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Copart Q3 2023 Earnings Call Transcript


Listen to Conference Call View Latest SEC 10-K Filing

Participants

Corporate Executives

  • Jeff Liaw
    Co-Chief Executive Officer
  • Leah Stearns
    Chief Financial Officer

Presentation

Operator

Greetings and welcome to the Copart Incorporated Third Quarter Fiscal 2023 Earnings Call. [Operator Instructions].

Before turning the call over to management, I will share Copart's statement on the Safe Harbor and non-GAAP financial measures. During today's call, the company will discuss certain non-GAAP measures, including adjustments to income tax benefits related to stock-based compensation. The Company has provided a reconciliation of these non-GAAP financial measures to the most directly-comparable GAAP measures on its Investor Relations website and in its press release issued at approximately 3:00 PM Central Time, today. The Company believes these non-GAAP measures together with corresponding GAAP measures are relevant in analyzing the Company's results and assessing its business trends and performance.

In addition, the Company's comments today include forward-looking statements within the meaning of the Federal Securities laws, including management's current views with respect to trends, opportunities and uncertainties in the Company's market. 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, 2022 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.

Jeff Liaw
Co-Chief Executive Officer at Copart

Great. Thank you, Paul. Good afternoon, and welcome everyone to our quarterly earnings call. We're pleased to report good results for the third quarter of fiscal 2023. We take pride in being the most customer-centric organization in our industry, so I'll orient my introductory comments today around our clients. Leah will follow thereafter with details on our financial results.

We recently concluded our 23rd Annual Advisory Board meeting with our key insurance clients, in honor of our 40th anniversary as a company, we hosted this event in Northern California, close to our headquarters from which we moved about 10 years ago. It was something of a homecoming for all of us. Every year we gather in-person to solicit feedback from our clients about the opportunities and challenges they face, which in-turn informs our service offerings, tech deployments and capital investment programs.

I thought I'd start with some of the key themes that emerged from those discussions this year. The insurance industry continues to experience radical change across a multitude of dimensions, including across-the-board inflation as reflected in their rising combined ratios. They and we are observing an apparent reversion to increasing total loss frequency trends. According to CCC total loss frequency bottomed at 17% or thereabouts in the second calendar quarter of 2022. And has subsequently rebounded to 19% in the first calendar quarter of 2023, the third consecutive sequential quarterly increase.

We anticipate that vehicle prices will likely stabilize or soften faster than repair costs will, which will drive total loss frequency to pre-COVID levels and beyond. We see new vehicle prices as a leading indicator for the used vehicle market. Kelley Blue Book data in particular indicates that average retail transaction prices for new vehicles in March of 2023 and were below MSRP for the first time in nearly two years. The long-term drivers of total loss frequency, of course, remain unchanged.

First, repairs are more expensive and less attractive over time, due to increasing accident severity, vehicle complexity, labor costs and rental car costs. And two, salvage economics are more attractive because the fastest-growing economies in the world in Central and South America, Africa and Eastern Europe, lean on our damaged vehicles to provide the mobility, they need.

Although our U.S. insurance volumes increased 6% or so year-over-year, we estimate the total loss volumes remain suppressed, when compared to historical total loss frequency norms. In the first calendar quarter of 2023 alone -- pardon me, in this past quarter alone, if total loss frequency had been at their pre-COVID levels, our insurance volumes could have been 10% more than they were.

Another theme that emerged is that our insurance clients continue to experience hiring and retention challenges for their own workforces, which we believe will have them leaning more heavily on trusted partners like us to provide additional services, including virtual inspection, loan payoff, title procurement services among others. Our clients also had expressed a strong interest in engaging with our image recognition tools and machine-learning algorithms to enable better decision-making; and importantly, faster decision-making.

For a vehicle that will ultimately be totaled, insurance companies often incur literally thousands of dollars in towing, storage, estimating tear down costs and appraiser labor, much of which could have been mitigated with streamlined decision-making. Our meetings with our clients also underscore the importance of our global marketplace in providing superior salvage returns to the insurance industry.

I'll turn next to our non-insurance business. For several quarters now, we've reported on our progress with our non-insurance customers. Particularly in the bank and finance fleet and rental segments, which we collectively call Blu Car. We drove ongoing growth in our third quarter of approximately 7% year-over-year despite a still constrained supply base. Likewise, we grew our dealer volume by nearly 5% year-over-year as well. We view these additional customer segments as examples of our ability to leverage our existing infrastructure to add both mass and velocity to the flywheel of our auction marketplace.

Last comment, we've fielded a number of questions already from some of our analysts and investors about our growing cash balance, and I thought I would address that question proactively here. I'll start with our long-standing position and follow with a more nuanced current view. Our evergreen position is that we take our responsibility as stewards of capital seriously, and evaluate prospective investments with an owner's mindset, because we are owners from Willis Johnson, our Founder to our newest employees who elect to participate in our Employee Stock Ownership program. We prioritize, investing in our core business, land and technology, in particular.

Secondly, we consider strategic extensions that leverage our key capabilities, as is evident from our conservative M&A track record, these opportunities generally must meet a very high bar. And as we have done episodically, but very substantially over the years. We ultimately return excess cash flow to our investors, and subject to how the tax code evolves, generally in the form of share buybacks.

Regarding where we stand specifically today, I do want to emphasize how the strength of our balance sheet empowers and differentiates Copart. In comparison to other participants in our industry, we do not prioritize interest payments, debt pay-down, dividends or massive cost-reduction initiatives. We can deploy our resources. Specifically, our capital and our management bandwidth to prioritizing the long-term prosperity and satisfaction of our clients. Three simple examples.

First. We can continue investing in our owned real-estate portfolio, which provides a strong, durable protection against an inflationary environment; and also ensures the sustainability of our service model for the next 50 years.

Second, we can provide superior service to our clients in catastrophic events, even when doing so, requires substantial capital investments in technology, trucks, land and people.

And third, we can invest in the tech platforms and marketing resources that create and sustain our global buyer base. In short, we believe our long-term orientation is in itself a distinct competitive advantage.

I'll turn it over to Leah.

Leah Stearns
Chief Financial Officer at Copart

Thank you, Jeff. Turning to the quarter, global unit sales increased more than 5% year-over-year, including an increase of over 4% in the U.S. and nearly 12% internationally. In the U.S., our fee units grew about 5%, and primarily due to growth across our insurance business and our purchased units declined 21%. Internationally, our unit growth came from a mix of fee and purchased units, which increased over 11% and 14%, respectively.

During the quarter, our US insurance business grew relative to its one and two-year comps of 6% and 25%, respectively. This was primarily due to the continued recovery of driving activities, increasing accident frequency and severity, total loss frequency and share gain. Our auction returns remains strong as we continue to invest in growing our global buyer base by driving member recruitment, registration and retention. As a result, Copart auctions provide our insurance customers with best-in class liquidity and returns, ultimately, providing a more cost-effective way to manage growing claims costs by making it more cost-effective to deem damaged vehicles at total loss.

Turning to our financial results. For the third quarter, global revenue increased $82 million or nearly 9%, including a 1% or $11 million headwind due to currency. Global service revenue increased $81 million or nearly 11% for the third quarter, primarily due to higher average revenue per unit and increased volumes. U.S. and international service revenue grew nearly 11% and 9%, respectively, for the quarter. ASPs were down slightly year-over-year, with U.S. average sale price down about 1%, compared to over 4% decline in the Manheim Index, which ended April at 230.8.

Purchased vehicle sales for the third quarter increased $1 million or nearly 1%, with U.S. purchased vehicle revenue for the quarter down 27% and international, up 49% for the quarter. During the quarter, our purchased unit activity in the U.S. remained low, as we managed our principal unit exposure in a softening vehicle pricing environment. We continue to believe that this portion of our business provides an opportunity for our future growth and is an important enabler for us in new adjacent asset classes and geographies.

Purchased vehicle cost of sales grew more than $2 million or 1.4% in the third quarter. As a result, purchased vehicle gross profit decreased by $1 million or approximately 8% during the quarter. Global gross profit in the third quarter increased by about $47 million or 11%, while our gross profit margin percentage increased by approximately 100 basis points to 47.3%.

U.S. margins increased to 52.2% and international margins decreased to 25.5%. The year-over-year margin increase on a consolidated basis was driven primarily by vehicle mix shift in the U.S. towards higher margin consignment units. And was partially offset by inflationary impacts to labor and fuel costs. And vehicle mix shift internationally where we had a greater percentage of revenue coming from lower margin purchase units.

As noted previously, over the last three years, we have seen pressures from inflation primarily across labor and transportation costs. More recently, we have observed some attenuation in these expenses particularly around transportation, which was partially driven by reductions to the cost of diesel, which has experienced a 20% decline year-over-year. In addition, we are constantly seeking to optimize our operational processes by leveraging technology and automation, which we expect will drive efficiency across the organization and help mitigate longer-term cost pressures.

Finally, while we experienced increases in labor costs over the last 12 months, we have viewed a significant portion of this as a direct investment in our employees and as an investment to support best-in class service for our customers. We believe we can continue to increase margins and return on capital over time as we pursue our consistent investment discipline, focusing on our real estate, logistics and technology assets to ensure we are positioned to scale appropriately to meet the demand of our customers.

Turning to general and administrative expenses, excluding stock-based compensation and depreciation. G&A spend in the quarter increased $2 million. I'd like to highlight that last year, we mentioned a non-recurring legal expense in Q3, excluding the impact of this G&A would have been up $9 million. While G&A can be volatile from period-to-period, the longer-term trends show that we are benefiting from the scale of our corporate infrastructure. Its effect can be observed on the downward trend of our G&A as a percent of revenue, which was 5.1% in Q3. The combination of our strong revenue growth and moderate cost increases drove an increase in GAAP operating income, by more than 12% to $419 million for the quarter. Third quarter, income tax expense was $90 million, which reflects a 20% effective tax-rate. Finally, third quarter GAAP net income increased about 26%, to $350 million or $0.72 per diluted common share.

Our global inventory at the end of April, increased 4% from last year, and when excluding low-value units like wholesalers and charities, global inventory increased by 7%, that is comprised of a year-over-year increase of over 2% for U.S. inventory or 5% when excluding low-value units and nearly 15% for international inventory.

Turning to our liquidity and financial position. Our liquidity stood at $3.3 billion as of quarter-end, which is comprised of $2.1 billion in cash and cash equivalents, and our capacity under our revolving credit facility of over $1.2 billion. Year-to-date we have generated operating cash flow of $1 billion, which is an increase of over 16% from the prior year period. In addition, we have invested nearly $347 million in capital expenditures, with over 71% of this amount attributable to our physical infrastructure, primarily capacity expansion.

Finally, year-to-date, if you take our operating cash flow less CapEx, we've generated nearly $660 million of free cash flow. Given our strong financial position we intend on continuing to invest in our business for growth and to meet our customers needs. These investments include yard expansion, new yard acquisition, logistics and our technology platform. And as Jeff outlined in detail, we believe that these types of historical investments have differentiated Copart as a service provider, while ensuring that we have the capacity necessary to serve our industry's future growth.

And that concludes our prepared remarks. We'd be happy to take some questions. Paul?

Questions and Answers

Operator

Thank you. [Operator Instructions]. Our first question is from Bob Labick with CJS. Please proceed with your question.

Bob Labick
Analyst at CJS Securities

Good afternoon, and congratulations on a great -- another great quarter.

Jeff Liaw
Co-Chief Executive Officer at Copart

Thanks, Bob.

Bob Labick
Analyst at CJS Securities

I just wanted to start, you touched on this a little bit, but as you successfully keep expanding into whole car particularly dealer and then the Blu Car, the commercial areas, are there like new features or new products that you're focused on adding? And then, is there an opportunity there via M&A or is this generally something -- generally build these things out organically? And how are you thinking about those two things, given the cash balance you've touched on and kind of the new adjacent area that you're rapidly expanding into? Are there opportunities for M&A or how are you thinking about it?

Jeff Liaw
Co-Chief Executive Officer at Copart

Got it. Appreciate the question, Bob. As for the cash balance. I'd separate that question. I think our -- we haven't been per se capital constrained in the sense that we've been effectively an unlevered company for a long time, so we've had the financial wherewithal to acquire companies, and in fact, have done so including the acquisition of NPA now five almost six years ago to expand into the Powersports arena.

And if we think our organic growth prospects are compelling and it does require investments on our part in the form of technology serving a bank is, it does have some nuance distinctions. There are nuanced products and approaches we have to take with financial institutions that are different from what we do for our insurance clients, that's for sure. Ultimately, though the benefit to both is apparent, because the liquidity is enhanced for both parties and the buyer base just grows as a result. So. I think we are investing organically on that front. I think, it's the right acquisition opportunity were to present itself at a compelling valuation that enhances those capabilities and accelerates our growth, we evaluate it to consider it, but it would have to meet the same very high bar that we've always applied.

Bob Labick
Analyst at CJS Securities

Okay, great. And then just kind of sticking with this expansion into the whole car and whatnot, are the Blu Car, in particular, buyer base the same as your core buyers or are they different? And are you marketing to these new buyers or are they finding you? How are you kind of growing the buyer base, which. I know obviously benefits everyone as you go, but how is it coming about, is it organic? Or are you getting them or are they coming to you?

Jeff Liaw
Co-Chief Executive Officer at Copart

Very much, both. So I think we are at this point, a well-known liquid marketplace. So folks come to us, but certainly we proactively approach folks who may be aware of us, but think of us in one specific context and we inform that now of the newer and emerging portfolio of vehicles available at Copart. So it is very much both.

Bob Labick
Analyst at CJS Securities

Got it, super. Okay, I'll jump back in queue. Thanks.

Jeff Liaw
Co-Chief Executive Officer at Copart

Thanks, Bob.

Operator

Thank you. Our next question is from Daniel Imbro with Stephens. Please proceed with your question.

Daniel Imbro
Analyst at Stephens & Co.

Yeah. Hey, good morning -- good evening, everybody. Maybe to start, I want to follow-up on Bob's question a little bit around customer acquisition, more focus on the international buyer, Jeff, for a couple of years, you've been talking about growing into these new markets and kind of growing this international buyer base. I'm curious from here. I mean, how much of the low-hanging fruit on SEO has been captured maybe kind of what inning are we in.

And then the deeper question there is, I guess when you look at these new customers you brought in, in these new markets like how deep the moats that you've built to keep them on Copart platform versus you know the long-term, the risk of competition coming in and maybe taking some of those customers? Thanks.

Jeff Liaw
Co-Chief Executive Officer at Copart

Hi Daniel, I think you mean our members and buyers, specifically. And to them, but there are of course other places to buy vehicles, including some of the other well-known auction platforms. Our liquidity, I think has grown over-time we've become a more compelling platform for them to enroll in and to pursue vehicle than we were 10 years ago. The one correction or modification, I'd make to your comments, it's the expansion into the international arena has not just been in the past couple of years, that's been a decade-long endeavor. It so happens that the evolving mix of vehicles, driven in-part by total -- rising total loss frequency, which means the cars are better and less damaged, as well as our pursuit of cars from non-insurance sellers has naturally grown that buyer base.

I'd say, in terms of -- in the baseball analogy, we're in the first or second inning, because the fastest growing economies are still, they will continue to outpace growth in Western Europe, the U.S., Japan, Canada, etc. The established economies where people have vehicles will increasingly provide those vehicles perhaps older, perhaps damaged, perhaps neither to the economies that demand more mobility, right? Cars divided by population remains very high in the origin countries where we operate our auctions and remains very low in the destination countries that buy them.

Daniel Imbro
Analyst at Stephens & Co.

That's helpful. And I think about maybe one follow-up on that, how capital-intensive is it to enter a new country? I know, in some countries you've done Copart lounges. I guess, like is there a big capital investment to doing this? or what is the cost of growth as you continue on this journey, if we're still early innings?

Jeff Liaw
Co-Chief Executive Officer at Copart

Yes. I draw a distinction there between expanding internationally, in the sense that we are operating auctions in a new country. So now, 16 years ago, if I have my date straight, we entered the U.K., and our investment there has been very capital-intensive in the sense that we've had to acquire land and build systems and hire people and acquire loaders and trucks and so forth to serve that market that is by its nature capital-intensive, ultimately rewarding as well, but capital-intensive at the outset.

As far as attracting new buyers and buyers from new countries that is not per se, capital-intensive, it does require a meaningful investment of resources in the form of our internal bandwidth. It also requires spending on SEO and SEM and third-party expenditures of that sort, but not capital in the sense that you're describing it.

Daniel Imbro
Analyst at Stephens & Co.

Great. That's super helpful. And if I can just squeeze one more in for Leah, you mentioned at the end there, the falling transportation costs. I think about, maybe last year that was a big headwind on the industry. As those prices come down, I'm curious how you guys view that? And does that become a tailwind to gross margin. I know you've owned some of your own transportation, so maybe it's less directly flowing through. But how should we think about that impacting gross margins during the past quarter, when we look at the service gross margin expansion?

Leah Stearns
Chief Financial Officer at Copart

Yes. There definitely was a benefit on the sequential margin improvement, so. I would continue to expect that as diesel prices remain low and then we get the benefit of some of our investments around our logistics and transportation capabilities that we would continue to see that be a benefit. Certainly the labor and inflationary pressures on towing costs around labor availability, that was a big pressure about a year ago. So, we're beginning to see the other elements of the cost of transportation, come down, which is nice to see and that should flow through from a margin perspective.

Jeff Liaw
Co-Chief Executive Officer at Copart

Daniel, broadly I'd characterize transportation cost as having stabilized as opposed to reverted to anything resembling pre-COVID norms. And so, the inflationary pressure, I think, is abating or stabilizing, but it certainly has not reverted.

Daniel Imbro
Analyst at Stephens & Co.

Great. I appreciate all the color, guys. Best of luck, going forward.

Jeff Liaw
Co-Chief Executive Officer at Copart

Great. Thank you.

Operator

Thank you. Our next question is from Craig Kennison with Baird. Please proceed with your question.

Craig Kennison
Analyst at Robert W. Baird

Hey. Good afternoon. Thank you for taking my question, and I appreciate the new conference call time for what it's worth. I wanted to dig into ASP, Leah. I think, you said that ASP was down a little bit versus the Manheim Index down maybe 3%. Last quarter, if I recall, you were flat on ASP in a Manheim environment down 13, I'm wondering why that gap closed, if it was a function of mix or another dynamic?

Leah Stearns
Chief Financial Officer at Copart

Yes. No, so we saw ASPs down across the board at about 1.4%. In the U.S., that was down 1.1% and that was compared to a 4% decline on the Manheim Index. And again, most of that is driven by mix. It's hard to obviously pinpoint the exact drivers of it, but I think what's important to appreciate is that, we certainly have an evolving mix of vehicles that are coming through our auctions quarter-to-quarter. And there is a fairly static set of units that are being measured through that Manheim Index, so I do think there is less of a correlation today than what you've historically observed between those two.

Craig Kennison
Analyst at Robert W. Baird

That's helpful. Thank you. And then a question on National Powersports Auction or NPA. Are you seeing an uptick in volume from repossessions in that powersports business? And then to what extent our new, I'll call it, captive marketplaces from Harley-Davidson or from Polaris impacting your volume opportunity?

Jeff Liaw
Co-Chief Executive Officer at Copart

I'd say in terms of the repo question, I think a modest increase, not yet step function changes in that regard. I think though vehicle values in powersports and light vehicles, in general, have softened. I think for the most part, loans remain in the money, though that trend can change over time as well.

What was your next question? Oh, the Harley question. The captive marketplace is not having per se affected us. I think the business continues to perform well, and the sources of bikes and other related power sports continues.

Craig Kennison
Analyst at Robert W. Baird

All right. Thank you.

Jeff Liaw
Co-Chief Executive Officer at Copart

Thanks, Craig.

Operator

Thank you. Our next question is from Chris Bottiglieri with BNP Paribas. Please proceed with your question.

Chris Bottiglieri
Analyst at BNP Paribas

Hey. Thanks for taking the questions. First one, I might kind of follow up with your comment on the -- from your trade show that you did with the insurers. So I want to think there was the application of the several thousand dollars that are being spent on cars that are totaled anyway, not sure what percentage of time this happens, but it sounds like that's nearly half the proceeds. So, I guess, that the insurance companies did kind of use your advanced data and make decisions quicker. Like what would the impact on total loss rates be? Like what's the elasticity of getting 50% lower cost on relative to revenue, what would that mean?

Jeff Liaw
Co-Chief Executive Officer at Copart

Yeah. I think it's a fair question, Chris. That was the multiple thousands of dollars is an illustration. I would say that the strong majority of cars that Copart sells on behalf of insurance companies have advanced charges on them in the many hundreds of dollars range, right? So it is serious money that the insurance companies are paying to towing companies, repair shops; and frankly, their own employees as well, to touch and see vehicles that arguably did not require any of that intervention.

The cars could have been towed directly to Copart and been sold and have the title processed without anyone ever having touched it otherwise. So the economic opportunity there for our insurance companies is massive. And so, we take it very seriously and are engaged with them on various initiatives to varying degrees in terms of their flexibility and ability to change the way they handle their own business processes. I would say that there is a long-standing industry bias, which I think is now evolving to repair cars when possible, right? I think there is a long-held view that people grow attached to their vehicles, policyholders grow attached to their cars and want them back. And I think that line of thinking has changed a lot even over the course of the past eight years, and we think will change over the next 20 as well. And so, the default repair mindset will change.

As for your specific question about how it affects total loss frequency, the total loss economics would be still better if you could forgo all of that waste in the system. And could it, therefore, drive total loss frequency up? Yes. In terms of the elasticity, I think, it's harder to comment on, except to say that the economics we're talking about here are very substantial. It is a good portion of the -- is a robust portion of the ultimate claims cost for a towed [Phonetic] car for an insurance company.

Chris Bottiglieri
Analyst at BNP Paribas

Got you. Okay. Thanks. And then I just want to ask about the used car pricing has been volatile more recently. I mean it seems like you got to hit this inflection point where total loss rates were starting to pick back up again as car prices softened. I think we went through like a multi-month period where car prices actually started to appreciate again, now are depreciating. But what's the net of all that? Like do you think we've just kind of hit a corner now with total loss rates kind of just keep sequentially building? Or is there any risk that you see as like a small air pocket just given the appreciation we saw?

Jeff Liaw
Co-Chief Executive Officer at Copart

I think to be fair, Chris, we don't know, right, I don't think -- we don't make management operational decisions on month-to-month or quarter-to-quarter blips like that. I think, the five-year trend, I'd bet a lot of money that in five years, the total loss frequency rate will be meaningfully higher. But that's what happens in the next quarter or two or three. I think the volatility you cite is unprecedented in your career and mine, in terms of what we observed over the past the years. So forecasting that and it's been derivative effects on our assignment volume, tough to do from where we sit. But I think we generally expect total loss frequency to rise over the next forever, but certainly over any appreciable horizon.

Chris Bottiglieri
Analyst at BNP Paribas

Got you. Okay. Thank you.

Operator

Thank you. Our next question is from Bret Jordan with Jefferies. Please proceed with your question.

Bret Jordan
Analyst at Jefferies Financial Group

Hi. Good afternoon, guys.

Jeff Liaw
Co-Chief Executive Officer at Copart

Hi, Bret.

Bret Jordan
Analyst at Jefferies Financial Group

A quick question. I think you guys called out some of your services, including loan payoff. And just on the loan payoff product, I think, your peer was touting something that's sort of automated and integrated into the insurance and bank systems that didn't involve human interaction. Is that something that is the same as what you're offering? Or is that something you're developing that's automated?

Jeff Liaw
Co-Chief Executive Officer at Copart

In a word, yes, Bret. And I think the financial institution universe, as I think, you appreciate, is very fragmented. So there are literally thousands of lenders who participate in auto lending. Some of which are technologically advanced and some of which are tiny credit unions that no matter what you do, require faxes and phone calls and so forth to settle claims. I think we are at the forefront of the digital integration.

And in fact, although others in the industry may have announced partnerships with certain integrators, we had actually started with them, I think, six or nine months prior to even their engagement with Dealertrack, for example. So we have been at the forefront of obtaining the loan payoff balance, and we are at the forefront of servicing and paying that loan balance in the letters of guarantee, and the other ancillary services and offerings that come with it. So I think as much as you can be, given the fragmented nature in highly varying degrees of technological sophistication among financial institutions. I'd say we're at the forefront of that.

Bret Jordan
Analyst at Jefferies Financial Group

Great. And then a quick question on international. I think you saw 12% unit growth. Could you talk about what markets is Germany gaining traction? Is it the addition of Finland and Spain? Maybe give us some puts and takes on the international volumes.

Jeff Liaw
Co-Chief Executive Officer at Copart

Yeah. I'd say without getting into the nitty grid, we're experiencing growth consistently across the countries, including our long-time incumbent markets like the U.K. and Brazil, for example, where we're experiencing growth due to both market trends as well as share capture and the like. And then, in our emerging markets, so to speak, or our new -- more newly entered markets like Germany and Spain and Finland, we are experiencing growth. They are, by their nature, still small enough that they don't affect the overall growth equation that much.

Bret Jordan
Analyst at Jefferies Financial Group

Okay, great. Thank you.

Operator

[Operator Instructions]. Our next question is from John Healy with Northcoast Research. Please proceed with your question.

John Healy
Analyst at Northcoast Research Partners

Thanks for taking my question. Just wanted to talk a little bit about the Blu Car opportunity. As you look at that business, do you see it running complementary kind of side-by-side with the legacy insurance business? Or do you run it as kind of one business? Just from a technology standpoint or just from a day of auction standpoint, like how are you thinking about the actual auction event with dealers engaging? And is there any sort of thought process about what the incremental spend in terms of technology or platforming that we might think about just kind of over the next few years?

Jeff Liaw
Co-Chief Executive Officer at Copart

Got it. No, I appreciate the question, John. And those are good questions. And as you might imagine, we do AD test, those specific notions. So our certain cars or certain products better off in their own stand-alone auctions, virtually across the country or in a region or appended to the existing Copart auctions that are increasingly twice weekly at each of our facilities. So we test those things, and ultimately, we'll do what is best for returns.

The question would be how we drive the superior economic outcomes for our sellers, right? So, I don't think we have a definitive rule of thumb that it must be one giant auction or that it must be highly specialized. I would say we have examples of both, so our NPA auctions continue to operate on a stand-alone basis. Our big auctions at, for example, our Grand Prairie Yard in Dallas continue to run, I think, twice weekly. Big auctions that include most of the products product types that we might sell out of that facility. So we see both, and I think, we could very well evolve over time. That's just a function of observed behavior and observed outcomes.

John Healy
Analyst at Northcoast Research Partners

Sure. No, that makes sense. And then just one kind of question on whole car as well. We're roughly 12 months out since the ADESA deal with Carvana closed. I always thought of those guys as the big repo house in the auction world. Curious to know if you're seeing any, I don't know, RFP upticks or opportunities that could be sizable on that front? Because when I think about where everyone is going with their platforms in real estate, it seems like you guys might be in a position to have a high a value-added mousetrap there? Thanks.

Jeff Liaw
Co-Chief Executive Officer at Copart

No, pretty good question. I think, we see opportunity to win the right to sell cars on behalf of financial institutions, including ones handled by ADESA and including cars handled by other folks as well. So perhaps not uniquely so, but of course, there is obviously some press some noise in that specific circumstance that has given rise to discussions and conversations with prospective sellers.

John Healy
Analyst at Northcoast Research Partners

Great. Thank you.

Jeff Liaw
Co-Chief Executive Officer at Copart

Thanks, John.

Operator

Thank you. Our next question is from Gary Prestopino with Barrington Research. Please proceed with your question.

Gary Prestopino
Analyst at Barrington Research

Hey, Jeff, how are you doing?

Jeff Liaw
Co-Chief Executive Officer at Copart

Good. Hey, Gary.

Gary Prestopino
Analyst at Barrington Research

Hey, I couldn't write this down fast enough, but Leah, did you say units were up 4% in the U.S. and 12% internationally?

Leah Stearns
Chief Financial Officer at Copart

Yes. Units were up 4%, and they were up I believe, 7% excluding low value, and they were up 12% internationally -- or 15% internationally. I'm sorry, 12% internationally.

Gary Prestopino
Analyst at Barrington Research

Okay, 12% internationally. What -- on a combined basis, what were the units up?

Leah Stearns
Chief Financial Officer at Copart

Sorry, can you repeat that, Gary?

Gary Prestopino
Analyst at Barrington Research

On a combined basis between U.S. and international, what were the units up year-over-year?

Leah Stearns
Chief Financial Officer at Copart

Combined was up 5%.

Gary Prestopino
Analyst at Barrington Research

Okay. And then, Jeff, in the meetings that you had with your insurance customers, was there any really new issues that kind of cropped up that insurance companies want you to maybe start addressing? Or is it still really decreased cycle times, increased salvage returns? I just want to get a feel for what they are thinking.

Jeff Liaw
Co-Chief Executive Officer at Copart

I think it's more evolutionary than not in the sense, Gary, that we talk to our customers literally every day. So there aren't going to be any new bombs dropped an event like that. But I think it's a nice opportunity to crystallize some of that thinking and to gather more consensus views on what the priorities are. And so for sure, cycle times, for sure, salvage returns. And I think as I noted in the introductory remarks, people pressure on their front that leads them to want to lay more of the work on Copart to have us perform more services for them. That's probably the biggest emerging theme we've seen over the past couple of years. So we have virtual inspection services that we've seen a very dramatic uptick in the adoption across many of our customers.

Gary Prestopino
Analyst at Barrington Research

Thank you.

Operator

Thank you. There are no further questions at this time, I'd like to hand the floor back over to Jeff Liaw, to close.

Jeff Liaw
Co-Chief Executive Officer at Copart

Great. Well, thank you, everyone, for joining us, and we'll talk to you next quarter.

Leah Stearns
Chief Financial Officer at Copart

Thank you.

Operator

[Operator Closing Remarks]

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