CPRT - Earnings call transcript Q3 2019

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Operator

Good day, everyone, and welcome to the Copart Incorporated Third Quarter Fiscal 2019 Earnings Call.

Just a reminder, today's conference is being recorded.

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

Jayson Adair

much. so Thanks and for everyone, the quarter third Good welcome call Copart. conference morning, to room Franklin, In and is today the Will Chief Officer. Jeff Executive Financial Liaw, President, Vice

hotel. We from are a calling

It's items exchange hopefully, our our kind and just So, the Canadian Copart's a at is customers, board. week ideas US on about technology annual great hear industry us a can us chance finished of little for and echoey. working you information a that processes on. We advisory This and we're that our customers okay. to invite and working

So, I that the some morning, share it's since got great been you of conference. some a fresh week. completed we've think we this just with that And are can facts the quite of we

over me Jeff it with let So, that, Liaw. to turn

Jeffrey Liaw

I'll start with a always as Safe Thanks, Harbor. Jay.

tax yesterday. these Investor gains GAAP basis deemed call, today's the presentation above. strength is financial common our tax and taxes and with both link the foreign measures of results taxes Relations net believe exercises income XXXX-XX. analyze of relevant most losses, in we'll diluted We've including currency shares press stock of and and on and ASU on discrete reverse corresponding the non-GAAP items, We equivalent under the provide non-GAAP described in of non-GAAP these a to non-GAAP issued the related discuss measures includes performance. measures, Copart's the income release non-GAAP impact business to measures related option together from a financial income per website reconciliation and During directly income comparable adjustments our assessing repatriation the payroll our our measures, effect benefits GAAP foreign We GAAP on which assets, certain earnings, share, certain of disposals accounting to for non-operating on

that statements comments. could contains from update or subject this differ to substantial cause the be not time uncertainties our time materially forward-looking by do meaning undertake are actual to which those statements to and federal our risks behalf. We securities that addition, to laws statements and results from within call projected on may In made forward-looking of any implied

X.X% and versus pound the grew year-over-year, US sales the at US increasing international XXXX. of the Germany, a primarily the million, real. relative XX.X% large with underlying also grew of million units growth levels service rising like rate it our strength to the dollar our review but and company the a discussion our could global related more top context. an the operating gross turning in remarks to revenue risks revenue on another performance analysis business, reports $X.X that provide the in experienced revenue, currency We and before over record please effect of of line. portions additional third profit the and SEC. We XX.X% growth affect the of on driven the in revenue and UK. XX.X%, for brief the discussion third Brazilian activity with by complete periodic management's Purchased starting Will filed financial with our XX.X% quarter year-over-year in For our despite Franklin at cars quarter markets I'll at principally units achieved income, in X.X% unfavorable Unit increasing of $XX.X for Global or due versus year-over-year. the quarter grew by

segments. again further growth the in and growth, by will both non-insurance of Will space. underlying the unit particular US non-insurance driven was insurance Our in describe drivers

to of year-over-year in XX.X% grew of the third comparison inventory global the XXXX. Our fiscal quarter end

a is to rate described of again XX million. a a reasons points. $XXX.X by XX.X% Moving a slight shift moment basis ago. decrease from the slight down to the approximately for grew we margin experienced P&L, purchase gross part car for to mix volume profits, XX.X% gross from This million change on XX.X% driven We in $XXX

we purchase as expect about price As as calls experienced and purchase also talked a rises, for because percentage lower prior average our vehicle vehicles sales sales a in price contraction the we we margin. purchase well, in rate margins basis on

of continue slightly general as from and to experienced increase mix to and to then, – particular, the value Will Some approximately and the percentage purchase in to also sequentially can auctions quarter. that what cars average year ex for. are vehicles, well so our Copart will selling on Germany vehicles administrative the $XX.X expand provide themselves to – higher of cars literally more the base. margins. the second our drivers member depreciation, moving for XX.X%. as stock down prices is a million expenditures, million the was Overall up $XX.X nature Copart's ago efforts down on lower Again, year-over-year therefore million versus sell this and We $X turning shift cause our context average the of P&L, comp

we G&A over quarters in As the or we rise believe inflation, growth that topline we operating for as G&A but have will to continue we speaking, given leverage say experienced. that expenditures we which declines, achieve experience rises generally Copart in time can

overcoming relative $XXX.X the operating of of third effect and to $X.X in to million year-over-year the of itself quarter. GAAP Our grew $XXX.X income million currency or decline from million growth a XX.X%

given balance. ended nonetheless was as the with in third up connection $X to vast over stock slightly quarter second $X expense revolver majority on with repaid quarter the of a repurchases. revolver a million slightly net drew from drawn during we interest million, late QX our and $X the the in average million quarter our higher our We've net balance balance Our

our rate part momentarily, tax calls is income a US fiscal of tax and third of beyond. XX% income federal – GAAP rate taxes X.X% quarter of lower in we've to prior rate on Turning the reflection discussed XXXX for tax

the XXXX had implemented tax may post end XXXX. were fiscal period and at You that bill we the reform pre was recall that the months which straddle in calendar of in both

as income tax benefits discrete returns. rate tax option as option of benefits exercises tax income and benefits from filed earnings stock previously recognized result well certain stock see tax a reflected as discrete The quarter well one-time exercises as amending non-GAAP income in our you'll from those reconciliation. items income related to items, third The

$XXX.X to net increased income XX% or $XXX.X million GAAP increase then million from a Our year-over-year.

Our non-GAAP net income, to XX.X%. million $XXX.X grew we of from growth million, $XXX.X

an that As the taxes, again tax business related in I these international from our income. filed underlying current $XX.X mentioned excess the of these tax appropriate excluded generated our items non-GAAP We exercises believe to net option returns. are of a from discrete These adjustments income previously mention include for and moment ago, were period deductions million last amendments payroll our benefits by our businesses. rate stock performance of that The tax excluding note reflection on well the burden. I'll as earnings as non-GAAP is run tax

of in Germany, and second we the to of you detail the the it. first much transcript our particular on earnings For encourage quarter our calls approach where to markets nature review we background further and describe in greater

to tenfold We there substantial our than the volume investing have in quarter of in of as comparison year-over-year growth in in XXXX Germany third experienced continued progress our in third quarter more the XXXX. Germany We've in are well. increase and future

our vehicles service practice of and at continued Copart's Germany them selling listing our through acquiring have our We auctions.

carriers of the land multiple a and generally in development operations technology, participation, shortchanging developed German very and on recruitment We're of internationally, similar processes, thesis Copart to auctions our logistics strong today's of including continues the German buyers know fronts, to prevail we outside policyholders Germany. power our support in have model will pleased other to particularly our ultimately Leveraging with our listing the progress that and is of high-quality that talent economies as our service well. insurance seen that there. experience Our for matter Copart model Germany with support

sheet, of currency year-over-year Collectively, Germany, international Those Will the to here. Excluding additional performance $XXX.X British the course, the attributable Well perform flow XX% excluding buyouts, lease now a the a international $XXX.X and of color to headwinds. will despite our of experienced businesses. well turn capacity continuation revenue of and years. to before in was Will, CapEx I this Then to we Germany, profit quarter, it businesses are theme growth million. cash our balance flow expansion and several businesses over growth, million of like. CapEx non-US generated growth, pronounced operating you've on for Brazilian continue our for have translation provide underlying cash unit Franklin most headwinds, with or heard

Franklin. consumed related With We facto turn million the We quarter. debt option cash over to of that, connection exercises. of facility EVP, on our as stock it de the will also Think exercise $XX.X third repaid owed to our taxes of with buybacks million $XX of in Will those revolving options. I during stock

William Franklin

insights more some [indiscernible] third performance. Jeff. our you, quarter Thank into

Hurricane quarter last X.X% volume by second sales grew In worldwide our for worldwide and by by the increased XX.X%. our inventory XX.X%. activity Our immaterial was this X.X% both and sales volume grew our inventory quarter by US, volume and grew the year.

not Our total that a growth expansion insurance by a measures of wins of quarter result volume the the for total This estimates total which in increase we in same market driven, of ever quarter of What within repair companies loss our the estimate. loss growth the and without suggest market, X.X% cars the XX.X% metric growth Published be into insurance instances to market is Organic last an over statistics increase by the reflected salvage salvage in first continues is in this metric insurance segments. is believe, organic an increase calendar within frequency. the written driven continued market year. frequency losses. in XXXX, percentage in the writing noninsurance the

trends that frequency scans repair in well than cost leading that inflation. conversations a of number the the particularly are the cost. average the and higher We as believe market trending by pre repairable growth in Repair rise with the of and replacement as to the and the us and repair MSOs executives cars. believe exceeding the the capacity of repair of trending growth An costs, the insurance damages increase lack less published. total for company post three repair assignments identifying, new and they're are cars, in is loss to now capitalized a industry current rate consolidation supplemental of parts, simply lead at that all the to is Our major

car for worldwide supply. available the returns continues industry generating returns that are generate combination far increasing, and The auction to platform While the of exceeding rebuildable used up by cars sellers. we're up as the so X.X% is are car our quarter XX%, used while overall the index marketing our for Manheim efficiency our represented index. as are repair sellers ASPs last of outpace demand over to same year, our returns, efforts too our to the to costs VBX continues Compared Manheim

Our international on marketing a bidding lawyers. from activity growth led to buyers in those focused has significant

full website US languages, is we translated US, the XXX of countries. countries. the elements to XXX translated Our into from sell website into native seven into with certain And languages

an car buyer. website Approximately an at value In terms of buyers. nearly buyers received international of share the of higher of our sold, volume, international sequentially. and generally our year-over-year vehicles, of sold X auctions, rebuildable, sold therefore and from through our represent both sellers increase of Because bid all auctions, US XX% US a Increases they the are vehicles higher purchase and US both now again value the sequentially. X international units out approaching year-over-year a still XX%, all

our base. We continue grow to buyer

been also on bidders driver US. base. While saw might international in The in for already which mature unique buyer we increase we revenue growth in and saw large XX% a is per growth we rate a remarkable year-over-year a XX% unique in believe consider increase a has some what bidders, a in the primary basis, ASPs increase the domestic in car

The loss In and first more more and our but of to focus are to year the of scale our the XX% auctioning franchise wholesalers. fleets, markets salvage and car the quarter quarter last charities, It in industry perform certain quarter our be companies, heavy our this because of addition, equipment There growth insurance tasks of strategy that same markets we US non-insurance same These of finance US. compared technology. volume years include overall ago. continue can to XX% services and efficiently to we dealers, two customers. a our between represented broad and leasing to, knowledge, XX% continue contribute independent provide notice our

in XX% respectively. and by last Excluding wholesalers, our quarter these industrial the volume increased the growth and US, and the in year operational grew XX%; focus market XX%; and car up in generated same growth was for charity was over We same seller X%. dealers and segments. fleets volume sales our this equipment, the the XX%; The two to broadly growth multiple from companies, Volume segments. returns quarter non-insurance spread years XX% rental marketing, across and of ago attribute

in allowed has in share land Brazil, growth This Turning the auto declining value and conditions after written insurance by to with In that adjusting year country. to remain the our UK we and EBIT Brazil, process remarkable terms international in operation, respectively. country. the and us the due our same considering consistent we growth market to local relatively quarter Canada offer for XX% see of however, revenue performance technology, the of continue fluctuations. to of policies terms EBIT XX%, currency currency volume is expand as and In and last our XX% revenue in economic of that meaningful and volume, grew the number

the which quarter volumes provided sold X.X% in the like are Germany. commentary to we in business, on non-insurance already X.X% year. Jeff growing total the same Additionally, Brazil, our of compared US, has represented last

in to the to cost Our of [indiscernible] UK We inventory outside weather we're labor, affected average other beginning for an is at the which and significantly of seeing our than insurance car. have was quarter our unusually sales XX.X%, attribute process growth that all Year-over-year, the in each difference higher an the X.X%. assignments EBIT. the of and costs, volume US the mild in quarter. which operations both of and US up led remain to rising revenue Americas, the globally, and In immaterial Germany, health increase the

three continue XX%, and expect standalone our this However, of over growth To growth and last the be East call, in the provide to Kentucky Fredericksburg, Copart Greenville, robust. to Mifflin, the the expansion assignments accommodate The have and and NPA Pennsylvania, to over first in we trend month along we have been West last and new Mexico earnings XX the quarter inventory Sacramento, year-over-year four this facilities, California. of has after capacity new continue. our US Gulf the opening we facilities continue of in activities. announced averaged quarters land the Coast, Since new one and Virginia, facility

Austin these in over storage Chicago, and yard addition, total, existing we expanding have and New facilities Copart new have In XXX added four expansions Atlanta, capacity. Newburgh, three York. yards of In acres

phase XX US, Germany, in and in in we Canada, phase. construction X expansions proceed now millions announced XX new year, the Currently, and the have XX XX XX and hundreds yard concludes this projects new call. consume far So this That in in capital. of to facilities, the as US. yard the in of alone dollars projects well my in Canada, acres of session will over each capacity in and and expansion of projects and the These the engineering as Brazil X yard US thousands we have of We'll comments. Q&A represent

Jayson Adair

Operator, it you please. for could questions, open up

Operator

Instructions]. [Operator

Securities. Bob Our first CJS Labick from with comes question

Robert Labick

nice a on And congratulations morning. quarter. Good

Jayson Adair

lot, Bob. a Thanks

Robert Labick

I So, buyer on follow-up comments thanks Will's international for base to some first. wanted of on the that color.

may I with the US of just a the of this changed drivers sort but was about And question. of which have getting would more years important into or base the that anyway, three to one sales of you salvage market market? sense that or have is probably led the buyers wondering of that us if could just in the part, talk have the for not percentage some this may five give that second you, is more international then, where in ago, You be part was,

William Franklin

and we customers length this this discussed Got a And at with some your actually is appreciate it. week. Much addressed our question, topic Bob.

shift major are drivers think underlying two the of ones there mentioning. I that worth As over time, for

the of auctions. observing The course, first higher rebuildable a huge vehicles, there economies, and like in UK. the is of that, economic demand And, more just developed from Copart we're is coming outside the natural including therefore, growth lot for cars countries US

total loss of the is second The nature frequency.

think industry long I for following the been Bob. a time, you've

even rebuilt. a easily the more from that was today because ago years know cars XX% much one car you what looks very damaged today are So, different XX

damage US. places technological that Some the simply fixed be of could more in the outside be may modules

ago XX-year the in that's the as well. with with recently So, more really years arrival the cars starting and been XX, technologies of trend airbags newer many

So, activity economic therefore, the a penetration, higher with number combination countries for these as and, two, nature growth, in of much growing demand changing economic the lower vehicle one. well. And cars cars of but number

– go really they going cars many nature. in dismantled time, easily, misunderstanding one the that As as to I fundamental international them parts dismantlers. of cars the not probably just of to increasingly Over only more business, told value this are is to that's rebuilder, assume have

Jayson Adair

me cars cars the foreign rebuilt growth, to and as add in are same that markets rebuilt generally one markets. Let standards in that more are to that domestic element is held not that

For example, the or replaced airbags the at all. may car may in Eastern Europe not have

in them vehicle. of of So, terms that drivable a converting cost that to gives car lowering an the advantage

Robert Labick

great. younger believe super this about the kind technology middle, what Okay, cars a et you early give do if and damaged are late? that of you. you cars where And and Where sense being the totaled less cars, And just is cetera, in innings, Thank you've being several going with wondering just centers, over of and you we us stands? sticking process. less trend trend color. then, are to could of damaged That's the that calls more totaled, think talked into younger

William Franklin

there those serves loss the of slow business sense the being general reflects base the growth. in it in literally a year. of our that month Right? quarter and are Bob, in nature matter, We're the cars million road, So, that principally think insurance the cars installed frequency in driven million, States, I total moving, as is XXX big them. registered step aren't XXX the insure any course, talking or function carriers, who United or in of for about changes or example. And, vehicles therefore, the cars given

I don't those think So, are sudden spiky changes.

change it's think has gradual I generally for that been now. favorable a one decades a

that involved think collectively, favorable precise the ultimately for the frequency. in totaled, age age loss But, be vehicles fleet are of expect changes the total will and changes. As of don't and the dramatic we precise to accidents therefore I

Robert Labick

And if it. one one, then, last quick Got I Great. could.

sense just on to you switching if as holding now was getting it could on the you went volumes increase right is tremendous. the The any Just be the a worked or what's about from know need Or tenfold out last or model, I the over But Germany, the what switching I addressed? the impediments to insurers us of two them do feedback quickly. specific give in to of, you're Copart to of there things or that near year still Or they of on just model? data? is need hopefully you think towards from if Copart end guess, kind a

Jayson Adair

great on a question. network we're year It's built. focused fiscal for was what Sure. now, this the Right Bob, getting

be So, longer carriers up we period as have the sometimes we the would to where results in two have UK, tow US, in but in the in Brazil now. the picked or we've we explain now, I And got vehicle opposed I of say a network the vehicles. time. We've can best can that day have that in to the in a hours, assigned within that way and a the team We're the got trucks achieving of place. we're facilities place pressure-testing is

or got and some of carriers performance swinging going already, have of out we've working all in a should. big not getting operational we're place it we the the we accounts everything are with and swinging the very fences So, – for until but hitting large couple way do

the we with testing. it's be a switching that. And But pressure some we to then, going have network, everything speaking we the before and team, this out the to year, building will carriers want perfectly do about over working model. process So, of

at one really get You shot success.

Robert Labick

That's great.

much. so Thanks Okay.

William Franklin

Bob. Thanks,

Operator

with Our Northcoast Research. from Healy next question comes John

John Healy

was and, started rental from these of even with Curious non-insurance convincing guys you about all that be win think sending talk you're allowing non-insurance business you covering the to about more are and just anymore. car some consigners cited proposition that not fairly clearly, really to bit to it's And I really that a that company, first And interesting. you up. could message was little the with getting impressed to hoping the you're share specifically, you you business the in charity that what's used work kind When dealers? to the value industry I of decent are guys Continue know, the how growth size and or business is how I putting what's you?

Jayson Adair

your for thanks question, John. So,

particularly think, I short, or marketing. just messages about about in it's fundamentally not It's returns.

international vehicles. base, a including of and rebuildable drivable we buyer So, active buyers large offer of quantities

And proven think And to results deliver so, I it's persuasive. has we particular dealers that mentioning really the non-insurance that net be auction in to you're can the segment.

logistics we So, returns quickly our outcomes after it's that to the do we and those silver-toned particularly demonstrate week and week any and their so on part. for generate really infrastructure to them . It's not can on communications with that month deliver the after just better month vehicles

William Franklin

just add me there. couple of a Let comments

Our are a ability of huge our returns, be in that part to successful market. obviously,

another send we the thing cars. think any aspects eliminate the friction and ability us to operational ignore is these I to don't that

or dealership. different. own cars a car And operating of Charity their [indiscernible] is significantly coming them franchise have each which these one equivalent a completely from different systems. than is of different a every segments than So, completely independent

they to the extent to we need continue volume that operations the can their our So, testing send they their extent to it the into they it process, volume. increase tests us to to likely to have will that needs, on us. more their systems, that specific be And of we that been such results our accommodate the makes the that change integrate

John Healy

estate ask real then, wanted to investment. And Great. just about the

you kind do there? ahead than thoughts investment. that to you more about of XX that kind or you guys you're And projects you're pace months on of kind investment? noted expect or of I thinking maybe Any estate underway. how Just XX updated tie up. of to the think, thought XX Do last call, real that

William Franklin

no is project slowing of be can these in There Yeah. or terms project the expensive two period markets. of we volume so these very the because especially years our And properties far years five out gestation – down for three expansion [ph] some out reason in with new easily, we is needs.

our decelerating I at years. see or don't next point so, activity, the any in And two three

John Healy

Great. forecast guess, of hook And, that kind to kind obviously, the mentioned I just I'm there, five-year in out volume your estate, going on When five-year that of that correlate building forecast for you to are the Will. of you to terms going real needs and capacity. it's in

when forecast, and those don't needs the guys So, know different what seeing forward, in or buying thus market quarters targets. as you're in a lot you're So, globally numbers you accelerates the like are the at guys you meaningfully look growth you think have business? I today? look you those growth the forecasts year-in, the But than movement about that year-out long-term put the think decelerates up does what far or of your volume you've kind last few do

William Franklin

I I'm really to exact our can though. tell numbers. this, share not So, you projection motivated

a couple the our have to [indiscernible]. And auctions We every have our absolutes of is One day. run auctions do. in

auction [ph]. our four, on [ph] sites is five KCLO or three Our Xs

absolute land. is The other

have We to land. have

land forward. really can't our we going So, needs under-projecting risk

very to are accommodate growth we land in once that And capacity the the so, again, our we're anticipating. of pursuit aggressive

John Healy

Understood. Thank you, congrats. And guys.

William Franklin

Thanks, John.

Operator

Benjamin Stephanie SunTrust. from comes with next Our question

Stephanie Benjamin

missed My quarter? or unit give in if per during total? Good first Did that And a question the Both know. just revenue the is I I you morning. or the it. apologize don't you Hi. in I internationally US clarification. saw

William Franklin

the our secondarily, driving the to that No. about and, always We talk provide a don't per of are car, our ASPs revenue primarily buyers. in providing we're increase that and that We that up sellers couple metric. levers services higher did our

Stephanie Benjamin

bit the remarks you And maybe the at kind investments. side of be forward? some speak technology of and talked technology can congress maybe about business Thanks. had in little the – we the your of and a Great. that opening potential done you in the this you're you've week last looking your But as investments about in what terms could more of move or then,

William Franklin

Sure.

simple. process selling companies in So, very reality, complex. the that sounds through But the it's go fairly insurance

lot in have You process. a constituents that whole of

insurance the got company. You've

got the You've policyholder.

need of an appraisal both which people. be by going estimate, repair can You're different to and provided

have a payoff. lean can You

and we in dealing DMV. and with And You're information in work of the coordinated to transfer every these sequenced the activities with company virtually order. States. the be United right need insurance And all

And able insurance companies of developed technology practices smaller too. best ones companies. those so, offer the generally, And and we're take those to and identify The all practices and best to technology around practices that best insurance the advantage it. will large will

So, your flow us allows to technology the flow to the that of process flow question, documents, generating the answer information, around of we loss the of the integrate our total process.

Jayson Adair

say pieces. think about technology, of framework I'd Stephanie, three in of for the only I it Copart thing I'd add when it, think kind there is,

our the in the technology about, better at the side. their data better own integration first decision-making that's right from to The that and processes. customers providing is we all importance of faster talked helping time their enable perform And

to for technology perform us of better. help is aspect Second us

different own applications, to different help example, have thirdly, of technologies, manage our towing trucks us dispatch efficiently. we reliability. network technology better, course, then, that And So, for enhances more our

You heard an auction our lights for Will which parlance talk about the keep investing KCLO, to is reliability. in on,

well us serving that continue serve are investment can well. customers. growth of as good we to to we make sure for prepare is our And technology so, to a our that the part

Stephanie Benjamin

the for Thanks helpful. color. really That's all

Jayson Adair

Thanks, Steph.

Operator

from Kennison comes question Craig from next Our Baird.

Craig Kennison

a upcoming to you've trend national of insurance prospects? a And dynamic the With or would big then, with has Germany? insurers. landed what's are taking questions. in for RFPs. handful mind, very Thanks there? I that past RFPs on contract Wanted morning. renewals RFPs there years any side large good or the Yeah, with in new my that stabilized? so, start know, national contracts five in be And Are additionally, with there the any the

Jayson Adair

Got for question. the it. Craig, thanks

coming expiration to their As same first business of bunch subscription like customers we're time. a a upon that at contract due question, has not your the

on literally is daily a customers our with dialog Our basis.

you've decades which the risk So, lumpy what we auction over a continue itself. no, heard lose or enables nature us share platform, to either and to of think or we expiration generally chunk us technology, our of today win business said, not now we big there all simply about in done That et for win future opportunity particularly well. by a the as believe and in the is of we generate, for returns will time, market have cetera, contract

posed altogether way issue is changing done a Germany, insurance by isn't someone question business It's about RFPs as principally the the carriers. the As for German earlier. principally

So, shift or think in certainly that in per the generally. – the obviously, a salvage world an is and, it's a Copart contract expiration well-known successful us. it they way a not for a enterprise auctions very a around opportunity triggers RFP se enough

So, ready are per they're ready se dialogs to are them, available when and we for us but an not RFP. those when it's

Craig Kennison

on the shed like in on What depending that? corporate helpful. of terms you upon be investment? And would the to you project, a pay are metrics Will, the that economics typical the to And but volume hoping cost or car what's then, can estate I the capacity path returns a share an what breakeven to on real market? average can maybe Anything get of kind then, Thanks. acre and question real or you average spend, the estate you either had for of do project on of some might you frame light range that

William Franklin

Sure.

Let me transaction. no saying by is start typical there

economic the the second So, equivalent just an acre get some bid in We on didn't country. an round $XX,XXX of over buy land land acre of for and parts $X the an into We one million we can your yard nationwide. companies insurance yard. the bidding output from don't service one for Continuing we look of some you service can't land. at that insurance one company on in because questions,

So, you they markets markets. ignore can't may very these the real expensive as really estate as expensive less profitable because not economically be

really to it. for us. whenever that's companies So, know even that insurance land just have not the consideration a have we need We

Jayson Adair

and next form you you in this capital, the terms, going history early a it of put cost of hindsight, of benefit exceeds in Copart's rate our of have financial in benefit Kingdom ROI took enablers business. any time no. parcels valuable. snapshots well. estate and the we Copart, go an the average is of acquired you not, real to be that United will obviously the the almost in even Craig, had does buy We elsewhere United economic having or around back answer now that moment to one that It's said, and Copart's if the incredibly machine, the strategically of be think forward its land at of true certainly the But massive is proven cap key weighted believe we as parcel land globe, generate decide whether to of the and if I if XXXXs should States

about that not So, as given of noted, Will it's cap It's buyers parcel allows of as about the then land. well. a building on any liquid the to amass rate network you market global

auction. So, it's two-sided and a has of critical enabler auction that owning land a our two-sided been

Craig Kennison

Will, where longer follow-up, or that costs? you mean to distances you given helpful. of towing that higher make What is And to plan round. your Does with that? service the is didn't market? the maybe customers just point property on super in What your the consequence is backup second That need

William Franklin

have of that We'll trucking that approach and to we at do smaller look ways certain large settle a tracking number we'll not there's negatively to for we'll Well, markets Typically, sellers. sites. a one also impactful is our like that. situations, yard. in like manner multiple In to

the some become will operationally address as truck will off But, become For the by to more costs ultimately, development expensive can and taking and is well. example, around it. constraints land ways a There moving it more expensive continue We inventory in evening. yard site. older the of

Jayson Adair

of customers. land we out, market. talking just get bumped let market example get add but talks about buy, can zoning. things about. to Craig, of We can Will capacity. five-year to we've the buy, didn't, service Will in the some we're plan. there and room that we've we've buy get do piece got a time. And we out And, if will land we're specifically, to me Because example that. room of of years eventually of he's tried but on in and the customers, that he We've five working can just we another we this and couldn't on service gave you is we can't And, then about, another we got all not would land got be land That we plenty that spoke

Craig Kennison

thank Great, you.

Jayson Adair

Thanks, Craig.

Operator

Our next question comes Incorporated. from Daniel Imbro with Stephens

Daniel Imbro

being Good bidders US more guys. the despite start of on in for and market. mature it strength number Thanks you morning, made growing Yeah. on ASP a taking I my questions. a to the wanted comment

there Or initiatives marketing you bidders more recent your auction, noted strength bring auction? increased international in that you've that think, bring bidders to doing attribute point are to in you to? to do international what to are but domestic any can guys I you quarters, you've that help buyers to

William Franklin

Yes.

We are initiatives to or those our with We we're for particularly aware social the more both and profiles. have or cars targeting auction buyer PPC And marketing whether SEO, available. domestic work and they international are specific make through buyers of buyers. car that efforts,

may introduce So, by successful. XX%. an our just a We've my me that's Obviously, large some segment I'd new notes. by bidders very numbers. or particular to buyers. segmented buyer amount we've XX% more not those segment call it's time spend because resources handed be domestic we'll is been a the when into of unique volume Jay And on of country. International over to that increased our identify country And say existing side and go that extra we segment and base, to we familiar

are Jordan. are So, two and reason, And buying of cars. growing the Georgia electric Georgia, countries for that they're whatever

Georgia high finding way at Priuses and very ASPs. are to Teslas very, So, their

And the they're promoting in cars. so, In trucks. In we they're pickup are Mexico, Netherlands, that. obviously China, they buying are buying buying sports And Harley-Davidsons.

regions. want to demand affordable that So, we're just we're Nigeria, getting these they the in reflect our gaining. know In particular efforts marketing knowledge that and transportation

Daniel Imbro

a a growth but or the considering on quarter, that the steel years the Got revenue headwinds you give scrap ARPU, like your especially really us how just changed steel just bigger Can us impacts Jeff, remaining driver That's looking strong, the ASPs? implied, scrap color. it at give during how bit, gears ago, and a of a can you unit like maybe feel anything the helpful has kind per of in little revenue quarter. switching it. saw that we I business? felt your a impacts business reminder refresher your on few

Jeffrey Liaw

a of over That's a the meaningfully. And It's a ago we that coin declined flip the – low the car literally day. a imagine has scrap on shrunken of car answer the business and moments few is metal automobile. it's a content. next question. our in it's the And end, is worth the its and talked steel spectrum, – spectrum issue car great other I has of very of the strong very at its very extreme end nature time. And the a it side values. of waste a the other perfectly its yes potential at A influence intact the drivable And think about that

They're this us the drivable. the nature As of more – something, cars more the obviously, a being finding to And, at worth more to high at thousand way, higher cars The total cars the of melt are all. made as cars than are, day therefore, the car cars, complexity certainly scrap scrap. closer day value not is parts the as of of several they're international the end really buyers buyers they're the rebuildable, of metal. they value shipping – more the about It's increasing assuredly sold it by more spectrum end drivable the the right on has miles of particularly to technology not – totals operationally, down. we and for the for focus are not and

over time. matters, less So, but increasingly scrap

Daniel Imbro

helpful. That's

nicely, about thinking – you're helpful. one. about you us of Internationally, your opportunity? scaling touched yeah, it learning And Europe? what's thinking about kind last although on offering it's market lot Thanks. like a Germany, small. That's maybe we as So, we've you're but then, growing that feedback Germany looking update pretty it. still that Or in we in on beyond or Spain pretty Can – next should on looks how think change how we're any

Jayson Adair

Sure.

network the to letting we Germany take and we're it in team implemented So, that will, playbook new a Spain. build And if implement Europe out. you in playbook, the in basically

cetera. people, further example added to switch big will many There locations. Germany even those what And achieve they've once in efforts in expanding dozen right their has a et we'll market process, And over, for that Will's to to of terms develop in sites. we're and volume is a but, in the putting we're it start doing locations. clearly, get continued see our terms now to of investment we're sites see mimicking into own Germany. a the land, US in trying So, right at. we're technology, doing This now then looking of markets, be they're, Germany majority we been land is of win market the a And transition both ways, We've what success. and growth to focus into purchase that in got over. we're in vast

and ability time. takes to network build to So, success that the achieve

than that same exact and nonetheless seeing but doing is They're same much exact thing. success. the Spain market Germany, the doing weight so, in they And are smaller thing

about So, that. we're excited

Daniel Imbro

Best guys. much, of so Thanks luck. Great.

Jayson Adair

Thank you.

William Franklin

you. Thank

Operator

Instructions]. [Operator

with Chris Bottiglieri comes Wolfe Our from next question Research.

Chris Bottiglieri

taking questions. This Bottiglieri. Hi. for Chris Thanks the is

The was, XX% that one but I are buyers first revenue? correctly of hear did XX% international of units,

William Franklin

the XX% everything of rebuildable because being and of we of we're are not parted cars It's out. And the buying units. that that the that's XX% cars value auction.

Daniel Imbro

non-international makes Got as those cars would can XX% the it. That that thumb, And suggest than the of is – a bidders. sense. price that higher of I rule selling

XX% on rule for fair thumb that impact be a the as the growth, it of grows? would to kind of So, mix premium international use ARPU as

Jeffrey Liaw

that ago. them got moments go of scrap the yes. that cars of of phenomenon directionally, They because very Many but, the validate But do. in average, value few I've part none course, internationally. low are on buying of end a heard to cars precise arithmetic, higher high-end you cars, meaningfully

Daniel Imbro

That's what figured. I you. Got

That – fuzzy. what talk just of ARPU of what revenue the the that's I kind to couple of is sense makes vehicles? question versus based Can and you to of mix of you've Okay. And give a contributed talked percentage recently. you math I the the But had can growth was, purchase this of ancillary fees us excluding kind lot about next service years? about, within like don't last fee-based US, the extent think in can a – you

Jayson Adair

to on tend schedule, Chris, them in discuss not substance. fee we any think, I

I services. think delivered we additional have

very a value You competitive are few of sensitive strong forth. so We talk procurement and believe, title fee and amounts and schedules about to services, matters sellers pay-off heard deliver, buyers. for Will our we us. including them, But loan our our both

Daniel Imbro

you. Got

and a then, a if I entirely this in cap like driven rates rent whatnot. doubled is business quick you've a you. years. or between rent philosophy wondering the the way just there or question versus Okay. the own bifurcate us? international expansion US on had And by or past change that's international was is expense, on for rent And to expense over Thank

Jeffrey Liaw

You decision were on own versus posing the question the lease about estate? real

Daniel Imbro

Yeah.

two for years. expense, it's the company, you at doubled facilities If the rent last look the over

that? all Just that's doubling Is trying rent to international? driving else is what's figure of it on going like expense? Or something driving that out it

Jeffrey Liaw

Copart. see it therefore a for and, that you'll we attention. we've and, draws reported publicly we expense a what like number rent of purchased little But, It's therefore, buy in think bit and practice, would – I can. cars

always necessary. we're that's and, the some moment actionable in not very some desire. case or in off pursue up in operationally buy markets, example, anything running any When to particular enter in And a many when desire lease. it's be us our capacity cases, for lease our so leased. be we when fundamentally would in some quickly we bought can to can't decades, land existing buy, of is our There purchasing are So, a are as market, properties you to to But to instead properties, we're our necessity, circumstances rental ago, by help to are almost be there have expectation which that and better we for available buying. properties There and circumstances, them. by additional metro every which lease not adding we in be preference can cases, therefore, Germany, mentioned and a are we in area

Daniel Imbro

you. Got

thank Okay, you.

Operator

I session. you, the Thank Adair. call concludes this to . turn over everyone now that today's At will time, back Mr. question-and-answer

Jayson Adair

quarter Thanks call fourth We we you much. so call. the the on appreciate Thanks end so forward all and the next the reporting look on the and to Bye-bye. year of attending much.

Operator

Ladies conclude today's participation. day. and a your for gentlemen, This does thank conference. your great Have you of rest

Copart (CPRT) 23 May 192019 Q3 Earnings call transcript