Research Notes: Copart
Copart Q4 2024 conference call transcript notes
Research Notes
I read a lot of investment material during the typical week/month/year. Readers benefit from my more structured research but I thought it might be a win/win for me to put down a few words in a less structured format on some of the things that come across my desk. Readers can get updates on the company in question and see my thought process in digesting the material. Let me know what you think of this concept by commenting or hitting reply. Thanks for your support!
Copart Q4 Conference Call Transcript
Business with insurance sellers +6% YOY
Mainheim Used Vehicle Index down 8.6% in Q4 (ended July 31, 2024)
21.4% total rate (Q2 24 calendar), up 200bps
New Title Express service offering providing a one-stop solution for obtaining salvage titles, working directly with policyholders and lenders, a complex, fragmented process; nearly 1mm titles per year run rate
Blue Car (bank, finance, fleet, rental) volume up 20.4% in Q4 YOY
Purple Wave (equipment auctions) up 17% (volume) outpacing market
FY 24 unit sales +10% from higher frequency and share gains
US: Insurance volume +7% for the year; non-insurance up 28%
International: +21% growth in volume
Global average selling prices down 5% for the quarter / 3% for the year.
Global revenue up 10% to $4.2 billion for the year
Yard expense up 17% for the quarter on higher volume, higher taxes, and higher expenses related to the early storm season
Q4 gross profit down 1% / GPM down 340bps to 42.4%
FY gross profit +10% / GPM up 10bps to 45%
International GPM is up to 25.5% for the year
Opex up over the prior year due to investments in systems and processes, particularly related to whole car and heavy equipment sales
Operating income down 7% to $322mm for the quarter, up 10% to $1.4 billion for the year
$3.4 billion cash on hand
Capex was $511mm for the year; included 1,100 acres of land and 370 transportation assets
Q&A Segment
Expect higher margins on whole car (dealer / blue car) over time as investment in sales/infrastructure reaps benefits
Purple Wave expanding geographically from the midwest; exclusively a virtual business
Discussion on long-term trend of declining accident frequency. Anti-lock brakes in the 1970s, to autonomous braking and lane departure sensors today.
Title procurement low on the list for insurance companies in terms of highest priorities; Copart can do it better at scale and they are getting insurance companies to trust them with this function, in addition to saving them money
They mobilize in advance of storms even if they don’t materialize; “it’s what we owe our customers”
“We view ourselves as responsible long-term stewards of this business”
Stay rational! —Adam
