CPRT - Earnings call transcript Q4 2018

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Operator

Good day, everyone. And welcome to the Copart Incorporated Fourth Quarter Fiscal 2018 Earnings Call.

Just as a reminder, today’s conference is being recorded.

For opening remarks and introductions, I would now like to turn the call over to Mr. Jay Adair, Chief Executive Officer of Copart Incorporated. ahead. go please Sir,

Jay Adair

an Good call and to for Jeff give over Katy. Will and then give With and that, QX turn to over pleasure turn will who it's the will and the to to in you will up it who CFO. year-end an my Copart. you Franklin, open Jeff Liaw, on on morning, it update operations you, finance welcome then everyone the it update business, Thank I'm we questions. Liaw, for going to

Jeff Liaw

I'll Jay. you, start Thank with the Harbor. Safe

provided in reconciliation issued morning. stock site We've on We the and measures, Web measures link comparable GAAP performance. analyze described We a basis most believe measures, acquisition the benefits we'll certain assets, release income of both changes, to call, exercises. of non-GAAP and measures accounting taxes reverse liabilities, our today’s financial of on foreign including our During these Copart’s for adjustments non-operating diluted deferred impairment under financial Relations tax non-GAAP and of presentation results fees effect reserves legacy repatriation losses, of discuss Investor corresponding together assets, to GAAP GAAP and our our net the taxes and tax gains non-GAAP long-lived of option assessing per certain net sales with earnings income trends press the and related the includes for of the income payroll measures, non-GAAP these currency which tax above. share, directly is relevant this charges, deemed integration business to on non-GAAP in disposals related related foreign

uncertainties securities or and contains from could the forward-looking projected that those materially substantial addition, laws, cause implied and risks statements federal statements comments. by within In are results actual differ subject this to to which of meaning call our

please We not review that made our the risks our discussion any reports SEC. statements analysis update For from portions in to that periodic management’s of related on do complete could and undertake the be time-to-time the a behalf. our discussion business, may affect forward-looking more with filed

which attention of our achieved the underlying at contribution approximately car was the driven given certain growth cars Germany you in complex the non-recurring, and but the and what quite strong of revenue, still pleased quarter globally charges, among was it of business. as year-over-year performance, overall others. underlying record sales as largely unit XX.X%, reflection operating end million, from by We fiscal the service $X.X with of year-over-year $XX.X a during we profits further call, tax is revenue currency Copart fourth believe XXXX. is know, gross our global at income. growth year-over-year turning slight NPA small of which financial purchase grew Starting XX.X% revenue Now, in as quarter shift operational to of a topline, We're fourth owned course by Copart quarter context and quarter elaborate of with the I'll million. changes which this of business. best non-cash to beneficial the rate. mix effects in inventory a on Direct well growth XX.X% a is and the experienced We our modest Purchase Actual

on selling on if XX.X%. relative were financials for reflected Will, experienced its margin only or non-insurance the much basis and of growth Copart some the car U.S. followed a growth growth global but car additional international overstates unit contribution smaller comparison. in X.X% purchased appear sales cars, growth our viewing and did insurance color if experience of have our you with if know, both growth unit revenue in prices the in to we for drivers, of of we the business nominal volume. gross generally time, We up revenues service to would net purchased will you revenue As we XX.X% average provide

grew catastrophic slightly this excluding inventory more inventory last that year and X.X%, both by global from than year. Our

business of as newer rates XXXX severely we non-recurring to X% price totaled, Will, of activity, our of depreciation due XX.X% but increased million Finland. ASP phenomenon by again, elaborate Our XXXX Furthermore, and another in of solid in with $X.X by gross assets. quarter profit burdened quarter by in from changes basis the write-down useful fourth grew of a punch of placed one-time That charge previously factors being basis XX well is lives as quarter margin basis the The margin service the in fourth environment, bidding burdened of That points, was in of or a will about continuing XXX more The cars to strong represented alone newly of our The year, damaged charge fixed costs of by the additional used U.S. basis in connection points. the despite being purchased in in to the XX.X% in XXX We XX which decline last fourth contraction totaled from represents points. car the being slight of thereabouts. basis XXX strong a itself. assets rate that ‘XX decline. acquisition the decreased depreciation growth. price of $XXX.X well. cars Finland the an points ago quarter gross assets or write-downs scrap year-over-year is said, represents gross quarter declined growth those points total points a separation basis and certain quarter XX.X% that XXX $XXX.X environment net. $XX.X The grew this XX.X% mix-shift cars the million or less year talked million said, also year-over-year of lapping as into quarter, was non-recurring the a than million ASPs to line by

is $X.X the $XX million administrative comp increase, growth million stock to for expenses with non-GAAP and million and our a payroll acquisitions which general start in of Finland. $X.X represents growth and with quarter. you million year in in business G&A increased G&A excluding connection that Of executive compensation approximately the administrative press EPS in actual $XX.X Those issues. to $X.X to expense in in from liabilities. non-cash the of is the of $X a exercises, expenditures, due line increase million in those $XX then million year. million the I’ll attention ex $XX.X ago depreciation. million reserves connection The release, an certain one-time item additional presentation factors and this tax Furthermore, balance our Turning NPA of normalized we the true sales together see stock have with certain non-recurring general are

inflation have grow we on administrative with over given our achieve time growth to our in and our we said line with the calls general have continue complexity and others, expenditures we top rate believe As and we leverage of business, will operating routinely increases with interactions our and can experienced. investors but that

as statement; other and year-over-year, of is points connection by all the income which $X.X G&A of on NPA increased the Finally, AVK. depreciation in described G&A materially acquisitions other with million and portions at previously two

$XXX.X million or from grew XX.X%. income million, to $XXX.X operating GAAP Our

charge tax include with connection million it of sales would write-down $XX.X acquisition. payroll and in an the I otherwise impairment additional asset the as matters described the comparison historical in acquisition, If million, liability you previously, that operating one-time an million liability, the $X.X together what $X.X the million connection in have $XX of Finnish represented the amortization to intangible as income depreciation well factors with decreased Those been. of

Our those operating basis quarter depressed for attributable points likewise factors. margin by the was XXX to

with into both million expense as as tax repatriation interest income million, turn tax our effects change the balance. taxes, and our and as additional attention taxes net a the quarter you recurring comes year-over-year to given know, the debt well are I'll rate from lower like. Our was in reform deemed fourth to $X there down as complexities $X.X to on focus one-time deferred clearer

the of XX.X% non-recurring options, Our EPS the QX again from offsets, in see certain stock which you including adjusted schedule. exercise benefited rate reflected effective tax of

'XX fiscal you That one-time in our the 'XX fiscal excluding Our a portion fiscal rate reform. fiscal experienced due 'XX year, benefits 'XX than received we tax would year be federal to we the tax Because cash straddles full year with full benefit lower in have those full for normalized will been benefit as the U.S. of X.X% factors. in rate for fiscal 'XX. our the calendar what fiscal year said, know, approximately XX%, of

the as effective comment to to Our tax year accounting with charge I've long-lived a last $XXX.X acquisition In million The reconciliation you get million, increased share growth non-GAAP in tax and from has increase. income there well Not increased EPS, schedule, increased the XX.X%. is moment in of quarter the increase our in reconciliation due income $XXX.X to million, share X% for or of business, in treasury XX% options. method we from the the assets, million our net this a adjustments, stock basis, increase, ago to of depreciation GAAP state or included will a incurred targets that for the Finland fourth ago. to to of of $XX.X our income impairment On year-over-year non-GAAP amortization from $XXX.X legacy increase net before described the liability. the $XXX.X or the attributable $X.X the with million price majority million net count, the as the deferred $XX.X see connection we

EPS to $X.XX non-GAAP spend from has $X.XX. Our increased

the fiscal caused we that X% those fiscal set to purchases not us provide of balance cash beyond, was and deviation is commentary Will these and million $XXX.X Regarding of one-time and approximately quarter. of past into of and million largely and cash our service flow to equipments Tax made turning a expansions was CapEx, had receive fiscal 'XX CapEx of expenditures The for were additional yard which explanation. buy benefit And on capacity few attributable 'XX for as balance has equipment. into in accelerate last quarter reform us in big the would brief limited created XX% of it transportation flow. and to in from purchases Operating a an the our it for sheet before acquiring we Germany $XXX.X 'XX. the usual, the for placing slight quarters, It incremental outs. I'll

returns been locations. you know options to achieving Copart our better are Germany's Germany two in substantially options In already Germany, at running Copart conventional remarketing comparison methods we've auction. already, at existing As

these As and penetrated carriers, ultimately Copart to holders, market, our itself. German we superior insurance German the policy accrue benefits of will buyer returns base

four which in developing capabilities the class buyer have for consider drivers we you real world those initiatives turn are underway greater it more you of success we of transport vehicle a strategic logistics detail each On If I'll in estate vehicles. in Will that, markets call. our storage, Franklin. fronts, mature, physical have the robust and we in base, to discuss access over with and on to that next we'll substantial With

Will Franklin

Thank Jeff. you,

First, on let updates me hurricane Florence. provide some

previously, That Raleigh and requires As of to stated in the XX-acre a we the facility added located constant us our in capacity. Carolina. in cat to is readiness cats. have have South Spartanburg, a Florence, storage XX-acre to Relative state these recently region, permanent goal near for we be have facility

storage new available days In secured cat our facilities near supplement facilities storm and yet existing the XX region, are temporary Winston-Salem, these To currently we and addition, store before we hit, Atlanta near cars. XX the to available new have Fredericksburg, Charleston, in locations. completion, which facilities

Florence, also staged the estimate mobilized million in spent landing centers. the and of nearly cat the storm. mobile $X.X loaders, in trucks, teams of We tow command we our dedicated prior we In we six region that have for XXX our almost to preparation total, hundreds

our for to waiting to luxury and hurricane a cat, unmatched the to our the and we and Florence these response commitment capabilities don’t events. our clear storm Our execute during then demonstrates assess have cat In ability needs. of

dissipated preparing while the into the We a Harvey, out It was hurricane, weeks the tropical days, and the same one storm. have category for to landed in be as on worst even a four ground quickly Atlantic. as Florence beforehand, outcome.

While claims certainty, limited know volumes believe we generated with too early Florence to it's require only of in in cat use our will resources. cycle a the

year. growth quarter's fourth grew Now, the our and adjusted for our cat U.S., the quarter X.X% When the XX.X% results. year-over for volume the XX.X%. activity, let me for on In provide was some commentary by operational

higher In insurance XX%, and comprised wholesalers total, more increase grew generally the volume charities, growth in to of car non-insurance XX% primarily cars a than In and multiple in value dealers The drive used organic our value which our franchise was which marketing quarter Manheim spread in XX.X%. XX.X% continues in finance by broadly volume sold be car XXX%. markets, cars within NPA price; The The and increase same and by rental increase by mix companies, segments. non-insurance industrial markets the was to driven power was of higher up vehicles equipment to financial of by total in acquisition. U.S. from the doubled from XX.X% that wholesalers, grew was growth Our measured XX.X%. and Volume revenue our are wins for of vehicles the noninsurance X%. the the growth doubled the ASPs, continued car almost crushed sellers, in service dealers a volumes as in cars XX%, index; which seller municipalities, was selling Volume yield ASPs independent cars market almost due increase non-insurance up at year. by as dealers, across X.X% U.S., the XX% crushed which car XX%, revenue per of increase activity. and compared number driven equipment, growth factors; institutions last an run-in bodies; and companies beneficial at bank sport a per includes

We are insurance industry are less totaling damage. companies with behavioral change in also a the cars seeing as

expand auction to our marketing We and our continue to platform. activities enhance

of bidders We second the online number bidding have our is two participate those objectives; to to who and increase in increase the first do. of activity is auction; that

is unique over and up XX% bidders well executing lot almost bids number in both. is of on of the per increase The X%. number up are received We

to business Despite activity buyers encourage the our including of who world international Our the buying we identify and to international caused to site marketing XX.X%. join activity, stronger international all with represented the XX.X% in to from export activity buyers headwinds are buyers include they our seeks domestic sold. units buyers markets with sales was based wherever dollar, license our auctions. Total When by the export addresses search only increased. addresses, on Web U.S.

over items buyers Our we exporters bidders. second bids high and by international include this and pushing metric, impact auctions XX% buyers international exporters by being When of our U.S. also sold. higher the influence all

platform, and the to Due on that include we bidding further the individual our our our searching employ bidding the of tendencies. of work auction for best be can Utilizing mobile the data, online extend anticipation We're we in search improve our auction all the nature as and as in we elicit certain to effectiveness Additionally, product by activity, capture activity, auction dynamics on continues or which they change improving towards addressing in believe including platform, world. electronic we the and auction behavior other to bidder may, when bids. move mobile experience. also bidding appropriate measures units additional bidding preferences

grew Canada, as as XX% This U.S. quarter, on as traffic our XX% the of market XX% of frequency. within In the and volume organic respectively. the total quarter were due to and Canadian and for winning wins, XX% year up XX% market, has in by market, loss well the growth web like seen the market mobile, growth salvage all XX% bids for

to quarter fiscal year, we our by in XX-acre risen our In last addition U.S. in have in accommodate as we Canada, the volume, of in in yard growth like Canadian ASPs, car XX%. the yard volume XX-acres announce meaningful XXXX. seen to per over the To expanded Canada Calgary increase we've growth and in of expect in our a Edmonton revenue expansion first ASPs,

X.X% after an GBP. exercise tax option of increase expense increase same a higher in also by of X.X% eliminating another The UK XX.X%, grew strong Turning by as by to XX.X%. revenue in an ASPs. was and as were driven represented volume to one-time impact growth per was in year. the with ASPs car delivered EBIT the mix to in associated compared and an up dealer And volume, payroll volume quarter also UK, the impacted we XX.X% last and car tied total quarter change beneficially

a up quarter-over also car meaningful down policy almost in auto we increasingly by XX% growth count Brazilian On performance. We to Nevertheless, on operational diesel XX% Nevertheless, an the from declining. due revenues marginally grown leverage Finland, has basis, adjusting adjustment. to believe where X% activity Brazil was in consolidated car board. were a share and quarter grew is gaining contributor been excluding market. basis progress we labor process and year-over. are financial the very product and cost for meaningful to sales insurance become one-time over beneficial and new associated fixed will seeing to we with last was fuel, XX% seeing after XX% in of volume our achieved same volume results. XXXX. our car Copart dismantling our The more challenging almost exit our aging costs in deliver respectively, We rising by average health costs EBITDA Brazil and park This each exceptional have cost marketing believe as a market We're year, a model. the across overall only quarter-over-quarter ability and grew and the our XXXX

Our the X%, worldwide was X.X% up and X.X% and in respectively. inventory UK by America, North

quarter, by North America XX.X%. grew sales This

averaged XX.X%. Over our the quarterly growth year-over-year last XX quarters, volume has

have extensively total America in for previously We market. discussed drivers the loss the North growth the

rate we loss frequency. frequency such growth no and see total moderating, in is the While accident trends

did need yards our this and of for insurance announce and park in expansion program the expansion we wins see the non-insurance cat and organic accommodate total and both produced We by quarter. loss additional active in continued yard both remain expect growth market to opening new car frequency. continued to We capacity. the markets our growth not Accordingly, our growth in extremely any market,

development the under U.S., That South new in the Leipzig, you we'll one our and last we representing Wisconsin, X,XXX-acres Brazil Germany. addition NPA projects call have in quarter, Madison, currently concludes XX yards currently the construction, opened site for those the my after of Katy, close which capacity, new to each over back Canada and land However, other Germany, in to Q&A. Carolina, of the of in we in over XX Spartanburg, now turn Chiba, all have remarks.

Operator

[Operator sir you Instructions]. Thank

come Our from will question Securities. Labick first CJS with Bob

Bob Labick

on I a wanted step just take to G&A. back

materially certainly lot you a a and us I'll Whereas sales? to the bit profile You Could gave leverage the and Do operating know there, specifically. we given I a you you think how Has won't the guide you still numbers over negative last detail going of changed? significant anything on But there'd of just And few quarters? expect G&A get percent operating be know going line? back stuff. that volatility to transcript the forward go about little leverage through forward. should about talk as

Jeff Liaw

In to on We we leverage history, yes. do operating in as short, very expect our achieve, G&A. have consistently

you quarter, itself million legacy included the This sales as increase the the comp, on liabilities. non-G&A million the know, $X just tax $XX line and taxes payroll non-stock we on -- item,

true NPA. is non-occurring, of speak. up in we in acquisitions not from G&A there in picked in are And the that Finland growth the $X those actual balance and So for was our baseline the quarter. businesses million about the so to Then the

initiators as balance, Germany better into So we of can but we will income revenue. the add there we Western achieve will be do There do modest in and expect business than leverage, gross some that of in sort. the profit as we to on be in and growth yes, complexity expand operating inflation Europe we still increases, achieve so rest

Bob Labick

this the last I on And touched call. then, in end and think on Will

XX% of you acquisitions, in you've like much in you CAGR sense or you four close the car last Have reported haven't that the a but with years You land over have given lots know land? I up. picked kept volume. up in volume U.S. something of us how

volume have maintain the rate done creeps land, and if to And the up? up yards you with with kept the the seemingly is as have efficiencies not, so, I what guess question in you utilization

Will Franklin

years this, procurement, acquisition, when when very development in aggressive, our say here the as can't needs. I our and capacity We and ago Bob. though I excess rate activity expansion up, focuses of aggressive growth kept employ, say we plan is whatever our is world. think, I we mean terms have But a I our had that our dissipated. high of our and one assumption three across We capacity primary

developing we're to think that I So, number.

capacity But when that So, in you covered. we've got job. growth we're a I'd got rates, it question, construction. like we've we're we say projects to anticipating elevated an at it's pursuing, XX answer those CAT look your to additional big think permanent

targets I about have if would those being we think you'll two you see the pursuing next into, and a that and of looking at number the quarters, another in I of entered are XX those. we're say announced that contracts there’s

So, any I accommodate we're the to in well situated market needs. CAT as as growth the think well

Bob Labick

one last auctions, insurance for me, number as give I as rental build from those of in look the yard there's well. mentioned that? And milestones come you either updates other terms just Can companies think of in on that you another there should to participating us are you we there car and companies Germany. some or

Jay Adair

that give changed in of We've German in an quarter. market, the on going to strategy we're our update next and the you and some approach

today, I like this significant to talk of do. number two locations about we're going quarter. talk like we're got about we've what opening going where So locations we've to a would done. I what be to to don’t in

insured volume the auction volume. right is not update our reporting got locations quarter that. taking that do next then we're the from wait insurance that many vehicles, how to report and market fair be and to and of if amount you some when service we go to that are I'll industry. on build the large the bid, directly flip at where looking country They’re their on reached the noninsurance, now very vehicles. now, my Germany, in and is, end significant in and but you large auction month the them so and you the procured from had it’s we'll car market. we’ve insurance. I you Everything insurance market calendar committed my just at insurers of getting own our before them. procured those and on allows much the directly us that time And you handling that salvage to up year of that terms logistics out on Hanover. you Q, next a the we everyone to bigger have had finish right can But the succeeding in the today is by you time auction. said, and we’re saying the let's environment, and the come. amount These great -- in primarily now. the on marketplace we encourage auction strategy the in in I'm chance of locations only Germany to from in house give we're retentions is, you They’re where I’d to of we’re go in owner With we're a in else the cars the opened, has a to you creating retain tell country, are of place we So until example, the spending vehicles. And a vehicle if a handling insurance on over that look auction own approach volume that we’re may XXX the XXX% bid cars we’ve it we've environment environment company I but clearly where what in selling acquired doing we’re owners I’ll up a And facilities know is through market, the vehicle are end it. selling new as auctions, the you can getting the contingent can can where largest XXX of vehicle, online, All majority online, not have today

Jeff Liaw

Bob, And to on briefly point. that just elaborate

and indemnification German over policyholders the So function years. car the way markets insurance is sourcing provisions of its bars evolved from directly, have the the the some

are that sales Copart then to However, that’s we statement what achieving lead returns. to Germany clearly me better the

for as market our that the outcome. true ever, that and German So the evolution model is conviction the the merely achieve how remains right insurance Copart’s is Jay as described one we long-term

Operator

Thank you.

come Our next SunTrust. will with Benjamin from question Stephanie

Stephanie Benjamin

this to there’s the the about quarter. release? happy Of I the do schedule wanted you easier. or and offline in was based want out I if think go non-recurring press make in mentioned just I one-time back And what am $XX it operating But sorry, and overall on I on in that follow-up G&A, expenses. that’s the income the that, I'm non-GAAP correct broken million to that. in getting adjustment sure to just

Jeff Liaw

numbers in In burdened post see profit walked non-GAAP Otherwise, non-GAAP depreciation the million the that schedule, through. for the the you have of just everything $XX.X reconciliation, that pretax quarter. but the I and amortization gross you on a tax basis,

Stephanie Benjamin

of you expect occur, not and time million income forward… going had $XX the we said -- one that So operating to would really

Jeff Liaw

Correct.

Stephanie Benjamin

is Brazil. next My on question actually is just

just couple more just market, end this cause that think has something be the on there, that the and comment I your months think be -- market a very that be to positive and almost either a the in in color changed Thanks. contributor. there contributor? materially like more larger or from really meaningful of to Is to I that helpful? last seems going it’s there Or standpoint just would

Will Franklin

in And need the Brazil, United brand and your recent. There’s saw yard with we new expanded the think we there's gain that insurance while only simply better that processes, north not a here reputation Betim. kind grow, States. south to in your than build companies. in the we're but volume in, to a we in a everyone it And that I the of our opportunity the to it Recently, reputation, entered especially in be that business, just we have the market. because market byproduct returns think we efforts. have And recognition, starting just we we grow added It’s through think Curitiba. of kind you and operate change, in wasn’t we out kind takes the the think And provide our you and XXXX to presence and team of will it's to the growth gain -- re-marketing that of brand take our we highest

Stephanie Benjamin

will Or able the should wait we should until contribution or how And in that? go provide I around -- Brazil top you the XX-K? be or Or percent by percent, the had quarter? the to

Will Franklin

that we it the in number material sized won't respect until probably to becomes haven't We respect a total. with and

Operator

Thank you.

comes Kennison Baird. question next with Our from Craig

Craig Kennison

a assumption change mentioned you a in of change more and think I there. that some in issue Can but you on decision? small light Jeff, assets fixed shed lives the

Jeff Liaw

Yes.

So estimates. short, in placed million on in change that assets newly are, was in a expenses this depreciation the one, substantial based charge in two that, in management on profit. in change certain as the charge commenting is there and associated with well burdened with as gross useful service And a up total $XX.X depreciation yard shows and non-recurring lives, drivers I

a We number so harmonize and of facilities adjusted useful accordingly. to lives have with speak, them them, different and we

an you not quarter. the So charge would see is ongoing for basis one on that

Craig Kennison

understand I guess of the lives. decision drove trying And to length what to that I'm just change the

Jeff Liaw

alone, acquiring years developing including Excavation. as have it, in in past significantly own in experience we our our in-house you few Bright land team own think increased I with know and the

the two -- improved significantly our available understanding think years. over I the has of So even have to our land we our even past information us,

that awareness us caused bear accordingly. fixed that to revise those historical numbers certain bring of and we to reviewing when asset ledgers, So heightened

Craig Kennison

period the as the in about and revenues the here? through year. of running of Germany for maybe there acceleration Should activity think we costs And ahead we anticipate end of time a then

Jeff Liaw

of from think that I just perspective the would the I you not be P&L, what described. the pronounced effect overall think Craig, of

will that we meaningful There'll contribution. costs on I the is P&L. previously we when there are see have balance with costs the moments that moments that in through the from we don't of true drag on So ahead opposite invest when certainly your a the think would -- the be you when contribution be flow when we've connection invested. see perspective,

Craig Kennison

where buckets give out capital? you with respect spending allocate us lay expect Could your and just plan the some of in for to then And bigger to 'XX, you CapEx. fiscal maybe CapEx

Jeff Liaw

'XX expansions. in dominated CapEx by to fiscal capacity will be continue

cases be the land and developments So acquisitions. it buyout. weak some In will

for rough number you or CapEx would in as that have And continue be the of been years. We largely expenditures for few so expect our say I know quarters capital the past up to So past over 'XX. fiscal think general, been eight the our into over has those. that capacity, XX%

Operator

Ben Instructions] from Stephens with Bienvenu [Operator next Inc. question Our comes

Ben Bienvenu

things I unit. revenue been ASP some of that But also contributed being doing has for auctions. guys strong wanted the Obviously, growth some been have you really to to the in here. time you've about talked dynamic ask around It's about that. per

of to, you So that reflection because market? to extent ARPU a how is the of decisions the delineate I'd And curious making? from external guys factors, be of the are you can, much increase that is between much of how

Jeff Liaw

I happen Ben, really every fair, those variables both we they with would like would be because literally to to concurrently be hard isolate, auction run.

extent. at we for what as but we you do used look the we do either. the very some effects are not year-over-year car up isolate both that prices, we've been that market tell XX% can't But meaningful opposed or I market So what to would strong certainly is have what can as we they're to either they

function some our member management. there strong, is of some innovations, being the function also our So meaningful of but marketplace auction recruitments, our

Ben Bienvenu

around heard hear curious your flow? just fits more update bit be M&A cash about follow sometime. use capital continues think we to you little of M&A build curious your just And then in in balance you an up be on allocation. make just about a to don’t the know But plans future future on my around of Cash the prioritization I practice how I'd buyback. talking And I'd second of a haven't sheet. question for is landscape

Jeff Liaw

M&A certainly a growth fair and past be markets true, Ben. that It’s as in there are limited going UK been forward. the think cases, some driven of That acquire the has are and in Copart's U.S. which know has question, so said, in forth, to more few It will continue strongest, you I decades. our opportunities I to think business. company. in a part And the over we core journey

the do it isolation make our that to of acquisition one, kinds from the have we always we as revisit to that, this hurdle we generate financial in to has topic like as sense time-to-time have that; Beyond initiatives to into that’s to on our expanses returns capital the is strategic future dovetail it that expansion likes, with spaces. Copart well and Europe additional that going whether expect; has broadly, secondly, or in international and Brazil,

So a these that this M&A all of fact, But reasons. changed will calculus until future for all. as rubric at kind of know, well. hasn’t that We the part largely be Copart's after won't as on comment you activity

Ben Bienvenu

to future Or or lot either acquisitions have out targets as a the we have can are A about build follow-on that to well? just think made that And you capabilities business bear geographically When you that. from time-to-time fruit building your bring quick looking Copart are those at focused. been all you potentially of organically? guys for elements capacity historically capabilities, of

Jeff Liaw

The latter.

in Powersport National extension June last year an sports acquisition into illustrations, power we XQ So the clearly an completed arena. Auctions, non-salvage of

via our per capabilities And Germany even calls into as one acquisitions of listing you is the acquisition first of describe that services well. which was the in in or heard organic conference Germany, prior foray addition the se. WOM, on So connection was us not with

sure. reasons forever, and salvage from deviates beyond we extend Copart’s what characterize we as those time-to-time, much M&A traditional business to for have will if it have I of hurdles auction day-to-day what higher we done that the have just our would activity. But we know course in be more described, from So still

Operator

Thank you.

Our Jefferies. next comes from Bret question with Jordan

Bret Jordan

and the as in here, the were a think up think Do business Germany, vehicle your the result Germany. I forward? of is going purchased in accelerate going we as maybe I partially the gross volumes you guess to about think purchase we margin we accelerate early impact As comments, from mix discussed

Jeff Liaw

to -- be I think Bret question. And I a it’s think fair

I that we that's our we to want I that business way to to profit. maximize particularly a margin but were purchased fair, that run as rate, sophisticated we volumes wouldn’t contribution manage be and way. the would depress the nominal think increase understand where to car -- don’t the business

we wouldn’t one… we think this like And calls except when terms up on end so those in quarterly

Bret Jordan

going wondering here? to rate. forward try Germany’s acceleration to Well, that Is be your as I think going project should you was whether just margin meaningful about nominal from we

Jeff Liaw

off the cars the model improving profit to was that buying very more for we I let market Overtime, think comment naturally On more day, we’ll on heard remember consignment so. this the Germany say, you call lot do ourselves, proven auctions, to most have first, were and in as all participants as until whole a me heavily it have generally. new both I at UK, true, when to example, better you specifically, in notably. evolves Or selling often that various to counterparties in achieved purchased generally, a But that liquidity we’re Jay them the achieved Germany The grown and when spaces, market, today say we’ve model the into Copart true more than tilted may specifically, we one. On have car the liquidity. through and back consignment. the is opposite we we from the the compared purchase on in next the the often has generating expanded, model

the -- to store locations. and is a spaces, dealers NPA tremendous a So in when five credibility footprint, those example. five United in They among another we has States. around so in NPA had new speak, historically are growing had

few will markets prove Germany their And true As and model? international be be Yes. as in to initially other those well. the beyond will bikes same more they expand geographies, they could buy in true a

an But near have purchased purchased But overall or I will outgrow will wouldn’t two it analysis. lengthy paragraphs as that could cars the consignment cars, for sales effect. overweight per think about that I So yes, in future. the

Bret Jordan

a question. then follow-up And

prep spent incremental be there or million the guess some will storm. Is offset the volumes of have that the out way? they are Florence, loss? will think cap that be I like that sounds about commentary that may around -- Will’s may I of of impact coming So and to -- come And Or the light the from that an Florence? come that incremental expense. to Was expenses there magnitude volume along $X.X

it’d $X.X that So be than less maybe million.

Will Franklin

coming start storm. of subsides what too that. early assignments prepare water come to claims million really have and spent we just the was quoted I the It’s When the The to then for we’ll all in, tell. that better a picture in the $X.X

there’ll of and other the months. follow-on next throughout weeks to So course be expenses

Operator

Thank you.

Research. next question Barrington comes Our from Gary with Prestopino

Gary Prestopino

last impact year? inventory U.S. X% comping was You against said up Were year-over-year. your you the catastrophic events of

Jeff Liaw

August Hurricane year. it of Harvey last hit Not largely,

likes, So mind. the ones might had the not have events, you hailstorms July and XX, 'XX but some catastrophic meaty in

Gary Prestopino

is should and for impact a time seasonal a accidents. So and a seasonally read ebbs it's just we this more but slow more it that that? of way flows, Is

Jeff Liaw

year-over-year. don't would number, a I seasonality, even this be I think The the factor into year-over-year think but set same should

Gary Prestopino

the And of next about then said a Is I was that around for year. off you think XX%? decrease said And your that for tax something you rate then decrease X% somewhere XX% X.X% year.

Jeff Liaw

of the U.S. and stock And XX% the rate range would tax XX% XX.X% to Yes, option U.S. fair tax for income, in XX.X% XX% let federal stuff, income foreign federal The 'XX me decline The of lumpy historically 'XX. big company. includes fiscal clear like. blended XX% for the 'XX and on fiscal for total includes some that state I that been includes like about fiscal the perhaps it. the exercises, the in portion our through question. rate U.S. our approximately normalized would is point the have in 'XX income company is XX% the will from that that fiscal which to specifically taxes

in our rate will that lower tax in meaningfully itself somewhat So 'XX. fiscal and of

Gary Prestopino

in give combined trying -- I the and you basis quarter? your was then unit to me the a on then international, you in U.S. just growth this just write And and Could down. could

Jeff Liaw

XX.X% international, global U.S. XX.X%. X.X%

Gary Prestopino

that couldn't And XX.X%. this down U.S. then lastly was up of we're you scrap? change to write about I due on ASPs, said your How much again. the

Jeff Liaw

to pretty was up. tough was it scrap up remains quantify. how year-over-year, scrap The a It's healthy We you can XX%. environment, much tell

overwhelmed sometimes the of on business. importance is our perception little think I a scrap the in

$XXX just So is total if ton. and just body of passenger that per sells, typical car sedan half a number the usual the you a consider content, ton crushed the car Copart has

in you're thousands for of that if of for sells XX%, $XX it's a is or dollars. to of a But car the about So change underlying talking car $XX a scrap thousands. the that $XXX scrap content for sells even car value up

but that years don't I think the that the value that [indiscernible] the XX on that effect meaningful scrap no scrap imagine that a road. of on and a on I contributor, vehicles, when it it's it’s had from could cars back. -- back be in particular I that rebuilt the So not form, to done matters theoretical you matters, expected is brought portion car will But now lowest our virtually end some think In ASP. suspect nearly it's

Operator

question next Chris Our comes Instructions] Research. Bottiglieri with Wolfe [Operator from

Chris Bottiglieri

different And of and the maybe whatnot. you what on all. can metric, think thought sub-segments, cars it I last wanted the metric. quarter quarter? rental year-over-year, details, that I comparable I dealer first descriptive collectively got you've and not up were kind I'm But this am them But you the was I misinterpreting sure give given these XX% the

last what If what to you're provide space also and the aggregate context had just you're quarter? in some maybe how growing, done whole that doing that's car

Will Franklin

also platform. fruitful cars have in to turn has to market. they found for and buyers. to that their had. us finding specific through us these of just test more terms provide be I that and can sure developed in egg, returns, auction to general. I re-marketing And our talk and higher increasing questions for types buyers the numerical about allows and allows our different these -- ask process, mean, who in we're more that which them cars, We've of tracking returns, segments grown those of that not the we're the programs you which I'm approach it chicken types

different have different a program a wholesalers, have have we a for for financial we may we sellers, for or So program or separate program equipment companies.

those their identifying needs our and processes through technology. we're our so addressing astute specific and more And becoming in

Chris Bottiglieri

decelerate, Did Let me you've simple makes dealer what question? rephrase last cars it accelerate or it differently. growth your quarter the in and done

Will Franklin

accelerated. it think I

Chris Bottiglieri

differentiated service I your to think dealer of lower think and much how just Accelerated, product platform the holistically capabilities your is that longer and your bit pretty the lower like aggressively. -- growing and can that And about maybe sustainability about what's right about then you're and effect given you little is And now. But growth? consignment? helpful. as would we are you a growth that’s how strategy, this think Can how talk incumbents compound driving relative you than

Will Franklin

We growth think ahead consignment. in there and us is of of terms a long dealer runway

resources think of and to are who in refining the our processes. results. or first more happy the we're utilizing trying of with I I second we're inning And the sellers that And think We're game. we our the adding this this pursuit platform think volume. very are

there's robust dealer a ahead with of So I think to respect opportunity us cars.

Operator

am Thank for I you, sir. remarks. time, this turn over like questions. showing closing At it no further I'd back now to

Jay Adair

the everyone Katy. in to call. look November. thanks for forward on bye. you Bye, attending Well, QX reporting And we Thank

Operator

your for thank teleconference. participation. you This does gentlemen, conclude and Ladies today's

You may a Have now great day. disconnect.

Copart (CPRT) 19 Sep 182018 Q4 Earnings call transcript