Q1 2024 Copart Inc Earnings Call

Please standby good day, everyone and welcome to the co part incorporated first quarter fiscal 2024 earnings call. Just a reminder, today's conference is being recorded before.

Speaker 1: Please stand by. Good day, everyone, and welcome to the Copart Incorporated first quarter fiscal 2024 earnings call. Just a reminder, today's conference is being recorded.

Speaker 1: Before turning the call over to management, I will share Copark's Safe Harbor Statement.

Before turning the call over to management I will share co part Safe Harbor statement.

Speaker 1: The company's comments today include forward-looking statements within the meaning of federal security laws, including management's current views with respect to trends, opportunities, and uncertainties in the company's markets. These forward-looking statements involve substantial risks and uncertainty.

The company's comments today include forward looking statements within the meaning of federal securities laws, including management's current views with respect to trends opportunities and uncertainties in the company's markets. These forward looking statements involve substantial risks and uncertainties.

Speaker 1: For more detail on the risks associated with the company's business, we refer you to the section titled Risk Factors in the company's annual report on Form 10-K for the year ended July 31, 2023, and each of the company's subsequent quarterly reports on Form 10-Q . Any forward-looking statements are made as of today, and the company has no obligation to update or revise any forward-looking statements.

For more detail on the risks associated with the company's business. We refer you to the section titled Risk factors in the company's annual report on Form 10-K for the year ended July 31 2023.

In each of the company's subsequent quarterly reports on Form 10-Q.

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 Liao. Please go ahead, Jeff.

Now I'll turn the call over to the Companys co CEO Jeffrey out. Please go ahead Jeff.

Speaker 2: Good evening. Welcome to the first quarter earnings call. Let me hand it to Leah briefly for the safe harbor. Oh, there it is. Pardon. Well, let's dive in. I'll keep my comments brief. We'll highlight a few recurring themes that you've heard about, that you've heard previously before handing the call to Leah for a more in-depth look at the first quarter, and then we'll take your questions as well.

Good evening and welcome to the first quarter earnings call, Let me briefly for the Safe Harbor.

Oh pardon.

Well I'll keep my comments brief will highlight a few recurring themes that you've heard about I know you've heard previously before handing the call to leave for more in depth look at the first quarter and then we'll take your questions as well.

Speaker 2: First, as for our insurance business, we continue to observe a rebound in total loss frequency in the quarter.

As for our insurance business, we continue to observe a rebound in total loss frequency in the quarter.

Speaker 2: As you may recall, total loss frequency troughed at just north of 17% in the second calendar quarter of 2022. And it is now 19.3%, according to CCC, in the third calendar quarter of 2022.

As you May recall total loss frequency trough at just north of 17% in the second calendar quarter of 2022 and it is it is now 19, 3%. According to CCC in the third calendar quarter of 2023, you will note, though that today's total loss frequency remained substantially below pre.

Speaker 2: You'll note, though, that today's total loss frequency remains substantially below pre-COVID highs of 21.7% in the fourth calendar quarter of 2020. We continue to believe the total loss frequency will revert in time to historical levels and eventually well beyond, in keeping with all recorded history on this.

Covid highs of 21, 7% in the fourth calendar quarter of 2020.

We continue to believe that total loss frequency will revert and time to historical levels and eventually well beyond in keeping with all recorded history on this statistic.

Speaker 2: Our expectation, our continued expectation is that new and used vehicle prices are likely to stabilize, perhaps decrease more if and when they do, to do so more steeply than repair costs will, driving an ongoing recovery in total loss requests.

Our expectation our continued expectation is that new and used vehicle prices are likely to stabilize perhaps decrease more.

And if and when they do to do so more steeply than repair costs will driving an ongoing recovery in total loss frequency for the third calendar quarter of 2023, specifically, we observed a 4% decline in the manheim used vehicle value index.

Speaker 2: For the third calendar quarter of 2023 specifically, we observed a 4% decline in the Mannheim Used Vehicle Value Index, while accident severity increased by 4% over that same period, as reported by ISS Fast Track.

Accidents severity increased by 4% over that same period as reported by ISS fast track.

Although our U S insurance volumes continued to increase up nine 7% year over year for the quarter.

Speaker 2: Although our U.S. insurance volumes continue to increase up 9.7% year over year for the quarter, we estimate the total loss volumes continue to remain suppressed when compared to historical total loss frequency norms.

We estimate the total loss volumes continue to remain suppressed when compared to historical total loss frequency norms.

Speaker 2: And then, as you've heard us say before, a brief reminder on the long-term drivers of total loss frequency, first, vehicles become more expensive to repair with rising vehicle complexity, advanced components on the perimeter of vehicles in particular, rising labor costs and parts prices. And then, just as importantly, a rising demand for mobility in growing economies and our auction platform and marketing efforts accessing those prospective buyers.

And then as you've heard US say before a brief reminder, on the long term drivers of total loss frequency first vehicles become more expensive to repair with rising vehicle complexity.

<unk> components on the perimeter of vehicles in particular rising labor costs and parts prices and then just as importantly, a rising demand for mobility in growing economies and our auction platform and marketing efforts accessing those prospective buyers.

Speaker 2: A brief note on the storm season. On our last call, we had talked about

A brief note on the storm season on our last call we had talked about.

Speaker 2: potentially very active storm season and at that moment we'd experienced 12 named storms and we've had nine more since up over 50% versus 2022. Ultimately only a handful of these storms made landfall in the U.S. with none of them causing

Potentially very active storm season, and at that moment, we experienced 12 named storms and we've had nine more cents up over 50% versus 2022.

Ultimately only a handful of these storms made landfall in the U S with none of them, causing.

Speaker 2: a substantial number of vehicular losses in comparison to prior years.

A substantial number of <unk>.

Vehicular losses in comparison to prior years, we know all of this now of course with the benefit of hindsight storms. However are inherently unpredictable and the storm season was sufficiently active to causes cause us to deploy hundreds of team members co part owned and third party tow trucks co part owned loaders telecom equipment and generators.

Speaker 2: We know all of this now, of course, with the benefit of hindsight. Storms, however, are inherently unpredictable, and the storm season was sufficiently active to cause us to deploy hundreds of team members.

Speaker 2: co-part owned and third party tow trucks, co-part owned loaders, telecom equipment and generators all over the country in anticipation of major loss events.

All over the country in anticipation of major loss events.

Speaker 2: Last year, Hurricane Ian, the largest storm in our history as measured by consigned vehicles, caused us to incur substantial costs, including in the first quarter of 2023, with those units subsequently sold largely in the second and third quarters of fiscal 23. We view these undertakings in the aggregate as the normal cost of business in providing excellent service to our customers and our community.

Last year Hurricane in the largest storm in our history as measured by a consigned vehicles caused us to incur substantial costs, including in the first quarter of 2023 with those unit. Subsequent subsequently sold in largely in the second and third quarters of fiscal 'twenty three we view these undertakings.

In the aggregate as the normal cost of business and providing excellent service to our customers and our communities.

Speaker 2: Turning then to our Sellers Beyond Insurance.

Turning then to our.

Beyond insurance.

Speaker 2: We continue to grow our blue car business, serving specifically the bank and finance fleet and rental sellers. In the first quarter, we observed year-over-year growth of over 35%.

We continue to grow our blue car business, serving specifically bank and finance fleet and rental of sellers in the first quarter, we observed year over year growth of over 35%.

Speaker 2: We increased our dealer sales volume over that same period by 13% year over year.

We increased our dealer sales volume over that same period by 13% year over year.

Speaker 2: We speak frequently about the flywheel effect of our platform and the global buyer base.

We speak frequently about the flywheel effect of our platform and the global buyer base.

Speaker 2: that we serve. Our ongoing growth in these non-insurance customer segments illustrates our ability to leverage the scale and momentum of this flywheel effect, maximizing auction liquidity and ultimately returns for all sellers, insurance and otherwise.

That we serve are ongoing growth in these non insurance customer segments illustrates our ability to leverage the scale and momentum of this flywheel effect maximizing auction liquidity and ultimately returns for all sellers insurance and otherwise.

Speaker 2: I'll take a moment to comment about our auctions outside of the automotive arena. In addition to gains in the insurance and non-insurance passenger vehicle space, we continue to grow our specialty equipment business as well. By virtue of our serving our insurance and dealer clients, we have long been a substantial remarketer of specialty equipment, including in transportation, construction, and agricultural realms.

I'll take a moment to comment about our auctions outside of the automotive Arena. In addition to gains in the insurance and non insurance passenger vehicle space, we continue to grow our specialty equipment business as well.

By virtue of our serving our insurance and dealer clients, we have long been a substantial re marketer of specialty equipment, including in transportation construction and agricultural realms. This past quarter. We were pleased to announce a strategic investment in purple wave, we have known Erin and Susan Mcgee for over a decade and admire the excellent and.

Speaker 2: This past quarter, we were pleased to announce a strategic investment in PurpleWave. We have known Aaron and Susie McKee for over a decade and admire the excellent and growing business in PurpleWave that they and their team have built. They share our ownership mindset, a commitment to delivering excellent outcomes to their marketplace participants, and a digital-first approach. We're delighted to welcome the PurpleWave team and community to the CoPAR family.

Growing business in purple wave that they and their team have built they share our ownership mindset.

<unk> to delivering excellent outcomes to their marketplace participants and a digital first approach we're delighted to welcome the <unk> team and community to the <unk> family.

Speaker 2: Finally, on the subject of sustainability, last November we published our inaugural ESG report, our first ever account of our commitment and contributions to environmental sustainability, global economic empowerment, enterprise sustainability, and community-based sustainability.

Finally on the subject of sustainability last November we published our inaugural ESG report, our first ever account of our commitment and contributions to environmental sustainability global economic empowerment enterprise sustainability and community safety sustainability, we intend to publish our 2023 update in the next month or so.

Speaker 2: We intend to publish our 2023 update in the next month or so. In it, we'll provide updated data on the enhanced mobility that our marketplace provides to developing economies, the accelerated recovery we enable in communities affected by extreme weather events, and our focus on workplace diversity, equity, and satisfaction.

We will provide updated data on the enhanced mobility that our marketplace provides to developing economies the accelerated recovery, we enable and communities affected by extreme weather events and our focus on workplace diversity equity and satisfaction.

Speaker 2: And on the critical subject of environmental sustainability, we will again underscore and quantify the emissions avoidance that our business enables.

And on the critical subject of environmental sustainability, we will again underscore and quantify the emissions avoidance that our business enables.

Speaker 2: We, of course, invest time and resources to optimize our own CO2 equivalent emissions and energy consumption, but overwhelmingly, our most substantial contribution to environmental sustainability is in enabling the recycling and reuse of vehicles and their component parts and materials, meaningfully reducing what would otherwise be the more substantial carbon footprint of new vehicle and parts manufacturing.

We of course invest time and resources to optimize our own cotwo equivalent emissions and energy consumption, but overwhelmingly our most substantial contribution to environmental sustainability is an enabling the recycling and reuse of vehicles in their component parts and materials meaningfully reducing what would otherwise be the more substantial carbon footprint of new.

And parts manufacturing.

Speaker 2: As our volume grows, so, too, does this carbon emissions avoidance. In 2023, we estimate that we have helped the world avoid over 11 million metric tons of carbon dioxide equivalents, up roughly 10% year over year, and over 100 times more than our actual direct emissions.

As our volume grows so too does this carbon emissions avoidance in 2023, we estimate that we have helped to the world avoid over 11 million metric tons of carbon carbon dioxide equivalents up roughly 10% year over year and over 100 times more than our actual direct emissions with.

Speaker 3: With that, I'll turn it over to Lydia. Thanks, Jeff. I'll begin with our sales trends for the first quarter. During the quarter, our global unit sales and inventory increased nearly 13% and 3% respectively. Given the relatively quiet hurricane season in 23, our inventory growth was a function of a partial recovery in total loss frequency and share gain.

I'll turn it over to you.

Thanks, Jeff I'll begin with our sales trends for the first quarter during the quarter, our global unit sales in inventory increased nearly 13% and 3% respectively. Given the relatively quiet hurricane season in 'twenty three our inventory growth was a function of a partial recovery in total loss frequency and share gains.

Speaker 3: During the quarter, we saw global ASPs decline by approximately 1% versus the prior year.

During the quarter, we saw global Asps declined by approximately 1% versus the prior year.

Speaker 3: Focusing on our U.S. business, we experienced strong unit growth of over 10 percent, which reflected fee unit growth over 10 percent and purchase unit growth of 14 percent.

Focusing on our U S business, we experienced strong unit growth of over 10%, which reflected fee unit growth over 10% and purchase unit growth of 14%.

Speaker 3: Consignment, or fee units, continue to generate the vast majority of Coparts volume growth, with our insurance units posting nearly 10%, our dealer units posting 13% growth, and our blue car units, which include units from fleet, rental, and finance companies, posting over 35%.

Consignment RC units continue to generate the vast majority of cohorts volume growth with our insurance units posting nearly 10% our dealer units posting 13% growth in our Blue car units, which include units from fleet rental and finance companies posting over 35% correct.

Speaker 3: This unit growth was modestly offset by a decline in low value units from wholesalers and charities.

Unit growth was modestly offset by a decline in low value units from wholesalers and Carrie.

Inventory levels in the U S increased 1% or nearly 12% when excluding low value units and cat.

In the U S Asps were down 2% and more specifically insurance Asp's were down one 7% compared to the 4% decrease in the manheim used vehicle pricing.

Speaker 3: In the U.S., ASPs were down 2%, and more specifically, insurance ASPs were down 1.7% compared to the 4% decrease in the Mannheim Used Vehicle Prices.

Speaker 3: Turning to our international business, we saw unit growth of over 24% with fee units increasing over 28% and purchase units increasing by over 4%.

Turning to our international business, we saw unit growth of over 24% with the units increasing over 28% and purchase units increasing by over four.

Speaker 3: Our international business ended the quarter with inventory levels nearly 14% ahead of the prior year.

Our international business ended the quarter with inventory inventory levels, nearly 14% ahead of the prior year.

Speaker 3: International ASPs were up 7% compared to the prior year period.

International Asps were up 7% compared to the prior year period.

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

Returns remained strong as we continue to invest in growing our global buyer base by driving member acquisition activation retention.

Speaker 3: Coparts auctions provider 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 damaged vehicles a total loss.

So far its options provider insurance customers with best in class liquidity and returns ultimately, providing a more cost effective way to manage growing claims costs.

Looking at more cost effective to deem damaged vehicles, a total loss.

In addition, we continue to invest in expanding our products and services to serve a more diverse mix of sellers and unit type. Examples of this include our national sales such as our specialty equipment auctions, which primarily so heavy and medium duty trucks and agricultural equipment, and our select auction, which sells clean titled vehicles and now provide buyers with <unk>.

Speaker 3: In addition, we continue to invest in expanding our products and services to serve a more diverse mix of sellers and unit types. Examples of this include our national sales, such as our specialty equipment auctions, which primarily sell heavy and medium duty trucks and agricultural equipment, and our select auction, which sells clean title vehicles and now provides buyers with greater transparency in vehicle quality through sale lights and an arbitration policy.

Greater transparency and vehicle quality through satellites at an arbitration policy.

Speaker 3: Turning to our financial results for the first quarter, global revenue increased $127 million, or about 14%, including a 1% tailwind due to current...

Turning to our financial results for the first quarter global revenue increased $127 million.

We're about 14%, including a 1% tailwind due to currency.

Speaker 3: Global service revenue increased nearly 133 million, or over 18% for the first quarter, primarily due to higher average revenue per unit and increased volume.

Well service revenue increased nearly $133 million or over 18% from for the first quarter, primarily due to higher average revenue per unit and increase volume.

Speaker 3: U.S. service revenue grew by 17% and international service revenue grew by 29%.

U S service revenue grew by 17% and International service revenue grew by 29%.

Global purchased vehicle sales for the first quarter decreased about $6 million or 3% with U S purchased vehicle revenue for the quarter down, 19%, which was primarily due to a mix shift with the decline in our power sports business MTA being offset by an increase in our co product direct cash for cars purchased vehicle revenue.

The U S decline was offset by international growth of 19%.

Speaker 3: global purchase vehicle gross profit decreased about 2 million for the quarter, with U.S. purchase vehicle gross profit increasing about 2 million and international purchase vehicle gross profit decreasing 4 million, reflecting a 29 percent increase in cost of vehicle.

Mobile purchase vehicle gross profit decreased about $2 million for the quarter with U S purchased vehicles gross profit increasing about $2 million in international purchase vehicle gross profit decreasing $4 million, reflecting a 29% increase in cost of vehicle sales.

Speaker 3: Global growth profit in the first quarter increased over 94 million or about 26%. And our growth margin percentage increased by approximately 400 basis points to 45.5%.

Global gross profit in the first quarter increased over $94 million or about 26% and our gross margin.

<unk> increased by approximately 400 basis points to 45, 5% this year.

Speaker 3: This reflects U.S. margins, which increased to 49.9 percent, and international margins decreasing to 24.9 percent.

Flex U S margins, which increased to 49, 9% and international margins decreasing to 24, 9%.

Speaker 3: The year-over-year margin increase on a consolidated basis was driven primarily by a mixed shift due to the strong growth in fee units in the U.S., which was partially obsessed by the impact of inflation and a slight decline in purchase unit margins internationally.

The year over year margin increase on a consolidated basis was driven primarily by a mix shift due to the strong growth in fee units in the U S, which was partially offset by the impact of inflation and a slight decline in purchase unit margins internationally on.

Speaker 3: On the cost front, during the first quarter of last year, we incurred cap costs, cap expenses specifically related to Hurricane Ian, which did not recur.

On the cost front during the first quarter of.

Of last year, we incurred cap cost cut expenses, specifically related to hurricane in which did not recur.

Speaker 3: Operationally, we are focusing on increasingly standardizing processes and leveraging technology and automation to mitigate the inflationary impacts we've experienced across our business. We expect these efforts will drive greater scalability and efficiency across the organization and help mitigate longer-term cost pressure.

Operationally, we are focusing on increasingly standardizing processes, and leveraging technology and automation to mitigate the inflationary impacts we've experienced across our business. We expect these efforts will drive greater scalability and efficiency across the organization and help mitigate longer term cost pressures.

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

Turning to general and administrative expenditures, excluding stock based compensation and depreciation expenses.

Speaker 3: G&A spend in the quarter was $58 million, reflecting an increase in $13 million, and includes $3 million due to a one-time maintenance project, the financial consolidation of Purple Wave into our results, and the impact of our overall growth in business.

G&A spend in the quarter was $58 million, reflecting an increase of $13 million and includes $3 million due to a onetime maintenance project the financial consolidation of peripheral ways into our results and the impact of our overall growth in business.

Speaker 3: Over the long run, we continue to expect operating leverage as we grow.

Over the long run we continue to expect operating leverage as we grow.

Speaker 3: Because of our strong revenue growth and moderate cost increases, gap operating income increased by nearly 27% to over 395 million for the quarter. First quarter income tax expense was nearly 91 million, which reflects a 21.4% effective tax rate. And finally, first quarter gap net income increased by over 35% to over 332 million or 34 cents per diluted common share.

Because of our strong revenue growth and moderate cost increases GAAP operating income increased by nearly 27% to over $395 million for the quarter first quarter income tax expense with nearly 91 million, which reflects a 21, 4% effective tax rate and finally first quarter GAAP net income increased by over.

35% to over $332 million or <unk> 34.

Per diluted common share.

Speaker 3: Turning to our liquidity and financial position, liquidity was $3.9 billion as of Q1, which is comprised of $2.6 billion in cash and investments and held to maturity securities and our capacity under a revolving credit facility of over $1.2 billion.

Turning to our liquidity and financial position liquidity was $3 9 billion as of Q1, which is comprised of $2 6 billion in cash and investments and held to maturity securities and our capacity under our revolving credit facility of over $1 2 billion.

Speaker 3: For the quarter, we generated operating cash flow of over $375 million, which is an increase of 20% from the prior year period. In addition, during the first quarter, we invested about $162 million in capital expenditures with nearly 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.

For the quarter, we generated operating cash flow of over $375 million, which is an increase of 20% from the prior year period. In addition, during the first quarter, we invested about $162 million in capital expenditures with nearly 80% of this amount attributable to our physical infrastructure and more specific.

Capacity expansion, which contributes to our ability to serve our customers, while simultaneously, reducing our transportation costs and corresponding fuel consumption.

Finally for the quarter, if you take operating cash less capex, we generated $213 million of free cash flow.

Speaker 3: Finally, for the quarter, if you take operating cash, less CapEx, we've generated $213 million of free cash.

Speaker 3: I'll conclude with a few remarks about our capital allocation strategy focusing on investing in our core business and corporate development. We remain focused on building long-term value for our shareholders and endeavor to continue our strong track record for years to come. To achieve this, we will continue to use our disciplined approach to capital allocation and remain patient, flexible, and opportunistic.

I'll conclude with a few remarks about our capital allocation strategy focusing on investing in our core business and corporate development.

We remain focused on building long term value for our shareholders and endeavor to continue our strong track record for years to come to achieve this we will continue to use our disciplined approach to capital allocation and remain patient flexible and opportunistic our.

Speaker 3: Our first priority is to deploy capital to grow our core business, where we will continue to invest in our people, operational capabilities, including logistics, technology, and real estate, as well as our customer experience.

Our first priority is to deploy capital to grow our core business, where we will continue to invest in our people operational capabilities, including logistics technology and real estate as well as our customer experience.

Speaker 3: We also focus on opportunities to diversify our business, including expanding our marketplace capabilities into new geographies or to service new asset types. A prime example of this was our investment into Purple Wave, which like NPA, brings a leading marketplace for a specialized used unit type, which in Purple Wave's case, spans construction agencies.

We also focus on opportunities to diversify our business, including expanding our marketplace capabilities into new geographies.

Ore to surface new appetite a prime example of this was our investment in <unk>, which like NPA brings a leading marketplace for a specialized unit used unit type, which in <unk> case spans construction added fleet.

Speaker 3: And further, we seek to partner with leaders in areas of technology and innovation, which expand beyond Coparts' core business, but directly support our customers' needs. This includes in InsureTech, where we recently announced a strategic partnership with Highmarley to accelerate the total loss process for our customers and their policy.

And further we seek to partner with leaders in areas of technology, and innovation, which expand beyond co parts core business, but directly support our customers' needs.

This includes an insurer tax where we recently announced a strategic partnership with high Marley to accelerate the total loss process for our customers and their policyholders.

Speaker 3: This approach provides us ample opportunities to grow our core and drive diversification across our business. And with that, Jeff and I.

This approach provides us ample opportunities to grow our core and drive diversification across our business.

And with that Jeff and I would be happy to take some questions.

Thank you, we'll now be conducting a question and answer session.

Speaker 1: Thank you. We'll now be conducting a question and answer session. If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove yourself from the queue. One moment please while we poll for questions.

Can be placed in the question queue. Please press star one on your telephone keypad.

Information tone will indicate your line is in the question queue. You May press star two if you'd like to remove yourself from the Q1 moment. Please while we poll for questions. Our first question today is coming from Bob <unk> from CJS Securities. Your line is now live.

Speaker 1: Our first question today is coming from Bob Labick from CJS Securities. Your line is now live.

Speaker 4: Good afternoon. Congratulations on continued strong performance. Thanks, Bob.

Good afternoon, Congratulations on continued strong performance.

Thanks, Bob.

Speaker 4: uh... i want to start with purple wave it's an exciting announcement you made it last month and obviously talk a little bit about it but maybe you could talk further what um... co part brings to the relationship in addition to obviously to capital and one of the key goals of the investment and how will you define success in three to five years

I wanted to start with peripheral wave. It's an exciting announcement you made I guess last month, and obviously you talked a little bit about it but maybe you could talk.

Further what co par brings to the relationship in addition to obviously the capital and what are the key goals of the investment and how will you define success.

Three to five years.

Speaker 2: Got it. Well, Bob, as you know, having followed us for a while, we've talked in the past on multiple occasions about our potential interest in parlaying our expertise in managing high volume digital auctions.

Got it.

Rob as you know, having followed us for a while that we've talked in the past on multiple occasions about our potential interest in parlaying, our expertise in managing high volume digital auctions parlaying that expertise into other arenas, including for industrial construction and agricultural equipment, we've actually said that specifically.

Speaker 2: parlaying that expertise into other arenas, including for industrial construction and agricultural equipment. We've actually said that specifically. And as you know, we've – those kinds of expansions have had to clear a very high bar in the past. We invested or acquired national power sports auctions in 2017 and have been very careful or disciplined about extending beyond that before and since.

And as you know.

Those kinds of expansions have had to clear a very high bar in the past, we invested or acquired national power sports auctions in 2017 and have been very careful and disciplined about extending beyond that before and since.

Speaker 2: We've known Aaron and Susie forever, literally before I arrived at Co-Part myself, and we have tremendous respect for the community and the business that they and their team have built. As you noted,

We've known Erin and Susie forever literally before I arrived at cohort myself and we have tremendous tremendous respect for the community and the business that they and their team have built as you noted.

We will bring capital expertise and relationships to help grow their business and they in turn provide us with additional expertise in the equipment space as NPA did in power sports as well. So we will measure growth as we will measure success or determine success as we do with our own core business are we able to grow it profitably to serve more buyers and sellers.

Speaker 2: to help grow their business, then they in turn provide us with additional expertise in the equipment space, as MPA did in PowerSports as well. So we'll measure growth as we – we'll measure success or determine success as we do with our own core business. Are we able to grow it profitably to serve more buyers and sellers in a meaningful way over the course of the next 5, 10, and 20 years?

<unk>.

In a meaningful way over the course of the next 510 and 20 years.

Okay, Great and then obviously.

Speaker 4: Okay, great. And then, obviously, you highlighted a lot of success. You have a lot of major initiatives going on, or I guess just ongoing initiatives, including gaining market share in the insurance and salvage market, the acceleration in whole car market, Purple Wave, which we just talked about, and your international growth. How do you prioritize?

You highlighted a lot of success you have a lot of major initiatives going on or I guess, it was ongoing initiatives, including gaining market share in the insurance and salvage market the acceleration in whole car market Purple wave, which we just talked about in your international growth.

How do you prioritize.

Speaker 4: uh... time and capital and how would you rank the time and capital investment towards it those initiatives salvage market share gains whole or corporation purple wave international

Time, and capital and how would you rank the time and capital investments towards those.

These initiatives salvage market share gains hold whole car acceleration purple wave international growth.

Speaker 2: Yeah, I think it's a it's a fair question. And as you know, Bob, we maintain a conservative balance sheet in part so that capital is by and large not the constraint that when there are opportunities to serve our sellers and buyers better to grow our platform to grow our business that we aren't constrained at the moment. And also so that we can opportunistically acquire real estate. And so

Yes, I think.

So it's a fair question and as you know Bob we maintain a conservative balance sheet in part so that capital is by and large not the constraint that when there are opportunities to serve our sellers and buyers better to grow our platform to grow our business that we aren't constrained at the moment.

And also we can opportunistically acquire real estate and so forth.

Speaker 2: But the ultimate scarce resource is our own bandwidth, our ability to pursue initiatives successfully. I think you highlighted.

The ultimate scale resource scarce resources, our own bandwidth our ability to pursue initiatives successful I think you highlighted.

Speaker 2: really the priorities for the enterprise. And I don't think we stack rank them necessarily. It's critical to us that we serve our insurance sellers and buyers better over the years to come. We mentioned in passing some of the tools that we're working on to equip them to make.

Really the priorities for the enterprise and I don't think we stack rank them necessarily it's critical to us that we serve our insurance sellers and buyers better over the years to come.

You mentioned in passing some of the tools that we're working on to equip them to make better and faster decisions to yield better economic outcomes. In particular, we've been focused on reducing their advanced charges in many cases insurance companies incur literally thousands of dollars of storage and teardown cost on cars that any one of us would have noted.

Speaker 2: better and faster decisions to yield better economic outcomes. In particular, we've been focused on.

Speaker 2: reducing their advance charges. In many cases, insurance companies incur literally thousands of dollars of storage and tear down costs on cars that any one of us would have known is a total loss at the scene of the accident.

Total loss of a few of the accident.

Speaker 2: And we are committed to developing the tools and processes to enable them to sidestep that entire food chain, just to avoid all those unnecessary costs that ultimately inflate their claims costs as a result. So insurance is critical. The international markets, as you noted.

And we are committed to developing the tools and processes to enable them to sidestep that entire entire food chain just avoid all of those unnecessary costs, but ultimately bring ultimately in place their claims costs. As a result, so insurance is critical to the international markets as you noted our.

Speaker 2: are critical to us as well, as you know, also even using one word to capture all of those.

Critical to us as well as you know also.

Even using one word to capture all of them.

Speaker 2: is an oversimplification of Canada and Brazil and Germany and UK and Finland are all radically different from one another, the Middle East and Spain and so forth, but growth there is a priority as well. And then certainly, as you know, and as you've seen in the unit growth.

Is an over simplification, Canada, and Brazil, and Germany, and the U K in Finland are all radically different from one another in the middle East and Spain, and so forth.

Growth there is a priority as well and then certainly as you know and as you've seen in the unit growth.

Speaker 2: The non-insurance domain is important to us, not just in isolation, not just because it is a profitable and growing enterprise, but because we view it as instrumental to serving our insurance companies better as well. The liquidity flywheel.

Trajectory.

The non insurance domain is important to us not just in isolation not just because it is a profitable and growing enterprise, but because we view it is instrumental to serving our insurance companies better as well through liquidity flywheel is real and it's our job to make sure that we're spending it faster with each passing year.

Speaker 2: is real and it's our job to make sure that we're spinning it faster with each passing year.

Great. Thank you very much.

Thanks, Bob.

Speaker 1: Thank you. Next question is coming from Craig Kennison from Baird, Rhine is now live.

Thank you next question is coming from Craig Kennison from Baird. Your line is now live.

Speaker 5: Hey, good afternoon. Thanks for taking my question as well. I wanted to follow up on PurpleWave and I'm curious, you know, is there a chance that your real estate footprint brings new value to this platform? It's my understanding they have an on-site

Hey, good afternoon. Thanks for taking my question as well I wanted to follow up on Purple wave.

And I'm curious.

Is there a chance that your real estate footprint brings new value to this platform. It's my understanding they have an on site.

Speaker 5: auction process and I'm curious if your real estate is part of the synergy you see.

Auction process and I'm curious if your real estate is part of the synergy Yossi.

Speaker 2: Craig, they have built one of the very largest.

Craig if you will.

One of the very largest.

Speaker 2: yellow iron auction platforms without any real estate whatsoever. So they have a digital-only platform, as you noted, to sell in place. On the margin, I think we look to opportunities to potentially partner with them. That's not ultimately the foundation of the investment itself. It really is backing an exceptional team that's built an exceptional community and business. So we'll explore those kinds of ways to cooperate, whether it comes to

Yellow iron auction platforms without any real estate whatsoever. So they have a digital only platform as you noted to sell in place on the margin I think we look to opportunities to potentially partner with them. That's not ultimately the foundation of the investment itself. It really is back and an exceptional team that has built an exceptional community.

<unk> business. So we will explore those kinds of ways to cooperate with.

It comes to customer relationships certain technology expertise real estate in some cases and so forth. Those are all on the table, but fundamentally to develop backing and exceptional team.

Speaker 2: Customer relationships certain technology expertise real estate in some cases and so forth Those are all on the table, but fundamentally it is about backing an exceptional

And are you in a position now to bid on large liquidations. We know there was one yellow for example.

Speaker 2: And are you in a position now to bid on large liquidations? We know there was one, you know, yellow, for example. Are you able to help them bid on those types of deals? Or was that always possible for them, given their footprint? I think we are able. I'm not that doesn't mean we will. But it really across our entire business.

You're able to help them bid on those types of deals or was that always possible for them given their footprint.

We are able.

That doesn't mean, we will but it really across our entire business principal investments and inventory are just and necessary, enabling mechanism to ultimately wind consignment volume. So there was an era in which we bought the vast majority of the vehicles. We sold on behalf of insurance companies from them. So we took the principal risk on that.

Speaker 2: Principal investments in inventory are just a necessary enabling mechanism to ultimately win consignment volume So there was an era in which we bought the vast majority of the vehicles we sold on behalf of insurance companies from them So we took the principal risk on the cars over time the better customer service

Cars over time, the better customer service.

Speaker 2: Outcome is for us to sell it on the consignment basis for for our sellers and we just sit on the same side of The table rooting for the highest possible prices So if we were to do so in the yellow iron arena It would again be as an enabling mechanism to a consignment future. It is not an end state in another

Come is for us to sell it on a consignment basis for for our sellers and we just sit on the same side of the table rooting for the highest possible prices. So if we were to do so in the yellow iron arena. It would again be isn't enabling mechanism to a consignment future. It is not an end state in and of itself.

Speaker 3: Thanks, and one for you, Leah, if I could. I think you mentioned incurring some cost as you deployed resources in advance of a potential hurricane situations. Even though that didn't produce volume, you still had to incur that cost. Is there a way to quantify the implication there, the impact? No, it's really just part of our ongoing normalized cost structure. We do it every year in anticipation of hurricane season.

Thanks, and one for you Lee if I could.

I think you mentioned incurring some costs as you deployed resources in advance of.

<unk> hurricane situations, even though that didn't produce volume you still had to incur that cost is there a way to quantify the implication there.

It's really just part of our ongoing normalized cost structure, we do it every year in anticipation of hurricane season.

Speaker 3: And we did the same thing this year as we had done previously. We just did not experience the elevated level of repositioning folks and the kind of acute cost levels that we experience when there is a severe storm that does actually hit and there's significant recoveries that happen shortly thereafter.

And we did the same thing this.

This year as we had done previously we just did not experience the elevated level of repositioning folks and the kind of acute cost levels that we experienced when there is a severe storm that does actually hit and there is significant recoveries that happened shortly thereafter.

Speaker 3: So I would not look to call it out specifically because it's just part of our ongoing cost structure.

So.

I would I would not look to call it out specifically because it's just part of our ongoing cost structure Greg.

Speaker 2: Craig, I would characterize in the aggregate it's very substantial, meaning we could undertake the rigorous accounting exercise of figuring out how much have we spent once and on an ongoing basis to maintain x hundreds of acres of available land in Florida, North Carolina, New Jersey, New York, etc.

Greg I would characterize in the aggregate is very substantial meeting we could undertake the rigorous accounting exercise of figuring out how much have we spent once and not and on an ongoing basis basis to maintain X hundreds of acres of available land in Florida, North Carolina, and New Jersey, New York et cetera, we could quantify the elevated <unk>.

Speaker 2: We could quantify the elevated tow expense we pay year round by virtue of operating our own trucks, etc, etc, and try to capture.

<unk> expense, we paid year round by virtue of operating our own trucks et cetera, et cetera, and try to capture the full lifecycle of elevated cost that we incur as a result, but in the end, we just accept that it's a necessary cost of doing business.

Speaker 2: the full life cycle elevated cost that we incur as a result. But in the end, we just accept that it's a necessary cost of doing business. It helps.

<unk>.

Speaker 2: It helps empower our customers to trust us in a time of need. And if volume suddenly spikes 10 times or 20-fold in a given region, that we very much are positioned to handle it. That's great.

It helps empower our customers to trust us that in a time of need and if volume suddenly spikes 10 times or 20 fold in a given region that we very much are positioned to handle it.

That's great yes, Thank you Jeff MBA.

Thanks, Greg.

Thank you. Our next question today is coming from Daniel <unk> from Stephens. Your line is now live.

Speaker 1: Thank you. Next question today is coming from Daniel Imbro from Steven. Your line is now live. Yeah, hey, good afternoon.

Yes, Hey, good afternoon, everybody. Thanks for taking my questions.

Speaker 6: Jeff, I wanted to start maybe on the insurance side. Maybe ask another way on the market share. Obviously, there was a peer talking about some share shifting. I don't think you'll comment on it, but more curious around when you measure success or how you measure your comparative returns to the industry or to peers. Are you seeing that gap widen? And if so, is that accelerating with all the investments, the strategic investments you're making?

Jeff I wanted to start maybe on the insurance side, maybe asked another way on the market share. Obviously, there was a peter talking about some share shifting I don't think you will comment on it but more curious around when you measure success or how you measure your comparative returns to the industry or to peers are you seeing that gap widened.

And if so is that accelerating with all the investments strategic investments Youre, making.

Speaker 2: Yeah, Daniel, I think it's a fair question. I think you rightly anticipated our reluctance, as you know, we don't comment out of respect, frankly, for the confidential decision making processes of our clients. You know, we, we just don't want to comment on them individually, but generally, I think you are rightly focused on the ultimate decision rule, which is the delivered economic outcomes that we provide to our customers.

Yes, Daniel I think it's a fair question now that you rightly anticipated a reluctance as you know.

Don't comment out of respect frankly for the confidential decision, making processes of our clients. We just don't want to comment on them individually, but generally I think you are rightly focused on the ultimate decision rule, which is the delivered economic outcomes that we provide to our customers and so if I had a more generic we say how does an insurance company.

Speaker 2: And so if I had to more generically say, how did an insurance company decide who to use for their salvage remarketing services, I'd cite five general principles. One is...

Syed who to use further salvage remarketing services outside five general principles, one is delivered auction outcomes.

Speaker 2: delivered auction outcomes. We believe we're truly differentiated by virtue of our global buyer base and our auction platform.

We believe were truly differentiated by virtue of our global buyer base and our auction platform.

Speaker 2: We believe, and by the way, we define our competition pretty expansively, right? It's not just the competitor that you have in mind, but it's all the other possible outcomes for vehicles, whether it's repair, owner retention, sales through other auction platforms, hand-selling, retailing, you know, from the perspective of our rental car customers. We define that competition very expansively. But nonetheless, the five principles are, or the five priorities are.

We believe it Brent by the way, we define our competition pretty Expansively right. It's not just the competitor that you have in mind, but it's all the other possible outcomes for vehicles, whether it's repair owner Retentions self sales through other auction platforms hand, selling retailing.

From the perspective of our rental car customers, we define that competition very expansive week, but nonetheless, the five principles are.

Five priorities are delivered auction returns to service that we provide to our sellers as measured in our ability to recover vehicles in some cases from very difficult circumstances, our ability to process titles efficiently and to provide them with the tools they need to make better investor decisions.

Speaker 2: The service that we provide to our sellers as measured in our ability to recover vehicles, in some cases from very difficult circumstances, our ability to process title.

Speaker 2: and to provide them with the tools they need to make better and faster decisions.

Speaker 2: The third element I'd cite is the service we provide to our clients' clients, so in the case of insurance, to the policyholders, to whom we believe we provide a differentiated title retrieval and loan payoff process today, with the gap widening over time as well.

The third element I would cite is the service we provide to our clients clients. So in the case of insurance to the policyholders.

To whom we believe we provide a differentiated titled retrieval and loan payoff process today with the gap widening overtime as well fourth I'd say is the ability to do all of the above both in the ordinary course as well as an extreme weather event to gracefully manage all of these processes, even if volume against spikes 10.

Speaker 2: Fourth, I'd say, is the ability to do all of the above, both in the ordinary course as well as in an extreme weather event, to gracefully manage all of these processes, even if volume, again, spikes tenfold or twentyfold in a given period of time.

20 fold in a given period of time in a given region.

Speaker 2: And then fifth, and I think this is more esoteric, but I think it's real, is the assurance that

And fifth and I think this is more esoteric, but I think it's real is the assurance that.

Speaker 2: that due to our land ownership, our technology platform, our people and culture and capital structure, that we're here for the long haul and that when we make promises, we will absolutely deliver on them. So to your narrower question about the auction returns, I do believe the gap is substantial. I do believe that it's growing. Now, it's difficult to quantify because no given car is ever transacted on multiple platforms, whether the car sells here or it is...

But that due to our land ownership, our technology platform, our people and culture and capital structure that we're here for the long haul and that when we make promises we will absolutely deliver on them. So to your narrow or question of the auction returns I do believe the gap is substantial I do believe that it's growing now it's difficult to.

It's difficult to quantify because no given car is ever transacted on multiple platforms, where the car sells here or it is sold at a rental car retail lodge, where it's sold at a different auction house and so a true perfectly apples to apples comparison at a given moment is difficult, but I think the evidence the preponderance of the evidence.

Speaker 2: sold at a rental car retail lot or it's sold at a different auction house and so a true perfectly apples-to-apples comparison in a given moment is difficult, but I think the evidence, the preponderance of the evidence

Speaker 2: based on seller behavior over the years is yes, that we deliver superior economic outcomes in large part due to better auction returns, but also to the service elements that I thought a moment ago.

Based on seller behavior over the years is yes that we deliver superior economic outcomes in large part due to better auction returns, but also to the service elements that I cited a moment ago.

Speaker 6: Understood. I have to try sometimes. And then maybe a follow-up on the non-insurance side. You've gained, obviously, a lot of market share in the last few years. Into 2024, obviously, that wholesale volume backdrop should improve just as we look across dealer or commercial. I guess, can you talk about incremental cost to serve? Are those vehicles any more cumbersome on the income statement as you think about any selling cost associated with that volume? Or would it be a similar kind of incremental flow-through as we think about just typical insurance volume?

Understood. Thank you Jonathan.

And then maybe a follow up on the non insurance side.

And obviously a lot of market share in last few years.

24, obviously that wholesale volume backdrop should improve just as we look across the dealer or commercial.

Can you talk about incremental cost to serve or are those vehicles any more cumbersome on the income statement as you think about any selling costs associated with that volume or would it be a similar kind of incremental flow through as we think about just typical insurance volume.

Speaker 2: individually, they're not materially different, I think to serve financial institutions, there are certainly a different level of

Individually they are not materially different I think to serve.

Financial institutions, there is certainly a different level of compliance in certain different processes. So it's more like when we choose to emphasize a new.

Speaker 2: compliance and certain different processes. So it's more like when we choose to emphasize a new a new type of seller, we have to develop certain capabilities of equal disclosure and otherwise. So it's not per se volume driven. It's more just the the nature of the

A new type of seller, we have to develop certain capabilities of equal disclosure and otherwise so it's not per se volume driven it's more just the nature of the.

Speaker 2: the sellers that we're targeting. I think, by and large, the categories we've now all touched, so I don't think the contribution economics are material.

The sellers that were targeting I think by and large the categories. We've now all touched so I don't think the contribution economics are materially different.

Speaker 3: And Daniel, I would just add that we've spent a lot of time over the last 12 months developing the capabilities across our technology platform to address some of those needs, so the sale lights I talked about, arbitration policy that is now available at Copart, those are all items that are more familiar to our blue car seller, or sorry, the members who are purchasing those blue car units.

And Daniel I would just add that we've spent a lot of time over the last 12 months developing the capabilities across our technology platform to address some of those needs. So the sale as I talked about arbitration policy that is now available.

Co part those are all.

Items that are more familiar to our blue car seller or sorry, the members who are purchasing those blue car units.

Speaker 3: And so we've been forward thinking about preparing ourselves for that potential future demand.

And so we've been forward thinking about preparing ourselves for that potential future demand.

Great. Thank you both for all the color and best of luck.

Thanks, Dan.

Speaker 7: Thank you. Next question is coming from Brett Jordan from Jeffrey's. Your line is now live. Hey, good afternoon, guys. On the international side, did you talk a bit more specifically about what you're seeing in the EU? And obviously, Germany, Finland, Spain have been potentially large growth markets. Could you address those?

Thank you next question is coming from Bret Jordan from Jefferies. Your line is now live.

Good afternoon, guys Hi, Brett.

On the international side could you talk a bit more specifically about what youre seeing in the EU, Obviously, Germany, Finland, Spain had been potentially large growth markets could you address those.

Speaker 2: Yes, and I'll separate Finland for a moment. Finland is, frankly, more like the UK, Canada, and the US in that that has long been a gross settlement market in which insurance carriers simply pay.

Yes.

I'll separate Finland for a moment, Finland is frankly more like the U K U K, Canada, and the U S and that that has long been a gross settlement markets in which insurance carriers simply pay be owners.

Speaker 2: the owner's PAV or ACV, the intact value of the car, and then they can sign that vehicle to the salvage auction. So we acquired that salvage auction some years ago, and the business is trending well. Some of the same underlying trends that you expect here, rising total loss frequency with a dip during...

Or ACP the intact value of the car and then they can sign that vehicle to the salvage auction. So we acquired a salvage auction some years ago.

And the business is trending well some of the same underlying trends that you expect here rising total loss frequency with a dip during the COVID-19 period when vehicle prices skyrocketed, but otherwise fundamentally similar though fundamentally of course not a huge population are a huge market in and of itself.

Speaker 2: COVID-19 period when vehicle prices skyrocketed, but otherwise fundamentally similar, though fundamentally, of course, not a huge population or a huge market in and of itself.

Speaker 2: Then the UK, all set aside as well, that mirrors the US in some regards, obviously some noise from Brexit and otherwise, but by and large, similar.

Then.

The U K all set aside as well that mirrors the U S. In some regards obviously, some noise from Brexit and otherwise, but by and large similar.

Speaker 2: Overriding picture their overall picture there, which is to say total loss frequency growth market share growth And good marginal economics there as well

Overwriting.

Picture there overall picture, there, which is to say total loss frequency growth market share growth.

And good marginal economics, there as well.

As for Germany, and Spain, I think Thats, probably what you have in mind in Germany, Spain and by extension the rest of Western Europe. Those are the net settlement markets to which we have offered as you know a handful of different service propositions, including initially buying cars more aggressively than migrating more to consignment model, we continue to build.

Our businesses in both countries. We continue to earn the trust of our insurance company sellers continue to innovate and experiment with them. So there is not nothing radically new to report there.

Okay, and then I guess I guess housekeeping the non insurance business Blue cars, plus 35, and dealers plus 13 could you size those two businesses relative to each other within non insurance.

Speaker 7: Okay, and then I guess housekeeping, the non-insurance business, blue car is plus 35 and dealer is plus 13. Could you size those two businesses relative to each other within non-insurance?

I don't think we have.

Speaker 2: They're both both meaningful to us in terms of the P&L that both blue car and the dealer segments are both meaningful volume meaningful contribution You'll hear the carve out when we describe the wholesalers and charities. That's business also that we endeavor to serve We call these are the lower value vehicles those together Copa direct as well would constitute will be characterized as a non-insurance space but dealers and Blue car are the large ones

They're both both meaningful to us in terms of the P&L, both blue collar and the dealer segments are both meaningful volume meaningful contribution.

Here the carve out when we describe the wholesalers and charity that business also.

Endeavor to serve we call these are the lower value.

Vehicles.

<unk> together cope our direct as well would constitute characterized non insurance space, but dealers and blue car or the large ones among them.

Speaker 2: Right. But relative to each other, is dealer larger and that's why it grows at a lower rate? Or are they similarly sized to the unit standpoint? Dealer is larger, more mature, meaning we've been pursuing that business for longer. Though, as I think you've heard us say in the past, as the insurance business evolves, as more cars look like perfectly intact, drivable vehicles...

Right, but relative to each other as dealer larger and Thats why it grows at a lower rate or are they similarly size of the unit standpoint dealer is larger more mature, meaning we've been pursuing that business for a longer. So I think you've heard us say in the past as the insurance business evolves.

As more cars look like perfectly intact drivable vehicles, the buyer base for our vehicles is relevant for more and more of the dealer cars as well. So it's not a static game with every week or month per year that goes by more dealer cars are addressable than than in the period prior.

Speaker 2: the buyer base for our vehicles is relevant for more and more of the dealer cars as well. So it's not a static game with every week or month or year that goes by, more dealer cars are addressable than in the period prior.

Speaker 3: Okay, and it looks like you converted the treasury position to cash just on the cash flow statement. Is there anything there? No, that's just really a reflection of the movement in the yield curve. So the longer than 90-day maturities did mature and we've held them in shorter than 90-day treasury securities since then.

Okay and it looks like you converted the treasury position to cash just on the cash flow statement is there anything there.

No Thats, just really a reflection of the movement in the yield curve. So.

Longer than 90 day maturities.

Mature and we've held them in shorter than 90 days.

Treasury Securities.

Okay, great. Thank you.

Thanks, Brett.

Speaker 1: As a reminder, that's star one to be placed into question Q. Our next question is coming from John Healy from North Coast Research. Your line is now live.

As a reminder, that star one to be placed in the question queue. Our next question is coming from John Healy from Northcoast Research. Your line is now live.

John.

Perhaps your phone is on mute.

Speaker 8: Sorry about that, guys. Just wanted to ask a little bit about the whole car opportunity. I think you guys talked about the finance business, throwing people digits for you. I assume that's kind of analogous to repo.

Sorry about that guys just wanted to ask a little bit about the.

The whole car opportunity I think you guys talked about the finance business.

Double digits for you I assume that's kind of analogous to reap out when you look at the repo business.

Speaker 8: When you look at the repo business, have you made good strides there? I mean, is that the right way to read it? And when you look at how repo cars kind of move through the process, I've always thought they went through repo agents and then they go to impound lots and things like that.

Have you made good strides there I mean, the right way to read it yet when you look at how repo cars.

Process Ive always thought they went to repo agents and then they go to impounded lots and things like that is there any structural difference with how youre going to market that may be presented the savings at these finance companies.

Speaker 8: Is there any structural difference with how you're going to market that maybe presents a savings to these finance companies, maybe in terms of storage than maybe what the traditional model held up, maybe through other mechanisms of marketing?

Maybe in terms of storage than maybe what the traditional model.

Maybe two other other mechanisms for marketing.

Speaker 2: John , I think you're right that the vehicles from financial institutions are in large part repossessions. There are other use cases. And repossessions, of course, in some cases, are very straightforward and come straight to us from the financial institution. In other cases, the cars can be trapped at in-contact.

John I think youre right that the vehicles from financial institutions are in large part repossessions. There are other use cases and repossessions of course in some cases are very straightforward and come straight to us from a financial institution in other cases, the cars can be traffic and cost facilities. We do think we bring some unique capabilities there.

Speaker 2: We do think we bring some unique capabilities there in terms of the ability to navigate the vehicle retrieval process, it's both, it's a combination of technology as well as technology.

In terms of the ability to navigate NAV.

Navigate the vehicle retrieval process, it's both it's a combination of a <unk>.

Technology as well as.

Speaker 2: expertise. I think we offer both in that regard. Then, of course, again, the auction platform itself generates strong returns. So in the aggregate, then, the ability to get the car faster, the ability in some cases to liberate cars that otherwise would be trapped altogether that may be abandoned, for example, and then to generate good returns on all of the above is what's enabled our growth.

Human expertise I think we offer both in that regard then of course again the auction platform itself generates strong returns so in the aggregate that the ability to get the car faster the ability in some cases deliberate cars that otherwise would be trapped altogether. They may be abandoned for example, and then to generate good returns on all of the bug is what's enabled our growth there.

Okay great.

Speaker 8: OK, great. And then just one clarification question. I think when you guys press-released Purple Wave, you guys called it an investment. I think you've used that phrase today a few times. But you've also talked about consolidating that business. Can you just confirm to us how much of that business you bought? And really, what drove you guys from being familiar with them to in your work family with them now? What drove the timing? And just any thoughts of where we're at in the equipment for marketing cycle, just how you and Leah have studied that?

Clarification question I think when you guys press release, you guys called investments I think Dave you said today, a few times that you bought the talked about consolidating that business.

Can you just confirm to us how much of that business you bought at really what drove you guys from big familiar with them.

<unk> family, let them know what drove the timing again.

Any thoughts of where we're at in the equipment market.

Hi, Julie.

Yes.

Speaker 2: Oh, on that, I don't I don't think we would we would never characterize characterize ourselves.

On that I don't I don't think we would we would never characterize characterize ourselves as particularly savvy and timing the market. So it's not that we see a rebound or not and the yellow iron space I think for <unk>. It's just a company we have profoundly respected in Nevada, it multiple years long dialogue with.

Speaker 2: We're particularly savvy in timing the market, so it's not that we see a rebound or not in the yellow iron space. I think Purple Wave is just a company we have profoundly respected and have had a multiple years long dialogue with.

How and why deals ultimately by the way the same is true for MTA, leading up to June of 2017, we've been in dialogue with them for a decade as well and what ultimately causes the deal to get over the finish line for two parties to to reach that conclusion together as a mix of of course objective fact serendipity.

Speaker 2: how and why deals ultimately come to, by the way, the same was true for MPA, leading up to June of 2017. We've been in dialogue with them for a decade as well, and what ultimately causes the deal to get over the finish line for two parties to

Speaker 2: to reach that conclusion together is a mix of, of course, objective fact, serendipity, and just random timing as well. So it was not our trying to time the market per se. We have acquired a majority stake in the business, but it was important for us and important.

Just random timing as well so it was not our trying to time the market per se. We have acquired a majority stake in the business, but important it was important for us and important for Aaron's sushi, because they continue to retain and meaningful economic share as well.

Speaker 2: for Aaron and Susie, but they continue to retain a meaningful economic share as well.

Speaker 2: and we are committed and they are committed to growing that business profitably for years to come.

And we are committed and are committed to growing our business profitably for the year Scott.

Yeah.

Great. Thank you guys.

Thanks, John.

Thank you next question is coming from Chris <unk> from BNP Paribas. Your line is now live.

Speaker 1: Thank you. Next question is coming from Chris Portoglieri from BNP Powered by your line is now live.

Speaker 9: Hey, thanks for taking the question. I guess the first one is on the like, where is non-insurance today and mix to get given a pass and then to like the 35% growth and blue car sounds really high. Is that such as broad based? I would think a lot of those markets are like cyclically depressed right now. So, is it broad based or did you win like a couple large accounts are driving some of that follow up? Thank you.

Hey, Thanks for taking the question.

So I guess the first one is on the.

Like where does not insurance today and mix that could get them in the past then to like the 35% growth in blue collar sounds really high is that such as broad based I would take a lot of those markets are like cyclically depressed right. Now so is it broad based or did you win a couple of large accounts are driving some of that I have a follow up thank you.

Yes.

First question.

Oh.

25% circa.

Speaker 2: And very seasonally too, Chris, frankly, with charity volumes spiking in the fourth quarter, first quarter. We'll call it one out of, just from memory over a longer period of time, the one out of four cars is from someone that's not an insurance carrier. But as you know, both portions of our business have been growing very meaningfully, so insurance is growing, and also the blue car dealer segments as well.

Various seasonally hubris frankly with.

Charities volumes spiking in the fourth calendar quarter first calendar quarter, we call one out of an over.

Just from memory over a longer period of time for one out of four cars.

Is from someone that is not an insurance carrier.

As you know both portions of our business have been growing very meaningfully so insurance is growing and also the blue car dealer segments as well.

Speaker 2: And then as to your question about growth within the blue car arena, it is across different types of sellers, so it includes banks, it includes rental car companies, it includes corporations.

And then as to your question about growth within the Blue car arena. It is across different types of sellers. So it includes banks includes rental car companies that includes corporate fleets.

Speaker 2: And it's multiple accounts in each, so it's not one big seller driving the performance of that product.

It's multiple accounts.

Each so it's not one big seller driving the performance.

Of that business.

Speaker 2: And then the second question is more of a cost question, but when you onboard a larger customer, and this has happened periodically as you've won a lot of accounts over the years, what does this mean for expenses? Do you typically see like an increase in headcount or capacity? Is there anything you do differently when you're anticipating a 4% or 5% customer coming on board? Like, how do you handle that? What does that mean for the P&L before that volume arrives? That's a fair question, Chris. And I would say, one, yeah.

Got it Okay and then the second question is what are the cost question, but when you onboard a larger customer. This has happened periodically if you've won a lot of accounts over the years. What does this mean for expenses do you typically see like an increase in head count or capacity.

Is there anything you would do differently. When you are anticipating for a 5% customer collateral or like how do you handle that and what does that mean for the P&L for that volume.

It's a fair question Chris.

Say.

I assume you.

Turning to question largely for insurance is out there.

Speaker 2: Yeah, correct. For insurance, if you want a large insurance customer, how does that impact the P&L ahead of time where the volume shows? It's highly idiosyncratic. There are some insurance carriers that we will serve for the first time, or we'll sign them up for the first time. And in that case, the startup cost, so to speak, is kind of in large part on their choice of technology platforms, what their business process looks like, and what it takes for us to integrate.

Yes, correct reinsurance if you win a large insurance customer how does that impact. The P&L ahead of time for the volume shows.

It's highly idiosyncratic there are some and.

There are some insurance carriers that we will serve for the first time or will final sign them up for the first time and in that case.

The startup costs, so to speak and in large part on their choice of technology platforms.

Their business process looks like and what it takes for us to integrate with them.

Speaker 2: In other cases, we'll have customers that we already serve, and very substantially so, and we're merely taking on additional states that we don't already have. The marginal corporate cost, so to speak, at headquarters for technology and process development and so forth is more modest in that case, as you might imagine.

In other cases, we'll have customers that we already serve and very substantially so and we're merely taking on additional states that we don't already have the marginal corporate cost so to speak at headquarters for technology and process development. So forth is more modest in that case as you might imagine.

Yes.

Speaker 2: In the field, the costs certainly are substantial. We will hire additional folks in our facilities to handle both the physical movement and receipt of cars, as well as the back-of-the-house title processing, the title transfer process, loan payoff, title procurement, etc.

In the field costs, certainly are substantial we will hire additional folks in our facilities to handle both the physical movement and receipt of cars as well as the back of the house titled processing. The title transfer process won't pay off tighter procurement et cetera that that we scale up.

Speaker 2: that we scale up as well to serve the customer. And as you noted, generally speaking, somewhat in advance of that customer turning on their new business. We can't afford to drop the ball once it's on, so we make sure we scale up operations beforehand. Yeah.

Well to serve the customer.

As you noted generally speaking somewhat in advance of that customer turning on their new business, we can't afford to drop the ball on so we make sure we scale of operations beforehand.

Yeah. Okay. Thank you so much I appreciate it thanks, Chris.

Speaker 1: Thank you. Next question is coming from Ryan Brinkman from JP Morgan. Your line is not live.

Thank you next question is coming from Ryan Brinkman from Jpmorgan. Your line is now live.

Hi, This is Josh Boswell for on for Ryan Brinkman. Thanks for taking my question Congrats on a solid quarter.

Speaker 10: Hi, this is Josh Batra on for Ryan Brinkman. Thanks for taking my question and congrats on a solid quarter. Just wanted to get a sense of, you know, how you're thinking about the cadence of auction fees going forward. You know, do you continue to see room for price increases even as used car pricing has started to moderate meaningfully over the past few months? And then it seems like some of your peers on the dealer side have increased their fees and wondering if, you know, Copart has followed suit.

Just wanted to get a sense of how youre thinking about the cadence of auction fees going forward do you continue to see room for price increases even as you're still pricing has started to moderate meaningfully over the past few months and then it seems like some of your peers on the dealer side have increased fees and I'm wondering if copilot has followed suit.

Yes the fees.

Speaker 2: Yeah, these, as you know, from having followed us for a while, something

You know from.

From having followed us for a while that's something we evaluate on an ongoing basis, we don't.

Speaker 2: evaluate on an ongoing basis. We don't adhere to a regular schedule, so to speak, because there's not an annual schedule change of any kind. We evaluate the market, we evaluate competitors, and we evaluate our own value proposition and what we think we're bringing.

We don't adhere to a regular schedule so to speak because theres not an annual schedule change of any cod, we evaluate the markets we've got great competitors.

We evaluate our own value proposition of what we think we're bringing.

Speaker 2: So we have not, have not in the past commented on this matter specifically. I don't expect that we will.

Two ecosystem broadly so we have not have not in the past commented on this matter specifically I don't expect that we will anytime soon.

Speaker 10: Got it. That's helpful, Carlo. And then as a follow-up, you know, the broader wholesale industry environment seems to be getting more supportive of the blue car and dealer wholesale initiatives. And, you know, while growth is already very solid there, just wondering, you know, given the backdrop, would you be, you know, what would you be considering to accelerate the growth in those segments into 2024?

Got it that's helpful color and then as a follow up the broader wholesale industry environment, although it seems to be getting more supportive of the blue collar R&D level of sale initiative.

While growth is already very solid there just wondering.

Given the backdrop would you be.

What would you be considering to accelerate the growth in those segments into 2024.

Speaker 2: No step function changes. I think it's a matter of further execution on our part. We continue to invest very aggressively in our international buyer base. And there are, as I noted, a host of different competitors that we encounter in this space.

Yes, no step function changes I think it's a matter of further execution on our part we continue to invest very aggressively in our international buyer base and there are as I noted a host of different competitors that we encounter in this space.

Speaker 2: We think that our our value proposition is principally that we are very efficient at retrieving vehicles And we are very effective at finding the highest and best use

We think that our value proposition is principally that we are very efficient at retrieving vehicles and we are very effective at finding the highest and best use of that vehicle wherever that is in the world or that international buyer base is powerful for that business segment as well and our online platform digital first.

Speaker 2: of that vehicle wherever that is in the world, right? That international buyer base is powerful for that business segment as well. And our online platform, Digital First Sales, I think ultimately identifies the right buyer for that car wherever that person is in the world. So there's no step function change. You'll see, or our sellers will see additional enhancements, additional capabilities, but I wouldn't characterize any of them as being a meaningful step function change. Great.

Sales I think ultimately identify the right buyer for that car wherever that person is in the world. So there's no step function change youll see or are sellers, we'll see additional enhancements additional capabilities, but I wouldn't characterize any of them as being a meaningful step function change.

Great. Thanks for taking my question on good luck.

Thank you. Thank you.

Thank you we've reached end of our question and answer session I would like to turn the floor back over to Jeff for any further or closing comments.

Speaker 1: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to Jeff for any further closing comments.

Speaker 2: Nope. Thank you, everybody. We'll talk to you after the second quarter.

No. Thank you everybody, we'll talk to you after the second quarter.

Thank you that does conclude today's teleconference and webcast you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.

Speaker 1: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.