Q3 2024 Copart Inc Earnings Call

Operator: Please stand by. Good day, everyone, and welcome to the Copart Incorporated third quarter fiscal 2024 earnings call. Just a reminder, today's conference is being recorded. Before turning the call over to management, I will share Copart's Safe Harbor Statement. 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 market. Such forward-looking statements involve substantial risks and uncertainties.

Please standby good.

Speaker Change: Hey, everyone and welcome to the co part incorporated third quarter fiscal 'twenty 'twenty four earnings call. Just a reminder, today's conference is being recorded.

Speaker Change: Before turning the call over to management I will share a coke parts Safe Harbor statement. 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.

Speaker Change: These forward looking statements involve substantial risks and uncertainties.

Operator: For more detail on the risks associated with a 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. I'll now turn the call over to the company's CEO, Jeff Liaw.

Speaker Change: 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.

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

Speaker Change: Now I'll turn the call over to the company's CEO, Jeff Liao.

Jeffrey Liaw: Thank you. Good evening, and welcome everyone, and thank you for joining us.

Jeffrey Liaw: Thank you good evening and welcome everyone and thank you for joining US. This evening. We're pleased to report our results for the third quarter of fiscal 2024, I'll provide some brief comments about the business before handing the call from be it to review our financial results and then she and I will take your questions.

Jeffrey Liaw: We're pleased to report our results for the third quarter of fiscal 2024. I'll provide some brief comments about the business before handing the call to Leah to review our financial results, and then she and I will take your questions. First, turning to our insurance business, we recently concluded our 24th annual U.S. Insurance Advisory Board meeting in New York City. Every year, we gather in person to solicit feedback from our clients about the opportunities and challenges they face, which in turn informs our service offerings, tech deployments, and capital investment programs.

Jeffrey Liaw: First turning to our insurance business. We recently concluded our 24th annual U S Insurance Advisory Board meeting in New York City ever.

Jeffrey Liaw: Every year, we gather in person to solicit feedback from our clients about the opportunity opportunities and challenges they face.

Jeffrey Liaw: Which in turn inform our service offerings tech deployments and capital investment programs.

Jeffrey Liaw: Some of the priorities we addressed this year included a range of levers available to them to address escalating claims, cycle times, and advance charges, in particular. We discussed at length our best-in-class auction liquidity, fueled by our exclusively online marketplace, which itself has been refined repeatedly since its launch in 2003, our uniquely global firebase, and the auction intelligence that results from the application of machine learning tools to the data from literally billions of interactions with sellers and members that correspond with tens of millions of vehicles sold. And in the spirit of our shared success, we hosted this event to coincide with the celebration of our 30th anniversary as a public company, and together with our clients, we rang the NASDAQ opening bell.

Jeffrey Liaw: Some of the priorities we address this year included a range of levers available to them too.

Jeffrey Liaw: Address escalating claims cycle times and advanced charges in particular, we discussed at length, our best in class auction liquidity fueled by our exclusively online marketplace, which itself. It's been refined repeatedly since its launch in 2003.

Jeffrey Liaw: Our uniquely Coke global buyer base and.

Jeffrey Liaw: The auction intelligence that results from the application of machine learning tools to the data from literally billions of interactions with sellers and members correspond with tens of millions of vehicles sold.

Jeffrey Liaw: And in the spirit of our shared success. We hosted this event to coincide with the celebration of our <unk> anniversary as a public company and together with our clients, we rang the NASDAQ opening bell.

Jeffrey Liaw: We continue to grow our business with our insurance clients. As anticipated, new and used vehicle prices have decreased. Somewhat steeply in recent days, while repair costs remain elevated, driving a strong and continued recovery and total loss frequency. During our third fiscal quarter, we observed a 14% year-over-year decline in the Mannheim Used Vehicle Value Index. And though ISS FastTrack reported a slight softening in accident severity of 1.3% or so for the fourth calendar quarter of 2023, accident severity is still up almost 9% when compared to the same quarter two years prior, due to the combination of these two forces.

Jeffrey Liaw: We continue to grow our business with our insurance clients as anticipated new and used vehicle prices have decreased.

Jeffrey Liaw: Steeply in recent days, while repair costs remain elevated driving a strong and continued recovery in total loss frequency.

Jeffrey Liaw: During our third fiscal quarter, we observed a 14% year over year decline in the manheim used vehicle value index.

Jeffrey Liaw: ISS fast track reported a slight softening in accident severity of one 3% or so for the fourth calendar quarter of 2023.

Accident severity is still up almost 9% when compared to the same quarter two years prior.

Jeffrey Liaw: The combination of these two forces.

Jeffrey Liaw: Decreasing used vehicle values and elevated repair costs due to vehicle complexity and labor challenges in the repair industry have driven a recovery in total loss frequency back to pre-pandemic levels. Per CCC, total loss frequency for the first calendar quarter of 2024 was 21.1% across all loss categories, up approximately 150 basis points versus the same time a year ago.

Jeffrey Liaw: Decreasing used vehicle values and elevated repair costs due to vehicle complexity and labor challenges in the repair industry has driven a recovery in total loss frequency back to pre pandemic levels.

Jeffrey Liaw: CCC total loss frequency for the first calendar quarter of 2024 with 21, 1% across all loss categories up approximately 150 basis points versus the same time a year ago.

Jeffrey Liaw: We believe that long-run trends continue to make repairing vehicles less economically attractive to insurance carriers and totaling vehicles more economically attractive to them, and the total loss frequency will continue its steady, long-term path upward. Our U.S. insurance volumes increased 6.8% year over year as we have lapped the effects of units from Hurricane Ian a year ago. Given the increasing frequency and magnitude of storm-related activity, we're somewhat hesitant to provide, quote, normalized growth trends that exclude the effect of storms, but this was a modest reduction in year-over-year growth as a result of the E-N vehicles sold a year ago.

Jeffrey Liaw: We believe that long run trends continue to make repairing vehicles less economically attractive to insurance carriers and totaling vehicles more economically attractive to them and the total loss frequency will continue its steady long term path upwards.

Jeffrey Liaw: Our U S insurance volumes increased six 8% year over year as we have lapped the effects of units from hurricane Ian a year ago.

Jeffrey Liaw: Given the increasing frequency and magnitude of storm related activity were somewhat hesitant to provide quotes normalized growth trends, but exclude the effect of storms, but it was a modest modest reduction in year over year growth as a result of the Ian vehicles sold a year ago.

Jeffrey Liaw: And then to the theme more generally of our response to catastrophic events. We responded to multiple smaller weather events so far this year and last, but they did not in the aggregate approach the magnitude of major catastrophic events like Hurricanes Ian, Ida, and Harvey. Nonetheless, these comparatively smaller storms affected communities across the United States, including floods in the Houston area and tornado outbreaks in the Central Plains.

Jeffrey Liaw: And then to the theme more generally of our response to catastrophic events. We responded to multiple smaller weather events. So far this year and last they did not in the aggregate approached the magnitude of major catastrophic events like Hurricanes, Ian Ida and Heartbeat.

Jeffrey Liaw: Nonetheless, these comparatively smaller storms affected communities across the United States, including floods in the Houston area and tornado outbreaks in the Central Plains.

Jeffrey Liaw: Our investments in our catastrophe team and infrastructure have allowed us to respond efficiently to our customers' needs throughout these events and underscore our contributions to promoting resilience for the communities we serve in the face of evolving climate change trends. We note also that major research groups are predicting a serious storm season ahead, predicting as many as 31 named storms in 2024 and an increase of over 50 percent year over year. As a result, our focus remains on our proactive preparedness, investing in our teams on the ground, our logistics technology, our fleet of vehicles, and, of course, our dedicated acreage reserved for handling the peak capacity needs that come with major events.

Jeffrey Liaw: Our investments into our catastrophic team and infrastructure have allowed us to respond efficiently to our customers needs throughout these events and underscore our contributions to promoting resilience for the communities. We serve in the face of evolving climate change trends.

Jeffrey Liaw: We note also that major research groups are predicting.

A serious storm season ahead, producing as many as 31 named storms in 2024, an increase of over 50% year over year as a result, our focus remains on our proactive preparedness investing in our teams on the ground our logistics technology, our fleet of vehicles and of course, our dedicated acreage reserved for handling.

Jeffrey Liaw: The peak capacity needs to come with major events.

Jeffrey Liaw: On a similar note, outside the United States, we're leveraging our catastrophic response capabilities to support our clients in southern Brazil and in the Persian Gulf, who continue to experience the effects of ongoing historical flooding. I'll pause for a minute on our non-insurance business as well. We continue to grow our blue car business, which serves our bank and finance, fleet, and rental segment partners. In the third fiscal quarter, we observed year-over-year growth of 23 percent to almost 24 percent.

Jeffrey Liaw: On a similar note outside the United States, we're leveraging our catastrophic response capabilities to support our clients in southern Brazil, and in the Persian Gulf, who continue to experience the effects of ongoing historical flooding.

Jeffrey Liaw: I'll pause for a minute on our non insurance business as well, we continue to grow our blue car business, which serves our bank and finance fleet and rental segment partners in the third fiscal quarter, we observed year over year growth of 23% to almost 24% Likewise, our dealer sales volume a combination of our co part dealer.

Jeffrey Liaw: Likewise, our dealer sales volume, a combination of our Copart dealer services business unit and NPA, our power sports auction platform, increased unit volume sold by almost 18 percent. All told, our U.S. non-insurance, automotive, and dealer volume, excluding low-value and wholesale units, increased 19% year-over-year.

Jeffrey Liaw: Services business unit, and NPA RF power sports auction platform increased unit volumes sold by almost 18%.

All told our U S non insurance automotive and dealer volume, excluding low value and wholesale units increased 19% year over year. Our growth is the result of our commitment to customer service and our auction liquidity with.

Jeffrey Liaw: Our growth is the result of our commitment to customer service and our auction liquidity. With each additional vehicle we earn the right to sell, we increase the attractiveness of our auction platform to the world's automotive buyers, drawing still more members to our auctions and to the benefit of all of our sellers, new and old. I'll conclude with a reflection, a brief reflection on our first 30 years as a publicly traded company.

Jeffrey Liaw: With each additional vehicle, we earn the right to sell we increase the attractiveness of our auction platform to the world's automotive buyers drawing still more members to our auctions and to the benefit of all of our sellers new and old.

Jeffrey Liaw: I'll conclude with a reflection brief reflection on our first 30 years as a publicly traded company, perhaps the single most distinctive characteristic of co part today is our investment horizon, even as we celebrate our 30 <unk> anniversary our minds quickly shift to the work ahead of us to ensure a prosperous celebration with our clients of our 40% to $50 <unk>.

Jeffrey Liaw: Perhaps the single most distinctive characteristic of Copart today is our investment horizon. Even as we celebrate our 30th anniversary, our minds quickly shift to the work ahead of us to ensure a prosperous celebration with our clients on our 40th, 50th, and 60th as well. We'll continue to invest as we always have in our people, our technology, and our real estate to deliver excellent results for our clients worldwide. And with that, I'll turn it over to Leah, our CFO. Thank you, Jeff.

Jeffrey Liaw: Well, we will continue to invest as we always have in our people our technology and our real estate to deliver excellent results to our clients worldwide.

Speaker Change: And with that I'll turn it over to our CFO.

Leah C. Stearns: Thank you, Jeff. I'll begin with our third quarter sales trends. During the quarter, our global unit sales increased over 11%, including the modest benefit of the consolidation of Purple Wave, while inventory increased 4% from the year-ago period. This growth was a function of a partial recovery in total loss frequency and share gain. Focusing on our U.S. business, unit growth was over 9%, which reflected fee unit growth of over 9% and purchase unit growth of over 17%. Consignment or fee units continue to constitute the vast majority of our U.S. unit volume.

Jeff will begin with our third quarter sales trends during the quarter, our global unit sales increased over 11%, including the modest benefit of the consolidation of <unk>.

Jeffrey Liaw: Inventory increased 4% from the year ago period. This growth was a function of a partial recovery in total loss frequency and share gain.

Jeffrey Liaw: Focusing on our U S business unit growth with over 9%, which reflected the unit growth of over 9% and purchase unit growth of over 17% consignment or fee units continue to constitute the vast majority of our U S unit volume.

Leah C. Stearns: Insurance unit volume increased about 7% year-over-year. However, as Jeff mentioned, our non-insurance unit volume growth has continued to outpace that of our insurance business. This volume growth substantially came from dealer units, which increased nearly 18%, and fleet, rental, and finance units, which increased over 23%. Inventory levels in the U.S. increased over 3% in the quarter and over 5% when exceeding the low value in the catalytic converter. Returning to our international business, we saw unit growth of over 21%, with fee units increasing nearly 21% and purchase units increasing by over 24%.

Speaker Change: Insurance unit volume increased about 7% year over year as Jeff mentioned, our non insurance unit volume growth has continued to outpace that of our insurance business.

Speaker Change: This volume growth substantially came from dealer units, which increased nearly 18% and fleet rental and finance units, which increased over 23%.

Speaker Change: Inventory levels in the U S increased over 3% linked quarter and over 5% when excluding low value.

Speaker Change: Yes.

Speaker Change: Turning to our international business, we saw unit growth of over 21% with few units, increasing nearly 21% and purchase units increasing by over 24% our international business ended the quarter with inventory levels over 7% ahead of prior year.

Leah C. Stearns: Our international business ended the quarter with inventory levels over 7% ahead of the prior year. For the quarter, global ASPs declined by about 3% from the year-ago period, with U.S. insurance ASPs down less than 2% and international ASPs down about 5%. Overall, our ASPs continue to show resilience compared to the nearly 14% year-over-year decrease in the Mannheim Used Vehicle Price Index.

Speaker Change: For the quarter Global Asps declined by about 3% from the year ago period with U S insurance asps down less than 2% and international ASP is down about five.

Speaker Change: Overall, our Asps continue to show resilience compared to the nearly 14% year over year decrease in the Manheim used vehicle price index.

Leah C. Stearns: According to our financial results for the third quarter, global revenue increased to $1.13 billion, representing growth of over $105 million, or about 10%. Global service revenue increased nearly $100 million, or almost 12% for the third quarter, primarily due to increased volume. U.S. service revenue grew by over 10%, and international service revenue grew by nearly 22% for the quarter.

Speaker Change: Turning to our financial results for the third quarter global revenue increased to $1 3 billion representing growth of over $105 million or about 10%.

Speaker Change: Global service revenue increased nearly 100 million or almost 12% for the third quarter, primarily due to increased volume U.

Speaker Change: U S service revenue grew by over 10% and International service revenue grew by nearly 22% for the quarter.

Leah C. Stearns: Global purchase vehicle sales for the third quarter increased $6 million, or 3.5%, and global purchase vehicle gross profit increased by over $2 million, or over 17%. In the U.S., our purchased vehicle revenue was up nearly $7 million, or 8 percent, while gross profit increased less than 1 million, or almost 3 percent. This trend was primarily due to a mixed shift towards lower ASP units in the U.S. Internationally, purchased vehicle revenue decreased by less than 1 million, or almost 1 percent.

Speaker Change: Global purchased vehicle sales for the third quarter increased 6 million or three 5% and global purchase vehicle gross profit increased by over $2 million or over 17%.

Speaker Change: In the U S are purchased vehicle revenue was up nearly $7 million or 8%, while gross profit increased less than $1 million or almost 3%. This trend was primarily due to a mix shift towards lower ASP units in the U S.

Speaker Change: Internationally purchased vehicle revenue decreased by less than $1 million or almost 1%, while gross profit increased by over $2 million or about 29%. These results were primarily driven by significantly higher margins on purchase units in Germany.

Leah C. Stearns: While gross profit increased by over 2 million, or about 29 percent, these results were primarily driven by significantly higher margins on purchase units in Germany. Global gross profit increased to more than $525 million, an increase of over $42 million, or about 9%, and our gross margin percentage decreased approximately 70 basis points to 46.6%. In the U.S., our gross profit margin decreased to 50.9%, with DNA being the most impactful driver of margin compression as we continue to focus on investments in our yard infrastructure and technology, and our international gross profit margin increased to 27 points.

Speaker Change: Global gross profit increased to more than $525 million, an increase of over $42 million or about 9% and our gross margin percentage decreased approximately 70 basis points to 46, 6%.

Speaker Change: In the U S. Our gross profit margin decreased to 59% with DNA being the most impactful driver of margin compression as we continue to focus on investments in our yard infrastructure and technology and our international gross profit margin increased to 27, 6%.

Leah C. Stearns: Turning to general and administrative expenses, excluding stock-based compensation and depreciation, spend in the quarter was $76 million, reflecting an increase of more than $23 million and less than $4 million on a sequential basis. As we've highlighted over the past quarter, our year-over-year G&A increase continues to reflect our investments in our sales, marketing, product, and technology functions, the financial consolidation of Purple Wave into our results, as well as an increase in third-party-related projects.

Speaker Change: Turning to general and administrative expenses, excluding stock based compensation and depreciation.

Speaker Change: Then in the quarter was $76 million, reflecting an increase of more than $23 million and less than 4 million on a sequential basis as we've highlighted over the past quarter.

Speaker Change: Our year over year G&A increase continues to reflect our investments in our sales marketing product and technology functions, the financial consolidation of PREPA wave into our results as well as an increase in third party related projects.

Leah C. Stearns: This increase includes two key system implementations which we kicked off during the quarter relating to our finance and HR functions. We expect these investments will result in more scalable processes and systems and provide us with greater operating leverage over the long term. Finally, GAAP operating income increased by over 4% to $437 million, and third-quarter GAAP net income increased by over 9% to $382 million, or $0.39 per diluted common share.

Speaker Change: This increase includes two key system implementation, which we kicked off during the quarter relating to our finance and HR functions. We expect these investments will result in more scalable processes and systems and provide us with greater operating leverage over the long term.

Speaker Change: Finally, GAAP operating income increased by over 4% to $437 million and third quarter GAAP net income increased by over 9% to $382 million or <unk> 39 per diluted common share during the quarter, we benefited from over $18 million of incremental interest income as we have actively invested our cash into treasury securities as.

Leah C. Stearns: During the quarter, we benefited from over $18 million of incremental interest income as we actively invested our cash into Treasury securities, as well as a lower effective tax rate of 19.1%. Turning to our capital structure, as of the end of April, we had $4.3 billion of liquidity, which was comprised of nearly $3.1 billion in cash and investments and held to maturity securities, and our capacity under our revolving credit facility of over $1.2 billion.

Speaker Change: Well as a lower effective tax rate of 19, 1%.

Speaker Change: Turning to our capital structure as of the end of April we had $4 3 billion of liquidity, which is comprised of nearly $3 1 billion in cash and investments and held to maturity securities and our capacity under our revolving credit facility of over $1 2 billion.

Leah C. Stearns: We believe that our conservative capitalization is a distinct competitive advantage in our industry, empowering us to operate our business with a horizon that prioritizes long-term success for both ourselves and our clients. For the quarter, we generated operating cash flow of over $496 million and $408 million of free cash flow. Our capital expenditures in the quarter were about $88 million, with nearly all of our investments attributable to expanding our real estate and physical infrastructure to enhance capacity while simultaneously reducing our transportation costs and corresponding fuel consumption.

Speaker Change: We believe that our conserve conservative capitalization is a distinct competitive advantage in our industry empowering us to operate our business with a horizon that prioritizes long term success for both ourselves and our clients.

Speaker Change: For the quarter, we generated operating cash flow of over $496 million and $408 million of free cash flow our capital expenditures in the quarter were about $88 million with nearly all of our investments attributable to expanding our real estate and physical infrastructure to enhance capacity, while simultaneously, reducing our transportation costs and <unk>.

Speaker Change: Its funding fuel consumption.

Speaker Change: Consumption.

Leah C. Stearns: As I've highlighted in the past, we expect our capital allocation strategy will enable Copart to focus entirely on delivering outstanding products and services. To further this objective, over the last 12 months, we have deployed over $540 million into our real estate portfolio, leases, and technology. Today, our global portfolio of approximately 19,000 acres of outdoor vehicle storage, a robust fleet of transportation assets, and more than two decades of virtual auction technology development are the foundation of what truly differentiates Copart. And with that, Jeff and I would be happy to take some questions. Thank you.

Speaker Change: As I've highlighted in the past, we expect our capital allocation strategy will enable co part to focus entirely on delivering outstanding products and services to further this objective over the last 12 months, we have deployed over $540 million into our real estate portfolio, Please and technology today.

Speaker Change: Today, our global portfolio of approximately 19000 acres of outdoor vehicle storage, a robust fleet of transportation assets and more than two decades of virtual auction technology development are the foundation of what truly differentiates co part and with that Jeff and I would be happy to take questions.

Operator: Thank you. 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 queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button.

Speaker Change: Thank you we will now be conducting a question and answer session.

Speaker Change: I would like to ask a question. Please press star one on your telephone keypad econ.

Speaker Change: A confirmation tone will indicate your line is in the question queue you.

Speaker Change: You May press Star two if you would like to remove your question from the queue.

Speaker Change: For participants using speaker equipment, you may be necessary to pick up your handset before pressing the star.

Operator: One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Bob Labick with CTS Securities. Please proceed with your question.

One moment, please while we poll for questions.

Speaker Change: Thank you our first.

Speaker Change: First question comes from the line of Bob <unk> with CGS Securities. Please proceed with your question.

Speaker Change: Questions.

Robert James Labick: Do you hear me? Yep, oh great, okay, cool. Very great. So I wanted to start with a question about dealer cars in general, obviously a lot of success there. But just as a little context, we talked on previous calls about the dropping used car value, the Mannheim Index, and the impact on rising total loss frequency, and the fact that you're

Speaker Change: Hello can you hear me okay.

Speaker Change: Okay cool.

Speaker Change: Great Great. So I wanted to start with the question about dealer cars in general obviously, a lot of success there, but just as a little context, we've talked on previous calls about the dropping used car value. The manheim index and the impact on rising total loss frequency and the fact that your salvage asp's have held up because the increment.

Speaker Change: Salvage cargo into being total is the higher end car. So the question is what's the relationship for co part and your dealer car Asp's as used car values are dropping if any.

Jeffrey Liaw: Bob, I think it's a fair question. I think there are some natural effects. I think every auto auction business will encounter conversion implications as well, right, as seller expectations. [inaudible]

Speaker Change: Well I think it's a fair question.

There are some natural effects I think every.

Speaker Change: To auction business.

Speaker Change: We will encounter conversion implications as well as seller expectations begin to align better with current market conditions, New conversion is very high and rising price environments, though by and large we don't generally experienced those.

Speaker Change: But for 2021 22, when we saw a period.

Speaker Change: <unk> increases in used vehicle prices that generally speaking about the long term trend, but there are some modest effects in the near term.

Speaker Change: But I think overwhelmed by the unit volume implications. So the selling prices are somewhat softer for the dealer cars because for the same basket of cars. They certainly would sell for less than they would have a year ago.

Speaker Change: But as we deliver excellent results at total loss frequency rises in the relevant.

Speaker Change: <unk> the relevant window of cars that we can address well for our dealers continues to expand that has a natural the total loss frequency effects do have some.

Speaker Change: Some secondary effects on dealer cars as well for the same reason.

Robert James Labick: Okay, great. And then, I guess, just in general, how are ASPs trending, all else equal? In other words, if Mannheim was flat year over year right now, you guys have obviously pushed more into dealers, you've added arbitration and inspection at certain points. Has your, have your ASPs, you know, been going up over time, or what have been the trends if you were to level set kind of the Mannheim index to Copart dealer ASPs?

Speaker Change: Okay, Great and then I guess just in general.

Speaker Change: So you just mentioned that part.

Speaker Change: How are asps trending all else equal in other words if.

Speaker Change: Total loss frequency or if manheim was flat year over year right. Now you guys have obviously pushed more into dealer you've added arbitration inspection at certain points.

Has your have your asps.

Speaker Change: <unk> been going up over time or what have been the trends. If you were to level set kind of the manheim index to the co part dealer Asps.

Leah C. Stearns: So Bob, I think Mannheim is down about 14% year over year. And our dealer units are down just a little over 5%.

Speaker Change: So Bob.

Speaker Change: Manheim is down about 14% year over year, our dealer units are down just a little over 5% I think thats to Jeff's point, there is a mix shift going on within that population is.

Leah C. Stearns: I think that's to Jeff's point. There is a mixed shift going on within that population as we're adding higher-value units. We aren't exposed to the same type of overall headwinds that the broader used vehicle index is because we're naturally growing into the higher ASV bucket.

Adding higher value unit, we aren't exposed to the same type of overall headwinds that the broader used vehicle index is.

Speaker Change: Because we're naturally growing into the higher ASP buckets.

Jeffrey Liaw: And Bob, I'd say in both directions that the Mannheim used vehicle index you've followed us long enough to know it's never been a perfectly linear predictor of outcomes at Copart auctions. I think over the very long haul, our ASP performance has generally outpaced Mannheim for the reasons you mentioned a moment ago. Total loss frequency is rising, improving the quality of cars that we sell, and our mix, our growth among the non-insurance segment, doing the same. But even then, our prices have certainly decreased less than Mannheim has over the same comparable period. But this misalignment of the two metrics has always been true.

Bob: And Bob I would say in both directions that the Manheim used vehicle index, you followed us long enough to know who has never been.

Speaker Change: <unk> been a perfectly linear predictor of outcomes at cohort auctions I think over the very long haul our ASP ASP performance has generally outpaced Mannheim for the reasons you mentioned a moment ago total loss frequency rising improving the quality of cars that we sell and our mix our growth among the non insurance segment doing the same right, but even then.

Speaker Change: We have our U.

Speaker Change: Prices have certainly decreased less than Manhattan has over the same comparable periods, but thats that miss alignment of the two metrics has always been true.

Robert James Labick: Got it. Okay. And the last one for me, and I'm just finishing up on Pilar Carpert for now.

Speaker Change: Got it Okay, and then last one for me just finishing up on Taylor corporate for now we're obviously.

Robert James Labick: Where are you? You're obviously taking share. We don't see any other numbers as strong as that. So where is the growth coming from? Is it from physical auctions, or is it from the wholesale market, meaning you're actually growing the auction market, so to speak? These cars weren't going to be auctioned before. They were just kind of by a wholesaler behind the scenes, and you're getting those cars. Where do you view the growth of your dealer cars coming from?

Speaker Change: Making sure we don't see any other numbers as strong as that so where is the.

Speaker Change: The growth coming from is it from physical auctions or is it from like the wholesale market, meaning you're actually growing the auction market. So to speak these cars weren't going to be auctioned before they were just.

Speaker Change: Kind of buy a wholesaler.

Speaker Change: Behind the scenes and Youre getting those cars or where do you view the growth of your dealer cars most coming from.

Jeffrey Liaw: I think you accurately captured the universe of competitors for the vehicles that we sell. So the insurance world, I think you know, is unique.

Speaker Change: I think you accurately capture the universe of competitors for the vehicles that we sell so the insurance World I think is unique but as for the cars that we sell on behalf of other other parties. They also have many different outlets and depending on who you are talking about a dealer can certainly sell the car at his or her locked Ken.

Jeffrey Liaw: But as for the cars we sell on behalf of other parties, they also have – they have many different outlets. And depending on who you're talking about, a dealer can certainly sell the car at his or her lot, can sell through the other online channels you're aware of, can sell at physical auction as well, and can sell to wholesalers who take principal positions in those vehicles. Retail institutions have a different set of possibilities afforded to them.

Speaker Change: Sell through the other online channels Youre aware of can sell at physical auction as well and can sell to wholesalers, who take principal positions in those vehicles.

Speaker Change: Financial institutions have a different set of <unk>.

Speaker Change: Possibilities afforded to them they by and large don't hand, so as you know.

Jeffrey Liaw: They by and large don't hand sell, as you know. Rental car companies in some cases operate their own quasi-retail sites from which they sell vehicles directly. Some will use the other major auction houses you're aware of. So the competitive landscape is multidimensional for our non-insurance cars, for sure. And I think we are competing effectively, but against different folks for different reasons.

Speaker Change: Rental car companies in some cases operate their own quasi retail sites from which they sell vehicles directly some will use the other major auction houses youre aware of so the competitive landscape is as multi dimensional for our non insurance cars for sure and I think we are competing effectively.

Speaker Change: Against the different folks for different different types of sellers.

Robert James Labick: Okay, super. Thanks so much.

Speaker Change: Okay Super Thanks, so much thanks, Bob.

Operator: Thank you. Our next question comes from the line of Chris Bottiglieri with BNP Paribas. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Chris <unk>.

Speaker Change: Leary with BNP Paribas. Please proceed with your question.

Christopher James Bottiglieri: Hey, thanks. Perfect.

Perfect. Thanks, taking my question.

Speaker Change: Yes, two high level questions for you so the first one.

Christopher James Bottiglieri: Thanks for taking my question. Yeah, I have two high-level questions for you. I'll start with the first one. So, Jeff, in the past, you've talked about how much higher total loss rates could be if insurers had full access to, and then access to, data. So, I'm curious, just given some of the advances in AI, like you spoke at that conference and some of the more recent executive hires, like how much closer are you on that path to better monetizing that data and driving a better total loss rate decision?

Jeff in the past you've talked about how much higher total loss rates could be with insurers that full access and that access to data. So I'm curious just given some of the advancements in AI. Thank you spoke to that conference and some of your more recent executive hires like how much closer on that path to better monetize that data driving better total loss rate decisions.

Jeffrey Liaw: Yeah, a great question. I think we're still in. Perhaps to provide some additional context on the historical commentary on this front, we think there is The historical trend of total loss frequency increasing over time will assuredly continue over the long haul. Total loss frequency in 1980 was 4%, 10 years later it was 5%, in 1990, and today it's 21. So I think there's a pretty clear monotonic increase in total loss frequency over the long haul that we continue to observe.

Jeffrey Liaw: A great question I think we're still in.

Speaker Change: Perhaps to provide some additional context on the historical commentary on this front, we think there is.

Speaker Change: The historical trend of total loss frequency, increasing overtime, we will assure that we continue over the long haul total loss frequency of $19 80 was 4% 10 years later, it was 5% and 1990 and today. Its 21 right. So I think there's a pretty clear monotonic increase of total loss frequency over the long haul that that we continue to observe.

Jeffrey Liaw: As for a snapshot today, we note very different total loss practices across even insurance companies, even for like vehicles. And so the dispersion of practices today indicates that there are insurance companies who are leaving money on the table by repairing cars they arguably shouldn't, in the form of delayed and extended rental car rentals they're paying for, as well as the repairs and the supplements themselves. And as you noted, we have offered and continue to offer a range of tools to them to allow them to expedite their decision making, to make total loss decisions faster, and to make total loss decisions better. It's easier for any insurance company to say, "If the repair estimate exceeds X percent of the intact value, you total it." If it is less than that, you don't need to do it.

Speaker Change: As for a snapshot today, we note very different total loss practices across even insurance companies, even for like vehicles and so the dispersion of practices today indicates that there are insurance companies, who are leaving money on the table by repairing cars they arguably shouldnt.

Speaker Change: In the form of certainly delayed and extended rental car.

Speaker Change: Rentals theyre paying for as well as the repairs in the supplements themselves.

Speaker Change: As you noted we have offered and continue to offer a range of tools to them to allow them to expedite their decision, making to make total loss decisions faster and to make total loss decisions better but as for true full integration of those tools are truly individual car towed.

Speaker Change: Total loss decisions as opposed to general rules of thumb right. It's easier for any insurance company to say if the repair estimate exceeds X percent to being tech value you total it if it is less than that you don't but in practice you are actually better off making individual vehicle decisions, but as for the industry overall.

Jeffrey Liaw: But in practice, you're actually better off making individual vehicle decisions. But as for the industry overall, that more enlightened, data-informed decision early, I think there remains tremendous potential on that front. So besides the historical trend, lifting total loss frequency overall up, even a snapshot today, if circumstances were never to change, if market circumstances were never to change, there still remains abundant opportunity to make decisions better and faster for insurance.

Speaker Change: More enlightened data informed decision.

Speaker Change: Early I think there remains tremendous potential on that front. So besides the historical trend lifting total loss frequency overall up even snapshot today of circumstances, we're never change.

Speaker Change: If market circumstances were never to change they are still remains abundant opportunities to make decisions better investor for insurance companies.

Christopher James Bottiglieri: I think it's really helpful. And then my second big picture question is on the international mix. I think it's been a couple of years since you commented on where that sits.

Speaker Change: Okay. That's really helpful. And then my second question is on international.

Speaker Change: International mix I think it's a couple of years since you commented where that sits at the last I recall is 50% to 55%.

Jeffrey Liaw: I think last I recall, it was 50-55%. You know, given the lack of global vehicle production, I would think emerging markets and international buyers probably face even tighter supply than we face here in the US. So it's curious if that's caused any shift in demand towards international buyers, if you've seen that in your business at all. Yeah.

Speaker Change: No I just think given the lack of global vehicle production I would think of emerging markets international buyers, probably face even tighter supply that we face here in the U S.

Speaker Change: So I'm just curious if thats caused any shift in demand towards international have you seen this as well, yes. So I think the international buyer with each passing year it becomes a more prominent and more important.

Christopher James Bottiglieri: Yes, I think the international buyer, with each passing year, becomes more prominent and more important. As a portion of our member base and buyer base, during our meeting with our insurance clients, we underscored for them and quantified for them just how important they were. I think it's safe to say that, for the very lowest-value vehicles that aren't even towed 100 miles, to say nothing of being brought overseas to Eastern Europe or to South America, but for those vehicles, international bidders are instrumental in driving the value of every car sold at Copart, so they today speak for a majority of the value of U.S. auctions literally as buyers.

Speaker Change: That's a portion of our member base and buyer base.

Speaker Change: During our meeting with our insurance clients, we underscored for them and quantified for them just to just how important they were I think it's safe to say that but for the very lowest value vehicles that are that arent, even told 100 miles to say nothing of being brought to overseas to eastern Europe, or South America, but for those vehicles international bidders are instrumental.

Speaker Change: Driving the value of every car sold at cohort survey today speak for a majority of the value of U S auctions literally as buyers and by the time you incorporate those.

Christopher James Bottiglieri: And by the time you incorporate international bidding activity for cars they buy or for cars for which they are the push bid, meaning the second highest bid, which in some intellectual respect really dictates the selling price of the car, or participate in the auction itself driving further bidding activity, that's approaching 90% of the cars we sell. But the international buyer is instrumental, and we'll make it a point to highlight that on subsequent calls as well. But they are incredibly important and more important today than they were five years ago, and they will be more important five years from now than they are today. Well, that's high. Thanks a lot.

Speaker Change: International bidding activity for cars, they buy or for cars for which they are the push bid, meaning the second high bid, which in some intellectual respect really dictates the selling price of the car or participate that the auction itself driving further bidding activity that's approaching 90% of the cars, we sell but the international buyers is instrumental and will.

Speaker Change: We'll make it a point to better highlight that on subsequent calls.

Speaker Change: Well, but they are incredibly important and more important today than they were five years ago and it will be more important five years from now than they are today.

Christopher James Bottiglieri: That's high. Thanks so much for that explanation. Thanks, Jeff. Take care.

Speaker Change: Well, that's all right. Thanks, so much that exploration thanks Jessica.

Speaker Change: Great.

Speaker Change: Okay.

Speaker Change: Thank you.

Operator: Our next question comes from the line of Alice Wendlandt with Baird. Please proceed with your question.

Speaker Change: Our next question comes from the line of Alex.

Speaker Change: Lynn with Baird. Please proceed with your question.

Alice Wendlandt: Yeah, thanks for taking my questions on for TREG today. Maybe just thinking high level about inflation in the insurance industry. I mean, rates are up materially for everyone. Curious what your take is on any downstream implications, be it, you know, more uninsured motorists, pressure on you to provide additional services, maybe it's good for the total loss rate. What do you think about any of those potential trends?

Speaker Change: Yes, thanks for taking my questions on for Craig today.

Speaker Change: Maybe youre thinking high level about inflation in the insurance industry I mean rates are up materially materially for everyone. I'm curious what your take is on any downstream implications be it more uninsured motorist pressure on you to provide additional services maybe its good for the total loss rate how do you think about any of those potential trends.

Jeffrey Liaw: Presuming your question is principally U.S.-centric, right? The uninsured motorist ratios vary tremendously by market. For example, it won't surprise you, they're considerably higher for us in Brazil than they are in the U.S. or the U.K., for example.

Speaker Change: Presuming. Your question is principally U S centric write the uninsured motorist ratios vary tremendously by market. For example, it won't surprise you that are considerably higher for us in Brazil than they are in the U S with the U K for example, but for any given market. The uninsured motorist ratio I think is a function yes of ray.

Jeffrey Liaw: But for any given market, the uninsured motorist ratio, I think, is a function, yes, of rates, which in turn are a lagged byproduct of inflation. So many of our insurance clients, I think, are just now in recent quarters achieving the rate relief that comes with state-level approvals for the changes they wanted to make, which then, in turn, correspond with inflated costs for repairs and personnel and so forth that you noted.

Speaker Change: <unk>, which in turn are.

Speaker Change: Lagged a byproduct of inflation. So many of our insurance clients I think are just now in recent quarters.

Speaker Change: <unk> the rate relief that.

Speaker Change: It comes with state level approvals for the changes they wanted to make which then in turn correspond with inflated cost on repairs and personnel and so forth that you know.

Speaker Change: That you observed.

Jeffrey Liaw: I don't think it will have a meaningful, appreciable effect in the U.S. Perhaps you'll see some trends to liability-only coverage instead of collision and comprehensive or what have you, but I think those effects will be on the margin. In the end, the economic decision, once a car has been meaningfully impaired, its function has been meaningfully impaired in an accident, whether there's an insurance, it certainly helps expedite matters to have an insurance company mediating the resolution of that car, but if it makes economic sense to total it, it will eventually be totaled regardless.

Speaker Change: A moment ago.

Speaker Change: I don't think it will have a meaningful appreciable effect in the U S. Perhaps youll see some trends to liability only coverage instead of instead of collision and comprehensive what have you, but I think those effects will be on the margin and the and the economic decision once a car has been.

Speaker Change: Meaningfully impaired function has been meaningfully impaired in an accident, whether theres an insurance. It certainly helps expedite matters revenue insurance company mediating the resolution of that car, but if it makes economic sense to totally it eventually will be total regardless.

Alice Wendlandt: And then, just at a high level, on the insurance side again, I mean, For a variety of reasons, you've gained share with insurance carriers over the years. Maybe, again, at a high level, talk about the catalyst for those share shifts and maybe how sticky you consider those business wins to be. Got it. No, I appreciate that.

Speaker Change: Thanks, Sam Thanks for that and then just high level on the insurance side again I mean.

Speaker Change: So a variety of reasons you gained share with insurance carriers over the years, maybe again high level talk about the catalyst for those share shifts and maybe how sticky you consider those business with speed.

Speaker Change: Got it I appreciate that.

Speaker Change: And we described.

Jeffrey Liaw: Got it. I appreciate that you address that question, but happy to do so again. I think our advantages with our clients are first to drive better auction outcomes. I've mentioned the auction liquidity, our international buyer base, the technology platform, and the machine learning-enabled tools that allow us to drive better returns at auction. Ultimately, our insurance clients are, of course, economically motivated. They have to achieve the best possible cost outcomes they can to ensure the best possible combined ratios to ensure that they're competitive in turn on rates and that they can protect and grow their businesses accordingly.

Speaker Change: Address that question, but happy to do so again I think our our advantages with our clients are first to drive better auction outcomes.

Speaker Change: Mentioned that the auction liquidity, our international buyer base the technology platform. The machine learning enabled tools that allow us to drive better returns at auction ultimately our insurance clients are of course economically motivated they have to achieve the best possible cost outcomes. They can to ensure the best possible combined ratios to ensure that they are competitive in turn on rates and that they can.

Speaker Change: Protect and grow their businesses accordingly, so we believe that we generate.

Jeffrey Liaw: So we believe that we generate... Superior Returns at auction, and that has been persuasive to many of our insurance clients. The second element of what we do is to manage cars quickly. Cycle times are, by their nature, very positively correlated with costs for insurance companies, in particular on the front end. So our ability to retrieve vehicles quickly reduces their advance charges. It would surprise you how many cars that are very clearly eventually bound for a total loss auction, like Copart, are nonetheless subject to $2,000, $3,000 of advance charges, teardowns, and estimates, and partial repairs, or what have you, before the car is ultimately disposed of.

Our superior returns at auction and the debt has been persuasive to many of our insurance clients.

Speaker Change: The second element of what we do is to manage cars quickly cycle times are by their nature very positively correlated with cost for insurance companies in particular on the front end so our ability to retrieve vehicles quickly reduces their advanced charges. It would surprise you. How many cars that are very clearly eventually bound for a total loss.

Speaker Change: <unk> like cohort are nonetheless, subject to 2000 and $3000 of advanced charges tear downs and estimates and partial repairs or what have you before the car's ultimately disposed of so our ability to help insurance companies to reduce those front end cycle times is very.

Speaker Change: Very economically meaningful to them as well.

Jeffrey Liaw: So our ability to help insurance companies to reduce those front end cycle times is very economically meaningful to them as well. We've talked before about catastrophic events. Memories, in some cases, are short, sometimes long, but we distinguish ourselves in a moment of crisis. Storms like Harvey, Ian, and Ida are acute cost events and, perhaps more importantly, acute policy holder service events for the insurance companies as well. So our ability to support them, to support the communities, to be their ambassadors effectively on the ground in places like Florida and the Northeast, equipped by the land we've acquired, literally hundreds of acres of idle capacity that stands ready to serve them in a storm, as well as the communications technology, our own fleet of vehicles, our Copart catastrophic response team, the folks that we deploy upon a moment's notice, that's distinctive as well. So those are, I've talked about a few other elements, but those are three meaningful ones.

Speaker Change: We've talked before about catastrophic events memories in some cases are short, sometimes along but we distinguish ourselves.

Speaker Change: In a moment of crisis, the storms like Harvey Ian and Ida are acute cost events and perhaps more importantly, acute policyholder service events from the insurance companies as well so our ability to support them to support the communities to be their investors effectively on the ground in places like Florida and the northeast.

Speaker Change: In turn equipped to buy the land we've acquired literally one hundreds of acres of idle capacity that stands ready to serve them in a storm.

Speaker Change: Well as the communications technology, our own fleet of vehicles are co part catastrophic response team the folks that we deploy upon a moment's notice that's distinctive as well. So those are I will talk about a few other elements, but those are three meaningful ones as to durability.

Alice Wendlandt: As to durability, in general, when we are able to earn the trust of our clients, we run through walls to preserve that over the long haul. So, in general, those relationships have proven durable, but we never take it for granted. We wake up each morning committed to delivering better today than we did yesterday, this year, than we did the year before. So it has been durable in the past, but we never assume it will be forever. We'll make sure that we earn the right to serve them with each passing year.

Speaker Change: In general.

Speaker Change: When we are able to earn the trust of our clients we run through walls to two to preserve that over the long haul. So in general those relationships have proven durable, but we never taken for granted we wake up each morning committed to delivering better today than we did yesterday this year than we did the year before so it has.

Been durable in the past, but we never assume it will be forever, we will make sure that we earn the right to serve them for.

Speaker Change: Each passing year.

Jeffrey Liaw: Great, thanks for that overview, Jeff. And then, if I may, one more, just switching gears to Purple Wave, maybe just update us on how things have progressed there now that we have a couple quarters of that partnership underway. What are the biggest areas of opportunity you're seeing? And maybe what are some of the key trends in that market that you're observing so far? Sure.

Speaker Change: Great. Thanks for that I'll read Jeff and then if I may one more just switching gears purple wave, maybe just update us with a little more detail on how things have progressed. There analysis a couple of quarters of that that partnership underway. What are the biggest areas of opportunity youre seeing and maybe what are some of the key trends in that market that you're observing so far.

Alice Wendlandt: Sure, PurpleWave, we're delighted to have Aaron and Susie and the team on board. I think we noted that last quarter as well. They continue to grow GMV very well year over year. The growth opportunities for them include both geographic expansion; certainly, they were at the time of our investment in PurpleWave principally central time zone oriented, but they continue to expand their footprint from there. Aaron and Susie have done an extraordinary job building what they would call the community of buyers and sellers at PurpleWave, and they continue to invest in their capabilities there.

Speaker Change: Sure <unk>.

Speaker Change: We're delighted to have Aaron and Susie and the team on board I think we noted that last quarter as well they continue to grow GMB.

Speaker Change: Well very well year over year the growth opportunities for them include both geographic expansion certainly they were at the time of our investment in <unk>, principally central time zone oriented, but they continue to expand their footprint from there Aaron Susie have done an extraordinary job building, what they would call the community of buyers and sellers are peripheral wave.

Speaker Change: And they continue to invest in their capabilities there so even within the markets in which they are currently participating the remaining growth opportunities to bring on new sellers to bring on additional equipment for existing sellers. So I think it's across the board. They are still early enough in their journey and we are early enough in our journey with them there remain growth levers across all.

Alice Wendlandt: So even within the markets in which they're currently participating, there remain growth opportunities to bring in new sellers, and to bring in additional equipment for existing sellers. So I think, across the board, they are still early enough in their journey, and we are early enough in our journey with them. There remain growth levers across all of those dimensions, and frankly, the key management challenge, the key leadership challenge for Aaron and Susie is to figure out how to prioritize among them.

Speaker Change: All of those dimensions and frankly, the key management challenge the key leadership challenge for air to Susie's to figure out how to prioritize among them, but the growth trends have been very promising there.

Jeffrey Liaw: Great, that's it for me. Thank you.

Kevin: Great. That's it for me. Thank you thanks, Kevin.

Operator: Thank you. Our next question comes from the line of Bret Jordan with Jeffreys. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Bret Jordan with Jefferies. Please proceed with your question.

Bret David Jordan: Hey, good evening guys. Following up on that last question about PurpleWave, your foreign buyer base, does that differentiate your ability to sell the commercial equipment? Are they aware of what PurpleWave is?

Speaker Change: Hey, good evening, guys Hi, Brett.

Bret David Jordan: Following up on that last question on peripheral wave is your foreign buyer base.

Bret David Jordan: Is it does that differentiate your ability to sell the commercial equipment are they or are they buyers of what purple way to Sally.

Jeffrey Liaw: Yeah, that's a good question. And I probably would draw a distinction still between the commercial and the industrial because we do sell a lot of commercial equipment, box trucks, construction equipment, agricultural equipment, and the like from Copart proper, which is by and large the result of our serving insurance companies that have, as part of their book of their portfolio, a number of assets of that type. So we sell many assets on their behalf.

Bret Jordan: Yes.

Speaker Change: Good question.

Speaker Change: Probably we would draw a distinction still between.

Speaker Change: The commercial because we do sell a lot of commercial equipment box trucks construction equipment agricultural equipment and the like from co Park proper.

Which is by and large the result of our serving insurance companies have as part of their.

Speaker Change: The bulk of their portfolio a number of assets of that type. So we sell many assets on their behalf and certainly for them. The international buyer is deeply relevant purple wave historically has been principally a domestic oriented platform because their assets had been sold by and large in place here.

Jeffrey Liaw: And certainly for them, the international buyer is deeply relevant. Purple Wave, historically, has been principally a domestic-oriented platform because their assets have been sold by and large in place. For example, they would sell on behalf of a rental company, an agricultural concern, or an industrial one. They would sell in place. And so, by and large, they have been more domestically oriented in the past. Over the long haul, looking forward, that can become a more international business as well. But that's been the historical approach.

Speaker Change: So they would sell on behalf of a rental company.

Speaker Change: And agricultural concern.

Speaker Change: In industrial when they would sell in place and so by and large that they have been more domestically oriented in the past over the long haul looking forward that can become a more international business as well, but that's been the historical approach.

Bret David Jordan: Okay, and the question international, I mean, that 21% growth, do you see it looks like sequential improvement? Is that traction in Europe, you called out flooding in Brazil and cat events in the Middle East, but what's the big driver of international, and are you getting traction in some of those bigger vehicle markets like the EU? Fair question. I think we're experiencing growth. And international, as you know, Bret, is such a...

Speaker Change: Okay, and then a question on international I mean at 21% growth are you seeing it looks like sequential improvement is that traction in Europe, you called out flooding in Brazil, and the cat events in the middle East but.

Speaker Change: What's the big driver of International and are you getting traction in some of those bigger vehicle markets like the EU.

Speaker Change: A fair question I think we are experiencing growth.

Brett: International as you know Brett is such a.

Bret David Jordan: The all-inclusive notion in life is quite a bit more complicated than that, but we have grown in all of our major countries, certainly from memory, in Canada, in Brazil, in the UK, in the Middle East, for that matter, and in Germany and Spain as well. So for different reasons, though, in the UK, I think it is, for example, total loss frequency and the like. In Brazil, it's that as well. There's some early flood activity there.

Speaker Change: All inclusive notion in life is quite a bit more complicated than that we have grown.

Operator: Thank you. As a reminder, press star 1 to ask a question at this time. Our next question comes from the line of Josh Butzbash-Bottawa with J.P. Morgan. Please proceed with your question.

Speaker Change: In <unk>.

Speaker Change: All of our major countries.

Speaker Change: Certainly for memory in Canada, and Brazil, and the U K.

Speaker Change: In the middle East for that matter and in Germany, and Spain as well so for different reasons, though in the U K I think it is for example, total loss frequency and alike in Brazil.

Speaker Change: That is well there are certainly some flood act early productivity there, but the international arena growing for a combination of total loss frequency.

Speaker Change: Market penetration as you noted a moment ago, not a step function change with meaningful growth across across the centers.

Speaker Change: Great. Thank you.

Brett: Thanks, Brett.

Brett: Thank you.

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

Speaker Change: Our next question comes from the line of Josh.

Speaker Change: Masbate was with Jpmorgan. Please proceed with your question.

Josh Butzbash-Bottawa: Hi, thanks for taking my question. You know, I was just wondering if you could share some insights on your experience so far in moving towards the higher value units within the dealer segment that you highlighted previously. I believe there were some initiatives underway in developing the buyer base, you know, the condition reporting, inspection, and arbitration procedures for the whole car segment.

Josh: Hi, Thanks for taking my question.

Josh: Just wondering if you could share some insights on your experience so far in moving towards the higher value of the units within the data segment. You highlighted previously I believe there was some initiatives underway in developing the <unk> condition coding inspection in arbitration to see dose for the whole car segment.

Josh Butzbash-Bottawa: I'm wondering if you can, you know, share an update on how that has progressed so far. Thanks. And I have a follow-up question. Great. Yes.

Josh: Wondering if you could share an update on how that has progressed so far.

Josh: Great.

Jeffrey Liaw: Yes, as you noted, it has been an area of emphasis for us for years, of course, to serve the Copart dealer network better over time so that more of their cars are reachable by Copart auctions. There is the natural tailwind, as we discussed earlier today, of total loss frequency bringing better cars into our network to begin with from insurance companies, which in turn brings buyers that are relevant for an expanding portfolio of dealer cars as well.

Josh: Yes.

Speaker Change: You noted it has been an area of emphasis for us for years for us to serve the co part dealer network better over time, so that more of their cars are addressable by cohort auctions. There is the natural tailwind as we discussed earlier today of total loss frequency, bringing better cars into our network to begin with from insurance companies, which.

Speaker Change: In turn brings the buyers that are relevant for an expanding portfolio of dealer cars as well.

Jeffrey Liaw: You asked a good question about the relevant range of services that we need to provide to those sellers, which in some cases are more extensive, or they're different, frankly. The range of services provided to insurance companies for salvage cars is certainly robust as well, but in many cases, it is different. It is more like loan settlement, title procurement, salvage title issuance, a range of different things provided to them in comparison to dealer cars and, frankly, rental cars, financial institution vehicles, and the like. So yes, we continue to evaluate the range of services we provide, and continue to test a range of these things to expand so that we can better serve them. Yes, that's very much a priority.

Speaker Change: It's a good question about the relevant range of services that we need to provide to those sellers, which in some cases are more extensive other different frankly the range of services provided to insurance companies for salvage cars is certainly robust as well, but in many cases different it is more like loans settlement title procurement salvage title issuer.

Speaker Change: Yeah.

Speaker Change: A range of different things provided to them in comparison to dealer cars, and frankly rental cars financial institution vehicles and the like so yes, we continue to evaluate the range of services, we provide and continue to test a range of these things to expand so that we can better serve them, yes, that's very much a priority.

Speaker Change: Got it that's very helpful color and then.

Josh Butzbash-Bottawa: Got it. That's very helpful, Carlo. And then maybe just as a follow-up, just wanted to get your thoughts around, you know, how we should be thinking about the OPEX cadence over the next, you know, 12 to 18 months, just trying to get a sense of whether, you know, the bulk of the investments are in the base today or, you know, if we should start to see, if we should continue to see somewhat of a meaningful uptick in operating expenses in the coming few quarters.

Speaker Change: Maybe just as a follow up.

Speaker Change: Just wanted to get your thoughts around how we should be thinking about the opex cadence over the next.

Speaker Change: 12 to 18 months, just trying to get a sense of whether the bulk of the investments are in the base today or if we should start to see if we should continue to see.

Speaker Change: Somewhat of a meaningful uptick in operating expenses in the coming few quarters. Thanks.

Jeffrey Liaw: Yes, and to clarify, by operating expenses, do you mean the http://TheBusinessProfessor.com? I was referring to General Administrative Expenses, primarily. Yes, I think that over the long haul, I think if you've followed us for a while, you'll know we have almost always achieved operating leverage relative to G&A growth. We happen to have experienced more meaningful year-over-year growth for the reasons that Leah described a moment ago.

Speaker Change: Yes.

And to clarify the point by operating expenses do you mean.

Speaker Change: Gross level or you mean general administrative or you mean both.

Speaker Change: I was referring to the general and administrative expenses by Mandy.

Speaker Change: Yes, I think thats.

Speaker Change: Over the long haul.

Speaker Change: Probably followed us for a while you will know we have almost always achieved operating leverage relative to G&A growth.

Speaker Change: We happen to in the last few quarters have experienced more meaningful year over year growth for the reasons that we have described a moment ago. The very long term horizon, we expect to grow operating income to grow gross profit in excess of the rate of growth of opex or G&A opex.

Jeffrey Liaw: The very long-term horizon, we expect to grow operating income, to grow gross profits in excess of the rate of growth of OPEX or GNAs, OPEX as you described it, GNAs, we do. But on any given quarter, any given month, quarter, frankly, even year, that's not necessarily a priority for us. We want to make sure we achieve the right long-term outcomes. If that requires short-term investment; if that requires long-term investment, we are happy to make it.

Speaker Change: Opex as you described the G&A as we do.

But on any given quarter any given month quarter and frankly, even year that's.

Speaker Change: That's not necessarily a priority for us we want to make sure we achieve the right long term outcomes. If that requires short term investments that requires long term investments we are happy to make it so.

Jeffrey Liaw: As you know, as a rule, we don't provide forward-looking guidance, but we continue to spend these resources very prudently. We take our responsibilities as stewards of capital very seriously, and we'll invest those dollars when it makes sense to, to generate the right long-term returns for Copart, and when it doesn't.

Josh Butzbash-Bottawa: Got it. Thanks so much for taking my questions and good luck.

Speaker Change: As a rule we don't we don't provide forward looking guidance, but we continue to spend these resources very prudently, we take our our responsibilities as stewards of capital very seriously and we will invest those dollars when it makes sense to to generate the right long term returns for co partnering with it when they don't we won't.

Speaker Change: Got it thanks, so much for taking my questions and good luck. Thank you.

Jeffrey Liaw: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Jeff Liaw for closing comments. Thank you, everybody.

Speaker Change: Thank you there are no further questions at this time I'd like to turn the floor back over to Jeff for closing comments.

Operator: Thanks, everybody. We'll talk to you next quarter. Have a good night.

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

Jeffrey Liaw: Thanks, everybody, we'll talk to you next quarter have a good night.

Operator: ?? ?? ?? ?? ?? ??

Speaker Change: Okay.

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

Speaker Change: Yeah.

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