KAR Global has hit the reset button and is positioned for growth as it continues cutting costs, CEO Jim Hallett told analysts and investors Wednesday morning.
“2019 has been a challenging year,” he said in a conference call to report fourth-quarter and full-year earnings.
KAR’s net income plummeted 71 percent in the fourth quarter to $19.8 million. Income from continuing operations was up 1 percent to $15.3 million while operating profit fell 12 percent to $61.6 million in the quarter. The company’s revenue from continuing operations rose 13 percent to $671.3 million.
For the full year, KAR’s net income fell 42 percent to $188.5 million while operating profit was off 7.6 percent to $314.1 million. Revenue from continuing operations was up 14 percent to $2.78 billion in 2019.
Two of the biggest issues that weighed on the company’s results throughout 2019 were costs associated with the rollout of TradeRev, its mobile app-based vehicle trading platform, and issues with lost inventory at its High Tech Locksmith key-making unit, which is part of ongoing litigation.
TradeRev added $19.8 million in operating losses for the fourth quarter of 2019, compared with $15.7 million in the year-ago period. Hallett again said he expects TradRev to break even sometime in 2021.
Shares of KAR closed Wednesday’s trading up nearly 5 percent to $23.25.
KAR has adjusted its sales force to share both ADESA auction and TradeRev duties, essentially preventing overlap.
“We’ve reset, it’s early in 2020, we’ve got a great plan, and I can tell you, a month in, I’m not discouraged by what I’m seeing,” Hallett said.