kar-20230221
0001395942false00013959422023-02-212023-02-21

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 21, 2023
KAR Auction Services, Inc.
(Exact name of Registrant as specified in its charter)

Delaware
001-34568
20-8744739
(State or other jurisdiction
of incorporation)
(Commission File
Number)
(IRS Employer
Identification No.)


11299 N. Illinois Street
Carmel, Indiana 46032
(Address of principal executive offices)
(Zip Code)

(800) 923-3725
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, par value $0.01 per shareKARNew York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02    Results of Operations and Financial Condition.

On February 21, 2023, KAR Auction Services, Inc. (“KAR” or the "Company") issued a press release announcing its financial results for the three and twelve months ended December 31, 2022. KAR will host an earnings conference call and webcast, Wednesday, February 22, 2023 at 8:30 a.m., Eastern Time. The conference call may be accessed by calling 1-833-634-2155 and entering participant passcode "KAR," and the live webcast may be accessed at the investors section of www.karglobal.com. The call will be hosted by KAR's Chief Executive Officer, Peter Kelly and Interim Chief Financial Officer, Scott Anderson. The call will feature a review of operating highlights and financial results for the three and twelve months ended December 31, 2022. The press release dated February 21, 2023 is attached to this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference in its entirety.

On February 21, 2023, KAR also posted supplemental financial information for the three and twelve months ended December 31, 2022, and Earnings Slides for the three and twelve months ended December 31, 2022. The supplemental financial information and Earnings Slides can be located at the investors section of www.karglobal.com. The supplemental financial information and Earnings Slides posted on February 21, 2023 are attached to this Current Report on Form 8-K as Exhibits 99.2 and 99.3, respectively, and are incorporated herein by reference in their entirety.




Item 9.01    Financial Statements and Exhibits.

    (d) Exhibits

        EXHIBIT NO.            DESCRIPTION OF EXHIBIT
            
99.1    Press release dated February 21, 2023 – “KAR Auction Services, Inc. Reports 2022 Financial Results”

99.2    KAR Auction Services, Inc. Q4 and YTD 2022 Supplemental Financial Information – February 21, 2023

99.3    KAR Auction Services, Inc. Q4 2022 & Annual Earnings Slides – February 21, 2023

104    Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.


SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.


Dated:    February 21, 2023            KAR Auction Services, Inc.


                        /s/ SCOTT A. ANDERSON
                        Scott A. Anderson
Interim Chief Financial Officer and Chief Accounting Officer



EXHIBIT 99.1
EARNINGS RELEASE

For Immediate Release

Analyst Inquiries:                                                      Media Inquiries:
Mike Eliason                                                             Laurie Dippold
(317) 249-4559                                                           (317) 468-3900
[email protected]                     [email protected]    

KAR Auction Services, Inc. Reports 2022 Financial Results
•Total revenue and gross profit increased for the quarter and year
•Cost actions completed on schedule and contributed to a reduction in fourth quarter selling, general and administrative expenses
•Completed consolidation of U.S. dealer-to-dealer marketplaces and migrated European marketplace technology onto a single platform
•Over $1.5 billion of corporate debt repaid and 12.6 million shares of common stock repurchased and retired for approximately $182 million in 2022

Carmel, IN, February 21, 2023 — KAR Auction Services, Inc. (NYSE: KAR), today reported its fourth quarter and annual financial results for the period ended December 31, 2022.
"KAR’s Q4 and 2022 performance demonstrate the strength of our business and our ability to execute a highly focused strategy," said Peter Kelly, CEO of KAR Global. "Against a backdrop of a still very unusual and volume-constrained industry environment, we increased revenue and total gross profit while investing in the people, platforms and technology necessary to support our customers and our digital future. We remain highly focused on cost management and growth, and we believe our strategy and capabilities position us well to capture the opportunities ahead."
Fourth Quarter 2022 Financial Highlights
•Total revenue was $372.8 million, an increase of 4% for the fourth quarter of 2022, compared with $357.7 million for the fourth quarter of 2021.
•Income from continuing operations of $41.9 million, or $0.21 per diluted share, for the fourth quarter of 2022, compared with $15.2 million, or $0.04 per diluted share, for the fourth quarter of 2021. In October 2022, the Company closed on the sale of excess land in Montreal which resulted in a gain of $33.9 million.
•Operating adjusted net income from continuing operations of $47.6 million, or $0.33 per diluted share, for the quarter ended December 31, 2022, compared with $25.9 million, or $0.17 per diluted share, for the quarter ended December 31, 2021.
•Adjusted EBITDA from continuing operations was $56.5 million for the quarter ended December 31, 2022, compared with $64.3 million for the quarter ended December 31, 2021.
•Marketplace revenue, excluding purchased vehicle sales, was $227.1 million, an increase of less than 1% for the fourth quarter of 2022, compared with $226.6 million for the fourth quarter of 2021.
•Marketplace gross profit per vehicle sold increased 3% to $297 for the quarter ended December 31, 2022, compared with $288 for the quarter ended December 31, 2021.
•Finance segment's strong fourth quarter performance was driven by increased loan transactions of 15% and increased revenue per loan transaction of 11%.
•In the fourth quarter of 2022, KAR repurchased and retired 3,909,406 shares of common stock in the open market at a weighted average price of $12.79 per share, aggregating $50 million.



2022 Financial Highlights
•Total revenue was $1,519.4 million, an increase of 5% for the year ended December 31, 2022, compared with $1,450.6 million for the year ended December 31, 2021.
•Income from continuing operations of $28.6 million, or $(0.10) per diluted share, for the year ended December 31, 2022, compared with a loss from continuing operations of $(0.8) million, or $(0.27) per diluted share, for the year ended December 31, 2021. In October 2022, the Company closed on the sale of excess land in Montreal which resulted in a gain of $33.9 million.
•Operating adjusted net income from continuing operations of $65.8 million, or $0.43 per diluted share, for the year ended December 31, 2022, compared with $48.7 million, or $0.31 per diluted share, for the year ended December 31, 2021.
•Adjusted EBITDA from continuing operations was $231.2 million for the year ended December 31, 2022, compared with $270.2 million for the year ended December 31, 2021.
•Marketplace revenue, excluding purchased vehicle sales, was $960.6 million, an increase of 2% for the year ended December 31, 2022, compared with $940.5 million for the year ended December 31, 2021.
•Marketplace gross profit per vehicle sold increased 8% to $287 for the year ended December 31, 2022, compared with $265 for the year ended December 31, 2021.
•Finance segment's strong year ended performance was driven by increased revenue per loan transaction of 18% and increased loan transactions of 10%.
•In 2022, KAR repurchased and retired 12,649,722 shares of common stock in the open market at a weighted average price of $14.39 per share, aggregating approximately $182 million.

2023 Guidance
Annual
Guidance
Income from continuing operations (in millions)
$33 - $48
Adjusted EBITDA (in millions)
$250 - $270
Income (loss) from continuing operations per share - diluted *($0.08) - $0.02
Operating adjusted net income from continuing operations per share - diluted$0.37 - $0.47
* The company uses the two-class method of calculating income from continuing operations per diluted share. Under the two-class method, income from continuing operations is adjusted for dividends and undistributed earnings (losses) 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), 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 included below.
Earnings Conference Call Information
KAR will be hosting an earnings conference call and webcast on Wednesday, February 22, 2023 at 8:30 a.m. ET. The call will be hosted by KAR's Chief Executive Officer, Peter Kelly and Interim Chief Financial Officer, Scott Anderson. The conference call may be accessed by calling 1-833-634-2155 and entering participant passcode "KAR", while the live web cast will be available at the investors section of www.karglobal.com. Supplemental financial information for KAR’s fourth quarter 2022 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.
2

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. Our integrated marketplaces reduce risk, improve transparency and streamline transactions for customers around the globe. Headquartered in Carmel, Indiana, KAR Global has employees across the United States, Canada, Europe, Uruguay and the Philippines. 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," "can," "of the opinion," "confident," "is set," "is on track," "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," "continues," "outlook," "initiatives," "goals," "opportunities," 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 but are not limited to risks and uncertainties regarding the impact of adverse market, economic and geopolitical conditions and those other matters disclosed in the company’s Securities and Exchange Commission filings, including those discussed under the heading "Risk Factors" in the company's annual and quarterly periodic reports. The company does not undertake any obligation to update any forward-looking statements.









3

KAR Auction Services, Inc.
Condensed Consolidated Statements of Income
(In millions) (Unaudited)
Three Months Ended December 31,Year Ended
December 31,
2022202120222021
Operating revenues
Auction fees$80.8 $100.8 $370.3 $399.2 
Service revenue146.3 125.8 590.3 541.3 
Purchased vehicle sales45.0 51.9 182.9 220.9 
Finance-related revenue100.7 79.2 375.9 289.2 
Total operating revenues372.8 357.7 1,519.4 1,450.6 
Operating expenses
Cost of services (exclusive of depreciation and amortization)202.0 194.2 834.3 792.5 
Selling, general and administrative93.0 102.2 445.1 420.7 
Depreciation and amortization24.0 28.2 100.2 109.9 
Gain on sale of property(33.9)— (33.9)— 
Total operating expenses285.1 324.6 1,345.7 1,323.1 
Operating profit87.7 33.1 173.7 127.5 
Interest expense35.4 32.0 119.2 125.7 
Other (income) expense, net(7.7)8.0 (1.3)(12.5)
Loss on extinguishment of debt0.2 — 17.2 — 
Income (loss) from continuing operations before income
taxes		59.8 (6.9)38.6 14.3 
Income taxes17.9 (22.1)10.0 15.1 
Income (loss) from continuing operations41.9 15.2 28.6 (0.8)
Income (loss) from discontinued operations, net of income
taxes		(4.8)(10.1)212.6 67.3 
Net income$37.1 $5.1 $241.2 $66.5 
Net income (loss) per share - basic
Income (loss) from continuing operations$0.21 $0.04 $(0.10)$(0.27)
Income (loss) from discontinued operations(0.03)(0.08)1.40 0.43 
Net income (loss) per share - basic$0.18 $(0.04)$1.30 $0.16 
Net income (loss) per share - diluted
Income (loss) from continuing operations$0.21 $0.04 $(0.10)$(0.27)
Income (loss) from discontinued operations(0.03)(0.08)1.400.43 
Net income (loss) per share - diluted$0.18 $(0.04)$1.30 $0.16 


4

KAR Auction Services, Inc.
Condensed Consolidated Balance Sheets
(In millions) (Unaudited)
December 31,
2022		December 31,
2021
Cash and cash equivalents$225.7 $177.6 
Restricted cash52.0 25.8 
Trade receivables, net of allowances270.7 381.3 
Finance receivables, net of allowances2,395.1 2,506.0 
Other current assets78.9 87.9 
Current assets of discontinued operations— 213.2 
Total current assets3,022.4 3,391.8 
Goodwill1,464.5 1,598.0 
Customer relationships, net of accumulated amortization135.9 159.1 
Operating lease right-of-use assets84.8 94.7 
Property and equipment, net of accumulated depreciation123.6 143.5 
Intangible and other assets288.6 297.0 
Non-current assets of discontinued operations— 1,766.6 
Total assets$5,119.8 $7,450.7 
Current liabilities, excluding obligations collateralized by
     finance receivables, current maturities of debt and current
     liabilities of discontinued operations		$676.9 $939.0 
Obligations collateralized by finance receivables1,677.6 1,692.3 
Current maturities of debt288.7 16.3 
Current liabilities of discontinued operations— 361.7 
Total current liabilities2,643.2 3,009.3 
Long-term debt205.3 1,849.7 
Operating lease liabilities79.7 88.1 
Other non-current liabilities60.8 85.9 
Non-current liabilities of discontinued operations— 313.8 
Temporary equity612.5 590.9 
Stockholders’ equity1,518.3 1,513.0 
Total liabilities, temporary equity and stockholders’ equity$5,119.8 $7,450.7 


5

KAR Auction Services, Inc.
Condensed Consolidated Statements of Cash Flows
(In millions) (Unaudited)
Year Ended
December 31,
20222021
Operating activities
Net income$241.2 $66.5 
Net income from discontinued operations(212.6)(67.3)
     Adjustments to reconcile net income (loss) to net cash provided by operating activities:
     Depreciation and amortization100.2 109.9 
     Provision for credit losses18.6 7.2 
     Deferred income taxes(2.3)4.4 
     Amortization of debt issuance costs10.7 12.1 
     Stock-based compensation16.6 13.2 
     Contingent consideration adjustment— 24.3 
     Net change in unrealized (gain) loss on investment securities7.1 (1.4)
     Gain on sale of property(33.9)— 
     Loss on extinguishment of debt17.2 — 
     Other non-cash, net0.5 2.1 
     Changes in operating assets and liabilities, net of acquisitions:
     Trade receivables and other assets111.3 (81.0)
     Accounts payable and accrued expenses(238.7)143.9 
Net cash provided by operating activities - continuing operations35.9 233.9 
Net cash (used by) provided by operating activities - discontinued operations(448.4)194.9 
Investing activities
     Net (increase) decrease in finance receivables held for investment97.9 (618.6)
  Acquisition of businesses (net of cash acquired)(0.4)(521.8)
     Purchases of property, equipment and computer software(60.9)(64.2)
     Investments in securities(6.7)(22.5)
     Proceeds from sale of investments0.3 38.5 
     Proceeds from the sale of PWI— 2.2 
     Proceeds from the sale of property and equipment39.8 — 
Net cash provided by (used by) investing activities - continuing operations70.0 (1,186.4)
Net cash provided by (used by) investing activities - discontinued operations2,073.4 (32.2)
Financing activities
  Net (decrease) increase in book overdrafts(5.7)(8.0)
  Net increase (decrease) in borrowings from lines of credit141.9 (8.0)
  Net increase (decrease) in obligations collateralized by finance receivables1.5 424.4 
  Payments for debt issuance costs/amendments(11.6)(0.6)
     Payments on long-term debt(928.6)(9.5)
     Payment for early extinguishment of debt(606.3)— 
     Payments on finance leases(3.9)(5.6)
     Payments of contingent consideration and deferred acquisition costs(29.6)(37.1)
     Issuance of common stock under stock plans1.4 1.5 
     Issuance of common stock - private placement— 30.0 
     Tax withholding payments for vested RSUs(2.7)(2.2)
     Repurchase and retirement of common stock(182.2)(180.9)
     Dividends paid on Series A Preferred Stock(22.2)— 
Net cash (used by) provided by financing activities - continuing operations(1,648.0)204.0 
Net cash provided by (used by) financing activities - discontinued operations10.8 6.4 
Effect of exchange rate changes on cash(19.4)(1.5)
Net increase (decrease) in cash, cash equivalents and restricted cash74.3 (580.9)
Cash, cash equivalents and restricted cash at beginning of period203.4 784.3 
Cash, cash equivalents and restricted cash at end of period$277.7 $203.4 
Cash paid for interest, net of proceeds from interest rate derivatives$106.4 $112.7 
Cash paid for taxes, net of refunds - continuing operations$25.6 $24.8 
Cash paid for taxes, net of refunds - discontinued operations$378.1 $1.2 
6


KAR Auction Services, Inc.
Reconciliation of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA, operating adjusted net income (loss) and operating adjusted net income (loss) 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 (loss) and operating adjusted net income (loss) 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 (loss) and operating adjusted net income (loss) per share may include adjustments for certain other charges.
EBITDA, Adjusted EBITDA, operating adjusted net income (loss) and operating adjusted net income (loss) 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 income (loss) from continuing operations for the periods presented:
Three Months Ended
December 31,		Year Ended
December 31,
(in millions), (unaudited)
2022202120222021
Income (loss) from continuing operations$41.9 $15.2 $28.6 $(0.8)
Add back:
Income taxes17.9 (22.1)10.0 15.1 
Interest expense, net of interest income34.9 31.7 116.5 124.8 
Depreciation and amortization24.0 28.2 100.2 109.9 
EBITDA118.7 53.0 255.3 249.0 
Non-cash stock-based compensation(5.7)1.3 17.5 14.3 
Loss on extinguishment of debt0.2 — 17.2 — 
Acquisition related costs0.3 2.1 1.2 7.1 
Securitization interest(25.8)(8.3)(70.7)(29.8)
Gain on sale of property(33.9)— (33.9)— 
(Gain)/Loss on asset sales— 0.1 (0.1)(0.7)
Severance4.2 1.5 12.4 3.3 
Foreign currency (gains)/losses(6.1)1.1 2.5 3.8 
Contingent consideration adjustment— 4.2 — 24.3 
Net change in unrealized (gains) losses on investment securities0.6 9.3 7.1 (1.4)
Professional fees related to business improvement efforts3.1 — 15.2 — 
Other0.9 — 7.5 0.3 
  Total addbacks/(deductions)(62.2)11.3 (24.1)21.2 
Adjusted EBITDA$56.5 $64.3 $231.2 $270.2 
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The following table reconciles operating adjusted net income (loss) and operating adjusted net income (loss) 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)
2022202120222021
Net income (loss) from continuing operations (1)
$41.9 $15.2 $28.6 $(0.8)
   Acquired amortization expense8.0 8.6 33.0 33.4 
   Loss on extinguishment of debt0.2 — 17.2 — 
   Contingent consideration adjustment— 4.2 — 24.3 
   Income taxes (2)
(2.5)(2.1)(13.0)(8.2)
Operating adjusted net income (loss) from continuing operations$47.6 $25.9 $65.8 $48.7 
Net income (loss) from discontinued operations$(4.8)$(10.1)$212.6 $67.3 
   Acquired amortization expense— 4.4 5.9 21.2 
   Income taxes (2)
— (1.1)(1.5)(5.2)
Operating adjusted net income (loss) from discontinued operations$(4.8)$(6.8)$217.0 $83.3 
Operating adjusted net income$42.8 $19.1 $282.8 $132.0 
Operating adjusted net income (loss) from continuing operations per share - diluted
$0.33 $0.17 $0.43 $0.31 
Operating adjusted net income (loss) from discontinued operations per share - diluted(0.04)(0.05)1.43 0.53 
Operating adjusted net income per share - diluted$0.29 $0.12 $1.86 $0.84 
Weighted average diluted shares - including assumed conversion of preferred shares
145.7 156.1 151.9 156.6 

(1)The Series A Preferred Stock dividends and undistributed earnings allocated to participating securities have not been included in the calculation of operating adjusted net income (loss) and operating adjusted net income (loss) per diluted share.
(2)For the three months and year ended December 31, 2022, the effective tax rate at the end of each period was used to determine the amount of income tax on the adjustments to net income. An effective tax rate of 24.5% was used to determine the amount of income tax benefit on the acquired amortization expense in 2021. There was no income tax benefit related to the contingent consideration adjustment because this item is not deductible for income tax purposes.

8

The following table reconciles EBITDA and Adjusted EBITDA to income from continuing operations for the 2023 guidance presented:
2023 Guidance
(in millions), (unaudited)
LowHigh
Income from continuing operations$33 $48 
Add back:
Income taxes16 23 
Interest expense, net of interest income170 180 
Depreciation and amortization95 100 
EBITDA314 351 
  Total deductions, net(64)(81)
Adjusted EBITDA$250 $270 
The following table reconciles operating adjusted net income from continuing operations and operating adjusted net income from continuing operations per diluted share to income from continuing operations for the 2023 guidance presented:
2023 Guidance
(in millions, except per share amounts), (unaudited)
LowHigh
Income from continuing operations$33 $48 
   Total adjustments, net21 21 
Operating adjusted net income from continuing operations$54 $69 
Operating adjusted net income from continuing operations per share – diluted$0.37 $0.47 
Weighted average diluted shares - including assumed conversion of preferred shares146 146 

9

EXHIBIT 99.2






KAR Auction Services, Inc.    
Q4 and YTD 2022 Supplemental Financial Information
February 21, 2023


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.
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. EBITDA and Adjusted EBITDA 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 tables reconcile EBITDA and Adjusted EBITDA to income (loss) from continuing operations for the periods presented:
Three Months Ended December 31, 2022
(Dollars in millions), (Unaudited)
MarketplaceFinanceConsolidated
Income (loss) from continuing operations
$5.8 $36.1 $41.9 
Add back:
Income taxes4.5 13.4 17.9 
Interest expense, net of interest income6.8 28.1 34.9 
Depreciation and amortization22.2 1.8 24.0 
Intercompany interest5.3 (5.3)— 
EBITDA44.6 74.1 118.7 
Non-cash stock-based compensation(4.7)(1.0)(5.7)
Loss on extinguishment of debt0.2 — 0.2 
Acquisition related costs0.3 — 0.3 
Securitization interest— (25.8)(25.8)
Gain on sale of property(33.9)— (33.9)
Severance4.0 0.2 4.2 
Foreign currency (gains)/losses(6.1)— (6.1)
Net change in unrealized (gains) losses on investment securities— 0.6 0.6 
Professional fees related to business improvement efforts2.6 0.5 3.1 
Other0.7 0.2 0.9 
  Total addbacks/(deductions)(36.9)(25.3)(62.2)
Adjusted EBITDA$7.7 $48.8 $56.5 
2

Three Months Ended December 31, 2021
(Dollars in millions), (Unaudited)
MarketplaceFinanceConsolidated
Income (loss) from continuing operations
$(13.8)$29.0 $15.2 
Add back:
Income taxes(31.5)9.4 (22.1)
Interest expense, net of interest income21.2 10.5 31.7 
Depreciation and amortization25.9 2.3 28.2 
Intercompany interest— — — 
EBITDA1.8 51.2 53.0 
Non-cash stock-based compensation1.0 0.3 1.3 
Acquisition related costs2.1 — 2.1 
Securitization interest— (8.3)(8.3)
Loss on asset sales0.1 — 0.1 
Severance1.3 0.2 1.5 
Foreign currency (gains)/losses1.1 — 1.1 
Contingent consideration adjustment4.2 — 4.2 
Net change in unrealized (gains) losses on investment securities— 9.3 9.3 
Other0.1 (0.1)— 
  Total addbacks/(deductions)9.9 1.4 11.3 
Adjusted EBITDA$11.7 $52.6 $64.3 

Year Ended December 31, 2022
(Dollars in millions), (Unaudited)
MarketplaceFinanceConsolidated
Income (loss) from continuing operations
$(105.7)$134.3 $28.6 
Add back:
Income taxes(36.4)46.4 10.0 
Interest expense, net of interest income37.6 78.9 116.5 
Depreciation and amortization92.3 7.9 100.2 
Intercompany interest8.4 (8.4)— 
EBITDA(3.8)259.1 255.3 
Non-cash stock-based compensation14.2 3.3 17.5 
Loss on extinguishment of debt17.2 — 17.2 
Acquisition related costs1.2 — 1.2 
Securitization interest— (70.7)(70.7)
Gain on sale of property(33.9)— (33.9)
(Gain)/Loss on asset sales(0.1)— (0.1)
Severance11.7 0.7 12.4 
Foreign currency (gains)/losses2.5 — 2.5 
Net change in unrealized (gains) losses on investment securities— 7.1 7.1 
Professional fees related to business improvement efforts
13.3 1.9 15.2 
Other7.1 0.4 7.5 
Total addbacks/(deductions)33.2 (57.3)(24.1)
Adjusted EBITDA$29.4 $201.8 $231.2 
3

Year Ended December 31, 2021
(Dollars in millions), (Unaudited)
MarketplaceFinanceConsolidated
Income (loss) from continuing operations$(126.2)$125.4 $(0.8)
Add back:
Income taxes(26.4)41.5 15.1 
Interest expense, net of interest income85.3 39.5 124.8 
Depreciation and amortization100.5 9.4 109.9 
Intercompany interest0.2 (0.2)— 
EBITDA33.4 215.6 249.0 
Non-cash stock-based compensation12.1 2.2 14.3 
Acquisition related costs7.1 — 7.1 
Securitization interest— (29.8)(29.8)
(Gain)/Loss on asset sales0.1 (0.8)(0.7)
Severance2.9 0.4 3.3 
Foreign currency (gains)/losses3.8 — 3.8 
Contingent consideration adjustment24.3 — 24.3 
Net change in unrealized (gains) losses on investment securities— (1.4)(1.4)
Other0.6 (0.3)0.3 
Total addbacks/(deductions)50.9 (29.7)21.2 
Adjusted EBITDA$84.3 $185.9 $270.2 

4

Certain of our loan covenant calculations utilize financial results for the most recent four consecutive fiscal quarters (total KAR results, including the ADESA U.S. physical auctions shown as discontinued operations). The following table reconciles EBITDA and Adjusted EBITDA to net income (loss) for the periods presented:

Three Months EndedTwelve Months Ended
(Dollars in millions),
(Unaudited)
March 31,
2022		June 30,
2022		September 30,
2022		December 31,
2022		December 31,
2022
Net income (loss)$(0.3)$210.2 $(5.8)$37.1 $241.2 
Less: Income from discontinued operations8.1 215.6 (6.3)(4.8)212.6 
Income (loss) from continuing operations(8.4)(5.4)0.5 41.9 28.6 
Add back:
Income taxes(4.7)(9.9)6.7 17.9 10.0 
Interest expense, net of interest income25.5 25.2 30.9 34.9 116.5 
Depreciation and amortization26.0 25.9 24.3 24.0 100.2 
EBITDA38.4 35.8 62.4 118.7 255.3 
Non-cash stock-based compensation5.2 14.5 3.5 (5.7)17.5 
Loss on extinguishment of debt— 7.7 9.3 0.2 17.2 
Acquisition related costs0.3 0.3 0.3 0.3 1.2 
Securitization interest(10.4)(14.3)(20.2)(25.8)(70.7)
Gain on sale of property— — — (33.9)(33.9)
(Gain)/Loss on asset sales(0.1)— — — (0.1)
Severance3.4 3.3 1.5 4.2 12.4 
Foreign currency (gains)/losses1.2 3.3 4.1 (6.1)2.5 
Net change in unrealized (gains) losses on investment securities3.0 3.2 0.3 0.6 7.1 
Professional fees related to business improvement efforts8.1 0.8 3.2 3.1 15.2 
Other— 1.5 5.1 0.9 7.5 
  Total addbacks/(deductions)10.7 20.3 7.1 (62.2)(24.1)
Adjusted EBITDA from continuing ops$49.1 $56.1 $69.5 $56.5 $231.2 
Adjusted EBITDA from discontinued ops22.6 2.2 — — 24.8 
Adjusted EBITDA$71.7 $58.3 $69.5 $56.5 $256.0 
5

Results of Operations

KAR Results
 Three Months Ended December 31,Year Ended December 31,
(Dollars in millions except per share amounts)2022202120222021
Revenues from continuing operations  
Auction fees$80.8 $100.8 $370.3 $399.2 
Service revenue146.3 125.8 590.3 541.3 
Purchased vehicle sales45.0 51.9 182.9 220.9 
Finance-related revenue100.7 79.2 375.9 289.2 
Total revenues from continuing operations372.8 357.7 1,519.4 1,450.6 
Cost of services*202.0 194.2 834.3 792.5 
Gross profit*170.8 163.5 685.1 658.1 
Selling, general and administrative93.0 102.2 445.1 420.7 
Depreciation and amortization24.0 28.2 100.2 109.9 
Gain on sale of property(33.9)— (33.9)— 
Operating profit87.7 33.1 173.7 127.5 
Interest expense35.4 32.0 119.2 125.7 
Other (income) expense, net(7.7)8.0 (1.3)(12.5)
Loss on extinguishment of debt0.2 — 17.2 — 
Income (loss) from continuing operations before income taxes59.8 (6.9)38.6 14.3 
Income taxes17.9 (22.1)10.0 15.1 
Income (loss) from continuing operations41.9 15.2 28.6 (0.8)
Income (loss) from discontinued operations, net of income taxes(4.8)(10.1)212.6 67.3 
Net income$37.1 $5.1 $241.2 $66.5 
Income (loss) from continuing operations per share
Basic$0.21 $0.04 $(0.10)$(0.27)
Diluted$0.21 $0.04 $(0.10)$(0.27)

* Exclusive of depreciation and amortization
Overview of KAR Results for the Three Months Ended December 31, 2022 and 2021
Discontinued Operations
The financial performance of the ADESA U.S. physical auction business is presented as discontinued operations. As a result, revenue, cost of services and all costs of discontinued operations are presented as one line item in the above table as "Income (loss) from discontinued operations, net of income taxes."
Overview
For the three months ended December 31, 2022, we had revenue of $372.8 million compared with revenue of $357.7 million for the three months ended December 31, 2021, an increase of 4%. 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 decreased $4.2 million, or 15%, to $24.0 million for the three months ended December 31, 2022, compared with $28.2 million for the three months ended December 31, 2021. The decrease in depreciation and amortization was primarily the result of assets that have become fully depreciated and a reduction in assets placed in service.
6

Gain on Sale of Property
In October 2022, the Company closed on the sale of excess land in Montreal which resulted in a gain of $33.9 million.
Interest Expense
Interest expense increased $3.4 million, or 11%, to $35.4 million for the three months ended December 31, 2022, compared with $32.0 million for the three months ended December 31, 2021. The increase was attributable to an increase in the average balance on the AFC securitization obligations and an increase in the average interest rate on the AFC securitization obligations to approximately 6.2% for the three months ended December 31, 2022, as compared with approximately 2.3% for the three months ended December 31, 2021. This was partially offset by a decrease in interest expense resulting from the prepayment of Term Loan B-6 and $600 million of the senior notes.
Other (Income) Expense, Net
For the three months ended December 31, 2022, we had other income of $7.7 million compared with other expense of $8.0 million for the three months ended December 31, 2021. The increase in other income was primarily attributable to a decrease in unrealized losses on investment securities of approximately $8.7 million, a decrease in contingent consideration valuation adjustments of $4.2 million and an increase in other miscellaneous income aggregating $0.4 million, partially offset by a reduction in realized gains of approximately $4.8 million. In addition, there were foreign currency gains on intercompany balances of $6.1 million for the three months ended December 31, 2022, compared with foreign currency losses on intercompany balances of $1.1 million for the three months ended December 31, 2021.
The Company invests in certain early-stage automotive companies and funds that relate to the automotive industry. We believe these investments have resulted in the expansion of relationships in the vehicle remarketing industry. There were no realized gains on these investments for the three months ended December 31, 2022. The Company had unrealized losses of $0.6 million for the three months ended December 31, 2022. Any future changes in the fair value of these investment securities will be reflected as unrealized gains or losses until these securities are sold.
Income Taxes
We had an effective tax rate of 29.9% for the three months ended December 31, 2022, compared with an effective tax rate of 320.3% on a pre-tax loss for the three months ended December 31, 2021. The effective tax rate for the three months ended December 31, 2021 was impacted by a pre-tax loss driven mostly by expense for the increase in the estimated value of contingent consideration for which no tax benefit was recorded.
Income from Discontinued Operations
In May 2022, Carvana acquired the ADESA U.S. physical auction business from KAR. As such, the financial results of the ADESA U.S. physical auction business have been accounted for as discontinued operations for all periods presented. For the three months ended December 31, 2022 and 2021, the Company's financial statements included a loss from discontinued operations of $4.8 million and $10.1 million, respectively. The $4.8 million loss from discontinued operations for the three months ended December 31, 2022 was comprised of an adjustment to income taxes of $5.8 million, partially offset by a $1.0 million reduction to stock-based compensation expense resulting from the true-up of performance-based restricted stock units.
Impact of Foreign Currency
For the three months ended December 31, 2022 compared with the three months ended December 31, 2021, the change in the euro exchange rate decreased revenue by $6.0 million, operating profit by $0.3 million and net income by $0.2 million. For the three months ended December 31, 2022 compared with the three months ended December 31, 2021, the change in the Canadian dollar exchange rate decreased revenue by $5.5 million, operating profit by $3.9 million and net income by $2.7 million.
7

Overview of KAR Results for the Year Ended December 31, 2022 and 2021
Discontinued Operations
The financial performance of the ADESA U.S. physical auction business is presented as discontinued operations. As a result, revenue, cost of services and all costs of discontinued operations (including the gain on sale) are presented as one line item in the above table as "Income from discontinued operations, net of income taxes."
Overview
For the year ended December 31, 2022, we had revenue of $1,519.4 million compared with revenue of $1,450.6 million for the year ended December 31, 2021, an increase of 5%. Businesses acquired since the fourth quarter of 2021 accounted for an increase in revenue of $50.1 million or 3% 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 decreased $9.7 million, or 9%, to $100.2 million for the year ended December 31, 2022, compared with $109.9 million for the year ended December 31, 2021. The decrease in depreciation and amortization was primarily the result of assets that have become fully depreciated and a reduction in assets placed in service.
Gain on Sale of Property
In October 2022, the Company closed on the sale of excess land in Montreal which resulted in a gain of $33.9 million.
Interest Expense
Interest expense decreased $6.5 million, or 5%, to $119.2 million for the year ended December 31, 2022, compared with $125.7 million for the year ended December 31, 2021. The decrease was primarily attributable to a realized gain of $16.7 million related to the discontinuance of hedge accounting and termination of the interest rate swaps, as well as the prepayment of Term Loan B-6 and prepayment of $600 million of senior notes, partially offset by an increase in AFC interest. The average balance on the AFC securitization obligations increased and the average interest rate on the AFC securitization obligations increased to approximately 4.0% for the year ended December 31, 2022, as compared with approximately 2.4% for the year ended December 31, 2021.
Other (Income) Expense, Net
For the year ended December 31, 2022, we had other income of $1.3 million compared with $12.5 million for the year ended December 31, 2021. The decrease in other income was primarily attributable to unrealized losses on investment securities of approximately $7.1 million for the year ended December 31, 2022, compared with unrealized gains on investment securities of approximately $1.4 million for the year ended December 31, 2021, as well as a reduction in realized gains of approximately $32.0 million, partially offset by a decrease in contingent consideration valuation adjustments of $24.3 million, a decrease in foreign currency losses on intercompany balances of $1.3 million and an increase in other miscellaneous income aggregating $3.7 million.
The Company invests in certain early-stage automotive companies and funds that relate to the automotive industry. We believe these investments have resulted in the expansion of relationships in the vehicle remarketing industry. There were no realized gains on these investments for the year ended December 31, 2022. The Company had unrealized losses of $7.1 million for the year ended December 31, 2022. Any future changes in the fair value of these investment securities will be reflected as unrealized gains or losses until these securities are sold.
Income Taxes
We had an effective tax rate of 25.9% for the year ended December 31, 2022, compared with an effective tax rate of 105.6% for the year ended December 31, 2021. The effective tax rate for the year ended December 31, 2021 was unfavorably impacted by earnings mix between domestic and foreign, and by the expense for the increase in the estimated value of contingent consideration for which no tax benefit was recorded.
8

Income from Discontinued Operations
In May 2022, Carvana acquired the ADESA U.S. physical auction business from KAR. As such, the financial results of the ADESA U.S. physical auction business have been accounted for as discontinued operations for all periods presented. For the year ended December 31, 2022 and 2021, the Company's financial statements included income from discontinued operations of $212.6 million and $67.3 million, respectively.
Impact of Foreign Currency
For the year ended December 31, 2022 compared with the year ended December 31, 2021, the change in the euro exchange rate decreased revenue by $24.5 million, operating profit by $0.8 million and net income by $0.5 million. For the year ended December 31, 2022 compared with the year ended December 31, 2021, the change in the Canadian dollar exchange rate decreased revenue by $11.6 million, operating profit by $4.2 million and net income by $2.8 million.
Marketplace Results
Three Months Ended December 31,Year Ended
December 31,
(Dollars in millions, except per vehicle amounts)2022202120222021
Auction fees$80.8 $100.8 $370.3 $399.2 
Service revenue146.3 125.8 590.3 541.3 
Purchased vehicle sales45.0 51.9 182.9 220.9 
Total Marketplace revenue from continuing operations272.1 278.5 1,143.5 1,161.4 
Cost of services*186.3 179.8 771.2 737.1 
Gross profit*85.8 98.7 372.3 424.3 
Selling, general and administrative82.8 93.1 398.6 385.5 
Depreciation and amortization22.2 25.9 92.3 100.5 
Gain on sale of property(33.9)— (33.9)— 
Operating profit (loss)$14.7 $(20.3)$(84.7)$(61.7)
Commercial vehicles sold151,000 162,000 661,000 948,000 
Dealer consignment vehicles sold138,000180,000 636,000651,000 
Total vehicles sold289,000342,0001,297,0001,599,000
Auction fees per vehicle sold$280 $294 $286 $250 
Gross profit per vehicle sold*$297 $288 $287 $265 
Gross profit percentage, excluding purchased vehicles*37.8%43.6%38.8%45.1%

* Exclusive of depreciation and amortization
Overview of Marketplace Results for the Three Months Ended December 31, 2022 and 2021
Total Marketplace Revenue
Revenue from the Marketplace segment decreased $6.4 million, or 2%, to $272.1 million for the three months ended December 31, 2022, compared with $278.5 million for the three months ended December 31, 2021. The change in revenue included the impact of decreases in revenue of $6.0 million and $4.7 million due to fluctuations in the euro exchange rate and the Canadian dollar exchange rate, respectively. When excluding the effect of fluctuations in exchange rates, total Marketplace revenue in the fourth quarter of 2022 increased from the fourth quarter of 2021. The increase was primarily attributable to the increase in service revenues (discussed below).
The 15% decrease in the number of vehicles sold was comprised of a 7% decline in commercial volumes and a 23% decrease in dealer consignment volumes. The decrease in the number of vehicles sold was driven by an industry-wide lack of wholesale used vehicle supply.
9

Auction Fees
Auction fees decreased $20.0 million, or 20%, to $80.8 million for the three months ended December 31, 2022, compared with $100.8 million for the three months ended December 31, 2021. The decrease in auction fees was primarily the result of a decrease in the number of vehicles sold. Auction fees per vehicle sold for the three months ended December 31, 2022 decreased $14, or 5%, reflecting lower vehicle values.
Service Revenue
Service revenue increased $20.5 million, or 16%, to $146.3 million for the three months ended December 31, 2022 compared with $125.8 million for the three months ended December 31, 2021, primarily as a result of increases in repossession and remarketing fees of $10.1 million, platform fees provided to third parties of $5.8 million, transportation revenue of $3.7 million, inspection service revenue of $1.4 million and a net increase in other miscellaneous service revenues aggregating approximately $0.9 million, partially offset by a decrease in reconditioning revenue of $1.4 million.
Purchased Vehicle Sales
Purchased vehicle sales, which include the entire selling price of the vehicle, decreased $6.9 million, or 13%, to $45.0 million for the three months ended December 31, 2022, compared with $51.9 million for the three months ended December 31, 2021, primarily as a result of a decrease in the average selling price of purchased vehicles sold as a result of geopolitical events and macroeconomic conditions impacting our European operations.
Gross Profit
For the three months ended December 31, 2022, gross profit for the Marketplace segment decreased $12.9 million, or 13%, to $85.8 million, compared with $98.7 million for the three months ended December 31, 2021. Gross profit for the Marketplace segment was 31.5% of revenue for the three months ended December 31, 2022, compared with 35.4% of revenue for the three months ended December 31, 2021. Excluding purchased vehicle sales, gross profit as a percentage of revenue was 37.8% and 43.6% for the three months ended December 31, 2022 and 2021, respectively. The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold.
Gross profit as a percentage of revenue decreased for the three months ended December 31, 2022 as compared with the three months ended December 31, 2021, primarily due to an increase in lower margin transportation revenue and an increase in arbitration activity for vehicles sold on dealer-to-dealer platforms, as well as a decrease in on-premise auction revenue in Canada with a smaller decrease in direct costs.
Selling, General and Administrative
Selling, general and administrative expenses for the Marketplace segment decreased $10.3 million, or 11%, to $82.8 million for the three months ended December 31, 2022, compared with $93.1 million for the three months ended December 31, 2021, primarily as a result of decreases in stock-based compensation of $5.6 million, compensation expense of $4.2 million, information technology costs of $3.3 million and reductions in other miscellaneous expenses aggregating $3.0 million, partially offset by increases in incentive-based compensation of $3.7 million and severance of $2.1 million.
Gain on Sale of Property
In October 2022, the Company closed on the sale of excess land in Montreal which resulted in a gain of $33.9 million.
Overview of Marketplace Results for the Year Ended December 31, 2022 and 2021
Total Marketplace Revenue
Revenue from the Marketplace segment decreased $17.9 million, or 2%, to $1,143.5 million for the year ended December 31, 2022, compared with $1,161.4 million for the year ended December 31, 2021. Businesses acquired since the fourth quarter of 2021 accounted for an increase in revenue of $50.1 million. The change in revenue included the impact of decreases in revenue of $24.5 million and $10.2 million due to fluctuations in the euro exchange rate and the Canadian dollar exchange rate, respectively. When excluding revenue from acquired businesses and the effect of fluctuations in exchange rates, total Marketplace revenue for the year ended December 31, 2022 decreased from the year ended December 31, 2021. The decrease was primarily attributable to the decrease in the number of vehicles sold.
10

The 19% decrease in the number of vehicles sold was comprised of a 30% decline in commercial volumes and a 2% decrease in dealer consignment volumes. The decrease in the number of vehicles sold was driven by an industry-wide lack of wholesale used vehicle supply.
Auction Fees
Auction fees decreased $28.9 million, or 7%, to $370.3 million for the year ended December 31, 2022, compared with $399.2 million for the year ended December 31, 2021. The decrease in auction fees was primarily the result of a decrease in the number of vehicles sold. Auction fees per vehicle sold for the year ended December 31, 2022 increased $36, or 14%, reflecting higher vehicle values, the introduction of new dealer off-premise auction fees and a smaller mix of lower-fee commercial off-premise vehicles.
Service Revenue
Service revenue increased $49.0 million, or 9%, to $590.3 million for the year ended December 31, 2022, compared with $541.3 million for the year ended December 31, 2021, primarily as a result of increases in repossession and remarketing fees of $32.2 million, platform fees provided to third parties of $19.1 million, transportation revenue of $11.5 million and a net increase in other miscellaneous service revenues aggregating approximately $3.3 million, partially offset by a decrease in inspection service revenue of $17.1 million, resulting from the decrease in commercial vehicles sold.
Purchased Vehicle Sales
Purchased vehicle sales, which include the entire selling price of the vehicle, decreased $38.0 million, or 17%, to $182.9 million for the year ended December 31, 2022, compared with $220.9 million for the year ended December 31, 2021, primarily as a result of a decrease in the average selling price of purchased vehicles sold as a result of geopolitical events and macroeconomic conditions impacting our European operations.
Gross Profit
For the year ended December 31, 2022, gross profit from the Marketplace segment decreased $52.0 million, or 12%, to $372.3 million, compared with $424.3 million for the year ended December 31, 2021. Cost of services increased 5% for the year ended December 31, 2022, while revenue decreased 2% during the same period. Gross profit from the Marketplace segment was 32.6% of revenue for the year ended December 31, 2022, compared with 36.5% of revenue for the year ended December 31, 2021. Excluding purchased vehicle sales, gross profit as a percentage of revenue was 38.8% and 45.1% for the years ended December 31, 2022 and 2021, respectively. The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold. Businesses acquired since the fourth quarter of 2021 accounted for an increase in cost of services of $29.3 million for the year ended December 31, 2022.
Gross profit as a percentage of revenue decreased for the year ended December 31, 2022 as compared with the year ended December 31, 2021, primarily due to an increase in arbitration activity for vehicles sold on dealer-to-dealer platforms, an increase in lower margin transportation revenue, as well as a decrease in on-premise auction revenue in Canada without a corresponding decrease in direct costs. In addition, there were no benefits taken under the Canada Emergency Wage Subsidy in 2022, resulting in a reduction to gross profit as a percentage of revenue.
Selling, General and Administrative
Selling, general and administrative expenses from the Marketplace segment increased $13.1 million, or 3%, to $398.6 million for the year ended December 31, 2022, compared with $385.5 million for the year ended December 31, 2021, primarily as a result of increases in selling, general and administrative expenses associated with businesses acquired since the fourth quarter of 2021 of $12.7 million, professional fees of $8.9 million, severance of $5.4 million, bad debt expense of $4.4 million, stock-based compensation of $2.3 million, incentive-based compensation of $2.0 million and travel expenses of $1.2 million, partially offset by decreases in compensation expense of $5.1 million, information technology costs of $4.0 million, medical expenses of $3.3 million, telecom expenses of $1.1 million and reductions in other miscellaneous expenses aggregating $12.4 million. In addition, the Employee Retention Credit provided under the Canada Emergency Wage Subsidy was $2.1 million less for the year ended December 31, 2022, compared with the year ended December 31, 2021.
Gain on Sale of Property
In October 2022, the Company closed on the sale of excess land in Montreal which resulted in a gain of $33.9 million.
11

Finance Results
Three Months Ended December 31,Year Ended December 31,
(Dollars in millions except volumes and per loan amounts)2022202120222021
Finance-related revenue
   Interest income$59.7 $39.7 $202.8 $139.7 
   Fee income44.7 36.4 171.9 144.4 
   Other revenue3.3 2.2 11.0 8.6 
   Net recovery (provision) for credit losses(7.0)0.9 (9.8)(3.5)
Total Finance revenue100.7 79.2 375.9 289.2 
Cost of services*15.7 14.4 63.1 55.4 
Gross profit*85.0 64.8 312.8 233.8 
Selling, general and administrative10.2 9.1 46.5 35.2 
Depreciation and amortization1.8 2.3 7.9 9.4 
Operating profit$73.0 $53.4 $258.4 $189.2 
Loan transactions392,000342,000 1,562,0001,421,000 
Revenue per loan transaction$257 $232 $241 $204 
* Exclusive of depreciation and amortization
Overview of Finance Results for the Three Months Ended December 31, 2022 and 2021
Revenue
For the three months ended December 31, 2022, the Finance segment revenue increased $21.5 million, or 27%, to $100.7 million, compared with $79.2 million for the three months ended December 31, 2021. The increase in revenue was primarily the result of a 15% increase in loan transactions and an 11% increase in revenue per loan transaction.
Revenue per loan transaction, which includes both loans paid off and loans curtailed, increased $25, or 11%, primarily as a result of an increase in interest yields driven by an increase in prime rates (Federal Reserve raised interest rates 125 basis points in the fourth quarter), an increase in average portfolio duration and an increase in floorplan fees and other fee income per unit, partially offset by an increase in net credit losses and a decrease in loan values.
The provision for credit losses increased to 1.1% of the average managed receivables for the three months ended December 31, 2022 from (0.2%) for the three months ended December 31, 2021. The provision for credit losses is expected to be under 2%, annually, of the average managed receivables balance. However, the actual losses in any particular quarter could deviate from this range.
Gross Profit
For the three months ended December 31, 2022, gross profit for the Finance segment increased $20.2 million, or 31%, to $85.0 million, or 84.4% of revenue, compared with $64.8 million, or 81.8% of revenue, for the three months ended December 31, 2021. The increase in gross profit as a percent of revenue was primarily the result of a 27% increase in revenue, partially offset by a 9% increase in cost of services. The increase in cost of services was primarily the result of increases in lot check expenses of $0.7 million, compensation expense of $0.3 million, incentive-based compensation of $0.2 million and other miscellaneous expenses aggregating $0.1 million.
Selling, General and Administrative
Selling, general and administrative expenses for the Finance segment increased $1.1 million, or 12%, to $10.2 million for the three months ended December 31, 2022, compared with $9.1 million for the three months ended December 31, 2021 primarily as a result of increases in professional fees of $0.7 million, information technology costs of $0.7 million, incentive-based compensation of $0.3 million and other miscellaneous expenses aggregating $0.8 million, partially offset by a decrease in stock-based compensation of $1.4 million.
12

Overview of Finance Results for the Year Ended December 31, 2022 and 2021
Revenue
For the year ended December 31, 2022, the Finance segment revenue increased $86.7 million, or 30%, to $375.9 million, compared with $289.2 million for the year ended December 31, 2021. The increase in revenue was primarily the result of an 18% increase in revenue per loan transaction and an 10% increase in loan transactions.
Revenue per loan transaction, which includes both loans paid off and loans curtailed, increased $37, or 18%, primarily as a result of an increase in interest yields driven by an increase in prime rates (Federal Reserve raised interest rates 425 basis points in 2022), an increase in loan values and an increase in floorplan fees and other fee income per unit, partially offset by an increase in net credit losses for the year ended December 31, 2022.
The provision for credit losses increased to 0.4% of the average managed receivables for the year ended December 31, 2022 from 0.2% for the year ended December 31, 2021. The provision for credit losses is expected to be under 2%, annually, of the average managed receivables balance. However, the actual losses in any particular quarter could deviate from this range.
Gross Profit
For the year ended December 31, 2022, gross profit for the Finance segment increased $79.0 million, or 34%, to $312.8 million, or 83.2% of revenue, compared with $233.8 million, or 80.8% of revenue, for the year ended December 31, 2021. The increase in gross profit as a percent of revenue was primarily the result of a 30% increase in revenue, partially offset by a 14% increase in cost of services. The increase in cost of services was primarily the result of increases in compensation expense of $3.1 million, incentive-based compensation of $2.2 million, lot check expenses of $2.0 million and credit check expenses of $0.6 million, partially offset by a decrease in other miscellaneous expenses aggregating $0.2 million.
Selling, General and Administrative
Selling, general and administrative expenses for the Finance segment increased $11.3 million, or 32%, to $46.5 million for the year ended December 31, 2022, compared with $35.2 million for the year ended December 31, 2021 primarily as a result of increases in professional fees of $2.4 million, compensation expense of $1.7 million, incentive-based compensation of $1.7 million, information technology costs of $1.5 million, stock-based compensation of $1.1 million and other miscellaneous expenses aggregating $2.9 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)20222021
Cash and cash equivalents$225.7 $177.6 
Restricted cash52.025.8
Working capital379.2382.5
Amounts available under the Revolving Credit Facility161.0297.4
Cash provided by operating activities for the year ended35.9233.9
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.
13

Summary of Cash Flows
Year Ended
December 31,
(Dollars in millions)20222021
Net cash provided by (used by):
Operating activities - continuing operations$35.9 $233.9 
Operating activities - discontinued operations(448.4)194.9 
Investing activities - continuing operations70.0 (1,186.4)
Investing activities - discontinued operations2,073.4 (32.2)
Financing activities - continuing operations(1,648.0)204.0 
Financing activities - discontinued operations10.8 6.4 
Effect of exchange rate on cash(19.4)(1.5)
Net increase (decrease) in cash, cash equivalents and restricted cash$74.3 $(580.9)
Cash flow provided by operating activities (continuing operations) was $35.9 million for the year ended December 31, 2022, compared with $233.9 million for the year ended December 31, 2021. The decrease 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 marketplace sales held near period-ends, as well as a net decrease in non-cash item adjustments, partially offset by increased profitability. Specific details supporting the decrease in operating cash flow included:
•a decrease in the change of accounts payable and accrued expenses of $382.6 million (timing and impact of changes in wholesale vehicle values);
•an increase in the non-cash gain on sale of property of $33.9 million; and
•a decrease in the non-cash contingent consideration adjustment of $24.3 million;
partially offset by:
•a net decrease in trade receivables and other assets of $192.3 million (timing);
•increased profitability of $29.4 million;
•an increase in the non-cash loss on extinguishment of debt of $17.2 million; and
•an increase in the non-cash provision for credit losses of $11.4 million.
Net cash provided by investing activities (continuing operations) was $70.0 million for the year ended December 31, 2022, compared with net cash used by investing activities of $1,186.4 million for the year ended December 31, 2021. The increase in net cash provided by investing activities was primarily attributable to:
•a net decrease in finance receivables held for investment of approximately $716.5 million;
•a decrease in cash used for acquisitions of $521.4 million;
•an increase in the proceeds from the sale of property and equipment of $39.8 million; and
•a decrease in investments in securities of approximately $15.8 million;
partially offset by:
•a decrease in the proceeds from sale of investments of approximately $38.2 million.
Net cash used by financing activities (continuing operations) was $1,648.0 million for the year ended December 31, 2022, compared with net cash provided by financing activities of $204.0 million for the year ended December 31, 2021. The increase in net cash used by financing activities was primarily attributable to:
•the prepayment of Term Loan B-6 in May 2022, which resulted in an increase in Term Loan B-6 debt payments of $919.1 million;
14

•the prepayment of a portion of the senior notes and the related costs in August 2022, which resulted in an increase in senior notes payments of $606.3 million;
•a decrease in the additional obligations collateralized by finance receivables of approximately $422.9 million;
•a decrease in the issuance of common stock (private placement) of $30.0 million;
•an increase in dividends paid on the Series A Preferred Stock of $22.2 million; and
•an increase in payments for debt issuance costs of $11.0 million;
partially offset by:
•a net increase in the borrowings from lines of credit of approximately $149.9 million.
15
Q4 2022 & Annual Earnings Slides February 21, 2023

 
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 pandemic 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 2023 Guidance 2023 GUIDANCE (in millions, except per share amounts) Low High Income from continuing operations $33 $48 Add back: Income taxes 16 23 Interest expense, net of interest income 170 180 Depreciation and amortization 95 100 EBITDA $314 $351 Total deductions, net (64) (81) Adjusted EBITDA $250 $270 Income (loss) from continuing operations per share – diluted * ($0.08) $0.02 Income from continuing operations $33 $48 Total adjustments, net 21 21 Operating adjusted net income from continuing operations $54 $69 Operating adjusted net income from continuing operations per share - diluted $0.37 $0.47 Weighted average diluted shares – including assumed conversion of preferred shares 146 146 * The company uses the two-class method of calculating income from continuing operations per diluted share. Under the two-class method, income from continuing operations is adjusted for dividends and undistributed earnings (losses) 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.

 
4 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

 
5 KAR 2022 Highlights* ($ in millions, except per share amounts) KAR Q4 2022 Q4 2021 YTD 2022 YTD 2021 Total operating revenues from continuing operations $372.8 $357.7 $1,519.4 $1,450.6 Gross profit** $170.8 $163.5 $685.1 $658.1 % of revenue** 45.8% 45.7% 45.1% 45.4% SG&A $93.0 $102.2 $445.1 $420.7 Other (income) expense, net ($7.7) $8.0 ($1.3) ($12.5) EBITDA $118.7 $53.0 $255.3 $249.0 Adjusted EBITDA $56.5 $64.3 $231.2 $270.2 Income (loss) from continuing operations $41.9 $15.2 $28.6 ($0.8) Income (loss) from continuing operations per share – diluted $0.21 $0.04 ($0.10) ($0.27) Weighted average diluted shares 109.9 121.5 116.3 123.0 Operating adjusted net income (loss) from continuing operations per share – diluted $0.33 $0.17 $0.43 $0.31 Weighted average diluted shares – including assumed conversion of preferred shares 145.7 156.1 151.9 156.6 Effective tax rate 29.9% 320.3% 25.9% 105.6% Capital expenditures $15.1 $16.6 $60.9 $64.2 * 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, 2022. ** Exclusive of depreciation and amortization

 
6 Marketplace 2022 Highlights* ($ in millions, except RPU) Marketplace Q4 2022 Q4 2021 YTD 2022 YTD 2021 Auction fees $80.8 $100.8 $370.3 $399.2 Service revenue $146.3 $125.8 $590.3 $541.3 Purchased vehicle sales $45.0 $51.9 $182.9 $220.9 Total Marketplace revenue from continuing operations $272.1 $278.5 $1,143.5 $1,161.4 Gross profit** $85.8 $98.7 $372.3 $424.3 % of revenue, excluding purchased vehicles** 37.8% 43.6% 38.8% 45.1% SG&A $82.8 $93.1 $398.6 $385.5 Other (income) expense, net ($8.3) $3.5 ($8.4) $4.5 EBITDA $44.6 $1.8 ($3.8) $33.4 Adjusted EBITDA $7.7 $11.7 $29.4 $84.3 % of revenue 2.8% 4.2% 2.6% 7.3% Commercial vehicles sold 151,000 162,000 661,000 948,000 Dealer consignment vehicles sold 138,000 180,000 636,000 651,000 Total vehicles sold 289,000 342,000 1,297,000 1,599,000 Auction fees per vehicle sold $280 $294 $286 $250 Gross profit per vehicle sold** $297 $288 $287 $265 * 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, 2022. ** Exclusive of depreciation and amortization

 
7 Finance 2022 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, 2022. ** Exclusive of depreciation and amortization ($ in millions, except for revenue per loan transaction) Finance Q4 2022 Q4 2021 YTD 2022 YTD 2021 Interest income $59.7 $39.7 $202.8 $139.7 Fee income $44.7 $36.4 $171.9 $144.4 Other revenue $3.3 $2.2 $11.0 $8.6 Net recovery (provision) for credit losses ($7.0) $0.9 ($9.8) ($3.5) Total Finance revenue $100.7 $79.2 $375.9 $289.2 Gross profit** $85.0 $64.8 $312.8 $233.8 % of revenue** 84.4% 81.8% 83.2% 80.8% SG&A $10.2 $9.1 $46.5 $35.2 Other (income) expense, net $0.6 $4.5 $7.1 ($17.0) EBITDA $74.1 $51.2 $259.1 $215.6 Adjusted EBITDA $48.8 $52.6 $201.8 $185.9 Loan transactions 392,000 342,000 1,562,000 1,421,000 Revenue per loan transaction $257 $232 $241 $204 Provision for credit losses % of finance receivables 1.1% (0.2%) 0.4% 0.2% Managed receivables $2,416.6 $2,529.0 $2,416.6 $2,529.0 Obligations collateralized by finance receivables $1,677.6 $1,692.3 $1,677.6 $1,692.3

 
8 December 31, 2022 Leverage (US$ in millions) Corporate Credit Ratings: S&P B, Moodys B1 * As defined in the Credit Agreement Balance Maturity Term Loan B-6 (Adjusted LIBOR + 2.25%) $ - 2026 Revolving Credit Facility (Adjusted LIBOR + 1.75%) 145 2024 Senior Notes (Fixed 5.125%) 350 2025 Finance Leases & Other 7 Total 502 Less: Available Cash* 180 Net Debt 322 Senior Secured Net Leverage Ratio (0.1) Total Net Debt Ratio 1.3

 
9 H I S T O R I C A L D A TA

 
10 Consolidated Statement of Income – 2020 Marketplace Finance Consolidated Operating revenues $1,059.3 $267.6 $1,326.9 Operating expenses Cost of services (exclusive of depreciation & amortization) 665.2 79.1 744.3 Selling, general, and administrative 337.9 36.6 374.5 Depreciation and amortization 96.6 12.5 109.1 Goodwill and other intangibles impairment 29.8 - 29.8 Total operating expenses 1,129.5 128.2 1,257.7 Operating profit (loss) (70.2) 139.4 69.2 Interest expense 89.1 39.1 128.2 Other (income) expense, net 5.9 (0.1) 5.8 Intercompany 1.1 (1.1) - Income (loss) from continuing operations before income taxes (166.3) 101.5 (64.8) Income taxes (33.1) 21.9 (11.2) Income (loss) from continuing operations ($133.2) $79.6 ($53.6) Income (loss) from discontinued operations, net of income taxes 54.1 - 54.1 Net income (loss) ($79.1) $79.6 $0.5

 
11 Consolidated Statement of Income – Q1 2021 Marketplace Finance Consolidated Operating revenues $304.0 $65.8 $369.8 Operating expenses Cost of services (exclusive of depreciation & amortization) 190.3 13.5 203.8 Selling, general, and administrative 98.5 8.8 107.3 Depreciation and amortization 24.5 2.4 26.9 Total operating expenses 313.3 24.7 338.0 Operating profit (loss) (9.3) 41.1 31.8 Interest expense 21.5 9.3 30.8 Other (income) expense, net (5.4) (44.3) (49.7) Intercompany 0.1 (0.1) - Income (loss) from continuing operations before income taxes (25.5) 76.2 50.7 Income taxes 5.0 19.5 24.5 Income (loss) from continuing operations ($30.5) $56.7 $26.2 Income (loss) from discontinued operations, net of income taxes 24.7 - 24.7 Net income (loss) ($5.8) $56.7 $50.9

 
12 Consolidated Statement of Income – Q2 2021 Marketplace Finance Consolidated Operating revenues $307.4 $68.6 $376.0 Operating expenses Cost of services (exclusive of depreciation & amortization) 195.1 13.7 208.8 Selling, general, and administrative 97.6 8.8 106.4 Depreciation and amortization 24.9 2.5 27.4 Total operating expenses 317.6 25.0 342.6 Operating profit (loss) (10.2) 43.6 33.4 Interest expense 21.6 9.4 31.0 Other (income) expense, net 3.4 11.9 15.3 Intercompany 0.1 (0.1) - Income (loss) from continuing operations before income taxes (35.3) 22.4 (12.9) Income taxes (3.3) 5.7 2.4 Income (loss) from continuing operations ($32.0) $16.7 ($15.3) Income (loss) from discontinued operations, net of income taxes 26.8 - 26.8 Net income (loss) ($5.2) $16.7 $11.5

 
13 Consolidated Statement of Income – Q3 2021 Marketplace Finance Consolidated Operating revenues $271.5 $75.6 $347.1 Operating expenses Cost of services (exclusive of depreciation & amortization) 171.9 13.8 185.7 Selling, general, and administrative 96.3 8.5 104.8 Depreciation and amortization 25.2 2.2 27.4 Total operating expenses 293.4 24.5 317.9 Operating profit (loss) (21.9) 51.1 29.2 Interest expense 21.6 10.3 31.9 Other (income) expense, net 3.0 10.9 13.9 Intercompany - - - Income (loss) from continuing operations before income taxes (46.5) 29.9 (16.6) Income taxes 3.4 6.9 10.3 Income (loss) from continuing operations ($49.9) $23.0 ($26.9) Income (loss) from discontinued operations, net of income taxes 25.9 - 25.9 Net income (loss) ($24.0) $23.0 ($1.0)

 
14 Consolidated Statement of Income – Q4 2021 Marketplace Finance Consolidated Operating revenues $278.5 $79.2 $357.7 Operating expenses Cost of services (exclusive of depreciation & amortization) 179.8 14.4 194.2 Selling, general, and administrative 93.1 9.1 102.2 Depreciation and amortization 25.9 2.3 28.2 Total operating expenses 298.8 25.8 324.6 Operating profit (loss) (20.3) 53.4 33.1 Interest expense 21.5 10.5 32.0 Other (income) expense, net 3.5 4.5 8.0 Intercompany - - - Income (loss) from continuing operations before income taxes (45.3) 38.4 (6.9) Income taxes (31.5) 9.4 (22.1) Income (loss) from continuing operations ($13.8) $29.0 $15.2 Income (loss) from discontinued operations, net of income taxes (10.1) - (10.1) Net income (loss) ($23.9) $29.0 $5.1

 
15 Consolidated Statement of Income – 2021 Marketplace Finance Consolidated Operating revenues $1,161.4 $289.2 $1,450.6 Operating expenses Cost of services (exclusive of depreciation & amortization) 737.1 55.4 792.5 Selling, general, and administrative 385.5 35.2 420.7 Depreciation and amortization 100.5 9.4 109.9 Total operating expenses 1,223.1 100.0 1,323.1 Operating profit (loss) (61.7) 189.2 127.5 Interest expense 86.2 39.5 125.7 Other (income) expense, net 4.5 (17.0) (12.5) Intercompany 0.2 (0.2) - Income (loss) from continuing operations before income taxes (152.6) 166.9 14.3 Income taxes (26.4) 41.5 15.1 Income (loss) from continuing operations ($126.2) $125.4 ($0.8) Income (loss) from discontinued operations, net of income taxes 67.3 - 67.3 Net income (loss) ($58.9) $125.4 $66.5

 
16 Marketplace Metrics 1 Includes purchased vehicle sales 2 Includes vehicles sold by CARWAVE pre-acquisition 2022 4Q22 3Q22 2Q22 1Q22 2021 4Q21 3Q21 Revenue1 $1,143.5 $272.1 $293.9 $292.3 $285.2 $1,161.4 $278.5 $271.5 Commercial vehicles sold 661 151 159 177 174 948 162 192 Dealer consignment vehicles sold 636 138 155 166 177 651 180 165 Total vehicles sold 1,297 289 314 343 351 1,599 342 357 Auction fees per vehicle sold $286 $280 $283 $289 $289 $250 $294 $252 Gross profit per vehicle sold $287 $297 $320 $282 $255 $265 $288 $280 Gross profit percentage1 32.6% 31.5% 34.2% 33.0% 31.3% 36.5% 35.4% 36.7% Gross profit percentage, excluding purchased vehicles 38.8% 37.8% 40.5% 39.2% 37.4% 45.1% 43.6% 45.7% Income (loss) from continuing operations ($105.7) $5.8 ($35.8) ($36.3) ($39.4) ($126.2) ($13.8) ($49.9) Adjusted EBITDA $29.4 $7.7 $17.7 $5.0 ($1.0) $84.3 $11.7 $10.6 Digital dealer-to-dealer vehicles sold (N.A.) 487 107 121 126 133 5502 1352 1432 Gross auction proceeds ($B) $23.2 $5.0 $5.5 $6.2 $6.5 $28.0 $6.3 $6.0

 
17 Finance Metrics 2022 4Q22 3Q22 2Q22 1Q22 2021 4Q21 3Q21 Interest income $202.8 $59.7 $53.4 $46.5 $43.2 $139.7 $39.7 $35.4 Fee income $171.9 $44.7 $44.3 $42.7 $40.2 $144.4 $36.4 $35.8 Other revenue $11.0 $3.3 $2.9 $2.6 $2.2 $8.6 $2.2 $2.2 Net recovery (provision) for credit losses ($9.8) ($7.0) ($1.5) $0.1 ($1.4) ($3.5) $0.9 $2.2 Total Finance revenue $375.9 $100.7 $99.1 $91.9 $84.2 $289.2 $79.2 $75.6 Loan Transaction Units (LTU) 1,562 392 397 401 372 1,421 342 351 Revenue per Loan Transaction $241 $257 $250 $229 $226 $204 $232 $215 Income (loss) from continuing operations $134.3 $36.1 $36.3 $30.9 $31.0 $125.4 $29.0 $23.0 Adjusted EBITDA $201.8 $48.8 $51.8 $51.1 $50.1 $185.9 $52.6 $56.0 Ending Managed Finance Receivables $2,416.6 $2,416.6 $2,555.1 $2,681.6 $2,757.8 $2,529.0 $2,529.0 $2,191.7 Ending Obligations Collateralized by Finance Receivables $1,677.6 $1,677.6 $1,707.8 $1,781.3 $1,866.6 $1,692.3 $1,692.3 $1,385.7

 
18 A P P E N D I X

 
19 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) and operating adjusted net income (loss) 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) and operating adjusted net income (loss) 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.

 
20 2020 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2020 Marketplace Finance Consolidated Income (loss) from continuing operations ($133.2) $79.6 ($53.6) Add back: Income taxes (33.1) 21.9 (11.2) Interest expense, net of interest income 87.6 39.0 126.6 Depreciation and amortization 96.6 12.5 109.1 Intercompany interest 1.1 (1.1) - EBITDA $19.0 $151.9 $170.9 Non-cash stock-based compensation 10.5 2.3 12.8 Acquisition related costs 7.7 - 7.7 Securitization interest - (27.3) (27.3) (Gain)/Loss on asset sales 0.2 - 0.2 Severance 5.4 0.4 5.8 Foreign currency (gains)/losses 4.9 - 4.9 Goodwill and other intangibles impairment 29.8 - 29.8 Contingent consideration adjustment 6.8 - 6.8 Other 1.5 0.4 1.9 Total Addbacks/(Deductions) 66.8 (24.2) 42.6 Adjusted EBITDA $85.8 $127.7 $213.5 Revenue $1,059.3 $267.6 $1,326.9 Adjusted EBITDA % margin 8.1% 47.7% 16.1%

 
21 Q1 2021 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended March 31, 2021 Marketplace Finance Consolidated Income (loss) from continuing operations ($30.5) $56.7 $26.2 Add back: Income taxes 5.0 19.5 24.5 Interest expense, net of interest income 21.3 9.3 30.6 Depreciation and amortization 24.5 2.4 26.9 Intercompany interest 0.1 (0.1) - EBITDA $20.4 $87.8 $108.2 Non-cash stock-based compensation 4.4 0.7 5.1 Acquisition related costs 1.3 - 1.3 Securitization interest - (6.8) (6.8) (Gain)/Loss on asset sales - (0.8) (0.8) Severance 0.2 0.2 0.4 Foreign currency (gains)/losses 2.2 - 2.2 Contingent consideration adjustment 11.2 - 11.2 Net change in unrealized (gains) losses on investment securities - (43.5) (43.5) Other 0.2 (0.3) (0.1) Total Addbacks/(Deductions) 19.5 (50.5) (31.0) Adjusted EBITDA $39.9 $37.3 $77.2 Revenue $304.0 $65.8 $369.8 Adjusted EBITDA % margin 13.1% 56.7% 20.9%

 
22 Q2 2021 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2021 Marketplace Finance Consolidated Income (loss) from continuing operations ($32.0) $16.7 ($15.3) Add back: Income taxes (3.3) 5.7 2.4 Interest expense, net of interest income 21.4 9.4 30.8 Depreciation and amortization 24.9 2.5 27.4 Intercompany interest 0.1 (0.1) - EBITDA $11.1 $34.2 $45.3 Non-cash stock-based compensation 3.7 0.6 4.3 Acquisition related costs 1.6 - 1.6 Securitization interest - (6.8) (6.8) Severance 0.6 - 0.6 Foreign currency (gains)/losses 0.4 - 0.4 Contingent consideration adjustment 4.5 - 4.5 Net change in unrealized (gains) losses on investment securities - 11.9 11.9 Other 0.2 0.1 0.3 Total Addbacks/(Deductions) 11.0 5.8 16.8 Adjusted EBITDA $22.1 $40.0 $62.1 Revenue $307.4 $68.6 $376.0 Adjusted EBITDA % margin 7.2% 58.3% 16.5%

 
23 Q3 2021 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended September 30, 2021 Marketplace Finance Consolidated Income (loss) from continuing operations ($49.9) $23.0 ($26.9) Add back: Income taxes 3.4 6.9 10.3 Interest expense, net of interest income 21.4 10.3 31.7 Depreciation and amortization 25.2 2.2 27.4 Intercompany interest - - - EBITDA $0.1 $42.4 $42.5 Non-cash stock-based compensation 3.0 0.6 3.6 Acquisition related costs 2.1 - 2.1 Securitization interest - (7.9) (7.9) Severance 0.8 - 0.8 Foreign currency (gains)/losses 0.1 - 0.1 Contingent consideration adjustment 4.4 - 4.4 Net change in unrealized (gains) losses on investment securities - 20.9 20.9 Other 0.1 - 0.1 Total Addbacks/(Deductions) 10.5 13.6 24.1 Adjusted EBITDA $10.6 $56.0 $66.6 Revenue $271.5 $75.6 $347.1 Adjusted EBITDA % margin 3.9% 74.1% 19.2%

 
24 Q4 2021 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended December 31, 2021 Marketplace Finance Consolidated Income (loss) from continuing operations ($13.8) $29.0 $15.2 Add back: Income taxes (31.5) 9.4 (22.1) Interest expense, net of interest income 21.2 10.5 31.7 Depreciation and amortization 25.9 2.3 28.2 Intercompany interest - - - EBITDA $1.8 $51.2 $53.0 Non-cash stock-based compensation 1.0 0.3 1.3 Acquisition related costs 2.1 - 2.1 Securitization interest - (8.3) (8.3) (Gain)/Loss on asset sales 0.1 - 0.1 Severance 1.3 0.2 1.5 Foreign currency (gains)/losses 1.1 - 1.1 Contingent consideration adjustment 4.2 - 4.2 Net change in unrealized (gains) losses on investment securities - 9.3 9.3 Other 0.1 (0.1) - Total Addbacks/(Deductions) 9.9 1.4 11.3 Adjusted EBITDA $11.7 $52.6 $64.3 Revenue $278.5 $79.2 $357.7 Adjusted EBITDA % margin 4.2% 66.4% 18.0%

 
25 2021 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2021 Marketplace Finance Consolidated Income (loss) from continuing operations ($126.2) $125.4 ($0.8) Add back: Income taxes (26.4) 41.5 15.1 Interest expense, net of interest income 85.3 39.5 124.8 Depreciation and amortization 100.5 9.4 109.9 Intercompany interest 0.2 (0.2) - EBITDA $33.4 $215.6 $249.0 Non-cash stock-based compensation 12.1 2.2 14.3 Acquisition related costs 7.1 - 7.1 Securitization interest - (29.8) (29.8) (Gain)/Loss on asset sales 0.1 (0.8) (0.7) Severance 2.9 0.4 3.3 Foreign currency (gains)/losses 3.8 - 3.8 Contingent consideration adjustment 24.3 - 24.3 Net change in unrealized (gains) losses on investment securities - (1.4) (1.4) Other 0.6 (0.3) 0.3 Total Addbacks/(Deductions) 50.9 (29.7) 21.2 Adjusted EBITDA $84.3 $185.9 $270.2 Revenue $1,161.4 $289.2 $1,450.6 Adjusted EBITDA % margin 7.3% 64.3% 18.6%

 
26 Q1 2022 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended March 31, 2022 Marketplace Finance Consolidated Income (loss) from continuing operations ($39.4) $31.0 ($8.4) Add back: Income taxes (15.1) 10.4 (4.7) Interest expense, net of interest income 13.2 12.3 25.5 Depreciation and amortization 23.9 2.1 26.0 Intercompany interest 0.1 (0.1) - EBITDA ($17.3) $55.7 $38.4 Non-cash stock-based compensation 4.4 0.8 5.2 Acquisition related costs 0.3 - 0.3 Securitization interest - (10.4) (10.4) (Gain)/Loss on asset sales (0.1) - (0.1) Severance 3.2 0.2 3.4 Foreign currency (gains)/losses 1.2 - 1.2 Net change in unrealized (gains) losses on investment securities - 3.0 3.0 Professional fees related to business improvement efforts 7.3 0.8 8.1 Total Addbacks/(Deductions) 16.3 (5.6) 10.7 Adjusted EBITDA ($1.0) $50.1 $49.1 Revenue $285.2 $84.2 $369.4 Adjusted EBITDA % margin (0.4%) 59.5% 13.3%

 
27 Q2 2022 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended June 30, 2022 Marketplace Finance Consolidated Income (loss) from continuing operations ($36.3) $30.9 ($5.4) Add back: Income taxes (20.2) 10.3 (9.9) Interest expense, net of interest income 9.0 16.2 25.2 Depreciation and amortization 23.8 2.1 25.9 Intercompany interest 0.6 (0.6) - EBITDA ($23.1) $58.9 $35.8 Non-cash stock-based compensation 11.7 2.8 14.5 Loss on extinguishment of debt 7.7 - 7.7 Acquisition related costs 0.3 - 0.3 Securitization interest - (14.3) (14.3) Severance 3.1 0.2 3.3 Foreign currency (gains)/losses 3.3 - 3.3 Net change in unrealized (gains) losses on investment securities - 3.2 3.2 Professional fees related to business improvement efforts 0.7 0.1 0.8 Other 1.3 0.2 1.5 Total Addbacks/(Deductions) 28.1 (7.8) 20.3 Adjusted EBITDA $5.0 $51.1 $56.1 Revenue $292.3 $91.9 $384.2 Adjusted EBITDA % margin 1.7% 55.6% 14.6%

 
28 Q3 2022 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended September 30, 2022 Marketplace Finance Consolidated Income (loss) from continuing operations ($35.8) $36.3 $0.5 Add back: Income taxes (5.6) 12.3 6.7 Interest expense, net of interest income 8.6 22.3 30.9 Depreciation and amortization 22.4 1.9 24.3 Intercompany interest 2.4 (2.4) - EBITDA ($8.0) $70.4 $62.4 Non-cash stock-based compensation 2.8 0.7 3.5 Loss on extinguishment of debt 9.3 - 9.3 Acquisition related costs 0.3 - 0.3 Securitization interest - (20.2) (20.2) Severance 1.4 0.1 1.5 Foreign currency (gains)/losses 4.1 - 4.1 Net change in unrealized (gains) losses on investment securities - 0.3 0.3 Professional fees related to business improvement efforts 2.7 0.5 3.2 Other 5.1 - 5.1 Total Addbacks/(Deductions) 25.7 (18.6) 7.1 Adjusted EBITDA $17.7 $51.8 $69.5 Revenue $293.9 $99.1 $393.0 Adjusted EBITDA % margin 6.0% 52.3% 17.7%

 
29 Q4 2022 Adjusted EBITDA Reconciliation ($ in millions) Three Months ended December 31, 2022 Marketplace Finance Consolidated Income (loss) from continuing operations $5.8 $36.1 $41.9 Add back: Income taxes 4.5 13.4 17.9 Interest expense, net of interest income 6.8 28.1 34.9 Depreciation and amortization 22.2 1.8 24.0 Intercompany interest 5.3 (5.3) - EBITDA $44.6 $74.1 $118.7 Non-cash stock-based compensation (4.7) (1.0) (5.7) Loss on extinguishment of debt 0.2 - 0.2 Acquisition related costs 0.3 - 0.3 Securitization interest - (25.8) (25.8) Gain on sale of property (33.9) - (33.9) Severance 4.0 0.2 4.2 Foreign currency (gains)/losses (6.1) - (6.1) Net change in unrealized (gains) losses on investment securities - 0.6 0.6 Professional fees related to business improvement efforts 2.6 0.5 3.1 Other 0.7 0.2 0.9 Total Addbacks/(Deductions) (36.9) (25.3) (62.2) Adjusted EBITDA $7.7 $48.8 $56.5 Revenue $272.1 $100.7 $372.8 Adjusted EBITDA % margin 2.8% 48.5% 15.2%

 
30 YTD 2022 Adjusted EBITDA Reconciliation ($ in millions) Year ended December 31, 2022 Marketplace Finance Consolidated Income (loss) from continuing operations ($105.7) $134.3 $28.6 Add back: Income taxes (36.4) 46.4 10.0 Interest expense, net of interest income 37.6 78.9 116.5 Depreciation and amortization 92.3 7.9 100.2 Intercompany interest 8.4 (8.4) - EBITDA ($3.8) $259.1 $255.3 Non-cash stock-based compensation 14.2 3.3 17.5 Loss on extinguishment of debt 17.2 - 17.2 Acquisition related costs 1.2 - 1.2 Securitization interest - (70.7) (70.7) Gain on sale of property (33.9) - (33.9) (Gain)/Loss on asset sales (0.1) - (0.1) Severance 11.7 0.7 12.4 Foreign currency (gains)/losses 2.5 - 2.5 Net change in unrealized (gains) losses on investment securities - 7.1 7.1 Professional fees related to business improvement efforts 13.3 1.9 15.2 Other 7.1 0.4 7.5 Total Addbacks/(Deductions) 33.2 (57.3) (24.1) Adjusted EBITDA $29.4 $201.8 $231.2 Revenue $1,143.5 $375.9 $1,519.4 Adjusted EBITDA % margin 2.6% 53.7% 15.2%

 
31 (1) The Series A Preferred Stock dividends and undistributed earnings allocated to participating securities have not been included in the calculation of operating adjusted net income (loss) and operating adjusted net income (loss) per diluted share. (2) For the three months and year ended December 31, 2022, the effective tax rate at the end of each period was used to determine the amount of income tax on the adjustments to net income. An effective tax rate of 24.5% was used to determine the amount of income tax benefit on the acquired amortization expense in 2021. There was no income tax benefit related to the contingent consideration adjustment because this item is not deductible for income tax purposes. Operating Adjusted Net Income (Loss) per Share Reconciliation ($ in millions, except per share amounts), (unaudited) Three Months ended December 31, Year ended December 31, 2022 2021 2022 2021 Net income (loss) from continuing operations (1) $41.9 $15.2 $28.6 ($0.8) Acquired amortization expense 8.0 8.6 33.0 33.4 Loss on extinguishment of debt 0.2 - 17.2 - Contingent consideration adjustment - 4.2 - 24.3 Income taxes (2) (2.5) (2.1) (13.0) (8.2) Operating adjusted net income (loss) from continuing operations $47.6 $25.9 $65.8 $48.7 Net income (loss) from discontinued operations ($4.8) ($10.1) $212.6 $67.3 Acquired amortization expense - 4.4 5.9 21.2 Income taxes (2) - (1.1) (1.5) (5.2) Operating adjusted net income (loss) from discontinued operations ($4.8) ($6.8) $217.0 $83.3 Operating adjusted net income $42.8 $19.1 $282.8 $132.0 Operating adjusted net income (loss) from continuing operations per share - diluted $0.33 $0.17 $0.43 $0.31 Operating adjusted net income (loss) from discontinued operations per share – diluted (0.04) (0.05) 1.43 0.53 Operating adjusted net income per share - diluted $0.29 $0.12 $1.86 $0.84 Weighted average diluted shares – including assumed conversion of preferred shares 145.7 156.1 151.9 156.6