KAR Global posted lower revenue and profit for the first quarter, which included several days of the company’s ADESA auctions sitting idle during the coronavirus pandemic.
KAR’s net income from continuing operations in the period fell 82 percent from the year-earlier period to $2.8 million as revenue declined 6 percent to $645.5 million. Adjusted earnings before interest, taxes, depreciation and amortization fell 28 percent to $88.6 million.
KAR has withdrawn its outlook for 2020 amid the uncertainty surrounding the extent of the pandemic’s impact on the company’s business.
Shares of KAR were down 9 percent to $12.61 in early trading Thursday.
As the COVID-19 crisis spread in the U.S., KAR announced March 16 that all of its auctions would switch to a digital-only format. Then, on March 20, the company halted all sales at its auctions. It reopened digital-only sales April 6, and, like Cox Automotive’s Manheim, has continued to do digital-only sales where permitted by local laws.
Meanwhile, the company has taken cost-cutting measures, such as reducing salaries for executives and furloughing some 11,000 employees.
KAR CEO Jim Hallett, CFO Eric Loughmiller and President Peter Kelly all voluntarily elected to forgo 100 percent of their base salaries from April 5 through at least June 27, the company said. According to the company’s most recent proxy statement, those executives’ base salaries for 2020 are $975,000, $550,000 and $600,000, respectively.
The remainder of KAR’s executive officers have voluntarily opted to have their salaries cut in half during this period. Base salaries throughout the organization have been reduced, and the company’s board of directors is forgoing cash compensation for the second quarter.
Other expenditures, such as business travel and capital projects, have been halted, delayed or canceled.
KAR said it “intends to take advantage” of the Employee Retention Credit and the Federal Employer Social Security Tax Deferment as part of the Coronavirus Aid, Relief and Economic Security Act.
