Q1 2024 Copart Inc Earnings Call

Participants

Jeffrey Liaw; Co-CEO; Copart, Inc.

Leah C. Stearns; SVP & CFO; Copart, Inc.

Bret David Jordan; MD & Equity Analyst; Jefferies LLC, Research Division

Christopher James Bottiglieri; Research Analyst; BNP Paribas Exane, Research Division

Craig R. Kennison; Director of Research Operations and Senior Research Analyst; Robert W. Baird & Co. Incorporated, Research Division

Daniel Robert Imbro; MD & Research Analyst; Stephens Inc., Research Division

Jash Patwa; Analyst; JPMorgan Chase & Co, Research Division

John Michael Healy; MD & Equity Research Analyst; Northcoast Research Partners, LLC

Robert James Labick; President; CJS Securities, Inc.

Presentation

Operator

Good day, everyone, and welcome to the Copart, Inc. First 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 co-CEO, Jeff Liaw. Please go ahead, Jeff.

Jeffrey Liaw

Good evening. Welcome to the first quarter earnings call. Let me hand to Leah briefly for the safe harbor — pardon. Well, let’s dive in. I’ll keep my comments brief. We’ll highlight a few recurring themes that you’ve heard about — that you’ve heard previously before handing the call to Leah for a more in-depth look at the first quarter, and then we’ll take your questions as well.
First, as for our insurance business, we continue to observe a rebound in total loss frequency in the quarter. As you may recall, total loss frequency troughed at just north of 17% in the second calendar quarter of 2022, and it is now 19.3% according to CCC in the third calendar quarter of 2023. You’ll note, though, that today total loss frequency remained substantially below pre-COVID highs of 21.7% in the fourth calendar quarter of 2020. We continue to believe that total loss frequency will revert in time to historical levels and eventually well beyond in keeping with all recorded history on this statistic. Our expectation — our continued expectation is that new and used vehicle prices are likely to stabilize, perhaps decrease more. And if and when they do, to do so more steeply than repair costs will, driving an ongoing recovery in total loss frequency.
For the third calendar quarter of…