kar-20210216

EXHIBIT 99.1


EARNINGS RELEASE

For Immediate Release

Analyst Inquiries: Media Inquiries:

Mike Eliason Tobin Richer

(317) 249-4559 (317) 249-4521

[email protected] [email protected]

KAR Auction Services, Inc. Reports 2020 Financial Results

Carmel, IN, February 16, 2021 — KAR Auction Services, Inc. (NYSE: KAR), today reported its fourth quarter financial results for the period ended December 31, 2020. For the fourth quarter of 2020, the company reported revenue of $529.6 million as compared with revenue of $671.3 million for the fourth quarter of 2019. Net income (loss) from continuing operations for the fourth quarter of 2020 decreased to a loss of $17.1 million, or $0.21 per diluted share, as compared with net income from continuing operations of $15.3 million, or $0.12 per diluted share, in the fourth quarter of 2019. Adjusted EBITDA for the quarter ended December 31, 2020 decreased to $67.5 million, as compared with Adjusted EBITDA of $122.0 million for the quarter ended December 31, 2019. Operating adjusted net income (loss) from continuing operations per diluted share decreased to a loss of $0.01 for the quarter ended December 31, 2020, as compared with operating adjusted net income from continuing operations per diluted share of $0.19 for the quarter ended December 31, 2019.

For the year ended December 31, 2020, the company reported revenue of $2,187.7 million as compared with revenue from continuing operations of $2,781.9 million for the year ended December 31, 2019. For the year ended December 31, 2020, the company reported net income from continuing operations of $0.5 million and a loss of $0.16 per diluted share, as compared with net income from continuing operations of $92.4 million, or $0.70 per diluted share, for the year ended December 31, 2019. Adjusted EBITDA for the year ended December 31, 2020 decreased to $375.3 million, as compared with Adjusted EBITDA of $510.0 million for the year ended December 31, 2019. Operating adjusted net income from continuing operations per diluted share decreased to $0.51 for the year ended December 31, 2020, as compared with operating adjusted net income from continuing operations per diluted share of $1.04 for the year ended December 31, 2019. The company's operating results for the year ended December 31, 2020 were significantly impacted by the COVID-19 pandemic. In addition, the company recorded a $29.8 million charge for the impairment of goodwill and other intangible assets in the second quarter of 2020.

Impact of COVID-19 on Company Operations

The company has been subject to numerous COVID-19-related orders and directives that have caused us to modify our business practices. All ADESA auction locations in the U.S. and Canada are offering vehicles for sale via ADESA Simulcast, DealerBlock and Simulcast+. Auction locations have resumed offering ancillary and related services, where possible and as permitted by government directives. Given the evolving health, economic, social and governmental environments, the potential impact that COVID-19 could have on our business remains uncertain. The broader implications for our business and results of operations remain uncertain and will depend on many factors outside our control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the development and availability of effective treatments and vaccines, the imposition of protective public safety measures, and the timing to which normal economic and operating conditions resumes. Even after the COVID-19 outbreak has subsided, we may continue to experience materially adverse impacts to our business as a result of its impact.

2021 Guidance

The company expects net income from continuing operations of at least $90 million and Adjusted EBITDA of at least $475 million. The following table provides a reconciliation of net income from continuing operations to Adjusted EBITDA and additional assumptions used in the company's guidance.


(in millions, except per share amounts)			Annual Guidance

Net income from continuing operations			$90
Income tax expense			$38
Interest expense, net of interest income			$125
Depreciation and amortization			$205
EBITDA			$458
Adjusted EBITDA addbacks, net			$17
Adjusted EBITDA			$475
Effective tax rate			30%
Net income from continuing operations per share - diluted *			$0.30
Weighted average diluted shares *			131
Operating adjusted net income per share			$0.87
Weighted average diluted shares - including assumed conversion of preferred shares			165

* The company used the two-class method of calculating net income from continuing operations per diluted share. Under the two-class method, net income from continuing operations is reduced by dividends and undistributed earnings to the holders of the Series A Preferred Stock, and the weighted average diluted shares do not assume conversion of the preferred shares to common shares.

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.

Earnings Conference Call Information

KAR will be hosting an earnings conference call and webcast on Wednesday, February 17, 2021 at 8:30 a.m. EST. 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 7675889, while the live web cast will be available at the investors section of www.karglobal.com. Supplemental financial information for KAR’s fourth quarter 2020 results is available at the investors section of www.karglobal.com.

The archive of the webcast will also be available following the call and will be available at the investors section of www.karglobal.com for a limited time.

About KAR

KAR Auction Services, Inc. d/b/a KAR Global (NYSE: KAR), 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, financing, logistics and other ancillary and related services, including the sale of nearly 3.1 million units valued at approximately $30 billion through our auctions in 2020. Our integrated physical, online and mobile marketplaces reduce risk, improve transparency and streamline transactions for customers in about 75 countries. Headquartered in Carmel, Indiana, KAR Global has employees across the United States, Canada, Mexico, Uruguay, U.K. and Europe. For more information and the latest KAR Global news, go to www.karglobal.com and follow us on Twitter @KARSpeaks.

Forward-Looking Statements

Certain 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 based on management's current expectations, 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 uncertainties regarding the impact of the COVID-19 virus on our business and the economy generally, and those other matters disclosed in the Company’s Securities and Exchange Commission filings. The Company does not undertake any obligation to update any forward-looking statements.

KAR Auction Services, Inc.

Condensed Consolidated Statements of Income

(In millions) (Unaudited)


	Three Months Ended December 31,				Year Ended December 31,
	2020		2019		2020		2019
Operating revenues
Auction fees	$	207.0	$	261.0	$	887.7	$	1,115.3
Service revenue	173.5		243.0		737.4		1,018.2
Purchased vehicle sales	83.7		79.3		295.0		295.5
Finance-related revenue	65.4		88.0		267.6		352.9
Total operating revenues	529.6		671.3		2,187.7		2,781.9

Operating expenses
Cost of services (exclusive of depreciation and amortization)	325.4		394.9		1,284.8		1,617.1
Selling, general and administrative	139.7		164.7		545.4		662.0
Depreciation and amortization	50.6		50.1		191.3		188.7
Goodwill and other intangibles impairment	—		—		29.8		—
Total operating expenses	515.7		609.7		2,051.3		2,467.8

Operating profit	13.9		61.6		136.4		314.1

Interest expense	30.5		39.5		128.9		189.5
Other (income) expense, net	3.9		(2.5)		2.1		(7.7)
Loss on extinguishment of debt	—		—		—		2.2

Income (loss) from continuing operations before income taxes	(20.5)		24.6		5.4		130.1

Income taxes	(3.4)		9.3		4.9		37.7

Income (loss) from continuing operations	(17.1)		15.3		0.5		92.4
Income from discontinued operations, net of income taxes	—		4.5		—		96.1
Net income (loss)	$	(17.1)	$	19.8	$	0.5	$	188.5

Net income (loss) per share - basic
Income (loss) from continuing operations	$	(0.21)	$	0.12	$	(0.16)	$	0.70
Income from discontinued operations	—		0.03		—		0.73
Net income (loss) per share - basic	$	(0.21)	$	0.15	$	(0.16)	$	1.43

Net income (loss) per share - diluted
Income (loss) from continuing operations	$	(0.21)	$	0.12	$	(0.16)	$	0.70
Income from discontinued operations	—		0.03		—		0.72
Net income (loss) per share - diluted	$	(0.21)	$	0.15	$	(0.16)	$	1.42

Dividends declared per common share	$	—	$	0.19	$	0.19	$	1.08

KAR Auction Services, Inc.

Condensed Consolidated Balance Sheets

(In millions) (Unaudited)


	December 31, 2020		December 31, 2019
Cash and cash equivalents	$	752.1	$	507.6
Restricted cash	60.2		53.3
Trade receivables, net of allowances	367.2		457.5
Finance receivables, net of allowances	1,889.0		2,100.2
Other current assets	106.7		125.9
Total current assets	3,175.2		3,244.5

Goodwill	2,140.2		1,821.7
Customer relationships, net of accumulated amortization	211.3		207.9
Operating lease right-of-use assets	350.6		364.1
Property and equipment, net of accumulated depreciation	589.9		609.0
Intangible and other assets	331.0		334.0
Total assets	$	6,798.2	$	6,581.2

Current liabilities, excluding obligations collateralized by finance receivables and current maturities of debt	$	965.1	$	1,027.7
Obligations collateralized by finance receivables	1,261.2		1,461.2
Current maturities of debt	24.3		28.8
Total current liabilities	2,250.6		2,517.7

Long-term debt	1,853.8		1,861.3
Operating lease liabilities	344.2		358.3
Other non-current liabilities	184.0		193.7
Temporary equity	549.8		—
Stockholders’ equity	1,615.8		1,650.2
Total liabilities, temporary equity and stockholders’ equity	$	6,798.2	$	6,581.2

KAR Auction Services, Inc.

Condensed Consolidated Statements of Cash Flows

(In millions) (Unaudited)


	Year Ended December 31,
	2020		2019
Operating activities
Net income	$	0.5	$	188.5
Net income from discontinued operations	—		(96.1)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	191.3		188.7
Provision for credit losses	43.8		40.1
Deferred income taxes	(7.2)		(3.3)
Amortization of debt issuance costs	11.7		12.2
Stock-based compensation	14.0		19.6
Goodwill and other intangibles impairment	29.8		—
Loss on extinguishment of debt	—		2.2
Other non-cash, net	9.7		12.1
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables and other assets	117.9		(3.0)
Accounts payable and accrued expenses	(27.1)		19.8
Net cash provided by operating activities - continuing operations	384.4		380.8
Net cash provided by operating activities - discontinued operations	—		161.2
Investing activities
Net decrease (increase) in finance receivables held for investment	170.6		(132.7)
Acquisition of businesses (net of cash acquired)	(421.0)		(120.7)
Purchases of property, equipment and computer software	(101.4)		(161.6)
Proceeds from the sale of PWI	24.3		—
Proceeds from the sale of property and equipment	0.9		—
Net cash used by investing activities - continuing operations	(326.6)		(415.0)
Net cash used by investing activities - discontinued operations	—		(37.4)
Financing activities
Net decrease in book overdrafts	(6.9)		(4.7)
Net (decrease) increase in borrowings from lines of credit	(14.0)		19.3
Net (decrease) increase in obligations collateralized by finance receivables	(191.1)		3.8
Proceeds from issuance of Series A Preferred Stock	550.1		—
Payments for issuance costs of Series A Preferred Stock	(21.9)		—
Proceeds from long term debt	—		947.6
Payments for debt issuance costs/amendments	(18.5)		(14.1)
Payments on long-term debt	(9.5)		(1,749.0)
Payments on finance leases	(16.1)		(15.9)
Payments of contingent consideration and deferred acquisition costs	(31.2)		(9.4)
Issuance of common stock under stock plans	2.1		4.3
Issuance of common stock - private placement	15.0		—
Tax withholding payments for vested RSUs	(4.0)		(10.8)
Repurchase and retirement of common stock	(10.2)		(119.7)
Dividends paid to stockholders	(49.0)		(164.3)
Cash transferred to IAA	—		(50.9)
Net cash provided by (used by) financing activities - continuing operations	194.8		(1,163.8)
Net cash provided by (used by) financing activities - discontinued operations	—		1,317.6
Effect of exchange rate changes on cash	(1.2)		12.8
Net increase in cash, cash equivalents and restricted cash	251.4		256.2
Cash, cash equivalents and restricted cash at beginning of period	560.9		304.7
Cash, cash equivalents and restricted cash at end of period	$	812.3	$	560.9
Cash paid for interest, net of proceeds from interest rate derivatives	$	116.6	$	170.0
Cash paid for taxes, net of refunds - continuing operations	$	16.6	$	37.8
Cash paid for taxes, net of refunds - discontinued operations	$	—	$	41.4

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:


	Three Months Ended December 31,				Year Ended December 31,
(in millions), (unaudited)	2020		2019		2020		2019
Net income (loss)	$	(17.1)	$	19.8	$	0.5	$	188.5
Less: Income from discontinued operations	—		(4.5)		—		(96.1)
Net income (loss) from continuing operations	(17.1)		15.3		0.5		92.4
Add back:
Income taxes	(3.4)		9.3		4.9		37.7
Interest expense, net of interest income	30.3		38.3		127.3		186.4
Depreciation and amortization	50.6		50.1		191.3		188.7
EBITDA	60.4		113.0		324.0		505.2
Non-cash stock-based compensation	3.0		5.2		15.1		20.3
Loss on extinguishment of debt	—		—		—		2.2
Acquisition related costs	4.1		1.9		8.8		12.2
Securitization interest	(6.2)		(13.0)		(27.3)		(54.9)
Loss on asset sales	0.2		0.4		1.3		2.1
Severance	0.9		9.6		11.5		15.3
Foreign currency (gains)/losses	1.7		0.3		4.9		(0.7)
Goodwill and other intangibles impairment	—		—		29.8		—
IAA allocated costs	—		—		—		2.3
Contingent consideration adjustment	4.7		—		4.7		—
Other	(1.3)		4.6		2.5		6.0
Total addbacks	7.1		9.0		51.3		4.8
Adjusted EBITDA	$	67.5	$	122.0	$	375.3	$	510.0

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


	Three Months Ended December 31,				Year Ended December 31,
(in millions, except per share amounts), (unaudited)	2020		2019		2020		2019
Net income (loss)	$	(17.1)	$	19.8	$	0.5	$	188.5
Less: income from discontinued operations	—		(4.5)		—		(96.1)
Net income (loss) from continuing operations (1)	(17.1)		15.3		0.5		92.4
Acquired amortization expense	15.3		14.4		57.7		58.3
IAA allocated costs	—		—		—		2.3
Acceleration of debt issuance costs	—		—		—		1.8
Loss on extinguishment of debt	—		—		—		2.2
Contingent consideration adjustment	4.7		—		4.7		—
Goodwill and other intangibles impairment	—		—		29.8		—
Income taxes (2)	(4.6)		(5.4)		(17.3)		(18.7)
Operating adjusted net income (loss) from continuing operations	$	(1.7)	$	24.3	$	75.4	$	138.3

Operating adjusted net income (loss) from continuing operations per share - diluted	$	(0.01)	$	0.19	$	0.51	$	1.04

Weighted average diluted shares	161.8		130.1		147.0		132.9

(1)The Series A Preferred Stock dividends have not been included in the calculation of operating adjusted net income (loss) from continuing operations and operating adjusted net income (loss) from continuing operations per diluted share.

(2)The effective tax rate at the end of each period presented in 2019 was used to determine the amount of income tax on the adjustments to net income. For 2020, an effective tax rate of 30% was applied to the acquired amortization expense. There was no income tax benefit related to the contingent consideration adjustment or the goodwill and other intangibles impairment because these items were not deductible for income tax purposes.

The following table reconciles EBITDA and Adjusted EBITDA to net income from continuing operations for the 2021

guidance presented:


(in millions), (unaudited)	2021 Guidance
Net income from continuing operations	$	90
Add back:
Income tax expense	38
Interest expense, net of interest income	125
Depreciation and amortization	205
EBITDA	458
Total addbacks, net	17
Adjusted EBITDA	$	475

The following table reconciles operating adjusted net income from continuing operations and operating adjusted net income from continuing operations per diluted share to net income from continuing operations for the 2021 guidance presented:


(in millions, except per share amounts), (unaudited)	2021 Guidance
Net income from continuing operations	$	90.0
Acquired amortization expense	51.2
Contingent consideration adjustment	17.0
Income taxes	(15.4)
Operating adjusted net income from continuing operations	$	142.8

Operating adjusted net income from continuing operations per share – diluted	$	0.87

Weighted average diluted shares	165

In the table above, operating adjusted net income from continuing operations per diluted share is computed using the weighted average diluted shares assuming conversion of the preferred shares to common shares.

EXHIBIT 99.2

KAR Auction Services, Inc.

Q4 and YTD 2020 Supplemental Financial Information

February 16, 2021

KAR Auction Services, Inc.

EBITDA and Adjusted EBITDA Measures

EBITDA and Adjusted EBITDA 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.

The following tables reconcile EBITDA and Adjusted EBITDA to net income (loss) from continuing operations for the periods presented:


	Three Months Ended December 31, 2020
(Dollars in millions), (Unaudited)	ADESA		AFC		Consolidated
Net income (loss) from continuing operations	$	(38.5)	$	21.4	$	(17.1)
Add back:
Income taxes	(9.7)		6.3		(3.4)
Interest expense, net of interest income	21.5		8.8		30.3
Depreciation and amortization	47.7		2.9		50.6
Intercompany interest	0.1		(0.1)		—
EBITDA	21.1		39.3		60.4
Non-cash stock-based compensation	2.5		0.5		3.0
Acquisition related costs	4.1		—		4.1
Securitization interest	—		(6.2)		(6.2)
Loss on asset sales	0.2		—		0.2
Severance	0.9		—		0.9
Foreign currency (gains)/losses	1.7		—		1.7
Contingent consideration adjustment	4.7		—		4.7
Other	(1.7)		0.4		(1.3)
Total addbacks	12.4		(5.3)		7.1
Adjusted EBITDA	$	33.5	$	34.0	$	67.5


	Three Months Ended December 31, 2019
(Dollars in millions), (Unaudited)	ADESA		AFC		Consolidated
Net income (loss) from continuing operations	$	(12.6)	$	27.9	$	15.3
Add back:
Income taxes	0.6		8.7		9.3
Interest expense, net of interest income	23.3		15.0		38.3
Depreciation and amortization	46.6		3.5		50.1
Intercompany interest	0.9		(0.9)		—
EBITDA	58.8		54.2		113.0
Non-cash stock-based compensation	4.6		0.6		5.2
Acquisition related costs	1.8		0.1		1.9
Securitization interest	—		(13.0)		(13.0)
Loss on asset sales	0.4		—		0.4
Severance	8.9		0.7		9.6
Foreign currency (gains)/losses	0.3		—		0.3
Other	4.6		—		4.6
Total addbacks	20.6		(11.6)		9.0
Adjusted EBITDA	$	79.4	$	42.6	$	122.0


	Year Ended December 31, 2020
(Dollars in millions), (Unaudited)	ADESA		AFC		Consolidated
Net income (loss) from continuing operations	$	(79.1)	$	79.6	$	0.5
Add back:
Income taxes	(17.0)		21.9		4.9
Interest expense, net of interest income	88.3		39.0		127.3
Depreciation and amortization	178.8		12.5		191.3
Intercompany interest	1.1		(1.1)		—
EBITDA	172.1		151.9		324.0
Non-cash stock-based compensation	12.8		2.3		15.1
Acquisition related costs	8.8		—		8.8
Securitization interest	—		(27.3)		(27.3)
Loss on asset sales	1.3		—		1.3
Severance	11.1		0.4		11.5
Foreign currency (gains)/losses	4.9		—		4.9
Goodwill and other intangibles impairment	29.8		—		29.8
Contingent consideration adjustment	4.7		—		4.7
Other	2.1		0.4		2.5
Total addbacks	75.5		(24.2)		51.3
Adjusted EBITDA	$	247.6	$	127.7	$	375.3


	Year Ended December 31, 2019
(Dollars in millions), (Unaudited)	ADESA		AFC		Consolidated
Net income (loss) from continuing operations	$	(13.6)	$	106.0	$	92.4
Add back:
Income taxes	(0.1)		37.8		37.7
Interest expense, net of interest income	122.9		63.5		186.4
Depreciation and amortization	175.5		13.2		188.7
Intercompany interest	5.0		(5.0)		—
EBITDA	289.7		215.5		505.2
Non-cash stock-based compensation	17.6		2.7		20.3
Loss on extinguishment of debt	2.2		—		2.2
Acquisition related costs	11.6		0.6		12.2
Securitization interest	—		(54.9)		(54.9)
Loss on asset sales	2.1		—		2.1
Severance	14.3		1.0		15.3
Foreign currency (gains)/losses	(0.7)		—		(0.7)
IAA allocated costs	2.1		0.2		2.3
Other	6.0		—		6.0
Total addbacks	55.2		(50.4)		4.8
Adjusted EBITDA	$	344.9	$	165.1	$	510.0

Certain of our loan covenant calculations utilize financial results for the most recent four consecutive fiscal quarters. The following table reconciles EBITDA and Adjusted EBITDA to net income for the periods presented:


	Three Months Ended								Twelve Months Ended
(Dollars in millions), (Unaudited)	March 31, 2020		June 30, 2020		September 30, 2020		December 31, 2020		December 31, 2020
Net income (loss)	$	2.8	$	(32.3)	$	47.1	$	(17.1)	$	0.5
Add back:
Income taxes	2.0		(4.6)		10.9		(3.4)		4.9
Interest expense, net of interest income	37.2		30.6		29.2		30.3		127.3
Depreciation and amortization	47.7		46.5		46.5		50.6		191.3
EBITDA	89.7		40.2		133.7		60.4		324.0
Non-cash stock-based compensation	5.3		2.9		3.9		3.0		15.1
Acquisition related costs	1.4		0.9		2.4		4.1		8.8
Securitization interest	(11.4)		(6.0)		(3.7)		(6.2)		(27.3)
Loss on asset sales	0.5		0.5		0.1		0.2		1.3
Severance	1.8		6.5		2.3		0.9		11.5
Foreign currency (gains)/losses	0.4		2.7		0.1		1.7		4.9
Goodwill and other intangibles impairment	—		29.8		—		—		29.8
Contingent consideration adjustment	—		—		—		4.7		4.7
Other	0.9		2.5		0.4		(1.3)		2.5
Total addbacks	(1.1)		39.8		5.5		7.1		51.3
Adjusted EBITDA	$	88.6	$	80.0	$	139.2	$	67.5	$	375.3

Results of Operations

KAR Results


	Three Months Ended December 31,				Year Ended December 31,
(Dollars in millions except per share amounts)	2020		2019		2020		2019
Revenues
Auction fees	$	207.0	$	261.0	$	887.7	$	1,115.3
Service revenue	173.5		243.0		737.4		1,018.2
Purchased vehicle sales	83.7		79.3		295.0		295.5
Finance-related revenue	65.4		88.0		267.6		352.9
Total revenues	529.6		671.3		2,187.7		2,781.9
Cost of services*	325.4		394.9		1,284.8		1,617.1
Gross profit*	204.2		276.4		902.9		1,164.8
Selling, general and administrative	139.7		164.7		545.4		662.0
Depreciation and amortization	50.6		50.1		191.3		188.7
Goodwill and other intangibles impairment	—		—		29.8		—
Operating profit	13.9		61.6		136.4		314.1
Interest expense	30.5		39.5		128.9		189.5
Other (income) expense, net	3.9		(2.5)		2.1		(7.7)
Loss on extinguishment of debt	—		—		—		2.2
Income (loss) from continuing operations before income taxes	(20.5)		24.6		5.4		130.1
Income taxes	(3.4)		9.3		4.9		37.7
Net income (loss) from continuing operations	(17.1)		15.3		0.5		92.4
Net income from discontinued operations	—		4.5		—		96.1
Net income (loss)	$	(17.1)	$	19.8	$	0.5	$	188.5
Net income (loss) from continuing operations per share
Basic	$	(0.21)	$	0.12	$	(0.16)	$	0.70
Diluted	$	(0.21)	$	0.12	$	(0.16)	$	0.70

* Exclusive of depreciation and amortization

Overview of KAR Results for the Three Months Ended December 31, 2020 and 2019

Overview

For the three months ended December 31, 2020, we had revenue of $529.6 million compared with revenue of $671.3 million for the three months ended December 31, 2019, a decrease of 21%. Business acquired in 2020 accounted for an increase in revenue of $8.5 million or 2% of revenue. For a further discussion of revenues, gross profit and selling, general and administrative expenses, see the segment results discussions below.

Depreciation and Amortization

Depreciation and amortization increased $0.5 million, or 1%, to $50.6 million for the three months ended December 31, 2020, compared with $50.1 million for the three months ended December 31, 2019. The increase in depreciation and amortization was primarily the result of depreciation and amortization for the assets of businesses acquired.

Interest Expense

Interest expense decreased $9.0 million, or 23%, to $30.5 million for the three months ended December 31, 2020, compared with $39.5 million for the three months ended December 31, 2019. The decrease was attributable to a decrease in the weighted average interest rate of approximately 1% and a decrease of $9.5 million in the average outstanding balance of corporate debt for the three months ended December 31, 2020 compared with the three

months ended December 31, 2019. In addition, there was a decrease in interest expense at AFC of $6.3 million, which resulted from a decrease in the average finance receivables balance and interest rates for the three months ended December 31, 2020, as compared with the three months ended December 31, 2019. The decrease in interest expense was partially offset by an increase in interest expense on the interest rate swaps of approximately $1.6 million for the three months ended December 31, 2020.

Other (Income) Expense, Net

For the three months ended December 31, 2020, we had other expenses of $3.9 million compared with other income of $2.5 million for the three months ended December 31, 2019. The decrease in other (income) expense was primarily attributable to an increase in contingent consideration valuation of $4.7 million, an increase in foreign currency losses of $1.4 million and other miscellaneous items aggregating $0.3 million.

Income Taxes

We had an effective tax rate of 16.6% on a pre-tax loss for the three months ended December 31, 2020, compared with an effective tax rate of 37.8% for the three months ended December 31, 2019. The 2020 rate was unfavorably impacted by expense for the increase in the estimated value of contingent consideration for which no tax benefit has been recorded, as well as a greater proportion of earnings in higher tax jurisdictions. These were partially offset by the tax benefit from deductions related to stock-based compensation expenses and other discrete benefits.

Net Income from Discontinued Operations

On June 28, 2019, the Company completed the separation of its salvage auction business, IAA, through a spin-off, creating a new independent publicly traded salvage auction company. As such, the financial results of IAA have been accounted for as discontinued operations in the comparable 2019 results presented. For the three months ended December 31, 2020 and 2019, the Company's financial statements included income from discontinued operations of $0.0 million and $4.5 million, respectively.

Impact of Foreign Currency

For the three months ended December 31, 2020, fluctuations in the Canadian exchange rate increased revenue by $0.8 million, operating profit by $0.2 million, net income by $0.1 million and had no impact on net income per diluted share. For the three months ended December 31, 2020, fluctuations in the European exchange rate increased revenue by $4.0 million, increased operating profit by $0.3 million, decreased net income by $0.3 million and had no impact on net income per diluted share.

Overview of KAR Results for the Year Ended December 31, 2020 and 2019

Overview

For the year ended December 31, 2020, we had revenue of $2,187.7 million compared with revenue of $2,781.9 million for the year ended December 31, 2019, a decrease of 21%. Businesses acquired in 2019 and 2020 accounted for an increase in revenue of $26.8 million or 1% of revenue. For a further discussion of revenues, gross profit and selling, general and administrative expenses, see the segment results discussions below.

Depreciation and Amortization

Depreciation and amortization increased $2.6 million, or 1%, to $191.3 million for the year ended December 31, 2020, compared with $188.7 million for the year ended December 31, 2019. The increase in depreciation and amortization was primarily the result of certain assets placed in service over the last twelve months.

Goodwill and Other Intangibles Impairment

In light of the impact that the COVID-19 pandemic has had on the economy, forecasts for all reporting units were revised. These economic circumstances contributed to lower sales, operating profits and cash flows at ADESA Remarketing Limited (doing business as ADESA U.K.) through the first part of 2020 as compared to 2019, and the outlook for the business was significantly reduced. As a result of the updated forecasts, an impairment analysis of goodwill and intangibles was conducted. The change in circumstances resulted in the impairment of the goodwill balance totaling $25.5 million in our ADESA Remarketing Limited reporting unit and a non-cash goodwill impairment charge was recorded for this amount in the second quarter of 2020.

In addition, in the second quarter of 2020, a non-cash customer relationship impairment charge of approximately $4.3 million was also recorded in the ADESA Remarketing Limited reporting unit, representing the impairment in the value of this reporting unit’s customer relationships.

Interest Expense

Interest expense decreased $60.6 million, or 32%, to $128.9 million for the year ended December 31, 2020, compared with $189.5 million for the year ended December 31, 2019. The decrease was primarily attributable to a decrease in the weighted average interest rate of approximately 1.0% and a decrease of $360.9 million in the average outstanding balance of corporate debt for the year ended December 31, 2020, compared with the year ended December 31, 2019, resulting from the pay down of debt of approximately $1.3 billion in connection with the spin-off of IAA on June 28, 2019 and a net increase in term loan debt of approximately $0.5 billion in connection with the debt refinancing on September 19, 2019. In addition, there was a decrease in interest expense at AFC of $24.9 million, which resulted from a decrease in the average finance receivables balance and interest rates for the year ended December 31, 2020, as compared with the year ended December 31, 2019.

Other (Income) Expense, Net

For the year ended December 31, 2020, we had other expenses of $2.1 million compared with other income of $7.7 million for the year ended December 31, 2019. The decrease in other (income) expense was primarily attributable to an increase in foreign currency losses of $5.6 million and an increase in contingent consideration valuation of $4.7 million, partially offset by other miscellaneous items aggregating $0.5 million.

Loss on Extinguishment of Debt

In September 2019, we amended our Credit Agreement and recorded a $2.2 million pretax charge primarily resulting from the write-off of unamortized debt issue costs associated with Term Loan B-4 and Term Loan B-5.

Income Taxes

We had an effective tax rate of 90.7% for the year ended December 31, 2020, compared with an effective tax rate of 29.0% for the year ended December 31, 2019. The 2020 rate was unfavorably impacted by the goodwill and other intangibles impairment charge and expense for the increase in the estimated value of contingent consideration for which no tax benefits have been recorded, as well as significantly reduced earnings and a greater proportion of earnings in higher tax jurisdictions. These were partially offset by the tax benefit from law changes, deductions related to stock-based compensation expenses and other discrete benefits.

Net Income from Discontinued Operations

On June 28, 2019, the Company completed the separation of its salvage auction business, IAA, through a spin-off, creating a new independent publicly traded salvage auction company. As such, the financial results of IAA have been accounted for as discontinued operations in the comparable 2019 results presented. For the year ended December 31, 2020 and 2019, the Company's financial statements included income from discontinued operations of $0.0 million and $96.1 million, respectively.

Impact of Foreign Currency

For the year ended December 31, 2020, fluctuations in the Canadian exchange rate decreased revenue by $1.2 million, operating profit by $0.3 million, net income by $0.2 million and had no impact on net income per diluted share. For the year ended December 31, 2020, fluctuations in the European exchange rate increased revenue by $5.2 million, increased operating profit by $0.1 million, decreased net income by $0.1 million and had no impact on net income per diluted share. In addition, for the year ended December 31, 2020, as a result of the goodwill and other intangibles impairment in the U.K., fluctuations in the British pound exchange rate decreased net income by $0.3 million.

Impact of COVID-19 on Our Operations

The Company has been subject to numerous orders and directives that have impacted our ability to operate our business throughout North America and in Europe. As a result of restrictions on our operations, we have adjusted our business processes to meet the needs of our customers while complying with the various laws, regulations, mandates and directives in each individual market we operate. In many cases, we have had to limit the number of employees and customers within our physical locations at any given time and modify the delivery of services to our customers. However, we were able to make adjustments in our operations that have permitted us to improve performance.

New and used car retail activity was reduced to unprecedented levels in early April 2020. Auto retail operations were required to temporarily close and supply and demand for used cars was disrupted. By mid-April, we were experiencing improved retail automobile sales and demand for used vehicle supply was beginning to improve. The Company was prepared to meet the needs of the wholesale used car marketplace with its technology-based auction platforms throughout North America and in Europe. The Company believes that certain changes to its business processes that were necessitated by the COVID-19 outbreak are sustainable going forward. The Company has reduced the labor required to process wholesale auction transactions and reduced its selling, general and administrative expenses.

In March 2020, the Company had over 15,000 active employees. In early April 2020, the Company furloughed approximately 11,000 employees. Since then, we have called back approximately 6,000 of these furloughed employees. We notified approximately 5,000 furloughed employees that changes in our business processes have resulted in the elimination of their positions.

ADESA Results


	Three Months Ended December 31,				Year Ended December 31,
(Dollars in millions, except per vehicle amounts)	2020		2019		2020		2019
Auction fees	$	207.0	$	261.0	$	887.7	$	1,115.3
Service revenue	173.5		243.0		737.4		1,018.2
Purchased vehicle sales	83.7		79.3		295.0		295.5
Total ADESA revenue	464.2		583.3		1,920.1		2,429.0
Cost of services*	308.4		370.9		1,205.7		1,520.7
Gross profit*	155.8		212.4		714.4		908.3
Selling, general and administrative	130.6		154.9		508.8		621.1
Depreciation and amortization	47.7		46.6		178.8		175.5
Goodwill and other intangibles impairment	—		—		29.8		—
Operating profit (loss)	$	(22.5)	$	10.9	$	(3.0)	$	111.7

On-premise vehicles sold	328,000		502,000		1,511,000		2,137,000
Off-premise vehicles sold	353,000		385,000		1,551,000		1,647,000
Total vehicles sold	681,000		887,000		3,062,000		3,784,000
Auction fees per vehicle sold	$	304	$	294	$	290	$	295
Gross profit per vehicle sold	$	229	$	239	$	233	$	240
Gross profit percentage, excluding purchased vehicles	40.9%		42.1%		44.0%		42.6%
Dealer consignment mix	31%		28%		26%		28%
Commercial mix	69%		72%		74%		72%

* Exclusive of depreciation and amortization

Overview of ADESA Results for the Three Months Ended December 31, 2020 and 2019

Revenue

Revenue from ADESA decreased $119.1 million, or 20%, to $464.2 million for the three months ended December 31, 2020, compared with $583.3 million for the three months ended December 31, 2019. The decrease in revenue was the result of a decrease in the number of vehicles sold, partially offset by an increase in purchase vehicle sales. Businesses acquired in 2020 accounted for an increase in revenue of $8.5 million. The change in revenue included the impact of an increase in revenue of $4.0 million due to fluctuations in the European exchange rate and $0.7 million due to fluctuations in the Canadian exchange rate.

On-premise marketplace sales are initiated online for vehicles at one of our locations across North America and include Simulcast, Simulcast+ and DealerBlock sales. Off-premise marketplace sales are initiated online and include Openlane, TradeRev, BacklotCars and ADESA Europe sales. The 23% decrease in the number of vehicles sold was primarily attributable to a 35% decrease in on-premise vehicles sold and an 8% decrease in off-premise vehicles sold. Volumes sold for the three months ended December 31, 2020 were materially impacted by the COVID-19 related restrictions placed on businesses. For the three months ended December 31, 2020 we held all sales through digital marketplaces to protect the health and well-being of our workforce and customers. All vehicles were offered online, cars were not driven through the auction lanes and we limited access to our physical locations to promote social distancing measures and help prevent the spread of COVID-19.

Service revenue for the quarter ended December 31, 2020 decreased $69.5 million, or 29%, primarily as a result of the decrease in vehicles sold. Typically consigned vehicles located at our facilities utilize our service offerings at a higher rate than off-premise vehicles.

Gross Profit

For the three months ended December 31, 2020, gross profit for ADESA decreased $56.6 million, or 27%, to $155.8 million, compared with $212.4 million for the three months ended December 31, 2019. Gross profit for ADESA was 33.6% of revenue for the three months ended December 31, 2020, compared with 36.4% of revenue for the three

months ended December 31, 2019. Gross profit as a percentage of revenue decreased for the three months ended December 31, 2020 as compared with the three months ended December 31, 2019 primarily related to the increase in purchase vehicle sales and the impact of lower volumes. The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold. Excluding purchased vehicle sales, gross profit as a percentage of revenue was 40.9% and 42.1% for the three months ended December 31, 2020 and 2019, respectively. Businesses acquired in 2020 accounted for an increase in cost of services of $5.0 million for the quarter ended December 31, 2020. We have also taken measures to reduce expenses to help protect our business while our operations have been impacted by COVID-19.

Selling, General and Administrative

Selling, general and administrative expenses for the ADESA segment decreased $24.3 million, or 16%, to $130.6 million for the three months ended December 31, 2020, compared with $154.9 million for the three months ended December 31, 2019, primarily due to decreases in compensation expense of $12.4 million, severance of $8.5 million, marketing costs of $4.0 million, travel expenses of $3.1 million, bad debt expense of $2.2 million, stock-based compensation of $2.1 million, other employee related expenses of $1.3 million, telecom expenses of $1.2 million, supplies expense of $1.1 million and other miscellaneous expenses aggregating $4.5 million, partially offset by increases in incentive-based compensation of $7.8 million, costs associated with acquisitions of $5.0 million, professional fees of $2.2 million and information technology costs of $1.1 million.

Overview of ADESA Results for the Year Ended December 31, 2020 and 2019

Revenue

Revenue from ADESA decreased $508.9 million, or 21%, to $1,920.1 million for the year ended December 31, 2020, compared with $2,429.0 million for the year ended December 31, 2019. The decrease in revenue was the result of a decrease in the number of vehicles sold and a decrease in average revenue per vehicle sold due to the mix of vehicles sold. Businesses acquired in 2019 accounted for an increase in revenue of $18.3 million, of which approximately $12.7 million was included in "Purchased vehicle sales." Businesses acquired in 2020 accounted for an increase in revenue of $8.5 million. The change in revenue included the impact of an increase in revenue of $5.2 million due to fluctuations in the European exchange rate and a decrease of $1.1 million due to fluctuations in the Canadian exchange rate.

On-premise marketplace sales are initiated online for vehicles at one of our locations across North America and include Simulcast, Simulcast+ and DealerBlock sales. Off-premise marketplace sales are initiated online and include Openlane, TradeRev, BacklotCars and ADESA Europe sales. The 19% decrease in the number of vehicles sold was comprised of a 29% decrease in on-premise vehicles sold and a 6% decrease in off-premise vehicles sold. Volumes sold for the year ended December 31, 2020 were materially impacted by the COVID-19 related restrictions placed on businesses throughout the world. Beginning the week of March 16, we experienced a significant decline in volumes, as customers began to cease operations in response to local, state and provincial directives. Throughout the second, third and fourth quarters, we held all sales through digital marketplaces to protect the health and well-being of our workforce and customers. All vehicles were offered online, cars were not driven through the auction lanes and we limited access to our physical locations to promote social distancing measures and help prevent the spread of COVID-19.

Service revenue for the year ended December 31, 2020 decreased $280.8 million, or 28%, primarily as a result of the decrease in vehicles sold and COVID-19 restrictions in the second quarter that limited our on-premise service offerings. Typically consigned vehicles located at our facilities utilize our service offerings at a higher rate than off-premise vehicles.

Gross Profit

For the year ended December 31, 2020, gross profit for ADESA decreased $193.9 million, or 21%, to $714.4 million, compared with $908.3 million for the year ended December 31, 2019. Gross profit for ADESA was 37.2% of revenue for the year ended December 31, 2020, compared with 37.4% of revenue for the year ended December 31, 2019. Gross profit as a percentage of revenue decreased for the year ended December 31, 2020 as compared with the year ended December 31, 2019, but we have taken measures to reduce expenses to help protect our business while our operations have been impacted by COVID-19, and vehicles sold online require less labor. In addition, our gross profit as a percentage of revenue is impacted by purchased vehicles. Excluding purchased vehicle sales, gross profit as a percentage of revenue was 44.0% and 42.6% for the years ended December 31, 2020 and 2019, respectively. The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for

purchased vehicles sold. Businesses acquired in 2019 and 2020 accounted for an increase in cost of services of $20.6 million for the year ended December 31, 2020.

Selling, General and Administrative

Selling, general and administrative expenses for the ADESA segment decreased $112.3 million, or 18%, to $508.8 million for the year ended December 31, 2020, compared with $621.1 million for the year ended December 31, 2019, primarily due to decreases in compensation expense of $45.7 million, marketing costs of $16.4 million, travel expenses of $13.0 million, severance of $8.2 million, professional fees of $6.4 million, supplies expense of $5.9 million, stock-based compensation of $5.0 million, other employee related expenses of $4.9 million, telecom expenses of $4.8 million, other miscellaneous expenses aggregating $4.8 million and the recording of the Employee Retention Credit provided under the CARES Act and the Canada Emergency Wage Subsidy of $9.8 million, partially offset by increases in information technology costs of $5.7 million and costs associated with acquisitions of $6.9 million.

Goodwill and Other Intangibles Impairment

AFC Results


	Three Months Ended December 31,				Year Ended December 31,
(Dollars in millions except volumes and per loan amounts)	2020		2019		2020		2019
AFC revenue	$	65.4	$	88.0	$	267.6	$	352.9
Cost of services*	17.0		24.0		79.1		96.4
Gross profit*	48.4		64.0		188.5		256.5
Selling, general and administrative	9.1		9.8		36.6		40.9
Depreciation and amortization	2.9		3.5		12.5		13.2
Operating profit	$	36.4	$	50.7	$	139.4	$	202.4

Loan transactions	327,000		443,000		1,519,000		1,783,000
Revenue per loan transaction, excluding “Warranty contract revenue”	$	186	$	178	$	156	$	178

* Exclusive of depreciation and amortization

Overview of AFC Results for the Three Months Ended December 31, 2020 and 2019

Revenue

For the three months ended December 31, 2020, AFC revenue decreased $22.6 million, or 26%, to $65.4 million, compared with $88.0 million for the three months ended December 31, 2019. The decrease in revenue was primarily the result of a 26% decrease in loan transactions, partially offset by a 4% increase in revenue per loan transaction. Warranty contract revenue decreased $4.2 million for the three months ended December 31, 2020, compared with the three months ended December 31, 2019, as PWI was sold in December 2020.

Revenue per loan transaction, which includes both loans paid off and loans curtailed, increased $8, or 4%, primarily as a result of an increase in loan values and a decrease in provision for credit losses for the three months ended December 31, 2020, partially offset by decreases in interest yield and average portfolio duration. Revenue per loan transaction excludes "Warranty contract revenue."

The provision for credit losses decreased to 0.6% of the average managed receivables for the three months ended December 31, 2020 from 1.9% for the three months ended December 31, 2019.

Gross Profit

For the three months ended December 31, 2020, gross profit for the AFC segment decreased $15.6 million, or 24%, to $48.4 million, or 74.0% of revenue, compared with $64.0 million, or 72.7% of revenue, for the three months ended December 31, 2019. The increase in gross profit as a percent of revenue was primarily the result of a 26% decrease in revenue and an 29% decrease in cost of services. The decrease in cost of services was primarily the result of decreases in PWI expenses of $3.0 million, compensation expense of $2.8 million, lot audits of $0.8 million and other miscellaneous expenses aggregating $0.4 million.

Selling, General and Administrative

Selling, general and administrative expenses at AFC decreased $0.7 million, or 7%, to $9.1 million for the three months ended December 31, 2020, compared with $9.8 million for the three months ended December 31, 2019. The decrease in selling, general and administrative expenses was primarily attributable to decreases in compensation expense of $0.5 million, severance of $0.4 million, PWI expenses of $0.4 million and other miscellaneous expenses aggregating $0.4 million, partially offset by an increase in incentive-based compensation of $1.0 million.

Overview of AFC Results for the Year Ended December 31, 2020 and 2019

Revenue

For the year ended December 31, 2020, AFC revenue decreased $85.3 million, or 24%, to $267.6 million, compared with $352.9 million for the year ended December 31, 2019.The decrease in revenue was primarily the result of a 12% decrease in revenue per loan transaction and an 15% decrease in loan transactions.

Revenue per loan transaction, which includes both loans paid off and loans curtailed, decreased $22, or 12%, primarily as a result of an increase in provision for credit losses for the year ended December 31, 2020, as well as decreases in interest yield. Revenue per loan transaction excludes "Warranty contract revenue."

The provision for credit losses increased to 2.1% of the average managed receivables for the year ended December 31, 2020 from 1.7% for the year ended December 31, 2019.

Gross Profit

For the year ended December 31, 2020, gross profit for the AFC segment decreased $68.0 million, or 27%, to $188.5 million, or 70.4% of revenue, compared with $256.5 million, or 72.7% of revenue, for the year ended December 31, 2019. The decrease in gross profit as a percent of revenue was primarily the result of a 24% decrease in revenue and an 18% decrease in cost of services. The decrease in cost of services was primarily the result of decreases in compensation expense of $7.9 million, PWI expenses of $5.6 million, lot audits of $1.8 million, travel expenses of $1.1 million, incentive-based compensation of $0.5 million and other miscellaneous expenses aggregating $0.4 million.

Selling, General and Administrative

Selling, general and administrative expenses at AFC decreased $4.3 million, or 11%, to $36.6 million for the year ended December 31, 2020, compared with $40.9 million for the year ended December 31, 2019 primarily as a result of decreases in compensation expense of $1.1 million, travel expenses of $1.0 million, PWI expenses of $0.5 million, stock-based compensation of $0.5 million, severance of $0.5 million, promotion expenses of $0.5 million and other miscellaneous expenses aggregating $0.8 million, partially offset by an increase in information technology costs of $0.6 million.

LIQUIDITY AND CAPITAL RESOURCES

We believe that the significant indicators of liquidity for our business are cash on hand, cash flow from operations, working capital and amounts available under our Credit Facility. Our principal sources of liquidity consist of cash generated by operations and borrowings under our Revolving Credit Facility.


	December 31,
(Dollars in millions)	2020		2019
Cash and cash equivalents	$	752.1	$	507.6
Restricted cash	60.2		53.3
Working capital	924.6		726.8
Amounts available under the Revolving Credit Facility*	325.0		325.0
Cash flow from operations for the year ended	384.4		380.8

* There were related outstanding letters of credit totaling approximately $28.5 million and $27.4 million at December 31, 2020 and 2019, respectively, which reduced the amount available for borrowings under the Revolving Credit Facility.

We regularly evaluate alternatives for our capital structure and liquidity given our expected cash flows, growth and operating capital requirements as well as capital market conditions. The COVID-19 pandemic has had, and is continuing to have, a significant impact on our business. As a result, we have implemented several measures that we believe will enhance liquidity for the foreseeable future. Some of these measures included reducing our compensation expense (including a reduction of base salaries across many levels of the organization, including the elimination of base salaries for our Chief Executive Officer, Chief Financial Officer and President and 50% reduction of base salaries for our other executive officers during the second quarter of 2020, furloughs and a reduction in force, among others), prohibiting non-essential business travel, suspending non-essential services provided by certain third parties at our locations, delaying or canceling capital projects at our on-premise marketplace locations and temporarily suspending the Company's quarterly dividend.

In addition, in June 2020 we issued and sold an aggregate of 550,000 shares Series A Preferred Stock of the Company in private placements for net proceeds of approximately $528.2 million.

We have also taken advantage of legislation introduced to assist companies during this time. In the second, third and fourth quarters of 2020, we recorded a total of approximately $8.3 million of employee retention credits taken under the CARES Act and approximately $16.0 million under the Canada Emergency Wage Subsidy. These credits partially offset salaries and medical costs recorded in the U.S. and Canada. We will continue to monitor and assess the impact the CARES Act and similar legislation in other countries may have on our business and financial results. As the impact of the COVID-19 pandemic on the economy and our operations evolves, we will continue to assess our liquidity needs. A continued disruption could materially affect our liquidity.

Summary of Cash Flows


	Year Ended December 31,
(Dollars in millions)	2020		2019
Net cash provided by (used by):
Operating activities - continuing operations	$	384.4	$	380.8
Operating activities - discontinued operations	—		161.2
Investing activities - continuing operations	(326.6)		(415.0)
Investing activities - discontinued operations	—		(37.4)
Financing activities - continuing operations	194.8		(1,163.8)
Financing activities - discontinued operations	—		1,317.6
Effect of exchange rate on cash	(1.2)		12.8
Net increase in cash, cash equivalents and restricted cash	$	251.4	$	256.2

Cash flow provided by operating activities (continuing operations) was $384.4 million for the year ended December 31, 2020, compared with $380.8 million for the year ended December 31, 2019. The increase in operating cash flow was primarily attributable to changes in operating assets and liabilities as a result of the timing of collections and the disbursement of funds to consignors for auctions held near period-ends, as well as a net increase in non-cash item adjustments, partially offset by decreased profitability attributable to reduced operations beginning March 20, 2020, resulting from COVID-19 restrictions on our business.

Net cash used by investing activities (continuing operations) was $326.6 million for the year ended December 31, 2020, compared with $415.0 million for the year ended December 31, 2019. The increase in net cash from investing activities was primarily attributable to:

•a net decrease in finance receivables held for investment of approximately $303.3 million;

•a reduction in capital expenditures of approximately $60.2 million; and

•net proceeds from the sale of PWI of approximately $24.3 million;

partially offset by:

•an increase in cash used for acquisitions of approximately $300.3 million.

Net cash provided by financing activities (continuing operations) was $194.8 million for the year ended December 31, 2020, compared with net cash used by financing activities of $1,163.8 million for the year ended December 31, 2019. The increase in net cash from financing activities was primarily attributable to:

•a decrease in net payments on long-term debt of $791.9 million. In the second quarter of 2019, the Company used net cash provided by financing activities from discontinued operations (cash received from IAA in the separation) to prepay its term loan debt. In addition, in the third quarter of 2019, the Company refinanced the outstanding Term Loan B-4 and Term Loan B-5 and repaid the remaining amount on the 2017 Revolving Credit Facility with the new Term Loan B-6;

•net proceeds of approximately $528.2 million received from the issuance of the Series A Preferred Stock in the second quarter of 2020;

•a decrease in dividends paid to stockholders of approximately $115.3 million;

•a decrease in the repurchase of common stock of $109.5 million; and

•a decrease in cash transferred to IAA of $50.9 million;

partially offset by:

•a net decrease in the obligations collateralized by finance receivables of approximately $194.9 million;

•a net decrease in borrowings on lines of credit of approximately $33.3 million; and

•an increase in cash used for payments of contingent consideration of approximately $21.8 million.

Q4 2020 & Annual Earnings Slides February 16, 2021

2 Forward-Looking Statements This presentation includes forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward looking statements are based on management’s current expectations, are not guarantees of future performance and 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. Many of these risk factors are outside of the company’s control, and as such, they involve risks which are not currently known to the company that could cause actual results to differ materially from forecasted results. Factors that could cause or contribute to such differences include those uncertainties regarding the impact of the COVID-19 virus on our business and the economy generally, and those other matters disclosed in the company’s Securities and Exchange Commission filings. The forward-looking statements in this document are made as of the date hereof and the company does not undertake to update its forward-looking statements.

3 Fourth Quarter Summary ❑ Financial Performance – Year-to-Date o Consolidated revenue of $2,187.7M, vehicles sold of 3.1M o Adjusted EBITDA of $375.3M o Operating adjusted EPS of $0.51 ❑ Operations o 100% of transactions online o Completed BacklotCars acquisition o Permanently reduced operating expenses ❑ Balance Sheet o Cash in excess of $750M o Net Senior Secured leverage of 0.7x o Total net debt of 3.25x o $325M undrawn revolver

4 ANNUAL GUIDANCE (in millions, except per share amounts) 2021 2020 Net income from continuing operations $90 $0.5 Add back: Income tax expense $38 $4.9 Interest expense, net of interest income $125 $127.3 Depreciation and amortization $205 $191.3 EBITDA $458 $324.0 Total Adjusted EBITDA addbacks, net $17 $51.3 Adjusted EBITDA $475 $375.3 Effective tax rate 30% 90.7% Net income from continuing operations per share – diluted * $0.30 ($0.16) Weighted average diluted shares * 131 129.3 Operating adjusted net income from continuing operations per share - diluted $0.87 $0.51 Weighted average diluted shares – including assumed conversion of preferred shares 165 147.0 Capital expenditures $125 $101.4 Cash taxes $65 $16.6 Cash interest on corporate debt $74 $81.7 2021 Guidance * The company used the two-class method of calculating net income from continuing operations per diluted share. Under the two-class method, net income from continuing operations is reduced by dividends and undistributed earnings to the holders of the Series A Preferred Stock, and the weighted average diluted shares do not assume conversion of the preferred shares to common shares.

5 December 31, 2020 Leverage (US$ in millions) Corporate Credit Ratings: S&P B, Moodys B2 * As defined in the Credit Agreement Balance Maturity Term Loan B-6 (Adjusted LIBOR + 2.25%) $938 2026 Revolving Credit Facility (Adjusted LIBOR + 1.75%) - 2024 Senior Notes (Fixed 5.125%) 950 2025 Finance Leases & Other 31 Total 1,919 Less: Available Cash* (700) Net Debt $1,219 Senior Secured Net Leverage Ratio 0.7 Total Net Debt Ratio 3.25

6 F o u r t h Q u a r t e r & Y e a r - t o - D a t e R e s u l t s

7 KAR 2020 Highlights ($ in millions, except per share amounts) KAR Q4 2020 Q4 2019 YTD 2020 YTD 2019 Total operating revenues $529.6 $671.3 $2,187.7 $2,781.9 Gross profit** $204.2 $276.4 $902.9 $1,164.8 % of revenue 38.6% 41.2% 41.3% 41.9% SG&A $139.7 $164.7 $545.4 $662.0 EBITDA $60.4 $113.0 $324.0 $505.2 Adjusted EBITDA $67.5 $122.0 $375.3 $510.0 Net income (loss) from continuing operations ($17.1) $15.3 $0.5 $92.4 Net income (loss) from continuing operations per share – diluted ($0.21) $0.12 ($0.16) $0.70 Weighted average diluted shares 129.6 130.1 129.3 132.9 Operating adjusted net income (loss) from continuing operations per share – diluted ($0.01) $0.19 $0.51 $1.04 Weighted average diluted shares – including assumed conversion of preferred shares 161.8 N/A 147.0 N/A Dividends declared per common share $-- $0.19 $0.19 $1.08 Effective tax rate 16.6% 37.8% 90.7% 29.0% Capital expenditures $101.4 $161.6 * For a more complete explanation of these changes, see the MD&A in the company's supplemental financial information and Form 10-K, both for the period ended December 31, 2020. ** Exclusive of depreciation and amortization

8 ADESA 2020 Highlights ($ in millions, except RPU) ADESA Q4 2020 Q4 2019 YTD 2020 YTD 2019 Auction fees $207.0 $261.0 $887.7 $1,115.3 Service revenue $173.5 $243.0 $737.4 $1,018.2 Purchased vehicle sales $83.7 $79.3 $295.0 $295.5 Total ADESA Revenue $464.2 $583.3 $1,920.1 $2,429.0 Gross profit** $155.8 $212.4 $714.4 $908.3 % of revenue 33.6% 36.4% 37.2% 37.4% % of revenue, excluding purchased vehicles 40.9% 42.1% 44.0% 42.6% SG&A $130.6 $154.9 $508.8 $621.1 EBITDA $21.1 $58.8 $172.1 $289.7 Adjusted EBITDA $33.5 $79.4 $247.6 $344.9 % of revenue 7.2% 13.6% 12.9% 14.2% On-premise vehicles sold 328,000 502,000 1,511,000 2,137,000 Off-premise vehicles sold 353,000 385,000 1,551,000 1,647,000 Total vehicles sold 681,000 887,000 3,062,000 3,784,000 Auction fees per vehicle sold $304 $294 $290 $295 Gross profit per vehicle sold $229 $239 $233 $240 Dealer consignment mix 31% 28% 26% 28% Commercial mix 69% 72% 74% 72% * For a more complete explanation of these changes, see the MD&A in the company's supplemental financial information and Form 10-K, both for the period ended December 31, 2020. ** Exclusive of depreciation and amortization

9 AFC 2020 Highlights * For a more complete explanation of these changes, see the MD&A in the company’s supplemental financial information and Form 10-K, both for the period ended December 31, 2020. ** Exclusive of depreciation and amortization *** Excludes “Warranty contract revenue" ($ in millions, except for revenue per loan transaction) AFC Q4 2020 Q4 2019 YTD 2020 YTD 2019 Interest and fee income $61.4 $86.0 $266.1 $342.1 Other revenue $1.9 $2.8 $8.7 $10.9 Provision for credit losses ($2.7) ($9.8) ($38.6) ($35.3) Warranty contract revenue $4.8 $9.0 $31.4 $35.2 Total AFC revenue $65.4 $88.0 $267.6 $352.9 Gross profit** $48.4 $64.0 $188.5 $256.5 % of revenue 74.0% 72.7% 70.4% 72.7% SG&A $9.1 $9.8 $36.6 $40.9 EBITDA $39.3 $54.2 $151.9 $215.5 Adjusted EBITDA $34.0 $42.6 $127.7 $165.1 Loan transactions 327,000 443,000 1,519,000 1,783,000 Revenue per loan transaction*** $186 $178 $156 $178 Provision for credit losses % of finance receivables 0.6% 1.9% 2.1% 1.7% Managed receivables $1,911.0 $2,115.2 $1,911.0 $2,115.2 Obligations collateralized by finance receivables $1,261.2 $1,461.2 $1,261.2 $1,461.2

10 H I S T O R I C A L D A TA

11 ADESA Statements of Income (Loss) – 2020 & 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 YTD 2020 Operating revenues $ 567.0 $ 362.2 $ 526.7 $ 464.2 $ 1,920.1 Operating expenses Cost of services (exclusive of depreciation & amortization) 370.7 217.2 309.4 308.4 1,205.7 Selling, general, and administrative 152.4 103.7 122.1 130.6 508.8 Depreciation and amortization 44.4 43.3 43.4 47.7 178.8 Goodwill and other intangibles impairment - 29.8 - - 29.8 Total operating expenses 567.5 394.0 474.9 486.7 1,923.1 Operating profit (loss) (0.5) (31.8) 51.8 (22.5) (3.0) Interest expense 24.4 21.7 22.0 21.7 89.8 Other (income) expense, net (1.9) 1.3 (1.1) 3.9 2.2 Intercompany 0.8 0.2 - 0.1 1.1 Income (loss) before income taxes (23.8) (55.0) 30.9 (48.2) (96.1) Income taxes (5.2) (9.5) 7.4 (9.7) (17.0) Net income (loss) $ (18.6) $ (45.5) $ 23.5 $ (38.5) $ (79.1) Q1 2019 Q2 2019 Q3 2019 Q4 2019 YTD 2019 Operating revenues $ 599.7 $ 632.4 $ 613.6 $ 583.3 $ 2,429.0 Operating expenses Cost of services (exclusive of depreciation & amortization) 370.7 392.9 386.2 370.9 1,520.7 Selling, general, and administrative 163.7 153.0 149.5 154.9 621.1 Depreciation and amortization 41.2 44.6 43.1 46.6 175.5 Total operating expenses 575.6 590.5 578.8 572.4 2,317.3 Operating profit 24.1 41.9 34.8 10.9 111.7 Interest expense 39.5 39.4 22.2 24.4 125.5 Other (income) expense, net (2.0) (1.0) (1.9) (2.4) (7.3) Loss on extinguishment of debt - - 2.2 - 2.2 Intercompany 1.2 1.6 1.3 0.9 5.0 Income (loss) before income taxes (14.6) 1.9 11.0 (12.0) (13.7) Income taxes (3.2) (1.6) 4.1 0.6 (0.1) Net income (loss) $ (11.4) $ 3.5 $ 6.9 $ (12.6) $ (13.6)

12 ADESA Revenue 2020 4Q20 3Q20 2Q20 1Q20 2019 4Q19 3Q19 2Q19 1Q19 Auction Fees $887.7 $207.0 $247.6 $177.8 $255.3 $1,115.3 $261.0 $276.0 $294.5 $283.8 Service Revenue $737.4 $173.5 $192.9 $134.8 $236.2 $1,018.2 $243.0 $258.5 $258.6 $258.1 Purchased Vehicle Sales $295.0 $83.7 $86.2 $49.6 $75.5 $295.5 $79.3 $79.1 $79.3 $57.8 Total ADESA Revenue $1,920.1 $464.2 $526.7 $362.2 $567.0 $2,429.0 $583.3 $613.6 $632.4 $599.7 Gross Profit $714.4 $155.8 $217.3 $145.0 $196.3 $908.3 $212.4 $227.4 $239.5 $229.0 Gross Profit % 37.2% 33.6% 41.3% 40.0% 34.6% 37.4% 36.4% 37.1% 37.9% 38.2% Gross Profit %, Net of Purchased Vehicle Sales 44.0% 40.9% 49.3% 46.4% 39.9% 42.6% 42.1% 42.5% 43.3% 42.3%

13 ADESA Metrics - Annual 1 Includes purchased vehicle sales 2020 2019 2018 2017 2016 Revenue1 $1,920.1 $2,429.0 $2,101.9 $1,937.5 $1,765.3 On-premise vehicles sold 1,511 2,137 2,124 2,189 2,112 Off-premise vehicles sold 1,551 1,647 1,348 991 773 Total vehicles sold 3,062 3,784 3,472 3,180 2,885 Auction fees per vehicle sold $290 $295 $302 $311 $303 Gross profit per vehicle sold $233 $240 $251 $256 $253 Gross profit percentage1 37.2% 37.4% 41.4% 42.0% 41.3% Gross profit percentage, excluding purchased vehicles 44.0% 42.6% 43.9% 43.8% 42.8% Dealer consignment mix 26% 28% 30% 33% 36% Commercial mix 74% 72% 70% 67% 64%

14 ADESA Metrics - Quarter 1 Includes purchased vehicle sales 4Q20 3Q20 2Q20 1Q20 4Q19 3Q19 2Q19 1Q19 Revenue1 $464.2 $526.7 $362.2 $567.0 $583.3 $613.6 $632.4 $599.7 On-premise vehicles sold 328 403 312 468 502 527 553 555 Off-premise vehicles sold 353 468 336 394 385 431 441 390 Total vehicles sold 681 871 648 862 887 958 994 945 Auction fees per vehicle sold $304 $284 $274 $296 $294 $288 $296 $300 Gross profit per vehicle sold $229 $249 $224 $228 $239 $237 $241 $242 Gross profit percentage1 33.6% 41.3% 40.0% 34.6% 36.4% 37.1% 37.9% 38.2% Gross profit percentage, excluding purchased vehicles 40.9% 49.3% 46.4% 39.9% 42.1% 42.5% 43.3% 42.3% Dealer consignment mix 31% 26% 21% 26% 28% 30% 28% 26% Commercial mix 69% 74% 79% 74% 72% 70% 72% 74%

15 AFC Statements of Income – 2020 & 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 YTD 2020 Operating revenues $ 78.5 $ 56.8 $ 66.9 $ 65.4 $ 267.6 Operating expenses Cost of services (exclusive of depreciation & amortization) 23.9 17.9 20.3 17.0 79.1 Selling, general, and administrative 10.0 8.6 8.9 9.1 36.6 Depreciation and amortization 3.3 3.2 3.1 2.9 12.5 Total operating expenses 37.2 29.7 32.3 29.0 128.2 Operating profit 41.3 27.1 34.6 36.4 139.4 Interest expense 13.6 9.2 7.5 8.8 39.1 Other (income) expense, net (0.1) - - - (0.1) Intercompany (0.8) (0.2) - (0.1) (1.1) Income before income taxes 28.6 18.1 27.1 27.7 101.5 Income taxes 7.2 4.9 3.5 6.3 21.9 Net income $ 21.4 $ 13.2 $ 23.6 $ 21.4 $ 79.6 Q1 2020 Q2 2020 Q3 2020 Q4 2020 YTD 2020 Operating revenues $ 89.9 $ 86.7 $ 88.3 $ 88.0 $ 352.9 Operating expenses Cost of services (exclusive of depreciation & amortization) 23.2 24.5 24.7 24.0 96.4 Selling, general, and administrative 11.5 10.2 9.4 9.8 40.9 Depreciation and amortization 3.1 3.3 3.3 3.5 13.2 Total operating expenses 37.8 38.0 37.4 37.3 150.5 Operating profit 52.1 48.7 50.9 50.7 202.4 Interest expense 17.0 16.2 15.7 15.1 64.0 Other (income) expense, net (0.1) (0.1) (0.1) (0.1) (0.4) Intercompany (1.2) (1.6) (1.3) (0.9) (5.0) Income before income taxes 36.4 34.2 36.6 36.6 143.8 Income taxes 9.7 10.3 9.1 8.7 37.8 Net income $ 26.7 $ 23.9 $ 27.5 $ 27.9 $ 106.0

16 AFC Metrics - Annual 2020 2019 2018 2017 2016 Revenue $267.6 $352.9 $340.9 $301.3 $286.8 Loan Transaction Units (LTU) 1,519 1,783 1,760 1,688 1,718 Revenue per Loan Transaction, Excluding “Warranty Contract Revenue” $156 $178 $175 $159 $148 Ending Managed Finance Receivables $1,911.0 $2,115.2 $2,014.8 $1,912.6 $1,792.2 Ending Obligations Collateralized by Finance Receivables $1,261.2 $1,461.2 $1,445.3 $1,358.1 $1,280.3 % Vehicles Purchased at Any Auction 87% 84% 83% 85% 83% Active Dealers 10,900 12,900 12,300 12,400 12,200 Vehicles per Active Dealer 15 16 15 15 15 Average Credit Line $290,000 $270,000 $270,000 $250,000 $260,000 Avg Value Outstanding per Vehicle $11,800 $10,000 $10,200 $9,900 $9,500

17 AFC Metrics - Quarter 4Q20 3Q20 2Q20 1Q20 4Q19 3Q19 2Q19 1Q19 Revenue $65.4 $66.9 $56.8 $78.5 $88.0 $88.3 $86.7 $89.9 Loan Transaction Units (LTU) 327 324 420 448 443 442 437 461 Revenue per Loan Transaction, Excluding “Warranty Contract Revenue” $186 $179 $115 $155 $178 $180 $178 $177 Ending Managed Finance Receivables $1,911.0 $1,744.8 $1,548.3 $1,954.8 $2,115.2 $2,110.4 $2,070.1 $1,989.1 Ending Obligations Collateralized by Finance Receivables $1,261.2 $1,101.0 $735.9 $1,349.9 $1,461.2 $1,428.4 $1,422.3 $1,360.6

18 AFC Provision for Credit Losses - Annual 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Ending Managed Receivables $1,911.0 $2,115.2 $2,014.8 $1,912.6 $1,792.2 $1,641.0 $1,371.1 $1,107.6 $1,004.2 $883.2 $771.6 $613.0 $506.6 $847.9 Average Managed Receivables $1,854.8 $2,059.9 $1,959.8 $1,802.2 $1,732.5 $1,474.9 $1,208.4 $1,051.4 $925.8 $798.8 $688.6 $516.4 $744.4 $835.3 Provision for Credit Losses $38.6 $35.3 $32.9 $33.9 $30.7 $16.0 $12.3 $9.6 $7.2 $6.1 $11.2 $17.1 $44.7 $25.0 % of Managed Receivables 2.1% 1.7% 1.7% 1.9% 1.8% 1.1% 1.0% 0.9% 0.8% 0.8% 1.6% 3.3% 6.0% 3.0%

19 AFC Provision for Credit Losses - Quarterly 4Q20 3Q20 2Q20 1Q20 4Q19 3Q19 2Q19 1Q19 Ending Managed Receivables $1,911.0 $1,744.8 $1,548.3 $1,954.8 $2,115.2 $2,110.4 $2,070.1 $1,989.1 Average Managed Receivables $1,827.9 $1,646.6 $1,751.6 $2,035.0 $2,112.8 $2,090.3 $2,029.6 $2,002.0 Provision for Credit Losses $2.7 $-- $19.0 $16.9 $9.8 $8.9 $8.4 $8.2 % of Managed Receivables 0.6% 0.0% 4.3% 3.3% 1.9% 1.7% 1.7% 1.6%

20 A P P E N D I X

21 Non-GAAP Financial Measures 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 the company's 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 the company’s creditors. In addition, management uses EBITDA and Adjusted EBITDA to evaluate the company’s 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 non-compete 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 (loss) from continuing operations and operating adjusted net income (loss) from continuing operations per share, in the opinion of the company, provide comparability to other companies that may not have incurred these types of non-cash expenses or that report a similar measure. In addition, net income (loss) and net income (loss) per share have been adjusted for certain other charges, as seen in the following reconciliation. EBITDA, Adjusted EBITDA, operating adjusted net income (loss) from continuing operations and operating adjusted net income (loss) 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.

22 Q1 2020 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended March 31, 2020 ADESA AFC Consolidated Net income (loss) from continuing operations ($18.6) $21.4 $2.8 Add back: Income taxes (5.2) 7.2 2.0 Interest expense, net of interest income 23.7 13.5 37.2 Depreciation and amortization 44.4 3.3 47.7 Intercompany interest 0.8 (0.8) - EBITDA $45.1 $44.6 $89.7 Non-cash stock-based compensation 4.6 0.7 5.3 Acquisition related costs 1.4 - 1.4 Securitization interest - (11.4) (11.4) Loss on asset sales 0.5 - 0.5 Severance 1.8 - 1.8 Foreign currency (gains)/losses 0.4 - 0.4 Other 0.8 0.1 0.9 Total Addbacks 9.5 (10.6) (1.1) Adjusted EBITDA $54.6 $34.0 $88.6 Revenue $567.0 $78.5 $645.5 Adjusted EBITDA % margin 9.6% 43.3% 13.7%

23 Q2 2020 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2020 ADESA AFC Consolidated Net income (loss) from continuing operations ($45.5) $13.2 ($32.3) Add back: Income taxes (9.5) 4.9 (4.6) Interest expense, net of interest income 21.4 9.2 30.6 Depreciation and amortization 43.3 3.2 46.5 Intercompany interest 0.2 (0.2) - EBITDA $9.9 $30.3 $40.2 Non-cash stock-based compensation 2.4 0.5 2.9 Acquisition related costs 0.9 - 0.9 Securitization interest - (6.0) (6.0) Loss on asset sales 0.5 - 0.5 Severance 6.0 0.5 6.5 Foreign currency (gains)/losses 2.7 - 2.7 Goodwill and other intangibles impairment 29.8 - 29.8 Other 2.5 - 2.5 Total Addbacks 44.8 (5.0) 39.8 Adjusted EBITDA $54.7 $25.3 $80.0 Revenue $362.2 $56.8 $419.0 Adjusted EBITDA % margin 15.1% 44.5% 19.1%

24 Q3 2020 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended September 30, 2020 ADESA AFC Consolidated Net income (loss) from continuing operations $23.5 $23.6 $47.1 Add back: Income taxes 7.4 3.5 10.9 Interest expense, net of interest income 21.7 7.5 29.2 Depreciation and amortization 43.4 3.1 46.5 EBITDA $96.0 $37.7 $133.7 Non-cash stock-based compensation 3.3 0.6 3.9 Acquisition related costs 2.4 - 2.4 Securitization interest - (3.7) (3.7) Loss on asset sales 0.1 - 0.1 Severance 2.4 (0.1) 2.3 Foreign currency (gains)/losses 0.1 - 0.1 Other 0.5 (0.1) 0.4 Total Addbacks 8.8 (3.3) 5.5 Adjusted EBITDA $104.8 $34.4 $139.2 Revenue $526.7 $66.9 $593.6 Adjusted EBITDA % margin 19.9% 51.4% 23.5%

25 Q4 2020 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended December 31, 2020 ADESA AFC Consolidated Net income (loss) from continuing operations ($38.5) $21.4 ($17.1) Add back: Income taxes (9.7) 6.3 (3.4) Interest expense, net of interest income 21.5 8.8 30.3 Depreciation and amortization 47.7 2.9 50.6 Intercompany interest 0.1 (0.1) - EBITDA $21.1 $39.3 $60.4 Non-cash stock-based compensation 2.5 0.5 3.0 Acquisition related costs 4.1 - 4.1 Securitization interest - (6.2) (6.2) Loss on asset sales 0.2 - 0.2 Severance 0.9 - 0.9 Foreign currency (gains)/losses 1.7 - 1.7 Contingent consideration adjustment 4.7 - 4.7 Other (1.7) 0.4 (1.3) Total Addbacks 12.4 (5.3) 7.1 Adjusted EBITDA $33.5 $34.0 $67.5 Revenue $464.2 $65.4 $529.6 Adjusted EBITDA % margin 7.2% 52.0% 12.7%

26 YTD 2020 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2020 ADESA AFC Consolidated Net income (loss) from continuing operations ($79.1) $79.6 $0.5 Add back: Income taxes (17.0) 21.9 4.9 Interest expense, net of interest income 88.3 39.0 127.3 Depreciation and amortization 178.8 12.5 191.3 Intercompany interest 1.1 (1.1) - EBITDA $172.1 $151.9 $324.0 Non-cash stock-based compensation 12.8 2.3 15.1 Acquisition related costs 8.8 - 8.8 Securitization interest - (27.3) (27.3) Loss on asset sales 1.3 - 1.3 Severance 11.1 0.4 11.5 Foreign currency (gains)/losses 4.9 - 4.9 Goodwill and other intangibles impairment 29.8 - 29.8 Contingent consideration adjustment 4.7 - 4.7 Other 2.1 0.4 2.5 Total Addbacks 75.5 (24.2) 51.3 Adjusted EBITDA $247.6 $127.7 $375.3 Revenue $1,920.1 $267.6 $2,187.7 Adjusted EBITDA % margin 12.9% 47.7% 17.2%

27 Q1 2019 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended March 31, 2019 ADESA AFC Consolidated Net income (loss) from continuing operations ($11.4) $26.7 $15.3 Add back: Income taxes (3.2) 9.7 6.5 Interest expense, net of interest income 39.1 16.8 55.9 Depreciation and amortization 41.2 3.1 44.3 Intercompany interest 1.2 (1.2) - EBITDA $66.9 $55.1 $122.0 Non-cash stock-based compensation 5.7 0.9 6.6 Acquisition related costs 3.7 0.2 3.9 Securitization interest - (14.8) (14.8) Loss on asset sales 0.5 - 0.5 Severance 3.6 0.1 3.7 Foreign currency (gains)/losses (0.6) - (0.6) IAA allocated costs 1.3 0.1 1.4 Other 0.2 - 0.2 Total Addbacks 14.4 (13.5) 0.9 Adjusted EBITDA $81.3 $41.6 $122.9 Revenue $599.7 $89.9 $689.6 Adjusted EBITDA % margin 13.6% 46.3% 17.8%

28 Q2 2019 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2019 ADESA AFC Consolidated Net income (loss) from continuing operations $3.5 23.9 $27.4 Add back: Income taxes (1.6) 10.3 8.7 Interest expense, net of interest income 38.9 16.1 55.0 Depreciation and amortization 44.6 3.3 47.9 Intercompany interest 1.6 (1.6) - EBITDA $87.0 $52.0 $139.0 Non-cash stock-based compensation 3.4 0.6 4.0 Acquisition related costs 3.5 0.2 3.7 Securitization interest - (13.8) (13.8) Loss on asset sales 0.4 - 0.4 Severance 1.0 0.1 1.1 IAA allocated costs 0.8 0.1 0.9 Other 0.6 - 0.6 Total Addbacks 9.7 (12.8) (3.1) Adjusted EBITDA $96.7 $39.2 $135.9 Revenue $632.4 $86.7 $719.1 Adjusted EBITDA % margin 15.3% 45.2% 18.9%

29 Q3 2019 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended September 30, 2019 ADESA AFC Consolidated Net income (loss) from continuing operations $6.9 $27.5 $34.4 Add back: Income taxes 4.1 9.1 13.2 Interest expense, net of interest income 21.6 15.6 37.2 Depreciation and amortization 43.1 3.3 46.4 Intercompany interest 1.3 (1.3) - EBITDA $77.0 $54.2 $131.2 Non-cash stock-based compensation 3.9 0.6 4.5 Loss on extinguishment of debt 2.2 - 2.2 Acquisition related costs 2.6 0.1 2.7 Securitization interest - (13.3) (13.3) Loss on asset sales 0.8 - 0.8 Severance 0.8 0.1 0.9 Foreign currency (gains)/losses (0.4) - (0.4) Other 0.6 - 0.6 Total Addbacks 10.5 (12.5) (2.0) Adjusted EBITDA $87.5 $41.7 $129.2 Revenue $613.6 $88.3 $701.9 Adjusted EBITDA % margin 14.3% 47.2% 18.4%

30 Q4 2019 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended December 31, 2019 ADESA AFC Consolidated Net income (loss) from continuing operations ($12.6) $27.9 $15.3 Add back: Income taxes 0.6 8.7 9.3 Interest expense, net of interest income 23.3 15.0 38.3 Depreciation and amortization 46.6 3.5 50.1 Intercompany interest 0.9 (0.9) - EBITDA $58.8 $54.2 $113.0 Non-cash stock-based compensation 4.6 0.6 5.2 Acquisition related costs 1.8 0.1 1.9 Securitization interest - (13.0) (13.0) Loss on asset sales 0.4 - 0.4 Severance 8.9 0.7 9.6 Foreign currency (gains)/losses 0.3 - 0.3 Other 4.6 - 4.6 Total Addbacks 20.6 (11.6) 9.0 Adjusted EBITDA $79.4 $42.6 $122.0 Revenue $583.3 $88.0 $671.3 Adjusted EBITDA % margin 13.6% 48.4% 18.2%

31 YTD 2019 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2019 ADESA AFC Consolidated Net income (loss) from continuing operations ($13.6) $106.0 $92.4 Add back: Income taxes (0.1) 37.8 37.7 Interest expense, net of interest income 122.9 63.5 186.4 Depreciation and amortization 175.5 13.2 188.7 Intercompany interest 5.0 (5.0) - EBITDA $289.7 $215.5 $505.2 Non-cash stock-based compensation 17.6 2.7 20.3 Loss on extinguishment of debt 2.2 - 2.2 Acquisition related costs 11.6 0.6 12.2 Securitization interest - (54.9) (54.9) Loss on asset sales 2.1 - 2.1 Severance 14.3 1.0 15.3 Foreign currency (gains)/losses (0.7) - (0.7) IAA allocated costs 2.1 0.2 2.3 Other 6.0 - 6.0 Total Addbacks 55.2 (50.4) 4.8 Adjusted EBITDA $344.9 $165.1 $510.0 Revenue $2,429.0 $352.9 $2,781.9 Adjusted EBITDA % margin 14.2% 46.8% 18.3%

32 (1) The Series A Preferred Stock dividends have not been included in the calculation of operating adjusted net income (loss) from continuing operations and operating adjusted net income (loss) from continuing operations per diluted share. (2) The effective tax rate at the end of each period presented in 2019 was used to determine the amount of income tax on the adjustments to net income. For 2020, an effective tax rate of 30% was applied to the acquired amortization expense. There was no income tax benefit related to the contingent consideration adjustment or the goodwill and other intangibles impairment because these items were not deductible for income tax purposes. Operating Adjusted Net Income from Continuing Operations per Share Reconciliation ($ in millions, except per share amounts), (unaudited) Three Months ended December 31, Year ended December 31, 2020 2019 2020 2019 Net income (loss) ($17.1) $19.8 $0.5 $188.5 Less: Income from discontinued operations - (4.5) - (96.1) Net income (loss) from continuing operations (1) ($17.1) $15.3 $0.5 $92.4 Acquired amortization expense 15.3 14.4 57.7 58.3 IAA allocated costs - - - 2.3 Acceleration of debt issuance costs - - - 1.8 Loss on extinguishment of debt - - - 2.2 Contingent consideration adjustment 4.7 - 4.7 - Goodwill and other intangibles impairment - - 29.8 - Income taxes (2) (4.6) (5.4) (17.3) (18.7) Operating adjusted net income (loss) from continuing operations ($1.7) $24.3 $75.4 $138.3 Operating adjusted net income (loss) from continuing operations per share − diluted ($0.01) $0.19 $0.51 $1.04 Weighted average diluted shares 161.8 130.1 147.0 132.9