Hello, and welcome to today's IAA, Inc. fourth quarter 2021 earnings call. My name is Bailey, and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call, with a Q&A session. If you would like to ask a question, please press star followed by one on your telephone call pad. I would now like to pass the conference over to our host, Arif Ahmed, Vice President of Treasury. Arif, please go ahead. Thanks, Bailey. Good morning, everyone, and thanks for joining us today for IAA's fourth quarter fiscal 2021 earnings conference call. Speaking today are John Kett, Chief Executive Officer and President, and Susan Healy, our Chief Financial Officer. After John and Susan have made their formal remarks, we will open the call to questions. Before we begin, I would like to remind you that certain comments made during this call regarding our plans, strategies, and goals, and our anticipated financial performance constitute forward-looking statements and are made pursuant to and within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current assumptions and expectations and are subject to risks and uncertainties that could cause actual results to differ materially from such statements. Those important factors are referred to in IAA's press release issued today and in the risk factors section included in our annual report on Form 10-K for the year ended December 27th, 2020, filed with the SEC on February 22nd, 2021, and in the Form 10-K for the year ended January 2nd, 2022, which we expect to file on or near February 25th, 2022. The forward-looking statements made today are as of the date of this call, and IAA does not undertake any obligation to update these forward-looking statements. Finally, the speakers who refer to certain adjusted or non-GAAP financial measures on this call, a reconciliation schedule of the non-GAAP financial measures to the most directly comparable GAAP measures is available in IAA's press release issued today. A copy of today's press release may be obtained by visiting the investor relations page of the website at www.iaai.com. I'll now turn the call over to John. John? Thank you, Arif. Good morning, everyone, and thank you all for joining us for our fourth quarter and year-end earnings call. Today, I'm going to talk about some highlights from our fourth quarter and full-year performance. I'll then provide an update on our key strategic initiatives, including our strong buyer-based growth, our product advancements for both our buyer and seller customers, and our expansion in the U.K. market. I'll then make some comments on our outlook for 2022 before I turn the call over to Susan Healy, who will review our financial performance and outlook in more detail. We ended 2021 with a solid fourth quarter performance in line with our guidance, in which did include the impact from Hurricane Ida. Underlying our full-year performance was the further strengthening of our digital marketplace and the impacts of the macroeconomic environment, both of which contributed to strong revenue per unit trends. For the quarter, we delivered growth in revenue and adjusted EBITDA of approximately 33% and 19% respectively, and this performance helped us deliver full-year organic revenue growth of 29% and organic adjusted EBITDA growth of 36%. Let's talk about the supply side of our marketplace. We are pleased with how we delivered for our customers in 2021, particularly late in the year with our response to Hurricane Ida. The strong execution of our CAT strategy resulted in exceptionally fast pickup and strong sell-through of vehicles, which was recognized and appreciated by our customers. In fact, throughout 2021, we continued to make strong progress on the supply side customer base. We gained new customers and successfully renewed and expanded agreements with several key accounts. This success included national insurance companies in the top 10 and several regional and smaller carriers. However, there is one large customer who, as we have discussed in the past, has been shifting volume to a competitor. There is an additional shift that we expect to begin later in the first quarter and be completed in the first half of 2022. This shift will reduce our volume by approximately 2%, and after this customer will now represent less than 5% of our volume. We believe this situation is unique and does not reflect the strong progress that we have made enhancing our offerings and service levels for both our buyers and sellers, as evidenced by the successes that I just talked about. To put this into some perspective, outside of this customer, we had near double-digit volume growth in 2021. We also continue to succeed in the non-insurance segment with dealer, fleet, rental, and other sources of vehicle volume. We grew this segment of our business in 2021, both in terms of volume sold and customer base, and we see the opportunity to further expand. Buyers and sellers of this segment have unique needs in comparison to the insurance market, and our digital marketplace provides both the strongest auction liquidity for these assets due to our global buyer base and our market-leading user interface. We have actively developed innovative solutions that address the unique needs of this segment, which benefit the entire marketplace, including insurance vehicle buyers and sellers. Altogether, this non-insurance dealer fleet rental suppliers generated approximately one quarter of our total volume in 2021 and has also grown by 25% since the time of our spin in 2019. Another critical part of our commitment to our clients is our continued capacity expansion across all of our markets, the U.S., Canada, and the U.K. We added strategically to our U.S. real estate footprint last year with two new facilities and 14 expansion projects. This is all in addition to the temporary land that we quickly secured at seven distinct locations in New York, New Jersey, and Louisiana during Hurricane Ida, which enabled us to most effectively serve our providers. Now let me turn to updating you on our progress against our strategic initiatives. In terms of broadening our service offering, I'm really happy to report that we processed approximately $1.7 billion in transaction value through our loan payoff portal for the full year of 2021, and we expect the momentum to continue into 2022. We also recently announced our exclusive partnership with Fastlane to leverage their LossExpress solution, a platform that connects insurers with the largest active lienholder network in the U.S. IAA is now positioned to be the only company in the industry to reach complete lender coverage for total loss claims. Integrating with LossExpress, which we expect to be completed this year, will expand coverage to nearly all consumer automotive lenders within the loan payoff portal while maintaining all the benefits of our existing digital product. We've also made great progress on the buyer side of our platform, underscored by the 21% growth in our international buyer base, including a 7% sequential increase in Q4 alone. How did we achieve this? It starts with transportation. Transportation is one of the most important elements of a buyer's experience with us, and so to help buyers, we launched IAA Transport and have realized utilization levels that are beyond our expectations. This transportation option is a significant advancement in our industry. It allows buyers to schedule transport of their vehicles at the time of checkout and payment and streamlines the entire purchasing and delivery process. We've also invested significantly in improving the buyer customer experience, having launched a customer care values initiative that's focused on our buyer market. We are now more consistently measuring our customer service levels and dynamically working to identify areas of opportunity and make near real-time improvements. The results of our efforts are manifested at a 20% improvement in our NPS score in the fourth quarter alone. Another aspect of our international buyer strategy is the expansion of our Market Alliance partnership network, which now spans 20 countries and 16 partners operating 50 branded locations. In the fourth quarter, we added Kazakhstan, Kyrgyzstan, and Russia, and those came to us through an expanded Market Alliance agreement with our partner in Moldova, which we completed early in 2021. The continued growth of our market alliance partnership network and the further expansion of our international buyer network are both enhancing our strong competitive online marketplace, which results in increased revenue per unit through greater bidding activity. Our next initiative is focused on expanding our margins. We continue to be pleased with the benefits of our margin expansion plans, and overall, we remain on track. Both our buyer digital transformation and pricing optimization are ahead of our original expectations. However, we are experiencing the impact of the current staffing and labor shortage environment, which has been so widely reported by many others. To address this, we are focused on leveraging our strong and long-standing towing partnerships. We're also bringing in additional resources, leveraging more our Tow app, and piloting new technology to mitigate the impact of labor challenges on towing. Susan will provide a little more detail on this in her remarks, but we continue to believe that the changes in the resource strategies that we are implementing and the long-term opportunities that they present to us. Another area that I'm really excited about is our ongoing focus on innovation and enhancing our use of data analytics. Our customers are increasingly realizing the benefits of the advancements that our teams have been making to improve our offerings and leverage our deep analytic capabilities. Whether it's optimizing the sales channel or more effectively setting reserve prices, our bespoke seller portals provide actionable and transparent data that helps with the key decisions that sellers must make. In one example, a provider told us that a sizable portion of their returns growth in 2021 was simply taking advantage of our data analytic capability and modifying their own processes. We will continue to implement improvements from our innovation and data analytics skills throughout 2022 and beyond. The final strategic initiative is international expansion. We were excited to announce the acquisition of SYNETIQ earlier last quarter, further expanding our presence in the U.K. SYNETIQ brings a really good business and a strong management team and offers diversification through its ability to sell parts as well as auction vehicles. This transaction is still undergoing review from the U.K. Competition and Markets Authority, or CMA. At this point, we're limited in what we can say about the company. Just yesterday, the CMA lifted the initial enforcement order that had prevented us from integrating SYNETIQ into our operations. Based on this positive development, we remain increasingly optimistic that we will obtain full clearance from the CMA. We continue to be really excited about the long-term prospects of this business being part of IAA. Back to North America, we're also really pleased with our leadership position in Canada and our performance there in 2021. During the year, we renewed and grew volume with several key clients. On a macro level, you do need to keep in mind it is the market is different there. Miles driven is recovering more slowly. Nonetheless, we're really pleased with the results that they delivered for us in 2021 and our prospects for 2022. Overall, we continue to leverage innovation, technology, and products among all three of our primary geographic markets. One more example I'll point to is the Excellence in Technology award that we won in the U.K. for our Interact merchandising platform, which we now have expanded globally over the last 18 months. Now let me turn to our guidance that we've issued for 2022, which again, Susan will review in more detail in a few minutes. Embedded in our guidance is our current view of the macro environment, where we continue to see strong used car prices and increasing miles driven. Our guidance also includes our current perspective of our projected market share position in each of the segments and countries that we service. Finally, we've also included the impacts of the challenges with labor shortages and some of the other initiatives that I've already discussed. Before I end, I wanna just mention a couple of other, really important items. First, we're really proud of our continued work in sustainability. Our first sustainability report was published in 2020, and our continued work in this area is more critical than ever as we face ever-growing global environmental and climate-related changes. I'm also very happy with our continued focus on diversity, equity, and inclusion, and I'm extremely excited about the partnership that we recently announced with the Department of Defense and their Military Spouse Employment Partnership, or MSEP. This aligns with our goal of driving a culture of diversity, equity, and inclusion, where different perspectives and experiences are welcomed and respected. Through the MSEP program, we partner to identify employment opportunities at IAA for both military spouses and active duty members who are nearing their time to reenter civilian life. This, along with our earlier commitment to the CEO Action for Diversity and Inclusion pledge, supports IAA's continued focus on creating work environments that provide equal access to professional growth and advancement opportunities for all of our IAA team members. In summary, we are pleased with the progress and the results that we've delivered over the last year. We are operating in a dynamic environment, given the ongoing pandemic and some unique 2022 headwinds, and we'll continue to work closely with our buyers and sellers while remaining focused on the health and safety of our teams. I'm excited about the opportunities that are in front of us in 2022 and beyond. The capabilities that we have built and continue to improve upon put us in a great position to grow and succeed in this marketplace over the long term. I wanna thank you and all of our teams for their continued hard work and dedication to IAA. With that, I will turn the call over to Susan. Susan? Thank you, John. I will focus my discussion today on our adjusted non-GAAP results and touch on some key highlights. Please see today's press release for more details on our financial performance and our methodology when calculating non-GAAP results. As John discussed, Q4 results were in line with our guidance and capped off a strong fiscal 2021 performance. For the year, we delivered organic revenue growth of 28.8%, coming from a 21.3% increase in ARPU and a 9.2% increase in volume versus fiscal 2020. Organic adjusted EBITDA grew by 35.9%, as the sales increase was accompanied by gross margin expansion as well as leverage in adjusted SG&A. As a reminder, fiscal 2021 was a 53-week year with an extra week in the fourth quarter. For the 53rd week, revenue was approximately $28 million and adjusted EBITDA was approximately $11 million. Turning to our fourth quarter results in more detail, consolidated revenues increased 42.9% year over year to $548.1 million. Organic consolidated revenue, which excludes the impact of foreign currency and revenue from the Auto Exchange and SYNETIQ acquisitions, increased 32.8% to $509.4 million due to an increase in ARPU of 21.6% and a volume increase of 9.2%. ARPU growth was driven in part by the strong used car pricing environment, which results in higher proceeds in our auctions. Used car prices have continued to grow throughout the year, with the Manheim Index increasing 15.3% sequentially in the fourth quarter. At this point, we believe that used car pricing will remain elevated at least through the first half of 2022. ARPU also benefited from our initiatives to drive higher auction proceeds, including enhancements to our merchandising platform, Interact, and the growth in our global buyer base, which increases auction liquidity and drives higher returns. Volume growth in the quarter benefited from the extra week, increased volume from the CAT, and the continued recovery of miles driven, offset by a decline in the total loss ratio as published by CCC to 18.7% from 21.7% in the fourth quarter of 2020. We believe the strength in used car pricing, which benefits us in ARPU, may have some impact on the total loss ratio as it increases the threshold for deeming a vehicle to be a total loss. Over the long term, we expect the total loss ratio to resume its upward trend due to factors we have previously discussed, such as increased vehicle complexity, higher repair costs, longer repair times, and attractive salvage returns. Service revenue increased by 30.9% in the quarter, and purchased vehicle revenue increased by 121.5%. The outsized growth in purchased vehicle revenue was driven by a higher volume of purchased vehicles in the U.S., the switch of an international customer from a consignment model to a purchased vehicle model in the fourth quarter of 2020, and the addition of SYNETIQ. Like our IAA U.K. business, the majority of SYNETIQ's revenues come from purchased vehicle contracts. All of these increases pushed purchased vehicle sales up to 20.5% of total revenue in the quarter, compared to 13.2% in the prior year period. Gross profit increased 23.6% to $188.3 million, while gross margin rate declined 530 basis points versus Q4 2020. Most of this year-over-year decline, 440 basis points, came from two factors, the higher mix of purchased vehicles and the elevated cost of our CAT response in Hurricane Ida, each contributing 220 basis points of deleverage. The remainder came from higher towing and labor costs, both of which have been impacted by economy-wide resource constraints. For the quarter, our total CAT loss was $6.4 million. As we noted last quarter, servicing our customers is our number one priority during a CAT, so it is not unusual for us to incur losses during these events, especially in high-cost markets such as the Northeast. SG&A expenses increased to $55.4 million from $37.7 million in the prior year. Included in SG&A is $1.5 million of expense related to the earn-out from our Auto Exchange acquisition. That transaction was structured as a $4 million upfront payment and a maximum $11 million five-year earn-out that was booked at a value of $3.3 million at the time of purchase. Based on Auto Exchange's strong performance, the expected value of this earn-out was increased by $1.5 million In Q4 and could increase or decrease in the future depending on the performance of the business. This runs through SG&A but is in essence deferred purchase price consideration. SG&A also includes $700,000 of expense related to contingent consideration associated with the SYNETIQ transaction. Adjusted SG&A expenses were $47.9 million, an increase of 30.9% compared to the prior-year quarter due mainly to higher headcount, higher incentive compensation, greater technology spend, and the inclusion of Auto Exchange and SYNETIQ. Adjusted EBITDA increased by 21.2% to $140.4 million. Excluding the impact of foreign currency as well as the acquisitions of Auto Exchange and SYNETIQ, organic adjusted EBITDA increased by 18.8%. Interest expense declined to $11.7 million compared to $12.9 million in the fourth quarter last year. The decline was primarily driven by lower interest rates on floating rate debt as well as a lower debt balance for the month of October, partly offset by a higher net debt balance after the closing of the SYNETIQ acquisition at the end of October. The interest rate on our term loan and revolver is currently about 1.5%, which is nearly 100 basis points lower than the fourth quarter of last year. The effective tax rate was 23.2% versus 22.2% in the fourth quarter last year. Net income increased to $73.3 million from $64.1 million in the prior year quarter, and adjusted net income increased by 25.6% to $82 million or $0.61 per diluted share. Turning to our cash flow and balance sheet, capital expenditures were $55.6 million for the quarter and $135.6 million for the year. Included in the fourth quarter was a real estate purchase of approximately $37 million, which is part of a planned sale-leaseback transaction that will be completed later this quarter. In addition to this property, we spent another $17 million on real estate purchases in the year, including the exercise of purchase options on our existing locations in several attractive markets. We will continue to look for opportunities to purchase property where it makes sense, both economically and strategically for our business. Also driving our capital expenditures in the quarter were increased technology investments, which included enhancing our vehicle imaging capabilities to improve the buyer experience in our digital auctions. During the fourth quarter, we spent $34 million to repurchase approximately 680,000 shares at a weighted average price of $50.17 per share. We will continue to employ share repurchases on a selective basis as a method of returning capital to shareholders. Our balance sheet remains very strong, and we exited the year with total liquidity of $463.8 million. We ended the period with a leverage ratio of 2.3 x, which is 2.2 x on a pro forma basis as if SYNETIQ were owned for the full year. This compares to 2.7 x leverage at the end of 2020, which means that we were able to reduce our pro forma leverage by a half turn in 2021, while also deploying over $300 million in capital for acquisitions. Net cash provided by operating activities for the quarter was $27.7 million, down 38.2% from the prior year. For the full year, it was $311.1 million, essentially flat with the prior year. Cash flow in the back half of this year was negatively impacted by our outlays for Hurricane Ida. As a reminder, when we pick up vehicles for our providers, we pay advance charges, which are recouped only when the vehicle is sold. As of year-end, our level of advance charge payments was higher due to the CAT volume still in inventory. For the year, we generated free cash flow of $175.5 million, down 26.9% from 2020 due to higher capital expenditures and a greater dollar amount of land purchases, as well as the timing of advance charges relative to vehicles sold from the CAT. Before I turn to our outlook, I would like to provide an update on our margin expansion plan. As you may recall, we announced this initiative in March 2020 with the goal of achieving net adjusted EBITDA run rate benefits of $104 million-$122 million by the end of 2024. Through the end of 2021, we are on track with our plan, generating approximately $81 million in total savings. We've exceeded our initial estimates on the buyer digital transformation and pricing initiatives, although we are a little bit behind on towing and branch efficiency, due in large part to current macro conditions. At this point, we do not expect these constraints to ease in 2022, but we do remain confident in achieving our original savings target by 2024. Turning now to our outlook for fiscal 2022. Our guidance for 2022 includes the full year impact of actual and expected market share gains and losses and reflects a range of assumptions regarding market growth, ARPU, and towing and labor costs. The combination of these factors mean that we expect our adjusted EBITDA margin to decline in 2022, driven in part by the impact of a higher mix of purchased vehicles, including from SYNETIQ and other inflationary pressures, much, most notably in towing. In terms of cadence, we expect the margin pressures to be greater in the first half of the year. With the exception of the organic growth percentage, all figures in this outlook include the impact of currency and the Auto Exchange and SYNETIQ acquisitions. For fiscal 2022, we expect total revenues of $2.05 billion-$2.15 billion, including a negative impact from currency of approximately $8 million-$10 million. Organic revenue growth of 1.5%-7%. Total adjusted EBITDA of $525 million-$575 million, including a negative impact from currency of approximately $1.5 million. Organic adjusted EBITDA growth of -8% to +1.5%. Adjusted SG&A expense of $215 million-$225 million, including approximately $28 million of adjusted SG&A associated with SYNETIQ. Interest expense of $28 million-$50 million. An effective tax rate of 24.5%-25.5%. Depreciation and amortization of $100 million-$105 million. With that, we'll open up the call to questions. Operator? Okay. Our first question comes from Daniel Imbro from Stephens. Daniel, please go ahead. Yeah. Hey, good morning, everybody. Thanks for taking our questions. On the margin guidance, Susan, I think there's a little bit of confusion. Just I think the midpoint, it's a little over 26% EBITDA margin. You guys haven't done that since, call it, 2016, I think, and that's back when you ran physical auctions. I mean, you just called out $81 million in total cost savings since then. Can you just provide some more color on maybe or can you quantify the different buckets of the cost headwinds that are causing this substantial or the more larger step down in margins that you're guiding to for next year? Sure. You know, when you think about our business and our margins, and you're trying to compare it to where we are in the past, where we were in the past on a gross margin basis, the difficulty with doing that is our business has a higher mix of purchased vehicles than it was then. It's almost apples and oranges in terms of the revenue line. When we're looking at next year's margins, the biggest impact next year is similar to what we've reported on for this year, which is the mix of purchased vehicles just keeps going up. It goes up because of our international business growth, the acquisition of SYNETIQ, and the opportunities we're seeing in the U.S. market. To give you a guide, we disclose in our press release the impact on the year-over-year margin in 2021 of the purchased vehicle mix. We'd expect the year-over-year impact in 2022 versus 2021 to be similar. Okay. I think you said 220 basis points in the fourth quarter. That's part of the step down. The rest is just cost inflation? I mean, since you guys guided it, can you just quantify maybe with more specificity what the headwinds you're baking in are? Got it. Just to clarify, the 220 basis points was the impact of purchased vehicle mix quarter-over-quarter, and the full year number was 170 basis points. If I sort of say somewhere in between those two will be the impact 2022 versus 2021. You know, the other really big impact is towing costs. We called this out, I think starting in Q2, and definitely when we reported Q3 and Q4, that we were seeing an increase in towing costs. Originally, where it hit us the most was in the CAT for Hurricane Ida, and we had to pay a premium for towing resources there to service our providers, which you know made sense and was the right business decision for us long-term economics as well as strategically. What we then began to see was a knock-on impact of that. When you're attracting these towing resources to one market, you're gonna see an impact all across the country. We experienced that in Q4. When we look out to 2022, again, you know, nobody has perfect visibility, but we don't see anything that shows that those cost pressures are abating, especially because they are very similar to what other companies are experiencing across the economy in terms of, you know, here in other companies' reports in terms of transportation costs, in terms of labor costs due to the inflationary pressures in the economy. We're not seeing anything that's gonna have those abate, so that's what we've baked into our guidance, and that's the other factor that's pressuring our margins in 2022. Okay. That's helpful. Maybe a long-term question on margins. Just when used vehicle prices moderate, whether that's 12, 24 months, pick your timeframe, I mean, what is the right earnings power of the business? When you look at it, I mean, what is the right long-term EBITDA margin that you guys think you can achieve in the business? You know, I'll answer that thinking about the drivers, right? Because you mentioned one of the drivers, used car prices, and we've definitely benefited from that. Our ARPU has been driven by a combination of that used car pricing, but then also a lot of the things we're doing for self-help to drive higher proceeds in our auctions. It's been a mix. If and when, you know, used car price increases slow down, there are other levers in our business, most particularly volume, right? I mean, the leverage in our business comes foremost from volume. We have had a market share loss that John discussed from one provider, you know, a large customer who's not gonna be such a large customer going forward. We've had a number of gains, and maybe I'll let John address that. There's the volume side of the equation. Before I turn it back to John, one other thing on margins is there's our margin expansion plan. There's the efficiencies that we still have on our plate in towing and labor costs. If inflationary pressures abate in terms of used car prices, we would expect that to also allow us to focus on those opportunities as well. John, do you want to? Yeah. Thanks, Susan. Just a couple other comments, Daniel. One on the volume front. The other effect of moderating used car prices, all other things being equal, would be more total losses because of the ratio of repair to value. As values come down, you would expect more vehicles to actually then be totaled. That would be supportive on the volume side. The other thing that I would say is that used car pricing is a driver of value, but again, the things that we're doing around bringing more buyers to the auction, the things we're doing around providing additional services to make things easier to do business with us, that's gonna drive higher bidding. To us, those are things that. That's the self-help, I think, that Susan referred to. As well as embedded in the margin expansion plan is pricing optimization. We are doing other things to make sure that we're optimizing the services and products that we offer, that we're, you know, charging the appropriate fees for. All those factor into as we think about the long-term, you know, profit profile of IAA. Okay. I'll hop back in the queue. Thanks, guys. Thanks, Daniel. Thank you. The next question comes from Craig Kennison from Baird. Craig, please go ahead. Your line is open. Hey, thanks, and good morning. Just wanted to follow up on the revenue guidance of 1.5%-7% organic growth. Could you help us unpack that and share what your broad range assumptions would be for volume and ARPU within that guidance? Sure. Yeah. I mean, I think again, we do see recovery in miles driven, which, you know, from a base volume driver, that's a really important one. Then on ARPU, you know, our view is that used car prices are gonna remain strong through, you know, most of 2022. You know, there's differing reports out there now about how long it will last. Certainly from the most recent information, it seems like it's pushing later in the year versus earlier. I think both those are positive. You know, those are big drivers. To the extent that we don't see the same level of recovery or as insurance companies, you know, think about that total loss frequency. If they do in fact then total less cars, you know, that's kind of the downside of our range is trying to take all those things into account. That's helpful. Thanks, John. You know, with respect to ARPU, you know, there's a lot of focus on used car prices, rightly so. You know, internally you have initiatives like, you know, the price increases you've pursued or incremental fees from new services like an internet buying fee or loan payoff. Are there any sort of internally driven ARPU drivers that you're excited about in 2022? I mean, we have a number of things that, yes, we are excited about. You know, for competitive reasons, I can't really go into them. Yeah, we are really as part of our whole margin expansion, really taking apart all the things that we do and making sure that we are charging for them appropriately. There are other things that we are working on. Thanks. I'll get back in the queue. Thanks, Craig. Thanks, Craig. Thank you, Craig. The next question comes from Stephanie Moore from Truist. Stephanie, please go ahead. Your line is open. Hi. Good morning. Good morning, Stephanie. Morning, Stephanie. Morning. I think it might be helpful to just provide us an update or overview on how some of the contracts with your insurance customers are structured these days in terms of any kind of changes in auction providers. I think historically it's always been these are sticky contracts, multi-year, so that makes them pretty steady. While I think it's a positive we're kind of at the end of the share shift with this known customer, maybe just give us an update on how these contracts are structured. Just broadly speaking, I think it would be helpful just for an information purpose. Thank you. Great, Stephanie. Thanks. Yeah, you know, they really haven't changed the way you've described them. You know, I've always talked about the provider approach in a couple different ways. You know, national, very centralized, and then there are carriers that while they may have central decision-making, allow decisions to be made at a region or a geographic basis. That for the most part hasn't changed. I mean, you know, over a longer term, there was a lot more decentralized decision-making for the most part among the big carriers and even the mid-sized carriers. That is for the most part, centralized. I don't think that's changed. Yeah. I mean, y ou know, the way that we approach and the way that they're interacting with us, you know, it really hasn't changed that much, I would say. It's pretty similar to how you just described it, so. Got it. Just as a follow-up, so the ability for any insurance carrier to make a decision to, you know, shift volumes positive or negative, how is that determined? Just, you know, if that makes sense, kind of in the realms of the contract. You know, I guess the leniency or the ability, you know, intra-year to say, "Okay, well, I'm gonna give more volumes here or take volumes away," how does that work in a standard contract? I realize every contract is probably different, but just kind of broadly speaking. Yeah, yeah. Most agreements provide for the ability for a carrier to add or, you know, or change within the way the contract is set up. That's very typical that they could move. It doesn't mean they're going to, but it gives them flexibility for the most part to make those kinds of changes. Got it. Switching gears to just the towing inflation, I think we all are familiar with what's going on with freight and costs and labor costs, but you mentioned the ability to leverage your app a little bit more. Are there any other opportunities just with maybe contractual agreements or spot agreements to kinda lessen the impact of towing costs? Or at this point, are you kind of just at the mercy of the market? Any color there on abating some of the higher towing costs, just given your size, would be helpful. We are. We're taking a lot of actions to try and optimize routing and just try to make the dispatch and pickup process as efficient as we can so that even if we're paying more on a you know gross basis, we're trying to make it as efficient as we can so those towers can pick up more cars, you know, within the confines of how we've set up agreements with them. So using that driving adoption of our app has been really important to that because it does allow us a lot of efficiency and the ability to really see, you know, where a tower is relative to the vehicles we're trying to get picked up. We're also trying to really automate to the extent we can the payment process, because that is a fairly inefficient process of getting funds to clear the advanced charges that Susan talked about that we pay on the front end. That's another bottleneck in the process that to the extent we can automate and make those transactions electronic, we can speed that up too. Those are all things that we are very actively working on and implementing as we go. Great. Thanks so much. Thank you, Stephanie. Thank you, Stephanie. The next question comes from Bob Labick from CJS Securities. Bob, please go ahead. Your line is open. Good morning. Thanks for taking our questions. I wanted to you know, just keep digging a little bit on the towing costs for and the variable costs in general, I guess in the service components. Just to get a sense, can you give us the components of the service COGS line, how much are fixed and how much are variable? And then kinda how much are the variable you know up? Is there an ability to put in you know surcharges on towing? Or what are the best ways to you know address the increase in the variable costs that have you know kind of skyrocketed here? Yeah, Bob. Hey, good morning. I mean, I think a couple things. One, you know, certainly some of the things I just talked about on towing, you know, we're certainly trying to implement those. You know, we do have a two-sided marketplace with revenue on both sides. So you know, how we are able to offset this, you know, we're looking at different ways to do that. But really it's our primary focus is on trying to mitigate and control the costs because they are, you know, we're seeing those pressures that we've been talking about now for several quarters. So, you know, I don't think we typically disclose kind of the fixed versus variable, but obviously towing is the primary, you know, variable cost that we see. You know, as you begin to move into kind of reconditioning and then labor and then real estate, you're starting to move more into the fixed element of it because you need to have people in a branch, you know, and obviously our real estate expansions, which we've, you know, talked about that we've grown to support the growth of our business and our customers' business, that from a fixed perspective adds costs as well. Susan, anything to add to that or? I think you've covered the major components. Yeah. Okay, thanks. Yes, I mean, it sounds like I mean, sequentially, you know, cost of service was up $60 million. It sounds like the majority of that is towing. If that would be my interpretation. Okay. Switching topics from just the expenses. Wanted to just kind of get back to the other part of the business. You mentioned, I think, close to a quarter of the cars are non-salvage. Obviously, you have a non-compete from the spin agreement. How is the kind of dealer car right now, you know, a component of your sales, and what do you think that will look like in a couple of years when the non-compete ends? Because obviously, that's a big growing potential part of the market, and you guys have a very liquid and big buyer base that would be attracted to that. Maybe talk a little bit about the non-salvage growth opportunity and how that maybe changes as soon as the non-compete ends or during this time period, please. Great, Bob. Yeah. Just to be real clear, non-insurance. Many of the cars we sell for dealer fleet rental are actually salvage title. Just to be real clear, that 25% is 75% of our business is insurance, 25% is sort of everything else. But that market, you know, while we do have a non-compete in place from the spin, it didn't necessarily preclude us from servicing this market. It just put some royalties in place if we grew it above a certain level. You know, we've been very transparent that we're gonna continue to grow that business despite, you know, in the short term, royalty payments we might have to make. There are some, you know, literal restrictions that we have to comply with, but we continue to service that market. I think you said it well in repeating a little bit of what I said, that we do believe that our marketplace is really strong for not the entire sort of whole car world, but there's a segment of vehicles that we really think we are the best venue for. We are gonna continue to capitalize upon that. Yeah, I mean, the 2+ years left on the non-compete, we'll kind of have to see what happens as that unfolds. You know, we're undiminished in terms of how we are gonna continue to attack that market. 'Cause again, we think we're solving problems for customers in a way that no one else can in optimizing the value of those assets. Yeah, that's why I wanted to mention it, 'cause it is an important part of our business and a successful part of our business. Super. Okay. Thank you very much. Thanks, Bob. Thank you, Bob. Our next question comes from Bret Jordan of Jefferies. Bret, please go ahead. Your line is open. Hey, good morning, guys. Hey, Bret. Morning, Bret. Could you talk about the, I guess, the competitive landscape? You know, obviously a large customer has shifted what appears to be sort of an increasing majority of their business away. Is that? I guess when you think about the reasons for it, is there competitive pricing on the seller fee, or is there something at the service level? Again, I sort of. It originally struck me this was diversification, that you might lose half of it, but it seems like it's more than that now. You know, could you talk about why you think that decision was made? Yeah. I mean, I think it's multifaceted. You know, that is a carrier we continue to have a strong relationship with. We still do business with them in a number of geographies and across our product line. You know, it's part of our focus to try and recover that. You know, there are a lot of touch points in a relationship with a carrier, whether it's getting cars released and picked up, whether it's the titling process or the, you know, the proceeds that we get at auction. All those things matter at some levels, depending on who you're dealing with. I think, you know, those are all elements that enter into a decision. You know, I'm not gonna really get into the specifics of this customer 'cause I don't think it's, you know, necessarily appropriate. I think the things that I just talked about are all reasons that carriers look at in terms of how they make decisions about, you know, where they allocate share. Okay. Then you talked about 21% growth in the international buyer base. Do you have a feeling for what percentage of your transactions are being sold internationally now? I don't know if we've disclosed that, but you know, it's obviously a really important part and continues to grow. Again, you know, across the market alliance partners that I talked about, there's still a lot of room to grow that further. Yeah, I don't know that we've disclosed that percentage, but it is still growing vibrant, and we really think that from the feedback that we get because I talked about some of the customer service initiatives that we've implemented on the buyer side. We're getting a lot of really good feedback, and we're using that to further enhance you know, the services and the products that we offer both our domestic and our international buyers. We really think that we've got a strong growth story there that we believe will continue. Okay. Just a quick question as far as the model. I mean, you've done more purchased vehicles, you know, sequentially. Is the longer term strategy really to go back to more of an agency model, or are we sort of structurally thinking this is gonna be more of a purchased model going forward, you know, in the three-five- year basis? No. I mean, we still strongly believe in the agency model. We believe that. You know, again, the U.K. is a little different. There's some different dynamics there that we're gonna, you know, particularly with the integration of SYNETIQ, really take a harder look at. But I think in the U.S., some of the purchase agreement are opportunistic. We do see an opportunity in certain markets to buy vehicles that we think we've got information that we can use to buy them right and to be able to sell them at a profit. So it's not a shifting of the whole market. It's really just being opportunistic and attacking a part that maybe we hadn't really looked at as closely in the past. Okay. Thank you. Sorry. Go ahead. Go ahead, operator. Sorry. Thank you, Bret. No worries. The next question we have comes from Chris Bottiglieri from BNP Paribas Exane. Chris, please go ahead. Your line is now open. Hey, guys. Thanks for taking the question. Hey, Chris. Um. Hey. Hey, John. Hey. Hopefully we could zoom out a little bit on industry volumes. Like, there's just a lot of noise with, you know, market share, hurricanes, extra week, you know, you name it, acquisitions. Can you kind of give us a sense for where salvage industry market volume is today versus pre-COVID? If you don't have that, can you frame where your volume is kind of like, I don't know, on some adjusted basis, ex top customer? Like, where are we versus prior peak is what we're trying to get to. Yeah. I mean, I think that the overall industry volume based on, you know, what we see from CCC and just a growing car park, I think if you kind of combine all those things, I mean, I think we've seen growth in the market over the last couple. You know, obviously a pandemic, there was some noise in there. But if you kind of go pre-pandemic, maybe even back to the spin, there has been growth in the market. It's been, as I said, uneven. But I do think for the reasons that we've talked about, and particularly as we go forward, things like, you know, the increasing complexity of vehicles that our repair costs continue to go up even kind of excluding, you know, maybe some short-term inflationary issues that we're all dealing with. You know, the fundamentals that we see in the long-term prospect of total loss frequency, we still think is a positive. We still think that overall the market's gonna continue to grow for a combination of the things that I just talked about. Gotcha. Okay. Any way for you to further parse the hurricane impact? Like, it's just really messy. I mean, I don't even know how I'm gonna model this to be candid. Like, you know, what's like, how much of the volume's still left? How much was processed in Q4? I think you gave the margin rate headwind, but it's hard to do anything with that. Is there anything you can give us to help us kind of like parse this out a little bit better? You know, I guess, the way to think about it, right, is that it's basically affecting us for a total of three quarters. We had an impact in Q3, which we disclosed. The biggest impact is in Q4, the $6.4 million, and there'll be a small impact in Q1 as we move through the remainder of the vehicles. Yeah, over 50% of the vehicles we took in from the CAT have been sold at this point, but there is some, you know, in our inventory. It will have some impact in Q1. When we guided margins, you know, when I mentioned that when you think about the cadence of margins, it's gonna be, you know, more of a negative year-over-year in the first half of the year than the back half. That's part of what's impacting the first quarter. We should be completely through the volume through the end. Gotcha. Okay. That's helpful. Thank you so much. Thanks, Chris. Thank you, Chris. Our next question comes from Gary Prestopino from Barrington Research. Gary, please go ahead. Yeah, good morning. Several questions. You know, John, it looks like, you know, the EBITDA margins on the acquisition are much less than what you generated in, you know, the base business. Understanding that you can't get your hands on it to integrate it, but, you know, I get it about 6.6% adjusted EBITDA margin. Once you integrate that, where do you think that goes, on a two-three- year basis, that EBITDA margin? Yeah, I mean, again, thanks, Gary. One, the purchase agreement component of that business makes it hard to translate that EBITDA margin into our core business EBITDA margin. So you gotta almost think about it maybe in dollars and try to apply that. Even the $6.6 million feels low from our, from our. Gary, we announced when we did the deal, it was low double digit EBITDA margin. It was GBP 17 million of EBITDA, about GBP 154 million of revenue. Low double digits, or was at the time of acquisition. Nonetheless, we do see opportunities to grow that business in the U.K. and leverage our existing business. We do see synergy opportunities that, you know, that was part of our thesis in buying it. We haven't talked about exactly what those are yet, but we do think, again, if you separate the PA part of it, we do think it's gonna be accretive and, you know, valuable to our overall performance going forward. Would you say that, w ould the thrust be to try and change a lot of these from non-purchase to agency agreements? Can you do that? You know, all other things being equal, we'd rather be in an agency agreement, you know, for obvious reasons, but some of that is really market structure that, you know, we're gonna compete there, and we're gonna put forward the best, the most appropriate bids that we can for business. You know, trying to convince carriers that, you know, maybe the agency model is better. But we're also, you know, we're gonna take advantage of the skill set that SYNETIQ brings to us to make the best decisions. 'Cause again, because of their flexibility in terms of being able to part some cars and to auction others, you know, that's something we're gonna learn a lot about from them. That, you know, we're not quite sure what it's gonna mean going forward and beyond the U.K., but I think it is an intriguing business model that they have, and that was part of what attracted us to them. Okay. With SYNETIQ, do you have the increase in volume for the quarter, the increase in ARPU, and then what the increase in inventory would be? We haven't broken that up, Gary, separately. I mean, the revenue is kind of. Think about what it was on an annual basis, directionally proportional to that. Okay. Thank you. Thanks, Gary. Thank you, Gary. That concludes the Q&A session. I would now like to pass the conference back over to John Kett, CEO, for closing remarks. John, please go ahead. Well, thank you, and thank you all for your participation. You know, just in closing, you know, my enthusiasm remains unchanged about our ability to capitalize on the opportunities we have in front of us in 2022 and beyond, and I look forward to updating you on our progress as we go forward. Thank you all, and have a great day. That concludes the IAA, Inc. fourth quarter 2021 earnings call. Thank you for your participation. You may now disconnect your lines.