SPX5,618.49-56.63 -1.00%
DIA416.85-2.37 -0.56%
IXIC17,521.38-287.29 -1.61%

OPENLANE, Inc. (Exact name of Registrant as specified in its charter) Form 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Press release·02/21/2025 12:13:32
Listen to the news
OPENLANE, Inc. (Exact name of Registrant as specified in its charter) Form 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

OPENLANE, Inc. (Exact name of Registrant as specified in its charter) Form 10-K Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

OpenLanes, Inc. filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2024. The company reported total revenues of $1.79 billion, a 12% increase from the previous year. Net income was $243 million, a 15% increase from the previous year. The company’s cash and cash equivalents increased to $1.13 billion, a 20% increase from the previous year. The company’s common stock, par value $0.01 per share, was listed on the New York Stock Exchange under the ticker symbol KAR. As of February 14, 2025, there were 106,910,777 shares of common stock outstanding. The company’s aggregate market value of common stock held by non-affiliates was $1.79 billion as of June 30, 2024.

Overview

OPENLANE, Inc. is a leading provider of digital automotive marketplaces and finance solutions. The company operates in two main segments - Marketplace and Finance.

The Marketplace segment operates digital auction platforms that facilitate the buying and selling of wholesale used vehicles. OPENLANE supports the majority of commercial sellers in North America and also provides dealer-to-dealer transaction services. The Finance segment, through its subsidiary AFC, provides short-term inventory financing and other financial solutions to independent vehicle dealers.

Financial Performance

In 2024, OPENLANE reported total operating revenues of $1,788.5 million, up 5% from $1,695.7 million in 2023. This increase was driven by growth in the Marketplace segment, which saw a 9% rise in the number of vehicles sold.

The company’s operating profit for 2024 was $182.2 million, compared to an operating loss of $135.8 million in 2023. This turnaround was largely due to a $31.6 million gain on the sale of OPENLANE’s automotive key business, as well as lower impairment charges compared to 2023.

Net income for 2024 was $109.9 million, a significant improvement from the $154.1 million net loss in 2023. The effective tax rate was 30.4% in 2024, compared to -5.7% in 2023, which was impacted by the goodwill and intangibles impairment charges.

Segment Performance

Marketplace Segment The Marketplace segment saw a 8% increase in revenue to $1,357.4 million in 2024, driven by a 9% rise in the number of vehicles sold. Auction fees increased 12% due to the higher volume and higher fees per vehicle. Service revenue declined 5% due to a change in a customer contract.

Gross profit for the Marketplace segment increased 7% to $393.4 million, with the gross margin declining slightly to 29.0% from 29.4% in 2023. This was due to an increase in purchased vehicle sales and the impact of a new Canadian digital services tax, partially offset by improved transportation margins and cost savings.

The Marketplace segment recorded a $31.6 million gain on the sale of the automotive key business in 2024. It also incurred $250.8 million in goodwill and intangibles impairment charges in 2023 related to the U.S. Dealer-to-Dealer and Europe reporting units.

Finance Segment The Finance segment’s revenue decreased 3% to $431.1 million in 2024, primarily due to a decline in average receivables managed. However, the net finance margin improved to 13.7% from 13.3% in 2023, driven by higher fee and other revenue yields.

The Finance segment’s provision for credit losses decreased 6% to $47.6 million in 2024. The allowance for credit losses as a percentage of total receivables managed was 0.9% at the end of 2024, down from 1.0% in 2023.

Strengths and Weaknesses

Strengths

  • Leading market positions in both Marketplace and Finance segments
  • Diversified revenue streams from auction fees, service revenue, and finance revenue
  • Strong liquidity position with $143 million in cash and $398 million available under credit facilities
  • Ability to generate significant operating cash flow

Weaknesses

  • Exposure to volatility in the wholesale used vehicle market
  • Reliance on the automotive industry, which has faced supply chain disruptions and other challenges in recent years
  • Goodwill and intangibles impairment charges in 2023 related to certain reporting units
  • Valuation allowance against U.S. deferred tax assets

Outlook and Future Prospects

OPENLANE expects to see an improvement in the used vehicle market in the coming years, which should increase the volume of vehicles flowing through its auction platforms and have a positive impact on operating results. The company believes its sources of liquidity are sufficient to meet its operating needs and fund capital requirements and debt service for the foreseeable future.

However, a lack of recovery or further deterioration in market conditions could materially affect the company’s liquidity. OPENLANE will need to continue monitoring industry trends and adapting its business model accordingly. Successful integration of acquisitions, such as the Manheim Canada business, will also be important for future growth.

Overall, OPENLANE appears to be in a solid financial position, with leading market positions in both its Marketplace and Finance segments. While the company faced some challenges in 2023, including significant impairment charges, the return to profitability in 2024 and positive outlook for the used vehicle market provide reasons for optimism about the company’s future prospects.