Good morning, and welcome to the KAR Auction Services, Inc 2023 first quarter earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your touchtone telephone. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mike Eliason, Treasurer and Vice President, Investor Relations. Please go ahead. Thanks, Andrew. Good morning. Thank you for joining us today for the KAR Global first quarter 2023 earnings conference call. Today, we'll discuss the financial performance of KAR Global for the quarter ended March 31st, 2023. After concluding our commentary, we will take questions from participants. Before Peter kicks off our discussion, I'd like to remind you that this conference call contains forward-looking statements within the meaning of the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that such forward-looking statements involve risks and uncertainties that may affect KAR's business, prospects and results of operations. Such risks are fully detailed in our SEC filings. In providing forward-looking statements, the company expressly disclaims any obligation to update these statements. Let me also mention that throughout this conference call, we will be referencing both GAAP and non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to the applicable GAAP financial measure can be found in the press release that we issued yesterday, which is also available in the investor relations section of our website. Now I'd like to turn this call over to KAR Global CEO, Peter Kelly. Peter? Thank you, Mike. Good morning, everybody. I'm delighted to be here this morning to provide you with an update on KAR Global, which, as we announced in a press release last night, will soon be known as OPENLANE Inc Given that announcement, we will be structuring today's call a little differently than usual. I will begin by providing additional information relating to our first quarter performance and the current market factors impacting the automotive industry. We will turn to a more in-depth discussion of our financial performance in the quarter. Before we move to Q&A, we'll walk through a few slides detailing our OPENLANE brand transformation and platform consolidation strategy. Before I get started, I want to welcome our new Chief Financial Officer, Brad Lakhia, to the call and to our company. As we detailed in our announcement a few weeks ago, Brad brings a lot of great experience to our management team, and I'm very much looking forward to working with him to help grow this company and deliver excellent stockholder value. Brad, welcome to OPENLANE. Brad is only two weeks on the job, Scott Anderson, who served as our interim CFO for the past quarter, will deliver the remarks for the financial portion of the call in just a few minutes. Let me turn to our 1st quarter performance. As usual, I'm gonna speak about our business in two segments, a Marketplace segment and a Finance segment. I'm very pleased with our solid performance in the 1st quarter and the improvement we achieved over the prior year, including double-digit growth in revenue, gross profit, adjusted EBITDA, and operating adjusted earnings per share. These results are consistent with the expectation that we discussed on last quarter's call of 15%-20% growth in adjusted EBITDA over the next several years. I'm particularly pleased that we achieved these first quarter results despite an industry environment where volumes remain tight. During the quarter, we also continued to make solid progress on our strategic initiatives, managing our costs, integrating our platforms, and simplifying our business. The brand change that we just announced will help further align and unify these initiatives, and I'll discuss that in more detail later on this call today. To summarize our key results for the first quarter, we generated approximately $421 million in revenue, a 14% increase versus Q1 of last year. Purchased vehicle revenue represented 13% of total revenue in the quarter. We generated total gross profit of $196 million, an increase of 24% from Q1 of the prior year. Gross profit represented 54% of revenue, excluding purchased vehicles. We generated adjusted EBITDA of $59 million in the first quarter. This represented an increase of 20% versus Q1 of last year. However, this included an $11 million one-time charge related to an investment in an early-stage automotive company. Excluding this one-time charge, adjusted EBITDA would have been $70 million in the quarter, and that would have been an increase of 42% versus Q1 of last year. This led to operating adjusted earnings per share of $0.12, more than double our operating adjusted EPS performance in the same quarter of last year. I was also very encouraged to see that the Marketplace segment of our business contributed meaningfully to our Q1 consolidated results and led our improved performance compared to Q1 of last year. From a volume standpoint, we sold 330,000 vehicles in the first quarter. Approximately 51% of this was from commercial sellers and 49% of it from dealers. While this volume represented a decline of 6% versus Q1 of last year, I would point out that this decline was the lowest in percentage terms in well over a year. Sequentially, it was a volume increase of 14% compared to Q4 of last year, and that was also the best sequential volume performance for well over a year. The Marketplace segments delivered strong revenue growth of 13% in the first quarter. The revenue growth was driven by strong auction fees per vehicle sold and solid attached rates and solid growth in services revenue, which was driven by service attached rates and growth in services revenues that were not directly tied to vehicles sold. Marketplace gross profit performance was also strong, increasing 27% year-on-year and representing 35% of revenue. That was a 400 basis point increase compared to Q1 of last year. Excluding revenue from purchased vehicles, gross margin in the Marketplace segment was 43% of revenue. Our cost management efforts are also reflected in the fact that Marketplace segment SG&A declined year-on-year. Taking all those factors into account, the Marketplace segment delivered adjusted EBITDA of $14 million in the quarter. However, I would point out again that this is inclusive of the $11 million one-time charge that I mentioned earlier. Excluding that one-time charge, the Marketplace adjusted EBITDA would have been $25 million in the quarter. I believe that these results provide some solid evidence that the volume challenges are bottoming out, and also clearly demonstrate that our efforts to operate a more efficient and effective Marketplace businesses are bearing fruit. Both of those are very positive for our company. In the Finance segment of our business, Q1 revenue was $100 million. That was an increase of 18% over Q1 of last year. This was driven by a 13% growth in transaction volume and a 5% increase in revenue per transaction to $237. adjusted EBITDA was $45 million. This was down. Sorry. adjusted EBITDA on the Finance segment was $45 million. This was down $5 million versus Q1 of last year, reflected credit losses returning to a more normalized range compared to the below normal levels that we experienced in 2021 and the early part of last year. As I mentioned before, cost management remains an important part of our focus here at KAR, I believe that our cost management work is showing up in improved gross profit margins and reduced SG&A expenses. In Q1, we made meaningful progress on a number of areas, including the acceleration of our global shared services model. In Q1, total SG&A declined $11 million or 9% compared to Q1 of last year. We still have a pipeline of initiatives we're working on to further streamline our business. I'd now like to provide a few brief updates on the macro environment. First, new vehicle production was up in the first quarter of 2023. Additionally, recent reports suggest that new vehicle inventory on dealer lots increased during the quarter, and this was coupled with increase in new vehicle sales. These factors are necessary ingredients to the balancing of supply and demand in the used vehicle market over time. Shifting to used vehicle values, as expected, as we discussed on our last call, the used vehicle price declines that were witnessed in the second half of last year reverted to used vehicle price appreciation in the so-called spring market. The level of first quarter price appreciation was quite strong, but the week-on-week increases in used vehicle values appear to have plateaued. I think we may start to see some downward pressure on used vehicle values as the year progresses. We are not yet seeing any meaningful increase in off-lease volume supply, though some customers have communicated optimism that we will begin to see some increases as we head towards the second half of this year. We also have had feedback from customers that they expect to see increased incentives on new vehicle sales, and this could lead to increased volumes of leasing originations compared to last year as the year progresses. We will continue to watch that carefully also. With all that said, I believe that the two primary pieces of our growth equation remain intact. First, we believe that digital channels will continue to gain share, and we're very well positioned to gain more of that additional share over time. We also believe that over time, there will be a recovery in commercial volume, which will result in increased volume in our marketplaces. Finally, in the Finance segment, we believe that current conditions point to what we would describe as a more normalized risk environment, not that dissimilar to what we experienced pre-pandemic. We believe we can continue to manage a conservative portfolio and generate positive results in this environment. In terms of capital allocation, we will discuss this further during the financial portion of this call, but I would again like to highlight the strong cash flow characteristics of our business. This was evident again in Q1, where we generated cash flows of $96 million from operating activities. We believe that the company has a strong balance sheet and historically low leverage ratio and ample liquidity. We're now going to turn to a deeper dive on some of our first quarter financial results. As I mentioned earlier, Scott Anderson will deliver those remarks. I want to acknowledge Scott, not just for his many years of important service to this company, but also his good work in keeping our finance teams and functions running smoothly throughout our recent CFO transition. Scott, I appreciate you, and I know that you'll be an important member of the team here at OPENLANE going forward. Scott? Thank you, Peter. As Peter has already commented on many of our financial metrics, I have only a couple of additional areas to review. We have made one disclosure change. Because of platform consolidation, we will no longer be providing separate digital dealer-to-dealer vehicles sold volumes for our Marketplace segment. Since we are now 100% digital sales and we are moving to consolidated platforms, we believe the separate volume measure is no longer a key indicator of the success of our Marketplace business. We will continue to provide total dealer volume and total commercial volume. In the first quarter, Marketplace revenues, excluding purchased vehicle sales, increased 11% to $266 million and generated approximately 73% of our consolidated revenues, excluding purchased vehicle sales. Auction fees declined by 1%, largely due to a 6% decline in total vehicles sold due to the market conditions Peter highlighted. Offsetting volume declines, auction fees per unit increased approximately 5% to $303 due to select fee increases and a lower mix of commercial off-premise vehicles, which generally earn lower fees compared to other channels. Marketplace service revenue was up 20% due to increases in repossession, remarketing, transportation, and technology services provided. Strong Marketplace revenue growth resulted in 27% increase in gross profit versus the first quarter of 2022, and 520 basis point improvement in gross margins excluding purchased vehicle revenues. The business also benefited from improved transportation margins in the execution of cost control initiatives. Moving on to the Finance segment. Revenues grew 18% over the prior year and accounted for 27% of consolidated revenues excluding purchased vehicles. Strong revenue growth was due to loan transaction unit increases as well as fee and interest income growth. As we move through the year, we expect to manage a conservative portfolio. Our strong service offering and high-touch model helps mitigate risk and identify growth opportunities. AFC's provision for credit losses increased to 2% of average managed receivables for the quarter due to prior year used vehicle value declines. This represents a more normalized loss rate versus the low-risk environment experienced in the last two years. Long term, the provision for credit losses is expected to be 2% or under annually. However, the actual losses in any particular quarter could deviate from that range. Next, let me provide some additional color on SG&A. First quarter consolidated SG&A was $108 million, which was $11 million lower than the first quarter 2022. That's primarily due to decreases in professional fees of about $7 million and IT costs of about $4 million. As Peter highlighted, we have ongoing cost reduction initiatives to further offset inflationary increases, but some of the effects will not be realized until 2024. One additional item that did affect the first quarter performance was the $11 million charge related to an investment in an early-stage automotive company. As a reminder, we occasionally invest in certain early-stage auto-related enterprises, and have reported several instances of gains from those investments in prior years. In late March 2023, one of those companies filed to reorganize its operation through a bankruptcy process. The $11 million impact of this impairment was recorded in other income and expense in the income statement, this non-operating item was included as a reduction in adjusted EBITDA. To clarify, if we exclude the non-operating impairment from our results, adjusted EBITDA would have been $11 million higher or approximately $70 million for the quarter. I will highlight our strong capital structure and cash generation. We ended the quarter with over $400 million in liquidity, composed of $193 million in available cash and $241 million of available revolving line of credit. Cash flows from operating activities in the quarter were $96 million, which highlights the strong cash flow conversion characteristics of our business model. In terms of capital allocation activities, today we announced an offer to purchase up to $140 million of our outstanding Senior Notes at a purchase price of 100% of the principal amount plus accrued and unpaid interest. The detailed terms of the offer are included in a separate press release issued this morning. As I mentioned, we have sufficient available liquidity to fund the repurchase. As a reminder, we are required to make this Asset Disposition Offer under the terms of our Senior Notes indenture due to last year's ADESA U.S. physical auction business sale. Therefore, at quarter end, $140 million of the outstanding Senior Notes are classified as current debt. We also continue to look for windows of opportunity in the debt markets to extend our revolver maturity date and put in place a more permanent debt structure. Finally, let me close on some comments on annual guidance. We have not changed our previously stated guidance of adjusted EBITDA from $250 million-$270 million. We believe this earnings level will generate operating adjusted earnings per diluted share of $0.37-$0.47. Discussed on our last call, at this guidance range, we expect cash generated by our business, after taking into account estimated capital expenditures, interest payments on corporate debt, taxes, and preferred dividends could result in a reduction of net debt by approximately $80 million-$85 million, assuming no other capital allocation activity and working capital changes. That concludes my remarks, and I will now turn the call back over to Peter. Thank you, Scott. Before we go to Q&A, I'd like to provide some additional context and detail around yesterday evening's announcement and our rebrand from KAR Global to OPENLANE. During this section, I will be referencing slides that we will show as part of today's webcast. At the conclusion of this call, we will also post these slides to the investor section of our website. First, we're very excited to advance the next year of our company and our industry under the OPENLANE brand. I believe that this change is much more than just a new name and logo. It is a change in how we think about our business, how we operate, how we interact with our customers, and how we invest for the future. In many ways, it represents the culmination of the transformation that has already taken place at our company, shifting from a legacy physical auction business to a more asset-like digital marketplace that we believe will offer our customers the fastest, easiest, most advanced and most trusted channel available to sell and source used vehicles. Before I talk about what's changing, let me cover a few things that will not change. First, this rebrand will not apply to our floor plan business, AFC. As mentioned in our press release, we will continue to trade under the ticker symbol KAR, so there will be no confusion to our investor base. There's also no change to our purpose, which is to make wholesale easy so that our customers can be more successful. Our customers will be at the center of everything we do at OPENLANE. We want to make working with us and transacting on our Marketplace as easy as possible. At OPENLANE, we'll also continue pursuing our vision, which is to build the world's greatest digital marketplace for used vehicles. This vision is about creating the most data-driven, technologically advanced platform for buying and selling used vehicles. At the same time, it's about a single simplified experience with all of the buyers, all of the sellers, and all of the vehicles all in one place. By doing this, OPENLANE will give buyers access to the largest selection of inventory available and give sellers confidence that they've achieved the best possible market price for their vehicles. I think when you view our company through this lens, you can clearly see that OPENLANE is far greater, far more powerful, and far more compelling as an integrated whole than as a series of disconnected parts. First, we're a pure-play digital marketplace leader with deep strength in both the commercial and dealer segments of our industry. This is an important differentiator. We're the clear industry leader in commercial off-lease in North America, supporting a significant majority of North America's off-lease vehicles on our platforms. We continue to grow volume and our share in the dealer-to-dealer market. Combining all of this under OPENLANE will provide the only pure-play digital marketplace where customers can buy and sell anything from frontline ready, CPO-eligible off-lease vehicles to older, higher mileage vehicles and everything in between. From a numbers perspective, here's how OPENLANE stacks up. We sold 1.3 million vehicles last year. That's a significant number, but it's also one we intend to grow going forward. About half of that volume was from commercial sellers and the other half was from dealers. We also know that the commercial seller volume was well below its historical normal, owing to the ongoing pricing and supply challenges that we've discussed on prior calls. Our Gross Merchandise Value was $23 billion. GMV is commonly used to measure the health of digital marketplaces in other industries, and we will continue to report on this operational metric going forward. On average, OPENLANE has more than 50,000 active participants each year, most of them dealers. It's important to stress here, these are unique sellers and buyers who've logged in to list, bid, purchase, and sell vehicles in our Marketplace. One of the primary reasons you see this level of activity is because of the breadth of inventory available. During any given month, our sellers trust our Marketplace to offer more than 200,000 of their vehicles for sale. While we believe these statistics already represent a strong leadership position in our industry, it's important to note there's still a large addressable market of opportunity out there for our company. According to our analysis, there are more than 60 million retail and wholesale used vehicle transactions each year, and that's just in North America. Additionally, there are more than 100,000 sellers and buyers out there looking for the best solutions to help them bid, buy and sell. We have a large addressable market, a market that we believe will be increasingly digital over time, and where we are well-positioned to gain share as this happens. With that as background, let me answer the questions on why we're making this change to OPENLANE and further, why now. First, the transition to OPENLANE will simplify the experience for our customers. Having one brand, one marketplace, one sign-in, and one user experience will simplify the way our customers interact with the company and with each other. It will enhance Marketplace efficiency and improve network effects. It will also streamline things for employees. I think it will create an even more aligned and unified team, accelerating our purpose and vision. To help us accomplish this, we're consolidating much of our technology. We will leverage the best features and functionalities from across all of our platforms, but we will sunset older platforms. This will also help us control costs as we shed the maintenance costs and other expenses associated with those legacy platforms. These efficiencies in our Marketplace focus will free up financial and engineering resource that we can reinvest into the core platforms and services that our customers value the most. That's how we will advance our strategy. One core brand will also help focus our sales and marketing efforts in the field. With all of our employees aligned and focused under OPENLANE, we can accelerate innovation across this entire business. We have a great team here at this company, and I'm confident in their entrepreneurial nature and the desire to build great products and create value for our customers. I believe focusing the energy and creativity of our team under one brand will be very powerful for this company, for our customers, and our stockholders. Ultimately, if we do all of these things right, and I'm confident that we will, we will expand our share in the scope of services we provide to our customers at a lower cost of operation. I believe this will be a solid formula for growth and one that can deliver meaningful stockholder value. Just to give you an idea of what this brand consolidation and marketplace consolidation looks like, let me share the example of the U.S. market and the work that is already well underway to create a simplified OPENLANE marketplace and customer experience. This time last year, we essentially had four different platforms running in the U.S. BacklotCars, CARWAVE, OPENLANE, by which I mean the open sale for off-lease vehicles, and then our private label sites that are running on what we call the OPENLANE iQ technology. In the fourth quarter, as you know, we completed the consolidation of BacklotCars and CARWAVE into a single marketplace. CARWAVE has now been retired and the national rollout of the BacklotCars live auction format is well underway. In parallel with that rollout, we're now working on combining our dealer inventory with the off-lease rental and other commercial inventory into a single OPENLANE branded marketplace experience in the U.S. We plan to deliver this integrated open marketplace before the end of this year. While there's no change to our private label business, we do believe that the flexibility of formats and the critical mass of buyers on this integrated OPENLANE marketplace will provide additional opportunities to sell inventory digitally versus sending it to a physical auction. Of course, the strong position in the off-lease space will continue to be a differentiator for our overall business. The brand change to OPENLANE is not limited to the United States. The first commercial application of the brand will be in Canada, where over the next few months, we intend to combine the TradeRev and ADESA Canada marketplaces into a single OPENLANE branded marketplace. Moving to the right side of this slide, we recently consolidated our ADESA UK and ADESA Europe offerings in Europe onto a single technology platform. We're now focused on executing our go-to-market strategy and launching a true single marketplace in Europe, which again will be branded OPENLANE. As we look to the future of OPENLANE, I believe we have a unique and differentiated offering for the marketplace, a compelling financial profile and a sound strategy for growth. We're a pure play digital marketplace leader with deep and growing strength in both the commercial and dealer-to-dealer business. We have access to a large addressable market in North America and in Europe, we intend to grow our share while unlocking new digital opportunities in the market. We have a robust pipeline of innovation that supports our growth strategy by consolidating platforms to focus our energy, resources, and investments on building the greatest digital marketplace for our customers. We are profitable and deliver strong positive cash flows. This was clearly evident in the first quarter. We have the ability to invest in our business while generating additional cash that can be used to pay down debt, return capital to shareholders, and make strategic investments. Finally, as we've discussed previously, we still believe that our strategy, our business, and the OPENLANE brand are capable of delivering the 15%-20% CAGR in adjusted EBITDA over the next several years that we spoke about on the last call. With that, I will now turn the call over to Andrew to take your questions. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you'd like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Ryan Brinkman with J.P. Morgan. Please go ahead. Great. This is Rajat on for Ryan. Thanks for taking the questions. I have a first question just on the rebranding exercise. You know, while you go through this transition through the course of the year, should we be accounting for any, maybe one-time impacts or, you know, any transitory impact on the volumes? Are you able to lay out or give us any sense of any other, like, one-time cash costs related to that transition that we should be keeping in mind? I have a follow-up. Thanks. Thanks, Rajat. You know, the brand change does not impact our guidance and does not impact our projections. You know, there's two elements to it. There's platform consolidation work, which is part of the ongoing work we've been doing. I've spoken about that on prior calls. The additional branding costs, candidly, are relatively modest and do not impact our guidance that Scott reiterated on the call here this morning. I don't expect material impacts to volume either from this transition. Got it. Got it. Maybe just on the guidance itself, I mean, excluding the one-time charge, you know, EBITDA was close to $70 million. You know, we're still at a depressed level of volumes from an industry perspective, admittedly higher prices. You know, going from $70 million in 1Q to, you know, more like $260 million at the midpoint, I mean, that seems like that seems much lower than the quarterly run rate that you started with at a depressed level of volume. So curious if you could give us any sense of the EBITDA trajectory through the course of the year. You know, what's driving that conservatism? You know, is it given where prices are or is it this more normal seasonality that you think might come into play again in the second half? You know, if you could just help us bridge that. Also, you know, if you could throw in like anything with AFC within the guide as well that might be impacting it. Thanks. Rajat, good questions. Listen, Q1 was a strong quarter. I think $70 million, you know, adjusted EBITDA excluding the one-time charge, I feel very good about. I also feel good about the fact that we're starting to see the Marketplace segment make a contribution once again. I mean, it is our core business. It has been under pressure, but I think in Q1, that positive impact of changes we're working on is starting to show up. I feel really good about that. You know, we're still taking a fairly conservative view on the year. You know, while some customers have signaled there may be increased off-lease vehicles in the second half of the year, it's been so difficult to predict over the last two years. We're just taking a cautious view on that. We're not projecting that. If that does show up, that will be positive to our projections. I'd also say we're, you know, continue to be cautious about AFC. I could comment more on that. I think we actually expect losses to, you know, credit risk losses to decline slightly here a little bit as we move into the year, but we did see higher losses certainly than last year. I think it's reasonable to expect AFC's total performance for this year might be a little bit below what we saw for the full year last year. That plays into our thinking as well as we think about the guidance. Understood. That's helpful. Maybe just like one clarification. I think last quarter you mentioned that you expect Marketplace volumes to be flattish for the full year. I'm assuming like that's still the expectation at the midpoint of the guide, right? Yes. That's still the expectation. Marketplace volume's flattish. I guess implied in that, Rajat, is we do expect to start seeing some year-on-year increases in volume before the end of this year, you know, to get us to a flat for the year overall. I think that's a reasonable expectation. Listen, there's been a lot of flux in our industry. It's been a couple of years where predictions have been difficult. Again, I think we've taken what I would characterize as a more cautious outlook around projections. Got it. Great. Thanks for all the color. I'll jump back in queue. Thank you, Rajat. The next question comes from Craig Kennison with Baird. Please go ahead. Hey, good morning. Thanks for taking my question. For what it's worth, I think my brain appreciates the simplicity of 1 platform under OPENLANE. That's my two cents. There's a lot you don't control about the market in terms of volume and whatnot, but you can still impact the number of dealers, you know, selling on your platform and the share of that volume. I'm just wondering what you can tell us about any success you've had with dealer recruitment efforts and to what extent it's in any way geographically based, given the history of, you know, BacklotCars or the history of OPENLANE on the West Coast. Well, Ryan, we did the change. Sorry, Craig. We did the change with you in mind. We're just trying to simplify our business for our investors as well as our customers and as well as for us. I appreciate the comments. You're right. There's a lot we don't control. I think it's important to focus on what are those things we can control, and I think that we are doing that. And again, I think that's showing up in our performance. You know, obviously, customer. I spoke in broad terms about the number of active customers in our Marketplace, 50,000 active participants on an annual basis. That's a number we're proud of. That number has been, I'd say, stable over time. Certainly, you know, as volumes come back, we expect it to increase as well. I'd say what we saw in the first quarter, we saw strong buyer activity. We saw buyer growth in absolute terms, and I think that was also consistent with just, you know, limited supply, strong demand, you know, improved conversion rates. Conversion rates improved materially versus Q4 into Q1. It was a strong spring market, and that was reflected by, you know, a lot of buyer activity. It was a quarter, I'd say, where sellers were, you know, holding on to get the best possible price for their vehicles. They recognized the market was strong, and they wanted to take advantage of that. We saw a good seller, you know, good seller activity as well. I'd say as we look into Q2, we're seeing those things kind of normalize a little bit. I'd say some of the demand is weakening a little bit. Prices are plateauing, and buyer and seller growth, I'd say, are more equally balanced at this point. I guess in terms of buyer recruitment, obviously we have sales and marketing efforts that go with that. One of the things we have been focused on, as I mentioned on prior calls, is the rollout of our auction format now on the BacklotCars platform. This was the former sort of CARWAVE model, an auction format operating in a limited number of markets. In Q1, we started rolling that out. I believe we've rolled it out now to 10 or 12 states, all I think west of the Mississippi still at this point. That rollout now is well underway, and we're signing up, more and more dealers to participate in that, more and more buyers to participate in that with, I'd say, generally good results there too. Got it. Thank you. Thanks, Craig. The next question comes from Gary Prestopino with Barrington Research. Please go ahead. Hey, good morning, Peter. Hey, I know you just mentioned that conversion rates improved materially, but could you put some numbers on that for us, please? What the conversion rates were in this quarter versus maybe Q1 last year and Q4 of last year? You know, we don't provide the precise conversion rates. They do vary by different channels when we've had these sort of different marketplaces. That's something that's going to evolve over time. I guess what I'd say sort of qualitatively or descriptively, Gary, would be we saw material improvement versus Q4. Conversion rates, I would say, consistent with Q1 of last year, maybe in a couple of areas, a little higher, you know. You know, depending on the marketplace. Yeah, probably, if anything, a little higher than Q1 of last year and materially higher than Q4 of last year. I'd say over the course of the quarter, you know, we probably saw that sort of level of intensity peak, you know, early March, and we've seen it kind of plateau since then. That scenario has kind of continued. You know, it's still a strong market, but no longer a market where pricing is increasing. Would you say that, you know, for the spring selling season, conversion rates usually improve pretty dramatically. You know, as a function of cars actually entering the auction, was it, you know, improve or were there is actually the conversion ratios were up just because there's a lower amount of cars coming through the pipe? You know, I'd say it's a little bit of both. A little bit of both. You know, as you know, Gary, there's typically a spring market. Perhaps one of the reasons it was more, more evident this year is the latter part of last year was particularly weak. Maybe the comparison from a, you know, November, December to a January, February was just more separation there than we might typically see. I think some of that was a function of supply. You know, off-lease volumes continued to remain very, very scarce, you know. We didn't see a material uptick in off-lease volume in the first quarter. Scarcity probably contributes to that. You know, we do look at market share. Some of our, you know, some of the data doesn't get reported until after hours. Based on the data that we have of the industry and various data sources that we look at, we think it was a positive quarter for us in terms of market share, one where our market share increased overall. Thank you very much. You're welcome, Gary. The next question comes from Bob Labick with CJS Securities. Please go ahead. Hi. Good morning. It's Peter Lukas for Bob. just going back to OPENLANE. part of the home run potential for the one platform, one brand strategy in our mind is the opportunity to sell off-lease cars in quote open online auctions, meaning not just that franchise's brand. Wondering if you could tell us what% of sales pre-COVID were quote open for OPENLANE. Where is it now, and where do you see it going in the next three to five years? Pete, that's a great question. I think you've hit on, a very important, you know, strategic lever we have, you know, over the longer term here with this business. You know, as I mentioned in my remarks, we've got deep strength in commercial and particularly in the off-lease segment. I kind of characterize that as, you know, that's a musical instrument that just isn't playing right now in this industry because there's just so few off-lease cars as a function of this market. It's to do with the pricing and the market value versus residual. I'm confident that over time, all that gets worked out, all of that normalizes. I'm confident that leasing is going to remain a big part of the way cars are retailed, particularly in the United States and Canada, North America. If anything, as the industry transitions to EVs, maybe we'll see even more leasing. Certainly, some of our commercial customers tell us that. I think leasing is going to be a big part of this industry, and I think ultimately this, you know, vehicle value versus residual value equation is all going to normalize, but it's going to take some time. To get to the specifics of your question, pre-COVID, typically what would happen is we'd sell about 50% of the off-lease cars in the private label environment, and then we'd maybe sell another 10% or so in the open. That would mean that the overall conversion rate was about 60% and 40% of the vehicles would go to physical auction. Those are sort of rough numbers, but directionally indicative of what that channel looked like. Today it's quite different because there's so few off-lease vehicles, 80%+ of them are selling in the private label to the grounding dealers, the first dealer that gets the chance to buy that car, right? We make a little bit of money, but that's not a strong revenue driver in our business. We have a situation today where there's not a lot of off-lease cars getting returned, and more than 80% of them are getting purchased. Very few of them are flowing deeper into the marketplace. Again, I think over time what will play out is off-lease volumes will increase. That 80% number will decline, which means more of the cars flow into the open. Then the opportunity you talked about is where I think our business will have real power. The ability to put these off-lease vehicles into a truly national digital marketplace with all types of buyers from all franchise dealer networks, all independent dealers, you know, large used car retailers and so forth. Frankly, it's one of the reasons the rollout of the auction format is really important to us. Putting those into a true digital auction, I think will be important. I think this is something that certainly we're excited about, but I think our customers are excited about too. Because they've gotten used to selling really all these cars without sending hardly any of them to physical auctions the last few years. I think they're very motivated to find a way to maximize the digital selling percentage of these portfolios, you know, well into the future. Big opportunity for us, one that'll play out over time. Very helpful. Thank you. Thanks, Peter. The next question comes from Bret Jordan with Jefferies. Please go ahead. Hey, good morning, guys. Good morning, Bret. You called out, service, and I think repo within service as a contributor in the quarter. Could you kind of bucket the contributors to service and maybe the cadence of what you're seeing in repo in the current environment? Yeah. Thanks, Bret. you know, under services, the way I think about services, we've got certain services that are attached to the vehicles that we sell. you know, examples of that. The The easiest example of that would be logistics. We sell a vehicle, we give the dealer the opportunity to have us deliver the vehicle for them, and if they choose us, as we often, we generally hope they will, that's an opportunity for service revenue and profit. That's what we call, like, an attached service. Certain reconditioning activities would be attached services as well. Then there are sort of services that are sort of separate from vehicles that we sell. you know, we have an inspection business that inspects vehicles. We have a key business. Obviously we have repossession servicing businesses, just to give a few examples. Those businesses, I'm happy to say, are all performing better than a year ago. Some of them are under volume pressure and the profitability was challenged. We've addressed a lot of that. That's showing up in our results. If we look at specifically the repo segment, we have two businesses that serve the repo segment. We've got a digital platform, RDN, and we've got a repossession servicing provider called PAR. Both of those have seen significant volume growth because there is more repossession activity in the industry today. Those businesses are driving some growth in revenue and growth in profit for our business. What I will say that today, pretty much all, and I've said this on prior calls, pretty much all of those repossessed vehicles sell at physical auction. It's really the one segment of our industry that has not yet been disrupted by a digital-only model. Although repo volumes are up, those volumes continue to flow to physical. We've got some initiatives to start to sell some of those vehicles in a more digital format in our marketplaces. We're working on that currently. It's too really early to talk about that. It's certainly not meaningful in any way to our business at this point, but it is an area of opportunity that we're focused on for the future. I guess that leads to my second question. Your comment that, pre-COVID, 40% of off-lease volumes went to physical, and we have not, I think, had a normal off-lease environment since you divested your physical assets. Is there, I guess, is there some requirement from some commercial sellers that you have availability of physical, or will they just put it all to digital because digital is all that is available? I don't think there's any requirement from sellers. No. I think our sellers see us as a digital marketplace business, a leader in the space, a leader with off-lease vehicles. I think our sellers are very. You know, we've had a chance to speak in detail about our strategy. I think they're very aligned with it. I've had a chance to preview our Marketplace consolidation strategy with, I would say at this point, most of our large sellers and you know, very, very supportive of the strategy. Frankly, I think in most cases, can't wait to see it happen and become a reality. I think it'll be very, very positive for them, for the outcome we can deliver on their vehicles and very positive for our business. Okay, great. Thank you. Thank you. The next question comes from Daniel Imbro with Stephens Inc. Please go ahead. Yep. Hey, good morning, guys. Thanks for taking our questions. Good morning, Dan. I wanted to start, actually, to follow up on an earlier comment around commercial market share. I guess I'm curious. There's been headlines around the industry the last couple of years. You guys noted commercial volume was still, I think, down 4%. Manheim in their slide deck kinda noted off-lease was up something like 80%, 81% year to date. I'm just curious, can you talk about within the three main commercial segments of rental and off-lease and repo, kinda where your market share stands today versus pre-COVID, and how your conversations with those sellers have progressed as you've made these strategic changes to the business? Yeah. Thanks, Daniel. you know, I don't wanna comment on that data point because I'm not familiar with it, but I guess what I'd say is we operate, you know, off-lease remarketing programs for the vast majority of captive finance companies in North America. We see all their volumes flowing through us. It's not up 80%. I can be very clear about that. It's broadly in line, slightly down with Q1 of last year. The volume of off-lease vehicles flowing to physical auction is, you know, in the same vein. you know, 80%+ of these vehicles are selling upstream before they go to physical. Now I think it's absolutely possible that commercial volume at physical auction was up because repossession volume has been up. As I just mentioned on the last question, all of that repo volume today sell to physical auction. It's also possible that that number from Manheim is a conquest number. I know a number of captive finance companies moved volume, from ADESA to Manheim after the divestiture. It's possible some of it is that. The off-lease volume selling at physical auction is well below its historical norm. Let's just say that. Great. Sorry. I'll let you finish. I was gonna ask about just a follow-up on the market share by maybe by segment, if you had any data there, that'd be helpful. Yeah. In terms of commercial, you know, our relationships, I think strong positive. You know, I mentioned we have the majority of OEMs on our platforms. The customer names are the same they were pre-COVID. I think those relationships are in a good place, and we continue to stay very close with those customers. Sorry, Dan, I did not address your question up, but please go. That's fine. Maybe a follow-up. I was gonna ask you a broader risk appetite. You know, we've seen some regional banks and others talk about pulling back on floor plan to dealers. You know, I'm just curious, how does that impact your strategy at AFC? Are you stepping in and viewing that as an opportunity for growth to provide more floor plan lending to your dealer customers? Would you also look to step back to control losses? Just maybe it seems like a pretty high ROI given the profitability at AFC. Kinda curious how you're viewing that as a growth use of capital almost in this environment if other floor plan providers pull back. Yeah. Thanks, Daniel. You know, I think, first of all, as I mentioned, you know, we're seeing a little bit of a different risk environment than we saw last year. Again, I'd characterize it as normal, consistent to what we experienced pre-COVID. You know, we're watching it carefully. We're managing our risk, I'd say conservatively compared to our competition. You're right, though. You know, a number of banks, you know, sort of looked at the space a number of years ago and said, "Hey, this is an interesting opportunity." Got into the space. I think they probably learned, listen, this requires a lot of sort of deep expertise specific to this space. That may not be a core competency of what a bank. We've seen one or two pull out. You know, that does create some opportunity for us because, you know, in a number of cases, those entities conquested some customers away from us, and some of those were our largest and probably best credit quality customers because they were, you know, the bank felt they could offer them a better deal, more akin to a banking line. I'd say it does create opportunity for us. We're looking at it, but we also look at it through, I'd say, a cautious and conservative lens. We're focused on having an AFC business that will continue to be a strong contributor to the business. We do expect it to grow, but it'll be a modest growth, a sort of single-digit level of growth from the AFC business. The larger growth that's gonna drive the 15%-20% CAGR that I've talked about has to come from the Marketplace business. Great. Appreciate all the color and best of luck going forward. Can we take one more question or we're done? Okay. Well, thanks, Daniel. I appreciate that. Thank you everybody for your time today and your questions. Before we close, I'd just like to summarize my key messages for today. First of all, in Q1, we performed well against a backdrop of what is still a challenging industry environment. We delivered double-digit growth in revenue, gross profit, adjusted EBITDA, and operating EPS. Importantly, our Marketplace business demonstrated a strong improvement versus last year, and we also delivered another solid quarter performance in our Finance segment. Our cost management work is showing up in our performance, and our cost initiatives remain on track. We are consolidating our platforms and executing on our plan to simplify our business. Going forward, we will have one Marketplace brand, which is OPENLANE. As I think about the future of OPENLANE, I believe that our strong differentiation will help drive our future growth. We're a digital marketplace, pure play leader. We're strong in technology, strong in industry knowledge, and strong in data. We have scale with 1.3 million cars sold last year, and this is a number that we intend to grow over time. We have deep strength with both commercial sellers and with dealers, and our volume is divided roughly 50/50 between both categories. We believe we will grow our volume in both categories as the industry continues to shift to digital. We also believe that volumes will grow as the commercial seller volumes recover from their current historical lows. We are profitable with strong cash flow characteristics, again evident in Q1. We have a strong balance sheet, low debt, and ample liquidity. We generate sufficient capital to support our investments, further reduce our debt, and return capital to our stockholders. Finally, we have a large addressable market in which to innovate and invest. In summary, we are very excited about the future of OPENLANE. Thank you for joining us today's call. I look forward to updating you on our continued progress on our next call in early August. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.