Q3 2017 & Year-to-Date Earnings Slides October 31, 2017 - PowerPoint PPT Presentation

Q3 2017 & Year-to-Date Earnings Slides October 31, 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

Q3 2017 Highlights Revenues Highlights Fundamentals • Revenue growth +7% • Diversified and complementary 843.0 789.6 • Adjusted EBITDA +13% business services model 78.2 71.2 287.7 • Operating Adjusted EPS +14% • Controlling SG&A 261.0 KAR • Adjusted EBITDA margin grew to 477.1 457.4 25% from 23% in prior year 2016 2017 • Adjusted EBITDA +9% • Off-lease supply driving volume • Strong volume growth +8% and physical auction fee growth AFC 9% • Physical volumes -1% • Commercial vehicle mix at ADESA IAA • Physical auction RPU +$23 physical auctions increased to ADESA 34% 57% • Incremental operating profit 90% 53% from 50% in prior year • Revenue +10% • Total Loss 18.8% Q3 2017 AFC • North American volume growth +9% vs.16.8% Q3 2016 (CCC) 9% • North American inv growth +12% • Scrap pricing -4.9% (American IAA ADESA IAA • Adjusted EBITDA +18% 57% 34% Recycler, Q3 2017 vs. Q3 2016) • Miles driven +1.5% (FHWA, YTD through July 2017 vs. 2016) • Adjusted EBITDA +15% • Conservative portfolio AFC 9% • LTU growth -6% management • Provision for credit losses as a • Increasing gross revenue per ADESA IAA 57% AFC 34% percent of managed receivables loan transaction excluding 1.1% provision for credit losses due to higher average loan balances 3

2017 Outlook KAR Auction Services' has updated its previous outlook to reflect the impact of recent acquisitions and a reduction of our effective tax rate. Previous Guidance Current Guidance 2017 Low 2017 High 2017 Low 2017 High Net income $218.4 $232.4 $231.4 $246.0 Add back: Income taxes $128.2 $136.4 $119.2 $126.8 Interest expense, net of interest income $170.0 $170.0 $170.0 $170.0 Depreciation and amortization $278.0 $278.0 $274.0 $274.0 EBITDA $794.6 $816.8 $794.6 $816.8 Total addbacks $30.4 $33.2 $30.4 $33.2 Adjusted EBITDA $825.0 $850.0 $825.0 $850.0 Capital expenditures $145.0 $145.0 $150.0 $150.0 Cash taxes related to calendar year $145.0 $145.0 $140.0 $140.0 Cash interest expense on corporate debt $120.0 $120.0 $120.0 $120.0 Free cash flow $415.0 $440.0 $415.0 $440.0 Effective tax rate 37% 37% 34% 34% Net income per share - diluted $1.57 $1.67 $1.68 $1.78 Operating adjusted net income per share - $2.15 $2.25 $2.30 $2.40 diluted Weighted average diluted shares 139 139 138 138 4

Key Operating Metrics 3Q17 3Q16 ADESA Total Vehicles Sold Growth 8% 17% Physical Vehicles Sold Growth 1 -4% 1% Online Only Vehicles Sold Growth 34% 23% Physical RPU Growth 3% 8% IAA Vehicles Sold Growth (includes HBC) 9% 5% Inventory Growth (excludes HBC) 12% 22% RPU Growth (includes HBC) 1% 1% AFC LTU Growth -6% 5% Provision for Credit Losses 1.1% 1.8% Revenue per loan transaction $174 $148 excluding “Other service revenue” Revenue per loan transaction before $186 $167 provision for credit losses 1 Excluding acquisitions 5

Capital Allocation Framework Share Strategic Capex Dividends Investments Repurchases  Historically ~18% - 20% of  45% - 50% of FCF  Acquisitions that leverage  Tool for managing cash and Adjusted EBITDA, plus  Highlights consistency & wholecar auction cyclical leverage strategic investments strength of free cash flow recovery (indep auctions) Priorities  Technology ~50%  Complementary technology  Physical ~50%  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)  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 $175M Paid Q1 – Q4 2017 $150M Estimated $97M Acquisitions $100M Repurchased  $150M Annual Estimate $0.32 per share paid DRIVIN (Data Analytics) 2.2M shares repurchased    January, April, July, & (April 2017) $320M Authorization  October DAS (Transportation) Remaining  2017 $0.35 per share announced (May 2017)  for January 2018 payment TradeRev (Online Sales)  (October 2017) 6

TradeRev TradeRev is an innovative digital mobile app that facilitates automotive exchanges between used car dealers • Headquartered in Toronto, Ontario and Carmel, Indiana • 200 employees across the U.S., Canada and United Kingdom • Thousands of registered dealers 7

KAR Q3 2017 Highlights ($ in millions, except per share amounts) KAR Q3 2017 Q3 2016 Highlights* Total operating revenues $843.0 $789.6 Gross profit** $363.8 $330.1 $155.7 $146.3 +$3.6M acquired SG&A SG&A EBITDA $207.4 $182.8 Adjusted EBITDA $209.3 $184.8 Net Income $62.8 $54.4 Net income per share - diluted $0.46 $0.39 Operating adjusted net income per share - diluted $0.57 $0.50 Weighted average diluted shares 137.7 139.7 Dividends declared per common share $0.32 $0.29 Effective tax rate 37.5% 36.9% Capital expenditures $34.7 $43.0 * 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 September 30, 2017. ** Exclusive of depreciation and amortization 8

ADESA Q3 2017 Highlights ($ in millions, except RPU) ADESA Q3 2017 Q3 2016 Highlights* Revenue $477.1 $457.4 +$12.9M acquisitions Gross profit** $204.5 $187.9 % of revenue 42.9% 41.1% SG&A $87.6 $80.6 +$3.6M acquired SG&A EBITDA $113.6 $104.3 Adjusted EBITDA $122.0 $111.6 % of revenue 25.6% 24.4% Vehicles sold 788,000 732,000 8% growth; 5% excluding acquisitions Physical vehicles sold 547,000 552,000 -1% growth; -4% excluding acquisitions Online only volume 241,000 180,000 Dealer consignment mix % (physical only) 47% 50% Conversion rate (N.A. physical) 61.3% 57.2% Physical RPU $781 $758 Excludes purchased vehicles Online only RPU $112 $108 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 September 30, 2017. ** Exclusive of depreciation and amortization 9

Used Vehicle Value Indices YoY Index Change Age 1Q17 2Q17 3Q17 YTD17 Industry All +4.1% +3.7% +1.9% +3.2% NADA 0-8 yrs -7.0% -7.3% -5.7% -6.7% Black Book 2-6 yrs -5.9% -5.1% -3.5% -4.8% RVI 2-5 yrs -6.1% -5.6% -2.7% -4.5%  Increased industry (commercial) volumes are driving average industry transaction wholesale prices higher (ADESA)  Revenue per unit sold has increased as a result of increased commercial mix (ADESA)  Declining used car values increase likelihood of total losses (IAA) 10

IAA Q3 2017 Highlights ($ in millions) IAA Q3 2017 Q3 2016 Highlights* Revenue $287.7 $261.0 +9% volume Gross profit** $102.9 $92.5 % of revenue 35.8% 35.4% SG&A $26.5 $26.7 EBITDA $76.5 $65.8 Adjusted EBITDA $77.8 $66.2 % of revenue 27.0% 25.4% Vehicles sold 562,000 516,000 Inventory growth (N.A.) 12% 22% +3% excluding catastrophe vehicles % Purchased contract vehiclces 5% 7% * 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 September 30, 2017. ** Exclusive of depreciation and amortization 11

IAA Q3 2017 Gross Profit ($ in millions) Three Months Ended Three Months Ended September 30, 2017 September 30, 2016 IAA HBC Total IAA HBC Total Revenue $280.4 $7.3 $287.7 $248.7 $12.3 $261.0 Cost of Services** 178.5 6.3 184.8 157.7 10.8 168.5 Gross Profit** $101.9 $1.0 $102.9 $91.0 $1.5 $92.5 % of Revenue 36.3% 13.7% 35.8% 36.6% 12.2% 35.4% * 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 September 30, 2017. ** Exclusive of depreciation and amortization 12