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IAA, Inc. announces Q2 revenue growth of 16.9%

On 9 August, IAA, Inc. (IAA) announced its financial results for the second quarter of fiscal 2022, which ended July 3, 2022.

 

IAA, Inc. announces Q2 revenue growth of 16.9% p

John Kett, Chief Executive Officer and President of IAA, Inc. stated:

“We continue to navigate a dynamic macro environment as reflected in our second quarter results. Our topline performance continued to benefit from solid revenue per unit trends as well as progress against our strategic initiatives, and as expected, profitability was impacted by inflationary pressures and industry volume headwinds. Despite the evolving environment, I am proud of our team’s unwavering focus on operational efficiency and delivering best-in-class service to our customers. As we look to the remainder of the year, regardless of the macro environment, we remain committed to executing on our strategic objectives, including improving our digital marketplace through data analytics and enhanced vehicle merchandising, while investing in technology and automation to further improve profitability and deliver value to all our stakeholders.”

Highlights for the Second Quarter Ended July 3, 2022:

  • Consolidated revenues increased 16.9% to $520.3 million from $445.1 million in the second quarter of fiscal 2021. Foreign currency movements had a negative impact of $4.1 million on revenue for the quarter. Revenue from our recent acquisitions of Auto Exchange and SYNETIQ was $39.5 million. Excluding these items, organic revenue increased $39.8 million, or 8.9%, to $484.9 million, consisting of a higher revenue per unit of 12.6%, partially offset by a decrease in volume of 3.2%. Service revenues increased 8.9% to $416.6 million from $382.5 million in the second quarter of fiscal 2021 due to higher revenue per unit and incremental revenue from the SYNETIQ acquisition, partially offset by lower volume of vehicles sold. Vehicle and parts sales increased 65.7% to $103.7 million, compared to $62.6 million in the second quarter of fiscal 2021, primarily due to higher revenue per unit and incremental revenue from the SYNETIQ acquisition, partially offset by lower volume of vehicles sold. U.S. revenues increased by 6.5% to $418.5 million from $393.0 million in the second quarter of fiscal 2021. U.S. revenues were driven by higher revenue per unit, partially offset by lower volume. International revenues increased by 95.4% to $101.8 million from $52.1 million in the second quarter of fiscal 2021. International revenues increased primarily due to the acquisition of SYNETIQ and higher volume in Canada.
  • Gross profit, which is defined as total consolidated revenues minus cost of services and vehicle and parts sales, and exclusive of depreciation and amortization, decreased by 7.1% to $182.0 million from $195.9 million in the second quarter of fiscal 2021. The decrease in gross profit was primarily due to a lower volume of vehicles sold, a higher mix of lower margin purchased vehicle and parts sales, market dynamics in our International segment, and higher costs for towing, occupancy and wages, partially offset by higher revenue per unit. Gross margin in the quarter declined by 900 basis points to 35.0% from 44.0% in the prior year period. Purchased vehicle and parts mix accounted for approximately 200 basis points of this decline.
  • Selling, general and administrative (“SG&A”) expenses increased by 8.7% to $47.5 million from $43.7 million in the second quarter of fiscal 2021. Adjusted SG&A expenses were $45.4 million, an increase of 4.8% compared to Adjusted SG&A expenses of $43.3 million in the second quarter of fiscal 2021. Adjusted SG&A expenses increased primarily due to incremental costs from our recent acquisitions of Auto Exchange and SYNETIQ, higher headcount and higher spending on information technology, partially offset by lower incentive compensation.
  • Interest expense was $11.5 million compared to $21.9 million in the second quarter of fiscal 2021. The decrease in interest expense was primarily due to a $10.3 million loss on early extinguishment of debt that was recognized in the second quarter of 2021.
  • The effective tax rate was 10.9% versus 24.7% in the second quarter of fiscal 2021. The effective tax rate in the second quarter of fiscal 2022 benefited from favorable adjustments of $13.3 million resulting from a change in the estimate for Foreign Derived Intangible Income (“FDII”). The adjustments are recorded as an $8.6 million discrete item and a $4.7 million benefit in the second quarter of 2022.
  • Net income decreased by 0.2% to $82.7 million, or $0.62 per diluted share, compared to $82.9 million, or $0.61 per diluted share, in the second quarter of fiscal 2021. Adjusted net income decreased by 11.4% to $82.7 million, or $0.62 per diluted share, compared to $93.3 million, or 0.69 per diluted share, in the second quarter of fiscal 2021.
  • Adjusted EBITDA decreased by 10.7% to $136.2 million from $152.6 million in the second quarter of fiscal 2021, primarily due to lower gross profit and higher SG&A expenses. Adjusted EBITDA includes unfavorable foreign currency movements of $0.1 million and contributions from Auto Exchange and SYNETIQ of $3.4 million in the second quarter of fiscal 2022. Excluding these items, organic Adjusted EBITDA was $132.9 million, a decrease of 12.9% compared to the second quarter of fiscal 2021.

To read the full report, go to www.businesswire.com

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Owain Griffiths

Owain Griffiths

Head of Circular Economy at Volvo Cars

Owain joined Volvo Cars in June 2021 to lead Circular Economy in the Global Sustainability Team. The company has committed to being a circular business by 2040 and has financial, recycled content and CO2 based targets for 2025, all of which Owain is working across the company to make happen. Owain previously worked for circular economy consultancy Oakdene Hollins where he advised businesses on evidence led circular economy implementation. 

Turning into a circular business and the importance of vehicle reuse and recycling.

The presentation will cover the work Volvo Cars is doing to achieve 2025 but mainly focus on the transformational work towards 2040 and the business and value chain changes being considered. Attention will be paid to the way vehicles are being dealt with at the end of life and the complexities of closing material and component loops. Opportunities and challenges which Volvo Cars is facing will be presented including engagement with 3rd parties and increasing pressure from stakeholders.

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