IAA - Earnings call transcript Q2 2019

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Operator

Good morning. My name is James and I will be your conference operator today. At this time, I'd like to welcome everyone to the IAA, Inc. Q2, 2019 Earnings Call. [Operator Instructions]. you. Thank to Treasury. over like Vice Arif the of President turn now to call Ahmed, I'd ahead. go Please

Arif Ahmed

Thanks, questions. James. XXXX their had everyone. Executive Chief IAA open With Good Financial morning, will are formal Officer second today joining me call John Vance the quarter remarks for and us Officer. President we fiscal Johnston, Kett, After made year John earnings and call. And conference to Chief thanks our for Vance and

Such remind to and you certain we anticipated begin, and like Before meaning the expectations regarding statements. are and assumptions actual strategies forward-looking would management's current during Safe could are within uncertainties made plans, financial materially and on from statements statements such Litigation of call to goals provisions Harbor that this the XXXX. made forward-looking I comments our Private based and pursuant of to to differ cause Securities are the performance that our constitute and risks subject results and of Reform Act

factors SEC The referred today date our of to today section as IAA's the in any filed these and XX, are June this with of to press made and of factors obligation issued update Information filed the Exhibit not XX looking call, release XX.X undertake risk Form Statement as forward-looking to statements does on XXXX. the the important statements. are Those IAA forward

release relations in the obtained to of non-GAAP most IAA's adjusted available be today. to a refer or visiting Finally, on at measures measures certain will page schedule www.iaai.com. by investor today's copy measures of issued GAAP release is this directly A the the of website press A this speakers financial may non-GAAP press financial comparable also call. reconciliation

will turn John? to the call now John. I over

John Kett

public you thank and morning as new a earnings our second Good quarter joining for Arif. you, company. call and our first Thank

their of successfully as milestone this took team to about us You spun hard future us. we point. want Auctions a Services front in get work get our of members and to all IAA good opportunities and for really know have a We it KAR great for us IAA work lot off to in I we the lot important dedication of from thank this for June. to feel hard of to

grown have and our a public a be We to leader industry in company. as standalone

growth favorable our benefit total of backdrop able loss. percentage and are We have combined tailwinds from a industry a drive a and enhanced resulting strong that with industry to With to the an structure. focus driven for We our our us now to be well value. streamlined claims services believe strategic an shareholder significant addressable operating and declared market grow strategic initiatives, business position increasing

outlined outlook, were the with to U.S. pleased Now strong bottom in performance, to results our growth to press in of on We briefly businesses this with growth I'd including like both a and and and consolidated delivered our EBITDA recent XX% saw per which morning. financial quarter XX% volume. top We XXXX. revenue strong unit international we line and revenue growth and a compared the results and quarter close second adjusted in our were release touch solid

our previously communicated business we our good with of results year, ahead feel to As full look we deliver line the about expect in outlook. and

higher We some really for that which and into have XXXX. purchase volume believe we position. remarks. will mix nature, initiatives vehicles Vance on in minutes few strengthen our his a more our our further changes that temporary all we experienced outlook some competitive the have the We provide some position a been our outlook to feel on market of buyer fees are of in in about are we good factored will in and shifts details a of making in think progress number

But and plans. longer about both talk term me short term as now we our forward, look let

one reinforcing our we and is business sellers results day of to our that well our further focus every our three implementation public execute plans. to term near a deliver and Our company few on great processes to beginning of functions and margin for expansion continue and buyers developing ensuring

We remain delevering initiatives other focused also balance driving our growth on key sheet. our and strategic

we fully instilling expansion focus margin growth a our manage and implementing disciplined term we allocation Longer capital will approach will strategy for capital how be allocation the accelerating the be as our our grow. plan, Discipline to foundation on company.

anchor our follows a first, They share. outlining growth So spend We relationships to insurance them little enhancing existing initiatives bit of wallet like penetrate accounts more these with opportunity total next, of share increasing of and term share addressable increasing deeply support as and our of by and sellers. well our existing to the that time as non-insurance longer plans. I'd turn market as are expanding see

in progress good fronts. these of We both are making

to our strategy these offerings second deepen is service relationships. growth The broadening strategic

our we meet As the and focused to our innovative we on of capabilities to customers, end services end are leading to more solutions. needs adding further look

For and financial such examples increased is as helping With by company insurance save are and our cycle partners Services. we sellers money. our both loan IAA would title institution adoption procurement, Inspection time seeing them and reduce loan include payoff, payoff, services key that

increased and of leading video bidders quality bidding outside the the the the enables proceeds. accurate been have XXX and high with get product and that buyers, car, IAA efforts IAA XXX further provides our to expanding which and an more inside recent services. higher our vehicle, view our focused on developing excellent of we've activity think information view We most buyer on developed on For to condition transportation

international network. Our buyer enhancing is third initiative around our

base focused enhances through prices for new a helps buyer doing larger easier, international improved buyer even are programs, and expanding buyer to IAA and our network on targeted and sellers. with business aggressively advertising improved to We competition make policies our having maximize

digital are And an improve to in have buyers assessing who trends arena. margins. our they buy believe margins, a are telling market to we desire to we and meaningfully listening regularly are focused opportunity our we us vehicles that Fourth, we know, on expanding increasingly you

this to we our As move IAA. making platform, auction increasingly for more will transformation participation We're result, of we online cost XXX buyers enable higher auction achieve towards enhancements conducting and also auctions also engagement changes an expect model. additional our are to year. assessment reductions. experience and improvement improve on facilitate to We will opportunities and early next more that in This to and our term sellers the move for towards think margin meaningful a including of drive Longer sellers. a buyers, view opportunities online this a proceeds we're the will us digital increased the specific benefit platform process dramatically making will detail

enhancing driving innovation our data analytics is The capabilities. fifth initiative and

the transportation. of number to to this and with Payoff, with have through been including IAA innovation buyer We're continue and continued at currently promising partners, partners, a develop in buyer area. our our progress invest value IAA mentioned expect view Chicago's We Centre the able see IAA and lab other working on and Engine innovation our service XXXX to solutions in number Loan seller in we XXX implement and projects a Innovation added previously of House and

in expanding markets. is and Our strategy attractive internationally operations final our growth sixth

Canada primarily in business the grow and Our international HPC continuing to UK. is team our on build today focused business our in strong

and opportunities. the in international also are process of assessing other identifying markets We

disciplined on we opportunities We strong in priority will high that grow be way returns. the internationally, generate focusing

is our lean IAA of our has of Loan our the negative previously as are acquisition DDI. we Payoff we with unions. lending over integrate further look I forward product are growth broadening really total As a competitive and around and one about to to our advantage directly electronic we XXXX loss equity of that advancing end, claims. credit service With this loans DDI now of ability excited With enhanced which regional product now established is transaction Inc. we believe integrated institutions, our providing as We for service we sellers Decision settle part many IAA which this mentioned, strategies this offerings. are its are To through with Dynamics,

to partners and are We their and IAA. deliver to upon I and continue support value new so forward employees look years. In our chapter for all the over this summary, again driving would begin thank for goals our we our to our commitment excited buyer and stakeholders. like to And for seller of

turn before will you call call to questions. to over now go and our open we results the detail I thank over the more So Vance outlook in for up and

Vance Johnston

good to we in corporate the we company. are I functions to feel near ahead of strengthen focus read standalone as discussion that public have about the our in to will progress gate, and mentioned, making. some of now QX, out us delivered solid term, first I We results. With how or be my we as to on really strong reiterate John, John quarter our non-GAAP a said the certain but detail. Thanks, more work continues a excited processes business I adjusted want will still our which be review today we're

item know. one begin housekeeping there I is to I want Before

We non-GAAP the adjustments will have made included for changes measures what going versus forward in we KAR the reported was certain to Form-XX. under to IAA present previously

as not adjust no that million adjusted second for and longer our and but [ph] press we representative detailed together X.X to our X.X million ongoing stock which quarter differed we continue compensation year-to-date realm have forward will operations release. adjust the EBITDA, Going of for items for expense totaled are will in for

will expense to and but are that changed operations of all For the and for intangible adjusted adjust second have for for EPS for for and stock acquired amortization more quarter this also our assets. comparisons items clarity, deferred related we proprietary of will rent, not We provides and adjust year-to-date. believe representative adjust XXXX will this not that ongoing compensation

second million X.X% million Now period. million of to the XX.X approximately for volumes XXX.X million U.S. million prior quarter X% increased period. year from XXX.X XXX.X in second and in XXXX revenue primarily year X%. the International increased prior per vehicle due XX% revenue XX.X increased XXX.X of the to million higher quarter. revenues to from XX.X% approximately the in revenue increased to from fiscal Consolidated

consolidated year-to-date significant since movements increased business. in revenue sales XXXX. volume due for further we our in impact exchange and and comparisons international vehicles as second by XX.X%. year of volume quarter which Canada minus record mix fiscal million volume revenue. of The and is where was quarter and The exclusive from our costs. impacted in purchased the the to partially offset as contributed of from was purchase to as to XX.X%. from defined additional added price revenue, from business in magnified amortization vehicles, Canadian year in of impacts increase business increase primarily X% of international XXXX We increased currency higher a to primarily was mix basis cost in the of Gross new this Foreign vehicles QX the to in negatively depreciation increase XXX.X late revenue in a by revenues as generated international which XXX XXXX, over These million profit entire services XXX.X second due an higher decrease margin occupancy as previously by items mentioned, purchase points well gross

purchase our only amount of We versus is majority business, vehicles of the base. a which small consignment

vehicles, record purchase the price auction do price in at lower versus as which entire sold we we purchase when services base. a revenue consignment of and gross on as sales margin results the vehicles cost However,

issued second primarily with were XX.X in cost the the XXXX of driven million X.X% quarter expenses. to SG&A primarily million from revenue, diluted second to primarily was XXX XXX in or rate increase million million, deferred per last XX year. adjustment higher year. rate the Interest The effective to net our expenses share XX.X senior SG&A offering tax net Adjusted increased notes item spin. versus quarter. in The by by X.X% of million fiscal Adjusted the last offset in is an discrete basis to to quarter effective in XXXX. due XX.X% million quarter second the interest quarter XX.X was X.X in to or effective of the increase related This the income taxes consolidated which fiscal increased in XX.X income the slightly increase tax by second impacted related to increase of from share services compared negatively to points. partially XXXX rate to fiscal the XXX.X of per by and Adjusted was $X.XX EBITDA the due XXX.X million tax an million incremental adjusted compared expense XX.X% in diluted the million $X.XX

increased of year XXX.X our the prior revenue approximately primarily year period, reasons XXX.X the increased X% to from XX.X to X%. million per International in regards revenue XXX.X with year-to-date Now from prior prior of due in X.X% to million consolidated year performance, increased XXX.X million and increased U.S. vehicle XX.X% volumes previously the period. XX million revenue to million in from period mentioned. the million revenue X.X% for to approximately higher

Foreign movements volume international a of to in an impacted increase as XX%. The primarily in increase and well exchange by revenue purchased currency due negatively international revenue revenue as unit. vehicles, higher per was mix

by year that and in effective mix million XXX.X EBITDA incremental occupancy costs. notes the our year. Adjusted interest XXX.X as period in contributed expenses we XX.X period, XX.X% second primarily profit by in million slightly effective offset million the impacted our increasing effective These tax XXX.X by expenses. prior as an basis to increase by to previously SG&A to well the points The in which driven half senior services is compared prior from revenue increase points. partially was of spin in an in due by X.X% XXX.X to item rate year decrease tax increased tax to offset in items consolidated million XX.X was in of XXX XX.X% mentioned. with rate vehicles Gross adjustment The This negatively purchased versus in the margin taxes period increase due was primarily related mentioned. million Interest to year million business, the to increase international as to partially million related due XX in the to higher gross first consolidated revenue prior for discrete increased XXX higher the primarily in quarter Adjusted to to SG&A previously the last expense to XX.X year was from million the primarily off deferred offering X.X% XX.X%. compared million XX.X increased the issued rate the prior by period. cost basis we

million income decline increased net briefly to million cash of growth, to per or cash net as year prior million our year. adjusted well like XXX.X some XXX.X XXXX would the which on an million, a increase with for of touch an working XX.X% in in six $X.XX cash cash sheet diluted function just flows $X.XX in per timing million was from is free capital expenditures metrics equipment due key Free spending. or to purchases capital and due XXX operations, flow share to of flow in XXX.X Adjusted we as from as last first defined and which compared months the is balance diluted flow $X share I income property period. of a well. increase was The which our of as less primarily

execute million XXX conjunction revolving in we million term XXX senior off quarter QX structure that a just a offerings million with us provide the second was loan the Net strategy. of undrawn will private and notes on credit and XXX X.X the a capital debt allow growth During billion. with spin of at completed transactions B end of These our facility. under us to

debt which as targeted two Our define current adjusted and in times. getting to ratio a of leverage to the X.X by divided near intend we EBITDA of our term within is times goal three with LTM, range delever we net

will instilling on an a well disciplined also M&A we down approach. As high term, opportunities. opportunities, focused basis as John focused In evaluate while on organic are selective paying his continuing in debt, growth both be remarks, as to return allocation the near mentioned we on capital

our trying outlook. buy We will lease to our also [Technical prudently to evaluate Difficulty] options

towards our performance we growth half target the expectations second end revenue now higher are year. tracking our our Given the for year-to-date of for the and

from of we revenue catastrophic on as to customer the growth in XXXX rate As targeted a revenue which long X% of QX consolidated X% from increase our X.X in timing exceed reminder, XXXX QX. growth this is would the wins billion generated in reported expect we to growth growth Based revenues, represents XXXX. a for the and well losses as in revenue also term fiscal target events in timing revenues

growth was to mix from X%. EBITDA XXXX to pressure X% will vehicles factored of below incremental -- our expected continuing range and XXXX previously on higher purchase growth Our year provided mix is that purchase are an of EBITDA of based to Adjusted our EBITDA will adjusted an and new company Therefore well. growth, XXX have we million, have some and this costs fiscal X%. term long adjusted still of but we increase have public to as revenue definition in be anticipate we vehicles for a do in X% for for on targets margin we high

call With that questions. open the we for will now Operator?

Operator

[Operator from line line ahead. from comes question Instructions]. Go of is And Daniel our your Inc. the first Please, Stephens, open. Imbro

Daniel Imbro

on in revenue that seems it you like per growth top Vance were So these in what the we this of of specifically XXXX? and And look the and strong in half to higher maybe into move, a line back guys unit think are? quarter? can prior through the X% more expecting, sustainable we little than pretty dig drove you bit quarter kind on how As drivers

Vance Johnston

of thoughts that. Just a couple on

per think that quarter vehicles it things. to vehicle. the continue and as purchased see at average know, really average the well, is couple certainly get for One as you proceeds couple driven that also the know and So that buyer mix by so proceeds then is kind on you fees, One is factors. it's we other -- slightly revenue well we you do per auction, driven second cars about the of impact by as and of are we a a thing sold as then that of can higher increasing unit, the is

prepared have XXXX of outlined want did due that the we we is relative as The higher second example, quarter primarily the other impact in second that our well thing a had. in in new to XXXX, that the that the of remarks, to purchased vehicles we as Canada contributed for and quarter mix of business

that your hopefully answers question. that's So

Daniel Imbro

have the one barrier the helpful. definitely to talked Yes, opportunity. like growing you be up opportunity. services then increasing seems M&A network offer you via the them And on would international that What a your ancillary about big going? that how to your, build your look some how buyer you over is now, you is you biggest you years? And follow your do of capabilities imagine a marketing to then coming John, international today? mentioned Do know, internationally? ability Or those Thanks. would the

John Kett

in We we So in but international a selling to terms grow to international of robust network, XXX the do buyers the deeply markets through we we opportunity business some very find you think serve more buyer have see we marketing, know, enormous plus targeted those network, buyer we're make to do continue already that, and countries. buyers, can penetrate us. with easier and for do it additional we

making terms really that's international of So buyer. to continuing on towards grow opportunity. the buyer really progress that good renewed focus We're that and in side, the

international In the most ancillary request transportation. services buyers, terms obvious of for is they have around

So solution now. but first out North that's be domestic we out to from find little services will really ways can our international and the markets? looking a America that to offer international a be vehicles we able to We're of at bio-transportation were these that stage think we next for move to building

Operator

ahead, comes please. line Kennison question Baird. from of next from Your Go the Craig

open. is line Your

Craig Kennison

developing run process really maybe How few capacity over we ask public talk and wanted identifying, get growth to company. next plans. to your should the in well to the permitting land Congratulations for offer services? on years, point model land about your as to property just this process a about I and a

John Kett

land to growth, growing footprint about our our support need business. our think we as to So run that we finding

we're Now for need we and a special but process. property, zoning, through typically industrial looking to use even go

but do So at good prolonged it can it, process be a fairly it. again we're we

our just mean, we support Texas. growth. in Phoenix and I put grow some our the additions releases out on some our seen footprint and continue McAllen, You've of Texas we -- to Houston, to

at sometimes, that got we're down. think but than the I good longer we've would like process I think then is it So I

at going the we're we have to opportunity procure forward, about we're to going to of going terms In can economic if allocation, on be forward, look potentially think jump opportunity. look going to as Vance purchase and We're opportunity about it’s property property. to talk capital at we land, best more but buy lease going the and and We If need to leasing, really the going more we make buy outcome. the we're certainly the the a returns looking sense. at in think

Vance Johnston

that number growth. of to, and purchase now alluded think about is I again, view We're We and just you. the thanks, add, and option we return Obviously, know, good with to of or would we that as right do do both with pipeline thing profile looking thing we depend shareholders. So we the what for comfortable the land us, very John vote to short what's a that for which years, and amount best capacity to to we're is the what for lease is either have on the to the will one, change nice out for medium you support feel process the have, as speak developing. a term we think the

bit So what that leased primarily be done than [ph]. different we've a which would historically, is

Craig Kennison

on to Thanks. recent that think way would And what's through you an follow should the acquisition that, you acquisition DDI be profile about like we margin the or question the that. How think the just best monetize how made? up of

John Kett

electronically element, of with. with think state improve DMV, a times able to process as part by I the dealing of more going to it's loan to know, that because going be title really, really because because a on of you and and our has, foremost, efficiently you're and linked connectivity also time it it's being mean depending there's able first but our payoff critical they support cycle that DMVs, I see are we in to we're product, quickly the XX So opportunities to service our be which it's and

efficiency vehicles this we more of process help us improve going our So our is really the by being able move think operations through branch to to quickly.

Operator

with Your of the Jefferies. next ahead, Jordan line Go question Bret please. comes from

Your line is open.

Bret Jordan

commented as or of about half you and any far customer base share? talk Could you're wins losses as about the market the You of meaningful what of and impacting timing customer second year. seeing shifts

John Kett

as mean, so time you I know, are and we this to there operate and Yes, business, from movements, volume. ships time

in and as we, win feel we said year know, feel earlier, market. comfortable but good very, about You any we the really very business business I lose I our competitive position in

Bret Jordan

as purchase the looking Okay, from and I mix a we third great. sort And into trajectory quarter? guess, vehicles half we quarter vehicle purchase are mix in second of the second at the the and look the the year, ramp accelerated of at of

Vance Johnston

the for the is, XXXX took business that and us significantly obviously, obviously purchase of it had and late some second had quarter because, know, insurance, from of of in the second quarter impact some that. new XXXX. vehicles, really half in an vehicles gross Canada anchor we as half we you have situations half of time because business is, not, good first And so sellers, did that very, cost in big our where we when first do we business if the the good of it's in in you for services working a not we is don’t So won our will, our XXXX remarks, of it time, and impact on first on that again for then and in to prepared catastrophic all or business that margin the that opportunity with in revenues we events, we but XXXX and in once outlined and did of we this was it's our purchased customers, on either will did XXXX there's about

move that we of we back in the anniversarying be will will that the back half in of have it to normalize XXXX. forward XXXX and half start we As because

Operator

of please. next Wolfe comes question ahead, from Your Research. Bottiglieri the Chris Go from line

open. is line Your

Chris Bottiglieri

kind how would that if purchase revenue disclosing margins ever wondering then much exclude COGs could kind vehicle policy? if profile, like about gross would would vehicle that was quantify consider revenue which separately just of changed as distorts hear think want I your and thoughts on so have think you purchase separately, you how you unattractive and I margin of the disclosure viewed be you to

John Kett

vehicles quarter we XXXX. Canada impact it the of second was XXXX really also detail. is of that vehicles margin all a is We going end couple new total some second did because that still outlined higher you purchase So of quantifying I a move very small and first be would half of that but to just it's from it the a XXXX happen are was to it What so not the it business on impact business and prepared business vehicles. in about things and level the purchase say at win quarter XXXX purchased has good in because have that of we I our bit percentage little in the we quarter business at revenue much so has an in in remarks as of to magnifying our of can quarter think and we one

which of profile purchase about yet, what's though a good it be philosophy thing is at the comes the good total that's even look and return way investment move margin, do we we as about the certainly disciplined the continue gross it. purchased look slightly running the and to it, the are think higher There vehicles, to to we out leverage it was picture those, that on way I we drive lower a at it on bit we're return go This around one gross we profit we certain EBITDA we think primary expect feel as quarter. at it's and it's a dollars a certainly so SG&A there, very higher good purchase it, about quarter it and to to treat of circumstances vehicles. really small to where little to component opportunities but in vehicles that from can continue

Chris Bottiglieri

in did top of you volume how revenue volume your this kind guide very as of And started or the ended but related predictive and positive I mix, inventory revenue at have implying You deceleration you was this negative Okay. vehicle at half but specifically? back was the know shifts then quarter. the in three the the up I high some at lagging purchase think about end kind for some guide growth of mentioned isn't is your of quarter metric do super

volume what So kind totality on growth. to kind you. want of the message is of think about Thank

John Kett

losses, plan. So we still our into and had wins right. have built We volume growth

As built I movement still in said industry is on plans. volume our into we of a occurs this but regular basis, earlier, growth have that there

Operator

Your from ahead, Stephanie Benjamin next Go SunTrust. the line question comes from of please.

Your line is open.

Stephanie Benjamin

the of the what you you about some for, to Maybe then little maybe be these market penetration in kind existing non-insurance looking and plans even and bit could insurance a and increase just total non-insurance going of hoping bit after you have that then was about accounts and capacity accounts. to penetrate and also capacity I side. of account on accounts some a maybe your kind little your could constraints with specifically you'd any of you're increase touch your speak

great. be So any color would Thank there you.

John Kett

from capacity the end. things further penetration, it's talk in really loan which some in clients, processes. the all their rental volume the segment yes, got banks, about services value the market insurance, think there's we think sellers to can about much we We been more further that's for talking that existing car customers that that's we're volume think payoff, have can partner then tail happened provided, operators to think And the to through make around companies, we about we're Title claim, that So time opportunity a as you reduce the Services, that it fleet the if grow when those you non-insurance really additional about roughly inefficiencies penetrating business when claim if loss as a we got our of and of we today. that sell generate been those damaged terms and and But cycle not about in are transaction. for And we've think and that historically entire of total about the beginning through think we've non-insurance our we of see we've market at constraint we've revenue expertise, the Procurement XX% grow process of and balance efficient. some have and These upstream adequate well. addressable as and because of to products the and really like penetrating you vehicles our we good continue then low we claim believe

Stephanie Benjamin

on touch to around wanted guidance and in just I some volumes, commentary you lastly, in also then the of fees. terms some mix change a And vehicles, made the in shifts Great. buyer but purchase

that the on bit So you little change a fee elaborate buyer just could mentioned? you

Vance Johnston

out and yes So buyer adjustments fees our changes, fees increased available, we to make that's effectively in categories. did the some buyer market our in which some

saying year. the the So you basically is, in outlook is, for know, of is are back that half that what we reflected our

Stephanie Benjamin

towards we the think next of of even kind should was that about that end implemented? reflecting year? that done When How of kind was the And quarter?

John Kett

quarter. know, third think the beginning you the right of Yes, at you more, can about

Operator

Your comes from Prestopino of next the Go Barrington question line Research. from please. Gary ahead,

Your open. line is

Gary Prestopino

give of this versus us was you vehicles quarter last? online that the Can sold percentage

Vance Johnston

We We be consistent we've percentage I to couple but thanks think don't moment for consistent, Vance think trends was I over the the is these. at and this quarters. have don't the seen last dialing of This in. that able it to with exact provide

XX% XX% of around know, So were range sold think, cars you a kind in of online. of -

last of will will to last years couple you've As the to change in continue continue that and before, seen about that even we've the as demographics go that certainly continue in our anticipation, kind of to buyer up. quarters, change habits in up discussed go

Gary Prestopino

at leads that to want to than mean, the my to you next And guys giving rather something Right. John, buy about certain all to online? site? more question. I possibly having going the any sites Are in thoughts venue buyers an auctioneer an online your fact that mentioned you

John Kett

are transformation, that. part the to we Gary. our groundwork mean, I do to Yes, digital able laying be we're as of

Gary Prestopino

you that doing have now? Okay, sites any

John Kett

it been timed although without timed and we're traditional We've product of do do the a auction to percentages of offer auction, are we've part It's vehicles products. has now vehicle. online buyers going out the got the We the process. there know, we selling the through a not, of going new buying we then where acceleration continue you through part auction

selling So are auctioneer. vehicles we sense some an without in today

Gary Prestopino

then acquisition, offering? not give does were and you give this any Does lastly, this Okay, this you any DDI? that currently services you

John Kett

It does.

processing now we deepens to have some partnered service So electronic had that access states, an electronic registration then but and XX with offering? that sent the we and really states vehicle offers DDI title lien

Gary Prestopino

Or just the it all lien that states ability listed? states are is processing? e-title Do the to XX the and have

John Kett

the it's even subset of a Well, XX.

So XX, we of levels within different the the states. connectivity have with

Operator

Go on the from Derek Consumer Research. Glynn question next please. line comes Your ahead, of Edge

open. is line Your

Derek Glynn

the have potential for options your economically that for the lease buyout. pursue these to Can quantify What on lease help potentially opportunity? buyout facilities land us of portion you [ph] to for contextualize you of attractive over Just time? or

Vance Johnston

couple a So things. there's

the or a is in it and the view property those option, have us out opportunities. just looking So and of that there for the kicking it's in cases, be one interested is leases. know, attractive decide kind foremost, that will we lease buyout it buyout ones a not term, property at to off is that project whether are look we we'll we a you lease and over at have an a and be buying The be longer have because look to where to way first most at process will

that look purchase and that kind if and or likely. term we it's attractive we're interested return has be tell in that it. is for a a investment there's where that a provision of willingness even buyout, to to in able that's sense to it’s out know, from terms able or capital early us will it be can of we strong a We too have like and probably to through negotiate perspective the of how be negotiate opportunities but be the and actually So and in which those the not perspective, provision a don't A, less for exist. buyout we lease lease many is terms Two, going from the three, process have to makes then property land opportunities long will that buy to an to to a that counterparty to come

You good that that of we use know will believe be a capital. that

Operator

Your next question comes from the line of Bob Go please. Labick from CJS Securities. ahead,

is line open. Your

Bob Labick

about, platform digital an touch to that potentially take margin you going in as on auction process, expansion Have board to you talked Q&A would live thoughts digital? long it across process. the that in started wanted opposed a purely to How I is back you the do like just about and a something thing? you you think change little to implement Have it it bit then that? where are in the

John Kett

So in our we we've to flexible close two groundwork platform, so can sell much we be about the of really that laying this for for been more years enhancing vehicle. terms how

it our drive prudent what desires to highest only sure think the to and and in quarter level of to to will to are pilot changes satisfying and some online then see step and the they and we're that what we're proceeds the XXXX platform, it to out how make going are. buyers for look So beginning buyers be fourth being to which we be adapting sellers it, are the of really test we rolling first our is in continuing

Vance Johnston

This thoughts is just I to would Vance, add that.

will than it of I a the buyer kind market obviously, locations enhancements of So we kind kind help terms our that think will auction and as auction one needs we in platform to dimensionalizing and buyers trending do us will we product, all have exists or that that even of are buyer alluded think really platform. a online of that leapfrog is way our answer for buyers turning be think that making to your way and we question believe to demographics in John that? something around we be there's great that less and

we're continues sellers. that, certainly in so that kind thing for would we our so can of make to is think much small make those be a buyers, markets and could terms but would so and where make it we subset help for where financial about it a see a as really it the be so and think auctions very And would likely auction the live sense great in that the you of I things diligent do the and we we evolve, offer investment live to and robust longer a in buyers know, what's make and markets sellers still still think sense because auction markets, there to probably of and will best to thing those there certain sense be to for total and buyers for continues place could take term in going situation live

Bob Labick

little And know time then other you talk par, some HPC bit I that with it work just for my now IAA about under you've not question, it, more a can to had was brought into time business talking to they've before, the and since learned that that been them some expand the with over time about plans you've fold. you've what but the any or had now

John Kett

of the we've market a got that in some there. UK a improve their to to different management there, that introduce America, is we you there think do offer do footprint so We is see definitely fragmentation. developed are of see to market some see but good and grow thriving. is we UK some slightly we've HPC to type that business. is able agreement business team, and opportunity grow there support primarily be we purchase opportunity the technology products them providing a and So we know, North that do opportunity opportunity market HPC good get to systems to the got We that there,

Operator

line Northcoast question our Instructions]. [Operator of from with John Research. the next comes Go please. ahead, Healy And

is line open. Your

John Healy

a underrepresented have wanted you're created that of And the pockets the that or base? the about international regions has maybe more void ask in? buyer there Are buyer feel I any factors gating that it opportunity higher. to historical been you that to base little bit that in globe the drive

John Kett

more that we base it the characterize I opportunities. or four the opportunity so again, Yes, grow to it, it's additional grow as last it wouldn't more void, but a five buyer years it to grow I we international significantly see the just over .We've an continue think grown

East, So well And as social learning we the digital focus markets renewed Eastern buyer. we've and West matter seen Mexico, Africa, Central some see that we've buyer opportunity just our grow, accelerate to and got a we're it's Europe, already a of international in those a utilizing advertising. all media, base solid to really growth in America, is Middle really the in

John Healy

the most the days. about of each call Great. existing relationships. wallet, gaining fees other what about I wanted in seller are I companies to your And can terms ask share made earlier these imagine of in close insurance pretty you of to then comment their are enhancing

that that business and of So insurance are companies you're for the reasons proposition winning what you're losing kind business bringing value to share? and that when what's the the you're to today win

John Kett

Right.

the they business large processing, offering industry, service our those make checked grow as and them do in trying them their and terms really are maintain about and them. of way offering to on been So on vehicles quickly really, as have how as efficiently I them of and mean, will of is we in we make successful share be of our unique, we insurance to really can ground. with focused thousands with in getting to each, breadth really claims That's through to almost continue to service have to talk company the companies, through we it because continue their The insurance process. up the can as our process you're thousands the successful our how picked execution easy for process. vehicles they each what's are and to really particularly important us independently when decisions you and help

Operator

this like presenters. And over I'd our the back turn time. questions are call no there to to at further

John Kett

talking our have as we to go appreciate all Thank thank it forward. we new call you IAA. We So day. and your us. support the you for really look quarter all forward to for and great Thanks first joining a you and

Operator

conference concludes This call. today's

disconnect. now may You

IAA (IAA) 13 Aug 192019 Q2 Earnings call transcript