Openlane Inc.
11/05/2025 | Press release | Distributed by Public on 11/05/2025 08:57
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and which are subject to certain risks, trends and uncertainties. In particular, statements made in this report that are not historical facts (including, but not limited to, expectations, estimates, assumptions and projections regarding the industry, business, future operating results, anticipated cash requirements and macroeconomic conditions) may be forward-looking statements. Words such as "should," "may," "will," "would," "could," "can," "of the opinion," "confident," "anticipates," "expects," "intends," "plans," "predicts," "projects," "believes," "seeks," "estimates," "continues," "contemplates," "outlook," "position," "initiatives," "goals," "targets," "opportunities" and similar expressions identify forward-looking statements. Such statements, including statements regarding market conditions; our future growth and profitability; anticipated cost savings; revenue increases, credit losses and capital expenditures; contractual obligations; common stock repurchases; changes in the value of foreign currencies relative to the U.S. dollar; tax rates and assumptions; the effects of macroeconomic conditions and geopolitical events (including but not limited to tariffs and trade policies) on our business and industry; business strategies; strategic initiatives, acquisitions and dispositions; business and industry trends and challenges; our competitive position and retention of customers; and our continued investment in information technology, among others, are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results projected, expressed or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section entitled "Risk Factors" in this report and Item 1A "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024, filed on February 20, 2025, and those described from time to time in our future reports filed with the Securities and Exchange Commission. Many of these risk factors are outside of our control, and as such, they involve risks which are not currently known that could cause actual results to differ materially from those discussed or implied herein. Moreover, we operate in a competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this report. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this report may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. In addition, the global economic climate and general market, political, economic, and business conditions may amplify many of these risks. The forward-looking statements in this report are made as of the date of this report and we do not undertake to update our forward-looking statements.
Automotive Industry and Economic Impacts on our Business
We are dependent on the supply of used vehicles in the wholesale market, and our financial performance depends, in part, on conditions in the automotive industry. In recent years, the automotive industry has experienced unprecedented market conditions, including global automotive production challenges. These conditions have resulted in significant fluctuations in used vehicle values and declines in vehicle volumes in the wholesale market. More recently, new vehicle supply has begun to recover, and this has resulted in wholesale vehicle supply also starting to increase. However, macroeconomic and geopolitical factors, including inflationary pressures, interest rates, volatility of oil and natural gas prices and declining consumer confidence continue to impact the affordability and demand for new and used vehicles. Further, the continuously evolving tariff and trade environment has become a source of uncertainty in the automotive industry. Due to their evolving nature, we cannot predict whether or for how long certain trends will continue, nor to what degree these trends will impact us in the future.
Overview
OPENLANE connects the leading automotive manufacturers, dealers, rental companies, fleet operators, captive finance and lending institutions as buyers and sellers to create a leading digital marketplace for wholesale used vehicles. Our business is divided into two reportable business segments, each of which is an integral part of the wholesale used vehicle remarketing industry: Marketplace and Finance.
•The Marketplace segment serves its customer base through digital marketplaces in the U.S., Canada and Europe and vehicle logistics center locations in Canada. Comprehensive private label remarketing solutions are offered to automobile manufacturers, captive finance companies and other commercial customers to offer vehicles digitally. Vehicles sold on our digital platforms are typically sold by commercial fleet operators, financial institutions, rental car companies, new and used vehicle dealers and vehicle manufacturers and their captive finance companies to dealer customers. We also provide value-added ancillary services including inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services.
•Through AFC, the Finance segment provides short-term, inventory-secured financing, known as floorplan financing, primarily to independent vehicle dealers throughout the United States and Canada. In addition, AFC provides liquidity for customer trade-ins which can encompass settling lien holder payoffs. AFC also provides title services for their customers. These services are provided through AFC's digital servicing network as well as its physical locations throughout North America.
Industry Trends
Wholesale Used Vehicle Industry
We believe the U.S. and Canadian wholesale used vehicle industry has a total addressable market of approximately 15 million vehicles, which can fluctuate depending on seasonality and a variety of other macro-economic and industry factors. This wholesale used vehicle industry consists of the commercial market (commercial sellers that sell to franchise and independent dealers) and the dealer-to-dealer market (franchise and independent dealers that both buy and sell vehicles). The Company supports commercial sellers in North America with our technology and we believe digital applications may provide an opportunity to expand the total addressable market for dealer-to-dealer transactions. The supply chain issues and market conditions facing the automotive industry in recent years, including the disruption of new vehicle production, low new vehicle supply and historically high used vehicle pricing have had a material impact on the wholesale used vehicle industry. More recently, new vehicle supply has begun to recover, and this has resulted in wholesale vehicle supply also starting to increase. New lease originations have remained healthy for the last several quarters. As these leases begin maturing in 2026 and beyond, we expect a higher volume of off-lease vehicles available to the wholesale used vehicle industry, with much of that volume flowing through OPENLANE first as we support the majority of commercial sellers with off-lease vehicle inventory in North America. However, recent tariffs and related trade disputes could impact the number of off-lease vehicles that are available to the wholesale used vehicle industry.
Automotive Finance
AFC works with independent vehicle dealers to improve their results by providing a comprehensive set of business and financial solutions that leverage its local presence of branches and in-market representatives, industry experience and scale, as well as OPENLANE affiliations. AFC's North American dealer base was comprised of approximately 14,000 dealers at December 31, 2024.
Key challenges for the independent vehicle dealers include demand for used vehicles, disruptions in pricing of used vehicle inventory, access to consumer financing, increased interest rates and increased used car retail activity of franchise and public dealerships (most of which do not utilize AFC or its competitors for floorplan financing). These same challenges, to the extent they occur, could result in a material negative impact on AFC's results of operations. A significant decline in used vehicle sales would result in a decrease in consumer auto loan originations and an increased number of dealers defaulting on their loans. In addition, volatility in wholesale vehicle pricing impacts the value of recovered collateral on defaulted loans and the resulting severity of credit losses at AFC. A decrease in wholesale used car pricing could lead to increased losses if dealers are unable to satisfy their obligations.
Seasonality
The volume of vehicles sold through our marketplaces generally fluctuates from quarter-to-quarter. This seasonality is caused by several factors including weather, the timing of used vehicles available for sale from selling customers, holidays, and the seasonality of the retail market for used vehicles, which affects the demand side of the auction industry. Wholesale used vehicle volumes tend to decline during prolonged periods of winter weather conditions. As a result, revenues and operating expenses related to volume will fluctuate accordingly on a quarterly basis. In North America, the fourth calendar quarter typically experiences lower used vehicle volume as well as additional costs associated with the holidays and winter weather.
In addition, changes in working capital vary from quarter-to-quarter as a result of the timing of collections and disbursements of funds to consignors from marketplace sales held near period end.
Sources of Revenues and Expenses
The vehicles sold on our marketplaces generate auction fees from buyers and sellers. The Company generally does not take title to these consigned vehicles and records only its auction fees as revenue ("Auction fees" in the consolidated statements of income) because it has no influence on the vehicle auction selling price agreed to by the seller and the buyer at the auction. The Company does not record the gross selling price of the consigned vehicles sold at auction as revenue. The Company generally enforces its rights to payment for seller transactions through net settlement provisions following the sale of a vehicle. Marketplace services such as inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, collateral recovery services and technology solutions are generally recognized at the time of service ("Service revenue" in the consolidated statements of income). The Company also sells vehicles that have been purchased, which represent approximately 2% of the total volume of vehicles sold. For these types of sales, the Company does record the gross selling price of purchased vehicles sold at auction as revenue ("Purchased vehicle sales" in the consolidated statements of income) and the gross purchase price of the vehicles as "Cost of services." AFC's revenue ("Finance revenue" in the consolidated statements of income) is comprised of interest revenue and fee and other revenue associated with our finance receivables. AFC's interest revenue is generally determined based on the applicable prime rate plus a margin.
Although Marketplace revenues primarily include auction fees and service revenue, our related receivables and payables include the gross value of the vehicles sold. Trade receivables include the unremitted purchase price of vehicles purchased by third parties through our marketplaces, fees to be collected from those buyers and amounts due for services provided by us related to certain consigned vehicles. The amounts due with respect to the services provided by us related to certain consigned vehicles are generally deducted from the sales proceeds upon the eventual auction or other disposition of the related vehicles. Accounts payable include amounts due sellers from the proceeds of the sale of their consigned vehicles less any fees.
Our operating expenses consist of cost of services, finance interest expense, provision for credit losses, selling, general and administrative and depreciation and amortization. Finance interest expense includes the cost of funds on our securitization borrowings and the amortization of debt issue costs on the securitization facilities. Cost of services is composed of payroll and related costs, subcontract services, the cost of vehicles purchased, supplies, insurance, property taxes, utilities, maintenance and lease expense related to the vehicle logistics centers and AFC branch locations. Selling, general and administrative expenses are comprised of payroll and related costs, sales and marketing, information technology services and professional fees.
Results of Operations
Overview of Results of OPENLANE, Inc. for the Three Months Ended September 30, 2025 and 2024:
|
Three Months Ended September 30, |
|||||||||||
| (Dollars in millions except per share amounts) | 2025 | 2024 | |||||||||
| Revenues | |||||||||||
| Auction fees | $ | 136.3 | $ | 113.2 | |||||||
| Service revenue | 144.2 | 148.1 | |||||||||
| Purchased vehicle sales | 108.9 | 93.0 | |||||||||
| Finance revenue | 109.0 | 105.5 | |||||||||
| Total operating revenues | 498.4 | 459.8 | |||||||||
| Operating expenses | |||||||||||
| Cost of services (exclusive of depreciation and amortization) | 270.2 | 252.0 | |||||||||
| Finance interest expense | 28.1 | 30.7 | |||||||||
| Provision for credit losses | 11.5 | 13.1 | |||||||||
| Selling, general and administrative | 110.9 | 97.7 | |||||||||
| Depreciation and amortization | 22.7 | 23.8 | |||||||||
| Total operating expenses | 443.4 | 417.3 | |||||||||
|
Operating profit
|
55.0 | 42.5 | |||||||||
| Interest expense | 1.1 | 4.6 | |||||||||
|
Other income, net
|
(2.2) | (3.6) | |||||||||
|
Income from continuing operations before income taxes
|
56.1 | 41.5 | |||||||||
| Income taxes | 8.2 | 13.1 | |||||||||
|
Income from continuing operations
|
47.9 | 28.4 | |||||||||
|
Income from discontinued operations, net of income taxes
|
- | - | |||||||||
|
Net income
|
$ | 47.9 | $ | 28.4 | |||||||
|
Income from continuing operations per share
|
|||||||||||
| Basic | $ | 0.26 | $ | 0.12 | |||||||
| Diluted | $ | 0.25 | $ | 0.12 | |||||||
Overview
For the three months ended September 30, 2025, we had revenue of $498.4 million compared with revenue of $459.8 million for the three months ended September 30, 2024, an increase of 8%. For a further discussion of our operating results, see the segment results discussions below.
Depreciation and Amortization
Depreciation and amortization decreased $1.1 million, or 5%, to $22.7 million for the three months ended September 30, 2025, compared with $23.8 million for the three months ended September 30, 2024. The decrease in depreciation and amortization was primarily the result of assets that have become fully amortized and depreciated.
Interest Expense
Interest expense decreased $3.5 million, or 76%, to $1.1 million for the three months ended September 30, 2025, compared with $4.6 million for the three months ended September 30, 2024. The decrease in interest expense was primarily the result of the repayment of the senior notes in the second quarter of 2025 and a decrease in the borrowings on lines of credit.
Other Income, Net
For the three months ended September 30, 2025, we had other income of $2.2 million compared with $3.6 million for the three months ended September 30, 2024. The decrease in other income was primarily attributable to foreign currency gains on intercompany balances of $1.6 million for the three months ended September 30, 2025, compared with foreign currency gains on intercompany balances of $3.2 million for the three months ended September 30, 2024. The decrease in foreign currency gains on intercompany balances was partially offset by a net increase in other miscellaneous income aggregating $0.2 million.
Income Taxes
We had an effective tax rate of 14.6% for the three months ended September 30, 2025, compared with an effective tax rate of 31.6% for the three months ended September 30, 2024. The effective tax rate for the three months ended September 30, 2025 was favorably impacted by a decrease in the valuation allowance related to 2025 current year movement of the adjusted U.S. net deferred tax asset primarily attributable to the application of new tax legislation, the One Big Beautiful Bill Act. The effective tax rate for the three months ended September 30, 2024 was unfavorably impacted by an increase in the valuation allowance related to 2024 current year movement of the adjusted U.S. net deferred tax asset.
We recorded a $34.6 million and $35.8 million valuation allowance against the U.S. net deferred tax asset at September 30, 2025 and December 31, 2024, respectively. The realization of the net deferred tax assets is dependent on our ability to generate sufficient future taxable income to utilize these assets. Depending on our current and anticipated future earnings, we may release a significant portion of our valuation allowance in a future period if there is sufficient positive evidence which would result in a corresponding decrease to income tax expense in such period. The actual timing and amount of the valuation allowance to be released is uncertain.
Additionally, the Organization for Economic Cooperation and Development has published a proposal to establish a new global minimum corporate tax rate of 15%, commonly referred to as Pillar Two. While the U.S. has not adopted the Pillar Two framework into law, numerous countries in which we operate have enacted tax legislation based on the Pillar Two framework with certain components of the minimum tax rules effective beginning in 2024 and further rules becoming effective beginning in 2025 and subsequent years. On June 26, 2025, the U.S. Treasury Department announced an agreement with the G7 that would exclude U.S. parented groups from some taxes imposed by Pillar Two. This agreement allows for the U.S. international tax rules and Pillar Two to operate in parallel. These rules, as well as potential changes due to the agreement, are not expected to materially impact the Company's consolidated financial statements. The Company will continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts.
On July 4, 2025, the United States enacted budget reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill Act ("OBBBA"). The Act includes a broad range of tax reform provisions, including extending and modifying various provisions of the Tax Cuts and Jobs Act and expanding certain incentives in the Inflation Reduction Act while accelerating the phase-out of other incentives. The legislation has multiple effective dates, with certain provisions effective in 2025 and other provisions effective in 2026 and subsequent years. OBBBA provisions include the restoration of the current deductibility for domestic research expenditures beginning in 2025, with transition options for previously capitalized amounts. OBBBA's changes to the deductibility of domestic research and experimental expenditures decreased our deferred tax asset position and related valuation allowance in the third quarter of 2025, as a change in tax law is accounted for in the period of enactment.
Impact of Foreign Currency
For the three months ended September 30, 2025 compared with the three months ended September 30, 2024, the change in the euro exchange rate increased revenue by $6.2 million, operating profit by $0.5 million and net income by $0.3 million. For the three months ended September 30, 2025 compared with the three months ended September 30, 2024, the change in the Canadian dollar exchange rate decreased revenue by $1.1 million, operating profit by $0.3 million and net income by $0.2 million.
Marketplace Results
|
Three Months Ended September 30, |
|||||||||||
|
(Dollars in millions, except GMV)
|
2025 | 2024 | |||||||||
| Auction fees | $ | 136.3 | $ | 113.2 | |||||||
| Service revenue | 144.2 | 148.1 | |||||||||
| Purchased vehicle sales | 108.9 | 93.0 | |||||||||
| Total Marketplace revenue | 389.4 | 354.3 | |||||||||
| Cost of services* | 270.0 | 253.8 | |||||||||
| Gross profit | 119.4 | 100.5 | |||||||||
| Provision for credit losses | 1.8 | 1.7 | |||||||||
| Selling, general and administrative | 97.6 | 86.0 | |||||||||
| Depreciation and amortization | 1.8 | 2.0 | |||||||||
| Operating profit | $ | 18.2 | $ | 10.8 | |||||||
| Commercial vehicles sold | 185,000 | 195,000 | |||||||||
| Dealer consignment vehicles sold | 187,000 | 164,000 | |||||||||
| Total vehicles sold | 372,000 | 359,000 | |||||||||
|
Gross merchandise value ("GMV") (in billions)
|
$ | 7.3 | $ | 6.7 | |||||||
* Includes depreciation and amortization
Total Marketplace Revenue
Revenue from the Marketplace segment increased $35.1 million, or 10%, to $389.4 million for the three months ended September 30, 2025, compared with $354.3 million for the three months ended September 30, 2024. The increase in revenue was partially attributable to the 14% increase in the number of dealer consignment vehicles sold. For the three months ended September 30, 2025, there was an increase in auction fees and an increase in purchased vehicle sales, partially offset by a decrease in service revenue (discussed below). The change in revenue included the impact of a net increase in revenue of $5.3 million due to fluctuations in the euro and Canadian dollar exchange rates.
The 4% increase in the number of vehicles sold was comprised of a 14% increase in dealer consignment volumes and a 5% decrease in commercial volumes. The GMV of vehicles sold for the three months ended September 30, 2025 and 2024 was approximately $7.3 billion and $6.7 billion, respectively.
Auction Fees
Auction fees increased $23.1 million, or 20%, to $136.3 million for the three months ended September 30, 2025, compared with $113.2 million for the three months ended September 30, 2024. Auction fees per vehicle sold for the three months ended September 30, 2025 increased $51, or 16%, to $366, compared with $315 for the three months ended September 30, 2024. The increase in auction fees per vehicle sold reflects the mix of vehicles sold in the third quarter of 2025 and the impact of price increases.
Service Revenue
Service revenue decreased $3.9 million, or 3%, to $144.2 million for the three months ended September 30, 2025, compared with $148.1 million for the three months ended September 30, 2024, primarily as a result of a decrease in revenue of $9.8 million as a result of the sale of our automotive key business in 2024, and decreases in inspection revenue of $1.6 million and other miscellaneous service revenues aggregating approximately $0.4 million, partially offset by increases in transportation revenue of $6.2 million and reconditioning revenue of $1.7 million.
Purchased Vehicle Sales
The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold, which represent approximately 2% of total vehicles sold. Purchased vehicle sales increased $15.9 million, or 17%, to $108.9 million for the three months ended September 30, 2025, compared with $93.0 million for the three months ended September 30, 2024, primarily as a result of an increase in the average selling price of purchased vehicles sold in Europe and an increase in the number of purchased vehicles sold in the U.S. marketplace, partially offset by a decrease in the number of purchased vehicles sold in Europe.
Gross Profit
For the three months ended September 30, 2025, gross profit from the Marketplace segment increased $18.9 million, or 19%, to $119.4 million, compared with $100.5 million for the three months ended September 30, 2024. Gross profit improvements were driven by a $12.9 million increase from pricing, a $4.0 million increase resulting from a higher mix of dealer consignment vehicles, a $3.4 million net increase in auction and service volumes and a $0.7 million benefit from lower depreciation and amortization. These improvements were partially offset by a decrease in other miscellaneous items aggregating $2.1 million.
Gross profit from the Marketplace segment was 30.7% of revenue for the three months ended September 30, 2025, compared with 28.4% of revenue for the three months ended September 30, 2024. Gross profit as a percentage of revenue increased for the three months ended September 30, 2025 as compared with the three months ended September 30, 2024, primarily due to increased prices and increased volumes, partially offset by an increase in purchased vehicle sales.
On June 28, 2024, Canada enacted a new 3% Digital Services Tax ("Canadian DST") on certain online revenues, including online marketplace service revenues, of companies with consolidated revenues of at least €750 million. On June 29, 2025, the Canadian government announced that it plans to rescind the Canadian DST as part of trade negotiations with the United States. The Company continues to record Canadian DST expense until the Canadian DST is officially rescinded by an act of Parliament. The Company recorded $1.4 million of Canadian DST in the third quarter of 2025, compared with $1.2 million in the third quarter of 2024. In total, the Company recorded Canadian DST related to the periods 2022 through 2024 of $10.2 million in 2024. The Company will reverse these expenses in the period the Canadian DST is officially rescinded.
Provision for Credit Losses
Provision for credit losses from the Marketplace segment increased $0.1 million, or 6%, to $1.8 million for the three months ended September 30, 2025, compared with $1.7 million for the three months ended September 30, 2024.
Selling, General and Administrative
Selling, general and administrative expenses from the Marketplace segment increased $11.6 million, or 13%, to $97.6 million for the three months ended September 30, 2025, compared with $86.0 million for the three months ended September 30, 2024, primarily as a result of increases in incentive-based compensation of $5.5 million, sales-related expenses of $2.6 million, compensation expense of $2.0 million, severance of $0.9 million, travel expenses of $0.6 million and other miscellaneous expenses aggregating $0.7 million, partially offset by $0.7 million related to costs incurred by the Company's automotive key business prior to its sale in the fourth quarter of 2024.
Finance Results
| As of and for the | |||||||||||
|
Three Months Ended September 30, |
|||||||||||
| (Dollars in millions) | 2025 | 2024 | |||||||||
| Finance revenue | |||||||||||
| Interest revenue | $ | 57.9 | $ | 56.1 | |||||||
| Fee and other revenue | 51.1 | 49.4 | |||||||||
| Total Finance revenue | 109.0 | 105.5 | |||||||||
| Finance interest expense | 28.1 | 30.7 | |||||||||
| Net Finance margin | 80.9 | 74.8 | |||||||||
| Finance provision for credit losses | 9.7 | 11.4 | |||||||||
| Cost of services (exclusive of depreciation and amortization) | 18.1 | 16.8 | |||||||||
| Selling, general and administrative | 13.3 | 11.7 | |||||||||
| Depreciation and amortization | 3.0 | 3.2 | |||||||||
| Operating profit | $ | 36.8 | $ | 31.7 | |||||||
| Portfolio Performance Information | |||||||||||
| Floorplans originated | 265,000 | 250,000 | |||||||||
| Floorplans curtailed* | 160,000 | 153,000 | |||||||||
| Total loan transaction units | 425,000 | 403,000 | |||||||||
| Total receivables managed | $ | 2,489.3 | $ | 2,184.5 | |||||||
| Average receivables managed** | $ | 2,389.2 | $ | 2,157.6 | |||||||
| Allowance for credit losses | $ | 23.0 | $ | 19.0 | |||||||
| Allowance for credit losses as a percentage of total receivables managed | 0.9 | % | 0.9 | % | |||||||
| Annualized finance provision for credit losses as a percentage of average receivables managed | 1.6 | % | 2.1 | % | |||||||
| Receivables delinquent as a percentage of total receivables managed | 0.3 | % | 0.9 | % | |||||||
* Floorplans curtailed represent existing loans that customers opt to extend beyond the initial term upon the customer making a partial principal payment and payment of accrued interest and fees.
** Average receivables managed is calculated based on the daily ending balance of total receivables managed.
| Yields (Annualized) |
Three Months Ended September 30, |
||||||||||
| % of Average Receivables Managed | 2025 | 2024 | |||||||||
| Finance revenue yield | |||||||||||
| Interest revenue | 9.6 | % | 10.3 | % | |||||||
| Fee and other revenue | 8.5 | % | 9.1 | % | |||||||
| Total Finance revenue yield | 18.1 | % | 19.4 | % | |||||||
| Finance interest expense | 4.7 | % | 5.7 | % | |||||||
| Net finance margin | 13.4 | % | 13.7 | % | |||||||
Revenue
For the three months ended September 30, 2025, the Finance segment revenue increased $3.5 million, or 3%, to $109.0 million, compared with $105.5 million for the three months ended September 30, 2024. The increase in revenue was primarily the result of a 5% increase in loan transaction units (vehicle finance transactions) and an increase in loan values, partially offset by decreases in interest yields driven by a decrease in prime rates.
Finance Interest Expense
For the three months ended September 30, 2025, finance interest expense decreased $2.6 million, or 8%, to $28.1 million, compared with $30.7 million for the three months ended September 30, 2024. The decrease in finance interest expense was attributable to an approximately 1.5% decrease in the average interest rate on the securitization obligations, partially offset by an increase in the average balance on the AFC securitization obligations.
Net Finance Margin (Annualized)
For the three months ended September 30, 2025 and 2024, the net Finance margin percent was approximately 13.4% and 13.7%, respectively. The net interest yield was approximately 4.9% and 4.6% for the three months ended September 30, 2025 and 2024, respectively. The decrease in the net Finance margin percent was primarily attributable to a decrease in fee and other fee yield driven by increasing loan values, partially offset by higher net interest yields.
Finance Provision for Credit Losses
For the three months ended September 30, 2025, the finance provision for credit losses decreased $1.7 million, or 15%, to $9.7 million, compared with $11.4 million for the three months ended September 30, 2024. The provision for credit losses decreased to 1.6% of the average receivables managed for the three months ended September 30, 2025 from 2.1% for the three months ended September 30, 2024. The provision for credit losses is expected to be approximately 2% or under, on a long-term basis, of the average receivables managed balance. However, the actual losses in any particular quarter or year could deviate from this range.
Cost of Services
For the three months ended September 30, 2025, cost of services for the Finance segment increased $1.3 million, or 8%, to $18.1 million, compared with $16.8 million for the three months ended September 30, 2024. The increase in cost of services was primarily the result of increases in compensation expense of $0.9 million and incentive-based compensation of $0.8 million, partially offset by a decrease in inventory audit expense of $0.4 million.
Selling, General and Administrative
Selling, general and administrative expenses for the Finance segment increased $1.6 million, or 14%, to $13.3 million for the three months ended September 30, 2025, compared with $11.7 million for the three months ended September 30, 2024 primarily as a result of increases in incentive-based compensation of $1.1 million, postage expense of $0.2 million and other miscellaneous expenses aggregating $0.3 million.
Select Finance Balance Sheet Items
| (Dollars in millions) | September 30, 2025 | December 31, 2024 | |||||||||
| Tangible Assets | |||||||||||
| Total assets | $ | 2,831.7 | $ | 2,677.7 | |||||||
| Intangible assets | 258.7 | 260.1 | |||||||||
| Tangible assets | $ | 2,573.0 | $ | 2,417.6 | |||||||
| Tangible parent equity | |||||||||||
| Total parent equity*** | $ | 775.4 | $ | 789.0 | |||||||
| Intangible assets | 258.7 | 260.1 | |||||||||
| Tangible parent equity*** | $ | 516.7 | $ | 528.9 | |||||||
*** Parent equity represents OPENLANE's net investment in AFC. Tangible parent equity is a non-GAAP measure of AFC's capital.
Overview of Results of OPENLANE, Inc. for the Nine Months Ended September 30, 2025 and 2024:
|
Nine Months Ended September 30, |
|||||||||||
| (Dollars in millions except per share amounts) | 2025 | 2024 | |||||||||
| Revenues | |||||||||||
| Auction fees | $ | 396.4 | $ | 331.8 | |||||||
| Service revenue | 426.6 | 445.4 | |||||||||
| Purchased vehicle sales | 293.1 | 231.4 | |||||||||
| Finance revenue | 324.1 | 324.9 | |||||||||
| Total operating revenues | 1,440.2 | 1,333.5 | |||||||||
| Operating expenses | |||||||||||
| Cost of services (exclusive of depreciation and amortization) | 766.2 | 711.8 | |||||||||
| Finance interest expense | 82.6 | 95.2 | |||||||||
| Provision for credit losses | 29.5 | 42.2 | |||||||||
| Selling, general and administrative | 332.4 | 308.9 | |||||||||
| Depreciation and amortization | 68.4 | 72.2 | |||||||||
| Loss on sale of property | 7.0 | - | |||||||||
| Total operating expenses | 1,286.1 | 1,230.3 | |||||||||
|
Operating profit
|
154.1 | 103.2 | |||||||||
| Interest expense | 8.2 | 17.2 | |||||||||
|
Other income, net
|
(14.6) | (2.9) | |||||||||
|
Income from continuing operations before income taxes
|
160.5 | 88.9 | |||||||||
| Income taxes | 42.3 | 31.3 | |||||||||
|
Income from continuing operations
|
118.2 | 57.6 | |||||||||
|
Income from discontinued operations, net of income taxes
|
- | - | |||||||||
|
Net income
|
$ | 118.2 | $ | 57.6 | |||||||
|
Income from continuing operations per share
|
|||||||||||
| Basic | $ | 0.59 | $ | 0.17 | |||||||
| Diluted | $ | 0.59 | $ | 0.17 | |||||||
Overview
For the nine months ended September 30, 2025, we had revenue of $1,440.2 million compared with revenue of $1,333.5 million for the nine months ended September 30, 2024, an increase of 8%. For a further discussion of our operating results, see the segment results discussions below.
Depreciation and Amortization
Depreciation and amortization decreased $3.8 million, or 5%, to $68.4 million for the nine months ended September 30, 2025, compared with $72.2 million for the nine months ended September 30, 2024. The decrease in depreciation and amortization was primarily the result of assets that have become fully amortized and depreciated.
Interest Expense
Interest expense decreased $9.0 million, or 52%, to $8.2 million for the nine months ended September 30, 2025, compared with $17.2 million for the nine months ended September 30, 2024. The decrease in interest expense was primarily the result of a decrease in the borrowings on lines of credit and the repayment of the senior notes in the second quarter of 2025.
Other Income, Net
For the nine months ended September 30, 2025, we had other income of $14.6 million compared with $2.9 million for the nine months ended September 30, 2024. The increase in other income was primarily attributable to foreign currency gains on intercompany balances of $10.5 million for the nine months ended September 30, 2025, compared with foreign currency gains on intercompany balances of $0.7 million for the nine months ended September 30, 2024. The remaining increase was attributable to a net increase in other miscellaneous income aggregating $1.9 million.
Income Taxes
We had an effective tax rate of 26.4% for the nine months ended September 30, 2025, compared with an effective tax rate of 35.2% for the nine months ended September 30, 2024. The effective tax rate for the nine months ended September 30, 2025 was not significantly impacted by the valuation allowance due to the decrease of the adjusted U.S. net deferred tax asset attributable to application of new tax legislation, the One Big Beautiful Bill Act, offsetting the increase related to all other 2025 current year movement of the adjusted U.S. net deferred tax asset. The effective tax rate for the nine months ended September 30, 2024 was unfavorably impacted by an increase in the valuation allowance related to 2024 current year movement of the adjusted U.S. net deferred tax asset.
We recorded a $34.6 million and $35.8 million valuation allowance against the U.S. net deferred tax asset at September 30, 2025 and December 31, 2024, respectively. The realization of the net deferred tax assets is dependent on our ability to generate sufficient future taxable income to utilize these assets. Depending on our current and anticipated future earnings, we may release a significant portion of our valuation allowance in a future period if there is sufficient positive evidence which would result in a corresponding decrease to income tax expense in such period. The actual timing and amount of the valuation allowance to be released is uncertain.
Additionally, the Organization for Economic Cooperation and Development has published a proposal to establish a new global minimum corporate tax rate of 15%, commonly referred to as Pillar Two. While the U.S. has not adopted the Pillar Two framework into law, numerous countries in which we operate have enacted tax legislation based on the Pillar Two framework with certain components of the minimum tax rules effective beginning in 2024 and further rules becoming effective beginning in 2025 and subsequent years. On June 26, 2025, the U.S. Treasury Department announced an agreement with the G7 that would exclude U.S. parented groups from some taxes imposed by Pillar Two. This agreement allows for the U.S. international tax rules and Pillar Two to operate in parallel. These rules, as well as potential changes due to the agreement, are not expected to materially impact the Company's consolidated financial statements. The Company will continue to monitor U.S. and global legislative action related to Pillar Two for potential impacts.
On July 4, 2025, the United States enacted budget reconciliation bill H.R. 1, referred to as the One Big Beautiful Bill Act ("OBBBA"). The Act includes a broad range of tax reform provisions, including extending and modifying various provisions of the Tax Cuts and Jobs Act and expanding certain incentives in the Inflation Reduction Act while accelerating the phase-out of other incentives. The legislation has multiple effective dates, with certain provisions effective in 2025 and other provisions effective in 2026 and subsequent years. OBBBA provisions include the restoration of the current deductibility for domestic research expenditures beginning in 2025, with transition options for previously capitalized amounts. OBBBA's changes to the deductibility of domestic research and experimental expenditures decreased our deferred tax asset position and related valuation allowance in the third quarter of 2025, as a change in tax law is accounted for in the period of enactment.
Impact of Foreign Currency
For the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024, the change in the Canadian dollar exchange rate decreased revenue by $8.7 million, operating profit by $2.3 million and net income by $1.1 million. For the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024, the change in the euro exchange rate increased revenue by $8.5 million, operating profit by $0.6 million and net income by $0.4 million.
Marketplace Results
|
Nine Months Ended September 30, |
|||||||||||
|
(Dollars in millions, except GMV)
|
2025 | 2024 | |||||||||
| Auction fees | $ | 396.4 | $ | 331.8 | |||||||
| Service revenue | 426.6 | 445.4 | |||||||||
| Purchased vehicle sales | 293.1 | 231.4 | |||||||||
| Total Marketplace revenue | 1,116.1 | 1,008.6 | |||||||||
| Cost of services* | 767.4 | 718.4 | |||||||||
| Gross profit | 348.7 | 290.2 | |||||||||
| Provision for credit losses | 2.3 | 5.2 | |||||||||
| Selling, general and administrative | 292.2 | 271.3 | |||||||||
| Depreciation and amortization | 5.1 | 6.3 | |||||||||
| Loss on sale of property | 7.0 | - | |||||||||
| Operating profit | $ | 42.1 | $ | 7.4 | |||||||
| Commercial vehicles sold | 574,000 | 634,000 | |||||||||
| Dealer consignment vehicles sold | 541,000 | 465,000 | |||||||||
| Total vehicles sold | 1,115,000 | 1,099,000 | |||||||||
|
Gross merchandise value ("GMV") (in billions)
|
$ | 21.7 | $ | 20.5 | |||||||
* Includes depreciation and amortization
Total Marketplace Revenue
Revenue from the Marketplace segment increased $107.5 million, or 11%, to $1,116.1 million for the nine months ended September 30, 2025, compared with $1,008.6 million for the nine months ended September 30, 2024. The increase in revenue was partially attributable to the 16% increase in the number of dealer consignment vehicles sold. For the nine months ended September 30, 2025, there was an increase in auction fees and an increase in purchased vehicle sales, partially offset by a decrease in service revenue (discussed below). The change in revenue included the impact of a net increase in revenue of $1.6 million due to fluctuations in the euro and Canadian dollar exchange rates.
The 1% increase in the number of vehicles sold was comprised of a 16% increase in dealer consignment volumes and a 9% decrease in commercial volumes. The GMV of vehicles sold for the nine months ended September 30, 2025 and 2024 was approximately $21.7 billion and $20.5 billion, respectively.
Auction Fees
Auction fees increased $64.6 million, or 19%, to $396.4 million for the nine months ended September 30, 2025, compared with $331.8 million for the nine months ended September 30, 2024. Auction fees per vehicle sold for the nine months ended September 30, 2025 increased $54, or 18%, to $356, compared with $302 for the nine months ended September 30, 2024. The increase in auction fees per vehicle sold reflects the mix of vehicles sold in the first nine months of 2025 and the impact of price increases.
Service Revenue
Service revenue decreased $18.8 million, or 4%, to $426.6 million for the nine months ended September 30, 2025, compared with $445.4 million for the nine months ended September 30, 2024, primarily as a result of a decrease in revenue of $29.7 million as a result of the sale of our automotive key business in 2024, and decreases in repossession revenue of $7.1 million, inspection revenue of $4.3 million and other miscellaneous service revenues aggregating approximately $1.7 million, partially offset by increases in transportation revenue of $21.3 million and reconditioning revenue of $2.7 million.
Purchased Vehicle Sales
The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold, which represent approximately 2% of total vehicles sold. Purchased vehicle sales increased $61.7 million, or 27%, to $293.1 million for the nine months ended September 30, 2025, compared with $231.4 million for the nine months ended September 30, 2024, primarily as a result of an increase in the number of purchased vehicles sold in the U.S. marketplace and in Europe and an increase in the average selling price of purchased vehicles sold in Europe, partially offset by a decrease in the average selling price of purchase vehicles sold in the U.S. marketplace.
Gross Profit
For the nine months ended September 30, 2025, gross profit from the Marketplace segment increased $58.5 million, or 20%, to $348.7 million, compared with $290.2 million for the nine months ended September 30, 2024. Gross profit improvements were driven by a $30.8 million increase from pricing, a $19.6 million increase resulting from a higher mix of dealer consignment vehicles, an $8.9 million benefit from lower Canadian DST, a $2.8 million benefit from lower depreciation and amortization and a $2.6 million net increase in auction and service volumes. These improvements were partially offset by a decrease in other miscellaneous items aggregating $6.2 million.
Gross profit from the Marketplace segment was 31.2% of revenue for the nine months ended September 30, 2025, compared with 28.8% of revenue for the nine months ended September 30, 2024. Gross profit as a percentage of revenue increased for the nine months ended September 30, 2025 as compared with the nine months ended September 30, 2024, primarily due to the benefit of lower Canadian DST and increased prices, partially offset by an increase in purchased vehicle sales.
On June 28, 2024, Canada enacted a new 3% Digital Services Tax ("Canadian DST") on certain online revenues, including online marketplace service revenues, of companies with consolidated revenues of at least €750 million. On June 29, 2025, the Canadian government announced that it plans to rescind the Canadian DST as part of trade negotiations with the United States. The Company continues to record Canadian DST expense until the Canadian DST is officially rescinded by an act of Parliament. The Company recorded $4.3 million of Canadian DST in the first nine months of 2025, compared with $13.2 million in the first nine months of 2024 (of which $10 million related to prior years). In total, the Company recorded Canadian DST related to the periods 2022 through 2024 of $10.2 million in 2024 (estimates were revised in the fourth quarter of 2024). The Company will reverse these expenses in the period the Canadian DST is officially rescinded.
Provision for Credit Losses
Provision for credit losses from the Marketplace segment decreased $2.9 million, or 56%, to $2.3 million for the nine months ended September 30, 2025, compared with $5.2 million for the nine months ended September 30, 2024, primarily as a result of initiatives implemented to reduce risk in the marketplace and initiatives to decrease bad debt expense.
Selling, General and Administrative
Selling, general and administrative expenses from the Marketplace segment increased $20.9 million, or 8%, to $292.2 million for the nine months ended September 30, 2025, compared with $271.3 million for the nine months ended September 30, 2024, primarily as a result of increases in incentive-based compensation of $17.7 million, sales-related expenses of $6.2 million, compensation expense of $4.4 million, marketing costs of $2.0 million, travel expenses of $1.2 million and other miscellaneous expenses aggregating $1.5 million, partially offset by decreases in stock-based compensation of $3.6 million, $2.6 million related to costs incurred by the Company's automotive key business prior to its sale in the fourth quarter of 2024, information technology costs of $2.5 million, fluctuations in the Canadian exchange rate of $2.0 million and severance of $1.4 million.
Loss on Sale of Property
In April 2025, the Company closed on the sale of excess property in Montreal that was originally purchased as part of the December 2023 Manheim Canada acquisition. This transaction resulted in a loss on sale of approximately $7.0 million in the second quarter of 2025.
Finance Results
| As of and for the | |||||||||||
|
Nine Months Ended September 30, |
|||||||||||
| (Dollars in millions) | 2025 | 2024 | |||||||||
| Finance revenue | |||||||||||
| Interest revenue | $ | 170.3 | $ | 176.6 | |||||||
| Fee and other revenue | 153.8 | 148.3 | |||||||||
| Total Finance revenue | 324.1 | 324.9 | |||||||||
| Finance interest expense | 82.6 | 95.2 | |||||||||
| Net Finance margin | 241.5 | 229.7 | |||||||||
| Finance provision for credit losses | 27.2 | 37.0 | |||||||||
| Cost of services (exclusive of depreciation and amortization) | 53.0 | 50.4 | |||||||||
| Selling, general and administrative | 40.2 | 37.6 | |||||||||
| Depreciation and amortization | 9.1 | 8.9 | |||||||||
| Operating profit | $ | 112.0 | $ | 95.8 | |||||||
| Portfolio Performance Information | |||||||||||
| Floorplans originated | 793,000 | 776,000 | |||||||||
| Floorplans curtailed* | 475,000 | 464,000 | |||||||||
| Total loan transaction units | 1,268,000 | 1,240,000 | |||||||||
| Total receivables managed | $ | 2,489.3 | $ | 2,184.5 | |||||||
| Average receivables managed** | $ | 2,363.9 | $ | 2,232.5 | |||||||
| Allowance for credit losses | $ | 23.0 | $ | 19.0 | |||||||
| Allowance for credit losses as a percentage of total receivables managed | 0.9 | % | 0.9 | % | |||||||
| Annualized finance provision for credit losses as a percentage of average receivables managed | 1.5 | % | 2.2 | % | |||||||
| Receivables delinquent as a percentage of total receivables managed | 0.3 | % | 0.9 | % | |||||||
* Floorplans curtailed represent existing loans that customers opt to extend beyond the initial term upon the customer making a partial principal payment and payment of accrued interest and fees.
** Average receivables managed is calculated based on the daily ending balance of total receivables managed.
| Yields (Annualized) |
Nine Months Ended September 30, |
||||||||||
| % of Average Receivables Managed | 2025 | 2024 | |||||||||
| Finance revenue yield | |||||||||||
| Interest revenue | 9.6 | % | 10.5 | % | |||||||
| Fee and other revenue | 8.7 | % | 8.9 | % | |||||||
| Total Finance revenue yield | 18.3 | % | 19.4 | % | |||||||
| Finance interest expense | 4.6 | % | 5.7 | % | |||||||
| Net finance margin | 13.7 | % | 13.7 | % | |||||||
Revenue
For the nine months ended September 30, 2025, the Finance segment revenue decreased $0.8 million, or less than 1%, to $324.1 million, compared with $324.9 million for the nine months ended September 30, 2024. The decrease in revenue was primarily the result of decreases in interest yields driven by a decrease in prime rates, partially offset by an increase in loan values and a 2% increase in loan transaction units (vehicle finance transactions).
Finance Interest Expense
For the nine months ended September 30, 2025, finance interest expense decreased $12.6 million, or 13%, to $82.6 million, compared with $95.2 million for the nine months ended September 30, 2024. The decrease in finance interest expense was attributable to an approximately 1.6% decrease in the average interest rate on the securitization obligations, partially offset by an increase in the average balance on the AFC securitization obligations.
Net Finance Margin (Annualized)
For the nine months ended September 30, 2025 and 2024, the net Finance margin percent was approximately 13.7%. The net interest yield was approximately 5.0% and 4.8% for the nine months ended September 30, 2025 and 2024, respectively.
Finance Provision for Credit Losses
For the nine months ended September 30, 2025, the finance provision for credit losses decreased $9.8 million, or 26%, to $27.2 million, compared with $37.0 million for the nine months ended September 30, 2024. The provision for credit losses decreased to 1.5% of the average receivables managed for the nine months ended September 30, 2025 from 2.2% for the nine months ended September 30, 2024. The provision for credit losses is expected to be approximately 2% or under, on a long-term basis, of the average receivables managed balance. However, the actual losses in any particular quarter or year could deviate from this range.
Cost of Services
For the nine months ended September 30, 2025, cost of services for the Finance segment increased $2.6 million, or 5%, to $53.0 million, compared with $50.4 million for the nine months ended September 30, 2024. The increase in cost of services was primarily the result of increases in incentive-based compensation of $1.6 million and compensation expense of $1.4 million, partially offset by decreases in credit checks and filing fees of $0.3 million and other miscellaneous expenses aggregating $0.1 million.
Selling, General and Administrative
Selling, general and administrative expenses for the Finance segment increased $2.6 million, or 7%, to $40.2 million for the nine months ended September 30, 2025, compared with $37.6 million for the nine months ended September 30, 2024 primarily as a result of increases in incentive-based compensation of $2.6 million, postage expense of $0.6 million and other miscellaneous expenses aggregating $0.2 million, partially offset by a decrease in severance of $0.8 million.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 2025, our sources of liquidity consisted of cash on hand, working capital and amounts available under our Revolving Credit Facilities. Our principal ongoing sources of liquidity consist of cash generated by operations and borrowings under our Revolving Credit Facilities.
| September 30, | December 31, | September 30, | |||||||||||||||
| (Dollars in millions) | 2025 | 2024 | 2024 | ||||||||||||||
| Cash and cash equivalents | $ | 119.3 | $ | 143.0 | $ | 132.1 | |||||||||||
| Working capital | 428.5 | 286.0 | 199.5 | ||||||||||||||
|
Amounts available under the Revolving Credit Facilities
|
408.1 | 397.9 | 349.3 | ||||||||||||||
|
Cash provided by operating activities for the nine months ended
|
266.4 | 260.1 | |||||||||||||||
We regularly evaluate alternatives for our capital structure and liquidity given our expected cash flows, growth and operating capital requirements as well as capital market conditions.
Working Capital
A substantial amount of our working capital (current assets less current liabilities) associated with our Marketplace segment is generated from the payments received for services provided. The majority of our working capital needs in the Marketplace segment are short-term in nature, usually less than a week in duration. Most financial institutions place a temporary hold on the availability of the funds deposited that generally can range up to two business days, resulting in cash in our accounts and on our balance sheet that is unavailable for use until it is made available. There are outstanding checks (book overdrafts) to sellers and vendors included in current liabilities. Because a portion of these outstanding checks for operations in the U.S. are drawn upon bank accounts at financial institutions other than the financial institutions that hold the cash, we cannot offset all the cash and the outstanding checks on our balance sheet. Changes in working capital vary from quarter-to-quarter as a result of the timing of collections and disbursements of funds to consignors from marketplace sales held near period end.
Approximately $52.8 million of available cash was held by our foreign subsidiaries at September 30, 2025. If funds held by our foreign subsidiaries were to be repatriated, state and local income tax expense and withholding tax expense would need to be recognized, net of any applicable foreign tax credits.
AFC offers short-term inventory-secured financing, also known as floorplan financing, to independent vehicle dealers. Financing is primarily provided for terms of 30 to 90 days. AFC principally generates its funding through the sale of its receivables. The receivables sold pursuant to the securitization agreements are accounted for as secured borrowings. For further discussion of AFC's securitization arrangements, see "Securitization Facilities."
Credit Facilities
On June 23, 2023, we entered into the Credit Agreement, which provides for, among other things, the $325 million Revolving Credit Facility. On January 19, 2024, the Company and ADESA Auctions Canada Corporation, a subsidiary of the Company (the "Canadian Borrower") entered into the First Amendment Agreement (the "First Amendment") to the Credit Agreement. The First Amendment provides for, among other things, (i) a C$175 million revolving credit facility in Canadian dollars (the "Canadian Revolving Credit Facility" and, together with the Revolving Credit Facility, "the Revolving Credit Facilities") and (ii) a C$50 million sub-limit (the "Canadian Sub-limit") under the Company's existing Revolving Credit Facility for borrowings in Canadian dollars. The proceeds from the Canadian Revolving Credit Facility were able to be used to finance a portion of the Manheim Canada acquisition, to pay for expenses related to the First Amendment and for ongoing working capital and general corporate purposes.
The Revolving Credit Facility is available for letters of credit, working capital, permitted acquisitions and general corporate purposes. The Revolving Credit Facility also includes a $65 million sub-limit for the issuance of letters of credit and a $60 million sub-limit for swingline loans.
Loans under the Revolving Credit Facility bear interest at a rate calculated based on the type of borrowing (at the Company's election, either Adjusted Term SOFR Rate or Base Rate (each as defined in the Credit Agreement)) and the Company's Consolidated Senior Secured Net Leverage Ratio (as defined in the Credit Agreement), with such rate ranging from 2.75% to 2.25% for Adjusted Term SOFR Rate loans and from 1.75% to 1.25% for Base Rate loans. The Company also paysa commitment fee between 25 to 35 basis points, payable quarterly, on the average daily unused amount of the Revolving Credit Facility based on the Company's Consolidated Senior Secured Net Leverage Ratio.
Loans under the Canadian Revolving Credit Facility bear interest at a rate calculated based on the type of borrowing (at the Canadian Borrower's election, either Adjusted Term CORRA Rate or Canadian Prime Rate (each as defined in the Credit Agreement, as amended by the First Amendment)) and the Company's Consolidated Senior Secured Net Leverage Ratio, with such rate ranging from 3.00% to 2.50% for Adjusted Term CORRA loans and from 2.00% to 1.50% for Canadian Prime Rate loans. Loans under the Canadian Sub-limit will bear interest at the Adjusted Term CORRA Rate plus a margin ranging from 2.75% to 2.25% based on the Company's Consolidated Senior Secured Net Leverage Ratio (the same margin as loans under the existing Revolving Credit Facility). The Canadian Borrower will also pay a commitment fee between 25 to 35 basis points, payable quarterly, on the average daily unused amount of the Canadian Revolving Credit Facility based on the Company's Consolidated Senior Secured Net Leverage Ratio.
As of September 30, 2025 and December 31, 2024, there were no borrowings on the Revolving Credit Facilities. We had related outstanding letters of credit in the aggregate amount of $42.6 million and $48.8 million at September 30, 2025 and December 31, 2024, respectively, which reduce the amount available for borrowings under the Revolving Credit Facilities. Our European operations have lines of credit aggregating $46.9 million (€40 million) of which $23.8 million was drawn at September 30, 2025.
The obligations of the Company under the Revolving Credit Facility are guaranteed by certain of our domestic subsidiaries (the "Subsidiary Guarantors") and are secured by substantially all of the assets of the Company and the Subsidiary Guarantors,
including but not limited to: (a) pledges of and first priority security interests in 100% of the equity interests of certain of the Company's and the Subsidiary Guarantors' domestic subsidiaries and 65% of the equity interests of certain of the Company's and the Subsidiary Guarantors' first tier foreign subsidiaries and (b) first priority security interests in substantially all other assets of the Company and each Subsidiary Guarantor, subject to certain exceptions.
The obligations of the Canadian Borrower under the Canadian Revolving Credit Facility are guaranteed by certain of the Company's domestic and Canadian subsidiaries (the "Canadian Revolving Credit Facility Subsidiary Guarantors") and are secured by substantially all of the assets of the Company, the Canadian Borrower and the Canadian Revolving Credit Facility Subsidiary Guarantors, subject to certain exceptions; provided, however, the Canadian Borrower and the other Canadian subsidiaries of the Company constituting the Canadian Revolving Credit Facility Subsidiary Guarantors shall guarantee and/or provide security for only the Canadian Secured Obligations (as defined in the Credit Agreement, as amended by the First Amendment).
Certain covenants contained within the Credit Agreement are critical to an investor's understanding of our financial liquidity, as the failure to maintain compliance with these covenants could result in a default and allow the lenders under the Credit Agreement to declare all amounts borrowed immediately due and payable. The Credit Agreement contains a financial covenant requiring compliance with a maximum Consolidated Senior Secured Net Leverage Ratio not to exceed 3.5 as of the last day of each fiscal quarteron which any loans under the Revolving Credit Facilities areoutstanding. The Consolidated Senior Secured Net Leverage Ratio is calculated as Consolidated Total Debt (as defined in the Credit Agreement) divided by Consolidated EBITDA (as defined in the Credit Agreement) for the last four quarters. Consolidated Total Debt includes, among other things, term loan borrowings, revolving loans, finance lease liabilities and other obligations for borrowed money less Unrestricted Cash (as defined in the Credit Agreement). Consolidated EBITDA is EBITDA (earnings before interest expense, income taxes, depreciation and amortization) adjusted to exclude, among other things, (a) gains and losses from asset sales; (b) unrealized foreign currency translation gains and losses in respect of indebtedness; (c) certain non-recurring gains and losses; (d) stock-based compensation expense; (e) certain other non-cash amounts included in the determination of net income; (f) charges and revenue reductions resulting from purchase accounting; (g) minority interest; (h) consulting expenses incurred for cost reduction, operating restructuring and business improvement efforts; (i) expenses realized upon the termination of employees and the termination or cancellation of leases, software licenses or other contracts in connection with the operational restructuring and business improvement efforts; (j) expenses incurred in connection with permitted acquisitions; (k) any impairment charges or write-offs of intangibles; and(l) any extraordinary, unusual or non-recurring charges, expenses or losses. Our Consolidated Senior Secured Net Leverage Ratio was negative at September 30, 2025.
In addition, the Credit Agreement (see Note 6, "Long-Term Debt" for additional information) contains certain limitations on our ability to pay dividends and other distributions, make certain acquisitions or investments, grant liens and sell assets, and contains certain limitations on our ability to incur indebtedness. The applicable covenants in the Credit Agreement affect our operating flexibility by, among other things, restricting our ability to incur expenses and indebtedness that could be used to grow the business, as well as to fund general corporate purposes. We were in compliance with the covenants in the Credit Agreement at September 30, 2025.
Senior Notes
On May 31, 2017, we issued $950 million of 5.125% senior notes due June 1, 2025. The Company paid interest on the senior notes semi-annually in arrears on June 1 and December 1 of each year. The senior notes were guaranteed by the Subsidiary Guarantors and as of June 1, 2023 became redeemable at par. The Company repaid the outstanding $210.0 million of senior notes upon maturity during the second quarter of 2025 with cash on hand.
Recent Developments
Second Amendment to the Credit Agreement
On October 8, 2025, the Company entered into a Second Amendment Agreement (the "Second Amendment") to the Credit Agreement that provides for, among other things, incremental term loans in an aggregate principal amount equal to $550.0 million (the "2025 Incremental Term Loans"). The proceeds of the 2025 Incremental Term Loans were used to finance the repurchases of Series A Preferred Stock (see further discussion below) and to pay fees and expenses incurred in connection with the establishment of the 2025 Incremental Term Loans. The 2025 Incremental Term Loans are due in October 2032.
The 2025 Incremental Term Loans will bear interest, at the Company's election, at a rate equal to (i) in the case of any Term Benchmark Loans and RFR Loans (each as defined in the Credit Agreement), the Adjusted Term SOFR Rate plus a margin of 2.50% and (ii) in the case of any Base Rate Loans (as defined in the Credit Agreement), the Base Rate plus a margin of 1.50%. The obligations of the Company under the 2025 Incremental Term Loans are guaranteed by certain of the Company's domestic subsidiaries (the "Subsidiary Guarantors") and are secured by substantially all of the assets of the Company and the Subsidiary Guarantors, subject to certain exceptions.
Repurchase of Series A Convertible Preferred Stock
In September 2025, the Company entered into preferred stock repurchase agreements with Ignition Acquisition Holdings LP and Periphas Kanga Holdings, LP to repurchase 288,322 shares and 45,706 shares, respectively, of the Company's Series A Preferred Stock for aggregate consideration of $558.9 million (the "Repurchases"). The Repurchases closed on October 8, 2025. The repurchased shares of Series A Preferred Stock have been cancelled.
Liquidity
At September 30, 2025, there were no borrowings on the Revolving Credit Facilities. At September 30, 2025, cash totaled $119.3 million and there was an additional $408.1 million available for borrowing under the Revolving Credit Facilities (net of $42.6 million in outstanding letters of credit). Funds held by our foreign subsidiaries could be repatriated, at which point state and local income tax expense and withholding tax expense would need to be recognized, net of any applicable foreign tax credits.
We believe our sources of liquidity from our cash and cash equivalents on hand, working capital, availability under our Revolving Credit Facilities and ongoing sources of liquidity from cash generated by operations and borrowings under our Revolving Credit Facilities are sufficient to meet our operating needs for the foreseeable future. In addition, we believe the previously mentioned sources of liquidity will be sufficient to fund our capital requirements and debt service payments for the foreseeable future. Changes in macroeconomic conditions could materially affect the Company's liquidity.
Securitization Facilities
AFC sells the majority of its U.S. dollar denominated finance receivables on a revolving basis and without recourse to AFC Funding Corporation. A securitization agreement allows for the revolving sale by AFC Funding Corporation to a group of bank purchasers of undivided interests in certain finance receivables subject to committed liquidity. The agreement expires on January 31, 2028. AFC Funding Corporation had committed liquidity of $2.0 billion for U.S. finance receivables at September 30, 2025.
We also have an agreement for the securitization of AFCI's receivables, which expires on January 31, 2028. AFCI's committed facility is provided through a third-party conduit (separate from the U.S. facility) and was C$375 million at September 30, 2025. In May 2025, AFCI entered into an Amendment No. 2 (the "Amendment No. 2") to the Receivables Purchase Agreement. The Amendment No. 2 increased AFCI's committed liquidity from C$300 million to C$375 million. The receivables sold pursuant to both the U.S. and Canadian securitization agreements are accounted for as secured borrowings.
AFC managed total finance receivables of $2,489.3 million and $2,314.0 million at September 30, 2025 and December 31, 2024, respectively. AFC's allowance for losses was $23.0 million and $19.8 millionat September 30, 2025 and December 31, 2024, respectively.
As of September 30, 2025 and December 31, 2024, $2,511.8 million and $2,335.1 million, respectively, of finance receivables (inclusive of accrued interest and fees) and a cash reserve of 1 or 3 percent of the obligations collateralized by finance receivables served as security for the $1,831.4 million and $1,679.1 million of gross obligations collateralized by finance receivables at September 30, 2025 and December 31, 2024, respectively. The amount of the cash reserve depends on circumstances which are set forth in the securitization agreements. There were unamortized securitization issuance costs of approximately $14.5 million and $18.8 million at September 30, 2025 and December 31, 2024, respectively. After the occurrence of a termination event, as defined in the U.S. securitization agreement, the banks may, and could, cause the stock of AFC Funding Corporation to be transferred to the bank facility, though as a practical matter the bank facility would look to the liquidation of the receivables under the transaction documents as their primary remedy.
Proceeds from the revolving sale of receivables to the bank facilities are used to fund new loans to customers. AFC, AFC Funding Corporation and AFCI must maintain certain financial covenants including, among others, limits on the amount of debt AFC and AFCI can incur, minimum levels of tangible net worth, and other covenants tied to the performance of the finance receivables portfolio. The securitization agreements also incorporate the financial covenants of our Credit Agreement. AtSeptember 30, 2025, we were in compliance with the covenants in the securitization agreements.
EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA, as presented herein, are supplemental measures of our performance that are not required by, or presented in accordance with, generally accepted accounting principles in the United States, or GAAP. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP.
EBITDA is defined as net income (loss), plus interest expense net of interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for the items of income and expense and expected incremental revenue and cost savings, as described above in the discussion of certain restrictive loan covenants under "Credit Facilities." Management believes that the inclusion of supplementary adjustments to EBITDA applied in presenting Adjusted EBITDA is appropriate to provide additional information to investors about one of the principal measures of performance used by our creditors. In addition, management uses EBITDA and Adjusted EBITDA to evaluate our performance. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not be considered in isolation or as a substitute for analysis of the results as reported under GAAP. These non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies.
The following tables reconcile income (loss) from continuing operations to EBITDA and Adjusted EBITDA for the periods presented:
| Three Months Ended September 30, 2025 | |||||||||||||||||
| (Dollars in millions) | Marketplace | Finance | Consolidated | ||||||||||||||
|
Income from continuing operations
|
$ | 18.5 | $ | 29.4 | $ | 47.9 | |||||||||||
| Add back: | |||||||||||||||||
| Income taxes | 0.8 | 7.4 | 8.2 | ||||||||||||||
| Finance interest expense | - | 28.1 | 28.1 | ||||||||||||||
| Interest expense, net of interest income | 0.6 | - | 0.6 | ||||||||||||||
| Depreciation and amortization | 19.7 | 3.0 | 22.7 | ||||||||||||||
| EBITDA | 39.6 | 67.9 | 107.5 | ||||||||||||||
| Non-cash stock-based compensation | 3.4 | 1.0 | 4.4 | ||||||||||||||
| Securitization interest | - | (25.6) | (25.6) | ||||||||||||||
| Severance | 2.3 | 0.1 | 2.4 | ||||||||||||||
| Foreign currency (gains) losses | (1.7) | 0.1 | (1.6) | ||||||||||||||
| Total addbacks (deductions) | 4.0 | (24.4) | (20.4) | ||||||||||||||
| Adjusted EBITDA | $ | 43.6 | $ | 43.5 | $ | 87.1 | |||||||||||
| Three Months Ended September 30, 2024 | |||||||||||||||||
| (Dollars in millions) | Marketplace | Finance | Consolidated | ||||||||||||||
| Income from continuing operations | $ | 4.8 | $ | 23.6 | $ | 28.4 | |||||||||||
| Add back: | |||||||||||||||||
| Income taxes | 5.0 | 8.1 | 13.1 | ||||||||||||||
| Finance interest expense | - | 30.7 | 30.7 | ||||||||||||||
| Interest expense, net of interest income | 4.2 | - | 4.2 | ||||||||||||||
| Depreciation and amortization | 20.6 | 3.2 | 23.8 | ||||||||||||||
| EBITDA | 34.6 | 65.6 | 100.2 | ||||||||||||||
| Non-cash stock-based compensation | 3.2 | 0.9 | 4.1 | ||||||||||||||
| Securitization interest | - | (27.9) | (27.9) | ||||||||||||||
| Severance | 1.4 | 0.1 | 1.5 | ||||||||||||||
| Foreign currency (gains) losses | (3.1) | (0.1) | (3.2) | ||||||||||||||
| Other | (0.3) | 0.1 | (0.2) | ||||||||||||||
| Total addbacks (deductions) | 1.2 | (26.9) | (25.7) | ||||||||||||||
| Adjusted EBITDA | $ | 35.8 | $ | 38.7 | $ | 74.5 | |||||||||||
| Nine Months Ended September 30, 2025 | |||||||||||||||||
| (Dollars in millions) | Marketplace | Finance | Consolidated | ||||||||||||||
|
Income from continuing operations
|
$ | 34.4 | $ | 83.8 | $ | 118.2 | |||||||||||
| Add back: | |||||||||||||||||
| Income taxes | 14.1 | 28.2 | 42.3 | ||||||||||||||
| Finance interest expense | - | 82.6 | 82.6 | ||||||||||||||
| Interest expense, net of interest income | 5.3 | - | 5.3 | ||||||||||||||
| Depreciation and amortization | 59.3 | 9.1 | 68.4 | ||||||||||||||
| EBITDA | 113.1 | 203.7 | 316.8 | ||||||||||||||
| Non-cash stock-based compensation | 8.3 | 2.5 | 10.8 | ||||||||||||||
| Securitization interest | - | (75.1) | (75.1) | ||||||||||||||
| Loss on sale of property | 7.0 | - | 7.0 | ||||||||||||||
| Severance | 6.6 | 0.2 | 6.8 | ||||||||||||||
| Foreign currency (gains) losses | (10.5) | - | (10.5) | ||||||||||||||
|
Other
|
0.7 | 0.1 | 0.8 | ||||||||||||||
| Total addbacks (deductions) | 12.1 | (72.3) | (60.2) | ||||||||||||||
| Adjusted EBITDA | $ | 125.2 | $ | 131.4 | $ | 256.6 | |||||||||||
| Nine Months Ended September 30, 2024 | |||||||||||||||||
| (Dollars in millions) | Marketplace | Finance | Consolidated | ||||||||||||||
| Income (loss) from continuing operations | $ | (24.2) | $ | 81.8 | $ | 57.6 | |||||||||||
| Add back: | |||||||||||||||||
| Income taxes | 4.0 | 27.3 | 31.3 | ||||||||||||||
| Finance interest expense | - | 95.2 | 95.2 | ||||||||||||||
| Interest expense, net of interest income | 16.1 | - | 16.1 | ||||||||||||||
| Depreciation and amortization | 63.3 | 8.9 | 72.2 | ||||||||||||||
| Intercompany interest | 13.3 | (13.3) | - | ||||||||||||||
| EBITDA | 72.5 | 199.9 | 272.4 | ||||||||||||||
| Non-cash stock-based compensation | 12.0 | 2.8 | 14.8 | ||||||||||||||
| Acquisition related costs | 0.5 | - | 0.5 | ||||||||||||||
| Securitization interest | - | (87.0) | (87.0) | ||||||||||||||
| Severance | 8.2 | 1.0 | 9.2 | ||||||||||||||
| Foreign currency (gains) losses | (0.6) | (0.1) | (0.7) | ||||||||||||||
| Professional fees related to business improvement efforts | 1.2 | 0.3 | 1.5 | ||||||||||||||
| Impact for newly enacted Canadian DST related to prior years | 10.0 | - | 10.0 | ||||||||||||||
| Other | (0.2) | 0.2 | - | ||||||||||||||
| Total addbacks (deductions) | 31.1 | (82.8) | (51.7) | ||||||||||||||
| Adjusted EBITDA | $ | 103.6 | $ | 117.1 | $ | 220.7 | |||||||||||
Certain of our loan covenant calculations utilize financial results for the most recent four consecutive fiscal quarters. The following table reconciles EBITDA and Adjusted EBITDA to net income for the periods presented:
| Three Months Ended |
Twelve Months Ended |
||||||||||||||||||||||||||||
| (Dollars in millions) | December 31, 2024 | March 31, 2025 | June 30, 2025 | September 30, 2025 | September 30, 2025 | ||||||||||||||||||||||||
|
Net income
|
$ | 52.3 | $ | 36.9 | $ | 33.4 | $ | 47.9 | $ | 170.5 | |||||||||||||||||||
| Less: Income from discontinued operations | - | - | - | - | - | ||||||||||||||||||||||||
|
Income from continuing operations
|
52.3 | 36.9 | 33.4 | 47.9 | 170.5 | ||||||||||||||||||||||||
| Add back: | |||||||||||||||||||||||||||||
| Income taxes | 16.7 | 15.8 | 18.3 | 8.2 | 59.0 | ||||||||||||||||||||||||
| Finance interest expense | 28.3 | 27.6 | 26.9 | 28.1 | 110.9 | ||||||||||||||||||||||||
| Interest expense, net of interest income | 4.1 | 3.4 | 1.3 | 0.6 | 9.4 | ||||||||||||||||||||||||
| Depreciation and amortization | 23.0 | 22.7 | 23.0 | 22.7 | 91.4 | ||||||||||||||||||||||||
| EBITDA | 124.4 | 106.4 | 102.9 | 107.5 | 441.2 | ||||||||||||||||||||||||
| Non-cash stock-based compensation | 1.1 | 2.0 | 4.4 | 4.4 | 11.9 | ||||||||||||||||||||||||
| Acquisition related costs | 0.1 | - | - | - | 0.1 | ||||||||||||||||||||||||
| Securitization interest | (25.7) | (25.1) | (24.4) | (25.6) | (100.8) | ||||||||||||||||||||||||
| Loss on sale of property | - | - | 7.0 | - | 7.0 | ||||||||||||||||||||||||
| Gain on sale of business | (31.6) | - | - | - | (31.6) | ||||||||||||||||||||||||
| Severance | 2.4 | 2.0 | 2.4 | 2.4 | 9.2 | ||||||||||||||||||||||||
| Foreign currency losses (gains) | 6.5 | (3.3) | (5.6) | (1.6) | (4.0) | ||||||||||||||||||||||||
| Gain on investments | (0.4) | - | - | - | (0.4) | ||||||||||||||||||||||||
|
Impact for newly enacted Canadian DST related to prior years
|
(4.6) | - | - | - | (4.6) | ||||||||||||||||||||||||
| Other | 0.5 | 0.8 | - | - | 1.3 | ||||||||||||||||||||||||
| Total addbacks (deductions) | (51.7) | (23.6) | (16.2) | (20.4) | (111.9) | ||||||||||||||||||||||||
|
Adjusted EBITDA
|
$ | 72.7 | $ | 82.8 | $ | 86.7 | $ | 87.1 | $ | 329.3 | |||||||||||||||||||
Summary of Cash Flows
|
Nine Months Ended September 30, |
|||||||||||
| (Dollars in millions) | 2025 | 2024 | |||||||||
| Net cash provided by (used by): | |||||||||||
| Operating activities - continuing operations | $ | 266.4 | $ | 260.1 | |||||||
| Operating activities - discontinued operations | - | (1.4) | |||||||||
| Investing activities - continuing operations | (195.5) | 10.4 | |||||||||
| Investing activities - discontinued operations | - | - | |||||||||
| Financing activities - continuing operations | (119.9) | (264.3) | |||||||||
| Financing activities - discontinued operations | - | - | |||||||||
| Net change in cash balances of discontinued operations | - | - | |||||||||
| Effect of exchange rate on cash | 11.7 | (3.1) | |||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | $ | (37.3) | $ | 1.7 | |||||||
Cash flow from operating activities (continuing operations)Net cash provided by operating activities (continuing operations) was $266.4 million for the nine months ended September 30, 2025, compared with $260.1 million for the nine months ended September 30, 2024. Cash provided by continuing operations for the nine months ended September 30, 2025 consisted primarily of cash earnings and an increase in accounts payable and accrued expenses, partially offset by an increase in trade
receivables and other assets. Cash provided by continuing operations for the nine months ended September 30, 2024 consisted primarily of cash earnings and an increase in accounts payable and accrued expenses, partially offset by an increase in trade receivables and other assets. The increase in operating cash flow was primarily attributable to increased profitability, partially offset by changes in operating assets and liabilities as a result of the timing of collections and the disbursement of funds to consignors for marketplace sales held near period-ends.
Changes in AFC's accounts payable balance are presented in cash flows from operating activities, while changes in AFC's finance receivables are presented in cash flows from investing activities and changes in AFC's obligations collateralized by finance receivables are presented in cash flows from financing activities. Variations in these balances can lead to significant fluctuations across operating, investing and financing cash flows. Growth and contraction in AFC's finance receivables portfolio can result in significant swings in cash flows in a given period as approximately 70% to 75% of AFC's finance receivables portfolio is funded through its securitization facilities with the remainder funded through other sources of liquidity including cash on hand and working capital.
Cash flow from investing activities (continuing operations)Net cash used by investing activities (continuing operations) was $195.5 million for the nine months ended September 30, 2025, compared with net cash provided by investing activities of $10.4 million for the nine months ended September 30, 2024. The cash used by investing activities for the nine months ended September 30, 2025was primarily from an increase in finance receivables held for investment and purchases of property and equipment, partially offset by proceeds from the sale of property. The cash provided by investing activities for the nine months ended September 30, 2024 was primarily from a decrease in finance receivables held for investment, partially offset by purchases of property and equipment.
Cash flow from financing activities (continuing operations) Net cash used by financing activities (continuing operations) was $119.9 million for the nine months ended September 30, 2025, compared with $264.3 million for the nine months ended September 30, 2024. The cash used by financing activities for the nine months ended September 30, 2025 was primarily due to payments on long-term debt, repurchases and retirement of common stock and dividends paid on the Series A Preferred Stock, partially offset by a net increase in obligations collateralized by finance receivables and a net increase in book overdrafts. The cash used by financing activities for the nine months ended September 30, 2024 was primarily due to a net decrease in obligations collateralized by finance receivables, repayments on lines of credit, dividends paid on the Series A Preferred Stock, repurchases and retirement of common stock and payments for debt issuance costs.
Cash flow from operating activities (discontinued operations)There were no operating activities (discontinued operations) for the nine months ended September 30, 2025, compared with net cash used by operating activities of $1.4 millionfor the nine months ended September 30, 2024. The cash used by operating activities for the nine months ended September 30, 2024 was primarily attributable to the payment of an accrued obligation.
Cash flow from investing activities (discontinued operations)There were no investing activities (discontinued operations) for the nine months ended September 30, 2025and 2024.
Cash flow from financing activities (discontinued operations)There were no financing activities (discontinued operations) for the nine months ended September 30, 2025and 2024.
Capital Expenditures
Capital expenditures for the nine months ended September 30, 2025 and 2024 approximated $40.7 million and $39.0 million, respectively. Capital expenditures were funded from internally generated funds. We continue to invest in our core information technology capabilities and our service locations. Capital expenditures are expected to be approximately $50 million to $55 million for fiscal year 2025. Future capital expenditures could vary substantially based on capital project timing, capital expenditures related to acquired businesses and the initiation of new information systems projects to support our business strategies.
Dividends
The Series A Preferred Stock ranks senior to the shares of the Company's common stock, par value $0.01 per share, with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The holders of the Series A Preferred Stock are entitled to a cumulative dividend at the rate of 7% per annum, payable quarterly in arrears. Dividends are payable in cash or in kind, or in any combination of both, at the option of the Company. For the nine months ended September 30, 2025 and 2024, the holders of the Series A Preferred Stock received cash dividends aggregating $33.3 million each period. The holders of the Series A Preferred Stock are also entitled to participate in dividends declared or paid on our common stock on an as-converted basis.
Contractual Obligations
The Company's contractual cash obligations for long-term debt, interest payments related to long-term debt and operating leases are summarized in the table of contractual obligations in our Annual Report on Form 10-K for the year ended December 31, 2024. Since December 31, 2024, the contractual obligations of the Company have changed as follows:
•In September 2025, the Company entered into preferred stock repurchase agreements with Ignition Acquisition Holdings LP and Periphas Kanga Holdings, LP to repurchase 288,322 shares and 45,706 shares, respectively, of the Company's Series A Preferred Stock for aggregate consideration of $558.9 million (the "Repurchases"). The Repurchases closed in October 2025.
•The remaining $210.0 million principal amount of the senior notes were repaid.
•Operating lease obligations change in the ordinary course of business. We lease most of our facilities, as well as other property and equipment under operating leases. Future operating lease obligations will continue to change if renewal options are exercised and/or if we enter into additional operating lease agreements.
Our contractual cash obligations as of December 31, 2024, are discussed in the "Contractual Obligations" section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission (the "SEC").
Critical Accounting Estimates
Our critical accounting estimates are discussed in the "Critical Accounting Estimates" section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC. A summary of significant accounting policies is discussed in Note 2 and elsewhere in the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2024, which includes audited financial statements.
New Accounting Standards
For a description of new accounting standards that could affect the Company, reference the "New Accounting Standards" section of Note 1 of the Unaudited Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q.
Off-Balance Sheet Arrangements
As of September 30, 2025, we had no off-balance sheet arrangements pursuant to Item 303 of Regulation S-K under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that we believe are reasonably likely to have a current or future effect on our financial condition, results of operations, or cash flows.
Openlane Inc. published this content on November 05, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 05, 2025 at 14:57 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]