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01/11 03:20
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows strong financial performance with increased gross profit and operating income, especially in the U.S. segment. International growth is solid despite some declines in ASP. Liquidity is strong with no debt. The Q&A highlights some concerns about insurance coverage changes and market dynamics, but overall, the business outlook is positive with strategic investments and growth in key segments like BluCar. The market strategy, including disciplined capital allocation, supports a positive sentiment.
Global insurance units Declined 8.4% or 5.6% excluding catastrophic volumes from a year ago. The decline is attributed to market share evolution among insurance carriers, soft claims counts due to consumer retrenchment in auto insurance purchasing behavior, offset by rising total loss frequency.
U.S. insurance units Declined 9.5% or 7.3% excluding catastrophic activity. The decline is due to similar reasons as global insurance units, including market share evolution, soft claims counts, and rising total loss frequency.
Total loss frequency (U.S.) Increased to 22.6% for the calendar year 2025 through September, an increase of 80 basis points year-over-year. This is part of a long-term upward trend.
Global insurance ASPs Increased 6.8% year-over-year. This reflects all-time high average selling prices for U.S. insurance carriers, even surpassing the inflationary COVID era.
U.S. insurance ASPs Increased 8.4% year-over-year. This growth rate eclipsed the Manheim Used Vehicle Value Index and similar service providers.
Consolidated revenue Grew just under 1% year-over-year or 2.9% excluding catastrophic events, to $1.16 billion. Service revenue increased just under 1%, and purchased vehicle sales increased nearly 2%.
Fee revenue per unit Increased over 7% during the quarter, driven by growth in average selling prices, which increased 8.5% from the prior year period.
Global gross profit Increased 4.9% or 3.7% excluding catastrophic events, to $537 million. Gross profit per fee unit increased 12.3%, while purchased unit gross profit decreased 3% to $22 million.
Gross margin Improved 184 basis points to 46.5%, reflecting the nonrecurrence of one-time expenses related to catastrophic response.
Operating income Rose 6% or 4.5% excluding catastrophic events, to $431 million.
Net income Increased 11.5% to $404 million, driven by revenue growth, margin expansion, and growth in interest income.
Earnings per diluted share Increased 10.8% to $0.41.
U.S. segment revenue Increased 0.5% or 2.3% excluding catastrophic events, reflecting a decline in unit volume offset by an increase in revenue per unit.
U.S. fee revenue per unit Increased 7.5%, driven by higher average selling prices, including U.S. insurance ASPs, which increased 8.4%.
U.S. gross profit Increased 3.7% to $464 million. Gross profit per fee unit increased 13.2%, and U.S. segment gross margin rose to 48.7%.
U.S. segment operating income Increased 5.6% to $375 million, reflecting strong execution and cost control.
U.S. segment operating margin Increased nearly 200 basis points to 39.4%.
International segment revenue Increased 1.6% or 5.7% excluding catastrophic events, to $202 million. Service revenues increased 7.9% or 13.9% excluding catastrophic events.
International fee revenue per unit Increased 8.1% year-over-year.
International average selling price for insurance units Declined 2.4% year-over-year.
International gross profit Grew 13%, reflecting operational efficiency and investments in yard capacity, technology, and logistics.
International operating income Was $56 million, with a 27.5% operating margin, showing continued expansion.
Liquidity Ended the quarter with $6.5 billion, including $5.2 billion in cash and cash equivalents, and no debt.
Purple Wave GTV growth: Purple Wave's GTV growth of over 10% over the last 12 months continues to outperform the broader industry, reflecting strong buyer engagement in expansion markets, growth in enterprise accounts, and sustained demand in the heavy equipment category.
International insurance growth: Strong insurance growth across diversified international footprint, including in the U.K. and Canada. International service revenues increased 7.9% or 13.9% excluding catastrophic events.
International buyer participation: International buyers purchased vehicles 38% higher in value than comparable U.S. buyers, with international demand continuing to grow.
Auction liquidity and returns: Higher pure sale rates, expanding international demand, greater bidder participation, stronger pre-auction engagement, and rising gross returns collectively attest to Copart's competitive advantage in delivering full and fair prices.
Cycle time improvements: U.S. cycle times decreased by 9% from the prior year period, increasing processing capacity of existing facilities and reducing inventory levels by over 17%.
Noninsurance/wholesale business expansion: Rising total loss frequency has enabled progress in noninsurance/wholesale business, attracting sellers such as rental car companies, financial institutions, and corporate fleets. Specialized systems for receiving inspection, condition reporting, and arbitration have been developed to meet unique needs of these partners.
Investment in technology and infrastructure: Continued investments in storage capacity, technology, and logistics infrastructure to support long-term growth in both U.S. and international markets.
Decline in Global Insurance Units: Global insurance units for the first quarter of 2026 declined 8.4%, with U.S. insurance units declining 9.5%. This decline is attributed to market share evolution among insurance carriers, soft claims counts due to consumer retrenchment in auto insurance purchasing, and reduced insurance coverage by consumers.
Consumer Retrenchment in Insurance Purchasing: Consumers are responding to late-cycle insurance rate increases by reducing the scope of their coverage or foregoing it altogether, leading to fewer vehicles entering the insurance-mediated total loss process.
Impact of Catastrophic Events: The absence of catastrophic events, which contributed to higher unit volumes in the prior year, has negatively impacted year-over-year unit growth.
Economic and Geopolitical Uncertainty: Uncertainty in the macro and geopolitical environment is causing delays in equipment purchases and sales, impacting the heavy equipment category and broader market demand.
Decline in International Insurance ASPs: Average selling prices for international insurance units declined by 2.4% year-over-year, which could impact revenue growth in international markets.
Shift in Insurance Customer Contracts: Some international insurance customers have migrated from purchase contracts to consignment contracts, leading to a decline in purchased vehicle revenue.
Insurance Business Trends: The company anticipates a continued long-term upward trend in total loss frequency, which has been a consistent pattern in the industry. Rising total loss frequency is expected to support growth in the noninsurance vehicle business as more vehicles become repairable and drivable again.
Noninsurance/Wholesale Business Growth: Copart expects ongoing progress in the noninsurance/wholesale business, driven by rising total loss frequency. The company is leveraging its platform to attract buyers and sellers, including rental car companies, financial institutions, and corporate fleets. Investments in specialized systems for commercial sellers are expected to enhance this segment.
Auction Liquidity and Returns: The company projects sustained and expanding advantages in auction liquidity and returns. Key indicators include higher pure sale rates, growing international demand, increased bidder participation, stronger pre-auction engagement, and rising gross returns. These trends are supported by investments in storage capacity, technology, and personnel.
International Market Trends: Copart foresees long-term durable trends in international demand, driven by population growth and mobility demand outside the U.S., U.K., and Canada. International buyers are purchasing vehicles at higher values compared to U.S. buyers, and this trend is expected to continue.
Operational Efficiency: The company is focused on reducing cycle times and improving processing capacity at existing facilities. These efforts are expected to enhance operational efficiency and support future growth.
Purple Wave Expansion: Copart is investing in its Purple Wave online equipment auction platform, which has shown over 10% growth in gross transaction value over the last 12 months. The company expects sustained demand in the heavy equipment category and growth in expansion markets.
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The earnings call shows strong financial performance with increased gross profit and operating income, especially in the U.S. segment. International growth is solid despite some declines in ASP. Liquidity is strong with no debt. The Q&A highlights some concerns about insurance coverage changes and market dynamics, but overall, the business outlook is positive with strategic investments and growth in key segments like BluCar. The market strategy, including disciplined capital allocation, supports a positive sentiment.
Copart's earnings call reflects strong financial performance, with increased revenue, margins, and net income. The Q&A highlights strategic priorities and the impact of advanced technology, AI, and EVs, suggesting future growth. Although there are some uncertainties regarding autonomous vehicles and capital returns, the overall sentiment is positive, driven by strong international growth and shareholder returns. The company's focus on technology and operational efficiency further supports a positive outlook.
The earnings call presents mixed signals: strong global revenue growth and increased international service revenue are positives, but decreased gross profit and global purchase vehicle sales are concerning. The Q&A highlights uncertainties in insurance trends and trade policy impacts, with management providing vague responses. The lack of a share repurchase program update and increased facility costs add to the neutral outlook. Despite some positive elements, the uncertainties and lack of clear guidance suggest a neutral stock price movement in the short term.
The earnings call summary presents a mixed financial performance with positive revenue growth but declining vehicle sales and gross profit. The Q&A section reveals uncertainties in market trends and trade policy impacts. The lack of clear guidance and shareholder return plans further adds to the uncertainty. Despite record high revenue and increased net income, concerns about margins and unclear management responses lead to a neutral outlook for the stock price over the next two weeks.
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