Cover Page
Cover Page - shares | 9 Months Ended | |
Oct. 02, 2022 | Nov. 02, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 02, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-38580 | |
Entity Registrant Name | IAA, Inc. | |
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 $0.01 per share | |
Trading Symbol | IAA | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 133,764,633 | |
Entity Central Index Key | 0001745041 | |
Current Fiscal Year End Date | --01-01 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2022 | Sep. 26, 2021 | Oct. 02, 2022 | Sep. 26, 2021 | |
Revenues | $ 497.5 | $ 420.7 | $ 1,575.4 | $ 1,289.3 |
Operating expenses: | ||||
Selling, general and administrative | 51 | 49.8 | 152.8 | 136.9 |
Depreciation and amortization | 25.2 | 21.2 | 77.9 | 61.5 |
Total operating expenses | 413.5 | 323.9 | 1,262.7 | 951.3 |
Operating profit | 84 | 96.8 | 312.7 | 338 |
Interest expense, net | 13.3 | 11.1 | 36 | 46 |
Other expense (income), net | 3 | 0.2 | 8.2 | (0.5) |
Income before income taxes | 67.7 | 85.5 | 268.5 | 292.5 |
Income taxes | 17.4 | 19.8 | 54 | 71.4 |
Net income | $ 50.3 | $ 65.7 | $ 214.5 | $ 221.1 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.38 | $ 0.49 | $ 1.60 | $ 1.64 |
Diluted (in dollars per share) | $ 0.38 | $ 0.49 | $ 1.60 | $ 1.63 |
Service revenues | ||||
Revenues | $ 397.9 | $ 359 | $ 1,249.5 | $ 1,101.9 |
Operating expenses: | ||||
Cost of service and vehicle sales | 244 | 198.4 | 739 | 592.4 |
Vehicle and parts sales | ||||
Revenues | 99.6 | 61.7 | 325.9 | 187.4 |
Operating expenses: | ||||
Cost of service and vehicle sales | $ 93.3 | $ 54.5 | $ 293 | $ 160.5 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2022 | Sep. 26, 2021 | Oct. 02, 2022 | Sep. 26, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 50.3 | $ 65.7 | $ 214.5 | $ 221.1 |
Other comprehensive (loss) income: | ||||
Foreign currency translation (loss) gain | (28.3) | (4.1) | (60.3) | 1.9 |
Comprehensive (loss) income | $ 22 | $ 61.6 | $ 154.2 | $ 223 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Oct. 02, 2022 | Jan. 02, 2022 |
Current assets | ||
Cash and cash equivalents | $ 145.9 | $ 109.4 |
Restricted cash | 0 | 53 |
Accounts receivable, net of allowances of $9.3 and $9.1 | 418 | 465.7 |
Prepaid consigned vehicle charges | 60.6 | 72.2 |
Other current assets | 77.6 | 69.6 |
Total current assets | 702.1 | 769.9 |
Non-current assets | ||
Operating lease right-of-use assets, net of accumulated amortization of $311.1 and $238.3 | 1,146.3 | 1,024.4 |
Property and equipment, net of accumulated depreciation of $558.1 and $531.9 | 368 | 338.1 |
Goodwill | 748.7 | 797.5 |
Intangible assets, net of accumulated amortization of $590.0 and $549.6 | 185.1 | 197.5 |
Other assets | 31.2 | 26.9 |
Total non-current assets | 2,479.3 | 2,384.4 |
Total assets | 3,181.4 | 3,154.3 |
Current liabilities | ||
Accounts payable | 196.3 | 163.5 |
Short-term right-of-use operating lease liability | 87.9 | 94.3 |
Accrued employee benefits and compensation expenses | 27.4 | 44.2 |
Other accrued expenses | 77.2 | 124.6 |
Current maturities of long-term debt | 32.5 | 181.3 |
Total current liabilities | 421.3 | 607.9 |
Non-current liabilities | ||
Long-term debt | 1,098.2 | 1,120.6 |
Long-term right-of-use operating lease liability | 1,104 | 984.8 |
Deferred income tax liabilities | 69.6 | 74.8 |
Other liabilities | 24.4 | 32.6 |
Total non-current liabilities | 2,296.2 | 2,212.8 |
Commitments and contingencies (Note 9) | ||
Stockholders' equity | ||
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: 133.8 shares at October 2, 2022 and 134.2 shares at January 2, 2022 | 1.3 | 1.3 |
Treasury stock at cost: 1.4 shares at October 2, 2022 and 0.7 shares at January 2, 2022 | (61.2) | (34) |
Additional paid-in capital | 21.9 | 18.6 |
Retained earnings | 576.6 | 362.1 |
Accumulated other comprehensive loss | (74.7) | (14.4) |
Total stockholders' equity | 463.9 | 333.6 |
Total liabilities and stockholders' equity | $ 3,181.4 | $ 3,154.3 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Oct. 02, 2022 | Jan. 02, 2022 |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 9.3 | $ 9.1 |
Accumulated amortization, operating lease right-of-use assets | 311.1 | 238.3 |
Property and equipment, accumulated depreciation | 558.1 | 531.9 |
Intangible assets, accumulated amortization | $ 590 | $ 549.6 |
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, shares issued (in shares) | 133,800,000 | 134,200,000 |
Common stock, outstanding shares (in shares) | 133,800,000 | 134,200,000 |
Treasury stock, at cost (in shares) | 1,400,000 | 700,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Loss |
Beginning Balance (in shares) at Dec. 27, 2020 | 134.5 | |||||
Beginning balance at Dec. 27, 2020 | $ 69.4 | $ 1.3 | $ 12 | $ 67.7 | $ (11.6) | |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 221.1 | 221.1 | ||||
Foreign currency translation adjustments, net of tax | 1.9 | 1.9 | ||||
Stock-based compensation expense | 8.3 | 8.3 | ||||
Common stock issued for the exercise and vesting of stock-based awards (in shares) | 0.4 | |||||
Common stock issued for the exercise and vesting of stock-based awards | 0.6 | 0.6 | ||||
Common stock issued for employee stock purchase plan | 1.2 | 1.2 | ||||
Withholding taxes on stock-based awards (in shares) | (0.1) | |||||
Withholding taxes on stock-based awards | (7.3) | (7.3) | ||||
Ending Balance (in shares) at Sep. 26, 2021 | 134.8 | |||||
Ending balance at Sep. 26, 2021 | 295.2 | $ 1.3 | 14.8 | 288.8 | (9.7) | |
Beginning Balance (in shares) at Jun. 27, 2021 | 134.8 | |||||
Beginning balance at Jun. 27, 2021 | 230.2 | $ 1.3 | 11.4 | 223.1 | (5.6) | |
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 65.7 | 65.7 | ||||
Foreign currency translation adjustments, net of tax | (4.1) | (4.1) | ||||
Stock-based compensation expense | 2.9 | 2.9 | ||||
Common stock issued for the exercise and vesting of stock-based awards | 0.2 | 0.2 | ||||
Common stock issued for employee stock purchase plan | 0.4 | 0.4 | ||||
Withholding taxes on stock-based awards | (0.1) | (0.1) | ||||
Ending Balance (in shares) at Sep. 26, 2021 | 134.8 | |||||
Ending balance at Sep. 26, 2021 | $ 295.2 | $ 1.3 | 14.8 | 288.8 | (9.7) | |
Beginning Balance (in shares) at Jan. 02, 2022 | 134.2 | 134.2 | ||||
Beginning balance at Jan. 02, 2022 | $ 333.6 | $ 1.3 | $ (34) | 18.6 | 362.1 | (14.4) |
Beginning Balance (in shares) at Jan. 02, 2022 | 0.7 | 0.7 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | $ 214.5 | 214.5 | ||||
Foreign currency translation adjustments, net of tax | (60.3) | (60.3) | ||||
Purchase of treasury stock (in shares) | (0.7) | 0.7 | ||||
Purchase of treasury stock | (27.2) | $ (27.2) | ||||
Stock-based compensation expense | 8.9 | 8.9 | ||||
Common stock issued for the exercise and vesting of stock-based awards (in shares) | 0.4 | |||||
Common stock issued for the exercise and vesting of stock-based awards | 0.4 | 0.4 | ||||
Common stock issued for employee stock purchase plan | 1.1 | 1.1 | ||||
Withholding taxes on stock-based awards (in shares) | (0.1) | |||||
Withholding taxes on stock-based awards | $ (7.1) | (7.1) | ||||
Ending Balance (in shares) at Oct. 02, 2022 | 133.8 | 133.8 | ||||
Ending balance at Oct. 02, 2022 | $ 463.9 | $ 1.3 | $ (61.2) | 21.9 | 576.6 | (74.7) |
Ending Balance (in shares) at Oct. 02, 2022 | 1.4 | 1.4 | ||||
Beginning Balance (in shares) at Jul. 03, 2022 | 133.7 | |||||
Beginning balance at Jul. 03, 2022 | $ 438.5 | $ 1.3 | $ (61.2) | 18.5 | 526.3 | (46.4) |
Beginning Balance (in shares) at Jul. 03, 2022 | 1.4 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Net income (loss) | 50.3 | 50.3 | ||||
Foreign currency translation adjustments, net of tax | (28.3) | (28.3) | ||||
Stock-based compensation expense | 3.1 | 3.1 | ||||
Common stock issued for the exercise and vesting of stock-based awards (in shares) | 0.1 | |||||
Common stock issued for the exercise and vesting of stock-based awards | 0.1 | 0.1 | ||||
Common stock issued for employee stock purchase plan | 0.4 | 0.4 | ||||
Withholding taxes on stock-based awards | $ (0.2) | (0.2) | ||||
Ending Balance (in shares) at Oct. 02, 2022 | 133.8 | 133.8 | ||||
Ending balance at Oct. 02, 2022 | $ 463.9 | $ 1.3 | $ (61.2) | $ 21.9 | $ 576.6 | $ (74.7) |
Ending Balance (in shares) at Oct. 02, 2022 | 1.4 | 1.4 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Oct. 02, 2022 | Sep. 26, 2021 | |
Operating activities | ||
Net income (loss) | $ 214.5 | $ 221.1 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 77.9 | 61.5 |
Operating lease expense | 132 | 113 |
Stock-based compensation | 8.9 | 8.3 |
Provision for credit losses | 0.8 | 0.7 |
Loss on extinguishment of debt | 0 | 10.3 |
Amortization of debt issuance costs | 2.1 | 2.6 |
Deferred income taxes | (3.1) | 6.9 |
Change in contingent consideration liabilities | 4.9 | 0 |
Other | 6.9 | (0.4) |
Changes in operating assets and liabilities: | ||
Operating lease payments | (139.4) | (107.2) |
Accounts receivable and other assets | 53.1 | (75) |
Accounts payable and accrued expenses | (43.2) | 41.6 |
Net cash provided by operating activities | 315.4 | 283.4 |
Investing activities | ||
Acquisition of business, net of cash acquired | 0 | (4) |
Purchases of property, equipment and computer software | (135.9) | (80) |
Proceeds from the sale of property and equipment | 38.8 | 0.4 |
Other | (2) | (2) |
Net cash used by investing activities | (99.1) | (85.6) |
Financing activities | ||
Net increase in book overdrafts | 47 | 0 |
Proceeds from debt issuance | 0 | 650 |
Payments of long-term debt | (173.1) | (774) |
Deferred financing costs | (0.1) | (4.8) |
Finance lease payments | (8.9) | (9) |
Purchase of treasury stock | (27.2) | 0 |
Issuance of common stock under stock plans | 0.4 | 0.6 |
Proceeds from issuance of employee stock purchase plan shares | 1.1 | 1.2 |
Tax withholding payments for vested RSUs | (7.1) | (7.3) |
Payments of contingent consideration | (54.7) | (1.3) |
Net cash used by financing activities | (222.6) | (144.6) |
Effect of exchange rate changes on cash | (10.2) | 0.1 |
Net (decrease) increase in cash, cash equivalents and restricted cash | (16.5) | 53.3 |
Cash, cash equivalents and restricted cash at beginning of period | 162.4 | 232.8 |
Cash, cash equivalents and restricted cash at end of period | 145.9 | 286.1 |
Cash paid for interest, net | 27.8 | 27.1 |
Cash paid for taxes, net | 61.8 | 68.3 |
Reconciliation of cash, cash equivalents and restricted cash reported in balance sheets | ||
Cash and cash equivalents | 145.9 | |
Restricted cash | 0 | |
Total cash, cash equivalents and restricted cash shown in statements of cash flows | $ 145.9 | $ 286.1 |
Basis of Presentation and Natur
Basis of Presentation and Nature of Operations | 9 Months Ended |
Oct. 02, 2022 | |
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 digital 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 and vehicle parts for a full spectrum of sellers. Headquartered in Westchester, Illinois, the Company has more than 210 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 digital bidding and buying channels, innovative vehicle merchandising, and efficient evaluation services, 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 and parts sold through its channels. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("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. 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 financial results for the periods presented. Financial results for interim periods are not necessarily indicative of results that may be expected for the year as a whole. 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 January 2, 2022 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 28, 2022. 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. Fiscal 2022 contains 52 weeks and fiscal 2021 contained 53 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. Goodwill Goodwill represents the excess of cost over fair value of identifiable net assets of businesses acquired. Goodwill is tested for impairment annually in the fourth quarter, or more frequently as impairment indicators arise. During the third quarter of fiscal 2022, the Company updated its forecasts which resulted in a decline in the International reporting unit's operating results and projections. The Company identified this as a triggering event and determined that the carrying amount of the International reporting unit's goodwill should be evaluated for impairment at October 2, 2022. The impairment test indicated that the fair value of the International reporting unit exceeded its carrying value by approximately 40% and therefore no goodwill impairment was recorded. The goodwill allocated to the International reporting unit was $250.1 million as of October 2, 2022. Recent Accounting Pronouncements 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. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Oct. 02, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition The Company generates its revenues from contracts with customers. The Company recognizes revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company identifies each performance obligation and evaluates whether the performance obligations are distinct within the context of the contract at contract inception. Performance obligations that are not distinct at contract inception are combined. The Company allocates the transaction price to each distinct performance obligation proportionately based on the estimated standalone selling price for each performance obligation. The Company then determines how the goods or services are transferred to the customer in order to determine the timing of revenue recognition. The Company has disaggregated revenue at the product level by Services and Vehicle and Parts Sales, as well as geographically by the United States and International. See Note 10 - Segment Information for disaggregated revenue. Service Revenues Service revenues include auction and auction related fees for all vehicles sold by the Company. The Company does not take title to vehicles that are consigned to the Company by the seller and records auction fees on those vehicles on a net basis because it has no influence on the vehicle auction selling price agreed to by the seller and the buyer at the auction. The buyer fees are typically based on a tiered structure with fees increasing with the sale price of the vehicle, while the seller fees are typically fixed dollar or a fixed percent of the selling price at auction. The Company generally enforces its rights to payment for seller transactions through net settlement provisions following the sale of a vehicle. Greater than 90% of the Company’s revenue is generated at the time of auction as a result of the satisfaction of the seller and buyer performance obligations as described below. The Company’s contracts with sellers are short-term in nature. The performance obligation contained within the Company's auction contracts for sellers is to facilitate the remarketing of salvage vehicles, including the inbound tow, processing, storage, titling, enhancing and sale at auction. These services are related to facilitating the sale of vehicles and are not distinct within the context of the contract. Accordingly, revenue for these services is recognized when the single performance obligation is satisfied at the point in time when the vehicle is sold through the auction process. Related costs are deferred and recognized at the time of sale. The Company's contracts with buyers are short-term in nature and are generally established via purchase at auction, subject to standard terms and conditions. These contracts contain a single performance obligation, which is satisfied at the point in time when the vehicle is purchased through the auction process. Buyers also pay a fixed registration fee to access the auctions for a one one Vehicle and Parts Sales Vehicle and parts sales represent the selling price of vehicles, vehicle parts and scrap associated with vehicles purchased by the Company. The Company's performance obligation is the completion of the sale process. Revenue is recognized at the point in time when control of the vehicle, vehicle parts or scrap is transferred to the customer, which generally occurs upon delivery to the carrier or the customer. Since the Company acts as principal in the sale process, the sales price for the vehicle or vehicle parts and scrap is recorded as revenue on a gross basis. Buyer fees associated with these sales are recorded in service revenues in the Company's consolidated statements of income . There were no material contract assets, contract liabilities or deferred contract costs recorded on the consolidated balance sheets as of October 2, 2022 and January 2, 2022. For each of the Company's primary revenue streams, cash flows are consistent with the timing of revenue recognition. For the three and nine months ended October 2, 2022 and September 26, 2021, revenue recognized from performance obligations related to prior periods was not material. Revenue expected to be recognized in any future period related to remaining performance obligations is not material. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 9 Months Ended |
Oct. 02, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation Plans | Stock-Based Compensation Plans 2019 Omnibus Stock and Incentive Plan ("2019 OSIP") 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 October 2, 2022, the number of common shares reserved and available for awards under the 2019 OSIP is 4,263,218, 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 Company recorded stock-based compensation expense of $3.1 million and $2.9 million during the three months ended October 2, 2022 and September 26, 2021, respectively, and $8.9 million and $8.3 million during the nine months ended October 2, 2022 and September 26, 2021, respectively. The following table summarizes the performance-based restricted stock units (“PRSUs”) and time-based restricted stock units (“RSUs”) granted by the Company to certain employees and restricted stock awards (“RSAs”) granted by the Company to non-employee directors in accordance with the 2019 OSIP during the three and nine months ended October 2, 2022: Three Months Ended October 2, 2022 Nine Months Ended October 2, 2022 Number of Awards Granted Weighted Average Grant Date Fair Value Number of Awards Granted Weighted Average Grant Date Fair Value PRSUs - Performance Condition 1,628 $ 36.82 117,932 $ 38.34 PRSUs - Market Condition 233 $ 36.82 33,058 $ 41.88 RSUs 4,298 $ 36.82 236,019 $ 38.27 RSAs — $ — 35,282 $ 35.00 PRSUs - Performance Condition: The PRSUs granted to certain executive officers and certain other employees 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. PRSUs - Market Condition: The PRSUs granted to certain executive officers and certain other employees vest based upon the Company's total stockholder return relative to the performance of a peer group over a three year performance period ending December 31, 2024. The grant date fair value of $42.18 per share underlying each PRSU award was calculated using a Monte Carlo simulation. The significant assumptions used to estimate the fair value were: grant date stock price of $38.37; term of 2.76 years; risk-free interest rate of 2.49%; expected volatility of IAA's common stock of 45.48% and the average expected volatility of the common stock of the peer group of 45.18%; correlation coefficients of IAA of 0.60 and the peer group's average of 0.72; and a dividend yield of 0.00%. RSUs - The RSUs granted to certain executive officers and certain other employees of the Company are contingent upon continued employment and vest in three equal annual installments. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Oct. 02, 2022 | |
Earnings Per Share [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, RSUs and RSAs 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 October 2, 2022 September 26, 2021 October 2, 2022 September 26, 2021 Net income $ 50.3 $ 65.7 $ 214.5 $ 221.1 Weighted average common shares outstanding 133.7 134.8 134.0 134.8 Effect of dilutive stock awards 0.2 0.5 0.1 0.5 Weighted average common shares outstanding and potential common shares 133.9 135.3 134.1 135.3 Net income per share Basic $ 0.38 $ 0.49 $ 1.60 $ 1.64 Diluted $ 0.38 $ 0.49 $ 1.60 $ 1.63 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 and market conditions which have not been fully satisfied at the end of the respective reporting periods (in millions) : Three Months Ended Nine Months Ended October 2, 2022 September 26, 2021 October 2, 2022 September 26, 2021 Anti-dilutive awards 0.3 0.1 0.3 0.1 Awards subject to conditions not fully satisfied 0.3 0.2 0.3 0.2 Total 0.6 0.3 0.6 0.3 Share Repurchase Program On August 2, 2021, the Company’s Board of Directors authorized a share repurchase program under which the Company can repurchase up to $400.0 million (exclusive of fees and commissions) of shares of its common stock (the “Repurchase Program”). The Repurchase Program expires on August 3, 2026. The shares under the Repurchase Program may be repurchased through open market, privately negotiated transactions, accelerated share repurchase transactions or other means, including under plans complying with the provisions of Rule 10b5-1 of the Securities Exchange Act of 1934. The timing and amount of common stock to be repurchased under this Repurchase Program will be subject to the discretion of the Company based upon market conditions and other opportunities the Company may have to deploy capital. The Repurchase Program does not obligate the Company to acquire any specific number of shares of its common stock, and the Repurchase Program may be suspended or discontinued at any time. Pursuant to the Repurchase Program, the Company did not repurchase any shares of its common stock during the three months ended October 2, 2022. During the nine months ended October 2, 2022, the Company repurchased 751,285 shares of its common stock for an aggregate gross purchase price of approximately $27.2 million. As of October 2, 2022, approximately $338.8 million remained available under the Repurchase Program. |
Debt
Debt | 9 Months Ended |
Oct. 02, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt consisted of the following (in millions) : October 2, 2022 January 2, 2022 Term Loan $ 641.9 $ 650.0 Notes 500.0 500.0 Revolving Credit Facility — 165.0 Total debt 1,141.9 1,315.0 Unamortized debt issuance costs (11.2) (13.1) Current maturities of long-term debt (32.5) (181.3) Long-term debt $ 1,098.2 $ 1,120.6 Credit Facility On June 28, 2019, the Company entered into a credit agreement (the “2019 Credit Agreement”), which provided for, among other things: (i) a seven-year senior secured term loan in an aggregate principal amount of $800 million (the "2019 Term Loan") and (ii) a five-year revolving credit facility in an aggregate principal amount of $225 million (the "2019 Revolving Credit Facility"). On May 1, 2020, the Company entered into an amendment to its 2019 Credit Agreement to increase the aggregate principal amount able to be borrowed under the 2019 Revolving Credit Facility by $136.0 million to $361.0 million. The 2019 Credit Agreement was terminated on April 30, 2021. During the nine months ended September 26, 2021, the Company recognized a loss of $10.3 million on early extinguishment of the 2019 Credit Agreement, which is included within the interest expense, net line of the consolidated statements of income. On April 30, 2021, the Company entered into a new credit agreement with JPMorgan Chase Bank, N.A., as administrative agent, and the other lenders from time to time party thereto (the “Credit Agreement”). The Credit Agreement provides for, among other things: (i) a senior secured term loan in an aggregate principal amount of $650 million (the "Term Loan") and (ii) a senior secured revolving credit facility with revolving commitments in an aggregate principal amount of $525 million (the "Revolving Credit Facility" and, together with the Term Loan, the "Credit Facility"). Borrowing availability under the Revolving Credit Facility is subject to no default or event of default under the Credit Agreement having occurred at the time of borrowing. The proceeds of the Credit Facility were used, along with cash on hand, to repay in full all outstanding borrowings under the Company’s 2019 Term Loan under its 2019 Credit Agreement. Future borrowings under the Revolving Credit Facility are expected to be used for the Company's ongoing working capital needs and general corporate purposes. The Credit Facility matures on April 30, 2026. Subsequent to November 2, 2021, borrowings under the Credit Agreement bear interest at (A) at the Company’s option, the highest of the prime rate, the Federal Funds Rate plus 0.5%, or one-month LIBOR plus 1.00% (the “Base Rate”) for base rate borrowings or (B) LIBOR, in each case plus an applicable margin ranging from 0.375% to 1.25% with respect to Base Rate borrowings and 1.375% to 2.25% with respect to eurodollar borrowings, in each case, depending on the Company’s Consolidated Net Leverage Ratio (as defined in the Credit Agreement). The Credit Agreement contains additional procedures for transition to a benchmark rate other than one-month LIBOR for eurodollar borrowings. The unused amount of the Revolving Credit Facility is subject to a commitment fee ranging from 0.175% and 0.30% depending on the Company’s Consolidated Net Leverage Ratio. As of October 2, 2022, the interest rate per annum for the Term Loan was 4.49%. The Credit Agreement requires the Company to comply with certain financial covenants, including a requirement that the Company’s Consolidated Net Leverage Ratio not exceed 4:00 to 1:00 as of the last day of any fiscal quarter, subject to certain exceptions for qualifying material acquisitions. Consolidated Net Leverage Ratio is defined as the ratio of Consolidated Total Debt (as defined in the Credit Agreement) to Consolidated EBITDA (as defined in the Credit Agreement). The Credit Agreement also contains other affirmative and negative covenants that are usual and customary for a senior secured credit agreement. The negative covenants include limitations on (i) the disposition of assets, (ii) mergers and acquisitions, (iii) restricted payments, including payment of future dividends, distributions and stock repurchases by the Company, (iv) the incurrence of additional indebtedness, (v) permitted acquisitions and investments and (vi) the incurrence of additional liens on property. The Credit Agreement includes customary events of default. 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. Other At October 2, 2022 and January 2, 2022, the Company had outstanding letters of credit in the aggregate amount of $5.5 million and $5.6 million, respectively, which reduced the amount available for borrowings under the Revolving Credit Facility. Fair Value of Debt The estimated fair value of the Company's Term Loan as of October 2, 2022 and January 2, 2022 and the Revolving Facility as of January 2, 2022 approximated book value as the interest rate is variable in nature. The estimated fair value of the Company's Notes as of October 2, 2022 and January 2, 2022 was $456.3 million and $517.5 million, respectively. These estimates were based on broker-dealer quotes as of the respective dates and are considered Level 2 fair value measurements in the fair value hierarchy. |
Accounts Receivable
Accounts Receivable | 9 Months Ended |
Oct. 02, 2022 | |
Receivables [Abstract] | |
Accounts Receivable | Accounts Receivable Components of accounts receivable, net were as follows ( in millions ): October 2, 2022 January 2, 2022 Advanced charges receivable $ 286.0 $ 322.7 Trade accounts receivable 130.5 139.8 Other receivable 10.8 12.3 Accounts receivable, gross 427.3 474.8 Less: Allowance for credit losses (9.3) (9.1) Accounts receivable, net $ 418.0 $ 465.7 |
Leases
Leases | 9 Months Ended |
Oct. 02, 2022 | |
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 2092, 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 October 2, 2022 September 26, 2021 October 2, 2022 September 26, 2021 Operating lease cost $ 45.2 $ 39.7 $ 132.0 $ 113.0 Finance lease cost: Amortization of right-of-use assets $ 2.8 $ 3.0 $ 8.7 $ 9.2 Interest on lease liabilities 0.2 0.2 0.6 0.6 Total finance lease cost $ 3.0 $ 3.2 $ 9.3 $ 9.8 Supplemental cash flow information related to leases was as follows ( in millions ): Nine Months Ended October 2, 2022 September 26, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 139.4 $ 107.2 Operating cash flows related to finance leases $ 0.6 $ 0.6 Financing cash flows related to finance leases $ 8.9 $ 9.0 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 194.6 $ 194.2 Finance leases $ 0.2 $ 7.6 |
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 2092, 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 October 2, 2022 September 26, 2021 October 2, 2022 September 26, 2021 Operating lease cost $ 45.2 $ 39.7 $ 132.0 $ 113.0 Finance lease cost: Amortization of right-of-use assets $ 2.8 $ 3.0 $ 8.7 $ 9.2 Interest on lease liabilities 0.2 0.2 0.6 0.6 Total finance lease cost $ 3.0 $ 3.2 $ 9.3 $ 9.8 Supplemental cash flow information related to leases was as follows ( in millions ): Nine Months Ended October 2, 2022 September 26, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 139.4 $ 107.2 Operating cash flows related to finance leases $ 0.6 $ 0.6 Financing cash flows related to finance leases $ 8.9 $ 9.0 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 194.6 $ 194.2 Finance leases $ 0.2 $ 7.6 |
Acquisition
Acquisition | 9 Months Ended |
Oct. 02, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisition | Acquisition SYNETIQ Ltd. On October 26, 2021, IAA, through its indirect wholly owned subsidiary, IAA International Holdings Limited, acquired 100% of SYNETIQ Ltd. ("SYNETIQ"), a leading integrated salvage and vehicle dismantling company in the United Kingdom, to expand its footprint in the United Kingdom. The cash purchase price for SYNETIQ, including working capital and other adjustments, was $314.2 million (£228.2 million), of which $260.2 million (£189.0 million) was paid out in the fourth quarter of fiscal 2021. The remaining payment of $54.0 million (£39.2 million), which was held in an escrow account and presented as Restricted cash on the consolidated balance sheets as of January 2, 2022, was paid out during the first quarter of fiscal 2022 upon receipt of required approvals from the U.K. Competition and Markets Authority. The Company funded the acquisition with cash on hand and $100.0 million in borrowings under its Revolving Credit Facility. The Company finalized the purchase price allocation for the SYNETIQ acquisition during the three months ended July 3, 2022. The following table summarizes the fair value of consideration transferred and the fair values of assets acquired and liabilities assumed as of the date of acquisition ( in millions ): October 26, 2021 Cash $ 260.2 Fair value of contingent consideration* 51.4 Total fair value of consideration transferred $ 311.6 *Recorded in Other accrued expenses line within the consolidated balance sheets as of January 2, 2022. October 26, 2021 Cash $ 7.1 Accounts receivable 4.7 Inventory 17.4 ROU assets 39.0 Property and equipment 12.5 Goodwill 256.4 Intangible assets 41.3 Other assets 1.4 Accounts payable and other accrued expenses (18.9) Operating lease liabilities (39.0) Other long-term liabilities (10.3) Net assets acquired $ 311.6 The intangible assets acquired related to developed technology (useful life 4 years) and tradename (useful life 5 years), which will be amortized over a weighted average-useful life of approximately 4 years. The relief from royalty method was used to value the developed technology and tradename. This method requires forward looking estimates to determine fair value, including among other assumptions, forecasted revenue growth, obsolescence, and estimated discount and royalty rates. The goodwill recognized from this acquisition reflects expected synergies resulting from adding SYNETIQ's products and processes to the Company's products and processes. The acquired goodwill has been allocated to the International segment and is deductible for tax purposes. The following unaudited pro forma financial information summarizes the combined results of operations for the Company and SYNETIQ, as though the companies were combined as of the beginning of fiscal 2021 ( in millions ): Three Months Ended September 26, 2021 Nine Months Ended September 26, 2021 Net revenue $ 471.7 $ 1,446.3 Net income 67.2 222.0 These pro forma results are based on estimates and assumptions, which the Company believes are reasonable. The pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the Company’s fiscal 2021, and is not necessarily indicative of the Company's consolidated results of operations in future periods. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Oct. 02, 2022 | |
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. Pyrite Canyon In the fourth quarter of fiscal 2020, the Company’s wholly owned subsidiary, Insurance Auto Auctions, Inc. (hereafter “IAAI”), received a letter from the California Department of Toxic Substances Control (the “DTSC”) styled “Draft Imminent and Substantial Endangerment Determination and Consent Order” (the “Draft Order”) in which the DTSC states that IAAI, along with nine other respondents named in the Draft Order, has been named as a potential responsible party for the release of hazardous substances at the former Universal Propulsion Company site (the “Former UPCo Site”). The Draft Order states that the Former UPCo Site has been identified as contributing to the Pyrite Canyon Plume by the U.S. Environmental Protection Agency and prescribes initial steps and a schedule for responding to the release of hazardous substances at the Former UPCo Site. The Draft Order further states that IAAI has been identified as a potential responsible party because it is either the company or the successor of a company responsible for a release of hazardous substances at the Former UPCo Site. The Draft Order is currently unsigned and has not been issued by DTSC. On January 26, 2021, DTSC hosted an informational teleconference for the respondents named in the Draft Order. At the meeting, DTSC described the background and current status at the Former UPCo Site, but did not provide any information related to possible response actions, associated cost estimates or financial liability determinations. DTSC directed the Respondents to provide comments upon the Draft Order by March 1, 2021. DTSC subsequently extended the response deadline to April 30, 2021 pursuant to respondent requests. On March 30, 2021, IAAI provided DTSC with its response to the Draft Order. The Company does not believe that IAAI should bear any financial liability for actions taken pursuant to the Draft Order because it does not believe that IAAI is the company or a successor of a company responsible for a release of hazardous substances at the Former UPCo Site. IAAI currently leases 50 gross acres of the Former UPCo Site, having commenced a sublease at the location on or about March 1, 2016. At all times since, IAAI has used the site for vehicle storage and general operations. The most significant contaminants at the Former UPCo Site, and the Pyrite Canyon Plume are perchlorate, NDMA and PCBs. These contaminants pre-date IAAI’s occupancy and operations at the Former UPCo Site and are inconsistent with any chemicals stored at the location or used in its operations. IAAI has tendered this matter to its landlord pursuant to indemnity provisions in its sublease, and to its environmental insurance carrier. IAAI's landlord has responded by tendering its own indemnification demand to IAAI, and IAAI has notified its environmental insurance carrier of the same. At this time, the Company does not have adequate information to determine IAAI’s liability, if any, for contamination at the Former UPCo Site. Lower Duwamish Waterway Since June 2004, IAAI 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 IAAI’s tenancy. On March 25, 2008, the United States Environmental Protection Agency (the "EPA") issued IAAI 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 IAAI 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 IAAI that the EPA believed IAAI 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 IAAI 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. IAAI is aware that certain authorities may bring natural resource damage claims against PRPs. On February 11, 2016, IAAI received a Notice of Intent letter from the United States National Oceanic and Atmospheric Administration informing IAAI 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, IAAI ceased all operations at the site and terminated its remaining lease of the property in June 2020. Accordingly, IAAI 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 IAAI's liability, if any, for contamination at this site, or to estimate the Company's loss as a result of this potential liability which might have been incurred during IAAI’s occupancy. |
Segment Information
Segment Information | 9 Months Ended |
Oct. 02, 2022 | |
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. Intercompany (income) expense related to charges for services provided by the United States segment to the International segment are based on the benefits received. Such services are related to technology and other business support services. Financial information regarding the Company's reportable segments is set forth below as of and for the three and nine months ended October 2, 2022 (in millions) : Three Months Ended October 2, 2022 Nine Months Ended October 2, 2022 United States International Total United States International Total Revenues: Service revenues $ 362.8 $ 35.1 $ 397.9 $ 1,140.3 $ 109.2 $ 1,249.5 Vehicle and parts sales 43.1 56.5 99.6 122.9 203.0 325.9 Total revenues 405.9 91.6 497.5 1,263.2 312.2 1,575.4 Operating expenses: Cost of services 215.1 28.9 244.0 648.6 90.4 739.0 Cost of vehicle and parts sales 41.3 52.0 93.3 117.8 175.2 293.0 Selling, general and administrative 45.8 5.2 51.0 135.3 17.5 152.8 Depreciation and amortization 20.3 4.9 25.2 62.5 15.4 77.9 Total operating expenses 322.5 91.0 413.5 964.2 298.5 1,262.7 Operating profit 83.4 0.6 84.0 299.0 13.7 312.7 Interest expense (income), net 13.6 (0.3) 13.3 36.3 (0.3) 36.0 Other expense (income), net 3.4 (0.4) 3.0 8.1 0.1 8.2 Intercompany (income) expense (1.8) 1.8 — (5.8) 5.8 — Income (loss) before income taxes 68.2 (0.5) 67.7 260.4 8.1 268.5 Income taxes 16.8 0.6 17.4 50.7 3.3 54.0 Net income (loss) $ 51.4 $ (1.1) $ 50.3 $ 209.7 $ 4.8 $ 214.5 Total assets $ 2,663.1 $ 518.3 $ 3,181.4 $ 2,663.1 $ 518.3 $ 3,181.4 Financial information regarding the Company's reportable segments is set forth below as of and for the three and nine months ended September 26, 2021 (in millions) : Three Months Ended September 26, 2021 Nine Months Ended September 26, 2021 United States International Total United States International Total Revenues: Service revenues $ 336.5 $ 22.5 $ 359.0 1,027.9 74.0 1,101.9 Vehicle and parts sales 32.6 29.1 61.7 92.5 94.9 187.4 Total revenues 369.1 51.6 420.7 1,120.4 168.9 1,289.3 Operating expenses: Cost of services 183.7 14.7 198.4 544.5 47.9 592.4 Cost of vehicle and parts sales 29.2 25.3 54.5 76.9 83.6 160.5 Selling, general and administrative 46.4 3.4 49.8 127.4 9.5 136.9 Depreciation and amortization 19.1 2.1 21.2 55.4 6.1 61.5 Total operating expenses 278.4 45.5 323.9 804.2 147.1 951.3 Operating profit 90.7 6.1 96.8 316.2 21.8 338.0 Interest expense (income), net 11.1 — 11.1 46.1 (0.1) 46.0 Other (income) expense, net (0.2) 0.4 0.2 (0.5) — (0.5) Intercompany (income) expense (1.8) 1.8 — (6.2) 6.2 — Income before income taxes 81.6 3.9 85.5 276.8 15.7 292.5 Income taxes 19.0 0.8 19.8 67.2 4.2 71.4 Net income $ 62.6 $ 3.1 $ 65.7 $ 209.6 $ 11.5 $ 221.1 Total assets $ 2,573.1 $ 239.6 $ 2,812.7 $ 2,573.1 $ 239.6 $ 2,812.7 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Oct. 02, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On November 7, 2022, the Company entered into the Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Ritchie Bros. Auctioneers Incorporated, a company organized under the federal laws of Canada (“RBA”), Ritchie Bros. Holdings Inc., a Washington corporation and a direct and indirect wholly owned subsidiary of RBA (“US Holdings”), Impala Merger Sub I, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of US Holdings (“Merger Sub 1”), and Impala Merger Sub II, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of US Holdings (“Merger Sub 2”), providing for RBA’s acquisition of the Company in a stock and cash transaction. Upon the terms and subject to the conditions set forth in the Merger Agreement, at the closing of the transactions (i) Merger Sub 1 will be merged with and into the Company (the “First Merger”), with the Company surviving as an indirect wholly owned subsidiary of RBA and a direct wholly owned subsidiary of US Holdings (the “Surviving Corporation”), and (ii) immediately following the consummation of the First Merger, the Surviving Corporation will be merged with and into Merger Sub 2 (together with the First Merger, the “Mergers”), with Merger Sub 2 surviving as a direct wholly owned subsidiary of US Holdings. At the effective time of the First Merger, each issued and outstanding share of common stock of the Company (other than certain customary excluded shares) as of immediately prior to such effective time will be converted automatically into the right to receive (A) 0.5804 of a common share, without par value, of RBA (“RBA Common Shares”) and (B) $10.00 in cash, without interest (together, the “Merger Consideration”). Upon completion of the Mergers, RBA stockholders will own approximately 59% of the common shares of the combined company and the Company's stockholders will own approximately 41% of the common shares of the combined company. The Merger Agreement provides that, as of immediately following the effective of the First Merger, the Board of Directors of RBA will consist of twelve members, of whom (i) eight directors will be designated by RBA, which designees will consist of: Erik Olsson, who will continue as Chair of the RBA Board of Directors; Ann Fandozzi, who will continue as the Chief Executive Officer of RBA; and six existing directors of RBA who are independent under the rules and regulations of the NYSE and applicable Canadian securities laws as designated by RBA; and (ii) four directors of IAA, three of whom are independent under the rules and regulations of the New York Stock Exchange ("NYSE") and applicable Canadian securities laws, as designated by IAA. The Merger Agreement contains customary representations, warranties and covenants made by each of RBA, US Holdings, Merger Sub 1, Merger Sub 2 and the Company, including, among others, covenants by each of RBA and the Company to use reasonable efforts to conduct their respective businesses in the ordinary course in all material respects between the date of signing of the Merger Agreement and the closing of the Mergers and prohibiting the parties from engaging in certain kinds of activities during such period without the consent of the other party. |
Basis of Presentation and Nat_2
Basis of Presentation and Nature of Operations (Policies) | 9 Months Ended |
Oct. 02, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of PresentationThe accompanying unaudited consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles ("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. 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 financial results for the periods presented. Financial results for interim periods are not necessarily indicative of results that may be expected for the year as a whole. 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 January 2, 2022 included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on February 28, 2022. |
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. Fiscal 2022 contains 52 weeks and fiscal 2021 contained 53 weeks. |
Use of Estimates | Use of EstimatesThe 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. |
Goodwill | Goodwill Goodwill represents the excess of cost over fair value of identifiable net assets of businesses acquired. Goodwill is tested for impairment annually in the fourth quarter, or more frequently as impairment indicators arise. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements 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 |
Oct. 02, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of granted stock-based awards | The following table summarizes the performance-based restricted stock units (“PRSUs”) and time-based restricted stock units (“RSUs”) granted by the Company to certain employees and restricted stock awards (“RSAs”) granted by the Company to non-employee directors in accordance with the 2019 OSIP during the three and nine months ended October 2, 2022: Three Months Ended October 2, 2022 Nine Months Ended October 2, 2022 Number of Awards Granted Weighted Average Grant Date Fair Value Number of Awards Granted Weighted Average Grant Date Fair Value PRSUs - Performance Condition 1,628 $ 36.82 117,932 $ 38.34 PRSUs - Market Condition 233 $ 36.82 33,058 $ 41.88 RSUs 4,298 $ 36.82 236,019 $ 38.27 RSAs — $ — 35,282 $ 35.00 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Oct. 02, 2022 | |
Earnings Per Share [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 October 2, 2022 September 26, 2021 October 2, 2022 September 26, 2021 Net income $ 50.3 $ 65.7 $ 214.5 $ 221.1 Weighted average common shares outstanding 133.7 134.8 134.0 134.8 Effect of dilutive stock awards 0.2 0.5 0.1 0.5 Weighted average common shares outstanding and potential common shares 133.9 135.3 134.1 135.3 Net income per share Basic $ 0.38 $ 0.49 $ 1.60 $ 1.64 Diluted $ 0.38 $ 0.49 $ 1.60 $ 1.63 |
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 and market conditions which have not been fully satisfied at the end of the respective reporting periods (in millions) : Three Months Ended Nine Months Ended October 2, 2022 September 26, 2021 October 2, 2022 September 26, 2021 Anti-dilutive awards 0.3 0.1 0.3 0.1 Awards subject to conditions not fully satisfied 0.3 0.2 0.3 0.2 Total 0.6 0.3 0.6 0.3 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Oct. 02, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt | Long-term debt consisted of the following (in millions) : October 2, 2022 January 2, 2022 Term Loan $ 641.9 $ 650.0 Notes 500.0 500.0 Revolving Credit Facility — 165.0 Total debt 1,141.9 1,315.0 Unamortized debt issuance costs (11.2) (13.1) Current maturities of long-term debt (32.5) (181.3) Long-term debt $ 1,098.2 $ 1,120.6 |
Accounts Receivable (Tables)
Accounts Receivable (Tables) | 9 Months Ended |
Oct. 02, 2022 | |
Receivables [Abstract] | |
Schedule of accounts, notes, loans and financing receivable | Components of accounts receivable, net were as follows ( in millions ): October 2, 2022 January 2, 2022 Advanced charges receivable $ 286.0 $ 322.7 Trade accounts receivable 130.5 139.8 Other receivable 10.8 12.3 Accounts receivable, gross 427.3 474.8 Less: Allowance for credit losses (9.3) (9.1) Accounts receivable, net $ 418.0 $ 465.7 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Oct. 02, 2022 | |
Leases [Abstract] | |
Schedule of components of lease expense | The components of leases expense were as follows ( in millions ): Three Months Ended Nine Months Ended October 2, 2022 September 26, 2021 October 2, 2022 September 26, 2021 Operating lease cost $ 45.2 $ 39.7 $ 132.0 $ 113.0 Finance lease cost: Amortization of right-of-use assets $ 2.8 $ 3.0 $ 8.7 $ 9.2 Interest on lease liabilities 0.2 0.2 0.6 0.6 Total finance lease cost $ 3.0 $ 3.2 $ 9.3 $ 9.8 |
Schedule of 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 October 2, 2022 September 26, 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows related to operating leases $ 139.4 $ 107.2 Operating cash flows related to finance leases $ 0.6 $ 0.6 Financing cash flows related to finance leases $ 8.9 $ 9.0 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 194.6 $ 194.2 Finance leases $ 0.2 $ 7.6 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Oct. 02, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of business acquisitions, by acquisition | The following table summarizes the fair value of consideration transferred and the fair values of assets acquired and liabilities assumed as of the date of acquisition ( in millions ): October 26, 2021 Cash $ 260.2 Fair value of contingent consideration* 51.4 Total fair value of consideration transferred $ 311.6 |
Schedule of purchase price allocated to the assets acquired and liabilities | October 26, 2021 Cash $ 7.1 Accounts receivable 4.7 Inventory 17.4 ROU assets 39.0 Property and equipment 12.5 Goodwill 256.4 Intangible assets 41.3 Other assets 1.4 Accounts payable and other accrued expenses (18.9) Operating lease liabilities (39.0) Other long-term liabilities (10.3) Net assets acquired $ 311.6 |
Schedule of business acquisition, pro forma information | The following unaudited pro forma financial information summarizes the combined results of operations for the Company and SYNETIQ, as though the companies were combined as of the beginning of fiscal 2021 ( in millions ): Three Months Ended September 26, 2021 Nine Months Ended September 26, 2021 Net revenue $ 471.7 $ 1,446.3 Net income 67.2 222.0 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Oct. 02, 2022 | |
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 October 2, 2022 (in millions) : Three Months Ended October 2, 2022 Nine Months Ended October 2, 2022 United States International Total United States International Total Revenues: Service revenues $ 362.8 $ 35.1 $ 397.9 $ 1,140.3 $ 109.2 $ 1,249.5 Vehicle and parts sales 43.1 56.5 99.6 122.9 203.0 325.9 Total revenues 405.9 91.6 497.5 1,263.2 312.2 1,575.4 Operating expenses: Cost of services 215.1 28.9 244.0 648.6 90.4 739.0 Cost of vehicle and parts sales 41.3 52.0 93.3 117.8 175.2 293.0 Selling, general and administrative 45.8 5.2 51.0 135.3 17.5 152.8 Depreciation and amortization 20.3 4.9 25.2 62.5 15.4 77.9 Total operating expenses 322.5 91.0 413.5 964.2 298.5 1,262.7 Operating profit 83.4 0.6 84.0 299.0 13.7 312.7 Interest expense (income), net 13.6 (0.3) 13.3 36.3 (0.3) 36.0 Other expense (income), net 3.4 (0.4) 3.0 8.1 0.1 8.2 Intercompany (income) expense (1.8) 1.8 — (5.8) 5.8 — Income (loss) before income taxes 68.2 (0.5) 67.7 260.4 8.1 268.5 Income taxes 16.8 0.6 17.4 50.7 3.3 54.0 Net income (loss) $ 51.4 $ (1.1) $ 50.3 $ 209.7 $ 4.8 $ 214.5 Total assets $ 2,663.1 $ 518.3 $ 3,181.4 $ 2,663.1 $ 518.3 $ 3,181.4 Financial information regarding the Company's reportable segments is set forth below as of and for the three and nine months ended September 26, 2021 (in millions) : Three Months Ended September 26, 2021 Nine Months Ended September 26, 2021 United States International Total United States International Total Revenues: Service revenues $ 336.5 $ 22.5 $ 359.0 1,027.9 74.0 1,101.9 Vehicle and parts sales 32.6 29.1 61.7 92.5 94.9 187.4 Total revenues 369.1 51.6 420.7 1,120.4 168.9 1,289.3 Operating expenses: Cost of services 183.7 14.7 198.4 544.5 47.9 592.4 Cost of vehicle and parts sales 29.2 25.3 54.5 76.9 83.6 160.5 Selling, general and administrative 46.4 3.4 49.8 127.4 9.5 136.9 Depreciation and amortization 19.1 2.1 21.2 55.4 6.1 61.5 Total operating expenses 278.4 45.5 323.9 804.2 147.1 951.3 Operating profit 90.7 6.1 96.8 316.2 21.8 338.0 Interest expense (income), net 11.1 — 11.1 46.1 (0.1) 46.0 Other (income) expense, net (0.2) 0.4 0.2 (0.5) — (0.5) Intercompany (income) expense (1.8) 1.8 — (6.2) 6.2 — Income before income taxes 81.6 3.9 85.5 276.8 15.7 292.5 Income taxes 19.0 0.8 19.8 67.2 4.2 71.4 Net income $ 62.6 $ 3.1 $ 65.7 $ 209.6 $ 11.5 $ 221.1 Total assets $ 2,573.1 $ 239.6 $ 2,812.7 $ 2,573.1 $ 239.6 $ 2,812.7 |
Basis of Presentation and Nat_3
Basis of Presentation and Nature of Operations (Details) | 3 Months Ended | 9 Months Ended | |
Oct. 02, 2022 USD ($) facility | Oct. 02, 2022 USD ($) facility segment | Jan. 02, 2022 USD ($) | |
Goodwill [Line Items] | |||
Number of facilities | facility | 210 | 210 | |
Number of reportable segments | segment | 2 | ||
Goodwill impairment | $ 0 | ||
Goodwill | $ 748,700,000 | $ 748,700,000 | $ 797,500,000 |
International Reporting Unit | |||
Goodwill [Line Items] | |||
Fair value in excess of carrying amount, goodwill, percentage | 40% | 40% | |
Goodwill | $ 250,100,000 | $ 250,100,000 |
Revenue Recognition (Details)
Revenue Recognition (Details) | 9 Months Ended |
Oct. 02, 2022 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percentage | 90% |
Minimum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Term for access to auction | 1 year |
Minimum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-03 | Auction Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation satisfaction | 1 year |
Maximum | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Term for access to auction | 2 years |
Maximum | Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-03 | Auction Sales | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Performance obligation satisfaction | 2 years |
Stock-Based Compensation Plan_2
Stock-Based Compensation Plans - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2022 USD ($) installment shares | Sep. 26, 2021 USD ($) | Oct. 02, 2022 USD ($) installment $ / shares shares | Sep. 26, 2021 USD ($) | |
Stock and Stock-Based Compensation Plans | ||||
Aggregate awards granted limit, options (in shares) | shares | 1,000,000 | |||
Aggregate awards granted limit, restricted shares (in shares) | shares | 500,000 | |||
Cash-based award limit | $ 5,000,000 | $ 5,000,000 | ||
Cash fees received limit | 750,000 | 750,000 | ||
Stock-based compensation expense | $ 3,100,000 | $ 2,900,000 | $ 8,900,000 | $ 8,300,000 |
PRSUs - Performance Condition | ||||
Stock and Stock-Based Compensation Plans | ||||
Vesting period | 3 years | |||
PRSUs - Market Condition | ||||
Stock and Stock-Based Compensation Plans | ||||
Grant date fair value (in dollars per share) | $ / shares | $ 42.18 | |||
Grant date stock price (in share) | $ / shares | $ 38.37 | |||
Expected term | 2 years 9 months 3 days | |||
Risk-free interest rate | 2.49% | |||
Expected volatility | 45.48% | |||
Peer group's average | 45.18% | |||
Correlation coefficients | 0.60 | |||
Peer group average | 0.72 | |||
Dividend yield | 0% | |||
RSUs | ||||
Stock and Stock-Based Compensation Plans | ||||
Number of annual installments | installment | 3 | 3 | ||
RSAs | Non Employee Directors | ||||
Stock and Stock-Based Compensation Plans | ||||
Vesting period | 1 year | |||
Number of annual installments | installment | 1 | 1 | ||
Additional Paid-In Capital | ||||
Stock and Stock-Based Compensation Plans | ||||
Stock-based compensation expense | $ 3,100,000 | $ 2,900,000 | $ 8,900,000 | $ 8,300,000 |
2019 OSIP | ||||
Stock and Stock-Based Compensation Plans | ||||
Number of common shares reserved and available for awards (in shares) | shares | 4,263,218 | 4,263,218 |
Stock-Based Compensation Plan_3
Stock-Based Compensation Plans - Schedule of Granted Stock-Based Awards (Details) - $ / shares | 3 Months Ended | 9 Months Ended |
Oct. 02, 2022 | Oct. 02, 2022 | |
PRSUs - Performance Condition | ||
Stock and Stock-Based Compensation Plans | ||
Number of Awards Granted (in shares) | 1,628 | 117,932 |
Weighted Average Grant Date Fair Value (in dollars per share) | $ 36.82 | $ 38.34 |
PRSUs - Market Condition | ||
Stock and Stock-Based Compensation Plans | ||
Number of Awards Granted (in shares) | 233 | 33,058 |
Weighted Average Grant Date Fair Value (in dollars per share) | $ 36.82 | $ 41.88 |
RSUs | ||
Stock and Stock-Based Compensation Plans | ||
Number of Awards Granted (in shares) | 4,298 | 236,019 |
Weighted Average Grant Date Fair Value (in dollars per share) | $ 36.82 | $ 38.27 |
RSAs | ||
Stock and Stock-Based Compensation Plans | ||
Number of Awards Granted (in shares) | 0 | 35,282 |
Weighted Average Grant Date Fair Value (in dollars per share) | $ 0 | $ 35 |
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 | ||
Oct. 02, 2022 | Sep. 26, 2021 | Oct. 02, 2022 | Sep. 26, 2021 | |
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ 50.3 | $ 65.7 | $ 214.5 | $ 221.1 |
Shares outstanding | ||||
Weighted average common shares outstanding (in shares) | 133.7 | 134.8 | 134 | 134.8 |
Effect of dilutive stock awards (in shares) | 0.2 | 0.5 | 0.1 | 0.5 |
Weighted average common shares outstanding and potential common shares (in shares) | 133.9 | 135.3 | 134.1 | 135.3 |
Net income per share: | ||||
Basic (in dollars per share) | $ 0.38 | $ 0.49 | $ 1.60 | $ 1.64 |
Diluted (in dollars per share) | $ 0.38 | $ 0.49 | $ 1.60 | $ 1.63 |
Net Income Per Share - Anti-dil
Net Income Per Share - Anti-dilutive Securities (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2022 | Sep. 26, 2021 | Oct. 02, 2022 | Sep. 26, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive awards (in shares) | 0.6 | 0.3 | 0.6 | 0.3 |
Anti-dilutive awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive awards (in shares) | 0.3 | 0.1 | 0.3 | 0.1 |
Awards subject to conditions not fully satisfied | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive awards (in shares) | 0.3 | 0.2 | 0.3 | 0.2 |
Net Income Per Share - Narrativ
Net Income Per Share - Narrative (Details) - USD ($) | 9 Months Ended | ||
Oct. 02, 2022 | Sep. 26, 2021 | Aug. 02, 2021 | |
Earnings Per Share [Abstract] | |||
Stock repurchase program, authorized amount | $ 400,000,000 | ||
Stock repurchased (in shares) | 751,285 | ||
Purchase of treasury stock | $ 27,200,000 | $ 0 | |
Stock repurchase program | $ 338,800,000 |
Debt- Schedule of Long-Term Deb
Debt- Schedule of Long-Term Debt (Details) - USD ($) $ in Millions | Oct. 02, 2022 | Jan. 02, 2022 |
Long-Term Debt | ||
Total debt | $ 1,141.9 | $ 1,315 |
Unamortized debt issuance costs | (11.2) | (13.1) |
Current maturities of long-term debt | (32.5) | (181.3) |
Long-term debt | 1,098.2 | 1,120.6 |
Term Loan | ||
Long-Term Debt | ||
Total debt | 641.9 | 650 |
Notes | ||
Long-Term Debt | ||
Total debt | 500 | 500 |
Revolving Credit Facility | ||
Long-Term Debt | ||
Total debt | $ 0 | $ 165 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 8 Months Ended | 9 Months Ended | ||||||
Jun. 28, 2019 | Jul. 03, 2022 | Oct. 02, 2022 | Sep. 26, 2021 | Jan. 02, 2022 | Apr. 30, 2021 | May 01, 2020 | Jun. 06, 2019 | |
Long-Term Debt | ||||||||
Loss on extinguishment of debt | $ 0 | $ 10,300,000 | ||||||
Outstanding letters of credit | 5,500,000 | $ 5,600,000 | ||||||
Estimated fair value of long-term debt | $ 456,300,000 | $ 517,500,000 | ||||||
Credit Agreement Amendment | ||||||||
Long-Term Debt | ||||||||
Net leverage ratio | 4 | |||||||
New Credit Agreement | Federal Funds Rate | ||||||||
Long-Term Debt | ||||||||
Interest rate | 0.50% | |||||||
New Credit Agreement | LIBOR | ||||||||
Long-Term Debt | ||||||||
Interest rate | 1% | |||||||
New Credit Agreement | Base Rate | Minimum | ||||||||
Long-Term Debt | ||||||||
Interest rate | 0.375% | |||||||
New Credit Agreement | Base Rate | Maximum | ||||||||
Long-Term Debt | ||||||||
Interest rate | 1.25% | |||||||
New Credit Agreement | Eurodollar | Minimum | ||||||||
Long-Term Debt | ||||||||
Interest rate | 1.375% | |||||||
New Credit Agreement | Eurodollar | Maximum | ||||||||
Long-Term Debt | ||||||||
Interest rate | 2.25% | |||||||
Notes | Senior Notes | ||||||||
Long-Term Debt | ||||||||
Aggregate principal amount | $ 500,000,000 | |||||||
Senior notes stated interest rate, percentage | 5.50% | |||||||
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 | 4.49% | |||||||
Revolving Credit Facility | Revolving Credit Facility | ||||||||
Long-Term Debt | ||||||||
Credit facility, term | 5 years | |||||||
Aggregate principal amount, line of credit | $ 225,000,000 | |||||||
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 | New Credit Agreement | Minimum | ||||||||
Long-Term Debt | ||||||||
Commitment fee | 0.175% | |||||||
Revolving Credit Facility | New Credit Agreement | Maximum | ||||||||
Long-Term Debt | ||||||||
Commitment fee | 0.30% | |||||||
Revolving Credit Facility | New Credit Agreement | JPMorgan Chase Bank, N.A | ||||||||
Long-Term Debt | ||||||||
Aggregate principal amount, line of credit | $ 525,000,000 | |||||||
Term Loan | New Credit Agreement | JPMorgan Chase Bank, N.A | ||||||||
Long-Term Debt | ||||||||
Aggregate principal amount, line of credit | $ 650,000,000 |
Accounts Receivable (Details)
Accounts Receivable (Details) - USD ($) $ in Millions | Oct. 02, 2022 | Jan. 02, 2022 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, gross | $ 427.3 | $ 474.8 |
Less: Allowance for credit losses | (9.3) | (9.1) |
Accounts receivable, net | 418 | 465.7 |
Advanced charges receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, gross | 286 | 322.7 |
Trade accounts receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, gross | 130.5 | 139.8 |
Other receivable | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts receivable, gross | $ 10.8 | $ 12.3 |
Leases - Components of Lease Ex
Leases - Components of Lease Expense (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 02, 2022 | Sep. 26, 2021 | Oct. 02, 2022 | Sep. 26, 2021 | |
Leases [Abstract] | ||||
Operating lease cost | $ 45.2 | $ 39.7 | $ 132 | $ 113 |
Finance lease cost: | ||||
Amortization of right-of-use assets | 2.8 | 3 | 8.7 | 9.2 |
Interest on lease liabilities | 0.2 | 0.2 | 0.6 | 0.6 |
Total finance lease cost | $ 3 | $ 3.2 | $ 9.3 | $ 9.8 |
Leases - Supplemental Cash Flow
Leases - Supplemental Cash Flow and Balance Sheet Information Related to Leases (Details) - USD ($) $ in Millions | 9 Months Ended | |
Oct. 02, 2022 | Sep. 26, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows related to operating leases | $ 139.4 | $ 107.2 |
Operating cash flows related to finance leases | 0.6 | 0.6 |
Financing cash flows related to finance leases | 8.9 | 9 |
Right-of-use assets obtained in exchange for lease obligations: | ||
Operating leases | 194.6 | 194.2 |
Finance leases | $ 0.2 | $ 7.6 |
Acquisition - Narrative (Detail
Acquisition - Narrative (Details) € in Millions, $ in Millions | 3 Months Ended | ||||
Oct. 26, 2021 USD ($) | Oct. 26, 2021 EUR (€) | Jan. 02, 2022 USD ($) | Jan. 02, 2022 EUR (€) | Oct. 26, 2021 EUR (€) | |
Business Acquisition [Line Items] | |||||
Cash | $ 260.2 | ||||
Fair value of contingent consideration | $ 51.4 | ||||
SYNETIQ Ltd | |||||
Business Acquisition [Line Items] | |||||
Percentage of voting interests acquired | 100% | 100% | |||
Cash purchase price, including working capital and other adjustments | $ 314.2 | € 228.2 | |||
Cash | $ 260.2 | € 189 | |||
Weighted average-useful life, intangible assets | 4 years | 4 years | |||
SYNETIQ Ltd | Developed Technology Rights | |||||
Business Acquisition [Line Items] | |||||
Weighted average-useful life, intangible assets | 4 years | 4 years | |||
SYNETIQ Ltd | Trade Names | |||||
Business Acquisition [Line Items] | |||||
Weighted average-useful life, intangible assets | 5 years | 5 years | |||
SYNETIQ Ltd | Revolving Credit Facility | |||||
Business Acquisition [Line Items] | |||||
Aggregate principal amount | $ 100 | ||||
SYNETIQ Ltd | Required Approvals From U.K. Competition And Markets Authority | |||||
Business Acquisition [Line Items] | |||||
Fair value of contingent consideration | $ 54 | € 39.2 |
Acquisition - Fair Value of Con
Acquisition - Fair Value of Consideration Transferred (Details) € in Millions, $ in Millions | 3 Months Ended | ||
Oct. 26, 2021 USD ($) | Jan. 02, 2022 USD ($) | Jan. 02, 2022 EUR (€) | |
Business Acquisition [Line Items] | |||
Cash | $ 260.2 | ||
Fair value of contingent consideration | 51.4 | ||
SYNETIQ Ltd | |||
Business Acquisition [Line Items] | |||
Cash | $ 260.2 | € 189 | |
Total fair value of consideration transferred | $ 311.6 |
Acquisition - Preliminary Fair
Acquisition - Preliminary Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Millions | Oct. 26, 2021 | Oct. 02, 2022 | Jan. 02, 2022 |
Business Acquisition [Line Items] | |||
Goodwill | $ 748.7 | $ 797.5 | |
SYNETIQ Ltd | |||
Business Acquisition [Line Items] | |||
Cash | $ 7.1 | ||
Accounts receivable | 4.7 | ||
Inventory | 17.4 | ||
ROU assets | 39 | ||
Property and equipment | 12.5 | ||
Goodwill | 256.4 | ||
Intangible assets | 41.3 | ||
Other assets | 1.4 | ||
Accounts payable and other accrued expenses | (18.9) | ||
Operating lease liabilities | (39) | ||
Other long-term liabilities | (10.3) | ||
Net assets acquired | $ 311.6 |
Acquisition - Summary of Purcha
Acquisition - Summary of Purchase Price Accounting and Pro forma Information (Details) - SYNETIQ Ltd - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 26, 2021 | Sep. 26, 2021 | |
Business Acquisition [Line Items] | ||
Net revenue | $ 471.7 | $ 1,446.3 |
Net income | $ 67.2 | $ 222 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 1 Months Ended | |
Dec. 31, 2014 USD ($) a | Mar. 01, 2016 a | |
Loss Contingencies [Line Items] | ||
Area of leased land | 50 | |
Record of Decision | ||
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 | |||
Oct. 02, 2022 USD ($) | Sep. 26, 2021 USD ($) | Oct. 02, 2022 USD ($) segment | Sep. 26, 2021 USD ($) | Jan. 02, 2022 USD ($) | |
Segment Reporting [Abstract] | |||||
Number of operating segments | segment | 2 | ||||
Number of reportable segments | segment | 2 | ||||
Segment Information | |||||
Revenues | $ 497.5 | $ 420.7 | $ 1,575.4 | $ 1,289.3 | |
Operating expenses: | |||||
Selling, general and administrative | 51 | 49.8 | 152.8 | 136.9 | |
Depreciation and amortization | 25.2 | 21.2 | 77.9 | 61.5 | |
Total operating expenses | 413.5 | 323.9 | 1,262.7 | 951.3 | |
Operating profit | 84 | 96.8 | 312.7 | 338 | |
Interest expense (income), net | 13.3 | 11.1 | 36 | 46 | |
Other expense (income), net | 3 | 0.2 | 8.2 | (0.5) | |
Intercompany (income) expense | 0 | 0 | 0 | 0 | |
Income before income taxes | 67.7 | 85.5 | 268.5 | 292.5 | |
Income taxes | 17.4 | 19.8 | 54 | 71.4 | |
Net income | 50.3 | 65.7 | 214.5 | 221.1 | |
Total assets | 3,181.4 | 2,812.7 | 3,181.4 | 2,812.7 | $ 3,154.3 |
Service revenues | |||||
Segment Information | |||||
Revenues | 397.9 | 359 | 1,249.5 | 1,101.9 | |
Operating expenses: | |||||
Cost of service and vehicle sales | 244 | 198.4 | 739 | 592.4 | |
Vehicle and parts sales | |||||
Segment Information | |||||
Revenues | 99.6 | 61.7 | 325.9 | 187.4 | |
Operating expenses: | |||||
Cost of service and vehicle sales | 93.3 | 54.5 | 293 | 160.5 | |
United States | |||||
Segment Information | |||||
Revenues | 405.9 | 369.1 | 1,263.2 | 1,120.4 | |
Operating expenses: | |||||
Selling, general and administrative | 45.8 | 46.4 | 135.3 | 127.4 | |
Depreciation and amortization | 20.3 | 19.1 | 62.5 | 55.4 | |
Total operating expenses | 322.5 | 278.4 | 964.2 | 804.2 | |
Operating profit | 83.4 | 90.7 | 299 | 316.2 | |
Interest expense (income), net | 13.6 | 11.1 | 36.3 | 46.1 | |
Other expense (income), net | 3.4 | (0.2) | 8.1 | (0.5) | |
Intercompany (income) expense | (1.8) | (1.8) | (5.8) | (6.2) | |
Income before income taxes | 68.2 | 81.6 | 260.4 | 276.8 | |
Income taxes | 16.8 | 19 | 50.7 | 67.2 | |
Net income | 51.4 | 62.6 | 209.7 | 209.6 | |
Total assets | 2,663.1 | 2,573.1 | 2,663.1 | 2,573.1 | |
United States | Service revenues | |||||
Segment Information | |||||
Revenues | 362.8 | 336.5 | 1,140.3 | 1,027.9 | |
Operating expenses: | |||||
Cost of service and vehicle sales | 215.1 | 183.7 | 648.6 | 544.5 | |
United States | Vehicle and parts sales | |||||
Segment Information | |||||
Revenues | 43.1 | 32.6 | 122.9 | 92.5 | |
Operating expenses: | |||||
Cost of service and vehicle sales | 41.3 | 29.2 | 117.8 | 76.9 | |
International | |||||
Segment Information | |||||
Revenues | 91.6 | 51.6 | 312.2 | 168.9 | |
Operating expenses: | |||||
Selling, general and administrative | 5.2 | 3.4 | 17.5 | 9.5 | |
Depreciation and amortization | 4.9 | 2.1 | 15.4 | 6.1 | |
Total operating expenses | 91 | 45.5 | 298.5 | 147.1 | |
Operating profit | 0.6 | 6.1 | 13.7 | 21.8 | |
Interest expense (income), net | (0.3) | 0 | (0.3) | (0.1) | |
Other expense (income), net | (0.4) | 0.4 | 0.1 | 0 | |
Intercompany (income) expense | 1.8 | 1.8 | 5.8 | 6.2 | |
Income before income taxes | (0.5) | 3.9 | 8.1 | 15.7 | |
Income taxes | 0.6 | 0.8 | 3.3 | 4.2 | |
Net income | (1.1) | 3.1 | 4.8 | 11.5 | |
Total assets | 518.3 | 239.6 | 518.3 | 239.6 | |
International | Service revenues | |||||
Segment Information | |||||
Revenues | 35.1 | 22.5 | 109.2 | 74 | |
Operating expenses: | |||||
Cost of service and vehicle sales | 28.9 | 14.7 | 90.4 | 47.9 | |
International | Vehicle and parts sales | |||||
Segment Information | |||||
Revenues | 56.5 | 29.1 | 203 | 94.9 | |
Operating expenses: | |||||
Cost of service and vehicle sales | $ 52 | $ 25.3 | $ 175.2 | $ 83.6 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent Event - IAA | Nov. 07, 2022 director $ / shares |
Subsequent Event [Line Items] | |
Number of directors designated | 12 |
RBA | |
Subsequent Event [Line Items] | |
Percentage of voting interests acquired | 41% |
Number of directors designated | 8 |
Number of independent directors designated | 6 |
RBA Stockholders | |
Subsequent Event [Line Items] | |
Percentage of voting interests acquired | 59% |
IAA | |
Subsequent Event [Line Items] | |
Number of directors designated | 4 |
Number of independent directors designated | 3 |
RBA Common Shares | RBA | |
Subsequent Event [Line Items] | |
Business acquisition, conversion ratio | 0.5804 |
Share price (in dollars per share) | $ / shares | $ 10 |