EX-99.1 3 c84802exv99w1.txt PRESS RELEASE EXHIBIT 99.1 [AUTO AUCTIONS INSURANCE LOGO] AT THE COMPANY: AT ASHTON PARTNERS: Scott Pettit Chris Kettmann Chief Financial Officer General Inquiries 847-839-4040 312-553-6716 www.iaai.com FOR IMMEDIATE RELEASE FRIDAY, APRIL 23, 2004 INSURANCE AUTO AUCTIONS ANNOUNCES FIRST QUARTER RESULTS SCHAUMBURG, ILL., APRIL 23, 2004 -- 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 March 28, 2004. The Company recorded net earnings of $2.3 million, or $0.20 per diluted share, versus net earnings of $2.0 million, or $0.16 per diluted share, for the same quarter a year ago. Revenues for the quarter were $57.2 million compared with $56.0 million in the first quarter of 2003. Fee income in the first quarter increased to $50.1 million versus $42.7 million in the first quarter of last year. "We are pleased to announce first quarter financial results that exceeded our expectations," said Tom O'Brien, CEO. "As the quarter progressed, we continued to see a positive trend in volumes sold and significantly higher returns for our customers. We believe our live auctions, complemented with an internet bidding capability, offer the optimal solution for both our insurance company suppliers and our buyers. Increased buyer participation and an increase in scrap prices during the quarter both contributed positively to the average selling price of our vehicles." O'Brien added, "Another positive takeaway from the first quarter was the fact that we gained some market share, which contributed to our current inventory levels and higher incoming volumes and has positioned us better for the future. We believe these customer wins validate the industry's recognition of our improved suite of value-added services. The market share gains are especially important given the recent decline in frequency of collision claims which could worsen as a result of rising fuel costs." Touching on the new, company-wide IT system that was rolled out to all of IAA's branches during 2003, O'Brien said, "We are happy to have the rollout of the IT system and the related business transformation costs behind us. We remain focused on using our new system to create further efficiencies and drive additional visibility for both the management team and our customers. We have, and will continue to, leverage our technology to generate further market share gains, create cost effective expansion opportunities and drive a consistently improving cost structure. As a strong by-product of our new system, we have developed a real-time bidding platform that is currently being tested in four markets. We plan to continue rolling it out to many other major branches during the second quarter." The Company also continued its expansion strategy during the first quarter with the addition of a new greenfield facility in Tucson, Arizona. This new 16-acre facility will provide needed coverage in the southern part of the state and will leverage IAA's existing location in Phoenix. The new facility will also improve IAA's regional coverage, complementing other existing locations in southern California and New Mexico. "We do not foresee making many expansion announcements in the second quarter and will likely fall at the low end of our expansion target for 2004," said O'Brien. "Instead, we will focus on leveraging our new system and generating additional market share gains. We will also continue to support our customers through additional investments in our existing facilities in order to add capacity as well as to improve yard and office functionality." O'Brien concluded, "In terms of guidance, due to strong current inventory levels combined with recent market share wins and their related volumes, we anticipate a solid second quarter that should produce financial results similar to those we just saw in the first quarter. However, we are cautious given the recent decline in collision claims and will provide further guidance with our second quarter results." INVESTORS' CONFERENCE CALL The Company previously announced that it will hold its first quarter 2004 investors' conference call on Friday, April 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 www.iaai.com. A replay will be available until midnight EST on April 30, 2004. To listen to the replay, please dial 800-642-1687 and enter conference reservation code 6508088 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 75 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 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 MONTHS ENDED -------------------------------- MARCH 28, MARCH 30, 2004 2003 -------------------------------- (Unaudited) Revenues: Vehicle sales $ 7,127 $ 13,304 Fee income 50,064 42,736 -------------- -------------- 57,191 56,040 Cost of sales: Vehicle cost 5,984 11,771 Branch cost 38,395 32,964 -------------- -------------- 44,379 44,735 -------------- -------------- Gross profit 12,812 11,305 Operating expense: Selling, general and administrative 8,480 7,168 Business transformation costs - 797 -------------- -------------- Earnings from operations 4,332 3,340 Other (income) expense: Interest expense 477 55 Other income (12) (79) -------------- -------------- Earnings before income taxes 3,867 3,364 Provision for income taxes 1,566 1,388 -------------- -------------- Net earnings $ 2,301 $ 1,976 ============== ============== Net earnings per share: Basic $ .20 $ .16 ============== ============== Diluted $ .20 $ .16 ============== ============== Weighted average shares outstanding: Basic 11,537 12,045 Effect of dilutive securities --stock options 132 96 -------------- -------------- Diluted 11,669 12,141 ============== ==============
INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands except per share amounts)
MARCH 28, DECEMBER 28, 2004 2003 -------------- -------------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 23,655 $ 15,486 Accounts receivable, net 50,420 48,375 Inventories 14,887 13,602 Other current assets 2,746 3,099 -------------- -------------- Total current assets 91,708 80,562 -------------- -------------- Property and equipment, net 62,402 60,187 Deferred income taxes 10,170 9,788 Intangible assets, net 1,969 2,101 Goodwill, net 135,062 135,062 Other assets 228 93 -------------- -------------- $ 301,539 $ 287,793 ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 40,074 $ 35,005 Accrued liabilities 11,985 13,195 Short-term borrowings 7,000 - Obligations under capital leases 2,605 2,822 Income taxes 2,117 - Current installments of long-term debt 7,547 7,547 -------------- -------------- Total current liabilities 71,328 58,569 -------------- -------------- Deferred income taxes 18,522 17,748 Other liabilities 3,562 3,612 Obligation under capital leases 1,396 1,891 Long-term debt, excluding current installments 15,001 16,887 -------------- -------------- Total liabilities 109,809 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; 12,345,508 shares issued and 11,538,299 outstanding as of March 28, 2004; and 12,325,482 shares issued and 11,518,273 outstanding as of 12 12 December 28, 2003 Additional paid-in capital 146,115 145,856 Treasury stock, 807,209 shares (8,012) (8,012) Deferred compensation related to restricted stock (835) (892) Accumulated other comprehensive income (loss) (598) (625) 55,048 52,747 -------------- -------------- Retained earnings Total shareholders' equity 191,730 189,086 -------------- -------------- $ 301,539 $ 287,793 ============== ==============
INSURANCE AUTO AUCTIONS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands)
THREE MONTHS ENDED -------------------------------- MARCH 28, MARCH 30, 2004 2003 -------------- -------------- (UNAUDITED) Cash flows from operating activities: Net earnings $ 2,301 $ 1,976 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 3,243 2,352 Gain on disposal of fixed assets (2) (42) Loss on change in fair market value of derivative unhedged portion - (307) Deferred compensation related to restricted stock 57 - Changes in assets and liabilities (excluding effects of acquired companies): (Increase) decrease in: Accounts receivable, net (2,045) (1,259) Inventories (1,285) 546 Other current assets 353 1,263 Other assets (117) (379) Increase (decrease) in: Accounts payable 5,069 (268) Accrued liabilities (1,338) (1,843) Income taxes, net 2,509 1,272 -------------- -------------- Total adjustments 6,444 1,335 -------------- -------------- Net cash provided by operating activities 8,745 3,311 -------------- -------------- Cash flows from investing activities: Capital expenditures (5,417) (2,769) Proceeds from disposal of property and equipment 180 44 Payments made in connection with acquisitions, net of cash acquired - (2,360) -------------- -------------- Net cash used in investing activities (5,237) (5,085) -------------- -------------- Cash flows from financing activities: Proceeds from issuance of common stock 259 215 Proceeds from term loan - 30,000 Proceeds from short-term borrowings 7,000 - Principal payments on long-term debt (1,886) (10) Purchase of treasury stock - (7,401) Principal payments -- capital leases (712) (573) -------------- -------------- Net cash provided (used) by financing activities 4,661 22,231 -------------- -------------- Net increase (decrease) in cash and cash equivalents 8,169 20,457 Cash and cash equivalents at beginning of period 15,486 10,027 -------------- -------------- Cash and cash equivalents at end of period $ 23,655 $ 30,484 ============== ============== Supplemental disclosures of cash flow information: Cash paid or refunded during the period for: Interest $ 656 $ 317 ============== ============== Income taxes paid $ 2 $ 20 ============== ============== Income taxes refunded $ 1,011 $ 1,250 ============== ============== Non-cash financing activities: Property and equipment additions resulting from capital leases $ - $ 2,250 ============== ==============