IAA - Earnings call transcript Q4 2019

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Operator

Good morning ladies and gentlemen and welcome to the IAA Q4 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded

I would now like to turn the conference over to Arif Ahmed, Vice President of Treasury. sir. ahead, go Please

Arif Ahmed

and and joining conference fiscal everyone, IAA's call. today fourth quarter XXXX thanks morning, us for for Good year-end earnings

and to have made Speaking Officer formal remarks, Financial Kett, John open their After Vance the will President; call Officer. Vance today Chief Johnston, and Chief John we our questions. are and Executive

forward-looking strategies, Safe certain of statements meaning financial this call during Before I like would made pursuant anticipated made we are of Reform of our to our and comments Private and plans, to, begin, performance the Act and Securities Litigation constitute remind Harbor you that within the goals, regarding XXXX. and provisions the

management's such Such actual could expectations assumptions cause and subject statements. to uncertainties forward-looking based and materially differ that statements results on from current to are are risks and

year date the and IAA XXth, statements ended update to XXXX. does today undertake statements. filed in Exhibit forward-looking Those the in statement XXth, of Factors today factors referred important to will we report June expect XXXX, are for be call, to near file XX.X press The in XX-K Form made as any obligations our are the filed March release issued of our the on which included and IAA's this XX annual XXth, XXXX section with information on as SEC and of the on or December Risk not to the these forward-looking Form

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

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

John Kett

and fourth Arif. Good for joining thank end quarter morning you and for year fiscal our all us Thanks call.

our thoughts of on individuals the are COVID-XX. our that that at like with by to are everyone first, IAA I'd Before say impacted all results, behalf discussing

and Our first priority remains the health employees and of their families. our safety

taken employees believe the have steps what the world. protect necessary our We are we to around

it's of the our the point, situation timeframe. business this may on over and unclear what At have impact what

revenue our expectations impact. been dynamics quarter-to-date volumes during monitoring this have of that period, per original situation. are early assess unit well created crisis the a line gathering market with in and and stages time in assessing as the our data While And we potential customers as the fluid to has

his or But of situation, light we outlook we In outlook long-term first the our not so fundamentals during of some quarter remain will business, additional are continue and long-term And thoughts XXXX and monitor the current this call. we plan potential today. confident We the in will to can providing a provide impact do that we are our on Vance of COVID-XX. do to remarks. hopeful

XXXX milestones, services Turning an XXXX, accomplished IAA late spinoff year important in for we June. was car auction including to our from as many

to support complete. of talent, teams, structure is growth independence. proud company public enhanced some During IAA's functions, we to successfully functions say the expanded now this our our build-out also extremely hired of that broadened and largely I'm key and the depth our operating year,

-- capacity XX estate growth. completion with flexibility our real projects, with with increased also the additional We future of providing us for providing

in company to financial drove near-term our objective with stand an strong fiscal also XXXX, along performance. we up So, independent public

growth growth with we in organic of of adjusted at revenue of year, original goals. EBITDA spin, line delivered our time organic the For goal the X.X%, of the ahead our and X.X%,

the competitive our I While feel position delivered growth that quarter in with to third we was confident we future. volume our quarter and that fourth positive. volume known still look results the impacted was shift by pleased our in am the overall as call, we reviewed

margin a Underlying the minute. as well just see time, and more detail the drive we progress that discuss opportunities made in further I in my to we over is against to strategic make confidence as initiatives expansion continue have which our will

me on let initiatives. review our key the First, progress

We buyer network. progress international to enhancing great make our continue

partnerships our efforts XX Our digital in-country and are alliance and continue market search now ago increased buyers significantly our a we international just and Through the months we efficiency results. volumes. in have efforts overall work, growing represent We well. visits have strong partners as marketing, percentage six traffic market alliance have versus in of our engine digital showing web marketing countries, improved to of optimization

and our buyer work business from to by marketplace. to with internationally drove is sellers and we we and XX%. bring activity buyers For double-digit in year, increased are Innovation growth our ability solutions over innovative the both sold the to seeing results units to international core significant

interior was buying. the Through This and now as out into tool developed a the this exterior U.S. enhancements bidding is to earlier provides we is including product, have in this and tour, this confidence work, is platform things such feature we've vehicles that buyers' of XXX and View, view increasing imagery which as integrated before, and this which, discussed through rolled a XXX-degree introduce continue across we full to month. superior

as instant access based options, of This customize to features vehicle's each as manufactured by of enhances XXX vehicles interest. ability buyers our areas View to tool providing specific capability well the evaluation original on their and with

In such continue and to engine. merchandising platform as recommendation innovations our buyer key virtual addition, start we enhance engine through

positive these buyers feedback from of seen introductions have sellers. All and very

are all auction returns strong analytic assessing experience, improve of are our providers. optimization while buyer which We opportunities continuing the our strides generating significant for other to on make data to enhancing focused also capabilities, in

relationships deepen key strategic is Broadening offering priority. to service another our

to One enhancements IAA reduce we've our industry-leading made As well improve services is cycle-time last we and tools in Payoff. Loan reviewed service quarter, returns. as as such

title. which are negative to up receive or loans, equity is be positive of off only quote, is Payoff a guarantee efficiently to payment industry's for a and IAA receive claims. XX% solution, in end-to-end enables all payoff providers the get of the estimated to loan arrange real-time product paying Loan Loan allowing marketplace quickly a to only negative letter the that Payoff equity and the

connected base via Payoff portal grow daily. continues lender to Our Loan IAA

XX Just ago, add we we a had today, every X,XXX. lenders over Similarly, and insurance new month. to continue we year have providers

efficient to cycle-times. is with seamless friction as focus a sellers reducing process, points provide Our as eliminating and where possible well

cycle-times Through And our DDI continue enhanced reduction Payoff believe integration further product seen and IAA additional our we further to we and Dealertrack, to acquisition of have Loan we have the in with opportunity that efficiencies. capabilities. our and have build

an a Snapsheet, integrated with also provider management of announced We leading claims partnership technology. recently

parties claims takes in automating by to of activities the reduce loss process well the the vehicles, the insurance involved as carriers control for it loss total process. Our combined offering across will greatly both exchange total the as time of all information

business turn have Let months our our carefully our several discuss analyzed initiative. one expansion to as Key heard for transformation the buyer now me and expand plan. margin Work digital you've to underway opportunities is margins. among we before this opportunities been on has and us plan these

buyers and was in During included analyze we both an resources XXXX, online and entirely utilizing made our their to XXXX. capabilities enhancing feedback. and in in model almost systems incorporate internal external surveys our exhaustive to This process an preparation significant conducting extensive with to move progress and

more We to information, and enhancements added with have core vehicle tools, enabling merchandising a our to data and and have of enhanced bid technology, buyers made confidence. number we've

well our to our and are the the We are the of current most rolling branches in underway U.S. we out auction accelerating in throughout environment, digital-only rollout.

quarter the this second the that will rollout end We by year. complete are of the we confident

Upon the completion, we will revenue recognize and will benefits buyer enhance overall experience. both live eliminating from this cost and auctions

that realign our We free capacity. will some believe also in able be will we to turn, yards, additional some up of which

experience process to seamless and Our make exceptional. goal the is the

Efficiency. completed we EBITDA of by XXXX. identified additional initiatives; Buyer these Based Optimization, million million Branch key incremental and opportunities Process Transformation our to adjusted fiscal $XXX Optimization, effectively additional now Improvement also initiatives; assessment on We've assessment, our in can including add expansion Towing $XXX margin believe following Digital Pricing the have and

situation. to implementation from relatively And note we to We've I'd of this potential impact commence and Digital the the begun Buyer any already expect of incorporate initiatives like not most Transformation the does COVID-XX soon. that

many performance many the plan. We pillars well our we and margin of with accomplishments achieved. on deliver and overall growth our expansion we to and are are positioned XXXX summary, pleased the In the we execute believe in -- strategy

of I thank our work against our their to Authority hard goals. I'm place for the certification that Global on work great in want of Culture. to proud a in all and was teams Workplace the and awarded executing very XXXX, IAA from also dedication

and operational turn to expansion beyond. goals executing committed over tools to against our stakeholders With are the plan and best providing for solutions call Vance. initiatives, I by all value will delivering and margin year our this sellers, Vance? achieving that, to buyers and the our growth long-term We and driving financial

Vance Johnston

press our full non-GAAP financial now more details today's discussion today financial calculating margin see plan. QX non-GAAP results. release key methodology Thanks as highlights on review and our provide year results. John. I well the our our will of for then year Please as focus and And color will full performance. expansion further on on adjusted we'll my performance I QX our in

the XX.X% was QX the tailwinds line better industry in quarter up XX.X%, benefit total expected as of quarter, than from to we as the continue from industry for For top ratio slightly our XXXX. fourth we loss was

organic drove X.X%, revenue per driven higher unit in as primarily we growth revenue volume. a the of For as increase slight quarter, by well

our was of unit other fees benefit per growth in as primarily and driven products. adjustment international well XXX View driven previous the -- buyer network product as revenue and to the Higher ancillary our was by

line the the during EBITDA we by adjusted public company increase quarter. driven which SG&A top the primarily X.X%, was in was resulting the for incurred offset performance, costs from Organic by period growth incremental our

million our net in capital balances primarily spin the expense a debt higher our increased year Interest prior off. increase resulting adjusted quarter This $X.X in expense EPS $X.XX fourth impacted $X.XX income from adjusted following driven performance our versus last result, period. structure versus interest the also by as year, was and new

already As volume XXXX vehicle. combination our revenue for results, and ratio higher industry original XXXX, growth total previous The it increased relates fiscal revenue above XXXX. per X.X% as by was to to year of in from our and a John guidance, loss organic XX.X% XX.X% full for driven reviewed, growth

revenue costs. strong of prior mix Gross the international growth as higher the vehicles despite due margin year was flat purchased higher a well segment to as in essentially our versus occupancy

year higher to below off. as debt quarter, for additional company Similar balance and Organic adjusted costs. was EBITDA increased of interest with to the X.X%, original was our higher due line primarily expense spin from the the our in organic SG&A public growth, result revenue expectations following growth a

EPS adjusted by diluted X.X% fiscal versus year, the For grew XXXX.

Turning now flow sheet. cash balance and our to

the driven ended $XX and the with ratio our inventory For million, as expenditures year free the generated of year, term we cash flow shifts year. times million slightly primarily we repay Same-branch over million declined X.X discussed. a X.X%, of we $XX.X the on prior of by impact volume previously Capital leverage $XXX.X of increased have loan.

slide margin the on that Now, be currently Investor expansion with please my will presentation during regard plan, to that I is discussion. refer website to our Relations available referencing our

want reiterate I I impact do the do situation. benefits EBITDA proceeding, any Before from potential assume the discussed the COVID-XX that not of to today dollar amount

long-term we outlook, benefits. update may we and the XXXX As adjust our

discussed, slide comprehensive plan this months conducted assessment the Please have and internal have a we on using for John as working both several turn external to past three, resources. and been

full the pillars to XXXX. realized beginning result to next plan the will be key partially drive net margin benefits that four range identified five in adjusted in over EBITDA years realization annualized this fiscal to $XXX and expansion million $XXX million have in by with expect XXXX We

Efficiency. please two, four, now to four of Improvement this Digital and are: Process Pricing turn plan Optimization; Towing Buyer Optimization; Branch four. And Transformation, slide three, pillars The one, and

will Now, reducing revenues. reviewed we higher discuss buyer Buyer highlights cost for John Transformation. is key to driving experience provide well please underway turn to Digital slide our and while five, and the work this initiative, where best-in-class a

for for we will from our improved merchandising Through and revenues vehicles. features with the science experience and increased differentiated revenue proceeds buyers impact and of will improve both platform, Internet significantly. information, use and higher This transformation fees auction higher and data costs new overall coming

the of live cost will elimination cost. result side, corresponding in a auctions most On reduction in

this adjusted of in rate our estimated full total million net $XX run a run expect from million with rate EBITDA $XX We benefit to specific initiative achieved XXXX. annual

services. today we six, new pricing -- adjustments changes services while through slide plan structure buyers turn buyer including introducing Please also monetizing optimize we ancillary our fee for pricing to that and some our to products, that revenue-generating selective provide valuable are

improving million, experience. goal rate to Our $XX net annual rate initiative features is buyers in of estimated buyer generate a $XX EBITDA to full adjusted remains run the while building the This with breadth services and total expected for improving of XXXX. a greater million achieved benefit run overall

to turn please seven. Now slide

costs focused enhanced towers actions includes are optimizing of rates. initiatives expand This our of to model and tools. These competition, an network drive our We on and terms portfolio will management network name through tower more contractors, our turn in route towing like performance new few. vendor of which optimization key a increase competitive expanding and renegotiation will

enhanced We well. benefit to programs will as also and towers be providing new

to XXXX. with full a $XX expect adjusted EBITDA run rate rate total estimated $XX achieved million million, of We in annual net benefit our run

to slide eight. turn Please

elements operations with entitling Key new include automation an processes as see improve also as Digital branch implementing key opportunity model. performance costs efficiencies management well further the We and of aligning tools. Transformation our Buyer reduce by to

drive a for buyers both better to and expect experience sellers. We

estimated expect run associated total full to million, rate EBITDA by run achieved benefit $XX We adjusted annual an million with net XXXX. $XX rate of

Please to to by achieve get turn cumulative well, category. category here, to as by see run net as the nine, anticipated can run to we the the rate that by full you timing benefits rate expect XXXX slide

While work do margin between investment, a of total million between expect $XX investment $XX our the to will now fund initiatives. require BDT and XXXX limited all million expansion and capital pricing to we

the work their had and from all seen volume been impact requiring on have undetermined time. over unit have As what evaluating that two for But and expectations. consistent measures the John period by employees companies home our been We our quarter-to-date we focused past has with of and recommending weeks, have per on of that an taken noted, or results. to are flow the we revenue could either it monitoring COVID-XX cash potential

our to recommending driven, if of the total period miles employees business mass increase in of could total of ride to toward a With total ratio. driven driven it if miles continues the accident decide total include flying Conversely, drivers turn home Key frequency. drive trend transit caused decline, miles it loss have likely or instead and for could require which to sharing, reduce from would people using work to miles respect time, or driven.

toward determine a economy occurred and assignment, a loss and Because much half week there data over the between is one receive the two usually the to when weeks. stay-at-home to could impact has only to window past a we and be. two occurs an when review We really the what have to move two still don't

impact we As the our on to it's we a result, the to prudent potential guidance are this additional believe time time as at not of situation business. understand take current providing

have our be outlook better the provide potential COVID-XX. a We and situation. on quarter impact first hopeful to which magnitude will to our so point will call, continue of the the of we we XXXX long-term of are We and we earnings monitor and that will plan timing believe to we at do able sense

remain our the As confident of business. in we John fundamentals long-term noted,

open With that, call up to questions. we will Operator? the

Operator

you. Thank

session. We will Instructions] [Operator now begin question-and-answer the

Craig question ahead. first Today's from at Kennison Please Baird. comes go

Craig Kennison

Good very so question wanted for and the about the it's details morning. early. I you I much traveled. the Thank miles you margin for know vehicle plans. shared to taking ask on

claims. if from that or you this shops accident indication give have wondering with likely see -- conversations would collision for repair week we're I'm to decline You just companies some that said but any the you anecdotes in insurance

John Kett

joining for Craig good morning. you us. Thank

all I players. even with don't it We don't point they're do industry our for again, have that anecdotes -- is assessment. it's early. this and trying And is at you -- We with it everyone's -- contact have same very any -- have customers been in the other to

to understand where things are We are go. to going

Craig Kennison

fixed cost appreciate to and I and question. here. you taking for us stress fair cost your Vance, a totally structure? Maybe that's test next sold the your model few SG&A just through we feel, What's Yes, and think of months? you as Could goods that variable give try and to

Vance Johnston

think provide that think But cost you in of of branches you I detail. it think services, overall, be of first all, I things about field, really whether that incredible in in our about if those model -- Yes, would the can't sitting if majority or we related services services our titling vast provide services that the and care is or that nature. be of customer

the of or employee-related are before, what And are costs either I would cost is majority about we've as talked of, they costs. towing-related say vast those

And so our think costs that cost be large that and costs, about you that, of service there's employees customer about as a think variable portion have running do obviously, towing the related the as would fixed. volume of you is branches, we titling-related to that

is period would think well that going to For of which probably think to then the would occupancy -- portion would and think I way is of a components and costs there but be it to of would think that in some similar fair assess benefits conceptually. I be costs, There it as it's about that fashion, But be as some think people some time, should that we some and volume. be about fixed. And variable portion variable. includes are SG&A obviously, the related that you of that's about -- that way

Craig Kennison

downturn? just last future of could then you that pushed your That's just Any Obviously, maturities any given may you and covenants got are you've that lot quite on here helpful. question, immediate, in whether but play comment potential in about Vance. that periods, exposure nothing have curious on And a be liquidity, covenants any there? a out see

Vance Johnston

exposure. immediate any see don't we so -- we mean, I Yes,

year only we on our on. not the a revolver, were drawn at the drawn covenant -- that are if currently springs draw it on end springing not of which and have We only is

and on plenty obviously, time. -- balance so of at this sheet point in have And our cash

point So, things comfortable in feel with once situation where change, again, in this time, point the can at this we time, at at. but are things

Craig Kennison

much. Thanks Great.

John Kett

Thanks.

Operator

And go today comes from our Inc. Please Daniel question Imbro ahead. next Stephens at

Daniel Imbro

taking Thanks questions. morning good Hey, our guys. for

John Kett

morning Daniel. Yes, good

Daniel Imbro

about just shifts, update Last quarter, how Would share hear state market that's your It customers Vance, that? lot stabilized love the business. quarter-to-date levels XQ. you somewhat we business to a are share on talked and like an to your improving about responding in there impacting sounds your you're how the to about made you've can service details that are of your any changes how they're and

Vance Johnston

then in go mean, kind Yes, well. to I'll ask I and I'll John of jump as

thanks for and one, the So, joining call for questions. your

So, I think a couple of things.

as that service, on, of to we in his we prepared and think, number in I feature more key also what if It providing we think really have to experience more place allows Digital cars so, really, as we talked have experience that in initiative in will and certainly enhance which more a significantly on is with doing confident initiatives on going put the remarks, think -- those them about John, we bid focused to be place XXX buyers, today, and will and that the doing bid Transformation, we're Buyer that primary products cars. in about you buyers. a much services -- for tour we're best View, for

And experience to really best focus them buyers as we cars, the we what our we to and compete feel move from focus really provide so differentiating vehicles looking we on a efforts a and information in of we to and primarily as far, -- that, the we're about And market. for that's the as think is total how in kind want is so for going merchandising in well And set future factor good and we're digital around best of that for toward that plays auction feel the the good really tools the that. we're seeing results of buyers. that, primary

align greater doing payoff something, we're help have with reduce And relationship really, and more is then with returns the and sellers but and good us help seeing buyers, ourselves cycle-times obviously, business are them a and way, sellers, that on. what focused secondly, we And sellers, we're them very, is sellers there. loan trying helps talked doing by to a which and buyers, about with which we're to seamless lot for very also strides drives what

John. So

John Kett

and the more Yes sellers merchandising. recognizing we're improve and on buyer more doing side what the the are to

translation making So, increasingly, are they And of that merchandising higher there. returns. -- strides to it is I leads we're mean, recognizing better the the they recognize

about So, offering our that I to returns I buyer think -- sell-side drive products to side yes, the higher we're doing levels of mean, them think our sellers I both them. and excited -- what the are customers directly on we're

Daniel Imbro

guys And business you the much this second Vance. near-term. on plan, but while, obviously, Got then visibility worked today, question on into margin it. there's have understand the for a expansion the I backdrop not

Are the So, I you've you identified comfort get do plans five years with savings comfort do time a look cost and the guess, how already given? or long is to how of Obviously, these get you ranges timeline the today? out. with quantified

Vance Johnston

Yes.

up engaged So, as that's that been the work call, that I on been team -- had some led time. across of the it. process has doing cross-functional alluded in John to in the been has in for we've a And presentation today company as work, work big the period to in and

as resources well. used external also We've

out initiatives each expansion spent to think you we of these. we of the is the of one margin we've what benefits assessing of is and have a these figuring page a specific identifiable see and effort. and related So, And and nine each sub plan time them, identifying what identified a lot areas are work them on of on that cumulative the really lot under timing one

there if are initiatives of very Transformation think Towing Optimization, number have we detailed that about you plans So, those. a each and detailed work example, are Digital think for sub or of you about Buyer for

answer the we And the plan, point, confident feel at benefits. about that is this very the short So, we feel confident initiative. the about

understand somewhat we be to are as by a we degree volume-driven we mentioned prepared around in some as could that's of it COVID-XX here impacted don't today. to, which Now, and these our sit subject to remarks,

Daniel Imbro

for then last And more near-term. Vance, helpful. That's one me,

tougher increase On quarter, row Can we much how in quarter the the that? expansion of gross expansion, margin second you gross the in the driven despite how then are comparisons. that talk impact, in underlying driving but by be just is of business? about COVID-XX And think this took what's saw Thanks. may you you margins in sustainable, a ex price how trending maybe the XQ? And the

Vance Johnston

Yes.

So, of a things. couple

I one, But good are that So, driven But by including XXX primarily results the that the business, from and beginning it's in factor we fee the to nature. the primary the implemented think enacted would some adjustment we buyer buyer fees. that be results, being XXXX. we've things that of July also, across things View of adjustment of seeing

Daniel Imbro

it. Best luck of guys. Got Thanks.

Vance Johnston

Thank you.

John Kett

Thank you.

Operator

our Please next Benjamin go Stephanie SunTrust. comes at And from today question ahead.

Stephanie Benjamin

morning. good Hi,

Vance Johnston

Good morning.

John Kett

Stephanie. morning Good

Stephanie Benjamin

I the impact it's the early wanted about And to buyer bit I ask with potentially. a know little on side. COVID-XX

-- an you seen But buyer know side? you kind I of the from driven it's accident demand miles fluid, from just frequency. have the and lot but last a happen or any any change about just So, the could any what again, in spoke very

where locations? lot you then a of buyers to a the could just see quantify where percentage, you if it, of And Thanks. but not kind us have geographic that large maybe remind you geographically, you residing, your see

John Kett

Stephanie. Sure. Great

our a have buying week at not and looking have we mean, early, very Thousands do bidding bidders -- robust I yes, it every I mean, buyer again, vehicles are base. domestically have but -- is of -- we very and very, and internationally. So, a we

a benefit So, to our type I environment. of in think business this that's

So, that's the short answer.

we're And really we're to around Our to international out and base. sure But have then do strong biggest buyers, through engaged our then domestic them our well make stay buyer to this them we a reaching business. have, buyers countries. the as XXX it in market we communicating internationally, starts to process about obviously, really, Mexico again, we spread And that and is globe.

So, yes, I we what of know today. mean, that's

Stephanie Benjamin

large kind those renewals you your standpoint. some or And quickly, time from of from if come so could insurers to Great. due any that can ask had if it with remind of this contractual wanted about the of that of us we I year just think some line you may Thanks. maybe big just

John Kett

Yes, customer. again, talk about we don't specific

As confident competitive comment I going to my all position, our that's feel about and that. in said we're on remarks,

Operator

Thank you.

Our next Bob CJS question Please Labick from go at Securities. today comes ahead.

Bob Labick

taking Good the question. for morning. Thanks

John Kett

morning Good Bob.

Vance Johnston

morning Bob. Good

Bob Labick

two-part going about, there start Obviously, don't all does a take what's question. of through But of that can know if speaking? on. little reduction unprecedented how it period I your to we miles will times, wanted of time, talk miles to assume for bit be driven kind long with we generally first, you for a volume, into down flow a driven like

demand And be can up. cars, long relationship the talk volume how between when so about of bid at prices Because realized you then may part auction the two, and presumably, that lot going for takes? prices falls the there's still to a be

through help those initially, offset potentially. but come think volumes some down, you'll dynamics may us just have two of And

help If think you please? kind believe that us through with of those prices, dynamics,

John Kett

a said notified. remarks, and when in mean, his I So, typically Vance I lag we're accident a week half two yes, as to there's to two from mean,

of look kind kind short-term time that's of frame that at. So, or we would short the

lot of a In drivers of mean, yes, I terms a of the there's -- demand in lot there's of our side, obviously prices auctions.

one you've to new going whole got used them. for demand is dynamic and that cars. is cars, of increase the And cars of Volume then used

pricing. many and so we've, this, affect things time, look one kind driver there to it that at of because So, it's hard are over pin to

about, information forward to all to we've as more buyers. history, provide that we up we're with our to demand talked drive find doing to drive to through services, to -- our And to work continue we've But the again, buyers, prices side. again, through we'll continued more the more support to are be going bring

Vance Johnston

and prepared my half John a that's get remarks, And what between John that. of and to when to as to -- noticed in outlined weeks two we're incident saying, Bob, takes just to, alluded that the add was the I that's place two when

assignments coming think to you if us. So, about

to a have -- car, has be a carrier the of we We a top carrier the on auction on or to the it the we whereby same, top get the convert that then kind have into way, by for And to there's could month no then that least the period title. on average. run is that, of, But provider the no car. title, salvage time, so and of then branded at of

cycle, total so we've something And before talked range. in that about XX, XX,

then cars between that was of some sold. time there As if cars a think the we see are in results less would be kind when actually frame that of resulted show in when driven you in about -- decrease incidents, there miles up our would that

I think you're right.

an price there would important it where point you John kind demand, -- the to go that said, and what just if as we're here fair But those of in we that remained had buyer of demand was be environment, an think well. evaluating for buyer don't think a in we're we're assumption as think bidding closely constant is monitoring know cars, that may I kind process, I one less the then up. cars

this changing. we're very, process It's don't of to very But less buyer once don't we stages, have We're kind we again, how is -- know don't of given activity -- we unfolding. how kind of which monitoring the that. early is the degree in know cars. We

Bob Labick

it. Got

growth Okay. how plan. Can any, you've helpful planning much you're natural if that, margin then the accelerating that outlined on growth base of Appreciate you business take Those about have little of growth margin a are and to bit that. expansion And were me. talk the enable Obviously, one you lot margin as plans? for a in biggest some reinvesting it of more opportunity insights enhancement there. to be may back able to is reinvest in? areas what accelerate it or then or buyer the this And just initiatives other and opportunity of the international you other that into

Vance Johnston

Bob, yes, it's I know, Vance.

form is back as of we've investment that So, SG&A what look time and that going consistent the way share of the think look investment we're G&A, we've point to to to going repurchases, we with is our kind rate. operations the the what's at we're look we're any outlined have to in opportunities And in that opportunity capital, we I which actually capital dividends, we're otherwise, cost financial laid that in in other and CapEx have. about and think we going philosophy invest opportunities make M&A, relative to the that previously, paying then that in of at that at we relative those at those hurdle have going best down our you, to one capital out, debt,

as opportunities initially, include our do And nature road Now, back some also we've so business said, that, in investments down our is reinvesting those land are think good way, at the and expansion, there things as drive may also the international focus include of those may well. least we the include business. of may by because to on having opportunities -- said repurchases,

initially more reinvestment that's But philosophy the towards, at And the business about we see to I think think least in expansion that I opportunities. reinvestment. a of as generate We'll according through with do back tilt kind returns think, slight philosophy, the we plan. margin

Bob Labick

Got it.

Okay, much. you Thank terrific. very

John Kett

Bob. Thanks

Vance Johnston

Thanks Bob.

Operator

And Bret question our today at ahead. next Please Jordan Jefferies. go from comes

Bret Jordan

guys. morning good Hey

John Kett

Bret. Hey

Bret Jordan

update Digital seeing first on out you an order cycle-time magnitude put Can us out you give When you that a release and and the loan and program, still sort we XXX of numbers. yield press improvement? payoff or threw are had of some

John Kett

-- bring on and in mean, more really So, mean, I we we're we more And going yes, cycle-time. decreases well. insurance on Loan lenders companies, significant I that's seeing are. as are Payoff, we

pilot about we talked XXX year a release, On or limited the with View, model limited press of that program ban. number in a

breadth value vehicles. of expanded lower the inventory, As it got you've our we've to

probably our add of really And continue said the throughout positive earlier, still lift as I mix. we're mix nominal is we not -- vehicles, it's seeing impact to features still great but it. as So, to

So, that we continue believe additional to it's bidding. to going drive

Bret Jordan

are about running auctions. dropping Okay. And guess, commented up incremental were utilization at? you some auctions XX capacity by guess, live projects would estate the you that capacity fact then, pick I I you'd and the gone, real assuming what the

Vance Johnston

provided information we haven't Bret, that previously.

feel in we've the intermediate-term the as So, see then confident that's demand as it kind we said estate now near that publicly. and and not and to I we right have need have that meet well. of we But with is think information real that provided current what we

to providers. we have the that provide So, we need estate feel that for real our with we the comfortable services seller to

Bret Jordan

Thank Great. you.

John Kett

you. Thank

Vance Johnston

Thanks Bret.

Operator

Instructions] [Operator

Consumer from Glynn at comes Derek go next Today's Edge Please Research. ahead. question

Derek Glynn

COVID-XX? timing the environment, how XXXX morning. normalized in expansion so I this the Apologies from expect you from to excluding a million but benefits Hi, is good impacts on plan, assuming to margin more if that $XXX this, missed of the much benefit, of $XXX realize million would

Vance Johnston

prepared is would specific give what but say nine, laid think and I you a we've out, to indication by of where the I we're Yes, not amount, some reference benefits page we've if that, given today category.

said run you think benefits the rate $XX XXXX. Transformation, million EBITDA to rate be if million. Digital Buyer we've of $XX we'll have So, full will that a run net -- rate run adjusted we've And about said in

in we're in be all and the remarks, U.S. markets all auctions majority to complete them doing the close -- the expectation, As our prepared will his is online-only with it's And of to the John expectation of be markets. fact, our in that conversion vast said in we going which to all that,

so by be by quarter. And the of to we're done second going the that end

in in could benefits that, to year on expect of to XXXX, And those full of from so you basis, accreting the a not -- would be you're right? we get to you're that amount decent going a but that XXXX. going So, get benefits a see

incur run Process, to we a benefits recognizing of Branch then tails be Efficiency, XXXX. on a rate terms be Optimization, we we But Improvement longer Buyer in Digital Transformation expect do and well. basis as have and Things full Towing those like to when to little benefits expect, from expect bit Pricing specifically in they and when

Derek Glynn

then buyer Curious it. factors? can fees you any vehicle just geography based where on the you're is other secondly, or type adjusting Optimization out clarify Pricing that if being got solely on is then fees initiative, called targeting more demand demand buy Okay, you or And inelastic. evaluated? evaluating sell-side and And both or

John Kett

Yes.

-- no So, thanks, that's a good question, Derek.

optimization, certain we the fees So, we remarks, believe where all as of the some prepared And the that think no, on have it the the said way on analysis that is side. elasticity under the things related and that we initiatives done. is, would pricing our in to we the I describe are that buyer based where have that makes adjust we to opportunity work we've sense that price

we the either But secondly, we've previously or charging -- we and for looked products are we existing things of place or think in where to there's different that looked done at the I a research where think certain we've to for outlined customer them to valuable have weren't analysis because or those at either services where that for willingness and services and better to buyers. more pay we things. understood really that they're for charge products them ability charge something And there's now really, either number

buyer Pricing products is addition, and which in of we're But and In of really the also price that on we there a Optimization are to given consideration everything the how rolling services lot number new side. And we've those. may so -- about. to we've talked related of thought out, then process

Derek Glynn

me. Okay, great. And one then last for just

the want order miles of severity. frequency, thinking how coin, to may costs What mentioned your accident like COVID-XX? repair vehicle there second accident impacted You on you traveled on be thoughts to the but other side impacts are get also and due

Vance Johnston

I of can that John, that but don't that total -- anything haven't answer to I'll think we see suggests of frequency, as the that, and this, the would over percentage on suggest turn to relative driven, total that change may think we too, miles we I accident would seen anything mean, loss but I I outlined, loss percentage that would change. change based one,

your So, hopefully, question. answers that

John Kett

around of parts are repair among vehicles. to Yes. the And being asked I more little that a supply color. just mean, questions some the carriers are

and parts fix there's period just to insurance I for Is in does disruptions do if Do to timing, that an time? extended decision-making. to differently That timing then cost? want a their takes an into repair longer car? rental what if think And of going company it around? So, to supply, incur enters

those asking, as having their So, view, but are a areas our situation those on it don't company providers, been we whole are assessed they're of insurance are this us questions discussions they are have we're that questions part with that, in. as those or being just given we've haven't view

Derek Glynn

that's you. Okay, helpful. all very Thank

John Kett

Thanks Derek.

Vance Johnston

Thanks Derek.

Operator

gentlemen, the turn to back and team this final to conference like I'd concludes for any the over remarks. session. the management question-and-answer Ladies

John Kett

quarter. have look again, end all say you and to And at to forward wanted Thank great thank to Just everybody to you day. you for we talking first us. the a the joining of

Vance Johnston

Thank you.

Operator

concluded has we Today's sir. thank now and all conference you today's for presentation. you, attending Thank

have and may lines a disconnect You day. now wonderful your

IAA (IAA) 18 Mar 202019 Q4 Earnings call transcript