Q2 2017 & Year-to-Date Earnings Slides August 8, 2017 - PowerPoint PPT Presentation

Q2 2017 & Year-to-Date Earnings Slides August 8, 2017

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 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 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. 2

Q2 2017 Highlights Revenues Highlights Fundamentals • Revenue growth +9% • Diversified and complementary $858.0 $788.5 70.1 • Adjusted EBITDA +13% 72.9 business services model 298.7 264.8 • Operating Adjusted EPS +18% • Leveraging unique data and KAR • Adjusted EBITDA margin grew to 26% analytic capabilities 489.2 450.8 • Controlling SG&A from 25% in prior year 2016 2017 • Adjusted EBITDA +13% • Off-lease supply driving volume AFC • Strong volume growth +11% and physical auction fee growth 8% • Physical volumes +6% • Commercial vehicle mix increased ADESA IAA ADESA • Physical auction RPU +$6 35% to 54% from 51% in prior year 57% • Incremental operating profit 32% • Revenue +13% • Total Loss 17.1% Q2 2017 AFC • North American volume growth +12% 8% vs.16.1% Q2 2016 (CCC) • North American inv growth +9% • Scrap pricing +27% (American IAA IAA ADESA 35% • Adjusted EBITDA +27% 57% Recycler) • Miles driven +1% (FHWA, Through May) • Adjusted EBITDA -12% • Conservative portfolio AFC 8% • LTU growth -1% management • Provision for credit losses as a • Increasing gross revenue per loan IAA ADESA AFC percent of managed receivables 2.6% transaction excluding provision for 35% 57% credit losses due to higher average loan balances 3

2017 Outlook KAR Auction Services has updated its previous outlook for the extinguishment of debt associated with the May 2017 debt refinancing as well as a decrease in cash taxes and expects Net Income Per Share, Operating Adjusted Net Income Per Share and Adjusted EBITDA above the midpoint of the annual guidance provided below. Previous Guidance Current Guidance 2017 Low 2017 High 2017 Low 2017 High Net income $235.7 $249.7 $218.4 $232.4 Add back: Income taxes $138.4 $146.6 $128.2 $136.4 Interest expense, net of interest income $170.0 $170.0 $170.0 $170.0 Depreciation and amortization $278.0 $278.0 $278.0 $278.0 EBITDA $822.1 $844.3 $794.6 $816.8 Total addbacks $2.9 $5.7 $30.4 $33.2 Adjusted EBITDA $825.0 $850.0 $825.0 $850.0 Capital expenditures $145.0 $145.0 $145.0 $145.0 Cash taxes related to calendar year $165.0 $165.0 $145.0 $145.0 Cash interest expense on corporate debt $120.0 $120.0 $120.0 $120.0 Free cash flow $395.0 $420.0 $415.0 $440.0 Effective tax rate 37% 37% 37% 37% Net income per share - diluted $1.70 $1.80 $1.57 $1.67 Operating adjusted net income per share - $2.15 $2.25 $2.15 $2.25 diluted Weighted average diluted shares 139 139 139 139 4

Key Operating Metrics 2Q17 2Q16 ADESA Physical Vehicles Sold Growth 1 1% 3% Online Only Vehicles Sold Growth 24% 29% Physical RPU Growth 1% 8% IAA Vehicles Sold Growth (includes HBC) 11% 6% Inventory Growth (excludes HBC) 9% 11% RPU Growth (includes HBC) 2% 1% AFC LTU Growth -1% 10% Provision for Credit Losses 2.6% 1.3% Revenue per loan transaction $148 $154 excluding “Other service revenue” Revenue per loan transaction $175 $167 before provision for credit losses 1 Excluding acquisitions 5

Capital Allocation Framework Over $700M Returned to Shareholders 2015 – 2017 Share Strategic Capex Dividends Investments Repurchases Historically ~18% - 20% of 45% - 50% of FCF Acquisitions that leverage Tool for managing cash     Adjusted EBITDA, plus Highlights consistency & wholecar auction cyclical and leverage  strategic investments strength of free cash flow recovery (indep auctions) Priorities Technology ~50% Complementary   Physical ~50% technologies  New geographies  2015 $135M Spent $152M Paid $118M Acquisitions $228M Repurchased  Technology $63M $1.08 per share paid Pittsburgh (Indep Auction) $300M two year     Physical $56M  DataScan (Veh Inspections) authorization approved in  Chicago Greenfield $16M  Autoniq (Price Guide October 2014 2015 Aggregator)  6.2M shares repurchased  MobileTrac (Veh History Rpts)  HBC (UK Salvage) 2016 $155M Spent $157M Paid $432M Acquisitions $80M Repurchased  Technology $77M  $1.14 per share paid  Brashers (8 Ind Auctions)  $500M three year  Physical $51M  Orlando (Indep Auction) authorization approved in 2016  Chicago Greenfield $27M  GRS (UK Online Auctions) October 2016  Flint (Indep Auction)  1.9M shares repurchased $132M Paid Q1 – Q3 2017 $145M Estimated $47M Acquisitions No Repurchases YTD  $145M Annual Estimate  $0.32 per share paid  DRIVIN (Data Analytics)  $420M Authorization January, April, & July (April 2017) Remaining 2017  DAS (Transportation) (May 2017) 6

KAR Q2 2017 Highlights ($ in millions, except per share amounts) KAR Q2 2017 Q2 2016 Highlights* Total operating revenues $858.0 $788.5 Gross profit** $376.3 $340.9 SG&A $154.6 $146.9 +$4.4M acquired SG&A EBITDA $195.5 $194.2 Adjusted EBITDA $223.5 $197.1 Net income $57.2 $61.8 Net income per share - diluted $0.41 $0.44 Operating adjusted net income per share - diluted $0.65 $0.55 Weighted average diluted shares 138.4 139.3 Dividends declared per common share $0.32 $0.29 Effective tax rate 37.2% 37.9% Capital expenditures $38.2 $39.5 * For a more complete explanation of these changes, see the MD&A in the company's supplemental financial information and Form 10-Q, both for the three months ended June 30, 2017. ** Exclusive of depreciation and amortization 7

ADESA Q2 2017 Highlights ($ in millions, except RPU) ADESA Q2 2017 Q2 2016 Highlights* Revenue $489.2 $450.8 +11% volume, +$18.2M acquisitions Gross profit** $210.5 $191.6 % of revenue 43.0% 42.5% SG&A $85.2 $80.6 +$4.4M acquired SG&A EBITDA $123.3 $109.2 Adjusted EBITDA $130.6 $115.7 % of revenue 26.7% 25.7% Vehicles sold 830,000 750,000 11% growth; 7% excluding acquisitions; total online 45% Physical vehicles sold 585,000 552,000 6% growth; 1% excluding acquisitions Online only volume 245,000 198,000 Dealer consignment mix % (physical only) 46% 49% Conversion rate (N.A. physical) 61.1% 59.1% Physical RPU $748 $742 Excludes purchased vehicles Online only RPU $105 $109 Excludes ADESA Assurance * For a more complete explanation of these changes, see the MD&A in the company's supplemental financial information and Form 10-Q, both for the three months ended June 30, 2017. ** Exclusive of depreciation and amortization 8

Used Vehicle Value Indices Age 1Q17 2Q17 YTD17 YoY Index Change Industry All +4.1% +3.7% +3.9% NADA 0-8 yrs -7.0% -7.3% -7.2% Black Book 2-6 yrs -5.9% -5.1% -5.5% RVI 2-5 yrs -6.1% -5.6% -5.9%  Increased industry (commercial) volumes are driving wholesale prices higher (ADESA)  Revenue per unit sold has increased as used vehicle prices decline as a result of increased commercial mix (ADESA)  Declining used car values increase likelihood of total losses (IAA) 9

IAA Q2 2017 Highlights ($ in millions) IAA Q2 2017 Q2 2016 Highlights* Revenue $298.7 $264.8 +11% volume, -$3.2M HBC, -$1.2M GBP currency Gross profit** $117.2 $97.5 % of revenue 39.2% 36.8% SG&A $27.5 $26.5 EBITDA $90.2 $71.0 Adjusted EBITDA $90.5 $71.4 % of revenue 30.3% 27.0% Vehicles sold 580,000 523,000 Inventory growth (N.A.) 9% 11% % Purchased contract vehicles 5% 6% * For a more complete explanation of these changes, see the MD&A in the company's supplemental financial information and Form 10-Q, both for the three months ended June 30, 2017. ** Exclusive of depreciation and amortization 10

IAA Q2 2017 Gross Profit ($ in millions) Three Months Ended Three Months Ended June 30, 2017 June 30, 2016 IAA HBC Total IAA HBC Total Revenue $288.5 $10.2 $298.7 $251.4 $13.4 $264.8 Cost of Services** 172.6 8.9 181.5 154.9 12.4 167.3 Gross Profit $115.9 $1.3 $117.2 $96.5 $1.0 $97.5 % of Revenue 40.2% 12.7% 39.2% 38.4% 7.5% 36.8% * For a more complete explanation of these changes, see the MD&A in the company's supplemental financial information and Form 10-Q, both for the three months ended June 30, 2017. ** Exclusive of depreciation and amortization 11