Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 27, 2020 | Oct. 28, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 27, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-38580 | |
Entity Registrant Name | IAA, Inc. | |
Entity Central Index Key | 0001745041 | |
Current Fiscal Year End Date | --12-27 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-1030538 | |
Entity Address, Address Line One | Two Westbrook Corporate Center | |
Entity Address, Address Line Two | Suite 500 | |
Entity Address, City or Town | Westchester | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60154 | |
City Area Code | 708 | |
Local Phone Number | 492-7000 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Trading Symbol | IAA | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 134,465,274 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Operating revenues | ||||
Revenues | $ 338 | $ 357.3 | $ 1,001.4 | $ 1,080.9 |
Operating expenses: | ||||
Cost of services (exclusive of depreciation and amortization) | 199.7 | 221.3 | 615.8 | 667.4 |
Selling, general and administrative | 34.9 | 38.9 | 107.2 | 106.2 |
Depreciation and amortization | 19.4 | 22.1 | 61.5 | 66 |
Total operating expenses | 254 | 282.3 | 784.5 | 839.6 |
Operating profit | 84 | 75 | 216.9 | 241.3 |
Interest expense, net | 13.3 | 17.5 | 43.1 | 39.1 |
Other income, net | (0.2) | 0 | (0.8) | (0.1) |
Income before income taxes | 70.9 | 57.5 | 174.6 | 202.3 |
Income taxes | 18.1 | 15.7 | 43.9 | 54.7 |
Net income | $ 52.8 | $ 41.8 | $ 130.7 | $ 147.6 |
Net income per share | ||||
Basic (in dollars per share) | $ 0.39 | $ 0.31 | $ 0.98 | $ 1.11 |
Diluted (in dollars per share) | $ 0.39 | $ 0.31 | $ 0.97 | $ 1.10 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 52.8 | $ 41.8 | $ 130.7 | $ 147.6 |
Other comprehensive income (loss): | ||||
Foreign currency translation gain (loss) | 3.1 | (1.8) | (2.6) | (4.5) |
Comprehensive income | $ 55.9 | $ 40 | $ 128.1 | $ 143.1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Sep. 27, 2020 | Dec. 29, 2019 |
Current assets | ||
Cash and cash equivalents | $ 216.2 | $ 47.1 |
Accounts receivable, net of allowances of $7.5 and $4.2 | 323.5 | 335.9 |
Prepaid consigned vehicle charges | 49.3 | 50.1 |
Other current assets | 29.8 | 26.9 |
Total current assets | 618.8 | 460 |
Non-current assets | ||
Operating lease right-of-use assets, net of accumulated amortization of $140.4 and $75.2 | 823.7 | 735.9 |
Property and equipment, net of accumulated depreciation of $470.6 and $438.3 | 242.6 | 246.9 |
Goodwill | 540.3 | 541.3 |
Intangible assets, net of accumulated amortization of $493.4 and $465.9 | 146.7 | 151.7 |
Other assets | 16.7 | 15.4 |
Total non-current assets | 1,770 | 1,691.2 |
Total assets | 2,388.8 | 2,151.2 |
Current liabilities | ||
Accounts payable | 101.3 | 96.4 |
Short-term right-of-use operating lease liability | 75.6 | 68.6 |
Accrued employee benefits and compensation expenses | 27.6 | 29.4 |
Other accrued expenses | 61.9 | 49.3 |
Total current liabilities | 266.4 | 243.7 |
Non-current liabilities | ||
Long-term debt | 1,250.9 | 1,254.7 |
Long-term right-of-use operating lease liability | 794.1 | 709.5 |
Deferred income tax liabilities | 63.1 | 63.7 |
Other liabilities | 17.9 | 16.8 |
Total non-current liabilities | 2,126 | 2,044.7 |
Commitments and contingencies | ||
Stockholders' deficit | ||
Preferred stock, $0.01 par value: authorized, 150.0 shares; issued and outstanding, none | 0 | 0 |
Common stock, $0.01 par value: authorized, 750.0 shares; issued and outstanding, 134.4 shares at September 27, 2020 and 133.6 shares at December 29, 2019 | 1.3 | 1.3 |
Additional paid-in capital | 9 | 3.5 |
Retained earnings (deficit) | 3.6 | (127.1) |
Accumulated other comprehensive loss | (17.5) | (14.9) |
Total stockholders' deficit | (3.6) | (137.2) |
Total liabilities and stockholders' deficit | $ 2,388.8 | $ 2,151.2 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Sep. 27, 2020 | Dec. 29, 2019 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 7.5 | $ 4.2 |
Accumulated amortization, operating lease right-of-use assets | 140.4 | 75.2 |
Property and equipment, accumulated depreciation | 470.6 | 438.3 |
Intangible assets, accumulated amortization | $ 493.4 | $ 465.9 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, authorized shares (in shares) | 150,000,000 | 150,000,000 |
Preferred stock, issued shares (in shares) | 0 | 0 |
Preferred stock, outstanding shares (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized shares (in shares) | 750,000,000 | 750,000,000 |
Common stock, issued shares (in shares) | 134,400,000 | 133,600,000 |
Common stock, outstanding shares (in shares) | 134,400,000 | 133,600,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' (Deficit) Equity - USD ($) shares in Millions, $ in Millions | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-In Capital | Retained Earnings (Deficit) | Net Parent Investment | Net Parent InvestmentCumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Loss |
Balance at Dec. 30, 2018 | $ 563.2 | $ 1.1 | $ 0 | $ 0 | $ 0 | $ 576.2 | $ 1.1 | $ (13) |
Balance (in shares) at Dec. 30, 2018 | 0 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 147.6 | 41.8 | 105.8 | |||||
Foreign currency translation adjustments, net of tax | (4.5) | (4.5) | ||||||
Stock-based compensation expense | 3.3 | 1.4 | 1.9 | |||||
Common stock issued for the exercise and vesting of stock-based awards | 0.7 | 0.7 | ||||||
Common stock issued for the exercise and vesting of stock-based awards (in shares) | 0.1 | |||||||
Withholding taxes on stock-based awards | (0.1) | (0.1) | ||||||
Reclassification of net parent investment to common stock and additional paid-in capital | 0 | $ 1.3 | (214.5) | 213.2 | ||||
Reclassification of net parent investment to common stock and additional paid-in capital (in shares) | 133.4 | |||||||
Dividend paid to KAR | (1,278) | (1,278) | ||||||
Net transfer to parent and affiliates | 379.8 | 379.8 | ||||||
Balance at Sep. 29, 2019 | (186.9) | $ 1.3 | 2 | (172.7) | 0 | (17.5) | ||
Balance (in shares) at Sep. 29, 2019 | 133.5 | |||||||
Balance at Jun. 30, 2019 | (228.9) | $ 1.3 | 0 | (214.5) | (15.7) | |||
Balance (in shares) at Jun. 30, 2019 | 133.4 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 41.8 | 41.8 | ||||||
Foreign currency translation adjustments, net of tax | (1.8) | (1.8) | ||||||
Stock-based compensation expense | 1.4 | 1.4 | ||||||
Common stock issued for the exercise and vesting of stock-based awards | 0.7 | 0.7 | ||||||
Common stock issued for the exercise and vesting of stock-based awards (in shares) | 0.1 | |||||||
Withholding taxes on stock-based awards | (0.1) | (0.1) | ||||||
Balance at Sep. 29, 2019 | (186.9) | $ 1.3 | 2 | (172.7) | $ 0 | (17.5) | ||
Balance (in shares) at Sep. 29, 2019 | 133.5 | |||||||
Balance at Dec. 29, 2019 | $ (137.2) | $ 1.3 | 3.5 | (127.1) | (14.9) | |||
Balance (in shares) at Dec. 29, 2019 | 133.6 | 133.6 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | $ 130.7 | 130.7 | ||||||
Foreign currency translation adjustments, net of tax | (2.6) | (2.6) | ||||||
Stock-based compensation expense | 6.5 | 6.5 | ||||||
Common stock issued for the exercise and vesting of stock-based awards | 7.2 | 7.2 | ||||||
Common stock issued for the exercise and vesting of stock-based awards (in shares) | 1 | |||||||
Common stock issued for employee stock purchase plan | 0.7 | |||||||
Withholding taxes on stock-based awards | (8.9) | (8.9) | ||||||
Withholding taxes on stock-based awards (in shares) | (0.2) | |||||||
Balance at Sep. 27, 2020 | $ (3.6) | $ 1.3 | 9 | 3.6 | (17.5) | |||
Balance (in shares) at Sep. 27, 2020 | 134.4 | 134.4 | ||||||
Balance at Jun. 28, 2020 | $ (67.4) | $ 1.3 | 1.1 | (49.2) | (20.6) | |||
Balance (in shares) at Jun. 28, 2020 | 134 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income | 52.8 | 52.8 | ||||||
Foreign currency translation adjustments, net of tax | 3.1 | 3.1 | ||||||
Stock-based compensation expense | 2 | 2 | ||||||
Common stock issued for the exercise and vesting of stock-based awards | 6.1 | 6.1 | ||||||
Common stock issued for the exercise and vesting of stock-based awards (in shares) | 0.4 | |||||||
Common stock issued for employee stock purchase plan | 0.7 | 0.7 | ||||||
Withholding taxes on stock-based awards | (0.9) | (0.9) | ||||||
Balance at Sep. 27, 2020 | $ (3.6) | $ 1.3 | $ 9 | $ 3.6 | $ (17.5) | |||
Balance (in shares) at Sep. 27, 2020 | 134.4 | 134.4 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 27, 2020 | Sep. 29, 2019 | |
Operating activities | ||
Net income | $ 130.7 | $ 147.6 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 61.5 | 66 |
Operating lease expense | 100.7 | 86.7 |
Stock-based compensation | 6.5 | 3.2 |
Provision for credit losses | 3.8 | 2 |
Amortization of debt issuance costs | 3.1 | 1.1 |
Deferred income taxes | (0.6) | 0.2 |
Gain on disposal of fixed assets | (0.5) | 0 |
Changes in operating assets and liabilities, net of acquisitions: | ||
Operating lease payments | (96.7) | (94.5) |
Accounts receivable and other assets | 1.4 | 11.5 |
Accounts payable and accrued expenses | 55.3 | 20.8 |
Net cash provided by operating activities | 265.2 | 244.6 |
Investing activities | ||
Acquisition of businesses (net of cash acquired) | 0 | (16.8) |
Purchases of property, equipment and computer software | (41.9) | (56.4) |
Proceeds from the sale of property and equipment | 0.5 | 0.1 |
Net cash used by investing activities | (41.4) | (73.1) |
Financing activities | ||
Net decrease in book overdrafts | (33.6) | (51.4) |
Proceeds from debt issuance | 0 | 1,300 |
Dividend paid to KAR | 0 | (1,278) |
Payments of long-term debt | (4) | 0 |
Finance lease payments | (11.4) | (10.9) |
Net cash transfers to Parent and affiliates | 0 | (117.7) |
Issuance of common stock under stock plans | 7.2 | 0.7 |
Proceeds from issuance of employee stock purchase plan shares | 0.7 | 0 |
Tax withholding payments for vested RSUs | (8.9) | (0.1) |
Deferred financing costs | (2.9) | (25.2) |
Payments of contingent consideration | (1.5) | 0 |
Net cash used by financing activities | (54.4) | (182.6) |
Effect of exchange rate changes on cash | (0.3) | (4.1) |
Net increase (decrease) in cash and cash equivalents | 169.1 | (15.2) |
Cash and cash equivalents at beginning of period | 47.1 | 48.3 |
Cash and cash equivalents at end of period | 216.2 | 33.1 |
Cash paid for interest, net | 34.5 | 0.3 |
Cash paid for taxes, net | $ 44.3 | $ 57.7 |
Basis of Presentation and Natur
Basis of Presentation and Nature of Operations | 9 Months Ended |
Sep. 27, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Nature of Operations | Basis of Presentation and Nature of Operations Description of Business IAA, Inc., together with its subsidiaries (collectively referred to herein as “IAA” and "the Company") is a leading global marketplace connecting vehicle buyers and sellers. Leveraging leading-edge technology and focusing on innovation, IAA's unique platform facilitates the marketing and sale of total loss, damaged and low-value vehicles for a full spectrum of sellers. Headquartered in Westchester, Illinois, the Company has more than 200 facilities throughout the United States, Canada and the United Kingdom. The Company serves a global buyer base and a full spectrum of sellers, including insurance companies, dealerships, fleet lease and rental car companies, and charitable organizations. The Company offers sellers a comprehensive suite of services aimed at maximizing vehicle value, reducing administrative costs, shortening selling cycle time and delivering the highest economic returns. The Company's solutions provide global buyers with the vehicles they need to, among other things, fulfill their vehicle rebuild requirements, replacement part inventory or scrap demand. IAA provides global buyers multiple bidding/buying digital channels, innovative vehicle merchandising, efficient evaluation services and digital bidding tools, enhancing the overall purchasing experience. The Company operates in two reportable segments: United States and International. The Company earns fees for its services from both buyers and sellers of vehicles sold through its channels. Separation and Distribution On February 27, 2018, KAR Auction Services, Inc. (“KAR” or “ Former Parent”), a Delaware corporation, announced a plan to pursue the separation and spin-off (the “Separation”) of its salvage auction business into a separate public company, IAA Spinco Inc. IAA Spinco Inc. was incorporated in Delaware on June 19, 2018 and was renamed IAA, Inc. on June 27, 2019. On June 28, 2019 (the "Separation Date"), KAR completed the distribution of 100% of the issued and outstanding shares of common stock of IAA to the holders of record of KAR's common stock on June 18, 2019, on a pro rata basis (the "Distribution"). On the Separation Date, each KAR common stockholder of record received one share of IAA common stock for every one share of KAR common stock held by such stockholder as of the record date. As a result of the Distribution, KAR does not retain any ownership interest in IAA. The Distribution was made pursuant to the Separation and Distribution Agreement, dated June 27, 2019 (the "Separation and Distribution Agreement"), pursuant to which KAR contributed the subsidiaries that operated the salvage auction business to IAA. The Distribution is expected to be a tax-free transaction under provisions of the Internal Revenue Code. Following the Distribution, IAA became an independent publicly-traded company and is listed on the New York Stock Exchange under the symbol “IAA”. In connection with the Separation, on the Separation Date, the Company paid a dividend to KAR of $1,278.0 million, which included $456.6 million to settle intercompany debt and $40.9 million for certain fixed assets transferred to the Company by KAR on the Separation Date. The Company also paid KAR $117.7 million to settle other intercompany accounts in connection with the Separation. In connection with the Separation, the Company also entered into a non-compete and various other ancillary agreements to effect the Separation and provide a framework for the Company's relationship with KAR after the Separation, including a transition services agreement, a tax matters agreement and an employee matters agreement. These agreements provide for the allocation of assets, employees, liabilities and obligations attributable to periods prior to, at and after the Company's Separation from KAR and govern certain relationships between the Company and KAR after the Separation. For further information regarding these agreements, see Note 2 - Relationship with KAR and Related Entities. Basis of Presentation Until the Separation Date, the Company operated as a separate reportable segment within KAR and, since the Separation Date, the Company has operated independently from KAR. The accompanying unaudited consolidated financial statements for the period from December 31, 2018 to the Separation Date and condensed notes related thereto have been prepared from KAR’s historical accounting records and are presented on a stand-alone basis as if IAA's operations had been conducted independently from KAR for all periods prior to the Separation Date. Accordingly, prior to the Separation Date, KAR’s net investment in these operations ("Net Parent Investment") was shown in lieu of stockholder’s deficit in the unaudited consolidated financial statements. The Company's historical results of operations, financial position and cash flows presented in the unaudited consolidated financial statements may not be indicative of what they would have been had the Company actually been a separate stand-alone entity during such periods, nor are they necessarily indicative of the Company's future results of operations, financial position and cash flows. IAA is comprised of certain stand-alone legal entities for which discrete financial information is available. The unaudited consolidated statements of income include all revenues and costs directly attributable to IAA, including costs for functions and services used by the Company. Prior to the Separation Date, certain shared costs were directly charged to the Company by KAR based on specific identification or other allocation methods. The Company's results of operations prior to the Separation Date also include allocations of costs for administrative functions and services performed on behalf of the Company by centralized staff groups within KAR. Current and deferred income taxes and related tax expense have been determined based on the Company's stand-alone results by applying Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes , to the Company's operations in each country as if the Company was a separate taxpayer (i.e., following the separate return methodology). Allocation methodologies were applied to certain shared costs to allocate amounts to the Company as discussed further in Note 2 - Relationship with KAR and Related Entities. The accompanying unaudited 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 unaudited 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 unaudited consolidated financial statements and condensed notes thereto are unaudited and should be read in conjunction with the audited consolidated financial statements and notes thereto, for the year ended December 29, 2019 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 18, 2020. Fiscal Periods The Company's fiscal year consists of 52 weeks with every fifth year consisting of 53 weeks and ending either the last Sunday in December or the first Sunday in January. Each of fiscal 2019 and fiscal 2020 contain 52 weeks. Use of Estimates The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP. 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 the Company's results of operations and financial position. Among other effects, such changes could result in future impairments of goodwill, intangible assets and long-lived assets, additional allowances on accounts receivable and deferred tax assets and changes in litigation and other loss contingencies. Reclassification Certain amounts reported in the Company's Quarterly Report on Form 10-Q filed with the SEC on November 13, 2019 have been reclassified to conform to the current year’s presentation. The reclassification is related to the presentation of outstanding checks of one of the Company's subsidiaries. The reclassification reduced cash and cash equivalents by $11.7 million, and decreased other accrued expenses by the same amount at December 30, 2018, and reduced cash and cash equivalents by $16.7 million and decreased other accrued expenses by $5.0 million as of September 29, 2019. As a result of this reclassification, certain line items have been amended in the Consolidated Statements of Cash Flows. Recent Accounting Pronouncements Recently Issued and Adopted Accounting Pronouncements In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The adoption of ASU 2018-15 on December 30, 2019 did not have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-4, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the test for goodwill impairment by eliminating Step 2 (implied fair value measurement). Instead goodwill impairment would be measured as the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. The adoption of ASU 2017-4 on December 30, 2019 did not have a material impact on the Company's consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which updates the guidance related to the measurement of credit losses on financial instruments, including trade receivables. This ASU requires the recognition of credit losses on financial instruments based on an estimate of expected losses, replacing the incurred loss model in the prior guidance. The adoption of ASU 2016-13 on December 30, 2019 did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted The Company does not believe that any recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material impact on its unaudited consolidated financial statements or disclosures. |
Relationship with KAR and Relat
Relationship with KAR and Related Entities | 9 Months Ended |
Sep. 27, 2020 | |
Related Party Transactions [Abstract] | |
Relationship with KAR and Related Entities | Relationship with KAR and Related Entities Prior to the Separation Date, the Company was managed and operated in the normal course of business with other affiliates of KAR. Accordingly, certain shared costs have been allocated to the Company and reflected as expenses in the stand-alone unaudited consolidated financial statements. The Company considers the allocation methodologies used to be reasonable and appropriate reflections of historical expenses of KAR attributable to the Company for purposes of the stand-alone financial statements; however, the expenses reflected in the unaudited consolidated financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Company historically operated as a separate, stand-alone entity. In addition, the expenses reflected in these unaudited consolidated financial statements may not be indicative of expenses that will be incurred in the future by the Company. Transactions between KAR and the Company, with the exception of purchase transactions and reimbursements for payments made to third-party service providers by KAR on behalf of the Company, are reflected in equity in the nine months ended September 29, 2019 Consolidated Statements of Stockholders' Deficit as “Net Parent Investment” and in the nine months ended September 29, 2019 Consolidated Statements of Cash Flows as a financing activity in “Net cash transfers to Parent and affiliates.” Corporate Costs/Allocations These unaudited consolidated financial statements include corporate costs incurred by KAR for services that were provided to or on behalf of the Company. These costs consist of allocated cost pools and identifiable costs. Corporate costs were directly charged to, or allocated to, the Company using methods management believes are consistent and reasonable. The identifiable costs were recorded based on dedicated employee assignments. The method for allocating corporate function costs was based on various proportionate formulas involving allocation factors. The methods for allocating corporate administration costs were based on revenue, headcount or the proportion of related expenses. However, the expenses reflected in these unaudited consolidated financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Company historically operated as a separate, stand-alone entity. All corporate charges and allocations have been deemed paid to KAR in the period in which the cost was recorded in the Consolidated Statements of Income. Allocated corporate costs included in selling, general and administrative expenses were $2.8 million for the nine months ended September 29, 2019. The allocated corporate costs were associated with human resources, risk management, information technology and certain finance and other functions. After the Separation Date, the Company is invoiced for services provided by KAR under the transition services agreement described below and, therefore, will no longer reflect these allocations in the Consolidated Statements of Income. Costs incurred related to the transition services agreement are recorded in selling, general, and administrative expenses. Cash Management and Financing KAR generally used a centralized approach to cash management and financing its operations, including the operations of IAA. Accordingly, none of KAR’s corporate cash and cash equivalents was allocated to IAA in the historical consolidated financial statements. Prior to the Separation Date, cash transferred daily, based on IAA’s balances, to centralized accounts maintained by KAR. As cash was disbursed or received by KAR, it was accounted for by IAA through the Net Parent Investment. Transactions with Other KAR Businesses The Company purchases goods and services from KAR’s other businesses. The cost of products and services obtained from these other businesses was $0.2 million and $0.3 million for the three months ended September 27, 2020 and September 29, 2019, respectively, and $0.7 million and $0.8 million for the nine months ended September 27, 2020 and September 29, 2019, respectively. Non-Compete Agreement Pursuant to the Separation and Distribution Agreement, the Company agreed not to compete with KAR in certain non-salvage activities for a period of five years following the Separation Date in certain jurisdictions, subject to certain exceptions. The Company is expressly permitted to continue to conduct its salvage auction business as conducted immediately prior to the Separation Date. The exceptions also permit the Company to conduct certain non-salvage business, in some cases subject to a revenue sharing mechanism in the event such business exceeds specified volume limits or other thresholds. Transition Services Agreement Under the transition services agreement, KAR and its subsidiaries provide, on an interim, transitional basis, various services to IAA for a period of up to two years from the Separation Date. The services provided include information technology, accounts payable, payroll, and other financial functions and administrative services. From time to time, IAA may provide similar services to KAR under the transition services agreement. Tax Matters Agreement The tax matters agreement generally governs IAA's and KAR’s respective rights, responsibilities and obligations with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the Separation, the Distribution or certain related transactions to qualify as tax-free for U.S. federal income tax purposes), tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes for any tax period ending on or before the Separation Date, as well as tax periods beginning after the date of the Distribution. In addition, the tax matters agreement imposes certain restrictions on the Company and its subsidiaries (including restrictions on share issuances, business combinations, sales of assets and similar transactions) designed to preserve the tax-free status of the Separation, the Distribution and certain related transactions. The tax matters agreement also provides special rules that allocate tax liabilities in the event the Separation, the Distribution, or certain related transactions fail to qualify as tax-free for U.S. federal income tax purposes. Employee Matters Agreement The employee matters agreement allocated liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs and other related matters. The employee matters agreement governs certain compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of each company. The employee matters agreement provides that, unless otherwise specified, KAR will be responsible for liabilities associated with employees who are employed by KAR following the Separation, former employees whose last employment was with the KAR businesses and certain specified current and former corporate employees, and the Company is responsible for liabilities associated with employees who are employed by it following the Separation, former employees whose last employment was with the Company's businesses and certain specified current and former corporate employees. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 9 Months Ended |
Sep. 27, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation Plans | Stock-Based Compensation Plans Prior to the Separation, KAR issued equity awards from time to time to select employees and non-employee directors of IAA. In connection with the Separation, IAA created its own equity plan, the 2019 Omnibus Stock and Incentive Plan (as amended, the "2019 OSIP"), as described below under 2019 Omnibus Stock and Incentive Plan. The employee matters agreement entered into with KAR in connection with the Separation required that the outstanding KAR equity awards held by IAA employees and non-employee directors be converted into adjusted awards of IAA pursuant to the 2019 OSIP. The awards were adjusted based on the following principles: • For each award recipient, the intent was to maintain the economic value of those awards before and after the Separation Date; and • The terms of the equity awards, such as the vesting schedule, will generally continue unchanged, except that the performance criteria for certain performance-based restricted stock units ("PRSUs") granted in 2019 were subject to adjusted performance criteria. Such PRSUs were converted into time-based restricted stock units ("RSUs") with two-year cliff vesting in February 2020, since the adjusted performance criteria were determined to have been met. 2019 Omnibus Stock and Incentive Plan On June 27, 2019, the Company's board of directors approved the 2019 OSIP. The purpose of the 2019 OSIP is to provide an additional incentive to selected management employees, directors, independent contractors, and consultants of the Company whose contributions are essential to the growth and success of the Company, in order to strengthen the commitment of such persons, motivate such persons to faithfully and diligently perform their responsibilities and attract and retain competent and dedicated persons whose efforts will result in the long-term growth and profitability for the Company. Benefits granted under the 2019 OSIP may be granted in any one or a combination of (i) options to purchase IAA common stock; (ii) IAA share appreciation rights (“SARs”); (iii) restricted shares of IAA common stock; (iv) other IAA stock-based awards; or (v) other cash-based awards. Options, restricted shares, and other share-based awards or cash awards may constitute performance-based awards. The granting or vesting of any performance-based awards will be based on achievement of performance objectives that are based on one or more financial or business criteria, with respect to one or more business units of IAA and its subsidiaries as a whole. Such financial or business criteria may be adjusted to account for unusual or infrequently occurring items or changes in accounting. Participants include any employee, director, independent contractor or consultant of IAA or any affiliate of IAA selected to receive awards under the 2019 OSIP, and, upon his or her death, his or her successors, heirs, executors and administrators, as the case may be. As of September 27, 2020, the number of common shares reserved and available for awards under the 2019 OSIP is 4,820,617, subject to adjustment made in accordance with the 2019 OSIP. Upon the occurrence of certain corporate events that affect the common stock, including but not limited to any extraordinary cash dividend, stock split, reorganization or other relevant change in capitalization, appropriate adjustments may be made with respect to the number of shares available for grants under the 2019 OSIP, the number of shares covered by outstanding awards and the maximum number of shares that may be granted to any participant. The aggregate awards granted during any calendar year to any single individual will not exceed: (i) 1,000,000 shares subject to options or SARs, (ii) 500,000 shares subject to restricted shares or other share-based awards and (iii) $5,000,000 with respect to any cash-based award. A non-employee director of IAA may not be granted awards under the 2019 OSIP during any calendar year that, when aggregated with such non-employee director’s cash fees received with respect to such calendar year, exceed $750,000 in total value. The following table summarizes the Company's stock-based compensation expense by type of award granted under both the KAR plans and the 2019 OSIP (in millions) : Three Months Ended Nine Months Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Performance-based Restricted Stock Units $ 0.4 $ 0.3 $ 1.0 $ 0.7 Restricted Stock Units and Awards 1.4 1.0 4.9 2.5 Stock Options 0.2 — 0.6 — Total Stock-based Compensation Expense $ 2.0 $ 1.3 $ 6.5 $ 3.2 The following table summarizes the stock-based awards granted by the Company to certain employees and non-employee directors in accordance with the 2019 OSIP during the nine months ended September 27, 2020: Three Months Ended Nine Months Ended Number of Awards Granted Weighted Average Grant Date Fair Value Number of Awards Granted Weighted Average Grant Date Fair Value Performance-based Restricted Stock Units 158 $ 49.85 99,848 $ 50.07 Restricted Stock Awards — $ — 26,831 $ 43.20 Restricted Stock Units 535 $ 49.85 116,649 $ 47.94 The PRSUs granted to certain executive officers and management of the Company vest at the end of a three-year performance period if and to the extent that the Company's three year average return on invested capital achieves certain specified goals. The restricted share awards granted to non-employee directors vest in four equal installments over a one year vesting term. The RSUs granted to certain executive officers and management of the Company are contingent upon continued employment and have a three year vesting term. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
Net Income Per Share | Net Income Per Share 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 the Company's stock-based employee compensation program. The effect of stock options and RSUs 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 the Company's common stock at the average market price during the period. The following table sets forth the computation of net income per share (in millions except per share amounts): Three Months Ended Nine Months Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Net income $ 52.8 $ 41.8 $ 130.7 $ 147.6 Weighted average common shares outstanding 133.9 133.5 134.0 133.3 Effect of dilutive stock awards 0.9 1.2 1.0 0.9 Weighted average common shares outstanding and potential common shares 134.8 134.7 135.0 134.2 Net income per share Basic $ 0.39 $ 0.31 $ 0.98 $ 1.11 Diluted $ 0.39 $ 0.31 $ 0.97 $ 1.10 The weighted number of shares outstanding used in the calculation of diluted earnings per share does not include the effect of the following anti-dilutive securities and awards subject to performance conditions which have not been fully satisfied at the end of respective reporting periods: Three Months Ended Nine Months Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Anti-dilutive awards 0.2 0.1 0.3 0.1 Awards subject to performance conditions not fully satisfied — 0.3 — 0.3 Total 0.2 0.4 0.3 0.4 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | Long-Term Debt Long-term debt consisted of the following (in millions) : September 27, 2020 December 29, 2019 Term Loan Facility $ 774.0 $ 778.0 Notes 500.0 500.0 Total debt 1,274.0 1,278.0 Unamortized debt issuance costs (23.1) (23.3) Current maturities of long-term debt — — Long-term debt $ 1,250.9 $ 1,254.7 Credit Facility On June 28, 2019, the Company entered into a credit agreement (the “Credit Agreement”), which provides for, among other things: (i) a seven-year senior secured term loan facility in an aggregate principal amount of $800 million (the “Term Loan Facility”) and (ii) a five-year revolving credit facility in an aggregate principal amount of $225 million (the “Revolving Credit Facility,” and together with the Term Loan Facility, the “Credit Facility”). On May 1, 2020, the Company entered into an amendment to its Credit Agreement to increase the aggregate principal amount able to be borrowed under the Revolving Credit Facility by $136.0 million to $361.0 million. The Revolving Credit Facility includes a $50 million sub-limit for issuance of letters of credit and a $50 million sublimit for swing line loans, which can be borrowed on same-day notice. The Term Loan Facility matures on June 28, 2026. During the nine months ended September 27, 2020, the Company made an optional principal pre-payment of $4.0 million on the Term Loan Facility. As a result of the Company's optional principal pre-payments under the Term Loan Facility, the next mandatory principal payment under the Term Loan Facility is not due until September 30, 2021. As of September 27, 2020 and December 29, 2019, the interest rate per annum for the Term Loan Facility was 2.4% and 4.0%, respectively. The Revolving Credit Facility matures on June 28, 2024. As of September 27, 2020, no amounts were outstanding under the Revolving Credit Facility. The Credit Agreement contains affirmative and negative covenants that 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 the Company's affiliates. The Credit Agreement also requires the Company to maintain a maximum Consolidated Senior Secured Net Leverage Ratio (as defined in the Credit Agreement) not to exceed 3.50 to 1.00 as of each test date on which any Revolving Loans (as defined in the Credit Agreement) are outstanding. The Company was in compliance with the covenants in the Credit Agreement at September 27, 2020. Notes On June 6, 2019, the Company issued $500.0 million aggregate principal amount of 5.500% Senior Notes due 2027 (the “Notes”). The Notes mature on June 15, 2027. Interest on the Notes is due on June 15 and December 15 of each year and accrues at a rate of 5.500% per annum. The Notes contain covenants which, among other things, limit the Company and its restricted subsidiaries’ ability to pay dividends on or make other distributions in respect of equity interests or make other restricted payments, make certain investments, incur liens on certain assets to secure debt, sell certain assets, consummate certain mergers or consolidations or sell all or substantially all assets, or designate subsidiaries as unrestricted. The Company was in compliance with the covenants at September 27, 2020. Canadian Credit Facility On July 7, 2020, the Company entered into a credit agreement which provides for a revolving credit facility in an aggregate principal amount of $10.0 million Canadian dollars (the "Canadian Credit Facility"). The Canadian Credit Facility matures on July 6, 2021 and is secured by certain of the Company's Canadian assets. The proceeds from the Canadian Credit Facility can be used by the Company's Canadian subsidiary for its working capital requirements, capital expenditures and general corporate purposes. Borrowings under this facility, based on the type of borrowing, bear interest at either (a) Bank of Montreal Prime Rate plus 1.00%; (b) Bankers Acceptance Rate plus 2.25%; or (c) Canadian Dollar Offered Rate (CDOR) plus 2.25%. As of September 27, 2020, no amounts were outstanding under the Canadian Credit Facility. The Canadian Credit Facility contains affirmative and negative covenants which, among other things, put certain limitations on asset sales, mergers and acquisitions, indebtedness, liens, dividends, investments and transactions with the Company's affiliates. The Canadian Credit Facility also requires the Company to maintain a Minimum Working Capital Ratio (as defined in the Canadian Credit Facility) of at least 1.00 to 1.00 and a Minimum Fixed Charge Coverage Ratio (as defined in the Canadian Credit Facility) of at least 1.25 to 1.00. The Company was in compliance with the covenants under the Canadian Credit Facility at September 27, 2020. Other At December 30, 2018, the Company had intercompany debt with KAR of $456.6 million. This debt was eliminated in the Separation. This debt was comprised of three promissory notes, payable on demand, with a weighted average interest rate of 8.27%. At September 27, 2020, the Company had outstanding letters of credit in the aggregate amount of $6.5 million, of which $6.2 million reduce the amount available for borrowings under the Revolving Credit Facility and $0.3 million reduce the amount available for borrowings under the Canadian Credit Facility. At December 29, 2019, the Company had outstanding letters of credit in the aggregate amount of $7.0 million, all of which reduce the amount available for borrowings under its Revolving Credit Facility. Fair Value of Debt As of September 27, 2020, the estimated fair value of the Company's long-term debt was $1,278.6 million. The estimates of fair value were based on broker-dealer quotes for the Company's debt as of September 27, 2020. The estimates presented on long-term financial instruments are not necessarily indicative of the amounts that would be realized in a current market exchange. |
Leases
Leases | 9 Months Ended |
Sep. 27, 2020 | |
Leases [Abstract] | |
Leases | Leases The Company leases property, software, automobiles, trucks and trailers, pursuant to operating lease agreements. The Company also leases furniture, fixtures and equipment under finance leases. The leases have varying remaining lease terms with leases expiring through 2038, some of which include options to extend the leases. The components of leases expense were as follows ( in millions ): Three Months Ended Nine Months Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Operating lease cost $ 34.4 $ 30.6 $ 100.7 $ 86.7 Finance lease cost: Amortization of right-of-use assets $ 3.6 $ 4.1 $ 10.9 $ 11.7 Interest on lease liabilities 0.2 0.3 0.7 0.8 Total finance lease cost $ 3.8 $ 4.4 $ 11.6 $ 12.5 Supplemental cash flow information related to leases was as follows ( in millions ): Nine Months Ended September 27, 2020 September 29, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 96.7 $ 94.5 Operating cash flows related to finance leases $ 0.8 $ 0.8 Financing cash flows related to finance leases $ 11.4 $ 10.9 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 153.0 $ 118.3 Finance leases $ 11.5 $ — Supplemental balance sheet information related to leases was as follows ( in millions, except lease term and discount rate ): September 27, December 29, Operating Leases Operating lease right-of-use assets $ 964.1 $ 811.1 Accumulated amortization (140.4) (75.2) Operating lease right-of-use assets, net $ 823.7 $ 735.9 Other accrued expenses $ 75.6 $ 68.6 Operating lease liabilities 794.1 709.5 Total operating lease liabilities $ 869.7 $ 778.1 Finance Leases Property and equipment, gross $ 139.0 $ 127.4 Accumulated depreciation (102.4) (90.9) Property and equipment, net $ 36.6 $ 36.5 Other accrued expenses $ 11.2 $ 12.4 Other liabilities 14.8 12.6 Total finance lease liabilities $ 26.0 $ 25.0 Weighted Average Remaining Lease Term (Years) Operating leases 11.48 11.81 Finance leases 3.03 1.58 Weighted Average Discount Rate Operating leases 5.6 % 5.7 % Finance leases 3.5 % 4.6 % Maturities of lease liabilities as of September 27, 2020 were as follows ( in millions ): Operating Finance Leases 2020 (excluding the nine months ended September 27, 2020) $ 28.0 $ 2.7 2021 123.9 10.9 2022 111.6 6.1 2023 102.3 3.8 2024 97.3 3.1 2025 93.5 0.8 Thereafter 647.1 — 1,203.7 27.4 Less imputed interest (334.0) (1.4) Total $ 869.7 $ 26.0 |
Leases | Leases The Company leases property, software, automobiles, trucks and trailers, pursuant to operating lease agreements. The Company also leases furniture, fixtures and equipment under finance leases. The leases have varying remaining lease terms with leases expiring through 2038, some of which include options to extend the leases. The components of leases expense were as follows ( in millions ): Three Months Ended Nine Months Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Operating lease cost $ 34.4 $ 30.6 $ 100.7 $ 86.7 Finance lease cost: Amortization of right-of-use assets $ 3.6 $ 4.1 $ 10.9 $ 11.7 Interest on lease liabilities 0.2 0.3 0.7 0.8 Total finance lease cost $ 3.8 $ 4.4 $ 11.6 $ 12.5 Supplemental cash flow information related to leases was as follows ( in millions ): Nine Months Ended September 27, 2020 September 29, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 96.7 $ 94.5 Operating cash flows related to finance leases $ 0.8 $ 0.8 Financing cash flows related to finance leases $ 11.4 $ 10.9 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 153.0 $ 118.3 Finance leases $ 11.5 $ — Supplemental balance sheet information related to leases was as follows ( in millions, except lease term and discount rate ): September 27, December 29, Operating Leases Operating lease right-of-use assets $ 964.1 $ 811.1 Accumulated amortization (140.4) (75.2) Operating lease right-of-use assets, net $ 823.7 $ 735.9 Other accrued expenses $ 75.6 $ 68.6 Operating lease liabilities 794.1 709.5 Total operating lease liabilities $ 869.7 $ 778.1 Finance Leases Property and equipment, gross $ 139.0 $ 127.4 Accumulated depreciation (102.4) (90.9) Property and equipment, net $ 36.6 $ 36.5 Other accrued expenses $ 11.2 $ 12.4 Other liabilities 14.8 12.6 Total finance lease liabilities $ 26.0 $ 25.0 Weighted Average Remaining Lease Term (Years) Operating leases 11.48 11.81 Finance leases 3.03 1.58 Weighted Average Discount Rate Operating leases 5.6 % 5.7 % Finance leases 3.5 % 4.6 % Maturities of lease liabilities as of September 27, 2020 were as follows ( in millions ): Operating Finance Leases 2020 (excluding the nine months ended September 27, 2020) $ 28.0 $ 2.7 2021 123.9 10.9 2022 111.6 6.1 2023 102.3 3.8 2024 97.3 3.1 2025 93.5 0.8 Thereafter 647.1 — 1,203.7 27.4 Less imputed interest (334.0) (1.4) Total $ 869.7 $ 26.0 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 27, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company is and may from time to time become 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. 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. The Company accrues 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 the Company's operating results in that period. Such matters are generally not, in the opinion of management, likely to have a material adverse effect on the Company's financial condition, results of operations or cash flows. Legal fees are expensed as incurred. IAA—Lower Duwamish Waterway Beginning in June 2004, IAA operated a branch on property it leased in Tukwila, Washington just south of Seattle. The property is located adjacent to a Superfund site known as the Lower Duwamish Waterway Superfund Site ("LDW Site"). The LDW Site had been designated a Superfund site in 2001, three years prior to IAA’s tenancy. On March 25, 2008, the United States Environmental Protection Agency (the "EPA") issued IAA a General Notice of Potential Liability, or "General Notice," pursuant to Section 107(a), and a Request for Information pursuant to Section 104(e) of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") related to the LDW Site. On November 7, 2012, the EPA issued IAA a Second General Notice of Potential Liability (the "Second General Notice") for the LDW Site. The EPA's website indicates that the EPA has issued general notice letters to approximately 116 entities, and has issued Section 104(e) Requests to more than 300 entities related to the LDW Site. In the General Notice and Second General Notice, the EPA informed IAA that the EPA believed IAA may be a Potentially Responsible Party ("PRP"), but the EPA did not specify the factual basis for this assertion. At this time, the EPA still has not specified the factual basis for this assertion and has not demanded that IAA pay any funds or take any action apart from responding to the Section 104(e) Information Request. Four PRPs, The Boeing Company, the City of Seattle, the Port of Seattle and King County - the Lower Duwamish Waterway Group ("LDWG"), have funded a remedial investigation and feasibility study related to the cleanup of the LDW Site. In December 2014, the EPA issued a Record of Decision ("ROD"), detailing the final cleanup plan for the LDW Site. The ROD estimated the cost of cleanup to be $342 million, with the plan involving dredging of 105 acres, capping 24 acres, and enhanced natural recovery of 48 acres. The estimated length of the cleanup was 17 years, including 7 years of active remediation, and 10 years of monitored natural recovery. IAA is aware that certain authorities may bring natural resource damage claims against PRPs. On February 11, 2016, IAA received a Notice of Intent letter from the United States National Oceanic and Atmospheric Administration informing IAA that the Elliott Bay Trustee Council were beginning to conduct an injury assessment for natural resource damages in the LDW. The Notice of Intent indicated that the decision of the trustees to proceed with this natural resources injury assessment followed a pre-assessment screen performed by the trustees. Shortly thereafter, in a letter dated August 16, 2016, EPA issued a status update to the PRPs at the LDW Site. The letter stated that EPA expected the bulk of the pre-remedial design work currently being performed by the LDWG to be completed by the beginning of 2018, with the Remedial Design/Remedial Action ("RD/ RA") phase to follow. The EPA previously anticipated that the pre-design work would be completed sometime during 2018, and the Company is not aware of any further information regarding that schedule. Accordingly, the Company is unable to predict when RD/RA negotiations with all PRPs might begin. In addition, the Washington State Department of Ecology ("Ecology") is working with the EPA in relation to the LDW Site, primarily to investigate and address sources of potential contamination contributing to the LDW Site. In 2007, IAA installed a stormwater capture and filtration system designed to treat sources of potential contamination before discharge to the LDW Site. The immediate-past property owner, the former property owner and IAA have had discussions with Ecology concerning possible source control measures, including an investigation of the water and soils entering the stormwater system, an analysis of the source of contamination identified within the system, if any, and possible repairs and upgrades to the stormwater system if required. As of May 31, 2020, IAA ceased all operations at the site and terminated its remaining lease of the property in June 2020. Accordingly, IAA submitted a Notice of Termination of its stormwater permit to Ecology, discontinuing IAA’s ongoing obligations around the stormwater system maintenance and any additional source control measures. At this time, the Company has not received any further notices from the EPA and still does not have adequate information to determine IAA's liability, if any, for contamination at this site, or to estimate IAA's loss as a result of this potential liability which might have been incurred during IAA’s occupancy. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 27, 2020 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information The Company has two operating segments: United States and International. The Company's two operating segments represent its two reportable segments. These segments represent geographic areas and reflect how the chief operating decision maker allocates resources and measures results. Financial information regarding the Company's reportable segments is set forth below as of and for the three and nine months ended September 27, 2020 (in millions) : Three Months Ended September 27, 2020 Nine Months Ended September 27, 2020 United States International Total United States International Total Revenues $ 298.4 $ 39.6 $ 338.0 $ 885.4 $ 116.0 $ 1,001.4 Operating expenses: Cost of services (exclusive of depreciation and amortization) 172.3 27.4 199.7 532.7 83.1 615.8 Selling, general and administrative 32.5 2.4 34.9 100.5 6.7 107.2 Depreciation and amortization 17.7 1.7 19.4 56.5 5.0 61.5 Total operating expenses 222.5 31.5 254.0 689.7 94.8 784.5 Operating profit 75.9 8.1 84.0 195.7 21.2 216.9 Interest expense, net 13.3 — 13.3 43.2 (0.1) 43.1 Other (income) expense, net (0.3) 0.1 (0.2) (0.4) (0.4) (0.8) Income before income taxes 62.9 8.0 70.9 152.9 21.7 174.6 Income taxes 15.3 2.8 18.1 39.1 4.8 43.9 Net income $ 47.6 $ 5.2 $ 52.8 $ 113.8 $ 16.9 $ 130.7 Total assets $ 2,183.1 $ 205.7 $ 2,388.8 $ 2,183.1 $ 205.7 $ 2,388.8 Financial information regarding the Company's reportable segments is set forth below as of and for the three and nine months ended September 29, 2019 (in millions) : Three Months Ended September 29, 2019 Nine Months Ended September 29, 2019 United States International Total United States International Total Revenues $ 318.1 $ 39.2 $ 357.3 $ 952.9 $ 128.0 $ 1,080.9 Operating expenses: Cost of services (exclusive of depreciation and amortization) 193.4 27.9 221.3 578.3 89.1 667.4 Selling, general and administrative 36.5 2.4 38.9 97.2 9.0 106.2 Depreciation and amortization 20.5 1.6 22.1 61.0 5.0 66.0 Total operating expenses 250.4 31.9 282.3 736.5 103.1 839.6 Operating profit 67.7 7.3 75.0 216.4 24.9 241.3 Interest expense, net 17.5 — 17.5 39.1 — 39.1 Other income, net — — — — (0.1) (0.1) Income before income taxes 50.2 7.3 57.5 177.3 25.0 202.3 Income taxes 13.7 2.0 15.7 47.7 7.0 54.7 Net income $ 36.5 $ 5.3 $ 41.8 $ 129.6 $ 18.0 $ 147.6 Total assets $ 1,886.9 $ 193.0 $ 2,079.9 $ 1,886.9 $ 193.0 $ 2,079.9 |
Business Acquisition
Business Acquisition | 9 Months Ended |
Sep. 27, 2020 | |
Business Combinations [Abstract] | |
Business Acquisition | Business AcquisitionOn July 31, 2019, the Company acquired Decision Dynamics, Inc. ("DDI"), a leading electronic lien and title technology firm located in Lexington, South Carolina. The Company acquired all of the outstanding equity of DDI pursuant to a stock purchase agreement, which contains customary representations, warranties, covenants and indemnities by the sellers and the Company. The acquisition date fair value of the total consideration transferred was $19.2 million, which consisted of an initial cash price of $16.7 million, net of cash acquired of $0.3 million, and the fair value of contingent consideration of $2.5 million which is payable upon achievement of certain performance targets over three years. During the nine months ended September 27, 2020, the Company paid contingent consideration of $1.5 million, which is included in financing activities on the consolidated statements of cash flows. The Company has finalized the purchase price allocation for the DDI acquisition. The fair value of acquired intangibles assets and other net liabilities assumed was $10.3 million and $0.6 million, respectively. The excess of the purchase price consideration over the estimated fair value of the acquired net assets of $9.5 million was allocated to goodwill. The intangible assets acquired primarily related to customer relationships, developed technology and tradename, which will be amortized over a weighted average-useful life of approximately 12 years. The goodwill recognized from this acquisition reflects expected synergies resulting from adding DDI products and processes to the Company's products and processes. The acquired goodwill is allocated to the United States segment and is deductible for tax purpose. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 27, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsThe Company has evaluated all events that occurred after the balance sheet date of September 27, 2020 through the date these financial statements were issued, and did not have any material recognizable events after September 27, 2020. |
Basis of Presentation and Nat_2
Basis of Presentation and Nature of Operations (Policies) | 9 Months Ended |
Sep. 27, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Until the Separation Date, the Company operated as a separate reportable segment within KAR and, since the Separation Date, the Company has operated independently from KAR. The accompanying unaudited consolidated financial statements for the period from December 31, 2018 to the Separation Date and condensed notes related thereto have been prepared from KAR’s historical accounting records and are presented on a stand-alone basis as if IAA's operations had been conducted independently from KAR for all periods prior to the Separation Date. Accordingly, prior to the Separation Date, KAR’s net investment in these operations ("Net Parent Investment") was shown in lieu of stockholder’s deficit in the unaudited consolidated financial statements. The Company's historical results of operations, financial position and cash flows presented in the unaudited consolidated financial statements may not be indicative of what they would have been had the Company actually been a separate stand-alone entity during such periods, nor are they necessarily indicative of the Company's future results of operations, financial position and cash flows. IAA is comprised of certain stand-alone legal entities for which discrete financial information is available. The unaudited consolidated statements of income include all revenues and costs directly attributable to IAA, including costs for functions and services used by the Company. Prior to the Separation Date, certain shared costs were directly charged to the Company by KAR based on specific identification or other allocation methods. The Company's results of operations prior to the Separation Date also include allocations of costs for administrative functions and services performed on behalf of the Company by centralized staff groups within KAR. Current and deferred income taxes and related tax expense have been determined based on the Company's stand-alone results by applying Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes , to the Company's operations in each country as if the Company was a separate taxpayer (i.e., following the separate return methodology). Allocation methodologies were applied to certain shared costs to allocate amounts to the Company as discussed further in Note 2 - Relationship with KAR and Related Entities. |
Use of Estimates | Use of Estimates The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP. 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 the Company's results of operations and financial position. Among other effects, such changes could result in future impairments of goodwill, intangible assets and long-lived assets, additional allowances on accounts receivable and deferred tax assets and changes in litigation and other loss contingencies. |
Reclassification | ReclassificationCertain amounts reported in the Company's Quarterly Report on Form 10-Q filed with the SEC on November 13, 2019 have been reclassified to conform to the current year’s presentation. The reclassification is related to the presentation of outstanding checks of one of the Company's subsidiaries. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Issued and Adopted Accounting Pronouncements In August 2018, the FASB issued Accounting Standards Update ("ASU") 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The adoption of ASU 2018-15 on December 30, 2019 did not have a material impact on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-4, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which simplifies the test for goodwill impairment by eliminating Step 2 (implied fair value measurement). Instead goodwill impairment would be measured as the amount by which a reporting unit's carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. The adoption of ASU 2017-4 on December 30, 2019 did not have a material impact on the Company's consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), which updates the guidance related to the measurement of credit losses on financial instruments, including trade receivables. This ASU requires the recognition of credit losses on financial instruments based on an estimate of expected losses, replacing the incurred loss model in the prior guidance. The adoption of ASU 2016-13 on December 30, 2019 did not have a material impact on the Company's consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted The Company does not believe that any recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material impact on its unaudited consolidated financial statements or disclosures. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of stock-based compensation expense by type of award | The following table summarizes the Company's stock-based compensation expense by type of award granted under both the KAR plans and the 2019 OSIP (in millions) : Three Months Ended Nine Months Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Performance-based Restricted Stock Units $ 0.4 $ 0.3 $ 1.0 $ 0.7 Restricted Stock Units and Awards 1.4 1.0 4.9 2.5 Stock Options 0.2 — 0.6 — Total Stock-based Compensation Expense $ 2.0 $ 1.3 $ 6.5 $ 3.2 |
Schedule of granted stock-based awards | The following table summarizes the stock-based awards granted by the Company to certain employees and non-employee directors in accordance with the 2019 OSIP during the nine months ended September 27, 2020: Three Months Ended Nine Months Ended Number of Awards Granted Weighted Average Grant Date Fair Value Number of Awards Granted Weighted Average Grant Date Fair Value Performance-based Restricted Stock Units 158 $ 49.85 99,848 $ 50.07 Restricted Stock Awards — $ — 26,831 $ 43.20 Restricted Stock Units 535 $ 49.85 116,649 $ 47.94 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Earnings Per Share, Basic and Diluted [Abstract] | |
Schedule of computation of net income per share | The following table sets forth the computation of net income per share (in millions except per share amounts): Three Months Ended Nine Months Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Net income $ 52.8 $ 41.8 $ 130.7 $ 147.6 Weighted average common shares outstanding 133.9 133.5 134.0 133.3 Effect of dilutive stock awards 0.9 1.2 1.0 0.9 Weighted average common shares outstanding and potential common shares 134.8 134.7 135.0 134.2 Net income per share Basic $ 0.39 $ 0.31 $ 0.98 $ 1.11 Diluted $ 0.39 $ 0.31 $ 0.97 $ 1.10 |
Schedule of anti-dilutive securities | The weighted number of shares outstanding used in the calculation of diluted earnings per share does not include the effect of the following anti-dilutive securities and awards subject to performance conditions which have not been fully satisfied at the end of respective reporting periods: Three Months Ended Nine Months Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Anti-dilutive awards 0.2 0.1 0.3 0.1 Awards subject to performance conditions not fully satisfied — 0.3 — 0.3 Total 0.2 0.4 0.3 0.4 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consisted of the following (in millions) : September 27, 2020 December 29, 2019 Term Loan Facility $ 774.0 $ 778.0 Notes 500.0 500.0 Total debt 1,274.0 1,278.0 Unamortized debt issuance costs (23.1) (23.3) Current maturities of long-term debt — — Long-term debt $ 1,250.9 $ 1,254.7 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Leases [Abstract] | |
Components of lease expense | The components of leases expense were as follows ( in millions ): Three Months Ended Nine Months Ended September 27, 2020 September 29, 2019 September 27, 2020 September 29, 2019 Operating lease cost $ 34.4 $ 30.6 $ 100.7 $ 86.7 Finance lease cost: Amortization of right-of-use assets $ 3.6 $ 4.1 $ 10.9 $ 11.7 Interest on lease liabilities 0.2 0.3 0.7 0.8 Total finance lease cost $ 3.8 $ 4.4 $ 11.6 $ 12.5 |
Supplemental cash flow and balance sheet information related to leases | Supplemental cash flow information related to leases was as follows ( in millions ): Nine Months Ended September 27, 2020 September 29, 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 96.7 $ 94.5 Operating cash flows related to finance leases $ 0.8 $ 0.8 Financing cash flows related to finance leases $ 11.4 $ 10.9 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 153.0 $ 118.3 Finance leases $ 11.5 $ — Supplemental balance sheet information related to leases was as follows ( in millions, except lease term and discount rate ): September 27, December 29, Operating Leases Operating lease right-of-use assets $ 964.1 $ 811.1 Accumulated amortization (140.4) (75.2) Operating lease right-of-use assets, net $ 823.7 $ 735.9 Other accrued expenses $ 75.6 $ 68.6 Operating lease liabilities 794.1 709.5 Total operating lease liabilities $ 869.7 $ 778.1 Finance Leases Property and equipment, gross $ 139.0 $ 127.4 Accumulated depreciation (102.4) (90.9) Property and equipment, net $ 36.6 $ 36.5 Other accrued expenses $ 11.2 $ 12.4 Other liabilities 14.8 12.6 Total finance lease liabilities $ 26.0 $ 25.0 Weighted Average Remaining Lease Term (Years) Operating leases 11.48 11.81 Finance leases 3.03 1.58 Weighted Average Discount Rate Operating leases 5.6 % 5.7 % Finance leases 3.5 % 4.6 % |
Maturities of lease liabilities, operating leases | Maturities of lease liabilities as of September 27, 2020 were as follows ( in millions ): Operating Finance Leases 2020 (excluding the nine months ended September 27, 2020) $ 28.0 $ 2.7 2021 123.9 10.9 2022 111.6 6.1 2023 102.3 3.8 2024 97.3 3.1 2025 93.5 0.8 Thereafter 647.1 — 1,203.7 27.4 Less imputed interest (334.0) (1.4) Total $ 869.7 $ 26.0 |
Maturities of lease liabilities, finance leases | Maturities of lease liabilities as of September 27, 2020 were as follows ( in millions ): Operating Finance Leases 2020 (excluding the nine months ended September 27, 2020) $ 28.0 $ 2.7 2021 123.9 10.9 2022 111.6 6.1 2023 102.3 3.8 2024 97.3 3.1 2025 93.5 0.8 Thereafter 647.1 — 1,203.7 27.4 Less imputed interest (334.0) (1.4) Total $ 869.7 $ 26.0 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 27, 2020 | |
Segment Reporting [Abstract] | |
Schedule of financial information regarding the entity's reportable segments | Financial information regarding the Company's reportable segments is set forth below as of and for the three and nine months ended September 27, 2020 (in millions) : Three Months Ended September 27, 2020 Nine Months Ended September 27, 2020 United States International Total United States International Total Revenues $ 298.4 $ 39.6 $ 338.0 $ 885.4 $ 116.0 $ 1,001.4 Operating expenses: Cost of services (exclusive of depreciation and amortization) 172.3 27.4 199.7 532.7 83.1 615.8 Selling, general and administrative 32.5 2.4 34.9 100.5 6.7 107.2 Depreciation and amortization 17.7 1.7 19.4 56.5 5.0 61.5 Total operating expenses 222.5 31.5 254.0 689.7 94.8 784.5 Operating profit 75.9 8.1 84.0 195.7 21.2 216.9 Interest expense, net 13.3 — 13.3 43.2 (0.1) 43.1 Other (income) expense, net (0.3) 0.1 (0.2) (0.4) (0.4) (0.8) Income before income taxes 62.9 8.0 70.9 152.9 21.7 174.6 Income taxes 15.3 2.8 18.1 39.1 4.8 43.9 Net income $ 47.6 $ 5.2 $ 52.8 $ 113.8 $ 16.9 $ 130.7 Total assets $ 2,183.1 $ 205.7 $ 2,388.8 $ 2,183.1 $ 205.7 $ 2,388.8 Financial information regarding the Company's reportable segments is set forth below as of and for the three and nine months ended September 29, 2019 (in millions) : Three Months Ended September 29, 2019 Nine Months Ended September 29, 2019 United States International Total United States International Total Revenues $ 318.1 $ 39.2 $ 357.3 $ 952.9 $ 128.0 $ 1,080.9 Operating expenses: Cost of services (exclusive of depreciation and amortization) 193.4 27.9 221.3 578.3 89.1 667.4 Selling, general and administrative 36.5 2.4 38.9 97.2 9.0 106.2 Depreciation and amortization 20.5 1.6 22.1 61.0 5.0 66.0 Total operating expenses 250.4 31.9 282.3 736.5 103.1 839.6 Operating profit 67.7 7.3 75.0 216.4 24.9 241.3 Interest expense, net 17.5 — 17.5 39.1 — 39.1 Other income, net — — — — (0.1) (0.1) Income before income taxes 50.2 7.3 57.5 177.3 25.0 202.3 Income taxes 13.7 2.0 15.7 47.7 7.0 54.7 Net income $ 36.5 $ 5.3 $ 41.8 $ 129.6 $ 18.0 $ 147.6 Total assets $ 1,886.9 $ 193.0 $ 2,079.9 $ 1,886.9 $ 193.0 $ 2,079.9 |
Basis of Presentation and Nat_3
Basis of Presentation and Nature of Operations - Narrative (Details) $ in Millions | Jun. 28, 2019USD ($)shares | Sep. 27, 2020USD ($)segmentfacility | Sep. 29, 2019USD ($) | Dec. 29, 2019USD ($) | Dec. 30, 2018USD ($) |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Number of facilities | facility | 200 | ||||
Number of reportable segments | segment | 2 | ||||
Issued and outstanding shares distributed to holders of record, percentage | 100.00% | ||||
Subsidiary common stock, conversion rate | shares | 1 | ||||
Parent common stock, conversion rate | shares | 1 | ||||
Dividend paid to KAR | $ 0 | $ 1,278 | |||
Payments for certain fixed assets | $ 40.9 | ||||
Reduction to cash and cash equivalents | (216.2) | $ (47.1) | |||
Reduction to other accrued expenses | $ (61.9) | $ (49.3) | |||
Reclassification Adjustment | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Reduction to cash and cash equivalents | 16.7 | $ 11.7 | |||
Reduction to other accrued expenses | $ 5 | $ 11.7 | |||
Affiliated Entity | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Dividend paid to KAR | 1,278 | ||||
Payments to settle intercompany debt | 456.6 | ||||
Payments to settle other intercompany accounts | $ 117.7 |
Relationship with KAR and Rel_2
Relationship with KAR and Related Entities - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Related Party Transaction [Line Items] | ||||
Selling, general and administrative | $ 34.9 | $ 38.9 | $ 107.2 | $ 106.2 |
Cost of products and services obtained | 199.7 | 221.3 | $ 615.8 | 667.4 |
Non-compete period | 5 years | |||
Services period | 2 years | |||
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Cost of products and services obtained | $ 0.2 | $ 0.3 | $ 0.7 | 0.8 |
Corporate | ||||
Related Party Transaction [Line Items] | ||||
Selling, general and administrative | $ 2.8 |
Stock-Based Compensation Plan_2
Stock-Based Compensation Plans - Narrative (Details) | 1 Months Ended | 9 Months Ended |
Feb. 29, 2020 | Sep. 27, 2020USD ($)installmentshares | |
Stock and Stock-Based Compensation Plans | ||
Aggregate awards granted limit, options (in shares) | 1,000,000 | |
Aggregate awards granted limit, restricted shares (in shares) | 500,000 | |
Cash-based award limit | $ | $ 5,000,000 | |
Cash fees received limit | $ | $ 750,000 | |
Restricted Stock Units | ||
Stock and Stock-Based Compensation Plans | ||
Vesting period | 2 years | 3 years |
Performance-based Restricted Stock Units | ||
Stock and Stock-Based Compensation Plans | ||
Vesting period | 3 years | |
Restricted Stock Awards | ||
Stock and Stock-Based Compensation Plans | ||
Vesting period | 1 year | |
Number of annual installments | installment | 4 | |
2019 OSIP | ||
Stock and Stock-Based Compensation Plans | ||
Number of common shares reserved and available for awards (in shares) | 4,820,617 |
Stock-Based Compensation Plan_3
Stock-Based Compensation Plans - Summary of Stock-Based Compensation Expense by Type of Award (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Stock and Stock-Based Compensation Plans | ||||
Total Stock-based Compensation Expense | $ 2 | $ 1.3 | $ 6.5 | $ 3.2 |
Performance-based Restricted Stock Units | ||||
Stock and Stock-Based Compensation Plans | ||||
Total Stock-based Compensation Expense | 0.4 | 0.3 | 1 | 0.7 |
Restricted Stock Units and Awards | ||||
Stock and Stock-Based Compensation Plans | ||||
Total Stock-based Compensation Expense | 1.4 | 1 | 4.9 | 2.5 |
Stock Options | ||||
Stock and Stock-Based Compensation Plans | ||||
Total Stock-based Compensation Expense | $ 0.2 | $ 0 | $ 0.6 | $ 0 |
Stock-Based Compensation Plan_4
Stock-Based Compensation Plans - Schedule of Granted Stock-Based Awards (Details) - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 27, 2020 | Sep. 27, 2020 | |
Performance-based Restricted Stock Units | ||
Stock and Stock-Based Compensation Plans | ||
Number of Awards Granted (in shares) | 158 | 99,848 |
Weighted Average Grant Date Fair Value (usd per share) | $ 49.85 | $ 50.07 |
Restricted Stock Awards | ||
Stock and Stock-Based Compensation Plans | ||
Number of Awards Granted (in shares) | 0 | 26,831 |
Weighted Average Grant Date Fair Value (usd per share) | $ 0 | $ 43.20 |
Restricted Stock Units | ||
Stock and Stock-Based Compensation Plans | ||
Number of Awards Granted (in shares) | 535 | 116,649 |
Weighted Average Grant Date Fair Value (usd per share) | $ 49.85 | $ 47.94 |
Net Income Per Share - Computat
Net Income Per Share - Computation of Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Earnings Per Share, Basic and Diluted [Abstract] | ||||
Net income | $ 52.8 | $ 41.8 | $ 130.7 | $ 147.6 |
Shares outstanding | ||||
Weighted average common shares outstanding (in shares) | 133.9 | 133.5 | 134 | 133.3 |
Effect of dilutive stock awards (in shares) | 0.9 | 1.2 | 1 | 0.9 |
Weighted average common shares outstanding and potential common shares (in shares) | 134.8 | 134.7 | 135 | 134.2 |
Net income per share | ||||
Basic (in dollars per share) | $ 0.39 | $ 0.31 | $ 0.98 | $ 1.11 |
Diluted (in dollars per share) | $ 0.39 | $ 0.31 | $ 0.97 | $ 1.10 |
Net Income Per Share - Anti-dil
Net Income Per Share - Anti-dilutive Securities (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive awards (in shares) | 0.2 | 0.4 | 0.3 | 0.4 |
Anti-dilutive awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive awards (in shares) | 0.2 | 0.1 | 0.3 | 0.1 |
Awards subject to performance conditions not fully satisfied | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive awards (in shares) | 0 | 0.3 | 0 | 0.3 |
Long-Term Debt - Schedule of Lo
Long-Term Debt - Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Sep. 27, 2020 | Dec. 29, 2019 |
Long-Term Debt | ||
Total debt | $ 1,274 | $ 1,278 |
Unamortized debt issuance costs | (23.1) | (23.3) |
Current maturities of long-term debt | 0 | 0 |
Long-term debt | 1,250.9 | 1,254.7 |
Term Loan Facility | ||
Long-Term Debt | ||
Total debt | 774 | 778 |
Notes | ||
Long-Term Debt | ||
Total debt | $ 500 | $ 500 |
Long-Term Debt - Narrative (Det
Long-Term Debt - Narrative (Details) | Jul. 07, 2020CAD ($) | Jun. 28, 2019USD ($) | Sep. 27, 2020USD ($) | Sep. 29, 2019USD ($) | Sep. 27, 2020CAD ($) | May 01, 2020USD ($) | Dec. 29, 2019USD ($) | Jun. 06, 2019USD ($) | Dec. 30, 2018USD ($)note |
Long-Term Debt | |||||||||
Optional principal pre-payment | $ 4,000,000 | $ 0 | |||||||
Outstanding letters of credit | 6,500,000 | $ 7,000,000 | |||||||
Estimated fair value of long-term debt | 1,278,600,000 | ||||||||
Term Loan Facility | |||||||||
Long-Term Debt | |||||||||
Optional principal pre-payment | 4,000,000 | ||||||||
Promissory Notes | Affiliated Entity | |||||||||
Long-Term Debt | |||||||||
Intercompany debt | $ 456,600,000 | ||||||||
Number of promissory notes | note | 3 | ||||||||
Weighted average interest rate | 8.27% | ||||||||
Revolving Credit Facility | |||||||||
Long-Term Debt | |||||||||
Amount reduced under Revolving Credit Facility | 6,200,000 | ||||||||
Credit Agreement | |||||||||
Long-Term Debt | |||||||||
Net leverage ratio | 3.50 | ||||||||
Notes | Senior Notes | |||||||||
Long-Term Debt | |||||||||
Aggregate principal amount, senior notes | $ 500,000,000 | ||||||||
Senior notes stated interest rate, percentage | 5.50% | ||||||||
Canadian Credit Facility | |||||||||
Long-Term Debt | |||||||||
Amount reduced under Revolving Credit Facility | $ 300,000 | ||||||||
Secured Debt | Term Loan Facility | |||||||||
Long-Term Debt | |||||||||
Credit facility, term | 7 years | ||||||||
Aggregate principal amount, line of credit | $ 800,000,000 | ||||||||
Secured Debt | Term Loan Facility | Base Rate | |||||||||
Long-Term Debt | |||||||||
Interest rate, per annum | 2.40% | 2.40% | 4.00% | ||||||
Revolving Credit Facility | Revolving Credit Facility | |||||||||
Long-Term Debt | |||||||||
Credit facility, term | 5 years | ||||||||
Aggregate principal amount, line of credit | $ 225,000,000 | ||||||||
Sub-limit for issuance of letters of credit | $ 50,000,000 | ||||||||
Sub-limit for swing line loans | 50,000,000 | ||||||||
Amount outstanding | $ 0 | ||||||||
Revolving Credit Facility | Credit Agreement Amendment | |||||||||
Long-Term Debt | |||||||||
Aggregate principal amount, line of credit | 361,000,000 | ||||||||
Increase in aggregate principal amount | $ 136,000,000 | ||||||||
Revolving Credit Facility | Canadian Credit Facility | |||||||||
Long-Term Debt | |||||||||
Aggregate principal amount, line of credit | $ 10,000,000 | ||||||||
Minimum working capital ratio | 1 | ||||||||
Minimum fixed charge coverage ratio | 1.25 | ||||||||
Revolving Credit Facility | Canadian Credit Facility | Bank of Montreal Prime Rate | |||||||||
Long-Term Debt | |||||||||
Interest rate | 1.00% | ||||||||
Revolving Credit Facility | Canadian Credit Facility | Bankers Acceptance Rate | |||||||||
Long-Term Debt | |||||||||
Interest rate | 2.25% | ||||||||
Revolving Credit Facility | Canadian Credit Facility | CDOR | |||||||||
Long-Term Debt | |||||||||
Interest rate | 2.25% |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | |
Leases [Abstract] | ||||
Operating lease cost | $ 34.4 | $ 30.6 | $ 100.7 | $ 86.7 |
Finance lease cost: | ||||
Amortization of right-of-use assets | 3.6 | 4.1 | 10.9 | 11.7 |
Interest on lease liabilities | 0.2 | 0.3 | 0.7 | 0.8 |
Total finance lease cost | $ 3.8 | $ 4.4 | $ 11.6 | $ 12.5 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow and Balance Sheet Information Related to Leases (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows related to operating leases | $ 96.7 | $ 94.5 | |
Operating cash flows related to finance leases | 0.8 | 0.8 | |
Financing cash flows related to finance leases | 11.4 | 10.9 | |
Right-of-use assets obtained in exchange for lease obligations: | |||
Operating leases | 153 | 118.3 | |
Finance leases | 11.5 | $ 0 | |
Operating Leases | |||
Operating lease right-of-use assets | 964.1 | $ 811.1 | |
Accumulated amortization | (140.4) | (75.2) | |
Operating lease right-of-use assets, net | 823.7 | 735.9 | |
Other accrued expenses | 75.6 | 68.6 | |
Operating lease liabilities | 794.1 | 709.5 | |
Total operating lease liabilities | 869.7 | 778.1 | |
Finance Leases | |||
Property and equipment, gross | 139 | 127.4 | |
Accumulated depreciation | (102.4) | (90.9) | |
Property and equipment, net | 36.6 | 36.5 | |
Other accrued expenses | 11.2 | 12.4 | |
Other liabilities | 14.8 | 12.6 | |
Total finance lease liabilities | $ 26 | $ 25 | |
Weighted Average Remaining Lease Term (Years) | |||
Operating leases | 11 years 5 months 23 days | 11 years 9 months 21 days | |
Finance leases | 3 years 10 days | 1 year 6 months 29 days | |
Weighted Average Discount Rate | |||
Operating leases | 5.60% | 5.70% | |
Finance leases | 3.50% | 4.60% |
Leases - Schedule of Maturities
Leases - Schedule of Maturities Of Operating And Financing Leases Liabilities (Details) - USD ($) $ in Millions | Sep. 27, 2020 | Dec. 29, 2019 |
Operating Leases | ||
2020 (excluding the nine months ended September 27, 2020) | $ 28 | |
2021 | 123.9 | |
2022 | 111.6 | |
2023 | 102.3 | |
2024 | 97.3 | |
2025 | 93.5 | |
Thereafter | 647.1 | |
Operating lease payment due | 1,203.7 | |
Less imputed interest | (334) | |
Total | 869.7 | $ 778.1 |
Finance Leases | ||
2020 (excluding the nine months ended September 27, 2020) | 2.7 | |
2021 | 10.9 | |
2022 | 6.1 | |
2023 | 3.8 | |
2024 | 3.1 | |
2025 | 0.8 | |
Thereafter | 0 | |
Finance lease payment due | 27.4 | |
Less imputed interest | (1.4) | |
Total | $ 26 | $ 25 |
Commitments and Contingencies -
Commitments and Contingencies - Narrative (Details) - Record of Decision $ in Millions | 1 Months Ended |
Dec. 31, 2014USD ($)a | |
Loss Contingencies [Line Items] | |
Estimated cost of cleanup | $ | $ 342 |
Area of land involving dredging (acres) | 105 |
Area of land involving capping (acres) | 24 |
Area of land involving enhanced natural recover (acres) | 48 |
Total length of cleanup | 17 years |
Active remediation | 7 years |
Monitored natural recovery | 10 years |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 27, 2020USD ($) | Sep. 29, 2019USD ($) | Sep. 27, 2020USD ($)segment | Sep. 29, 2019USD ($) | Dec. 29, 2019USD ($) | |
Segment Reporting [Abstract] | |||||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 2 | ||||
Segment Information | |||||
Revenues | $ 338 | $ 357.3 | $ 1,001.4 | $ 1,080.9 | |
Operating expenses: | |||||
Cost of services (exclusive of depreciation and amortization) | 199.7 | 221.3 | 615.8 | 667.4 | |
Selling, general and administrative | 34.9 | 38.9 | 107.2 | 106.2 | |
Depreciation and amortization | 19.4 | 22.1 | 61.5 | 66 | |
Total operating expenses | 254 | 282.3 | 784.5 | 839.6 | |
Operating profit | 84 | 75 | 216.9 | 241.3 | |
Interest expense, net | 13.3 | 17.5 | 43.1 | 39.1 | |
Other (income) expense, net | (0.2) | 0 | (0.8) | (0.1) | |
Income before income taxes | 70.9 | 57.5 | 174.6 | 202.3 | |
Income taxes | 18.1 | 15.7 | 43.9 | 54.7 | |
Net income | 52.8 | 41.8 | 130.7 | 147.6 | |
Total assets | 2,388.8 | 2,079.9 | 2,388.8 | 2,079.9 | $ 2,151.2 |
United States | |||||
Segment Information | |||||
Revenues | 298.4 | 318.1 | 885.4 | 952.9 | |
Operating expenses: | |||||
Cost of services (exclusive of depreciation and amortization) | 172.3 | 193.4 | 532.7 | 578.3 | |
Selling, general and administrative | 32.5 | 36.5 | 100.5 | 97.2 | |
Depreciation and amortization | 17.7 | 20.5 | 56.5 | 61 | |
Total operating expenses | 222.5 | 250.4 | 689.7 | 736.5 | |
Operating profit | 75.9 | 67.7 | 195.7 | 216.4 | |
Interest expense, net | 13.3 | 17.5 | 43.2 | 39.1 | |
Other (income) expense, net | (0.3) | 0 | (0.4) | 0 | |
Income before income taxes | 62.9 | 50.2 | 152.9 | 177.3 | |
Income taxes | 15.3 | 13.7 | 39.1 | 47.7 | |
Net income | 47.6 | 36.5 | 113.8 | 129.6 | |
Total assets | 2,183.1 | 1,886.9 | 2,183.1 | 1,886.9 | |
International | |||||
Segment Information | |||||
Revenues | 39.6 | 39.2 | 116 | 128 | |
Operating expenses: | |||||
Cost of services (exclusive of depreciation and amortization) | 27.4 | 27.9 | 83.1 | 89.1 | |
Selling, general and administrative | 2.4 | 2.4 | 6.7 | 9 | |
Depreciation and amortization | 1.7 | 1.6 | 5 | 5 | |
Total operating expenses | 31.5 | 31.9 | 94.8 | 103.1 | |
Operating profit | 8.1 | 7.3 | 21.2 | 24.9 | |
Interest expense, net | 0 | 0 | (0.1) | 0 | |
Other (income) expense, net | 0.1 | 0 | (0.4) | (0.1) | |
Income before income taxes | 8 | 7.3 | 21.7 | 25 | |
Income taxes | 2.8 | 2 | 4.8 | 7 | |
Net income | 5.2 | 5.3 | 16.9 | 18 | |
Total assets | $ 205.7 | $ 193 | $ 205.7 | $ 193 |
Business Acquisition (Details)
Business Acquisition (Details) - USD ($) $ in Millions | Jul. 31, 2019 | Sep. 27, 2020 | Sep. 29, 2019 | Dec. 29, 2019 |
Business Acquisition [Line Items] | ||||
Initial cash price | $ 0 | $ 16.8 | ||
Payment of contingent consideration | 1.5 | $ 0 | ||
Goodwill | $ 540.3 | $ 541.3 | ||
DDI | ||||
Business Acquisition [Line Items] | ||||
Purchase price for the transaction | $ 19.2 | |||
Initial cash price | 16.7 | |||
Cash acquired | 0.3 | |||
Acquired intangible assets | 10.3 | |||
Other net liabilities | 0.6 | |||
Goodwill | 9.5 | |||
Annual revenue for DDI | $ 8.3 | |||
DDI | Customer Relationships, Developed Technology and Tradename | ||||
Business Acquisition [Line Items] | ||||
Weighted average-useful life | 12 years | |||
DDI | Achievement of Certain Performance Targets | ||||
Business Acquisition [Line Items] | ||||
Contingent consideration | $ 2.5 | |||
Contingent consideration term | 3 years |
Uncategorized Items - iaa-20200
Label | Element | Value |
Accounting Standards Update [Extensible List] | us-gaap_AccountingStandardsUpdateExtensibleList | us-gaap:AccountingStandardsUpdate201602Member |