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Letter to the Editor
Thursday October 30
Insurance Auto Auctions Q3 Results Below Expectations
Insurance Auto Auctions, Inc. , a provider of automotive salvage and claims processing services in the United States, has reported a net loss for the third quarter of $0.6 million, or a loss of $0.05 per diluted share, versus net earnings of $0.6 million, or $0.05 per diluted share, for the same quarter a year ago.Revenues for the quarter were $49.1 million compared with $52.8 million in the third quarter of 2002. The decline in revenues was primarily due to the company's continued shift away from vehicles sold under the purchase agreement method and lower volumes on a same-store basis. Tom O'Brien, CEO, commented, "It is important to note that we believe the same store volume decline reflects a lower frequency of industry-wide claims. In addition to the negative financial impact caused by the decline in volume, higher than projected implementation costs for our new system contributed to the decline in year-over-year earnings results. To be specific, we incurred business transformation costs of approximately $1.2 million in the third quarter.... Consistent with the timetable that we communicated in the second quarter, we fully anticipate completing the system roll out by the end of the year.
O'Brien concluded, "Although we are disappointed that our financial results came in lower than we had originally anticipated, we remain confident in the long-term future of the company. Through the first nine months of the year we have remained focused on implementing the new enterprise-wide IT system and continue to roll it out in new branches. We believe recent customer wins have proven our ability to compete in the marketplace. Our inventory of consigned vehicles increased from the prior quarter as well, representing positive trends for the overall business. Finally, we are confident that the strategic initiatives we have implemented, particularly the new IT system and related customer interface and internet capabilities, have put us in a position to generate higher returns at IAA over the long term."
Insurance Auto Auctions, Inc. currently operates 74 sites across the United States.
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