Ladies and gentlemen, thank you for standing by and welcome to the KAR Quarter Third 2019 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference to your speaker today, Mike Eliason, Treasurer and Vice President of Investor Relations. Please go ahead, sir.

Thanks, Victor. Good morning and thank you for joining us today for the KAR Auction Services Third Quarter 2019 Earnings Conference Call. Today, we'll discuss the financial performance of KAR Auction Services for the quarter ended September 30, 2019. After concluding our commentary, we'll take questions from participants. Before Jim 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, 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. Let me also mention that throughout this conference call, we'll 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 Auction Services CEO, Jim Hallett. Jim?

Thank you, Michael, and good morning, ladies and gentlemen, and welcome to our call. The topics that I want to discuss with you today are our third quarter results, provide you with an update on TradeRev, speak to our revised guidance for 2019 and then review the actions that we're taking to improve our performance going forward. First, let me cover our third quarter results. Our results in the third quarter fell short of our expectations, and there are 2 primary factors that impacted our performance in the third quarter. First, volumes were softer than expected. We experienced double-digit growth in commercial volume and 7% growth in dealer consignment volume. While volumes grew in each of our channels, we clearly saw slower growth than expected. We have spoken with many of our customers, and this trend is throughout the industry. And we believe that it is a timing issue, and it is not a secular change in the market. The second factor impacting our results in the third quarter is the revenue mix out of ADESA that led to a decline in gross profit margin and adjusted EBITDA margin. We decreased SG&A across the businesses other than the increases at TradeRev and the SG&A from acquired businesses. Unfortunately, this wasn't enough to offset the lower gross profit realization per dollar of revenue. Volume grew 9% at ADESA excluding acquisitions. Organic volumes grew 7% driven by lower-revenue online transactions at OPENLANE and TradeRev. We also experienced slower growth in the OPENLANE channel in the third quarter. Forward growth was expected based on the lease originations in the third quarter of 2016. AFC performed in line with our expectations. We had modest growth in both the number of loan transactions and revenue per loan transaction, and we're also seeing decreases in interest…

Thank you, Jim. I would like to provide some more color on our performance. Let me start with some comments around revenue and ARPU at ADESA. Our same-store net revenue, or revenue excluding purchased vehicles and revenue from acquired businesses, grew 4% in the third quarter. This was driven by a 7% increase in same-store volume, offset by a 2% decline in ARPU. The 2% decline in ARPU reflects that our growth came from our online auction channels that have lower revenue and gross profit dollars per car sold. In the third quarter, 45% of our transactions were completed in our online-only channels compared to 40% in the prior year. This creates lower gross profit dollars per car sold. At physical auction, ARPU increased 5% to $893 per car sold. However, physical auction volumes grew only 1%, and auction revenue per vehicle sold was consistent with the prior year. Our lower-margin ancillary and off-premise services drove this hope but only at gross profit margins in the low 20s. The mix of revenue led to a 170 basis point decrease in gross profit margin on net revenue. As Jim mentioned, we believe we can address this changing revenue and profit mix by reducing cost of services through improved processes that result in lower cost per transaction and reducing SG&A on a consolidated basis. While the gross profit margin pressure is within the ADESA segment, the SG&A adjustments we need to make to offset this pressure are in ADESA and holding company segments combined. We do have visibility into a strong supply of vehicles as we end 2019 and into 2020. Lease returns will continue to be a positive influence on our online-only channels as well as a driver of ARPU at physical auction. We expect commercial volumes to begin leveling off…

[Operator Instructions]. And our first question will come from the line of John Murphy from Bank of America.

This is Aileen Smith on for John. Following up on your commentary around TradeRev and pulling back on incentives in the quarter, can you elaborate on what other programs and strategies, if any, you're pursuing to drive volume growth across your dealers? And other than profits, how do you define success at TradeRev? And what metrics are you looking for in the early rollout phase to gauge whether you're on track to hit your break-even targets?

Yes. This is Jim, so let me take that. Our losses were growing faster than our volumes, and we really made a management change. This business now reports to Peter Kelly. I think most people know that Peter Kelly was the founder of OPENLANE and is a very strong digital mind within the leadership team. And we got focused on this better together strategy of combining the TradeRev team with the ADESA team and really using the strength of ADESA, and not only the sales team but all the resources that are at ADESA as well. And then we relied less on incentives. I don't believe that these incentives were sticky, and I don't believe they were creating any long-term relationships. Transporting a car and providing incentives to transport that car 500, 600, 700 miles across the country really, I don't think, develops a longer-term relationship with that dealer. And then we really believe that there's a need to increase the revenue per loan transaction. This is a long game. I'm not interested in a short-term volume gain. I'm interested in what this business looks like in 5 and 10 years down the road. And I don't believe that you can chase volume without working towards profitability. And the technology offerings require capital to keep it current, and the technology solutions must ultimately generate the profits that we need to support the technology. What we're doing here as we speak, and this isn't something that's going to happen, this is something that is in motion now, we are going to cross-train those 2 teams at TradeRev and at ADESA, as we spoke about, and we're going to have one point of contact for the dealer. The dealers have been telling us for some time that they prefer to have one point of contact, one person that can come in to the store and represent all of our products, whether they be physical or digital. And I think that what we will do is this better together approach, we're going to slow it down a little bit. We're going to continue to increase fees. And we believe that having multiple offerings, not just one digital offering but having the physical offering as well, gives the dealer a choice. And we've always maintained that, that the dealers do want choice. It's not one size fits all. And at the end of the day, we look to finish the year as strong as we possibly can but, more importantly, look to be ready to really go hard at the market in 2020.

And Aileen, this is Eric. Let me add. Look, one measure of success that we've defined for the team is grow dealer consignment volume. Not grow TradeRev volume, not grow ADESA physical volume, focus on the marketplace and grow total dealer consignment volume.

And to Eric's point, and I said it in my commentary, dealer consignment was actually up 7% in the quarter between TradeRev and between physical again. So we're seeing signs that this better together, we have confidence that this can work.

Great. That's very helpful commentary. And as a follow-up to that question, the institutional mix continued to increase in the quarter versus dealer consignment, yet total conversion declined slightly year-over-year. Did something change in this quarter with respect to institutional behavior at auctions? Are they getting more selective on price at all? Or was there something going on with conversion across dealer consignment that may have dragged that metric down?

Yes. So a couple of points I would make there is, first of all, the third quarter was soft. It was soft in retail. And when retail is soft, that ultimately has an effect on the dealers and what they buy and what they're willing to stock and what they're willing to pay. And it also has an impact on what the sellers are willing to accept. So there's no question that the quarter was soft, and it was much softer than what we anticipated. The other thing I will tell you is the good news on dealer -- on the commercial side of the business. We continue to win share. And if you've listened to me over the years, I've always maintained we don't talk about our wins and our losses on an individual basis. But I will tell you overall, we are winning share. And the reason that we're winning share is because of the investments we made in technology, the investments we made in the platforms and the investments we made in data and analytics is now paying off. And the way we're winning with that -- with those investments is we're winning through getting more share.

And our next question will come from the line of Chris Bottiglieri from Wolfe Research.

So two questions. I guess like the first one more theoretically, is there anything you're seeing today like at local market level that gives you the confidence that you'll be able to raise fees and hold volumes when you have competitors that are presumably being -- have the willingness and the ability to flow in the capital markets to burn money for 10 years probably? Like -- so do you think it's feasible to head on if they don't care about profits and you do? I just want to get your sense there.

Yes. Yes, absolutely. I believe -- first of all, I believe that we need to focus on what we're doing. But I think that -- again, anecdotally, I think that we believe that they're probably taking a close look at their fees as well. And so it's not a case of following them, it's a case of doing what we believe we need to do in creating a profitable model, as I said, going forward here. With that said, they have one offering. Our competitors have one offering, and it's a digital offering only. And we have both offerings, as I am repeating here. But I think that is really the long-term win here. I don't believe that single-technology offering -- a single digital offering can win the long game here. I believe it's going to be those physical assets we have. And so yes, we have a platform, TradeRev, and we have the technology. We have the combined better together approach. But we also have a transportation company, we have a finance company, we have an inspection company. We have a number of other services that make this a much more holistic offering that dealers get to choose from. And as I say, it's not one size fits all. So I believe dealers will pay for those services, and they'll pay for those services all provided by one provider. And at the end of the day, we are raising our fees. We have raised their fees, and we continue to raise our fees, and we're not really looking at what the other guy is doing.

Got you. That's helpful. And then kind of just want to think about the implied Q4 guidance. I get the whole insurance recovery thing. But if we put that aside for a second, is there any way to simplify what you're assuming in guidance relative to like year-to-date? And then maybe just give us a framework for understanding off-lease growth and that's impact because I think those are both your most profitable vehicles and your least profitable vehicles. Just kind of get a sense for like what you're expecting there in terms of Q4.

Yes. So thank you, Chris. There was really 3 or 4 things I'd point to as we thought about our guidance, is, first of all, it was certainly the lower gross profit as a result of the soft market at physical auction. Really had an impact at the physical auction. And if you take a look at our growth in the quarter, most of that growth came through our ancillary services. The second was our costs. And we knew -- coming out of the spin, we knew we were going to have to adjust our costs and, as I say, rightsize the company. And in many cases, I would be complimentary of our leadership team. I think we've done a good job. I would say my criticism would be we didn't move fast enough, and we need to continue to move faster. And the third, which gets to your question on lease volumes, is we also know that these volumes were written in 2016. We said the highest month in the history of all leases was written in December 2016. Will we capture those cars in the fourth quarter? Or will some of those cars roll over into the -- into 2020? Some of my thoughts are that I don't really see the sellers being able to hold these cars because even though off-lease plateaus, it peaks, as we say. It peaks in 2019. It really plateaus. We have great visibility into what happens in terms of off-lease returns over the next 2 or 3 years, and it's pretty level as we go forward. So we see lease returns continuing to be a big driver of our volume and our profitability as we go forward. So Chris, did I answer your question?

Yes. I think you did.

And our next question will come from the line of Ryan Brinkman from JPMorgan.

Could you please comment on the softer industry volume trends that you'd earlier attributed to the timing issues? What are those timing issues exactly? And how long do you expect that they will persist?

Well, I got out of the predicting business a long time ago, Ryan. But listen, we didn't anticipate the quarter being as soft as it was. We didn't anticipate the lack of retail and retail going as soft as it did. And there's a lot of things going on around the world that you could speculate on as to what caused that, right, outside of the car industry itself. But with that said, I'm hopeful that it was a blip and that we'll get back to normal retail here as we continue to move forward towards the end of the year.

And Ryan, this is Eric. Let me add. Even at the lease volumes, to -- while we talk about December being a big month in 2016, September, October that year was very soft. So the end of the quarter was soft. I know we look at retail from the perspective of the public companies that have used car retail operations. That's only a subset. That's the late-model car. It was very soft when you get into the subprime and some of the other markets that are big supporters of the physical auction. That earlier question about conversion rate. We had the supply of inventory. The buyers just weren't willing to pay the value at which the seller would transact. That will correct itself. Either the seller will reduce expectations or the buyer will raise the price. But we know from history, I mean, this corrects over a relatively short period of time, of weeks, not months. The volume is coming and it will move.

That's helpful. And I heard you mention that the issue at High Tech Locksmiths could have a material impact on the fourth quarter. Can you just confirm that this potential impact would only be neutral to positive given you'd already taken the inventory loss in 2Q? And then is the magnitude still roughly the $5 million?

Ryan, you're right. There's no downside. This is just the recovery, the offset to earlier losses. And the magnitude, while we haven't given a specific number, would be at least mid-single digits and could be greater. We'll see where it ends up with the insurance claim.

Okay. Got it. And then just finally, is there any update you could provide on the New Wave initiative that was outlined a couple of years ago? I ask in part because I want to learn how the benefits might have tracked relative to your expectation, but also because I was under the impression the plan might have added a fair bit of costs. You had talked about hiring a slew of Ph.D.s, data scientists, technologists, et cetera. Is that an area that's being targeted maybe for the SG&A reduction? Or is it still such an important initiative that, I don't know, maybe you're looking to protect it?

Yes. So a number of parts to that question, Ryan. But first and foremost, our SG&A reduction is across all of our businesses. There isn't a business that we're not going to scrutinize and take a look at every job and what that job does and what it creates and the responsibility and do we need it. So that goes across all. But what we've really seen with New Wave is we've seen a new, enhanced system with features and benefits to, again, make it easier for our customers to do business with us. And we've seen market share gains. And all those market share gains, I can tell you, I would attribute much of that to the New Wave product and what we've done with New Wave. And the other area that I would attribute it to is there's -- is this data analytics area. There's absolutely no question that we've taken a leadership position with data and analytics. And the way -- and I've said in my commentary, I'll repeat it again, the way that we get rewarded with data and analytics is not necessarily by monetizing and getting paid for the data, it's by getting more share. And so with that, we've continued to grow share on the commercial side. And I would tell you that, without getting in specifics, we have won some major business.

And our next question will come from the line of Stephanie Benjamin from SunTrust.

I wanted to follow up a little bit on the question before me and just some of the softer industry volume trends and the timing of these and, I guess, the lack of retail volumes during the quarter. I know you said that this was -- you've seen this before and it can be timing, but maybe just so we can kind of learn a little bit more about that historical trend, where you did, in fact, see this, what was the driver of the slowdown historically and why it improved. So maybe just a little bit more context there so we can kind of wrap our heads around that. And then I just have a follow-up on TradeRev.

All right, Stephanie. This is Eric. I'll take the first shot at this. What we see is when we say slowdown, it's not a lack of supply, it's a disconnect between expectations of the seller on pricing and what the buyer is willing to pay. If a buyer has got a lot full of inventory and feels they have sufficient inventory, they're going to be less aggressive on the bidding on the car, because they don't need it today. They're always looking for inventory, and that shows up in conversion rate. And ironically, while we don't disclose this specifically, we even saw declining conversion rates on the OPENLANE platform. Cars coming back, we're selling at a slightly slower pace in the third quarter than what we've been experiencing, and that is because the dealers have sufficient inventory, and the sellers have not adjusted their price expectations to what the dealer will pay to add one more car to their lot. Does that make sense to you? And again, in the past, we've seen this. We saw it in '08, '09. We've seen it as -- there's different periods when you go back, even to '13, '14, where you did see it. These adjustments occur over a few weeks because the consigners need to move these cars.

No. No, that's helpful. Is there any concern that maybe the dealers are sourcing some of their vehicles in-house, so basically taking trade -- traded at -- trade and lease vehicles or just overall trade-ins and supplementing their own inventory that way versus going through the auction?

Yes. Dealers have always sourced their own vehicles. I mean they always source on trade-ins. Listen, being a former dealer, I can tell you my first choice was to always source my cars through trade-ins as much as I possibly could. That way, I was selling two cars. I was selling the new car and I was getting the trade-in, and I was selling it. So they've always sourced their own vehicles. They'll always keep the best vehicles that they can. But what OPENLANE and those private-label programs provide is they provide those young, off-lease cars, 3 years old, 30,000, 40,000, 50,000 miles on them, good condition, right, don't need a lot of reconditioning. You can basically take the vehicle, as we say, retail ready, get it back to your lot and put it in the front row and sell it today. And I think that's the attraction of those off-lease cars than the private labels.

Got it. No, that's helpful. And then just quickly on TradeRev. And I -- this is more of a clarification. So I think I understand the not necessarily chasing volumes at any cost strategy, but does this affect the actual rollout of the platform to dealerships across the U.S.? So my question is just -- I think the beauty of TradeRev is kind of building that network effect, creating that dealer-to-dealer marketplace, which builds on itself. So maybe if you can just comment a little bit about just the rollout, again not necessarily to target the volumes at any expense but just to make sure that dealers have access to that platform.

Yes. I'm going to take first part of that, and then I'm going to let Eric weigh in as well. So the bottom line is we haven't postponed the rollout. We continue to do the rollout, but we've slowed the pace of that rollout, including the pace of the incentives that we added to that. And I think, Eric, you want to add something?

Yes. But by the better together strategy, if there's a dealer in any market that has a contact with ADESA, that platform is immediately available to them to transact as opposed to us having to hire a new rep at TradeRev, train them on what the used car business is all about, which is what we do. We have people that already know that customer, already know that business. And so as Jim said, I like what he said, sometimes you slow down to go faster. By pulling back on hiring these independent but using the resources that already know the dealer, I think you'll see us accelerate the pace of entering markets on TradeRev over the next several quarters.

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

I wanted to just talk about -- Eric, you mentioned that you want to keep the losses of $60 million at TradeRev going forward. And it looks like you've lost $51 million the first 3 quarters, so you're running at a loss rate of about $17 million a quarter. And yet you're going to lose about $8 million in Q4. Is that a direct result of what you're doing with the better together strategy, knocking back incentives and actually reducing personnel that are going after these accounts, combining sales forces? And then would that portend that in 2020, we could see a step-down in the losses of TradeRev just because of what you're doing internally?

Gary, you've summed it up very well. Thank you for that. Yes, we are making these changes to have less incremental cost per transaction, which is going to possibly reduce volume but over time take better advantage of our breadth of coverage of the dealers. We are going to hire less in the fourth quarter. We -- I mean, what I pointed out in my commentary, I am not allocating ADESA cost to TradeRev if they're selling a TradeRev vehicle. We're not changing the cost structure of ADESA. And some of their activity may result in a TradeRev sale and the cost will stay at ADESA. That will be, in part, how we are able to reduce the losses that are directly attributable to TradeRev in the fourth quarter and hopefully, over time, accelerate the pace of growth on volume.

Okay. And then a lot of talk about what volumes and demand and supply and all that, but you also mentioned that you're going to take a long, hard look at your COGS and your SG&A out in the field. So could you maybe talk a little bit about what you could do better on the COGS side, what you could do better on the SG&A side in the field? Because obviously, any ancillary services that you book, it diminishes margins. So that would be a place to attack. So give us some idea of what you're looking to do.

Yes. Gary, I think that's a great question and one that we are thinking a lot about, and I'll share some thoughts with you here. First of all, we need to understand that as you look at our business, 60% of our costs are labor related. So we absolutely have to be able to address the labor, especially at the legacy physical auction business. And as you think about that, you've heard us talk about VirtuaLane in the past where the car can still come in and still go get reconditioning and get parked on the spot, but it doesn't necessarily have to drive through the lane anymore. And they -- basically, the dealers sit in the lanes comfortably, and they buy it off a screen where they can see pictures of the cars. And they can see a condition report in the car, and they can also go out and walk around the car in advance if they want -- the car is still sitting there, if they really want to come to the physical auction. We now have about 30 of our auctions equipped with VirtuaLane, and we continue to equip the balance of our auctions with VirtuaLane as we go forward. And a couple of points I would make on that is our major competitor in this business is doing the same thing, which has been very encouraging. In fact, they announced that they're doing one auction that is 100% virtual. No car goes through the lane -- through any lanes. And just recently, in the last week, they've announced they're about to move to their second 100% all-digital auction. So there's no question that this is the way the industry is moving and must move. We have to reimagine how we do things at the physical…

And just lastly is, is this -- what you're doing out in the field, is this something that you can accomplish over a year? Is it a 2-year program? Or is it just a continual program?

I think it's continuous improvement. I believe that we can -- certainly, it's being launched as we speak. Many of these things, I think we can get it launched now, and we can work at it auction by auction. And certainly, I don't think there's any finish line. I'll tell you the other thing that's important, too, that it's not just always what we want to do. We have to bring our customers with us. You just can't go out and shove it down their throat and force-feed it. You have to ask your customers to come with you, and they have to understand what the value proposition is and why they should support it. And I can tell you right now we're getting tremendous support from the OEMs on the VirtuaLane and not running cars. It's a little bit harder with the dealers because the dealers have an older car in most cases. And there are still some of them hanging on to the way that they've been doing it for the last 2 or 3 generations. But my point was the speed -- we want to go fast, but we've got to make sure that we're not going faster than our customers are prepared to go with us.

And our next question will come from the line of Craig Kennison from Baird.

Jim, I wanted to get to your goal of achieving SG&A as a percentage of sales below 20% of revenue in 2020. I wanted to clarify, is that the full year goal? And then is that something that will unfold throughout 2020 such that you're well below that in Q4 of next year? Or is it something you can address quickly so the cadence is more immediate?

Yes. So I've set the goal. We're working on it as we speak. I told you about the cost reductions that we did in March, and I've told you that we've done some recent cost reductions here. It's in motion. And throughout the course of the year, the goal is to be under -- at or under 20%.

And then I wanted to give you a chance to comment on Europe. You said it was in line with your goals. It feels like volume's ahead of what you had committed to earlier in the year. Could you just address what's working in Europe? And maybe clarify the profit profile of that volume as I know you're still in a hyper-growth phase.

Yes. Thank you for asking. CarsOnTheWeb is absolutely performing to our expectations. The thing that we've been able to do -- first of all, we've got a very good management team there. And what we've been able to do, we've been able to introduce them to some relationships that they weren't able to get to, and that has allowed us to increase our volumes. The other thing that -- as you think about the opportunity, if you think about the carpark in Europe, the carpark in Europe is equal to the size of the carpark here in North America. And CarsOnTheWeb, there aren't any other companies that do exactly what CarsOnTheWeb does. And so we think there's a real opportunity, and we think CarsOnTheWeb will be a big contributor to our growth going forward.

And then finally, around the spin. You talked about some long-term growth targets, 6% to 9% revenue growth and 25% EBITDA margins. Are those still reasonable goals in the time frame you described?

Yes.

And our next question will come from the line of Derek Glynn from Consumer Edge Research.

Just two questions on TradeRev. First, can you just elaborate more on the recent changes to the sales team to better align business across both ADESA and TradeRev? What impact did that have on the quarter? Were there any hiccups with respect to those incentive changes? And then secondly, just hoping to get more color on the competitive environment for TradeRev in the dealer-to-dealer space. Obviously, a private competitor has been able to raise some capital. Wondering if you've seen any significant changes in the competitive dynamic from them or Manheim over the last quarter or two that would perhaps lead you to this pivot in strategy for TradeRev?

So let me start. There's multiple parts there. I think I got most of them. Let me start with saying the teams are very excited with this merger of the 2 teams, and that's a great starting point. We -- through our own fault, I'll say, I'll take it, is we created a competitor. It was almost like we had 2 companies. We had a TradeRev company, and we had an ADESA company and they were competing. And it was really our employees who were saying, "This needs to change." And it was our employees that were encouraging the change as much as it was management. And so I think our employees are pleased that we listened to them and that we brought this together under single leadership. I mentioned there's a lot of cross-training going on. That cross-training continues. We also looked at compensation programs. We looked at the way somebody got paid at TradeRev and somebody got paid at ADESA. And now we've aligned those compensation programs, so it's not, I get more money or I make more money if I sell this car or that car. It's just get car, sell car. If it's a dealer car, you're getting paid. So I think aligning those compensation programs were good. And then from a competitive standpoint, again, I'm not a big fan of anecdotal information. I tend to like more factual information. I hear about a lot of things that are going on in the industry and what people are doing. I don't have anything factual to tell you about my competitors. And I also don't know how they count cars. Quite frankly, I hear that cars get counted differently with different organizations. I know how we count cars. One car, one sale is a car sold. If the car is arbitrated and it comes back, it's not another car sold. It's still one car sold. So I think it is competitive. There's no question that we run into our competitors when we're out there in the field. But on the other hand, I'll go back to what I originally said: There's competition in the space, but nobody has the offering that we have. And I believe it wins long term.

And the next question will come from Bret Jordan from Jefferies.

I have sort of a follow-up on that last competitive landscape question. But do you see Manheim Express or ACV backing off some of the incentive spend as well? I think there's been a lot of free transportation being thrown into deals, but do you see that cadence slowing with them also?

At this point, we wouldn't know what they're doing because they don't disclose any information publicly. But I would expect the market doesn't see the value in all these incentives creating temporary transactions that aren't sustainable over time. We'll see how they respond.

Will you build your sales force?

Bret, we were probably the driver initially of heavy incentives to build a market. We were the first to do it, and we're the first to stop doing it at the same level.

Yes. Bret, I was just going to add to that is we talk about breakeven, and that's a milestone. And we're still on track, we believe, to break even in 2021. But let me tell you, at breakeven, that's not where we want to be long term. We need to -- we need this business to stand on its own and start making money. And so this is not about how much money we can throw at the market, how much -- how we can throw incentives at the market and do some of the things that we're doing. As a matter of fact, I think we kind of did it to ourselves by throwing those incentives out there. And now we realize it's not incentives that's going to win this game.

And I'm not showing any further question at this time. I'd like to turn the call back over to Jim Hallett for any closing remarks.

All right. Thank you, and I appreciate you being on today. Obviously, we've got some things that we're dealing with. But as I mentioned in my commentary, it's nothing that we haven't seen before, and I have full confidence that the team is ready to execute on the things that we talked to you about. And we're ready to demonstrate to you that we can rightsize this company by doing the things we talked about, and we can continue to grow our business in all areas. And we appreciate your continued support and look forward to talking to you in February to tell you how we're going to execute on the things that we're going to execute on. So with that, have a great day. I appreciate you being on.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.