IAA, Inc (IAA) Tops Q1 EPS by 1c, Revenues Beat

IAA, Inc (NYSE: IAA) reported Q1 EPS of $0.37, $0.01 better than the analyst estimate of $0.36. Revenue for the quarter came in at $366.6 million versus the consensus estimate of $353.84 million.

John Kett, Chief Executive Officer and President, stated, “During this period of uncertainty, our focus continues to be on the health and safety of our employees, and we have implemented strict protocols to keep our employees and customers safe. Our business is considered an essential service, our branches remain open, and we remain committed to providing exceptional service to our buyer and seller partners.

Mr. Kett continued, “Since stay at home orders were executed across North America and the U.K. in mid-March, we have seen a significant decline in miles driven. The impact of this decline was limited in the first quarter, but will be more significant in the second quarter. In response to the expected impact of COVID-19 on our business, we have executed a series of cost and capital spending reduction actions across our business. In addition, on May 1, 2020, we expanded our revolving credit facility by $136 million, which we believe provides us more than enough liquidity to navigate through even more extreme scenarios. We are confident that these actions provide us with the financial flexibility to address the expected impact of COVID-19 and continue to execute on our strategic initiatives.”

Mr. Kett concluded, “While we continue to navigate through this crisis, we remain focused on driving our growth strategy and executing our margin expansion plan. One of the key elements of this plan is Buyer Digital Transformation, which we successfully accelerated and completed in early April, well ahead of our original timetable. I want to thank all of our teams for their hard work and dedication during this time. I remain confident in the long-term resiliency of our business and our ability to work through the challenges we are facing during this period.”

COVID-19 Actions and Impact on Outlook:

The Company has taken a series of actions to reduce cost and cash outlays, including, but not limited to:

• Reduction of branch labor hours and operating expenses to align with volume trends
• Temporary reduction in salaries at the senior leadership level and temporary reduction in Board cash compensation
• Reductions of discretionary spending across all departments
• Deferral of payroll and federal taxes in accordance with recently announced government programs
• Reduction or deferral of non-critical capital expenditures

Given the continued uncertainties regarding the duration and severity of impact of COVID-19 and the duration of federal, state and local mandates implementing “shelter in place” and social-distancing requirements, the Company is not providing a 2020 or long-term outlook at this time.

For earnings history and earnings-related data on IAA, Inc (IAA) click here.

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