The price of ADESA Inc. stock fell more than 20 percent last week after the vehicle auction company reported declines in quarterly revenue and profits.
ADESA reported net income of $28.6 million on revenues of $231.0 million for the April-June quarter. The Carmel, Ind., company had net profits of $34.1 million on revenues of $238.1 million in the second quarter of 2003.
Cam Hitchcock, ADESA's CFO, says company revenues fell primarily because of a decline in the number of off-lease vehicles returning to the market.
ADESA sold 494,647 vehicles at its auctions in the second quarter of 2004. That was a 5 percent decline from the year-ago period, when the company sold 520,654 vehicles.
ADESA's parent company, ALLETE Inc., spun off ADESA as a separate publicly held company last month. The stock price of the company's initial public offering on June 16 was $24 a share
The stock closed at $23.88 on Wednesday, July 21, the day the company issued its earnings report. It closed at $19.03 Thursday, July 22. It was trading at about $18.80 a share at midday Friday, July 23.
For the first six months of 2004, ADESA reported net income of $61.9 million on revenues of $478.3 million. In the first half of 2003, the company had net income of $61.2 million on revenues of $469.6 million.
ADESA Chairman David Gartzke told financial analysts during a conference call last week that he is pleased with ADESA's initial public offering. He said the company is well capitalized as a stand-alone entity.
Gartzke says he expects ADESA to complete its separation from ALLETE by September.