IAA, Inc. today announced its financial results for the first quarter fiscal 2022, which ended April 3, 2022.
John Kett, Chief Executive Officer and President stated:
“I’m very pleased with our strong first-quarter results. We experienced another quarter of record proceeds and revenue per unit driven by the benefits from our unique products, services and growing global buyer base, which helped to offset higher costs we are seeing in the current inflationary environment.”
Mr Kett continued:
“We believe the fundamentals of our industry remain strong, and that our products, services and delivery for our buyer and seller customers have never been better. We’re also progressing well on the integration of SYNETIQ, and we are already seeing the benefits of their integrated model as a competitive advantage in the U.K. marketplace. As a result of our performance to date and our view of the remainder of the year, we have increased the lower end of our 2022 guidance range.”
Key First Quarter Measures:
(Dollars in millions, except per share amounts)
Highlights for the First Quarter Ended April 3, 2022:
- Consolidated revenues increased 31.7% to $557.6 million from $423.5 million in the first quarter of fiscal 2021. Foreign currency movements had a negative impact of $0.8 million on revenue for the quarter. Revenue from our recent acquisitions of Auto Exchange and SYNETIQ was $49.5 million. Excluding these items, organic revenue increased $85.4 million, or 20.2%, to $508.9 million, consisting of an increase in volume of 4.4% and higher revenue per unit of 15.1%. Service revenues increased 20.7% to $435.0 million from $360.4 million in the first quarter of fiscal 2021 due to higher revenue per unit as well as higher volume. Vehicle and parts sales increased 94.3% to $122.6 million, compared to $63.1 million in the first quarter of fiscal 2021, primarily due to higher revenue per unit, higher volumes of vehicle and parts sales, and incremental revenue from the SYNETIQ acquisition. U.S. revenues increased by 22.5% to $438.8 million from $358.3 million in the first quarter of fiscal 2021. U.S. revenues were driven by higher revenue per unit, higher volume and a higher mix of vehicle sales. International revenues increased by 82.2% to $118.8 million from $65.2 million in the first quarter of fiscal 2021. International revenues increased primarily due to the acquisition of SYNETIQ, a higher mix of vehicle sales, higher volume in Canada and higher revenue per unit.
- Gross profit, which is defined as total consolidated revenues minus cost of services and vehicle sales, and exclusive of depreciation and amortization, increased by 16.5% to $201.2 million from $172.7 million in the first quarter of fiscal 2021. The increase in gross profit was primarily due to higher revenue per unit and a higher volume of vehicles and parts sold, partially offset by a higher mix of lower margin vehicle and parts sales, and higher costs for towing, wages and occupancy. Gross margin in the quarter declined by 470 basis points to 36.1% from 40.8% in the prior year. Purchased vehicle and parts mix accounted for approximately 190 basis points of this decline.
- Selling, general and administrative (“SG&A”) expenses increased by 25.1% to $54.3 million from $43.4 million in the first quarter of fiscal 2021. Adjusted SG&A expenses were $51.5 million, an increase of 30.7% compared to Adjusted SG&A expenses of $39.4 million in the first quarter of fiscal 2021. Adjusted SG&A expenses increased primarily due to a higher headcount and higher spending on information technology, as well as incremental costs due to the addition of Auto Exchange and SYNETIQ.
- Interest expense was $11.2 million compared to $13.0 million in the first quarter of fiscal 2021. The decrease in interest expense was primarily due to lower interest rates as a result of the refinancing of our credit facility completed in the second quarter of 2021.
- The effective tax rate was 24.5% versus 25.2% in the first quarter of fiscal 2021. The lower rate in 2022 was primarily due to certain discrete tax items in the first quarter of 2021 that negatively impacted the rate in that period.
- Net income increased by 12.4% to $81.5 million, or $0.61 per diluted share, compared to $72.5 million, or $0.54 per diluted share, in the first quarter of fiscal 2021. Adjusted net income increased by 14.6% to $89.3 million, or $0.66 per diluted share, compared to $77.9 million, or $0.58 per diluted share, in the first quarter of fiscal 2021.
- Adjusted EBITDA increased by 12.5% to $149.8 million from $133.2 million in the first quarter of fiscal 2021, primarily due to higher revenue and gross profit, partially offset by higher SG&A expenses. Adjusted EBITDA was not impacted by foreign currency movements in the quarter. The contribution to Adjusted EBITDA from Auto Exchange and SYNETIQ was $6.7 million in the first quarter of fiscal 2022. Excluding these items, organic Adjusted EBITDA was $143.1 million, an increase of 7.4% compared to the first quarter of fiscal 2021.
Other Financial Highlights as of April 3, 2022:
- Net Debt: $1,166.4 million
- Leverage Ratio: 2.1x
- Year-to-date Net Cash Provided by Operating Activities: $97.7 million
- Year-to-date Free Cash Flow: $103.9 million
- Repurchased $8.4 million of stock during the first quarter of fiscal 2022; $357.6 million remaining on authorization
- Liquidity: $534.6 million
- First quarter 2022 year-over-year vehicle inventory change: 4.4%
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