10-Q 1 iaa-20221002.htm 10-Q iaa-20221002
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 2, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-38580
iaa-20221002_g1.jpg
IAA, Inc.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
83-1030538
(I.R.S. Employer Identification No.)
Two Westbrook Corporate Center, Suite 500, Westchester, Illinois, 60154
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (708) 492-7000 
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 shareIAANew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes     No 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes     No 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer 
Accelerated filer 
Non-accelerated filer 
Smaller reporting company 
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes     No 
As of November 2, 2022, 133,764,633 shares of the registrant's common stock, par value $0.01 per share, were outstanding.


IAA, Inc.
Table of Contents
2

STATEMENT REGARDING FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains 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 in this report on Form 10-Q that are not historical facts may be forward-looking statements. Words such as "should," "may," "will," "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" and similar expressions identify forward- looking statements. Such statements include statements regarding our pending merger with Ritchie Bros. Auctioneers Incorporated (“Ritchie Bros”); the impact of macroeconomic conditions on our business; our future growth; expectations regarding vehicle volume sales, results of operations and capital expenditures; and our continued investment in information technology. 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. Risks and uncertainties related to our pending merger with Ritchie Bros. that may cause actual results to differ materially include, but are not limited to: the impact the announcement and pendency of the merger may have on our business, including potential adverse effects on partner and customer relationships and, which could affect our results of operations and financial condition; the extent to which various closing conditions, including regulatory approvals and approvals by our stockholders, are satisfied; the risk that failure to complete the merger, or a delay in the completion of the merger, could negatively impact our business, results of operations, financial condition and stock price; the uncertainty of the ultimate value our stockholders will receive in connection with the merger; the extent to which various interim operating covenants, with which we will be required to comply while the merger remains pending, constrains our business operations and diverts management’s focus from our ongoing business; the possibility of adverse impacts on our ability to retain and hire key personnel during the pendency of the merger; the extent to which potential litigation filed against us or Ritchie Bros. could prevent or delay the completion of the merger or result in the payment of damages following the completion of the merger; the extent to which provisions in the merger agreement limit our ability to pursue alternatives to the merger or discourage a potential competing acquirer of us, or result in any competing proposal being at a lower price than it might otherwise be; and after the merger, Richie Bros. may fail to realize the projected benefits and cost savings of the merger, which could adversely affect the value of Richie Bros. stock price. Additional risks and uncertainties that may cause actual results to differ materially include, but are not limited to: the impact of macroeconomic factors, including high fuel prices and rising inflation, on our revenues, gross profit and operating results; the loss of one or more significant vehicle suppliers or a reduction in significant volume from such suppliers; our ability to meet or exceed customers’ demand and expectations; significant current competition and the introduction of new competitors or other disruptive entrants in our industry; the risk that our facilities lack the capacity to accept additional vehicles and our ability to obtain land or renew/enter into new leases at commercially reasonable rates; our ability to effectively maintain or update information and technology systems; our ability to implement and maintain measures to protect against cyberattacks and comply with applicable privacy and data security requirements; our ability to successfully implement our business strategies or realize expected cost savings and revenue enhancements, including from our margin expansion plan; business development activities, including acquisitions and the integration of acquired businesses, and the risks that the anticipated benefits of any acquisitions may not be fully realized or take longer to realize than expected; our expansion into markets outside the U.S. and the operational, competitive and regulatory risks facing our non-U.S. based operations; our reliance on subhaulers and trucking fleet operations; changes in used-vehicle prices and the volume of damaged and total loss vehicles we purchase; economic conditions, including fuel prices, commodity prices, foreign exchange rates and interest rate fluctuations; trends in new- and used-vehicle sales and incentives; uncertainties regarding the impact of possible future surges of COVID-19 infections or other pandemics, epidemics or infectious disease outbreaks on our business operations or the operations of our customers; and other risks and uncertainties identified in our filings with the Securities and Exchange Commission (the “SEC”), including under Item 1A “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on February 28, 2022 and Item 1A “Risk Factors” in our Quarterly Report on Form 10-Q filed with the SEC on May 10, 2022, as such risk factors may be amended, supplemented or superseded from time to time by other reports we file with the SEC, including subsequent Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. Many of these risk factors are outside of our control, and as such, they involve risks which are not currently known that could cause actual results to differ materially from those discussed or implied herein. The forward-looking statements in this document are made as of the date on which they are made and we do not undertake to update our forward-looking statements.

3


PART I
FINANCIAL INFORMATION
Item 1.    Financial Statements
IAA, Inc.
Consolidated Statements of Income
(In millions, except per share data)
(Unaudited)

Three Months EndedNine Months Ended
October 2, 2022September 26, 2021October 2, 2022September 26, 2021
Revenues:
Service revenues$397.9 $359.0 $1,249.5 $1,101.9 
Vehicle and parts sales99.6 61.7 325.9 187.4 
Total revenues497.5 420.7 1,575.4 1,289.3 
Operating expenses:
Cost of services244.0 198.4 739.0 592.4 
Cost of vehicle and parts sales93.3 54.5 293.0 160.5 
Selling, general and administrative51.0 49.8 152.8 136.9 
Depreciation and amortization25.2 21.2 77.9 61.5 
Total operating expenses413.5 323.9 1,262.7 951.3 
Operating profit84.0 96.8 312.7 338.0 
Interest expense, net13.3 11.1 36.0 46.0 
Other expense (income), net3.0 0.2 8.2 (0.5)
Income before income taxes67.7 85.5 268.5 292.5 
Income taxes17.4 19.8 54.0 71.4 
Net income$50.3 $65.7 $214.5 $221.1 
Net income per share:
Basic$0.38 $0.49 $1.60 $1.64 
Diluted$0.38 $0.49 $1.60 $1.63 

See accompanying condensed notes to consolidated financial statements
4

IAA, Inc.
Consolidated Statements of Comprehensive (Loss) Income
(In millions)
(Unaudited)

Three Months EndedNine Months Ended
October 2, 2022September 26, 2021October 2, 2022September 26, 2021
Net income$50.3 $65.7 $214.5 $221.1 
Other comprehensive (loss) income:
Foreign currency translation (loss) gain(28.3)(4.1)(60.3)1.9 
Comprehensive (loss) income$22.0 $61.6 $154.2 $223.0 
See accompanying condensed notes to consolidated financial statements
5

IAA, Inc.
Consolidated Balance Sheets
(in millions, except per share amounts)
October 2,
2022
January 2,
2022
(Unaudited)(Audited)
Assets
Current assets
Cash and cash equivalents$145.9 $109.4 
Restricted cash 53.0 
Accounts receivable, net of allowances of $9.3 and $9.1
418.0 465.7 
Prepaid consigned vehicle charges60.6 72.2 
Other current assets77.6 69.6 
  Total current assets702.1 769.9 
Non-current assets
Operating lease right-of-use assets, net of accumulated amortization of $311.1 and $238.3
1,146.3 1,024.4 
Property and equipment, net of accumulated depreciation of $558.1 and $531.9
368.0 338.1 
Goodwill748.7 797.5 
Intangible assets, net of accumulated amortization of $590.0 and $549.6
185.1 197.5 
Other assets31.2 26.9 
  Total non-current assets2,479.3 2,384.4 
  Total assets$3,181.4 $3,154.3 
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable$196.3 $163.5 
Short-term right-of-use operating lease liability87.9 94.3 
Accrued employee benefits and compensation expenses27.4 44.2 
Other accrued expenses77.2 124.6 
Current maturities of long-term debt32.5 181.3 
  Total current liabilities421.3 607.9 
Non-current liabilities
Long-term debt1,098.2 1,120.6 
Long-term right-of-use operating lease liability1,104.0 984.8 
Deferred income tax liabilities69.6 74.8 
Other liabilities24.4 32.6 
  Total non-current liabilities2,296.2 2,212.8 
Commitments and contingencies (Note 9)
Stockholders' equity
Preferred stock, $0.01 par value: Authorized: 150.0 shares; issued and outstanding: none
  
Common stock, $0.01 par value: Authorized: 750.0 shares; issued and outstanding: 133.8 shares at October 2, 2022 and 134.2 shares at January 2, 2022
1.3 1.3 
Treasury stock at cost: 1.4 shares at October 2, 2022 and 0.7 shares at January 2, 2022
(61.2)(34.0)
Additional paid-in capital21.9 18.6 
Retained earnings 576.6 362.1 
Accumulated other comprehensive loss(74.7)(14.4)
  Total stockholders' equity463.9 333.6 
Total liabilities and stockholders' equity$3,181.4 $3,154.3 
See accompanying condensed notes to consolidated financial statements
6

IAA, Inc.
Consolidated Statements of Stockholders' Equity
(In millions)
(Unaudited)
Three Months Ended October 2, 2022
Common StockTreasury StockAdditional
Paid-In
Capital
Retained EarningsAccumulated
Other
Comprehensive
Loss
Total Stockholders' Equity

Shares

Amount
 SharesAmount
Balance at July 3, 2022133.7 $1.3 1.4 $(61.2)$18.5 $526.3 $(46.4)$438.5 
Net income— — — — — 50.3 — 50.3 
Foreign currency translation adjustments, net of tax— — — — — — (28.3)(28.3)
Stock-based compensation expense— — — — 3.1 — — 3.1 
Common stock issued for the exercise and vesting of stock-based awards0.1 — — — 0.1 — — 0.1 
Common stock issued for employee stock purchase plan— — — — 0.4 — — 0.4 
Withholding taxes on stock-based awards— — — — (0.2)— — (0.2)
Balance at October 2, 2022133.8 $1.3 1.4 $(61.2)$21.9 $576.6 $(74.7)$463.9 


Three Months Ended September 26, 2021
Common StockAdditional
Paid-In
Capital
Retained EarningsAccumulated
Other
Comprehensive
Loss
Total Stockholders' Equity

Shares

Amount
Balance at June 27, 2021134.8 $1.3 $11.4 $223.1 $(5.6)$230.2 
Net income— — — 65.7 — 65.7 
Foreign currency translation adjustments, net of tax— — — — (4.1)(4.1)
Stock-based compensation expense— — 2.9 — — 2.9 
Common stock issued for the exercise and vesting of stock-based awards— — 0.2 — — 0.2 
Common stock issued for employee stock purchase plan— — 0.4 — — 0.4 
Withholding taxes on stock-based awards— — (0.1)— — (0.1)
Balance at September 26, 2021134.8 $1.3 $14.8 $288.8 $(9.7)$295.2 
See accompanying condensed notes to consolidated financial statements
7

IAA, Inc.
Consolidated Statements of Stockholders' Equity
(In millions)
(Unaudited)
Nine Months Ended October 2, 2022
Common StockTreasury StockAdditional
Paid-In
Capital
Retained EarningsAccumulated
Other
Comprehensive
Loss
Total Stockholders' Equity

Shares

Amount
SharesAmount
Balance at January 2, 2022134.2 $1.3 0.7 $(34.0)$18.6 $362.1 $(14.4)$333.6 
Net income— — — — — 214.5 — 214.5 
Foreign currency translation adjustments, net of tax— — — — — — (60.3)(60.3)
Purchase of treasury stock(0.7)— 0.7 (27.2)— — — (27.2)
Stock-based compensation expense— — — — 8.9 — — 8.9 
Common stock issued for the exercise and vesting of stock-based awards0.4 — — — 0.4 — — 0.4 
Common stock issued for employee stock purchase plan— — — — 1.1 — — 1.1 
Withholding taxes on stock-based awards(0.1)— — — (7.1)— — (7.1)
Balance at October 2, 2022133.8 $1.3 1.4 $(61.2)$21.9 $576.6 $(74.7)$463.9 


Nine Months Ended September 26, 2021
Common StockAdditional
Paid-In
Capital
Retained EarningsAccumulated
Other
Comprehensive
Loss
Total Stockholders' Equity

Shares

Amount
Balance at December 27, 2020134.5 $1.3 $12.0 $67.7 $(11.6)$69.4 
Net income— — — 221.1 — 221.1 
Foreign currency translation adjustments, net of tax— — — — 1.9 1.9 
Stock-based compensation expense— — 8.3 — — 8.3 
Common stock issued for the exercise and vesting of stock-based awards0.4— 0.6 — — 0.6 
Common stock issued for employee stock purchase plan— — 1.2 — — 1.2 
Withholding taxes on stock-based awards(0.1)— (7.3)— — (7.3)
Balance at September 26, 2021134.8 $1.3 $14.8 $288.8 $(9.7)$295.2 
See accompanying condensed notes to consolidated financial statements

8

IAA, Inc.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
Nine Months Ended
October 2, 2022September 26, 2021
Operating activities
Net income$214.5 $221.1 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization77.9 61.5 
Operating lease expense132.0 113.0 
Stock-based compensation8.9 8.3 
Provision for credit losses0.8 0.7 
Loss on extinguishment of debt 10.3 
Amortization of debt issuance costs2.1 2.6 
Deferred income taxes(3.1)6.9 
Change in contingent consideration liabilities4.9  
Other6.9 (0.4)
Changes in operating assets and liabilities:
Operating lease payments(139.4)(107.2)
  Accounts receivable and other assets53.1 (75.0)
  Accounts payable and accrued expenses(43.2)41.6 
Net cash provided by operating activities315.4 283.4 
Investing activities
Acquisition of business, net of cash acquired (4.0)
Purchases of property, equipment and computer software(135.9)(80.0)
Proceeds from the sale of property and equipment38.8 0.4 
Other(2.0)(2.0)
Net cash used by investing activities(99.1)(85.6)
Financing activities
Net increase in book overdrafts47.0  
Proceeds from debt issuance 650.0 
Payments of long-term debt(173.1)(774.0)
Deferred financing costs(0.1)(4.8)
Finance lease payments(8.9)(9.0)
Purchase of treasury stock(27.2) 
  Issuance of common stock under stock plans0.4 0.6 
Proceeds from issuance of employee stock purchase plan shares1.1 1.2 
  Tax withholding payments for vested RSUs(7.1)(7.3)
Payments of contingent consideration(54.7)(1.3)
Net cash used by financing activities(222.6)(144.6)
Effect of exchange rate changes on cash(10.2)0.1 
Net (decrease) increase in cash, cash equivalents and restricted cash(16.5)53.3 
Cash, cash equivalents and restricted cash at beginning of period162.4 232.8 
Cash, cash equivalents and restricted cash at end of period$145.9 $286.1 
Cash paid for interest, net$27.8 $27.1 
Cash paid for taxes, net $61.8 $68.3 
9

See accompanying condensed notes to consolidated financial statements

Period Ended
October 2, 2022January 2, 2022
Reconciliation of cash, cash equivalents and restricted cash reported in balance sheets
Cash and cash equivalents$145.9 $109.4 
Restricted cash 53.0 
Total cash, cash equivalents and restricted cash shown in statements of cash flows145.9 162.4 

See accompanying condensed notes to consolidated financial statements
10

IAA, Inc.
Condensed Notes to Consolidated Financial Statements
(Unaudited)

Note 1—Basis of Presentation and Nature of Operations
Description of Business
IAA, Inc., together with its subsidiaries (collectively referred to herein as “IAA” and "the Company"), is a leading global digital marketplace connecting vehicle buyers and sellers. Leveraging leading-edge technology and focusing on innovation, IAA's unique platform facilitates the marketing and sale of total loss, damaged and low-value vehicles and vehicle parts for a full spectrum of sellers. Headquartered in Westchester, Illinois, the Company has more than 210 facilities throughout the United States, Canada and the United Kingdom. The Company serves a global buyer base and a full spectrum of sellers, including insurance companies, dealerships, fleet lease and rental car companies, and charitable organizations. The Company offers sellers a comprehensive suite of services aimed at maximizing vehicle value, reducing administrative costs, shortening selling cycle time and delivering the highest economic returns. The Company's solutions provide global buyers with the vehicles they need to, among other things, fulfill their vehicle rebuild requirements, replacement part inventory or scrap demand. IAA provides global buyers multiple digital bidding and buying channels, innovative vehicle merchandising, and efficient evaluation services, enhancing the overall purchasing experience.
The Company operates in two reportable segments: United States and International. The Company earns fees for its services from both buyers and sellers of vehicles and parts sold through its channels.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, generally consisting of normal recurring accruals, necessary for a fair statement of our financial results for the periods presented. Financial results for interim periods are not necessarily indicative of results that may be expected for the year as a whole. These unaudited consolidated financial statements and condensed notes thereto are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended January 2, 2022 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 28, 2022.
The Company's fiscal year consists of 52 weeks with every fifth year consisting of 53 weeks and ending either the last Sunday in December or the first Sunday in January. Fiscal 2022 contains 52 weeks and fiscal 2021 contained 53 weeks.
Use of Estimates
The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP. The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates based in part on assumptions about current, and for some estimates, future economic and market conditions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. Although the current estimates contemplate current conditions and expected future changes, as appropriate, it is reasonably possible that future conditions could differ from these estimates, which could materially affect the Company's results of operations and financial position.
Goodwill

Goodwill represents the excess of cost over fair value of identifiable net assets of businesses acquired. Goodwill is tested for impairment annually in the fourth quarter, or more frequently as impairment indicators arise.

During the third quarter of fiscal 2022, the Company updated its forecasts which resulted in a decline in the International reporting unit's operating results and projections. The Company identified this as a triggering event and determined that the carrying amount of the International reporting unit's goodwill should be evaluated for impairment at October 2, 2022. The impairment test indicated that the fair value of the International reporting unit exceeded its carrying value by approximately 40% and therefore no goodwill impairment was recorded. The goodwill allocated to the International reporting unit was $250.1 million as of October 2, 2022.

11



Recent Accounting Pronouncements
The Company does not believe that any recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material impact on its unaudited consolidated financial statements or disclosures.
Note 2—Revenue Recognition
The Company generates its revenues from contracts with customers. The Company recognizes revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation. The Company then determines how the goods or services are transferred to the customer in order to determine the timing of revenue recognition.

The Company has disaggregated revenue at the product level by Services and Vehicle and Parts Sales, as well as geographically by the United States and International. See Note 10 - Segment Information for disaggregated revenue.

Service Revenues

Service revenues include auction and auction related fees for all vehicles sold by the Company. The Company does not take title to vehicles that are consigned to the Company by the seller and records auction fees on those vehicles on a net basis because it has no influence on the vehicle auction selling price agreed to by the seller and the buyer at the auction. The buyer fees are typically based on a tiered structure with fees increasing with the sale price of the vehicle, while the seller fees are typically fixed dollar or a fixed percent of the selling price at auction. The Company generally enforces its rights to payment for seller transactions through net settlement provisions following the sale of a vehicle. Greater than 90% of the Company’s revenue is generated at the time of auction as a result of the satisfaction of the seller and buyer performance obligations as described below.

The Company’s contracts with sellers are short-term in nature. The performance obligation contained within the Company's auction contracts for sellers is to facilitate the remarketing of salvage vehicles, including the inbound tow, processing, storage, titling, enhancing and sale at auction. These services are related to facilitating the sale of vehicles and are not distinct within the context of the contract. Accordingly, revenue for these services is recognized when the single performance obligation is satisfied at the point in time when the vehicle is sold through the auction process. Related costs are deferred and recognized at the time of sale.

The Company's contracts with buyers are short-term in nature and are generally established via purchase at auction, subject to standard terms and conditions. These contracts contain a single performance obligation, which is satisfied at the point in time when the vehicle is purchased through the auction process. Buyers also pay a fixed registration fee to access the auctions for a one- or two-year term in addition to the fees paid upon purchase of a vehicle. The performance obligation to provide access to the auctions, associated with the registration, is satisfied ratably over the one- or two-year contractual term of the buyer agreement. Accordingly, registration fee revenue is recognized ratably over the contract term. The Company also offers other services to buyers such as transportation, storage, vehicle condition reporting, and other ancillary services. Revenue from such services is recognized in the period in which such services are provided.

Vehicle and Parts Sales

Vehicle and parts sales represent the selling price of vehicles, vehicle parts and scrap associated with vehicles purchased by the Company. The Company's performance obligation is the completion of the sale process. Revenue is recognized at the point in time when control of the vehicle, vehicle parts or scrap is transferred to the customer, which generally occurs upon delivery to the carrier or the customer. Since the Company acts as principal in the sale process, the sales price for the vehicle or vehicle parts and scrap is recorded as revenue on a gross basis. Buyer fees associated with these sales are recorded in service revenues in the Company's consolidated statements of income.

12


There were no material contract assets, contract liabilities or deferred contract costs recorded on the consolidated balance sheets as of October 2, 2022 and January 2, 2022. For each of the Company's primary revenue streams, cash flows are consistent with the timing of revenue recognition.

For the three and nine months ended October 2, 2022 and September 26, 2021, revenue recognized from performance obligations related to prior periods was not material. Revenue expected to be recognized in any future period related to remaining performance obligations is not material.
Note 3—Stock-Based Compensation Plans

2019 Omnibus Stock and Incentive Plan ("2019 OSIP")

On June 27, 2019, the Company's board of directors approved the 2019 OSIP. The purpose of the 2019 OSIP is to provide an additional incentive to selected management employees, directors, independent contractors, and consultants of the Company whose contributions are essential to the growth and success of the Company, in order to strengthen the commitment of such persons, motivate such persons to faithfully and diligently perform their responsibilities and attract and retain competent and dedicated persons whose efforts will result in the long-term growth and profitability for the Company.

Benefits granted under the 2019 OSIP may be granted in any one or a combination of (i) options to purchase IAA common stock; (ii) IAA share appreciation rights (“SARs”); (iii) restricted shares of IAA common stock; (iv) other IAA stock-based awards; or (v) other cash-based awards. Options, restricted shares, and other share-based awards or cash awards may constitute performance-based awards. The granting or vesting of any performance-based awards will be based on achievement of performance objectives that are based on one or more financial or business criteria, with respect to one or more business units of IAA and its subsidiaries as a whole. Such financial or business criteria may be adjusted to account for unusual or infrequently occurring items or changes in accounting.

Participants include any employee, director, independent contractor or consultant of IAA or any affiliate of IAA selected to receive awards under the 2019 OSIP, and, upon his or her death, his or her successors, heirs, executors and administrators, as the case may be. As of October 2, 2022, the number of common shares reserved and available for awards under the 2019 OSIP is 4,263,218, subject to adjustment made in accordance with the 2019 OSIP. Upon the occurrence of certain corporate events that affect the common stock, including but not limited to any extraordinary cash dividend, stock split, reorganization or other relevant change in capitalization, appropriate adjustments may be made with respect to the number of shares available for grants under the 2019 OSIP, the number of shares covered by outstanding awards and the maximum number of shares that may be granted to any participant.

The aggregate awards granted during any calendar year to any single individual will not exceed: (i) 1,000,000 shares subject to options or SARs, (ii) 500,000 shares subject to restricted shares or other share-based awards and (iii) $5,000,000 with respect to any cash-based award. A non-employee director of IAA may not be granted awards under the 2019 OSIP during any calendar year that, when aggregated with such non-employee director’s cash fees received with respect to such calendar year, exceed $750,000 in total value.

The Company recorded stock-based compensation expense of $3.1 million and $2.9 million during the three months ended October 2, 2022 and September 26, 2021, respectively, and $8.9 million and $8.3 million during the nine months ended October 2, 2022 and September 26, 2021, respectively.

The following table summarizes the performance-based restricted stock units (“PRSUs”) and time-based restricted stock units (“RSUs”) granted by the Company to certain employees and restricted stock awards (“RSAs”) granted by the Company to non-employee directors in accordance with the 2019 OSIP during the three and nine months ended October 2, 2022:
Three Months Ended October 2, 2022Nine Months Ended October 2, 2022
Number of Awards GrantedWeighted Average Grant Date Fair ValueNumber of Awards GrantedWeighted Average Grant Date Fair Value
PRSUs - Performance Condition1,628 $36.82 117,932 $38.34 
PRSUs - Market Condition233 $36.82 33,058 $41.88 
RSUs4,298 $36.82 236,019 $38.27 
RSAs $ 35,282 $35.00 
13



PRSUs - Performance Condition: The PRSUs granted to certain executive officers and certain other employees of the Company vest at the end of a three-year performance period if and to the extent that the Company's three year average return on invested capital achieves certain specified goals.

PRSUs - Market Condition: The PRSUs granted to certain executive officers and certain other employees vest based upon the Company's total stockholder return relative to the performance of a peer group over a three year performance period ending December 31, 2024. The grant date fair value of $42.18 per share underlying each PRSU award was calculated using a Monte Carlo simulation. The significant assumptions used to estimate the fair value were: grant date stock price of $38.37; term of 2.76 years; risk-free interest rate of 2.49%; expected volatility of IAA's common stock of 45.48% and the average expected volatility of the common stock of the peer group of 45.18%; correlation coefficients of IAA of 0.60 and the peer group's average of 0.72; and a dividend yield of 0.00%.

RSUs - The RSUs granted to certain executive officers and certain other employees of the Company are contingent upon continued employment and vest in three equal annual installments.

RSAs - The RSAs granted to non-employee directors vest in one installment on the earlier of the one-year anniversary date of the grant date or the day preceding the Company's next annual meeting of stockholders following the date of grant.
Note 4—Net Income Per Share
Basic net income per share was calculated by dividing net income by the weighted average number of outstanding common shares for the period. Diluted net income per share was calculated consistent with basic net income per share including the effect of dilutive unissued common shares related to the Company's stock-based employee compensation program. The effect of stock options, RSUs and RSAs on net income per share-diluted is determined through the application of the treasury stock method, whereby net proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company's common stock at the average market price during the period.
The following table sets forth the computation of net income per share (in millions except per share amounts):
Three Months EndedNine Months Ended
October 2, 2022September 26, 2021October 2, 2022September 26, 2021
Net income$50.3 $65.7 $214.5 $221.1 
Weighted average common shares outstanding133.7 134.8 134.0 134.8 
Effect of dilutive stock awards0.2 0.5 0.1 0.5 
Weighted average common shares outstanding and potential common shares133.9 135.3 134.1 135.3 
Net income per share
Basic$0.38 $0.49 $1.60 $1.64 
Diluted$0.38 $0.49 $1.60 $1.63 

The weighted number of shares outstanding used in the calculation of diluted earnings per share does not include the effect of the following anti-dilutive securities and awards subject to performance and market conditions which have not been fully satisfied at the end of the respective reporting periods (in millions):
Three Months EndedNine Months Ended
October 2, 2022September 26, 2021October 2, 2022September 26, 2021
Anti-dilutive awards0.3 0.1 0.3 0.1 
Awards subject to conditions not fully satisfied0.3 0.2 0.3 0.2 
Total0.6 0.3 0.6 0.3 



14

Share Repurchase Program
On August 2, 2021, the Company’s Board of Directors authorized a share repurchase program under which the Company can repurchase up to $400.0 million (exclusive of fees and commissions) of shares of its common stock (the “Repurchase Program”). The Repurchase Program expires on August 3, 2026. The shares under the Repurchase Program may be repurchased through open market, privately negotiated transactions, accelerated share repurchase transactions or other means, including under plans complying with the provisions of Rule 10b5-1 of the Securities Exchange Act of 1934. The timing and amount of common stock to be repurchased under this Repurchase Program will be subject to the discretion of the Company based upon market conditions and other opportunities the Company may have to deploy capital. The Repurchase Program does not obligate the Company to acquire any specific number of shares of its common stock, and the Repurchase Program may be suspended or discontinued at any time.
Pursuant to the Repurchase Program, the Company did not repurchase any shares of its common stock during the three months ended October 2, 2022. During the nine months ended October 2, 2022, the Company repurchased 751,285 shares of its common stock for an aggregate gross purchase price of approximately $27.2 million. As of October 2, 2022, approximately $338.8 million remained available under the Repurchase Program.
Note 5—Debt
Long-term debt consisted of the following (in millions):
October 2, 2022January 2, 2022
Term Loan $641.9 $650.0 
Notes 500.0 500.0 
Revolving Credit Facility 165.0 
Total debt1,141.9 1,315.0 
Unamortized debt issuance costs(11.2)(13.1)
Current maturities of long-term debt(32.5)(181.3)
Long-term debt$1,098.2 $1,120.6 

Credit Facility

On June 28, 2019, the Company entered into a credit agreement (the “2019 Credit Agreement”), which provided for, among other things: (i) a seven-year senior secured term loan in an aggregate principal amount of $800 million (the "2019 Term Loan") and (ii) a five-year revolving credit facility in an aggregate principal amount of $225 million (the "2019 Revolving Credit Facility"). On May 1, 2020, the Company entered into an amendment to its 2019 Credit Agreement to increase the aggregate principal amount able to be borrowed under the 2019 Revolving Credit Facility by $136.0 million to $361.0 million. The 2019 Credit Agreement was terminated on April 30, 2021.

During the nine months ended September 26, 2021, the Company recognized a loss of $10.3 million on early extinguishment of the 2019 Credit Agreement, which is included within the interest expense, net line of the consolidated statements of income.

On April 30, 2021, the Company entered into a new credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders from time to time party thereto (the “Credit Agreement”). The Credit Agreement provides for, among other things: (i) a senior secured term loan in an aggregate principal amount of $650 million (the "Term Loan") and (ii) a senior secured revolving credit facility with revolving commitments in an aggregate principal amount of $525 million (the "Revolving Credit Facility" and, together with the Term Loan, the "Credit Facility"). Borrowing availability under the Revolving Credit Facility is subject to no default or event of default under the Credit Agreement having occurred at the time of borrowing. The proceeds of the Credit Facility were used, along with cash on hand, to repay in full all outstanding borrowings under the Company’s 2019 Term Loan under its 2019 Credit Agreement. Future borrowings under the Revolving Credit Facility are expected to be used for the Company's ongoing working capital needs and general corporate purposes. The Credit Facility matures on April 30, 2026.

Subsequent to November 2, 2021, borrowings under the Credit Agreement bear interest at (A) at the Company’s option, the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month LIBOR plus 1.00% (the “Base Rate”) for base rate borrowings or (B) LIBOR, in each case plus an applicable margin ranging from 0.375% to 1.25% with respect to Base Rate borrowings and 1.375% to 2.25% with respect to eurodollar borrowings, in each case, depending on the Company’s Consolidated Net Leverage Ratio (as defined in the Credit Agreement). The Credit Agreement contains additional procedures for transition to a benchmark rate other than one-month LIBOR for eurodollar borrowings. The unused amount of the Revolving Credit Facility is subject to a commitment fee ranging from 0.175% and 0.30% depending on the Company’s
15


Consolidated Net Leverage Ratio. As of October 2, 2022, the interest rate per annum for the Term Loan was 4.49%.

The Credit Agreement requires the Company to comply with certain financial covenants, including a requirement that the Company’s Consolidated Net Leverage Ratio not exceed 4:00 to 1:00 as of the last day of any fiscal quarter, subject to certain exceptions for qualifying material acquisitions. Consolidated Net Leverage Ratio is defined as the ratio of Consolidated Total Debt (as defined in the Credit Agreement) to Consolidated EBITDA (as defined in the Credit Agreement). The Credit Agreement also contains other affirmative and negative covenants that are usual and customary for a senior secured credit agreement. The negative covenants include limitations on (i) the disposition of assets, (ii) mergers and acquisitions, (iii) restricted payments, including payment of future dividends, distributions and stock repurchases by the Company, (iv) the incurrence of additional indebtedness, (v) permitted acquisitions and investments and (vi) the incurrence of additional liens on property. The Credit Agreement includes customary events of default.

Notes

On June 6, 2019, the Company issued $500.0 million aggregate principal amount of 5.500% Senior Notes due 2027 (the “Notes”). The Notes mature on June 15, 2027. Interest on the Notes is due on June 15 and December 15 of each year and accrues at a rate of 5.500% per annum.

The Notes contain covenants which, among other things, limit the Company and its restricted subsidiaries’ ability to pay dividends on or make other distributions in respect of equity interests or make other restricted payments, make certain investments, incur liens on certain assets to secure debt, sell certain assets, consummate certain mergers or consolidations or sell all or substantially all assets, or designate subsidiaries as unrestricted.

Other

At October 2, 2022 and January 2, 2022, the Company had outstanding letters of credit in the aggregate amount of $5.5 million and $5.6 million, respectively, which reduced the amount available for borrowings under the Revolving Credit Facility.

Fair Value of Debt
The estimated fair value of the Company's Term Loan as of October 2, 2022 and January 2, 2022 and the Revolving Facility as of January 2, 2022 approximated book value as the interest rate is variable in nature.
The estimated fair value of the Company's Notes as of October 2, 2022 and January 2, 2022 was $456.3 million and $517.5 million, respectively. These estimates were based on broker-dealer quotes as of the respective dates and are considered Level 2 fair value measurements in the fair value hierarchy.
Note 6—Accounts Receivable

Components of accounts receivable, net were as follows (in millions):
October 2, 2022January 2, 2022
Advanced charges receivable$286.0 $322.7 
Trade accounts receivable130.5 139.8 
Other receivable10.8 12.3 
Accounts receivable, gross427.3 474.8 
Less: Allowance for credit losses(9.3)(9.1)
Accounts receivable, net$418.0 $465.7 
Note 7—Leases
The Company leases property, software, automobiles, trucks and trailers, pursuant to operating lease agreements. The Company also leases furniture, fixtures and equipment under finance leases. The leases have varying remaining lease terms with leases expiring through 2092, some of which include options to extend the leases.
16


The components of leases expense were as follows (in millions):
Three Months EndedNine Months Ended
October 2, 2022September 26, 2021October 2, 2022September 26, 2021
Operating lease cost$45.2 $39.7 $132.0 $113.0 
Finance lease cost:
Amortization of right-of-use assets$2.8 $3.0 $8.7 $9.2 
Interest on lease liabilities0.2 0.2 0.6 0.6 
Total finance lease cost$3.0 $3.2 $9.3 $9.8 

Supplemental cash flow information related to leases was as follows (in millions):
Nine Months Ended
October 2, 2022September 26, 2021
Cash paid for amounts included in the measurement of lease liabilities:  
Operating cash flows related to operating leases$139.4 $107.2 
Operating cash flows related to finance leases$0.6 $0.6 
Financing cash flows related to finance leases$8.9 $9.0 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$194.6 $194.2 
Finance leases$0.2 $7.6 
Note 8—Acquisition
SYNETIQ Ltd.
On October 26, 2021, IAA, through its indirect wholly owned subsidiary, IAA International Holdings Limited, acquired 100% of SYNETIQ Ltd. ("SYNETIQ"), a leading integrated salvage and vehicle dismantling company in the United Kingdom, to expand its footprint in the United Kingdom. The cash purchase price for SYNETIQ, including working capital and other adjustments, was $314.2 million (£228.2 million), of which $260.2 million (£189.0 million) was paid out in the fourth quarter of fiscal 2021. The remaining payment of $54.0 million (£39.2 million), which was held in an escrow account and presented as Restricted cash on the consolidated balance sheets as of January 2, 2022, was paid out during the first quarter of fiscal 2022 upon receipt of required approvals from the U.K. Competition and Markets Authority. The Company funded the acquisition with cash on hand and $100.0 million in borrowings under its Revolving Credit Facility.

The Company finalized the purchase price allocation for the SYNETIQ acquisition during the three months ended July 3, 2022. The following table summarizes the fair value of consideration transferred and the fair values of assets acquired and liabilities assumed as of the date of acquisition (in millions):
October 26, 2021
Cash$260.2 
Fair value of contingent consideration*51.4 
Total fair value of consideration transferred$311.6 
*Recorded in Other accrued expenses line within the consolidated balance sheets as of January 2, 2022.

17


October 26, 2021
Cash$7.1 
Accounts receivable4.7 
Inventory17.4 
ROU assets39.0 
Property and equipment12.5 
Goodwill256.4 
Intangible assets41.3 
Other assets1.4 
Accounts payable and other accrued expenses(18.9)
Operating lease liabilities(39.0)
Other long-term liabilities(10.3)
Net assets acquired$311.6 

The intangible assets acquired related to developed technology (useful life 4 years) and tradename (useful life 5 years), which will be amortized over a weighted average-useful life of approximately 4 years. The relief from royalty method was used to value the developed technology and tradename. This method requires forward looking estimates to determine fair value, including among other assumptions, forecasted revenue growth, obsolescence, and estimated discount and royalty rates. The goodwill recognized from this acquisition reflects expected synergies resulting from adding SYNETIQ's products and processes to the Company's products and processes. The acquired goodwill has been allocated to the International segment and is deductible for tax purposes.
The following unaudited pro forma financial information summarizes the combined results of operations for the Company and SYNETIQ, as though the companies were combined as of the beginning of fiscal 2021 (in millions):
Three Months Ended September 26, 2021Nine Months Ended September 26, 2021
Net revenue$471.7 $1,446.3 
Net income67.2 222.0

These pro forma results are based on estimates and assumptions, which the Company believes are reasonable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the Company’s fiscal 2021, and is not necessarily indicative of the Company's consolidated results of operations in future periods.

The pro forma results include adjustments related to purchase accounting, primarily amortization of intangible assets, and interest expense related to the borrowings under the Company's Revolving Credit Facility in connection with the acquisition of SYNETIQ.
Note 9—Commitments and Contingencies
The Company is and may from time to time become involved in litigation and disputes arising in the ordinary course of business, such as actions related to injuries; property damage; handling, storage or disposal of vehicles; environmental laws and regulations; and other litigation incidental to the business. Management considers the likelihood of loss or the incurrence of a liability, as well as the ability to reasonably estimate the amount of loss, in determining loss contingencies. The Company accrues an estimated loss contingency when it is probable that a liability has been incurred and the amount of loss (or range of possible losses) can be reasonably estimated. Management regularly evaluates current information available to determine whether accrual amounts should be adjusted. Accruals for contingencies, including litigation and environmental matters, are included in “Other accrued expenses” at undiscounted amounts and exclude claims for recoveries from insurance or other third parties. These accruals are adjusted periodically as assessment and remediation efforts progress, or as additional technical or legal information becomes available. If the amount of an actual loss is greater than the amount accrued, this could have an adverse impact on the Company's operating results in that period. Such matters are generally not, in the opinion of management, likely to have a material adverse effect on the Company's financial condition, results of operations or cash flows. Legal fees are expensed as incurred.
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Pyrite Canyon

In the fourth quarter of fiscal 2020, the Company’s wholly owned subsidiary, Insurance Auto Auctions, Inc. (hereafter “IAAI”), received a letter from the California Department of Toxic Substances Control (the “DTSC”) styled “Draft Imminent and Substantial Endangerment Determination and Consent Order” (the “Draft Order”) in which the DTSC states that IAAI, along with nine other respondents named in the Draft Order, has been named as a potential responsible party for the release of hazardous substances at the former Universal Propulsion Company site (the “Former UPCo Site”). The Draft Order states that the Former UPCo Site has been identified as contributing to the Pyrite Canyon Plume by the U.S. Environmental Protection Agency and prescribes initial steps and a schedule for responding to the release of hazardous substances at the Former UPCo Site. The Draft Order further states that IAAI has been identified as a potential responsible party because it is either the company or the successor of a company responsible for a release of hazardous substances at the Former UPCo Site. The Draft Order is currently unsigned and has not been issued by DTSC.

On January 26, 2021, DTSC hosted an informational teleconference for the respondents named in the Draft Order. At the meeting, DTSC described the background and current status at the Former UPCo Site, but did not provide any information related to possible response actions, associated cost estimates or financial liability determinations. DTSC directed the Respondents to provide comments upon the Draft Order by March 1, 2021. DTSC subsequently extended the response deadline to April 30, 2021 pursuant to respondent requests. On March 30, 2021, IAAI provided DTSC with its response to the Draft Order.

The Company does not believe that IAAI should bear any financial liability for actions taken pursuant to the Draft Order because it does not believe that IAAI is the company or a successor of a company responsible for a release of hazardous substances at the Former UPCo Site. IAAI currently leases 50 gross acres of the Former UPCo Site, having commenced a sublease at the location on or about March 1, 2016. At all times since, IAAI has used the site for vehicle storage and
general operations. The most significant contaminants at the Former UPCo Site, and the Pyrite Canyon Plume are perchlorate, NDMA and PCBs. These contaminants pre-date IAAI’s occupancy and operations at the Former UPCo Site and are inconsistent with any chemicals stored at the location or used in its operations.

IAAI has tendered this matter to its landlord pursuant to indemnity provisions in its sublease, and to its environmental insurance carrier. IAAI's landlord has responded by tendering its own indemnification demand to IAAI, and IAAI has notified its environmental insurance carrier of the same. At this time, the Company does not have adequate information to determine IAAI’s liability, if any, for contamination at the Former UPCo Site.
Lower Duwamish Waterway
Since June 2004, IAAI operated a branch on property it leased in Tukwila, Washington just south of Seattle. The property is located adjacent to a Superfund site known as the Lower Duwamish Waterway Superfund Site ("LDW Site"). The LDW Site had been designated a Superfund site in 2001, three years prior to IAAI’s tenancy. On March 25, 2008, the United States Environmental Protection Agency (the "EPA") issued IAAI a General Notice of Potential Liability, or "General Notice," pursuant to Section 107(a), and a Request for Information pursuant to Section 104(e) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") related to the LDW Site. On November 7, 2012, the EPA issued IAAI a Second General Notice of Potential Liability (the "Second General Notice") for the LDW Site. The EPA's website indicates that the EPA has issued general notice letters to approximately 116 entities, and has issued Section 104(e) Requests to more than 300 entities related to the LDW Site. In the General Notice and Second General Notice, the EPA informed IAAI that the EPA believed IAAI may be a Potentially Responsible Party ("PRP"), but the EPA did not specify the factual basis for this assertion. At this time, the EPA still has not specified the factual basis for this assertion and has not demanded that IAAI pay any funds or take any action apart from responding to the Section 104(e) Information Request. Four PRPs, The Boeing Company, the City of Seattle, the Port of Seattle and King County - the Lower Duwamish Waterway Group ("LDWG"), have funded a remedial investigation and feasibility study related to the cleanup of the LDW Site. In December 2014, the EPA issued a Record of Decision ("ROD"), detailing the final cleanup plan for the LDW Site. The ROD estimated the cost of cleanup to be $342 million, with the plan involving dredging of 105 acres, capping 24 acres, and enhanced natural recovery of 48 acres. The estimated length of the cleanup was 17 years, including 7 years of active remediation, and 10 years of monitored natural recovery. IAAI is aware that certain authorities may bring natural resource damage claims against PRPs. On February 11, 2016, IAAI received a Notice of Intent letter from the United States National Oceanic and Atmospheric Administration informing IAAI that the Elliott Bay Trustee Council were beginning to conduct an injury assessment for natural resource damages in the LDW. The Notice of Intent indicated that the decision of the trustees to proceed with this natural resources injury assessment followed a pre-assessment screen performed by the trustees. Shortly thereafter, in a letter dated August 16, 2016, EPA issued a status update to the PRPs at the LDW Site. The letter stated that EPA expected the bulk of the pre-remedial design work currently being performed by the LDWG to be completed by the beginning of 2018, with the Remedial Design/Remedial
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Action ("RD/RA") phase to follow. The EPA previously anticipated that the pre-design work would be completed sometime during 2018, and the Company is not aware of any further information regarding that schedule. Accordingly, the Company is unable to predict when RD/RA negotiations with all PRPs might begin.
In addition, the Washington State Department of Ecology ("Ecology") is working with the EPA in relation to the LDW Site, primarily to investigate and address sources of potential contamination contributing to the LDW Site. In 2007, IAA installed a stormwater capture and filtration system designed to treat sources of potential contamination before discharge to the LDW Site. The immediate-past property owner, the former property owner and IAA have had discussions with Ecology concerning possible source control measures, including an investigation of the water and soils entering the stormwater system, an analysis of the source of contamination identified within the system, if any, and possible repairs and upgrades to the stormwater system if required. As of May 31, 2020, IAAI ceased all operations at the site and terminated its remaining lease of the property in June 2020. Accordingly, IAAI submitted a Notice of Termination of its stormwater permit to Ecology, discontinuing IAA’s ongoing obligations around the stormwater system maintenance and any additional source control measures.

At this time, the Company has not received any further notices from the EPA and still does not have adequate information to determine IAAI's liability, if any, for contamination at this site, or to estimate the Company's loss as a result of this potential liability which might have been incurred during IAAI’s occupancy.
Note 10—Segment Information
The Company has two operating segments: United States and International. The Company's two operating segments represent its two reportable segments. These segments represent geographic areas and reflect how the chief operating decision maker allocates resources and measures results.

Intercompany (income) expense related to charges for services provided by the United States segment to the International segment are based on the benefits received. Such services are related to technology and other business support services.

Financial information regarding the Company's reportable segments is set forth below as of and for the three and nine months ended October 2, 2022 (in millions):
Three Months Ended October 2, 2022Nine Months Ended October 2, 2022
United StatesInternationalTotalUnited StatesInternationalTotal
Revenues:
Service revenues$362.8 $35.1 $397.9 $1,140.3 $109.2 $1,249.5 
Vehicle and parts sales43.1 56.5 99.6 122.9 203.0 325.9 
Total revenues405.9 91.6 497.5 1,263.2 312.2 1,575.4 
Operating expenses:
Cost of services215.1 28.9 244.0 648.6 90.4 739.0 
Cost of vehicle and parts sales41.3 52.0 93.3 117.8 175.2 293.0 
Selling, general and administrative45.8 5.2 51.0 135.3 17.5 152.8 
Depreciation and amortization20.3 4.9 25.2 62.5 15.4 77.9 
Total operating expenses322.5 91.0 413.5 964.2 298.5 1,262.7 
Operating profit83.4 0.6 84.0 299.0 13.7 312.7 
Interest expense (income), net13.6 (0.3)13.3 36.3 (0.3)36.0 
Other expense (income), net3.4 (0.4)3.0 8.1 0.1 8.2 
Intercompany (income) expense(1.8)1.8  (5.8)5.8  
Income (loss) before income taxes68.2 (0.5)67.7 260.4 8.1 268.5 
Income taxes