Q1 2020 Earnings Call
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Thanks, Keith and good morning, everyone. Thanks for joining us today for a first quarter fiscal 2020 earnings conference call.
Turning to the or John Cat, Chief Executive Officer, and President and Vance Johnston, our Chief Financial Officer.
After John advances made their formal remarks, we will open the call questions.
Before we begin I'd like to remind you that certain comments made during the call regarding our plan strategy in gold and our anticipated financial performance.
Forward looking statements are made pursuant to and within the meaning of the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Forward looking statements are based on management's current assumptions and expectations and are subject to risks and uncertainties that could cause actual results could differ materially from such statements.
It was important factor to referred to in a press release issued today and the risk factor section included in our annual report on form 10-K for the year ended December 29 2019.
Forward looking statements made today are as of the date of this call NIAID does not undertake any obligation to update those forward looking statements.
Finally speakers refer to certain adjusted or non-GAAP financial measures on this call a reconciliation schedule the non-GAAP financial measures for the most directly comparable GAAP measures is available at night press release issued today.
Copy of today's press release may be obtained by visiting the Investor Relations page of the website at www that I dotcom.
I'll now turn the call over to John John.
Thanks, a brief good morning, and thank you all for joining us on our first quarter earnings call.
Since we last spoke to you on March 18.
The cobot 19 pandemic has intensified across the globe.
Our thoughts continued to be with those affected by this pandemic directly as well as those on the front lines and helping our communities during this crisis.
First I'd like to spend a few minutes, providing an update on how we see covert 19 impacting our business and the things that we are doing to address this challenge.
Our business is classified as a central and we remain open at all of our locations, we have implemented strict health and sanitation protocols to keep our employees customers and suppliers safe.
We have also activated contingency plans to ensure continued operations and business continuity across our global network.
We continue to maintain strong relationships with their buyer and seller partners and our communicating with them on a regular basis, providing solutions that will help them navigate in this new environment.
We offer many products and solutions such as inspection services loan payoff and title services that help providers remotely manage their workforce safely and efficiently without human contact.
We also have tools in place Hell provider set reserve prices and negotiate digitally with buyers on individual vehicle transactions.
And through our digital tools, such as 360 view feature tour and engine start along with buyer happened buyer App enhancements, we are helping buyers navigate this new touchless world and purchased vehicles with confidence.
Turning now to our results.
As we noted on our Q4 call at that time, our Q1 performance was in line with our expectations, what we acknowledge that our business typically lags a drop in miles driven.
As stay at home orders were executed across the US beginning the weaker March 16th we began to see an impact to our business.
As a result, our Q1 year over year sales increase of 2.6% and adjusted EBITDA decrease of 5.6% were negatively impacted by these late March trends.
Our focus right now is managing the impact of the reduction of miles driven which has translated into a reduction in accidents and in turn vehicle assignments by taking decisive actions to minimize costs and cash outlays and maximize our liquidity and flexibility for the duration of this crisis.
Before I discuss the actions we are implementing let me take a moment to frame the impact that we have seen so far.
First on the seller side.
On average seven since stay home orders were executed there have been reports that miles driven as decline between 40 and 50%.
This has resulted in a sharp reduction assignments in the last two weeks of March.
Building to a 45% decline in mid April.
Since mid April we have seen vehicles Simon stabilize however, given our existing inventory coming into the period, we have not seen as much of an impact on units sold.
Although the impact of the decline in units sold has gradually increased since inception of covert 19 on average it has been down approximately 22%.
Road traffic has been slowly increasing said since mid April and we do believe that we will continue to see that go up as states lift and relax stay at home orders.
With regards to our buyers we began to see some reduction in demand in late March.
However in mid April we began to see buyer attendance and bidding activity improved and proceeds and revenue per unit appeared to have stabilized.
During the last completed fiscal week net revenue per unit was ups up slightly compared to pre covert 19 levels versus down 7%. During the first two weeks of April.
This also incorporates the benefit and increased fees for moving to digital only auctions.
Given the sharp decline in vehicle assignments, we have reacted swiftly and aggressively.
As I mentioned, we have an actively engaging with our sellers and providing both our sellers and buyers with an even higher level of service during this time.
Advance will discuss in more detail. Shortly we have also taken steps to manage costs capital outlay and liquidity to increase our financial flexibility given the current environment and better align our cost structure to the decline in volume that we've seen.
We also have expanded our revolver to provide ample liquidity to continue to navigate through this period, while also continuing to execute on our strategic growth initiatives.
While these are unprecedented times, our entire organization has been quick to act and I am proud of every 100 IEI eight for their dedication and commitment to our customers and to each other.
We believe that the impact from Cowen 19 on our business is temporary in nature and.
And we continue to have a strong position in the marketplace with tremendous opportunities in front of us that we plan to capitalize upon.
We recently announced our exclusive partnership with NASCAR, expanding our company our catastrophe capacity footprint.
This is the industry's most expensive catastrophe footprint to date and provides over 4000 acres of vehicle storage.
Even as we manage through the current environment, we remain very focused on executing against our strategic growth initiatives as well as our margin expansion plan.
Let me give you a quick update on our progress in this area.
Most recently, we successfully expedited the work on our buyer digital transformation.
As of the second week of April. This work was complete well ahead of our prior schedule, which are contemplated the project to be complete by the end of Q2.
As a result, we are seeing the benefits and cost reductions associated with this transformation earlier than we had originally envisioned.
As it relates to enhancing our service offering we have also continue to hear positive feedback from both buyers and sellers on our key innovations, including 360 view engine start feature tour and digital negotiations as well as our buyer recommendation engine.
With respect to 360 view in particular, we have received very positive feedback regarding the ability to get a more accurate inspection on the condition of the car.
We've also continued to enhance our tools with further integration of dealer track and Dbi into our loan payoff tool and we have had great success with over 1100 financial institutions and insurance partners currently on the portal.
In closing I want to reiterate my appreciation in gratitude to every member of the 18.
Despite the current challenges we are all facing our teams have continued to exemplify the dedication and commitment throughout this time, we are staying focused taking swift action to preserve our financial strength, while also executing against our strategic initiatives, including our margin expansion plan to ensure readiness to.
Summers needs when volume ramps back up as it undoubtedly will.
To that point, we are encouraged by what we see in China in terms of an initial recovery as miles driven has started to rebound relatively quickly there and we are hopeful to see a similar rebound in North America in the near future as communities began to open up again.
I am confident in the resiliency of our team and our model and our ability to navigate through this current environment.
With that I will turn it over to events.
Thanks, John and good morning, everyone.
Joining the call like John mentioned earlier, our Hearts go out all those who have been impacted by Copel 19th.
I want to start with a brief overview of our first quarter results and then spend more time discussing in detail. How we are assessing and addressing the impact of cobot 19 on our business.
For the first quarter results were relatively in line with our expectations notwithstanding the unexpected impact of Coca Cola 19 had on our business during the second half of March as John mentioned earlier.
Organic revenue increased 2.1% to 364.6 million driven by higher revenue per vehicle of approximately 3.3%, which more than offset the 1.2% decline and volume.
If not for the impact of Kobin 19 volume would have been positive for the quarter.
Adjusted EBITDA decreased 5.6%, primarily due to the decline in volume as well as an increasing cost of services and higher SDMA expenses, primarily due to the increased public company costs in Q1 2020 relative to Q1 20 with 19.
We are complete details of our first quarter performance. Please refer to earnings press release issued earlier this morning.
Let me now turn and take some time to detail the steps, we're taking to assess and address the impact cobot 19 is having on our business.
Very early in the news of the pandemic, we quickly put in place a centralized team to manage and address the rapidly evolving landscape, we enhanced our daily monitoring and reporting on key drivers of our business, including volume assign unsold inventory buyer attendance bids for vehicle proceeds per vehicle and employee.
Andas among others in order to quickly assess the impact coated 19 was having on our business. We then developed a number of scenarios based on projections of these and other key drivers to understand the impact on our business results and liquidity in detail on a weekly in quarterly basis throughout the potential duration of the crisis.
And created the necessary plans to address the very at various levels of potential impact the disruption could have on our business.
As part of our contingency planning beginning in early April we began to take Swift action from a cost and capital outlay perspective.
As we detailed in our press release. This included taking actions to better align our expense structure with the volume levels, we are operating with including significantly reducing travel and other discretionary spending freezing hiring for open positions reducing hours worked for branch employees to align with current volume trends as well as temporary or reduce.
Reducing salaries at the senior leadership level and the election of our board reduce their cash fees for a period of time.
Let me provide some additional color on the degree of fixed and variable expenses within our cost structure approximately 50% of cost of sales are completely variable, including towing reconditioning and certain auction in yard costs.
Certain costs in cost of sales are similar variable and that consist of branch labor the cost of purchased vehicles security in other yard in auction costs, which in total our approximately 20% to 25% of cost of services and finally, we have costs that are largely fixed including occupancy utilities and certain.
In labor costs, which is approximately 25% to 30% of cost of services. It is also important to note that since we completed our buyer digital transformation, we will see a reduction in cost in the second quarter due to the reduction of cost specific to physical auctions.
Well as DNA is less than 10% of sales and is mostly conns considered fixed we've taken actions here as well which include the reductions in discretionary spending and the salary reductions I mentioned earlier among other things.
We've also taken advantage of deferrals, where appropriate including our four when came match as well as various government programs in the United States, Canada, and UK to deferred cash payment of certain taxes, including payroll federal state local and prevents you'll taxes. We are also pursuing certain government subsidy and tax credit programs related to.
Retention in support of our employees.
We've also reduced our non critical capital expenditures at this time in of identified approximately 15 million of Capex that we are reducing or different should the impact of cobot 19 possessed we have the ability to for additional capex going forward between operating cost and capital spending we reduced our cash spending meaningfully.
Meaningfully for the remainder of 2020.
As it relates to working capital relatively speaking, we have a great working capital model with minimal upfront investment and very limited exposure on receivables in most cases, when we sell vehicle, we collect the cash immediately and that the seller fee in advanced charges out of the proceeds remitted to sellers.
In almost all cases buyers do not receive their car until payment has been received.
As you saw accounts receivable was a source of cash in the first quarter due impart to our ability to continue to sell and immediately collect cash from previously assigned vehicles that were ready for sale while assignments in the related upfront investment in working capital declined at a much greater rate than vehicle sales. This trend has.
Continue to date in the second quarter on the payable side earlier. This year, we had begun an initiative to extend our terms with many of our suppliers and we have accelerate our efforts in this environment. We've had success so far and believe there is further opportunity for improvement.
At quarter end, our total debt balance was approximately 1.3 billion as a reminder, we have no debt maturities until September 2021.
$2 million will be do.
Our quarter ending cash balance was 86.1 million and total liquidity, which included 218 million and credit facility availability was 304.1 million as we indicated during our earnings call in March we saw increased free cash flow during the first quarter with working capital a positive contributor which added to talk.
Our cash balance in total liquidity since the end of 2019.
On May Onest, we increased the size of our revolving credit facility by 136 million to 361 million.
As of May 4th our revolving credit facility is still Undrawn and we have total liquidity, including cash on hand, and net of letters of credit of approximately $469 million as John mentioned earlier, we believe that we have ample liquidity to navigate the current environment, even under more extreme scenarios and to make the inverse.
Estimates needed in order to execute our growth strategy and margin expansion point.
To reiterate our revolving credit facility has a springing covenant, meaning it is only tested if we are drawn on the facility at the ended the quarter. As noted we were not drawn on the facility at the end of Q1 and do not expect to be drawn at the end of Q2, if we were to be drawn our net senior secured leverage defined as total debt.
Less our senior notes less cash must be less than 3.5 times consolidated EBITDA as defined in our credit agreement. The credit agreement definition has additional add backs for items, such as stock compensation nonrecurring costs and certain cost saving programs that have been identified but not yet.
Limited among other things.
At the end of Q1, our net senior secured leverage ratio was 1.4 times.
We believe all of these actions we've taken to date will enable us to address the impact of cobot, 19, and emerge and a strong position to resume our growth and margin expansion.
While we had hoped to be in a position to provide guidance at this time given the continued uncertainty due to coven 19, we're not providing the financial outlook with that we will open up the call to questions operator.
Yes. Thank you we will now begin the question and answer session.
Last quick question, you mean press Star then one on your Touchtone phone.
If you guys speakerphone, please pick up your handset before pressing the case.
To address your question. Please press Star then to.
At this time, we'll pause momentarily to assemble the roster.
And the first question comes from Dan Marino with Stephens, Inc.
Yes, Hey, good morning, guys. Thanks, taking my questions.
Morning.
And then maybe starting on the first quarter wondered parts on gross margins topline held very nicely even gross margin showed greater pressure despite continued benefit.
To the revenue per unit line can you maybe help to shed some light on the puts and takes of what went on in that line and then.
Currently how the buyer digital transformation will impact that going forward.
Yes, Hi, Dan and good morning, everyone. So yes as we it is we kind of outlined in our prepared remarks.
We did see.
Gross margin percentage decline in the first quarter and that was primarily due to some increased labor cost on that we had in our and our branch network in our fuel operations. It was also due to.
Some increase occupancy costs.
And then the timing of some certain benefit related costs that we expect throughout the remainder of the year to kind of stabilize and come back to an equilibrium.
And then the other thing it was impacting it would have been.
Our purchased cars the gross profit that we saw from purchase vehicles was less than the first quarter of 2020 than it would have been in the first quarter of 29.
Got it Thats helpful.
The second one from a buyer digital transformation initiative I think in the past you guys than your peers have noted this should help you grow internationally as you kind of lower the barriers to entry. So maybe two questions. One is that going to take an incremental marketing spend as you look to expand beer Nash International buyer base and then secondly, you can use of the does.
On the health of the international buyer I think John you mentioned that activity at auction has increased and improved since mid April but any update on the health of the international buyer.
Sure Dan So we do think that BDC is going to help international buyers.
Drive higher levels of participation, we are continuing to invest in that area.
We have.
Undertaken several initiatives there relatively modest in costs, but we think there effectiveness is going to be high and certainly before Covre 19 at we were really pleased with the results were seeing and then we are seeing them as I talked about there was our several we period where buyers for sort of trying to understand environment, we have seen.
And improvements in international buyer demand there are still some spots, where it's difficult because of banking and port issues, but overall, we're feeling pretty good about.
The deployment of BDC and we do believe it's going to bring additional international buyers to our platform.
Got it.
Thanks for the color guys.
Thank you Dan Thank you.
Thank you.
And the next question comes from Craig Kennison with Baird.
Hey, good morning, Thanks for taking my question.
First wanted to ask about the total loss rate, obviously, we're going to see fewer accidents, but I'm wondering if you expect to see a changing the total loss rate as a result of this given that repair shops may be idle and have capacity to take on more work.
Yes, I mean, we've we've seen several a lot of commentary kind of both ways on that.
Theres if the other side of as if theres fewer shops, there might be.
You know that might work in our favor if.
But it's still too early to tell you know the other element again and that decision as what happens the used car prices. So I've used car prices are under pressure that again could be a positive to the total loss ratio because the value that there that they are comparing the repair estimate to if that comes down that's actually going to push.
More cars over the total line so.
It's too early to tell we're kind of we're assessing it we're talking to our channel partners to understand what they're seeing but.
Don't have any any definitive view on it yet.
Great and then.
Okay.
Yes, I'll just add I think theres, obviously been a lot reported recently about used car prices and what has already happened was expected. So I think the.
We do think that there's.
Likely situation were used car prices decrease and all things considered equal that would have a positive impact on the total offers right.
And then the supply impact is pretty clear and apologies if youve covered this in your prepared remarks, but on the demand side of the equation how have.
Your part recycler customers and your international buyers change their behavior as a result that pandemic.
Yes, again I think in the in the early weeks, we saw downward pressure on demand, but since the middle of April we've been please.
Domestic recyclers have been very active in the market and again, we're seeing the international buyer come back.
Yes, I think there.
Seeing the opportunities.
They're thinking about the future and they're thinking about if more if there's fewer new cars and more used cars that are going to need to be repair those going to be an increased demand for recycled parts. So I think they're seeing they're thinking about that opportunity right now and are pretty active.
Great Hey, thank you.
Thanks locker. Thank you correct.
Thank you and the next question comes from a 70 Benjamin with Suntrust.
Okay.
Hi, good morning, everybody.
Good morning, Warren said.
I was hoping you could discuss the comment you made about the positive volume growth and one Q ex kind of impacted Cozadd and what you saw towards the end of March maybe if you could discuss what you're saying that can competitive standpoint overall is a market I think.
Most expecting probably a little bit more of a headwind to volumes given some share shifts. So any additional color you can provide there would be helpful. Thank you.
Sure Stumped me, so I think as we've talked about and in our calls in the in the past we feel good about our competitive positioning.
There are opportunities that we've seized upon to grow our volume and yes. I mean, there are puts and takes but I think overall, we feel pretty good about how we performed.
And then in terms of the impact on Q1 Vance.
Yes, I think the way.
Second conceptualize as we said in our prepared remarks is is that volume notwithstanding the impact of Cowen 19 would have actually been off.
In Q1, 2020 relative to Q1 19.
To give you some other sense for that or total revenue.
That has not been for cobot 19.
Would've been in the range of our longer term outlook organic revenue growth of 5% to 7%.
And then how are they understand what John was a is that.
We also we feel really good about our competitive position as we've talked about our prepared remarks and quite a bit is we're making really significant strides in our digital auction platform and our merchandise platform that goes along with that specifically things.
Threesixty view feature to were.
Engine store.
Digital negotiations and we feel really good about the progress we've made their feedback we're hearing from buyers and sellers. So.
We think thats really important initiative going forward.
Got it and just for clarification. So there was really nothing other than coal that I guess in the quarter.
That was the one time or abnormal or timing related to that.
Strong volume performance again ex that that was pretty pretty clean.
Yes, no as I mean, obviously, we talked about some volume movements in 2019.
And so.
You would have had in 2000.
We would not have yet anniversary those in the first quarter 2020.
But outside of that it was a pretty clean quarter and.
Our business performed really really well on we were able Odyssey.
Implement and execute the fire digital transformation, we started that rate.
We can be significant progress during the first quarter. So yes, it was fairly clean and we operated really well.
Great. Thanks, so much for the color.
Yes.
Thank you and the next question comes from Bret Jordan with Jefferies.
Good morning, guys.
Warner Bros, 21 of right.
The initial announcements of the digital auction product and the the title transfer you talked about through improved yields and cycle times are you still seeing.
Performance consistent to what you saw WIDIA first of all those out.
We are I mean in terms of the what we've done with loan payoff for the for the companies that have that have implemented and that list keeps growing they are seeing meaningful reductions in cycle time some.
Some as I think we talked about 19 days in the release some are seeing that some are seeing a little more some a little less but it's still a significant.
Improvements that we're seeing and then as we further our.
Our integration with dealer track, which were still getting rolled out we think theres going to be additional areas, where we can take time out of the process and get deeper penetration of the lender market as well. So yes, we're continuing to be very excited about it on the customers that are deploying it are really pleased with it.
Okay, and then a follow up I guess.
You talked about the volume movements that we saw 19 do you have any expectations of volume movements in 20, I guess that our of note or just more of the same.
Yes, again, I think as we've talked about in the past.
Customers there are shifts in volume that occur pluses and minuses that happens just as part of the normal course.
Theres nothing.
But we see changing that behavior of our insurance carriers and as I think Vance said and I said earlier, we feel really good about where we sit.
In the market with the products and services that we're bringing to market. We feel we feel good about our prospects.
And then a housekeeping I guess, that's had mentioned that some of the gross margin impacts in the first quarter, where maybe nonrecurring.
I think a benefit costs could you maybe carve out what one of the margin might be not impacting the second quarter.
Yes, I mean, we're not correct, we're not prepared at this point to give specific detail on that.
There was a.
A portion of the you know that decline in gross margin percentage that with some one time benefit costs that we expensed in the first quarter.
That.
The kind of how that would have taken place in last year would have been a little bit different we expect that over the year kind of normalized so relative to 2018, but.
That's just that's one of a number of elements that we mentioned related reduction it.
Gross margin.
Alright, thank you.
Thanks, Brett.
Thank you and the next question comes from Bob Labick CJS Securities.
Good morning, Thanks for taking my questions.
Hi, Bob.
I wanted to start with a couple kind of I guess more macro questions.
On the Berkshire Hathaway annual meeting they discuss the potential increase in uninsured drivers that could be a protect potential detriment to geico, but how does that flow through to salvage auctions in general if there is a increase in uninsured drivers due to the recession.
So right I mean vehicles that are that don't come to our insurance at endo being in total loss those do find their way into our ecosystem through a variety of ways. So if if they then sell it to directly to a recycler potentially or they'll sell so there are there are buyers of.
Low end damage vehicles that then typically use our platform to liquidate those vehicles. So I do think there's we still would see those vehicles and then you've also got the other side of an uninsured motorists potentially as uninsured motorists to has coverage for that so it's.
Depending on who is a fault and so on.
So I do think it would still find its way into our ecosystem.
Just wouldn't be as direct.
Got it okay, great and then also.
Last.
Recession, there was a cash for clunkers, there's increasing talk about that could you talk about how that impacts the industry or how it did last time and.
Thoughts if that could be is a potential stimulus and how could impact the industry going forward.
Yes, I mean last time around it was a there was a benefit to us we got involved with helping make sure those vehicles that were taken off the road were properly.
You know they had to seize up the transmission. So they couldn't physically operate and we were part of that.
Protocol. So we did see an influx of volume and I do think it helped stimulate the demand side.
Vehicle purchases so.
Depending on what it looks like.
We do think there would be an opportunity.
To benefit us in the short term if we can be a part of it and then stimulating further vehicle transactions, whether they're used our new in the long run. We do think is good for our business. So I think we'd be.
Then depending on what it looks like we were hopeful that something like that.
Come to fruition.
Okay, great. Thanks for that and for all the great detail on the call today.
Thanks, Bob Thank you. Thanks.
Thank you and once again as a reminder, please press Star then one if you would like to ask your question.
Okay.
And the next question comes or Greg Prestopino without Barrington research.
Good morning, everyone.
Good morning.
John could you maybe talk about I don't know if you touched on this is trying to take notes as quickly as I could our price realizations at the auctions for cars starting to mimic the what's going on with the Manheim index, where a car prices are coming down fairly dramatically.
So Gary so actually what we've seen in the last couple of weeks.
We are seeing demand improves so we're actually seeing higher revenue per unit than we did right in the first several weeks in a call, but so we are seeing increased demand at auction for more vehicles that we sell so it would be running counter to that.
Right.
Yes, and Gary one thing that we say you know.
About it I mean.
One thing is that you think about it kind of AD units aside it comes down and there is less available units.
Sales, we talked about Kurt parse there continues to strong demand for people.
Looking for those vehicles and the simple kind of equation of supply and demand has worked.
I think our favor in the sense that we've seen proceeds and revenue per unit per vehicle go up because there's less vehicles available purchase they're still continues to be really good demand.
And our new but our digital platform again, the feedback we're getting from our buyer says that they really like it. So we're we're it's hard to define the what's driving the walk, but we do feel good that we're helping.
Push up prices through the through the efficiency of our new model.
Okay, and then you said assignments were down.
But from the time you get an assignment to the time that's reflected in inventory what's that time period.
Lot of times there about.
So from from data loss to when we get an assignment is typically tend to 14 days.
Now how long it takes us to sell it from when we get an assignment is anywhere from 45 in 90 days as is typical.
Okay.
So if you know inventories were only down 11% assignments are down if nothing really changes here and then the other starting to see actually miles driven increase in all that it's quite possible that the <unk>.
Mentor, he could bottom sometime in Q2.
At reading you know just hypothetically with the way you're talking about the numbers with assignment and plan to sell.
Yes, Gary I think that and obviously as we talked about our prepared remarks, we run multiple scenarios.
Including aside as set for sale units sold the impact on inventory proceeds and otherwise and I think that the way you're thinking about is that reasonable way.
Okay, and then just lastly quickly in terms of what you've done with the SGN a expenses I realize this is all short term but.
Can you just slap around some some numbers as to what.
Prs DNA was 38 million then in Q1, if you had these things in place for all the Q1, what would that have done to the SGN AG.
On an absolute basis.
Yes.
I think we would prefer not to provide details we outlined earlier, where we were not providing.
In Europe.
Because of the uncertainty around cobot 19.
There are also.
Number of things I think we did as we said in her prepared remarks, we have made reductions that SGN a and between those are the ones were making it cost of services along with our capital deferrals or reductions we believe is meaningful.
For the full year 2020.
But we did make productions both in terms of discretionary spend needs of actually already been acted upon in terms of reductions to senior leadership compensation on things that those nature, so they're meaningful but there are other puts and takes as it relates to SGS.
Well the things like on.
Bonus accruals and things of that nature as well so I think.
Probably to the level of detail that we prefer to get into at this point.
Okay, and then promises just one last question.
Realizing there's very few independence left out there but are you seeing.
Seeing insurance companies.
Maybe starting to channel assignments that would have gone to the independence to major players like yourself given.
You know the fact that.
There could be some financial duress on on on their end as well as the smaller players don't have the technology to.
Compete and maybe do an entire digital auction.
In the salvage space.
That's that's really been happening for the last 10 or 15 years never the as you I think you said, there's really very little independent volume left in the insurance World. So it's it's.
I don't see it as a meaningful.
Opportunity it doesn't mean that doesn't exist, but I don't think it's a it's a meaningful okay. Thanks a lot.
Thank you your thanks, Gary this year.
Thank you and the next question is a fall from Daniel Umbro with Stephens, Inc.
Yes, hi, guys. Thanks, taking a quick follow up I had a question on the revolver essentially vans and maybe as you following up on the last line of questioning you just mentioned pretty consolidated industry, but I think one of the phrase you use vans was purposes. The debt was to continue your corporate growth initiatives curious if that was an indication of the.
M&A market potentially some remaining independent looking to sell or any update you can give us kind of clarifying what you meant by that comment on uses a corporate debt, maybe and there's backdrop.
Yes no.
Thanks for the follow up questions. So no what we're really remark.
Commenting on was is that we raised $136 million of additional liquidity by expanding our revolving credit facility, which was the revolving credit facility that we already have in place with the bank group that we already have in place and so on that provides we now have a revolving credit facility of 306.
The $1 million.
And really.
What we also commented on is that we believe that provides ample liquidity along with a cash that we have on had one to navigate through the Coca 19 had downtick in the impact on our business, but also during that time to continue to make the appropriate investments in our business.
And do the things that we think are important both from the gross initiatives that we're executing on our as well as our margin expansion plan. So it was really meant around that we don't.
See it's not really earmarked for specific M&A or anything of that nature at this point in time.
Got it really helpful affect that.
Thanks, Thanks again.
Thank you and as that was the last question I would like to return the photo management for any closing comments.
Well. Thank you all for your participation. Thanks for your interest in I, a and we look forward to talking to you. All soon have a great day and be safe and healthy.
Thank you. The conference has now concluded. Thank you for attending today's presentation may now disconnect your lines.