KAR - Earnings call transcript Q4 2024 | KAR Auction Services, Inc.

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Operator

Good day, and welcome to the OPENLANE Fourth Quarter and Year-End Results 2024 Conference Call. (Operator Instructions.) Please note, this event is being recorded. I would now like to turn the conference over to Itunu Orelaru. Please go ahead.

Itunu Orelaru

Thanks, operator. everyone. afternoon, Good Fourth OPENLANE's Fiscal XXXX Year Welcome Quarter Call. Earnings to and CEO are of and today me of OPENLANE. Peter CFO With and Kelly, OPENLANE EVP Brad Lekia,

today our Our actual forward-looking statements. cause statements meaning our as filings. release on call the non-GAAP defined website. With risks and from in within press GAAP provided Litigation Certain under Reconciliations remarks Peter. such may Factors Act available performance to Investor involve forward-looking such cause discussed over to and that those are Private materially to the our call. Reform our and Such that, be in could Relations SEC I'll in the discussed or materials of Peter? differences financial Securities the XXXX. our of uncertainties today include non-GAAP measures turn results that SEC in measures rules of this earnings issued of include will section statements differ

Peter Kelly

afternoon, and reflected positive XXXX. value of this differentiated pleased and but strategy spend our year-end OPENLANE of good with Brad where we XXXX. very for The to guidance results. and market in all highlights, OPENLANE full that offerings had of our is momentum in and the the results. deliver few and and speed walk headed. Itunu, fourth time year our ease, and quarter outcomes. through then discussing a a is you my everyone. we're Customers tangible, terms unique are will I'll building quarter responding in is here you, to today the financials share fourth I'm and Thank start OPENLANE's to the our be majority provide

EBITDA seventh which we XX% EBITDA driven increase a also and consolidated quarter fourth an segment, by the during of by marketplace million XX% adjusted volume marks EBITDA. X% volumes. $XX by included grew XX% year adjusted basis, OPENLANE a adjusted generated straight marketplace the a by in $XXX in Marketplace consolidated marketplace million revenue impressive the quarter, XX% increase. On in increase increase XX%, year-over-year growth the in This in mainly a dealer During quarter, in generated driven volumes. full EBITDA, adjusted The

in our grew time flow to We also from segments for $XX given loan on our we're held and finance billion, AFC November, update $XXX investor detailed AFC $XXX XX% in originations, merchandise indicator of quarters of momentum value million another eight adjusted cash million EBITDA our operations, that level a to building generated spend market. I I the last gross floor of loss will the out lot powerful generated plan but today and rate lowest call its the year. grew won't the in

of and it digital our in long-term me my for financial positive and this growth to OPENLANE's our characteristics profitability. With let on So, optimism turn summary, model, consistent strategy demonstrates that, scalability our asset-light market how plan performance momentum. of we build in strong growth and volume, to the pattern and clearly fuels share

our for it best to experience, preferred and better customer best and easy by delivering innovative outcomes. services transparent, marketplace. customers our can customers offering best anchored achieve commercial our available; three focusing informed third, technology, products the more And the our more marketplace buyers most easy expanding by And delivering to by and and and First, easy our more be which is marketplace, dealer making wholesale for customers to sellers and OPENLANE reminder, help a the As make delivering wholesale is making diverse transact decisions second, fast, in priorities: most successful. so making by strategy and we're growth enabling purpose, make inventory keeping that fair the on the

company the We based rebranded company the priorities many enhanced We believe strongest I we than We a assets, a positioned CEO, is my what assets. sheet. and divested our OPENLANE anniversary into on today, integrated digital As this stronger ever improved talent, with company industry. as new becoming better acquired, four-year I believe better these strength we've unified culture in rapidly around is the made brand positive I consolidated our well. digital physical the argue approach different new much our to very of on would down our We period. paid changes balance during and as customers. We're the and our I deliver debt and team and

the for the I our and that when is think the on customer I'm about experience, word anchoring delivering execution. So, best XXXX the best technology strategy, marketplace, best

to building So, and for accomplished us win. the time is now execute on date, all that we've to

will the be supply. terms for XXXX know in. that of the marketplace, We the off-lease cycle bottom In of going

also that have we a line of back. volumes However, these coming clear sight are

mature in rose majority as the originations through time, in the off that of to mature, gap a same beyond. lease to marketplace. values will also that and volume the volume New and industry and leased of when This percentage in flow values the the and they lease means our QX, narrow. will more residual vehicles our for result continues leases off-lease data between OPENLANE first straight equity seventh XXXX flowing lower and data quarter will confirm At those that be paid

OPENLANE's few lease years payoff That looks will to of OPENLANE's tailwind be was back beyond. double depth of decision support a double were today, volumes already large this past majority the to leading become increased XXXX maturities what support North percentage, institution now leasing OEM, We recently which expert and over a customer and benefit. whammy us in a essentially, set starting experience, of the technology remarketing knowledge for and and declining for financial is we remarketing So, and evidences advantage, OEM a and America business capability. awarded the off-lease in programs

good very potential optimistic our in feel commercial, space. in I'm equally opportunity about I growth dealer-to-dealer but So, about the the

now. me turn let So, to that

growth through then record of and growth accelerated months in in sellers unique XX% and grew, in grew, our United year in quarter dealer XXXX every in from to QX early front, dealer Dealer volumes States. dealer listings terms in we the growth several sign-ups the buyers had lower On single-digit new and QX. the

So, XXXX, of and there I remain a of convinced digital momentum still the future. growth. lot into lot fundamentally is is there is that a for going opportunity positive

in are our it's We growth. increasingly we're volume importantly, NPS customers it auctions industry faster, have events. physical seeing drawn it seen that dealership and that in our it We're visits every almost easily most OPENLANE more customers hearing better We're solution positive our for something during replicate, cost. surveys. offers convenient That's from a industry. outcomes lower And customers a the to. produces and something in cannot seeing at

is the TAM large. So, very

robust programs. I'm We last a in help position long-term this growth innovation, This and we version XXXX capture selling are creates Hopefully, our buying I to these This more a follow. years the to two the new marketing on open middle our of the we perspectives source and of And go-to-market confident meaningful app the of look sustainable as to see positioned launch opportunities toggle as what allows to platform well these of approach, our for investments by effects. continuing positive strategy. In that reinforce and I OPENLANE marketplace link has between believe product, more OPENLANE. between for dealer-to-dealer, direct private and dealers can U.S. is including our and invest beneficial industry seamlessly and label a in people and in in our one made recent and sales, more some year, we execute

through the franchise the dealers and we've of every sellers private the in investments investments. our our the connects the OPENLANE dealer second And don't our directly label definitely and these some the marketplace, labels it private more more of buyers, these marketplace. fruits but to performance impact offers yet, it more inventory. I First, year that into inventory franchise passes independent the reflects seen of think of on off-lease full half

we're to best the best in and in So, experience. marketplace, the invest technology customer lean and best the going further delivering

we a his These enhancements features include to deeper condition pleased rapidly preferred pricing, possible. To of XXXX climbing has to over only believe to around the that marketplace surveys the we're and stimulate marketplace and innovations reinforces our for additional months flagship the robust weeks to help that the and And and months. market never We XX that sources preferred tell in and forward more and both pipeline values me these the dealer and dealer States demand, investing in more recognized hard to help have most more encouraging, sharing in data coming heard slated supply, of That's ago, that insights look very on that decisions ranks I'm recently reports, It's internal best our and for I we're six of innovations show is make our the OPENLANE even the to and promote industry. Anecdotally, most and had buying also engagement, right OPENLANE, now our OPENLANE one sometimes dealers had approach. that selling track. solution. actionable capabilities been me third-party AI-enabled months. go-to-market United we're he it brand Midwestern

engagement more So, first mind, new precisely list, that's the in the our quarter journeys stimulate everywhere to had more to and first we goal buy. And on and to feet OPENLANE up fourth share. transaction sell to market is more our dealer and to say awareness for be support more people, I promotions to first broader me a we're into And more customers. support sales expansion, resources Coast targeted then volume a first West to personal will these and the investing continue drive personalized wallet more to finally, campaigns days. street, to to lean during that

collaborative their said marketplace relationship before ultimately customers take us earn fosters in customer I've loyalty and business. is OPENLANE we partnership a a greater digital share on greater approach calls, business. these of will our a with The As

business. making mentioned investments in previously, U.S. have we As our we dealer meaningful are go-to-market

dealer revenue strategic in I thereafter. these in and guidance, to in did and believe in will to to we adjusted XXXX. But be you simultaneously, investments have are will see invest grow delivering continuing now return our very the confidence We to grow we ability and in decision to multiplier to and off-lease, XXXX sure to further EBITDA but volumes begin invest in dealer-to-dealer, growth our strong we accelerate share. both and We're want just continue as and commercial equally to as grow commercial also are that already volumes our reflected XXXX a XXXX our strong OPENLANE's in also made grow growth. These

uniquely So to we're and focused sellers. dealers, large for for asset-light, positioned believe dealer I value for easy we're believe in and growth, highly is overall, automotive segments. wholesale investors marketplace OPENLANE execute remains strategy our a leader, proposition and our with an market compelling. key and both making well digital in manufacturers I positioned commercial on America addressable commercial well and There North Europe, is scalable

technology quickly. differentiator features us and products advantage market new competitive to Our enables is that to bring very a

Our business a finance is leader floorplan synergistic is marketplace. with our category highly that

to flow returns. shareholder cash capability deliver and meaningful and positive next sheet And are deliver has our we We a well over invest several to business years. in the growth strong the earnings that with balance growth positioned believe

remind So, to that call OPENLANE. want best. and before many appreciate his I all turn last with earnings his we will our wish the things to I over contributions company, this be and to leadership I Brad, him you

our search, actively final to months, new and made. CFO a introducing our candidates to update look is forward to an past for few decision have when CFO been we the you evaluating As we

I'll call over with now the that, Brad. to So, turn

Brad Lakhia

executed are had you, the and easier disciplined results. platform a resulting team in quarter, financial our fourth strategy Peter. The winning outcomes. a in market superior in and operating delivering innovation, strengthened cost is in customer and successful excellent these XXXX reflected made in go-to-market a delivering consistently results. OPENLANE marketplace our manner, strong We culture that and and investments The management Thank

As a purchased are usual, the related make certain the segment of I consolidated vehicle comments net excludes Marketplace OPENLANE sales. impact and revenue on to which basis,

and at results a on results. basis, state year-over-year my unless consolidated addition, be level then fourth will I cover segment will I start with comments otherwise. a will the In quarter

some up expectations wrap and with commentary XXXX. will I Finally, for

we XX%, each revenue volume within million, volume, XX%, of third consecutive due consolidated $XXX Marketplace the $XXX services marketplace and SG&A down fees. Consolidated segment. successful XX%, the top EBITDA inflationary was segments. initiatives, X% Adjusted savings than was This up quarter the million, Our reflects up primarily cost Total driven $XXX up marketplace year X%, and net cost made platform volumes attributed auction savings lower was million, incremental quarter line shift. investments year primarily consolidated of realization have driven million, execution and growth, to which of X%, was half more for was Revenue X%. by second of compensation the of down adjusted in initiative. lower to mix million, professional SG&A in unit while EBITDA increased SG&A our and the go-to-market was expenses from the consolidation growth cost full full increased by The SG&A $XX of general is $XXX while increased technology our XXXX. $XXX was reflecting our headwinds fees momentum in decrease growth up our offset and mainly million, the improved

will and cost we As of innovation. committed culture a investment remain management to rigorous that to company, a growth in maintaining continue unlock

Marketplace Turning million. X% segment. $XXX to Revenue increased the to

dealer volumes investments fueled dealer U.S. fee Canada. mix strategy go-to-market auction growth price The sales revenue and Our total demand volumes increases. our X%. up driven as in primarily XX%, in by X% XX% increased Auction volumes with up as X% successful increased and by growth, was commercial volume by were up well fee

As reported, revenue X%. services down was

the to gross transportation we have change, marketplace increased method to due GAAP XX-K, volumes an revenue increased comparable allocation amortization of and our costs. marketplace calculation. excluding on XX%, a and now our note profit was accounting and basis, cost periods In up includes has depreciation updated profit within However, reported is applied by amortization gross depreciation primarily Please discussed in available been lower X% EBITDA services fees the This higher volume services. to and X%. Gross adjusted of lower decreased was XX%. factors by adjusted profit a the year, today. Marketplace now XX%. EBITDA earlier. Marketplace our X% year driven million, for Full the quarter SG&A is up and fourth materials the supplemental on posted $XXX in profit Marketplace up This growth, million, was earlier adjusted the $XX website gross and reconciliation driven was by by by costs. improvement full auction which

As year Peter strong marketplace our a business. stated, for XXXX was

to We pleased are see momentum accelerate. OPENLANE's

solution physical cost. offering Our business competitively dealer highly at a model, faster, compared particularly This by when models. growing is higher-value a scalable, business a better, combination represents differentiated lower to

well the leader is positioned in Our of clear commercial a is maturities capture market in increase business beginning XXXX. and to anticipated the lease benefits

on to in customer factors, our digital our OPENLANE increased as marketplace our Our experience give of advantage, extending is the pipeline innovation others, creates technology the opportunity strategy and preferred These amongst believe we invest confidence willingness and position focus for most us provider. to growth.

like As These for you I updates made turn to our Finance investor segment, our to quartile this on remind I in to AFC business. enhancements OPENLANE. available which is investor changes performance detailed improve would better Investor and of of November Relations these metrics part understanding meaningful feel update, our we've top this were the business, our ability We page. one's improve will highlight value AFC's should web of

Turning segment to our finance results.

floor lower The by X% decrease in interest plan in loan increase were outstanding. to lower partially was the and originations values, offset vehicle plan This For a primarily curtailments total X%, was and up volumes. revenues modest rates in originations days floor down X%, transactions total down finance growth In by were two driven quarter, were due plan quarter, primarily floor the X%. factors. up were a

quarter, First, growth we initiatives yielded positive which during results. on the organic focused

curtailments. Net improvement dealer in this Overall segment health. EBITDA cost further to adjusted representing losses dealer from capability. improvements credit a our eight evidenced lots a This million, earlier. in for service a discussed, management and We was turnover, million, in X%, quarter down during improved fourth throughout in in as the pleased a $XX average in risk XX% and rate a outstanding was losses coupled be of saw driven relationships. by strong basis $XX decrease management expect vehicle robust proprietary in management fundamentals quarters. was consistent X.X%. the of floorplan perspective, provision XXXX of reflects severity a margin quarter the by we an already unique the will up EBITDA quarters, Finance originations, with with inventory improvement and disciplined in the delivery factors performance XX customer was and notable lowest by the improved improved and risk we adjusted This continue reflecting SG&A saw due half in improved these values. model and independent is reflecting Second, its quarter, sentiment first increased finance discussed a days whole, attributed increase we dealer XX.X%, and And inventory XXXX frequency to in the year-over-year decrease up quarter on of and first also through and continued XXXX. AFC's increase management. Finance points were of eight growth and yield decrease fundamentals risk supported leading the can

we've for business overall our durability. risk leading Its and processes marketplace complementary core financial AFC's a and business. As strength management previously highlighted, AFC underscore is OPENLANE to returns is that

addition, strong OPENLANE and innovation In capital strengthens flow cash strategy. AFC's characteristics across fuel allocation our

the to the allocation. the sheet million improved an digitally of leading floorplan our quarters, leverage the X.Xx. generation business at We level liquidity. in focused value with This flow continue marketplace we cash with generate of approximately with consolidated our We finance strong Consistent capital and cash to and same. operations combination had remains allocation stands capital ended from balance net of our demonstrates cash Moving working asset-light, core of $XXX business. Overall, our and framework the balance year sheet prior flow.

part approximately back funding to ensuring continue complementary In repurchase and of opportunities as high-return, organic XXXX, flexibility strategic our share prioritize program. returns. X.X the million for bought while of investments We shares we shareholder

program philosophy available XXXX, on $XXX and will remain and the have principled opportunistic. our approximately share As million we of for repurchase repurchases end under of the

as to we In of year. prior addition, cash use plan this liquidity from in note senior in due and repay available the flow mentioned June to calls, million $XXX operations

XXXX, discussed factors ahead regularly most wide uncertainties. challenging of maturities, and to experience in Looking a business this headwinds. impact XXXX. is point to an that performance as our macro midst are the I'd provide XXXX and of a industry we all year. From some which or this the continue the commentary this period continue like has on of some improvements last in we now in we expect to range will year two, perspective through macro strengthening dollar, U.S. low From in resulted we a expect beginning recently, until perspective, like creating will industries, see And more to off-lease translation

terms In business enhances The our and for of further half value in make in our the EBITDA. was strategy, and investors. With marketplace of not advances XXXX, of business to business our our approximately sale service XXXX. represented our key half X% of net sale model automotive fourth completed to XXXX consolidated X% with OPENLANE's we to of the regard quarter. This and our go-to-market and business consistent initiatives, the portfolio, digital our business we adjusted core investments first both model to simplifies plan to second customers the continue revenue

improve drive the investments, and incremental these experience. are ongoing returns not will will customer our only have and we confidence We growth, further investments from but seeing therefore,

others, operating $X.XX share and our adjusted million. our XXXX and be expect $X. we And million factors we to expect earnings $XXX to per adjusted EBITDA be between between these $XXX and Given

and summarize in and our Finally, release to driven support XXXX, which earlier guidance in line marketplace dealer quarter with EBITDA for Consolidated these operations our million earnings of we from are by XX% million is metrics of XXXX. growth $XX volumes flow X%, be fourth adjusted adjusted published cash Further EBITDA we in $XX generated the $XXX with million expect available today. To XX% by between for growth. grew year. results, capital XX%, grew expenditures

mentioned earlier, Peter earnings final OPENLANE is As my this call.

at I'll optimistic appreciation right supporting winning leadership for me finally, leader. better want OPENLANE Therefore, future. trust. With the and So, And and been purpose. honor talented for It's to over are has about and to remain making the entire expressing committed the entire thank OPENLANE. business right I want to a a a strategy, my team I the you and community the insights to thank OPENLANE's model and investment call questions. to operator close by that, an me team and serve who Peter, gratitude. OPENLANE our turn our for your I privilege support,

Operator

question the Bob from Instructions.) will CJS Labick first (Operator be from Securities. And

Unknown Analyst

on Will is for This Bob.

[setting] industry the how in volumes With they less decline and are dealers trade-ins? have handling Or Are been steady? off-lease vehicles, keeping often? more

Peter Kelly

you, Thank been steady or Volumes strong. Will. have

was year. volume Our in all had growth That's strongest quarter DXD the growth fourth XX%. the we

well pleased base months with strong active number. the grew that platform sign-ups of very United really States dealer of sellers had in So, buyers. the as on We our fourth We and the new some quarter. in

of with And even pleased all volume believe, even XX% sales. say really of listings, didn't faster I our was though in volume it than I So, that. grew of remarks, we the

So, not to I'm inventory noticing point. out there at any this lack not least at dealers, of

that, good feeling about So, Thank Will. you.

Unknown Analyst

be affected Very And volumes Canadian one to helpful. wholesale you more. trade war? or Do tariffs just by expect then

Peter Kelly

to commercial Yes. do say any sort all, is, in. is well growth, was to prosper ourselves what on OPENLANE at speaking new of see and customer front, the on the wins If I'd fourth very we volume progress, I which survive front the first I find we of positioned guess strong progress I think to commercial environment dealer look in strong about. well with -- progress just that I quarter, and

exiting feel good our say, and year been the year model, management starting through, some macro new strong I'd about sheet. a I business frankly, the positioned environments with that our we're challenging And here the has with last four with how team balance over years. So, asset-light

well find that on. company a to environment really there whole positioned to whatever What of of range lot prosper speculate used to will the So, don't they want they in cars? to will variables ourselves are applied? -- out is a What there's apply we this But that. There's about I'm there in. about they I good Will be speculation tariffs. percentages? really that feel I confident So, apply

Operator

will be question Gupta next from Rajat from the JPMorgan. And

Rajat Gupta

the DXD Nice one on just had first I here, progress here. volumes. acceleration question

the give could that. the terms and outlook So, congrats of give market the did anything you terms a as what sense on in baked in both specifically? And quarter question, share range, and your your in us obviously, if gains were could Curious you then what you volumes. think wide what's of in a us for your It's follow-up into dealer guidance? commercial of a U.S.

Peter Kelly

Rajat. Thanks,

So, let me take that of the part first. question first

I I the So guess, saw Canada. Dealer, the solid United the performance quarters was as both growth four in mentioned, with States pleased quarter, in We yes, in I'm year-on-year our of growth. strongest quarter XX% and in XXXX,

for growth So, and volume about I good growth, participating in growth not feel both volume well, offered as markets. sellers buyers. and only on on good vehicles but that sale

So, feel really good I about that.

third the good specifics States, the about the quarter. we beginning end the leaned had the United of into I States. question sort In of of feel quarter, Your additional of really investments second at United around sort the

the little inventory. coming a So, our the to approach. made decision of felt strategic the the sort now commercial integration we a time of go-to-market accelerator that OPENLANE bit was on We off the rebranding, hit was

end the of yet, full but were quarter. those from the we've fourth say, So, and through think marketing both technology, grow some of investments out I the efforts off. we impacts the sort in to see think paying and payoff that that and go thoughtful there improving seen the made of I'd participation. don't And I what performance targeted of sales in investments, I some, very drove

that towards as quarter about that. end of Frankly, me increase fourth the good slightly caused feeling those to So, well. the investments

adoption going -- So, a market, I I fairly see player I into share-wise hear U.S. I our NPS the is them. large So, our we've very the as XXXX. our And is platform. strong. U.S. I share a small in market and dealers strong in we very got today, repeat us offering, from relatively I Rajat, have but the see momentum market that And when in I as surveys. that our some here talk look okay? that fairly use guess feedback very, see in the in at TAM, believe, a we small, to

DXD a sort So, I as source very of at look long-term And about I feel sustainable company. DXD the the bullish growth this opportunity for market. of

of go it. So, it, that's kind going that's looking we're and after how I'm at how to

source the On It's strong makes sellers, that of differentiation. the side, obviously, this one unique. is of commercial with footprint, our off-lease commercial company particularly things a

It So, a really about lease you volumes originations off-lease challenging that. the of be again, of XXXX I will as in XXXX. know, happens, that low good year because commercial feel in terms overall

factor that's So, known a in. going

Our guidance of -- that the also that. despite what is a that from I that confidence case take by way, lot reflects QX. But was and the in

So, down the maturities versus in performance. a prior delivered commercial our nonetheless, QX strong of QX volume business were very But year.

XXXX grow finance accelerating and And that a outstanding me and I -- strong I to at XXXX, business of together a a continued results. XXXX commercial our beyond. performance together business OPENLANE, of looking prospects can think opportunity where this I'm grow that, commercial I for we XXXX, our base growing grow customer So, a what strong that in the so put two alongside excited our time, a business of in steadily when start into the dealer company. delivering XXXX, that's and about acceleration on has side kind going an that's and over very those sort alongside strong that's put that's here TAM, then that for things of this of in and business XXXX share,

Operator

Baird. Craig be will question next Kennison the from And from

Craig Kennison

well. to want wish I just Brad, you

business? looks OPENLANE. see about to the basically flow a very what statement like $XX impact Maybe I on with cash had million. key tied the I'll positive a you, start You Brad. Is that on line item

Brad Lakhia

that's Yes, accurate. That's accurate.

Craig Kennison

you that or back customer to on had just an add come And an had you you? of Maybe a little Okay. a a color incremental left gain had mentioned share with and side, or whether customer award Peter, the a think renewal that's been back. I just that off-lease already

Peter Kelly

wins back. don't Yes, question -- losses, recall and It's about more a and left can customer prior up come of this with customer. customer a as question had don't came specific we that earnings call typically We you. our that a in I Craig, thank but talk

So, left. years customer it was ago. probably four That

alternative So They year three last this were ran be they've years platform had and on would year. successful. an four. RFP We an late

be volume will that to real year. It impact this have the we end any towards want onboarding material clear about So, in be XXXX. I customer of that. won't

incur in start will the process our we'll volumes up again, And some of to XXXX reflected the implementation But in in In and show fact, costs XXXX. guidance. that's in beyond. the

although share was years point, at So, from four say. that win this I ago, would a back it incremental consider let's

Craig Kennison

And Peter, then, another in a moments response few ago to question. just

commercial You the inventory on Can exactly integrating talked you what a platform. means? more just little light shed on that dealer about

Peter Kelly

Craig. Thanks, Yes.

So innovation, again, the integrate and how we digital these to us the process move innovate our platform assets as making enables easy here sort focus of faster, faster, combined being etc.

sides touch that. two me let on of So,

marketplace hits was was So, all, rebranded our in okay, over that just all OPENLANE its the That -- life when when when the brand cycle, year first into and point a to cycle what launched the BacklotCars of marketplace up the part of of commercial open OPENLANE we that to the we ago, launch. inventory off-lease open OPENLANE. then integrated the it that's the U.S., we

as all, So, encouraging. also vehicles dealer by we've franchise seen that franchise then, more the because buyers strong of volume of dealers And franchise are first purchased understandable what of since But a there these growth marketplace. appeal on seen significant and increase the It's Craig, being frankly, in very in our OPENLANE to we've terms audience. dealers. a we've that's off-lease of numbers vehicles growth in seen typically continuing would logging

with there. they and of we single say the majority have and obviously to access franchise seamless can private within that find sign-on that's brand, a -- app going. What one let's to logs support dealer their dealer So, we we app We that that to marketplace OPENLANE if want on the positive. a phone, obviously, launched last what OPENLANE here out a when labels, franchise private their did, was to Craig, a -- that's on month, has label. the or keep they're just the their a franchise log-in They the they're app dealers

to for of they their buy anchor sort in we're that launch So, dealer and label, they the extent, of to they cars trying the an point also can can private that some but so course, into make open app sell. can

live behind and one the we're So, that's excited about the customers, was kind of now that. our with what and that app, thinking

that So, you, -- Craig. explains I yes, think hopefully, it for

Craig Kennison

does. of America. it Bank next will Yes, And from the be John from Murphy question

Unknown Analyst

at that, XXXX was and versus about look -- the it's adjust adjusted the $XXX of we Peter midpoint or the of midpoint. you of $XXX to EBITDA for $XXX X%, of get you mentioned sort million had key the sort you if of million Ryan. the so full base EBITDA million at million sort X% year, to the When $XXX

AFC that X% and see without about might mean, talk like, that much it indicates kind about Can I between to sort volume, challenges. just So, not AFC, some organic that And of from see from? Marketplace volume growth. where it actually perspective, growth. EBITDA growth coming loan a there's you you be of sounds Because going

So, will where just think from be EBITDA two you the will how and curious it between come that segments, generated. growth X%

Peter Kelly

thanks, John. Well, Yes.

first high the comment, bit well. I'll me your little of more of get as question let of on details then all, the into a a a sort So at guidance level,

terms business, year's is last of the of Brad taken here you're automotive of X% first One That's in referenced X% of all, think of So, I'll obviously not them X% think repeat of our terms guidance. how just guidance out sale are I X% them, factors -- right, of to EBITDA. guidance. revenue, the to of, to the overall, about in there four key and our that's

You've math already. done that

a And but the of I there's think a a reflected in, I Canadian year commercial that. mentioned, headwind sure. of maturities. going created headwind overstate there some a one to okay? volume lower on profits, the and headwinds of want has bit that, for then is bit I don't recognize little a off-lease that, math We in our the of little on European can you this dollar U.S. think you strong but do

investments QX. made a investments late that in go-to-market. in We late finally, So, little QX. the that's some We addition then And been reflected. increased in U.S. to added

on commercial XXXX. Notwithstanding investments year the all year forecast headwind We of have strong through carry that EBITDA a side. that, those of will despite increased of we full with sort the

So, I about feel that. good really

model terms but marketplace I guidance, the the the say our incremental okay? side of was won't In saw plays. say of business. pleased on on in side, the of with of dollars we'll performance I we be of -- say most are the pleasantly that gain year in the terms the AFC contribution, fourth marketplace But would quarter. I'd most our So, I in see I would was how surprised,

Unknown Analyst

some dealer. customer. how sort then going just and talking sounds baking changing and sense. sell very is the growing Or dealers literally and kind retail there might leveraging receptive these sounds things it at actually really it maybe the a sell so sounds really some these and very of to to in dumb like idea of confusing, then any of should talk lot changes I kind the about it intuitive tech to making landing or in are one and intuitive market Okay. one any and confusion what are But and tech. on of of the for auto market closed app in I'm I label exciting. app, makes you side? analyst technology, the their absorb point just on about It into marketing or the technology to than leverage product the private a in entry one wholesale very adjustments? of And a even sort power of you're some that level as sell, doing And a auctions Because aptitude the that be When so kind this trying -- very just spot sounds it's the you for of the is question. it's buy mean the as keep savvy, there second of you're with you're and so? to more place dealers say, pains in curious of and the buy is

Peter Kelly

it's good I'd here's very I guess say. And a Yes. John, what question.

a dealers us, a use. all it's First perspective, tell and us when give the my from lot of talk favorite of use. Like ease of because on it's dealers, dealers use our to marketplace your our to simplicity we one marks so all, to of easy platform high

scenes. So, pretty there's not, but try I we sort the Do We to time? on lot very the sophistication behind front. do well a we easy. that of experience make of succeed the Perhaps think all

they here, of Now almost like habit buttons I how it, this a know works the dealers that, and -- use it's John, nature. are the the downside to and is second of app build and

So change of a get range when you stuff, you'll feedback. typically

Some adopters early happened. what maybe will some just like and love it people

careful you've on got to be So, that.

to I try it try smaller feature very that. those We think things. about to a to and types a be out do audience all roll try do we We to testing. and new iterate first thoughtful through A/B of

think So, we've [cheese]. yes, about careful I people's to be moving got

what invisible changes OEM, I've of that I've this of have think I kind I'm was with on our now had bring is my a never And a of sort say, go-to-market a of. got to part it He company a an know long the ago. OPENLANE doing experience was customer, sort Oh, -- private been process. well who that is six for to aware that said do, So, buying John, dealers we ours branded time. in the of months dealer, them. until dealer angle was that's good But I've thing heard that sort that units mentioned wholesale for well. right? opportunity didn't business to about as label them. over because And with will knew and we're of dealer though, had sell side it trying about OPENLANE and decade. OPENLANE in of right? probably these realized, The that's a some expression. I just oh, of these Midwest I as been the he'd odd

Unknown Analyst

helpful. That's last And question. one then just

pie I've talking franchise heard you and a area. versus what about what car a as maybe of the a growing of are growth the franchise versus of which it guys the sell dimension a give line quite dealer-to-dealer much You're dealers on driving there of side. of buy between portion is independent there dealer the you dealers. demarcation ton percentage sense But or growth how like obviously growth And part bit, draw really any two the franchise independents? on kind us sounds the or is mean, a I the makes is never used could

Peter Kelly

of you dealers. understanding and rough franchise say the break purchased of volume But sort hard is of that give that fast, we commercial most it, by it John. sell volume out to We don't I'd just

say the could cars franchise by You dealers. commercial purchased we percent XX-ish of sell is

the to And That's of And say market, business. the dealer-to-dealer the for enough most directionally purchased dealers. understanding for is rough you the sale volume independent by accurate most, from purchased of Within math, is give most XX%, -- franchise that's offered an XX%. when dealers. XX%. I again, volume XX%, And of but

Unknown Analyst

on But on the even equation? potentially opportunity even that buy is the dealer an side side increase more there to franchise of the

Peter Kelly

hope increase well. On we the side And side to as obviously, would there's sell on for an sure. it both. the opportunity on I mean buy

Operator

Bret next The Jordan Instructions.) question (Operator from from is Jefferies.

Bret Jordan

primarily in space a current be Or through new standpoint cyclically from on and we you auction the XXXX? guess seeing a be just side competitive, with competition for As to struggle or sort salvage that share market least I what's expect of the of you commercial do car state to the promotional other of at sort whole and guess, I what XXXX see used is legacy couple the look guys, the at environment becoming entrants of the and more pressured? could

Peter Kelly

I more customers. competitor. for I to But want see maybe I I guess it specific what any Yes, here's like on But -- maybe one see it. actually Bret, I the you the opposite being see don't say. see. don't are it would clarified actually don't comment choices we'll we that

First our really good I feel OPENLANE, of company, that about the all, about positioning when we think have. I

just brand with auctions, wholesale I ranks. most in our dealers well, OPENLANE own been our ever, only preferred again, that's both than or positioning XX we've dealers. for think it's actually I in asking are dealers has been with or the rising as but through internal think your sellers surveys, commercial the surveys And U.S. independent also better months. third-party who the OPENLANE some in is with And whether reflected franchise not market

I experience. our the marketplace, good customer strategy, feel feel I and better about So, improving better good technology that. about delivering the delivering

a got think the differentiation commercial strong I seller side. we've on really

for our leader volume We there. leader be will growth is well. remarketing. company, I going XXXX offering been. to XXXX, volumes off-lease but in our And but strong source be stronger We're That's grow a of like a as strong ever XXXX feel are dealer-to-dealer differentiation a are than to the beyond. it's of those with going and a challenge, source also

again, seeing I customers I in think like And said remarks a a big really strong We're but share more a earlier, getting better TAM, offering. I think, the small participating. outcomes. we've we're market in we're relatively got

think viewed volume the going I grow gain and our we're category. over term, to that So, share long in

offer might about time. focused what we we I'm what I'm present vis-a-vis feeling on offer good the listen, really what and So, offer, competitors at

Bret Jordan

just I sort -- that through lease least? the was of Or originations the guess originations quarter supply? Okay. year standpoint, from had XXXX, notable within the just given low of shortage lease And any there a troughed. Is just modeling in it

Peter Kelly

in Well, -- -- to XXXX. if their started And diminish were -- to QX returned they max QX then XXXX, I And they and the okay? believe year looked in we QX in QX QX. at quarterly then year-on-year of decline in lease sort the the at they and of they originations, growth of

kind a in was slowly. of could It than modestly. declining pace the of want these higher But time. roughly of then the be that there been I return. If our at some declining okay? payoff been clear that to about little decline, but in I don't some cause on to it in is still to of continues want a to maturity a if which to moment it that of that has pre-COVID, bet that, So, It's place way -- of And we in has lag sort acceleration this profile. take three-year hasn't declined. consumer the percentage, think wildcard

Bret Jordan

new think used change and tariffs drives up as on cost -- because goes the of by of the vehicle more value do you Do a that up whole? a -- attractive a creates If average of does the consumer environment underlying tariffs, that because payoff? $X,XXX

Peter Kelly

values if about vehicle up that's you go payoff could narrowing, gap probably doesn't declining, probably Like leading X. equity to to be half by think Bret. help, X, has by up it go vehicle The and bit been consumer new a Yes, used that percentage something assume -- I of I -- a values honest, might But to out off-lease some plays. but what it overall narrative, quarter trend it this we'll a be cause the like I referenced. of is have that. think it to or But which might that delay might don't that. just changes see how push it yes,

Operator

session. Peter turn closing to this for today's will back and conference the concludes gentlemen, any remarks. question-and-answer ladies And Kelly I

Peter Kelly

for you, your interest and you, everybody, thank and thank Chad, support questions your and OPENLANE. of Well, continued

the As positive XXXX I entered call, I momentum. during with believe we've mentioned

well is for in long-term dealer growth positioned and sustained both marketplace commercial. Our

a finance fronts. and to multiple category-leading continuing we're advantage have We extend business, technology our on

performance first very quarter good Have later OPENLANE's evening. our updating and remain you you, our So, for spring. I Thank optimistic on I forward this look a progress on future, to everybody.

Operator

And sir. you Thank The thank concluded. today's you, conference has for attending now presentation.

may You now disconnect.

KAR Auction Services (KAR) 19 Feb 252024 Q4 Earnings call transcript