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What changed in OPENLANE, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of OPENLANE, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+466 added−395 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-21)

Top changes in OPENLANE, Inc.'s 2024 10-K

466 paragraphs added · 395 removed · 328 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

72 edited+23 added−13 removed34 unchanged
Biggest changeOur Business Strategy OPENLANE’s strategy is to build the world’s greatest digital marketplaces for used vehicles, and we are advancing this strategy by fulfilling our purpose, to make wholesale easy so our customers can be more successful.
Biggest changeOur Business Strategy OPENLANE’s vision is to build the world’s greatest digital marketplaces for used vehicles, and our strategy for growth is grounded in our purpose, "to make wholesale easy so our customers can be more successful." We believe we can do this by focusing on three enabling priorities: • First, by delivering the best integrated marketplace - expanding our marketplace to include more buyers and more sellers and offering the most diverse inventory available. • Second, by delivering the best technology - innovative products and services that help our customers make informed decisions and achieve better outcomes. • And third, by delivering the best customer experience - keeping our marketplace fast, fair and transparent, making it easy for customers to transact and making OPENLANE the most preferred - and most utilized marketplace.
We facilitate the transfer of ownership directly from seller to buyer and, generally, we do not take title to, nor ownership of, vehicles sold through our marketplaces. However, we also sell vehicles that have been purchased, for which we do take title and record the gross selling price of the vehicle sold through our marketplaces as revenue.
We facilitate the transfer of ownership directly from seller to buyer and, generally, we do not take title to, nor ownership of, vehicles sold through our marketplaces. However, we also sell vehicles that we have purchased, for which we do take title and record the gross selling price of the vehicle sold through our marketplaces as revenue.
In addition, our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Principal Executive and Senior Financial Officers and charters of the audit committee, the compensation committee, the nominating and corporate governance committee and the risk committee of our board of directors are available on our website and available in print to any stockholder who requests it.
In addition, our Corporate Governance Guidelines, Code of Business Conduct and Ethics, Code of Ethics for Principal Executive and Senior Financial Officers and charters of the audit committee, the compensation committee and the nominating and corporate governance committee of our board of directors are available on our website and available in print to any stockholder who requests it.
Risk specialists work closely with the field personnel to track trends before an account becomes a troubled account and to determine, together with collection attorneys, the best strategy to secure the collateral once a troubled account is identified.
Risk specialists work closely with the field personnel to track trends before an account becomes a troubled account and to determine, together with collection attorneys, the best strategy to secure the collateral and mitigate risk once a troubled account is identified.
Poor results from inventory audits typically require personnel to take actions to determine the status of missing collateral, including visiting the dealer personally, verifying units held off-site and collecting payments for units sold. Audits also identify troubled accounts, triggering the involvement of AFC's risk department. AFC operates three divisions which are organized into ten regions in North America.
Poor results from inventory audits typically require personnel to take actions to determine the status of missing collateral, including visiting the dealer personally, verifying units held off-site and collecting payments for units sold. Audits also identify troubled accounts, triggering the involvement of AFC's risk department. AFC operates two divisions which are organized into ten regions in North America.
An important component of our services to buyers is providing short-term inventory-secured financing, known as floorplan financing. This is provided primarily to independent used vehicle dealers ("independent dealer customers") through our wholly-owned subsidiary, AFC, which has approximately 90 locations (hybrid of physical locations and a digital servicing network) throughout North America.
An important component of our services to buyers is providing short-term inventory-secured financing, known as floorplan financing. This is provided primarily to independent used vehicle dealers ("independent vehicle dealers") through our wholly-owned subsidiary, AFC, which has approximately 90 locations (hybrid of physical locations and a digital servicing network) throughout North America.
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. AFC's securitization facility has been in place since 1996. AFC Funding Corporation had a committed facility of $2.0 billion from a third-party facility for U.S. finance receivables at December 31, 2023.
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. AFC's securitization facility has been in place since 1996. AFC Funding Corporation had a committed facility of $2.0 billion from a third-party facility for U.S. finance receivables at December 31, 2024.
The agreement expires on January 31, 2026. We also have an agreement in place for the securitization of Automotive Finance Canada Inc.'s ("AFCI") receivables. This securitization facility provides up to C$300 million in financing for eligible finance receivables through a third-party conduit (separate from the U.S. facility). The agreement expires on January 31, 2026.
The agreement expires on January 31, 2028. We also have an agreement in place for the securitization of Automotive Finance Canada Inc.'s ("AFCI") receivables. This securitization facility provides up to C$300 million in financing for eligible finance receivables through a third-party conduit (separate from the U.S. facility). The agreement expires on January 31, 2028.
The information posted on our website is not incorporated into this Annual Report. The SEC maintains a website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov. 11 Table of Contents
The information posted on our website is not incorporated into this Annual Report. The SEC maintains a website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov. 12 Table of Contents
The receivables sold pursuant to both the U.S. and Canadian securitization agreements are accounted for as secured borrowings. Competition AFC provides short-term dealer floorplan financing of wholesale vehicles primarily to independent vehicle dealers in North America. At the national level, AFC's competition includes NextGear Capital by Cox Automotive ("NextGear Capital"), other specialty lenders, banks and financial institutions.
The receivables sold pursuant to both the U.S. and Canadian securitization agreements are accounted for as secured borrowings. Competition AFC provides short-term dealer floorplan financing of wholesale vehicles primarily to independent vehicle dealers in North America. At the national level, AFC's competition includes NextGear Capital, other specialty lenders, banks and financial institutions.
Our electronic filings with the Securities and Exchange Commission ("SEC") (including all Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and if applicable, amendments to those reports) are available free of charge on the website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.
Our electronic filings with the Securities and Exchange Commission ("SEC"), including all Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports, are available free of charge on our website as soon as reasonably practicable after they are electronically filed with or furnished to the SEC.
We generally deduct seller fees and other ancillary service fees to sellers from the gross sales price of each vehicle before remitting the net amount to the seller. We also sell vehicles that have been purchased, which represent approximately 1% of the total volume of vehicles sold.
We generally deduct seller fees and other ancillary service fees to sellers from the gross sales price of each vehicle before remitting the net amount to the seller. We also sell vehicles that we have purchased, which represent approximately 2% of the total volume of vehicles sold.
Vehicles on our marketplaces are typically sold by commercial sellers including vehicle manufacturers and their captive finance companies, financial institutions, commercial fleet operators and rental car companies (collectively "commercial customers"), as well as used vehicle dealers, to franchised and independent used vehicle dealers (collectively "dealer customers").
Vehicles on our marketplaces are typically sold by commercial sellers including vehicle manufacturers and their captive finance companies, financial institutions, commercial fleet operators and rental car companies (collectively "commercial customers"), as well as new and used vehicle dealers, to franchise and independent used vehicle dealers (collectively "dealer customers").
There are several other providers in the market of varying size. Over the last several years, industry transactions have been increasingly shifting from physical marketplace venues to digital marketplace channels. This shift has attracted the entry of several new technology-driven marketplace participants, who are generally smaller in size and service more select segments of buyers and sellers.
Over the last several years, industry transactions have been increasingly shifting from physical marketplace venues to digital marketplace channels. This shift has attracted the entry of several new technology-driven marketplace participants, who are generally smaller in size and service more select segments of buyers and sellers.
Field personnel are proactive in managing collateral by monitoring loans and changes in payoff activity. In addition, over 58,000 routine audits, or inventory audits, are performed annually on the dealers' lots through our AutoVIN subsidiary. The audit reconciliation process is centralized in order to better mitigate risk and make field personnel time available to focus on the customer.
Field personnel are proactive in managing collateral by monitoring loans and changes in payoff activity. In addition, over 54,000 routine audits, or inventory audits, are performed annually on the dealers' lots. The audit reconciliation process is centralized in order to better mitigate risk and make available field personnel time to focus on the customer.
AFC's proprietary system facilitates this daily collateral management by providing real-time access to dealer information and enables field and corporate personnel to assess and manage potential collection issues. Restrictions are automatically placed on customer accounts in the event of a delinquency, payments by dealers from bank accounts with insufficient funds or poor audit results.
AFC's data analytics facilitates this collateral management by providing real-time access to dealer information and enables field and corporate personnel to assess and manage potential risk issues. Restrictions are automatically placed on customer accounts in the event of a delinquency, payments by dealers from bank accounts with insufficient funds or poor audit results.
We generate revenue through auction fees charged to vehicle sellers and buyers as well as by providing value-added ancillary products and services, including transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services and floorplan financing.
We generate revenue through auction fees charged to vehicle sellers and buyers as well as by providing value-added ancillary products and services, including transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services and floorplan financing, as well as SaaS-based remarketing and other supporting technology services.
Our OPENLANE marketplaces provide comprehensive vehicle condition reports, greater transparency into bidding activity, and real-time market price discovery on listed vehicles.
Our OPENLANE marketplaces provide comprehensive 5 Table of Contents vehicle condition reports, greater transparency into bidding activity, and real-time market price discovery on listed vehicles.
Our Corporate History ADESA entered the vehicle remarketing industry in 1989 and first became a public company in 1992. In 1994, ADESA acquired AFC. ADESA remained a public company until 1995, and then became public again in 2004. KAR Auction Services, Inc. ("KAR") was incorporated in 2006 and acquired ADESA and IAA in 2007, taking ADESA private.
Our Corporate History ADESA entered the vehicle remarketing industry in 1989 and first became a public company in 1992. In 1994, ADESA acquired AFC. ADESA remained a public company until 1995, and then became public again in 2004. KAR Auction Services, Inc. ("KAR") was incorporated in 2006 and acquired ADESA and Insurance Auto Auctions, Inc.
In 2023, our marketplaces facilitated the sale of approximately 1.3 million used vehicles, making OPENLANE a leading digital-only wholesale marketplace for used vehicles in North America.
In 2024 , our marketplaces facilitated the sale of approximately 1.4 million used vehicles, making OPENLANE a leading digital wholesale marketplace for used vehicles in North America.
Over the last few years, the Company has integrated and leveraged technology, capabilities and staff from these businesses to deliver what we believe is the best digital dealer-to-dealer solution in the market. 5 Table of Contents Expanding our commercial business: The commercial consignment business represents approximately one-half of the Company’s transactional volume, and growing our share in this area remains a strategic priority.
Over the last few years, we have integrated and leveraged technology, capabilities and staff from these businesses to deliver what we believe is the best digital dealer-to-dealer solution in the market. • Expanding our commercial business: The commercial consignment business represents approximately 57% of our transactional volume, and growing our share in this area remains a strategic priority.
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.
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.
We target and solicit new dealers through both direct sales efforts at the dealer's place of business as well as location-based sales and customer service representatives, who service our dealers at our vehicle logistics centers or competitors where they replenish and rotate vehicle inventory. These largely local efforts are handled by field personnel.
We target and solicit new dealers through both direct sales efforts at the dealer's place of business as well as location-based sales at one of our physical locations, vehicle logistics centers or competitor auctions where they replenish and rotate vehicle inventory. These largely local efforts are handled by field personnel.
The vehicles that are purchased by us (as opposed to consigned) are remarketed on our own behalf through our marketplace platforms. Since these vehicle titles transfer to us, the entire selling and purchase price of the vehicle is recorded as revenue and cost of services upon sale.
The vehicles that we purchase (as opposed to consign) are remarketed through our marketplace platforms. Since these vehicle titles transfer to us, the entire selling and purchase price of the vehicle is recorded as revenue and cost of services upon sale.
These local representatives focus on the dealer sellers and buyers and are complemented by a centralized team of inventory consultants matching buyers and inventory. Both the local sales representatives and the inventory consultants are managed by a corporate-level team focused on developing and implementing standard best practices and expanding relationships with major dealer groups.
Both the local sales representatives and the inventory consultants are managed by a corporate team focused on developing and implementing standard best practices and expanding relationships with major dealer groups.
Wholesale Used Vehicle Market In the North American wholesale used vehicle marketplace industry, the largest providers of physical auctions include Manheim by Cox Automotive ("Manheim"), Carvana's used vehicle auctions operated as ADESA and America's Auto Auction. In the North American wholesale used vehicle marketplace industry, the largest providers of digital marketplaces include the Company and ACV Auctions.
In the North American wholesale used vehicle marketplace industry, the largest providers of physical auctions include Manheim by Cox Automotive ("Manheim"), Carvana's used vehicle auctions operated as ADESA and America's Auto Auction. There are several other providers in the market of varying size.
Digital innovation: The cornerstone of OPENLANE's business is our digital technology, so we intend to continue investing in innovation in our digital platforms, data analytics capabilities and digital talent that power our marketplaces, make wholesale easy for our customers and differentiate our marketplace from our competitors. • Enabling capabilities: We understand that as transactions become more digital, our capabilities need to evolve to meet the increased customer needs and expectations in a digital marketplace.
We intend to continue investing in innovation in our digital platforms, data analytics capabilities and digital talent that power our marketplaces, make wholesale easy for our customers and differentiate our marketplace from our competitors. • Enabling capabilities: As the wholesale used vehicle industry continues to migrate to digital, our capabilities need to evolve to meet the increased customer needs and expectations in a digital marketplace.
Additionally, a more simplified business will help us focus our investments, accelerate the pace of innovation and manage our operating costs to the evolving market realities of our business. Our Business Segments We operate as two reportable business segments: Marketplace and Finance. Our revenues for the year ended December 31, 2023 were distributed as follows: Marketplace 76% and Finance 24%.
Additionally, a more simplified business will help us focus our investments, accelerate the pace of innovation and manage our operating costs to the evolving market realities of our business. 6 Table of Contents Our Business Segments We operate as two reportable business segments: Marketplace and Finance.
Transportation Services We provide transportation services utilizing our own equipment and personnel as well as licensed and insured third-party carriers. Through our proprietary technology that provides automated vehicle shipping services, customers can instantly review price quotes and delivery times, and vehicle transporters can check available loads and also receive instant notification of available shipments.
Through our proprietary technology that provides automated vehicle shipping services, customers can instantly review price quotes and delivery times, and vehicle transporters can check available loads and also receive instant notification of available shipments.
Employees and Human Capital At December 31, 2023, we had approximately 4,500 employees, of which approximately 2,100 were located in the U.S. and approximately 2,400 were located in Canada, Europe, Uruguay and the Philippines. Approximately 85% of our workforce consists of full-time employees.
Employees and Human Capital At December 31, 2024, we had approximately 4,800 employees, of which approximately 2,000 were located in the U.S. and approximately 2,800 were located in Canada, Europe, Uruguay and the Philippines. Approximately 82% of our workforce consists of full-time employees. None of our employees participate in collective bargaining agreements.
This technology is also utilized at our vehicle logistics center locations, and we believe that the expanded utilization of comprehensive vehicle condition reports with pictures, video and sound facilitates dealers sourcing vehicles digitally.
Field managers are equipped with handheld computers and digital cameras to record all inspection and audit data on-site. This technology is also utilized at our vehicle logistics center locations, and we believe that the expanded utilization of comprehensive vehicle condition reports with pictures, video and sound facilitates dealers sourcing vehicles digitally.
Typical loan terms are 30 to 90 days, each with a possible loan extension. For an additional fee, this loan extension allows the dealer to extend the duration of the loan beyond the original term for another 30 to 90 days, and generally requires the dealer to make payment towards the principal and payment of accrued fees and interest.
For an additional fee, this loan extension allows the dealer to extend the duration of the loan beyond the original term for another 30 to 90 days, and generally requires the dealer to make payment towards the principal and payment of accrued fees and interest. Collateral Management Collateral management is an integral part of daily operations throughout the organization.
The Company supports the majority of 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 Company supports the majority of 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. 4 Table of Contents Wholesale Used Vehicle Market In the North American wholesale used vehicle marketplace industry, the largest providers of digital marketplaces include OPENLANE and ACV Auctions.
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.
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.
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. 10 Table of Contents Government Regulation Our operations are subject to regulation, supervision and licensing under various federal, state, provincial, local and foreign authorities, agencies, statutes and ordinances, which, among other things, require us to obtain and maintain certain licenses, permits and qualifications, provide certain disclosures and notices, limit interest rates, fees and other charges and protect personal data.
Government Regulation Our operations are subject to regulation, supervision and licensing under various federal, state, provincial, local and foreign authorities, agencies, statutes and ordinances, which, among other things, require us to obtain and maintain certain licenses, permits and qualifications, provide certain disclosures and notices, limit interest rates, fees and other charges and protect personal data.
Digital marketplace sales are initiated online and include OPENLANE US, OPENLANE Canada and OPENLANE Europe sales. 6 Table of Contents Vehicles available on our marketplaces include vehicles from commercial customers such as off-lease vehicles, repossessed vehicles, rental vehicles and other fleet vehicles that have reached a predetermined age or mileage, as well as vehicles from dealer customers turning their inventory.
Vehicles available on our marketplaces include vehicles from commercial customers such as off-lease vehicles, repossessed vehicles, rental vehicles and other fleet vehicles that have reached a predetermined age or mileage, as well as vehicles from dealer customers turning their inventory. Liquidity and the breadth and selection of inventory offered on our marketplaces are essential to our sellers and buyers.
The extension of a credit line to a dealer starts with the underwriting process. Credit lines up to $600,000 are extended using a proprietary scoring model developed internally by AFC. Credit lines in excess of $600,000 may be extended using underwriting guidelines which generally require dealership and personal financial statements, monthly bank statements, sales reports and tax returns.
Credit lines in excess of $600,000 may be extended using underwriting guidelines which generally require dealership and personal financial statements, monthly bank statements, sales reports and tax returns.
We sell the majority of our U.S. dollar-denominated finance receivables without recourse to a wholly-owned bankruptcy remote special purpose entity, which sells an undivided participation interest in such finance receivables to a group of bank purchasers on a revolving basis. We also securitize the majority of our Canadian dollar denominated finance receivables through a separate third-party facility.
In 2024, AFC serviced approximately 1.6 million loan transactions, which includes both loans originated and loans extended, or curtailed. We sell the majority of our U.S. dollar-denominated finance receivables without recourse to a wholly-owned bankruptcy remote special purpose entity, which sells an undivided participation interest in such finance receivables to a group of bank purchasers on a revolving basis.
Additionally, we enable support functions and people managers that are dedicated to the growth and development of our teams. Intellectual Property We rely on various intellectual property laws, confidentiality procedures and contractual provisions to protect our proprietary technology and brands. We have registered, and applied for the registration of, U.S. and international trademarks, service marks, domain names and copyrights.
Intellectual Property We rely on various intellectual property laws, confidentiality procedures and contractual provisions to protect our proprietary technology and brands. We have registered, and applied for the registration of, U.S. and international trademarks, service marks, domain names and copyrights. We have also filed patent applications and obtained registrations in the U.S. and foreign countries covering certain of our technology.
AFC competes primarily on a relationship basis, focusing on quality of service, convenience of payment, scope of services offered to solve customer pain points and consistent commitment to the sector. This and our long-term relationships with customers have been established over time and act as a competitive strength for us.
AFC competes primarily on a relationship basis, focusing on quality of service, convenience of payment, scope of services offered to solve customer pain points and consistent commitment to the sector.
Customers Suppliers of vehicles to our digital marketplaces primarily include (i) commercial customers; and (ii) dealer customers. Buyers of vehicles on our marketplace platforms primarily include dealer customers. Services Our digital marketplaces also provide a full range of innovative and value-added services to sellers and buyers that enable us to serve as a "one-stop shop" to service our customers' needs.
Services Our digital marketplaces also provide a full range of innovative and value-added services to sellers and buyers that enable us to serve as a "one-stop shop" to service our customers' needs. These services include pre and post-sale inspections, transportation and logistics, title services and floorplan financing.
Marketplace Overview OPENLANE is a leading digital-only wholesale used vehicle marketplace in North America. OPENLANE is committed to leading the digital transformation of the wholesale automotive remarketing industry and supporting our customers by providing fast and transparent digital marketplaces for buying and selling used vehicles.
OPENLANE is committed to leading the digital transformation of the wholesale automotive remarketing industry and supporting our customers by providing fast and transparent digital marketplaces for buying and selling used vehicles. Our marketplace offerings allow us to offer vehicles for sale from any location. Digital marketplace sales are initiated online and include OPENLANE US, OPENLANE Canada and OPENLANE Europe.
The underwriting of each line of credit requires an analysis, write-up and recommendation by the credit department and, in the case of credit lines in excess of $600,000, final review by a credit committee. 9 Table of Contents Collateral Management Collateral management is an integral part of daily operations at each AFC location, including our corporate headquarters.
The underwriting of each line of credit requires an analysis, write-up and recommendation by the credit department and, in the case of credit lines in excess of $600,000, final approval by a credit committee.
None of our employees participate in collective bargaining agreements, but we have a works council in Belgium pursuant to local law. In addition to the employee workforce, we utilize independent contractors and temporary labor services to provide certain services. Our people drive our business, so we strive to attract, develop and retain high-performing talent.
In addition to the employee workforce, we utilize independent contractors and temporary labor services to provide certain services. Our people drive our business, so we strive to attract, develop and retain high-performing talent. We have programs and practices in place to onboard, support and retain our talent, and to source new talent in a highly competitive environment.
We offer online and mobile wholesale vehicle marketplaces, as well as value-enhancing ancillary services in an effective and efficient manner to maximize returns for the sellers of used vehicles. We transfer the vehicles and ownership to the buyer and the net funds to the seller.
The number of vehicles offered for sale and sold on our marketplaces are key drivers of our costs incurred and revenues generated. Via online or mobile application access, we offer wholesale vehicle marketplaces, as well as value-enhancing ancillary services in an effective and efficient manner to maximize returns for the sellers of used vehicles.
Key replacement services through a mobile field workforce are offered to digital marketplace participants as well as other non-marketplace customers. 7 Table of Contents Inspection Services We inspect many of the vehicles that are offered for sale in our marketplaces through a combination of our employees and third parties using our proprietary technologies.
Inspection Services We inspect many of the vehicles that are offered for sale in our marketplaces through a combination of our employees and third parties using our proprietary technologies. In addition, we provide vehicle condition reporting, inventory verification auditing, program compliance auditing and facility inspections to non-marketplace customers.
Competition In the North American wholesale used vehicle industry, we compete with physical auction providers including Manheim and Carvana who now owns and operates ADESA. We also compete with several digital marketplace providers, including ACV Auctions and others. In addition, used car retailers, such as CarMax, have developed proprietary platforms for selling vehicles to other dealers.
We also compete with physical auction providers including Manheim, ADESA (Carvana) and America's Auto Auction. In addition, used car retailers, such as CarMax, have developed proprietary platforms for selling vehicles to other dealers. In the United States, competition is strongest with Manheim for the supply of used vehicles from national commercial customers.
These services include pre and post-sale inspections, key replacement, transportation and logistics, title services and floorplan financing. For vehicles at our vehicle logistics centers, we can also provide reconditioning and mechanical work.
For vehicles at our vehicle logistics centers, we can also provide reconditioning and mechanical work.
In 2023, we took meaningful steps towards achieving our vision by consolidating all of our marketplace platforms under the OPENLANE brand to create a single, unified marketplace within each of our geographies – bringing together all of the buyers, all of the sellers and all of the vehicles all in one place.
In 2024, we built on the momentum created by consolidating all of our marketplace platforms under the OPENLANE brand in 2023, and further leveraged our unified marketplace – bringing together all of the buyers, all of the sellers and all of the vehicles all in one place.
We generate a significant portion of our revenues from fees. These fees include origination, floorplan, curtailment and other related program fees. When the loan is extended or paid in full, AFC collects all accrued fees and interest. In addition, AFC provides liquidity for customer trade-ins which can encompass settling lien holder payoff. We also provide title services for our customers.
We also securitize the majority of our Canadian dollar denominated finance receivables through a separate third-party facility. We generate a significant portion of our revenues from fees. These fees include origination, floorplan, curtailment and other related program fees. When the loan is extended or paid in full, AFC collects all accrued fees and interest.
And through our combined OPENLANE marketplaces, the commercial inventory from these customers is now offered to the full population of our OPENLANE buyers, increasing the likelihood of sale and ensuring the best market prices available are achieved.
Through our combined OPENLANE marketplaces, this exclusive commercial customer inventory is now offered to the full population of our OPENLANE buyers, increasing the likelihood of sale and ensuring the best market prices available are achieved. • Delivering strong performance in our floorplan business: AFC is a leading provider of floorplan financing and affiliated solutions to independent dealers across North America.
KAR became a public company in 2009. In 2019, IAA was separated from KAR through a tax-free spin-off. In 2022, KAR sold the ADESA U.S. physical auction business to Carvana. In 2023, KAR rebranded to OPENLANE. Our Industry Wholesale used vehicles are generally sold through marketplaces that bring together sellers and buyers to facilitate transactions.
("IAA") in 2007, taking ADESA private. KAR became a public company in 2009. In 2011, KAR acquired a digital marketplace called "OPENLANE." In 2019, IAA was separated from KAR through a tax-free spin-off. In 2022, KAR sold the ADESA U.S. physical auction business to Carvana.
AFC and its competitors play a significant role in the wholesale used vehicle industry by providing liquidity in our marketplaces. AFC's floorplan financing also supports independent dealer customers with non-auction purchases. In addition, AFC offers value-added services that generate fee-based, non-interest revenue.
By providing buyers (primarily independent vehicle dealers) access to capital, the independent vehicle dealers are able to place inventory on their lots. AFC and its competitors play a significant role in the wholesale used vehicle industry by providing liquidity in our marketplaces. AFC's floorplan financing also supports independent vehicle dealers with non-auction purchases.
An average of approximately 15 vehicles per active dealer were floorplanned with an approximate average value outstanding of $12,800 per vehicle as of December 31, 2023. Sales and Marketing AFC approaches and seeks to expand its share of the independent dealer floorplan market through a number of methods and channels.
Sales and Marketing AFC approaches and seeks to expand its share of the independent dealer floorplan market through a number of methods and channels.
We have also been centralizing many key customer support and administrative functions to ensure a faster, more predictable and consistent experience for our customers. As these consolidation efforts progress, we expect increased engagement from our dealers, increased efficiency in our technology development and operations and improved results across our marketplace business.
As these efforts progress, we expect increased engagement from our dealers, increased efficiency in our operations and technology development and improved results across our marketplace business.
In the United States, competition is strongest with Manheim for the supply of used vehicles from national commercial customers. In Canada, we are the largest wholesale used vehicle marketplace operator. The supply of vehicles from dealers is dispersed among all of the marketplace and auction competitors in the used vehicle market.
In Canada, we are the largest wholesale used vehicle marketplace operator. The supply of vehicles from dealers is dispersed among all of the marketplace and auction competitors in the used vehicle market. The wholesale used vehicle industry is highly fragmented in Europe. Our digital marketplaces primarily compete with large European digital remarketers, including BCA Group and others.
Led by our Chief People Officer, we have programs and practices in place to onboard, support and retain our talent, and to source new talent in a highly competitive environment. We recognize the importance of our workforce and the employee experience, and strive to offer competitive compensation and benefits while fostering a culture of open dialogue, inclusion and belonging.
We recognize the importance of our workforce and the employee experience, and strive to offer competitive compensation and benefits while fostering a culture of open dialogue, inclusion and belonging. Additionally, we enable support functions and people managers that are dedicated to the growth and development of our teams.
We have also filed patent applications and obtained registrations in the U.S. and foreign countries covering certain of our technology. We have licensed in the past, and expect that we may license in the future, certain of our rights to other parties. For additional information regarding the risks relating to intellectual property, see Item 1A.
We have licensed in the past, and expect that we may license in the future, certain of our rights to other parties. For additional information regarding the risks relating to intellectual property, see Item 1A. "Risk Factors" of this Annual Report on Form 10-K . 11 Table of Contents Available Information Our website address is corporate.openlane.com.
These services are provided through AFC's digital servicing network as well as its physical locations throughout North America. Customers and Locations Floorplan financing primarily supports independent dealer customers in North America who purchase vehicles on our marketplaces or those of our competitors and for non-auction purchases.
Customers and Locations Floorplan financing primarily supports independent vehicle dealers in North America who purchase vehicles on our marketplaces or those of our competitors and for non-auction purchases. In 2024, approximately 88% of the vehicles floorplanned by AFC were vehicles purchased by dealers on our marketplaces or through a competitor.
As of December 31, 2023, we serviced customers through approximately 90 locations (hybrid of physical locations and a digital servicing network) in markets with a significant concentration of AFC customers. Geographic proximity to the customers gives our employees the ability to stay in close contact with outstanding accounts, thereby better enabling them to manage credit risk and build customer relationships.
Our ability to provide floorplan financing facilitates the growth of vehicle sales for independent vehicle dealers. As of December 31, 2024, we serviced customers through approximately 90 locations (hybrid of physical locations and a digital servicing network) in markets with a significant concentration of AFC customers.
Delivering strong performance in our floorplan business: AFC is a leading provider of floorplan financing and affiliated solutions to independent dealers across North America. We are focused on increasing the attach rate of our finance offerings across our marketplaces, growing share across the broader floorplan finance market, and deploying innovative new, non-interest, fee-based services and offerings.
We are focused on increasing the attach rate of our finance offerings across our marketplaces, growing share across the broader floorplan finance market, and deploying innovative new services and offerings. Additionally, AFC maintains best-in-class safeguards and processes to identify, mitigate and manage risk across their portfolio.
We believe this combination of a centralized structure with decentralized resources enhances relationships with the local dealer community and may further increase dealer consignment business on our marketplaces. We also provide market analysis to our customers, as they use analytical techniques in making their remarketing decisions.
We believe this combination of a centralized structure with decentralized resources enhances relationships with the local dealer community and may further increase dealer consignment business on our marketplaces. 8 Table of Contents Competition In the North American wholesale used vehicle industry, we compete with several digital marketplace providers, including ACV Auctions, EBlock and others.
Typically, we assess a floorplan fee at the inception of a loan and we collect all accrued fees and interest when the loan is extended or repaid in full. In addition, AFC generally holds the title or other evidence of ownership to all vehicles which are floorplanned.
In addition, AFC generally holds the title or other evidence of ownership to all vehicles which are floorplanned. Typical loan terms are 30 to 90 days, each with a possible loan extension.
Growing dealer consignment: The dealer consignment business represents approximately one-half of the Company’s transactional volume, and we believe this is an area with significant opportunity for growth. Last year, we consolidated many of the marketplace platforms acquired in previous years as part of our OPENLANE marketplace launches in the U.S., Canada and the EU.
And both customer sets will benefit from greater exposure, integration and interaction through OPENLANE. • Growing dealer consignment: The dealer consignment business represents approximately 43% of the Company’s transactional volume, and we believe this is an area with significant opportunity for growth.
We provide short-term inventory-secured financing, known as floorplan financing, to independent dealer customers through a hybrid of physical locations and a digital servicing network throughout North America. In 2023, AFC serviced approximately 1.6 million loan transactions, which includes both loans paid off and loans extended, or curtailed.
There are also a number of small independent auction operations throughout Europe. Finance Overview AFC is a leading provider of floorplan financing to independent vehicle dealers. We provide short-term inventory-secured financing, known as floorplan financing, to independent vehicle dealers through a hybrid of physical locations and a digital servicing network throughout North America.
Simplification: At the heart of our strategy is our purpose, to make wholesale easy so our customers can be more successful. We are highly focused on simplifying the customer experience at every step of the process, from registration, to activation, to transaction and post-transaction services.
They also allow us to provide comprehensive services to on-premise and off-premise customers, including inspection, reconditioning, mechanical work, storage and logistics. Delivering the Best Customer Experience: We are highly focused on simplifying the customer experience at every step of the process, from registration, to activation, to transaction and post-transaction services.
AFC also relies on the utilization of actionable data to drive the business forward (predictive modeling from historical and real-time data). Credit Our procedures, proprietary systems and data enable us to manage our credit risk by tracking each vehicle from origination to payoff, while expediting services through our field network.
Portfolio Servicing Our procedures, proprietary systems and data enable us to manage our credit risk by tracking each vehicle from origination to payoff, while expediting services through our field network. Typically, we assess a floorplan fee at the inception of a loan and we collect all accrued fees and interest when the loan is extended or repaid in full.
Floorplan Financing An important component of the wholesale used vehicle industry is the availability of short-term inventory-secured financing, known as floorplan financing. By providing buyers (primarily independent dealer customers) access to capital, the independent dealer customers are able to place inventory on their lots.
Floorplan Financing An important component of the wholesale used vehicle industry is the availability of short-term inventory-secured financing, known as floorplan financing. At the national level, this financing is provided AFC, NextGear Capital by Cox Automotive ("NextGear Capital"), other specialty lenders, banks and financial institutions.
The combined OPENLANE platform now provides dealers with fast, easy, mobile-app enabled solutions to sell and source inventory from other dealers. In North America, they also feature exclusive off-lease inventory not yet available on any other competitor platform or physical auction.
Last year, we consolidated many of the marketplace platforms as part of our OPENLANE marketplace launches in the U.S., Canada and the EU. The combined OPENLANE platform now provides dealers with fast, easy, mobile-app enabled solutions to sell and source inventory from other dealers.
We are reducing our overall cost structure while increasing resource levels in our technology, engineering, analytics and product development teams.
We are reducing our overall cost structure while making investment in our technology, engineering, analytics and product development teams. • Vehicle logistics center locations and operations: In our Canadian market, our 15 vehicle logistics center locations serve as local and regional hubs for our customers and OPENLANE's digital simulcast auctions.
Additionally, AFC maintains best-in-class safeguards and processes to identify, mitigate and manage risk across their portfolio. We believe AFC’s local presence, centralized services and processing, and their pipeline of innovation position the floorplan business well for continued growth and contribution to OPENLANE’s overall results.
We believe AFC’s pipeline of innovation and in-market presence branch model that is paired with its centralized, highly efficient services positions this business well for continued growth and meaningful contribution to OPENLANE’s overall results.
In addition, the majority of U.S. titles are processed and held in a centralized location, enabling field personnel more time to focus on our dealers. As of December 31, 2023, AFC had approximately 12,000 active dealers with an average line of credit of approximately $370,000 and no one dealer representing greater than 1.3% of our portfolio.
Geographic proximity to the customers gives our employees the ability to stay in close contact with outstanding accounts, thereby better enabling them to manage credit risk and build customer relationships. In addition, the majority of U.S. titles are processed and held in a centralized location, enabling field personnel more time to focus on our dealers.
Removed
The Company also operates a simulcast technology that supports marketplace sales at our vehicle logistics centers in Canada. Access to this proprietary technology is also sold and licensed to other auction providers, including independent auctions in North America; generally, this revenue is generated on a per vehicle basis, but we do not include these transactions in our vehicle sold numbers.
Added
In 2023, KAR rebranded to "OPENLANE." During its history, the Company has also acquired and divested a number of other businesses that provide services to the wholesale automotive market, including digital marketplace platforms in the U.S., Canada and Europe. Our Industry Wholesale used vehicles are generally sold through marketplaces that bring together sellers and buyers to facilitate transactions.
Removed
The supply chain issues and 4 Table of Contents 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.
Added
In addition, AFC offers value-added services that generate fee-based, non-interest revenue.
Removed
OPENLANE has identified five strategic priorities that we believe will advance our strategy and continue to position our company for the future. Those priorities are: • Growing dealer consignment; • Expanding our commercial business; • Delivering strong performance in our floorplan business; • Digital innovation; and • Simplification.
Added
We invested in new technology, leaned into our go-to-market efforts - particularly in the U.S. market, and we began focusing on improving and enhancing the customer experience - an area where we see opportunity for differentiation.
Removed
We will continue to evaluate our talent pool and seek new talent where necessary to advance our strategy and support our customers. • Vehicle logistics center locations and operations: In our Canadian market, our vehicle logistics center locations provide comprehensive services to on-premise and off-premise customers, including inspection, reconditioning, mechanical work, storage and logistics.
Added
Delivering the Best Marketplace: OPENLANE is focused on leveraging the combined power of our growing dealer-base with our strong relationships and market position with commercial customers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

97 edited+27 added−25 removed134 unchanged
Biggest changeIn addition, divestitures could involve additional risks, including difficulties in the separation of operations, services, data, technology, products and personnel, inability to fully reduce fixed costs previously associated with the divested assets or business, the potential need to provide transitional services and the need to agree to retain or assume certain liabilities in order to complete the divestiture.
Biggest changeIn addition, divestitures often involve additional risks, including but not limed to: (i) difficulties in the separation of operations, services, data, technology, products and personnel; (ii) inability to fully reduce fixed costs previously associated with the divested assets or business; (iii) the need to provide or receive transitional services (including ongoing network and system access); (iv) reliance on counterparty compliance with transaction agreements (e.g., Carvana complying with payment obligations and AFC’s right to occupy office space in the ADESA U.S. physical auction locations under the commercial agreement); (v) entering into restrictive covenants that restrict us from conducting certain activities for multiple years; and (vi) the need to agree to retain or assume certain liabilities and indemnification obligations and rely on the counterparty to satisfy its respective indemnification obligations.
Our control over and ability to monitor the security practices of our vendors and other third parties with whom we do business remains limited, and there can be no assurance that we can prevent, mitigate, or remediate the risk of any compromise or failure in the cybersecurity infrastructure owned or controlled by such third parties or others within their respective supply chains.
Our control over and ability to monitor the security practices of our customers, vendors and other third parties with whom we do business remains limited, and there can be no assurance that we can prevent, mitigate, or remediate the risk of any compromise or failure in the cybersecurity infrastructure owned or controlled by such third parties or others within their respective supply chains.
These changes could be disruptive to our business, and we may experience a loss of accumulated knowledge, loss of continuity and inefficiency, adverse effects on employee morale, loss of key personnel and other retention issues during transitional periods. These initiatives can require a significant amount of time and focus, which may divert attention from operating and growing our business.
These changes could be disruptive to our business, and we may experience a loss of accumulated knowledge, loss of continuity and inefficiency, adverse effects on employee morale, loss of key personnel and other retention issues during transitional periods. These initiatives require a significant amount of time and focus, which may divert attention from operating and growing our business.
For purposes of accounting, the assets and liabilities of our foreign operations are translated using period-end exchange rates; such translation gains and losses are reported in “Accumulated other comprehensive income/loss” as a component of stockholders’ equity. The revenues and expenses of our foreign operations are translated using average exchange rates during each period.
For purposes of accounting, the assets and liabilities of our foreign operations are translated using period-end exchange rates; such translation gains and losses are reported in “Accumulated other comprehensive loss” as a component of stockholders’ equity. The revenues and expenses of our foreign operations are translated using average exchange rates during each period.
Consumer purchases of new and used vehicles may be adversely affected by economic conditions such as employment levels, wage and salary levels, trends in consumer confidence and spending, reductions in consumer net worth, interest rates, inflation, the availability of consumer credit and taxation policies.
Consumer purchases of new and used vehicles may be adversely affected by economic conditions such as employment levels, wage and salary levels, trends in consumer confidence and spending, reductions in consumer net worth, interest rates, inflation, the availability of consumer credit and taxation and trade policies.
Our indebtedness could have important consequences including: • limiting our ability to borrow additional amounts to fund working capital, capital expenditures, debt service requirements, execution of our business strategy, acquisitions and other purposes; • requiring us to dedicate a substantial portion of our cash flow from operations to pay principal and interest on debt, which would reduce the funds available for other purposes, including funding future expansion; • making us more vulnerable to adverse changes in general economic, industry and competitive conditions, in government regulation and in our business by limiting our flexibility in planning for, and making it more difficult to react quickly to, changing conditions; and • exposing us to risks inherent in interest rate fluctuations because a portion of our indebtedness is at variable rates of interest, which could result in higher interest expenses in the event of increases in interest rates.
Our indebtedness could have important consequences including: • limiting our ability to borrow additional amounts to fund working capital, capital expenditures, debt service requirements, execution of our business strategy, acquisitions and other purposes; • requiring us to dedicate a substantial portion of our cash flow from operations to pay principal and interest on debt, which would reduce the funds available for other purposes, including funding future expansion; 20 Table of Contents • making us more vulnerable to adverse changes in general economic, industry and competitive conditions, in government regulation and in our business by limiting our flexibility in planning for, and making it more difficult to react quickly to, changing conditions; and • exposing us to risks inherent in interest rate fluctuations because a portion of our indebtedness is at variable rates of interest, which could result in higher interest expenses in the event of increases in interest rates.
If we cannot make scheduled payments on our debt, we would be in default and, as a result, our debt holders could declare all outstanding principal and interest to be due and payable, the lenders under our Revolving Credit Facility could terminate their commitments to lend us money and foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.
If we cannot make scheduled payments on our debt, we would be in default and, as a result, our debt holders could declare all outstanding principal and interest to be due and payable, the lenders under our Revolving Credit Facilities could terminate their commitments to lend us money and foreclose against the assets securing their borrowings and we could be forced into bankruptcy or liquidation.
We may not be able to refinance our debt or sell additional debt or equity securities or our assets on favorable terms, if at all, particularly because of the restrictions imposed by the agreement governing our Revolving Credit Facility and the indenture governing our senior notes on our ability to incur additional debt and use the proceeds from asset sales.
We may not be able to refinance our debt or sell additional debt or equity securities or our assets on favorable terms, if at all, particularly because of the restrictions imposed by the agreement governing our Revolving Credit Facilities and the indenture governing our senior notes on our ability to incur additional debt and use the proceeds from asset sales.
If actual trends, including the severity of claims and medical cost inflation above expectations were to occur, our self-insured costs would increase, which could have an adverse impact on our results of operations and financial position. We assume the settlement risk for vehicles sold through our marketplaces.
If actual trends, including the severity of claims and medical cost inflation above expectations were to occur, our self-insured costs would increase, which could have an adverse impact on our results of operations and financial position. We assume settlement risk and inventory risk for certain vehicles sold through our marketplaces.
If we fail to achieve some or all of the expected benefits of our cost reduction and business alignment initiatives, it 12 Table of Contents could have an adverse effect on our competitive position and market share, business, financial condition and results of operations. We operate in a highly competitive industry.
If we fail to achieve some or all of the expected benefits of our cost reduction and business alignment initiatives, it could have an adverse effect on our competitive position and market share, business, financial condition and results of operations. 13 Table of Contents We operate in a highly competitive industry.
As noted elsewhere, a portion of our indebtedness is at variable rates of interest. As such, increases in interest rates could also result in higher interest expenses. A portion of our net income is derived from our international operations, primarily Canada, which exposes us to foreign exchange risks that may impact our financial statements.
As noted elsewhere, a portion of our indebtedness is at variable rates of interest. As such, increases in interest rates could also result in higher interest expenses. A portion of our net income is derived from our international operations, which exposes us to foreign exchange risks that may impact our financial statements.
As of December 31, 2023, 634,305 shares of our Series A Preferred Stock were outstanding, representing approximately 25% of our outstanding common stock, including the Series A Preferred Stock on an as-converted basis. Holders of Series A Preferred Stock are entitled to a cumulative dividend at the rate of 7% per annum, payable quarterly in arrears.
As of December 31, 2024, 634,305 shares of our Series A Preferred Stock were outstanding, representing approximately 25% of our outstanding common stock, including the Series A Preferred Stock on an as-converted basis. Holders of Series A Preferred Stock are entitled to a cumulative dividend at the rate of 7% per annum, payable quarterly in arrears.
Volatility and disruption in the asset-backed commercial paper market could lead to a narrowing of interest rate spreads at AFC in certain periods. In addition, any volatility and disruption has affected, and could affect, AFC’s cost of financing related to its securitization facility. • Ability to service and refinance indebtedness.
Volatility and disruption in the asset-backed commercial paper market could lead to a narrowing of interest rate spreads at AFC in certain periods. In addition, any volatility and disruption has affected, and could affect, AFC’s cost of financing related to its securitization facilities. • Ability to service and refinance indebtedness.
Volatility and/or market disruption in the asset-backed securities market in the United States or Canada can impact AFC’s cost of financing related to, or its ability to arrange financing on acceptable terms through, its securitization facility, which could negatively affect AFC’s business and our financial condition and operations.
Volatility and/or market disruption in the asset-backed securities market in the United States or Canada can impact AFC’s cost of financing related to, or its ability to arrange financing on acceptable terms through, its securitization facilities, which could negatively affect AFC’s business and our financial condition and operations.
Significant volatility or disruption of global financial markets, inflation, supply chains or commercial activity due to Russia’s invasion of Ukraine or other geopolitical events, war, terrorism, natural disasters, public health issues (including pandemics such as the COVID-19 pandemic) or other factors could negatively affect our industry and business and our ability to refinance our debt or sell additional debt or equity securities or our assets on favorable terms, if at all.
Significant volatility or disruption of global financial markets, inflation, supply chains or commercial activity due to geopolitical events, war, terrorism, natural disasters, public health issues (including pandemics such as the COVID-19 pandemic) or other factors could negatively affect our industry and business and our ability to refinance our debt or sell additional debt or equity securities or our assets on favorable terms, if at all.
The holders of our Series A Preferred Stock also have the right, subject to certain exceptions, to require us to repurchase all or any portion of the Series A Preferred 24 Table of Contents Stock upon certain change of control events at the greater of (a) the consideration the holders would have received if they had converted their shares of Series A Preferred Stock into common stock immediately prior to the change of control event and (b) 105% of the sum of i) the liquidation preference thereof and ii) all accrued but unpaid dividends.
The holders of our Series A Preferred Stock also have the right, subject to certain exceptions, to require us to repurchase all or any portion of the Series A Preferred Stock upon certain change of control events at the greater of (a) the consideration the holders would have received if they had converted their shares of Series A Preferred Stock into common stock immediately prior to the change of control event and (b) 105% of the sum of i) the liquidation preference thereof and ii) all accrued but unpaid dividends.
Since October 2019, the share repurchase program has been amended from time-to-time through subsequent approvals by the board of directors. These amendments have served to increase the size of the share repurchase program and extend its maturity date through December 31, 2024.
Since October 2019, the share repurchase program has been amended from time-to-time through subsequent approvals by the board of directors. These amendments have served to increase the size of the share repurchase program and extend its maturity date through December 31, 2025.
Furthermore, the agreement governing our Revolving Credit Facility and the indenture governing our senior notes include, and future debt instruments may include, certain restrictive covenants which could limit our ability to enter into certain transactions in the future and may adversely affect our ability to operate our business.
Furthermore, the agreement governing our Revolving Credit Facilities and the indenture governing our senior notes include, and future debt instruments may include, certain restrictive covenants which could limit our ability to enter into certain transactions in the future and may adversely affect our ability to operate our business.
There is no guarantee that we will be successful in 21 Table of Contents defending ourselves in legal and administrative actions or in asserting our rights under various laws. In addition, we could incur substantial costs in defending ourselves or in asserting our rights in such actions.
There is no guarantee that we will be successful in 22 Table of Contents defending ourselves in legal and administrative actions or in asserting our rights under various laws. In addition, we could incur substantial costs in defending ourselves or in asserting our rights in such actions.
While no single customer accounted for 10% or more of our consolidated revenues in 2023, the loss of, or material reduction in business from, our key customers could have a material adverse effect on our business and operating results.
While no single customer accounted for 10% or more of our consolidated revenues in 2024, the loss of, or material reduction in business from, our key customers could have a material adverse effect on our business and operating results.
Future dividend decisions will be based on and affected by a variety of factors, including our financial condition and results of operations, 25 Table of Contents contractual restrictions, including restrictive covenants contained in our Credit Agreement, the indenture governing our senior notes and AFC’s securitization facilities, capital requirements and other factors that our board of directors deems relevant.
Future dividend decisions will be based on and affected by a variety of factors, including our financial condition and results of operations, contractual restrictions, including restrictive covenants contained in our Credit Agreement, the indenture governing our senior notes and AFC’s securitization facilities, capital requirements and other factors that our board of directors deems relevant.
The volume of new vehicle production, accuracy of lease residual estimates, interest rate fluctuations, customer demand and changes in regulations, among other things, all potentially affect the pricing of used vehicles.
The volume of new vehicle production, accuracy of lease residual estimates, interest rate fluctuations, customer demand, and changes in regulations and trade policies, among other things, all potentially affect the pricing of used vehicles.
There is no guarantee that we will be able to retain or renew existing agreements, maintain relationships with any of our customers or business partners on acceptable terms or at all, or collect amounts owed to us from customers or business partners. Any such change could harm our business and operating results.
There is no guarantee that we will be able to retain or renew existing agreements, maintain relationships with any of our customers or business partners on acceptable terms or at all, or collect amounts owed to us from customers or business partners. Any such change could harm our business 15 Table of Contents and operating results.
Our compliance with global laws and regulations relating to privacy, data protection and information security may materially increase our costs or otherwise limit our ability to continue or pursue certain business activities.
Our compliance with global laws and regulations relating to privacy, data protection, information security and artificial intelligence may materially increase our costs or otherwise limit our ability to continue or pursue certain business activities.
Furthermore, the program does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time, which could cause the market price of our stock to decline. Item 1B. Unresolved Staff Comments None.
Furthermore, the program does not obligate the Company to repurchase any dollar amount or number of shares of common stock, and may be suspended or discontinued at any time, which could cause the market price of our stock to decline. 26 Table of Contents Item 1B. Unresolved Staff Comments None.
Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock. Apax and the other holders of our Series A Preferred Stock may exercise influence over us.
Sales of a substantial number of shares of our common stock in the public market, or the perception that such sales might occur, could have a material adverse effect on the price of our common stock. 24 Table of Contents Apax and the other holders of our Series A Preferred Stock may exercise influence over us.
If our information technology systems are compromised, become inoperable for extended periods of time or cease to function properly, we may have to make a significant investment to fix or replace the information technology and our ability to provide many of our electronic and online solutions to our customers may be impaired, which would have a material adverse effect on our consolidated operating results and financial position.
If our information technology systems are compromised, become inoperable for extended periods of time or cease to function properly, we may have to make a significant investment to fix or replace the information technology and our ability to provide services and solutions to our customers may be impaired, which would have a material adverse effect on our consolidated operating results and financial position.
In addition, the increased use of vehicle sharing and alternate methods of transportation, including autonomous vehicles, could lead to a decrease in consumer purchases of new and used vehicles and a decrease in vehicle rentals.
In addition, the increased use of vehicle sharing and alternate methods of transportation could lead to a decrease in consumer purchases of new and used vehicles and a decrease in vehicle rentals.
Even if we successfully protect our own network and systems, our supply chain infrastructure and other third parties may not maintain adequate security measures (including identifying defects or vulnerabilities) to protect against unauthorized access, cyber attacks or mishandling of data, which could result in a breach of or disruption to our systems and network.
Even if we successfully protect our own network and systems, our supply chain infrastructure and other third parties may not maintain adequate security measures (including identifying defects or vulnerabilities) to protect against unauthorized access, cyber- attacks or mishandling of data, which could result in a breach of or disruption to our systems and network or create other legal or financial exposure.
As of December 31, 2023, the outstanding shares of our Series A Preferred Stock represented approximately 25% of our outstanding common stock, including the Series A Preferred Stock on an as-converted basis.
As of December 31, 2024, the outstanding shares of our Series A Preferred Stock represented approximately 25% of our outstanding common stock, including the Series A Preferred Stock on an as-converted basis.
Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings in us. The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public market.
Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings in us. 25 Table of Contents The market price of our common stock could be negatively affected by sales of substantial amounts of our common stock in the public market.
Many of our customer agreements can be terminated by the customer for convenience on 14 Table of Contents advance written notice, which provides our customers with the opportunity to renegotiate their agreements with us or to award more business to our competitors.
Many of our customer agreements can be terminated by the customer for convenience on advance written notice, which provides our customers with the opportunity to renegotiate their agreements with us or to award more business to our competitors.
Changes in the value of foreign currencies, particularly the Canadian dollar and the euro relative to the U.S. dollar could negatively affect our profits from foreign operations and the value of the net 20 Table of Contents assets of our foreign operations when reported in U.S. dollars in our financial statements.
Changes in the value of foreign currencies, particularly the Canadian dollar and the euro relative to the U.S. dollar could negatively affect our profits from foreign operations and the value of the net assets of our foreign operations when reported in U.S. dollars in our financial statements.
In addition, there may be tax inefficiencies in repatriating cash from our foreign subsidiaries. Approximately 38% of our revenues from continuing operations were attributable to our foreign operations for the year ended December 31, 2023. The results of operations of our foreign subsidiaries are translated from local currency into U.S. dollars for financial reporting purposes.
In addition, there may be tax inefficiencies in repatriating cash from our foreign subsidiaries. Approximately 41% of our revenues from continuing operations were attributable to our foreign operations for the year ended December 31, 2024. The results of operations of our foreign subsidiaries are translated from local currency into U.S. dollars for financial reporting purposes.
Cyber-attacks or other security incidents could lead to service interruptions, malfunctions or other failures in the technology that supports our businesses and customers, as well as the operations of our customers or other third parties.
Cyber-attacks or other security incidents compromise sensitive data and could lead to service interruptions, malfunctions or other failures in the technology that supports our businesses and customers, as well as the operations of our customers or other third parties.
Additional risks and challenges we face in connection with acquisitions include, but are not limited to: • incurring significantly higher capital expenditures, operating expenses and operating losses of the business acquired; • coordination of technology, research and development, and sales and marketing functions, along with integration of the acquired business’s accounting, management information, human resources, and other administrative systems; • incurring liability for pre-acquisition activities of the acquired business; • inheriting certain security or privacy vulnerabilities of the acquired business; • implementing or remediating the controls, procedures, and policies of the acquired business; • incorporating acquired technology and rights into our offerings and unanticipated expenses related to such integration; • retaining and integrating acquired employees, including cultural challenges associated with integrating employees from the acquired business into our organization; • maintaining important business relationships and contracts of the acquired business; and 15 Table of Contents • integrating the acquired business onto our systems and ensuring the acquired business meets our financial reporting requirements and timelines.
Additional risks and challenges we face in connection with acquisitions include, but are not limited to: (i) incurring significantly higher capital expenditures, operating expenses and operating losses of the business acquired; (ii) coordination of technology, research and development, and sales and marketing functions, along with integration of the acquired business’s accounting, management information, human resources, and other administrative systems; (iii) incurring liability for pre-acquisition activities of the acquired business; (iv) inheriting certain security or privacy vulnerabilities of the acquired business; (v) implementing or remediating the controls, procedures, and policies of the acquired business; (vi) incorporating acquired technology and rights into our offerings and unanticipated expenses related to such integration; (vii) retaining and integrating acquired employees, including cultural challenges associated with integrating employees from the acquired business into our organization; (viii) maintaining important business relationships and contracts of the acquired business; and (ix) integrating the acquired business onto our systems and ensuring the acquired business meets our financial reporting requirements and 16 Table of Contents timelines.
Our marketplace businesses also sell vehicles that have been purchased (e.g., inherited vehicles, vehicles returned or vehicles purchased by OPENLANE Europe and others). When a vehicle is purchased and then resold, rather than sold on a consignment basis, we are exposed to inventory risks, including losses from theft, damage and obsolescence.
Our other marketplace businesses also sell vehicles that have been purchased (e.g., returned or inherited vehicles). When a vehicle is purchased and then resold, rather than sold on a consignment basis, we are exposed to inventory risks, including losses from theft, damage and obsolescence.
Any of the risks described above could result in the loss or misuse of proprietary, confidential or sensitive information, disrupt our business, damage our reputation, expose us to legal liability and materially adversely affect our consolidated financial position and results of operations.
Any of the risks described above could result in the loss or misuse of sensitive data, disrupt our business, damage our reputation, expose us to legal liability and materially adversely affect our consolidated financial position and results of operations.
If we are unable to collect the vehicle sale price plus applicable buyer fees from buyers on a large number of vehicles, our revenue and cash flows may be negatively impacted resulting in a material adverse effect on our results of operations and financial condition. Risks Related to the Sale of ADESA U.S.
If we are unable to collect the vehicle sale price plus applicable buyer fees from buyers on a large number of vehicles, our revenue and cash flows may be negatively impacted resulting in a material adverse effect on our results of operations and financial condition.
The technology infrastructure and systems of our suppliers, vendors, service providers and partners have also in the past experienced and may in the future experience such threats and attacks.
The technology infrastructure and systems of our 17 Table of Contents suppliers, vendors, service providers and partners have also in the past experienced and may in the future experience such threats and attacks.
Adverse credit conditions also affect the ability of dealers to secure financing to purchase used vehicles, which further negatively affects buyer demand. In addition, a reduction in the number of franchised and independent used car dealers may reduce dealer demand for used vehicles. • Decrease in consumer spending.
Adverse credit conditions also affect the ability of dealers to secure financing to purchase used 19 Table of Contents vehicles, which further negatively affects buyer demand. In addition, a reduction in the number of franchise and independent used car dealers may reduce dealer demand for used vehicles. • Decrease in consumer spending.
These laws are complex and are rapidly evolving, including adverse legislative and regulatory trends towards regulating small business lending similar to consumer lending. • We are subject to various local zoning requirements with regard to the location of our facilities, which requirements vary from location to location. • We are subject to federal, state and international laws, directives and regulations relating to the collection, use, retention, disclosure, security and transfer of personally identifiable information (e.g., GDPR and CCPA).
These laws are complex and are rapidly evolving, including adverse legislative and regulatory trends towards regulating small business lending more comparable to consumer lending. • We are subject to various local zoning requirements with regard to the location of our facilities, which requirements vary from location to location. • We are subject to federal, state and international laws, directives and regulations relating to the collection, use, retention, disclosure, security and transfer of personally identifiable information.
In addition, if we are unsuccessful in identifying or finding high-quality partners, if we fail to negotiate cost-effective relationships with them, or if we ineffectively manage these relationships, it could have an adverse impact on our business and financial results. Reliance on outsourcing arrangements could adversely affect our business.
In addition, if we are unsuccessful in identifying or finding high-quality partners, if we fail to negotiate cost-effective relationships with them, or if we ineffectively manage these relationships, it could have an adverse impact on our business and financial results.
If these technologies fail, or if such third-party service providers or strategic partners were to cease operations, temporarily or permanently, face financial distress or other business disruptions, increase their fees, or if our relationships with these providers or partners deteriorate or terminate, we could suffer increased costs and we may be unable to provide similar services until an equivalent provider could be found or we could develop replacement technology or operations.
If these technologies fail, or if such third-party service providers or strategic partners were to cease operations, temporarily or permanently, experience financial distress, technology challenges, cybersecurity incidents, or other business disruptions, increase their fees, or if our relationships with these providers or partners deteriorate or terminate, we could suffer increased costs and we may be unable to provide similar services for ourselves and our customers until an equivalent provider could be found or we could develop replacement technology or operations.
Aspects of our operations and businesses are subject to privacy regulations in the United States, including but not limited to the California Consumer Privacy Act (“CCPA”), as amended and expanded by the California Privacy Rights Act ("CPRA"), and 17 Table of Contents around the globe, most notably the European Union’s General Data Protection Regulation (the “GDPR”).
Aspects of our operations and businesses are subject to privacy regulations in the United States, including but not limited to the California Consumer Privacy Act, as amended and expanded by the California Privacy Rights Act, and around the globe, most notably the European Union’s General Data Protection Regulation.
These laws, directives, regulations and their interpretation and enforcement continue to evolve and may be inconsistent from jurisdiction to jurisdiction. • We are subject to laws and regulations with respect to emerging technologies being incorporated into our business, including artificial intelligence, machine learning and data analytics. • Certain of the Company’s subsidiaries may be deemed subject to the regulations of the Consumer Financial Protection Act of 2010 due to their vendor relationships with financial institutions. • PAR is subject to laws in certain states which regulate repossession administration activities and, in certain jurisdictions, require PAR to be licensed. • We are subject to various reporting and anti-money laundering regulations.
These laws, directives, regulations and their interpretation and enforcement continue to evolve and may be inconsistent from jurisdiction to jurisdiction. • We are subject to laws and regulations with respect to emerging technologies being incorporated into our business, including artificial intelligence, machine learning and data analytics. • Certain of the Company’s subsidiaries may be deemed subject to the regulations of the Consumer Financial Protection Act of 2010 due to their vendor relationships with financial institutions. • Our vehicle transition and asset recovery business is subject to laws in certain states which regulate activities related to repossession administration and debt collection and, in certain jurisdictions, require a license. • We are subject to various reporting and anti-money laundering regulations.
We have experienced cyber-attacks and security incidents of varying degrees and believe we will continue to be a potential target of such threats and attacks. This threat has increased corresponding to the increased sophistication and activities of organized crime, hackers, terrorists and other external parties.
We have experienced cyber-attacks and security incidents of varying degrees and believe we will continue to be a potential target of such threats and attacks. This threat has increased corresponding to the increased sophistication and activities of organized crime, nation-state actors, hackers, terrorists and other bad actors.
During the past global economic downturn and credit crisis, there was an erosion of retail demand for new and used vehicles that led many lenders to cut back on originations of new loans and leases and led to significant manufacturing capacity reductions by automakers selling vehicles in the United States and Canada.
During past global economic downturns, there has been an erosion of retail demand for new and used vehicles that led many lenders to cut back on originations of new loans and leases and led to significant manufacturing capacity reductions by automakers selling vehicles in the United States and Canada.
We have incurred and may in the future incur expenditures relating to compliance and risk mitigation efforts, releases of hazardous materials, investigative, remedial or corrective actions, claims by third parties and other environmental issues, and such expenditures, individually or in the aggregate, could be significant. We are partially self-insured for certain losses.
We have incurred and may in the future incur expenditures relating to compliance and risk mitigation efforts, releases of hazardous materials, investigative, remedial or corrective actions, claims by third parties and other environmental issues, and such expenditures, individually or in the aggregate, could be significant.
If we are not successful in meeting our customers' expectations, our customer relationships could be negatively affected and result in a loss of future business, which would adversely affect our operating results and financial condition. Our business and operating results would be adversely affected if we lose one or more significant customers.
If we are not successful in meeting our customers' expectations, our customer relationships could be negatively affected and result in a loss of future business, which would adversely affect our operating results and financial condition.
We have continued to restructure our business to reflect the current market and asset-light digital model, reallocate our resources towards the highest growth initiatives, consolidate our platforms, transition to cloud-based solutions and leverage a global shared services model.
Following the sale of the ADESA U.S. physical auction business, we have continued to restructure our business to reflect the current market and asset-light digital model, reallocate our resources towards the highest growth initiatives, consolidate our platforms, transition to cloud-based solutions and leverage a global shared services model.
In addition, we anticipate that our non-U.S. based operations will continue to subject us to risks associated with operating on an international basis, including: • exposure to foreign currency exchange rate risk, which may have an adverse impact on our revenues and profitability; • exposure to the principal or purchase auction model rather than the agency or consignment model, which may have an adverse impact on our margins and expose us to inventory risks; • restrictions on our ability to repatriate funds, as well as repatriation of funds currently held in foreign jurisdictions, which may result in higher effective tax rates; • tariffs and trade barriers and other regulatory or contractual limitations on our ability to operate in certain foreign markets; • compliance with anti-corruption and anti-bribery laws, including the Foreign Corrupt Practices Act and the U.K.
We anticipate that our non-U.S. based operations will continue to subject us to risks associated with operating on an international basis, including but not limited to the following: (i) exposure to foreign currency exchange rate risk; (ii) exposure to the principal or purchase auction model rather than the agency or consignment model (which may have an adverse impact on our margins and expose us to inventory risks); (iii) restrictions on our ability to repatriate funds, as well as repatriation of funds currently held in foreign jurisdictions (which may result in higher effective tax rates); (iv) taxes, tariffs, trade barriers, trade disputes, and other regulatory limitations or measures, including retaliatory countermeasures; (v) compliance with anti-corruption and anti-bribery laws (including the Foreign Corrupt Practices Act and the U.K.
In addition, our long-lived assets could also become subject to impairment. At the national level, AFC's competition includes NextGear Capital, a subsidiary of Cox Enterprises, Inc., other specialty lenders, banks and financial institutions. At the local level, AFC faces competition from banks, credit unions and independent auctions who may offer floorplan financing to local auction customers.
At the national level, AFC's competition includes NextGear Capital, a subsidiary of Cox Enterprises, Inc., other specialty lenders, banks and financial institutions. At the local level, AFC faces competition from banks, credit unions and independent auctions who may offer floorplan financing to local auction customers.
Any such customer could reduce its overall supply of vehicles for our marketplaces, seek protection under the bankruptcy laws, or otherwise seek to materially change the terms of its business relationship with us at any time.
Any such customer could reduce its overall supply of vehicles for our marketplaces, seek protection under the bankruptcy laws, or otherwise seek to materially change the terms of its business relationship with us at any time. Dealership and other customer consolidations may further intensify these risks.
As we continue to expand globally, our success will depend on our ability to anticipate and effectively manage these and other risks associated with operating on an international basis. Our failure to manage these risks could have an adverse effect on our operating results and financial condition. Significant disruptions of information technology systems could adversely affect our business and reputation.
As we continue to expand globally, our success will depend on our ability to anticipate and effectively manage these and other risks associated with operating on an international basis. Our failure to manage these risks could have an adverse effect on our operating results and financial condition.
Likewise, we have non-U.S. based buyers who participate in our marketplaces. Increases in the value of the U.S. dollar relative to these buyers’ local currencies may reduce the prices they are willing to pay at our marketplaces, which may negatively affect our revenues.
Likewise, we have non-U.S. based buyers who participate in our marketplaces. Increases in the value of the U.S. dollar relative to these buyers’ local currencies may reduce the prices they are willing to pay at our marketplaces, which may negatively affect our revenues. 21 Table of Contents We may incur additional tax expense or become subject to additional tax liabilities.
Any of these risks, if realized, could materially and adversely affect our business, financial condition and results of operations. Some of the same risks exist if and when we decide to sell a business or assets.
Any of these risks, if realized, could materially and adversely affect our business, financial condition and results of operations. We have also divested businesses and assets and may consider divesting businesses and assets in the future. Some of the same risks exist if and when we decide to sell a business or assets.
Under our amended and restated certificate of incorporation, we are authorized to issue up to 400,000,000 shares of common stock, of which 108,040,704 shares of common stock were outstanding as of December 31, 2023.
Under our amended and restated certificate of incorporation, we are authorized to issue up to 400,000,000 shares of common stock, of which 106,849,134 shares of common stock were outstanding as of December 31, 2024.
Our principal sources of competition historically have come from: (1) direct competitors (e.g., Manheim, ACV Auctions, EBlock and NextGear Capital), (2) new entrants, including new vehicle remarketing venues and dealer financing services, and (3) other participants in the automotive industry with vehicle remarketing capabilities (e.g., rental car companies, automobile retailers and wholesalers).
Our principal sources of competition historically have come from: (i) direct competitors (e.g., Manheim, ADESA U.S. (Carvana), America's Auto Auction, ACV Auctions, EBlock and NextGear Capital), (ii) new entrants, including new vehicle remarketing venues and dealer financing services, and (iii) other participants in the automotive industry with vehicle remarketing or financing capabilities (e.g., rental car companies, automobile retailers and wholesalers).
As of December 31, 2023, our total debt was approximately $364.6 million, exclusive of liabilities related to our securitization facilities which are not secured by the general assets of OPENLANE, and we had $133.3 million of borrowing capacity under our Revolving Credit Facility (net of $54.7 million in outstanding letters of credit).
As of December 31, 2024, our total debt was approximately $230.7 million, exclusive of liabilities related to our securitization facilities which are not secured by the general assets of OPENLANE, and we had $397.9 million of borrowing capacity under our Revolving Credit Facilities (net of $48.8 million in outstanding letters of credit).
In addition, when vehicles are purchased, we are subject to changes in vehicle values, which could adversely affect our revenue and profitability. AFC is exposed to credit risk with our dealer borrowers, which could adversely affect our profitability and financial condition. AFC is subject to credit risk resulting from defaults in payment by our dealer customers on our floorplan loans.
AFC is exposed to credit risk with our dealer borrowers, which could adversely affect our profitability and financial condition. AFC is subject to credit risk resulting from defaults in payment by our dealer customers on our floorplan loans.
If such litigation were introduced 23 Table of Contents against us, it could result in substantial costs and a diversion of our attention and resources, which could have a material adverse effect on our business.
If such litigation were introduced against us, it could result in substantial costs and a diversion of our attention and resources, which could have a material adverse effect on our business. Moreover, such volatility could attract the interest of activist stockholders.
The technology to operate some of our businesses is provided, in whole or in part, by third-party service providers, and we do not own or control the operation of third-party facilities.
The secure operation of these systems, and the maintenance, reliability and availability of these systems, are critical to our business operations and strategy. The technology to operate some of our businesses is provided, in whole or in part, by third-party service providers, and we do not own or control the operation of third-party systems and facilities.
If the number of loans originated and serviced decreases due to these competitors, our revenue and profitability may be negatively impacted. Decreases in the supply of used vehicles coming to the wholesale market has impacted and may continue to impact sales volumes, which has adversely affected and may continue to adversely affect our revenues and profitability.
Decreases in the supply of used vehicles coming to the wholesale market has impacted and may continue to impact sales volumes, which has adversely affected and may continue to adversely affect our revenues and profitability.
Compliance with U.S. and global privacy and data security requirements could result in additional costs and liabilities or inhibit our ability to collect, transmit and/or store data, and the failure to comply with such requirements could subject us to significant fines and penalties, which could adversely affect our business, financial condition and reputation.
Compliance with U.S. and global privacy and data security requirements could result in additional costs and liabilities, and the failure to comply with such requirements could adversely affect our business, financial condition and reputation.
If implementation of such improvements are delayed, or if we encounter unforeseen problems with our new systems and processes or in migrating away from our existing systems and processes, our operations and our ability to manage our business could be negatively impacted as we may experience disruptions in our business operations, loss of customers, loss of revenue or damage to our reputation.
If we are unable to develop and implement these initiatives in a cost-effective, timely manner or at all, or if we encounter unforeseen problems with our new systems and processes or in migrating away from our existing systems and processes, our operations and our ability to manage our business could be negatively impacted as we may experience disruptions in our business operations, loss of customers, loss of revenue or damage to our reputation.
If such cyber-related events are not detected in a timely manner, their effect could be compounded. Although we have technology and information security policies and processes and disaster recovery plans in place, these measures may not be adequate to ensure that our operations will not be compromised or disrupted should such an event occur.
Although we have technology and information security policies and processes and disaster recovery plans in place, these measures may not be adequate to ensure that our sensitive data and operations will not be compromised or disrupted should such an event occur.
We are subject to a complex framework of federal, state, local and foreign laws and regulations, which have in the past, and could in the future, subject us to claims, challenge our business model, or otherwise harm our business.
Our results of operations and cash flows could be adversely impacted by additional taxes imposed on us prospectively or retroactively. We are subject to a complex framework of federal, state, local and foreign laws and regulations, which have in the past, and could in the future, subject us to claims, challenge our business model, or otherwise harm our business.
Generally, as market values of used vehicles rise, the number of vehicles purchased at residual value by the lessees and dealers increases, thus decreasing the number of off-lease vehicles available to the wholesale market.
In most cases, the lessee and the dealer have the ability to purchase the vehicle at the residual price at the end of the lease term. Generally, as market values of used vehicles rise, the number of vehicles purchased at residual value by the lessees and dealers increases, thus decreasing the number of off-lease vehicles available to the wholesale market.
We may not be successful in structuring our technology or developing, acquiring, implementing or consolidating technology systems which are competitive and responsive to the needs of our customers. We might lack sufficient resources to continue to make the significant technology investments to effectively compete with our competitors.
We may not be successful in structuring our technology or developing, acquiring, implementing or consolidating technology systems which are competitive and responsive to the needs of our customers.
In recent years, these factors have resulted in significant fluctuations in used vehicle values and declines in vehicle volumes in the wholesale market. In particular, the number of new and used vehicles that are leased by consumers affects the supply of vehicles coming to the wholesale market in future periods as the leases mature.
In particular, the number of new and used vehicles that are leased by consumers affects the supply of vehicles coming to the wholesale market in future periods as the leases mature.
As manufacturers and other lenders decrease the number of new vehicle lease originations and extend the terms of some of the existing leases, the number of off-lease vehicles available for the wholesale industry declines. 13 Table of Contents Volumes of off-lease vehicles in subsequent periods will be affected by total new vehicle sales and the future leasing behavior of manufacturers and lenders; therefore, we are not able to accurately predict the volume of vehicles coming to the wholesale market.
Volumes of off-lease vehicles in subsequent periods will be affected by total new vehicle sales and the future leasing behavior of manufacturers and lenders; therefore, we are not able to accurately predict the volume of vehicles coming to the wholesale market.
Our systems and the third-party systems 16 Table of Contents with which we interact are subject to damage, failure or interruption due to various reasons, such as power or other critical infrastructure outages, facility damage, physical theft, telecommunications failures, malware, security incidents, cyber-attacks (including cyber-threats from nation-state actors), natural disasters and catastrophic events, legacy applications, integration delays, inadequate system hygiene and inadequate or ineffective redundancy measures.
Our systems and the third-party systems with which we interact are subject to damage, failure or interruption due to various reasons, including but not limited to power or other critical infrastructure outages, facility damage, physical theft, telecommunications failures, security incidents, cyber-attacks (including the use of malicious codes, viruses, worms, phishing, social engineering, deepfakes, spyware, malware, denial of service attacks, and ransomware), natural disasters and catastrophic events, legacy applications, integration delays, inadequate system hygiene and inadequate or ineffective redundancy measures.
Risks Related to Ownership of Our Common Stock The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders and could expose us to securities class action litigation.
In addition, when vehicles are purchased, we are subject to changes in vehicle values, which could adversely affect our revenue and profitability. 23 Table of Contents Risks Related to Ownership of Our Common Stock The market price and trading volume of our common stock may be volatile, which could result in rapid and substantial losses for our stockholders and could expose us to securities class action litigation.
The dealer-to-dealer space in particular is experiencing a digital disruption as competitors and new market participants introduce new technologies. If the number of vehicles sold through our marketplaces decreases due to these competitors or other industry changes, or if we are unable to compete and gain market share in the dealer-to-dealer space, our revenue and profitability may be negatively impacted.
If the number of vehicles sold through our marketplaces decreases due to these competitors or other industry changes, or if we are unable to compete and gain market share in the dealer-to-dealer space, our revenue and profitability may be negatively impacted. In addition, our long-lived assets could also become subject to impairment.
Bribery Act; • compliance with various privacy regulations, including but not limited to the General Data Protection Regulation ("GDPR"); • compliance with data localization and/or data residency requirements and cross-border data transfer regulations; • dealing with unfamiliar regulatory agencies and laws, including those favoring local competitors; • dealing with political and/or economic instability, including the effects of the exit of the U.K. from the E.U.; • geopolitical instability, terrorism, war and military conflicts, including the conflict between Ukraine and Russia; • the difficulty of managing and staffing foreign offices, as well as the increased travel, infrastructure, legal and compliance costs associated with international operations; • localizing our product offerings; and • adapting to different business cultures and market structures.
Bribery Act); (vi) laws, rules and regulations governing digital commerce and online services; (vii) compliance with various privacy regulations, data localization and/or data residency requirements and cross-border data transfer regulations; (viii) dealing with unfamiliar regulatory agencies and laws, including those favoring local competitors; (ix) political and/or economic instability and tensions, including tensions between governments and changes in international economic policies; (x) geopolitical instability, terrorism, war and military conflicts (such as the conflict in Ukraine and in the Middle East); (xi) the difficulty of managing and staffing foreign offices, as well as the increased travel, infrastructure, legal and compliance costs associated with international operations; (xii) localizing our products and services; and (xiii) adapting to different business cultures and market structures.
Any significant disruptions of our information technology systems could negatively impact our business and customers, damage our reputation and materially adversely affect our consolidated financial position and results of operations. Data security concerns relating to our technology or breaches of information technology systems, could adversely affect our business and reputation.
We, our customers and our vendors also rely on each other's information technology systems to conduct our respective operations. Any significant disruptions of our information technology systems or those of our customers or vendors could negatively impact our business and customers, damage our reputation and materially adversely affect our financial position and results of operations.
We are dependent on the supply of used vehicles coming to the wholesale market, and our financial performance depends, in part, on conditions in the automotive industry. Currently, disruptions in new vehicle production are resulting in fewer vehicles coming to wholesale channels.
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 indu stry.
Certain technology initiatives that management considers important to our long-term success will require capital investment, have significant risks associated with their execution, and could take several years to implement.
We have made and continue to make investments to improve our information technology infrastructure, including a multi-year technology platform consolidation initiative. This and other technology initiatives that management considers important to our long-term success require capital investment, have significant risks associated with their execution, and could take several years to implement.
A disruption in the financial markets may adversely affect our ability to raise, restructure or refinance indebtedness. 19 Table of Contents Our indebtedness and the terms of our indebtedness could impair our financial condition and adversely affect our ability to react to changes in our business.
A disruption in the financial markets may adversely affect our ability to raise, restructure or refinance indebtedness.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company describes risks related to cybersecurity threats that could materially impact its business strategy, results of operations or financial condition under the heading “Risk Factors.” Material impacts could include loss of access to systems and data, financial costs and reputational harm, among others.
Biggest changeThe Company maintains an incident response plan that includes escalation criteria and preliminary materiality assessments to guide reporting and disclosure objectives. The Company describes risks related to cybersecurity threats that could materially impact its business strategy, results of operations or financial condition in Item 1A. “Risk Factors” of this Annual Report on Form 10-K.
The CISO has served in this position for the Company since 2017, holds various relevant credentials including CISSP (Certified Information Systems Security Professional), and has extensive cybersecurity experience having served in information technology roles for over 35 years and cybersecurity leadership roles for 15 years.
The CISO has served in this position for the Company since 2017, holds various relevant credentials including CISSP (Certified Information Systems Security Professional), and has extensive cybersecurity and privacy experience having served in information technology roles for over 35 years and cybersecurity leadership roles for 15 years.
Governance Management is responsible for assessing and managing risk at the Company, including communicating the most material risks to the Board of Directors and its committees. The Board of Directors has primary responsibility for risk oversight, with a focus on the most significant risks facing the Company.
Governance Management is responsible for assessing and managing risk at the Company, including communicating key risks to the Board of Directors and its committees. The Board of Directors has primary responsibility for risk oversight, with a focus on the most significant risks facing the Company.
The CISO also briefs the full Board of Directors on cybersecurity matters at least annually. As described above, management informs the Risk Committee about prevention, detection, mitigation and remediation of cybersecurity incidents quarterly and monitors such matters continuously.
The CISO also briefs the full Board of Directors on cybersecurity matters at least annually. As described above, management informs the Audit Committee about prevention, detection, mitigation, resolution, and remediation of cybersecurity incidents quarterly and monitors such matters continuously.
With respect to cybersecurity risks, the Risk Committee of the Board of Directors (“Risk Committee”) provides oversight for matters specifically relating to cybersecurity and other risks related to information technology systems and procedures, including but not limited to data security and privacy.
With respect to cybersecurity risks, the Audit Committee of the Board of Directors (“Audit Committee”) provides oversight for matters specifically relating to cybersecurity and other risks related to information technology systems and procedures, including but not limited to data security and privacy.
Given the dynamic nature of the cyber-threat environment, the Company engages third-party assessors, consultants and others from time to time to assist in various cyber-related matters, including assessing, enhancing, implementing and monitoring the Company's cybersecurity risk management process.
Given the dynamic nature of the cyber-threat environment, the Company engages with third-party assessors, consultants and others from time to time on various cyber-related matters, including assessing, enhancing, advising and monitoring the Company's cybersecurity risk management process.
The Risk Committee reviews and discusses with management the quality and effectiveness of the Company’s efforts to mitigate such risks and reports such findings to the Board of Directors.
The Audit Committee reviews and discusses with management the quality and effectiveness of the Company’s efforts to mitigate such risks and reports such findings to the Board of Directors. 27 Table of Contents
The CISO reports to the Risk Committee quarterly on information security matters, including, among other things, the Company’s cyber risks and threats, the status of projects to further strengthen the Company’s 26 Table of Contents information security systems, assessments of the Company’s security program and the emerging regulatory and threat landscape.
The CISO reports to the Audit Committee quarterly on information security matters, including, among other things, the Company’s cyber risks and threats, any incidents or events, the status of projects to further strengthen the Company’s information security systems, assessments of the Company’s security program and the emerging regulatory and threat landscape.
The Company maintains a vendor risk management program designed to identify and manage risks associated with third-party service providers, with management retaining responsibility for oversight of cybersecurity threats. The Company also maintains an incident response plan that includes escalation criteria and preliminary materiality assessments to guide disclosure objectives.
The Company maintains a vendor risk management program designed to help identify and manage risks associated with third-party service providers, including a risk-based approach to identifying and monitoring cybersecurity threats presented by certain third-party service providers, with management retaining responsibility for oversight of cybersecurity threats.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeEach of the remaining AFC offices is strategically located in close proximity to at least one of the auctions that it serves. AFC generally leases its branches.
Biggest changeEach of the remaining AFC locations (hybrid of physical locations and a digital servicing network) is strategically located in proximity to auctions or major metro areas. AFC generally leases its branches.
Item 2. Properties Our corporate headquarters is located in Carmel, Indiana, where we lease office space pursuant to a lease that expires in 2034. At December 31, 2023, we also owned or leased other properties in the United States, Canada, Europe, the United Kingdom, Uruguay and the Philippines.
Item 2. Properties Our corporate headquarters is located in Carmel, Indiana, where we lease office space pursuant to a lease that expires in 2034. At December 31, 2024, we also owned or leased other properties in the United States, Canada, Europe, the United Kingdom, Uruguay and the Philippines.
Facilities utilized by the Marketplace segment primarily include 15 vehicle logistics center locations across Canada at December 31, 2023, which are either owned or leased.
Facilities utilized by the Marketplace segment primarily include 15 vehicle logistics center locations across Canada at December 31, 2024, which are either owned or leased.
In our Finance segment, AFC has approximately 90 locations in North America at December 31, 2023, including 51 branches which are physically located at 9 OPENLANE Canada vehicle logistics centers and other competitor locations (hybrid of physical locations and a digital servicing network).
In our Finance segment, AFC has approximately 90 locations in North America at December 31, 2024, including 9 branches which are physically located at OPENLANE Canada vehicle logistics centers and 37 branches located within other competitor locations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAlthough the outcome of litigation cannot be accurately predicted, based on evaluation of information presently available, our management does not currently believe that the ultimate resolution of these actions will have a material adverse effect on our financial condition, results of operations or cash flows. Item 4. Mine Safety Disclosures Not applicable. 27 Table of Contents PART II
Biggest changeAlthough the outcome of litigation cannot be accurately predicted, based on evaluation of information presently available, our management does not currently believe that the ultimate resolution of these actions will have a material adverse effect on our financial condition, results of operations or cash flows. Item 4. Mine Safety Disclosures Not applicable. 28 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe timing and amount of any repurchases is subject to market and other conditions. 28 Table of Contents Stock Price Performance Graph The graph below shows the cumulative total stockholder return, assuming an investment of $100 and dividend reinvestment (and taking into account the value of the IAA, Inc. common shares distributed in the spin-off), for the period beginning on December 31, 2018 and ending on December 31, 2023, on each of OPENLANE's common stock, the Standard & Poor's SmallCap 600 Index and the Standard and Poor's 500 Index.
Biggest changeThe timing and amount of any repurchases is subject to market and other conditions. 29 Table of Contents Stock Price Performance Graph The graph below shows the cumulative total stockholder return, assuming an investment of $100 and dividend reinvestment for the period beginning on December 31, 2019 and ending on December 31, 2024, on each of OPENLANE's common stock, the Standard & Poor's SmallCap 600 Index and the Standard and Poor's 500 Index.
Issuer Purchases of Equity Securities The following table provides information about purchases by OPENLANE, Inc. of its shares of common stock during the quarter ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (Dollars in millions) October 1 - October 31 — $ — — $ 125.0 November 1 - November 30 — — — 125.0 December 1 - December 31 — — — 125.0 Total — $ — — (1) In October 2019, the board of directors authorized a repurchase of up to $300 million of the Company’s outstanding common stock, par value $0.01 per share.
Issuer Purchases of Equity Securities The following table provides information about purchases by OPENLANE, Inc. of its shares of common stock during the quarter ended December 31, 2024: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (1) (Dollars in millions) October 1 - October 31 — $ — — $ 100.0 November 1 - November 30 — — — 100.0 December 1 - December 31 — — — 100.0 Total — $ — — (1) In October 2019, the board of directors authorized a repurchase of up to $300 million of the Company’s outstanding common stock, par value $0.01 per share.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record OPENLANE's common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "KAR" and has been traded on the NYSE since December 11, 2009. As of February 15, 2024, there were 5 stockholders of record.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information and Holders of Record OPENLANE's common stock is traded on the New York Stock Exchange ("NYSE") under the symbol "KAR" and has been traded on the NYSE since December 11, 2009. As of February 14, 2025, there were 5 stockholders of record.
In October 2023, the board of directors authorized an increase in the size of the Company’s share repurchase program by an additional $20.3 million and an extension of the share repurchase program through December 31, 2024.
In October 2024, the board of directors authorized an increase in the size of the Company’s share repurchase program by approximately $5.0 million and an extension of the share repurchase program through December 31, 2025.
Company/Index Base Period 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 OPENLANE, Inc. $ 100 $ 123.82 $ 107.18 $ 89.96 $ 75.16 $ 85.30 S&P 500 Index $ 100 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P SmallCap 600 Index $ 100 $ 122.78 $ 136.64 $ 173.29 $ 145.39 $ 168.73 Item 6. [Reserved] 29 Table of Contents
Company/Index Base Period 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 OPENLANE, Inc. $ 100 $ 86.56 $ 72.66 $ 60.70 $ 68.89 $ 92.29 S&P 500 Index $ 100 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P SmallCap 600 Index $ 100 $ 111.29 $ 141.13 $ 118.41 $ 137.42 $ 149.37 Item 6. [Reserved] 30 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

136 edited+87 added−25 removed101 unchanged
Biggest changeThese measures may not be comparable to similarly titled measures reported by other companies. 46 Table of Contents The following tables reconcile EBITDA and Adjusted EBITDA to income (loss) from continuing operations for the periods presented: Three Months Ended December 31, 2023 (Dollars in millions) Marketplace Finance Consolidated Income (loss) from continuing operations $ (17.7) $ 31.3 $ 13.6 Add back: Income taxes (2.5) 10.1 7.6 Interest expense, net of interest income 4.9 34.0 38.9 Depreciation and amortization 22.7 2.6 25.3 Intercompany interest 9.8 (9.8) — EBITDA 17.2 68.2 85.4 Non-cash stock-based compensation 2.7 0.9 3.6 Acquisition related costs 2.0 — 2.0 Securitization interest — (31.4) (31.4) Severance 2.0 0.1 2.1 Foreign currency (gains)/losses (2.1) — (2.1) Net change in unrealized (gains) losses on investment securities — (0.4) (0.4) Professional fees related to business improvement efforts 1.7 0.4 2.1 Other 0.2 0.3 0.5 Total addbacks/(deductions) 6.5 (30.1) (23.6) Adjusted EBITDA $ 23.7 $ 38.1 $ 61.8 Three Months Ended December 31, 2022 (Dollars in millions) Marketplace Finance Consolidated Income (loss) from continuing operations $ 5.8 $ 36.1 $ 41.9 Add back: Income taxes 4.5 13.4 17.9 Interest expense, net of interest income 6.8 28.1 34.9 Depreciation and amortization 22.2 1.8 24.0 Intercompany interest 5.3 (5.3) — EBITDA 44.6 74.1 118.7 Non-cash stock-based compensation (4.7) (1.0) (5.7) Loss on extinguishment of debt 0.2 — 0.2 Acquisition related costs 0.3 — 0.3 Securitization interest — (25.8) (25.8) Gain on sale of property (33.9) — (33.9) Severance 4.0 0.2 4.2 Foreign currency (gains)/losses (6.1) — (6.1) Net change in unrealized (gains) losses on investment securities — 0.6 0.6 Professional fees related to business improvement efforts 2.6 0.5 3.1 Other 0.7 0.2 0.9 Total addbacks/(deductions) (36.9) (25.3) (62.2) Adjusted EBITDA $ 7.7 $ 48.8 $ 56.5 47 Table of Contents Year Ended December 31, 2023 (Dollars in millions) Marketplace Finance Consolidated Income (loss) from continuing operations $ (277.5) $ 122.7 $ (154.8) Add back: Income taxes (40.4) 48.7 8.3 Interest expense, net of interest income 21.7 130.6 152.3 Depreciation and amortization 92.2 9.3 101.5 Intercompany interest 33.9 (33.9) — EBITDA (170.1) 277.4 107.3 Non-cash stock-based compensation 13.2 4.2 17.4 Loss on extinguishment of debt 1.1 — 1.1 Acquisition related costs 3.1 — 3.1 Securitization interest — (120.4) (120.4) Severance 5.1 0.4 5.5 Foreign currency (gains)/losses (2.9) — (2.9) Goodwill and other intangibles impairment 250.8 — 250.8 Contingent consideration adjustment 1.3 — 1.3 Professional fees related to business improvement efforts 5.4 1.2 6.6 Other 1.3 0.9 2.2 Total addbacks/(deductions) 278.4 (113.7) 164.7 Adjusted EBITDA $ 108.3 $ 163.7 $ 272.0 Year Ended December 31, 2022 (Dollars in millions) Marketplace Finance Consolidated Income (loss) from continuing operations $ (105.7) $ 134.3 $ 28.6 Add back: Income taxes (36.4) 46.4 10.0 Interest expense, net of interest income 37.6 78.9 116.5 Depreciation and amortization 92.3 7.9 100.2 Intercompany interest 8.4 (8.4) — EBITDA (3.8) 259.1 255.3 Non-cash stock-based compensation 14.2 3.3 17.5 Loss on extinguishment of debt 17.2 — 17.2 Acquisition related costs 1.2 — 1.2 Securitization interest — (70.7) (70.7) Gain on sale of property (33.9) — (33.9) (Gain)/Loss on asset sales (0.1) — (0.1) Severance 11.7 0.7 12.4 Foreign currency (gains)/losses 2.5 — 2.5 Net change in unrealized (gains) losses on investment securities — 7.1 7.1 Professional fees related to business improvement efforts 13.3 1.9 15.2 Other 7.1 0.4 7.5 Total addbacks/(deductions) 33.2 (57.3) (24.1) Adjusted EBITDA $ 29.4 $ 201.8 $ 231.2 48 Table of Contents Certain of our loan covenant calculations utilize financial results for the most recent four consecutive fiscal quarters.
Biggest changeThe following tables reconcile EBITDA and Adjusted EBITDA to income (loss) from continuing operations for the periods presented: Three Months Ended December 31, 2024 (Dollars in millions) Marketplace Finance Consolidated Income from continuing operations $ 25.9 $ 26.4 $ 52.3 Add back: Income taxes 7.3 9.4 16.7 Finance interest expense — 28.3 28.3 Interest expense, net of interest income 4.1 — 4.1 Depreciation and amortization 20.0 3.0 23.0 EBITDA 57.3 67.1 124.4 Non-cash stock-based compensation 0.9 0.2 1.1 Acquisition related costs 0.1 — 0.1 Securitization interest — (25.7) (25.7) Gain on sale of business (31.6) — (31.6) Severance 2.3 0.1 2.4 Foreign currency (gains)/losses 6.4 0.1 6.5 (Gain)/loss on investments (0.4) — (0.4) Impact for newly enacted Canadian DST related to prior years (4.6) — (4.6) Other 0.5 — 0.5 Total addbacks/(deductions) (26.4) (25.3) (51.7) Adjusted EBITDA $ 30.9 $ 41.8 $ 72.7 Three Months Ended December 31, 2023 (Dollars in millions) Marketplace Finance Consolidated Income (loss) from continuing operations $ (17.7) $ 31.3 $ 13.6 Add back: Income taxes (2.5) 10.1 7.6 Finance interest expense — 34.0 34.0 Interest expense, net of interest income 4.9 — 4.9 Depreciation and amortization 22.7 2.6 25.3 Intercompany interest 9.8 (9.8) — EBITDA 17.2 68.2 85.4 Non-cash stock-based compensation 2.7 0.9 3.6 Acquisition related costs 2.0 — 2.0 Securitization interest — (31.4) (31.4) Severance 2.0 0.1 2.1 Foreign currency (gains)/losses (2.1) — (2.1) (Gain)/loss on investments — (0.4) (0.4) Professional fees related to business improvement efforts 1.7 0.4 2.1 Other 0.2 0.3 0.5 Total addbacks/(deductions) 6.5 (30.1) (23.6) Adjusted EBITDA $ 23.7 $ 38.1 $ 61.8 56 Table of Contents Year Ended December 31, 2024 (Dollars in millions) Marketplace Finance Consolidated Income from continuing operations $ 1.7 $ 108.2 $ 109.9 Add back: Income taxes 11.3 36.7 48.0 Finance interest expense — 123.5 123.5 Interest expense, net of interest income 20.2 — 20.2 Depreciation and amortization 83.3 11.9 95.2 Intercompany interest 13.3 (13.3) — EBITDA 129.8 267.0 396.8 Non-cash stock-based compensation 12.9 3.0 15.9 Acquisition related costs 0.6 — 0.6 Securitization interest — (112.7) (112.7) Gain on sale of business (31.6) — (31.6) Severance 10.5 1.1 11.6 Foreign currency (gains)/losses 5.8 — 5.8 (Gain)/loss on investments (0.4) — (0.4) Professional fees related to business improvement efforts 1.2 0.3 1.5 Impact for newly enacted Canadian DST related to prior years 5.4 — 5.4 Other 0.3 0.2 0.5 Total addbacks/(deductions) 4.7 (108.1) (103.4) Adjusted EBITDA $ 134.5 $ 158.9 $ 293.4 Year Ended December 31, 2023 (Dollars in millions) Marketplace Finance Consolidated Income (loss) from continuing operations $ (277.5) $ 122.7 $ (154.8) Add back: Income taxes (40.4) 48.7 8.3 Finance interest expense — 130.6 130.6 Interest expense, net of interest income 21.7 — 21.7 Depreciation and amortization 92.2 9.3 101.5 Intercompany interest 33.9 (33.9) — EBITDA (170.1) 277.4 107.3 Non-cash stock-based compensation 13.2 4.2 17.4 Loss on extinguishment of debt 1.1 — 1.1 Acquisition related costs 3.1 — 3.1 Securitization interest — (120.4) (120.4) Severance 5.1 0.4 5.5 Foreign currency (gains)/losses (2.9) — (2.9) Goodwill and other intangibles impairment 250.8 — 250.8 Contingent consideration adjustment 1.3 — 1.3 Professional fees related to business improvement efforts 5.4 1.2 6.6 Other 1.3 0.9 2.2 Total addbacks/(deductions) 278.4 (113.7) 164.7 Adjusted EBITDA $ 108.3 $ 163.7 $ 272.0 57 Table of Contents Certain of our loan covenant calculations utilize financial results for the most recent four consecutive fiscal quarters.
The provision for credit losses increased to 2.1% of the average managed receivables for the year ended December 31, 2023 from 0.4% for the year ended December 31, 2022. The increased loss rate was due to significant used vehicle value declines, interest rate increases and tightening retail credit availability that impacted used retail sales.
The provision for credit losses increased to 2.1% of the average receivables managed for the year ended December 31, 2023 from 0.4% for the year ended December 31, 2022. The increased loss rate was due to significant used vehicle value declines, interest rate increases and tightening retail credit availability that impacted used retail sales.
The provision for credit losses is expected to be approximately 2% or under, on a long-term basis, of the average managed receivables balance. However, the actual losses in any particular quarter or year could deviate from this range.
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.
The effective tax rate for the three months ended December 31, 2023 was unfavorably impacted by an increase in the valuation allowance related to current year movement of the adjusted U.S. net deferred tax asset and tax expense related to current and planned distribution of foreign earnings.
The effective tax rate for the three months ended December 31, 2023 was unfavorably impacted by an increase in the valuation allowance related to 2023 current year movement of the adjusted U.S. net deferred tax asset and tax expense related to current and planned distribution of foreign earnings.
The goodwill impairment related to our Europe reporting unit was driven by combining two previously separate reporting units (ADESA U.K. and ADESA Europe) into a single reporting unit. Including ADESA U.K. in the reporting unit resulted in a reduction in the overall fair value of the combined reporting unit, resulting in an impairment charge.
The goodwill impairment related to our Europe reporting unit was driven by combining two previously separate reporting units (ADESA U.K. and ADESA Europe) into a single reporting unit. Including ADESA U.K. in the reporting unit resulted in a reduction in the overall fair value of the combined reporting unit, resulting in an impairment charge.
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 Previous Credit Agreement.
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.
As a result of replacing the Previous Revolving Credit Facility, we incurred a non-cash loss on the extinguishment of debt of $0.4 million in the second quarter of 2023. The loss was the result of the write-off of unamortized debt issuance costs associated with lenders that are not participating in the Revolving Credit Facility.
As a result of replacing the Previous Credit Agreement, we incurred a non-cash loss on the extinguishment of debt of $0.4 million in the second quarter of 2023. The loss was the result of the write-off of unamortized debt issuance costs associated with lenders that are not participating in the Revolving Credit Facility.
Gain on Sale of Property In October 2022, the Company closed on the sale of excess land in Montreal which resulted in a gain of $33.9 million. 33 Table of Contents Goodwill and Other Intangibles Impairment Goodwill represents the excess cost over fair value of identifiable net assets of businesses acquired.
Gain on Sale of Property In October 2022, the Company closed on the sale of excess land in Montreal which resulted in a gain of $33.9 million. 40 Table of Contents Goodwill and Other Intangibles Impairment Goodwill represents the excess cost over fair value of identifiable net assets of businesses acquired.
Furthermore, as a result of the rebranding to OPENLANE, the ADESA tradename is no longer deemed to have an indefinite life and its remaining carrying amount of $97.3 million is being amortized over a remaining useful life of approximately 6 years.
Furthermore, as a result of the rebranding to OPENLANE, the ADESA tradename was no longer deemed to have an indefinite life and its remaining carrying amount of $97.3 million is being amortized over a remaining useful life of approximately 6 years.
The increase in cost of services of $2.8 million was primarily the result of increases in compensation expense of $2.2 million, lot check expenses of $0.6 million and other miscellaneous expenses aggregating $1.3 million, partially offset by a decrease in incentive-based compensation of $1.3 million.
The increase in cost of services was primarily the result of increases in compensation expense of $2.2 million, lot check expenses of $0.6 million and other miscellaneous expenses aggregating $1.3 million, partially offset by a decrease in incentive-based compensation of $1.3 million.
The Company did not identify any impairment for our reporting units in 2022 or 2021. In the second quarter of 2023 and as part of our annual goodwill impairment testing, we performed a quantitative assessment. This analysis resulted in goodwill impairment charges totaling $218.9 million ($166.4 million net of $52.5 million deferred tax benefit) in our U.S.
The Company did not identify any impairment for our reporting units in 2024 or 2022. In the second quarter of 2023 and as part of our annual goodwill impairment testing, we performed a quantitative assessment. This analysis resulted in goodwill impairment charges totaling $218.9 million ($166.4 million net of $52.5 million deferred tax benefit) in our U.S.
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, 2026.
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.
They are not measurements of our financial performance under GAAP and should not be considered substitutes for net income (loss) or any other performance measures derived 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.
They are not measurements of our financial performance under GAAP and should not be considered substitutes for net income (loss), operating profit (loss) or any other performance measures derived 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.
As such, the Company evaluated the $122.8 million carrying amount of its indefinite-lived ADESA tradename, resulting in a non-cash impairment charge totaling $25.5 million in the second quarter of 2023 and associated deferred tax benefit of $6.5 million (within the Marketplace segment).
As such, the Company evaluated the $122.8 million carrying amount of its indefinite-lived ADESA tradename, resulting in a non-cash impairment charge totaling $25.5 million i n the second quarter of 2023 and associated deferred tax benefit of $6.5 million (within the Marketplace segment).
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 quarter on which any loans under the Revolving Credit Facility are outstanding.
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 quarter on which any loans under the Revolving Credit Facilities are outstanding.
At December 31, 2023, 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.
At December 31, 2024, 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.
In addition, our most significant accounting policies are discussed in Note 2 and elsewhere in the notes to the consolidated financial statements for the year ended December 31, 2023, which are included in this Annual Report on Form 10-K.
In addition, our most significant accounting policies are discussed in Note 2 and elsewhere in the notes to the consolidated financial statements for the year ended December 31, 2024, which are included in this Annual Report on Form 10-K.
The increase in depreciation and amortization was primarily the result of the amortization of the ADESA tradename, which was previously an indefinite-lived asset, partially offset by assets that have become fully depreciated and a reduction in assets placed in service.
The in crease in depreciation and amortization was primarily the result of the amortization of the ADESA tradename, which was previously an indefinite-lived asset, partially offset by assets that have become fully depreciated and a reduction in assets placed in service.
Key challenges for the independent dealer customers 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).
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).
As a result of the impairment charges, the carrying value of the U.S. Dealer-to-Dealer and Europe reporting units now approximate fair value. The fair value of each of our other reporting units was substantially in excess of its carrying value, with the exception of our Canada reporting unit within the Marketplace segment, which exceeded its carrying value by approximately 14%.
As a result of the impairment charges, the carrying value of the U.S. Dealer-to-Dealer and Europe reporting units approximated fair value. The fair value of each of our other reporting units was substantially in excess of its carrying value, with the exception of our Canada reporting unit within the Marketplace segment, which exceeded its carrying value by approximately 14%.
The allowance for credit losses is also based on management's evaluation of the receivables portfolio under current economic conditions, the size of the portfolio, overall portfolio credit quality, review of specific collection matters and such other factors which, in management's judgment, deserve recognition in estimating losses.
The allowance for credit losses is also based on management's evaluation of the receivables 60 Table of Contents portfolio under current economic conditions, the size of the portfolio, overall portfolio credit quality, review of specific collection matters and such other factors which, in management's judgment, deserve recognition in estimating losses.
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 dealer customers. Financing is primarily provided for terms of 30 to 90 days.
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.
Off-Balance Sheet Arrangements As of December 31, 2023, 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. 54 Table of Contents
Off-Balance Sheet Arrangements As of December 31, 2024, 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. 62 Table of Contents
Selling, General and Administrative Selling, general and administrative expenses from the Marketplace segment decreased $18.0 million, or 5%, to $380.6 million for the year ended December 31, 2023, compared with $398.6 million for the year ended December 31, 2022, primarily as a result of decreases in professional fees of $9.8 million, severance of $5.9 million, fluctuations in the Canadian exchange rate of $5.5 million, telecom expenses of $3.0 million, information technology costs of $1.6 million and stock-based compensation of $1.0 million, partially offset by increases in incentive-based compensation of $3.4 million, marketing costs of $2.8 million, compensation expense of $1.3 million and other miscellaneous expenses aggregating $1.3 million.
Selling, General and Administrative Selling, general and administrative expenses from the Marketplace segment decreased $17.8 million, or 5%, to $372.0 million for the year ended December 31, 2023, compared with $389.8 million for the year ended December 31, 2022, primarily as a result of decreases in professional fees of $9.8 million, severance of $5.9 million, fluctuations in the Canadian exchange rate of $5.5 million, telecom expenses of $3.0 million, information technology costs of $1.6 million and stock-based compensation of $1.0 million, partially offset by increases in incentive-based compensation of $3.4 million, marketing costs of $2.8 million, compensation expense of $1.3 million and other miscellaneous expenses aggregating $1.5 million.
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 To provide a clear picture of matters potentially impacting our liquidity position, the table below sets forth a summary of our contractual obligations as of December 31, 2023.
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. 59 Table of Contents Contractual Obligations To provide a clear picture of matters potentially impacting our liquidity position, the table below sets forth a summary of our contractual obligations as of December 31, 2024.
Specific collection matters can be impacted by the outcome of negotiations, litigation and bankruptcy proceedings with individual customers. AFC controls credit risk through credit approvals, credit limits, underwriting and collateral management monitoring procedures, including over 58,000 lot audits and holding vehicle titles where permitted.
Specific collection matters can be impacted by the outcome of negotiations, remarketing results, litigation and bankruptcy proceedings with individual customers. AFC controls credit risk through credit approvals, credit limits, underwriting and collateral management monitoring procedures, including over 54,000 lot audits and holding vehicle titles where permitted.
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 a domestic and international customer base through digital marketplaces in the U.S., Canada and Europe and vehicle logistics center locations across Canada.
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 across Canada.
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 (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 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.
In particular, statements made in this report on Form 10-K that are not historical facts (including, but not limited to, expectations, estimates, assumptions and projections regarding the industry, business, future operating results, potential acquisitions and anticipated cash requirements) may be forward-looking statements.
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, potential acquisitions and anticipated cash requirements) may be forward-looking statements.
Given the nature of these factors, 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 We are a leading digital marketplace for used vehicles, connecting sellers and buyers across North America and Europe to facilitate fast, easy and transparent transactions.
Therefore, 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 We are a leading digital marketplace for used vehicles, connecting sellers and buyers across North America and Europe to facilitate fast, easy and transparent transactions.
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 statement of income (loss)) and the gross purchase price of the vehicles as "Cost of services." AFC's revenue ("Finance-related revenue" in the consolidated statement of income (loss)) is comprised of interest and fee income, provision for credit losses and other revenues associated with our finance receivables.
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 statement of income (loss)) and the gross purchase price of the vehicles as "Cost of services." AFC's revenue ("Finance revenue" in the consolidated statement of income (loss)) is comprised of interest revenue and fee and other revenue associated with our finance receivables.
The fair value of the remaining reporting units were in excess of their carrying value. The impairment charges were reported as a component of "Goodwill and other intangibles impairment" in the consolidated statements of income (loss). As a result of the second quarter 2023 impairment charges, the carrying value of the U.S.
The fair value of the remaining reporting units were in excess of their carrying value. The impairment charges were reported as a component of "Goodwill and other intangibles impairment" in the consolidated statements of income (loss). As a result of the second quarter 2023 impairment charges, the carrying value of the U.S. Dealer-to-Dealer and Europe reporting units approximated fair value.
As a measure of sensitivity, if we had experienced a 10% increase in net charge-offs of finance receivables for the years ended December 31, 2023 and 2022, our provision for credit losses would have increased by approximately $4.9 million and $0.9 million in 2023 and 2022, respectively.
As a measure of sensitivity, if we had experienced a 10% increase in net charge-offs of finance receivables for the years ended December 31, 2024 and 2023 our provision for credit losses would have increased by approximately $5.1 million and $4.9 million in 2024 and 2023, respectively.
We incurred a loss on the extinguishment of the senior notes of $9.5 million in 2022 primarily representative of the early repayment premium and the write-off of unamortized debt issuance costs associated with the portion of the senior notes repaid. As of December 31, 2023 there was $210.0 million of senior notes outstanding.
We incurred a loss on the extinguishment of the senior notes of $9.5 million in 2022 primarily representative of the early repayment premium and the write-off of unamortized debt issuance costs associated with the portion of the senior notes repaid. As of December 31, 2024 there was $210.0 million of senior notes outstanding, which are classified as current debt.
Some of those judgments can be subjective and complex. Consequently, actual results could differ from those estimates. Accounting measurements that management believes are most critical to the reported results of our operations and financial condition include: (1) allowance for credit losses; (2) business combinations; and (3) goodwill and other intangible assets.
Consequently, actual results could differ from those estimates. Accounting measurements that management believes are most critical to the reported results of our operations and financial condition include: (1) allowance for credit losses; (2) business combinations; and (3) goodwill and other intangible assets.
When evaluating goodwill for impairment, we may first perform a qualitative 52 Table of Contents assessment to determine whether it is more likely than not that a reporting unit is impaired.
When evaluating goodwill for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that a reporting unit is impaired.
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 dealer customers throughout the United States and Canada.
We also provide value-added ancillary services including inbound and outbound transportation logistics, reconditioning, vehicle inspection and certification, titling, administrative and collateral recovery services. 31 Table of Contents • 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.
For further discussion of AFC's securitization arrangements, see "Securitization Facilities." 43 Table of Contents Credit Facilities On June 23, 2023, we entered into the Credit Agreement, which replaces the Previous Credit Agreement, and provides for, among other things, the $325 million Revolving Credit Facility.
For further discussion of AFC's securitization arrangements, see "Securitization Facilities." Credit Facilities On June 23, 2023, we entered into the Credit Agreement, which replaced the Previous Credit Agreement, and provides for, among other things, the $325 million Revolving Credit Facility.
The amount of the cash reserve depends on circumstances which are set forth in the securiti zation agreements. There were unamortized securitization issuance costs of approximately $13.5 million and $19.4 million at December 31, 2023 and 2022, respectively.
The amount of the cash reserve depends on circumstances which are set forth in the securiti zation agreements. There were unamortized securitization issuance costs of approximately $18.8 million and $13.5 million at December 31, 2024 and 2023, respectively.
For the year ended December 31, 2023, the holders of the 50 Table of Contents Series A Preferred Stock received cash dividends aggregating $44.4 million. For the year ended December 31, 2022, the holders of the Series A Preferred Stock received cash dividends aggregating $22.2 million and dividends in kind with a value in the aggregate of approximately $21.6 million.
For the years ended December 31, 2024 and 2023, the holders of the Series A Preferred Stock received cash dividends aggregating $44.4 million each year. For the year ended December 31, 2022, the holders of the Series A Preferred Stock received cash dividends aggregating $22.2 million and dividends in kind with a value in the aggregate of approximately $21.6 million.
However, macroeconomic factors, including inflationary pressures, rising 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. Declining economic conditions present a risk to our operations and the stability of the automotive industry.
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. These factors and related impacts present a risk to our operations and the stability of the automotive industry.
Automotive Finance AFC works with independent dealer customers 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 14,200 dealers in 2023.
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.
The increase in cost of services of $0.6 million was primarily the result of increases in compensation expense of $0.4 million, professional fees of $0.2 million and travel expenses of $0.2 million, partially offset by a decrease in other miscellaneous expenses aggregating $0.2 million.
The increase in cost of services was primarily the result of increases in professional fees of $0.7 million, compensation expense of $0.4 million, travel expenses of $0.4 million and other miscellaneous expenses aggregating $1.0 million, partially offset by a decrease in lot check expenses of $1.0 million.
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. A lack of recovery in market conditions, or further deterioration in market conditions, could materially affect the Company's liquidity.
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, including the repayment of the $210.0 million in senior notes in 2025. A lack of recovery in market conditions, or further deterioration in market conditions, could materially affect the Company's liquidity.
Cash flow from financing activities (continuing operations) Net cash used by financing activities (continuing operations) was $279.9 million for the year ended December 31, 2023 , compared with $1,621.9 million for the year ended December 31, 2022.
Cash flow from financing activities (continuing operations) Net cash used by financing activities (continuing operations) was $173.9 million for the year ended December 31, 2024 , compared with $279.9 million for the year ended December 31, 2023.
Words such as "should," "may," "will," "can," "of the opinion," "confident," "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" "continues," "outlook," initiatives," "goals," "opportunities," and similar expressions identify 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.
Working Capital A substantial amount of our working capital is generated from the payments received for services provided. The majority of our working capital needs are short-term in nature, usually less than a week in duration.
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.
Cash flow from investing activities (continuing operations) Net cash used by investing activities (continuing operations) was $90.5 million for the year ended December 31, 2023 , compared with net cash provided by investing activities of $70.0 million for the year ended December 31, 2022.
Cash flow from investing activities (continuing operations) Net cash used by investing activities (continuing operations) was $70.9 million for the year ended December 31, 2024 , compared with $90.5 million for the year ended December 31, 2023.
The proceeds from the Canadian Revolving Credit Facility may 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 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.
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.
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.
Income Taxes We had an effective tax rate of 35.8% for the three months ended December 31, 2023, compared with an effective tax rate of 29.9% for the three months ended December 31, 2022.
Income Taxes We had an effective tax rate of 24.2% for the three months ended December 31, 2024, compared with an effective tax rate of 35.8% for the three months ended December 31, 2023.
The following table summarizes our contractual cash obligations as of December 31, 2023 (in millions) : Payments Due by Period Contractual Obligations Total 1 year or Less More than 1 Year Long-term debt $325 million Revolving Credit Facility (a) $ 137.0 $ 137.0 $ — Senior notes (a) 210.0 — 210.0 European lines of credit 17.6 17.6 — Finance lease obligations (b) 0.9 0.9 — Interest payments relating to long-term debt (c) 32.1 24.8 7.3 Operating leases (d) 103.7 15.4 88.3 Total contractual cash obligations $ 501.3 $ 195.7 $ 305.6 ________________________________________ (a) The Company has historically included the Revolving Credit Facility in current debt based on its intent to repay the amount outstanding within one year; however, the Company is not contractually obligated to repay the borrowings until the maturity of the Revolving Credit Facility (June 2028).
The following table summarizes our contractual cash obligations as of December 31, 2024 (in millions) : Payments Due by Period Contractual Obligations Total 1 year or Less More than 1 Year Long-term debt $325 million Revolving Credit Facility (a) $ — $ — $ — Canadian Revolving Credit Facility (a) — — — Senior notes (a) 210.0 210.0 — European lines of credit 20.7 20.7 — Interest payments relating to long-term debt (b) 9.3 6.5 2.8 Operating leases (c) 90.0 15.6 74.4 Total contractual cash obligations $ 330.0 $ 252.8 $ 77.2 ________________________________________ (a) The Company has historically included the Revolving Credit Facilities in current debt based on its intent to repay the amount outstanding within one year; however, the Company is not contractually obligated to repay the borrowings until the maturity of the Revolving Credit Facilities (June 2028).
For the year ended December 31, 2023 compared with the year ended December 31, 2022, the change in the euro exchange rate increased revenue by $7.0 million, operating profit by $0.5 million and net income by $0.3 million. 35 Table of Contents Marketplace Results Year Ended December 31, (Dollars in millions, except per vehicle amounts) 2023 2022 Auction fees $ 395.3 $ 370.3 Service revenue 619.7 590.3 Purchased vehicle sales 236.7 182.9 Total Marketplace revenue from continuing operations 1,251.7 1,143.5 Cost of services* 801.7 771.2 Gross profit* 450.0 372.3 Selling, general and administrative 380.6 398.6 Depreciation and amortization 92.2 92.3 Gain on sale of property — (33.9) Goodwill and other intangibles impairment 250.8 — Operating profit (loss) $ (273.6) $ (84.7) Commercial vehicles sold 710,000 661,000 Dealer consignment vehicles sold 621,000 636,000 Total vehicles sold 1,331,000 1,297,000 Gross profit percentage, excluding purchased vehicles* 44.3% 38.8% * Exclusive of depreciation and amortization Total Marketplace Revenue Revenue from the Marketplace segment increased $108.2 million, or 9%, to $1,251.7 million for the year ended December 31, 2023, compared with $1,143.5 million for the year ended December 31, 2022.
For the year ended December 31, 2023 compared with the year ended December 31, 2022, the change in the euro exchange rate increased revenue by $7.0 million, operating profit by $0.5 million and net income by $0.3 million. 42 Table of Contents Marketplace Results Year Ended December 31, (Dollars in millions) 2023 2022 Auction fees $ 395.3 $ 370.3 Service revenue 619.7 590.3 Purchased vehicle sales 236.7 182.9 Total Marketplace revenue 1,251.7 1,143.5 Cost of services* 883.6 848.1 Gross profit 368.1 295.4 Provision for credit losses 8.6 8.8 Selling, general and administrative 372.0 389.8 Depreciation and amortization 10.3 15.4 Gain on sale of property — (33.9) Goodwill and other intangibles impairment 250.8 — Operating loss $ (273.6) $ (84.7) Commercial vehicles sold 710,000 661,000 Dealer consignment vehicles sold 621,000 636,000 Total vehicles sold 1,331,000 1,297,000 * Includes depreciation and amortization Total Marketplace Revenue Revenue from the Marketplace segment increased $108.2 million, or 9%, to $1,251.7 million for the year ended December 31, 2023, compared with $1,143.5 million for the year ended December 31, 2022.
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.
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.
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.
The entire selling and purchase price of the vehicle is recorded as revenue and cost of services for purchased vehicles sold.
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.
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. 45 Table of Contents The Company’s auction volumes have been adversely impacted by the supply chain disruptions and associated challenges in the automotive industry.
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. The Company’s auction volumes have been adversely impacted by the market conditions experienced in the automotive industry in recent years.
The cash provided by investing activities in 2022 was primarily from a decrease in finance receivables held for investment and proceeds from the sale of property and equipment, partially offset by purchases of property and equipment.
The cash used by investing activities in 2024 was primarily from an increase in finance receivables held for investment and purchases of property and equipment, partially offset by the proceeds from the sale of a business.
Most of the 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 by the various financial institutions.
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.
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.
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 52 Table of Contents the outstanding checks on our balance sheet.
The cash provided by investing activities for the year ended December 31, 2023 was attributable to the final proceeds from the sale of the ADESA U.S. physical auction business.
The cash provided by investing activities for the year ended December 31, 2023 was attributable to the final proceeds from the sale of the ADESA U.S. physical auction business. Cash flow from financing activities (discontinued operations) There were no financing activities (discontinued operations) for the year ended December 31, 2024 and 2023.
Cash flow from financing activities (discontinued operations) There were no financing activities (discontinued operations) for the year ended December 31, 2023 , compared with net cash provided by financing activities of $10.8 million for the year ended December 31, 2022.
Cash flow from investing activities (discontinued operations) There were no investing activities (discontinued operations) for the year ended December 31, 2024 , compared with net cash provided by investing activities of $7.0 million for the year ended December 31, 2023.
Such statements, including statements regarding adverse market conditions; our future growth; anticipated cost savings, revenue increases, credit losses and capital expenditures; contractual obligations; dividend declarations and payments; common stock repurchases; tax rates and assumptions; strategic initiatives, acquisitions and dispositions; our competitive position and retention of customers; and our continued investment in information technology, 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.
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 on our business; 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.
We had related outstanding letters of credit in the aggregate amount of $54.7 million and $19.0 million at December 31, 2023 and 2022, respectively, which reduce the amount available for borrowings under the respective revolving credit facility. Our European operations have lines of credit aggregating $33.1 million (€30 million) of which $17.6 million was drawn at December 31, 2023.
We had related outstanding letters of credit in the aggregate amount of $48.8 million and $54.7 million at December 31, 2024 and 2023, respectively, which reduce the amount available for borrowings under the Revolving Credit Facilities. Our European operations have lines of credit aggregating $31.1 million (€30 million) of which $20.7 million was drawn at December 31, 2024.
Service Revenue Service revenue increased $29.4 million, or 5%, to $619.7 million for the year ended December 31, 2023, compared with $590.3 million for the year ended December 31, 2022, primarily as a result of increases in repossession and remarketing fees of $25.1 million, third-party fees for platform services of $9.0 million, inspection service revenue of $7.1 million and a net increase in other miscellaneous service revenues aggregating approximately $4.3 million, partially offset by decreases in transportation revenue of $13.6 million and reconditioning revenue of $2.5 million. 36 Table of Contents Purchased Vehicle Sales Purchased vehicle sales, which include the entire selling price of the vehicle, increased $53.8 million, or 29%, to $236.7 million for the year ended December 31, 2023, compared with $182.9 million for the year ended December 31, 2022, primarily as a result of an increase in the number of purchased vehicles sold and the average selling price of purchased vehicles sold in Europe.
Service Revenue Service revenue increased $29.4 million, or 5%, to $619.7 million for the year ended December 31, 2023, compared with $590.3 million for the year ended December 31, 2022, primarily as a result of increases in repossession and remarketing fees of $25.1 million, third-party fees for platform services of $9.0 million, inspection service revenue of $7.1 million and a net increase in other miscellaneous service revenues aggregating approximately $4.3 million, partially offset by decreases in transportation revenue of $13.6 million and reconditioning revenue of $2.5 million.
As of December 31, 2023 and 2022, $2,296.4 million and $2,396.6 million, respectively, of finance receivables and a cash reserve of 1 or 3 percent of the obligations collateralized by finance receivables served as security for the $1,631.9 million and $1,677.6 million of obligations collaterali zed by finance receivables at December 31, 2023 and 2022, respectively.
As of December 31, 2024 and 2023, $2,335.1 million and $2,296.4 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 $1,660.3 million and $1,631.9 million of gross obligations collaterali zed by finance receivables at December 31, 2024 and 2023, respectively.
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.
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 55 Table of Contents results as reported under GAAP. These measures may not be comparable to similarly titled measures reported by other companies.
We believe our sources of liquidity from our cash and cash equivalents on hand, working capital, cash provided by operating activities, and availability under our Revolving Credit Facility are sufficient to meet our operating needs for the foreseeable future.
We believe 54 Table of Contents 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.
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.
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 December 31, 2024 and 2023, $0.0 million and $137.0 million was drawn on the Revolving Credit Facilities, respectively.
For a further discussion of revenues, gross profit and selling, general and administrative expenses, see the segment results discussions below. Depreciation and Amortization Depreciation and amortization increased $1.3 million, or 1%, to $101.5 million for the year ended December 31, 2023, compared with $100.2 million for the year ended December 31, 2022.
For a further discussion of our operating results, see the segment results discussions below. Depreciation and Amortization Depreciation and amortization in creased $1.3 million, or 1%, to $101.5 million for the year ended December 31, 2023, compared with $100.2 million for the year ended December 31, 2022.
Selling, General and Administrative Selling, general and administrative expenses for the Finance segment increased $1.9 million, or 19%, to $12.1 million for the three months ended December 31, 2023, compared with $10.2 million for the three months ended December 31, 2022 primarily as a result of increases in stock-based compensation of $1.9 million, postage expense of $1.1 million and information technology costs of $0.2 million, partially offset by decreases in compensation expense of $0.2 million, incentive-based compensation of $0.2 million and other miscellaneous expenses aggregating $0.9 million.
Selling, General and Administrative Selling, general and administrative expenses for the Finance segment increased $3.3 million, or 7%, to $49.8 million for the year ended December 31, 2023, compared with $46.5 million for the year ended December 31, 2022 primarily as a result of increases in postage expense of $2.8 million, information technology costs of $0.8 million, stock-based compensation of $0.8 million and other miscellaneous expenses aggregating $0.1 million, partially offset by decreases in professional fees of $0.4 million, incentive-based compensation of $0.4 million and contract labor of $0.4 million.
Impact of Foreign Currency For the three months ended December 31, 2023 compared with the three months ended December 31, 2022, the change in the euro exchange rate increased revenue by $3.6 million, operating profit by $0.3 million and net income by $0.2 million.
Impact of Foreign Currency For the three months ended December 31, 2024 compared with the three months ended December 31, 2023, the change in the Canadian dollar exchange rate decreased revenue by $2.7 million, operating profit by $0.7 million and net income by $0.4 million.
December 31, (Dollars in millions) 2023 2022 Cash and cash equivalents $ 93.5 $ 225.7 Restricted cash 65.4 52.0 Working capital 363.1 379.2 Amounts available under the Revolving Credit Facility 133.3 161.0 Cash provided by operating activities for the year ended 237.0 4.1 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.
December 31, (Dollars in millions) 2024 2023 Cash and cash equivalents $ 143.0 $ 93.5 Working capital 286.0 363.1 Amounts available under the Revolving Credit Facilities 397.9 133.3 Cash provided by operating activities for the year ended 292.8 237.0 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.
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 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. 53 Table of Contents 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).
Cash flow from operating activities (discontinued operations) Net cash used by operating activities (discontinued operations) was $1.6 million for the year ended December 31, 2023 , compared with $459.1 million for the year ended December 31, 2022. The cash used by operating activities for the year ended December 31, 2023 was primarily attributable to an adjustment to income taxes.
Cash flow from operating activities (discontinued operations) Net cash used by operating activities (discontinued operations) was $1.4 million for the year ended December 31, 2024 , compared with $1.6 million for the year ended December 31, 2023. The cash used by operating activities for the year ended December 31, 2024 was primarily attributable to the payment of an accrued obligation.
As such, the announcement served as a triggering event and we performed a quantitative impairment test on the 53 Table of Contents ADESA tradename, resulting in an impairment charge totaling $25.5 million ($19.0 million net of $6.5 million deferred tax benefit).
In the second quarter of 2023, the OPENLANE branded marketplace was announced as a replacement to the ADESA branded marketplaces. As such, the announcement served as a triggering event and we performed a quantitative impairment test on the ADESA tradename, resulting in an impairment charge totaling $25.5 million ($19.0 million net of $6.5 million deferred tax benefit).
Senior Notes On May 31, 2017, we issued $950 million of 5.125% senior notes due June 1, 2025. The Company pays interest on the senior notes semi-annually in arrears on June 1 and December 1 of each year. The senior notes may be redeemed at par as of June 1, 2023. The senior notes are guaranteed by the Subsidiary Guarantors.
The Company pays interest on the senior notes semi-annually in arrears on June 1 and December 1 of each year. The senior notes may be redeemed at par. The senior notes are guaranteed by the Subsidiary Guarantors.
Selling, General and Administrative Selling, general and administrative expenses for the Marketplace segment increased $8.9 million, or 11%, to $91.7 million for the three months ended December 31, 2023, compared with $82.8 million for the three months ended December 31, 2022, primarily as a result of increases in stock-based compensation of $7.4 million, information technology costs of $2.4 million and compensation expense of $1.6 million, partially offset by decreases in severance of $1.9 million and other miscellaneous expenses aggregating $0.6 million.
Selling, General and Administrative Selling, general and administrative expenses from the Marketplace segment decreased $12.4 million, or 3%, to $359.6 million for the year ended December 31, 2024, compared with $372.0 million for the year ended December 31, 2023, primarily as a result of decreases in compensation expense of $9.8 million, information technology costs of $4.3 million, professional fees of $3.7 million and other miscellaneous expenses aggregating $1.4 million, partially offset by increases in severance of $4.2 million and marketing costs of $2.6 million.
Cost of services is composed of payroll and related costs, subcontract services, the cost of vehicles purchased, supplies, insurance, property taxes, utilities, service contract claims, maintenance and lease expense related to the auction sites and loan offices. Cost of services excludes depreciation and amortization.
Our operating expenses consist of cost of services, finance interest expense, provision for credit losses, selling, general and administrative and depreciation and amortization. Cost of services is composed of payroll and related costs, subcontract services, the cost of vehicles purchased, supplies, insurance, property taxes, utilities, service contract claims, maintenance and lease expense related to the auction sites and loan offices.
Our Consolidated Senior Secured Net Leverage Ratio was 0.4 at December 31, 2023.
Our Consolidated Senior Secured Net Leverage Ratio was negative at December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+1 added−4 removed3 unchanged
Biggest changeForeign currency gains on intercompany loans were approximately $2.9 million for the year ended December 31, 2023 and foreign currency losses on intercompany loans were approximately $2.5 million for the year ended December 31, 2022. Canadian currency translation negatively affected net income by approximately $1.5 million and $2.8 million for the year ended December 31, 2023 and 2022, respectively.
Biggest changeForeign currency losses on intercompany loans were approximately $5.8 million for the year ended December 31, 2024 and foreign currency gains on intercompany loans were approximately $2.9 million for the year ended December 31, 2023. Canadian currency translation negatively affected net income by approximately $0.5 million and $1.5 million for the year ended December 31, 2024 and 2023, respectively.
A 1% change in the month-end Canadian dollar exchange rate for the year ended December 31, 2023 would have impacted foreign currency losses on intercompany loans by $0.2 million and net income by $0.2 million.
A 1% change in the month-end Canadian dollar exchange rate for the year ended December 31, 2024 would have impacted foreign currency on intercompany loans by $0.1 million and net income by $0.1 million.
A 1% change in the month-end euro exchange rate for the year ended December 31, 2023 would have impacted foreign currency losses on intercompany loans by $0.7 million and net income by $0.5 million. A 1% change in the average Canadian dollar exchange rate for the year ended December 31, 2023 would have impacted net income by approximately $0.5 million.
A 1% change in the month-end euro exchange rate for the year ended December 31, 2024 would have impacted foreign currency on intercompany loans by $0.6 million and net income by $0.5 million. A 1% change in the average Canadian dollar exchange rate for the year ended December 31, 2024 would have impacted net income by approximately $0.5 million.
A sensitivity analysis of the impact on our variable rate corporate debt instruments to a hypothetical 100 basis point increase in short-term rates (LIBOR/Prime/SOFR) for the year ended December 31, 2023 would have resulted in an increase in interest expense of approximately $0.7 million. 55 Table of Contents
A sensitivity analysis of the impact on our variable rate corporate debt instruments to a hypothetical 100 basis point increase in short-term rates (SOFR/CORRA) for the year ended December 31, 2024 would have resulted in an increase in interest expense of approximately $0.6 million. 63 Table of Contents
Removed
We most recently used interest rate swap agreements to manage our exposure to interest rate changes. We originally designated the interest rate swaps as cash flow hedges for accounting purposes. Accordingly, the earnings impact of the derivatives designated as cash flow hedges are recorded upon the recognition of the interest related to the hedged debt.
Added
We do not currently use interest rate contracts to manage our exposure to interest rate changes.
Removed
In January 2020, we entered into three pay-fixed interest rate swaps with an aggregate notional amount of $500 million to swap variable rate interest payments under our term loan for fixed interest payments bearing a weighted average interest rate of 1.44%. The interest rate swaps had a five-year term.
Removed
In February 2022, we discontinued hedge accounting as we concluded that the forecasted interest rate payments were no longer probable of occurring in consideration of the Transaction and expected repayment of Term Loan B-6. In connection with the repayment of Term Loan B-6 in May 2022, we entered into swap termination agreements.
Removed
We received $16.7 million to settle and terminate the swaps, which was recognized as a realized gain in "Interest expense" in the consolidated statement of income (loss).

Other OPLN 10-K year-over-year comparisons