KAR Global was able to boost profits in the first quarter despite a decline in revenue.
The automotive auction company on Wednesday said net income leapt to $50.9 million, vs. $2.8 million in the same period last year when the coronavirus pandemic took root in the U.S.
The company's total operating revenue fell 10 percent to $581.6 million in the first quarter.
KAR achieved relatively solid results amid "an environment of constrained vehicle supply across the wholesale used-vehicle market," CEO Peter Kelly told investors and analysts in an earnings call.
"This is particularly the case when it comes to the commercial vehicle category, affecting repossessed vehicles, off-lease vehicles and rental vehicles," he said. "The root causes vary, but they all originate in the COVID pandemic."
The pandemic has caused supply-chain constraints for new vehicles, especially because of the microchip shortage that has cascaded down to used retail and wholesale sectors at a time when consumer demand has been strong.
Kelly said he believes these dynamics are temporary and said the company will look to keep costs under control in the interim.
The company sold 753,000 vehicles in the quarter, compared with 862,000 in the first quarter of 2020.
Meanwhile, the company said it remains committed to digital wholesaling. As Manheim and other independent auctions run vehicles physically down lanes in some instances, Kelly said Wednesday the company has no plans to do so.
"We believe that a digital model and the model we have can generate very strong outcomes for customers, very strong conversion rates, and represents also the model for the future and the model customers are transitioning to over time," he said.
The company has been allowing buyers to attend its auctions, but more sales are happening away from the company's physical auction sites, too. The company said 54 percent of its sales were sold off-premise in the first quarter, compared with 46 percent sold off-premise in the year-ago quarter.
KAR shares gained 17 percent to $16.97 in Wednesday trading.