Good day, ladies and gentlemen, and welcome to the KAR Auction Services, Inc. Third Quarter 2011 Earnings Conference Call. Today's call is being recorded. Today's hosts will be Jim Hallett, Chief Executive Officer of KAR Auction Services, Inc.; and Eric Loughmiller, Executive Vice President and Chief Financial Officer of KAR Auction Services, Inc. I would now like to turn the conference over to Mr. Loughmiller. Please go ahead, sir.

Thank you for joining us today for the KAR Auction Services Third Quarter Earnings Call. Today, we will discuss the financial performance of KAR Auction Services for the period ended September 30, 2011. After concluding our commentary, we will take questions from participants. We will make every effort to accommodate all of the questions within the hour we have scheduled today. Before Jim kicks off our discussion, I would 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, and such risks are fully detailed in our SEC filings. Now I would like to turn the call over to KAR Auction Services' CEO, Jim Hallett.

Great. Thank you, Eric. And good morning, ladies and gentlemen, and welcome to our third quarter discussion. Today, I'm actually -- I had Eric join me here in the Motor City. I've been on the road this week with Tom Caruso, President and CEO of ADESA; and Peter Kelly, President and CEO of OPENLANE, doing customer visits across the country and taking the time out to do this conference call. And really, there's 2 things I want to focus on today. I want to focus on our third quarter performance, and then I want to give you an update on OPENLANE, not only the acquisition, but the feedback from customers and employees as well. So with that, looking at the third quarter, as they say, give me the facts. Third quarter EBITDA, $116 million; year-to-date adjusted EBITDA, $375 million. And I would say that we are disappointed that the strong performances at Insurance Auto Auctions and at AFC were not enough to offset the 15% volume decline at ADESA. And as a result, we need to lower our 2011 adjusted EBITDA expectations from approximately $500 million to approximately $485 million to $490 million. The volume outlook for ADESA, we expect that these industry headwinds will continue into 2012, and that 2012 institutional volumes are expected to be down from the 2011 levels. However, we do anticipate future volume declines won't be as steep in the -- quarter-over-quarter going forward, as what we experienced in the third quarter of 2011. And we're hopeful that our Dealer Consignment volumes will continue to improve. And hopefully, these volumes may offset the institutional volume declines. I would also like to point out that with the merger of OPENLANE complete, we will begin reporting their volumes as part of ADESA in Q4. The virtual-only auctions…

Thank you, Jim. I would like to highlight just a few items in our performance for the quarter. First, consolidated revenue was essentially flat. This reflects 16% growth in revenue at Insurance Auto Auctions, which was based on a 10% increase in volumes sold; and a 15% growth in revenue at AFC, which reflects a 13% increase in the number of loan transactions. These strong performances, though, were not enough to offset the 10% decline in revenue at ADESA. That revenue at ADESA, though, reflects a 15% decline in volumes. So the good news is we were able to partially offset that decline in volume with some increases in revenue per unit sold. As Jim mentioned, the consolidated gross margin came in at 45%. I do believe this is a very strong performance and reflects how we're running the business. We've been able to increase, especially at ADESA, the components of our cost structure that are variable versus fixed and maintain these strong margins. The SG&A for the quarter declined. But this is primarily the results of a credit recorded in stock-based compensation relating to the profit interest held by senior management. The credit recorded in Q3 for this small group was $13 million. Please keep in mind that the variability of our stock-based compensation only relates to the profit interest held by members of the senior leadership team of KAR from the 2007 LBO transaction and Insurance Auto Auctions from their 2005 LBO transaction. All other options are expense based on the measurement at our IPO date in December of '09. This amount amounted to approximately $5 million of expense in Q3. So the net stock-based compensation was a credit of $8 million, taking those 2 components. Year-to-date, adjusted EBITDA is about 1% ahead of the prior year. Our…

Good. Thank you, Eric. And just before we go to Q&A, I just want to take a moment and comment on why I remain very, very positive and optimistic about our company and about the future of our industry going forward. There is no question that OPENLANE brings a lot of excitement to the party, and I think that we all see the advantages of that. But OPENLANE is only part of the reason for my optimism. When you think about Insurance Auto Auctions, they continue to excel in understanding the needs of the insurance and non-insurance industry, and that's been evidenced and witnessed by the 10% unit growth that they've seen in third quarter. I think that speaks volumes. AFC. AFC continues to use a very disciplined growth model and achieve strong profitable growth while maintaining a portfolio that's 99% current. There's no question we've talked about the pressure and the supply story at ADESA. But despite the decline in revenues at ADESA, EBITDA margins remain robust, and ADESA sales are now 45% Dealer Consignment. 45% of all the sales at ADESA are dealer sales, and this is an initiative that we first spoke to you about a couple of years ago. And I'm very pleased with the way that initiative has been orchestrated and rolled out throughout the entire company. And I think it's important to note that we don't believe that we're finished in this area, and there's much progress that we feel that we can continue to gain with the Dealer Consignment initiative. And when you add the OPENLANE component in there, that even expands the opportunity and make that whole initiative even more powerful. Eric mentioned that this business throws off a lot of cash, over $200 million through September of this year. And we…

[Operator Instructions] We'll take our first question from Tony Cristello with BB&T Capital Markets. Anthony F. Cristello - BB&T Capital Markets, Research Division: I guess the question I have is, as we look at the ADESA side of the business today, do you think that this is sort of the trajectory we're going to see for the next few quarters? I mean, you sort of adjusted the guidance down, and it seems that this might have been worse than you had expected. And I guess what I'm just wondering is, could it continue to be worse than you possibly expect?

Yes. I would say to you that we think that the third quarter -- as I mentioned earlier, we don't think that the declines be as steep going forward quarter-over-quarter. And we have had the opportunity to see October results coming in, and I would say that we're seeing moderate improvement. And we don't feel that the declines will be as steep. Eric, any thoughts on that?

No. Tony, I mean, Jim summed it up there. We still -- October was down year-over-year but much less than what we experienced in the third quarter. We want everybody to hear that specific detail. Anthony F. Cristello - BB&T Capital Markets, Research Division: Okay. And then -- and maybe if I can have one more question. When you look at what's going on at your other businesses, particularly IAA, it seems like the strength continues in spite of what has been a little bit of an easing on the pricing side. So what I want to understand is the dynamic, if you see the seasonality along with an increase on volume, how quick do you see or will you see an impact on the pricing side of the business? Or is what's going on in the dynamics of the Whole Car still going to keep pricing relatively stable for right now at IAA?

Well, Tony, that's a very good question. And predicting the future would help a whole lot of people in a lot of places. There seems to be no indication on the Whole Car side that there will be significant reductions in pricing, although there is some evidence of some moderation, slight movement. And I'll just point to our third quarter result. We were up 16% in revenue, 10% on volume and, roughly, 6% on revenue per vehicle. And our revenue per vehicle is driven strictly by proceeds. So I think in a relative sense, the pricing remains strong. There is a seasonality to the summer months, the types of cars and the availability. There's also some impact as you get into some of the conditions in the Northeast that could impact what's happening in the salvage business relative to an abundance of flood cars from the hurricanes and things like that. All of that can impact the proceeds. But generally, we are seeing what I would describe as overall strong pricing across the marketplace. I probably wouldn't get too caught up into the moderations that occur that are small changes, if that's fair for you.

And we'll take our next question from Gary Prestopino.

I checked the website for the national auto auction industry. I didn't see any data there for Q3. Do you have any data as to what the volumes were down in the industry?

Gary, I haven't seen that yet.

Okay. That's fine.

Preliminary data, they were down. And again, there's preliminary data that it was down double digits, probably just slightly less than ours.

Okay. And then in terms of the vehicles on the wholesale side, you're basically saying that going forward the magnitude of the declines won't be as much as they were over the last 2 quarters. Now is that inclusive or exclusive of the -- what OPENLANE is going to add for you all?

Yes, Gary. That would be exclusive of what OPENLANE will add.

Okay. So that's exclusive of OPENLANE.

Yes.

Okay. Great. And then when you made the acquisition, you said OPENLANE was going to do about 300,000 vehicles this year. Is that still a good number? And based on the fact that they're in maybe somewhat of a different industry with the virtual side, would you expect that to be up next year as well?

The answer to your first question, yes, that's still a good number. And your numbers are accurate, and we do believe there is opportunity on the virtual side.

Although I will add to that, a lot of the virtual business comes out of off-lease and repossessions. They will not be immune to the trends we're seeing as we go into 2012 where the off-lease volumes -- the -- that's what we refer to. The institutional volumes are expected to be lower in '12 than '11. That would be true to their part of the market as well. So who knows how that'll turn out. They could see some declines there as well.

Okay. And then you talked about that they're in the virtual auction market, as well as it enables dealer-to-dealer and dealer-to-wholesaler. But right now, are the majority of what they're doing in the virtual auction market and you have you transition that into dealer-to-dealer, dealer-to-wholesaler? Or have they got a thriving business in there?

They're primarily, Gary, on the commercial space. But I will say that they have made very good progress in the dealer-to-dealer space, although it's still relatively a small portion of their business at this time. But again, this is an area that we think we have the opportunity to grow. One of the tools that we did not have was this dealer self-posting activity. And all of our competitors did have that. The ability to go to a dealer and allow him to image the car, do a condition report and post it right from his facility without that car ever having to go to auction. And this is not only for the dealers, but it could be for the daily rental customers and others alike. So this is a whole new capability for us that we did not have in the past.

So the dealer posts the car themself, and it opens it up to the market, including dealer-to-dealer, dealer-to-wholesaler?

That's correct.

And we'll take our next question from Rick Nelson.

The 15% decline that you reported for ADESA volumes, can you break that down between Dealer Consignment and the institutional business?

I don't have that right in front of me, Rick, but institutional was down. We are actually up year-over-year on Dealer Consignment.

Got you. And the improvement that we're seeing here in October, is that happening on the Dealer Consignment or the institutional side of the business or both?

Actually, Rick, it's on both.

Got you. And when does this headwind of fewer off-lease vehicles, when does that actually become a tailwind for you?

That's a good question, and one that people are very much focused on. We think we will see the bottom of the trough sometime in late 2012, where some indication and a lot more feedback that we got this week, a lot more clarity that we got on that from our customers this week, that some customers are actually expecting to see their volumes start to pick up on a year-over-year basis. But we think it will come late in the year, possibly the fourth quarter.

Got you. And are you seeing any indications of late given the Thailand floods and potential shortages again on the new car supply that the franchise dealers increasingly are going to focus on used cars, or once again, I guess, and try to retail more, wholesale less. Is that a growing headwind again?

Yes. I think the floods in Thailand are a temporary thing. We spoke with the import manufacturers that are most affected by that this week, and they've given us their outlook on that. And so it's temporary. You kind of get over the effects of the tsunami and then we're dealing with the floods in Thailand. But dealers are always going to -- I think dealers have now become better merchandisers of used vehicles. They are always going to be focused on trying to retail first. And I think it will be much of the same going forward.

And, Rick, CNW's report on used car sales that was put out I think earlier this week, it was pretty promising seeing -- I think it was 4% year-over-year growth for the month of October, and the strongest segment was franchised dealers. Sooner or later they're going to run out of cars if they can't get the trades on the new cars. And that's always good for the auction business.

Yes, I saw that things were picking up sequentially there from September to October, and maybe that explains some of your own improvement...

I would think so.

We'll take our next question from Ryan Brinkman with Goldman Sachs.

I know you're looking forward to the return of these off-lease volumes toward 2012 end, and definitely in 2013. Do you have an estimate or care to guess publicly regarding which quarter you think the core ADESA operation is likely to trough in terms of the number of vehicles auctioned?

Yes. As Eric said, predictions are for Gypsies. No, I don't think I would want to predict when that takes place.

Okay then. And I would just say that one strong part of your story right now is definitely the volume trend at IAA, which comes despite the fairly negative trend in miles driven. Can you talk about what is driving that result which in recent quarters has come also despite the drag from loss to Allstate volumes, maybe you're better or more fully cycling that this quarter? And I'm interested to know, too, if you think you're taking significant amounts of market share on Salvage. And if you are, who do you think it's coming from; mom-and-pops or major competitors such as TRA or perhaps even Copart?

I would say that the growth at IAA is primarily coming from the noninsurance.

In this quarter.

Yes.

And let me add to that, Ryan. This will be in our Q, but I think you've asked the right question. Noninsurance, we've got a little more aggressive. We have taken title on more vehicles, and in our Q, you'll see a disclosure about that. Not a significant number more, but slightly more so. We pointed that out. And when our Q is filed, we'll give a little detail on that. So to be honest, in the pricing environment we're in, there's a lot of opportunities for everyone in our business. And while we talk about noninsurance, our insurance business remains quite strong, and you just happen to be in a quarter, Q3, where there's fewer accidents. I'm mean, the roads are in better shape. We aren't into any weather. So I think we're holding our own there. It's not as if we're losing ground there. In fact, I think we're doing very well in the insurance segment. But in Q3, that was not a significant contributor to growth.

Okay. Still encouraging. Can you talk to about how you think OPENLANE is likely to benefit you from a rental car channel diversion perspective? I think they have a strong relationship with Avis, Budget, and perhaps others.

Yes. OPENLANE has strong relationships with the customers that you mentioned, with the daily rental companies. And we are currently selling cars for those rental companies. We would expect that with the combination there's even more of an opportunity for us to do more of that business. And going back to that self-posting case -- capability that I spoke about earlier with the dealers, we will actually be able to image and post cars that are still driving around and earning rent for these companies. These cars can be posted for sale, while they're still in their inventory. And we see that as a growing opportunity, and OPENLANE has demonstrated their capability to be able to handle this business.

Great. And my last question, just a housekeeping item. Your share count has been pretty steady. Yet it looks like it ticked up maybe $2.1 million during the quarter. Is that right? And what would it be attributable to?

Yes, Ryan, it's correct, it went up. But that's because in Q2, as a result of the refinancing and all those costs, we had a net loss. Therefore, you do not dilute the share count. Year-to-date through Q2, we had -- the shares were 137.6. So it was really just the exclusion of the dilution of -- for options. So a pretty good number to use now would be in the neighborhood of 137.5 to 138. But it was really just the impact of the accounting rules on whether you dilute the shares in a quarter with a loss. That's why the share count in Q2 was lower.

And we'll take our next question from John Murphy with Bank of America Merrill Lynch.

Just wanted to ask a question on the ADESA side that you guys didn't talk about too much yet on the conversion rate side. I mean, the 57% was relatively low. I'm just curious, is that just a mix impact from Dealer Consignment? It just seems a little bit odd given that pricing is so strong and that conversion rate was light relative to where it's been in the past couple of years.

Yes, John. That is attributed to the mix. As you know, we're selling a much higher number of dealer vehicles in -- as we've talked about in the past, Dealer Consignment does not convert at the same level as the commercial inventory.

And then a follow-on to that. The revenue per vehicle sold increasing, I mean, is that a result of fees being ticked up on your schedules? Or is that really also just a function of dealers being on both side of the equation and in your mix?

John, good question. It's actually a combination of 2 things. In our mix we are seeing a little bit of a lift on the ancillary services due to the types of institutional cars, even though there's fewer. And then we've had fee increases, combined with the increased dealer mix, gets you in the, as we call it, the 2-legged fee, because the buy fee and the sell fee are -- the sell fee is actually higher on many dealer cars than it would be on an institutional car. But there's also some minor fee increases, as well, on the rate schedules.

Got you. And then on the AFC side, you guys are doing a great job of growing loan transactions there. Are you -- I mean, who are you taking share from? Are you -- is there an initiative there to go to these Manheim auctions and work that business? Or, I mean, I know you guys have always been doing that, but what's going on with the growth there? Because it's far outstripping what you're doing on your volume on your ADESA side.

I think what's going on there is we're getting credit for our ability to increase our capacity. And so we're a very dependable floor plan provider. Where the competition in that space is, generally, pretty tight on its available capital and maybe seen as a risk. I mean, you can't really highlight because when you borrow for a car, John, and you pay it off, you don't like -- it's not like credit cards where you transfer balances. So it's really who has the most stable deal at the time. But it's not a competitive fee environment. I really think our availability of capital has been a big plus, and the discipline in the marketplace that our AFC team has shown to consistently perform. I mean, all of that combines to what we're doing. So you have a service elements. And our competition, particularly our large competitor that has a captive that you named, that we don't use the name too often, they probably are more focused on financing cars that are acquired at their auctions where we've really never put a restriction on our customers as to where they buy their cars.

Okay. And then just lastly, a big quick -- picture question for you, Jim. As you think about the recovery in the SAR, do you think there's the potential that as that recovers, we had a better churn in the secondary market, being the used car market that you play in, and that could be a very significant potentially complete offset to the pressure that you're expecting to continue on the institutional side next year?

I would certainly hope that it would offset some of those volumes, yes.

Okay. But do you -- I mean do you -- would you venture a guess that a pretty significant recovery, even a recovery that we've seen late this year, could offset the pressure on institutional? Or is the institutional pressure going to overwhelm it and we'll still see some volume declines next year? I'm just trying to gauge the plus or minus for...

John, all we've been able to get to is the declines in our view, and these were in our comments, we think will not be at the pace we experienced in the third quarter. We aren't going to get into specific predictions on volumes quite yet. We're still working throughout the year end. We'll probably have more commentary in our next call when we give you some insights into what we're seeing for 2012.

We'll take our next question from Craig Kennison with Robert W. Baird. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: Given the discussion already on this call around 2013 when you're going to be on the better side of the OPENLANE integration and some of these off-lease trends. I'm curious if you would comment on any opportunities outside of North America that your acquisition of OPENLANE would create for you.

Yes, I think that our primary focus is getting this integration and getting it right here in North America. But there's no question that we know there are opportunities outside North America. And I've spoken in the past that we are very familiar with the opportunities and who the target would be. They're certainly familiar with us, I would say, we're well known to each other. Our relationships are good. And I think it's a matter of time as to -- first things first. Let's take care of business at home. And then possibly look at opportunities where we could leverage this technology around the globe. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: And then with respect to the integration, are there any major fee differences between OPENLANE and ADESA that you don't need to reconcile and would present either an opportunity or a problem if you do so?

Craig, what I would comment on is they are virtual-only auction, so their fee structure is designed around less services than we provide as ancillary services at the auction. But there's not significant differences in terms of auction fees as it relates to the type of sale. If you do apples-to-apples, physical versus OPENLANE, they'd be very comfortable. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: And then, Eric, you may have commented on this earlier in the call, but will we see OPENLANE metrics stand-alone? Or will they be embedded within ADESA going forward?

OPENLANE will be reported as part of the ADESA segment. With that said, in order -- because they haven't been included in the volume numbers of the industry or at ADESA, we'll be able to give you some -- we're going to give you some data to help you understand what the impact of the acquisition is compared to what's happening kind of in the core industry that we've been talking about for the last several years. But we will not be reporting OPENLANE separately.

We'll go next to Scot Ciccarelli with RBC Capital Markets.

This is Patrick calling in for Scot today. I guess my question, just around AFC and OPENLANE. I was just sort of wondering what kind of financing opportunities were available at OPENLANE previously, and sort of what opportunities you see there as you move AFC financing into your OPENLANE business?

Yes. AFC has an existing relationship with OPENLANE that has been in place for some time now. But we feel now with the integration and with the focus that we put on the consolidated entity, we feel that there will be increased opportunity for OPENLANE just because of the nature of all the relationships coming together.

Yes, Scot (sic) [Patrick], the other thing is, remember now, that customer base that's buying there, we can market directly to them where before it was kind of pushed to us. So we can be a little more forward about the ability to use AFC as part of the OPENLANE transaction.

Okay. And then, I guess, within the Whole Car auction business, you've seen growth in Dealer Consignment despite dealer selling their own inventory to supplement the drop in new and used car sales. I guess looking forward, do you expect some of the dealers move back to the more traditional businesses allowing for you to capture this part of the market? Or do you expect them to remain in the market?

I would very much expect that they will remain in the market. And I think that -- I think in many cases, dealers have discovered that the auction is even more critical to how they manage their inventory and how they manage their supply and how they maximize their proceeds, and there may have been some good habits that have been learned through this period of time.

We'll take our next question from Bill Armstrong with CL King & Associates. William R. Armstrong - CL King & Associates, Inc.: Earlier you mentioned that about 45% of ADESA sales are Dealer Consignment. Is that a third quarter number?

Yes, that's a third quarter number. William R. Armstrong - CL King & Associates, Inc.: Okay. Does your remaining guidance for the year, to what extent is the strong SAR that we've seen in September and October play into your guidance in terms of helping Dealer Consignment volume?

Bill, to be honest, the SAR from our perspective for the year is kind of ending up where we thought it would, somewhere between 12.5 and 13. And the monthly variations, we probably don't spend as much time focused on. So we have not adjusted our expectations at all as a result of September and October new car sales being a little bit higher. There seems to be other pressures that might influence us in the fourth quarter. William R. Armstrong - CL King & Associates, Inc.: Okay. In thinking about 2012 internally, what is your outlook for the SAR for 2012?

You know what, what Tom Kontos has really talked about is steadily increasing SAR over a period of time. And I think, Jim, that's where we are, right? We don't have a number, but we think it will be above 2011, and we're not looking at any production levels that would indicate that it will be a big jump. It will be more like incremental gains as we've continued the SAR, kind of on a slow, moderate recovery. William R. Armstrong - CL King & Associates, Inc.: Got it. And then ADESA SG&A expense seems to be pretty well under control. Can you break out the variable versus fixed components of SG&A for ADESA? What the approximate percentages are?

I've given the guidance before that we're about 40% fixed, 60% variable. But because ADESA owns more property than IAA, IAA leases substantially all of their property, it's probably more like 35% at ADESA and maybe a little above 40% at IAA because of the occupancy costs I consider a fixed component. So -- although I think we've made further improvements relative to -- we've outsourced some functions in the shops and in the reconditioning centers, we might have made a little improvement. I haven't updated that number in a while. Maybe I will do that toward year end. But I've always believed around 35%, and we might be slightly less than that right now.

And we'll take our next question from Chris Ceraso with Credit Suisse. Christopher J. Ceraso - Crédit Suisse AG, Research Division: So just to check, because we've heard about this from some of the other companies, the adjustment that you had in stock comp in the quarter where it end up being a credit. Is that because the price of your stock was down in Q3?

Yes, Chris, and it only applies to the profit interest, not to the larger number of options. Our larger number of people that have smaller grants throughout our workforce, those are not impacted by the stock price. That's a fixed measurement. So it's the top 6 executives at KAR, and I think there are 7 at IAA from the '05 transaction, that are accounted for in the liability method, which means any movement in stock up or down has a direct impact on our P&L. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Okay. So that is likely to flip to an expense in Q4, but you pull this out of both your earnings and EBITDA guidance anyway, right?

On the adjusted, yes. It's all -- it's out of adjusted EBITDA. It is out of adjusted earnings per share, but not out of GAAP earnings per share, which is why the GAAP earnings per share didn't change. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Right. Okay. Ford -- I believe it was Ford -- mentioned something recently on its sales call that not only were off-lease units down, but the percentage of lessees that were keeping their vehicle was up quite a bit, further reducing the flow-through of off-lease vehicles. Is that something that you can validate? Are you seeing that? And have you taken into account that change in the number of people keeping their vehicles in your expectations for Q4 and for next year?

I would say that, although we don't have any exact data on this, from our customers, anecdotally, there's no question that more cars are being kept at termination, either by the consumer or by the dealer that originated the lease. So, yes, I would -- that would be an accurate statement.

And, Chris, I'll go even further. We believe, again, from what we're hearing, that's a major factor as to why the declines in Q2 and Q3 for us on the volumes were greater than what we've expected going into the year. Because we have good visibility on the number of cars coming back from leases. What we don't have visibility on is what do they do with them when they turn them in relative to remarketing. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Right. So have you taken that into account as you've thought about Q4 so that you don't get surprised to the downside again?

Well, we've been responding to it all along. I'm referring back to our expectations at the beginning of the year. But yes, we've taken that into account as a major factor as to why we provided updated guidance today. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Right. Okay. And then just lastly, I'm sorry if I didn't quite get this, but can you just explain again what CarsArrive is about?

Yes. CarsArrive is a transportation solution. Basically, they have created software that allows for us to aggregate and dispatch vehicles to be transported in a most efficient way with the use of technology. And to elaborate on that a little bit is, all of the vehicles that are bought by customers that the customers are asking for shipping, they are able to instantly provide them with a price to move that car from ZIP to ZIP, and then all those cars are posted in a pool and the transporters go in, there are 30,000, 40,000 trucks that go in and actually bid on that vehicle, on that move, and they build their own loads. And a very high percentage of these vehicles, I'm thinking like in the order of 80%, 85% of these vehicles, are bid on and self-distributed without us ever having to be involved with it. It's all through technology. And so these cars -- if -- obviously, if a transporter is moving in this direction and there's a car going in that direction, he goes in and bids on it and drives it down himself. So what we've been able to do is -- OPENLANE has been very successful with providing that. Number one, it makes it very easy for the dealer when he can buy the car and he can instantly see how much it is to ship that car, and they can also guarantee him how many days it's going to take for that car to arrive. And now if you think about that, CarsArrive has been doing that for OPENLANE, and their marketplace has been in the 300,000 to 350,000 volume. And now if you think about bringing that into ADESA, where you have approximately 2 million vehicles moving in and out, this really expands the opportunity there. And that's the opportunity that we see.

And, Chris, let me add, I just want to be clear. CarsArrive and RDN were owned by OPENLANE. We've talked about acquiring them. They were part of the OPENLANE. They weren't separate acquisitions. They were owned by OPENLANE.

And we'll take our next question from Eli Halliwell with D.E. Shaw.

I just have 3 quick questions. One is on the volume that you guys got at IAAI. It looks like it took a big jump in Q3, and I was wondering if you could help explain that?

Yes. I think I said earlier that it is primarily the noninsurance vehicles that we were able to attract to IAA.

Yes. And we're also -- and again, when we issue our Q, we'll give -- you'll get the numbers on this. We did acquire title to more cars than we have in the past because of the opportunities in the marketplace. And again, it's still not a significant number, but it was up from what we've had, so we've given that in our Q, that disclosure, which will go out in the next day or so. Probably today, I hope.

So that's a trend that we can sort of count on continuing, that you're sort of having more robust than historical growth in that category, in the noninsurance vehicles?

Yes. I think it's a focus of the industry as not just IAA. And I think we're having success because of the relationships that we have through ADESA, to be honest. Jim, maybe you can tell them about VRD as a component of our vehicle remarketing division as a part of that.

Yes. We've talked in the past about the VRD. And VRD is a program to attract some of the lower end Whole Cars, and also some of the damaged cars from our Whole Car customers that had historically been going through Whole Car auctions. Now we are able to give them the choice of should that car go to a salvage auction, is that where the best buying audience is, or should that vehicle go to the Whole Car auction. And again, because of our footprint and because of the complementary companies, we were able to offer that service. And many of our Whole Car customers are now taking advantage of that, and that continues to grow. And we see more and more Whole Car customers sending cars to the salvage auction. Primarily damaged cars and some of the low-end cars that are going there as well.

And with all that said, I'd like to reiterate, about 85% of our insurance auto auction business is still with the insurance industry. So that's still the focus. And they're doing very well within that segment as well.

Got it. Second question was on the SG&A. I know you've been through it a couple of times with the stock comp thing. What I just have a hard time understanding is sort of the underlying level of spending at the corporate level. Like if I take the SG&A that you report and subtract that with the division SG&As, I get a number of like $4 million in this quarter, which I understand that's an offset against it. But what's the underlying SG&A spending level that we can look at going forward? Like how much of an offset was there?

Again, I'll give you an approximate number. But we said our goal for this year was to keep that holding company number flat year-over-year on an adjusted EBITDA basis, and the magnitude of it is about $60 million. It's about $15 million, roughly, these are rough numbers, $15 million per quarter. That's what you're looking for, isn't it?

Yes, that's correct. Okay. Great. And then the last question is you mentioned earlier that you said you were implying positive guidance for growth in Q4 based on the change in the calendar and, I guess, maybe some good momentum at IAAI. It's a big jump, though, from the trend in the last few quarters. Can you help us understand that a bit better so we can sort of get a better sense for that quarter?

Yes. I'll just clarify it. I mean, with December 25 and January 1 being Sundays, the legal holidays are Mondays. And last year, the legal holidays were Fridays. If I were to tell you the strongest auction days are Wednesday, Thursdays and Fridays, I mean, every week. So you're picking up 2 strong auction days that last year were holidays. And then on top of that, the day before a holiday is often -- we just -- having the 23rd and the 30th is fortuitous from an auction scheduling perspective. And with the strong market, I mean, part of that is our expectations are built upon the strength of the market. Our customers are wanting their cars to continue to be sold, where some years if the pricing were softer, they might say, I'll wait until January. So there's a lot of that going in our favor. And then, again, unfortunately, in my business I have to become very anal about minutia. You look at how many Wednesdays you have. It's just a good month for us across all of our business. So that's the number of auction days. And then you hit on the other one, I mean, the hurricanes, the land-based hurricanes I'm now calling them. But the hurricanes that crawled over land, you build up that inventory. We have pretty good visibility into that, and you'll see strong salvage volumes, I would expect, in the industry, but especially at IAA, in the fourth quarter that are also something that really came out of what we saw in the September -- I think it was September when all those hurricanes hit ground. And it takes a while to process them. And then AFC is on a strong run rate. I mean, again, we include all that. That's why I took the time to explain it because somebody might ask it. It's not optimism that things are turning around over the macro of our businesses.

And at this time, I'd like to turn the conference back over to Jim Hallett for any closing remarks.

No. I would just say thank you very much. We appreciate you being on and appreciate your continued interest. We are not without a challenge on the Whole Car side. But again, as I mentioned in my comments, there's much to be optimistic about. And we think about how fast the year goes by. 2012 is going to come, it's going to go, and we're going to get to 2013. And with all the things that we've addressed, we feel good about the future outlook of the business and the company, and are very positive and very focused on going forward. So with that, I want to thank you for being on the call today and appreciate your interest. And we'll look forward to talking to you on the next quarter.

That concludes today's conference. Thank you for your participation.