Good day, ladies and gentlemen, and welcome to the KAR Auction Services, Inc. First Quarter 2012 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 call over to Eric Loughmiller. Please go ahead, sir.

Thank you for joining us today for the KAR Auction Services First Quarter Earnings Conference Call. Today, we will discuss the financial performance of KAR Auction Services for the quarter ended March 31, 2012. 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. In providing forward-looking statements, the company expressly disclaims any obligation to update these statements. Also let me mention that throughout this conference call, we will be representing 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 was issued yesterday, which is also available in the Investor Relations section of our website. Now I'll turn the call over to Jim.

Great. Thank you, Eric, and good morning, ladies and gentlemen, and thank you for joining us today. Really 3 topics that I would like to cover. First, I'd like to give you an overview of our first quarter performance; outlook on the wholesale used vehicle market; and then following Eric's comments, I would like to come back to you and give you an update on the OPENLANE integration process and how that's going. First taking a look at KAR's first quarter performance, KAR was able to achieve 5% revenue growth and all of our segments were up over last year. We continue to maintain very strong gross margins, and Eric will provide more detail on that in his commentary. And I believe that the company is well positioned for growth. We've done a good job of controlling our direct cost and holding our SG&A line steady other than the SG&A costs that are associated with the integration of OPENLANE. But more importantly, and what management continues to focus on is this company continues to be a very strong generator of free cash flow. In fact, Eric will be telling you that we've repaid our revolver, and that has been done ahead of schedule. So as we look at the business units starting with ADESA, overall volumes at ADESA increased 9% and that did include the OPENLANE volumes. Without the OPENLANE volumes, volume at ADESA was down 6%. And just a couple words of caution. I think we need to be careful when we're analyzing the ADESA volumes. We're now selling vehicles at OPENLANE that were previously sold at ADESA. And as we say the lines between ADESA and OPENLANE are starting to blur. And the most important thing is that we continue to sell as many vehicles as we can,…

Thank you, Jim. I'd like to start with what I think is a real highlight, and that's the KAR gross profit. We had 46.9% gross profit for the first quarter compared to 45.4% in the prior year. A big contributor to this growth is ADESA's gross profit was up to 45.3% from 42.2% last year. IAA's gross profit continued to be strong, above 41%. And AFC's gross profit is also very strong for us. And as Jim mentioned, for the first time in a while, all 3 business segments increased revenue year-over-year, with a consolidated revenue increase of about 5%. In terms of spending, our SG&A now includes OPENLANE which has added about $10 million of recurring expenses. Also this quarter, we experienced increased profit interest expense. It was $5.2 million for the quarter, up from $3.3 million in the first quarter of last year. In terms of the OPENLANE integration expenses or the non-recurring component, we had $2.7 million of such expenses that are in SG&A in the first quarter. These integration expenses are added back in computing our adjusted EBITDA. All of these integration expenses are cash, non-recurring costs and they include such things as the legal costs of the transaction, severance arrangements and some third-party consulting that was part of our integration plan. Another important item for me to talk about is our effective tax rate. It came in at 41% for the quarter. That's up from 2% for the same period last year. As I discussed in our last earnings call, we expected an effective tax rate of 30% to 35% for the year. I also indicated that if profit interest expense were greater than the amount assumed in our estimated tax rate, we would see an effective tax rate above our expected range, well this…

Great. Thanks, Eric. And I guess I'll start by saying we have a lot of significant issues -- or a lot of significant initiatives going on within KAR. And I would say to you that there's probably nothing more important on my radar right now than this OPENLANE integration, in not only getting it right, but getting it done in the timely manner that we set out. During the quarter, I'm pleased to say that we significantly have enhanced the customer experience. We've integrated 2 ADESA private label closed sales onto the OPENLANE platform. We have now had ADESA DealerBlock transfer or migrate onto the OPENLANE platform, and we are migrating the other functionality on ADESA.com for our U.S. customers to OPENLANE throughout the balance of 2012. And this will include the market guide, LiveBlock, auction run list and Notify Me. As we complete the U.S. in 2012, that will immediately be followed by going through the same integration processes in Canada as we begin 2013. Also I would remind you that the CarsArrive project continues to go well. I believe I mentioned on our last call that CarsArrive is a realtime transportation solution that gives you guaranteed quotes on price and gives you guaranteed delivery times. We piloted it at 7 auctions and now we're up to 12 sites that have been fully deployed. And we are on track to roll out CarsArrive and integrate it with all of our physical auctions by the end of 2012. And this is the real opportunity for both our buyers and sellers. It really is a value add. It's a win-win. It provides us the opportunity to move any vehicle anywhere in the country, basically at any time. So I think it also provides us an opportunity to further improve our operating…

[Operator Instructions] Our first question will come from Matthew Fassler with Goldman Sachs.

A couple of questions on OPENLANE and ADESA. If you could just remind us as you talked about things like ADESA gross margin and the impact of OPENLANE on the various line items. And as part of that, Jim, it sounds like you really don't want to try to unscramble the egg at this point. But if there's some sense you could give us as to the evolution or rather the contribution of legacy OPENLANE business to the ADESA top line, it sounds like you're indication is that negative 6 probably is not quite as bad as it sounds because you are shifting some business. Any sense to what's the underlying run rate really would be?

Matt, we are breaking it out again. It's consistent -- that was $100 million business with about 300,000 cars. And the volumes are down like the rest of the industry, but it's still -- it's roughly in the run rate we expected. But we're not getting granularity greater than that.

Any impact on margin rate?

It was up. It contributes a little bit. But it's very similar to Dealer Consignment, where it's a lower average revenue per vehicle, but a higher gross margin percent. And I will tell you what contributed to the ADESA gross margin being up so much was actually the U.S. and Canadian physical auction component of it. It wasn't really driven by online. Although online does add a few bps. It was really driven by the physical auctions and that was great news for us. And that was -- sorry Jim go ahead.

No, the other thing that I'd just add to that was the reference I made to the Dealer Consignment. Dealer Consignment being up 16% year-over-year. As you know, the margin on that Dealer Consignment business is greater than it is on the commercial side of the business, and even on the OPENLANE side of the business.

Got it. And then a second question, you talked about the second quarter outlook being lighter. The only explicit reason that I think you gave to itemize why that would be the case was the impact of the benign spring weather on the Salvage business. Any particular reason the auction business -- rather the whole car auction business would see that as well? And when you talk about it being low, do you talk about it from a revenue perspective or an earnings perspective?

When we talk about being light, I'm speaking to volumes. And if you take a look at this business historically, the second quarter has always been softer than the first quarter. You come out of the fourth quarter of the year, pretty strong first quarter where maybe some of the accounts have held vehicles over the holiday season and they run those vehicles off the first quarter and then the volumes tend to drop down a little bit in the second quarter. So it's primarily related to the volumes, the off lease volumes, dropping down and slightly impacted by the weather at Insurance Auto Auctions, where as you know those vehicles that were acted in the first quarter really won't come to market until the second quarter. And those volumes maybe down a little bit just based on the number of auctions that took place.

So you're saying that -- I guess there's been some inconsistency overtime, you're saying that the volumes of cars sold at ADESA should come down sequentially from Q1?

Matt, that's what it's looking like, yes, and heavily driven by the commercial side. And it's a little hard to predict the SAR and what new car sales would do that creates trades, which creates Dealer Consignment volumes. But what Jim is saying is we're seeing the second quarter start a little softer than how we finished the first quarter.

And our next question will come from John Lovallo from Merrill Lynch.

Just a follow-up on that last question or one of the last questions. When we're thinking about ADESA going forward, I mean with the integration of OPENLANE, I mean, is it fair to assume that your volumes will increase, but that revenue per vehicle should come down?

Yes. I think that's fair assumption.

And particularly, John, until we annualize over the acquisition in the fourth quarter. We're just adding the OPENLANE volumes. And the average revenue per vehicle will come down as our mix increases the Dealer Consignment. So what Jim was mentioning is this is not just OPENLANE. It's actually equal to the mix, I mean where are we at 46% Dealer Consignment that also has an average revenue per vehicle lower than a physical sale of a commercial vehicle, which usually uses more ancillary services.

Okay, great. If I could stick one more in here. If we think about the depreciation levels across the businesses, looking at AFC in particular, I mean, what actually drives the depreciation at AFC? I mean is it loan curtailments or what is the factors behind that?

When you say depreciation, are you -- you're talking about the accounting depreciation and amortization?

Yes, correct.

Yes. I mean, that's really the original purchase accounting being amortized. I mean, there's no capitalized assets associated with the loan transaction. So it's a lot of the capital. We also have, Jim mentioned that the leadership there is focused on investing in technology. But again, it's not really that significant compared to the other businesses. But that's the only thing that would really be significant, capital expenditures, technology.

And next we'll go to Rick Nelson with Stephens.

I would like to follow up on the commentary about the second quarter, the volume I think you addressed sequentially. If you could talk some about what you expect year-over-year you were plus 9%, in the first quarter minus 6% and in ADESA only [indiscernible] what's your...

Rick, we've avoided, since we went public like, of giving quarterly guidance other than some general impressions. And again the visibility and the volumes is difficult. Again all we're pointing out is, the second quarter commercial volumes are going to be lighter. That's a function of what happened with leasing 3 years ago, right, Jim? I mean, it's just pointing that out. We don't really want to go out there and put a number on it and Jim mentioned it, and I'll just reiterate it, our customers are telling us though later in the year we'll probably going to see things reverse a little bit, we'll see a little bit stronger volumes based again on what they did 3 years ago.

Okay. If we could talk some about the conversion, 62.6% compared to 66.7%. If -- drilling down looking at commercial Dealer Consignment and OPENLANE, the trends at least anecdotally would be helpful.

I think that's a reflection of the increase in Dealer Consignment sales. As you know, the commercial vehicles convert at a much higher rate than the dealer vehicles. And with Dealer Consignment being up 16%, still the overall selling percentage is brought down by that conversion rate.

And, Rick, you brought up a good point that I don't know that I've clarified for anyone. We are not including OPENLANE listings and sales in the conversion rate calculation. And the reason being, it's a different business model, a lot of cars get listed. But what I will tell you, again anecdotally, is we are seeing a very strong conversion relative to history in terms of the number of listings that are resulting in sales of commercial vehicles. As we see more Dealer Consignment cars go to the OPENLANE platform, it will be the same thing, you'll probably see a lower conversion of those. But at this point, I would tell you, with the tight supplies of commercial vehicles, the OPENLANE platform is very attractive and they're seeing a very strong sell-through rate of the number of listings.

Got you. I'd like to also follow up on SG&A. It did widen, it looks like some onetime items and a lot of that has to do with the growth in expenses due to OPENLANE. If we look at SG&A as a percent of revs, ex-OPENLANE, did we see a narrowing in the expense ratio? It's difficult to calculate without the revenue from OPENLANE.

What I do know, Rick, is the absolute number went down. But I didn't calculate the percent, ex-OPENLANE revenues, because we look at the ADESA segment in total. But the absolute dollars spent on SG&A ex-OPENLANE were actually down even with the increased profit interest expense.

And our next question will come from Gary Prestopino from Barrington Research.

You mentioned what the ADESA division is doing in online sales. Can you talk -- give us a percentage of what insurance auto is doing and how is that trending year-over-year?

Yes, Gary. We've reported that they're getting bids on approximately close to 80% of the vehicles, up maybe a little bit better than 80% of the vehicles and selling a little bit more than 50% of the vehicles online. That's been pretty consistent I think over the course of last few years and maybe up a smidge. But pretty consistent over the course of last few years.

And then what's the mix there between insurance, noninsurance, have you made that public?

Yes, I think we've said that the insurance business is primarily responsible for 80% of the volume -- approximately 80% or a little bit better than, and the balance of it is obviously these non-insurance and charity vehicles.

Okay. And then I didn't see it in the press release, but in terms of -- what's the size of the overall AFC portfolio and how much more capacity do you have to build that?

We have plenty of capacity and the size is -- I just want to -- like $866 million. Gary, but give me one second and I'll look it up it give you the number. It'll be in the Q that we file tonight.

Okay, I can look at that, so...

Gary, it's just -- I think it's just under $900 million, Gary.

Okay. And then in terms of capacity, when you say you're planning, can you put a number out there?

Yes. We have $750 million of securitization availability and we had drawn $610 million on it at quarter end.

So $610 million drawn, okay. And then lastly in terms of OPENLANE, although it's early in your ownership. But in terms of your efforts with the institutional market garnering new share, can you talk about maybe what some of your people in the field have experienced. Obviously, this is going to help you, I would tend to think, but anything you could share there with us?

Well, first thing I would share is the reception by customers of basically merging the sales teams together. We now have one person dedicated to all of the -- to each major account -- calling on each major account. So as we say, we're speaking with one product and one voice when we really go in there as KAR. We've always said that we don't talk specifically about individual customer wins and losses and things of that nature. But I can tell you that our sales folks have a little bit of success in picking up some new business along the way.

Okay. And is this -- you'd mentioned at one time or another that this OPENLANE platform was applicable to the dealer trade market. Are you doing anything there or is that contemplated?

We are, Gary. As a matter of fact, that's part of this whole Dealer Consignment initiative. And we've certainly invested in a lot of people, in a lot of resources to go out and train the dealers. It's a little bit slower coming quite frankly. It's a little bit more work to get the dealers trained and to get them to take pictures and post cars and to get into the adoption. But we have a very dedicated team under the direction of Tim Zierden, who's been leading this initiative for the last 3 years. Not only leading the initiative at ADESA physical sales, but leading the initiative with the OPENLANE sales team as well. And now that we've transitioned DealerBlock onto OPENLANE, hopefully I think Tim is feeling that we have that single product and we have more focus and we'll be able to kind of bring them to the trough here a little bit more as we go forward.

And next we'll go to Bill Armstrong from CL King and associates. William R. Armstrong - CL King & Associates, Inc.: I just wanted to clarify on the SG&A with OPENLANE. Eric, I think you said that SG&A included about $10 million in recurring SG&A from OPENLANE? And in the breakout that you published, there's a dollar figure of $12.3 million. I just wanted to reconcile those.

Yes. I'm rounding numbers, Bill. You've got it right. The $12.3 million is the actual OPENLANE SG&A, which was just under $10 million, it rounds to $10 million. And add to that the $2.7 million that I gave you in my comments and you'll get to that number. William R. Armstrong - CL King & Associates, Inc.: Okay, $2.7 million was the acquisition, non-recurring costs.

The cash, non-recurring integration-related costs, yes, for OPENLANE only. William R. Armstrong - CL King & Associates, Inc.: Got it. Okay. Interest expense, I think in your last call you were looking at GAAP interest expense of $100 million to $105 million. Sounds like it's going to be a little higher now. Is that correct or no?

Well, I'm looking for cash interest expense that I believe is $95 million. And GAAP interest expense, I don't know that I would change my expectations on that other than we have paid off the revolver a little ahead of schedule. We mentioned that, so there could be a little bit of savings there. But again, it's just a little bit ahead of schedule. William R. Armstrong - CL King & Associates, Inc.: Okay. Was there anything nonrecurring in the corporate SG&A line?

Yes. There are some add backs. If you just analyze the add backs, which you'll see tonight in our 10-Q that we will file, there are some other active non-cash activities such as stock-based compensation that go into there. I gave you the profit interest, but there's also an option component to that and there are some other nonrecurring costs; they aren't that significant this quarter related to other activities within the corporation that meet the definition of nonrecurring. William R. Armstrong - CL King & Associates, Inc.: Okay. Moving to insurance auto auctions. It looks like you had a nice quarter there. I guess, 2 questions. How much of that increase came from your -- a higher number of owned vehicles, company-owned vehicles that you sold? And it looks like you're taking some market share, even though I know you had an account loss last quarter, looks like you might still be taking market share, do you see it that way?

First, our number of vehicles purchased and then sold was 5% this quarter, which was consistent with where we finished last year, Bill. So on a relative basis, it may be up on absolute numbers because of the 9% year-over-year growth. But it's really pretty -- we're hovering right around 5% as the purchased vehicle component. And relative to market share, again it's a little bit harder with Insurance Auto Auctions to give you an absolute number because there's no industry data. We know what we sell, we hear a little bit about some of our competition that discloses some information. But we feel good how business is performing, and we think we have a strong platform. Jim, anything to add? I mean, we really like the fact that our hybrid methodology seems to have traction with the customers and the record levels of returns they realized at our auctions in the first quarter.

Again, I just take it right back to the customer and the customer's voice. When the customers are telling us that the proceeds are at record levels and they're interested in much of the marketing that we're doing and the ability to attract more buyers from around the world and put more eyeballs on these cars that's all driving the retentions. And so to me, that's always a measurement.

And, Bill, one last thing, just -- I want everybody to understand this, when we talk about a customer situation it does take a while to transition those cars away. So I don't believe that situation impacted the first quarter at all. In other words I don't think we would say we'd lost really any of their business other than the impact of their business, were their volumes up or down, which I'm not going to get into. William R. Armstrong - CL King & Associates, Inc.: Right. And it sounds like the mild winter weather, the negative impact from that is probably going to hit more in the second quarter than in the first?

Yes. We say that approximately, the turn rate from accident to divestiture is usually 70 to 90 days. So those quarters -- those cars are going to get sold in the second quarter. And again it's not going to be huge, but there is going to be some impact there on volumes.

And Bill, this is a chance for me to again clarify something. On softer quarters because we've had a series of very strong year-over-year quarters in a row, it doesn't mean that we see this business going backwards in any way. It just may not be as strong as what we've been experiencing really the last probably 5, 6, 7 quarters. William R. Armstrong - CL King & Associates, Inc.: No, I understand. And you have that unusual weather situation too. Last question on ADESA. Obviously, we have -- the SAR has improved. Your Dealer Consignment business has improved. Do you think that's -- is there any way to parse out how much is market share gain and how much are we just seeing a rising tide from greater used trade-in volumes from dealerships? And then related to that, we're hearing that car rental companies had sold off a larger number of vehicles this quarter versus a year ago. Any comments or color you can provide on that also would be helpful.

I think I would term it as probably all of the above. I think that, obviously, new car sales increasing creates more used vehicles and more transactions that can take place at auction. So I think the initiatives that we've done in going out and working with the dealers and training dealers and the work we've done in the technology area of bringing them to technology. I think as you -- as we see leasing increasing and rentals increasing and turning over more often, I think it all adds up to a better situation for ADESA. And I think we've seen that through the first quarter, even with volumes being soft we feel it picking up.

And before we move on to another question, I'd like to clarify something. Someone just slipped me a note, which is a good one. I misspoke. Our Dealer Consignment volumes in Q1 were 41%. I had mentioned 46%, which may have been last year's number. But last year in the first quarter we were at 38%. So I wanted to clarify that. And another analyst, Gary, had asked us our March 31 total managed receivables was $867.6 million. So I wanted to clarify that number just to be accurate. So now we can go to the next question.

[Operator Instructions] And then move on to our next question from Chris Ceraso from Credit Suisse. Christopher J. Ceraso - Crédit Suisse AG, Research Division: So just to clarify what you just said, Eric, because I had this on my list here. The Dealer Consignment you said was 41% in first quarter '12, it was 38% in first quarter '11?

That is correct. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Okay. The -- a question about CarsArrive. Can you give us some numbers or any kind of metrics about how much incremental business that's adding? I know it's early still. And is there going to be some kind of metric that we can track to see how additive this is to your business over time?

Well, I can -- Chris, I can tell you that through the pilot of the initial 7 auctions, it's thousands of vehicles that we move through that pile, and now we're up to 12 auctions, I would say we're moving in excess of 10,000 vehicles. Christopher J. Ceraso - Crédit Suisse AG, Research Division: And you -- what's -- can you quantify the incremental revenue that's coming from this?

Chris, it's a pilot. We're actually, right now focused on transitioning ADESA transportation to OPENLANE's CarsArrive platform. So incrementally, I don't see it as a contributor. It's really, can we change the profit profile when we get to the CarsArrive profile -- platform and have a lower cost to deliver those services? So at this stage, I'm not seeing it incrementally adding revenue to the combined enterprise.

I think Eric is saying that we're trying to get it integrated and get it working. And then we'll focus on the efficiency and the profitability.

Right. Christopher J. Ceraso - Crédit Suisse AG, Research Division: So it's not about extra units or extra revenue, it's about lower cost?

In terms of the pilot. Over time, we think it'll be so attractive it might draw more transportation business to us. But at this point we're really transitioning ADESA transportation over to the CarsArrive platform. Christopher J. Ceraso - Crédit Suisse AG, Research Division: Okay. And I wanted to clarify another thing that you said Eric, recently here on the call, the second quarter is going to be softer than the first. Are you talking about an absolute terms EBITDA, for example, or are you saying that it's going to be a lower year-over-year growth rate than what you printed in Q1?

Well, what I'm focused on is year-over-year in terms of volumes. Again, Chris, we don't give granular to the quarters relative to our guidance in total. We just felt it was important to give you an idea of what we're overseeing early in the second quarter on the volumes. And again, we would attribute that to both IAA and ADESA volumes. Christopher J. Ceraso - Crédit Suisse AG, Research Division: So year-over-year growth in volumes smaller in the second quarter than the first quarter?

Yes, definitely growth when you describe IAA and again trends are different at ADESA as you know, cause year-over-year we've been... Christopher J. Ceraso - Crédit Suisse AG, Research Division: Right, okay. And then you mentioned on the call at one point that Dealer business was up 16%, how much was commercial down?

I didn't calculate that, unfortunately. But overall, ADESA was down 6% excluding OPENLANE, and it was 41% -- I have -- we'll have to do the math, Chris. I didn't bring that number with me, but I think it was down by a noticeable amount. Christopher J. Ceraso - Crédit Suisse AG, Research Division: And then just lastly, what was the -- do you have any industry data, what was industry auction volume look in the quarter?

Jim -- that's to Jim's comment. I mean, I haven't seen anything published. I am aware of at least one NAAA economist presentation he did where he had it down slightly. I will tell you again the data we get -- we're just being careful with it, we outperformed in Dealer Consignment the data we received, and we were pretty consistent on the commercial side. So we think we did a little better.

And our next question will come from Craig Kennison from Robert W. Baird. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: Many have been asked already, but I wanted to ask on the OPENLANE integration. I'm just trying to understand the switch to the customer. Would you expect existing ADESA customers to transfer incremental volume from those ADESA platforms to OPENLANE platforms? And then could you just explain how the economics look when they make that switch from a customer perspective and then from a KAR perspective?

Yes. No question that we would expect customers to go into the OPENLANE platform, and customers have been very cooperative in transitioning to the OPENLANE platform. And relative to the revenue profile, again, Craig, it's a little bit lower revenue per vehicle with a higher margin. So we think, overall, the contribution can be at the same level on a per car basis and we're hoping to protect price in order to achieve that. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: And then just a longer-term question, and as that transition happens, at what point would you need to reevaluate your real estate footprint to optimize for that new structure?

I think, obviously, we expect that this Internet component will continue to grow. We're not sure where the sweet spot is, but we know we're the 32% in first quarter. I think we're continuously focusing on our footprint -- continuously focusing on brick and mortar and real estate and how much of that we need and how that fits in. I've said before, there's always going to be a need for brick-and-mortar because we do need a place to park these cars and image these cars and marshal these cars and do the things that we do in terms of reconditioning and other things. But it's something that our board and our management team continues to focus on is to how do we right size this physical business with this Internet business?

And Craig, I'll go back to late 2008 when there wasn't a parking spot for a car. We had so many vehicles, we avoided adding long-term leases and expanding the footprint then. And now the market is right sized or downsized, and as short-term leases end, we aren't renewing them. So I think we have our footprint where we like it. And Jim has told me this many times, so I'll repeat it for all of you, the online platform gets a few days to sell a car than the car has to go somewhere. And we need to have the home for that car. Is that right, Jim?

Absolutely. Craig R. Kennison - Robert W. Baird & Co. Incorporated, Research Division: One more follow-up, Eric. In terms of 2013, the tax rate this year is going to go a little higher. Any thought on where that can be in 2013?

Again without specific guidance, but I've always said over time we were going to migrate up into that 38% to 40% range. And I think we're getting there, Craig, to be honest. And again, I'll highlight once again that profit interest is nondeductible. So if the stock price were to increase, it does play games with that. But again I will also point out, I did this a couple of calls ago, the profit interests do not result in dilution to our shareholders. The profit interests are held by a small number of our executives, and it comes out of the returns realized by the private equity firms. It doesn't create dilution or new equity in the business. So that's why it has a unique feature.

And next we'll go to a question from Scot Ciccarelli from RBC Capital Markets.

This is Patrick Palfrey on for Scot today. Just real quick. With ADESA, could you speak a little bit about the type of vehicles you're currently selling as to, say, what you're selling about a year ago and is there a big difference between the unit sold at OPENLANE and ADESA?

In terms of ADESA, I mean, what we're selling a year ago probably was probably what we're selling today. The mix will shift a little bit from time to time as we've talked about the dealer cars have gone up a little bit, commercial cars have come down. Commercial cars' price points are -- they can vary from time to time, but they may be slightly higher on the commercial side to selling prices. And on the OPENLANE platform, we're primarily focused on selling off-lease vehicles there. And those off-lease vehicles tend to be a 3- to 4-year old car and tend to be what I would term pretty consistent in terms of mileage and condition and things of that nature. But primarily off-lease vehicles versus not as many dealer vehicles and vehicles from the other segments of the business.

And I'll add to that, the average selling price of a vehicle at OPENLANE is higher than at an ADESA physical auction because it tends to focus on these later model vehicles. And the other thing, Patrick, to keep in mind is, and this has been published, there's a shortage of these late-model vehicles because of the low SAR we've had for the past few years. So that's going to blend the entire market place to be a little bit older in average age of vehicle sold at auction.

Okay, great. And then one more if I may. I guess, also looking at AFC. Your loan transaction units continue to be up, I think this quarter it was 17%. I was just curious, what's driving that growth? Is it coming from increased financing of units related to the OPENLANE acquisition? Or is there something else there?

I think it just comes down to performance and the levels of customer service that this AFC team is able to provide. It's a very strong team, it's very management team we put together under Don Gottwald. These guys are on it, it's continuous improvement, it's continuous levels of service. And I think at the end of the day, that's what the dealer is looking for rather than a few bucks here or there. He's looking for good, fast, efficient, quick service.

And 103 locations close to these dealers. I mean, there's a lot of things that go into it, Patrick that I think we're out there with them, watching them operate day-to-day at the auctions and in their retail marketplace.

And at this time, we have no further questions in the queue, so I'll turn the call back over to Jim Hallett for any closing remarks.

Okay. Thank you, Melissa, and I would just say thank you for being on our call today. We appreciate your interest in our company. And from our standpoint, very pleased with the first quarter -- very pleased with really how we've been able to work through the last several years, quite frankly. And as we've dealt with the headwinds on whole car side. And as we work through the second quarter, we know that as we work through 2012 that things get better. We expect that things -- we know things will significantly improve in '13 and '14, especially on the whole car side where we have insight to what those volumes are going to look like. So we feel good about our business, feel good about where we're heading. And we look forward to coming back to you next quarter. So with that, thank you for your time and attention.

And that does conclude our conference for today. Thank you for your participation. You may now disconnect.