KAR Auction Services (KAR) 17 Feb 212020 Q4 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the KAR Auction Services, Incorporated Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to your host Mr. Mike Eliason, Vice President, Investor Relations and Treasurer. Please go ahead.

Jerome. Thanks, thank us. and for you morning joining Good Today Global XX for discuss the XXXX. of KAR financial performance the we will quarter ended December

remind Litigation meaning may such of are Before affect would operations forward-looking detailed Safe KAR’s these cautioned Harbor call prospects our that obligation off the the uncertainties of forward-looking statements you involve filings. of Private XXXX. risks risks to of and to statements, expressly SEC are Securities and our contains the Jim conference that Act such that within discussion, forward-looking the statements provision this Reform kicks like I fully and in results update providing disclaims business, In statements. company Investors any

this both is yesterday, be throughout in Reconciliations be Relations section we Let the the of financial measures measures. can release mention conference GAAP issued in the non-GAAP GAAP that me website. referencing which non-GAAP financial the applicable found our Investor also press of available to that will and measure call, financial also we

KAR Now to this to CEO, Jim turn call over Jim? I’d Hallett. like Global

cover Thank review topics. of you, good and to ladies Welcome I our BacklotCars; and on and Michael, TradeRev for call. with plan I want guidance morning to to an you XXXX. XXXX; Today integration provide gentlemen. update and three the our review

the to and working we all environment in faced customers. our that the providing our acknowledging for possible year. remain challenges XXXX, businesses in impacted employees start Obviously, including unusual the with COVID-XX Let KAR. me most We safest committed

our directly challenges workforce, our COVID-XX impacted With we created in cars. the our for marketplaces used saw that wholesale also challenges

DealerBlock. OPENLANE, was ecosystem. our Simulcast, Simulcast+, auctions But April, was low prevalent to digital in automotive continue TradeRev operate our the uncertainty as on demand throughout We very platforms, and

accelerate literally a technology the digital have technology disruption of were challenges our been XXXX asked the assets And of the offer our the X the we was of of faced in of the the what to and collective to we challenge from were sure to period, second digital and able the vehicles in a service the the responded quarter March The legacy keeps while level the entire the digital were new always accelerate marketplaces XXXX. digital This the at Well, happen. matter to of investors operating many In digital collection our use in best and beginning the took proud disruption our extremely employees make to top over model have physical of of we only me marketplaces. that remainder a X-week instead of teams bidding at to weeks, and transition mid KAR need X me to have industry. at there I'm awake night. continue by disruptions increased all through began development key and increased of We through that always past, networks. caused effort years technology of to business anticipated of digital no the list. had auction our make of systems We today quickly a this our available online we level, XXXX.

pay handling challenge having COVID-XX sent and our closed late we of in fallen performance. employees weekly some customers. impact By low was low revenue XX% auctions XX,XXX In evaluate that to faced of point globally. safety demand. prior XXXX to had our April, see the employees Global our our for furloughed of our of began employees the recovery our the We in we was to all year we our on Another with May, of as as workforce. March, XX,XXX the revenue, KAR and In home

cost conversion In the like a will strain be Lower transaction went had inventory reduced saw that tighten wholesale from any in permanently positions, by we these uncertainty rates support a our as the the and today. in resurgence the be quarter are impacts relief strong process. it decline the levels the reducing payroll all to was in volumes and that time were COVID-XX. environment, structure to We changed had to supply changes the before an We eliminate quarter forward. the By And many expect functions. the COVID-XX organization permanent in vehicles are people obvious had resulting strong million. permanent. performance we of up this of going our our continue over been contribute at We with our in functions prices. back of experienced running costs heavily the our while office and changes high especially digital demand fall, of the it cost aligned impact our remains headcount building operations longer what and results the in business people with used And fourth improved structure. see process business cost became auction most the beyond of Changes and strong, annual we leaned of led and had in business it is retail inventory our sites, saw our technology to X,XXX to lead aspect most auctions going we this the our reductions and made the performance at business challenging $XXX feeling for all we've supporting strain In despite to looks of that spring. us the valuable saw supply and then Our into to our our as structure third asset. of our financial

some me let Now share XXXX. our in accomplishments of

the to pace accelerate successfully of to over have direction been X all change This we were we KAR marketplaces. during for our migrated strategic platforms XXXX. of First, and a has auction digital able for years,

and operating efficient. to are We and the business wholesale by services that make capabilities easy process supported committed a marketplace logistics digital

Our the several have the improves a digital move running in months. unique numbers But lane years collection over cars that are the that despite the on for business increased assets competitors with financial block returned running to past true customers. and model. through strategically a outcomes way acquiring there believe we of the the focused business last over that is It don't put building position to we our not us have any digital and the of COVID doing evidence old cars many X our across of is forward

Simulcast+ marketplace. Simulcast+ our auction auction improves going the sellers. proven can is Simulcast+ digitally to liquidity technology multiple providing services we geography fully easily and people automated forward. by this the event. using a expand are to committed of for We auction to the introduced represented buyers run cars that manage instead has the from In sell and XXXX, to locations

sale without be not Simulcast+. capabilities in us locations. We leaving locations. a day when to to sellers or ADESA week And can day are auction manage one event any or our the We These tied their operate multiple Simulcast+ office. event that digital time additional the also Simulcast+ the gives real customer allow can using from of platform

vehicle to of you've on virtual of number both a we of involved significant interested strong attainment are demos buyers realistic the -- excuse seen have a saw as that better expectations that those Simulcast+ current sellers for to all the offered, liquidity, seen you greater platforms. information to provided We information both in for by integrate increased that benefits to vehicle. tours, number a execute the and is seen to one sellers. buyers to leads pricing and to value the conversion amount lower of have easier we've car see this it number we're me, analytics that data is parties. reach available and and on the of buyers and in And all to able a costs what lead is Better We've the the in We transactions available year. being the process investors to price if sellers of

our growth TradeRev in platform. profitability XXXX Another improved was success the for and

months consignment simplified several dealer better acquired BacklotCars our auction in been proven generated we We forward. and positive this success. the order focused in customers. order U.S have of let profitable combination structure. growth for and experience cost XXXX reductions business a Our TradeRev And provide to teams growth and reduced We ADESA accelerate in in of going model our for in market. earnings of finally, incentives our the our on me can process segment sales permanent We to be in talk levels. about And the dealer-to-dealer use a has service the

SG&A. and permanent we and moving us our changes a costs labor allowed made make direct model the digital both labor First, business reductions in to to

even -- in was SG&A was saw we costs quarter to despite $X of the our wholesale industry. entire below SG&A the quarter were in as million. our achieved, costs, supply Our adding though This $XX reduce our able decline though down by we to to related performance the vehicles fell throughout year-over-year decrease able expectations fourth million our BacklotCars. fourth of Even QX were

cases. Our volumes not in are lower in I in disruption impacted increased QX our the or that believe I economy negatively volumes the marketplaces. the the our believe QX reflect response factors reflect permanent the do impacts the to of seasonal the slowing COVID of supply transitory.

update time and BacklotCars. give me you let on Now, real TradeRev a

that transactions the took place customers to all We We BacklotCars Beginning First, TradeRev markets. pleased these markets we customers of we three TradeRev the the with acceptance ran migration January U.S by in were in migrating to the the platform TradeRev migration of our dealer-to-dealer the U.S on platform. previously pile BacklotCars in migration migration February are playbook. U.S and of all to a results platform. our X, BacklotCars of initiated refine

be a customers auction marketplace. expect to moving TradeRev BacklotCars, the a to XX/X from bid-ask be in By format U.S our March. We application we the from moving completed will activities migration to the timed

We positive. our the in reduction dealer-to-dealer began and has the our the about increase U.S of growing small seeing fastest is in customers in the in be was the X migrations. of on BacklotCars customers by platform. activities we in that for were process wave we sold U.S The volumes cost been days cars consistency learning a the the should curve the very running first platform seems believe We migration using second believe marketplace BacklotCars inspection on in the week markets began in believe market. combined two the TradeRev will the most competition move. provide inspection single greater performance the Utilizing The this platforms lower reports liquidity. platform digital a realization And price results U.S dealer-to-dealer analysis and early vehicle the on our market. important, developed platform. the BacklotCars in maximize BacklotCars on per BacklotCars inspection the Initially, X volumes as to outperforms Our the former supported to there for

Our want goal is the number simple. one marketplace We be the U.S. digital BacklotCars in dealer-to-dealer to

clear, operate pleased be up, days BacklotCars, all and to we with To we Canada. the performance to it TradeRev in sum of Just continue KAR. fit are after owning the will XX with

a leading the -- and dealer-to-dealer focused transactions energetic the the have in have We we team digital to leader efforts be U.S. focused our in

digital and Our in to update last of my important change days is been the fantastic outlook team growth XXXX. the organization accelerate strength agenda bringing already the and space. the KAR have -- dealer-to-dealer the today should on combination of the for agenda last receptive customers that is a activities an the outstanding our The at for in topic BacklotCars on item winning pace early of to integration

reinstating XXXX. annual guidance for are We

and to analyze continue to in we middle we likely all COVID the impacts markets, the the of outcomes crisis better-positioned business on be assess our the on we various believe scenarios. While our in are of

we least As at in will press at The will $X.XX XXXX. share adjusted are our EBITDA and you operating $XXX income least net for million guidance. adjusted saw per release, be providing be

are We performance to some together. Obviously, production, to employment, we to transactions, indicates to specific continue timing car and normal. a provide ways below range, into the that many coming the industry providing a level this We is this have pre-COVID economy, I be new expect how of factors outlook. our see of from activities are year. numbers levels providing we would uncertainty XXXX and repossession representative our other without of insight returning not around we of still we still the guidance of level like expect are but minimum significant

persist First, through of we of expect supply to lower the vehicles half used wholesale first the year.

XXXX. XXXX outlook half result, second half of conservative. for will first and believe in the half not the first As a of second quarter improve We upon our second is the of do XXXX the

seen front have markets first all in the and months vaccinations expect serve. we progress good progress in We this of providing geographic XXXX continued in on the

-- as retail passed U.S., a stimulus customers and We our positive and European the in for market, car the Canada, also legislators. if see used in Europe by

also our cost performance levels XXXX we believe We our in volume we've financial exceed levels before made may improvements the given achieve structure. that XXXX that

Let that drive me market the we speak to believe the to parts normal. a of return will

First, TradeRev Canada over BacklotCars in grow our are to the digital platforms, levels. substantially U.S XXXX dealer-to-dealer and in expected

to market We channel expect throughout continue this in gaining the share year.

are to of committed use XXXX. We the in Simulcast+ expanding

we We number growth value our The high are marketing XXXX. throughout and and platform targeting have internationally, at buyer allow typical to that this reach Simulcast+ of this Europe, to Web of the for auction. for create the Cars There is similar On especially that ADESA an And the strong sales vehicles interest events geographic tremendous multi-location expand technology events, expect us continue increased very all using formerly events using of is platform. targeted physical to

normal not our We like, of with have questions income have EBITDA adjusted answers outperform on return It share operations look the the start to in is difficult uncertainty especially the what the operating to still net will levels. when range first per of have in We of more set improving. have volumes adjusted opportunity we the an upper a end on But half range will guidance. than our markets given year. an provided once guidance above and to had

increasing focus controlling will our our we share. market costs, on team, a As

car asset We our we excuse -- capital to balance dealer-to-dealer around as We the strong an current be and the and share look driven by primarily a TradeRev, will deployment. our economic capital, priorities be connection to of transformation wholesale deploy the platforms, our expect digital strategic to disciplined we in digital to And industry. market expect around BacklotCars used we capital have think me, uses sheet environment. is of

my summarize on this me call. let finish, I As key messages

are that a locations America. throughout digital services of utilizes value through data marketplace added We network business analytics and a North and

We are leading industry. the digital our transformation of

reduced increased permanently, have and structure profitability forward. cost expect We we going our

the of We being finally, the wholesale have well-positioned is in the balance goal of have leading to of two leading and auction segment sheet States in Canada. market And we dealer-to-dealer platforms, combined support our growth the the provider our and digital United this believe business.

forward support capital strategy. deploy We going that will on the initiatives our

thank that, our now will for it for your turn you to I with Eric time details today. over So more on financial performance. Eric?

a I before correct half into like believe not my of second the And Jim. and you, get He XXXX during Thank remarks, will I'd believe upon half improve second the Jim made said do of statement the do He call. we the to it improve upon the second we first half XXXX the is will half. half of XXXX of XXXX. first misspoke that

remarks. get now my into I'll So

of strong performance the and a strong this an used we and prior approximately of pandemic. say were year. adjusted rebound performance X financial been saw challenging first and volumes that COVID-XX weeks were May of with strong employees inventories, start was money for a the very in selling as To created ups the our financial demand, and over had We used year. all year performed to financial Uncertainties minimal, were We relatively despite last were as prior X it month. volumes of by those down like experienced low as riding car the least, Followed performance rebounded downs $XX roller negative the me the a operations April. in closed. were Volumes to exceeded We saw for remain through well properties million Let review, locations month July car results March. overview us our car June, March. and and both our in year. quarter We until performance for EBITDA In coaster. caused XX% we was in the our started paid weeks had of all during increasing lost XXXX. middle in X we our weekly inventory million on the approximately and values new weeks revenue of shut by being fast $XX then lost the We quarter-to-quarter

structure performance we volumes excluding Gross or to acquisitions. Profit third near in We improved of And that though declined quarter XX% fourth revenue. performance demonstrates fixed this performance and in the levels volumes our there volume of XX.X% XXXX generate XXXX levels. for adjusted experienced did drop net While not the was due EBITDA gross cost with at XX% Unfortunately, is levels. the of -- are reduced our above quarter net saw volumes decline of of that margin sufficient the the the component August, quarter characteristics to and XX% EBITDA started feel the Even XX% our to forward XXXX quarter to to gross model total revenue XX% revenue maintain low revenue of our the adjusted direct fourth going finished levels. our had have business and We over levels financial prior when and direct deteriorated was year, over volume revenue. cost profit of a we labor, to margins. X%

committee hold proposal threshold was quarter, incentive increase from year XXXX. to accomplished challenges in in employees compared million reflect $XX of for the in incentive set performance did adjust felt XX% recognized the target by sacrifices the pay not of to the The a for the XXXX. the threshold. the with the year. we payment of The total faced approximately programs We year. employees beginning Directors at approximately by incentive XX% based This in reflects $X payout. the to payout prior SG&A In the and of management XX% million. threshold opportunity for able contributions target annual The despite below fourth SG&A, be adjustments terms $XX of we're approved control year in compensation of million approximately to of for recording by of the with incentive pay the of and costs prior Board should the was our This

contingent the $X.X the a increase for On The a to to On the price Cars the of contingent expense purchase related We estimated Dent-ology, was reduction an consideration by expected adjustment where at of at also Cars expectations has recorded that to than offset The of expected payments set an and to exceeded consideration are represents in Web net in increase This contingent purchase time Web million. time purchase the transaction, acquisitions of as performance related be in Dent-ology the the acquisition. less

year Our effective totaling of rate. tax The and million consideration write-off tax unusual that purchase for and are not $XX.X rates the U.K fourth were recorded tax in we effective for year the full our increased and contingent quarter earlier goodwill the deductible in XXXX. our operations

to what forward, effective June look question is what in expect our look believe performance is XX% in approximately mid third in revenue U.S do of does net gave big adjusted rate to we with federal mind EBITDA generate XX% insight increased margins levels. As We us tax from we everyone's like the of post-pandemic? income our know get the unless I tax the current be rate approximately XX% when believe our KAR's back performance and XXXX quarter forward. or can business range. gross levels, going we XX% more through volumes profit of We the can on

allow business to structure a more us processes focus for technology marketplace leverage maintaining Our at on that a level. perform will this efficient digital cost operating and

get so what markets changes the normal made to call results. prove will back would these the we need can generate we have we to Now to you we

and reporting. me of the statements to let segment Now in changes our presentation speak financial

providing you are can financial in press in included statements As our four line now. see revenue the items release, we

and major in We businesses. This are a components of providing auction revenue finance fees, will clear our vehicle revenue. the of service revenue, revenue, purchase give picture related

disclosing a for vehicle terms volumes In fee reporting MD&A, key We're and metric. sold. in as key are per of performance off-premise sold vehicle metrics now provided on-premise auction we

per no longer vehicle as will sold We metric. revenue a key utilizing be physical

number is vehicle services is computing We're While significant on-premise to activity also capture the the going as in MD&A. forward trends services vehicle revenue off-premise profit easy calculate, the gross in that metric from and key dollars volumes our to is of sold, This revenue a portion per of impact will increase. not the sold. performance and a on revenue of generated including and performance. this and will important indicator This both metric option related be

also costs post want AFC. how ADESA businesses our than structure business with holding are the structure of cost segment matches simplified be cost the have revenue better insurance of our related managed. organization and the performance simplification company Aligning auto are simplifies in reportable KAR auctions. by our the structure All the KAR with businesses. that reflected simplified spin produced KAR other reporting of of specifically and segment business. and to the maintain reflects the reporting directly being We businesses the with to segment a the cost revenue our We the consistent to costs reporting reflects This segments

all in Let I me on release. a will numbers comments are some not through go our included in the close earnings they table as with guidance.

two method computation determining weighted per share or the that of when Accepted is the of Series preferred numbers stock. converted convertible the method the Principles creates item Accounting Generally average A using to impact shares. require if diluted either one confusion compute However, us class the

for use per required are that share. and GAAP lower calculations earnings both use we clarity, produces number For the the to

the dividends the shares the we shares the adjust preferred dividend, conversion in preferred for common preferred net per For calculation. the but of calculation. into method. the income converted method, of if we GAAP dividends we're exclude preferred the include the diluted and utilizing the fully operated conversion use include the accrued outstanding method. kind, the not share, In do we class when shares shares computing the extent by purposes, this from we two preferred reduced In do paid calculation are in adjusted To in net dividend income

We in the is share. the count diluted the in average in shares quarter the provided calculations of press window of capital because the price within using per fourth $XX.XX at average $XX.X be convertible open tomorrow conversion our provide that We have in I One included XXXX. $XX.XX million table stock common share. guidance of item acquired weighted shares be will both the will filed summary, call expectation only that buy conversion between the quarter. the the the We established common the In the an preferred did for in is market two or release. difference we in stock during the open expenditures today back price the it during last per our of parameters share will for later in the XX-K shares numbers

expenditures to as capital increase as our an support million transformation, expenditures expected to expect in strategy digital be support XXXX. actual approximately XXXX technology The to physical from return increase $XXX million, in We our well capital capital continued $XXX expenditures locations. capital normal of around investment in to in spending reflects

Our expenditures by for pandemic. turn levels you operator joining your XXXX as the I the business back conserve our call capital impacted adversely expected questions. today. it the take Thank will capital now was to XXXX our and to again were for reduced from

with Your question line comes of first [Operator Instructions] Brinkman JPMorgan. the Ryan from

question. your ask now may You

taking Thanks my questions. Hi. for

margin. about is which of first The

volume maybe in of the but in the actions. guess sold out So margin than both gross XQ and you I year-over-year, given materially vehicle less headwinds out your XQ. and and increases deleverage, cost lower of does a managed revenue in lot eke revenue were were EBITDA like seem it but both course XQ, in XQ, to still

materially materially from And which why trend was increase revenue ADESA to volume as SG&A, XQ the declined. comment can Maybe performance so and on to I'm margin the understand to you trying even softer. seems XQ sequentially in

that as the in comes these as should maybe we XQ we XQ there's of the how to margin? on just if the I'm just seasonal we expenses, Should just So, more maybe XQ trends in went when what etcetera, as back XXXX? cannot much in Or or be forecasting that some consider? And to place consider compensation, planned? such costs sure. emphasis Or talk not avoided, it trend then layering opposed about about in XQ, should

Thanks, Ryan.

us First, That In we gives tends me revenue mix the But towards and of that higher services, of is impacted per quarter, revenue do transaction. or issue speak. weighted gross some let a just be margin. us have higher ARPU annual the and to year. much more that's fourth revenue heavily every that lower

Second, we And fourth occurring it was that the expense because we had most it compensate been annual have do first quarters. overall that upon in but margins some against quarter. we the in so -- could hard our fourth we people fourth discretion that decision of and threshold we in some quarter, was There year relative the would that labor, previous this, in that performance, direct for to some We use based the highlighted of incentive the performance hit to impact change the and are we third the did expenses payments there not accrual to quarter. work. three in the We the quarter. the had threshold most made recorded bonus QX, in

changed out. that that and expense a structure the we've bit called So little

it's so again, really number So, the the low of quarter. just was transactions in fourth

You actually we're that's get detrimental the margins impact. doing work the and on

a in see any the changes we and quarter. we couldn't Consistently cost pricing overcome. So the changes quarter full headwind individual don't to was for XXXX don't XX% of structure. the falling of We through in the overall transactions, see

off-lease have in expectations can or the talk might by of of expecting you're ongoing impact bit, Are how just maybe insight any sort out and for repossession volume on are you the are I'll XXXX? repossession a of lower stems economy activities what asking a weighing are your quite presumably you that what relative think regard the do much marketplace. you also the forbearance on about just a the volumes maybe to what Then, Thanks. you there's able given volume, genuinely there, subside? lot seeing start see. on with lenders? I any volumes. to going forbearance finish lower residuals to Maybe when those off-lease to there And the part from in you're Do quantify into XQ, better of volume strong

So I'm going more to latter going talk about about And Ryan. some the talk specific is then numbers. to topic, Jim

So we purchased the the impact a are getting If transaction, volumes. at if off-lease you upstream biggest transaction, some the get is dealers. on see the they're by the lower do it's But that revenue did fact correct, executed we level. grounding it's per grounding declines dealer

off-lease that, might for longer see, expect and over as about that a might I to much decline, ADESA and of how off. of And both very would I'll the physical physical XX% decline going getting I'm that's number but off process from expect, dissect auction be our how downstream, and it it's a all significant the continue of the we So volumes volume, because than as take which mean, locations. repossessions. Stimulus as that be industry few a they we into we impacted for well, we least volumes, sorry, repossession Relative let to report year kind a are there competitors at while really kind to Off-lease don't negative actually Jim talking a you feel wasn't what have continue was good to are for it. have volumes, an cars Very -- into off-lease network. repossession have auction maybe

Yes.

for and thanks question. Ryan, So, your good morning,

I platforms -- here, to to off-lease mentioned, the pricing, the through get the it's think with auctions. and just be it on difficult I'm but strong will down more to Eric our those vehicles the obviously physical repeating the volumes, funnel as

year repossessed, and half those vehicles protect unemployment since repossessions now that of from in repossessions volumes first We've having for there's in We XXXX. and market, the the was a So with in the times all And of the all normal tell you the on to that we the the and to people tight. XXXX. will going waiting that's of excuse crisis with the of noises been about in middle talking and on me. and no to be thought marketplace, uncertainty these there are expect half more laws continue repossession out return second their would question level just fact, I that COVID starting

first I think the repossessions. to that a huge would increase about we a get and all talked the think market vaccinations return, if and things expecting not year, the the through can the we of But that huge COVID to in say I think half XXX% better, I'm do there in see related what of in we're they we see feel not do repossessions. the of second in the but the on, be increase were to we and the year, sure year. an get of in that should unemployment second XXXX, will an half increase back half or we they and

helpful. you. Okay, very Thank

You're welcome.

of of the with John from Bank Murphy question comes next Your line America.

You may your now ask question.

Good morning, guys.

morning. Good

are which going fairly is nearly well, thing Carvana, seeing people the business the maybe think I sort of bit all dealer, sort is, of supply, flowing thinking To the in with follow-up the and think and the about but about major that of you're the of into what that maybe by the little commercial think auction, then question, much channels CarMax, Ryan's sort dealers XXXX. sort we're on you're lot not franchise as actually I volumes And vehicles XX%. of as down are and of that of being hearing -- a struggling buckets just okay, guys, from a and struggling hampered the

So it But seems retail industry the level, level, pressure. the well. obviously, there's at is like functioning wholesale the at fairly this

is understand trying the also just XXXX so you to to really wholesale in question. channels the just the I’m on going dealer flow flow the side? the of what beyond understand an retail the trying here there think and XXXX. going kind into think then but on the flow which near-term current repo, is and really just you So side, is to happen important what and maybe going Really between the

good that, Yes, saw I XXXX XXXX. we question. of John, it's lot in And a tell will see you a to and I what similarities

remained dealers sales the do have car used strong, retail opportunity source. the While to

used now. that this running terms to digital every tight. to see But right see supply our in increasing, by all in we strong is acquiring trade from see space. values, continue point, and think taking the they've at network profits cars would being public I retail at really channel. don't strong truth buying car sold As ends, them retailers consumers, inventory you through all etcetera seeing and do they be is, values retail relatively that would all are having price. we're the And acknowledged retailing And at segments, whether dealer-to-dealer are the apply the We are the strong of vehicles reasonably very low a because performance

the performance is dealers but Jim new we forward. and that will lap the car forbearance Off-lease that affecting out because together. slightly from with -- for been We've leases, are be In the they that's of for emphasis of We a just let and vehicles until production, early, things fact, And repose take finance BacklotCars free it's cars probably think you're in lenders. we consumer back, if right platforms strong, I the And publicity a they're get I'll to spring growth be come one, a a again, significant over new pulling be in low like minute. source to users where time, got of by networks. in seeing being we will on up. those companies inventory those in turn by comment the And are performer. then his things saw we number probably think car time outstanding below previous extending an year. us. captive XXX,XXX the overall And that repossess and strong going not the of levels, think car has of the sold buying still of That economy when you will to the a a perspective. a likely XXXX the volume another And our have for leases they and a TradeRev big have this vehicle of

maybe business? dealer our portion [ph] of to do consignment about more a talk So you the Jim, want little

especially Yes, I side think losses that the only on our some offset thing these to the the I we're of business commercial could that can and the add with going to what get Eric consignment said off-lease business, of the repossessions. expect is potential dealer we do

in excited single and acquisition the about now taking commentary, dealers very very platform. has The we said the a by TradeRev are I my good. of to Backlot As transferring receptivity been and it

of don't to we've there's we're we're doing we have I think background a in their the that know of their the with platform fact, We We here diligence, Every not in number a this about believe Backlot platform. dealer excited. truly big like you, we any we're we our excited the target acquiring experience take at platform. and their focused I team, has single in mentioned combined that like tell XXX,XXX going We're digital we to over if what platform. do point year position gone on very and this dealer-to-dealer last leadership bid-ask the were when and can think position. segment. really the In the year like far terms dealer time, We And dealer-to-dealer so two in and that this Eric I that said, vehicles. leadership to can Obviously, migrated are that We and volumes company knowledge. the no. the inspections.

number it position, short-term. we can think absolutely closing gap in space, number position see we are have do and and one we’re the we one the focused We the that can that and on clearly that -- we in

question. to there. at on-premise -- us Okay. you’ve We stuff. off you really then, to understand mouthful, a premise lot And I reorganization a just Jim, of the kind services in TradeRev, try Block, have around got and looked OPENLANE, still Simulcast, appreciate good But Simulcast+ and help it's Dealer the BacklotCars, of a strategic

we ADESA clearer, go-to-market a --it's kind that got know And it that's get do -- simpler around, message it -- of this so way brand understand just have go so just here. well need, or those everything bigger KAR, a want a into feels to moving Is I externally we're way, this got do want of to addition the a Because so it. above online, to the way. just It's move dealer -- there's a single sales there I hard is way to doing just, listen, like, kind like, beyond you, understand how sales In more brands. just and or us call sold. force industry maybe it's I we and moving can KAR, simplify themselves be dealers just into just for as deal if just you're don't give might interesting to it I'm I solicit to bit all that pieces question, a and one the maybe this your just to go parts like other your things do and the combine it's well, with go that kind here. us, like, to a force you going harder you shifting, if It's that of of a with as us, the to business? brands these lot to kind go this just of or lot I get little stupid with of car, hey,

go-to-market use sales side. we how the told we team sales on sales job and sell that focused on hand and our platforms. these how little combined that should of is But how the they've dealers to to to and our the them, these articulating question speak, or In and to We've provide those certain one, focused we're with we're want staying just they is out is I out going with good and John, cases, many these platform. out holding and and Clearly, make use on these out our side getting brands perform all we're all never those the on we're And telling want it's team, a a commercial think we've totally are how and operate, these focused your sales a Backlot kind anecdote platforms. now buy on with know really add for the we then, and we that they commercial number we have ADESA. transacted about how And get forces. how all combined and work through value. we're there platform they platforms you channels, walking customers, to there And how teams, dealer one these platforms. vehicles, all we're they the XXX until years on either is use. platforms Eric have going sure which so of making provide here. We to to how channel and and and sure

the course very Over platform. on a And never dealers have bought had the car never of percentage a buyers those we've a car the year, [technical new a high matter difficulty] as fact, of signed online last bought of that and XX,XXX over up transacted platform. now

them that really So and the once them to to on platform and next you we them one utilize the step. we're that's get what and getting with is with use Getting that's to platform, what step get the them support. platform -- focused the now them the familiar give platform, stay is

these sure them. that make for focused can time So your do so dealer to really I on understands question, hope platforms answers lot but yes, really what spending the more and handholding a

add let me John, And, that. to

that don't of One car if a offered you get a very the your you than solutions. BacklotCars we are have you we to in all we strategically, seamless working competitors any U.S., strategic take that a price when to initiatives want is prepare can so move point or try different to and we offer to the auction, because Simulcast the of that we And hard on more a our the market. do solution have the can make end-to-end seller a Simulcast+

Yes, John, I'll just add.

dollars cars physical And no the Canada in say, would quietly, and Canada, as we share in haven't And marketing on with quietly we and think Eric a on taking where done been behind do and that that U.S that pilot them encouraged we we're We doing bring point can would makes the think very auction. that the good TradeRev have, very, it, shipping we're a very here. we well. I into sold right that very been to that seamlessly continue I and just we've path with you can seeing. results it I we've think with market

It's just of it. huge a a to there's So here. matter getting opportunity

One Okay. consider private? at with last one the where going you quick stock XX, can is it When real change. do just

won't the we business, has we for that We worry stock strategy does our the we lot just the in today. we'll to that's feel have and the a say about run owners. and it of value a don't we current KAR not reflect long-term -- all can price that business see the who run opportunity, We that value I owns really us,

I Thank the That's Thank feedback. appreciate helpful. you. you, guys.

Thank you, John.

Baird. from question line Craig comes with Kennison next of Your the

now may You your ask question.

good integration? take around? question. this after differently you What to you Hey, that I excited from What's Jim, integration acquired the that morning. for taking you going Thanks were my lessons time know were TradeRev. Backlot really the

Craig, fair question.

it and that strategy. think go-to-market was I execution

that I will there, from got also this our I we we we that will being think not missed beat is strategy. I I and also TradeRev. learned say, -- a defensive, think things the And lot but say go-to-market on

very and very, a all, well Canadian it remains And of dealer-to-dealer it's Canada. does Canada. in the digital marketplace to in be First leading still product

in up And important was on in come I we to out to very, U.S just figured platform. and was that. marketplace, it However, United they were the thought is wasn't really that very the U.S. able different the days X that and you the States the to the develop And up car they Dealer guys to with different we was could the gives bring drop the case. bid-ask behavior sell to which Backlot in, it key was think and and what the dealers

cars. I on Backlot to average X.X bid that days, have about the on time do you dealers X more the gives days is think but the

an was important that think I change.

the the were just And I get think of from the we to do able recognize outset. really own key program the U.S., started want was inspections. it doing adds condition that and Dealers was inspections lot inspections the to winner doing report the in dealers we these their had inspections. lot a credibility part a buyer car. In that in right of BacklotCars of the on we is the have when Backlot buying mechanics do out inspections, and Canada, us to for that them They and clearly the here. and going confidence think I

that some we've the there's markets with we separates I here Canada, learned in thin So the in from I got were sales think teams months. is now even very a Listen, behavior border the TradeRev very even ADESA us overall, are go-to-market and right get we've that different. to though did we strategy think it break The profitable dealer U.S. combining and different,

need it bit. And were going most. we we acquisition. take a we did at today. they think to got did that the opportunity if with leadership We take and I'm to did our stumble our on overall, position, get think but very is through did winner point TradeRev out doing I So, us it some to can now where It takes I recognize I process little look and of that guess what stumbled, satisfaction we competitor get the get the are and a our Backlot us I us of right. be to and And bullish leadership the

that doesn't have not I'd of TradeRev like It's add. And a value. lot Craig,

has force their online. new our better a result support having as giving gone accelerates customer because resources over doubt. transaction and operations greater and it's the In a can fact, into platform, completed service the entry support Backlot markets team is represented, without Backlot the that sales more once team, about BacklotCars of very And our support that having to them excited

value what, just know for one creation, over taking you not the So combination other. is it's the the

the point what from Backlot, business, well. understanding the team and the the the do frankly, industry spent they of I this really execution up dealer that has and think, strategy, knew how up leadership this business, but aside dealer the dealer understand how family and make, car they in at in repeating shown time and be dealer here, think wants needed. they business Craig, retail go-to-market final was and understand it knowledge up business their what here really more dealerships. thinks dealer leading knew And I'd really to grew -- They a and quite and the and the they terms owned And where may BacklotCars. of operated I they the grew in understanding that I

Thanks to both you. of

buyers? provide of goal to hard you you good about? on that bottlenecks You about type have, to I are the you're run adding what enough significantly. that to you Is business that to track? guess Just think a it curious, feedback dealers? are mechanics are expand the it and big When use add or what that KPIs Is feel barriers to that concerned volumes that,

Yes, metric We called need word, Craig, business focused our important most the and more it's volume. on volume, we're one in is volume.

volume of there is I As fact, will on on more XXXX, in tell matter you, than there focused is a profitability.

and doing dealers make Now, really getting existing better that some on a more And set our we breakeven with have it's business there and we're want and big sure focused volume the volume more a said, dealers it's that here. But on. And what we that's game, getting to or operate numbers this we pace. signed getting sights at out up.

the get a it's it probably easier is signs to to than first up. him dealer specifically, use sign Craig, platform to very that day up the on he

high the getting that to and them first do is super success. once they're we And increasing dealers using to the that it, thing who using the that, platform it's getting have metric The actually status, numbers they the of potential user them And week. having and you them through the them where market growth. you the that's get platform. to put market the per the selling successful, they're get then them sign accelerates kind and So -- then want do up, volume well-defined, know these are, platforms is and the

Thank you.

welcome. You're

question Benjamin comes Your from of next the Truist. Stephanie line with

question. your ask now may You

morning. Hi, good

morning. good Hi,

Hi, Stephanie.

in the continue versus could Just you last you breaking in you in out think Maybe think fourth compares segment expectations business dealer-to-dealer performed? the you individual the the how talk directionally to you how BacklotCars quarter to TradeRev your maybe without the performed the that did overall quarter? volumes, talk How industry just could the past? like question, and fourth on

sequential going at is The BacklotCars you very both when at a TradeRev and strong of we it's and growth year-over-year, basis, Stephanie. to year-over-year and the I'm it was up okay, of doubt and performance well some our quarterly business. as is up combined well a looking here, been dealer-to-dealer dealer-to-dealer basis, a doing XX%. where it combined week-over-week by numbers. digital right our got look I'm QX growth at as off-premise, strength looking year-over-year. on numbers, the at is to On come about I look get it from without a in was very Again, to

So were November with the to growth where give I'm not do on specific deal is the the going wondering think were but volume what a number, markets rate. I to in actual a combination, because we and our that's you we period XX. And closed going looking at that

numbers. point we as year Backlot combined with the that two we prior zero platforms two the well. with the their And that's as used actual year to if year-over-year platforms combined So, combined were before were very performance. at pleased that That's not growth compared

really it. That's Got helpful.

which are there that guess the -- beyond in fourth pretty there? either Is of going the would of do Or this OPENLANE of and that's this maybe some dynamic XQ those the that, grounding of off then? keeping the been business I between must anything off happened delays this that Or dealers, quarter. to primarily materially roll the with what means year? just just to of So XQ means all vehicles component think kind in it the OPENLANE, going there down be you was dealers, that beginning have other

out conversion Yes, remained the line Not cars just strong grounding buying all onto pricing the the reasonably through to dealer of it OPENLANE the function us. had dealer transactions and buying fewer that's dealer. leases, listings. fewer listings. and come And rate a behavior, bottom is was mean, network, was strong, fewer at grounding came very I

in so lower that that expected our the own, pricing Some environment. we just we on strong saw given platform their are And impact listed processed that, on can fourth the -- the somewhat quarter. volumes numbers. And OPENLANE

market, if Yes, returning I strength Stephanie, are cars but sure or call the of off-lease this in the and in the many in these I'm think, Eric money. mentioned with what price we not of not,

bought So the or value the the residuals below being below the being cars wholesale are realized actually that's marketplace. in

they're the the dealers consumers knowing car than market buying that So in them, value. taking cases, car, in only other not at buying less but many the cases, the

So a think that's been OPENLANE. takeaway I from

And a from That's to the residuals that just X on leasing XX% old XX% are this happen to vehicles about industry. report Current X-year on give you for of that at the ago, at the an time, running a residual MSRP is example, number of values I week. year. recently specific third-party this see very years parties up track provided third beginning by at this

quarter. majority pay you some then incentive And the a had I payments in a the and of year, annual you the incentive Can was question Absolutely. gave out what Ryan's think just of I all dollar that sales? follow-up breakout for you percentage fourth but wise? eventually rough the the SG&A the breakout, or either didn't the of out at but dollars, call. of us just you that give to accrue beginning cost total to believe, you between Eric, called

SG&A Yes, XX% doing the XX%. that the it's that's But goes I'm to going direct. to Stephanie. and be XX% about roughly of breakout. back envelope,

you were through in could on more well there of lastly, discussions? to tax that as kind would is your additional as look from move private, of off from And or engaging with keep anything forward, even appetite consequence takeout a acquisitions those prior participating a Got opportunity go and how a as if you And presented look kind for you question, strategically, at XXXX? then any you then XXXX it. we

let about the talk focused Well, part. very strategy. would That acquisitions. me easy we're will on be I our say,

to and to And That's a here. we that's continue fully have and a strategy. digital continuing make that XXX% digital company we're to a defined and have very of future, industry transform strategy the build going stick. We defined where this

in of our allocation capital of the should and our platforms, we're our to In digital investments, digital our in expect think initiatives, in us you supporting and any what digital area terms I strategy of to -- doing our terms continue invest our and commitment.

and in In an terms not that acquisition. suggest not board nothing would a that's priority, support of I you us could speak you that acquisitions, But area would I'm more not we the us should money, suggesting do spending But spending see the see on importantly, strategy. there's if I that our of today. to

XXXX. know relative you're tax impact have tax And, the there proposed tax There not spin I'm in free that -- to would referring on is to of be treatments. that occurred Stephanie, see your would any I June the is -- and question, nothing specifically I free that

opportunities a would for I no So on see that the company. issues be tax limitation

Thanks it. so much, Got guys.

welcome. You're

from question of next line Your comes … the

Probably --- more Jerome, for question. we probably time one just have

sure. Okay,

Your be will with -- next Stephens, question Imbro the from Incorporated. comes line of Daniel

open. is line Your

here late. question to on competition. I wanted broader thanks. me squeezing ask Thanks a Yes, for in

during volume? your of of only online. be you returns, have is you car great. channels. you thoughts difference challenge opinion. brought And your auctions competitors Do think And any auctions salvage your about competition would Did Obviously, the back the that incremental share online traditional whole in to During some do talking Jim no share posing kind But said competitors. customers on you quarter? the then see And any shift that in are more there's you physical view? mentioned your additionally, some any XQ,

Yes.

me, So, Daniel, no to takes car anytime expect a anybody there's car away some that are people running commitment our you probably not. make that haven't competitors that able to the digital, been I one matter just lost from tell to in our or cars. will Listen, No if they're long-term right? a digital. cases, transition to And that some going a it's some But don't vehicles, we have competitor, be we issue. question

show this the job We the is information. the our at to evidence get the show gather that with that way to And doing. analytics, our through outcome, future. is it's through to that get we that continue we way and better. least are data equal expect out sales a we provide we're This the can to to that -- can is it our there better continued real, and think We expect to digital an or we that able economic data anecdotal I that

that course. I don't competitors, business. to the the strategy. selling at doing the customers, going information point the go on to again, guys is the on to the right the the is world We side of and to And the with our cars, are side. the share old always marketplace. believe it's to to continue way whether able in committed have say way We some And direction, be this both that it's to the continue going. in yes, dealer commercial We that back been stay want that's we're We're low end we salvage time,

I sell think end those continued the of guys low some have to cars.

digital here. the be which competitor, talked on about major And in to we position we're length have and closing the dealer-to-dealer a that obviously, gap there. to a there, We we're have position going at side, a we leadership think take

So with going there's We've be always competition. competition. always dealt to

And competition. us is long-term short-term in that front they as we're say, in make though of staying we right be might the some our sure for some pain, strategy the job is to even direction, leading gain. taking Our

if helpful. I a That’s it. follow-up. could Got ask And quick

if physical think supplemental something guys site the built extent shift You that over How you you on business think added use to hurting assets, the given a to the a time? vehicles you sentence premise for continues the is off utilizing the have do in says more of to higher about How scale your at offside services that. sales? do to shift rate

land. about the let Jim I'll talk Well,

with of think is, you course, that services I people. quick, tell vehicles. you of through having legally with it's where inability cycle their run the on-premise. now. the groups the nobody we And just values the large previous happened use in people groups that because to mean, of of in much And can this easier of Let's sell is shift XXXX, auctions XXXX not in high temporary, run to right the cars

Jim, the utilization site, it showing that would you don't there. industry cars to talk our land So, on through that running for about vehicles apply even there's whole fewer I those are focus lane. up why think and

to So real they're of especially, say, think that urban frankly, I've the always areas, assets. get maintained when that to differentiator, few car away. we dealers, car as you reconditioned, to they a provide and off get auction get need to these the quite the cases going property space, decided It's at our estate these get going about And critical need it wholesale especially our that continue imaged. some brick is I In right we the to they and it a their We need need mortar, services. have. inventory, they've our land one to need to car, we auction, to need and in is

say with to that important, That's Now, not in land. land have never think I we that right? I all think it's in size, to right location really right right some the the really what’s divest would said, the important

matter a land rather one is, other can it. we the you we're major base. differentiate a a a with digital only continue was else I the we land a I duopoly think of lease a these provide And would can other And just digital other would did of small only ourselves that tell kinds in buyer provide own we more there -- platform As auction have that I to thing have to I probably assets. fact, you, look there's say And small you'll sense exit. one that know, holistic than when these that platforms, I see still competitive us there this, a nobody there's auction, and that think with at because was competitor, you

be reconditioning we that the when you about You and and about these on right and logistics finance think able talked have to down transportation to offer you other and services about, line. think inspections

going And the to unmatched As our terms that's I why the of say We're of assets. in we're day, we're win. unmatched. at end

Got it. Thanks. of Best luck.

You’re welcome.

closing That’s of turn Chairman the and you. now I'll end Q&A today's the Thank of our -- remarks. Hallett, CEO, Jim to call session you. That's any back thank call. for the

today. of repeat no And and quarter digital quarter, data what Listen, this a and ladies you, what are marketplace report. tough a Jerome to But about and fourth call was Obviously, want gentlemen, to one that's business Thank I we you I've direction. with leave much for utilizes added that said. committed thank easy services. mistake, to Okay. make analytics our and as not value are being we on you

We are running cars. not interested in

not We are we us we're believe this like in other taken And around forward. believe leadership that happening the it's interested industry we something we moving place. leading transformation short-term And just is so this some the we that. that's as But pain many in And businesses future, taking that something we take it's And have go yes, here. will now. position forward.

is I The would other go I you tell will thing cost structure. to back our

got right the And You now is we of without sized volume X,XXX sized. that can it right taken take over continue believe add heard, forward. adding can that that to we costs. the out We've and sustainable organization. it permanently We jobs we've company we've

the in being have gains balance And dealer-to-dealer makes us leader, and say Next, able the TradeRev our with we're of BacklotCars feel here industry. the us it truly our I together, would the combination this U.S., makes makes to going on that and we also leader strong put us spoke segment huge leader in that Canada of with to sheet. that, about TradeRev. the We

position I strong forward. have good our be sheet think support to as a to we're advantage take opportunities in a strategy go we very of balance that to able

back coming you to some to next forward making. And that call And on thank with you looking we're these you today. we're of to that, share interest with So our for more quarter. being in have your information on transitions we'll

conference. Ladies and for gentlemen, day. this you Thank concludes participation wonderful your a today's and have

all disconnect. may You