (In millions) (Unaudited) Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7
Income tax expense $39.0 - $45.0 mike.eliason@karglobal.com gene.rodriguez@karglobal.com Less: Income from discontinued operations (0.9) (46.6) (91.6) (158.2)
Interest expense, net of interest income $187 Three Months EndedSeptember 30, Nine Months EndedSeptember 30, September 30, 2019 December 31,2018 Nine Months EndedSeptember 30, Net income from continuing operations 34.4 30.9 77.1 102.5
Depreciation and amortization $185 2019 2018 2019 2018 Cash and cash equivalents $ 508.6 $ 277.1 2019 2018 Add back:
EBITDA $512.8 - $532.8 Operating revenues Restricted cash 23.3 27.6 Operating activities Income taxes 13.2 8.7 28.4 32.5
Adjusted EBITDA addbacks, net ($2.8) ADESA Auction Services $ 613.6 $ 527.0 $ 1,845.7 $ 1,593.4 Trade receivables, net of allowances 510.2 454.6 Net income $ 168.7 $ 260.7 Interest expense, net of interest income 37.2 47.7 148.1 136.1
Adjusted EBITDA $510 - $530 AFC 88.3 85.4 264.9 255.6 Finance receivables, net of allowances 2,095.6 2,000.8 Net income from discontinued operations (91.6) (158.2) Depreciation and amortization 46.4 41.4 138.6 129.8
Capital expenditures $160 Total operating revenues 701.9 612.4 2,110.6 1,849.0 Other current assets 120.0 100.6     Adjustments to reconcile net income to net cash provided by operating activities: EBITDA 131.2 128.7 392.2 400.9
Cash taxes $50 Current assets, discontinued operations 453.5      Depreciation and amortization 138.6 129.8 Non-cash stock-based compensation 4.5 5.8 15.1 15.9
Cash interest on corporate debt $110 Operating expenses Total current assets 3,257.7 3,314.2      Provision for credit losses 28.9 25.6 Loss on extinguishment of debt 2.2 2.2
Effective tax rate 28% Cost of services (exclusive of depreciation and amortization) 410.9 330.7 1,222.2 989.2      Deferred income taxes 2.5 (0.1) Acquisition related costs 2.7 1.5 10.3 5.2
Net income from continuing operations per share - diluted $0.77 - $0.87 Selling, general and administrative 158.9 154.7 497.3 460.1 Goodwill 1,810.3 1,676.9      Amortization of debt issuance costs 9.6 8.0 Securitization interest (13.3) (12.9) (41.9) (37.0)
Operating adjusted net income per share $1.12 - $1.22 Depreciation and amortization 46.4 41.4 138.6 129.8 Customer relationships, net of accumulated amortization 218.3 227.4      Stock-based compensation 14.6 15.3 Severance 0.9 1.4 5.7 3.8
Weighted average diluted shares 133 Total operating expenses 616.2 526.8 1,858.1 1,579.1 Operating lease right-of-use assets 366.4      Loss (gain) on disposal of fixed assets 0.1 (0.1) Foreign currency gains/losses (0.4) (1.0)
Intangible and other assets 323.9 303.4  Loss on extinguishment of debt 2.2 IAA allocated costs 1.4 2.3 3.9
Operating profit 85.7 85.6 252.5 269.9 Non-current assets, discontinued operations 1,053.3      Other non-cash, net 7.8 (2.6) Other 1.4 0.5 3.1 2.0
Property and equipment, net of accumulated depreciation 603.1 631.0      Changes in operating assets and liabilities, net of acquisitions:   Total addbacks (2.0) (2.3) (4.2) (6.2)
Interest expense 37.9 49.0 150.0 138.7 Total assets $ 6,579.7 $ 7,206.2      Trade receivables and other assets (41.3) (158.3) Adjusted EBITDA $ 129.2 $ 126.4 $ 388.0 $ 394.7
Other income, net (2.0) (3.0) (5.2) (3.8)      Accounts payable and accrued expenses 51.0 206.8
Loss on extinguishment of debt 2.2 2.2 Current liabilities, excluding obligations collateralized by finance receivables and current maturities of debt $ 1,060.8 $ 952.0 Net cash provided by operating activities - continuing operations 291.1 326.9
Obligations collateralized by finance receivables 1,428.4 1,445.3 Net cash provided by operating activities - discontinued operations 156.7 238.2
Income from continuing operations before income taxes 47.6 39.6 105.5 135.0 Current maturities of debt 27.0 13.1 Investing activities
Current liabilities, discontinued operations 214.4      Net increase in finance receivables held for investment (119.0) (90.2)
Income taxes 13.2 8.7 28.4 32.5 Total current liabilities 2,516.2 2,624.8      Acquisition of businesses (net of cash acquired) (120.7) (23.3)
     Purchases of property, equipment and computer software (127.6) (82.7)
Income from continuing operations 34.4 30.9 77.1 102.5 Long-term debt 1,863.0 2,654.3 Net cash used by investing activities - continuing operations (367.3) (196.2)
Income from discontinued operations, net of income taxes 0.9 46.6 91.6 158.2 Operating lease liabilities 361.1 Net cash used by investing activities - discontinued operations (37.4) (37.9)
Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7 Other non-current liabilities 203.6 196.9 Financing activities
Non-current liabilities, discontinued operations 266.0      Net increase in book overdrafts 9.2 8.5
Net income per share - basic Stockholders' equity 1,635.8 1,464.2      Net increase in borrowings from lines of credit 17.5
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76 Total liabilities and stockholders' equity $ 6,579.7 $ 7,206.2      Net (decrease) increase in obligations collateralized by finance receivables (25.0) 6.0
Income from discontinued operations 0.01 0.35 0.69 1.18  Proceeds from long term debt 947.6
Net income $ 0.27 $ 0.58 $ 1.27 $ 1.94  Payments for debt issuance costs/amendments (13.7)
     Payments on long-term debt (1,746.6) (8.0)
Net income per share - diluted      Payments on capital leases (12.2) (11.0)
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76      Payments of contingent consideration and deferred acquisition costs (0.5) (7.4)
Income from discontinued operations 0.01 0.34 0.68 1.16      Issuance of common stock under stock plans 4.1 14.2
Net income $ 0.27 $ 0.57 $ 1.26 $ 1.92      Tax withholding payments for vested RSUs (10.5) (10.1)
     Repurchase and retirement of common stock (119.7) (50.0)
Dividends declared per common share $ 0.19 $ 0.35 $ 0.89 $ 1.05      Dividends paid to stockholders (139.8) (141.2)
     Cash transferred to IAA (50.9)
Net cash used by financing activities - continuing operations (1,140.5) (199.0)
Net cash provided by (used by) financing activities - discontinued operations 1,317.6 (6.7)
Effect of exchange rate changes on cash 7.0 (4.9)
Net increase in cash, cash equivalents and restricted cash 227.2 120.4
Cash, cash equivalents and restricted cash at beginning of period 304.7 303.5
Cash, cash equivalents and restricted cash at end of period $ 531.9 $ 423.9
Cash paid for interest, net of proceeds from interest rate caps $ 120.0 $ 120.7
Cash paid for taxes, net of refunds - continuing operations $ 27.8 $ 47.5
Cash paid for taxes, net of refunds - discontinued operations $ 40.1 $ 49.4

The following table reconciles operating adjusted net income from continuing operations and operating adjusted net income from continuing operations per share to net income and net income per share for the periods presented:

(in millions, except per share amounts) AnnualGuidance Analyst Inquiries: Media Inquiries: KAR Auction Services, Inc. KAR Auction Services, Inc. KAR Auction Services, Inc. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, Three Months EndedSeptember 30, Nine Months EndedSeptember 30,
Mike Eliason Gene Rodriguez Miller Condensed Consolidated Statements of Income Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows (in millions), (unaudited) 2019 2018 2019 2018 (in millions, except per share amounts), (unaudited) 2019 2018 2019 2018
Net income from continuing operations $101.8 - $115.8 (317) 249-4559 (317) 343-5243 (In millions) (Unaudited) (In millions) (Unaudited) (In millions) (Unaudited) Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7
Income tax expense $39.0 - $45.0 mike.eliason@karglobal.com gene.rodriguez@karglobal.com Less: Income from discontinued operations (0.9) (46.6) (91.6) (158.2) Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7
Interest expense, net of interest income $187 Three Months EndedSeptember 30, Nine Months EndedSeptember 30, September 30, 2019 December 31,2018 Nine Months EndedSeptember 30, Net income from continuing operations 34.4 30.9 77.1 102.5 Less: income from discontinued operations (0.9) (46.6) (91.6) (158.2)
Depreciation and amortization $185 2019 2018 2019 2018 Cash and cash equivalents $ 508.6 $ 277.1 2019 2018 Add back: Net income from continuing operations 34.4 30.9 77.1 102.5
EBITDA $512.8 - $532.8 Operating revenues Restricted cash 23.3 27.6 Operating activities Income taxes 13.2 8.7 28.4 32.5    Acquired amortization expense 14.5 13.9 43.9 49.6
Adjusted EBITDA addbacks, net ($2.8) ADESA Auction Services $ 613.6 $ 527.0 $ 1,845.7 $ 1,593.4 Trade receivables, net of allowances 510.2 454.6 Net income $ 168.7 $ 260.7 Interest expense, net of interest income 37.2 47.7 148.1 136.1 IAA allocated costs 1.4 2.3 3.9
Adjusted EBITDA $510 - $530 AFC 88.3 85.4 264.9 255.6 Finance receivables, net of allowances 2,095.6 2,000.8 Net income from discontinued operations (91.6) (158.2) Depreciation and amortization 46.4 41.4 138.6 129.8 Acceleration of debt issuance costs 1.8
Capital expenditures $160 Total operating revenues 701.9 612.4 2,110.6 1,849.0 Other current assets 120.0 100.6     Adjustments to reconcile net income to net cash provided by operating activities: EBITDA 131.2 128.7 392.2 400.9 Loss on extinguishment of debt 2.2 2.2
Cash taxes $50 Current assets, discontinued operations 453.5      Depreciation and amortization 138.6 129.8 Non-cash stock-based compensation 4.5 5.8 15.1 15.9    Income taxes (1) (4.6) (3.4) (13.5) (12.9)
Cash interest on corporate debt $110 Operating expenses Total current assets 3,257.7 3,314.2      Provision for credit losses 28.9 25.6 Loss on extinguishment of debt 2.2 2.2 Operating adjusted net income from continuing operations $ 46.5 $ 42.8 $ 113.8 $ 143.1
Effective tax rate 28% Cost of services (exclusive of depreciation and amortization) 410.9 330.7 1,222.2 989.2      Deferred income taxes 2.5 (0.1) Acquisition related costs 2.7 1.5 10.3 5.2
Net income from continuing operations per share - diluted $0.77 - $0.87 Selling, general and administrative 158.9 154.7 497.3 460.1 Goodwill 1,810.3 1,676.9      Amortization of debt issuance costs 9.6 8.0 Securitization interest (13.3) (12.9) (41.9) (37.0) Net income from continuing operations per share - diluted $ 0.26 $ 0.23 $ 0.58 $ 0.76
Operating adjusted net income per share $1.12 - $1.22 Depreciation and amortization 46.4 41.4 138.6 129.8 Customer relationships, net of accumulated amortization 218.3 227.4      Stock-based compensation 14.6 15.3 Severance 0.9 1.4 5.7 3.8    Acquired amortization expense 0.11 0.10 0.33 0.36
Weighted average diluted shares 133 Total operating expenses 616.2 526.8 1,858.1 1,579.1 Operating lease right-of-use assets 366.4      Loss (gain) on disposal of fixed assets 0.1 (0.1) Foreign currency gains/losses (0.4) (1.0) IAA allocated costs 0.01 0.02 0.03
Intangible and other assets 323.9 303.4  Loss on extinguishment of debt 2.2 IAA allocated costs 1.4 2.3 3.9 Acceleration of debt issuance costs 0.01
Operating profit 85.7 85.6 252.5 269.9 Non-current assets, discontinued operations 1,053.3      Other non-cash, net 7.8 (2.6) Other 1.4 0.5 3.1 2.0 Loss on extinguishment of debt 0.02 0.02
Property and equipment, net of accumulated depreciation 603.1 631.0      Changes in operating assets and liabilities, net of acquisitions:   Total addbacks (2.0) (2.3) (4.2) (6.2)    Income taxes (0.04) (0.02) (0.11) (0.10)
Interest expense 37.9 49.0 150.0 138.7 Total assets $ 6,579.7 $ 7,206.2      Trade receivables and other assets (41.3) (158.3) Adjusted EBITDA $ 129.2 $ 126.4 $ 388.0 $ 394.7 Operating adjusted net income from continuing operations per share - diluted $ 0.35 $ 0.32 $ 0.85 $ 1.05
Other income, net (2.0) (3.0) (5.2) (3.8)      Accounts payable and accrued expenses 51.0 206.8
Loss on extinguishment of debt 2.2 2.2 Current liabilities, excluding obligations collateralized by finance receivables and current maturities of debt $ 1,060.8 $ 952.0 Net cash provided by operating activities - continuing operations 291.1 326.9 Weighted average diluted shares 132.4 135.6 133.8 135.7
Obligations collateralized by finance receivables 1,428.4 1,445.3 Net cash provided by operating activities - discontinued operations 156.7 238.2
Income from continuing operations before income taxes 47.6 39.6 105.5 135.0 Current maturities of debt 27.0 13.1 Investing activities
Current liabilities, discontinued operations 214.4      Net increase in finance receivables held for investment (119.0) (90.2)
Income taxes 13.2 8.7 28.4 32.5 Total current liabilities 2,516.2 2,624.8      Acquisition of businesses (net of cash acquired) (120.7) (23.3)
     Purchases of property, equipment and computer software (127.6) (82.7)
Income from continuing operations 34.4 30.9 77.1 102.5 Long-term debt 1,863.0 2,654.3 Net cash used by investing activities - continuing operations (367.3) (196.2)
Income from discontinued operations, net of income taxes 0.9 46.6 91.6 158.2 Operating lease liabilities 361.1 Net cash used by investing activities - discontinued operations (37.4) (37.9)
Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7 Other non-current liabilities 203.6 196.9 Financing activities
Non-current liabilities, discontinued operations 266.0      Net increase in book overdrafts 9.2 8.5
Net income per share - basic Stockholders' equity 1,635.8 1,464.2      Net increase in borrowings from lines of credit 17.5
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76 Total liabilities and stockholders' equity $ 6,579.7 $ 7,206.2      Net (decrease) increase in obligations collateralized by finance receivables (25.0) 6.0
Income from discontinued operations 0.01 0.35 0.69 1.18  Proceeds from long term debt 947.6
Net income $ 0.27 $ 0.58 $ 1.27 $ 1.94  Payments for debt issuance costs/amendments (13.7)
     Payments on long-term debt (1,746.6) (8.0)
Net income per share - diluted      Payments on capital leases (12.2) (11.0)
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76      Payments of contingent consideration and deferred acquisition costs (0.5) (7.4)
Income from discontinued operations 0.01 0.34 0.68 1.16      Issuance of common stock under stock plans 4.1 14.2
Net income $ 0.27 $ 0.57 $ 1.26 $ 1.92      Tax withholding payments for vested RSUs (10.5) (10.1)
     Repurchase and retirement of common stock (119.7) (50.0)
Dividends declared per common share $ 0.19 $ 0.35 $ 0.89 $ 1.05      Dividends paid to stockholders (139.8) (141.2)
     Cash transferred to IAA (50.9)
Net cash used by financing activities - continuing operations (1,140.5) (199.0)
Net cash provided by (used by) financing activities - discontinued operations 1,317.6 (6.7)
Effect of exchange rate changes on cash 7.0 (4.9)
Net increase in cash, cash equivalents and restricted cash 227.2 120.4
Cash, cash equivalents and restricted cash at beginning of period 304.7 303.5
Cash, cash equivalents and restricted cash at end of period $ 531.9 $ 423.9
Cash paid for interest, net of proceeds from interest rate caps $ 120.0 $ 120.7
Cash paid for taxes, net of refunds - continuing operations $ 27.8 $ 47.5
Cash paid for taxes, net of refunds - discontinued operations $ 40.1 $ 49.4

(in millions, except per share amounts) AnnualGuidance Analyst Inquiries: Media Inquiries: KAR Auction Services, Inc. KAR Auction Services, Inc. KAR Auction Services, Inc. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, Three Months EndedSeptember 30, Nine Months EndedSeptember 30,
Mike Eliason Gene Rodriguez Miller Condensed Consolidated Statements of Income Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows (in millions), (unaudited) 2019 2018 2019 2018 (in millions, except per share amounts), (unaudited) 2019 2018 2019 2018 (1) The effective tax rate at the end of each period presented was used to determine the amount of income tax on the adjustments to net income.
Net income from continuing operations $101.8 - $115.8 (317) 249-4559 (317) 343-5243 (In millions) (Unaudited) (In millions) (Unaudited) (In millions) (Unaudited) Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7
Income tax expense $39.0 - $45.0 mike.eliason@karglobal.com gene.rodriguez@karglobal.com Less: Income from discontinued operations (0.9) (46.6) (91.6) (158.2) Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7
Interest expense, net of interest income $187 Three Months EndedSeptember 30, Nine Months EndedSeptember 30, September 30, 2019 December 31,2018 Nine Months EndedSeptember 30, Net income from continuing operations 34.4 30.9 77.1 102.5 Less: income from discontinued operations (0.9) (46.6) (91.6) (158.2)
Depreciation and amortization $185 2019 2018 2019 2018 Cash and cash equivalents $ 508.6 $ 277.1 2019 2018 Add back: Net income from continuing operations 34.4 30.9 77.1 102.5
EBITDA $512.8 - $532.8 Operating revenues Restricted cash 23.3 27.6 Operating activities Income taxes 13.2 8.7 28.4 32.5    Acquired amortization expense 14.5 13.9 43.9 49.6
Adjusted EBITDA addbacks, net ($2.8) ADESA Auction Services $ 613.6 $ 527.0 $ 1,845.7 $ 1,593.4 Trade receivables, net of allowances 510.2 454.6 Net income $ 168.7 $ 260.7 Interest expense, net of interest income 37.2 47.7 148.1 136.1 IAA allocated costs 1.4 2.3 3.9
Adjusted EBITDA $510 - $530 AFC 88.3 85.4 264.9 255.6 Finance receivables, net of allowances 2,095.6 2,000.8 Net income from discontinued operations (91.6) (158.2) Depreciation and amortization 46.4 41.4 138.6 129.8 Acceleration of debt issuance costs 1.8
Capital expenditures $160 Total operating revenues 701.9 612.4 2,110.6 1,849.0 Other current assets 120.0 100.6     Adjustments to reconcile net income to net cash provided by operating activities: EBITDA 131.2 128.7 392.2 400.9 Loss on extinguishment of debt 2.2 2.2
Cash taxes $50 Current assets, discontinued operations 453.5      Depreciation and amortization 138.6 129.8 Non-cash stock-based compensation 4.5 5.8 15.1 15.9    Income taxes (1) (4.6) (3.4) (13.5) (12.9)
Cash interest on corporate debt $110 Operating expenses Total current assets 3,257.7 3,314.2      Provision for credit losses 28.9 25.6 Loss on extinguishment of debt 2.2 2.2 Operating adjusted net income from continuing operations $ 46.5 $ 42.8 $ 113.8 $ 143.1
Effective tax rate 28% Cost of services (exclusive of depreciation and amortization) 410.9 330.7 1,222.2 989.2      Deferred income taxes 2.5 (0.1) Acquisition related costs 2.7 1.5 10.3 5.2
Net income from continuing operations per share - diluted $0.77 - $0.87 Selling, general and administrative 158.9 154.7 497.3 460.1 Goodwill 1,810.3 1,676.9      Amortization of debt issuance costs 9.6 8.0 Securitization interest (13.3) (12.9) (41.9) (37.0) Net income from continuing operations per share - diluted $ 0.26 $ 0.23 $ 0.58 $ 0.76
Operating adjusted net income per share $1.12 - $1.22 Depreciation and amortization 46.4 41.4 138.6 129.8 Customer relationships, net of accumulated amortization 218.3 227.4      Stock-based compensation 14.6 15.3 Severance 0.9 1.4 5.7 3.8    Acquired amortization expense 0.11 0.10 0.33 0.36
Weighted average diluted shares 133 Total operating expenses 616.2 526.8 1,858.1 1,579.1 Operating lease right-of-use assets 366.4      Loss (gain) on disposal of fixed assets 0.1 (0.1) Foreign currency gains/losses (0.4) (1.0) IAA allocated costs 0.01 0.02 0.03
Intangible and other assets 323.9 303.4  Loss on extinguishment of debt 2.2 IAA allocated costs 1.4 2.3 3.9 Acceleration of debt issuance costs 0.01
Operating profit 85.7 85.6 252.5 269.9 Non-current assets, discontinued operations 1,053.3      Other non-cash, net 7.8 (2.6) Other 1.4 0.5 3.1 2.0 Loss on extinguishment of debt 0.02 0.02
Property and equipment, net of accumulated depreciation 603.1 631.0      Changes in operating assets and liabilities, net of acquisitions:   Total addbacks (2.0) (2.3) (4.2) (6.2)    Income taxes (0.04) (0.02) (0.11) (0.10)
Interest expense 37.9 49.0 150.0 138.7 Total assets $ 6,579.7 $ 7,206.2      Trade receivables and other assets (41.3) (158.3) Adjusted EBITDA $ 129.2 $ 126.4 $ 388.0 $ 394.7 Operating adjusted net income from continuing operations per share - diluted $ 0.35 $ 0.32 $ 0.85 $ 1.05
Other income, net (2.0) (3.0) (5.2) (3.8)      Accounts payable and accrued expenses 51.0 206.8
Loss on extinguishment of debt 2.2 2.2 Current liabilities, excluding obligations collateralized by finance receivables and current maturities of debt $ 1,060.8 $ 952.0 Net cash provided by operating activities - continuing operations 291.1 326.9 Weighted average diluted shares 132.4 135.6 133.8 135.7
Obligations collateralized by finance receivables 1,428.4 1,445.3 Net cash provided by operating activities - discontinued operations 156.7 238.2
Income from continuing operations before income taxes 47.6 39.6 105.5 135.0 Current maturities of debt 27.0 13.1 Investing activities
Current liabilities, discontinued operations 214.4      Net increase in finance receivables held for investment (119.0) (90.2)
Income taxes 13.2 8.7 28.4 32.5 Total current liabilities 2,516.2 2,624.8      Acquisition of businesses (net of cash acquired) (120.7) (23.3)
     Purchases of property, equipment and computer software (127.6) (82.7)
Income from continuing operations 34.4 30.9 77.1 102.5 Long-term debt 1,863.0 2,654.3 Net cash used by investing activities - continuing operations (367.3) (196.2)
Income from discontinued operations, net of income taxes 0.9 46.6 91.6 158.2 Operating lease liabilities 361.1 Net cash used by investing activities - discontinued operations (37.4) (37.9)
Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7 Other non-current liabilities 203.6 196.9 Financing activities
Non-current liabilities, discontinued operations 266.0      Net increase in book overdrafts 9.2 8.5
Net income per share - basic Stockholders' equity 1,635.8 1,464.2      Net increase in borrowings from lines of credit 17.5
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76 Total liabilities and stockholders' equity $ 6,579.7 $ 7,206.2      Net (decrease) increase in obligations collateralized by finance receivables (25.0) 6.0
Income from discontinued operations 0.01 0.35 0.69 1.18  Proceeds from long term debt 947.6
Net income $ 0.27 $ 0.58 $ 1.27 $ 1.94  Payments for debt issuance costs/amendments (13.7)
     Payments on long-term debt (1,746.6) (8.0)
Net income per share - diluted      Payments on capital leases (12.2) (11.0)
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76      Payments of contingent consideration and deferred acquisition costs (0.5) (7.4)
Income from discontinued operations 0.01 0.34 0.68 1.16      Issuance of common stock under stock plans 4.1 14.2
Net income $ 0.27 $ 0.57 $ 1.26 $ 1.92      Tax withholding payments for vested RSUs (10.5) (10.1)
     Repurchase and retirement of common stock (119.7) (50.0)
Dividends declared per common share $ 0.19 $ 0.35 $ 0.89 $ 1.05      Dividends paid to stockholders (139.8) (141.2)
     Cash transferred to IAA (50.9)
Net cash used by financing activities - continuing operations (1,140.5) (199.0)
Net cash provided by (used by) financing activities - discontinued operations 1,317.6 (6.7)
Effect of exchange rate changes on cash 7.0 (4.9)
Net increase in cash, cash equivalents and restricted cash 227.2 120.4
Cash, cash equivalents and restricted cash at beginning of period 304.7 303.5
Cash, cash equivalents and restricted cash at end of period $ 531.9 $ 423.9
Cash paid for interest, net of proceeds from interest rate caps $ 120.0 $ 120.7
Cash paid for taxes, net of refunds - continuing operations $ 27.8 $ 47.5
Cash paid for taxes, net of refunds - discontinued operations $ 40.1 $ 49.4

The following table reconciles EBITDA and Adjusted EBITDA to net income from continuing operations for the 2019 guidance presented:

(in millions, except per share amounts) AnnualGuidance Analyst Inquiries: Media Inquiries: KAR Auction Services, Inc. KAR Auction Services, Inc. KAR Auction Services, Inc. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2019 Outlook
Mike Eliason Gene Rodriguez Miller Condensed Consolidated Statements of Income Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows (in millions), (unaudited) 2019 2018 2019 2018 (in millions, except per share amounts), (unaudited) 2019 2018 2019 2018 (1) The effective tax rate at the end of each period presented was used to determine the amount of income tax on the adjustments to net income. (in millions), (unaudited) Low High
Net income from continuing operations $101.8 - $115.8 (317) 249-4559 (317) 343-5243 (In millions) (Unaudited) (In millions) (Unaudited) (In millions) (Unaudited) Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7
Income tax expense $39.0 - $45.0 mike.eliason@karglobal.com gene.rodriguez@karglobal.com Less: Income from discontinued operations (0.9) (46.6) (91.6) (158.2) Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7 Net income from continuing operations $ 101.8 $ 115.8
Interest expense, net of interest income $187 Three Months EndedSeptember 30, Nine Months EndedSeptember 30, September 30, 2019 December 31,2018 Nine Months EndedSeptember 30, Net income from continuing operations 34.4 30.9 77.1 102.5 Less: income from discontinued operations (0.9) (46.6) (91.6) (158.2) Add back:
Depreciation and amortization $185 2019 2018 2019 2018 Cash and cash equivalents $ 508.6 $ 277.1 2019 2018 Add back: Net income from continuing operations 34.4 30.9 77.1 102.5 Income tax expense 39.0 45.0
EBITDA $512.8 - $532.8 Operating revenues Restricted cash 23.3 27.6 Operating activities Income taxes 13.2 8.7 28.4 32.5    Acquired amortization expense 14.5 13.9 43.9 49.6 Interest expense, net of interest income 187.0 187.0
Adjusted EBITDA addbacks, net ($2.8) ADESA Auction Services $ 613.6 $ 527.0 $ 1,845.7 $ 1,593.4 Trade receivables, net of allowances 510.2 454.6 Net income $ 168.7 $ 260.7 Interest expense, net of interest income 37.2 47.7 148.1 136.1 IAA allocated costs 1.4 2.3 3.9 Depreciation and amortization 185.0 185.0
Adjusted EBITDA $510 - $530 AFC 88.3 85.4 264.9 255.6 Finance receivables, net of allowances 2,095.6 2,000.8 Net income from discontinued operations (91.6) (158.2) Depreciation and amortization 46.4 41.4 138.6 129.8 Acceleration of debt issuance costs 1.8 EBITDA 512.8 532.8
Capital expenditures $160 Total operating revenues 701.9 612.4 2,110.6 1,849.0 Other current assets 120.0 100.6     Adjustments to reconcile net income to net cash provided by operating activities: EBITDA 131.2 128.7 392.2 400.9 Loss on extinguishment of debt 2.2 2.2   Total addbacks, net (2.8) (2.8)
Cash taxes $50 Current assets, discontinued operations 453.5      Depreciation and amortization 138.6 129.8 Non-cash stock-based compensation 4.5 5.8 15.1 15.9    Income taxes (1) (4.6) (3.4) (13.5) (12.9) Adjusted EBITDA $ 510.0 $ 530.0
Cash interest on corporate debt $110 Operating expenses Total current assets 3,257.7 3,314.2      Provision for credit losses 28.9 25.6 Loss on extinguishment of debt 2.2 2.2 Operating adjusted net income from continuing operations $ 46.5 $ 42.8 $ 113.8 $ 143.1
Effective tax rate 28% Cost of services (exclusive of depreciation and amortization) 410.9 330.7 1,222.2 989.2      Deferred income taxes 2.5 (0.1) Acquisition related costs 2.7 1.5 10.3 5.2
Net income from continuing operations per share - diluted $0.77 - $0.87 Selling, general and administrative 158.9 154.7 497.3 460.1 Goodwill 1,810.3 1,676.9      Amortization of debt issuance costs 9.6 8.0 Securitization interest (13.3) (12.9) (41.9) (37.0) Net income from continuing operations per share - diluted $ 0.26 $ 0.23 $ 0.58 $ 0.76
Operating adjusted net income per share $1.12 - $1.22 Depreciation and amortization 46.4 41.4 138.6 129.8 Customer relationships, net of accumulated amortization 218.3 227.4      Stock-based compensation 14.6 15.3 Severance 0.9 1.4 5.7 3.8    Acquired amortization expense 0.11 0.10 0.33 0.36
Weighted average diluted shares 133 Total operating expenses 616.2 526.8 1,858.1 1,579.1 Operating lease right-of-use assets 366.4      Loss (gain) on disposal of fixed assets 0.1 (0.1) Foreign currency gains/losses (0.4) (1.0) IAA allocated costs 0.01 0.02 0.03
Intangible and other assets 323.9 303.4  Loss on extinguishment of debt 2.2 IAA allocated costs 1.4 2.3 3.9 Acceleration of debt issuance costs 0.01
Operating profit 85.7 85.6 252.5 269.9 Non-current assets, discontinued operations 1,053.3      Other non-cash, net 7.8 (2.6) Other 1.4 0.5 3.1 2.0 Loss on extinguishment of debt 0.02 0.02
Property and equipment, net of accumulated depreciation 603.1 631.0      Changes in operating assets and liabilities, net of acquisitions:   Total addbacks (2.0) (2.3) (4.2) (6.2)    Income taxes (0.04) (0.02) (0.11) (0.10)
Interest expense 37.9 49.0 150.0 138.7 Total assets $ 6,579.7 $ 7,206.2      Trade receivables and other assets (41.3) (158.3) Adjusted EBITDA $ 129.2 $ 126.4 $ 388.0 $ 394.7 Operating adjusted net income from continuing operations per share - diluted $ 0.35 $ 0.32 $ 0.85 $ 1.05
Other income, net (2.0) (3.0) (5.2) (3.8)      Accounts payable and accrued expenses 51.0 206.8
Loss on extinguishment of debt 2.2 2.2 Current liabilities, excluding obligations collateralized by finance receivables and current maturities of debt $ 1,060.8 $ 952.0 Net cash provided by operating activities - continuing operations 291.1 326.9 Weighted average diluted shares 132.4 135.6 133.8 135.7
Obligations collateralized by finance receivables 1,428.4 1,445.3 Net cash provided by operating activities - discontinued operations 156.7 238.2
Income from continuing operations before income taxes 47.6 39.6 105.5 135.0 Current maturities of debt 27.0 13.1 Investing activities
Current liabilities, discontinued operations 214.4      Net increase in finance receivables held for investment (119.0) (90.2)
Income taxes 13.2 8.7 28.4 32.5 Total current liabilities 2,516.2 2,624.8      Acquisition of businesses (net of cash acquired) (120.7) (23.3)
     Purchases of property, equipment and computer software (127.6) (82.7)
Income from continuing operations 34.4 30.9 77.1 102.5 Long-term debt 1,863.0 2,654.3 Net cash used by investing activities - continuing operations (367.3) (196.2)
Income from discontinued operations, net of income taxes 0.9 46.6 91.6 158.2 Operating lease liabilities 361.1 Net cash used by investing activities - discontinued operations (37.4) (37.9)
Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7 Other non-current liabilities 203.6 196.9 Financing activities
Non-current liabilities, discontinued operations 266.0      Net increase in book overdrafts 9.2 8.5
Net income per share - basic Stockholders' equity 1,635.8 1,464.2      Net increase in borrowings from lines of credit 17.5
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76 Total liabilities and stockholders' equity $ 6,579.7 $ 7,206.2      Net (decrease) increase in obligations collateralized by finance receivables (25.0) 6.0
Income from discontinued operations 0.01 0.35 0.69 1.18  Proceeds from long term debt 947.6
Net income $ 0.27 $ 0.58 $ 1.27 $ 1.94  Payments for debt issuance costs/amendments (13.7)
     Payments on long-term debt (1,746.6) (8.0)
Net income per share - diluted      Payments on capital leases (12.2) (11.0)
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76      Payments of contingent consideration and deferred acquisition costs (0.5) (7.4)
Income from discontinued operations 0.01 0.34 0.68 1.16      Issuance of common stock under stock plans 4.1 14.2
Net income $ 0.27 $ 0.57 $ 1.26 $ 1.92      Tax withholding payments for vested RSUs (10.5) (10.1)
     Repurchase and retirement of common stock (119.7) (50.0)
Dividends declared per common share $ 0.19 $ 0.35 $ 0.89 $ 1.05      Dividends paid to stockholders (139.8) (141.2)
     Cash transferred to IAA (50.9)
Net cash used by financing activities - continuing operations (1,140.5) (199.0)
Net cash provided by (used by) financing activities - discontinued operations 1,317.6 (6.7)
Effect of exchange rate changes on cash 7.0 (4.9)
Net increase in cash, cash equivalents and restricted cash 227.2 120.4
Cash, cash equivalents and restricted cash at beginning of period 304.7 303.5
Cash, cash equivalents and restricted cash at end of period $ 531.9 $ 423.9
Cash paid for interest, net of proceeds from interest rate caps $ 120.0 $ 120.7
Cash paid for taxes, net of refunds - continuing operations $ 27.8 $ 47.5
Cash paid for taxes, net of refunds - discontinued operations $ 40.1 $ 49.4

The following table reconciles operating adjusted net income from continuing operations and operating adjusted net income from continuing operations per share to net income from continuing operations and net income from continuing operations per share for the 2019 guidance presented:

(in millions, except per share amounts) AnnualGuidance Analyst Inquiries: Media Inquiries: KAR Auction Services, Inc. KAR Auction Services, Inc. KAR Auction Services, Inc. Three Months EndedSeptember 30, Nine Months EndedSeptember 30, Three Months EndedSeptember 30, Nine Months EndedSeptember 30, 2019 Outlook 2019 Outlook
Mike Eliason Gene Rodriguez Miller Condensed Consolidated Statements of Income Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Cash Flows (in millions), (unaudited) 2019 2018 2019 2018 (in millions, except per share amounts), (unaudited) 2019 2018 2019 2018 (1) The effective tax rate at the end of each period presented was used to determine the amount of income tax on the adjustments to net income. (in millions), (unaudited) Low High (in millions, except per share amounts), (unaudited) Low High
Net income from continuing operations $101.8 - $115.8 (317) 249-4559 (317) 343-5243 (In millions) (Unaudited) (In millions) (Unaudited) (In millions) (Unaudited) Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7
Income tax expense $39.0 - $45.0 mike.eliason@karglobal.com gene.rodriguez@karglobal.com Less: Income from discontinued operations (0.9) (46.6) (91.6) (158.2) Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7 Net income from continuing operations $ 101.8 $ 115.8 Net income from continuing operations $ 101.8 $ 115.8
Interest expense, net of interest income $187 Three Months EndedSeptember 30, Nine Months EndedSeptember 30, September 30, 2019 December 31,2018 Nine Months EndedSeptember 30, Net income from continuing operations 34.4 30.9 77.1 102.5 Less: income from discontinued operations (0.9) (46.6) (91.6) (158.2) Add back:    Acquired amortization expense 58.3 58.3
Depreciation and amortization $185 2019 2018 2019 2018 Cash and cash equivalents $ 508.6 $ 277.1 2019 2018 Add back: Net income from continuing operations 34.4 30.9 77.1 102.5 Income tax expense 39.0 45.0    IAA allocated costs 2.3 2.3
EBITDA $512.8 - $532.8 Operating revenues Restricted cash 23.3 27.6 Operating activities Income taxes 13.2 8.7 28.4 32.5    Acquired amortization expense 14.5 13.9 43.9 49.6 Interest expense, net of interest income 187.0 187.0    Acceleration of debt issuance costs 1.8 1.8
Adjusted EBITDA addbacks, net ($2.8) ADESA Auction Services $ 613.6 $ 527.0 $ 1,845.7 $ 1,593.4 Trade receivables, net of allowances 510.2 454.6 Net income $ 168.7 $ 260.7 Interest expense, net of interest income 37.2 47.7 148.1 136.1 IAA allocated costs 1.4 2.3 3.9 Depreciation and amortization 185.0 185.0    Loss on extinguishment of debt 2.2 2.2
Adjusted EBITDA $510 - $530 AFC 88.3 85.4 264.9 255.6 Finance receivables, net of allowances 2,095.6 2,000.8 Net income from discontinued operations (91.6) (158.2) Depreciation and amortization 46.4 41.4 138.6 129.8 Acceleration of debt issuance costs 1.8 EBITDA 512.8 532.8    Income taxes (18.1) (18.1)
Capital expenditures $160 Total operating revenues 701.9 612.4 2,110.6 1,849.0 Other current assets 120.0 100.6     Adjustments to reconcile net income to net cash provided by operating activities: EBITDA 131.2 128.7 392.2 400.9 Loss on extinguishment of debt 2.2 2.2   Total addbacks, net (2.8) (2.8) Operating adjusted net income from continuing operations $ 148.3 $ 162.3
Cash taxes $50 Current assets, discontinued operations 453.5      Depreciation and amortization 138.6 129.8 Non-cash stock-based compensation 4.5 5.8 15.1 15.9    Income taxes (1) (4.6) (3.4) (13.5) (12.9) Adjusted EBITDA $ 510.0 $ 530.0
Cash interest on corporate debt $110 Operating expenses Total current assets 3,257.7 3,314.2      Provision for credit losses 28.9 25.6 Loss on extinguishment of debt 2.2 2.2 Operating adjusted net income from continuing operations $ 46.5 $ 42.8 $ 113.8 $ 143.1 Net income from continuing operations per share – diluted $ 0.77 $ 0.87
Effective tax rate 28% Cost of services (exclusive of depreciation and amortization) 410.9 330.7 1,222.2 989.2      Deferred income taxes 2.5 (0.1) Acquisition related costs 2.7 1.5 10.3 5.2    Acquired amortization expense 0.44 0.44
Net income from continuing operations per share - diluted $0.77 - $0.87 Selling, general and administrative 158.9 154.7 497.3 460.1 Goodwill 1,810.3 1,676.9      Amortization of debt issuance costs 9.6 8.0 Securitization interest (13.3) (12.9) (41.9) (37.0) Net income from continuing operations per share - diluted $ 0.26 $ 0.23 $ 0.58 $ 0.76    IAA allocated costs 0.02 0.02
Operating adjusted net income per share $1.12 - $1.22 Depreciation and amortization 46.4 41.4 138.6 129.8 Customer relationships, net of accumulated amortization 218.3 227.4      Stock-based compensation 14.6 15.3 Severance 0.9 1.4 5.7 3.8    Acquired amortization expense 0.11 0.10 0.33 0.36    Acceleration of debt issuance costs 0.01 0.01
Weighted average diluted shares 133 Total operating expenses 616.2 526.8 1,858.1 1,579.1 Operating lease right-of-use assets 366.4      Loss (gain) on disposal of fixed assets 0.1 (0.1) Foreign currency gains/losses (0.4) (1.0) IAA allocated costs 0.01 0.02 0.03    Loss on extinguishment of debt 0.02 0.02
Intangible and other assets 323.9 303.4  Loss on extinguishment of debt 2.2 IAA allocated costs 1.4 2.3 3.9 Acceleration of debt issuance costs 0.01    Income taxes (0.14) (0.14)
Operating profit 85.7 85.6 252.5 269.9 Non-current assets, discontinued operations 1,053.3      Other non-cash, net 7.8 (2.6) Other 1.4 0.5 3.1 2.0 Loss on extinguishment of debt 0.02 0.02 Operating adjusted net income from continuing operations per share – diluted $ 1.12 $ 1.22
Property and equipment, net of accumulated depreciation 603.1 631.0      Changes in operating assets and liabilities, net of acquisitions:   Total addbacks (2.0) (2.3) (4.2) (6.2)    Income taxes (0.04) (0.02) (0.11) (0.10)
Interest expense 37.9 49.0 150.0 138.7 Total assets $ 6,579.7 $ 7,206.2      Trade receivables and other assets (41.3) (158.3) Adjusted EBITDA $ 129.2 $ 126.4 $ 388.0 $ 394.7 Operating adjusted net income from continuing operations per share - diluted $ 0.35 $ 0.32 $ 0.85 $ 1.05 Weighted average diluted shares 133 133
Other income, net (2.0) (3.0) (5.2) (3.8)      Accounts payable and accrued expenses 51.0 206.8
Loss on extinguishment of debt 2.2 2.2 Current liabilities, excluding obligations collateralized by finance receivables and current maturities of debt $ 1,060.8 $ 952.0 Net cash provided by operating activities - continuing operations 291.1 326.9 Weighted average diluted shares 132.4 135.6 133.8 135.7
Obligations collateralized by finance receivables 1,428.4 1,445.3 Net cash provided by operating activities - discontinued operations 156.7 238.2
Income from continuing operations before income taxes 47.6 39.6 105.5 135.0 Current maturities of debt 27.0 13.1 Investing activities
Current liabilities, discontinued operations 214.4      Net increase in finance receivables held for investment (119.0) (90.2)
Income taxes 13.2 8.7 28.4 32.5 Total current liabilities 2,516.2 2,624.8      Acquisition of businesses (net of cash acquired) (120.7) (23.3)
     Purchases of property, equipment and computer software (127.6) (82.7)
Income from continuing operations 34.4 30.9 77.1 102.5 Long-term debt 1,863.0 2,654.3 Net cash used by investing activities - continuing operations (367.3) (196.2)
Income from discontinued operations, net of income taxes 0.9 46.6 91.6 158.2 Operating lease liabilities 361.1 Net cash used by investing activities - discontinued operations (37.4) (37.9)
Net income $ 35.3 $ 77.5 $ 168.7 $ 260.7 Other non-current liabilities 203.6 196.9 Financing activities
Non-current liabilities, discontinued operations 266.0      Net increase in book overdrafts 9.2 8.5
Net income per share - basic Stockholders' equity 1,635.8 1,464.2      Net increase in borrowings from lines of credit 17.5
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76 Total liabilities and stockholders' equity $ 6,579.7 $ 7,206.2      Net (decrease) increase in obligations collateralized by finance receivables (25.0) 6.0
Income from discontinued operations 0.01 0.35 0.69 1.18  Proceeds from long term debt 947.6
Net income $ 0.27 $ 0.58 $ 1.27 $ 1.94  Payments for debt issuance costs/amendments (13.7)
     Payments on long-term debt (1,746.6) (8.0)
Net income per share - diluted      Payments on capital leases (12.2) (11.0)
Income from continuing operations $ 0.26 $ 0.23 $ 0.58 $ 0.76      Payments of contingent consideration and deferred acquisition costs (0.5) (7.4)
Income from discontinued operations 0.01 0.34 0.68 1.16      Issuance of common stock under stock plans 4.1 14.2
Net income $ 0.27 $ 0.57 $ 1.26 $ 1.92      Tax withholding payments for vested RSUs (10.5) (10.1)
     Repurchase and retirement of common stock (119.7) (50.0)
Dividends declared per common share $ 0.19 $ 0.35 $ 0.89 $ 1.05      Dividends paid to stockholders (139.8) (141.2)
     Cash transferred to IAA (50.9)
Net cash used by financing activities - continuing operations (1,140.5) (199.0)
Net cash provided by (used by) financing activities - discontinued operations 1,317.6 (6.7)
Effect of exchange rate changes on cash 7.0 (4.9)
Net increase in cash, cash equivalents and restricted cash 227.2 120.4
Cash, cash equivalents and restricted cash at beginning of period 304.7 303.5
Cash, cash equivalents and restricted cash at end of period $ 531.9 $ 423.9
Cash paid for interest, net of proceeds from interest rate caps $ 120.0 $ 120.7
Cash paid for taxes, net of refunds - continuing operations $ 27.8 $ 47.5
Cash paid for taxes, net of refunds - discontinued operations $ 40.1 $ 49.4

 

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SOURCE KAR Auction Services, Inc.

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