Wholesale auction and digital services company KAR Global expects to finalize the sale of its ADESA U.S. physical auction business to Carvana "within the next week."
KAR Global CEO Peter Kelly confirmed the time frame in the company's first-quarter earnings release, which it published Tuesday. KAR also reported a net loss of $8.4 million in the quarter, though its total revenue, $369.4 million, was down less than 1 percent from the year-earlier period.
KAR previously said it wanted to sell off the auction arm — which includes 56 physical sites across the nation — in order to reduce its debt and focus on becoming an online-centric auction company.
"Going forward, KAR will be the premier digital marketplace for wholesale used vehicles, with a meaningful finance company enabling our customer base," Kelly said in the release. "Our business will become asset-light with an enhanced financial profile — including significantly less debt."
Kelly said the company expects the "simplified" KAR to generate $265 million in adjusted earnings before interest, taxes, depreciation and amortization in 2022.
The company based in Carmel, Ind., first indicated in February that it would sell ADESA U.S., the No. 2 auction house in the nation, to online used-vehicle retailer Carvana.
KAR shares rose nearly 1 percent to $14.60 in Tuesday trading.
The company's gross profit fell to $158.6 million in the quarter, down about 4.5 percent from a year earlier.
Because the U.S. arm of ADESA is being sold, KAR designated it as "discontinued operations" on its first-quarter earnings sheet. The following paragraphs don't reflect results from the ADESA U.S. side.
The company's ADESA auction giant sold 351,000 total vehicles in the quarter, down 23 percent from 458,000 sold in the year-earlier period. Eighty-six percent of those vehicles were sold off-premise, KAR said.
Gross profit per vehicle sold grew to $255 in the quarter, up about 3 percent from $248 in the year-earlier period.
KAR will hold its first-quarter earnings conference call at 8:30 a.m. EDT Wednesday.
Results from the company's Tuesday earnings report include:
Q1 total revenue: $369.4 million, down less than 1 percent from a year earlier.
Q1 net income: Net loss of $8.4 million, compared with a net profit of $26.2 million in the year-earlier period.
Q1 adjusted EBITDA: $49.1 million, down about 36 percent from a year earlier.
Vehicles sold: KAR sold 351,000 total vehicles in the quarter, down 23 percent from 458,000 in the year-earlier period.