KAR Auction Services Inc.'s stock price rose in morning trading Wednesday after the company reported solid third-quarter results after the market closed Tuesday and raised both its dividend and its full-year earnings forecast.
KAR's stock was trading at $48.90 a share on Wall Street, as of 10:21 am ET, up 3.3 percent.
In the third quarter, net income at KAR, the parent of auction giant ADESA, rose 15 percent to $62.8 million from a year earlier, on a 6.8 percent increase in revenue to $843 million, the company said.
"I am very pleased with KAR's consolidated performance and our ability to navigate the events encountered during the third quarter," which included hurricanes disrupting auctions in Texas and the Southeast, CEO Jim Hallett said in a statement.
Cost controls, currency
Cost controls helped boost net as major costs rose more slowly than revenue. Selling, general and administrative expenses rose 6.4 percent, while cost of services, excluding depreciation and amortization, rose 4.3 percent.
KAR raised its third-quarter dividend to 35 cents a share, payable in January, from 32 cents a share previously.
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The company also raised its full-year guidance for net income to $1.68 to $1.78 a share from $1.57 to $1.67 a share previously.
The strengthening of the Canadian dollar during the quarter added $3.9 million to revenue and about $800,000 to net.
ADESA results
At ADESA, which accounted for 57 percent of revenue, operating profit rose 7.8 percent to $88.4 million as revenue rose 4.3 percent to $477.1 million.
Total vehicles sold at auction by ADESA rose 7.7 percent to 788,000, led by a 34 percent jump in online-only volume to 241,000. The number of vehicles sold at physical auctions slipped 0.9 percent, or 4 percent excluding acquisitions, to 547,000.
The volume gains were powered by the rising number of off-lease vehicles. Dealer consignments fell 6 percent to represent 47 percent of the company's volume in the quarter, down from 50 percent a year earlier. Institutional volume rose 16 percent.
The North American physical-auction conversion rate -- the percentage of vehicles offered that sold the same day, and a key marker of operational efficiency -- rose to 61 percent from 57 percent a year earlier.
Profits also rose at Insurance Auto Auctions, the company's salvage-auction arm, and Automotive Finance Corp., its financing arm.
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