CPRT - Earnings call transcript Q4 2021

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Operator

Good day, everyone, and welcome to the Copart Incorporated Fourth 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

Thanks. morning. Good

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

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

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

of our turn the So, now President. I'll out Jeff the that way, language got call Harbor over we’ve the Safe to Liaw,

Jeff Liaw

We're key the record to with on the for in core news, consumption Thank the across you dimensions the discussing of us measures, last spoke big fiscal including we our as ongoing for business the with quarter Nevertheless, variant course, for factors the recovery of with like. joining you, of a some a results the Delta you everyone. XXXX. vehicle Department of published miles and another fourth emergence in and multiple we've gasoline traveled, setting has seen Transportation, industry the of Thanks May year, John, since review underlying and by been such well. as COVID-XX. the quarter morning, with good The pleased of

to cetera, activity we return normal noticed driving we're still though, to beginning years on et basis an versus volumes, likely accident the see down So ago. two apples-to-apples

in Given we'll well. our our all-time well, meaningfully highs. prices, as the average for the and our growth in digits in values are nonetheless, double remain levels a on several to up about and talk discuss inventory selling as customers due call we'll fact up bit July business, we drivers versus are at generate the later year-over-year, XXXX And elevated our

the weeks, Before we had to dig CAT team moment and has to certainly. Copart wanted active take a in, productive I few acknowledge an which

of with future events take projected as the a we we're now of flooding very We're couple Ida over our serve remarks in own members, severe statistics wanted included but speedy quarter recent to more us, our have business is observed always with many and of myself future close still Germany, over the our our the handful I affected customers those discuss weather and best all in to and those weekend of As forward. Northeastern United and severe communities, course, own including seeing Alabama, weather each of implications States. quarters, headed in the from the to and and financial provide start every well. the in the the We'll weather Copart here care that order other northeast a passing more employees, Hundreds wishing just events with in a first year. members there recovery. team people. the And these Louisiana, years, about Mississippi, we've Tennessee, leading Hurricane team charge of in of recently, of were as

a XX% year-over-year, Our quarter XX% increased increase U.S. the of for and global of an sales unit with XX.X% international year-over-year. increase

see our markets has here or U.S., volume have caused we continue markets. in of in of those reduction more international more COVID-XX volume the in many measures than We to a which aggressive growth less

Within increasing and driving significantly activity well. activity U.S., total our the of is lower loss of increasing driving still basis, frequency increased grew effect versus insurance the driving on quarter two net business year fourth year-over-year claims year-over-year while That frequency slightly the but lower as XXXX. a activity,

non-insurance business from business, which in business We’ve charities growth growth U.S. particular which on that business, non-insurance our our solid despite and about year-over-year, shortages consignments, XX% throughout provided cars Copart historically we volume talked industry. direct business in buy we well. of basis the institutional quarter and including our consumers each excluding wholesales and Our course includes dealer the unit wholesalers for inventory dealer grew automotive charities, consignment and as

vehicle across and used growth strong are consignment of returns, non-insurance prices use strong categories. these Our driving therefore prices are car

year measures few increase Our end global of U.S. and a inventory, for on ago. year well. XX.X% for digit international in to ago, to increased XX% a inventory compared as growth attributable That's a I've basis XX% two double of comprised July and described the at decline the inventory moments a a COVID-XX of year-over-year

mix with and attributable efforts. up recruitment quarter, a ASPs that question member how part grew often not. a for The ASPs selling ASP proud the worldwide reflection XX.X%. also is prices for our customers. our that it's are XX.X% of for vehicles, retention course strength we it's We byproduct is used is, The average of and of we're shift, market of but get the especially of in U.S. a record delivering to much dynamics

than comparable that. are or even up our still up more So levels ASPs insurance

in While our prices to growth contributed course use have car of ASP growth.

would well we and recruitment that the index, mentioned which efforts use The at throughout prices well, moment of had third-party month prices provide of car a to as reflection other rate for the directional generally and track member guidance. which at marketing that is being selling of Our track XXX.X of excess I indices as grown a it XX.X% similar pandemic in year-over-year. the of prior an of those increase well, ago. indices Manheim August, one do is as We a

selling that the as average per figures certainly are output bids the per In bids for the year unit, notion of But quarter, all well. notion, more continue noted support the more a that ultimate flywheel underlying certainly unit to liquidity. metrics international prices compared ago. we per auction Our unit, the domestic fourth more bids effect

away. is largely hold an of will questions, U.S. about back pandemic. pandemic affected we our lifetime of humility nature But longer-term the is certainly revisiting traveled. liquidity once auction appropriate we Driving stronger worth course, Our in of of activity continue the has what they've to and And by I be about have given by gasoline certainly on than level comments ever centric. miles been. how the these we've be assumptions it's and after the The XXXX goes to measures levels. the some But seen, prior not And will been think yet rebounding natural it talked a event. calls, vehicle happens consumption

accident business U.S., saw they're of and accidents grow highest it is but believe driven. fewer but new many during countries frequency to long-term the us increased one the traveled per accident frequency, in We length emerging the some in to certainly claims or wisdom to see, the the our practice, buying miles miles to be to loss learning about that significantly. miles accident frequency a has actually pandemic per that the will driving, we in offer can miles continue vehicles somewhat pandemic, driving our relative pandemic in That if value miles decrease. in I in historical that traveled, respects driven. per inversely frequency arguably that decline always And we've that vehicle in the been are to think related that to well. for at continue therefore mobility But distracted conventional of past, will the I that miles person We most markets a will On effects more longer-term in we've grow in there wanted and driver speed during addendum higher vehicle talked moment. important increase certainly traveled, actual frequency total seen as our seen

of of the note trends we ASPs, durability longer-term favor the ASPs. in On

we important consideration U.S., for We in and or all values increasing their be XX, that demand high weakness has note questions natural and see is prone Canada, especially are What higher prices ACVs repaired. and the continue new other the I eventual emerging else high to the accident trend The about economies be light is the total in loss future. else so an easily economies. and be more emerging the I like. to are vehicles, UK, one when face mature I are the That semiconductors from recovery to a it been cars accident before think misunderstood want sometimes These is car think XX-year drivable purchase vehicles equal, from all The can of could is worth which total will economies that the our selling the wrecked think more vacancy. wrecked become actually to fleet. pre trend equal a reduce overlooked. vehicles for eager foreseeable

and vehicle eventually we consideration there will higher certainly is offsetting in ASPs loss values, frequency volume. a see that therefore higher consignment decline in so total in decline And or is the

the We with our backdrop now strategic tone excited make pleased post-pandemics, of to for and weather call. and pandemic, of severe strong communicated operating congratulatory certainly year sound can continue decisions quarter the in We're of against predicated over with feel the performance nonetheless, ahead. long-term the grateful events the the the what expectation quarter certainly growth But results we're a a we've It this consistent all financial about awkward our on fourth world. years. to on over the

depth business it our over ever quality With the sophistication think our Our results that, stacks of of of than yielding been. it is team, than North. technology our John the let The auction our is better has CFO, we and for liquidity, me customers. to ever our stronger turn

John North

Thanks, comments questions. our of a few and to some Jeff. operational then more results, open on can up I'll we make

service the benefit or U.S. Global service revenue For revenue revenue currency. selling $XXX million due a prices. fourth higher XX%, grew to increased $XXX.X million to quarter average due $XX including or XX% XX%, year, primarily XX% increased revenue global U.S. an Purchase vehicle group the increase XX%. and prior or was XX%. increased and of with vehicle increased $XX.X over up ASPs sales international the XX% international higher and experienced purchase volumes. million million

offset lower of defined primarily As driven decreased $XXX.X or by gross G&A to year, higher XX%. in million $X XXXX, purchase $XX.X U.S. increased at XX%, to depreciation vehicle XX%. move by in XX%, higher year X.X% a ASPs this less but million an by a expense. vehicle partially of basis G&A compensation from revenue vehicle XX% as $XX.X to the gross a gross improved $X.X We leverage. margin percentage a from anticipate increased and to million vehicle XXX improvement of discussion future revenue spend years. our margins, Global sales stock And points million expenditures margins sales ago improve XX% X.X% excluding to from revenue a increased by to of result in by million from to increased profit continue percentage approximately due as points. higher I'll overall. of cost basis profit, XX quarter G&A ASPs. of and to cost now International purchase margins mix to fourth decreased

leveraging a expense last by from from facility, revolving improvement delivered due XX% margin to July our interest million. upsized of which XXX in $XXX.X X% strong points to Net income revenue upsize million our year-over-year, to We increased credit operating due volume. As growth $XXX.X operating we $X.X and or million of GAAP increased ASPs result, year. basis primarily

rate expense tax million fourth Adjusted a would benefit XX.X%, rate XX% of stock the a tax from to year in release. XX% would $XX have last from the $XX.X effective included this XX.X%. basis, options, adjusted effective year year. $XXX.X quarter exercise purposes million non-GAAP been our On was stock and on options, a benefit the of million income at full rate, million increased the last have XX.X% which currency, reflecting income Before been income the the normalized non-GAAP our tax non-GAAP our and earnings $XXX.X year related GAAP employee to effects for costs million tax Fourth to of of $XXX.X an been net $XXX tax exercise this year. on net remove acquisition increased in have million quarter

revenue XX% or global margin benefit million XX%. For gross operating including basis improved ’XX, full year to by fiscal currency. million basis, gross increased $XX.X points. by income million, a increased basis XXX $XXX.X $XXX.X percentage XXX Global $XXX.X to XX%, and increased on increased a profit million year to margin our or XX%, Operating and points due

Finally year. from XX.X% And $XXX.X million increased this XX% non-GAAP million $XXX.X million from GAAP last last net this income $XXX.X $XXX.X income year to and increased year year. net million

cash inventory liquidity capital by of billion had quarter which over by moments increase of ago. XX, over and $X.X Now million quarter, million flow revolving dollars the $XXX.X highlights, and as of $X of liquidity to flow of an capacity expenditures over XX% XXXX, is the briefly July of approximately last with year-over-year year. our we capacity a spoke This We for comprised few July increased undrawn of and Jeff Operating a cash invested of cash an in capital and expansion. billion. a equivalents, update of about working decreased driven $XXX.X credit million $XX.X amount XX levels, we the facility to billion this was primarily million, investments attributable $XX.X cash as

invested we $XXX expansion. capacity of with CapEx, XX% which approximately year, the in associated was For million

We this marketplace. ability whole our prioritize numbers and in opportunities adjacent investing total other handle infrastructure and believe the car to of continue physical and in increasing durable investment a above creating is to vehicles choices, loss advantage continued

changes, structure market We regardless focus or for technology, conservative in the dynamics. economic on operational while that transitory and maintaining allows flexibility, both continue our investing of relentless capital future capacity

Now our happy remarks some up questions. we’ll to it for morning. conclude this we’re And open prepared

Operator

you. be question-and-answer session. Thank Instructions] [Operator We'll the now you. conducting Thank

Pleased the questions. Our of with today Securities. is first question coming line CJS your from proceed Labick Bob with

Bob Labick

congratulations results. fantastic and morning, Good on

Jeff Liaw

Bob. Hey, Thank you.

Bob Labick

Yes.

quite too, to this And the I roughly little sequentially to sales strong were were inventory So looking of from flat, cost of point? all want basis. yard cyclical but at building what bit. increase factors it? inventory quarter is but kind Are other you obviously, quarter And talked that bit the Is it's up sequentially, not seasonally yard kind a between start, are really, about revenues? build? revenues on if drivers inventory, service growth. inventory that the And revenue last is a -- expenses there other Service behind this flat on really

Jeff Liaw

fourth yard preparing business costs. inventory in that driver this which year, part growth of meaningful about Yes, the of ago. ahead historically in the the quarter explanation that usually certainly -- in to is because that portion quarter, healthy inventory a are of a quarter particular is activity talked of not growth. for that a we us. is tend is reasons through from because of the fourth and an investment, And seasons winter, pandemic the Bob. part quarter The for the the the third. question, portion is the the to inventory Fair some Yeah. ending comes for we while a liberating the little second quarter We January build in in This is build in in extent,

Bob Labick

Got it.

know terms you I of it versus put could you've but just this, recovering. up the is insurance looking pre-pandemic wrap kind the if of And it us in touched of you growth great. How driving a a accidents, do of Jeff, to Okay, et insurance And in now on normalized cetera terms of how ahead? you accident, activities? to takes levels, get kind rate long maybe back think

Jeff Liaw

that different, certainly and I case on our Yeah, when emerged. across seen, other we one. that's way in and in our answer impossible to the almost rolling might and course, being out, again of of right all, vaccines the rise were U.S. many were the question the My an well. many even June, be Delta at and in we've markets with counts variant And then as thought of done

the we I is, the consumption look than might, would the activity, So perspective I think data, driving you about gas to is metrics, same have a DoT that data. that the of more forecast we others know On insightful the might. which unwinding don't COVID-XX

fourth We last XXXX suggest I multiple quarters of but guess answer we bounces back back, information which versus quarter would would that clients to know. don't I quarter fourth the candid not is levels. huge certainly year, as our don't growth When though. company have from of insurance -- well, yet

Bob Labick

it. Got

of now Okay, ASP for dealer growth compare for Obviously, words, the mix before inventory cetera? cars ago? the the great. about big guess a for And older been car -- have car Obviously, used have and were you now? et to I me. quite How driver presumably cars you expanded dealer you same mix Copart maybe then you've car or Manheim last Or, the are Copart adjusting time. like one some the years look index. cars other three typical is been talking cars for selling as like such two still type dealer in does your and it aged the what

Jeff Liaw

that of vehicles high member think side. be I our their perfectly least of on value see in look good at perfectly that you'd Range lots, European car the side cases. some a you're Manheim adjusted surface functional therefore and base, know. on you similar the different the damaged and natural Rovers that's us the think that's ASP cultivated for continues. astonished and more I and would some by dealer likely base looking somewhat in as you car The has many typical you describing a cuff That though, know benefited over better the turn becomes higher off the index. on and who's for quotes yards, that you've for valuable And has different even as certainly been And things liquidity from drivable trend pool buyer insurance a looks if as car. us true That forever, of less the liquidity years visited

shift a an the liquidity as market, But time. is speak, up well. has CD nudged our so dealer in Copart certainly is This it gradual So overnight business not to us over shift. and

Bob Labick

Congratulations again. Thank you super. Okay, so much.

Jeff Liaw

Thanks, Bob.

Operator

of your The the next Moore from question Stephanie proceed with line questions. with Truist. is Please

Stephanie Moore

afternoon. good Hi,

Jeff Liaw

Hey, Stephanie.

Stephanie Moore

have events a bit the to months. I of catastrophic globe the on that really wanted over the little of couple touch the impact last swept

that the know for quarter particular deadly the of any profitable as maybe more or and particularly we profitable, somewhat coming of should in lot there's some expect I the Germany, we across on flooding as a well impact expectations and what capabilities that quarter to saw in situation. the First, the us, pretty or Europe, it remind to catastrophic expand you so make been And U.S.? can given your efforts had

any So generally provide can would update you you. helpful. be Thank

Jeff Liaw

Sure. Thanks, Stephanie. after catastrophic occurred activity largely quarter. The significant the

in events. we United So past, modest in In absolute relatively in events catastrophic in prior experience these particular, States, flooding size. compared some in did were to U.S. and the the Germany the

certainly In depending simply run well of to that more a years is the then of we yards insurance awaiting behalf have, answer and bought up We land an Do course, idle, of have posed I answer CAT the catastrophic a to activity. invested might weather acute terms continuing the on as again. We store have on basis catastrophic volume behalf of middle on have in of and massively accelerated the our behind process titles the the that also yes, year come. anticipating of catastrophe, key on our the expand the a we event we invest in again, severe pick readiness, we our Stephanie, think yes, land it. many catastrophic customers suddenly have company service trucking in support and In are important is our to question, over cases then more technology The and and are, temporary questions the And clients? sell have a to lease where a The this them we is to millions towing you vehicles event certainly built be, the customers well. need to a of to catastrophe. can as we until cars variable do capacity.

in our efforts. own, as fairly therefore We expect continue fleet to a which have those to sizable in support of we to well invested invest

folks home in the ground, who in us to a where on need join these most day is So acute. but are deployed are to are the day their yards crisis asked

ways ready year-after-year. So for made Those those continue and very events to investments are the more than in minute. to consistently address be anticipation weather grow us to we've been have scrambling that all rather of last

Stephanie Moore

really insurance from model it. to more little Got what your That's them Germany, impact in this a situation an the opportunity to a consignment there? bit guys this you're and the model might maybe where accelerate what is value potentially standpoint? a And helpful. kind come show or longer-term, more where update were of over on of the in you really Germany Is to and back with flooding of the shift looks maybe it able switching any get or that of providing in U.S. and to where carriers shift thinking the

Jeff Liaw

whether more business catastrophic first or of that's And question model time their think proposition that events we're moment at crisis That Copart the have underscore the true or more Yeah, a like that and recording they of the true. visible for hustle model. insightful much customers, is insightful an it our or our the us Copart’s I I is that with consignment for carriers, insurance XX-years, value converting in service, certainly under elsewhere, volume premise. German are moments very in longtime still I Germany insurance been customers think think is to to who

So German our this it value market. better proposition all for the this else equal sure, communicates to

Stephanie Moore

Got it Thank leave you. I'll at it. that.

Jeff Liaw

Thanks, Stephanie.

Operator

the The with coming of is Please from questions. Kennison Craig with Baird. proceed line question your next

Craig Kennison

sellers? think. But for last enhancements six I platform or that any buyers you curious made for value call XX-months driving taking much innovate question. likes to be I'm Hey, the key you might Copart would to without have thanks could out my your if fanfare, in

Jeff Liaw

calls, to well. to and members not customers Craig, these particular where I We as our think is the sellers, we victory products our introductory there declare clause our in tend investor launch much on I accurate. think

including more the in that single scheduling and Copart list we much and new have to made to for to friendly to faster forward. at tools, to ball that let as is and pickups invest reducing that who products enhanced in terms quickly. to talk I'll of talked our do titles think loan introduced to The make we year vehicles it Lien the cars we I of and process we ago cars to perhaps today still our help range very it based especially move sell customers auction is important do of us make broadly, an we app And the wants lender a such still therefore allow than most the arguably about check-ins are I possible. past was more to that a in more the them to have to to coverage. And mobile tool buy and it more payoff are obtain, members see Copart, friction in are and experience think better So and track aggressively seamless at member our certainly tools, insurance seamless. ever vehicle. importantly, think on challenging been. buy we various have most and and to itself their including carriers lastly, then have realm of as platform title that experience of mobile existing offerings experience side to make our different than loan that better things, they When the has comes for included And anyone deployed a number payoff

a growth, arena. paid member in growth up meaningful paid investments member that of our is reflection year-over-year, very Our

Craig Kennison

Thanks. you your impact the on And to there's factor that or cost seemingly then shipping the of stories from that shipping would high in. exceptionally hear that customers on demand? extent. no would no I containers business have about surprised to your relies overall continue has And, some we think of naturally cost Are to your containers. rising that

Jeff Liaw

probably no is overstating it. I that's think a -- effect,

it. than the vehicle member the have have think auction covered overwhelmed point forces the liquidity I and recruitment be more demand, that, would that offsetting so

on I containers been also then has the to as elsewhere. shipping leaving to think the to comes case when the containers much that U.S. are the it's inbound the U.S. there, and say fair or is always the inflationary it those heavier going pressures volume it ships leaving and

less routes think the little I less tend a those for. slots spoken be congested, to

So than those they appear at might pressures I think are first more modest glance.

Craig Kennison

so That's Thank much. great. you Hey, Craig. A Jeff - Liaw thank you,

Operator

with question your Please next from Jordan Thank Bret with is of you. coming proceed Jefferies. the line questions. The

Bret Jordan

A on, good guess the guys. morning, question one Hey, I of vehicle profile.

Jeff seeing that damage what drive Could in car what think might over metals price you that your bodies be I environment as where of commented see time. of the percentage inverse less content? then on is mix sold you're about and percentage its crushed that that of sort run talk mix now? you of mix And metals really

Jeff Liaw

then sells service or melted of the to that Still, to small our dollars rebounding our underlying valuable a down physical eliminate very and goods cars, our smaller it our of Yeah, to as terms for like the that a prices. communities still economics and the business. to last portion economics where few car the for are the metals a our of is They're two it's those pure part provide the speak. it's of meltdown comes minority your question, which is in stripped and And is cars. to minority so probably but of easiest sold commodity not customers we of consequential hundred certainly a metals, value when many relevant

Bret Jordan

obviously gone But with and And or it sold up. cars XX% that? your mean, as I mix run then it's of the XX% is a a dealer or percentage volume drive less than

Jeff Liaw

is on that drive for insurance the tend to from and think do probably the that so. the loss question. run the Yes, lane and damaged No, sensor that as less mix, And and the the rear past we a else rising are to don't because more matter run or precise total can that mirror everything and because But to terms are percentage be strip in knocked expensive. is the to today is cars when it car out of But comes of isolate and of so cars yes, calibration Bret a reflection disclosed a I replacement frequency, or haven't sensor departure cars. mix drive yes sensor easier insurance in it's it there totaled front total. warning more vehicles, drivable a

Bret Jordan

cash question, was you estate maintenance land we when CapEx quick ‘XX. investment acquisition it CapEx acquisition the think back are the real a your you And of build or about think flow the think land in when out expectations, inning I I guess strategy, in? what's What expectation? versus ‘XX And about CapEx Okay. number

John North

Rob?

Operator

Thank you.

is Our of Please next Imbro question. your with from line Daniel the with Stephens. proceed question

Unidentified Analyst

Joe Difficulty]. for on [Technical is This Daniel Imbro. [indiscernible]

our we're want availability looking kind land Difficulty]. So given the overseas. find I know for to process of if arduous [Technical land? it's question, to And an on

John North

hear can Rob, you us?

Operator

can gentlemen, hear you continue. I please Yes,

Unidentified Analyst

Okay, yeah.

the more Germany, support the and in have Given you capacity do growth? growth to

Operator

standby, Instructions]. Please, [Operator momentarily we're technical experiencing difficulties. We'll resume

Jeff Liaw

Bret, We disconnected you. Thank hear apologies. there. Bret, Hello, got can Okay. us? you

Unidentified Analyst

Hi, this Joe. is

Jeff Liaw

Joe. Hi,

Unidentified Analyst

Hey.

looking to land. the you some land growth have if given an growth support of color Germany, was do then process in I on to arduous more for the So find it's the capacity availability overseas. And Wondering there?

Jeff Liaw

It depending well here varies It by land the we're in as And universal. of countries varies well. those it state what and the certainly development States, Great. on about. degrees, city Good across as acquisition is question. and United talking and certainly even within varies challenge countries and then

growth on the a time to there. certainly capacity to growth. and do But thoughtful nuanced We invest Germany the in challenges come is do for built have the have lead so. So business have we to we are similar. it’s to the to expect our years answer difficult over more we there. ongoing yes, But support support There would provide to

the tell parcel in in you've for expect example pursuing been We to to don't would it. can on time to us XX-years. in in identify, does the stories California, here the past, that So a operate before severely the these But of U.S. which markets. in to buy land take we permit in for we've that and we it land time develop heard

Unidentified Analyst

as have what about there? markets, you or Great. And a then follow-up, capacity other Spain

Jeff Liaw

intend we but business near, for growth, invest in to our to Same answer. the that support the Yes, more to we will have there. and still it today capacity future business serve medium-term and also

Unidentified Analyst

Thank Great. so much. you

Jeff Liaw

Joe. Thank you,

Operator

the next The questions. your Bottiglieri Exane. be with coming of Please Chris you. with question Thank from will line proceed

Chris Bottiglieri

Hey, guys, for questions couple a me.

of could of sellers all? impact a you inflationary this what your growth? helpful. at for seen cost, be periods to competitors of there extent pass type ops to towing give out able the historically, cost? you cost, one in like what seen on of when to have And spoke one to sensitivity us would you've then is operations to be inflation First towing this yard salvage Can Have sense towing and

Jeff Liaw

course, Got And are many generalized reading been Well, years, the other the acute always business. all perhaps manage of commodities. our in in to for reasons leverage operating business. comfortable, press it. somewhat deliver such Today, inflationary you're the in it's consideration We're about and more continue in yes, can probably we that already. inflation healthcare, a different for first, In fuel it's business. inflation, our inputs different years, there and our

level. So in costs yard our short, portion a of costs at towing significant the are

So forth. consideration But they is healthcare think utilities, so raised because as this what And to we we of matter do. part business labor haven't it's as it and certainly and a do costs, proactively cost, it's just It's power us. part of quarter, we the manageable.

Chris Bottiglieri

services Are the that? for small be there better to sounds buyers? to that what your side towing tend like an scale Is like insurers, an guess of them? side international of shipping be able for it for your that. They lot rates the buyers? to international to a you opportunity I’m business there's market, do behalf there curious or all Like customers? arbitrage you one-off consumers like of So kind at, shipping container is of to to just how advantage way think process I there use the get who like that to are on while trying a get managing logistics businesses? for your ocean this Or or smaller, wholesalers not freight are small managing about

Jeff Liaw

one of markets. their vehicles Yeah, native are car pure who some literally cases by I sell in think thousands buy some in cases there's And their will there who disappear. a to and one-off others make rebuild and then distribution hundreds, business healthy buyers, buyers of it

ecosystem a on ship, who in and healthy them martial size, around buyers. dabbled certainly do over If course, of is the shipping We there of have other of who that experimented do vehicles, folks our business years. international who emerges, aggregate a do behalf

evaluate. So to would barrier to participation. continue it's never we something robust us and healthy auction been enough has But there's enough a ecosystem that a around

Chris Bottiglieri

I’m this small helpful. housekeeping proceeds But not or could anything acquisition it quick or shade so was be you sure the for something. like acquisition Just there'll $X quarter, It color looks past million one. me

Jeff Liaw

small we've it years the United had our States. a regional Yeah, provider in it’s relationship with and bought space a that Midwestern in

Chris Bottiglieri

That's helpful. Thank you.

Jeff Liaw

Thank you.

Operator

of questions. Please question Brinkman next your proceed JPMorgan. the Ryan is line from with Our with

Ryan Brinkman

do, than that extent then And just and pre-pandemic. curious questions. How course such declined than in transaction I'm is projections. vehicle higher body much I auto it's or But up, or course lasting? seen, estimate of we your the which by fiscal may prices experienced could which actually think having Thank have the prove about be in nature we've is of in whatever of versus much by being crushed after or driven you increase my potentially used partly think might, member also, driven level structural cyclically do and the policies, we that recruitment prices you where taking fact, to in cyclically think cyclical, in given in a or do that make you rise transaction prices, of the to which would decline efforts, rather for prove handicap to specific you prices run such how stood commodity in company's could monetary increases large or think used difficult other increase longer vehicle

Jeff Liaw

nested I you've in probably there, got eight questions try them. Sure, tackle think but we'll to

of you vehicles the their driving growth, variable to I'd today. dynamics use On think, list question and third in I the add addition the what citing were market ASPs, first your and to is

experience. recruitment, our and citing you're retention, member expansion Second,

The that third healthy variable vehicles as I'd damaged add they to as that on list has is effect total loss ASPs frequency newer well. that as a cars, carriers and less fill total more

latter durable the I long-term describe would two, forces. secular as So

open an think, first question. is The I

I over year. past mattered the think lot have a the of three all course

know is what on don't of enlightened to The secular a the vehicle structural especially extent values are reflections first fair that forces, perspective question. more an typical I question have on we I think or that.

I the semiconductor vehicle, rebound the or think some cetera, think on is of six the a course over how it. here how different it the all of those stay, universe they XX-months, I unwind not is and to universe et don't for next perhaps we that of to perspective sure forces know I How new have that.

Ryan Brinkman

The less maybe less driving different, latest is accent hours, question in Okay, comments just miles last in about the is has recovery LKQ distribution seeing in can along in how well some what recovering. very frequency miles is, and throughout Thanks. driven. of made are day miles a when centered driven not color. the around of you're people then fashion helpful meaning congestion, terms driven? recovering the which is commuting recently result that linear And with

latest that you're the what be? curious Just might there seeing

Jeff Liaw

August, we're to question is suggests you finer And levels. a yet to underlying recovery. back Day the July, a Latest the know school, at on not we recovery. looking have post-Labor Northeast also same we're seeing goes I data, which don't June, that than But that back XXXX now would, certainly resolution ongoing data.

people change distribution we've seen drive to. both the think driving and As I when drive where a they hours, for of in

much cases, So some avoided less have and airlines I as retail, recreation, more much in folks more such. commuting think

has end accident predicted frankly frequencies the going into I yielded the and think in that higher had that Now been pandemic.

I down accidents, like. number miles higher than down less speed down reflection ex-percent. more than by it you in accidents by And driving, the driving, ex-percent, If conventional traveled folks would in go think more distracted of gone the by wisdom a significantly vehicle is go fact, the and has told ex-percent, that that the absolute of would

So, think described. than less that I yielded been has has appreciably yet you effect even not though the congestion think it I the was, just once

Ryan Brinkman

Thank you. interesting. Very

Jeff Liaw

Yeah.

Operator

Our Bret next coming Jefferies. proceed with line questions. Please of question Jordan with the is your from

Bret Jordan

Hey, guys.

American inning are as six lost got When It shuffle we the flow. last real the of my estate about real building real your additional acquisition at will the estate think years about you number, estate? was number five earlier. remain think follow-up or think of going And, versus I CapEx in investment, question in your what North CapEx what forward? you in cash out

Jeff Liaw

fair Bret. Yeah, question,

overseas. is fair times, our absorb XXXX, under to we think through or then we have our to seen. our talking even the XXXX a you've opportunities continued Jay The issue launched land in you share volume and the If weekly of like, cetera. the is growth, the dynamic come. certainly that program et past in ambitions question. in prognosis with then that forward we this to bit, our to it a of I both It's may are review what investment literally XX, reflection remember cycle had meet gain, this U.S. see quarter, anything, and was continuing in growth to about of as spring and we invest non-insurance a business, growth expand But declared by footprint the to

one. that the is invest for that because expectation So comes to we and land it be much you it's to and a very quarter continue therefore land. time, lumpy, we our finally continue do. as suddenly, we is quarter, know, to long substantial in what in nature one than can more it tends my to But invest essential prior through of each we'll It the chase business,

expect we to So that continue.

Bret Jordan

spend? Okay. of is CapEx, maintenance us Could an what bucket you expectation versus ongoing can acquisition sort of sort we give on so

Jeff Liaw

decent how of It's starting certainly about asset a that good think logic review Yeah, reflection our a accountants should that overall. forth, maintenance last. and a and as it's lives diligent that long amortization point. proxy with I proxy reflect we the are a the and across And CapEx, that useful depreciation is so company should

Bret Jordan

you. Thank Great.

Jeff Liaw

Thanks, Bret.

Operator

Moore question [Operator from questions. is of The line next Stephanie Please Instructions] proceed your you. the with Truist. with Thank

Stephanie Moore

follow-up. the I had thank point. Hi, a you for just quick

the recruitment I think you side. the been that just on many done on on touched times side a have efforts buyer member

has that needed anything would just Has changed on different there been as touch purchases? change, bit what be helpful. there consistent you a the remind done more base maybe doing you is base? reach or to a is to to anything specifically Thank there stable little more just us So that you. buyer create you're buyer strategy anything maybe larger where Just can have

Jeff Liaw

to board. dealers consignments increasing board. total dealers board the companies. appreciate is loss is additional and circular, members the The from we on our sell who then from it logic but the on quality then the members the Stephanie. more Excellent. vehicles I more that brings And brings on questions, insurance The right cars, of bit a members earn brings little the frequency increasing growth, are

works So both is very in certainly circulars directions. much that it

It is major of a Copart, we really in the member terms there our paramount and a not attendance, have come funnel, but on the and auctions, it buy experience much to varies and so And of which country all provide specific countries. characteristics major it radio pick member means it, eligible to to include of there that on participate bid the sophisticated pay active It's a the next with is we cetera. the we enhancements the tried lifetime And Copart we'll to well, should certainly social well. of in buyer, do the has by trade It's it's just ours market measures to so to years over certainly et by what journey invest car, to and also take Copart that. member In buying as actual and of type ads, for proactively registration and forth. are over map becoming the then at the show a once be buyer. they're anticipate and each one the as view up, as to by approach very major can physical country, things media, the recruitment, it media, market, like. mundane But

Stephanie Moore

you. Great. Thank

Operator

Thank you.

with from is with question line the of Ali your questions. final Please Our Faghri proceed Guggenheim.

Ali Faghri

my taking margin sell In the CAT towing I'm pretty a total kind sizable you've your incremental costs related these margins. initially for And wondering vehicles. you events upfront and land. impact talked of on actually past, those impact seen Thanks Great. about question. loss about to the you of before

well in of towing your land, than the and historically? fleet of these cost side margin there less impact they events near-term have CAT is that all investments as Given a kind have maybe chance as made the you've well, as of a on

Jeff Liaw

I the think than same been. to effect say the to it's muted perhaps accurate that impact is event relative to catastrophic more us for have otherwise Ali, ago, financial more XX-years it would

which Louisiana, And Now, turn as every in different from in certainly Coast unique. in is is the is East very is Houston, catastrophic event Germany turn well. Texas, different different very from which

service us assigned to as to about So that today service matter equal, Copart, it's customer be allows reason question moment's who it a really the about team than supply a and because cost, of too. But here curve, to investing of the is the priority a catastrophic but muted of would excellent more at much otherwise margin proactively. yes, clip largely our and effects deploy It's else extremes have the land trucks is would notice, partially we as is already about a The all own cost. it at have they customers. been. ready service But providing

Ali Faghri

And sense. you'd there? quick color. Is stronger the anything follow-up, the there then out in the Great. makes That quarter? Appreciate a what growth call vehicle sales drove

Jeff Liaw

direct cars, to why our international the including with at business. also purchases cars The consumers model in different makes most going of vehicle platform. the we consignment directly sales sell Copart the vehicles through sense, market reflects there from auction It penetrate growth, which avenues turn the market by there purchasing and are well. certainly business, buy Germany, a the we Copart as and Copart our number includes show which flywheel hope In get we our as

number different So a of there are forces.

sales to of that vehicle focused actual grown, scheme like. world. basis evaluate per even our up a less yes, car vehicle sales number vehicle the selling transparent and margin grand you to purchase to just effect business continue I still a bit outsized vehicles and Meaning, the modest is basis, especially the we we have think, on the we you're P&L were point its unfortunately, which on changes the the rates results, to certainly, little sold if modest. the will business if on economics outside but size actual the awkwardly very But pretty an has in of gross price, things. every see relative is But of to

Ali Faghri

primary on your within of do Got market your squeeze years. the insurance last one can this work business, it's as if this but in. of clear it may the that I sure currently but share And kind a it. be historically the side you has Copart share been insights viewed competitor? pretty internally, about five any call I’m a consignment I it know has versus plus industry what final duopoly, question, lot taken over

if curious you that I'm kind market versus any your main of numbers share So your competitor. you. around you would have put Thank

Jeff Liaw

share. I way provide and that and invest the don't our No, think an certainly question. do could have as alternatives an act appreciate we and well. know our customers that We operate absolute of number that or estimate we market way

which we et on day to just including a including call, the gains and you the some things service, or the member Our day share of technology auction talked moment of cetera. described reflection liquidity about ago, catastrophic stack market experience, including readiness, a

we the provide because grown hope as to and a That's our an one have market certainly a it. take estimate. aspirations not key in we absolute years, business, in so we the well, as future position but over our to So position, of do

Ali Faghri

Jeff. Thanks, John. Great. Thanks,

Jeff Liaw

Thanks, Ali.

Operator

you. Thank closing floor to turn management for I'll this remarks. time, the back At

Jeff Liaw

you the the fiscal you, of quarter. after months ‘XX. for Well, in us for Thanks, everyone, joining a of couple We'll Okay. fourth thank quarter talk to first everybody.

Operator

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

Copart (CPRT) 9 Sep 212021 Q4 Earnings call transcript