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spk07: Greetings, please stand by. Good day, everyone, and welcome to the Copart Incorporated Second Quarter Fiscal 2022 Earnings Call. Just a reminder, today's conference is being recorded. For opening remarks, I would like to turn the call over to Mr. John North, Chief Financial Officer of Copart Incorporated. Please go ahead, sir.
spk02: During today's call, we'll discuss certain non-GAAP measures, which include adjustments to reverse payroll tax benefits related to accounting for stock option exercises and certain discrete tax items. We provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures on our investor relations website and in our press release issued yesterday. We believe these non-GAAP measures, together with our corresponding GAAP measures, are relevant in analyzing our results and assessing our business trends and performance. In addition, our 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 our markets, including the COVID-19 pandemic. These forward-looking statements involve substantial risks and uncertainties. For more detail on the risks associated with our business, we refer you to the section titled Risk Factors in our annual report on Form 10-K for the year ended July 31st, 2021, and each of our subsequent quarterly reports on Form 10-Q. Any forward-looking statements are made as of today, and we have no obligation to update or revise any forward-looking statements. And so with that out of the way, I'd like to turn the call over to our president, Jeff Leoff.
spk04: Thanks, John.
spk02: Good morning, everyone.
spk04: We're pleased to report a strong second quarter for fiscal 2022. I know that over the course of our discussion today, we'll naturally migrate to a discussion of near-term trends, such as driving patterns, new vehicle production, total loss frequency, cost inflation, market share trends, and the like. But I'll start by observing that the long-term fundamentals of our business are as strong as they've ever been. auction liquidity and returns, member recruitment and participation, our collaborative engagement with our clients day-to-day and in catastrophic situations, and certainly our aggressive reinvestment in capacity, technology, and people that make all of the above a reality. A quick thank you to the COPAR team worldwide for their efforts in making these true. Our results in the second quarter financially were largely a continuation of what we experienced In the first quarter, as we observe commerce and mobility continuing to trend back to the quote, new normal, which we'll elaborate on in greater detail, accident and assignment volumes beginning and continuing to recover, and ASPs remaining elevated as well. As I've done previously, I'll elaborate on a handful of key themes for the quarter, and John will provide additional detail and perspective as well. Starting with our unit trends for the quarter, our unit sales globally increased 19% year over year, with a U.S. increase of 21% and an international increase of 9%. Our insurance business in the U.S. in particular grew over the second quarter of 2021 by 21.5% and was also up on a two-year comparison versus fiscal 2020 due to the recovery I described a moment ago as well as share gains. Notably, our unit volume has been reduced by increasing used car prices, which I'll describe in greater detail momentarily. As we noted a moment ago, driving activity continues to rebound, as measured across a number of different dimensions, including simply vehicle miles driven, as measured by the US Department of Transportation and the UK Department of Transport statistics, and gasoline consumption and a host of other statistics as well. We note, however, that the character of driving has evolved as well. With downtown office occupancy remaining quite low, driving is less focused at rush hour and more distributed over the course of the day. There are a number of other phenomenon that have emerged with COVID-19 with nuanced outcomes like that one. The next theme I'd tackle is total loss frequency, which for the first time in our memory we have noted has declined sequentially from the third quarter calendar quarter of 2021 to the fourth quarter from 19.3% to 19%. That's, of course, a very fine measure in that case. But in any case, it's the first time we have seen a decline as opposed to the long-standing increases we've observed over the course of our 40-year history. This is a reflection of the very strong used car price environment and vehicle availability, used car availability, reducing assignment volume relative to what it otherwise would be. As most of you already well know, insurance companies typically compare the cost to repair a vehicle to the difference between the pre-accident value and what they can recover at an auction through Copart for the damaged vehicle. While our auction returns are at or near all-time highs and have kept pace with used car appreciation on a percentage basis, higher pre-accident values certainly do reduce our volume relative to what they otherwise would have been. As those who are following us and the industry in general would well know, there are a host of countervailing forces also working in our favor, which have been incorporated into our clients' total loss decision process to varying degrees. Accident severity and repair costs are up We are facing and our clients are facing larger repair supplements. Repair cycle times are up, parts are delayed, and rentals are both longer and at higher rates than they ever have been. We certainly look to the 40-year trend and the 40-year history of total loss frequency as the right long-term perspective. Total loss frequency, as a reminder, was 4% in 1980 and effectively 20% today, a five-fold increase over the company's history. we take that to mean that we're likely experiencing a temporary dislocation as a function of used car prices. The secular trends we have discussed previously remain true. Vehicle complexity rises, vehicle composition becomes less repairable substrates like composites and aluminum, making cars more expensive to repair, and our auction liquidity and international member base make them ever more efficient to total instead. We believe that as used vehicle values potentially peak and trend back to historical norms in the future, we may see some moderation in our ASPs. We'll certainly benefit from volume increases as well. Moving to our non-insurance business, we've continued to expand our market share there, excluding cars as we customarily do from sources such as wholesalers and charities. Our U.S. non-insurance business grew on a unit basis by 4.5%, driven in part by growth in our co-part direct business, as well as consignments from rental fleets and financial institutions. Across our various non-insurance channels, we believe our growth is a reflection of market share capture as a function, in turn, of our auction liquidity and returns, combined with our own proactive selling efforts. The cars we earn the right to sell on behalf of insurance companies through our online auction platform no doubt enable us to achieve superior returns for progressively more non-insurance cars as well. And in turn, these dealer, rental, bank, and consumer cars further contribute to our auction liquidity, spinning the flywheel to benefit our insurance sellers as well. Turning then to our average selling prices, we continue to experience ASP strength, as previously noted. Worldwide, our selling prices grew 20% year over year for the quarter. The Mannheim Used Car Vehicle Index is currently at record levels in January at 236.3, an increase of 45% year over year. Since the beginning of the pandemic, our selling prices frankly increased earlier, but have kept pace in the aggregate with the Mannheim Used Car Index. When we look forward prospectively, we note that a variety of industry sources indicate that chip shortages will persist for 2022 and potentially well into 2023. We've seen a variety of forecasts. We are, from a business perspective, certainly prepared for the influx of volume that may come with softening in used car prices. With that, I will hand the call to John North.
spk02: Thanks, Jeff. I'll make a few comments on our operational results, and then we'll take a few questions. For the second quarter, global revenue increased $250 million, or 40.6%, including a $3 million loss due to currency. Global service revenue increased $178.5 million, or 33.5%, primarily due to higher average selling prices and increased volume. U.S. service revenue grew 35.5%, international experience an increase of 20%. Purchased vehicle sales increased 71.9% or 85.2% due to higher ASPs and increased volumes. U.S. purchased vehicle revenue was up 84% over the prior year and international grew 87%. As a result, purchased vehicle gross profit, defined as vehicle sales less cost to vehicle sales, increased by $5 million overall. Global gross profit in the second quarter increased by 95.8 million, or 31%, and our gross margin percentage decreased by approximately 350 basis points to 46.5%. U.S. margins declined from 52.2% to 49.4%, and international margins decreased from 37.6% to 31.6%. The margin decline was primarily attributable to two factors, approximately 150 basis points of decline, is due to the mixed shift from a greater proportion of purchased vehicles which have a lower gross margin but a similar profit per vehicle. The balance of our margin contraction is attributable to cost inflation offset partially by higher revenue per unit. There was a very modest impact to margin rate due to Hurricane Ida as we continue to incur expenses due to the sale of vehicles consigned to us from that event, although we have now sold through approximately 85% of our assignment volume from the storm. We remain excited by the opportunity to increase margin over time as we add additional scale and find further operational efficiencies through technology and innovation. I will now move to a discussion of G&A expenditures, excluding stock compensation and depreciation. G&A spend in the quarter increased $7 million from $35.8 million a year ago to $42.7 million this year, and increased slightly on a sequential basis from $41.1 million last quarter. However, as a percentage of revenue, down 88 basis points to 4.9% compared to 5.8% last year. While G&A can be volatile from period to period, we anticipate G&A to continue to decline its percentage of revenue as we grow our business and create additional leverage. As a result, our GAAP operating income increased by 34.5% from $258.2 million to $347.3 million. Second quarter income tax expense was $54.6 million at a 16% effective tax rate reflecting a $4 million tax benefit on the exercise of employee stock options and a $17.5 million benefit associated with a discreet tax item, both of which have been adjusted for purposes of the non-GAAP earnings included in our earnings release. On a non-GAAP basis, our effective tax rate would have been 22.2%. Second quarter GAAP net income increased 49%, from $193 million last year to $287 million this year. Adjusted to remove the tax benefits I described a moment ago, Non-GAAP net income increased 39% from $191 million last year to $266 million in the second quarter of this year. Our global inventory at the end of January increased 8.4% from the last year. This is comprised of a year-over-year increase of 7.7 in the U.S. and 13.2 internationally. The increase in inventory is largely a function of accident frequency and miles driven returning to normal, as Jeff mentioned previously, along with growth in our non-insurance business. Now to briefly update our liquidity and cash flow highlights. As of January 31st, 2022, we had 2.4 billion of liquidity comprised of 1.3 billion of cash and cash equivalents and an undrawn revolving credit facility with a capacity of over a billion dollars. We amended our credit facility in December of last year, increasing the size to 1.25 billion while lowering certain fees. Operating cash flow for the quarter increased by 53.5 million year over year to 446.5 million driven by stronger earnings. We invested $91.5 million in capital expenditures in the quarter, and approximately two-thirds of this amount was attributable to capacity expansion. We are continuing to prioritize investments in physical infrastructure and our technology platform, and believe this continued investment creates a durable value in enabling us to serve our current and future customers more effectively. And with that, we'll conclude our prepared remarks and take a few questions.
spk07: At this time we will 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 star keys. One moment please while we poll for questions. Our first question comes from the line of Bob Lubick with CJS Securities. Please proceed with your question.
spk06: Good morning. Thanks for taking my questions.
spk04: Bob.
spk06: I wanted to start with cost inflation, as you guys talked about it a bit in the prepared remarks. Obviously, it's not unique to Copart, the inflationary environment we're in. So maybe just help us understand the primary drivers of the cost inflation for you. Is it towing, labor, other? Where is it coming from? and really what remedies you're looking at and the opportunity to bring back kind of cost per unit to prior levels or how long you think that might take.
spk04: Got it. Thanks, Bob. I think you made the astute preamble there that like all enterprises, frankly, across all industries, we experience inflation. We consume a mix of third-party goods and services and certainly employ a large number of team members worldwide. And so we've always been subject to inflationary pressures, I'd say historically on a more selective basis, whether it's healthcare or commodity cycles and the like. Today, there is more widespread inflation across our cost base overall. I think you are already aware of the major costs in our business, but they do include the towing, the personnel, certainly our technology platform as well. We have some structural protection in that, as you know, we own the vast majority of our land. And so that cost is we already own the land outright and therefore don't face the inflationary pressures when it comes to rental expense to the extent that we otherwise might. Historically speaking, over any intermediate term, Bob, we've always demonstrated the ability to recover or more than recover inflation in the marketplace, and I don't think the expectation in this case would be any different long term. Now, most importantly, we also strive – both before this wave, courtesy of COVID-19, and otherwise.
spk06: Okay, got it. Great. And then you've obviously had a lot of success in growing not just the salvage and insurance cars, but beyond that to non-salvage and dealer cars and whatnot. Can you talk about, I know not in specific numbers per se, but the relative profitability, the gross profit per unit, of the salvage vehicles versus the, say, dealer or, you know, rental or repos?
spk04: I think it's tough to provide a sweeping answer that covers all such non-insurance categories. It's a little bit of a contrived, you know, catch-all basket for us. average selling price is higher than our typical insurance car and therefore the contribution may be higher as well there are other categories included in that non-insurance portion that are lower average selling price than our typical insurance car so on a tough to tough to answer so on a blended basis probably on average higher but distributed okay great and then last one for me and i don't know if you guys are ready to answer this not yet or not if it's too early but
spk06: I'll give it a shot. Obviously you've recently launched Copart Select and it's an attractive kind of less damaged non-insurance car, clean title, less damaged car auction. And so I was just curious if you could give your initial thoughts on the launch, if there's any surprises from the launch and how you think about Copart Select going forward.
spk04: Bob, you're always observant. On Copart Select, it is, as with many things we do at our auction, we are innovating and experimenting and attempting new ways to position our auctions and the product that our sellers can sign through us. We think this kind of offering holds real promise, so we're not yet ready to share substantive results, but it's in keeping with themes we've addressed in the past. We probably
spk05: of cars for years now and this is one more arrow in the quiver to to tackle that marketplace okay super good luck thanks our next question comes from the line of Daniel Embro with Steve I think please proceed with your question yeah hey good morning guys thanks taking our questions um I wanted to ask one on the pricing backdrop maybe first Jeff you made the comment you know The salvage market moves faster, but in aggregate it's kind of kept up with Mannheim. Are you still as confident, now that we have the benefit of hindsight, that some of the more secular drivers, you know, less damage, total loss vehicles, more improved auction liquidity, were as big of our approved drivers as we thought at the time? Or has hindsight proven that maybe that was more used car price driven than you initially thought? Just trying to understand that comment. were saying since march of 20 or you were saying yeah i feel like during 2020 some of the comments and learnings calls um discussed that you guys thought a lot of the maybe company specific drivers auction liquidity things like that were were a larger contributor than used car pricing but used car pricing was one of the inputs just trying to understand as we move further from it and gotten more data points if your understanding is is the same or if it's changed at all uh i don't think it's changed i think it's been imprecise the whole time uh when we look
spk04: newer cars that are totaled, less damaged cars that are totaled. I think the auction liquidity is, when we say that, those are objective measures. availability and such, I think both were factors for sure. Both our proactive efforts, both the character of the cars we're selling, as well as the used car marketplace.
spk05: That's helpful. I wanted to ask one on the business mix. You have been growing revenue much faster into purchase vehicles, but part of that's just the way you reflect revenue. Have units also been shifting towards the purchase side in a similar way to the revenue we're seeing? And if so, why would that be? Is that a change in the U.S. insurance market, or is there something else going on there?
spk04: Not a change in the U.S. insurance market. There are some portions of our business, including, for example, Copa. of what would cause it, but it is not, by and large, U.S. insurance carriers shifting back to principle. They understand the merits of the consignment model in which they and we share in the upside of the highest possible returns on cars. Generally speaking, nobody moves back to principle. They move from principle to consignment over time.
spk05: Perfect. And then maybe the last one for me. Thinking about ancillary services, a peer of yours last week talked more about maybe offering transportation. I'm just curious if you guys have looked at that. I think you guys connect your buyers with transportation partners but don't actually provide that service. Have you looked at that? Would it be ROIC accretive for you guys? And maybe anywhere else you see an opportunity to add ancillary services for either buyers or sellers to your platform today?
spk04: leading marketplace, global online marketplace for cars of the type that we sell. There may well be untapped potential when it comes to additional services that we offer the member base. I think to be fair, there is a robust ecosystem of those service providers that has emerged around Copart, as you might imagine, selling millions of cars a year to buyers worldwide. There's to Copar Yards and certainly who know many of our buyers firsthand as well. So the answer is we are always evaluating those opportunities, experimenting with them, trialing them, and from time to time they stick and we expand them. So it is always on our radar.
spk05: Got it. That's it for me, guys. Thanks so much and best of luck.
spk04: Thanks, Andrew.
spk07: Our next question comes from the line of Ryan Brinkman with J.P. Morgan. Please proceed with your question.
spk09: Hi, thanks for taking my question. I think you are maybe reticent to discuss individual contract wins or customer relationships, etc., but wanted to check in on the potential market share shift in the salvage auction industry, what you think your market share may now be, how much share you might have gained, and whether there are any practical or potential regulatory limits to your share in the U.S., or how much more room your share could run. And then, On a related note, it would be great to get your thoughts on what has been the driver of your higher share, whether you may be competing on price or winning contracts based upon superior service level or greater ancillary services or just the net yield that sellers can realize as a result of your bigger buyer base, et cetera.
spk04: Got it. And as you might imagine, Ryan, I probably can't answer the first half of your question at all. And we don't discuss individual accounts, but certainly happy to comment on the second half of your question, which is what is it that has driven our market share capture as a general theme, which I would say has been true for the past 40 years and not just the past few. And as for why we would win an individual account, I think the answer which I think our brains would prefer, but certainly to articulate a few. Our auction returns are critical, and that is literally how much money we put in the pockets of our sellers after we auction the cars, which is a function of our BB3 online auction technology, which we believe is the parties to buy cars at Copart. It's also a function of the auction liquidity we talked about a few times on this call, which is that the growth of our insurance business has helped to affect the further growth of our insurance business, ditto non-insurance and vice versa. The second theme I touch on is our approach to customer service and that we take a long-term horizon to We believe that we re-earn the right to sell cars for our customers with every assignment that we get, and that mindset starts with our founder, Willis Johnson, at J. Adair, and to me, and to the new hire who starts at UR12 tomorrow morning. And that sounds like a throwaway cultural comment, but I think it absolutely rings true to us day-to-day here, and you would see it perhaps most pronounced in a catastrophic event. or many even the executive leadership are on the ground making sure that our teams are serving our clients capably. As one other example, we have acquired our physical land nonstop in every instance we can for the past 40 years to ensure that we have the long-term ability to serve our customers, that we're never prisoners to third parties who may prefer to do something else with the facility or otherwise. So it is a combination of those two. It is auction returns and the customer service mindset and having the long-term horizon, which we think has yielded those benefits over the long haul.
spk09: Okay, thanks. That's very helpful. And then just lastly for me, you know, it was discussed some already, the degree to which you're surging revenue per unit during the pandemic may have been attributable to various different factors, including, you know, increased prices for used vehicles, metals, et cetera, versus your proactive efforts, including relative to mix, et cetera. But I think fee increases have not really been a driver, right? My understanding is you've had more or less the same fee structure over this time that has just been applied to a much more expensive vehicle. So if that is the case, do you think that there might be potential scope to increase the fee structure, particularly if we see some cooling off in used vehicle prices? I saw the mid-month Mannheim finally tick down today, or some of the metal prices, which seem to have sort of peaked in kind of October-type timeframe after, you know, surging every single month in order to, you know, help offset some of these inflationary cost increases that you talked about?
spk04: We don't comment on our fee structures, unfortunately, but I would direct you back to the overall comment that over any intermediate horizon, we've shown the ability to recover and more than recover inflation rates. via both productivity and other measures we might take in the marketplace overall. And the second point I'd add is that if and when we see a moderation in used car prices, we'll almost certainly see a rebound or an increase in volume relative to where it otherwise would be as well.
spk09: Very helpful. Thank you.
spk07: Our next question comes from the line of Chris. By the way, with BNP Paribus. Please proceed with your question.
spk08: It was a good attempt. Hey, guys. Hey, Chris. So, yeah, first question is, you know, more gentle topic, but can you give me a sense of your exposure to, like, Russia, Ukraine, the neighboring Soviet blocs? And I would think they're probably 5%, 10% of sales, but maybe just give us some sense of that. And have you seen activity tighten up yet there, or is it, like, generally pretty healthy still?
spk04: Yeah. healthy, less than that, and healthy.
spk08: Yeah, it's okay. Good to hear. And then the other question is, to the extent you can comment on it, can I reframe the question on used car pricing? I would think a lot of your fees are fixed on the buy side. I would guess they're probably fixed on the sell side on average. And then your price bands have a beta of less than one. So I know mix varies, but I guess my question is, is there like a rule of thumb you can give us for the ASP growth? What's the contribution to ARPU growth? Is there any kind of, I don't know, any way you could frame? That would help ease the discussion on used car pricing sensitivity. Is there some kind of rule of thumb or sensitivity factor we could apply?
spk04: We haven't shared those rules of thumb, Chris, in the past. We certainly do have a publicly published fee schedule for our members, so some of that math you can literally do by hand based on what's publicly available.
spk07: My next question comes from the line of Brett Jordan with Jefferies. Please proceed with your question.
spk11: To keep flogging that dead horse, given that your fee structure does vary by transaction value, have you done the math to sort of explain from a correlation standpoint what the what the relationship to Mannheim is. You talked about some moderation in ASP in the prepared remarks, but do you have a feeling for maybe what the actual statistical correlation of Mannheim is to ASP?
spk04: I think over the long haul, our ASPs have outpaced the Mannheim. Let's stop the clock, March 2020. Our growth in ASPs have generally outpaced the Mannheim used vehicle index, which is not a surprise given total loss frequency because lesser damaged cars and newer cars are totaled. So our mix naturally evolves over time. Mannheim's mix naturally does not evolve over time. So I would say that has been true for many years pre-pandemic. During the pandemic, for, as you heard us describe today, our growth in the up 40%, 45% or thereabouts. And I think that reflects a lag in their index, I suppose is the best way to describe it, because from, say, pre-pandemic levels to today, both they and we have experienced a percentage increases in our selling prices that are plus or minus comparable. And therefore, I'd argue that our prices increased earlier, and today we are plus or minus a parity relative to pre-pandemic levels. Over the long haul, I continue to believe we'll our ASP growth will outpace theirs by virtue of the mix shift in total loss frequency before accounting for non-insurance business.
spk11: Okay. And the other mixed driver, I guess, in your favor is non-insurance. Could you give us a little bit of an update as far as the dealer cars and maybe, you know, what the dealer relationship count is or however, whatever metric you want to be using to measure the success in the dealer strategy?
spk04: Yeah. I think it's our non-insurance business. I think, you know, breadth is a mix of And all of the above are experiencing some of the same disruptions that we just talked about for the purposes of Mannheim and our insurance cars as well, meaning there are used car availability challenges. There's ample demand for cars, automotive dealers literally putting up billboards to buy cars, not to sell them. So we're experiencing an unusual dislocation in that regard, but have nonetheless grown our non-insurance business year over year for the quarter by 4.5%. But individually, I think there's good traction there, which is a function, again, of returns and liquidity.
spk00: All right. Thanks.
spk04: Thanks, Brett.
spk07: Our next question comes from the line of John Healy with North Coast Research. Please proceed with your question.
spk03: Thank you, and thanks for taking my question. I wanted to ask about that tick down in total loss rates. When you look at that and see that, where do you see the total loss rate changing within your own business? Is it at lower dollar value cars, or is it the middle, or is it the high end? And how do you think that change in total loss rate actually impacted your ASPs this year? Was it helpful, or was it hurting you guys, depending on where it fell?
spk04: Tough question, because I think in some cases we're mixing X and Y variables a little bit. But total loss frequency, in general, the marginal car would be the higher end. without much consideration. The newer cars are going to be the somewhat more marginal ones. Now the reason that, and this is what I mean by X and Y variables, the reason why total loss frequency has tapered somewhat is because used car prices are as high as they are, meaning the cars are difficult to replace. Availability is a problem outright, and certainly when you can replace it, it's at higher prices, which makes the total loss decision all else equal more expensive than it otherwise would be. But those very same high used car prices underlying cause, an unusually strong used car price environment has helped our ASPs. Overall, it perhaps has, quote, hurt our ASPs by cutting off a slice of the cars that otherwise would have been totaled.
spk03: Understood. And then I might have missed it, but did you guys quantify what volumes were for the U.S. and the international business in the quarter in terms of just how those improved?
spk02: We shared growth numbers, John. Do you have them? Yeah, global unit sales are up 19%. U.S. is up 20.8. International was up 9.3.
spk03: Great. Thank you, guys.
spk02: Thanks, John.
spk07: And as a final reminder, if anyone has any questions, you may press star 1 on your telephone keypad. Doing so will ensure your spot in the question and answer queue. Our next question comes from the line of Gary Prestopino with Barrington Research. Please proceed with your question.
spk10: Hey, John. Hey, Jeff. Could you just, I didn't quite get the growth in U.S. purchase and international purchase sales for the quarter. Could you just give me that, please?
spk02: U.S. purchase was up 50.7%, and international was up 20 units.
spk10: What about sales? Did you give that number?
spk02: Gary, let me get it for you offline. We can go over the specific numbers.
spk10: Okay, that's fine. Jeff, just kind of a rhetorical question here. As used car prices come down, which they are going to eventually, is there pretty much a quick correlation with total loss ratios going up because these prices are going down?
spk04: In short, yes, there are other variables at play as well, which is there's a lot of confounding forces here that make it hard car prices. As for today's circumstances, I think we're facing a more extreme set of variables than we ever have seen, at least in my own professional career, when it comes to used car availability and prices. If those prices do come down, I think we absolutely would see an increase, all else equal, in consignments to us from insurance carriers.
spk10: Okay. And then lastly, I don't know if you make this public, but could you give us an idea of What percentage of your cars are processed on a non-insurance basis this quarter versus, say, a year ago?
spk04: That's reasonably stable. I mean, it's approximately 25% in the U.S. here.
spk09: Thank you.
spk04: Thank you.
spk07: Our next question comes from the line of Stephanie Moore with Truist Securities. Please proceed with your question.
spk01: Hi, thank you. I wanted to touch or turn to this inflation discussion that we had earlier. I'm curious, you kind of talked about remedies in terms of trying to overcome the inflation that I think pretty much every company and business is dealing with in this environment. I know that in the past there's been flexibility to adjust fee structures on the buy side, but what is your appetite and or ability to have conversations with your insurance customers on the sell side to have them help offset some of this truly probably historical inflationary environment, especially with regards to some aspects like towing and others that they're directly benefiting from. Thanks.
spk04: Got it. Thanks, Stephanie. commitments certainly very seriously and the contracts are what they are this is our responsibility to manage our costs and as i noted a moment ago over any intermediate period of time we have been able to recover and more than recover the inflation in the marketplace and through productivity enhancements so unfortunately we can't we can't say much more about the pricing on either the seller or buyer side that's fair and then just as a follow-up can you maybe discuss your your towing process yeah you know i
spk01: You know, the use of maybe company-owned trucks, the use of third-party brokers, just kind of what has been the normal practice and maybe expanding on that, what might be an opportunity.
spk04: Got it. You mean the inbound retrieval of the cars to go to our facility?
spk01: Yes. Yep, exactly.
spk04: So we use a mix of third parties as well as our own trucks. and the local towers and build longstanding relationships with them so that they come effectively retrieve cars for us on a near daily basis once they're on board.
spk01: Great. And then just did you give, John, the U.S. ASP number? I know you gave the worldwide one, so I'm just wondering on that.
spk02: U.S., we're up 20.3.
spk01: Great. Okay. Thanks so much.
spk02: Thanks, Stephanie.
spk07: And we have reached the end of the question and answer session, and I'll now turn the call back over to Jeff Leal for closing remarks.
spk04: Great. Thank you for joining us today. We'll look forward to talking again after the third quarter. Take care.
spk07: And ladies and gentlemen, thank you for your participation. This does conclude today's conference. Have a great rest of your day.
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