Insurance Auto Auctions Unveils Q3 Report

Illinois-based Insurance Auto Auctions Inc., a provider of automotive salvage and claims processing services in the United States, reported higher net earnings for the quarter ended Sept. 25, 2004.

The company recorded net earnings of $3.4 million, or $0.28 per diluted share, versus a net loss of $0.6 million, or $0.05 per diluted share, for the same quarter a year ago. The third quarter of 2004 includes a $0.3 million, or $0.03 per diluted share, gain on the sale of IAA’s Boston property that occurred early in the quarter. Revenues for the quarter were $60.8 million compared with $49.1 million in the third quarter of 2003. Fee income in the third quarter increased to $53.2 million versus $40.3 million in the third quarter of last year.

“We are pleased to announce quarterly financial results that were significantly better than the third quarter of last year, both from a revenue and an earnings standpoint,” said Tom O’Brien, CEO. “These improved results are primarily due to the enhancements we have made to our business over the past couple years, as well as to our unwavering focus on providing the best customer service possible. Once again we saw a double-digit volume improvement over last year, reflecting market share gains that we announced earlier this year. Our customers continue to benefit from our enhanced operating model as well, as we generated higher year-over-year average returns in the most recent quarter.”

O’Brien also commented on the company’s improved technology platform, saying, “Our recently developed IT system continues to produce solid dividends for IAA, enhancing our operating processes and providing both management and our customers with exceptional pricing and inventory visibility. In addition, our comprehensive auction methodology, live auctions complemented with proxy and real-time bidding capabilities, continues to be well received by our buyer base. We strongly believe we have the right bidding strategy in place, and increased activity from both our suppliers and buyers over the past few quarters has reinforced that belief.

“One of our major initiatives during the quarter was the rollout of our real-time bidding platform, I-bid LIVE, throughout our network of branches. By further leveraging our IT platform, we have continued to enhance this product with additional value-added features such as a live voice feed, which allows Internet bidders to feel as if they’re physically at the auction. We were able to roll out I-bid LIVE to an additional 15 branches during the third quarter, giving us 25 fully implemented branches in all and representing more than 50 percent of our total volume at quarter’s end. We remain confident in our plan to complete the rollout of I-bid LIVE by the end of the year to the remainder of our targeted branches.”

The company also continued its expansion strategy with the addition of a new greenfield facility in El Paso, Texas and a strategic acquisition in Jackson, Mississippi, both of which were announced early in the quarter.

“These two new branches are strategically located and were cost effective for IAA,” said O’Brien. “However, consistent with our remarks from last quarter, we do not foresee making many expansion announcements the remainder of the year, as we focus instead on the rollout of our real-time bidding platform and growing organically by gaining market share.”