Q4 2023 Copart Inc Earnings Call

Please standby.

Speaker 1: Please stand by.

Speaker 1: Good day everyone and welcome to CoParts Incorporated Fourth Quarter Fiscal 2023 Earnings.

Good day, everyone and welcome to co parts incorporated fourth quarter fiscal 2023 earnings call.

Speaker 1: Just a reminder, today's conference is being recorded.

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

Speaker 1: Before turning the call over to management, I will share CoPart's statement on safe harbor and non-GAAP financial services.

Before turning the call over to management I will share a co part statement on safe Harbor and non-GAAP financial measures.

Speaker 1: During today's call, the company will discuss certain non-GAAP measures including discrete income tax items, the effect of extinguished debt, and adjustments to income tax benefits related to stock-based compensation.

During today's call the company will discuss certain non-GAAP measures, including discrete income tax items, the effect of extinguish debt and adjustments to income tax benefits related to stock based compensation.

Speaker 1: The company has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures on its Investor Relations website, and in its press release issued at approximately 3 p.m. Central Time today.

The company has provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures on its investor Relations website and in its press release issued at approximately three P. M central time today.

Speaker 1: The company believes these non-GAAP measures together with the corresponding GAAP measures are relevant in analyzing the company's results and assessing its business trends and

The company believes these non-GAAP measures together with the corresponding GAAP measures are relevant in analyzing the company's results in assessing its business trends and performance in.

Speaker 1: In addition, the company's comments today include forward-looking statements within the meaning of the federal securities laws, including management's current views with respect to trends, opportunities, and uncertainties in the company's market.

In addition, the company's comments today include forward looking statements within the meaning of the federal securities laws, including management's current views with respect to trends opportunity and uncertainties in the company's markets differ.

Speaker 1: These forward-looking statements involve substantial risks and uncertainty.

These forward looking statements involve substantial risks and uncertainties.

Speaker 1: For more details on the risks associated with the company's business, we refer to you to the section titled Risk Factors in the Company's Annual Report on Form 10-K for the year ending July 31, 2021.

For more details on the risks associated with the company's business, we refer to you to the section titled Risk factors in the company's annual report on Form 10-K for the year ending July 31st 2023, and each of the company's subsequent quarterly results on Form 10-Q.

Speaker 1: and each of these companies subsequent quarterly results on Form 10-

Speaker 1: Any forward-looking statements are made as of today and the company has no obligation to update or revise any forward-looking statements.

Any forward looking statements are made as of today and the company has no obligation to update or revise any forward looking statements.

Speaker 1: I'll now turn the call over to the company's co-CEO, Jeff Lea-

I'll now turn the call over to the company's co CEO Jeffrey out.

Speaker 2: Great, thank you and good evening and thank you everyone for joining us today. We're pleased to report our results for the fourth quarter of fiscal 2023 and the conclusion of a strong fiscal year. We continue our trend of generating excellent results for new and existing customers.

Great. Thank you and good evening and thank you everyone for joining us today.

These reports are.

For the fourth quarter of fiscal 2023, and the conclusion of a very strong fiscal year.

We continue our trend of generating excellent results for new and existing customers.

Speaker 2: of growing our business profitably and of reinvesting in the future prosperity of our customers and ourselves. Today I'll keep my comments brief, focusing on some of the recurring themes that are most relevant to our business and to our customers.

Growing our business profitably and are reinvesting in the future prosperity of our customers and ourselves today I'll keep my comments brief focusing on some of the recurring themes that are most relevant to our business into our customers.

Speaker 2: A year ago on this same call, we talked about the various dimensions of enterprise sustainability that we consider here at COPART.

A year ago on this same call we talked about the various dimensions of enterprise sustainability that we consider here at cohort.

Speaker 2: including environmental sustainability given our critical role in the circular automotive economy.

Including environmental sustainability, given our critical role in the circular automotive economy.

Speaker 2: our financial sustainability in the form of our conservative capitalization.

Our financial sustainability in the form of our conservative capitalization.

Speaker 2: operational sustainability through our land stewardship and ownership strategy, and global socioeconomic sustainability in our providing mobility to developing economies around the world. Today I'll spend just a few minutes elaborating on a fifth dimension, which is the proactive role COPAPART plays in assisting communities in their recovery from catastrophic weather.

Operational sustainability through our land stewardship, and ownership strategy and global socio economic sustainability and are providing mobility to developing economies around the world today I'll spend just a few minutes elaborating on a fifth dimension, which is the proactive role co Parc plays and assisting communities and their recovery from catastrophic weather events.

Speaker 2: The 2023 hurricane season has been forecast to be, quote, above normal, according to the National Oceanic and Atmospheric Administration, a division of the Department of Commerce.

The 2023 Hurricane season has been forecast to be quote above normal according to the national Oceanic and atmospheric administration, a division of the department of Commerce.

Speaker 2: That forecast feels evergreen now, year to year. So far in 2023, we've experienced 12 named storms, more than double the number we encountered last year.

That forecast feels evergreen now year to year. So far in 2023, we've experienced 12 named storms more than double the number we encountered last year thankfully for our insurance clients and their policyholders the insurance loss impacts of the first hurricane to make landfall this year hurricane Hurricane Dahlia, where relative.

Speaker 2: Thankfully for our insurance clients and their policyholders, the insurance lost impact of the first hurricane to make landfall this year, Hurricane Adelia. We're relatively modest in comparison to major storms in prior years.

Modest in comparison to major storms in prior years.

Speaker 2: The threat of a more substantial event nonetheless remains in 2023, as many of the most significant storms in the past 20 years have occurred late in the summer.

The threat of a more substantial event Nonetheless remains in 2023 as many of the most significant storms in the past 20 years have occurred late in the season.

Speaker 2: Hurricane Ian, for example, the largest ever catastrophic event in our history, as measured by unit volume, did not itself make landfall until the 23rd of September of last year.

Hurricane Ian for example, the largest ever catastrophic event in our history as measured by unit volume did not itself make landfall until the 20 <unk> of September of last year.

Speaker 2: For any substantial storm likely to affect our insurance clients and their policyholders, we don't have the luxury of perfect visibility.

For any substantial storm likely to affect our insurance clients and their policyholders. We don't have the luxury of perfect visibility before we deploy resources both in the moment and in the years prior our response to hurricane to Dahlia illustrates this reality.

Speaker 2: before we deploy resources, both in the moment and in the years prior. Our response to Hurricane Idyllia illustrates this reality.

Speaker 2: Though the landfall of the hurricane's eye was projected to be in the Big Bend area of Florida, prevailing weather models showed a wide range of possible outcomes, including a potential initial landfall in the Tampa area and eastward progression thereafter through Florida, Georgia, and the Carolinas. Well before landfall, we deployed hundreds of team members, co-part owned and third-party owned tow trucks, and co-part owned loaders, telecommunications equipment, and generators from around the country to the region.

Operator: Please stand by. Good day, everyone, and welcome to Copart's Incorporated Fourth Quarter fiscal 2023 earnings call. Just a reminder, today's conference is being recorded.

So the landfall of the Hurricanes I was projected to be in the Big Bend area of Florida prevailing weather models showed a wide range of possible outcomes, including a potential initial landfall in the Tampa area and eastward progression thereafter through Florida, Georgia, and Carolinas, well before landfall we deployed hundreds of team members co part.

Operator: Before turning the call over to management, I will share Copart's statement on safe harbor and non-gap financial measures. During today's call, the company will discuss certain non-gap measures, including discrete income tax items, the effect of extinguished debt, and adjustments to income tax benefits related to stock-based compensation. The company has provided a reconciliation of these non-gap financial measures to the most directly comparable gap measures on its investor relations website, and in its press release issued at approximately 3pm central time today. The company believes these non-gap measures together with the corresponding gap measures are relevant in analyzing the company's results and assessing its business trends and performance.

Owned and third party owned tow trucks and co part owned loaders telecommunications equipment and generators from around the country to the region.

Speaker 2: we were prepared to immediately retrieve inventory, store, process titles for, and sell many thousands of vehicles in the affected areas.

We were prepared to immediately retrieve inventories store process titles for and sell many thousands of vehicles in the affected areas.

And of course, our real estate.

Speaker 2: investment and planning had begun years in advance, yielding more than 600 available acres of dedicated cat storage in Florida alone.

Investment in planning had begun years in advance yielding more than 600 available acres of dedicated cat storage in Florida alone.

For a given storm quarter or year are investments and catastrophic readiness may appear to be overkill, but we recognize the responsibility we have to our customers and to the communities. We serve together to optimize our ready readiness perception severe weather events.

Speaker 2: For a given storm quarter or year, our investment in catastrophic readiness may appear to be overkill, but we recognize the responsibility we have to our customers and to the communities we serve together to optimize our readiness for such severe weather.

Operator: In addition, the company's comments today include forward-looking statements within the meaning of the federal securities laws, including many management's current views, risk respect to trends, opportunity, and uncertainties in the company's markets. These forward-looking statements involve substantial risks and uncertainties.

Speaker 2: I'll touch on a few additional themes for both our insurance and non-insurance businesses. But first on the insja—

I'll touch on a few additional themes for both our insurance and non insurance businesses.

But first on the <unk> and the insurance universe.

Speaker 2: According to CCC, total loss frequency trot at 17.1% in the second calendar quarter of 2022, and has subsequently rebounded to 18.8% in the second calendar quarter of 2000.

But CCC total loss frequency trough at 17, 1% in the second calendar quarter of 2022 and has subsequently rebounded to 18, 8% in the second calendar quarter of 2023.

Operator: For more details on the risks associated with the company's business, we refer to you to the section titled Risks Factors in the Company's Annual Report on Form 10K for the Year Ending to Life 31st, 2023. Any of these company's subsequent quarterly results on Form 10K, any forward-looking statements are made out of today, and the company has no obligation to update or revise any forward-looking statements.

Speaker 2: This is down a bit sequentially from calendar quarter one into calendar quarter two. So this is the result of seasonality. We've observed that same modest reduction in total loss frequency from the first quarter to the second quarter in each of the past eight years.

This is down a bit sequentially from calendar quarter.

Quarter, one into calendar quarter. Two so this is the result of seasonality we've observed that same modest reduction in total loss frequency from the first quarter to the second quarter in each of the past eight years the CCC data.

Speaker 2: Our our expectation is that new and used vehicle prices are likely to stabilize or decrease in more swiftly than repair costs will We believe this in turn should lead to a recovery in total loss frequency eventually surpassing pre-covid levels as well

Our expectation is that new and used vehicle prices are likely to stabilize our decrease in more swiftly than repair cost will we believe this in turn should lead to a recovery in total loss frequency eventually surpassing pre COVID-19 levels as well.

Jeff Liao: I'll now turn the call over to the company's co-CEO, Jeff Liao. Great, thank you, and good evening, and thank you everyone for joining us today. We're at the fourth quarter of fiscal 2023 and the conclusion of a strong fiscal year. We continue our trend of generating excellent results for new and existing customers of growing our business properly and of reinvesting in the future prosperity of our customers and ourselves. Today, I'll keep my comments brief, focusing on some of the recurring themes that are most relevant to our business and to our customers.

Speaker 2: In March 2023, Kelly Blue Book data indicated that average retail transaction values for new vehicles were below MSRP for the first time in nearly two years. In April 2023, this average transaction price was nearly $400 below MSRP compared to being $600 above just one year prior.

In March 2023, Kelley Blue book Blue books data indicated that average retail transaction values for new vehicles were below MSRP for the first time in nearly two years in April 2023. This average transaction price was nearly $400 below MSRP compared to being $600.

Above just one year prior.

The long term drivers of total loss frequency of course remain unchanged first repairs are more expensive and less attractive due to increasing accident severity vehicle complexity labor costs and rental car costs and to salvage economics are more attractive because their growing economies and central and South America Africa, and eastern Europe depend on our dam.

Speaker 2: The long-term drivers of total loss frequency, of course, remain unchanged. First, repairs are more expensive and less attractive due to increasing accident severity, vehicle complexity, labor costs, and rental car costs. And two, salvage economics are more attractive because the growing economies in Central and South America, Africa, and Eastern Europe depend on our damaged vehicles to provide the mobility.

Jeff Liao: A year ago on this same call, we talked about the various dimensions of enterprise sustainability that we consider here at co-part, including environmental sustainability given our critical role in the circular automotive economy. Our financial sustainability in the form of our conservative capitalization, operational sustainability through our land, stewardship, and ownership strategy, and global social economic sustainability in our providing mobility to developing economies around the world. Today, I'll spend just a few minutes elaborating on a fifth dimension, which is the proactive role co-part plays in assisting communities in their recovery from catastrophic weather events. The 2023 hurricane season has been forecast to be, quote, above normal according to the National Oceanic and Atmospheric Administration, a division of the Department of Commerce.

Used vehicles to provide the mobility they need.

Although our insurance U S insurance volumes continue to increase up some 9% year over year, we estimate the total loss volumes continue to be relatively suppressed when compared to historical total loss frequency norms.

Speaker 2: Although our insurance, U.S. insurance volumes continue to increase, up some 9% year-over-year, we estimate the total loss volumes continue to be relatively suppressed when compared to historical total loss frequency.

Speaker 2: As this inflationary environment persists, our insurance clients continue to experience hiring and retention challenges.

Yes, this inflationary environment persists, our insurance clients continue to experience hiring and retention challenges.

Speaker 2: and we therefore believe they'll lean still more heavily on trusted partners like COPART to provide additional services including virtual inspection, loan payoffs, and title procurement services among many others.

And we therefore believe they'll lean still more heavily on trusted partners like co part to provide additional services, including virtual inspection loan payoff entitled procurement services. Among many others. Our insurance company clients continue to leverage and incorporate our image recognition tools and machine learning algorithms to enable better decision, making on total losses.

Jeff Liao: Jones. That forecast feels evergreen now, year-to-year. So far in 2023, we've experienced 12 named storms, more than double the number we encountered last year. Thankfully for our insurance clients and their policyholders, the insurance loss impact of the first hurricane to make landfall this year, Hurricane Idalia, we're relatively modest in comparison to major storms in prior years. The threat of a more substantial event nonetheless remains in 2023, as many of the most significant storms in the past 20 years have occurred late in the season.

Speaker 2: Our insurance company clients continue to leverage and incorporate our image recognition tools and machine learning algorithms to enable better decision-making on total losses and importantly faster decision-making.

And importantly faster decision, making as we've noted in the past for a vehicle that will ultimately be totaled insurance companies, often nevertheless incurred literally thousands of dollars in towing storage estimating teardown costs, an appraiser labor much of which could have been mitigated with streamlined decision making.

Speaker 2: As we've noted in the past, for a vehicle that will ultimately be totaled, insurance companies often nevertheless incur literally thousands of dollars in towing, storage, estimating, teardown costs, and appraiser labor, much of which could have been mitigated with streamlined decision.

Our insurance companies continue to benefit from and appreciate the importance of our global marketplace and providing superior salvage returns to the insurance industry and minimizing their claims expense as a result.

Speaker 2: Our insurance companies continue to benefit from and appreciate the importance of our global marketplace in providing superior salvage returns to the insurance industry and minimize

Jeff Liao: Hurricane Ian, for example, the largest ever catastrophic event in our history, as measured by unit volume, did not itself make landfall until the 23rd of September last year. For any substantial storm, likely to affect our insurance clients and their policyholders, we don't have the luxury of perfect visibility before we deploy resources, both in the moment and in the year's prior. Our response to Hurricane Idalia illustrates this reality. Though the landfall of the hurricane's eye was projected to be in the big bend area of Florida, prevailing weather models showed a wide range of possible outcomes, including a potential initial landfall in the Tampa area and eastward progression thereafter through Florida, Georgia, and Carolinas.

Speaker 2: Finally, a few comments on the non-insurance world as well. In the fourth quarter, we observed year-over-year growth of 13.8% in our blue card division.

Finally, a few comments on the non insurance world as well in the fourth quarter, we observed year over year growth of 13, 8% and our Blue card Division underscoring the realization of the benefits of our auction platform and our global member base as we serve the bank and finance fleet and rental segments as well.

Speaker 2: underscoring the realization of the benefits of our auction platform and our global member base as we serve the bank and finance fleet and rental segments as well.

We likewise increased our dealer volume year over year by 5%.

Speaker 2: We likewise increased our dealer volume year over year by 5%.

Speaker 2: These dealers are unique as they serve in some cases as both sellers and buyers on our platform. In both cases for the blue car and dealer sources of vehicles for Copark, we believe we are outperforming other wholesale channels for vehicles.

These dealers are unique as they serve in some cases as both sellers and buyers on our platform in both cases for the Blue car and dealer sources of vehicles for co part. We believe we are outperforming other wholesale channels for vehicles.

Jeff Liao: Well before landfall, we deployed hundreds of team members, co-part owned and third party owned tow trucks and co-part owned loaders, telecommunications equipment, and generators from around the country to the region. We were prepared to immediately retrieve inventory store process titles for and sell many thousands of vehicles in the affected areas. And of course, our real estate investment and planning had begun years in advance yielding more than 600 available acres of dedicated cap storage in Florida alone.

Speaker 2: Lastly, in July of 2023, we received approval from the competition authorities in the UK to complete the merger of our acquisition of Hills Motor Company, which we had completed in financial terms a year ago prior.

Lastly in July of 2023, we received approval from the competition authorities in the U K to complete the merger of our acquisition of Hill's Motor Company, which we had which we had completed in financial terms a year ago Prior hills.

Speaker 2: Hills Motor Company is a leading vehicle dismantling business in the UK. Our insurance customers in the region have made clear to us that they prefer us to be a partially, to be partially vertically integrated in auctioning vehicles on their behalf while also directly satisfying some of their needs for recycling parts.

<unk> Motor company is a leading vehicle dismantling business in the UK, our insurance customers in the region have made clear to us that they prefer us to be a partially to be partially vertical vertically integrated and auction vehicles on their behalf. While also directly satisfying some of their needs for recycled parts.

Jeff Liao: For a given storm quarter or year, our investment in catastrophic readiness may appear to be overkill, but we recognize the responsibility we have to our customers and to the communities we serve together to optimize our readiness for such severe weather events. I'll touch on a few additional themes for both our insurance and non-insurance businesses, but first in the insurance universe. According to CCC, total loss frequency troughed at 17.1 percent in the second calendar quarter of 2022 and has subsequently rebounded to 18.8 percent in the second calendar quarter of 2023.

Speaker 2: With that, I'll turn it over to our CFO , Leah Stearns, to provide additional commentary to walk through some key statistics in our fourth quarter financial results before we open it up for questions. Leah. Thank you, Jeff. Turning to the quarter, global unit sales increased nearly 10% year over year including an increase of almost 8% in the U.S. and over 22% internationally.

With that I'll turn it over to our CFO <unk> to provide additional commentary to walk through some key statistics in our fourth quarter financial results before we open it up for questions.

Thank you Jeff.

Turning to the quarter Global unit sales increased nearly 10% year over year, including an increase of almost 8% in the U S and over 22% internationally.

For the fiscal year 2023, global unit sales increased over 5%, including an increase of over 4% in the U S and over 12% internationally.

Speaker 3: For the fiscal year 2023, global unit sales increased over 5% including an increase of over 4% in the U.S. and over 12% internationally.

Speaker 3: In the U.S., our fee units grew about 8% for the quarter and 5% for the year, primarily due to growth across insurance.

In the U S. R. P units grew about 8% for the quarter and 5% for the year, primarily due to growth across insurance units.

Jeff Liao: This is down a bit sequentially from calendar quarter 1 into calendar quarter 2, though this is the result of seasonality. We've observed that same modest reduction in total loss frequency from the first quarter to the second quarter in each of the past eight years of CCC's data. Our expectation is that new and used vehicle prices are likely to stabilize or decrease in more swiftly than repair costs will. We believe this in turn should lead to a recovery and total loss frequency, eventually surpassing pre-COVID levels as well.

Speaker 3: Our purchase units declined 3% for the quarter at about 14%

Units declined 3% for the quarter at about 14% for the year.

Speaker 3: Internationally, our unit growth came from a mix of fee and purchased units, with fee units increasing over 22% in the fourth quarter and over 11% for the year, and purchased units increasing nearly 21% for the quarter and 22% for the year.

Nationally our unit growth came from a mix of cm purchase units.

It's increasing over 22% in the fourth quarter and over 11% for the year and purchase units, increasing nearly 21% for the quarter and 20% for the year.

Our U S insurance business grew relative to its one and two year comps of 9% and 19% during the quarter and seven and 28% for the year respectively.

Speaker 3: Our U.S. insurance business grew relative to its one- and two-year comps of 9% and 19% during the quarter and 7% and 28% for the year.

Speaker 3: This is primarily due to the continued recovery and driving activity, increasing accident frequency and severity, and total loss frequency, and share gain.

Jeff Liao: In March 2023, Kelly Blue Blue Book Data indicated that average retail transaction values for new vehicles were below MSRP for the first time in nearly two years. In April 2023, this average transaction price was nearly $400 below MSRP compared to being $600 above just one year prior. The long-term drivers of total loss frequency, of course, remain unchanged. First, repairs are more expensive and less attractive due to increasing accident severity, vehicle complexity, labor costs, and rental car costs.

This is primarily due to the continued recovery in driving activity, increasing frequency accident frequency and severity and total loss frequency and share gain.

Our auction returns remained strong as we continue to invest in growing our global buyer base by driving member recruitment registration and activation as a result of our auctions provide insurance customers with best in class liquidity and returns ultimately providing a more cost effective way to manage growing claims cost by making it more cost effective to deem damaged vehicles.

Speaker 3: Our auction returns remain strong as we continue to invest in growing our global buyer base by driving member recruitment, registration, and acquisition.

Speaker 3: As a result, our auctions provide insurance customers with best in class liquidity and returns, ultimately providing a more cost effective way to manage growing claims costs by making it more cost effective to deem.

The total loss.

Turning to our financial results for the fourth quarter global revenue increased $114 million or nearly 13%, including a 1% or $6 million tailwind to the currency for.

Speaker 3: Turning to our financial results, for the fourth quarter, global revenue increased to $114 million or nearly 13%, including a 1% or $6 million tailwind due to current.

Jeff Liao: And two, salvage economics are more attractive because the growing economies in Central and South America, Africa and Eastern Europe depend on our damaged vehicle to provide the mobility they need. Although our insurance, U.S, insurance volumes continue to increase. Up to some 9% year-over-year, we estimate the total loss volumes continue to be relatively suppressed when compared to historical total loss frequency norms. As this inflationary environment persists, our insurance clients continue to experience hiring and retention challenges.

Speaker 3: For fiscal year 23, global revenue increased $369 million, or over 10%, which includes a 1% or $44 million headwind.

For fiscal year, 'twenty, three global revenue increased $369 million or over 10%, which includes a 1% or $44 million headwind due to currency.

Speaker 3: Global service revenue increased $126 million or nearly 18% for the fourth quarter and $345 million or 12% for the year, primarily due to higher average revenue per unit and increase.

Mobile service revenue increased $126 million or nearly 18% for the fourth quarter and $345 million or 12% for the year, primarily due to higher average revenue per unit and increase volume.

Speaker 3: US service revenue grew by nearly 16% for the quarter and over 12% for the year. And international service revenue grew over 36% for the quarter and over 11% for the year.

Jeff Liao: And we therefore believe they'll lean still more heavily on trusted partners like Copart to provide additional services, including virtual inspection, loan pay-offs, and title procurement services among many others. Our insurance company clients continue to leverage and incorporate our image recognition tools and machine learning algorithms to enable better decision-making on total losses, and importantly, faster decision-making. As we've noted in the past, for a vehicle that will ultimately be totaled, insurance companies often nevertheless incur literally thousands of dollars in towing storage, estimating tear-down costs, and a crazier labor, much of which could have been mitigated with streamlined decision-making. Our insurance companies continue to benefit from and appreciate the importance of our global marketplace in providing superior salvage returns to the insurance industry, and minimizing their claims expenses as a result.

U S service revenue grew by nearly 16% for the quarter and over 12% for the year and International service revenue grew over 36% for the quarter and over 11% for the year.

Asps were up slightly year over year for the quarter with U S average sales prices up about 2% and thats compared to an over 11% decrease in the Manheim Index, which ended July at 211 seven.

Speaker 3: ASPs were up slightly year over year for the quarter, with U.S. average sales prices up about 2%, and that's compared to an over 11% decrease in the Mannheim Index, which ended July at 211.

Speaker 3: Purchase vehicle sales for the fourth quarter decreased 12 million or 7 percent with U.S. purchase vehicle revenue for the quarter down 25 percent and international up

Purchased vehicle sales for the fourth quarter decreased $12 million or 7% with U S purchased vehicle revenue for the quarter down, 25% and international up 29% for the quarter.

Speaker 3: For fiscal year 2023, purchased vehicle sales increased 23 million or about 4%, with the U.S. down 15% and international up about 4%.

For fiscal year, 2023 purchased vehicle sales increased $23 million or about 4% with the U S down, 15% and international up about 37%.

Speaker 3: Purchased vehicle costs of sales decreased 12 million or 7.5% for the fourth quarter and purchased vehicle gross profit decreased by about.

Purchase vehicle cost of sales decreased $12 million or seven 5% for the fourth quarter and purchased vehicle gross profit decreased by about 1%.

Jeff Liao: Finally, a few comments on the non-insurance world as well. In the fourth quarter, we observed year-over-year growth of 13.8% in our blue card division, underscoring the realization of the benefits of our auction platform and our global member base. As we served the bank, finance, fleet, and rental segments as well. We likewise increased our dealer volume year-over-year by 5%. These dealers are unique as they serve, in some cases, as both sellers and buyers in our platform. In both cases for the blue card and dealer sources of vehicles. For Copart, we believe we are outperforming other wholesale channels for vehicles.

Speaker 3: For the fiscal year, purchase vehicle cost of sales increased $29 million, or 5%, and purchase vehicle gross profit decreased by 5%.

For the fiscal year purchase vehicle cost of sales increased $29 million or 5% and purchase vehicle gross profit decreased by $6 million or 9%.

Speaker 3: Global gross profit for the fourth quarter increased by 76 million, or about 20 percent, and our gross margin percentage increased by approximately 270 basis points.

Global gross profit for the fourth quarter increased by $76 million or about 20% in our gross margin percentage increased by approximately 270 basis points to 45, 9%.

Speaker 3: U.S. margins increased to 51.2 percent and international margins decreased to 21.5 percent.

U S margins increased to 51, 2% and international margins decreased to 21, 4%.

Speaker 3: Global gross profit in fiscal year 23 increased by about 131 million, or 8%, and our gross margin percentage decreased by approximately 100 basis points to 44%.

Global gross profit in fiscal year, 'twenty, three increased by about $131 million or 8% and our gross margin percentage decreased by approximately 100 basis points to 44, 9%.

Jeff Liao: Lastly, in July of 2023, we received approval from the competition authorities in the UK to complete the merger of our acquisition of Hills Motor Company, which we had completed in financial terms a year ago prior.

Speaker 3: U.S. margins for the year increased to 49.2% and international margins decreased.

U S margins for the year increased to 49, 2% and international margins.

24, 5%.

Jeff Liao: Hills Motor Company is a leading vehicle dismantling business in the UK. Our insurance customers in the region have made clear to us that they prefer us to be partially vertically integrated in auction vehicles on their behalf while also directly satisfying some of their needs for recycled parts.

Speaker 3: I'd like to note the decline in our international gross margin reflects approximately six million of prior period non-cash expenses, which are primarily depreciation and amortization and the effect of marking our acquired inventory to fair market value, which was incurred due to our completion of the final purchase price accounting for Hill's acquisition.

I'd like to note the decline in our international gross margin reflects approximately $6 million of prior period noncash expenses, which are primarily depreciation and amortization and the effect of marking our acquired inventory to fair market value, which was incurred due to the completion of the final purchase price accounting for <unk> acquisition in the UK.

Leah Stearns: With that, I'll turn it over to our CFO Lea Sterns to provide additional commentary to walk through some key statistics in our fourth quarter financial results before we open it up for questions. Thank you, Jeff. Turning to the quarter, global unit sales increased nearly 10% year-of-year, including an increase of almost 8% in the US and over 22% internationally. For the fiscal year 2023, global unit sales increased over 5%, including an increase of over 4% in the US and over 12% in the internet.

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The year over year margin increase on a consolidated run rate basis was primarily driven by a mix shift in the U S, partially offset by inflationary impacts to labor and fuel costs and a slight decline in purchase unit margins internationally.

Speaker 3: The year-over-year margin increase on a consolidated run rate basis was primarily driven by a mixed shift in the U.S., partially upset by inflationary impacts to labor and fuel costs, and a slight decline in purchase unit margin.

Speaker 3: On the cost front, our teams remain focused on optimizing our operational processes by leveraging technology and automation to mitigate the inflationary impacts we've experienced across our labor and transportation costs. In addition, we have recently observed some attenuation in certain expenses, particularly to the

On the cost front, our teams remain focused on optimizing our operational processes by leveraging technology and automation to mitigate the inflationary impacts we've experienced across our labor and transportation costs and.

In addition, we have recently observed some attenuation in certain expenses, particularly transportation, which was partially driven by reductions in the cost of diesel which has experienced a 29% decline year over year.

Leah Stearns: In the US, there are few units who grew about 8% for the quarter and 5% for the year, primarily due to growth across insurance units. Our purchase units declined 3% for the quarter at about 14% for the year. The US insurance business grew relative to its one and two-year comps of 9% and 19% during the quarter and 7% and 28% for the year respectively. This was primarily due to the continued recovery and driving activity, increasing frequency, accident frequency and severity and total loss frequency and share gain.

Speaker 3: which was partially driven by reductions in the cost of diesel, which has experienced a 29% decline year over year.

In addition, where we're constantly seeking to optimize our operational processes by leveraging.

Speaker 3: In addition, we are constantly seeking to optimize our operational processes by leveraging.

Speaker 3: Technology and automation, which we continue to expect, will drive scalability and efficiency across the organization to continue to help mitigate longer-term impacts.

Technology, and automation, which we continue to expect will drive scalability and efficiency across the organization to continue to help mitigate longer term cost pressures.

Speaker 3: Turning to general and administrative expenditures, excluding stock-based compensation and depreciation

Turning to general and administrative expenditures, excluding stock based stock based compensation and depreciation expenses G&A spend in the quarter increased $12 million and $23 million for the fiscal year.

Speaker 3: The GNA spend in the quarter increased $12 million and $23 million for the fiscal year. And GNA as a percentage of revenue was 5.6% in Q4 and 5.1% in Q2.

G&A as a percentage of revenue with five 6% in Q4 and five 1% for the fiscal year 2023.

Speaker 3: Because of our strong revenue growth and moderate cost increases, GAAP's operating income increased by more than 20% to over $390 million for the quarter, and about 8% to nearly $1.5 billion this year. The fourth quarter income tax expense was near $76 million, which reflects an 18% effective tax rate. And for the year, income tax expense was nearly $317 million.

Because of our strong revenue growth and moderate cost increase with GAAP operating income increased by more than 20% to over $390 million for the quarter.

Leah Stearns: Our auction returns remain strong as we continue to invest in growing our global buyer base by driving member recruitment, registration and activation. As a result, our options provide insurance customers with best-in-class liquidity and returns ultimately providing a more cost-effective way to manage growing claims costs by making it more cost-effective to deem damage vehicles with total loss. During our financial results, for the fourth quarter, global revenue increased 114 million or nearly 13%, including a 1% or $6 million tailwind due to currency.

And about 8% to nearly $1 5 billion for this year.

Fourth quarter income tax expense was nearly was near 70 million, which reflects an 18% effective tax rate and for the year income tax expense was nearly $317 million, which reflects an effective tax rate of 20%.

Finally fourth quarter GAAP net income increased about 32% to almost 348 million or <unk> 36 per diluted common share.

Speaker 3: Finally, fourth quarter GAP net income increased about 32% to almost 348 million, or 36 cents per diluted.

Speaker 3: Will GAAP net income for the year increase 13.5% to over $1.2 billion, or $1.28 billion?

While GAAP net income for the year increased 13, 5% to over $1 2 billion or $1 28 per diluted common share.

Leah Stearns: For a fiscal year 23, global revenue increased 369 million or over 10%, which includes a 1% or $44 million headwind due to currency. Global service revenue increased 126 million or nearly 18% for the fourth quarter and 345 million or 12% for the year, primarily due to higher average revenue per unit and increased volume. US service revenue grew by nearly 16% for the quarter and over 12% for the year and international service revenue grew over 36% for the quarter and over 11% for the year.

Speaker 3: Our global inventory at the end of July increased 9.5% from last year.

Our global inventory at the end of July increased nine 5% from last year, and when excluding low value units like wholesalers and charities global inventory increased 11%.

Speaker 3: including low-value units like wholesalers and charities, global inventory increased 11%. That is compromised of a year-over-year increase of over 8% for U.S. inventory.

That is compromised of a year over year increase of over 8% for U S inventory or over 10% when excluding low value units and nearly 16% for international inventory.

Speaker 3: Turning to our liquidity and financial position liquidity stood at 33.6 billion as of year end which is comprised of one point four billion in investments and health to maturity Securities one billion in cash and cash equivalent and our capacity under a revolving credit facility of.

Turning to our liquidity and financial position liquidity stood at $33 6 billion as of year end, which is comprised of $1 4 billion in investments and held to maturity Securities 1 billion in cash and cash equivalents, our capacity under our revolving credit facility of over $1 2 billion.

Leah Stearns: ASPs were up slightly year-over-year for the quarter with US average sales prices up about 2%, and that's compared to an over 11% decrease in the man-hime index, which ended July at 211.7. Purchase vehicle sales for the fourth quarter decreased 12 million or 7%, with US purchase vehicle revenue for the quarter down 25%, and international up 29% for the quarter. For fiscal year 2023, purchase vehicle sales increased 23 million or about 4%, with the US down 15% and international up about 37%.

For the year, we have generated operating cash flow of nearly $1 4 billion, which is an increase of almost 16% from the prior year and in addition during 2023, we invested nearly $517 million in capital expenditures with over 80% of this amount attributable to our physical infrastructure and more specifically capacity expansion.

Speaker 3: For the year, we have generated operating cash flow of nearly $1.4 billion, which is an increase of almost 16% from the prior year. And in addition, during 2023, we invested nearly $517 million in capital expenditures.

Speaker 3: with over 80% of this amount attributable to our physical infrastructure, and more specifically, capacity expansion, which contributes to our ability to serve our customers while simultaneously reducing our transportation costs and corresponding fuel.

Which contribute to our ability to serve our customers while films, while simultaneously, reducing our transportation costs and a corresponding fuel consumption.

Leah Stearns: Purchase vehicle cost of sales decreased 12 million or 7.5% for the fourth quarter and purchased vehicle gross profit decreased by about 1%. For the fiscal year, purchase vehicle cost of sales increased 29 million or 5% and purchase vehicle gross profit decreased by 6 million or 9%. Global gross profit for the fourth quarter increased by 76 million or about 20%, and our gross margin percentage increased by approximately 270 basis points to 45.9%.

Speaker 3: Finally, year-to-date, if you take our operating cash flow, less CapEx, we've generated over $847 million of free cash flow.

Finally year to date, if you take our operating cash flow less capex, we've generated over $847 million of free cash flow given the strong financial position, we intend to continue to invest in our business to meet our customers' needs.

Speaker 3: Given this strong financial position, we intend to continue to invest in our business to meet our customers.

Speaker 3: These investments include yard expansion, new yard acquisition, logistics, and our technology platform.

These investments include yard expansion new yard acquisition logistics in our technology platform as Jeff outlined in detail. We believe that these types of historical investments have differentiated co part as a service provider, while ensuring that we have the capacity necessary to serve our industry's future growth.

Speaker 3: As Jeff outlined in detail, we believe that these types of historical investments have differentiated CoPART as a service provider while ensuring that we have the capacity necessary to serve our industry's customers.

Speaker 3: With that, we're concluding our prepared remarks and we're happy to take some questions.

With that we're concluding our prepared remarks, and we're happy to take some questions.

Leah Stearns: US margins increased to 51.2%, and international margins decreased to 21.4%. Global gross profit for the fiscal year 2023 increased by about 131 million or 8%, and our gross margin percentage decreased by approximately 100 basis points to 44%. US margins for the year increase to 49.2% and international margins to 24.5%. I'd like to note the decline in our international growth margin reflects approximately 6 million of prior period non-cash expenses, which are primarily depreciation and amortization and the effect of marking our acquired inventory to fair market value, which was incurred due to our completion of the final purchase price accounting for a hills acquisition in the UK.

Thank you.

Speaker 1: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question and answer session.

We will now be conducting a question and answer session.

If you would like to ask a question. Please press star one on your telephone keypad.

A confirmation tone will indicate your line is in the question queue.

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You May press Star two if you would like to remove your questions from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing mascara.

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One moment, please while we poll for questions.

Thank you.

Leah Stearns: The year-over-year margin increase on a consolidated run-right basis was primarily driven by a mixed shift in the US, partially upset by inflationary impacts to labor and fuel costs in a slight decline in purchasing at margins internationally. On the cost front, our teams remain focused on optimizing our operational processes by leveraging technology and automation to mitigate the inflationary impacts we've experienced across our labor and transportation costs. In addition, we have recently observed some attenuation in certain expenses, particularly transportation, which was partially driven by reductions in the cost of diesel, which has experienced the 29% decline year-over-year.

Our first question comes from.

Speaker 1: Bob Labick with CJS Securities.

Bob lobby with CGS Securities. Please proceed with your question.

Speaker 4: Good afternoon. Congratulations on continued strong performance.

Good afternoon, Congratulations on continued strong performance.

Bob.

Speaker 4: First question, I have a related follow-up as well, but could you talk a little bit about the recent announcement of, I guess, a partnership with High Marley, you know, Tech Naval Services in general, to help your insurance customers. Talk about what you'll do with that company and if there's other areas of interest where you might be partnering to help your insurance customers.

First question I have a related follow up as well, but could you talk a little bit about the recent announcement of I guess the partnership with high Marley.

Tech enabled services in general to help your insurance customers.

Talk about what you'll do with that company and if theres other areas of interest.

Where you might be partnering.

Leah Stearns: In addition, we are constantly seeking to optimize our operational processes by leveraging technology and automation, which we continue to expect will drive scalability and efficiency across the organization to continue to help mitigate longer term cost pressures. Turning to general and administrative expenditures, excluding stock-based compensation and depreciation expenses, GNA spent in the quarter increased 12 million and 23 million for the fiscal year, and GNA as a percentage of revenue with 5.6% in Q4 and 5.1% for the fiscal year 2023.

Yes.

To help your insurance customers.

Speaker 2: Sure. Happy to address that, Bob. So HiMarley is a service provider in the insurance ecosystem, broadly speaking. They started in the messaging space in particular, but they're committed to improving workflow efficiency, as well as the interface between policyholders and companies within the insurance industry.

Sure happy to address that Bob So high morally.

These are service.

Provider in the insurance ecosystem broadly speaking.

Started in the messaging space in particular, but they are committed to improving workflow efficiency as well as the interface between policyholders and companies.

Within the insurance industry.

Speaker 2: Well, I think we share that objective to improve insurance outcomes, to streamline processes, and to automate them on behalf of all the participants in the industry. So we're delighted to partner with them. We see that they have achieved some traction with some of the leading carriers in the space, and we think that we can develop product offerings together that will achieve those outcomes, reduce cycle times, reduce waste, increased policyholder satisfaction in total loss.

I think we share that objective to improve insurance outcomes to streamline processes and automate them on behalf of all the participants in the industry. So we're delighted to partner with them, we see that they have.

Leah Stearns: Because of our strong revenue growth and moderate cost increase, the gap operating income increased by more than 20% to over 390 million for the quarter, and about 8% to nearly 1.5 billion for the year. Fourth quarter income tax expense was nearly near $74 million, which reflects 18% effective tax rate, and for the year income tax expense was nearly $317 million, which reflects effective tax rate of 20%. Finally, fourth quarter gap net income increased about 32% to almost 348 million, or 36 cents per diluted common share.

<unk> some traction with some of the leading carriers in the space and we think that we can develop product offerings together that will achieve those outcomes reduce cycle times reduced waste increased policyholder satisfaction and total loss scenarios.

Speaker 4: Okay, super. And then kind of as a related follow-up, we're increasingly seeing AI-based programs just using smartphones for enhanced inspection to evaluate of autos, either damage or evaluation of the car. Do you see this as an area that you're interested in investing in? And is this a buy-build or potential partnership opportunity for you?

Okay Super and then kind of as a related follow up.

Increasingly seeing AI based programs, just using smartphones for enhanced inspection to evaluate which of autos other damage.

Valuation of the car.

Do you see this as an area.

That you're interested in investing in and this is a buy build or potential partnership opportunity for you.

Leah Stearns: Well, gap net income for the year increased 13.5% to over 1.2 billion, or $1.28 per diluted common share. Our global inventory at the end of July increased 9.5% from last year, and when excluding low-value units like wholesalers and charities, global inventory increased 11%. That is compromised to the year-over-year increase to over 8% for U.S, inventory or over 10%, and excluding low-value units nearly 16% for international inventory. Turning to our liquidity and financial position, liquidity stood at 3.6 billion as of year end, which is comprised of 1.4 billion in investments in health and maturity securities, 1 billion in cash and cash equivalent, and our capacity under a revolving credit facility of over 1.2 billion.

I think it is likely a mix of the above so we have developed and continue to refine our own image based tools and the more precise the.

Speaker 2: I think it's likely a mix of the above, so we have developed and continue to refine our own image-based.

Speaker 2: And the more precise the exercise, certainly the more difficult the development challenge. But to assess a vehicle as a total loss, I think for a healthy portion of them, the AI required is not that sophisticated, right? A car that has multiple airbags delivered, pardon me, deployed and that collided at 35 miles an hour, that is five years old, is highly probable to be a total loss.

<unk> certainly the more the more difficult the development channel challenge, but to assess a vehicle as a total loss I think for a healthy portion of them.

Our required is not that sophisticated credit card that has multiple airbags delivered pardon me deployed and collected at 35 miles an hour of debt is five years old is highly probable to be a total loss and the image recognition will only enhance the conviction of that call.

Speaker 2: image recognition will only enhance the conviction of that call.

Speaker 2: Where I think the image recognition becomes a more complicated endeavor is when there's slight damage and to estimate the actual repair cost and to try to forecast from deflection in a given panel, how much damage has been done to the underlying drive train or.

Where I think the image recognition becomes a more complicated endeavor is when there is slight damage and to estimate the actual repair cost and to try to forecast from deflection in a given panel how much damage has been done to the underlying drivetrain or computing.

Leah Stearns: For the year, we have generated operating cash flow of nearly 1.4 billion, which is an increase of almost 16% from the prior year. In addition, during 2023, we invested nearly 517 million in capital expenses, with over 80% of this amount attributable to our physical infrastructure and more specifically capacity expansion, which contributes to our ability to serve our customers while simultaneously reducing our transportation costs and corresponding fuel consumption. Finally, you're to date if you take our operating cash flow less Quebec, we've generated over 847 million of free cash flow.

Speaker 2: computing capabilities of the car. That's harder to do, but for the total loss application, we have a robust product ready to be deployed and deployed in some cases with insurance companies. But likewise, if there are other service providers that insurance companies prefer, we're happy to plug in with them as well. Ultimately, we share the same objective.

Capabilities of the car that's harder to do but for the total loss application, we have a robust product ready to be deployed in deployed in some cases with insurance companies, but likewise, if there are other service providers that insurance companies prefer we're happy to plug in with them as well ultimately we share the same objective maximum maximum.

Speaker 2: Maximum maximum efficiency, maximum speed on behalf of work lines. If that happens through our natively developed products, great. If there is a product they prefer instead, that's.

Cincy maximum speed on behalf of our clients if that happens through our natively developed products great. If there was a product they prefer instead, that's great too.

Leah Stearns: Given this strong financial position, we intend to continue to invest in our business to meet our customers needs. These investments include yard expansion, new yard acquisition, logistics and our technology platform. As Deaf outlined in detail, we believe that these types of historical investments have differentiated Copart as a service provider while ensuring that we have the capacity necessary to serve our industry's future growth.

Okay Super Thanks for that and then one last one.

Speaker 4: Ok super thanks for that. And then one last 1, I'll jump pback King Q, you kind of touched on this already, but just you mentioned obviously CapEx this year 500.00008 million% for capacity addition. Essentially, where do you stand in terms of your capacity and your yard efficiency based on the capacity in those yards? Obviously you've had record volumes. You keep.

I'll jump back in queue, you kind of touched on this already but just you.

You mentioned, obviously the Capex this year $500 million, 80% for capacity additions essentially where do you stand in terms of.

Your capacity and your yard efficiency based on the capacity in those yards, obviously, you've had record volumes you keep.

Leah Stearns: With that, we're concluding our prepared remarks and we're happy to take some questions. Thank you.

Speaker 4: Increasing that that volume and there's still a lot of room to run with total loss frequency as you pointed out today as well so just

Increasing that volume and Theres still a lot of room to run with total loss frequency as you pointed out today as well so just.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the scar key. One moment, please, while we pull for questions.

Operator: Thank you.

Speaker 4: I know you're investing $400 million in the last year and tons and tons of capital, but how do you see the yard's current efficiency and where do you stand in terms of capacity that you want slash need?

I know, you're investing $400 million in the last year and tons and tons of capital, but how do you see the yards current efficiency and where do you stand in terms of capacity that you want slash need.

Speaker 2: Yeah, I think it's a it's a great question and tough to answer in a single paragraph in part because the answer varies.

Yes, I think it is.

It's a great question and tough to answer in a single paragraph.

Because the answer varies.

Speaker 2: very significantly by geography, by region, by city, even by areas in a

Vary significantly by geography by region by city, even by areas in a given city.

Speaker 2: So, as a blanket statement, we are certainly in a good place in terms of capacity and being able to serve our customers as they stand today. But we forecast five and ten and twenty years at a time, and so very much still have the appetite for significantly more investments as well in land and capacity, in part to support the growth that Bob, you observed at the outset here. So we are

So as a blanket statement, we are certainly in a good place in terms of capacity and being able to serve our customers as they stand today, but we forecast five and 10 and 20 years at a time and so very much still have the appetite for significantly more investments as well in land and capacity in part to support the growth that Bob <unk>.

Robert Labick: Our first question comes from Bob Labic with CJS Securities. Please proceed with your question. Good afternoon, congratulations on continued strong performance. Thanks, Bob. First question, I have a related follow up as well, but could you talk a little bit about the recent announcement of, I guess, a partnership with Hi Marley, tech and able services in general to help your insurance customers. Maybe talk about what you'll do with that company and if there's other areas of interest, where you might be partnering to help your insurance customers?

Served at the outset here so we are.

If you were to look across our system. There are certainly pockets in which we know we need land relatively soon there are other areas in which we know we are in good shape for 567 10 years, even but I think we would expect to continue to deploy capital in support of our growth. If we look back now with the benefit of hindsight after 40 some years.

Speaker 2: If you were to look across our system, there are certainly pockets in which we know we need land relatively soon. There are other areas in which we know we are in good shape for 5, 6, 7, 10 years even. But I think we would expect to continue to deploy capital in support of our growth. If we look back now with the benefit of hindsight after 40-some years,

Speaker 2: The land we have bought is generally proven to be objectively a good financial investment regardless, which is not to say we would be wasteful or reckless about it, but in general land itself is not consumption, it's investment in a durable asset that has proven to accumulate value as well over time.

The land we have bought is generally proven to be objectively a good financial investment, regardless, which is not to say, we would be wasteful or reckless about it but in general land itself is not consumption. Its investment in a durable asset that has proven to accumulate value as well over time.

Jeff Liao: Sure, happy to address that, Bob. Hi Marley is a service provider in the insurance ecosystem broadly speaking. They started in the messaging space in particular, but they're committed to improving workflow efficiency as well as the interface between policyholders and companies within the insurance industry. I think we share that objective to improve insurance outcomes to streamline processes and to automate them on behalf of all the participants in the industry, so we're delighted to partner with them.

Okay Super Thanks, so much.

Speaker 1: Thank you. Our next question comes from the line of Daniel Imbrough with Stevens. Please proceed with your question.

Thank you. Our next question comes from the line of Daniel <unk> with Stephens. Please proceed with your question.

Good evening, everybody. Thanks for taking my questions.

Speaker 5: Jeff, I want to start on the demand side, maybe the equation. You know, you mentioned these emerging markets need Copart to provide affordable transportation. I'm curious, where else can those markets supply vehicles from at scale? There have been some headlines around maybe Asian manufacturers, especially China, exporting more cheap cars. But are you seeing any change in, you know, the need for those cars or the availability, maybe from outside of of your channel that you would compete with on the buyer's side?

Jeff I wanted to start on the demand side, maybe the equation you mentioned these emerging markets need co part to provide affordable transportation I'm curious where else can those markets supply vehicles from at scale there've been some headlines around maybe Asian manufacturers, especially China exporting more cheap cars, but are you seeing any change in the knee.

Jeff Liao: We see that they have achieved some traction with some of the leading carriers in the space and we think that we can develop product offerings together that will achieve those outcomes, reduce cycle times, reduced waste, increased policyholder satisfaction in total loss scenarios. Okay, super.

<unk> for those cars or the availability maybe from outside of of your channel that you would compete within the buyer side.

Jeff Liao: And then kind of as the related follow-up, we're increasingly seeing AI-based programs just using smartphones for enhanced inspection to evaluate your vatoes, either damage or evaluation of a car. Do you see this as an area that you're interested in investing in? And is this a by-build or potential partnership opportunity for you? I think it's likely a mix of the above. So we have developed and continue to refine our own image-based tools.

Speaker 2: In a word, no, which is not to say that that picture can't change in the years ahead, but the international demand, and to be fair, there are countries that

In a word no.

Which is not to say that that picture can change in the years ahead.

But the international demand and to be fair.

There are countries that emerge.

Speaker 2: In the aggregate, international demand for cars from Copart has expanded very significantly on a 1, 5, 10 year period.

In the aggregate international demand for cars.

Cohort has expanded very significantly on a one 510 year basis.

Jeff Liao: And the more precise the exercise is certainly the more difficult the development channel challenge. But to assess a vehicle as a total loss, I think for a healthy portion of them, the AI required is not that sophisticated or a car that has multiple airbags delivered, pardon me, deployed and that collided at 35 miles an hour, that is five years old is highly probable to be a total loss. And the image recognition will only enhance the conviction of that call.

Speaker 2: For any individual country, the demand can be subject to economic volatility.

For any individual country.

Demand can be subject to economic volatility inflation, unemployment et cetera, but in the aggregate.

Jeff Liao: Where I think the image recognition becomes a more complicated endeavor is when there's slight damage and to estimate the actual repair cost and to try to forecast from deflection in a given panel, how much damage has been done to the underlying drivetrain or computing capabilities of the car. That's harder to do. But for the total loss application, we have a robust product ready to be deployed and deployed in some cases with insurance companies.

Speaker 2: unemployment, etc. But in the aggregate, the

The developing economies.

Speaker 2: have seemingly perpetually growing appetite for our cars. Could that be satisfied by other providers? Perhaps. But it seems that a high-grade US quality vehicle, UK, Canada for that matter, that can be repaired is the better.

<unk>.

Seemingly perpetually growing appetite for our cars could that be satisfied by other providers, perhaps but it seems that a high grade U S quality vehicle U K, Canada for that matter that can be repaired.

Is that better.

Speaker 2: the better instrument to address that demand and it has been at least that's been true for the past 20 years I think we don't expect

Just a better instrument to address that demand and it has been at least that's been true for the past 20 years I think we don't expect that to change.

Speaker 5: There may be more near-term looking at the quarter. Leah, I think you mentioned U.S. vehicle sales, maybe units were down a few percent, but there was a nice pickup sequentially in the service vehicles. Was that just a customer shifting, maybe from principal to agency? And is that still something you see in your new markets? I'm curious, you know, internationally, vehicle sales units were up a lot. Is that just the onboarding of customers that still want you to take principal risk, but the long-term strategy to convert them to agency?

Great and then maybe more near term looking at the quarter Leah. Thank you mentioned U S vehicle sales new units were down a few percent, but there was a nice pickup sequentially in the in the service vehicles was that just a customer shifting maybe from principal to agency and is that still something you see in your new markets I'm curious internationally.

Jeff Liao: But likewise, if there are other service providers that insurance companies prefer, we're happy to plug in with them as well. Ultimately, we share the same objective. Maximum efficiency, maximum speed on behalf of our clients. If that happens through our natively developed products, great if there is a product they prefer instead, that's great too. Okay, super, thanks for that.

Vehicle sales units were up a lot is that just the onboarding of customers that still want you to take principal risk, but the long term strategy to convert them to agency.

So in terms of U S purchased vehicle sales, we were actually up sequentially, but year over year that was down slightly.

Speaker 3: So in terms of U.S. purchase vehicle sales, we were actually up sequentially, but year over year, that was down slightly.

Speaker 3: So that does appear and we do believe that the reduction in purchase vehicle sales earlier in 2023 was really a temporary phenomenon for the business.

So that does appear and we do believe that the.

Jeff Liao: And then one last one, I'll jump back and cue. You kind of touched on this already, but just you mentioned obviously CapEx this year, 500 million 80% for a capacity addition to centrally. Where do you stand in terms of your capacity and your yard efficiency based on the capacity in those yards? Obviously you've had record volumes. You keep increasing that that volume. And there's still a lot of room to run with total loss frequency as you pointed out today as well.

The reduction in purchased vehicle sales earlier in 2023 was really a temporary phenomenon for the business. So we would expect to see that continue to grow going forward on a sequential basis as the market becomes more stable from an A&P perspective more of the whole car space.

Jeff Liao: So just I know you're investing for a million dollars in a lecture and tons and tons of capital. Look, how do you see the yards current efficiency and where do you stand in terms of capacity that you want flesh need?

Speaker 3: So we would expect to see that continue to grow going forward on a sequential basis as the market becomes more stable from an ASP perspective and more of the whole car space.

Speaker 3: And then, as it relates to the second part of your question, can you repeat that? Just internationally, you know, that continues to grow very quickly. I'm curious if that is more the long-term strategy, or if that is a helping onboard new customers, remove the risk from the seller, but ultimately shift them to agencies.

And then <unk>.

As it relates to the second part of your question can you repeat that.

Internationally that continues to grow very quickly I'm curious if that is more of the long term strategy or if that is a <unk>.

Helping onboard new customers and remove the risk from the seller, but ultimately shift them to agencies the strategy.

Jeff Liao: Yeah, I think it's a great question and tough to answer in a single paragraph. In part because the answer varies very significantly by geography, by region, by city, even by areas in a given city. So as a blanket statement, we are certainly in a good place in terms of capacity and being able to serve our customers as they stand today, but we forecast five and 10 and 20 years at a time.

Speaker 3: It's really the latter initially and to the extent that we find opportunities to continue to expand in international markets We may use that But I don't think you'll see us to grow significantly on the internet

It's really the latter initially and to the extent that we find opportunities to continue to expand in international markets, We may use that but.

But I don't think Youll see it.

Grow significantly on the international side.

Speaker 3: particularly for the insurance business. We may increase our whole car, cash for cars business internationally, but that is a separate.

Particularly for the insurance business, we may increase our whole car cash for cars business internationally, but that is a separate endeavor.

Speaker 2: Yeah, the purchasing approach is a necessary enabler. I think that would be what you were hinting at when it comes to our institutional.

Purchasing approach is necessary enabler I think that was what you were hinting at when it comes to our institutional clients in the U S. A healthy portion of our purchase volume as our direct to consumer business. So to speak this is cash for cars in which we buy cars from customers because to date it hasn't proven to be a scalable solution too.

Jeff Liao: And so very much still have the appetite for significantly more investments as well in land and capacity in part to support the growth that the volume served at the outset here. So we are. If you were to look across our system, the certainly pockets in which we know we need land relatively soon, there are other areas in which we know we are in good shape five, six, seven, ten years even, but I think we would expect to continue to deploy capital in support of our growth.

Speaker 2: The U.S., a healthy portion of our purchase volume is our direct-to-consumer.

Speaker 2: Cash for Cars in which we buy cars from customers because to date it hasn't proven to be a scalable solution to create a consumer-branded.

To create a consumer branded cohort so the better solution for an individual vehicle owner has to buy the car to offer a certain value to them and to sell the car at a profit for ourselves.

Speaker 2: so the better solution for an individual vehicle owner is to buy the car to offer a certain value to them and to sell the car at a profit to ourselves.

Jeff Liao: If we look back now with the benefit of hindsight after 40 some years, the land we have bought is generally proven to be objectively a good financial investment regardless, which is not to say we would be wasteful or reckless about it, but in general land itself is not consumption. It's investment in a durable asset that has proven to accumulate value as well, over time. Okay, super. Thanks so much.

Speaker 2: If we could sell those cars purely on a consignment basis, we'd probably prefer it. And that certainly holds true for institutional clients as well, the U.S. and elsewhere.

We could sell those cars purely on a consignment basis, we probably prefer it and that certainly holds true for institutional clients as well as the U S and elsewhere in the UK. When we entered in 2007. So thats now almost 16. It is 16 years ago. When we entered the UK for the first time the mix there for insurance clients was very heavily principal oriented today.

Speaker 2: UK when we entered in 2007, so that's now almost 16, it is 16 years ago when we entered the UK for the first time. The mix there for insurance clients was very heavily principal oriented.

Operator: Thank you.

Speaker 2: Today, we migrated to be a strong majority of those cars being sold on a consignment basis. That is generally our preferred approach, not necessarily because we make more money doing so, but because it is a better alignment of interest with our.

We migrated to be a strong majority of those cars being sold on a consignment basis that is generally our preferred approach not necessarily because we make more money doing so but because it is a better alignment of interest with our customers. When we buy cars from them they want to sell them for the lowest possible value, we want to sell them for the highest possible value and we're on office.

Daniel Imbro: Our next question comes from the line of Daniel Imbro with Stevens. Please proceed with your question. Yeah, good even everybody. Thanks for taking our questions. Jeff, I want to start on the demand side, maybe the equation. You know, you mentioned these emerging markets need Copart to provide affordable transportation. I'm curious, where else can those markets supply vehicles from at scale? There've been some headlines around maybe Asian manufacturers, especially China exporting more cheap cars, but are you seeing any change in the need for those cars or the availability, maybe from outside of your channel that you would compete with in the buyer side?

Speaker 2: When we buy cars from them, they want to sell them for the lowest possible value, we want to sell them for the highest possible value, and we're on opposite sides of the trade. When we instead are selling cars on their behalf, we're both rooting for the highest

The size of the trade.

When we instead are selling cars on their behalf.

Both rooting for the highest possible outcome and working collaboratively to do so so it's a better alignment of interest with our institutional clients. It's more conducive to a constructive 20 year relationship than a principal trading counterparty arrangement.

Speaker 2: So it's a better alignment of interests with our institutional clients. It's more conducive to a constructive 20-year relationship than a principal trade encounter.

Speaker 5: Thanks a ton of sense. I appreciate all the color and best of luck guys. Thank

That makes a ton of sense I appreciate all the color and best of luck guys. Thank you.

Daniel Imbro: In a word, no, which is not to say that that picture can't change in the years ahead, but the international demand and to be fair, there are countries that emerge that they in the aggregate, international demand for cars from Copart has expanded very significantly on a one five, ten year basis. For any individual country, the demand can be subject to economic volatility, inflation, unemployment, etc. But in the aggregate, the developing economies have seemingly perpetually growing appetite for our cars.

Speaker 1: Thank you. Our next question comes from Craig Kennison.

Thank you.

Our next question comes from Craig Kennison with Robert W. Baird. Please proceed with your question.

Speaker 1: Robert W. Baird. Please proceed with your.

Speaker 6: Hey, good afternoon, and thank you for taking my question. I wanted to circle back on ASPs. I think the surprise for me this year is how strong your ASP has been.

Hey, good afternoon, and thank you for taking my question I wanted to circle back on Asps.

The surprise for me. This year is how strong your asps has been despite the drop in used car prices as measured by the Manheim index or other sources.

Speaker 6: despite the drop in used car prices as measured by the Mannheim Index or other sources.

Speaker 6: I think you've explained that in part as a function of mix, and I'm wondering if you can help us understand how wide the gap is between your insurance ASPs and your non-insurance ASPs, and whether that's the fundamental driver to that outperformance.

I think you've explained that in part.

As a function of mix and I'm wondering if you can help us understand.

How wide the gap is between your insurance Asps.

Daniel Imbro: Could that be satisfied by other providers perhaps, but it seems that a high grade US quality vehicle UK Canada for that matter that can be repaired is the better instrument to address that demand. And at least that's been true for the past 20 years. I think we don't expect that to change. Maybe more near term, looking at the quarter, Leah, I think you mentioned US vehicle sales units were down a few percent, but there wasn't a pick up sequentially in the service vehicles.

The non insurance Asps, whether that's the fundamental driver to that outperformance.

Speaker 2: In this case, Craig, it's not the fundamental driver of the performance in the quarter.

In this case, Craig it's not the fundamental driver of the performance in the quarter.

I would.

Speaker 2: And I think I think it's fair to acknowledge that if you track copart ASPs versus Mannheim every quarter and go back a lot of years, there are there. They are certainly positively correlated.

I think it's fair to acknowledge that if you tracked co part asps versus Manheim every quarter and go back a lot of years. There are there are certainly positively correlated.

Speaker 2: And there are certainly some leads and lags, you would have seen our prices jump well before Mannheim in the pandemic after the initial declines in the spring of 2020.

And there are certainly some leads and lags you would've seen our prices jump well before manheim independent Mcguffey initial declines in the spring of 2020.

Daniel Imbro: Was that just a customer shifting maybe from principle to agency? And is that still something you see in your new markets? I'm curious, you know, internationally vehicle sales units were up a lot. Is that just the onboarding of customers that still want you to take principle risk, but the long-term strategy to convert them to agency? So in terms of US purchase vehicle sales, we were actually up sequentially, but year over year that was down slightly.

Our prices increased far earlier than <unk> ever did and then in late 2021, if I have my data straight we would've seen in the wholesale market is reflected in that Manheim index increase rapidly then we continue to grow as well, but not at the same rate because we had grown earlier still.

Speaker 2: far earlier than Mannheim's ever did. And then in late 2021, if I have my dates straight, we would have seen the wholesale market, as reflected in that Mannheim index, increase rapidly then. We continue to grow as well, but not at the same rate because we had grown earlier.

Speaker 2: today with Mannheim declining somewhat meaningfully year over year.

Today with manheim declining somewhat meaningfully year over year.

Our.

Speaker 2: Our prices have held steady or grown, both for insurance units and non-insurance units. So that outperformance is not principally a shift.

Daniel Imbro: So that does appear, and we do believe that the reduction in purchase vehicle sales earlier in 2023 was really a temporary phenomenon for the business. So we would expect to see that continue to grow going forward on the sequential basis. As the market becomes more stable from an ASP perspective in more of the whole car space, and then as it relates to the second part of your question, can you repeat that?

Our prices have held steady or grown both for insurance and non insurance units. So that outperformance is not principally a shift from insurance not insurance, what I would observe I think is fair is that with used vehicle prices are softening, we see total loss frequency rebounding when total loss frequency increases and cohort.

Speaker 2: What I would observe, I think, is fair, is that with used vehicle prices softening, we see total...

Speaker 2: When the total loss frequency increases and Copart earns the right to sell the marginal vehicle, those marginal vehicles will generally sell for more than the average vehicle before.

Earned the right to sell the marginal vehicle those marginal vehicles would generally sell for more than the average vehicle before it. So I think thats partial does that partially explain the strong performance on price on the insurance side as well as of course, the auction performance itself, we see more bidders more bids per vehicle et cetera, et cetera, all the traditional metrics we used to talk.

Speaker 2: So I think that partially explains the strong performance on price on the insurance side, as well as, of course, the auction performance itself. We see more bidders, more bids per vehicle, et cetera, et cetera. All the traditional metrics we used to talk about quarter to quarter, we're seeing still better auction liquidity even per unit sold than we did a year ago, than we did five years ago, and so on.

Daniel Imbro: Just internationally, you know, that continues to grow very quickly. I'm curious if that is more the long-term strategy, or if that is a helping onboard new customers remove the risk from the seller, but ultimately shift them to agency as the strategy? It's really the latter initially, and to the extent that we find opportunities to continue to expand in international markets, we may use that, but I don't think you'll see it, to grow significantly on the international side, particularly for the insurance business.

About quarter to quarter, we're seeing still better auction liquidity even per units sold and we did a year ago than we did five years ago and so on so that explains part of it as well.

And as a follow up within your let's say dealer service cars are cool part Blue are you continuing to mix up in other words earn the right to sell a more expensive car and is that in any way a driver to asps.

Speaker 6: And as a follow-up, within your, let's say, dealer service cars or Copart Blue, are you continuing to mix up, in other words, earn the right to sell a more expensive car? And is that in any way a driver to ASP?

Daniel Imbro: We may increase our full-car cash for cars business internationally, but that is a separate endeavor. The purchasing approach is a necessary enabler, I think that was what you were hinting at when it comes to our institutional clients. In the US, a healthy portion of our purchase volume is our direct to consumer business, so to speak, the cash for cars in which we buy cars from customers, because to date it has been proven to be a scalable solution to create a consumer branded copart.

Speaker 2: Less so in this, yes, but less so in this case. In terms of the pure arithmetic for the quarter, that's not the principal driver of our outperformance relative to the Mannheim Use Vehicle Index.

Less so in this yes, but less so in this case in terms of the pure arithmetic for the quarter, that's not the principal driver.

Of our outperformance relative to the Manheim used vehicle index.

Got it okay. Thank you thanks Craig.

Thank you.

Daniel Imbro: So the better solution for an individual vehicle owner is to buy the car to offer a certain value to them and to sell the car at a profit for ourselves. If we could sell those cars purely on a consignment basis, we probably prefer it, and that certainly holds true for institutional clients as well, the US and elsewhere. In the UK, when we entered in 2007, so that now almost 16, it is 16 years ago when we entered the UK for the first time, the mix there for insurance clients was very heavily principal-oriented.

Speaker 1: As a reminder, press star 1 to ask a question at this time.

As a reminder, press star one to ask a question at this time.

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

Speaker 1: Our next question comes from Brett Jordan with Jeffries. Please proceed with your.

Speaker 6: Hey, good afternoon, guys. Hey, Brett. When you look at the blue car and the dealer cars that you're selling, is the mix of foreign buyers higher in that space, or do they prefer the salvage cars because they have the arbitrage of low repair costs?

Hey, good afternoon, guys Hi, Brett.

Just look at the Blue car in the dealer cars that Youre selling is is the mix of foreign buyers higher in that space or do they prefer the salvage cars because they have the arbitrage of low repair costs.

Daniel Imbro: Today, we migrated to be a strong majority of those cars being sold on a consignment basis that is generally our preferred approach, not necessarily because we make more money doing so, but because it is a better alignment of interest with our customers. When we buy cars from them, they want to sell them to the lowest possible value. We want to sell them for the highest possible value and we are on opposite sides of the trade.

Speaker 2: I think it's similar, Brett. So yes, they like the arbitrage of repair costs, but and we're going to pull this up and double check it real time, but I think it's it's.

I think its similar Brett so yes, they like the arbitrage of repair costs, but.

We're going to pull this off and double check it real time, but I think it's directionally similar.

Speaker 2: Okay, also like these cars once brought to the marketplace. That's the

Okay also like these cars once brought to the marketplace. That's the.

Speaker 2: That's the point we've made in the past about the flywheel of liquidity. We bring buyers, we bring vehicles to the buyers and therefore buyers to the vehicles. And those buyers in turn develop an interest with the cars we incrementally bring to the

That's the point, we've made in the past about the flywheel of liquidity, we bring buyers.

Daniel Imbro: When we instead are selling cars on their behalf, we are both rooting for the highest possible outcome and working collaboratively to do so. So it is a better alignment of interest with our institutional clients. It is more conducive to a constructive 20-year relationship than a principal trading counterpart of your arrangement. I appreciate all the color and best of luck, guys. Thank you.

We bring vehicles to the buyers and therefore buyers of the vehicles and those buyers in turn development interest with the cars, we incrementally bring to the auction as well.

Speaker 6: And then you called out Hurricane Adelia in the prepared remarks, I guess that was a Q1 event. Was the cost associated with prepping for that versus the limited cars delivered by that a negative in the quarter, or is that just sort of a washout?

Okay, and then you called out Hurricane Italia in the in the in the prepared remarks, I guess that was a Q1 event.

Was that was the cost associated with prepping for that versus the limited cars delivered by that are negative in the quarter or is that just sort of a wash.

Jeff Liao: Our next question comes from Craig Kennison with Robert W. Beard. Please proceed with your question. Hey, good afternoon and thank you for taking my question. I wanted to circle back on ASPs. I think the surprise for me this year is how strong your ASP has been despite the drop in used car prices as measured by the Manhattan Index or other sources. I think you have explained that in part as a function of mix.

Speaker 3: That, Adelia, happened in the first quarter of 24, and so that's not.

Scott.

Italia happened in the first quarter of 'twenty four and so that's not reflected in these numbers.

Jeff Liao: I am wondering if you can help us understand how wide the gap is between your insurance ASPs and your non-insurance ASPs and whether that is the fundamental driver to that outperformance. In this case, Craig, it is not the fundamental driver of the performance in the quarter. And I think it is fair to acknowledge that if you track co-part ASPs versus Manhattan every quarter and go back a lot of years, they are certainly positively correlated.

Speaker 6: No, no, I was asking whether that's an impact in the quarter that we are currently in or yeah, any cost associated with servicing the hurricanes that occur in this quarter would would impact.

Asking whether that's an impact in the quarter that we are currently in our yes.

Cost associated with servicing that hurricanes that occurred in this quarter what.

Would impact this quarter.

Speaker 6: Okay. My question was more like, was that a very high cost prep event that didn't generate the return? I guess, is it a negative for the first quarter? It is, but also to what extent that's just the cost of doing business in 2023 and beyond, right? So we'll talk about next quarter, next quarter. We definitely incurred some.

My question was more of like it was that a very high cost prep event that didn't generate the return I guess is it a negative for the first quarter.

It is but also to what extent that's just the cost of doing business in 2023 and beyond right. So we'll talk about next quarter next quarter, we definitely encourage some mobilization costs in preparation for a storm that didn't ultimately materialized.

Speaker 2: Mobilization costs in preparation for a storm that didn't ultimately materialize now I think to be fair if you look back to major storms like Harvey, let's go all the way back to 2017 A lot of the massive expenses would be

To be fair, if you look back two major storms like Harvey Let's go all the way back to 2017, a lot of the massive expenses would be towing costs.

Speaker 2: Temporary leases short-term leases of racetracks and so forth in this case We haven't incurred those kinds of costs in part because we've deployed the capital

Temporary leases Youre short term leases of race tracks and so forth in this case, we haven't incurred those kinds of costs in part because we deployed the capital to own the land to be ready for it. So we would we would likely not have entered into meaningful emergency leases. In this case, even had the storm arrived and as for the towing the towing largely never material.

Speaker 2: Own the land to be ready for it. So we would we would likely not have entered into meaningful emergency leases in this case Even had the storm arrived and as for the towing the towing largely never materialized at all because the cars

Jeff Liao: And there are certainly some leads and lags you would have seen our prices jump well before Manhattan in the pandemic, after the initial declines in the spring of 2020. Our prices increased far earlier than Manhattan's ever did. And then in late 2021, if I had my dates straight, we would have seen the wholesale market as reflected in that Manhattan Index increase rapidly. Then we continue to grow as well, but not at the same rate because we had grown early.

At all because the cars weren't there.

Speaker 6: Okay. And then a quick question on sort of thoughts around the cash balance. Obviously you guys are still piling it up despite buying a fair amount of real estate every year. Do you have any, I guess, is it just interest income off of that or are there longer term strategies around what you do with two plus billion dollars?

Okay, and then a quick question on sort of thoughts around the cash balance. Obviously, you guys are still piling it off despite buying a fair amount of real estate every year.

Any I guess is it just interest income off of that or other longer term strategies around what you do with two plus billion dollars.

Jeff Liao: Today, with Mannheim declining somewhat meaningfully year-over-year, our prices have held steady or grown both for insurance units and non-insurance units, so that our performance is not principally a shift from insurance to non-insurance. What I would observe, I think, is fair, is that with used vehicle prices softening, we see total loss frequency rebounding. When total loss frequency increases and copart earns the right to sell the marginal vehicle, those marginal vehicles will generally sell for more than the average vehicle before it.

Sure with respect to the current investment strategy given the fact that we are.

Speaker 3: With respect to the current investment strategy, given the fact that we are earning in excess of five and a quarter on government T-bills that are short duration and tenure, we are currently comfortable using that until we find a higher and better use and we continue to look at opportunities to invest, everything across the spectrum of additional technology, land, logistic opportunities to bring down cost. And obviously looking at ways to enhance the broader business.

Earnings in excess of five and a quarter on government T bills that are of short duration and tenure.

We are currently comfortable using that until we find a higher and better use and we continue to look at.

Opportunities to invest everything across the spectrum of.

Additional technology land logistic opportunities to bring down cost and.

And obviously looking at ways to enhance.

Broader business that we have so oh, Jeff.

Jeff Liao: So, I think that partially explained the strong performance on price on the insurance side, as well as, of course, the auction performance itself. We see more bidders, more bid for vehicle, etc, that are all the traditional metrics we talk about quarter to quarter, we're seeing still better auction liquidity even per unit sold, and we did a year ago than we did five years ago, and so on. So, that explains part of it as well.

Speaker 2: Yeah. Right over the very long haul. As you know we've returned capital to shareholders via stock buybacks. And no doubt we will. We'll do that again. It's a question of when and how. Historically we've done so both via open market purchases as well as through.

Brett over the very long haul as you know we've returned capital to shareholders via stock buybacks and no doubt we will we'll do that again, it's a question of when and how and historically, we've done so both vehicles market purchases as well as through more structured Dutch tender offerings and so forth. So that is the long term answer in the near term.

Speaker 2: more structured Dutch tender offerings and so forth. So that is the long-term answer. In the near term, yes, we are investing that cash in treasuries, which is certainly yielding better returns than they would have historically, and we think the fortress balance sheet is of interest.

Yes, we are.

Investing that cash in treasuries, which certainly yielding a.

Jeff Liao: And as a follow-up, within your, let's say, dealer service cars or copart blue, are you continuing to mix up, in other words, earn the right to sell a more expensive car, and is that in any way a driver to ASP? Less so in this, yes, but less so in this case. In terms of the pure arithmetic for the quarter, that's not the principal driver. Of our out-performance relative to the Mannheim used vehicle index. Thank you. As a reminder, press star one to ask a question at this time.

Better returns than they would have historically and we think that fortress balance sheet is of value to ourselves and to our clients I think it positions us to act very aggressively when we see land purchase opportunities for example.

Speaker 2: value to ourselves and to our clients. I think it positions us to act very aggressively when we see land purchase opportunities, for example. It equips us to respond to a pandemic in a way that a lesser-capitalized company could not. The pandemic arrived. I know it feels like a distant memory now, but there's a moment in which we wondered if we'd be able to sell a car, or if every DMV would shut down.

Equips us to respond to a pandemic.

In a way that to be lesser capitalized company could not the pandemic arrived I know it feels like a distant memory now, but there was a moment in which we wondered if we'd be able to sell a car or if every DMV would shut down and knowing that we have the capitalization. We do we're able to operate without furloughing employees without suspended capex and we can we can continue our business as.

Speaker 2: And knowing that we have the capitalization we do we're able to operate without furloughing employees without suspending cap

Speaker 2: we can continue our business as is and we will bend so that our insurance companies can rely upon us. That balance sheet is part of what enables us to be that resilient in that environment.

Fred Jordan: Our next question comes from Fred Jordan with Jeffries. Please proceed with your question. Hey, good afternoon, guys. Hey, Fred. When you look at the blue car and the dealer cars that you're selling, is the mix of foreign buyers higher in that space or do they prefer the salvage cars, because they have the arbitrage of low repair costs? I think it's similar, Fred. So yes, they like the arbitrage of repair costs, but we're going to pull the seven double check at real time, but I think it's directionally similar. Okay.

And we will bend, so that our insurance companies can rely upon us that balance sheet is part of what enables us to be that resilient in that environment.

Great. Thank you.

Thanks, Brett.

Thank you. Our next question comes from the line of Ryan Brinkman with JP Morgan. Please proceed with your question.

Speaker 1: Thank you. Our next question comes from the line of Ryan Brinkman with J.P. Morgan.

Speaker 6: Hi, thanks for taking my question. I thought to ask on the Hills Motors acquisition that's gone through with the

Alright, Thanks for taking my question I thought to ask on the Hills Motors acquisition, that's gone through with.

Speaker 6: the regulatory approval now, and I heard you say that it was

The regulatory approval now.

I heard you say that it was.

Speaker 6: driven by customer preferences in that region. But just curious about, you know, maybe gauge your interest in, as we think about, you know, what you could potentially do with your cash word, et cetera, your desire or inclination to participate in these other sort of adjacencies.

Driven by customer preferences in that region, but just curious about maybe gauge your interest in as we think about what you could potentially do with your cash hoard et cetera. Your.

Jeff Liao: Also like these cars, once brought to the marketplace, that's the point we've made in the past about the flywheel of liquidity. We bring buyers, we bring vehicles to the buyers, and therefore buyers of the vehicles. And those buyers in turn develop an interest for the cars we incrementally bring to the auction as well. Okay. And then you called out at Hurricane Adalia in the in the in the in the prepare remarks.

Desire or inclination to participate in these other sort of adjacencies, which might in some cases, maybe b I think competing with.

Jeff Liao: I guess that was a Q1 event. Was that was the cost associated with prepping for that versus the limited cars delivered by that a negative in the quarter, or is that just sort of a wash? That Adalia happened in the first quarter of 24, and so that reflected in these numbers. No, now I was asking whether that's an impact in the quarter that we are currently in or. Yes. Does any cost associated with servicing the hurricanes that occur in this quarter would impact the quarter?

Speaker 6: which might, in some cases, maybe be, I think, competing with, you know, buyers of vehicles at your auctions, although not sellers, and is it somehow more restricted to the U.K., or is there maybe opportunity in the U.S., or are there other potential vertical integrations or adjacencies that maybe we're not thinking of that could potentially be attractive to expand into inorganically? Yeah, I think that's a... Yeah, I think that's a...

Buyers of vehicles at your auctions, although not sellers.

Is it somehow more restricted to the UK or is there may be opportunity in the U S or are there other potential vertical integrations or adjacencies that maybe we're not thinking of that that could potentially be attractive to expand into inorganically.

Yes, I think thats.

Inappropriate question and when we consider.

Areas in which we would expand strategically we certainly always start with the question of what do we what are we good at and where can we deploy those capabilities most profitably and I think what we know we're good at is managing a high volume digital auction platform, which we've done now for literally 20 years. So we started that in 2003 and have refined our approach repeatedly over the years.

Speaker 2: areas in which we would expand strategically. We certainly always start with the question, what are we good at and where can we deploy those capabilities most profitably? And I think what we know we're good at is managing a high volume

Jeff Liao: Okay. My question was more like, would that a very high cost prep event that didn't generate the return? I guess is it a negative for the first quarter? It is, but also to what extent that's just the cost of doing business in 2023 and beyond. So we'll talk about next quarter, next quarter. We definitely incurred some mobilization cost in preparation for a storm that didn't ultimately materialize. Now I think to be fair, if you look back to major storms like Harvey, let's go all the way back to 2017, a lot of the massive expense, in this case we haven't incurred those kinds of costs in part because we deployed the capital to own the land to be ready for it.

Speaker 2: Digital auction platform, which we've done now for literally 20 years So we started that in 2003 and it refined our approach repeatedly over the years and think we have a a best-in-class Online digital real-time auction platform part one part two. I think we're

I think we have a best in class online digital real time auction platform part one part two I think we're good at managing the complex physical logistics of moving cars around literally millions of vehicles that we retrieved from various places, including homeowner premises dealers.

Speaker 2: The complex physical logistics of moving cars around literally millions of vehicles that we retrieve from various places, including homeowner premises dealers.

Speaker 2: Repair shops and the like and deploying all of the employees and subcontractors to retrieve them We think we're good at managing complex regulatory environments as well So we have 50 different DMVs a multitude of different countries that we serve that have different title processes and so forth And we can navigate those universe as well. And so knowing all of that we consider strategically How do we deploy those capabilities, you know having followed us for years?

Their shops and alike and deploying all of the employees and subcontractors to retreat them. We think we're good at managing complex regulatory environments as well. So we have 50 different dmv's a multitude of different countries that we serve that have different title processes and so forth and we can navigate those universe as well and so knowing all of that we consider strategically how do we.

Jeff Liao: So we would likely not have entered into meaningful emergency leases in this case even had the storm arrived and asked for the towing, the towing largely never materialized at all because the cars weren't there. Okay, and then a quick question on sort of thoughts around the cash balance. Obviously you guys are still piling it off despite buying a fair amount of real estate every year. Do you have any, I guess, is it just interest income off of that or are there longer term strategies around what you do with two plus billion dollars?

We deploy those capabilities you know having followed us for years that we are careful about that we acquired national power sports auction in 2017, which sells wholesale motorcycles and we have not expanded beyond the perimeter.

Speaker 2: that we are careful about that. We acquired.

Speaker 2: National Power Sports Auction in 2017, which sells wholesale motorcycles, and we have not expanded beyond

Speaker 2: the perimeter of COPAR, except to expand ourselves into new countries, very meaningfully.

Peter a co part except to expand ourselves into new countries very meaningfully since then so all of those investment opportunities.

Jeff Liao: With respect to the current investment strategy given the fact that we are earning an excess of five and a quarter on government he bills that are short duration and tenure. We are currently comfortable using that until we find a higher and better use and we continue to look at opportunities to invest everything across the spectrum of additional energy, land, logistic opportunities to bring down cost. And obviously looking at ways to enhance the broader business that we have.

Speaker 2: So all of those investment opportunities would face a very high bar for us.

Face a very high bar for us to pursue.

Speaker 2: In the specific question you raised, there are markets in which we participate today. For example, the U.S., in which the dismantling industry and the U.S.

And the specific question you raised there are markets in which we participate today for example, the U S in which the dismantling.

Industry and the use of <unk>.

Speaker 2: Alternative parts is a well-trodden path already. The insurance industry, the repair industry here is well accustomed to that. And so there are many companies, including public companies, that are in that business today. I think it's unlikely we would ever ourselves enter that space, in part for the reasons you articulated, which is that we are the neutral intermediary that is optimizing auction proceeds for our customers. And if the best possible economic outcome is that that car is dismantled.

Alternative parts is a well trodden path already insurance industry, the repair industry here as well accustomed to that and so there are many companies, including public companies that are in that business. Today I think it's unlikely we would ever ourselves enter that space in part for the reasons you articulated which is that we are.

Jeff Liao: Yeah, right over the very long all as you know we've returned capital to shareholders via stock buybacks and no doubt we will we'll do that again. It's a question of when and how and historically we've done so both the open market purchases as well as through more structured Dutch tender offerings and so forth. So that is the long term answer in the near term. Yes, we are investing that cash and treasuries which certainly yielding better returns than they would have historically and we think the fortress balance sheet is of value to ourselves and to our clients. I think it positions us to act very aggressively when we see land purchase opportunities for example it equips us to respond to a pandemic in a way that a lesser capitalized company could not.

The neutral intermediary that is optimizing auction proceeds for our customers and if the best possible economic outcome in Tibet cars dismantled the dismantling will buy it if the best possible outcome for that cars that it has driven again in the U S or in Poland or in Nigeria that our auction will find to that buyer as well.

Speaker 2: dismantler will buy it. If the best possible outcome for that car is that it is driven again in the U.S. or in Poland or in Nigeria, then our auction will find that buyer as well.

Speaker 2: As you noted, in this case in the UK, perhaps elsewhere in Europe , there has been less penetration in alternative parts utilization.

As you noted in this case in the UK, perhaps elsewhere in Europe . There has been a less has been less penetration and alternative parts of utilization and so to help turbocharge that some of our customers have made that specific requests that they would like us to assist them in that they don't I don't believe they expect us ultimately to dish.

Speaker 2: to help turbocharge that, some of our customers have made that specific request that they would like us to assist them in that. They don't, I don't believe they expect us ultimately.

Speaker 2: to dismantle a majority or anywhere close to a majority of the vehicles. The point is that having that capability as well, at their request, right, we are very happy, as you know, to be the auction intermediary and to sell the car first and foremost to a third party, wherever that third party may be, whether it's in the UK or elsewhere. But in this case, we'll meet our customers where they are and where they were is specifically asking us to take this on, and we're happy.

Jeff Liao: But the pandemic arrived I know it feels like a distant memory now but there's a moment which we wondered if we'd be able to sell a car or if every DMV would shut down and knowing that we have the capitalization we do we're able to operate without furlowing employees without suspending capex and we can we can continue our business as is and we will bend so that our insurance companies can rely upon us that balance sheet is part of what enables us to be that resilient in that environment. Thank you.

<unk>, our majority or anywhere close to a majority of the vehicles. The point is that having that capability as well at their request right. We are very happy as you know to be the auction intermediary and to sell the car first and foremost to a third party.

Wherever that third party may be whether it's in the U K or elsewhere, but in this case, we will meet our customers, where they are and where they were you specifically asking about could take this on and we're happy to do it.

Very helpful. Thank you and then just lastly, I'd be interested to get any updated thoughts that you might have on the whole car market I'm not sure what percentage of the co part Blue is <unk>.

Ryan Brinkman: Our next question comes from the line of Ryan Brinkman with JP Morgan. Please proceed with your question. Hi, thanks for taking my question. I thought to ask on the Hills Motors acquisition that's gone through with the regulatory approval now and I heard you say that it was driven by customer preferences. You know what I mean by customer preferences in that region but just curious about maybe gauge your interest in as we think about you know what you could potentially do with your cash word et cetera your desire inclination to participate in these other sort of adjacencies which might in some cases maybe be I think competing with buyers of vehicles at your auctions although not sellers.

Sort of that.

Presented by the traditional whole car market. If you have any thoughts on you.

You still participate there.

I think.

Physical auctions right, although youre selling them virtually does that meet the requirements for selling.

Possession vehicles, which I think can be sold like just purely online.

Just get your thoughts on kind of.

Online only.

Full car space and if that's.

And anything you might have or desire to.

Expand into.

It's possible I misunderstand your question, but we certainly have expanded into an open.

Ryan Brinkman: And is it somehow more restricted to the UK or is there maybe opportunity in the US or are there other potential vertical integrations or adjacencies that maybe we're not thinking of that that could potentially be attractive to expand into in organic.

<unk> and <unk> might do for example online only.

We do I mean in some respects compete with them.

Stands today, we are trying to earn the right to sell those cars from financial institutions from corporate fleets rental car fleets and the like so we compete with many industry participants, including the traditional physical auction houses you have in mind. So that's a reality and has been for a long time call. It.

Jeff Liao: Yeah, I think that's an inappropriate question and when we consider areas in which we would expand strategically, we certainly always start with the question, what are we good at and where can we deploy those capabilities most profitably? And I think what we know we're good at is managing a high volume digital auction platform which we've done now for literally 20 years. So we started that in 2003 and refined our approach repeatedly over the years and think we have a best-in-class online digital real-time auction platform, part one.

Speaker 2: including the traditional physical auction houses you have in mind. So that's a reality and has been for a long time.

Speaker 2: Three-quarters of our business or thereabouts is insurance and the balance is not and so if somehow the insurance if somehow we were to separate The businesses which for all the reasons you've heard on this call today. We never would But our non insurance business itself would be a large-scale Auction house without insurance whatsoever now, it's so it turns out that having the two combined Massively enhances the value proposition for both sides of it as well

Three quarters of our business or thereabouts as insurance and the balance is not and so if somehow the insurance if somehow we were to separate the businesses, which for all the reasons you've heard on this call today, we never would.

But our non insurance business itself would be a large scale auction house without insurance whatsoever. So it turns out that having the two combined massively enhances the value proposition for both sides of it as well.

Jeff Liao: Part two, I think we're good at managing the complex physical logistics of moving cars around, literally millions of vehicles that we retrieve from various places including homeowner premises, dealers, repair shops and the like and deploying all of the employees and subcontractors to retrieve them. We think we're good at managing complex regulatory environments as well. So we have 50 different DMVs, a multitude of different countries that we serve that have different title processes and so forth and we can navigate those universe as well.

Very helpful. Thank you.

<unk>.

Thank you.

Speaker 1: Thank you. Our next question comes from Craig Kenison with Robert W. Baird. Please proceed with your question.

Next question comes from Craig Kennison with Robert W. Baird. Please proceed with your question.

Speaker 7: Hey, thanks for letting me back in the queue. I just wanted to follow up on the UK business. You mentioned, Jeff, that insurers want you to be more vertically integrated there, and you're gonna meet them where they're at, which I understand. But is there some future state of the world where you could divest that dismantling business piece? Or is there a fundamental need for that to be connected in the UK? And I just don't understand it.

Hey, Thanks for letting me back in the queue I just wanted to follow up on that.

UK business, you mentioned, Jeff that insurers.

Jeff Liao: And so knowing all of that we consider strategically how do we deploy those capabilities? You know having followed us for years that we are careful about that. We acquired national power sports auction in 2017 which sells wholesale motorcycles and we have not expanded beyond the perimeter of Copart except to expand ourselves into new countries very meaningfully since then. So all of those investment opportunities would face a very high bar for us to pursue.

I want you to be more vertically integrated there and youre going to meet them, where they are at which I understand but is there some future state of the world, where you could divest that dismantling business piece.

Or is there a fundamental need for that to be connected in the UK and I just don't understand it.

Speaker 2: Well, there's no expectation that we're going to divest it. We don't generally take on initiatives like that, intending for them to be temporary. But intellectually, I think the reason you struggle with it, Craig, is you are natively a U.S. analyst, and you are accustomed.

Well there is no expectation that we're going to divest or we don't generally take on initiatives like that intending to for them to be temporary.

Jeff Liao: In the specific question you raised there are markets in which we participate today. For example the US in which the dismantling industry and the use of alternative parts is a well-trodden path already. Insurance industry, the repair industry here is well accustomed to that and so there are many companies including public companies that are in that business today. I think it's unlikely we would ever ourselves enter that space in part for the reasons you are accumulated which is that we are the neutral intermediary that is optimizing auction proceeds for our customers and if the best possible economic outcome that that car is dismantled the dismantling will buy it.

But intellectually I think the reason you struggled with it Craig is your natively a U S analysts and you are accustomed to decades of an industry in which the auction houses and the dismantling and the repair shops are altogether separate pieces of the value chain, but you've never seen them intermingled and that's how we've operated now for 40 years and change we've always.

Speaker 2: Decades of an industry in which the auction houses and the dismantlers and the repair shops are Altogether separate pieces of the value chain, but you've never seen them

Speaker 2: And that's how we've operated now for 40 years and change. We've always preferred the notion of pure neutrality and we'll sell the car to whomever values it, to whoever, pardon me, values the car the most, whatever they're going to do.

Preferred the notion of pure neutrality, and we will sell the car to whomever values to whoever pardon me values of the car the most whatever theyre going to do with it in the U K, we've heard loud and clear and it's not it's not a one off requests but it is a.

Speaker 2: In the U.K., we've heard loud and clear, and it's not a one-off request, right? It is a near consensus view among the industry that there is value in their salvage auction provider likewise providing access to dismantled parts. And so we want to address that head-on. Ultimately, the customer's preferences prevail. We can certainly articulate to them why we think the circular economy can be equally supported with third parties doing the dismantling. But we are also happy to do it if that's what the.

And near consensus view, among the industry that there is value in their salvage auction provider likewise, providing access to dismantle parts and so we want to address that head on ultimately the customers preferences prevail. We can certainly articulate to them why we think the circular economy can be equally supported with third party.

Jeff Liao: If the best possible outcome for that car is that it is driven again in the US or in Poland or in Nigeria then our auction will find that buyer as well. As you noted in this case in the UK perhaps elsewhere in Europe there has been less penetration in alternative parts utilization and to help turbo charge that some of our customers have made that specific request that they would like us to assist them in that they don't I don't believe they expect us ultimately to dismantle a majority or anywhere close to a majority of the vehicles the point is that having that capability as well at their requests we are very happy as you know to be the auction intermediary and to sell the car first and foremost to a third party wherever that third party may be whether it's in the UK or elsewhere but in this case we'll meet our customers where they are and where they were is specifically asking us to take this on and we're happy to do it.

He is doing the dismantling, but we are also happy to do it if that's what they would like us to do.

Speaker 7: And is that unique to the U.K.? Are there other markets in Europe , for example, that have that same request? I think it remains to be seen. There are a lot of different forces at work here, including...

And is that unique to the U K are there other markets in Europe . For example that have that same request I think it's I think it remains to be seen there are a lot of different forces at work here, including <unk>.

Speaker 2: divergent views about alternate parts utilization, so there are some countries you can imagine

Divergent views about alternative parts utilization. So there are some countries you can imagine in which the Oems are very influential and they're able to preference insurance companies and repair shops to use first fit parts. There are other countries in which the carbon reduction initiative is more critical and therefore.

Speaker 2: which the OEMs are very influential and they're able to preference insurance companies and repair shops to use first fit parts. There are other countries in which the carbon reduction initiative is more critical and therefore

Jeff Liao: That's very helpful thank you and then just lastly I'd be interested to get any updated thoughts that you might have on the the whole car market I'm not sure you know what percentage of the copard blue is you know sort of the you know represented by the traditional whole car market if you have any thoughts on because you still participate there via I think you know physical auctions right although you're selling them virtually does that meet the requirements for selling you know repossession vehicles which I think can't be sold like just purely online and I you know just get your thoughts on the kind of you know online only whole car space and if that's you know anything you might ever desire to you know expand into It's possible I'm misunderstanding your question, but we certainly have expanded it into an R&B. We're like, what open lane an ACV might do, for example, online only, full car.

Use of recycled parts is more important so I don't think it's the U K alone, but it was certainly the UK most acutely but this is also a dynamic game, where theres no question that preferences will change over the course of the next year, three and five and many of the countries in which we do business.

Speaker 2: use of recycled parts is more important. So I don't think it's the U.K. alone, but it was certainly the U.K. most acute.

Speaker 2: But this is also a dynamic game, right? There's no question that preferences will change over the course of the next year, three and five, in many of the countries in which we do business.

Great. Thank you.

Great. Thanks, Greg.

Thank you there are no further questions at this time I would now like to turn the floor back over to Jeff for closing comments, great. Thanks, everybody for joining us for the fourth quarter and we'll talk to you. After Q1. Thank you.

Speaker 1: If there are no further questions at this time, I would now like to turn the floor back over to Jeff for closing comments.

Speaker 2: Great. Thanks everybody for joining us for the fourth quarter and we'll talk to you after Q1. Thank you.

Speaker 1: Thank you. This concludes today's teleconference. You may disconnect your lines at this time.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time.

You for your participation.

Speaker 8: Thanks for watching!

[music].

Mhm.

Jeff Liao: We do, I mean, in some respects, compete with them, as we stand today, we are trying to earn the right to sell those cars from financial institutions, from corporate fleets, rental car fleets and the like. So we compete with many industry participants, including the traditional physical auction houses you have in mind. So that's a reality that has been for a long time. It will call it three quarters of our business, or thereabouts, insurance and the balance is not.

[music].

Hello.

[music].

Jeff Liao: And so if somehow we were to separate the businesses, which for all the reasons you've heard on this call today, we never would. But our non insurance business itself would be a large scale auction house without insurance whatsoever. Now it turns out that having the two combined massively enhances the value proposition from both sides of it as well. Very helpful.

Operator: Thank you.

Hum.

Craig Kennison: Our next question comes from Craig Kennisin with Robert W.

Yeah.

Craig Kennison: Baird. Please proceed with your question.

Jeff Liao: Hey, thanks for letting me back in the queue. I just wanted to follow up on the UK business. As you mentioned, Jeff, that insurers want you to be more vertically integrated there, and you're going to meet them where they're at, which I understand. But is there some future state of the world where you could divest that dismantling business piece? Or is there a fundamental need for that to be connected in the UK and I just don't understand it?

Jeff Liao: Well, there's no expectation that we're going to divest that we don't generally take on initiatives like that, intending for them to be temporary. But intellectually, I think the reason you struggle with it Craig is you are natively a US analyst and you are accustomed to decades of an industry in which the auction houses and the dismantlers and the repair shops are all together separate pieces of the value chain. You've never seen them intermingled and that's how we've operated now for 40 years and change.

Jeff Liao: We've always preferred the notion of pure neutrality, and we'll sell the car to whomever values it to, whoever pardon me, values the car the most, whatever they're going to do with it. In the UK, we've heard loud and clear, and it's not a one off request, but it is a near consensus view among the industry that there is value in their salvage auction provider, likewise providing access to dismantled parts. And so we want to address that head on.

Jeff Liao: Ultimately the customers preferences prevail. We can certainly articulate to them why we think the circular economy can be equally supported with third parties doing the dismantling. But we are also happy to do it if that's what they would like us to do. And is that unique to the UK? Are there other markets in Europe, for example, that have that same request? I think it remains to be seen. There are a lot of different forces at work here, including divergent views about alternative parts utilization.

Jeff Liao: So there are some countries you can imagine in which the OEMs are very influential, and they're able to preference insurance companies and repair shops to use first-fifth parts. There are other countries in which the carbon reduction initiative is more critical, and therefore... The use of recycled parts is more important. So I don't think it's the UK alone but it was certainly the UK most acutely but this is also a dynamic game or there's no question that preferences will change over the course of the next year, three and five in many of the countries we in which we do business.

Operator: Great. Thank you. Great. Thanks, Greg. Thank you. There are no further questions at this time.

Operator: I would now like to turn the floor back over to Jeff for close and comments. Great. Thanks everybody for joining us for the fourth quarter and we'll talk to you after two one. Thank you. This concludes today's teleconference. You may disconnect your lines at this time.

Thank you for your participation.