KAR Auction Services (KAR) 9 May 212021 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by, and welcome to the KAR Auction Services Quarter 1 2021 Earnings Conference Call. Please note that today’s call is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker for today, Mr. Mike Eliason, Treasurer, Vice President, Investor Relations. Mike, the floor is yours.

Jay. Thanks, thank Quarter us XXXX and KAR for for First Global Earnings you morning, today joining the Good Conference Call. discuss ended will for we the of performance Today, KAR the quarter March XXXX. XX, financial Global commentary, our concluding questions from we After participants. take will

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

we Let we Investor be in call, Relations Eric press release the throughout mention both our CEO; the financial available and conference Executive non-GAAP Peter will the the we GAAP of on Kelly, issued also is measures. applicable that that CFO. financial measures GAAP Chairman; call, found Today non-GAAP be Reconciliations and website. Jim section the in can of referencing financial to Hallett, have Loughmiller, me also which night, this last measure

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

has today’s Great. Global Thank Kelly you, the CEO Consistent into with call. thank joining April announcement Michael, everyone, our this beginning for morning, of and Peter transitioned good role you X. earlier year, and KAR of

to moments, over this Eric few our be of CFO. call So the Peter I handing will in and remainder Loughmiller, to a

will wanted congratulate sharing in an a has story many also Peter for support thank I on KAR you. leadership pleasure to what our KAR’s architect industry know is decade to over seamless Kelly been inspirational would vision want been has a been has the leader our company I call of transformation future, bold I a over and true for with which however, the KAR’s clear This customers, so take for and our is to and all Peter for Chairman, and digital transition. right today. to of is for pioneer. transition, you I He and It has the a your you leader time know for all this Peter with my our getting our the investors begin years. he of the for employees. sharing of Executive opportunity you right and As

Kelly. I’m and this to with very to Peter? pleased proud very pass CEO, Global call So Peter that, KAR

Jim. first Perhaps insights for industry provide over plan representing net results. was the of across supply going the on will my of today’s our industry, future quarter. first I’m vehicles, On quarter I achieved of our and first XXX,XXX on my start KAR we Despite environment constrained in I CEO with you, thank you call I’m sale Thank pleased Global. the the an with of in facilitated operating to adjusted performance. that, million, following call, much, to of for million the I XX% proceeds to of with We some And of EBITDA plan generated We here million, million gross I and We quarter what of vision $XXX of a spend generated total everybody. auction total you billion. net focused earnings revenue. expect good we increase be of $XXX gross in an revenue $XX.X $XXX XX% believe Jim. most our can representing speak very appreciate KAR we revenue. of profit generated then and $XXX as morning rest dynamics constrained speak the is to of of call. Well, we year. morning, to compared my expect this delighted to of in all this TradeRev Global. I But time combined I our in can first I more marketplaces, XXX,XXX results. the vehicle to more see in year. vehicles year. case the the QX, over This representing BacklotCars completed date supply an basis, particularly BacklotCars last over migration were to I Eric our operating marketplaces of this what On we facilitated used that TradeRev. across wholesale will QX, we would now rest very and of it sale This in when comes not and vehicle ahead these mentioned environment in by like in the our QX rental vehicles. control. growth affecting of from operating but digital The vehicles and financial to COVID our all repossessed category, pandemic. on we to We supply-side commercial versus dealer-to-dealer and the these and within performance to importantly, industry-wide encouraging. first is dynamics the originate saw results far vary, of causes QX schedule. in our strongest vehicles the for they’re a around detail vehicles, XXXX. provide XX% later other in to even off-lease the These root the market. the are of quarter commercial U.S.in they vehicle

However, lining. a silver there is

be to vehicles The and used impacted adjusting prudently that vehicles. prices are us. their to the over on the are these commercial will believe run these less technology relationships and market our First, been more I keep believe volumes the has strong by time. and dynamics, strong and are KAR trade-in platforms demand to continue given recognizing When we will consignors. with although given high will that many dealers consignment I return volumes to temporary that that current category a dealer normal our our beneficiary likely dynamics position, Until to happens, business happens, available

encouraged So given am quarter. that fact, first in performance consignment the in strong more even I by our dealer

that of shortfalls is to second these supply, even business in continues The perform piece with our good news well.

increases the of while our in us well demonstrate remaining to when A This supply organization. on enabled downward supply strong react culture, corner prepared is during meaningfully adjusted part us streamlined unit every is changes We and focus economics our permanently of of continue cost have corporate management our cost to to and constraint. again. structure important this our has market, period in and it operations for to for

an a the time cars know, XX rental segments: So means relationships a on cars significant to exists that future. transport are with operates our look perspectives as our sell, service, X the tools sites, platforms, spend proprietary I well sharing unique some of buy, opportunity the of finance expertise, serving service physically in our Europe. model, means America this do millions North to our long-standing of capabilities, finance customers footprint leading and that, are and are car sites, companies, physically ability motor an used business-to-business Core ability and to we and customers on-premise KAR business operators efficiently logistics we inspection developed this digital I’d my our store and vehicles in are We as to value finance our and our KAR dealers, ADESA from which digital transactions, on and business-to-business of as not companies. used is balance business and locations. from tens cars as model, you with like We our at vehicles. And these AFC. marketplaces, to off-premise North services of our the through and that what data fleet believe car for sale enable manufacturers, report provide which launched to using our through transport over for business and American

As I see, components. segment has ADESA X

close XX auction of billion. those. And The over In our buyers first those U.S. vehicle XXXX. North our transactions vehicle million transactions million The served marketplace unique X in and to approximately and was XX,XXX we marketplaces. $XX ADESA.com proceeds unique wholesale in marketplaces, BacklotCars, facilitated Canada used were XX,XXX sellers is gross component American in TradeRev There OPENLANE, of the used over and approximately XXXX.

are America’s support terms as off-lease powered number important we share, our open categories, that we of label market #X our #X marketplaces While over such a XX% in inventory. private of lane of North in are overall

second U.K. international marketplace. market ADESA entered European ago and through is We CarsOnTheWeb used our The some years via the in within component vehicle the ADESA

remainder With our will to our the our cover to presence comment business in as of and our over market in pursue customers international $X.X a we remarks and marketplaces, focus I’m provided my customers share. within billion. opportunities We serve We #X today I AFC going that of backdrop, by grow XX,XXX total and global million are [ph] dealer outstandings North future calls. of on American to transactions XXXX. the strategy. volume like to International continue and I’d segment, to And with X.X And to the AFC on loan loans

used selling undergoing and buying So change. the market for is significant vehicles

are customers Our evolving.

adapting shift Some to technology embrace power sales transition COVID accelerated. of the customers more digital the digital that slowly. marketplaces are are to to has off-premise to eager and Other

is buyers their have goal we so. Today, and all range no to help running to with no and Our a plans to vehicles in provide meet full more needs successful. sellers capabilities to and lane, them are of be customers, to do longer we

sale alternative However, them any inspect selling we location and to our XX-plus service to and to launch for have from if any before them. them vehicles sites or need of inspect ability be, bring the store, to

to the XX% of in believe are in shift offer that sold of sold XXXX. business-to-business As per marketing of vehicle point off-premise sold this out vehicle industry to XX% could year the a and versus able investors future a and QX ago. and they cars $XXX know sold result profit that I our this year ADESA profit superior compared we for of in customers. QX this, $XXX digital margins. in of $XXX I our marketplaces were outcomes were gross digital XXX% that to segment them were the that increase off-premise I to the last of QX concerned of are in some we erode sold would QX year digitally,

and Some are what buyers cars competing pre-pandemic. appealing sellers familiar auctions to was to in running lane,

superior choice to and geographical sellers, improve and an reduced sides. lower viewing days our for sale, bidding time increased and vehicles, to on digital greater marketplaces Benefits selection buyers reach, model us your opportunity for to with proceeds. real-life and gives that costs; participation of greater and convenience, buyer run for reduce demonstrate include: cash buyers, this to both to more sellers However, marketplace digital our greater buyers experiments offer outcomes

continue the typically While vehicles for past. principal well a increase, to on-premise the customers who in bringing off-premise sales services services are have related role and sellers, providing true greater need for the these and and services. facilities there who have is commercial is this, particularly been to our positioned still are for we these to for for likely for This

to effect business, to of So like marketplace differentiation. points and automotive capabilities our of remains any leads network other anybody our get is this offerings where context, breadth position and marketplace this me of sellers positioned overall a specific a than better scale Wholesale and industry their else. success. We business, set competitive tailored In needs. to buyers belief my KAR is broader offer

customizable For highly captive their marketing example, The finance customers OEM platform our vehicles. a provides for with their platform and OPENLANE off-lease of

Our infrastructure and is a are geographies. in for differentiated strongly even world respective or deliver ability for and we at reconditioning digital services, more BacklotCars the dealer that one those also TradeRev value-enhancing cars We vehicles have our to capability detailing, strong platforms off-premise of differentiator the remain repair segment physical their and offer And believe will in either marketplaces as the to off-premise. We the future. such vehicle facilities. sell the on-premise our

participants more as of transportation, financing, We sellers, buyers counterparties, and a cetera. customers ancillary and a also buy et market base and offer back more suite services, of larger broader our products, such guarantee meaning

entire marketplace sales data our the with opportunities business. for vehicle creates annually, digital X Finally, transactions our from million unique over

this customers. So digital eyes competitive such best-in-class about strong these think Frontier. the our competitors, KAR auction Plus. offerings, positive capabilities strengthened BacklotCars, TradeRev, when a we differentiation our offers with superior week physical acquisition further the Auction digital I position, Versus as I have in Simulcast with We think capabilities, our of of OPENLANE,

than reach dealer off-premise digital newer any offer for we independent the vendors auction also versus point solutions Finally, standalone broader considerably have who segment.

market that as at a our have looking Just have dealer whole, leading segment similar scale taking we the considerably by competitor. more off-premise we a itself, to But scale.

data, choice offerings, offer of reconditioning, or of a counterparties, a also cetera. broader buyers of land, services, set financing, sellers on-premise of marketplace ancillary such larger suite a broader a our We base et as transportation, off-premise, and

vehicle used XX approximately share. we’re to to to transactions and States form, I’d marketplace volumes So a Total transactions new relatively another to company over retail million -- marketplace significantly initiatives. year years. believe XX automotive expands as vehicle transactions. intend amount estimate vehicle large of In taking We in our year grow is currently stable. most million The to categories. all like per XX of our our vehicles XX that well. speak to XX alone transactions and vehicle to in We well addressable digital in and wholesale vehicle going and market million the more and million trade-in a the transactions key as grow wholesale retail where used United the used our the we other to model include million potentially simplest some place used And also each

exists share our larger and So services. we volumes will for market in our on increasing our growing be that focused this now addressable

and platforms. We’ll of select we offer. buyers sellers. be that that a We technology best-in-class only also a data tighter service a number capabilities value achieve and offerings for of and other may on integration Today, we marketplace aim our have available proposition create one-of-a-kind across to platforms services

structure to We our across so all streamlined allow a will those of also our are cost more operations. for for working platforms that Digital of from customers benefit integrate can them. our all

the will have already I and that sustain model COVID, We transitioned during cost sales believe allow us this have to digital we preserve will achieved. reductions we that the to

reflect continue percentage grow will structure of the our be cost to an also off-premise. likely sales that will we we to as However, our our fixed adjust business, increasing fact

our efficient growth. to evaluate need and had We invest accelerate where become have to constantly to the will we where we more opportunity

past of physical into the will Our future. our centers the of evolve vehicle logistics auctions

and engagement within services We to for also increasing company. using and There and report ADESA marketplaces. use the a on X Greater our attach AFC, to provide rate set sold interest, will for ancillary opportunity the will our for and grow by segment. progress transition We customers. metrics cross-selling of rate use reflect offerings the our attach raise digital including that by these that services businesses, growth, awareness, our that believe intend the marketplace a our these by meaningful our increasing of fresh of existing metrics the key financial on to measure services customers help I intend digital are we vehicles our key

in vehicles, volume that I our metric is of over first sold total proceeds. the $XX.X to billion total proceeds. supply gross sold Notwithstanding is The vehicles we representing and vehicles near-term earlier, XXX,XXX intention auction In our time. transacted constraints [ph] QX, grow discussed

the We volume growing will measure all aggregate our performance marketplaces. based on across our the of cars sold in of

percentage We to an the to in gives a investors is opportunity the model. transition metric Second customers how this XX%. asset-light of are sold and vehicles off-premise, indicator our was our QX, metric understand is evolving this and more of believe

fixed TradeRev in our on vehicles, XX% of fifth provide on QX, to was The to And QX reflected third off-premise overall cost This growing with also on-premise The profit will they vehicles A the the per an for those and and have sold. off-premise. mix fee metric, models SG&A sold competitors. XXX,XXX It margin a of basis. structures, the structures, important metric will get insight make representing this business. help understand different segment but $XXX. number sold from growth are investors we gross last per navigating a those different the in in how within metric shift that easier base investors on-premise was vehicle Again, our ultimately, key and business, more have BacklotCars year. vehicle digital combined metric the vehicle our on volumes that gross segment. believe this transition this we the provides this was align how versus metric, transitioning investors metric ADESA compare understanding sold cost and are fourth one with an with is metric it platforms of key to QX, marketplace-driven This a within to of our this We segment. ADESA QX, $XXX. per is In asset-light. is will In

the loan in those transactions was addition loan in segment, ADESA metrics metrics within the be AFC. which per number XXX,XXX will of loan $XXX. QX, QX also at to revenue The In following focused transaction, we And the transactions. key on

$XXX continue X relevant overall. remains believe and be the QX Adjusted and key key a EBITDA, of Finally, performance that metrics KAR metric million, to EBITDA for team. myself KAR’s earnings to most relating management adjusted I will metric the

flow from cash million. Finally, In $XXX operations. QX,

and key this We metric. will we’ll continue as continue to power highlight generation the view business KAR strong model, a of performance the to cash

So to here performance morning, conclude remarks quarter. my first the I am in our with this pleased

BacklotCars growth successful with of sales I’m digital our off-premise and platforms off-site mix. pleased More integration of continued or our progress and our our TradeRev transformation, the in importantly,

As we XXXX, vision constraints comes significant I rest our continuation should supply it substantially to the and to our performance, deliver of of we of future in and I that we years be I that reasons a this look a to the When the I’ve to believe business the earlier. to come. described. expect the all that months have on will increase for excited value opportunity grow this mentioned of company and

Our by wholesale our is customers, customers growth will focus very want to finally, can so I be our be purpose, our propelled which with be make on stated that And to clear. successful. more consistent easy relentless a

a We digital competitors. from chasm, have crossed that marketplace and as business are industry-leading digital the we our us clearly differentiates solutions infrastructure platforms, with operating and

over more the data-driven industry, quarter. building of on from review extend our our to Eric digital greatest active, build position, in used first marketplaces of a and our advanced financial with will most technologically hand the to that, for vision results the vehicles. intend detailed marketplaces Eric? world’s our I and consistent the strong lead We operating we will for With within

first improved both quarter start of much all and were results for our by digital by the of let on results across and KAR SG&A our optimize focus the full The offerings And Peter. supply constraints. over of to suite taking driven me advantage marketplaces. costs, Global stating our quarter continued despite you, performance Thank direct controlling fourth were the

the minority moments. addition, investments these businesses. auto a more we benefit from realized the investments In behind about in early-stage talk in few strategy retail will I

fees increase reflect the also We $XXX $XXX was metric per increase per vehicle from fees in are vehicle auction X% an QX. sold, sold the with I vehicles in the per accomplishment performance from quite pleased have car to label auction of last This across The year. fees this platforms the average $XXX our given that sequentially price strong selling all increasing platforms. consider our for in lowest up private the sold. in auction

Another that down is supply and is wholesale the on-premise services services was for on in often XX% XX% continued Not I high low don’t for that obvious marketplaces. ancillary of shortage same the to car positive admit volume revenue put supply rates year, will period. services. down premium improvement on is a the despite surprising, attachment results used on-premise do that time which from prices in lower I market, believe sequential revenue our but prior

from cost-effective reconditioning performance of managing segment. cars However, may ADESA the a alternative’s opportunity we per to have offset has buyers and our growth have and services a for this used delivery, consider than vehicles. a Peter retailers strong the on factors service the or faster, Despite wholesale view used negative due revenue but including in profit a Assurance our of demonstrate inherited are vehicles improvement profit going as our these in focus We sale car premiums with by under using the were reconditioning the We available a vehicles. purchased XX% be profit a on and some we metrics retail the purchased for capability vehicle and provided strength gross and or ADESA services as of to America from experience. the transitory. in of services that sold these pricing, costs Many our the provide more XX% first revenue in of covered profit gross program decreased capacity prep in incurred gross of benefit ADESA in losses gross The that ongoing market. losses To our Assurance for confirming the gross retailers line capabilities QX impact volumes vehicles, increase of typically clear, performance, we internally percent reflects of line Net the we normal returned key reflected the revenue year-over-year forward. net of sold sale local with the quarter. in strength that XXX vehicles, these experienced some for loss increasing profit their our delivered. the sale our the quarter losses losses ADESA on were trends in of point in sale vehicles from North basis in approximately on were we did experienced earned to

EBITDA additional We balances higher the The segment up new We additional a are performed was also result as Operating as costs in portfolio of quarter realize average for within platform XX% reach asked full well bonus the a growing in have of markets. clean SG&A with the BacklotCars’ essentially future may the did often this quarter to migration have prior first opportunity first full synergies TradeRev offset segment, performance. BacklotCars see year. quarter as the portfolio and our recently we ADESA. of SG&A that of loan U.S. of and fairly year the in first the may the We was I expenses. our ADESA Adjusted and and Staying grow, profit loan most seeing quarters includes the at quarter. ADESA flat to complete per floored. a a AFC of wholesale quarter consider decline I strong am enter expanded about offering XX% XXXX the Assurance SG&A. year-over-year. rate the vehicle to run saw on our through contributor now prices

transaction unit per channels from a ago. loan XXX auction headwind economics to year were AFC, we with clearly volumes While up saw all lower strong transaction a XXX in revenue for

credit first total compared for of the point the reduced strength will also quarter the AFC the losses compared the $X.X wholesale expected given car allowance credit KAR first this decline increased to balance position We was allowance the quarter in well. for a that the as reflects market a despite business. had by business A significant over allowance. million used I in consider the losses we the out prior SG&A XX% on are the strength also We for This I in as losses the constraints market is year-end credit provision in to segment strong loans decline the today. the the characteristics XXXX. the recognize model performance the have this year conservative in We originated. seeing in cash-generating of supply. in the of

you very in services the generated we and Typically, cash a consumer for see for of vehicles. our million see situation of of the the times working flows, our $XXX for first operations. a position. quarter can turn is creates times supply in statement as but a cycle through cash of reduced a environment characteristic most faster from we sale As tight positive This quarter, of cash capital

for As Peter vehicles. is likely supply of be the the mentioned previously, of year remainder constrained the to outlook

of to this and cash environment With free is cash be One from position first price it we at average cash $XX of open generating supply our stock outlook our of market quarter, per is it the an the for the that will a KAR strong strong purchased allocation. continue flows, important very generating positives in good continue $XX.XX prioritization operations. million In we to in balanced capital [ph] of share. have

shares limited market at window. of open the open extent purchase in could the prices, offset the attractive stock quarter, the open this created year. the issuance first was of Our dilution shares represented we last window our maximum To very number the preferred acquire during can we and by in we the

share being disciplined our remaining our million authorization. repurchase We approximately $XXX have program repurchase and share in on are

Frontier well the for week. is of utilized of strategy, our also with Auction operate, Auction marketplaces an $XX purchase integral we others acquisition our We aligned clearly operated part of as This technology industry. Frontier million is the in as cash the digital as this

now cash to contingency the met. terms deploying a our said, to to of as conservative, capital. it generate investing million contingent We X in have flows balance. the especially a it think payable want customer we tied retention. relates to dealer-to-dealer transaction We the are With asset addition to $XX and strong In cash includes the while balances years The in contingent that growth, will still our at marketplace. closing, consideration strong paid the right cash is consideration real continue in in in to businesses cash digital if be is

speak Now let me on the first quarter. in to the gains investments had we

are in opportunity investing been by them. These investments AI. our to all businesses. strategic cases, these recently, of have have CarLotz, been these and participate have past our these centered we several supporting that years, early-stage minority businesses. development demonstrate certain commitment we capital relationships Ravin In businesses to Two taken develop positions. have strategic some the growth the the Over car opportunity with to used the most to retail of These in disclosed relationships support were around and raises providing taken investments publicly services to

early-stage made investments achieved we have investments. were those appreciation these has in a publicly less the investments all have goal million we are now that And businesses have is making relationship. seeing when value other enterprises our created in disclosed, of to enterprises been and We each. strong these than not investments goal The strategic $X establish primary situation capital. we been by significant feel each And in of the of recognition the this deployed

transaction. cash securities. the quoted on monetizing from an sale securities of investment is realized established realized underlying in through from cost at these quarter, become or million we are carried stock first the equity $XX the All In proceeds approximately until gains investments an of market the alternative

$XX are in publicly now that on additional traded. unrealized an securities million equity have We gains

of are and this those restricted the sale later on these We year. currently equity securities restrictions lapse

clarity, For realized operating in are unrealized included income. adjusted and net gains both

the have noncash EBITDA excludes adjusted gains EBITDA. in we unrealized adjusted excluded As the computation items, of

we that businesses see marketplace. early-stage in invest our periodically to operating continue will We in

However, common My on an following be plans an we quarter KAR of a of to business Day future what these host last review expected a to to provide expect today heads-up not of not do the detailed for and our earnings to early capital. are material Analyst our piece holds use give second you of strategy be and that time, situations our our release. investors. is Peter At will

on detail give strategy, what out has, Peter a details digital event. Global are will this morning. you We as your This get look our date opportunity forward. Thank into time as many but more model wanted to advantages notice this KAR highlight the in go give for to like look -- our safer continue business will we we a competitive soon finalized, the much to the and we early world as you fully will of

I’ll your We questions. take will now Jay, you. it turn back to

the comes first Our Ryan question Instructions] [Operator of Brinkman of line JP from Morgan

some they Are that the kind your And then comment Manheim starting that with toward maybe think you could how too competitive of wanted some into bidding. some that, quarter, ground what Maybe And to maybe established was a do to might wise necessitate and smaller Do that it just to some physical observation been the how there that some doing sustainability able discussion there in that because in benefits margin that end? happening independents the the are of more looking to be enjoying? have response on reopening you’ve auctions trend last I plays moving of on check were was suspect was more independent speculation respond in-person have and as the again that on on tracked in online capabilities? that not may first you quarter? this the more may be

most this appreciate Yes. returned Thank to you, question. remarks. Ryan. the that independent And no believe, sites, At relative speak say I a digital the of of relative would I in I to capabilities like means have returned point, regards traditional And running all my format I Manheim think factor of some lack be I by most But to its little their the in as -- do perhaps a in decision. might vehicles. cars key and -- auctions at cars lane. the somebody Manheim, that has to running but of did us

probably Manheim have the we we said key argue analyze to not and in generate my the our closely our many to performance obviously approach, in have But in strong And model terms superior are a as in clearly future akin the capabilities model transitioning model to represents also to I model strong and customers that Ryan, outcomes remarks, return rates for our very digital running we conversion digital that cars areas. dialogue in us, I can We although plan So of is customers, with do we We time. for more our close believe the and would very relative performance. lane. and customers. over are

you integration receive, profit post feedback more savings competitive or offering might aspects last per your out offering to the -- there’s investors is, my to of relative that more to on be communicating I then customer become relative being you cost that car to you time? generally, with the think about to and And just I understand offering strong to say on you Okay. anything to that each now call more different public comment quarter. BacklotCars. think your expect And to ACV, specifically ACV’s that able alternatively, areas their relative are than appealing how maybe very over the yours, just don’t know compares on obviously, relative with at firm where gross anything think they question to want if of or you a quarter the or I then targets? thinking And profitability you’re wanting volume-wise some But maybe generally not

just say with very platform yes, you, with maybe very, Ryan. was migration we and of I completed. Well, all pleased get to as was Backlot with really customers. to, loss. those had the migration. concept any really because of strong our volume XX% post migration in from the U.S. QX completed actually in QX the volume growth, integration performance was very Eric that like synergies we’ve ahead first benefit it record alluded in TradeRev even from the month we feedback And But digital I in migrated dealer our QX. customers customers didn’t the the the to of our saw We introduced in performance would that when end early cost more importantly, Thanks, the no integration within a schedule. essentially We and the the of growth February

of So since. like platform, I really the lived month be And speak. Customers the very to of simplicity up every positive user the model feedback. the has so facilitating expectations And increased platform. us see the We I say customers engagement -- we pre-acquisition. the level liked in it of directly to the from the without our would to Backlot platform having in an transaction, middle of the friendliness

would strong So I you say differentiation just positive that lot And versus of alternative platform a the lot of a mentioned. points.

are, I on the the I industry. pre share, in best think think I scale think specifically the acquisition as we’ve going within focus and mentioned, one unit Backlot with acquisition achieved is that category. And economics think market I a in capital capital substantial call post -- frankly, we’re though aspect substantial well. particularly detail strong. continues are into its invested. rate and of growth what growth this platform limited efficiency. the got even I the relative of of But those attributes on It that had as The as platform to platform, not was that And

from platform. taking on focused so very can they very really that and excited our very benefit to all we’re So very, that customers strong

And allocation maturity, like you unit. gross less in full at than about includes Ryan, asked modest was add, total, that near also, about and global talked a achieving performance. me sales a million let specifically $XX In profit loss, quarter, I’d cost the highlight of to there, Peter, to the XX%. we’ve And first that our it something

We’re and forward. any XX%, I’m pleased that all very are going including result to channel. with realized XX% that’s gross profit close And that that’s before on synergies already costs, very because under just

my performance, a in very opinion. strong that’s So

line from Next question the comes of America. John Murphy of of Bank

thinking those this year and and which I well are the supply it say, at Jim, might is get could Which as pressure. and as there’s are a wanted that not be as to very of disruption moment? think not people forces. constraint there that some X same time handle an disruption and a is I on Peter. is you’re well you’ll to just hey, greater business Peter, both how it do we increased handling business there the think the There’s at creating going into and about mean congratulations, seem here in might in fast mean, I short-term listen, or transformation these competition. Congratulations, is the here, competing transformation optimist next occurring, get this you the what the and into, changes are your argue, one will force mean thinking secular do ease the the forward? you’re parse might strategy going as supply and that disruption secular be "Hey, digital be out digital something and pessimist about supply you I

to a industry-wide, you deal And to wishes, well competitors. the in line but first be about appreciate it with. And talked I vehicles, assessment. we the there of that just particularly It that’s temporary think probably nature. question, us And have time has is to all. affects considerations. a constraint, And reasonable is as our as there good in your reality is a commercial is Thanks, I clearly, on supply John. a near-term focus obviously,

I we that. I good So a as think heavily a normal, volume bigger through mentioned, I the trend has place accelerated in But commercial to really suppose now some which QX we’ve segment like I’d accelerated of is and managing disruptor And focus of the through you is good And COVID. our our to that. think in remarks, industry an overall. job through I part say manage starts longer But there’s my be to a as very with to strong respects a taking obviously as secular to the career doing said that I for I’ve secular early more digital of know, tend the my think has we into in for And that COVID. be over when change. been It evidence in through is all because, believe I will something been on this of got -- that’s that. that return you honest, business we’re an beneficiary being to it time And been opportunity. lean OPENLANE.

all our That the half no to where a seen auctions can those have more off-premise. just now I us speaks for where an we than the think any customer. built That’s longer to vehicles were to we’ve for them. case. had opportunity address anytime vehicles to we for We historically, come quarter of KAR, anywhere, vehicles sold sell

and to So the I addressable chance a about that. we into there’s opportunity, increased and think talked tremendous market grow the

provides company, have So are focused think the I substantial. trend and that really, secular on think really stay which opportunities to that, I we the our longer-lasting on

it good similar never expect formed as time here. are to on back, there’s said something And And that -- We be I less the to in in spending were of at lasted add, times our been transacting while. at have they is expecting a online, digital transactions, the difficult I’m we habits acquired John, when secular where we space could position physical the shift Good that, location, a yet habit and time supply volumes until down. the were I continue. OPENLANE, and to of business back John, time, you around this I marketplace the in XXXX. in XXXX, back commercial for our more you looked OPENLANE. know, and working about if have on will when used you success then, comes the In we were quite a on

of XX very or you kind as And maybe way, question, to give then units, a about always in million XX simple a the traditionally, dealer-dealer just physical in going second kind a wholesalers alluded, consumer I on mean of auction think you stuff. follow-up that. opportunity take of million you set. there’s and and throw the as But with what’s some when Peter,

$XX well from have operate how is that that of going potential second million to look opportunity. to it -- as there there you’re market seems of going I’m kind run it, And at fragmented just because market go a if a break you is into after, you trying what’s candy like disorganized competition, is can not to incremental in pretty well, for play in it of half the long it? that fragmented it’s it As and hard. you you’re taking and you -- that like a such into your as baby huge doubling the that’s right just that understand break

think, the tech, for segment I the accelerate who the that it U.S. would same fragmented frankly, dealer has we’ve my evident respect and established anything that become historically, to in grow to future. of the all, a starting this granted. competition into tend selling But say lot John, a first have has of you’re Well, to of the right, seen opportunity the the substantial total growth. been see been and relationship some -- marketplace. competitors never and argue, segment of I little I likely I There volume our now healthy for digital continue in business for obviously, in is competition. trend growth I bit more take I competitors longer, consignment. for where us within And would always of our the frankly, grow low Canada know you a are a footing in

enabling some these for but characterize But in candy any have growth, what a we’ve potential I our as it does can vehicle, environment. to there’s that wholesale a lot we’re wrapped an that, offering. time services opportunities amount in behalf location customer. can of around retail vehicle transaction into baby. KAR think right to at trading a cusp as now, the taking [indiscernible] And of be compelling set from of within and be any full on It’s powerful the brought a engine here, of transaction mature, have a got I brought And So any with engine level, possible we to that’s marketplaces of cash it not any competitive brings a very that on would really that, lot bear. shortest for advantages a a customer. There’s of that that

KAR. the of part I see that’s opportunity the future So for that of

then sure and to Day. last also, an look might And think Analyst physical question even the truly And North if not though mean and Peter. now, the are necessarily you if at a business. opportunity at the America opportunity distraction? what right operations, sleeve, about it’s other there? necessary whole be set the it I North need to that human a Europe to building get sorry. Is if just the into so there great not international of synergies it I like one we But I’m the in you might mean, argue you seems fair locations, back one, then at And get is a I’m And more back vertical be America? or might moment, capital a similar it’s might capital

that, to I’ll I center a logistics So my question, continue in talked call we vehicle see the model evaluate first footprint. the future. about on Obviously, it the remarks we how and in

value many think and historically tremendous assets, I differentiator our there some to are segment, services our seller a but for necessary the of said, commercial I company. positive provide to physical to reconditioning consumers. Eric They we and customers, underpin segment. that key obviously the mainly And as relationships services for have in we asked companies -- provide those retailing to with increasingly, direct to alluded are then using are remarks, being are his cars that as

So vehicle and car, dealers, independent retail franchise used operations. large used dealers, dealers

that place facilities the at activities but take have value, facilities real those the change. So

digital model, versus running centralized different service again, and provision technology. place a of that take there’s will sort the more locations the obviously, be centralized a and But of So activities through will set cars most today. in we’re handled through with not

evolving an that’s So picture.

We manage have to in we’ll out and that our in, evaluating continue team business, a day then day that.

business business, in is strong in mentioned, terms is, international of digital-only model very I the demonstrating about car As we per gross like is regards I the what an to profit international asset-light have performance, that one It sold. -- as I it of like Europe. things about

of transacting our there synergies limited, are economic isn’t synergies are fairly segment not in Europe, that. across on that technology because that correct some an just a I the the in really there do are observation the Your is its between terms driver It’s they and some ocean business of for But greater right? be I for North vehicles our and America the that it’s that the globally opportunity. it’s sure, But becomes think extendable And potential a digital and business. customer relationships. business like growth more a to

go to in build physical with have can you in assets the globally, technology. don’t and go You

sure, would for month my say in here our operations opportunity the an been is that my American But that company. on first on I has, for job. North personal focus more So our

couple overnight turn, received to I we confused couple Peter, of I’d John, And When a like talk international, that’s to at subject a of people. e-mail. least questions on a

consideration an the a of in first contingent CarsOnTheWeb. as Our acquisition of portion that international relates our big add-back quarter, to recorded

accounting, Monte price As a used added purchase performance, result to we of ultimate their did Carlo and when the a the we that in. simulation contingent model calculate

probability Our performance the what exceeded has was.

so are not Those They’re employees. former to owners. had And that. payments have the we related to compensation to record to

same happening the thing We had TradeRev with platform. also our

and had we but offset. time QX this minor consideration netted a demonstrating that, million questions less to $XX exceed in added We was by those Dent-ology a the digital contingent is night than thought all acquired And There would calculated, we I I explain of the originally anticipated. were probably in didn’t recognized to COVID. several these Our it. to marketplaces, and in ask, strength you last where going add-back. good be part what we’re going pay

so on forward? the about going that on That’s we tail what’s incredibly can run those think Eric, out? those that helpful. contingencies do just When

them of XXXX. all Ironically, run in out

the you is into ultimate which is So why payment to these end be. adjustments, going of cycle, what the you’ve visibility we’re the got great at have

the Craig of Next comes Kennison of from Baird. line question

prepared Peter, were really Congratulations, Jim. your remarks, I helpful. think,

backwards. that all a on those of for thanks that. sure not quarterly we So have metrics I’m basis going

are that some well. more I’m on and Share So with facing? request become I as seeing pressure could little light make your shed pressures take wondering more you’re would a a cyclical those for us if And values in kind you cyclical residual bit cyclical what business your metrics, as businesses to that what will off-lease of tailwind? more it channel? the of such

Thank question. you, Good Craig.

originate I guess, at, to that in pandemic, which the has demand returned, -- less the say, they a less still, which economic terms by in part supply, if conversions a very there’s vehicles been mentioned significant there’s pressures segment, at So what -- some to I between how look cyclical of or of the off-lease values. in the car sort of least very, a And very, has is led appreciation used return likely led are a means on car stimulus, in and which of high mismatch is new a very when platform. to I on upstream them, year. equity, lot in they consumer high the this with of shortage vehicles say the from But has transpired car supply supply of a chip the what large maturing I’d and driven book, lack retail off-lease new demand

example, for got strengthened all-time if its and a of has had off-lease again, And So QX. we’ve record here lot of conversion it within vehicles then. OPENLANE, high quarterly share since anything,

And car and they’re watch that upstream in talk So closely high. to you we much have, to downstream first conversion not us. as that need see say, lucrative, Craig, more think the side. new some to we about. return it’s our probably as let’s have for that Those as happen to very around guys is very, transactions but on to transactions as But thing data rates normal as customers something I continue I needs segment. production the count

the return my well, to made would of probably environment probably and new a production. normal So economic positive, a business. to return car way more And normal having more the be a for return to in view, through its stimulus some as economy our

temporary not time X are lot which but now the still that, are finance off-lease another into on a these future. out line vehicles firm There extend do making our I years the company’s of So I’m books, phenomena. captive on predictions, think

We that. have into visibility

there. are vehicles So those

rental into and -- to remarketing are enter us time. back little to share lease It period normal to expect think, got for to repossession take buying the in companies take think it starting high time rental I will time we’ve below repossessions a heard over will those for fleets I again, take a longer. They’re a market And see leading, but still will return category. of travel. phase. people normal, We are I’ve vehicles cars,

things So reasons, managing we’re as anyway, that’s and expectations costs the to in -- talked all prudent be said, I for I all continuing my our in remarks. our about those about

standpoint, if I follow Eric, to From capital could brackets And amount repurchase? up you’d allocation could deploy with the put great. That’s be capital you of around you. a for willing share

we it million I’ll around Craig, is our the put we have Board Well, by $XXX -- Directors. bracket a of authorization

So we that be to over frames that’s what do. would of But period a time. authorized

Stephens comes of line Daniel Inc. question the Imbro from Next of

role. add the congratulations I’ll my I Peter, And start guidance. to the want on new on

not, gain you Just to for in on guidance you prepared $XX if you And remarks, million the year. Peter, quarter? times expect supply out rest few the I so a investment mentioned original the called your did will clarify, of the in remain the constrained include think,

EBITDA? about get what’s can talk ramp going year if the that to back adjusted So, million, we full drive up implied in million to $XXX you maybe the $XX to

how Daniel, $XX we in is million which will EBITDA form remains said expect be, gain in don’t how the much part we will of the in realize year cash, did much we at these gains adjusted current the were $XXX become the cash least to in and know unrealized. why we year of that We some it million. throughout that of transactions, on realize that had would aware we

the of we’re length, nature again, this was Relative upper business a a back through current give but our unit that there gains what up and economics, would strong that ramp, it. we levels environment don’t to anybody this, to would there were us year, $XXX end will can not a we but Peter give of in better tough believe at or recovery continue continue we it about improved again, a I run permit see to very with would this today. the adjusted guidance. we So the to to road did profitable we supply an supply be suggest a some in if over talked number. contemplation the quarterly million EBITDA I seeing the be end achieve without for environment, to It guidance, in to

on it. then that. Got just X And clarifiers

number or were on that last year, investment not? in there EBITDA gains So any

have I’ll anything public causing and SPACs would Daniel, than That’s investments less something. become comment. they No. some to with were, The or they recent been $X has enterprises. else. this, our If what’s just activity not million small caused IPOs of

a fee. of just Okay, change your be went then earlier, seen BacklotCars, you got in seller auction any of bid And you’re you X-day it. a proceeds? XX/X guide. a helpful the to responding dealer your what talk of touched timed on platform. this curious, the competitive it’s more I’d the format? have Peter. getting from car kind driving in But That’s Can response And dealers to removal then how on kind auction You you are on whether to maybe reception net about that, bids or per to

seller removed any about talk response BacklotCars TradeRev think fee. you has seller no competitive fee to Obviously, that? year. late last Can I the maybe

growth. Yes. TradeRev Good in extremely Canada both and in terms volumes question, we Daniel. in of in say Thank I U.S. first both and saw I’d of performance QX, total you. guess, all, in Backlot strong the

which the So okay? with BacklotCars in would is a the the I cash. XX think and as value is, cycle, of place say, into vehicles to format both. good I day to the it’s pleased start you market, segments really X-day hours, cars lower disruptor. cycle. the digital sell actually typically started, a different, but into X vehicles X-day in convert It theory, So is Backlot in Yes, the about a mentioned -- a

sale So on has higher on maintaining data strong really, market performance price -- price sub lower-value the let’s a conversion our has of says we’re Backlot seeing cars now also go materially say. to the number started that really analysis with delivers average rates. of strong of while extremely vehicle, -- the TradeRev, up But Backlot $X,XXX to integration

I think is TradeRev. another The than higher Backlot. it conversion is higher, on that feature rate of absolutely materially was

success rate buyer for factor So I key conversion the the at and look really both as a the seller.

think If very, you that. we’re very and them customer feeds rates, And delivering I think conversion very, very want, about I of what mentioned those both customers want strong the into that that earlier. being feedback strong. And

know are offers to of and terms seen response. of programs, the market In own a competitors with their direct pricing of a competitive model, own their haven’t kind response our their I that’s business. and sort I in

we about going We getting, feedback excited continue feel we’re business good We’re have again, the to this our on about kind grow and as feel we focused I have. -- to we’re customer the model But forward. said, of we business. great

line the of from comes Labick Securities. question last CJS Bob of Our

or $XXX clarify QX reasonable question per years. The be to pointed go the could expect you a far to the out And going for in X as more there dollar volatility. if significant versus But I profit number the been the is and was obviously as you for can hoping quarterly back unit? the try I’ll And quick. or Eric, volatility you is back that to whatever dollars forward of per $XXX a $XXX gross unit, metric. profit record or is, of we has kind $XXX then quoted looking tell, some QX.

strong Good even but in a I time I analysis frame on have, question, shorter the it back looked your you’ve than number Bob, further that and is gone at.

in looking quarters, It us situations the grow, I’d got So of to for to but manage costs. some I yes, helps one-off It this focus number supply good obviously more of like observation. seek a good quarters. $XXX rates and a is opportunity strong range profit. maybe would volatility with various that, But on was there the strong think gross good do some prior even business. there’s a and direct think tight our rates number. greater And profit, -- ultimately closely. focus say managing try to environment, I ahead to maybe we’ve performing something a conversion But conversion in was $XXX strong on a I there’s range, helped range think I is And in QX, by gross maintain

digital costs maybe a up with a down I gives greater think more manage model quickly opportunity volume -- the to our profit scale effectively. gross a more and more us or

I So key of the reasons one a it as that, we’re and the focused metric view doing business. for on that’s

I And little a could Bob, if add flavor.

year, I of we I have. number was recall. much think higher $XXX also the quarter is third The normally last at than were we That

is $XXX does but of performance the bit, little in be a Mix that. just or relates sustaining another the We’re it as quarter, why cars as number a as which a $XXX may a $XXX to mix the strong of will over last When quarter impact number bigger, stronger gets we than X-year to third sold. that what prior you change to year. denominator be will the it it period expect it, saw strong, the be and

on-premise? How the mix Okay, profit promise. impact does the off-premise the on as And long per And profit that how just vehicle dollar term, goes term one, how then mix vehicle? per in forward and shift gross long-term gross looking last versus in should per a great. basis, impact change to that the -- short more does

in those, mentioned, I the revenue cost as Well, also of structure. but the both is Bob, structure different

So profit sides whole of I the side cost And that. get managing important. industries. kind that both across both that for -- the to on say increasing improved marketplaces to managing direct scale, scale, is becomes to be of mix. bunch see side on the would and and of cost returns And important when multiple think that. able of I of and we factors, scale you economics, that number gross model, revenue how sold on you digital the think it digital in us, an economics, per car unit of improved on do managing we’re both I mix to metric how a the get think a profile of speaks get you sides structure really we’re this off-premise at and revenue think scale, I we’ll I the When

So model, where is think gross be strong, I per digital it in don’t the think though that is long our car don’t profit that off-premise the current in it will term. I even

have a to over can time, improve statistic. we’ll continue Assuming think the gain market to will able be scale favorable we position, be strong to and number I that and that

add, I’ll one going for the drive include things But do. in has creates And on all number. services. online that growing not to what’s there’s AFC our focus of transportation Peter, I that’s it end attachment cars profit real help it, acquires all recondition to who of profit clear. up. buyer of the to he they gross opportunities all We we gross up. a can the we be want commented services whether a that and rates That’s continue be number an And think generate profit, as the adding then sold. gross car for other do us additional not do And us

So that’s Peter? how will to right, rate key be the a contributor attach this,

good a good point, Eric. a That’s point. very very That’s

you, thank that. for Well, Bob, So

closing at we’re remarks. think I So

reinforce from about our any have ladies and we’ll the thank this a and a a is I to company, for I’m to what to to questions. Jay, just personal at you, I you CEO will it a and meet point. your remarks some more the opportunity in to company. So to morning opportunity am getting Day, time note, and good coming Thank looking of to not over lead and Global, months ahead opportunity know close And KAR real our Jay, of forward going just the excited our what my Analyst for you, be want Eric employees. you morning mentioned On have for this take questions. and to I’m many focused start on as do Jim be better upcoming for to to your is for our hopefully that. great here. shareholders take and get privilege to gentlemen, that out

to be we’re it of comes be a building our out a skill sets vehicle focused business. and all, category. platforms, First capabilities to I’m to used wholesale leader digital marketplace when our on digital true marketplace going our

have we with significant volumes. in us opportunity in growth the a off-premise of our Secondly, front

performance our demonstrated on easier it economics it making cost growth making demonstrate for we to the and sure we our our continue our to We for making with on and customers focused and business, shifts understand matching simplifying first quarter. overall investors engage And strong in easier understand, the rate the forward. strong will strong I’m volumes mix to to that build volumes to and also seek and unit and third, going

end morning’s we’ll So call. all with you that, much. very Thank this

And again, ladies today’s for Thank you concludes gentlemen, and call. this conference participating.

Have may You now day. a disconnect. great