Insurance Auto Auctions Reports Decreased 4Q Revenues

Automotive salvage and claims processing services provider, Insurance Auto Auctions Inc., based in Illinois, reported decreased revenues for the fourth quarter 2001, but recorded a $0.6 million operating profit before unusual charges and amortization of intangible assets.

Including the charges and amortization, the company reported a net loss for the quarter of $4.7 million compared to a net loss of $1.2 million in the fourth quarter of 2000. The unusual charges include a $1.2 million provision for losses on inventories acquired under terminated purchase agreement contracts, $2.7 million of business transformation costs, and a $2.0 million special charge primarily comprised of the write-off of certain assets.

Revenues for the quarter ended Dec. 31, 2001, decreased 16.0 percent to $68.7 million compared with $81.8 million in the fourth quarter of 2000. The decline in net revenues is primarily due to a change in the revenue mix as the company continues to transition away from the purchase agreement method of sale.

The reduction in purchase agreement revenue was somewhat offset by an increase in fee revenue during the fourth quarter. Revenues from fees in the fourth quarter increased 17.5 percent to $40.0 million compared to $34.1 million in the fourth quarter of last year as the result of both increased volume and favorable pricing.

Lower operating profits for the quarter, excluding unusual charges and amortization were primarily the result of lower margins realized on the sale of purchase agreement vehicles, and increased operating expenses due in large part to new facilities.

The company said it remains committed to realigning its cost structure and streamlining operations, and expects to return to solid profitability in the first quarter.

Topics Auto Profit Loss