Docoh
Loading...

KAR KAR Auction Services

Document and Entity Information

Document and Entity Information Cover - $ / shares3 Months Ended
Mar. 31, 2021Apr. 30, 2021Dec. 31, 2020
Cover [Abstract]
Document type10-Q
Document quarterly reporttrue
Document period end dateMar. 31,
2021
Document transition reportfalse
Commission file number001-34568
Entity registrant nameKAR Auction Services, Inc.
Entity incorporation stateDE
Entity tax identification number20-8744739
Entity address, address line one11299 N. Illinois Street
Entity address, cityCarmel
Entity address, stateIN
Entity address, postal zip code46032
City area code800
Local phone number923-3725
Title of 12(b) securityCommon Stock, par value $0.01 per share
Trading symbolKAR
Security exchange nameNYSE
Entity current reporting statusYes
Entity interactive data currentYes
Entity filer categoryLarge Accelerated Filer
Entity small businessfalse
Entity emerging growth companyfalse
Entity shell companyfalse
Entity common stock, shares outstanding124,761,100
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Entity central index key0001395942
Current fiscal year end date--12-31
Document fiscal year focus2021
Document fiscal period focusQ1
Amendment flagfalse

Consolidated Statements of Inco

Consolidated Statements of Income - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Operating revenues
Auction fees $ 235.5 $ 255.3
Service revenue187.6 236.2
Purchased vehicle sales92.7 75.5
Finance-related revenue65.8 78.5
Total operating revenues581.6 645.5
Operating expenses
Cost of services (exclusive of depreciation and amortization)330.4 394.6
Selling, general and administrative149 162.4
Depreciation and amortization47 47.7
Total operating expenses526.4 604.7
Operating profit55.2 40.8
Interest expense30.9 38
Other income, net(50.2)(2)
Income before income taxes74.5 4.8
Income taxes23.6 2
Net income $ 50.9 $ 2.8
Net income per share - basic
Basic $ 0.25 $ 0.02
Net income per share - diluted
Diluted0.250.02
Dividends declared per common share $ 0 $ 0.19

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Net income $ 50.9 $ 2.8
Other comprehensive income (loss), net of tax
Foreign currency translation gain (loss)1.6 (35.9)
Unrealized gain (loss) on interest rate derivatives, net of tax6.7 (19)
Total other comprehensive income (loss), net of tax8.3 (54.9)
Comprehensive income (loss) $ 59.2 $ (52.1)

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in MillionsMar. 31, 2021Dec. 31, 2020
Current assets
Cash and cash equivalents $ 759 $ 752.1
Restricted cash52.5 60.2
Trade receivables, net of allowances of $12.1 and $12.1659.3 367.2
Finance receivables, net of allowances of $25.5 and $22.01,958.9 1,889
Other current assets95.8 106.7
Total current assets3,525.5 3,175.2
Other assets
Goodwill2,135.9 2,140.2
Customer relationships, net of accumulated amortization of $681.7 and $668.6198.9 211.3
Other intangible assets, net of accumulated amortization of $383.2 and $362.0283 290.2
Operating lease right-of-use assets343 350.6
Property and equipment, net of accumulated depreciation of $606.8 and $596.4578.2 589.9
Other assets95.7 40.8
Total other assets3,634.7 3,623
Total assets7,160.2 6,798.2
Current liabilities
Accounts payable1,118.1 688.9
Accrued employee benefits and compensation expenses57.4 81.3
Accrued interest18.9 6.5
Other accrued expenses189.4 185.2
Income taxes payable2.7 3.2
Obligations collateralized by finance receivables1,239.1 1,261.2
Current maturities of long-term debt30.4 24.3
Total current liabilities2,656 2,250.6
Non-current liabilities
Long-term debt1,852.8 1,853.8
Deferred income tax liabilities136.1 128.6
Operating lease liabilities336.3 344.2
Other liabilities31.7 55.4
Total non-current liabilities2,356.9 2,382
Commitments and contingencies (Note 9)
Temporary equity
Series A convertible preferred stock559.8 549.8
Stockholders' equity
Common stock, $0.01 par value: Authorized shares: 400,000,000; Issued and outstanding shares: March 31, 2021 124,761,100: December 31, 2020: 129,700,1561.3 1.3
Additional paid-in capital969.4 1,046.5
Retained earnings641.2 600.7
Accumulated other comprehensive loss(24.4)(32.7)
Total stockholders' equity1,587.5 1,615.8
Total liabilities, temporary equity and stockholders' equity7,160.2 6,798.2
Other Balance Sheet Items
Trade receivables allowances12.1 12.1
Finance receivables allowances25.5 22
Customer relationships, accumulated amortization681.7 668.6
Other Intangible Assets Accumulated Amortization383.2 362
Property, Plant and Equipment Accumulated Depreciation $ 606.8 $ 596.4
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
Common Stock, Shares Authorized400,000,000 400,000,000
Common Stock, Shares, Issued124,761,100 129,700,156
Common Stock, Shares, Outstanding124,761,100 129,700,156

Consolidated Statements of Stoc

Consolidated Statements of Stockholders' Equity - USD ($) $ in MillionsTotalCumulative Effect, Period of Adoption, Adjustment [Member]Common StockAdditional Paid-In CapitalRetained EarningsRetained EarningsCumulative Effect, Period of Adoption, Adjustment [Member]Accumulated Other Comprehensive Loss
Beginning balance at Dec. 31, 2019 $ 1,650.2 $ 1.3 $ 1,028.9 $ 651 $ (31)
Beginning balance (in shares) at Dec. 31, 2019128,800,000
Increase (Decrease) in Stockholders' Equity
Net income2.8 2.8
Other comprehensive income (loss)(54.9)(54.9)
Issuance of common stock under stock plans0.4 0.4
Issuance of common stock under stock plans (in shares)500,000
Surrender of RSUs for taxes(3.4)(3.4)
Surrender of RSUs for taxes (in shares)(100,000)
Stock-based compensation expense5 5
Dividends earned under stock plans $ 0 0.7 (0.7)
Cash dividends declared to stockholders (in dollars per share) $ 0.19
Cash dividends declared to stockholders $ (24.5)(24.5)
Ending balance at Mar. 31, 20201,571.8 $ (3.8) $ 1.3 1,031.6 624.8 $ (3.8)(85.9)
Ending balance (in shares) at Mar. 31, 2020129,200,000
Beginning balance at Dec. 31, 2020 $ 1,615.8 $ 1.3 1,046.5 600.7 (32.7)
Beginning balance (in shares) at Dec. 31, 2020129,700,156 129,700,000
Increase (Decrease) in Stockholders' Equity
Net income $ 50.9 50.9
Other comprehensive income (loss)8.3 8.3
Issuance of common stock under stock plans0.3 0.3
Issuance of common stock under stock plans (in shares)400,000
Surrender of RSUs for taxes(2.2)(2.2)
Surrender of RSUs for taxes (in shares)(100,000)
Stock-based compensation expense5.4 5.4
Repurchase and retirement of common stock(80.8)(80.8)
Repurchase and retirement of common stock (in shares)(5,200,000)
Dividends earned under stock plans $ (0.2)0.2 (0.4)
Cash dividends declared to stockholders (in dollars per share) $ 0
Dividends on preferred stock $ (10)(10)
Ending balance at Mar. 31, 2021 $ 1,587.5 $ 1.3 $ 969.4 $ 641.2 $ (24.4)
Ending balance (in shares) at Mar. 31, 2021124,761,100 124,800,000

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Millions3 Months Ended12 Months Ended
Mar. 31, 2021Mar. 31, 2020Dec. 31, 2020
Operating activities
Net income $ 50.9 $ 2.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization47 47.7
Provision for credit losses5.5 18.7
Deferred income taxes5.2 (4.7)
Amortization of debt issuance costs3 2.7
Stock-based compensation5.4 5
Contingent consideration adjustment11.2 0
Unrealized gain on investment securities(43.5)0
Other non-cash, net1.6 1.4
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables and other assets(297.8)210.7
Accounts payable and accrued expenses376 (333.5)
Net Cash Provided by (Used by) Operating Activities164.5 (49.2)
Investing activities
Net (increase) decrease in finance receivables held for investment(73.3)146.3
Purchases of property, equipment and computer software(14.5)(29.6)
Investments in securities15.3 0
Proceeds from sale of investments21.1 0
Proceeds from the sale of PWI0.9 0
Proceeds from the sale of property and equipment1.9 0
Net Cash Provided by (Used by) Investing Activities(79.2)116.7
Financing activities
Net increase (decrease) in book overdrafts39.8 (35.1)
Net increase (decrease) in borrowings from lines of credit6.1 (1.8)
Net decrease in obligations collateralized by finance receivables(25.1)(103.7)
Payments on long-term debt(2.4)(2.4)
Payments on finance leases(3.1)(4.4)
Payments of contingent consideration and deferred acquisition costs(21.3)(22.3)
Issuance of common stock under stock plans0.3 0.4
Tax withholding payments for vested RSUs(2.2)(3.4)
Repurchase and retirement of common stock(80.8)0
Dividends paid to stockholders0 (24.5)
Net Cash Provided by (Used by) Financing Activities(88.7)(197.2)
Effect of exchange rate changes on cash2.6 (23.7)
Net decrease in cash, cash equivalents and restricted cash(0.8)(153.4)
Cash, cash equivalents and restricted cash at beginning of period812.3 560.9 $ 560.9
Cash paid for interest, net of proceeds from interest rate derivatives15.3 23.4
Cash paid for taxes, net of refunds11.7 5.6
Cash, cash equivalents and restricted cash at end of period $ 811.5 $ 407.5 $ 812.3

Basis of Presentation and Natur

Basis of Presentation and Nature of Operations3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of Presentation and Nature of OperationsBasis of Presentation and Nature of Operations Defined Terms Unless otherwise indicated or unless the context otherwise requires, the following terms used herein shall have the following meanings: • "we," "us," "our," "KAR" and "the Company" refer, collectively, to KAR Auction Services, Inc. and all of its subsidiaries; • "ADESA" or "ADESA Auctions" refer, collectively, to ADESA, Inc., a wholly-owned subsidiary of KAR Auction Services, and ADESA, Inc.'s subsidiaries, including Openlane, Inc. (together with Openlane, Inc.'s subsidiaries, "Openlane"), Nth Gen Software Inc. ("TradeRev"), BacklotCars, Inc. ("BacklotCars"), ADESA Remarketing Limited (formerly known as GRS Remarketing Limited ("GRS" or "ADESA Remarketing Limited")) and ADESA Europe (formerly known as CarsOnTheWeb ("COTW")); • "AFC" refers, collectively, to Automotive Finance Corporation, a wholly-owned subsidiary of ADESA, and Automotive Finance Corporation's subsidiaries and other related entities, including PWI Holdings, Inc. (which was sold on December 1, 2020); • "Credit Agreement" refers to the Amended and Restated Credit Agreement, dated March 11, 2014 (as amended, amended and restated, modified or supplemented from time to time), among KAR Auction Services, Inc., as the borrower, the several banks and other financial institutions or entities from time to time parties thereto and JPMorgan Chase Bank N.A., as administrative agent; • "Credit Facility" refers to the $950 million, senior secured term loan B-6 facility due September 19, 2026 ("Term Loan B-6") and the $325 million, senior secured revolving credit facility due September 19, 2024 (the "Revolving Credit Facility"), the terms of which are set forth in the Credit Agreement; • "IAA" refers, collectively, to Insurance Auto Auctions, Inc., formerly a wholly-owned subsidiary of KAR Auction Services, and Insurance Auto Auctions, Inc.'s subsidiaries and other related entities, including HBC Vehicle Services Limited ("HBC"); • "KAR Auction Services" refers to KAR Auction Services, Inc. and not to its subsidiaries; • "Senior notes" refers to the 5.125% senior notes due 2025 ($950 million aggregate principal was outstanding at March 31, 2021); and • "Series A Preferred Stock" refers to the Series A Convertible Preferred Stock, par value $0.01 per share (581,608 and 571,606 shares of Series A Preferred Stock were outstanding at March 31, 2021 and December 31, 2020, respectively). Business and Nature of Operations ADESA is a leading provider of wholesale vehicle auctions and related vehicle remarketing services for the automotive industry. As of March 31, 2021, the ADESA Auctions segment serves a domestic and international customer base through online auctions and provides services from 74 facilities in North America. ADESA also includes BacklotCars, an app and web-based dealer-to-dealer wholesale vehicle platform utilized in the United States, TradeRev, an online automotive remarketing platform in Canada where dealers can launch and participate in real-time vehicle auctions at any time, ADESA Remarketing Limited, an online whole car vehicle remarketing business in the United Kingdom and ADESA Europe (formerly known as CarsOnTheWeb), an online wholesale vehicle auction marketplace in Continental Europe. Our auctions facilitate the sale of used vehicles through on-premise and off-premise marketplaces. ADESA's online service offerings include customized private label solutions powered with software developed by its wholly-owned subsidiary, Openlane, that allow our commercial consignors (automobile manufacturers, captive finance companies and other institutions) to offer vehicles via the Internet prior to arrival at on-premise marketplaces. Remarketing services include a variety of activities designed to transfer used vehicles between sellers and buyers throughout the vehicle life cycle. ADESA facilitates the exchange of these vehicles through an auction marketplace, which aligns sellers and buyers. As an agent for customers, the Company generally does not take title to or ownership of vehicles sold at the auctions. Generally, fees are earned from the seller and buyer on each successful auction transaction in addition to fees earned for ancillary services. ADESA has the second largest used vehicle auction network in North America, based upon the number of used vehicles sold through auctions annually, and also provides services such as inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services. ADESA is able to serve the diverse and multi-faceted needs of its customers through the wide range of services offered. AFC is a leading provider of floorplan financing to independent used vehicle dealers and this financing is provided throughout the United States and Canada. Floorplan financing supports independent used vehicle dealers in North America who purchase vehicles at ADESA, BacklotCars, TradeRev, other used vehicle and salvage auctions and non-auction purchases. Prior to December 2020, in addition to floorplan financing, AFC also provided independent used vehicle dealers with vehicle service contracts. In October 2020, a subsidiary of ADESA signed a definitive agreement to sell all of the issued and outstanding shares of capital stock of PWI Holdings, Inc., the Company's extended vehicle service contract business ("PWI"), to certain subsidiaries of Kingsway Financial Services Inc. for a purchase price of approximately $24.3 million in cash and deferred payments of approximately $2.2 million (subject to customary adjustments). The sale was completed on December 1, 2020. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. Operating results for interim periods are not necessarily indicative of results that may be expected for the year as a whole. In the opinion of management, the consolidated financial statements reflect all adjustments, generally consisting of normal recurring accruals, necessary for a fair statement of our results of operations, cash flows and financial position for the periods presented. These consolidated financial statements and condensed notes to consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission on February 18, 2021. The 2020 year-end consolidated balance sheet data included in this Form 10-Q was derived from the audited financial statements referenced above and does not include all disclosures required by U.S. GAAP for annual financial statements. Reclassifications ADESA's "Auction fees and services revenue" reported in the consolidated statement of income for the three months ended March 31, 2020 has been broken out between "Auction fees" and "Service revenue" in the consolidated statement of income to conform with the presentation for the three months ended March 31, 2021. Prior to 2020, the costs and expenses of the holding company were reported separately from the reportable segments. Due to the spin-off of IAA in 2019 and the Company's transition from physical marketplaces to digital marketplaces, the Company has simplified its business and operations. Corporate expenses, previously reported as holding company expenses, are now included in the segments. Certain known expenses (e.g., information technology costs) were recorded directly to the ADESA and AFC segments. Interest expense previously reported by the holding company has been recorded in the ADESA segment. The residual shared services expenses were recorded at ADESA and allocated to AFC based on revenue and employee headcount. Holding company amounts reported in the segment results in the consolidated financial statements prior to December 31, 2020 have been reclassified to conform to the current presentation. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates based in part on assumptions about current, and for some estimates, future economic and market conditions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. Although the current estimates contemplate current conditions and expected future changes, as appropriate, it is reasonably possible that future conditions could differ from these estimates, which could materially affect our results of operations and financial position. Among other effects, such changes could result in future impairments of goodwill, intangible assets and long-lived assets, incremental losses on finance receivables, additional allowances on accounts receivable and deferred tax assets and changes in litigation and other loss contingencies. New Accounting Standards In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. The update also requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. The new guidance is effective for annual periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update can be adopted on either a fully retrospective or a modified retrospective basis. We do not expect the adoption of ASU 2020-06 will have a material impact on the consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within Topic 740

Acquisitions

Acquisitions3 Months Ended
Mar. 31, 2021
Business Combinations [Abstract]
AcquisitionsAcquisitions Deferred and Contingent Payments Related to Prior Year AcquisitionsSome of the purchase agreements related to prior year acquisitions included additional payments over a specified period, including deferred and contingent payments based on certain conditions and performance. At March 31, 2021, we had deferred and estimated contingent consideration with a fair value of approximately $1.8 million and $31.1 million, respectively (based on Level 3 inputs). At March 31, 2021, the aggregate maximum potential payment remaining for undiscounted deferred payments and undiscounted contingent payments related to these acquisitions could approximate $47.3 million. For the three months ended March 31, 2021, we made contingent consideration payments related to the CarsOnTheWeb acquisition of $21.3 million. For the three months ended March 31, 2021, adjustments to estimated contingent consideration associated with the CarsOnTheWeb and TradeRev acquisitions increased contingent consideration and decreased "Other income, net" by approximately $11.2 million in the aggregate.

Stock and Stock-Based Compensat

Stock and Stock-Based Compensation Plans3 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]
Stock and Stock-Based Compensation PlansStock and Stock-Based Compensation Plans The KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan ("Omnibus Plan") is intended to provide equity and/or cash-based awards to our executive officers and key employees. Our stock-based compensation expense includes expense associated with KAR Auction Services, Inc. service-based options ("service options"), market-based options ("market options), performance-based restricted stock units ("PRSUs") and service-based restricted stock units ("RSUs"). We have determined that the KAR Auction Services, Inc. service options, market options, PRSUs and RSUs should be classified as equity awards. The following table summarizes our stock-based compensation expense by type of award (in millions) : Three Months Ended March 31, 2021 2020 Service options $ 0.3 $ — Market options 1.1 — PRSUs 2.2 1.5 RSUs 1.8 3.5 Total stock-based compensation expense $ 5.4 $ 5.0 Service Options In the first quarter of 2021, we granted approximately 0.4 million service options with a weighted average exercise price of $13.81 per share to certain executive officers of the Company. The service options have a life of ten years and vest in equal annual installments on each of the first four anniversaries of the grant date. The weighted average fair value of the service options granted in the first quarter of 2021 was $2.53 per share. The fair value of the service options granted was estimated on the date of grant using the Black-Scholes option pricing model with an expected life of 6.25 years, an expected volatility of 35.78%, an expected dividend yield of 5.5% and a weighted average risk free interest rate of 1.04%. Market Options In the first quarter of 2021, we granted approximately 1.8 million market options with a weighted average exercise price of $13.81 per share to certain executive officers of the Company. The market options have a life of ten years and have a service component along with an additional market component. The market options become eligible to vest and become exercisable in equal increments, each upon the later to occur of (i) the first four anniversaries of the grant date, respectively, and (ii) for each respective 25% increment, the attainment of KAR's closing stock price at or above $5, $10, $15 and $20 over the exercise price, for 20 consecutive trading days. The weighted average fair value of the market options granted in the first quarter of 2021 was $2.38 per share. The fair value and requisite service period of the market options was developed with a Monte Carlo simulation using a multivariate Geometric Brownian Motion with a drift equal to the risk free rate. PRSUs and RSUs In the first quarter of 2021, we granted a target amount of approximately 0.4 million PRSUs to certain executive officers of the Company. The PRSUs granted in 2021 vest if and to the extent that the Company's three-year cumulative operating adjusted net income per share attains certain specified goals. In addition, approximately 0.5 million RSUs were granted to certain management members of the Company. The RSUs are contingent upon continued employment and generally vest in three equal annual installments. The weighted average grant date fair value of the PRSUs and the RSUs was $13.81 per share, which was determined using the closing price of the Company's common stock on the dates of grant.

Net Income Per Share

Net Income Per Share3 Months Ended
Mar. 31, 2021
Earnings Per Share, Basic and Diluted [Abstract]
Net Income Per ShareNet Income Per Share The following table sets forth the computation of net income per share (in millions except per share amounts) : Three Months Ended March 31, 2021 2020 Net income $ 50.9 $ 2.8 Series A Preferred Stock dividends (10.0) — Net income attributable to participating securities (8.3) — Net income attributable to common stockholders $ 32.6 $ 2.8 Weighted average common shares outstanding 129.0 129.0 Effect of dilutive stock options and restricted stock awards 0.7 1.0 Weighted average common shares outstanding and potential common shares 129.7 130.0 Net income per share Basic $ 0.25 $ 0.02 Diluted $ 0.25 $ 0.02 Prior to 2020, basic net income per share was calculated by dividing net income by the weighted average number of outstanding common shares for the period. Diluted net income per share was calculated consistent with basic net income per share including the effect of dilutive unissued common shares related to our stock-based employee compensation program. The effect of stock options and restricted stock on net income per share-diluted is determined through the application of the treasury stock method, whereby net proceeds received by the Company based on assumed exercises are hypothetically used to repurchase our common stock at the average market price during the period. As a result of the spin-off, there are IAA employees who hold KAR equity awards included in the calculation. Stock options that would have an anti-dilutive effect on net income per diluted share and PRSUs subject to performance conditions which have not yet been satisfied are excluded from the calculations. No service options were excluded from the calculation of diluted net income per share for the three months ended March 31, 2021 and 2020, respectively. All of the market options were excluded from the calculation of diluted net income per share for the three months ended March 31, 2021. Approximately 0.8 million PRSUs and approximately 0.4 million PRSUs were excluded from the calculation of diluted net income per share for the three months ended March 31, 2021 and 2020, respectively. Total options outstanding at March 31, 2021 and 2020 were 2.7 million and 0.7 million, respectively. Beginning in June 2020, the Company also includes participating securities (Series A Preferred Stock) in the computation of net income per share pursuant to the two-class method. The two-class method of calculating net income per share is an allocation method that calculates earnings per share for common stock and participating securities. Under the two-class method, total dividends provided to the holders of the Series A Preferred Stock and undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders. During periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company.

Finance Receivables and Obligat

Finance Receivables and Obligations Collateralized by Finance Receivables3 Months Ended
Mar. 31, 2021
Financing Receivable, after Allowance for Credit Loss, Current [Abstract]
Finance Receivables and Obligations Collateralized by Finance ReceivablesFinance Receivables and Obligations Collateralized by Finance Receivables AFC sells the majority of its U.S. dollar denominated finance receivables on a revolving basis and without recourse to a wholly-owned, bankruptcy remote, consolidated, special purpose subsidiary ("AFC Funding Corporation"), established for the purpose of purchasing AFC's finance receivables. A securitization agreement allows for the revolving sale by AFC Funding Corporation to a group of bank purchasers of undivided interests in certain finance receivables subject to committed liquidity. The agreement expires on January 31, 2024. AFC Funding Corporation had committed liquidity of $1.60 billion for U.S. finance receivables at March 31, 2021. We also have an agreement for the securitization of Automotive Finance Canada Inc.'s ("AFCI") receivables, which expires on January 31, 2024. AFCI's committed facility is provided through a third-party conduit (separate from the U.S. facility) and was C$175 million at March 31, 2021. The receivables sold pursuant to both the U.S. and Canadian securitization agreements are accounted for as secured borrowings. The following tables present quantitative information about delinquencies, credit loss charge-offs less recoveries ("net credit losses") and components of securitized financial assets and other related assets managed. For purposes of this illustration, delinquent receivables are defined as receivables 31 days or more past due. March 31, 2021 Net Credit Losses Total Amount of: (in millions) Receivables Receivables Floorplan receivables $ 1,975.0 $ 22.6 $ 1.3 Other loans 9.4 — — Total receivables managed $ 1,984.4 $ 22.6 $ 1.3 December 31, 2020 Net Credit Losses Total Amount of: (in millions) Receivables Receivables Floorplan receivables $ 1,892.1 $ 22.9 $ 11.9 Other loans 18.9 — — Total receivables managed $ 1,911.0 $ 22.9 $ 11.9 The following is a summary of the changes in the allowance for credit losses related to finance receivables ( in millions ): March 31, March 31, Allowance for Credit Losses Balance at beginning of period $ 22.0 $ 15.0 Opening balance adjustment for adoption of ASC Topic 326 — 5.0 Provision for credit losses 4.8 16.9 Recoveries 2.5 1.9 Less charge-offs (3.8) (13.8) Balance at end of period $ 25.5 $ 25.0 As of March 31, 2021 and December 31, 2020, $1,930.7 million and $1,865.3 million, respectively, of finance receivables and a cash reserve of 1 or 3 percent of the obligations collateralized by finance receivables served as security for the obligations collateralized by finance receivables. The amount of the cash reserve depends on circumstances which are set forth in the securitization agreements. Obligations collateralized by finance receivables consisted of the following: March 31, December 31, Obligations collateralized by finance receivables, gross $ 1,258.9 $ 1,282.8 Unamortized securitization issuance costs (19.8) (21.6) Obligations collateralized by finance receivables $ 1,239.1 $ 1,261.2 Proceeds from the revolving sale of receivables to the bank facilities are used to fund new loans to customers. AFC, AFC Funding Corporation and AFCI must maintain certain financial covenants including, among others, limits on the amount of debt AFC and AFCI can incur, minimum levels of tangible net worth, and other covenants tied to the performance of the finance receivables portfolio. The securitization agreements also incorporate the financial covenants of our Credit Facility. At March 31, 2021, we were in compliance with the covenants in the securitization agreements.

Long-Term Debt

Long-Term Debt3 Months Ended
Mar. 31, 2021
Long-term Debt, Unclassified [Abstract]
Long-Term DebtLong-Term Debt Long-term debt consisted of the following (in millions) : Interest Rate* Maturity March 31, December 31, Term Loan B-6 Adjusted LIBOR + 2.25% September 19, 2026 $ 935.7 $ 938.1 Revolving Credit Facility Adjusted LIBOR + 1.75% September 19, 2024 — — Senior notes 5.125% June 1, 2025 950.0 950.0 European lines of credit Euribor + 1.25% Repayable upon demand 20.9 14.8 Total debt 1,906.6 1,902.9 Unamortized debt issuance costs/discounts (23.4) (24.8) Current portion of long-term debt (30.4) (24.3) Long-term debt $ 1,852.8 $ 1,853.8 *The interest rates presented in the table above represent the rates in place at March 31, 2021. Credit Facilities On September 19, 2019, we entered into the seven-year, $950 million Term Loan B-6 and the $325 million, five-year Revolving Credit Facility. The Credit Facility is available for letters of credit, working capital, permitted acquisitions and general corporate purposes. The Revolving Credit Facility also includes a $50 million sub-limit for issuance of letters of credit and a $60 million sub-limit for swingline loans. The Company also pay s a commitment fee between 25 to 35 basis points, payable quarterly, on the average daily unused amount of the Revolving Credit Facility based on the Company’s Consolidated Senior Secured Net Leverage Ratio, from time to time. The interest rate applicable to Term Loan B-6 was 2.38% at March 31, 2021. The obligations of the Company under the Credit Facility are guaranteed by certain of our domestic subsidiaries (the "Subsidiary Guarantors") and are secured by substantially all of the assets of the Company and the Subsidiary Guarantors, including but not limited to: (a) pledges of and first priority perfected security interests in 100% of the equity interests of certain of the Company's and the Subsidiary Guarantors' domestic subsidiaries and 65% of the equity interests of certain of the Company's and the Subsidiary Guarantors' first tier foreign subsidiaries and (b) perfected first priority security interests in substantially all other tangible and intangible assets of the Company and each Subsidiary Guarantor, subject to certain exceptions. The Credit Agreement contains affirmative and negative covenants that we believe are usual and customary for a senior secured credit agreement. The negative covenants include, among other things, limitations on asset sales, mergers and acquisitions, indebtedness, liens, dividends, investments and transactions with our affiliates. The Credit Agreement also requires us to maintain a Consolidated Senior Secured Net Leverage Ratio (as defined in the Credit Agreement), not to exceed 3.5 as of the last day of each fiscal quarter, if there are revolving loans outstanding. We were in compliance with the applicable covenants in the Credit Agreement at March 31, 2021. There were no borrowings outstanding on the Revolving Credit Facility at March 31, 2021 or December 31, 2020. We had related outstanding letters of credit in the aggregate amount of $29.8 million and $28.5 million at March 31, 2021 and December 31, 2020, respectively, which reduce the amount available for borrowings under the Revolving Credit Facility. European Lines of Credit COTW has lines of credit aggregating $35.2 million (€30 million). The lines of credit had an aggregate $20.9 million and $14.8 million of borrowings outstanding at March 31, 2021 and December 31, 2020, respectively. The lines of credit are secured by certain inventory and receivables at COTW subsidiaries. Fair Value of Debt As of March 31, 2021, the estimated fair value of our long-term debt amounted to $1,900.9 million. The estimates of fair value were based on broker-dealer quotes (Level 2 inputs) for our debt as of March 31, 2021. The estimates presented on long-term financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange.

Derivatives

Derivatives3 Months Ended
Mar. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]
DerivativesDerivatives We are exposed to interest rate risk on our variable rate borrowings. Accordingly, interest rate fluctuations affect the amount of interest expense we are obligated to pay. We have used interest rate derivatives with the objective of managing exposure to interest rate movements, thereby reducing the effect of interest rate changes and the effect they could have on future cash flows. Currently, interest rate swap agreements are used to accomplish this objective. In January 2020, we entered into three pay-fixed interest rate swaps with an aggregate notional amount of $500 million to swap variable rate interest payments under our term loan for fixed interest payments bearing a weighted average interest rate of 1.44%, for a total interest rate of 3.69%. The interest rate swaps have a five-year term, each maturing on January 23, 2025. We have designated the interest rate swaps as cash flow hedges. The changes in the fair value of the interest rate swaps that are included in the assessment of hedge effectiveness are recorded as a component of "Accumulated other comprehensive income." For the three months ended March 31, 2021, the Company recorded an unrealized gain on the interest rate swaps of $6.7 million, net of tax of $2.2 million in "Accumulated other comprehensive income." For the three months ended March 31, 2020, the Company recorded an unrealized loss on the interest rate swaps of $19.0 million, net of tax of $6.2 million in "Accumulated other comprehensive income." The earnings impact of the interest rate derivatives designated as cash flow hedges is recorded upon the recognition of the interest related to the hedged debt. When derivatives are used, we are exposed to credit loss in the event of non-performance by the counterparties; however, non-performance is not anticipated. ASC 815, Derivatives and Hedging , requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. The fair values of the interest rate derivatives are based on quoted market prices for similar instruments from commercial banks (based on significant observable inputs - Level 2 inputs). The following table presents the fair value of our interest rate derivatives included in the consolidated balance sheets for the periods presented ( in millions ): Liability Derivatives March 31, 2021 December 31, 2020 Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value Balance Sheet Location Fair Value 2020 Interest rate swaps Other liabilities $ 17.0 Other liabilities $ 25.9

Other Income, Net

Other Income, Net3 Months Ended
Mar. 31, 2021
Other Nonoperating Income (Expense) [Abstract]
Other Income, NetOther Income, Net Other income, net consisted of the following ( in millions ): Three Months Ended March 31, 2021 2020 Realized and unrealized gains on investment securities $ 60.5 $ — Contingent consideration valuation (Note 2) (11.2) — Foreign currency gains (losses) (2.2) (0.4) Other 3.1 2.4 Other income, net $ 50.2 $ 2.0 Fair Value Measurement of Investments The Company invests in certain early-stage automotive companies and funds that relate to the automotive industry. We believe these investments have resulted in the expansion of relationships in the vehicle remarketing industry. Realized gains on these investments were $17.0 million for the three months ended March 31, 2021. The Company had unrealized gains of $43.5 million for the three months ended March 31, 2021. ASC 820, Fair Value Measurement , defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A small portion of finance receivables for one entity were converted to investment securities during the first quarter of 2021. This entity became publicly traded during the first quarter of 2021 and now has a readily determinable fair value. As of March 31, 2021, the fair value of investment securities are based on quoted market prices for identical assets (Level 1 of the fair value hierarchy) and approximated $51.0 million. The unrealized gain on these investment securities was $43.5 million at March 31, 2021. The remaining investments held of $16.2 million are recorded at cost as they do not have readily determinable fair values. Investments are reported in "Other assets" in the accompanying consolidated balance sheets. Realized and unrealized gains and losses are reported in "Other income, net" in the consolidated statements of income.

Commitments and Contingencies

Commitments and Contingencies3 Months Ended
Mar. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments and contingenciesCommitments and ContingenciesWe are involved in litigation and disputes arising in the ordinary course of business, such as actions related to injuries; property damage; handling, storage or disposal of vehicles; environmental laws and regulations; and other litigation incidental to the business such as employment matters and dealer disputes. Management considers the likelihood of loss or the incurrence of a liability, as well as the ability to reasonably estimate the amount of loss, in determining loss contingencies. We accrue an estimated loss contingency when it is probable that a liability has been incurred and the amount of loss (or range of possible losses) can be reasonably estimated. Management regularly evaluates current information available to determine whether accrual amounts should be adjusted. Accruals for contingencies including litigation and environmental matters are included in "Other accrued expenses" at undiscounted amounts and exclude claims for recoveries from insurance or other third parties. These accruals are adjusted periodically as assessment and remediation efforts progress, or as additional technical or legal information becomes available. If the amount of an actual loss is greater than the amount accrued, this could have an adverse impact on our operating results in that period. Such matters are generally not, in the opinion of management, likely to have a material adverse effect on our financial condition, results of operations or cash flows. Legal fees are expensed as incurred. There has been no significant change in the legal and regulatory proceedings which were disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

Accumulated Other Comprehensive

Accumulated Other Comprehensive Loss3 Months Ended
Mar. 31, 2021
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Accumulated Other Comprehensive LossAccumulated Other Comprehensive Loss Accumulated other comprehensive loss consisted of the following ( in millions ): March 31, December 31, Foreign currency translation loss $ (11.6) $ (13.2) Unrealized loss on interest rate derivatives, net of tax (12.8) (19.5) Accumulated other comprehensive loss $ (24.4) $ (32.7)

Segment Information

Segment Information3 Months Ended
Mar. 31, 2021
Segment Reporting [Abstract]
Segment InformationSegment Information ASC 280, Segment Reporting , requires reporting of segment information that is consistent with the manner in which the chief operating decision maker operates and views the Company. Our operations are grouped into two operating segments: ADESA Auctions and AFC, which also serve as our reportable business segments. These reportable business segments offer different services and have fundamental differences in their operations. Prior to 2020, the costs and expenses of the holding company were reported separately from the reportable segments. Due to the spin-off of IAA in 2019 and the Company's transition from physical marketplaces to digital marketplaces, the Company has simplified its business and operations. Corporate expenses, previously reported as holding company expenses, are now included in the segments. Certain known expenses (e.g., information technology costs) were recorded directly to the ADESA and AFC segments. Interest expense previously reported by the holding company has been recorded in the ADESA segment. The residual shared services expenses were recorded at ADESA and allocated to AFC based on revenue and employee headcount. Holding company amounts reported in the segment results in the consolidated financial statements prior to December 31, 2020 have been reclassified to conform to the current presentation. Financial information regarding our reportable segments is set forth below as of and for the three months ended March 31, 2021 (in millions) : ADESA AFC Consolidated Operating revenues $ 515.8 $ 65.8 $ 581.6 Operating expenses Cost of services (exclusive of depreciation and amortization) 316.9 13.5 330.4 Selling, general and administrative 140.2 8.8 149.0 Depreciation and amortization 44.6 2.4 47.0 Total operating expenses 501.7 24.7 526.4 Operating profit 14.1 41.1 55.2 Interest expense 21.6 9.3 30.9 Other income, net (5.9) (44.3) (50.2) Intercompany expense (income) 0.1 (0.1) — Income (loss) before income taxes (1.7) 76.2 74.5 Income taxes 4.1 19.5 23.6 Net income (loss) $ (5.8) $ 56.7 $ 50.9 Total assets $ 4,783.4 $ 2,376.8 $ 7,160.2 Financial information regarding our reportable segments is set forth below as of and for the three months ended March 31, 2020 (in millions) : ADESA AFC Consolidated Operating revenues $ 567.0 $ 78.5 $ 645.5 Operating expenses Cost of services (exclusive of depreciation and amortization) 370.7 23.9 394.6 Selling, general and administrative 152.4 10.0 162.4 Depreciation and amortization 44.4 3.3 47.7 Total operating expenses 567.5 37.2 604.7 Operating profit (loss) (0.5) 41.3 40.8 Interest expense 24.4 13.6 38.0 Other income, net (1.9) (0.1) (2.0) Intercompany expense (income) 0.8 (0.8) — Income (loss) before income taxes (23.8) 28.6 4.8 Income taxes (5.2) 7.2 2.0 Net income (loss) $ (18.6) $ 21.4 $ 2.8 Total assets $ 3,553.2 $ 2,446.5 $ 5,999.7 Geographic Information Our foreign operations include Canada, Mexico, Continental Europe and the U.K. Approximately 52% and 57% of our foreign operating revenues were from Canada for the three months ended March 31, 2021 and 2020, respectively. Most of the remaining foreign operating revenues were generated from Continental Europe. Information regarding the geographic areas of our operations is set forth below (in millions) : Three Months Ended March 31, 2021 2020 Operating revenues U.S. $ 439.6 $ 523.3 Foreign 142.0 122.2 $ 581.6 $ 645.5

Subsequent Event

Subsequent Event3 Months Ended
Mar. 31, 2021
Subsequent Events [Abstract]
Subsequent EventSubsequent Event In May 2021, ADESA acquired Auction Frontier, LLC (“Auction Frontier”) for $80 million in cash and up to an additional $15 million contingent on certain terms. Auction Frontier is the owner and operator of the cloud-based auction simulcast solution Velocicast ® . The acquisition is aligned with KAR’s strategy, as Velocicast powers ADESA Simulcast and Simulcast+ technologies, as well as other wholesale and retail auctions across North America and Australia.

Basis of Presentation and Nat_2

Basis of Presentation and Nature of Operations Accounting Policies (Policies)3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Basis of PresentationBasis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. Operating results for interim periods are not necessarily indicative of results that may be expected for the year as a whole. In the opinion of management, the consolidated financial statements reflect all adjustments, generally consisting of normal recurring accruals, necessary for a fair statement of our results of operations, cash flows and financial position for the periods presented. These consolidated financial statements and condensed notes to consolidated financial statements are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission on February 18, 2021. The 2020 year-end consolidated balance sheet data included in this Form 10-Q was derived from the audited financial statements referenced above and does not include all disclosures required by U.S. GAAP for annual financial statements.
ReclassificationsReclassifications ADESA's "Auction fees and services revenue" reported in the consolidated statement of income for the three months ended March 31, 2020 has been broken out between "Auction fees" and "Service revenue" in the consolidated statement of income to conform with the presentation for the three months ended March 31, 2021.
Use of EstimatesUse of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates based in part on assumptions about current, and for some estimates, future economic and market conditions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the period. Although the current estimates contemplate current conditions and expected future changes, as appropriate, it is reasonably possible that future conditions could differ from these estimates, which could materially affect our results of operations and financial position. Among other effects, such changes could result in future impairments of goodwill, intangible assets and long-lived assets, incremental losses on finance receivables, additional allowances on accounts receivable and deferred tax assets and changes in litigation and other loss contingencies.
New Accounting StandardsNew Accounting Standards In August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible debt instruments and convertible preferred stock by reducing the number of accounting models and the number of embedded conversion features that could be recognized separately from the primary contract. The update also requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. The new guidance is effective for annual periods beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. This update can be adopted on either a fully retrospective or a modified retrospective basis. We do not expect the adoption of ASU 2020-06 will have a material impact on the consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within Topic 740

Stock and Stock-Based Compens_2

Stock and Stock-Based Compensation Plans (Tables)3 Months Ended
Mar. 31, 2021
Share-based Payment Arrangement [Abstract]
Summary of stock-based compensation expense by type of awardThe following table summarizes our stock-based compensation expense by type of award (in millions) : Three Months Ended March 31, 2021 2020 Service options $ 0.3 $ — Market options 1.1 — PRSUs 2.2 1.5 RSUs 1.8 3.5 Total stock-based compensation expense $ 5.4 $ 5.0

Net Income Per Share (Tables)

Net Income Per Share (Tables)3 Months Ended
Mar. 31, 2021
Earnings Per Share, Basic and Diluted [Abstract]
Schedule of computation of net income per shareThe following table sets forth the computation of net income per share (in millions except per share amounts) : Three Months Ended March 31, 2021 2020 Net income $ 50.9 $ 2.8 Series A Preferred Stock dividends (10.0) — Net income attributable to participating securities (8.3) — Net income attributable to common stockholders $ 32.6 $ 2.8 Weighted average common shares outstanding 129.0 129.0 Effect of dilutive stock options and restricted stock awards 0.7 1.0 Weighted average common shares outstanding and potential common shares 129.7 130.0 Net income per share Basic $ 0.25 $ 0.02 Diluted $ 0.25 $ 0.02

Finance Receivables and Oblig_2

Finance Receivables and Obligations Collateralized by Finance Receivables (Tables)3 Months Ended
Mar. 31, 2021
Financing Receivable, after Allowance for Credit Loss, Current [Abstract]
Schedule of quantitative information about delinquencies, credit losses less recoveries ("net credit losses") and components of securitized financial assets and other related assets managedThe following tables present quantitative information about delinquencies, credit loss charge-offs less recoveries ("net credit losses") and components of securitized financial assets and other related assets managed. For purposes of this illustration, delinquent receivables are defined as receivables 31 days or more past due. March 31, 2021 Net Credit Losses Total Amount of: (in millions) Receivables Receivables Floorplan receivables $ 1,975.0 $ 22.6 $ 1.3 Other loans 9.4 — — Total receivables managed $ 1,984.4 $ 22.6 $ 1.3 December 31, 2020 Net Credit Losses Total Amount of: (in millions) Receivables Receivables Floorplan receivables $ 1,892.1 $ 22.9 $ 11.9 Other loans 18.9 — — Total receivables managed $ 1,911.0 $ 22.9 $ 11.9
Summary of the changes in the allowance for credit losses and doubtful accountsThe following is a summary of the changes in the allowance for credit losses related to finance receivables ( in millions ): March 31, March 31, Allowance for Credit Losses Balance at beginning of period $ 22.0 $ 15.0 Opening balance adjustment for adoption of ASC Topic 326 — 5.0 Provision for credit losses 4.8 16.9 Recoveries 2.5 1.9 Less charge-offs (3.8) (13.8) Balance at end of period $ 25.5 $ 25.0
Schedule of obligations collateralized by finance receivablesObligations collateralized by finance receivables consisted of the following: March 31, December 31, Obligations collateralized by finance receivables, gross $ 1,258.9 $ 1,282.8 Unamortized securitization issuance costs (19.8) (21.6) Obligations collateralized by finance receivables $ 1,239.1 $ 1,261.2

Long-Term Debt (Tables)

Long-Term Debt (Tables)3 Months Ended
Mar. 31, 2021
Long-term Debt, Unclassified [Abstract]
Schedule of long-term debtLong-term debt consisted of the following (in millions) : Interest Rate* Maturity March 31, December 31, Term Loan B-6 Adjusted LIBOR + 2.25% September 19, 2026 $ 935.7 $ 938.1 Revolving Credit Facility Adjusted LIBOR + 1.75% September 19, 2024 — — Senior notes 5.125% June 1, 2025 950.0 950.0 European lines of credit Euribor + 1.25% Repayable upon demand 20.9 14.8 Total debt 1,906.6 1,902.9 Unamortized debt issuance costs/discounts (23.4) (24.8) Current portion of long-term debt (30.4) (24.3) Long-term debt $ 1,852.8 $ 1,853.8

Derivatives (Tables)

Derivatives (Tables)3 Months Ended
Mar. 31, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Schedule of the fair value of the entity's interest rate derivatives included in the consolidated balance sheetThe following table presents the fair value of our interest rate derivatives included in the consolidated balance sheets for the periods presented ( in millions ): Liability Derivatives March 31, 2021 December 31, 2020 Derivatives Designated as Hedging Instruments Balance Sheet Location Fair Value Balance Sheet Location Fair Value 2020 Interest rate swaps Other liabilities $ 17.0 Other liabilities $ 25.9

Other Income, Net (Tables)

Other Income, Net (Tables)3 Months Ended
Mar. 31, 2021
Other Nonoperating Income (Expense) [Abstract]
Schedule of Other Income, NetOther income, net consisted of the following ( in millions ): Three Months Ended March 31, 2021 2020 Realized and unrealized gains on investment securities $ 60.5 $ — Contingent consideration valuation (Note 2) (11.2) — Foreign currency gains (losses) (2.2) (0.4) Other 3.1 2.4 Other income, net $ 50.2 $ 2.0

Accumulated Other Comprehensi_2

Accumulated Other Comprehensive Loss (Tables)3 Months Ended
Mar. 31, 2021
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Schedule of accumulated other comprehensive lossAccumulated other comprehensive loss consisted of the following ( in millions ): March 31, December 31, Foreign currency translation loss $ (11.6) $ (13.2) Unrealized loss on interest rate derivatives, net of tax (12.8) (19.5) Accumulated other comprehensive loss $ (24.4) $ (32.7)

Segment Information (Tables)

Segment Information (Tables)3 Months Ended
Mar. 31, 2021
Segment Reporting [Abstract]
Schedule of financial information regarding the entity's reportable segmentsFinancial information regarding our reportable segments is set forth below as of and for the three months ended March 31, 2021 (in millions) : ADESA AFC Consolidated Operating revenues $ 515.8 $ 65.8 $ 581.6 Operating expenses Cost of services (exclusive of depreciation and amortization) 316.9 13.5 330.4 Selling, general and administrative 140.2 8.8 149.0 Depreciation and amortization 44.6 2.4 47.0 Total operating expenses 501.7 24.7 526.4 Operating profit 14.1 41.1 55.2 Interest expense 21.6 9.3 30.9 Other income, net (5.9) (44.3) (50.2) Intercompany expense (income) 0.1 (0.1) — Income (loss) before income taxes (1.7) 76.2 74.5 Income taxes 4.1 19.5 23.6 Net income (loss) $ (5.8) $ 56.7 $ 50.9 Total assets $ 4,783.4 $ 2,376.8 $ 7,160.2 Financial information regarding our reportable segments is set forth below as of and for the three months ended March 31, 2020 (in millions) : ADESA AFC Consolidated Operating revenues $ 567.0 $ 78.5 $ 645.5 Operating expenses Cost of services (exclusive of depreciation and amortization) 370.7 23.9 394.6 Selling, general and administrative 152.4 10.0 162.4 Depreciation and amortization 44.4 3.3 47.7 Total operating expenses 567.5 37.2 604.7 Operating profit (loss) (0.5) 41.3 40.8 Interest expense 24.4 13.6 38.0 Other income, net (1.9) (0.1) (2.0) Intercompany expense (income) 0.8 (0.8) — Income (loss) before income taxes (23.8) 28.6 4.8 Income taxes (5.2) 7.2 2.0 Net income (loss) $ (18.6) $ 21.4 $ 2.8 Total assets $ 3,553.2 $ 2,446.5 $ 5,999.7
Schedule of information regarding the geographic areas of entity's operationsInformation regarding the geographic areas of our operations is set forth below (in millions) : Three Months Ended March 31, 2021 2020 Operating revenues U.S. $ 439.6 $ 523.3 Foreign 142.0 122.2 $ 581.6 $ 645.5

Basis of Presentation and Nat_3

Basis of Presentation and Nature of Operations (Details) $ / shares in Units, $ in Millions3 Months Ended12 Months Ended
Mar. 31, 2021USD ($)providernetwork$ / sharessharesMar. 31, 2020USD ($)Dec. 31, 2020USD ($)sharesSep. 19, 2019USD ($)May 31, 2017
Basis of Presentation and Nature of Operations [Abstract]
Long-term debt $ 1,906.6 $ 1,902.9
Proceeds from the sale of PWI $ 0.9 $ 0
ADESA Auctions
Basis of Presentation and Nature of Operations [Abstract]
Number of sites for whole car auctions | network74
Ranking of largest providers of used vehicle auctions and related services | provider2
PWI
Basis of Presentation and Nature of Operations [Abstract]
Proceeds from the sale of PWI $ 24.3
Deferred payment from sale of PWI $ 2.2
Series A Preferred Stock [Member]
Basis of Presentation and Nature of Operations [Abstract]
Series A Preferred Stock par value per share | $ / shares $ 0.01
Series A Preferred Stock shares outstanding | shares581,608 571,606
Term Loan B-6
Basis of Presentation and Nature of Operations [Abstract]
Long-term debt $ 935.7 $ 938.1
Senior notes
Basis of Presentation and Nature of Operations [Abstract]
Long-term debt $ 950 950
Senior notes stated interest rate5.125%5.125%
Credit Agreement | Term Loan B-6
Basis of Presentation and Nature of Operations [Abstract]
Long-term debt $ 950
Credit Agreement | Senior secured revolving credit facility
Basis of Presentation and Nature of Operations [Abstract]
Long-term debt $ 0 $ 0
Maximum borrowing capacity $ 325

Acquisitions (Details)

Acquisitions (Details) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Acquisitions
Fair value of deferred payments $ 1.8
Fair value of estimated contingent payments31.1
Maximum amount of undiscounted contingent payments related to acquisitions47.3
Payments for Contingent Consideration and deferred Acquisition Costs21.3 $ 22.3
Contingent consideration adjustment11.2 $ 0
CarsOnTheWeb
Acquisitions
Payments for Contingent Consideration and deferred Acquisition Costs $ 21.3

Stock and Stock-Based Compens_3

Stock and Stock-Based Compensation Plan Summary (Details) $ / shares in Units, shares in Millions3 Months Ended
Mar. 31, 2021USD ($)installment$ / sharessharesMar. 31, 2020USD ($)
Stock and Stock-Based Compensation Plans
Stock-based compensation expense (in dollars) $ 5,400,000 $ 5,000,000
Service options
Stock and Stock-Based Compensation Plans
Stock-based compensation expense (in dollars)300,000 0
Market options
Stock and Stock-Based Compensation Plans
Stock-based compensation expense (in dollars)1,100,000 0
PRSUs
Stock and Stock-Based Compensation Plans
Stock-based compensation expense (in dollars)2,200,000 1,500,000
RSUs
Stock and Stock-Based Compensation Plans
Stock-based compensation expense (in dollars) $ 1,800,000 $ 3,500,000
KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan | Service options
Stock and Stock-Based Compensation Plans
Options granted | shares0.4
Weighted average exercise price of options granted | $ / shares $ 13.81
Term of award10 years
Weighted average grant date fair value of options granted | $ / shares $ 2.53
Fair value assumption - expected term6 years 3 months
Fair value assumption - expected volatility35.78%
Fair value assumption - expected dividend yield5.50%
Fair value assumption - risk free interest rate1.04%
Number of equal annual installments | installment4
KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan | Market options
Stock and Stock-Based Compensation Plans
Options granted | shares1.8
Weighted average exercise price of options granted | $ / shares $ 13.81
Term of award10 years
Weighted average grant date fair value of options granted | $ / shares $ 2.38
Number of equal annual installments | installment4
Percent of options outstanding eligible for exercise25.00%
$5 common stock price hurdle $ 5
$10 common stock price hurdle10
$15 common stock price hurdle15
$20 common stock price hurdle $ 20
Consecutive trading day period required for entity's common stock to be at or above a certain amount as part of vesting conditions.20 days
KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan | RSUs
Stock and Stock-Based Compensation Plans
Number of equal annual installments | installment3
PRSUs and/or RSUs grants | shares0.5
PRSUs and/or RSUs grant date fair value | $ / shares $ 13.81
KAR Auction Services, Inc. 2009 Omnibus Stock and Incentive Plan | PRSUs - Operating Adjusted EPS
Stock and Stock-Based Compensation Plans
PRSUs and/or RSUs grants | shares0.4
PRSUs and/or RSUs grant date fair value | $ / shares $ 13.81
Award vesting period3 years

Share Repurchase Plan (Details)

Share Repurchase Plan (Details) - USD ($) $ / shares in Units, $ in MillionsOct. 30, 2019Mar. 31, 2021Mar. 31, 2020Dec. 31, 2020
Additional disclosures
Common stock, par value (in dollars per share) $ 0.01 $ 0.01
October 2019 Share Repurchase Program
Additional disclosures
Stock repurchase program, authorized amount $ 300
Stock repurchase program expiration dateOct. 30,
2021
Stock repurchased and retired during period (in shares)5,219,800 0
Stock repurchased and retired weighted average price per share $ 15.47

Net Income Per Share (Details)

Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Earnings Per Share, Basic and Diluted [Abstract]
Net income $ 50.9 $ 2.8
Series A Preferred Stock dividends(10)0
Net income attributable to participating securities(8.3)0
Net income attributable to common stockholders $ 32.6 $ 2.8
Shares outstanding
Weighted average common shares outstanding129 129
Effect of dilutive stock options and restricted stock awards0.7 1
Weighted average common shares outstanding and potential common shares129.7 130
Net income per share
Basic $ 0.25 $ 0.02
Diluted $ 0.25 $ 0.02
Shares attributable to stock options excluded from the calculation of diluted net income per share0 0
Securities excluded from calculation of earnings per share amount due to performance conditions not yet satisfied0.8 0.4
Stock options outstanding (in shares)2.7 0.7

Finance Receivables and Oblig_3

Finance Receivables and Obligations Collateralized by Finance Receivables (Details) $ in Millions, $ in Millions3 Months Ended
Mar. 31, 2021USD ($)Mar. 31, 2020USD ($)Mar. 31, 2021CAD ($)Dec. 31, 2020USD ($)
Finance Receivables and Obligations Collateralized by Finance Receivables
Principal amount of receivables $ 1,984.4 $ 1,911
Principal amount of receivables delinquent22.6 22.9
Net credit losses1.3 $ 11.9
Finance receivables pledged as security1,930.7 1,865.3
Obligations collateralized by finance receivables, gross1,258.9 1,282.8
Obligations collateralized by finance receivables1,239.1 1,261.2
Changes in the Allowance for Credit Losses
Balance at beginning of period22 15
Opening balance adjustment for adoption of ASC Topic 3260 5
Provision for credit losses4.8 16.9
Recoveries2.5 1.9
Less charge-offs(3.8)(13.8)
Balance at end of period25.5 25
Floorplan receivables
Finance Receivables and Obligations Collateralized by Finance Receivables
Principal amount of receivables1,975 1,892.1
Principal amount of receivables delinquent22.6 22.9
Net credit losses1.3 11.9
Other Loans
Finance Receivables and Obligations Collateralized by Finance Receivables
Principal amount of receivables9.4 18.9
Principal amount of receivables delinquent0 0
Net credit losses0 $ 0
AFC
Finance Receivables and Obligations Collateralized by Finance Receivables
Unamortized securitization issuance costs $ (19.8) $ (21.6)
AFC | Minimum
Finance Receivables and Obligations Collateralized by Finance Receivables
Period to define financing receivables as past due (in days)31 days
AFC Funding Corporation
Finance Receivables and Obligations Collateralized by Finance Receivables
Committed liquidity $ 1,600
AFC Funding Corporation | Minimum
Finance Receivables and Obligations Collateralized by Finance Receivables
Cash reserve as security for obligations of collateralized financing receivables (as a percent)1.00%
Cash reserve as security for obligations of collateralized financing receivables - circumstance two (as a percent)3.00%
AFCI
Finance Receivables and Obligations Collateralized by Finance Receivables
Committed liquidity $ 175
AFCI | Minimum
Finance Receivables and Obligations Collateralized by Finance Receivables
Cash reserve as security for obligations of collateralized financing receivables (as a percent)1.00%
Cash reserve as security for obligations of collateralized financing receivables - circumstance two (as a percent)3.00%

Long-Term Debt Summary (Details

Long-Term Debt Summary (Details) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Dec. 31, 2020Sep. 19, 2019May 31, 2017
Long-Term Debt
Total debt $ 1,906.6 $ 1,902.9
Unamortized debt issuance costs/discounts(23.4)(24.8)
Current portion of long-term debt(30.4)(24.3)
Long-term debt1,852.8 1,853.8
Term Loan B-6
Long-Term Debt
Total debt $ 935.7 938.1
Term Loan B-6 | Adjusted LIBOR
Long-Term Debt
Variable rate basisAdjusted LIBOR
Interest rate basis (as a percent)2.25%
Revolving Credit Facility | Adjusted LIBOR
Long-Term Debt
Variable rate basisAdjusted LIBOR
Interest rate basis (as a percent)1.75%
Senior notes
Long-Term Debt
Senior notes stated interest rate5.125%5.125%
Total debt $ 950 950
Credit Agreement | Term Loan B-6
Long-Term Debt
Total debt $ 950
Credit Agreement | Revolving Credit Facility
Long-Term Debt
Total debt0 0
European lines of credit | Foreign line of credit
Long-Term Debt
Total debt $ 20.9 $ 14.8
European lines of credit | Foreign line of credit | Euribor rate
Long-Term Debt
Variable rate basisEuribor
Interest rate basis (as a percent)1.25%

Credit Facilities (Details)

Credit Facilities (Details) € in Millions, $ in MillionsSep. 19, 2019USD ($)Mar. 31, 2021USD ($)itemMar. 31, 2020USD ($)Mar. 31, 2021EUR (€)Dec. 31, 2020USD ($)
Long-Term Debt
Long-term debt $ 1,906.6 $ 1,902.9
Payments on long-term debt $ (2.4) $ (2.4)
Percentage of equity interests of certain of the company's and the Subsidiary Guarantors' domestic subsidiaries pledged under the Credit Facility100.00%
Percentage of equity interests of certain of the company's and the Subsidiary Guarantors' first-tier foreign subsidiaries pledged under the Credit Facility65.00%
Estimated fair value of long-term debt $ 1,900.9
Term Loan B-6
Long-Term Debt
Long-term debt935.7 938.1
Letters of credit
Long-Term Debt
Maximum borrowing capacity50
Outstanding letters of credit29.8 28.5
Swing line loans
Long-Term Debt
Maximum borrowing capacity60
Senior notes
Long-Term Debt
Long-term debt $ 950 950
Credit Agreement | Term Loan B-6
Long-Term Debt
Long-term debt $ 950
Interest rate of loan (as a percent)2.38%2.38%
Term of debt instrument7 years
Credit Agreement | Revolving Credit Facility
Long-Term Debt
Long-term debt $ 0 0
Maximum borrowing capacity $ 325
Frequency of commitment fee paymentquarterly
Amount borrowed $ 0 0
Term of debt instrument5 years
European lines of credit | Foreign line of credit
Long-Term Debt
Long-term debt20.9 $ 14.8
Maximum borrowing capacity $ 35.2 € 30
Maximum
Long-Term Debt
Credit facility consolidated senior secured net leverage ratio | item3.5
Maximum | Credit Agreement | Revolving Credit Facility
Long-Term Debt
Commitment fee on the unused amount of the Revolving Credit Facility (as a percent)0.35%
Minimum | Credit Agreement | Revolving Credit Facility
Long-Term Debt
Commitment fee on the unused amount of the Revolving Credit Facility (as a percent)0.25%

Derivatives (Details)

Derivatives (Details) $ in MillionsJan. 23, 2020USD ($)agreementMar. 31, 2021USD ($)Mar. 31, 2020USD ($)Dec. 31, 2020USD ($)
Fair value of the entity's interest rate derivatives included in the consolidated balance sheet
Fixed Interest Rate3.69%
Unrealized gain (loss) on interest rate derivatives, net of tax $ 6.7 $ (19)
January 2020 interest rate swap
Fair value of the entity's interest rate derivatives included in the consolidated balance sheet
Number of derivative agreements entered | agreement3
Aggregate notional amount $ 500
Swap derivative weighted average interest rate1.44%
Term of interest rate swaps5 years
Tax impact from unrealized gain (loss) on interest rate derivatives2.2 $ (6.2)
Other Liabilities [Member] | Designated as Hedging Instrument [Member] | January 2020 interest rate swap
Fair value of the entity's interest rate derivatives included in the consolidated balance sheet
Derivative Liability, Fair Value $ 17 $ 25.9

Other Income, Net (Details)

Other Income, Net (Details) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Other Nonoperating Income (Expense) [Abstract]
Realized and unrealized gains on investment securities $ 60.5 $ 0
Contingent consideration valuation (Note 2)(11.2)0
Foreign currency gains (losses)(2.2)(0.4)
Other3.1 2.4
Other income, net50.2 2
Realized gains (losses) on investments17
Unrealized gain (loss) on investment securities43.5 $ 0
Fair value of investment securities51
Investments recorded at cost $ 16.2

Commitments and Contingencies (

Commitments and Contingencies (Details) $ in Millions3 Months Ended
Mar. 31, 2021USD ($)
Commitments and Contingencies Disclosure [Abstract]
Significant Change In Legal And Regulatory Proceedings $ 0

Accumulated Other Comprehensi_3

Accumulated Other Comprehensive Loss (Details) - USD ($) $ in MillionsMar. 31, 2021Dec. 31, 2020
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]
Foreign currency translation loss $ (11.6) $ (13.2)
Unrealized loss on interest rate derivatives, net of tax(12.8)(19.5)
Accumulated other comprehensive loss $ (24.4) $ (32.7)

Segment Information (Details)

Segment Information (Details) $ in Millions3 Months Ended
Mar. 31, 2021USD ($)segmentMar. 31, 2020USD ($)Dec. 31, 2020USD ($)
Segment Reporting [Abstract]
Number of operating segments | segment2
Number of reportable segments | segment2
Segment Information
Operating revenues $ 581.6 $ 645.5
Operating expenses
Cost of services (exclusive of depreciation and amortization)330.4 394.6
Selling, general and administrative149 162.4
Depreciation and amortization47 47.7
Total operating expenses526.4 604.7
Operating profit (loss)55.2 40.8
Interest expense30.9 38
Other (income) expense, net(50.2)(2)
Intercompany expense (income)0 0
Income before income taxes74.5 4.8
Income taxes23.6 2
Net income50.9 2.8
Total assets7,160.2 5,999.7 $ 6,798.2
Operating Segments | ADESA Auctions
Segment Information
Operating revenues515.8 567
Operating expenses
Cost of services (exclusive of depreciation and amortization)316.9 370.7
Selling, general and administrative140.2 152.4
Depreciation and amortization44.6 44.4
Total operating expenses501.7 567.5
Operating profit (loss)14.1 (0.5)
Interest expense21.6 24.4
Other (income) expense, net(5.9)(1.9)
Intercompany expense (income)0.1 0.8
Income before income taxes(1.7)(23.8)
Income taxes4.1 (5.2)
Net income(5.8)(18.6)
Total assets4,783.4 3,553.2
Operating Segments | AFC
Segment Information
Operating revenues65.8 78.5
Operating expenses
Cost of services (exclusive of depreciation and amortization)13.5 23.9
Selling, general and administrative8.8 10
Depreciation and amortization2.4 3.3
Total operating expenses24.7 37.2
Operating profit (loss)41.1 41.3
Interest expense9.3 13.6
Other (income) expense, net(44.3)(0.1)
Intercompany expense (income)(0.1)(0.8)
Income before income taxes76.2 28.6
Income taxes19.5 7.2
Net income56.7 21.4
Total assets $ 2,376.8 $ 2,446.5

Segment Information (Details 2)

Segment Information (Details 2) - USD ($) $ in Millions3 Months Ended
Mar. 31, 2021Mar. 31, 2020
Geographic Information
Operating revenues $ 581.6 $ 645.5
U.S.
Geographic Information
Operating revenues $ 439.6 $ 523.3
Foreign
Geographic Information
Percent of foreign revenue from Canada52.00%57.00%
Operating revenues $ 142 $ 122.2

Subsequent Event (Details)

Subsequent Event (Details) - USD ($) $ in MillionsMay 04, 2021Mar. 31, 2021
Subsequent Event
Maximum amount of undiscounted contingent payments related to acquisitions $ 47.3
Auction Frontier [Member] | Subsequent Event [Member]
Subsequent Event
Payment to acquire business $ 80
Maximum amount of undiscounted contingent payments related to acquisitions $ 15