CPRT - Earnings call transcript Q3 2020

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Operator

Good day, and welcome to the Copart Conference Call. At this time. I would like to turn the conference over to Jeff Liaw, President of Copart. Please go ahead, sir.

Jeffrey Liaw

Thank you, Dan. with for harbor opening call over turning today's Jay to remarks. start the before safe it I'll

comparable During reconciliation today's tax on the call, losses, issued directly GAAP the measures, to include XXXX-XX. and nonoperating adjustments GAAP most accounting our measures believe we'll their ASU foreign common certain on discuss and our of certain reverse assets, under to provided measures option payroll basis. We've certain our measures, equipment non-GAAP non-GAAP financial non-GAAP tax website GAAP Investor the assessing analyze in results for benefits from in business our discrete non-GAAP taxes gains stock on effect income currency-related items, corresponding these relevant these and with of together our to yesterday. trends disposal both a link are and measures, related We Relations and which press release We And exercises. performance.

uncertainties The Copart today periods and within and our reports July our uncertainties, forward-looking no adversely XX-Q, and forward-looking including management's under the Form to sellers, selling has include statements. any identified the respect pandemic involve each worldwide results for opportunities, current trends, our in international XX-K strategies, average In in concerning expansion such subsequent addition, and COVID-XX our risks and operating prices "Risk pandemic. obligation on accident financial business our as as subject future statement our uncertainties. to the could additional other generally for forward-looking annual Factors" and the vehicles, based Form and factors vehicles XX, major business risks to views risks statements of update to of revise our in XXXX, today, caption the current applicable years dependence with to laws, or forward-looking relating declines factors, quarterly statements ended statements comments any with on our forward-looking on auction affecting including additional on affect securities of These meaning volume pandemic-related are results respect

Adair. Jay CEO, that, With

Jayson Adair

Thanks, Jeff.

up on that. little just breaking You're a bit

we maybe should So dial in.

Jeffrey Liaw

Yes.

Jayson Adair

and go were to I would Perfect. coming Again, beginning Copart, acquiring third of at quarter property, the later to for I the that to everyone. off. If welcome, selling Thanks ahead were month business, call. land, I'll speed units, describe be would of full company-wide. a I March, the fast Yes. We winning number ahead. kick units were the beginning but developing to say, record And prepared. unpredicted us if could forward describe best way of record the I quarter,

was down position unpredictable business. to of we at Clearly, day, -- I of a that would salons, that every events had week open to some And I keep but week that couldn't of coming was to people out to out where and We from had, had got travel. hair from was COVID, this anticipate to restaurants. we out and so this government specifically cancel keep to be out dinner go saw, looking and to saw by we March, that gone was to the or anyone thinking the people industry, first COVID second up time reached had that could in would traveling, the not enough had company-wide. Washington specifically and cancel news overnight, say, who people Overnight, planned. that to and government customers point, conferences service of friends March, own the the mine just we told all the of in going from day the we yet work at it not people business, not the actually their what And to of shutting that rhetoric own our are

the people. concern about behavior my of was really And

be to And country business meetings And whether out it that and polio, coming but We a of to think whether be Italy, over political that flu, they're is so has haven't I actually be been quickly I away going thinking saw that we the the business in came U.S. down. the situation reached just contacts the going been not obviously, of U.K. And it some shut I've through Spanish years, number in we where down. out from to shut experiences those got.

the down little much U.K. But from results think the the on harder I've point. that earlier a in than U.S. really, I end, really regardless, But U.S. was unpredictable than this was seen. U.K. the the at the probably shut definitely did.

as But prepared. very said, I

So financial liquidity at banks. be thing We felt we the a first there little bit did, was crisis. like this if sure weren't going to 'XX

at were play all we financial that So to position the people's were a recorded something fears the really something not of and on our could pulled And we of and back. excess of be of all $XXX is reached that our in the them first together was would phone to control number can't We thing were Copart aside. to of of of phone calls company-wide the management to all these how going fields. times. what your point, so have calls calls precarious but setting had could we I about And mean, over did, the fear security we billion COVID is ourselves, out the control, with on line. We, this of employees. balance our the not $X subsequent that, knowing first sheet. we knowing we down put future, million cash exactly We

and right? lot all that that you hear reached lot the second everyone know of of that had cash we cash. me you know okay? a out X a reached and Can hear we on have on, let we here. So everyone -- We let me Okay. call Can

Operator

proceed. Please sir. Yes,

Jayson Adair

will in come Jeff here. then there, issues got We've

right. Okay. All

are we've can and because obviously, They So -- COVID. locations, different just in I'll -- continue. We me got fine. X I hear of Jeff some

You apparently me, Jeff's but all can having hear trouble.

continue continue. it to operating, going survive that he's for could of on months sell for on We we operate could being very amount without cars. without cars, able pick months So a on note, able to sheet. had clear get and we made or Copart just being balance without significant up cash the that But to he'll to

our will a that's going work, that. that markets that U.S., Now and be But a and days, for nation. we messaging the XX the we our there the no was furloughs for strong, are I'll U.K. That's there get to clearly, to other initial to problem for company be going the problem be into promise, that reduction that deliver about no And to about Copart of be sure continuity. they can the is this and that did. will is that do that services to that way confidence hours the for exactly can This provide making we give what so on and people Copart the customers. is that's at we

I quarter the and to said, want position. As speed didn't off change that full started we from we ahead,

we're Jeff reduction a more, coming But volume We're will was a of to throughout back. continued think to necessary So is continued already really this Message we've that temporary long-term quarter the already the that seeing that that. We've is to but this quarter We that develop talk believe Copart. success seeing acquire throughout We land. land. the that of one. volume. little about

Message and none They're is this businesses, before. thought you is work if their -- success. two my some of this speak of at to to have were family. essential was this And business, that my essential. us of some businesses not are to about friends businesses, concept if clearly, new friends to something their speak they They're to that essential you feel their run all of essential

then at at at can social state doing at X/X was us are government of the businesses level, at of of would friends the quarantining politicians hard risk And that or point conditions. with, that some distancing, that I to so connected at with I level, if they've work a not us to so similar be, got we parse actually look And to at at conceptually, population let's city the with would that now look that high level, the us understand so as an we're preexisting I'm it what company. and made or operate. telling at the to look federal of X/X at or -- let's work the trying work say maintain And are are let's X/X argument

the sell times made the locations, and So rallied, down arguments throughout multiple experience, Copart throughout our the internationally, doesn't had going and parts repair. to If clear. from tow vehicles, shut and companies, all to the U.S. that pick full U.K., to going from And they're where cars not left this those law shops. are don't going body if we up we in both to very doesn't and enforcement available on team tried in Copart experiences, up cars Copart them. have are pick cars we're for We have get streets

not You're shops able to fix have to cars. body going

to insurance You're the process. to have pay going off it's insurance able going stop insureds, companies and not to

a able working was made most and folks part, we or to strong by reverse multiple were Copart's couple I'm all say that most in the X we or happy that with for to down then very day states, So where were open, up. for other for back shut to enforcement day able get part, of down reverse day maybe of we've and back arguments of and we and up, then in for X, the open. a police, chiefs there were back meaning for and locations, and scenarios been down law a have a

throughout running picking of that, essentially been about Jeff less, quarter talk been this So process. inventory vehicles, off have and lot we've this selling a we will although through whole and up

so with work but public with they're was DMVs while on sold. down front, titles we reflected and unpredictable the that very to prepared. and in on that This DMVs can these to get tried that, said, internally, those have and general the vehicles trying we this with dealing I work we back as retail continue them down process to they So to the to have so very shut something that continue shut

had large Fortunately a capacity. for us, we've

As developed we've adding developed over land, a been capacity. lot land years, of a of we've lot the

of up we've ensure able to XX that we the DMVs a So because yard that for express then make move And sold I'd in we has, that quarter some in enough We did facility room another increased keep to be last at the to continue have everything we not anticipation vehicles. online. those are room that finally, the argument yard picking company had down things if did years, we There's vehicles that cars sell and to X being from costs at to facilities. we shut got things. like our

That up open. was arguments And so one a and look buyers if send that had the lot benefit we've of online of and the completely our another and made in stay the utilized, bid the to argument to you pick states we trucks online online, able vehicle. you're that of then being can

was So overall, that's claims jobless think of shutting unpredictable that, know million. that across been it's convinced -- case, the business very weeks be wasn't all X down all we government as -- the going second time. experience. I, week seeing aggressive what's really, that didn't as it's period and I'd actually been happened I over be, of the to know country. just March, didn't later, We XX.X I of a

we course-corrected deliver Our technology. the services, those we services, office technology we The cetera. social of IT day phenomenal load cars single sell folks, the though offer We've not away, all every really sales trucks, to to changed out, have we've -- have our unload at team cars, distancing, a because really, fly and set work, coming the and services, adjusted, folks put the how rallied. done field continued on the use has offer to sure et job those making customers in

built so of anticipate is said the while things we this. one folks internally this at we've Copart pandemic, the didn't for And were

phenomenal for to you books listening out the of Copart of your We call, guys one is this job. this couldn't Jeff Liaw, On you've we've guys and that have a the No, that give and really ass, done. more have you kicked I'll success to are as proud be experiences done folks a -- prouder those an pandemic. I'm for on those And a actually, there that over great the CEO, this And company. go I it's job everything as it President, update have turn handled way note, history of will you our to down in the and quarter. done me,

Jeffrey Liaw

on our results. the effect business, our from start and affected on how a coronavirus our and some has offer deviation the Thanks. following crisis its Thank the narrative COVID-XX you, operations, our financial remarks Jay. and usual with specifically We'll priorities our comments script Jay's

On European and the month in business our as beginning global and first, experience operations, worldwide, XXXX, operations of began our as March operations. interruption throughout the and progressed the to quarter Jay noted, operations of progressed the within our balance

business, Jay of appropriate as follow well. facilities societies in highways, health and in authorities been and and safety do critical taken world's streets will during support the smooth serving As yards, vehicles protocols eventual care we've deemed safe proud of it road recovery our we for buyers business shops partners noted, work removal jurisdictions, to by our materially of impound working helped the which conditions business an because the our and great other all functioning our the the we as of employees and our crisis of people for to from the in enabling into in essential contact. to We've we certainly sellers, repair ensure enable infrastructure. we role our the function with of do whom We're all ensure our from well and communities our as local play come

also no communicate as proactively in as work cases, simply we're remote And to our arrangements and experienced business usual. with well. have many respects, continuing customers We disruptions business. adapted, our to We've many and in frequently material

have in our exclusively well. iterative best-in-class remain facilities members we sell refinements to Jay the auctions XX the for as noted any moment continue not for in best-in-class disruptions And any our the more made as cars. our experience ago. our we've online-only and that way Because years of we've technology experienced example, terms now how and transformative over operational operated For sellers we and returns believe drives for auction overhauls a auctions as well years, fully online

their priorities. of those our and cases, adapting as remote modifications many work It surprise accommodating deployed their priorities real-time technologies you own won't to support Turning are new on that to our in customers, in near-term our We've arrangements. accommodations workflow well.

long-term Our retention. is, member international investing on in and again, focus recruitment

liquidity sacrosanct our auction to is enables and business grow. Our

keenly focused terms members our every ways ecosystem. our as aspects advantage respect, many of in in well both our of with extending sellers, are and our the on we technology We various our as interact auctions the

there future the expenditures did this be spent customers' growth. our capacity. expenditures. our of are place. to acquiring expenditures XXXX capital we capital customers. of opportunistic terms thing they we investing noncritical, We isn't as as ours in and forward made support such would our any of of we in were first all If capacity note we future more noncritical capital aggressively also in have We in look believe never in support them past quarter in in more still fiscal than We'd serve We'll in

well. as in are people our investing We

continue We train recruit, members. our to promote and team

We employees contributions. or furloughed XXX(k) suspended have not

critical our and well. course, our people are our we to season that fundamentally growth to believe be We business, affect will to we of customers one ability well be have prepared to decisions their and, our assets. make prudent our prepared always them of while for potentially We that of shortsighted be before and stewards want and a growth active as And tropical ahead. said won't storm our most serve serve

quarter, Google, We and that note declines due baseline, XX% as activity state the including being occurring fewer course, though among result of national at we note shelter-in-place pandemic. pre-coronavirus quarter quarter results. sources, financial fewer Metrics, that down than volume. fewer level. in our to the range effect driving in affected miles sold orders. Apple the a processed in And also has The in had certain many It industry relative for trough anticipated troughed were XX% others. levels lower University you track to of Mobility, the response our from increased would substantially a we Then on the activity appears We that that were turn it periods the coronavirus to won't results Washington's received operating vehicle to that the vehicles and driven to volume surprise of the due, from during of by accidents we

still. frequency to has faster compared driving insurance repairs. driving with on affected distractions loss not wanting a having industry as claims function automobiles more and severely, remote often vehicles, been by also simplify to total loss reductions not a our to And as the service vehicles apparent and Total then has behavior, are behavior and nearly carrier after so, increased loss volume shop the repair that process with to it activity, assignment disruptions, driving On roads in which of according to the frequency. are driving their of recover sources. less congested, policyholders mix because drivers work perhaps and adjusters affected That's most have ability caused decisions been opposed appears

quarter a logistics But auction the by remained vehicles the -- and, quite has large, vehicles. for some strong. regarding well finally, We've as auctions some and auctions, substantially often after we actually in affected levels purchasing and a power also during days has in the than that at in quarter, the that seen countries global has the somewhat uncertainty, therefore, purchase vehicles end the would economic auctions have have recent prices would course, our dollar, had throughout reached pre-crisis the currencies the and auction of of volatility There, been that or as -- though liquidity impaired note The U.S. higher liquidity volatility have price prices at purchase challenges strengthened we for has Selling potential selling result. which participation to remained high also often cars more exported crisis. part attribute demand or our their also levels. uncertainties noted

We've our of XXXX, borrowings subsequently in in facilities. had what described. March, to billion as noted repaid financial own undrawn including all just of uncertainty. our as perceived available I under $XXX liquidity, systemic the our facility, million $XXX credit down of million we X-K issued approximately we $X.X liquidity, our April outstanding cash we On part XX, we revolving And funds drew as in in those of in under in available facility response

enables make shareholders. interest Our conservative benefit to capitalization, our to we continue long-term and us customers decisions the for of our think, and

the transport well either our or in the quarters, for pandemic coronavirus, in reduce the example, of quarterly an markets in daily increase forward air the the as demand dependent structural of will suspended our ways and structural our that facing we of short, global In that that that and when indicate approach are expect shift. services, shift availability reduced of If timing on transit and magnitude the and remote with for Looking activity demand then of pandemic treatments, future resumption potential disruption permanent on public massive those economy course, shelter-in-place as of to it's we effects, and the accordingly. impact serve and commuting substitution business the our such the pandemic, not that on to travel, to permanent across to and of The a a for those the for have, can but a is we'll adjust adverse depend orders. automotive otherwise on course, markets revenues arrangements for example, services, none our facts of society's ways the work responses longer-term vaccines which we we predict. and duration development developments extent effect of the potential on economic our

financial our discuss provide share we we'll quarter. the every metrics results, that customary we As

in noninsurance, in bidding sales, past unit as crisis, prices, continued, Meaningful the opening increases assignments, the international Jay in so Before the noted had bidding remarks. in and his activity, in selling largely insurance, we've activity forth. average in discussed themes

and metrics we'll share, crisis precrisis So of blend a course, include the of -- pre and input.

particular strengthening million third describe arrangement pardon of as engagement well effect unfavorable of the the That to customer experienced a the dollars currency $X.X revenue of of a us U.S. heard of as X.X% decline year-over-year. -- includes from shift global a me, due purchase to We an U.S. $X.X dollar, consignment quarter. Turning to million a you've the or before.

service experience noted revenue X.X% year-over-year, million Global in That, turn, in and a as we've international the in $XX.X or of reflection did We economic the is revenues accurate at business. noted in by to a revenue of million service we before, of grew more more reflects activity growth the contract. of a purchased ago, international decline X.X% service growth the underlying in X.X%. U.K. XX% which, sales decline was a customer our again shift growth fee-based moment the or U.S. $XX.X U.S. primarily by vehicle driven as offset the than

wholesale sales increase has by driven quarter. a unit from year-over-year provide share -- more charities units The the we noninsurance U.S. global unit XX.X%, the market experienced organic international unit growth increase for momentarily X%. unit business and just our growth, gains. On existing of customers been decrease of if sold in decline insurance under with U.S. and X.X% X.X% XX.X%. grew of growth quarter. for U.S. you the our exclude color grew We'll an though actually Noninsurance Insurance business, and declined unit

rates had to year-over-year. crisis, Prior track, that their our growth volumes actually group consignment as double-digit important we continued dealer the one

in because of COVID-XX. noninsurance auction of have we by digital affected been believe businesses been Our during the meaningfully for other XX course, our auto business, almost crisis, We auction business have a has liquidity. and natively outperformed we because part, years

declined declining X.X%. U.S. with international inventory X.X% of our positive Worldwide, inventory. global to inventory and Turning XX.X% growth inventory

declined as was reduced then at rates. inventory Our which inventory, auctions replenished consumed

decline million declined million X.X% to year-over-year. a or Our $XXX.X gross profit from $XXX.X

of to pandemic volumes. assignment as the contraction yards In we Our sales a throughout gross our remained gross to XX.X% XX.X% open with lower-than-expected from declined U.S., margin rate unit slightly XX.X% XX.X%. experienced the margin and

negative arrangement units part to for reflection to than anticipated. of and operating received shift from increased unit had and consignment. part efficiencies fewer the to In gross international we a principal operating from also and Our in fewer globally, sold XX.X XX.X a do to the in due processing leverage previously cost of from that we margins note units a rising U.S. customer

selling quarter. Turning the for prices to

U.S., the have for the within in seen Within prices And prices of selling quarter. to above the year-over-year the increases we crisis, the in had we to prices decline pre-crisis experienced full X.X%. end of since rise quarter we observed levels. the average selling Prior quarter, a

the I noted part unprecedented auction in ago, the due unique this As and as our Even international is auction in observed international enhanced global by bidders in a remains in and, in unit liquidity. by of selling year-over-year well as currency demand per moment higher members quarter actually course, the The international therefore, volatility has almost drive bids dislocation, outcome, member customers sold. effects increased prices base as to been our liquidity per for uncertainty. with quarter and XX% we increases and We increases logistics our better critical bids unit bids to outcomes. and

will now turn grow G&A before, expenditures we've fluctuate and as time. to expenditures. administrative and general over noted general, In I'll

continue We time. we believe can that to leverage operating achieve over

our gross more in data unit G&A, than so metrics to you lines quarter longer-dated trended business. a for all with the single view of we'd business, margins, encourage forth, rather accurate the As review trend sales and

for GAAP million to $XXX.X $XXX.X from the quarter. income Our declined million operating

nonconsolidated disposal interest net to gains Other offset due income from investment, million to attributable currency quarter, drawn method $X.X positive Our the expense X.X% as a equity gains. the a lower by increased revolver earnings portion asset interest well. partially and year-over-year of largely of rates for was

was provision $XX.X the taxes such million, which third includes of benefit non-GAAP -- from reflected the earnings the which employee our we the quarter, in reconciliation. options, stock as for has been tax exercise In

declined year income and million million this to million a $XXX.X decreased non-GAAP year the to Our $XXX.X million net our for quarter. income $XXX.X from GAAP $XXX.X net ago from

Turning We cash $XXX just then sheet. leaving of north quarter of in the net finished balance the and million debt, million the sheet balance us lease on on adopted just in to lease right-of-use north with which standard a of $XXX.X year liabilities this first $XXX.X lease new million assets our and million balance essentially in sheet. operating operating shows quarter, the unlevered. We $XXX

an at and This in On operating third well working well. the from increase quarter versus the increase come 'XX business quarter driven as cash second is the cash flow cash inventory. the flow, flow was decline as robust with the for substantial million, a the the $XXX capital generated as of by part quarter that in reductions versus

million. of our capital expansion. than for Our the XX% quarter, in attributable CapEx investing to capacity expenditures $XX.X was more Again,

new in have the number expansion We a of as projects well. and yards queue

We continue land current efforts demand. taking prospective our I'll can questions. to to back develop that, purchase who With mic and operator the and the turn to begin meet

Operator

question Instructions]. queue. Labick from CJS in This We'll comes first our take Bob [Operator one with Securities.

Robert Labick

I just kind relates start finished want to off the it as remarks of prepared land. where you the to

mass driven longer transit talked could the fewer there flying, an are on or impacts be on people remarks, You potential miles reduce the increase. Could miles work taking about, in or earlier X term driven. be more from if could home

can more now? -- it find your you the how to be impact answer does that as purchase expect land? outcome right So or will land that in I easier is just the is that, as it How you to regard. And the that then going now obviously, don't to harder what too, Is know -- you do to that if a activity relates of on land, enough economy you there wanted? result strategy

Jeffrey Liaw

for are questions, big question, years societal and be On Very developing land you're land think, short, the lead In ahead. acquiring remain those long. quarters times and over the will right Bob. quite resolved months, I investments, that I think to good

will Our that is growth we and a our to that horizon. expectation customers' land accommodate use our multiple-year own for

XX-year decision. acquire XX-month, to a sense X-month, even because So horizon. over a X-year X- it We land not it's a makes

We continue our activity.

crisis that because the facility unlock the fair to of us land cases, jurisdictions other because cases that are ability activity perhaps where In having excited think to it. our values a has jobs in I stalled brings some forward or virus new may available opportunities approvals the in about regulatory more impact. move respects, have Copart where though, do your now in for with still limited is more is economic local so intuition reasonable at been some

not in happens So strategic have our anything disrupted short, that I on or land horizon. we acquisitions, a meaningfully based think changed do and so wouldn't to over we approach to XX-week X-

As going remarks, now, unfold course, revisit. of forward, we noted we'll, change in the in facts no if opening the for our course. But differently

Robert Labick

Got as value work you process, frequency to we've a carriers seen talked that and years? data total Can have the bit ticked we've the it. up total your now calls well. process, well, little your what Great. in total you expand you've previous recently on carriers you on loss optimizing in the many and as for noted been to collecting And just about given loss on increased can seems then some so that publications loss with add

Jeffrey Liaw

Yes. And Bob. question, good

I the will in that resolution total with storage quickly, help costs cases, our providing data them which ago, talked the in more process own about to misunderstood uncertainty and in empower that own informed loss insurance and I burden, and shops, more policyholders. to them will regarding couple quarter. saves your their we question of and, processing them last make more many our cars repair claims quarters a But short, think claims earlier believe partners carrier we loss decisions

that limited sets millions able efficiently it in quickly. of us, amassing for that That's from ways carriers us work time at and being make based empower quarters the over value on that years those the couple having that pace. the a and comes meant of to data available quickly tens we them certainly to continues that sold what sharing data ago, and So and of more is to vehicles to decisions moment data in

Robert Labick

And on back just economic the then in update shifting Okay. you jump me, How anything are insurance to for impact there one U.S.-style general a convert Super. update. queue. little Can or gears Germany? And give an over us Has last decisions bit. else I'll going? the a impacted just to things And auction? carriers'

Jeffrey Liaw

I broad think there we as to well. strokes, in move continue forward

in and people invested to continue technologies. and invest we've So and in land

the to very with productive. dialogues be Our carriers continue insurance

think, I carriers cuts last cuts that begun coronavirus consignment there. had -- both I of the think of This kind vehicles call noted we disruption, behalf the we on on insurance ways. selling

On customers difficult among the our prospective either or ourselves nowadays face-to-face, to meet or one hand, with customers. it's

radical the considering alternatives hand, no open is once that also where quo other status to this longer like the glide it to the the tend On shifts was. mind path

hasn't it that I Germany long-term think is for pursue. us there way, changed. conviction think in I to So our prosperity Either our

Operator

our take We'll from Craig with next queue comes Baird. question in Kennison

Craig Kennison

much reduce I in event? more wanted revenue expect, pandemic the impact be the quarter. guess, days XX severe I recognition something would knowing like in after what to that loss the So extent the revenue can to did ask, be current the pandemic we to quarter,

Jeffrey Liaw

Yes.

I answer. think question to observation's your fair, is and that difficult

post-metrics. to have car's just a or yes. we directional our assess. in our is very Oklahoma Paulo It and Louisiana we again business, So given versus happened So the number why before wasn't weeks us very get leads to hard auction, volume, that's elaborate, the directional accident effect in question processed date clean a start of available -- assigned the And so versus yes, you the Your very, post. is, right? and and versus very fair. Toronto, had to the observation I and And that impact pre- the think right? when finely, for is difficult Where cut that car into pre- enough didn't there you're coronavirus didn't the lags several the data the when answer weeks and consider -- is to then But start lagging to do when from correct reason title to you the do it worthwhile to on happens is

Craig Kennison

And of like have then current the last a the below comment in weeks to terms much, better quarter we Or assignments give last year. activity versus far maybe just for couple still year? sense as like on I what but normalizes? driving know of so looked you maybe last don't Are -- meaningfully

Jeffrey Liaw

to I think, the Craig, as know, you comment, tend think we on I current quarter. not

rebounded from very a talk ago, will the we ASPs year-over-year when leave The meaningfully the troughs. and quarter. noted about for moments I As assignment be so have few certainly volumes, have we'll comparisons, we forth seen

Craig Kennison

sooner maybe feared just the Is purely growth maybe your metric that that initiatives? up as I internationally. always back a had driving coming was as just not international through on then internal had that inventory, than much trends created you've kind increase? And I Okay. is of What's Or market and feared? helpful down actually secular you that share, that

Jeffrey Liaw

question. fair a It's

I that every think also, been there cases, have DMV about interruptions talk processing we are there, some yes, in secular forces In quarter. the U.S. outside titles. of

outside cases, So that's because inventory been they also of were in hung U.S. were more In as that's you noted than well. that unit sales the the international some down U.S.

Operator

our in Bret with comes Jefferies. next from take question We'll Jordan queue,

Bret Jordan

sense that, do think question, maybe and inventory April post-crash? up, in driving picked would an of of being you assignment we'll weeks trough driving if the around trough inventory down in a beginning theory, the you the inventory On and couple XX, has seeing about month-end And inventory that maybe be takes higher, being think? your when the sequentially in be

Jeffrey Liaw

is We of stuff. out inventory, several are cases, activity, many maybe, trough from inventory No. Not and, driving years-old Trough accumulation in assignments the Bret. weeks itself some right? but months weeks,

so includes to activity So longer loss that's time. of from cake, bigger speak, layer for a much volume period a that absent frequency driving

Bret Jordan

then prices is in Or aggressively? on is on of domestic foreign And Okay. bids? rebounding, pretty market buyer the selling the back the recent back that

Jeffrey Liaw

bidders both internationally. unique and meaningfully There's Both. increased domestically and bids,

Bret Jordan

Okay. And a then question. housekeeping

quarter some that? expense think the costs DMV you vehicles moving logistically the around I around Could give how mentioned that due Jay an in much was idea with us had to of are associated activity.

Jeffrey Liaw

number I don't have provide, a precise Bret. to

the it I moving short, in part, was I on think -- in think fear, vehicles of having stranded. of frankly, vehicle it's in us logistics,

yards able would to our be sure that wanted to our congested we make continue customers. serve So most to

we own our so move some within And cars expense at network. our

alluding Jay number to. provide. have I So that's But a was no, don't precise what to think

Operator

next from queue, We'll Humphrey. Benjamin, take our Robinson in Stephanie comes question

Stephanie Benjamin

comment would on kind the more specific aggressive expansions International you're of you of of some in talk looking What's general domestic you're if to continued if focused? little at wanted this acquisitions Is CapEx location I or some could about bit a be geographic that the areas. land targeting focused? of plans. helpful. and these the Maybe the terms theme or geographies

Jeffrey Liaw

Thanks, Stephanie. the of healthy both mix is A answer.

the long-term growth, within above. ship right, U.K., for what pursuit it's Brazil, U.S., in the Germany and wait so so on bit in in all can't crystal also Canada certainty stop to in perhaps traditional happens the elsewhere, but clear long-standing and of fair a -- And So in of we with of markets investments support the our driving activity forth. and our

But that to on loss commuting frequency it on stands total trends meaningful demand mobility Mobility will trends for and I as liquidity. a continue with auction believe abate leisure, will we'll today. health general. just society's work. XX-year necessary continue that XXX-year for those think in we It's for for fundamentally to the not perhaps education drive really isn't care, also interruption

So believing invest customers. those to of underlying our us our think, to and to leads principles, that support own want I growth

that I So it'd think irresponsible to be us mid-course. for arrest process

Stephanie Benjamin

of Absolutely. But in trends? some are of the metrics U.S.? comments certainly across improvement terms you've -- seeing trough true And you that terms the internationally, made of some the levels in then seeing about levels, both of the some of from obviously, same is

Jeffrey Liaw

daily those risk the and yes, business a track pretty not or strategic carefully, meaningfully reports to bit a in -- but the metrics traffic good oversteering to That's short, make responded bit very of we'd from In business we either. operate right? if at way a Friday, U.K. also be with of decisions uncertainty, of right? a So we we fair variability fair

So we track those metrics.

Certainly, later some be in earlier to therefore, and were seeing reopen and it shut recovery later therefore, seen have just to as full countries will you cases. gamut the earlier, of somewhere activity, some described. We down,

quickly and Some more folks slowly. are more others recovering

Operator

in We'll queue, Daniel from comes Stephens, our question with take Imbro next Inc.

Daniel Imbro

the something wanted on dealer talked about to I just start you on consignment side.

obviously, you channel the in seen globally? the reduction meaningfully progresses channel heard and pre-crisis, U.S. progresses given both think during from You the slowed you've and what crisis. do used health How declines from that of given in probably said here just that channel and it the was the vehicle stronger we've sales,

Jeffrey Liaw

fair A question.

is me answer. X question to X the next if think quarters, I to over harder the for

I by period. folks fewer activity. reduced to that over in think the in the I The bullish market. trafficking haul, Sure, we ability serve remain term, long are our about They're quite impaired taking near course, think, of trade-ins. volumes vehicles, less

fewer sense -- are that consign route there to makes So Copart. in to

auction that Over the though, to the long new and will a selling our of growing liquidity, ecosystem. international of I cars, think, used base, capture continue and buyer our buying haul, portion

long outlook, not our has term, certainly So changed.

cars. outperformed such bidding dependent never auction lunch folks during meaningfully we do the on were period, and a because auto As at moment having other auction think I part noted ago, I have we platforms the facility and coming in live somewhat on

We a been quarter. time, in showed have the long it and digital natively for I think

Daniel Imbro

maybe then related a And Helpful. question.

higher. Just the us unit. dynamic vehicle a negative think used per on to to units that that help total pricing, falls impact XX rate there and negative the prices? on positive the to in how is maybe think or the Can puts takes about it just And as loss positive you and going -- kind used as with impacts the There's revenue net next changes net we vehicle that a of is XX then through months?

Jeffrey Liaw

And and prices, and with therefore, car lower directionally less our one correct, for will would with reduced softer With for volume all That's I've easily, question wrestled else used selling car would we difficult now make cars you're than a that improvement. else the prices, speaking, total would. see unit and more prices well. a equal, car per fair otherwise be years. X equal, as we And all would, however, cars used we

and know cars How those inventory we over CFO selling have and achieve as thousands know for." financially I think those nets, the I want of we, a possible I I in person, price a of cars. think the that to hundreds struggled already, what we've best oriented to years "root for as

So them. many it's when for intuitively already you probably have of hard to asset read values declining

effect volume unit the said, that But be real. would

prices, X there's forces, used robust or other prices for masked suppressed volume by Dan, have somewhat gains, that Copart, our invisible. past, would otherwise frequency, total which used have would say, by prices volumes to that been to the demand very forces doubt and years, in ago. If have let car you be has other saw made robust substantial X have That market loss unit meaningfully. suppressed even robust doubt, forecasted very have over that no no our come in But X has, unit remained years unit services. share would a that decline analysts that they increase relative where industry And car

Daniel Imbro

don't ancillary suite helpful. that And insurance any you today insurance squeeze the customers services in. your more the are a you services, providing today over think your can requesting Jeff, that companies. last guys we've just needs? months, covers Got Or it. that talk provide? then have the Are of robust around if companies' most Really about you lot there heard a more one do for the industry last I XX

Jeffrey Liaw

talk about customers in monolithic I think tough to entities.

carrier an Some and expanded years, do us past more for for of partners. integrate more and them years, over we certainly they offerings what certainly years, have into more XX more do have to still day appetite we XX our to to the and service year, vertically day, do our insurance and X

offer that more well. So additional yes, services over are that services there as time and we offer we'll

Operator

Edge We'll with take queue our comes Consumer Research. Derek question from Glynn next in

Derek Glynn

positive frequency. volumes driving you've At total on loss some we're higher attach seeing may reduce call past, higher this rates the you've vehicles, point, the frequency ADAS tailwinds some in and time, at which same In discussed business? and growing urgency frequency. an from is in yourself also there Is to the to any in a increased perhaps noninsurance accident if wondering exposure to conscious diversify I'm eventual hedge segments. noninsurance effort decline those channels

Jeffrey Liaw

of embedded different just lot what you A questions posed. in

to them one try I'll So one. dissect by

went Copart's iPhone terms ADAS working XX technologies, That was of actually a long because it that accident a reduce I'd reasonable reduced things. frequency. for as the when eventually past with hypothesis think I I I year-over-year. that's generally as in will would frequency, frequency, That's society. the XXXX safety accident and the of function short-term a couple blip, have First, true around is accident for years, frequency up between effect note one think across One of say, been is hypothesis on that proliferating and been 'XX

and drive those speaking, ADAS, total will the think, other frequency frequency, offset will accident on hand, forces loss So we generally increases decline. another. does in one

logical generally think to ADAS, a makes of total frequency easily frequency the total loss loss than from has what decreased. be more cars expensive cars I history, to has to the course are thread proliferation calibrate difficult damaged, to totaled. tend increased safer to there's because Over accident ADAS be and the very walk cars frequency more drive perimeter that of will and on still much sensors

so on segments, much question It's of not a diversification our measure your is Specifically, it into way. other of as characterize that risk wouldn't auction mitigation I the it liquidity. byproduct

in trade-ins cultivated more is become international Honduras, vehicles has that in the purchasing to member damage, overlap is As that to at in Maine, begins we it Lithuania, us base car whole in cars which heavily liquidity buyers that enabled domestic attractive dealer Nigeria, on and and in have as increasingly more dealers that expose therefore, have immediately well, and and lighter segment. an We Poland, car the it within universe lighter to the and Copart. more that grow receive Oklahoma,

as the companies to So well. dealer it's returns. and risk. better our also and desire a more that per helps insurance liquidity then begets begets incremental grow not a se Auction to car ultimately, mitigate It's desire liquidity business, option

Derek Glynn

there. climate? terms you the capital doing clarity Okay. solely uncertain capital precautionary Great. that opportunistic Appreciate a given would what that. Or was on amount more were there priorities? And drawn thinking of in intent was other that of perhaps can some appreciate about your the down credit you on original elaborate anything and allocation line. measure I Was economic

Jeffrey Liaw

it. the Sure. question. global that a it still low was financial moment enough we We mitigation we should measure of the there to cash a risk at have was a enough made cost for more draw took and That revolver. us economy the system, just the that Know when do, we course. uncertainty, to sense us needed on had and Fair available

with revolving quite first-tier credit funding. intact facility Our remains banks

that there have there when all it is was was to that conviction and So it, we we it. need now

Operator

Prestopino This next Barrington. question from We'll queue. with take in comes Gary our

Gary Prestopino

A up. to keep I'm couple of questions here. I was trying writing real fast.

correct? down. You were XX.X%. noninsurance that were said your Vehicles Is down

Jeffrey Liaw

precise the going. you give keep me Let decimal, but

Gary Prestopino

is, the charity I at Down were or up? trying if have was back you to what you Well, what Do get that? out they? cars,

Jeffrey Liaw

the said out north quarter. -- positive, slightly the back positive, of you been If as X% just have wholesalers, the would for and charities we

Gary Prestopino

then question kind That's of fine. Okay. a And hypothetical here. just

do when for if Given challenged, say, all QX et how the takes be whole that's June, up the from country you to quarter, you going things -- to is. assignments, do long the at June, open is yours. were by obviously, of of way of it it cycle quarters, to of by, you where the two there -- if -- normalize? back country think and up take the hypothetically, does it think fault to the accidents just before? if to start middle But when the a cetera, the opens growth get level you end no were to quarters It's three Is right,

Jeffrey Liaw

or And you mean, Gary, in terms our of unit sales revenue?

Gary Prestopino

Yes.

does impact real flush losses, of system from given is start no going Exactly. take Just level you are how the through there trying same assume up people that that driving, long time to what COVID every -- from get I'm and where opening is And country your to any situation to the total level same in going the have be the you're at you in general, of quarter? yes. to starts to accident,

Jeffrey Liaw

that sell were paused, we I reason same assigned quarter. we quarter, cars The given that any Gary,

and picked in the XXXX, cars of April. we that quarter February, in So up third sold March we

last layer that and ago. cars and few before, quarter saw moments the also a and years before a described cake literally, quarter from the that X before before the -- We quarter I

going for terms you've has it's -- in think car. months really of several I on it's us memory quarters quarter So no average before some based a several -- meaningful because sell the every But burden to quarter got forward.

Operator

Ali question next queue Partners. from comes Our Guggenheim in Faghri with

Ali Faghri

of like I remind specifically COVID, I A meaningfully? proactively be out taking are decremental your to may should in wrong. fixed response the here. us structure, about where versus costs but aren't you term you the think about variable cost like and guess, backdrop we can a business, declining couple near first, margins how It sounds volumes in

Jeffrey Liaw

described you of handful too. Yes. questions, what A there,

with In terms boils and time of costs. haul, when horizon that fixed selling In what when and are -- tow long we we for the and costs the vehicle incur mix, question the don't over Selling we example, all semi-fixed, costs we to term, is, exception, near don't. variable costs of to of variable. the are always down tend them for majority your the a

meaningful and in we think a as storm X, then the as shift, near to for as heard with customers the a But years through few I and operate serve ago, So our term, changes. the you would XX we that well us intent the describe is consider minutes otherwise, conclude business next will this we season structural if is well. X,

Ali Faghri

quick helpful. follow-up That's And a here. it. Got as then

perhaps limited, it's more a ASPs mentioned mismatch pre-COVID of of supply-demand levels. trend? so You above that to market, is currently still the returning supply due the temporary but buyers relatively to a are Is as are vehicles

Jeffrey Liaw

It be. could

I think to that remains be seen.

I in inventory or is higher rebuild Also soon. But every something folks frequency, been that's you, cars, themselves general going liquidity, catch-up quarter lives, be loss think our -- forces up go to chosen speak. economies a So X, up of our won't think ago. trends before week away long, and if damaged long-term tailwind course, had less short parts what the suddenly cars, to just auction -- you this sit a -- quarter, the younger for XX effect, that described moment right? aren't there the they quarters, there if or of out a what you I find the but cars those ASPs themselves so or or it they rest may have had of anytime total recover, forces consecutive of better,

three horizon, week, returns means too that a is of drive quarter a What focus multiyear with those course, concern we what we four Now on to ourselves basis. over much. week, two up on, a don't even how

Operator

Instructions]. [Operator

Humphrey. Robinson Stephanie Our in comes next question from Benjamin, queue

Stephanie Benjamin

looked if one maybe auction have speaking, some was I their or just their felt, insurance providers your if really they relationships interact with diversify of you speak follow-up. or hoping their restructured how you broadly have I providers. could auction had customers to quick to

year looking Just comment just the years. be any high-level several back helpful, would last or

Jeffrey Liaw

ones all have of I general, appreciate efforts are ways But tough again, of the generating approaching in our possible we're service like times we providing question, them serving times crazy about ordinary and the in different possible many and auction to the who No. and And generalize -- customers returns in Stephanie. on well the our focus the today. business. best best in

time, over and customers the think generally we share a trust have earn So to of win gained as continued and result. have I our market

that wouldn't say that theme general. So I've I heard in

and the or question one serve persuade the sourcing we sole multiple customers think heard forth, direction we can match I we well. is our haven't our chess I them and can any particular works other. serve the between well How trends providers prospective customers that so in can

has So chips the approach. I long we'll history returns let to they where that, productive as level proven customers, fall been may. and Copart auction we And Copart service think deliver level that has a our

Operator

question Ryan in queue next JPMorgan. from Brinkman comes with Our

Ryan Brinkman

miles non-salvaged split able lower more with absorb is other split materially or whole cars, if of insurance decline you the historically out cars. any and dealers by think ability whether also driven the have cars? split. versus the if wondering the in I investors I'm noninsurance Are accidents, than taking car noninsurance to know capacity yard salvaged whole or of -- just percentage there whole sold on is But sources. given versus by you the provided I break to

Jeffrey Liaw

second -- customers us. capacity, think and with so To to and invested business in our dealer your second is first. probably can because aggressively wherever I we the customers can serve large, have they our the serve by than part want the insurance customers, question do question, in easier we,

well. about that at call on our Jay earnings think length some I as last talked

always invested opportunities that We present those we continue can say invest and so have yes when to we themselves.

insurance it's land declines the that do so, figure problem. and us allows them So the that would that driving to excellent -- dealer serve returns drive It can the assignments not and to more and that so out we per We'll not no, activity in our is to we that business. background win reduced us it's enable in them flawlessly. se service is

Operator

there more at Speakers, this questions queue no in are time.

Jayson Adair

you. to forward everyone wish then. the everybody you stay call, we Thank on the and and on talk Appreciate we'll right. coming All look XXXX, QX to safe, reporting year fiscal and in

Operator

and Thank This today's you, gentlemen. ladies presentation. concludes

disconnect. now may You

Copart (CPRT) 21 May 202020 Q3 Earnings call transcript