CPRT - Earnings call transcript Q3 2021

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Operator

Good day, everyone, and welcome to the Copart Incorporated Third Quarter Fiscal 2021 Earnings Call.

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

For opening remarks, I would like to turn the call over to Mr. John North, Chief Financial Officer of Copart Incorporated. Please go ahead, sir.

John North

morning. Good us joining today. for Thanks

certain these today's discuss reconciliation accounting include tax for non-GAAP and of gains, which stock option provided non-GAAP we'll with to press financial Relations website During items, Investor corresponding taxes reverse a measures to on currency-related income these release yesterday. certain adjustments discrete are the analyzing measures measures, issued our relevant certain to together benefits trends the assessing We've call, our effect related tax GAAP income most exercises. performance. non-GAAP foreign We measures payroll of GAAP results believe in our our directly our measures and comparable in and business and

meaning respect securities views substantial including statements addition, management's current risks trends, including to the of forward-looking uncertainties. Federal in In today COVID-XX within comments our our with laws, involve and and include opportunities uncertainties forward-looking These markets, pandemic. the statements

refer our and Any on detail have Report XX-K more For ended XX-Q. no in for subsequent revise our and of are quarterly the Form update Risk as July on made our we the to the on reports Annual Form each statements. year statements associated today with section or titled XXXX Factors XXst, forward-looking business, of you risks obligation to we any forward-looking

turn over to call way, Jeff the the President. with I'll of our out So the disclosure Liaw,

Jeff Liaw

agility around past our and extending financial in our the at you for the field want thank of report Thank third We're resilience for start XXXX. their here record results to a to you, world, team and headquarters by pleased John. over to the XX-months. I fiscal the first quarter

roads our And essential year both. challenge our customers, having grateful responsibility an I'll results, excellent on we support remarks people of for we financial business over of infrastructure for delivered and as things. I'll keeping I'm statistics and movement specifically. each now to before safe. the about and We that people close it some our of For the turning share and some seriously of take review our providing with and for a key start proud John team in the to communities a the quarter, our over clear future while for the keeping service face very with

for quarter, For with a a global the and we increase international sales the of U.S. X%, unit decline of of increase experienced an X%. X.X% quarter

in operate. more we're countries are observed and We pronounced which we reopening likewise plans, certain experiencing in the have here in shutdowns They U.S. more protracted internationally adopting

the the increases specifically Our slightly volumes of the below and with driving insurance activity XXXX. flat approximately business but product loss This in by frequency, claims in decreased also was down offset relative of activity, and is total course, norm, as driving third X%, remains frequency suppressed lower gain. quarter to XXXX, effectively share

Our a categories. environment approximately grew non-insurance business is efforts sales volume with strong in XX% combined unit This our liquidity U.S. across vehicle price reflection and non-insurance auction of used year-over-year. also

we believe what as Our course, significant serve whole expanding our about auction well. those that been to set liquidity Previously, us talking we've XX% calls. serve car enhance were the to vehicles, further a growing year-over-year, of our of vehicles, auction is earnings additional enables effect platforms on in dealer This increased for then an and unit particular of liquidity volume declines reflection in business flywheel compared other dealers.

moment our dynamics year-over-year for XX% ago, U.S. selling and at On the XX% XX% of quarter. year-over-year worldwide global described ago. decline increase ASPs reflection comprised inventory, a average XX% a inventory for Our of versus of increased prices, of that's April inventory the for of the end a year increased international

recruitment, number market as well. both strength our moment shift is on cultivate own ASP retention a as to more in a buyers effects. primarily mix The efforts reflection of increase more We'll recruitment Our that worldwide. is as comment and ASP dynamics member as we not well due

for And prices in have more while our Our than were the car used exceeded example, who ASP contributed car year-over-year. selling our the and overall are reach our vehicles growth in from XX% has U.S. growth up a buyers of marketing of broad used our emerging to recruitment markets. price price reflection far environment, insurance member ASPs increasingly economies, growth, global course our of capabilities, again and to

apply a and to auction as cultivation itself that we The long-term confounding force signal I of both extreme as My Our year-over-year U.S.-centric, will challenging would what's those we markets and might per well abundance separate to of noise business. of of be the all observed from our our pandemic. by unit, pose I'd by reflection supply our talk liquidity assumptions a continues growth the would active pandemic buyers. comments of or rest to and natural large some the certainly to not as minute the may and bids bidders how be grow, also the they affected as be domestic and about international an given been aftermath questions the sequentially, but more take It's variables will largely our well. of thought at moment. and have

from over continue reopening commuting to modest the XX% Due relative appear the increases to to time you the well. capita due way however, appear We U.S. do our know, availability, more still suppressed modest certainly does those aspect but other behind there shipments, particular, perhaps observed levels, though, arrangements, we very accident markets to over to transit more XX-years. existence. six gradual here to technologies in based be vaccine speed past shift a well, among frequency work per trend during and favor driving. in down of and severity mass safety still increasing operating turn reopening car the as is decade more, a pandemic, others. to penetration it like claims activity, or expect then technologies months of decline severity sources declined driving with to sight new essential their virtual also on various which line but the to in employment, and time, higher We other in anticipate in every XX% Google as expensive expect driving. as certainly repair as of of have U.S., fleet. the driving, eventually safety on a make our and in to an increasing remains leisure we've with Longer-term, become by Maps, increasing over of as traffic of do, First education, pre-pandemic rebounding, to expect increasing driving, frequency the a in continuation of sequence we or thereabouts, due other to long Long-term, fully healthcare, distracted forms three Mobility Accident offset increase some be and for to

East On quarters. Canada, from ASPs. combined from the with average Certainly, But Germany, and Middle have U.S., vehicles selling would over I longer-term there wrecked over the prices, the emerging and pandemic elsewhere, Finland our markets, time, favor has been note Spain, say effects. of economies question of UK, nearer-term XX-years our higher been from the for for straight the of efforts demand increases from for growth we it driven the the trends of seeing with in cultivation plus, used prices of supply time. for valuations, shortage cars. quarter pandemic, we've we're the that have acknowledge in new given I'd very ASP XX historic over now car an experienced third last that year-over-year have beginning But, member moment year, exception our the unusual experienced

of elements will the that we prove over there time. selling So, that process more are durable much think certainly

future continue grateful our Our our consistent to strategic dramatically over quarter, We're long-term well a of North. the I'll and with and expectation post-pandemic, in four largely and CFO, to recovery that, decisions the post-pandemic, what over on excited we've operating with performance our as growth turn financial past And it this years. are for predicated as investing John volume our own. customers' experienced strong

John North

Thank you, Jeff.

ASPs. XX%. on revenue revenue to and or to due then year, earlier Purchased of or increased million due service little U.S. or grew I'll primarily brief $XX on including higher to the we'll currency. few vehicle As international international and million benefit an XXX% make increase service the increased results $XXX questions to vehicle Global prior increased and higher revenue $X over ASPs a XX%, to remarks, XX%, Global The sales million by be to we U.S. few mentioned, morning. to our revenue a more grew XX%, purchased a up was take provide an increased million color XX% $XXX this experienced XX%. comments and due happy volumes.

$XX XX%, cost $XXX XX%, percentage increased improved basis to Global million gross was defined profit, XX%. increased points to as As to margin sales a result, by profit purchased increased our and almost higher vehicle XX% of million improvement less vehicle XXX approximately by vehicle by gross ASPs. international segments by driven from margins sales and margin or both margins from XX%, gross primarily overall. U.S. XX% improved

and in expenditures, continue expense, a will to depreciation but percentage million time increased improve and anticipate lumpy $XX to XXXX. to year be G&A G&A revenue a we of Moving compensation as We excluding G&A over $X.X spend from million grow. stock will million our ago $XX as quarter-to-quarter,

margin in ensure non-GAAP We $X.X by to million operating tax the year from to year this effects $XXX due in the million income decreased $XXX tax QX remove improvement currency $XX non-GAAP X% of XX% XX.X% on would $XXX income million. described liquidity. the which of revenue costs. to XX%. to to income been basis stock last items, from and decision income the ASPs for out increased 'XX. earnings, net options, effective a million both lapping due $XX.X above, primarily adequate the have million rate, the release. net days from quarter million was operating district increased As On or tax employee result been benefit non-GAAP evolver year's rate our from to In delivered strong certain million $X draw our year. income earnings have of and to million tax exercise a million GAAP and expense XX% benefit tax of interest in effective of a XXX of Net our the a tax $XXX at of from adjusted controlling benefits pandemic an purposes year-over-year, Adjusted third expense last our effect to of GAAP initial reflecting points basis, included $XX.X $XXX growth million $XXX million summary, from tax increased last

nine net non-GAAP year income this And from 'XX, increased last to year $XXX income year. from million this months to first net year. million million the million GAAP of XX% increased last $XXX XX% fiscal For $XXX $XXX

XX, a XX, July year-over-year April cash over We over of of offset had questions. adequate partially in expenditures as conclusion, flow, the cash $XXX and of durable moat attributable to and We're remarks. capital $X and And capacity market comprised zoned for million facility credit stronger increased to our to potential XXXX. building This for enable Operating given invested interest, for by and earnings decisions difficulty $XXX This shareholders. to to of make of the capital quarter, liquidity creates million billion business, in ensure conservative both driven equivalents, with In prepared we economic and inventory. and of was capital for is strong by long-term for cash sourcing flow revolving this million that's billion. to our end were an and highlight of facilities. increase briefly primarily XX% our the happy customers investment $XXX cash with to consignment million, additional of continue working cash our appropriately Now million capacity approximately liquidity the undrawn capacity amount an $XX of consumed us $X on the the entrants, some structure flow that take by continues expansion. by $XX.X a wider that, quarter

Operator

your conducting Our question. Securities. is will first Bob a [Operator CJS we proceed Labick session. Instructions] with with question Please this from At be question-and-answer time,

Pete Lucas

for good Bob. morning. Pete It's Hi, Yes. Lucas

service if how just than less you how you about talk increased ability could there. raise wondering you demand needed? can if anything Just impact auctions i.e. is supply to could Your cars price, are comment imbalance selling -- fees, other discuss faster,

Jeff Liaw

with bidders I But, I'm for about not I talking activity, bidding bids car in where international you're having a -- domestic reflected entirely recurring margin been environment, certainly don't more terms effects unit, been from already bids it dealers. that's large, conversion thanks for Everything of question. vehicles and consigned the unusual used than think else before per strong if years, some talk price in course, has since the and helped Pete, has on has many a of other true the price. think follow. sure and But, and what we there by pandemic. any theme about the are high I of been

Pete Lucas

Great. you you there. does think mentioned I Can mentioned seeing some to just of kind talk significant whereas domestically, or terms have? Thanks. or dealers, internationally Copart dealer you in about, And mix there. disadvantages And disproportionately What themselves advantages sticking with you overall? share taking cars, of are had similar Copart

Jeff Liaw

in more to because than be cars. internationally cars say, instance our tend I'd the higher indexed they but first similar, insurance value

internationally units. as higher locally, low do that though, cars will the some So value tend as of transacting to are almost end go matter the include economically, well. mix very dealer that the up insurance ones cars Those the end course

of customers what prices what of are at with to can are that share the terms we results described, In you them in our capture all the achieve matters the the as end, delivered auction.

So more by we thus auction right far. still cars. earn sell their and And matter of them, the dealers to to for the prices continue deliver and it's most liquidity, to that

Pete Lucas

just your them you can Copart a one for anticipate a one last Or, them bringing me to with cars that the And being you without to in all dealer go Do do sticking to And if Great. future? cars. yard? do able not, location? sell dealer

Jeff Liaw

our before commenting after a Today, brought I it think to a sold, long-term we're or go. when is either where might sells is not vehicle location. Copart it on today products

Pete Lucas

Thanks. helpful. the the Congrats in Very and jump back on Great. quarter, I'll queue.

Jeff Liaw

Thanks, Pete.

Operator

Our question Truist. Stephanie from Please your is next with Benjamin proceed with question.

Stephanie Benjamin

afternoon. good Hi,

Jeff Liaw

Hey, Stephanie.

Stephanie Benjamin

bit assignments little side versus seeing, levels? than some just demand get the a pre-COVID touch you a rate they're greater what at demand to has from buying of like international trying buyers. the levels on you're the saw supply to I'm lower wanted feel level. of we I function just a Do particularly been and

this trying just I'm healthy point of So, the to an how at are of idea get time. buyers

Jeff Liaw

were describe the or as international purchasing the bidding purchasing would the I and rates our buyers they very pre-pandemic. same minus in The are healthy it aggregate. is plus buyers

with the Now has ASPs that's on they everything with having meaningfully, cars domestic to their activity than grown shifted up average proportionally and XX%, value higher very our during pandemic. buy tend buyers,

Stephanie Benjamin

an so internationally, some And the love Thank with you. to on with consignment and model. for switch already I'd update you update believe continuing stand Great. Germany then, pilots get to where consignment particularly there. model, beforehand, you any operation, I doing were a

Jeff Liaw

continue Briefly, of people and technology, in so, we land, invest infrastructure. in Germany to the form

a continue well described as selling we are carriers, consignment I a know earnings a insurance probably selling there. out. gross results as settlement, principle for there a to from much style carriers to convert ago. as markets you vehicles to much, basis we as for well, an good eight The This path the as auction think But Copart The superior you settlement economically We historical continue listing as progress away service/net insurance the seven, policyholder as as in well. on to superior model. multiple long-term, greater well as six, experience detail, bear being key as calls linchpin, make vehicles is noted and

Germany in Europe. results further changed in has particularly nothing approach. our investment and to warrant continue Western in our And So, elsewhere

Stephanie Benjamin

guys you customers, high the terms But, tool? Got events the from it. we're system level. are What well as clear some made. that for has with are year, me they as year? customers, well guys What given partner? have changed non-insurance growing. conversations I'm last your for last digital is over you as even investments the for And a preferred significant all more guys then curious, services, have insurance you as when that looking at in asking they of your of in as this some last that And especially

Jeff Liaw

question, Stephanie. Great

much of more by included, phone, more more ecosystem, think I participants handled others insurance is there ourselves more want more various provide by They work has our we our to applications them. done it that sellers. carriers, but through the certainly by being virtually in changed, our think certainly I all virtual text, among

It that's speak. that digital that since so met. we certainly have been So auctions we've one demands, We've has natively operating online-only the to of been helped XXXX.

a to an already and well approach. spoke do many that who our been to we is already customers accustomed means fluently. business we such And to this had language accommodate operating to We've not So so operate internationally, able what this it we're in cases. some cases been in so know remotely

services lieu gotten the or we've those in virtual interaction. for video some requests So are certainly pandemic-related of in-person specific of communication

Stephanie Benjamin

so Great. you much. Thank

Jeff Liaw

Stephanie. Thanks,

Operator

Our is from question with with Please Craig Baird. proceed next Kennison your question.

Craig Kennison

my one frame and as for cultivation member thanks it think goes globally. well. buyer question I advantages, big and morning, network? global compare which size you good Hey, to It's the your And a to does that your scale core picture and of your questions of would How competition? how taking really your is consolidation

Jeff Liaw

I to latter I Being of the us we for largely international on, online, half the firsthand into question, visibility Craig, this accessing think result decade the multiple since is have the I network. pursuing would in I that say, to portion market. is harder what But, advantage marketplace. of think opine a think having of their own is don't essential your buyer

and been promises of We markets. investing digital infrastructure Copart in We in for showing vehicles. market to physical respond a those early media, in and signs physical physical have years of presence buyers

Copart markets anticipate will also vehicles make sense there. and seeds plant that for certain We

of itself manifests know. at We for it's So, for which decades But, think auction in believe multiple in of a advantage of distinct product do investments us. regard, to difficult form a ultimately comparatively the this returns. we is us that

Craig Kennison

CapEx you your for maybe And expect maybe, And this you and frame Jeff. to the couple next could of years? your dollars? then Thanks, target year, outlook where investment John,

Jeff Liaw

very Craig, short, in in still investment think, are mode. I much we

remember yards May may and if expand we the from, XXXX was I XXXX, new launched XX you So, XX to initiative, which of probably XX date the get earnings yards months. call, straight, my when inside XX open

was the out, to years. in exceeded it enough, we As and have at that continue nearly for turns land to least that and few expect ambitious not next far infrastructure invest

is dynamic I think a always this question.

an to taken We've perhaps difficult acquire buy you As to Craig, we time have land, or turn perhaps land, buy permit it up and takes or as permit long been it know, a into land. pandemic the opportunities and previously would opportunity to and pursue.

we very ourselves in much So, still mode. investment view

Craig Kennison

lastly, you just is extent kind you maybe you opportunity Or, that And would share land, case the land that a on shared it where When have acquisition potential can you your that align of buy consume property? follow-up the knowledge that of not what to land? piece. acquire with gains, immediately gain

Jeff Liaw

than wider is aperture narrowly. that, our it's customer-specific, per not or think I even or time-bound, se

congestion And land steward for deliver market make next being certain our buy when could share of that or sure serving about we gain destiny not owning include are industry, to the but good for XX-years, that congested markets, the are think a we customers our currently industry land this and we three. next in own it's I foresee broadly. and can service the potential that control

the about So decisions. and it's tomorrow. serve of just to those But, enough in account-specific factor short, industry yes, today more certainly overwhelmingly, into considerations kinds having our

Craig Kennison

Got you. it. Thank

Operator

question. proceed next Our your with Jordan Bret Jefferies. Please question with from is

Bret Jordan

morning, guys. good Hey,

Jeff Liaw

Bret. Hey,

Bret Jordan

is how bit that stand? To utilization follow-up sort And incremental to weighted then, talk talk about I could congestion a of versus capacity in investment international out markets, little question, real land CapEx maybe that guess, could expansion? us but for you CapEx feel could give U.S. You if about of geographic talked we if feeling much when on maybe as you estate, a capacity you utilization? about building you

Jeff Liaw

is characterize of Sure. to growth But incumbent expenditures in To certainly mind and first that's very I so Spain as a that the U.S., not to-date. question, your the think and the markets, Western capital we the what with Copart Germany majority strong Brazil, your Europe. in come Canada, CapEx UK, portion would of in substantial still

question was? Bret second Your

Bret Jordan

we footprint, utilizing? real Capacity existing utilization, are your looked sort we of at estate what

Jeff Liaw

capacity is Yeah, utilization, part, in challenging as our land fungible know. directly not a subject you address because to

not having or So Salt you benefit city or excess example in in Minneapolis at City, for did Lake in capacity in all, one Miami.

a not it macroeconomic microeconomic so a decision, And being ends up one.

or we on globally se certainly measure report U.S. capacity metropolitan actually don't track per so speaking, areas. within utilization wider, we So look

based capacity is on or in And events. high utilization, utilization could high be or either where high a so then catastrophic we it our today, be CapEx capacity could target

that by isn't, all those into global. decisions, large, factor will microeconomic but and We an of overall it

a were We year are metric ago. That's X% a guides our business. not that higher than we

Bret Jordan

looks it as a like the sort Could average, company quick the was of cars comparable And, insurance of car mix-driven, not you us Okay. of value. versus a And dealer sort structure typically give what is higher cars description for that then a question dealer said like you dealer transaction sounds fee it the ASP, are just is on value? the maybe business? it for but really

Jeff Liaw

Our the of vehicle, the so auction same fee of regardless platform, speak. structure, the to has source

be one vehicle. So would source buyer of the as to you auctions, a indifferent as of our the at

well. whole I shift or drivable be like down for It's more a parted over higher, the car, a makes melted that look Copart I insurance frequency. dealer that will price, is that the meaningfully that time, higher big disclosure, think lot as think average expanding total insurance It salvage than but rising It wrecked it than typical haven't is car In terms universe we well. the dismantled though selling is to safety it us of car values is provided loss over relevant vehicle, a technology metal. is decreasing our time specific as or the they the

but view with overlap, higher curve is as has and the midpoint them its overlap The insurance some vehicles, car as dealer So, certainly increasing we heavy both well. for there the curves. for than certainly, curve

Bret Jordan

you. Thank Great.

Jeff Liaw

Bret. Thanks,

Operator

Inc. Please proceed Imbro question. with with Stephens Our next from question is Daniel your

Daniel Imbro

improving morning, noted increased or questions. the emerging for you taking guys. Yep. in buyers, particularly markets Thanks Jeff, our liquidity. Good

if activity foothold? you sorry penetration growth the of secondly, missed already existing of First, are seeing from bidder this, or a provide you countries? growth the in Or, markets is but did buyer newer then And I international you kind further of global this bidders increased quarter? mix where have

Jeff Liaw

the but disclose so domestic question. note both we're to increase, fair We unit, didn't for speak, buyers' quarter. did bids percentage the Okay, specifically per that and increasing and domestically internationally bids

So, for I think -- and been we many quarters. has that true

back You check and can transcripts. the go

we've that So virtually the phone. I think said every time we've been on

In are have one terms year the There or currency, countries than of considerations microeconomic of countries mix true. stronger others. some some is are that both here, a one than will quarter others,

some And shifts time. over you'll so see

obviously local see variables also pandemic. the dwarfed fluctuate, You'll economic all by

that's period. flow, that's of global and economies online, ultimate in But accessing the world's ebb effect, we think the confounding activity that's I general, a true is in So see by we'll all benefit that platform the of variable. countries having that smooth

Daniel Imbro

natural just factoring or ASPs limit, how prices they going a follow-up That's there question sense limit just to they at helpful. cannot to it make and why to auction, on keep backside guys maybe where buyer. a need the about that, why as that increase? longer-term money makes purchase they If a do maybe on that on of or will, still And is up where continue your theoretical think business? international the Or, you are which ARPU to

Jeff Liaw

ultimate and is they a car, the environment. that, the car make that certainly to to activity an truth specific sell price the for to have some individual is is it to margin answer for car into restore buyer, the rebuild again used I a question whatever think, there their

some certainly that So, have point. they given wouldn't buyer, at for

demand the automobile it's will and of that to reason, automobile international not share international has number access which country, to access over think time. that what much I that want a an and drives however, population has demand static the is so countries an is buyer, grown our the of

the the and what Japan So, countries, cars East over per as U.S. UK, there that's slowest GDP capita specific grow as are a as as per are not most cases, growth in Europe also Canadian, China Asian Middle richest of have that most But a certainly cars, U.S., and Western buyer desire the more countries But the countries with more capita, and rates know, countries and growth for well well. you have drives economies, there the have se. more wealthier. well. wealthiest the per used it's time, But, countries

with vehicle appetite we faster ago. vehicles everyone leisure, employment, growing that is I evade. to call much and economies the a education, for an XX-year a that a So reasons takes the very they that healthcare, for all trend for not granted access on for you I for and this wants moment And cited trend, think, will

Daniel Imbro

helpful non-insurance. then That's on perfect, color. the And last one really

as you unit up XX% imply I within else the XX%. to is XX%, what mentioned get know quarter to you units non-insurance XX% were think that you well over that this other sources were up. total of up dealers but that does non-insurance outperforming average to within were Curious up Both bring are something volume impressive, growth? that

Jeff Liaw

I not. think, it's probably

cars, and signal. that But that segment includes in the of like. sharing level think more will sharing rental of charities noise fleets, rest the general, wholesalers, and banks be I may that detail car

collectively, So, as confusing all or is than more non-insurance you businesses you as us. XX%, catch a helpful. And that bit certainly than individually grew know, separate they serve. than to customer be detail them know, but more a would separate as think more that to of for sets think I We of

Daniel Imbro

best much so enough. Fair of Thanks it. Got luck. and

Jeff Liaw

you. Thank

Operator

from Our proceed next your is question. Please question Guggenheim. Faghri with with Ali

Ali Faghri

company there normalize? occurred structurally higher thanks pricing suggest during the of ASPs even the pricing your after higher, more Hi, strength. pandemic, and the for taking my cyclical dynamics constrain industry like anything factors, or supply Is questions. starting guess, that's car changes on the that remain would used I in could some specifically,

Jeff Liaw

the Ali, before straight in to than I it quarter that would year-over-year think you been more increases pandemic have even, is I ASPs. think what I'd point every three years maybe

ASPs drives of most total is the dynamics upward. long-term, think frequency business loss important the driver naturally it's our I and

more vehicles, and carriers find sensors rational, a economically better and marginal those less drive buyers trains. over vehicles. favorable time, And out, very set insurance taken total their more cars want As cameras more are those who have it damage to better to economically not cars with of wide those ranging ones

But is lot I Five years, certainly prices, growth, talk I the our prove us. So, used will to obviously is relevant isolate today. ASP think exactly There I there's those about -- a ASP Today, which exercise are to factors. to which difficult we're secular. ago, intellectual I we are what more growth clearly scrap a is this car which durable. years over less there is cyclical think to portions either, variables. think think metal prices, of relevant How about are obviously used talking secular attributable to exactly?

Ali Faghri

And in maybe in great. they total companies historically, the follow-up, increase guess help recent greater has the the past? pricing the total rate just maybe at which perhaps than done should insurance causes think salvage way losses, a surge Okay, about in a pricing as I a faster they've what factoring to loss formula, than change degree to

Jeff Liaw

continuation strong shift anniversary as the well. Today, decades loss And over Ali, the I'd either, we has total XX-years think north say during I past total X%. overall, reason I'd that you're the pandemic. long of prone know, before we've loss frequency of loss well seen were the intact repair we the more been in increase the a say of the of is continuation of seen higher of not used aware a as trend, And course, car trend. a fivefold. as value a accident, pandemic, frequency for well. dramatic XXXX, it. of you year, of the we many car price The the over shift. the we If haven't to that frequency more the that, is grown total a carriers are environment dramatic have course has as the And seen

the else and would all offsetting salvage So, equal we drive effect very have returns, of had volumes loss. total otherwise which more strong

favorable trend continuation we've is gradual cars We also repair. more for drive themselves, all I the values The had a would net increasing used else seen effect that XX-years. which equal to think of car of

Ali Faghri

Do loss into all factor their companies insurance total formula? salvage in returns

Jeff Liaw

economic at auction. degrees, machine proposition pricing varying we that meaning achieve call carriers which some can to literally the carrier will Proquote, estimates car. Others, value tool, will our think an access every they insurance on that evaluate I learning-enabled

every which And economic rules run every thumb for the claim see of a make if cost think value rely makes exceeds intact the to leads Over more Proquote and loss some loss more literally of on outcome it of total repair that those decision, and specific the to total time, better guideposts perspective, more or economic use a car, them. accessing ex-percent are will total for economic to I to Others decisions. will carriers that car. sense the

Ali Faghri

beyond a for sheet, last the talk to about in of with that. investing know me in for And much still mode nearly capital? is, Great. you're does you can you're balance earlier like But color. have cash that your capacities Appreciate priorities one billion that investment I your on cash for your excess is dollars deploying very going seem comments. it priority. And

specifically? how So, two? think to you I see balance maybe buybacks want M&A those And about potential and you how

John North

it’s Ali, John. Hey,

past times back are we think still obviously, the our you the we've at focus. the there 'XX the Europe, as I markets Spain, Western in think priority first Germany, the capital it plan. trend are obviously as to with in investment, in to over as other otherwise, well. XXXX, return makes and sense. shareholders mentioned, And capacity all our that remains opportunistic past, expansion the and then years, about, been way that has been primary is There XX number talked of with That we've

able sheet pandemic wouldn't I the the we been that possible been like have we've that think take without the in to think otherwise balance that actions We overall, flexibility. had. we

think so structural other as than And I And that, want maintain. capitalists. we're we view that to advantage a we

on So, we're generate to overall, return highest capital capital shareholders. invested about thinking on the our how for certainly return

Ali Faghri

Jeff, Thanks, questions. Great. taking and John, my for

Jeff Liaw

Ali. Thanks,

Operator

proceed Please is Bottiglieri Our question. Paribas. Exane BNP your with from question next Chris with

Chris Bottiglieri

thanks the for taking question. guys, Hey,

of The technology. first one is on deployment the XXX

that any technology? of see this the be you prevalent your but wanted you are measurable do of And the early, you rollout selling on Just of kind prices, impact think seeing in technology. to of where stand because terms will inventory? How across

Jeff Liaw

in isolate at variables are I Chris, a right, think those changing variables very environment, to that of In hard dynamic a number there the a word, same of are which are kind very time. in

such in service that. technology of you like other among For They us for including us, like the the terms XXX, have provide sellers. one for described technologies, important that we images use cases

best good service. don't differential to we're don't XXX images a fundamental there there's shift carefully make I sure -- in a about talk possible we so a not them And auction think is think very we're position returns. to I certainly to particularly. that track fundamental attributable the providing

Chris Bottiglieri

talk sourcing consignment having And from side then equation, industry? buy on the side inventories equation can the interesting. at in seeing these same the And more at this you two, engagement the the constrained effect as become to buy on channel. any more of increased the That's about more Are you dealers? the your ability of is source flywheel vehicles of kind dealer

Jeff Liaw

much I'm I'm Canadian in to yes, dealers a it's the defined more I the of activity and that of U.S. and as sells word, not both mean, grown and the a dealers, as that sure very our around just a recondition to side extent but the part include a moment. world, it and then XX-years have past dealers sell broadly some XX-years, dealer as unique flywheel think buy side sell share all sure. dealer I it on and not but a By not is, plus. who over buys the or who effect has been will buys is, the car to

Chris Bottiglieri

it. Got

Thank you. helpful. that's Okay, very

Operator

Brinkman next proceed your is question. Please with our with Ryan from question JPMorgan. And

Ryan Brinkman

it just Hi, wanted to primarily the in larger ask can I'd quarter to and thanks I benefited the my if for given and zero taking value like around car of used have part land to to metals I is try given looks again your national of holdings. on a But, now inflation the conversation, prices. higher question. from

research average has seen generally of recently seeing been really articles done. like land what et about the increases much haven't about in price I've some land XX.X% of, the cetera. home of a farmland, or big how seen But price headlines these in So done has the incredible say, I've April, risen into other or and undeveloped year-over-year an value by

gets in appreciate your given might with value kind get doesn't of increase tap your they value land? have could better land, shareholders it the would the be sense what have in think to I into out thinking I captured consider of of of P&L, would recent some for estimates equity so existing raise historically that ever out try the you is given even that reflected properties, actions or So get so ensure other what years that to the you like actions value sale of maybe a capitalized, value of of value any into for actions with friendly leaseback here? about So you the too? land, that there you've just happening that any just you your have the wanted see, any to happening preferred capital there are been the company? the about know put might land, that to good And, buying much you increased into or value you or to captured but the that be in shareholder marketplace conservatively value to sense thinking of how the are to

Jeff Liaw

the thoughts. the and question appreciate appreciate Certainly,

plus. the taken the that also as insurance it, for the history And industry that we own that facility, shareholder capacity of the well, as we land and think buy hold behalf the and I is land, approach friendliest that the customer that friendliest we are it of the view control show on we we would stewards forever. action have XX-years the next

default is that we the So, would approach that's me overwhelmingly to take.

question values reflected narrowly, ensure your to our that in question, more about price. IR the your stock how As

academic think, repurposed us. repurpose we We don't so other to because for to it, been in part virtually never it we that. that's use I permitted have has for Copart it, achieve that uses. it's hard We some own extent land for use

We expanding sellers there serve today to well. and as tomorrow the our non-insurance insurance and serve to carriers, are

us. there is So, know question That I is unfortunately, land but to I academic effectively intention, outcome serve for customers. think the the our is your good,

Ryan Brinkman

to in? you Very that in any dealer-to-dealer ACV digital you participating than given whole for cars thinking I helpful. to on your more a is and have auction backlot rather car car sort if was thoughts market just Car businesses a capacity salvage you're that then without Thank cat might a events, capacity, need Auctions for primarily that on that lots the and might of search Global's be operate? you. grabbing a market trade space salvage participate et curious emerging I type cetera, cars? And if And way in company this have be that, marketplace think including that interested out

Jeff Liaw

of We moment that the certainly extensions evaluate and consider described strategic ago. a you sort

think evolving I world So, how vehicles in we recognize transact. is terms that the of

move to XX-years first call, think move time a it was the at rather to in obvious ago. on were dramatically conventionally that earlier We we XXXX, pure noted we to did auction the less I the platform. As digital

experiment, of the that the still against as sort additional I over is in time. of achieve for from can how cetera backdrop you now. et site to companies note performing the described, who options, dealer, as for is on would services we backdrop it we that certainly continue share dealer to greater the and that who evaluate, double digital-only shifts So here, we are are market grow healthy years running forth. business rates that so It digit of against is

So well. to as I think of power auction that the liquidity speaks

liquidity attending many So bidders so replicate app, and the and money you sure XXXXs inspectors I'm globally. replicate of With not and forth. can online auction buyers auctions an one thing and money that can you with

or Honduras, Poland highest use and you help value the or Estonia or might your will wherever achieve absolute for whether best We or here be. it's car, and it

platforms out the achieve the cannot of there other I think same. many

Ryan Brinkman

doing you're know that about also if know you thank watercraft years you you. now I that XX-plus other right you think? your know. it like sort don't but something crash I last auction. or like to obviously I consider or RVs wheelhouse auctioning wanted have equipment, balls Interesting, of don't of more but salvage air focused ago, on market, if consider gotten damaged Okay. at ever one of you've the the were on And smoke I any cars, do your that's personal heavier don't the was ask things and that or that. in the consider whole got would motorcycles. already? I things might you've you question, then anything ATVs Or, enough to moves? the furniture some increasingly doing, And, just What cars. again, sort was with you within potentially know auction yards, I fire damaged what into tangential then types toys of just

Jeff Liaw

approach think I think priority that list. other a I But, though our furniture is long-term that's technology have auction and possibility, that to we arenas. low on extended

continue business well As per to that we in as Powersport behalf not of National motorcycles, salvage and sells se you know, Auctions, business is on dealers, that other which as the equipment as watercraft, well. financial acquired institutions that a powersports expand we and

would is to well as serving priority our obviously customers number applicable So, as thoughtfully, our we would be critical businesses cautiously core could existing that environment, our and our markets other believe existing we one. us regulatory But cetera consider a other markets. because well understanding our experiment do technology, our of the We extensions to et logistics and auction management, such well.

Ryan Brinkman

Very helpful. you. Thank

Operator

Please Prestopino from Gary Our Barrington with your is questions. with proceed next question Research.

Gary Prestopino

down your to John. didn't the that I global or write were get what's Could down? get chance inventories Jeff, I up Hi, in quarter, a

Jeff Liaw

at Global XX% April, inventory at the end quarter of up the end was of year-over-year. the

Gary Prestopino

XX% year-over-year.

market. Okay. question a And the dealer then on just

was more XX-year wholesaler My the a selling? younger are was real was guess liquidity the XX is the that platforms car that some you're initially market? Have you online it car allows old of that And lot vehicle? compete off profile proliferating the of you of Over downstream these the advantage hands. you competitive to that market to the of a now? auction kind that the you is the Are has of with have to that I is the dealers it that target years taking kind how that changed seeing of understanding

Jeff Liaw

yes. Yes, word, in a

volume to So have with so cars in our insurance well. time, become younger, speak, as the accordance over

So that old sensors to are used as seeing cars, because damaged business the of and and and wider industry well. quotes, newer cars, which vehicles the damage badly and costs increasingly, we're total repair insurance severity

well. As to become has that to so direction buyers cars and brought in market bear more addressable shifted that as then do of therefore the dealer

policyholder you portion car. cars that went imagine back were been good wrecked didn't I have want dealer ago, perhaps a only If XX-years of the would the for have which didn't to liability actual or cars cars had repair coverage, collision, that up cash portion meaningful to another herself, money ended himself car the we and a at Those traded for in dealer, have the front might a sold of were the been for selling.

ago. certainly they is drivable whole than decade more were Nowadays, likely think however, cars, it I a now newer

Gary Prestopino

Okay. Thank you.

Jeff Liaw

Thanks, Gary.

Operator

proceed Research. our [Operator question your next from is Please with Northcoast Healy John And question. with Instructions]

John Healy

those materially Jeff, Thank you, and engine what findings than your there? of what of of see up, of wanted do guys. population. when how How coming think electric you vehicles picture combustion about proceeds compared of question. frequency? terms historical curious terms at car big electrification, different of that's you I And trend to look you vehicles of vehicles, total are kind are loss what kind stacking into the in the initial the another in kind book Just ask business? to see

Jeff Liaw

returns outperformed higher. the vehicle short, electric are In The the Sure. average auction. at combustion meaningfully vehicles engine

a think car cause tend lot with well sensors, weight perimeter, be so I the and I root lower in think that, electric cars the more technology forth. materials of a on the of that exotic to may the of to vehicles lot be

So we auction we easily. shoot the returns we any in more many some But the vehicles generated at kinds of are cases, they for highest of total that sell.

be loss high. total repairs so the there, So, severity I are proposition think to think I is promising difficult, tends

repairs rely on, the rely handful pop extensive public U.S. the around Canada Our our if know as anything, insurance a more be yet insurance that everywhere to as the and engine U.S., to mom equipped electric you the as for The prove Not carriers repair that's think well on of carriers -- so and in well severity combustion cars, cars. UK, network extreme so companies, are favor, the still manage tailwind electric infrastructure, vehicles. of in cases for I most will

John Healy

question. another And theoretical Great. just then

becoming guys. the even With bigger the non-insurance part business for of puzzle you an

I business, pretty a feel As polarizing good at getting do that the business, to do business? you financing of plan returns potentially look think how but you aspects how it's and about react floor it. have some proven it's you to into

rate of the that curious kind how you forward? that going would see just opportunity is? company How an So as for you

Jeff Liaw

will credit think large for or will for it's [indiscernible] I and available, Sure, a a by buyer certainly, dealer be car. financing qualified given

a space would consider, carefully. that we So that's but

do we day. So in day different to respects, it's obviously from many what

so And has been a thing that to-date not It's priority. has that's banking business, of so us for to and kind enter. the priority something a along models been window, But other in with the auctioning but not strategic forth. our

John Healy

Great. guys. Thank you,

Jeff Liaw

Thanks, John.

Operator

have I'll remarks. question-and-answer to Liaw closing reached the for Jeff of the the call end session. turn over We And now

Jeff Liaw

a talking everyone. Great. to Thanks, Have quarter to everyone well. you Thanks, as for joining look call. after the good day. We fourth our forward

Operator

a conference, rest and great of may at time. today's have and you, disconnect your Thank day. your concludes you This this lines

Copart (CPRT) 20 May 212021 Q3 Earnings call transcript