CPRT
#<UNK>, this is <UNK>.
On this one dimension alone, it's certainly the case that scrap values improved year over year.
I think it's worth noting a couple things.
One, scrap value most acutely affects our lowest end cars.
So a car that's likely to be rebuilt, likely to be returned to service for some number of years, export or otherwise, is affected much less by scrap.
It's the lowest end vehicles that are affected, not literally ---+ not necessarily the high end cars.
Part one.
Part two is there are other contributing forces, so the strength of the US dollar being an important consideration given the number of cars we export out of the US.
The dollar has clearly strengthened against a lot of our reference currencies, a lot of our export currencies.
So that's an offsetting consideration.
But yes, all else equal, scrap improvement year over year would be helpful, yes.
<UNK>, we've done a fair bit of homework on this question, as you can imagine, ourselves.
When I look ---+ I'd say we have seen the historical analogue in the sense that we have seen accident rates decline for a very long period of time.
So from the mid 1970s to 2011, accident rates declined very steadily, as the last generation of safety ---+ of accident avoidance technologies spread through the market.
It took decades for it to do so, which is also going to be true today.
If the US, for example, will see 15 million or 17 million of new car shipments in a given year, we have a car park of 250 million or 260 million cars.
It is just decades, but the math is fairly straightforward.
It will take decades before all cars have these technologies.
The second note is that over that same period of time from the 1970s, 1980s to 2011, the salvage industry grew well because the decline in accidents was more than offset by the total loss frequency, which is again, a function of repair cost, vehicle age, and so forth.
So we've seen this movie before.
I think a lot of that will be true going forward, as well.
A lot of the technologies that make automobiles safer also make them much more expensive to repair.
You heard <UNK> talk about computers and sensors and so forth.
The typical car is much more complex today than it was 10 years ago.
So the math is decades.
I think it's an open question as to precisely how many, but I think it's decades away.
<UNK>, that's an understatement.
I think we do not historically provide detailed guidance or general guidance, but I think your inquiry is fair.
The most important driver, you did hear <UNK> talk about, which is the unit growth, and therefore, revenue-growth assumptions.
I'd say just looking backwards, say, four to eight quarters, big drivers are currency, scrap values, catastrophic events which can cause higher than normalized cost incurrence.
G&A is largely predictable for us.
We don't provide forward guidance, except to say that it will continue to increase on an absolute dollar basis given this ---+ the [indeployed] meaningful capital and land assets.
So if you went to some other measures of operating performance, returns on invested capital, and so forth, our investments and our infrastructure could, of course, affect those numbers.
I would say that all our recent experiences have done nothing but make us feel more optimistic about these markets.
And the timing is somewhat uncertain, but we will be [pursuing] with systems and resources, and I anticipate real estate, as well.
Good morning.
Simply growth in volume.
It's funny, I used to be on the finance side, and I was always arguing that you need to operate yards at 100% capacity.
And for the six weeks during the time in the year when you have peak, you just operate it efficiently, that doesn't work on the off side.
You have to have a certain amount of excess capacity.
And now as we enter an environment where we're having CAT situations more frequently, for whatever reason, it amplifies the need to have excess capacity in terms of land to adequately serve our insurance customers.
And so because of that, because of the increase in volume, because of the increase in CATs, and because of the growth in our market share, we find ourselves in a position where we really need to expand our network of facilities.
<UNK>, let me quantify it a little bit for you.
Copart, from an inventory perspective, grew 20% in the quarter.
We have over 400,000 cars on the ground.
If you do that math and you then calculate that you can only store about 100 cars per acre, and you sit back and you think about the fact that Copart added over 60,000 units to inventory year over year, you've got to add 600 acres of land to the Company.
And that's the kind of growth that we've been seeing in the last year.
Ad that's, as <UNK> said, we anticipate that growth going forward.
We are ---+ when we talk about our 20/20/20 program, that was where we started six months ago.
We will anticipate opening more than 20 locations at this point and expanding more than 20 locations at this point because of the growth in units and the corresponding growth in inventory, because we have to store those vehicles.
That market, I went in with a team during that event.
That market is about one-quarter of the size of hurricane Katrina, off the top of my head.
So big event.
We picked up a lot of cars, but still relatively small compared to a Katrina.
In terms of a hurricane Sandy, Sandy was less than Katrina, probably one-third, off the top of my head, off the size of hurricane Sandy.
Thank you.
I'll tell you, it's just extremely difficult to give you a response because of the uncertainties of acquiring this land.
Not only is it difficult to locate it, it's extremely difficult to get it properly zoned, and the timing of that creates the uncertainty I'm talking about.
In total, if you look at the total schedule of properties that we're targeting, it's in the many hundreds of acres.
So over the course of probably two years, we'll be expending a significant amount of capital to obtain those acres.
And the math is right.
We've talked about volume growth.
If you've got three years of volume growth at 8%, you're at a 27% growth in the overall market.
And if you assume that your market is 4 million cars, you're well over 1 million additional cars.
It's becoming a real issue, and that's why we're so extremely focused on it.
We have a lot of resources focused on obtaining this land, because without this land, you can't properly satisfy and service your insurance customers.
<UNK>, just a sliver of color here.
The reason, I thin, you hear us reluctant to provide more specific forward-looking guidance on this is because real estate is by nature it is so episodic and unpredictable.
We were pursuing land in southern California for 20-plus years until we found a yard that made sense for us at the location, the permitting, and the value available to us.
So the business is somewhat elastic.
If you look at an aerial photo of our nearby yards in southern California until we opened the new one, they were clearly fuller than other yards within Copart.
We want to be disciplined about how we buy land.
We expect to be aggressive about buying and developing land, but that's also somewhat dependent on availability, permitting, timing and so forth.
So it's a big part of our forward-looking strategy.
It's just very hard to narrow it down to say next quarter it's precisely this many yards or precisely this many millions of dollars.
A lot of the volume that we've had in market share was a year ago in the Farmers account.
There's some new business that's come on in the most recent quarter.
So you'll be seeing that trend extending in the year.
So just as I think <UNK> or <UNK> are about to give you a number, I want to make sure that you understand that number will increase as we go into the new year, from additional market share gains.
It is somewhat difficult to arrive at a specific number with much certainty.
If we look at the growth in the market and we assume it's 8%, and that's 20% of our business, 6.5% to 7% came from market growth.
And so the balance came from either new business or CAT and the CAT level is probably 2% of that.
I won't comment on that other than to say that industry research suggest that one of the drivers of the increase in the cost to repair these cars is the consolidation that's occurring.
You'd have to imply that by that statement.
Mixed.
Every country has its own profile of car that we sell.
Every insurance company has its own profile of car that they provide to us.
Some insurance salvage at a higher damage rate; some at lower damage rate.
Overall trends in used car pricing, FX, scrap metal pricing, things like proximity to port have an impact on the selling price of a vehicle.
There's a lot of inputs and drivers in this ASP movement.
We have.
We've seen just a marginal increase in international activity, but not anywhere near what it was two years ago.
That's fair.
It is actually up, as <UNK> said.
Okay.
Great.
Thank you.
What do you mean by air pocket, <UNK>.
Clearly, it has caused the average age of vehicles to move up, as <UNK> stated earlier.
In terms of a bucket of cars that are missing in that particular year, I think if we can just take an extreme, if we didn't sell any cars one year and the next year we told twice as many cars, I think it would just move the average down.
I don't think it would be indicative of some air pocket or other impact.
So it definitely had an impact in the average age of vehicles, and as <UNK> stated, that is starting to reverse now as we're seeing 17 million new car sales a year.
I'm sorry.
What was the question.
Thanks for the question, <UNK>.
I think you're asking about attachment rates for other ancillary services that Copart provides its buyers or sellers, and we don't customarily comment on those kinds of things.
Thanks, Samantha.
Again, thank you, everyone for attending the fourth-quarter call.
We'll be reporting on the first quarter and the new year, FY17, on the next call.
We look forward to chatting with everyone then.
Thanks so much.
Bye.
