IAA, Inc. has completed its spin-off from KAR Auction Services and began trading the “regular way” on the New York Stock Exchange on Friday.
Later in the day, IAA president and chief executive officer John Kett spoke with AuSM by phone from the NYSE.
"It's almost a bit overwhelming," he said. "It really is exciting ... Just walking over there (to the NYSE from the hotel) by myself, it was powerful for me, just to think about the journey that I've been on and the company.
"One of the things that gets me going is the 3,600 employees and how dedicated and committed they are,” Kett said. “So, for all of them, I'm really excited.”
The spin-off was first announced in February 2018, with the end result of IAA as an independent, publicly traded company.
“We are excited for IAA to enter the public markets as a strong, independent company. As a standalone publicly traded company, IAA will continue to be a leader in the salvage auction industry, benefitting from an enhanced strategic focus and a streamlined operating structure,” Kett said in a news release.
Photo from IAA.
“We plan to maximize long-term value for our stockholders and customers by building on our core strengths and executing against our defined growth strategy,” he said.
The new IAA
So, what might the auto industry and the end customer notice about IAA?
Well, for one, the company is going by the “IAA” moniker. But the service and innovation that IAA brings its customers will continue, Kett said.
Emerging as a standalone company does give IAA more flexibility and “allows us to really focus on our vision and our strategy,” Kett said in the interview.
"It allows us to make investments when and where we deem appropriate,” he said. “It just gives us that flexibility, and it's exciting for, again, our employees. Because I think they've always identified with IAA and I think this really makes it very clear to the market.”
As far as the opportunities that might open up, IAA will “continue to expand our relationships with our core customers,” Kett said, and focus on the “blocking and tackling” of its core business. But there is room for growth.
“We are really looking at broadening the spectrum of offerings. So, if you think about a total loss claim from the beginning to the end, we've pretty much lived at the end of that claim for most of our history. But as we've mapped out the entire process, there's a lot of opportunities for us to deliver value throughout that process,” Kett said.
“And we've been introducing products and will continue to introduce innovative products to help drive value there. Our international buyer base, while it's vibrant and robust ... (we're) really refocusing our efforts to continue to grow that, because it's so important to the market,” he said.
“And then using our data and analytics to help, again, drive some of the innovation. We've got a really unique data set that we can take advantage of. And then I think the last one from a strategic perspective would be to think international,” Kett said.
A news release from KAR on Friday indicated that IAA will have control over the “pre-separation salvage auction businesses of KAR,” which in addition to IAA here in the U.S., would also include Impact Auto Auctions Ltd. in Canada and HBC Vehicle Services Limited in the U.K.
In that same release, KAR chairman and CEO Jim Hallett said, “Today marks the beginning of a new era for KAR and our investors, employees and diverse customers around the globe.
“KAR’s strong, focused strategy positions us well to lead the digital evolution of our industry and expand our broad portfolio of innovative, integrated and data-driven solutions. We look forward to seizing the many opportunities ahead, advancing our entrepreneurial culture, and upholding our historical commitment to customer service.”
More on expansion
In mid-June, IAA announced it had opened IAA Houston South, a new 125-acre-capacity location, which marks IAA’s third in the Houston metro area. It was also the 17th branch in the state for the company.
So, might physical facility expansion like this continue?
“As we continue to grow our business, we've expanded where we need or where we see opportunity ... the business we're in, there is really an important requirement around having physical property. The intermittent delays that are built into a total loss transaction require the cars to be stored in a safe environment for some period of time before we can properly sell them. So, real estate is certainly an important aspect of our business."
Asked about expanding beyond salvage into whole cars, Kett said that approximately 20% of IAA’s sales are non-insurance vehicles.
“Those are primarily damaged and older, high-mileage vehicles that we sell on behalf of fleet providers, the rental car companies and even dealers," Kett said. “So that's going to remain a part of our business as we go forward."