CPRT - NASDAQ

Good day, everyone, and welcome to the Copart Incorporated Fourth 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 markets. These forward-looking statements involve substantial risks and uncertainties. For more detail on the risks associated with the company's business, we refer you to the section titled Risk Factors in the company's annual report on Form 10-K for the year ended July 31, 2023, and each of the company's subsequent quarterly reports on Form 10-Q. Any forward-looking statements are made as of today, and the company has no obligation to update or revise any forward-looking statements. I'll now turn the call over to the company's CEO, Jeff Liaw.

Thank you, Owen and good evening. We're pleased to report our results for the fourth quarter of fiscal '24 and the conclusion of another successful fiscal year for our customers and for Copart. I'll begin with a few comments on our business before handing the call to Leah to review our financial results in greater detail. And then she and I will take your questions. Turning first to the Insurance industry. We continue to grow our business with insurance sellers of 6% year-over-year, a reflection of our compelling and growing service offerings and industry-leading auction liquidity. The recent decline in used vehicle values, in particular, has driven total loss frequency upwards back in line with pre-pandemic historical norms. During our fourth fiscal quarter 2024, we observed an 8.6% year-over-year decline in the Manheim Used Vehicle Value Index. As Leah will more fully describe later in her comments, our insurance company's selling prices significantly outpaced those of the broader used vehicle market. All indications are that the long-term trends in the repair industry towards increasing vehicle complexity, as measured, for example, by the average number of parts to repair a vehicle as well as rising labor rates continue to tip the scales in favor of totaling vehicles rather than repairing them. In fact, that's 21.4% for the second calendar quarter of 2024. Total loss frequency is some 200 basis points higher than for the same 3-month period a year ago. This, of course, is itself a blended average. Some of our customers total vehicles at rates significantly higher still. We continue to observe an ever-increasing economic incentive for insurance carriers to total vehicles rather than repair them, a long-term trend we firmly believe will continue. Today, we offer a range of sophisticated tools to our insurance clients to assist them with optimizing these decisions. Another theme I'd like to highlight is the deepening of our relationships with our insurance company clients. As reflected recently in the ongoing expansion of our Title Express service offering. Historically, auction houses like ours have obtained salvage certificates from the states in which we do business after the insurance companies have first obtained the original title, either directly from policyholders if they own their cars outright or from lenders if the vehicles have liens outstanding. Insurance companies have always reasoned that for a pivotal touch point with their own customers, typically after a claims event, it would be best to keep this function in-house. Today, however, our offer of an integrated one-stop solution for title procurement, which we call Title Express, has achieved substantial traction in the industry. On behalf of our carrier clients, we obtain original titles from policyholders and from lenders. Each state has its specific nuances in what it requires as documentation, signatures, secured forms, powers of attorney, and so forth. And each lender, too, has its own requirements for the provision of payoff balances and per diems and the releasing of liens and titles. The lender universe in particular is an especially fragmented constituency. Between our online lender portal, AI-powered outbound calling systems and access to other intermediaries, we believe we offer a substantially more efficient title procurement process than our insurance customers can otherwise achieve. Today, we're pleased to note that we are approaching a run rate of 1 million titles obtained per year on behalf of our insurance clients, a testament to their trust in us to provide excellent service to them and, importantly, to their own customers as well. One additional note on the Insurance industry regarding the storm season of 2024. As anticipated by many, the 2024 storm season is off to an active start relative to other seasons in recent years. Hurricane Beryl, the earliest Cat 5 Atlantic hurricane on record, caused widespread damage across Texas, Louisiana, and neighboring states. Though, the storm's path fortuitously bypassed major population centers. Other named storms of this season, including Hurricanes Debby and Ernesto, have required significant mobilization of resources on our part, which we are happy to undertake on behalf of our insurance clients. I'll turn our attention to our non-insurance sellers as well. We've continued to grow our volume with them, leveraging our core capabilities in having physical storage capacity via our real estate portfolio, a strong network of logistics solutions, and a global liquid buyer base. We continue to grow our blue car business, which serves our bank and finance, fleet and rental segment partners. In the fourth quarter, we observed year-over-year volume growth of 20.4% in compares to a year ago. Likewise, our dealer sales volume, a combination of our Copart dealer services business and MPA, our power sports auction platform, increased volume sold by 9.5% year-over-year as well. Excluding our low value and wholesale units, a customary measure we provide, our U.S. non-insurance automotive volume increased 12.6% year-over-year. We view our growth among these non-insurance sellers as attractive not only for the economic benefit that these incremental units provide to our business, but also as a critical factor in sustaining and extending the liquidity advantage of our auctions. We have seen abundant examples of first time buyers attending Copart auctions in pursuit of a vehicle we sell on behalf of a rental car company or a financial institution, only to then begin purchasing vehicles from insurance companies thereafter. As total loss frequency rises and insurance companies elect to total ever more drivable vehicles, the power of the crossover buyer will only grow. We're committed to investing our time and our resources to cultivate this aspect of our business. This, in a nutshell, is the flywheel effect you've heard us talk about at length in the past. Finally, as an additional note, our partner in the equipment arena Purple Wave, led by Aaron and Suzy McKee and their team based in Manhattan, Kansas, drove 17% year-over-year growth for the full year -- for the full fiscal year, outpacing industry growth in the equipment auction markets they serve. We're excited about what the future holds for our partnership with them. With that, I'll turn it over to Leah for her comments on the financials.

Thanks, Jeff. I'll begin with our fourth quarter and fiscal year '24 sales trend. During the quarter, our global unit sales and inventory increased 8% and about 7% respectively from the year ago period. For fiscal year '24, global unit sales increased nearly 10%. This growth was a function of an increase in total loss frequency and share gain. Focusing on our U.S. business, unit growth was over 6% which reflected fee unit growth of over 6% and purchase unit growth of over 13%. For fiscal year '24, unit growth was nearly 8% with fee units growing over 7% and purchase unit growth of almost 14%. Consignment or fee units continue to constitute the vast majority of our U.S unit volume. Our U.S unit volume increased 6 -- our U.S insurance unit volume increased 6% year-over-year and about 7% for fiscal year '24. As Jeff mentioned, our non-insurance unit volume growth has continued to outpace that of our insurance business. This volume growth substantially came from fleet rental and finance units which increased over 20% in Q4 and nearly 28% for the year and dealer units which increased nearly 10% for the quarter and over 15% for the fiscal year '24. Inventory levels in the U.S increased over 6% and nearly 9% when excluding low value and cat units. Turning to our international business, we saw unit growth of almost 17% in the quarter and 21% for fiscal year '24, with fee units increasing over 17% in Q4 and 22% for the year. Purchase units increased by nearly 13% for the quarter and almost 16% for the fiscal year. Our international business ended the quarter with inventory levels over 9% ahead of the prior year. Global ASPs declined by approximately 5% for the quarter relative to a year ago period and about 3% for the full year. Our U.S ASPs continue to show resilience and are significantly outperforming the used vehicle market more broadly. While the Manheim Used Vehicle Price Index declined by nearly 9% from the year ago quarter and almost 2% sequentially, our U.S insurance ASPs declined less than 4% from a year-ago for the quarter and increased over 2% sequentially. Turning to our financial results. Global revenue in the quarter increased to nearly $1.1 billion representing growth of over $71 million or about 7%. For the year, global revenue increased to more than $4.2 billion representing growth of over $367 million or nearly 10%. Global service revenue increased nearly $59 million or over 7% for the fourth quarter and almost $363 million or over 11% for the fiscal year, primarily due to increased volume. Our U.S. service revenue grew by over 6% for the quarter and 10% for the year and international service revenue grew by nearly 14% for the fourth quarter and 22% for the year. Global purchase vehicle sales for the fourth quarter increased over 12 million or 8% and over 4 million or about 1% for the fiscal year. Global purchase vehicle gross profit decreased by about 1% in the fourth quarter and for the fiscal year. In the U.S., purchase vehicle revenue was up over $10 million or 12%, while purchase vehicle gross profit increased less than $1 million or about 11% in the quarter. And for the fiscal year, purchase vehicle revenue decreased about $9 million or almost 3%, and purchase vehicle gross profit increased about $4 million or over 18%. Internationally, purchased vehicle revenue increased by over $2 million or about 3% and gross profit decreased by almost a $1 million or about 11% in the fourth quarter. And for the full year, purchased vehicle revenue increased almost $14 million or over 4% and purchased vehicle gross profit decreased about $4 million or over 12%. Global yard operations cost, excluding stock-based compensation and depreciation expense increased about $59 million or about 17% from the prior year period. This growth reflects the increase in unit volume as well as approximately $16 million of non-recurring expenses primarily related to operating taxes. In addition, as Jeff noted, given the active and early start to the storm season in 2024, our CAT storm response teams incurred seasonally higher costs preparing and positioning resources for several storms which did not produce significant unit volumes. Given the unpredictable nature of catastrophic events during storm season, we absorbed these costs as part of our normal course of serving our customers and their policyholders. During the quarter, global growth profit was over $453 million, a decrease of $4 million or about 1%, and our gross margin percentage decreased by approximately 340 basis points to 42.4% in the fourth quarter. For the fiscal year, global gross profit was over $1.9 billion, an increase of over $170 million or about 10%, and gross margin percentage was 45%, an increase of about 10 basis points. In the U.S., our gross profit margin decreased to 46.5% for the quarter and increased to 49.4% for the year. The key drivers of margin compression during the quarter included the impact of nearly $12 million of out-of-period expenses as well as increased salary and benefits expense associated with our yard operations personnel. Our international gross profit margin increased to 24.2% in the quarter and 25.5% for the year. Turning to general and administrative expenses. Excluding stock-based compensation and depreciation expense, spend in the quarter was about $81 million, reflecting an increase of $26 million over the prior year and about $5 million on a sequential basis. For the year, spend was about $288 million, an increase of about $88 million. As we highlighted last quarter, our year-over-year G&A increase continues to reflect our investments in organic product development, our platform functions, the financial consolidation of Purple Wave into our results, as well as an increase in third-party project-related costs associated with system implementations. Across our organization and as we are investing in expanding our whole car and heavy equipment sales functions, our teams are simultaneously focused on deploying emerging technologies to enhance our business processes and systems in pursuit of scalability and operating leverage over the long-term. GAAP operating income for the quarter decreased by 8% to over $359 million and for the fiscal year GAAP operating income decreased -- sorry, GAAP operating income increased by over $85 million or nearly 6%. Finally, fourth quarter GAAP net income decreased by over 7% to over $322 million or $0.33 per diluted common share. For the fiscal year, GAAP net income increased by over 10% to over $1.4 billion. During the quarter, we benefited from over $14 million of incremental interest income as we have actively invested our cash into Treasury Securities. And for the quarter, our tax rate was 21.1%, and for the fiscal year, it was 20.5%. Turning to our capital structure, as of the end of July, we had over $4.6 billion of liquidity, which is a compromise of nearly $3.4 billion in cash and investments in health maturity securities and our capacity under a revolving credit facility of over $1.2 billion. We believe that our conservative capitalization is a distinct competitive advantage in our industry enabling us to operate our business with a horizon that prioritizes ours and our clients' long-term success. For the year, we generated free cash flow of $962 million reflecting our operating cash flow generation of $1.473 billion [ph] and capital investments of about $511 million. Our investment focus in 2024 remains steadfast, with nearly all of our capital being deployed into assets which drive best-in-class outcomes for our customers, including more than 1,100 acres of land acquired and 370 transportation assets as well as enhanced physical infrastructure. With a new year upon us, I wanted to reiterate that our multi-decade investment horizon and longstanding approach to capital allocation is unwavering. We continue to prioritize investments that grow and diversify our existing marketplace businesses, including differentiated products and service capabilities. This includes our approach to yard infrastructure investments, which are critical to ensuring that we are positioned to serve our customers' needs for the long-term. We remain focused and disciplined on deploying capital through M&A and strategic partnerships, with valuation and/or strategic fit being the major hurdles that opportunistic transactions typically fail to clear. This consistent approach has positioned us to deliver outstanding business outcomes, while generating long-term value creation for our shareholders. And with that, Jeff and I would be happy to take some questions.

[Operator Instructions] Thank you. Our first question comes from the line of Bob Labick with CJS Securities. Please proceed with your question.

Good afternoon. Thanks for taking our questions.

Hi, Bob.

Hi. So I wanted to start with the business financial model with all the moving parts and the various growth rates all growing of your different subcategories and stuff. So as you build out whole car, particularly a dealer and blue car, I want to maybe discuss the impact on the financial model. From our seat, we can see that there's less customer or seller concentration and maybe you get higher fees at some point on those, but there's also a lot more upfront investment, there's hiring and sales and infrastructure to get that ready. Is that the correct way to think about it? You're investing upfront now and then maybe over time the margins on those businesses will mature and grow? Or how should we think about that? And where are we in the process of investment for those growth initiatives?

Yes, I think that's a fair question, Bob. I'd say long-term, the unit economics of those vehicles should be at parity or better than the traditional cars Copart has sold. The average selling prices tend to be higher as well. And so I think that's the long-term answer. Near-term, of course, there is some upfront investments to support the growth there, some more infrastructure-like spending to build the platform in the first place. So I think that question is fair, that observation is fair.

Okay, super. And then just, as it relates to Purple Wave, obviously nice growth for the year for them and you. Where are you in terms of kind of building out nationally? How should we think about that timeline for them?

I think they would describe themselves as still being in the transitional stage. They started as a more regional company focused in particular on the central time zone and are expanding their footprint from there. As you know, it is primarily a virtual business or historically was exclusively a virtual business. So they built an incredible pure auction platform in their arena and have built the Purple Wave brand to become a meaningful presence in that space. So they are expanding geographically as we speak.

Okay, great. And last one for me on Purple Wave too. If we are indeed moving into a lower interest rate environment like I think everyone believes, just given that [indiscernible] obviously new to you and to us, how does lower rates impact the [indiscernible] business model as we look out the next 1,3, 5 years?

Probably the candid answer is we don't know. This is just conjecture. But I think lower interest rates generally propagate more business activity period, right, the more purchase of new equipment, perhaps the trading in of old equipment. So I think lower interest rates will just lead to more -- just higher velocity activity period in the various spaces they serve. But as you know well, Bob, even to characterize their customers, their sellers, a single monolithic notion is not quite accurate. There's construction and agriculture and commercial construction versus residential. There's many, many nuances to all of the above. But in general, I think of low interest rates as being a catalyst for activity and activity, generally speaking, being a good thing for intermediaries like Purple Wave.

Super. All right. Thanks so much.

Thanks, Bob.

Thank you. Our next question comes from the line of John Healy with Northcoast Research. Please proceed with your question.

Thank you. Jeff and Leah, I just wanted to ask a little bit about the top of the business on the accident side. Kind of a variety of data points here today, just how miles driven is trending, how repairable claims are trending. You guys talked, I believe, to 6% volume growth on the insurance business. And I believe you said that total loss rates are up about 200 basis points. Just crude [ph] math, I mean, I would think that implies a level of accident frequency decline. And I was curious if you agree with that, if that is a new trend, do you think we're at the beginning of seeing a different rhythm to how accidents play out and impact the model? We'd just love to get your thoughts just on the frequency side specifically, I know people sometimes use repairable claims, but I think frequency is the area that I think a lot of investors would like to get more on. Thanks.

Got it and a good question and a very nuanced one. What I would offer first is I think if you’re simply doing the arithmetic of saying its 200 basis points of [indiscernible] starting point of 20%, that’s 10% growth. I think for better or for worse those measures just aren't precise enough. You'll see the third parties that report them will even sometimes adjust those numbers in arrears. So they move around a fair bit and they don't match perfectly with the total loss volumes either if you just went back and did this exercise for 10 years. As to your observation about accident frequency perhaps declining, I think I would characterize that as having broadly been true for the past 50 years period. Accident frequency has always declined, certainly if you adjust for miles driven, a reflection of an ever safer car park, so you can imagine the big waves of innovation in the automotive space. In the mid-1970s, you saw anti-lock brakes arrive for the first time, which reduced crashes, in particular in winter time and with high precipitation conditions. Then the arrival of traction control and so forth in the years thereafter. Nowadays, autonomous braking, lane departure warning sensors are also reducing accident frequency. That's a longstanding trend. It has always been dwarfed on the other side by total loss frequency. So if accidents are down a little bit, total loss frequency is almost always outpaced that over any reasonable historical period. The one anomaly to that that I can remember, because I remember studying this a couple of years ago when we were talking about this topic then, was I want to say from memory 2013-'14, there was a 2, 3, 4-year period in which accident frequency per miles driven actually increased. And that, I think, was the adoption of smartphones and social media from while folks were driving, God forbid, but I think that was a catalyst then that has now been absorbed into the numbers. So I think we now see gradually declining accident frequency, but not a precipitous change, not a disruptive change of any kind, we would note.

Got it. Makes sense. And then I just wanted to hear more about the Express Titling product. You guys went into great detail on that. So, I would just try to make sure I understand kind of what the takeaway is there. My observation was that is something that insurance companies can alleviate internal functions, costs, headcount, you take that responsibility on. Are we interpreting it the right way? Is that this is Copart taking service levels to a higher degree, and it's something that allows you to drive the relationship further beyond just what the seller fee is and the turn time. Is that the right way to think about it?

I think you summarized it well. It's us forward integrating, so to speak, into functions historically led by the insurance industry. And they had kept it because the touch points with their own policyholders, their own customers was viewed as a critical matter, but they trust us enough to handle that for them. They know that with the scale of the millions of vehicles we sell and the millions of titles we're processing, that we [indiscernible] have the more efficient business processes and software and bespoke software for this very narrow business case than any of them could have individually.

Got it. Thank you.

Thanks, John.

Thank you. Our next question comes from the line of Craig Kennison with Baird. Please proceed with your question.

Hey, good afternoon. Thanks for taking my questions. John had some really good ones there, and I wanted to follow-up on Title Express. Are you saying, Jeff, that will this actually save time in terms of the time it takes to cycle through a full sale and that it will save money for the insurance companies in the form of time?

Correct. Yes, time as well as fully burdened costs for their performing the function themselves. Imagine that Copart has a specialized department, and we do, led by a very capable, very longstanding leader here at Copart. And we do this, that group of folks does this full-time for a living and knows it cold. It's just easier to do that at the scale that we just talked about than it is for any individual insurance carrier, certainly the smaller ones, but also increasingly larger carriers as well than for them to staff. The people departments will leave this function on their own. If you ask any, if you ask the top 20 customers of Copart, what do you do best as an insurance company, you'll get answers ranging from underwriting to claims management to consumer advertising and marketing or what have you. Those are, and more frankly, investing the float too. Those are the core functions of an insurance company. I think you'd be pretty far down the list with any of them where they said title procurement is our bread and butter. That's where we distinguish ourselves. I think you hear that very rarely.

So I'm curious. You've had that long enough to generate a million title transfers this year. To what extent is this a driver to your market share gains overall? Does this make the front page of your pitch book?

It is certainly in the pitch book. It is perceived as. And so it had been, again, there are good reasons for insurance companies to want to keep this function in-house. I think the catalyst for change in recent years started with COVID-19 in part when insurance companies realized that hiring and retaining folks and managing them remotely and deploying laptops and remote call centers, et cetera, was increasingly complex, increasingly problematic, and not worth the squeeze. So they trusted us, they trialed the project with us, and I think we've delivered over and over again. I think it's a reflection of their trust in us in that regard.

Great. Thanks. And, Leah, if I could ask you, you mentioned the $12 million out of period expense. Can you shed more light on that expense? In which period did it normally occur?

Sure. In total for yard Ops, we had $16 million in the fourth quarter of nonrecurring expense. Twelve of that was related to our U.S. segment. A little over $4 million was related to our international segment. And so I would consider it to be really non-recurring. A portion of it was related in the U.S. to property taxes that are related to prior periods and also grossing up our accruals to levels we expect for here to go forward. And then some of the other related items are related to out-of-period invoicing for some of our vendors that we received in the fourth quarter.

Okay, thanks. And just one on Purple Wave. I'm curious, how many territory managers did you add, if that's the right metric? I'm trying to get a feel for whether that 17% is driven by, external matters or really driven by your expansion plan. I'd say both our drivers is both expansion of territory but also like territory growth, in territory growth, so to speak. And remember, this is a virtual business. Of course, they do have the team and the sales force, so to speak, to reach out to potential sellers of the business and customer support agents and the like. But it's virtual, so it's not quite like opening a new Starbucks on the street corner. It's more adding the institutional sales force to go to pursue the clients in the first place.

Got it. Hey, thank you.

Thanks, Craig.

Thank you. [Operator Instructions]. Our next question comes from the line of Chris Bottiglieri with BNP power bus. Please proceed with your question.

Hey, guys. Chris Bottiglieri. I'll fix that one. Question for you. I'm going to cut the volume question a little bit differently. There's been press reports that would suggest that auto and home insurance rates see a skyrocket. Consumers are canceling auto insurance, reducing coverage. I'm just curious if you're hearing this from insurers, how does a lower insurance rate impact your business? In past cycles, obviously [indiscernible] now at climate change and [indiscernible] normalizes that as I went past cycles, we’ve seen people cut [indiscernible] auto insurance and drop the penetration and [indiscernible].

Got it. Fair question. And I think if history is any guide, I would say it is modestly negative in the sense that if folks either are uninsured altogether, or perhaps they have liability-only coverage to save money, and they have the abandoned collision and comprehensive, then there may be claims that previously their insurance carrier would have handled and therefore would have totaled the car through Copart that may lead them on the margin to trying to fix it, trying to patch it together or trying to drive a car that otherwise would have been total. I think if the financial crisis in '09, this is from memory or from research, frankly, but the downturn in '09 and since has shown very modest effect of this, almost an immeasurable one, but I think directionally speaking, that's what would happen.

Yes, [indiscernible]. And then I think we gave a ton of metrics here, so I might have botched these, but it sounded like U.S is up six, U.S insurance is up six, but then dealer fleet [indiscernible] fleet rental finance of 20 and dealer plus 10. So it seems like there's an offset somewhere. Is that just low value charity cars? And is there a competitor that's being irrational there that's causing a drag in that segment or is it something more systemic?

No, it's just that low value bucket continues to shrink.

And what's causing that to shrink? Is that competition or is it just something like a market that's changing?

It's really just our focus in terms of where we're allocating our efforts.

Yes, I think it's a combination of the [indiscernible]. It's competitive tension as well as institutional prioritization, right? That we will always have scarce resources and that is, those are the units that we are most willing to work on.

Makes sense. Okay. Thank you.

Thanks, Chris.

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

Hey, good afternoon, guys.

Bret.

On the 6% insurance units, I think you guys were still taking share in the fourth quarter from a peer in the space. Could you sort of carve out what was organic growth versus share gain year-over-year in that quarter?

Bret, we don't have that off the top of our head, but you're right. It is both organic growth as well as share capture.

Okay. And then I guess sort of similar question, on a year-over-year cap basis, obviously you spent money prepping for storms that didn't result in a lot of cars. Do you have a year-over-year number on how many cars came from catastrophic events in the fourth quarter versus the prior year?

Very modest. So in the grand scheme of Copart's, relatively speaking, a rounding error. That said, the mobilizations weren't trivial. So this year with multiple storms, multiple named storms, we do mobilize trucks and people and such in anticipation of those storms. We don't have the luxury of waiting to see if it's real. We mobilize in advance because that's what we owe our customers. So we did have multiple mobilizations this year with trivial volume to show for it.

Okay. And then I guess, final question, on the yard operation expense growth, is part of that the investment you've been making in recent years in expanding the real estate portfolio? Do you have to staff yards that aren't at full capacity yet or that are deleveraging around some of this capital investment or is it really just sort of a spike in labor and some of these non-recurring costs? Is there something more structural as you've expanded so much acreage recently that builds in a higher yard operating expense?

One very narrow example, Bret, is the increased footprint that also has brought higher property tax bills, both literally with more acreage as well as rising property values around the country. So that's definitely in the P&L as well. As for the deleveraging, I think that largely is smoothed out over time. We don't have a huge bolus of yards opening at one moment in time. So as those -- as we encounter those facilities that have new management, new staff for which we don’t yet have a volume to fully absorb that we also have volume coming into yards that are more mature, more fully matured for which we are getting the operating leverage. So that [indiscernible] distortion, it's a small.

Great. Thank you.

Thanks, Bret.

Thank you. Our next question comes from the line of Jash Patwa with JPMorgan. Please proceed with your question.

Hi, good evening and thanks for taking my question. Just one on the non-insurance business, if you could give us an update on the business mix in terms of the proportion of revenue and any color around the demographics of the non-insurance customers. I believe you have been investing towards building out a dedicated buyer base on the whole car side for a few quarters now. It would be great if you could share some early inning results on this front. Thanks, and I will follow up.

Great. So as for those non-insurance sellers, the key dimensions would be our blue car volume. We think of that as institutional sellers like banks and rental car companies, corporate fleets, and dealers. So that's Copart dealer services at number two. Number three, cash for cars. So this is our consumer-facing business at Copart through which we buy cars from consumers. For example, those liability coverage-only consumers who end up with a wrecked car are looking for ways to dispose of them. All three are meaningful. We don't think we've disclosed precisely how much is each, but all three are substantial in the scheme of our non-insurance business. The one correction or one clarification I'd make to your inquiry about the buyer base is that we definitely don't think of it as a dedicated buyer base. We think of the buyer base as being very much an integrated one, and the importance of the crossover buyer underscores that point. So we often will have buyers arrive for the first time to look at a rental car that's six years old, a perfectly drivable vehicle, who then discovers that insurance cars nearby or perhaps not nearby fit the bill as well because they were hail cars or they're otherwise drivable or they have damage that doesn't affect at all the fundamentals of the vehicle as is. So those buyers end up buying cars from both sides. We find that to be the case far more than we find the case of the dedicated buyers you described. I would say the shared characteristic across all of these sellers is that the international buyers for Copart are very relevant. The international buyers, as you know probably from having followed us for a while, generally buy cars that are more valuable, in fact, much more valuable than the average car sold at Copart. And that is true, too, of the non-insurance vehicles. They are active participants both as buyers and as bidders, which of course drives liquidity and drives selling prices for Copart as well.

Understood. That is very helpful color. Just one more for me on the fee side. I think it has been a couple of years since you have implemented any major fee hikes on the buy side. Curious if you could share any color around the historical framework for fee increases with pricing, moderating on the salvage car side as well as on the whole car side. And wondering if any changes in the competitive environment have altered your approach to fee hikes in recent years?

Yes, I'll acknowledge that's a good and reasonable substantive question. It's one we don't address on -- in forums like this one. We view ourselves as responsible long-term stewards of this business. We focus first and foremost on delivering value to our sellers, to our buyers and we trust that in the long run we'll also capture our appropriate share thereof. So we don't talk about fee schedules, I would encourage you to pursue that research through third parties.

I appreciate it. Thank you.

Thank you. There are no further questions at this time. I'd like to pass the call back over to Jeff for closing comments.

Thank you for joining us. We'll talk to you in a couple of months.