Good day and welcome to the KAR Auction Services Third Quarter 2014 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Jonathan Peisner, Treasurer and Vice President of Investor Relations. Please go ahead, sir.

Thanks, Randy. Good morning and thank you for joining us today for the KAR Auction Services third quarter 2014 earnings conference call. Today we will discuss the financial performance of KAR Auction Services for the quarter ended September 30, 2014. After concluding our commentary, we will take questions from participants. 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 risk 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. Lastly, let me mention that throughout this conference call we will be referencing both GAAP and non-GAAP financial measures. Reconciliations of the non-GAAP financial measures to the applicable GAAP financial measures 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?

Great. Thank you, Jon, and good morning ladies and gentlemen and welcome to our call. Last night we announced our third quarter earnings as well we announced an increase in our dividend and the share repurchase authorization. But before I discuss the capital allocation topics that I know many of you are interested, I would like to highlight our excellent performance in the third quarter which is really what we’re focused on on a day-to-day basis. So, as we look at the third quarter, net revenue increased 10%. Adjusted EBITDA increased 14%. And as you will see in the comments to follow, we had a very strong performance in each of our business segments. At ADESA revenue increased 12%. Adjusted EBITDA was up 16% and volume was up 6%. Revenue per vehicle sold was up 6% and physical auction revenue per vehicle sold was at $697; this represents a 9% over the prior year. This increase was primarily driven by the increased ancillary and other services revenue. In terms of our online-only volumes, they increased 11% and revenue per vehicle sold online was just $100. This was similar to what we reported to you in the last quarter and again, this is being driven by the governing [ph] dealers continue to buy off lease vehicles at the residual value. Volumes sold at physical auctions increased 4% over the prior year and our performance in dealer consignment segment continues to be strong, representing 53% of our overall volume in the third quarter. We have also seen an increase in repossessions. So with that, we would say the cyclical recover at ADESA is in the early stages. As many of you know, the SAR continues to be strong at over 16 million vehicles sold. Lease penetration rates are holding strong and may…

Thank you, Jim. I only have a few things to add to your comments this morning. First, on a consolidated basis, our gross margin of 44.3% of revenue is in line with the prior year. I believe this is important to point out as we have seen an increase in ancillary services and other revenue at ADESA which often has a lower gross profit profile. We also experienced growth in preferred warranties revenue at AFC which also has a lower gross profit characteristic. Overall, this demonstrates we realize some operating leverage as we saw our revenue grow on a consolidated basis. We are also maintaining our discipline in controlling SG&A. The absolute dollar value of selling, general and administrative expenses declined in the quarter. This decrease was primarily driven by reduced stock-based compensation. Excluding stock-based compensation expense, our SG&A increased by less $3 million in the third quarter. Our strong year-to-date performance is the reason for this increase. We have accrued annual incentive pay in all of our reported segments at a rate greater than the prior year in the third quarter. Our incentive pay programs are based on financial performance at the consolidated business segment or local operating level. Our pay-for-performance compensation design rewards our employees when results are strong and provides a lower cost structure when the business is under pressure. The ability to leverage our SG&A cost is a primary driver of our improved adjusted EBITDA margin for the third quarter and year-to-date. On a consolidated basis, our adjusted EBITDA margin was 25.3% for the third quarter and 25.6% for the nine months ended September 30, 2014. In terms of business segment performance, I believe Jim’s comments combined with the financial supplement we made available last night provide a good explanation of the strong performance in each…

Thank you. (Operator instructions) And we’ll now take our first question from Matthew Fassler from Goldman Sachs. Matthew Fassler – Goldman Sachs: Good morning.

Good morning, Matt. Matthew Fassler – Goldman Sachs: Congratulations on a nice quarter here.

Thank you. Matthew Fassler – Goldman Sachs: I’d like to dig a little bit deeper to the composition of ADESA. And, Eric, you alluded to the margin profile of ancillary, et cetera. But what do you think changed this quarter in terms of that revenue per vehicle at physical auction because the move was pretty dramatic and obviously flow through to overall revenue per vehicle? I know we’ve all been waiting for physical auction to pick up but it seems like the pace was rather sudden and dramatic.

Yes, I’ll let Eric get into the details, Matt, but obviously as these cars get to physical auction, we did experience a growth in our ancillary services and other revenues. So, maybe Eric if you want to break it down a little bit.

Yes, sure, Matt. As we look at it, it’s really being driven by the fact as more cars get to physical auction, we can do more work on the cars. We want to expect this transportation but it gets in to mechanic work, body work, inspections, cutting keys is an element of it, the repossession activities of our PAR and RDN. So it’s across the board and that’s what makes what I think was an excellent quarter for ADESA is getting that ARPU up to $697 I think is something we’ve all been waiting on and now we’ve seen it in the third quarter. But it really ties in – I would tell you, it really ties in to the ancillary services at the physical auction and locations as much as any of the other revenue sources that we have. Matthew Fassler – Goldman Sachs: And do you feel like those trends are directionally sustainable in terms of the growth and cars of physical auction and the revenue for car sold?

Well, Matt, I’ve told you in the past, I’ve gotten out of the predicting business. But I think we’ll just stand by and see what happens here going forward.

But the color I’d add for you Matt is with this type of mix I do expect this is the type of revenue per vehicle we have. What we can’t tell you is what the mix will be next quarter or the quarter after. But with this strong physical auction volume, we’ve been telling you they tend to use services at the auction lines. Matthew Fassler – Goldman Sachs: If I could ask one follow up, I know that we expected this to happen for a while and we’re grateful that it finally did. To the extent that you can now look back and see, if you can’t see, kind of where the volume came from, was it off lease, was it repossession, did the CPO vehicle seem to back up a bit in the channel leading to them to spill over into physical? Any sense of what finally gave way to enable the strength to start to kick in.

Matt, I think it was a combination of a number of things. There’s no question that the lease cars are having an impact. Whether we’re getting the lease car directly to the physical auctions we say through the funnel or whether the lease car is displacing a dealer car and we’re getting the dealer car but I don’t want to lose sight of the fact that, yes, there are the lease cars but we also did a very good job on dealer consignment. We are seeing more repossessions. So I think it’s a combination of a number of things. Matthew Fassler – Goldman Sachs: Great. And then one very final quick one just kind of a between-the-lines question. You gave us a breakout in [indiscernible] last night of the different components of online-only and you have the downstream pieces. And upstream and midstream continue to grow at a very rapid rate over 30% in units. The downstream is coming down. We’re not concerned about that but just want to understand the moving pieces within that online-only business.

And, Matt, I want to be careful. You’re using terms that we use in the business. When you say downstream, like online-only was up 11% year-over-year. Matthew Fassler – Goldman Sachs: Yes.

We generally call that upstream. Matthew Fassler – Goldman Sachs: I’m talking about the 79,000 cars down from 91,000, that piece of the mix.

Well, again, those are your numbers. Generally speaking I think it’s more seasonal than anything. Again, the third quarter volumes as opposed – and again, you look at it, the online sales remain quite strong in the high 30s for us, so – and that’s online total, not online-only. So I really – you saw the upstream or the online-only dropped sequentially. It went 128,000; 132,000; 120,000, the three sequential quarters. That’s a seasonal trend, not a change in the marketplace. Matthew Fassler – Goldman Sachs: Thank you.

You’re welcome, Matt.

And we’ll now take our next question from Bret Jordan from BB&T Capital Markets.

Good morning, Bret. Bret Jordan – BB&T Capital Markets: Good morning, guys.

Good morning. Bret Jordan – BB&T Capital Markets: A question on the IAA and one of your competitors recently service talked about some structural increases in expenses related to the insurance contracts. Were you pushing against high winds in that category? Were there offset that allowed you to grow the business or are you seeing less structural impacts?

I can’t speak for what they had to say but I can tell you that I think that we’re just doing a good job of managing our business, first of all. I think there’s a couple of things that point to that. I think we’re demonstrating that we’re leading with technology in terms of the way that we’re servicing our customers, mobile applications, the way we’re integrating with our customers. And then, I think the thing that we’ve talked about for years, the fact that we offer every car online and we offer that car physical as well continues to play out. And the way it continues to play out is demonstrating that we are driving higher proceeds and getting better results. And I think customers are taking notice of it and at the end of the day I think it’s allowing us to win business. Bret Jordan – BB&T Capital Markets: Great. Thank you.

You’re welcome.

And we’ll now take our next question from Ryan Brinkman from JP Morgan. Ryan Brinkman – JP Morgan: Hi.

Good morning, Ryan. Ryan Brinkman – JP Morgan: Good morning, yes, and congrats on the quarter.

Thank you. Ryan Brinkman – JP Morgan: Regarding the decline in used car prices during the quarter, that’s starting to get some increased attention in other circles too. Do you think that the decline is simply a function of increased supply of cars in whole car auctions? Is that the primary driver? Or do you think it relates to other things happening in the broader economy impacting demand or the trend in new car price? My sense is it’s a function of supply. But because you guys have some unique insights here, I’ve got to ask you.

Yes, Ryan, I think I would determine in terms of supply. The declines are modest. I think we pointed out to you last quarter that we expect that those declines would be somewhere in the 2% to 3% range overall on a year-to-date basis. That’s kind of the numbers that we’re seeing. Ryan Brinkman – JP Morgan: Okay. And then, I think investors are pretty pleased with the 4% increase in physical auctions today. In your prepared remarks though you talked about cyclical recovered as being like [ph] in the early stages, and I know you described yourself in recent quarters as being out of the prediction business in terms of when those volumes would inflect. But now that they seem to actually have inflected or started to inflect, I’m curious if you see a more comfortable in commenting further on the expected trend there.

Well, I point to a couple of things. I know we’ve said a number of times that there’s an additional 700,000 all fleet vehicles coming in 2015 and another 500,000 coming in 2016. And at some point in time we have said that we thought more vehicles would get to the physical auction. I don’t want to jump all over 4% here in one quarter but I will say over the long term I’ve always maintained that they cannot absorb all these cars at the top of the funnel and these cars will eventually at some point in time make their way to the physical auction. Ryan Brinkman – JP Morgan: Okay.

And let me add to that, Ryan. In Jim’s comments, he commented, we have a strong SAR. We have the average credit score in the new car transaction declining. All of that is actually good for the supply of vehicles in the wholesale marketplace. It isn’t just one factor. Right, Jim?

Very true. Ryan Brinkman – JP Morgan: Okay. And I think there’s been a lot of focus or there has been on sort of the mix of your volume between high ARPU physical sort of medium ARPU online-only, open and I guess low ARPU online-only close, and maybe you’ve got some ability to try to influence that mix but not a whole lot. What about the effort though to increase ARPU in each of these channels which seem that you might be in a better to position to impact. For example, higher fee and only-only close where you’ve got some dominant share in technology. Is there any progress there?

Well, again, what you see is really the progress in providing more services to the consigner in advance of selling the car drive ARPU up at the physical auction. At this point, you look at mix, we’re waiting for more car. Ultimately, we hope more cars will be selling in the online-only open channel. And when that happens there’s a natural pick up in revenue per unit in the online-only channel. But again, most of this is really driven by the nature of the car, not by pure price increases for common services that we provide. Ryan Brinkman – JP Morgan: Okay, that’s helpful. Last question, on the 16% increase in inventory at IAA [ph] total loss [ph] just trying to think about the modeling implications of that strong increase. Coparts talked about some of the increase in their inventory level relating more to just a rising cycle times and just try to parse out the impact of cycle times versus underlying gain. I’m just curious if you’re influenced at all by the same phenomena or whether the underlying gain really is that strong?

No, we clearly – and again, we’ve this in particular with certain customers, the cycle times have increased as they’ve changed their title processing. We think that’ll come back over time. But there’s a real increase in the absolute number of cars on the lot as well unrelated to cycle times. Again, our representation with our customer base and it’s really been a good season in terms of collisions and in total losses relative to our business. And while the number of insurance claims may have declined slightly this year compared to the prior year, severity is up. And that has typically been good for the supply and the collision-repair industry needs these parts. So we’re in a pretty good spot and sitting again with a lot of that inventory is really related to accident rates more than cycle times. Ryan Brinkman – JP Morgan: Okay, very helpful. Thanks for the color.

Thank you.

And we’ll now take our next question from Craig Kennison from Robert W. Baird & Co.

Good morning, Craig. Craig Kennison – Robert W. Baird & Co.: Good morning. Thanks for taking my question. It’s nice to see the progress you’ve made integrating TradeRev so far. I’m wondering how you would frame the volume opportunity in 2015. I know you don’t like to predict, but we’re trying to figure out what kind of metrics we should hold you too to see if we’re gaining traction in that new business model.

Well, more so, Craig, I would maybe speak to what the addressable market is. If you take a look at vehicles that are being sold dealer to dealer, there is approximately 20 million to 22 million vehicles in that space. And if you would think that the dealer is going to keep a number of those vehicles for their own inventory requirements and then they’re going to sell off other inventory, if you think of that maybe just keeping half of it and selling off half of it, that gets your market to about 10 million, 11 million units. We would be looking for some slice of that as we go forward on an increasing basis. So, other than that, that’s as much of a prediction you’re going to get from me. Craig Kennison – Robert W. Baird & Co.: Okay, I thought I’d try. And then with respect to repo market, I know that your market share does depend on category. You have a different share of institutional volume versus dealer volume. You have a high share of the off lease volume. What does your share look like in the repo space if that volume starts to pick up?

Yes, Eric, I’ll let you quote the numbers there, but I can just tell you that this is a space that we’ve tended to do very, very well in. We have a large number of customers with a large share in the repo space. Eric?

Yes, I mean, the commercial vehicles we’ve said that we are over-represented probably more in that 30% range as opposed to that 24% to 25% where our total market share is. And, Craig, like anything, we actually evaluate the customer, not the nature of the car and why it’s with us. So I would just point to that’s kind of our share of that commercial space. It’s in the low 30s. Craig Kennison – Robert W. Baird & Co.: Got it. Thank you.

You’re welcome, Craig.

And we’ll now take our next question from John Lovallo from Bank of America Merrill Lynch.

Good morning, John. John Lovallo – Bank of America Merrill Lynch: Hi, thanks. Good morning. Thanks for taking my call. First question just following up on Craig’s question, on the repo volume; the increase there, can you attribute this, does it lose your financing terms which could have some economic implications here or is this just something that’s a little bit spotty and kind of bounces around from quarter to quarter.

I would say to you that there is more credit availability. And I think that many of these lenders are just taking on more paper. Eric?

Yes, and I’m looking at a chart that’s published in the industry. This is not our data. There is an absolute reduction in the average FICO score on a new car transaction and that is one of the leading indicators, John, of increased credit risk being taken by the lenders. And when you take more risk, in the retail transaction in particular, you are going to have more repossessions. John Lovallo – Bank of America Merrill Lynch: That’s very helpful, guys. Next question is on AFC. There is a slight decline and I’m not trying to beach [ph] up on this but a slight decline in revenue per loan [indiscernible] about the other services. What were the main drivers there?

Well, the driver of that was a very slight but relative portfolio. It’s really modest increase in provision for loan losses which is a negative on our revenue per unit, revenue per loan transaction. John Lovallo – Bank of America Merrill Lynch: Okay, perfect. And then final question is –

However – John Lovallo – Bank of America Merrill Lynch: Sorry, go ahead.

I was just going to add, with that said, this portfolio continues to perform at a very high level. We’re still over 99% current and the portfolio has continued to grow. So I would say it’s very, very modest there.

Exactly, and that slight increase is more seasonal than something related to the portfolio. That third quarter is oftentimes where dealers maybe took some chances in their tax season inventory, have to pay the piper [ph] and we end up with some loan losses every year during the third quarter. John Lovallo – Bank of America Merrill Lynch: Helpful. And last question, there is a large British auction company that just filed an S-1. I guess, I’m curious, is this something that you guys took a look at and I’m just wondering if the buyback being put in place now is due to the fact that these guys look like they’re pursuing the IPO route?

Yes, we really don’t have any comment on that at this point in time.

And again, the buyback is independent of any discussions in the marketplace, right. We said they’re mutually exclusive of our strategic priorities. We’ll do what’s right with capital allocation as the opportunities are in front of us. John Lovallo – Bank of America Merrill Lynch: Very helpful guys. Thank you.

You’re welcome.

And we’ll now take our next question from Gary Prestopino from Barrington Research Associates, Inc.

Good morning, Gary. Gary Prestopino – Barrington Research Associates, Inc.: A couple of questions on TradeRev which is I find intriguing. First of all, in doing your analysis pre-buying this and all that and what you’re going to do with it, how many of the dealers domestically right now, the franchise dealers have some kind of technology driven system to do dealer-to-dealer trades?

I’m not sure of what kind of products are in the marketplace. I can tell you that there are some products in the marketplace, Gary, but TradeRev was the one that stood out to us as having the best technology and the best platform that we thought would be most appealing to dealers. Eric, do you have any thoughts on that?

And, Gary, I’d add, most of the products that we see would be like our DealerBlock or SmartAuction that really were focused on age inventory, wouldn’t you say, Jim?

Right.

More than fresh trades. Is that a fair way to say it?

Right. Yes. Gary Prestopino – Barrington Research Associates, Inc.: So the key differentiator there is their focus on fixed trades and their technology to do the transaction or to facilitate the transaction?

Very much so, Gary. You’re really starting an auction process as we say with TradeRev while the customer is sitting in your show room. You’re basically going out and you’re taking a couple of photos of that vehicle and taking a shot at the VIN plate [ph] and you’re immediately sending that out to a network of buyers and you’re instantaneously starting to receive bids on that vehicle. So we’re really talking about fresh trade even before the new car dealer gets transacted. John Lovallo – Bank of America Merrill Lynch: Okay. And then in terms of this increase in physical auction revenue driven by services, do you even measure this in terms of what has been the more prevalent service that you’re seeing right up front. Is it detailing minor body work, painting, some mechanical repair, I’m just trying to get an idea of what kind of car is coming in right now that would be facilitating this increase in revenue per vehicle.

Yes, Gary, I would say, again, it’s all of the above as well as transportation being another one. And these consigners are going to do whatever work is required. If it’s body, if it’s paint, if it’s mechanical reconditioning, cutting keys, whatever, and they’re doing what they need to do to make sure that they’re getting the car in a competitive spot in the lane so that they’re going to attract the most buyers and achieve the highest resale price. And again, it’s going to be different work. But most of this work tends – a lot of this work tends to focus on appearance-type items; and those being paint and tires and detailing and things of that nature. Gary Prestopino – Barrington Research Associates, Inc.: Is there any statistics you can share with us that as you get deeper into the cycle, how many of these like you’re saying about 700,000 off lease vehicles next year, how many of those – as the inventory pipeline gets filled, what’s the shift going from close to just down to the physical auction? Do you have any estimate [ph]?

I will say – Gary Prestopino – Barrington Research Associates, Inc.: Go ahead. I’m sorry.

The one thing we’ve said in the past, Gary, that is still true, the off lease car is the biggest user of ancillary services historically. Gary Prestopino – Barrington Research Associates, Inc.: Okay.

Every class of [ph] finance company does something it, at a minimum, reconditions the car but they’ll do more work on the car than probably other segment in the industry.

And I think, Gary, as far as – okay, sorry, go ahead. Gary Prestopino – Barrington Research Associates, Inc.: Go ahead. I’m sorry. Go ahead.

No, I was going to say, as far as the shift, I think we just have to wait and let it play out. Then we’ve seen a little bit of that this quarter and then I think it’s too early to get into forecasting what that ship [ph] is going to look like. Gary Prestopino – Barrington Research Associates, Inc.: Okay. And these leases coming next year, I mean, it’s kind of – it kind of dovetails with the seasonality with car sales, correct, in terms of being spread out across the year.

Yes, I would think, if you take a look, we know the number is 700,000. There could be some seasonality based on when the lease was written. But I think it is spread across 12 months without looking at it in detail here.

And keep in mind, Gary, we were coming – three years ago, we were coming off the bottom in new car sales. So there was a more steady increase than there probably was in a typical, seasonal pattern of new car sales. Gary Prestopino – Barrington Research Associates, Inc.: Okay. Thank you.

You’re welcome.

And we’ll now take our next question from John Lawrence from Stephens Inc. John Lawrence – Stephens Inc.: All right, good morning.

Good morning, John.

Good morning. John Lawrence – Stephens Inc.: Could you take on that – looking at that just a little further, on those services and the margins that they represent, if you have more paint mix one quarter versus mechanical. Does it really move the margin on those different services or they’re all about the same?

No, no, those services have varying margins. And I’ll let Eric break that down a little bit. But what I would tell you at the outset is my focus is more on EBITDA dollars than it is perhaps the margin. But, Eric, maybe you want to speak to some of those margins on the various services?

Yes, John, we’ve talked in the past, the lowest margin business is transportation and again, by just the competitive nature of transportation and moving the cars. And then after that, they’d vary a little bit. We do pretty well on reconditioning and aesthetic paint and body work. Mechanical is good but not as good; it’s a little lower. Post sale inspections, very strong. So it varies but I would tell you, other than transportation, we generally would tell you it’s a 30% to 40% margin on ancillary services. The high end might be more reconditioning and paint and body work and the low-end might be more mechanical. John Lawrence – Stephens Inc.: And would you share on that range, would this be this mix for this quarter would be – the total mix made toward the top the stronger margin or toward average?

Well, you can do all kinds of math and many have done it for me, it varies. What’s going to put you at the kind of the bottom of that range will be probably more transportation and nothing to do with whether it’s mechanical versus body. Transportation is what’s swings this margin up or down more than anything. It is our largest ancillary services revenue component.

Yes, I think I would go back to Eric’s point that we’re going to average somewhere on ancillary services in that 30% to 40% range with the exception of transportation. And then you’d have to adjust for transportation volumes being – impacting that down.

Yes. John Lawrence – Stephens Inc.: Great. Thanks for that. Secondly, can you talk about the flow of the quarter? Did these increases really start July or was September a hockey stick month or how did it flow during the quarter?

There’s a level of granularity. But there is a seasonal aspect to the business as people finish their summer vacations. Retail used car activity is a little lower and then Labor Day and beyond it really picks up. So I would tell you, as is normal in our business, it would tend to be the last half of the quarter over the first half, but that has more to do with the calendar than the flow of vehicles. John Lawrence – Stephens Inc.: Okay. And last, regionally, pretty strong across all regions?

Yes, with one thing with us, we – the U.S. is of course in the recovery and Canada is lagging. We have not begun to see the recovery in Canada quite yet, although there is some very positive retail activity up there. It’ll take in a few years to get to our marketplace.

Yes, and I wasn’t necessarily thinking of Canada as a region but if you’ve been following it, Canada is predicting perhaps a record in terms of new car sales. And also, with leasing, being now fully back in vogue, we expect those leases to really, the impact here, we really expect to see in 2017 on those lease returns. John Lawrence – Stephens Inc.: Right. Thanks. Good luck.

Thank you.

Thank you.

And we’ll now take our next question from Bob Labick from CJS Securities, Inc.

Good morning, Bob. Bob Labick – CJS Securities, Inc.: Good morning. A lot of my questions have been answered but I just wanted to dig a little deeper, on IAA, fantastic results there. And then the inventory build was up sequentially from 10%, I guess, at the end of June to 15%. It didn’t seem like there was unusual weather. Can you – I know you don’t want to comment specifically but is there market share shifts or new account wins? Is industry volume growing that much or what do you attribute the sequential growth there to?

I think we did mention that we do have a customer or two that are in the process of changing their processes in terms of the way they take these vehicles to market and that has backed up inventory a little bit.

And again, Bob, good point. Although we look at weather in our local region. It’s been a very steady weather year. There’s been a lot more activity in isolated pockets within the United States in particular than we might all relate to in our local market. It’s been a steady stream. And also, keep in mind, last year’s third quarter, we’ve been coming off of Sandy and inventory levels might have just been a little bit lower too. I didn’t look at that. But that could have been a cause of it as well. Bob Labick – CJS Securities, Inc.: Okay, great. Now, because I mean, your volume pass-through of 7% off of a plus 10% seems like you pass through pretty well, right.

Yes. Bob Labick – CJS Securities, Inc.: So it didn’t seem like that would be the sequential driver.

I’m referring to the inventory level, not the pass-through of a year ago. Bob Labick – CJS Securities, Inc.: Right, right. Now, exactly, I’m just saying your volume was good off of a plus 10% inventory, so I thought that something may have changed it to continue to grow that but if the cycle time is certainly understandable as well.

Well, as we go back to Sandy and coming out of Sandy and a number of RFPs that took place last year, there was no question that we did well in gaining market share through some of those RFPs and perhaps some of that showing up in the volume as well. Bob Labick – CJS Securities, Inc.: Yes, no complaints. It’s great; just trying to get a little more color there. And then one more in terms of just a little deeper, you spoke about it obviously on the call already. But on the online-only closed versus open auctions, obviously there’s a big revenue different to you. Can you talk to the proceeds to the seller difference, is there a significant, higher proceeds to the seller and open versus close auction. And if that is the case, can you help influence more closed auctions to become open auctions online?

I like the way you’re thinking. Eric, you take that.

Yes, I mean, essentially it’s the venue at which the buyer transacts at a price the consigner is willing to take. What we are doing, Jim talked about in the last call is we’re giving the analytics to our customers. We do think there is an opportunity in the online-only open for them to transaction. When they let it get to physical auction, perhaps they’re not getting a better result than they might have gotten without moving to car, right, Jim?

Right.

But again, it’s more data analytics than it is kind of what’s the value. The question on the open is – are they getting net more than they get at the physical because it’s already gotten through that private label closed.

Yes, and one of the things that we’ve done to encourage more of those vehicles being able to be sold in the open online sale, Eric point it to the analytics. But I would also point to a couple policy changes we made in terms of, we’ve kind of simplified the fee structure and we’ve made a little bit more of a, I would say, of a liberal arbitration policy where we’ve relaxed some of the arbitration rules a little bit. And I think all of this is in an effort to drive more of those vehicles to be sold in the open sale. Bob Labick – CJS Securities, Inc.: Okay, great. Thanks very much.

You’re welcome.

(Operator instructions) We’ll now take our next question from Bill Armstrong from C.L. King & Associates. Bill Armstrong – C.L. King & Associates: Good morning, Jim and Eric.

Good morning. Bill Armstrong – C.L. King & Associates: Good morning.

Good morning. Bill Armstrong – C.L. King & Associates: On the Insurance Auto Auction side, your gross margins were very strong, up over 200 basis points year-over-year. Considering that the average selling price as I would image were a little bit lower than a year ago, I was just wondering if you could delve in to maybe some of what the drivers were of the higher margin and are these sustainable drivers going forward.

Bill, good question. One of the things you point that I would point to is we had 6% of our volume was purchased vehicles for last year, that was a little bit higher percent. That does actually impact margin because of how we have to recognize the gross sale price in our revenue if we purchase the vehicle. So we pick up a little bit of margin improvement merely because we have a lower mix of purchase vehicles. And then the rest of it is really just the ability to manage the business as Jim mentioned. Bill Armstrong – C.L. King & Associates: Okay, got it. And that actually was a follow-up question, was there anything to call out that was behind the relative decline in the purchased vehicle, 6% versus 8% from a year ago?

No, other than that was the target we set. We felt we needed to reduce that as there has been a healthy – again, we go back a few years where there was shortage of total loss vehicles that we were supplementing by purchasing vehicles and things like that. We have a healthy supply right now and so there’s emphasis on that. And also in this – the current pricing environment of cars, it’s a little bit riskier transaction so it’s not as beneficial for us. Bill Armstrong – C.L. King & Associates: Okay, got it. And on the guidance, so if we take your guidance and back in to the fourth quarter that would imply adjusted EPS of $0.23 to $0.33 which obviously is quite a wide range, what sort of assumptions or what sort of trends would you be looking for that would move that number either towards the higher end of the range or the lower end of the range. In other words, I guess, what are the opportunities and what are the risks within that range of estimates?

Bill, we don’t speak to individual quarters on or guidance. But it’s like the whole – when we talk about the whole year, what creates a range for us is really the mix, the mix of vehicles within our businesses, so that would be the primary driver that would allow the range for the year. Bill Armstrong – C.L. King & Associates: Okay, great. Thank you.

You’re welcome, Bill.

And this concludes our question-and-answer portion. I would now like to turn the call back over to Mr. Jim Hallett for closing comments.

Thank you, Randy, and thank you ladies and gentlemen, for being on our call this morning. We appreciate your time. We appreciate your interest in our company and then in our stock. Obviously, we’re extremely pleased with the quarter we’ve been able to report to you, but I would say even more so as we look forward to what lies ahead of us, we’re feeling very good about how we’re positioned and how we can continue to grow this company to the next level. So, with that, I thank you and look forward to talking to you next quarter.

This does conclude today’s conference. Thank you for your participation.