Good day, everyone, and welcome to the Copart Incorporated First Quarter Fiscal 2025 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, 2024, 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 everyone for joining the earnings call for our first quarter for fiscal 2025. On our recent calls, we've been talking about some important themes about our business, including our recent growth with bank rental and fleet sellers. We talked about Title Express, a new offering we're introducing to the insurance industry. We've talked about sustainability, and we discussed growth in our international businesses, as well as in the heavy equipment space. Today, with the first quarter past us for this next fiscal year, we thought it would be a good opportunity to reflect specifically about our insurance business. There are two themes I wanted to draw upon today. First is our response to the recent hurricane activity in the Southeastern United States, and the second is the longer-term trends that we observe in the insurance industry more broadly. First, regarding the recent flurry of hurricane activity. In late September of this year, Category 4 Hurricane Helene made landfall in Florida. Severe flooding, of course, struck the Tampa-St. Petersburg area and eventually caused significant damage elsewhere in Florida, Georgia, and North and South Carolina, including areas not accustomed to dealing with storms of this magnitude. Then, less than two weeks later, Category 3 Hurricane Milton struck Florida again, and the back-to-back nature of the storms added a level of complexity to our storm response that we hadn't previously experienced, including a brief evacuation of our people in certain most dangerous areas. In comparison to Hurricane Ian, a similarly scaled and located storm from just two years ago, our advanced preparation and our team's execution this time around yielded even better results, with approximately twice as many vehicles picked up in the first 10 days of these 2024 storms in comparison to Ian in 2022. As always, our emphasis is on retrieving, processing, and selling vehicles as quickly as we can to help restore the communities in which we do business back to their prior state and to assist our clients, the major insurance companies, in resolving their claims with policyholders as quickly as they can. To that end, by the end of October, just three weeks after landfall for Milton, we had sold approximately a quarter of all of the assigned vehicles we would ultimately receive from both Helene and Milton. In fact, according to one third-party source, three out of every four catastrophic units sold in Florida during the month of October were sold on Copart's auction platform, reflecting both our presence as well as the speed of our execution. This time around, our proactive storm preparation was marked by three pillars. First, the dedicated owned storage capacity that we hold in reserve for storms of this nature, representing nearly 2,000 acres nationwide, and approximately 1,000 acres specifically for the Helene and Milton areas alone. Second, our technology and logistics teams have deployed real-time tools that serve both our own people and our third-party towing network, as well as our own employed drivers in optimizing routing and dispatch for the rapid retrieval and movement of vehicles through our network. And finally, our industry-leading, contracted, and full-time towing and transport network, which we have steadily built up over the years, was able to respond with unprecedented speed in this instance. I’ve already had an opportunity to meet face-to-face with many of the Copart employees. But we again wanted to extend our heartfelt gratitude to the more than 1,200 folks and their families who sacrificed for days, in some cases weeks or even months at a time, to work in challenging conditions, to work long hours to assist our clients, our people, and our communities. Turning our attention to our insurance business more broadly, our insurance business grew approximately 13% for the quarter in unit volume, and when excluding the effect of catastrophic events, we grew 9% year-over-year for the quarter. Total loss frequency was certainly one of the major catalysts we experienced, with the total loss frequency for the calendar quarter ending September 30, reported by CCC at 21.7%, an increase of almost 2% year-over-year. More broadly though, we wanted to pause for a moment to reflect on longer-term industry trends. There has been a steady drumbeat in the news media and in various company announcements on accident avoidance technologies and autonomous driving rollouts over the past decade plus. Additionally, we've encountered a number of inquiries in recent days from investors and other interested parties on this subject as well. Our answer here will be especially U.S. centric, but the takeaways, I think, are broadly applicable to the markets in which we do business. We all, of course, draw inferences from our own empirical experience. The cars we drive now experience more safety technologies in the form of lane departure warning systems that buzz our steering wheels, rear cameras that we probably all use when we back up our cars nowadays. Many of us have also taken rides in autonomous taxis, within the geofence areas in which they're operating today. We think there's also insight to be derived, however, from multiple decade trends that we can observe in actual data. There are four factors I wanted to draw out today, and then a secondary consideration I wanted to offer that inform our perspective on the long-term organic growth trends in our business. The first is simply population growth. Since 1960, the population in the United States has grown at 1% compounded, which sounds like a fairly modest growth rate. However, over a time horizon of that scale, our population has almost doubled in the United States. The second consideration is vehicle miles traveled, which over that same horizon has grown at 2%. As a result, vehicle miles traveled has quadrupled from 1960 to today, which means that ultimately vehicle miles traveled, as a country grows more populous and more prosperous, as the United States has done, generally outpaces population growth alone. We're all aware of course, of the anomalous, well-documented steep decline in vehicle miles traveled in 2020 due to COVID-19. We are now above pre-pandemic peaks on this specific metric. If you were to look at a visual chart showing vehicle miles traveled over this 60-plus year period, I think you'd likely conclude that we still have several years of return-to-work tailwinds ahead of us, as more and more businesses implement those policies. The third phenomenon I want to comment on specifically is accident rates and their long-term trends downward. Over the past 30 years, the Department of Transportation has published data on police-reported crashes. There is one anomalous trend from the 2014 to 2018 period, likely marked by the proliferation of smartphones and the addictive apps that certainly afflict us all that caused accident rates to increase in certain years during that period. Nonetheless, over the decades-long horizon, we've observed a steady decline in accidents per mile driven. In fact, today versus 1990, there are approximately one-third fewer crashes and fatalities per million miles driven. However, in absolute terms, that decline has only been 8% due to offsetting effects from the growth in population and vehicle miles traveled. Safety technologies penetrate gradually into new vehicle shipments and even more gradually into the installed base of drivable vehicles. It is that fleet effect that causes the gradual decline in accidents relative to the perhaps more innovative technology deployments exhibited or implemented by OEMs today. The fourth and most important driver of our business is total loss frequency itself, which has been the key catalyst of our growth now for decades and it's grown more than fourfold since 1990. This phenomenon has exhibited a nearly monotonous increase over that period. Except for an anomaly in late 2021 and early 2022, when the pop in used car prices made total loss a relatively expensive settlement procedure for insurance companies, briefly suppressing total loss frequency. We are yet again above pre-pandemic highs on this specific metric. The long-term catalyst here is that vehicles are becoming ever more complex, in part due to the safety technologies we've discussed today, and thus more expensive to repair, rendering the repair path less attractive, while the intrinsic value of these vehicles rises via our marketplace. We find even more buyers in areas like Eastern Europe, Central and South America, Africa, and elsewhere, where their mobility needs are ultimately satisfied by our wrecked cars. The proliferation of safety technologies that drive accident frequency down, and by the way, there have been multiple rounds of these technologies over the decades, from antilock brakes in the 70s and 80s to the more sensor-driven technologies of today. But the proliferation of these technologies is not incidental to total loss frequency; it is directly causal. These technologies tend to be enabled by sensors and chips, often configured on the perimeter of vehicles, rendering them quickly and easily damaged in an accident, thus raising the cost of repair as a result. Those cars are still quite valuable to our destination markets as drivable contributors to mobility in those regions. One additional secondary driver worth mentioning today is the phenomenon of uninsured, underinsured, and under-capitalized motorists specifically. In terms of uninsured or liability-only drivers, there is a clear 30-year plus downward trend, indicating over time, in a market like the United States, that insurance coverage generally becomes more robust. However, we do observe cyclicality within that longer-term secular trend, driven in part by insurance premiums, economic health, and so forth. In the past year or two particularly, insurance premiums have generally increased at a rate outpacing other components of the consumer experience due to the natural regulatory lag in raising insurance rates. As a result, the liability-only plus uninsured motorists combined represent a greater share of the drivable fleet than they had in prior years. Once again, the long-term trend here appears to be a secular trend downwards. The upshot of everything I've discussed today is that as we look forward over five, ten, and even twenty years, our baseline expectation continues to be ongoing organic industry growth. As the trends of population growth, vehicle miles traveled, and total loss frequency most importantly more than offset the declining accident frequency as safety technologies penetrate new vehicle shipments and eventually the larger drivable fleet. We do expect perhaps more volatility from contributors such as used car prices, severe weather events, and so forth on both fronts. Therefore, we are investing accordingly to ensure that we have the physical technology and personnel capacity to serve our insurance clients under any conditions. With that, I'll hand it over to our CFO, Leah Stearns.

Thank you, Jeff. I'll begin with our first quarter sales trends. During the quarter, our global unit sales and inventory increased 12% and 6% respectively from the year-ago period, a function of growth in total loss frequency and share gains. Focusing on our U.S. business, unit growth was about 11%, reflecting fee unit growth of 11% and purchase unit growth of nearly 6%. Consignment or fee units continue to constitute the vast majority of our U.S. unit volume. Our U.S. insurance unit volume increased about 12% year-over-year and approximately 9% excluding catastrophe units. We continue to grow our volume with non-insurance sellers by leveraging our core capabilities in outdoor storage via our real estate portfolio, a strong network of logistics solutions, and a global liquid buyer base. We are also seeking to optimize the mix of non-insurance units from a profitability perspective as we continue to prune the low-value unit volume during the quarter. Our blue car business, which serves our bank and finance fleet and rental segment partners, continued its strong trend of year-over-year growth of over 20%. Our dealer sales volume, a combination of our Copart dealer services division and National Powersports Auctions, increased sales volumes by over 2% year-over-year, with CDS declining less than 1%, and NPA increasing nearly 14%. Conversely, low-value units, including charities and municipalities, declined by 4%. On a final note, our partner in the specialty equipment space, Purple Wave, has driven double-digit gross transaction value growth year-over-year for the trailing 12-month period ending October 31, which significantly outpaces industry growth in the equipment auction marketplaces they serve. This impressive growth demonstrates the value of our partnership and what it brings to the market. Overall, inventory levels in the U.S. increased over 5% and decreased by about 1% when excluding low-value and catastrophe units. Turning to our international business, we saw unit growth of nearly 16% in the quarter, including about 6% from catastrophe units due to severe floods in the UAE and Brazil, with fee units increasing about 16% in Q1, and purchased units increasing by just over 14% for the quarter. Our international business ended the quarter with inventory levels over 10% ahead of the prior year. Global average selling prices declined by less than 1% for the quarter, relative to the year-ago period. Our U.S. average selling prices continue to show resilience and are significantly outperforming the used vehicle market more broadly. While the Mannheim Used Vehicle Price Index declined by about 4% year-over-year, our U.S. insurance average selling prices declined by only 1% over the same time period and had a slight increase of about 1% sequentially; internationally, average selling prices increased nearly 7%. Turning to our financial performance, global revenue in the quarter increased to $1.15 billion, representing growth of over $126 million, or about 12%. Global service revenue increased nearly $127 million, or about 15% for the first quarter, primarily due to increased volume. U.S. service revenue grew by about 13% for the quarter, which included 2% attributable to catastrophe units, and international service revenue grew by about 30%. Global purchased vehicle sales for the first quarter decreased less than $1 million, or approximately 20 basis points, while global purchased vehicle gross profit increased by about 72% in the first quarter. In the U.S., purchased vehicle revenue was up about $9 million, or approximately 12%, while purchased vehicle gross profit increased nearly $5 million, or about 77% for the quarter. Internationally, purchased vehicle revenue decreased by nearly $10 million, or approximately 12%, while gross profit increased by $4 million, or about 67% in the first quarter. The reduction in international purchased vehicle revenue, accompanied by an increase in gross margin, was primarily driven by higher average selling prices for insurance vehicles in Germany, which transitioned from purchase contract to a consignment model, coupled with stronger purchase unit margins in the U.K. Global facility-related costs, which include facility operations, depreciation, amortization, and stock-based compensation, increased by $88 million, or about 22%. In the U.S., facility-related costs increased by $74 million, or nearly 22%. During the quarter, we recognized $29 million in incremental costs associated with Hurricanes Helene and Milton. This reflects non-capitalized costs associated with units sold in the quarter, which is a change from our past catastrophe financial disclosures. There remain $18 million in costs that were incurred and are currently capitalized on the balance sheet. These will be recognized as the remaining catastrophe units are sold. Excluding the costs associated with the hurricanes, facility-related costs per unit increased by about 4% from the prior year period. This normalized increase in per unit cost reflects our ongoing investments in expanded operational capacity to support our continued growth. International facility-related costs were up $14 million, an increase of nearly 24%, or approximately 7% on a per unit basis. The increase in per unit costs was primarily due to growth in headcount to support our business in the U.K. During the quarter, global gross profit was approximately $512 million, representing an increase of $48 million or about 10%, and our gross margin percentage decreased by approximately 82 basis points to 44.7% in the quarter. In the U.S., our gross profit increased to $448 million, representing an increase of over $28 million or about 7%, and gross margin decreased 260 basis points to 47.2%. Our international gross profit increased to $65 million, about a $20 million increase, or 44%, and gross margin increased over 740 basis points to 32.3% in the quarter. Turning to our general and administrative expenditures, which were $106 million in the quarter, this increase of $37 million reflects growth across the investments we have made into growing our specialty equipment sales team, which covers both a geographic and sector-specific coverage perspective. We expect to generate meaningful growth in specialty equipment gross transaction value over the next 12 to 24 months as a direct result of this investment. In addition, the investments we're making in our platform services teams and systems, which include our legal compliance, technology, and people and culture teams, have continued with support from third-parties. We would expect these expenses to partially recede over the next 12 months and believe the business will be well positioned to generate strong operating leverage in the future. As a result, first quarter GAAP operating income increased by about 3% to over $406 million, which includes a modest headwind from the impact of Hurricanes Helene and Milton. Finally, first quarter GAAP net income increased by about 9% to over $362 million or $0.37 per diluted common share. During the quarter, we did benefit from over $13 million of incremental interest income, as we actively invested our cash into treasury securities, and for the quarter our tax rate was 20%. Turning to our capital structure, as of the end of October, we had over $4.9 billion of liquidity, which is comprised of nearly $3.7 billion in cash and our capacity under a revolving credit facility. For the quarter, we generated free cash flow of about $246 million, reflecting operating cash flow generation of $482 million and capital investments of about $237 million. Our strong performance in responding to the hurricanes during the quarter was directly attributable to the investments we've made in our teams, catastrophe land portfolio, logistics solutions, and technology platforms. We expect to prioritize the deployment of capital into these areas as we strive to continuously improve upon our service levels on behalf of our customers. And with that, Jeff and I would be happy to take some questions.

Great. Thank you. Our first question here is from Bob Labick from CJS Securities. Please go ahead.

Thanks. Good afternoon, and thanks for taking our questions.

Hi, Bob.

I wanted to follow up on your earlier discussion on total loss frequency and salvage trends. I think you said 21.7% is roughly where total loss frequency is, so it's obviously really returned and gotten high. You've mentioned on prior calls that this is obviously a combination of some of your customers, insurance companies, well above that and then therefore some are below that as well. So I was wondering if you could tell us some of the characteristics of the insurance companies that are at the higher end of that or at the lower end. Are they, you know, the big ones are higher and small ones are lower? Is it tech-savvy versus old school? How should we think about that? And then maybe more importantly, what are the reasons a company would have a lower total loss frequency? Is that intentional or maybe just…? I'll stop there.

Got it. Bob, a very fair question, and one for which there isn't a tidy one-paragraph answer. The reality is if you even took one insurance carrier and compared them regionally against themselves, I think you'd find meaningful variation even within a given company. Broadly speaking, I think you highlighted a couple of axes on which our insurance clients can vary, including their book of business. Where there are certain types of cars, certainly high-end luxury automobiles, for which some policyholders are less open-minded about retaining a heavily damaged and now heavily repaired vehicle after the fact. So for customer service accommodation reasons, sometimes those cars are totaled more readily than they otherwise would be. In terms of total loss practices, I think that some of the variations we'll see are literally the decision-making criteria. So at one end of the spectrum, you'll have folks who if anything, still have the statutory mindset, for lack of a better expression, which is to say that in certain states, if damage exceeds X percent of the intact value of the car, by statute, a carrier must offer the policyholder a total loss, at least as an option. And so, some carriers to this day still adopt that 75% threshold or whatever arbitrary threshold for the repair estimate divided by the intact value of the car to determine the absolute line above which all cars are totaled and below which none of the cars are totaled. Others are adopting a more like individual underwriting, so to speak, on an individual claim. So a claim comes in, what is the repair cost for this claim? How long will it take? What will the rental charges be on this repair, while it's in the shop? How much can we generate for that car at Copart instead? And then make an individual economic decision? Every carrier is somewhere on that spectrum. But as you noted, there's a huge dispersion among insurance carriers today, and we certainly provide them with a number of tools to help them make that decision better and help them make that decision faster. I think we've made strides in that regard, but certainly with many years of progress still to come.

Okay. Great. And then just one other question for me. Obviously, continued nice success with the blue car initiative there with the reduction, the current reduction in off-lease vehicles, which I know you don't participate in really, but how does it impact the supply, if at all, of from your blue car customers? Because there's less younger cars kind of going into the reconditioning market. Is this impacting the total loss frequency in the blue car area versus just the regular salvage cars, or have you seen any impact thus far? Are you expecting any over the next couple of quarters?

I'll take that one, Bob. Just in terms of how we see off-lease volumes impact our non-insurance business, it's more impactful to our CDS business, our dealer services. It's just the overall volume impact to the wholesale market and how that can influence pricing and unit availability. It's less impactful from a blue car perspective because, again, remember many of those blue car units still have some level of damage. And increasingly, we're working towards being close to having lower damaged vehicles flowing through blue car. But the off-lease units are more impacting the overall unit volume within the wholesale market as a whole, and that can impact pricing and availability for the broader dealer wholesale space.

Bob, I'd say for our business off-lease volume is not a specific catalyst; it's just one contributor to the supply and demand dynamics for new and used vehicles overall. So it perhaps is somewhat softening used vehicle supply, but that's one variable amidst a large range of them that influence those used car prices.

Okay. Super, thank you very much. I'll jump back in queue.

Our next question is from Chris Bottiglieri from BNP Paribas. Please go ahead.

Hi guys, thanks for taking the question. Jeff, two for you. The first one I want to ask about is following up the question from the last call on insurance, uninsured motorists. I was wondering what you've historically seen when there have been changes like cat events. We have large hurricanes. On one hand, you think the higher insurance costs afterward could be problematic for insurance participation; on the other hand, it might serve as a stark reminder that you need comprehensive insurance, because your losses go up when there are major catastrophes. So I’m just curious if you noticed an impact in the past?

Chris, I'd say the data we've seen, and I was going to give you the citation here as well, it's from I think the Insurance Institute, which has tracked uninsured motorists back to call it the late 1980s plus or minus an annual figure. That annual figure would be for the country overall. There are other sources from which we derive liability coverage as well. I'd say given the nationwide nature of the data, trying to find that finely parsed question as to whether Hurricane Sandy led to changes in the Northeast or Ian and Milton and Helene caused changes in Florida, Harvey and Texas—I don't think we can quite see that in the data. When I look at 2017, for example, with Hurricane Harvey being a major event, there's not per se an attributable change to the uninsured motorist population then.

Yes. Okay, that makes sense. It's tough. All right, a similar question that's probably equally hard to answer and ask anyway, if you go back to the Trump tariff, I know you don't have any direct impact, but I was just curious if you saw any noticeable impact on your business from the Trump tariff regime in '18 and '19? Did you see impacts on ASP or total loss rates or anything else?

Not one we could isolate, no. And I think even the nature of your question is probably looking forward, what it means for our business. There are certainly elements of this that are unknown. I would say that most of the countries, I think, which the administration has those tariffs in mind, China, for example, are not per se meaningful importers of cars to the United States, nor are they particularly meaningful export markets for Copart either. So could we face some contradictory effects here in our own business? You can imagine scenarios in which the value of the cars we sell are certainly higher because they are already landed on U.S. shores and so they're now competing against vehicles or parts from overseas that may now face new tariffs. You could also imagine a scenario in which it causes used car values to be higher than they otherwise would be, which could suppress some of the demand for our services relative to where it otherwise would be. How that all plays out over the course of the next 12 months, the next four years—I don't think we know precisely, but I would say the last time around there was not a meaningful disruption to the business.

Got you. Okay, thank you.

Our next question is from Bret Jordan from Jefferies. Please go ahead.

Hi, good morning. Good evening, I guess. A question on the G&A, Leah, I think you said a lot of that $36 million was specialty sales team growth that might recede over the next 12 months. In the shorter term, do you expect to continue to build that up as you're focusing outside, into the incremental markets outside of salvage, or are we sort of at a G&A spend level that you see flatlining?

We'll be disciplined in terms of when we make those investments. Specifically, attributable to your point around the specialty sales team expansion, we're being opportunistic. Therefore, to the extent that we find the right sales team members, we will bring them on board. We have targeted areas that we're focusing on initially, but if there are opportunistic hires that we can make that make sense for us, we certainly will pursue that. That G&A investment that we've made—we've basically doubled the headcount in our sales team since the acquisition. It's a fairly sizable increase. We're likely to digest that for a period of time, but I don't want to take anything off the table and assume that we won't be pursuing hires to the extent that we find the right folks.

Okay. And then Jeff, you mentioned that three out of four catastrophic cars in Florida were going via Copart. I guess, how does that compare to your market share in Florida? Is it an example that you are just cross-collecting and processing cars faster and they're languishing on competitors' lots? You know, sort of, how does that three out of four cars…?

Yes, I think that’s probably speculation I’m not prepared to undertake at the moment. But I think it reflects our market presence there and our speed. So I think our ability to process cars, the time both retrieved and have the salvage titles issued is critical. To be fair, Florida is one of the more efficient states among the 50 in terms of how quickly they issue salvage titles back to us. So it’s a function of all of those dynamics. We do perceive a competitive advantage in terms of how quickly we respond to catastrophic events.

Is Title Express playing a role in that salvage title, or is it just the state being more cooperative than others?

It can. As you may recall, we're now managing the titles for approximately 1 million vehicles per year, so now it's a sizable portion of all of the titles processed on behalf of insurance carriers. The salvage title issuance is the speed with which the state responds to us once we submit the original title. Our Title Express team can help determine how quickly we retrieve that original title. Their ability to do so does yield a competitive advantage. Their ability to do so quickly yields an advantage in Florida and elsewhere.

Thank you.

Thanks, Bret.

Next question is from Alice Wycklendt from Baird. Please go ahead.

Hi guys, thanks for taking my question. I think maybe the off-lease discussion kind of touched on this a little bit, but wanted to just hit on the dealer services side again. I think you said it was down just under 1%. Can you confirm that? I have that number right. And then if that's the case, maybe a little bit more detail about what you're seeing in that market, as it seems like a slowdown from the prior four-quarter trend?

So Alice, I think what we noticed in the first quarter was just a pause in September, with slightly lower volumes related to some specific accounts. However, we saw October come back. So I don't think it's a headwind that will persist. We are obviously watching that closely. Generally speaking, the wholesale space was a bit soft in September, correlating with what we observed in the broader market.

Thanks, Alice.

Next question is from Jash Patwa from JPMorgan. Please go ahead.

Hi. Thanks for taking my questions. I wanted to follow up on your comments regarding the shift towards consignment models or model units in Germany. I am curious if you could elaborate on what you're seeing in the market there and whether we are arriving at a turning point with a broader shift towards consignment-based units from the insurance carriers there?

Jash, appreciate the question. I think as you probably know, if you followed Copart for a while, when we enter new markets and seller segments. For example, in the U.K., when we first launched our business, we were largely a principal shop; we'd buy cars from insurance carriers. As we proved to the marketplace that we had a liquid auction platform, and that in fact, sellers could achieve better results by letting it ride, so to speak, by selling the cars at Copart auctions, we invariably migrated them over time to a pure auction arrangement. That is now true in the U.K. In the U.S., the example would be there are certain cars we once would've bought from certain institutional sellers like charities that, over time again eventually migrate to an auction format instead. In Germany, the journey has been much the same as you might imagine. All of these progressions are gradual, so it’s not an overnight snapping of the fingers. But that's certainly the direction in which we want to move the business and where the business should be going as well, right? It's the right economic outcome for us and clients to be on the same side of the table rooting for the same outcomes. This is the destination we want to achieve. So we have made progress, though there's still room to go in that respect.

Understood. That's very helpful. I also noticed an uptick in CapEx spend relative to the run rate over the past couple of years. Could you share any details around the nature of these investments, and if we should expect a similar run rate going forward? Just any granularity around the cost pockets, whether it's primarily land-oriented or any other investments that you're making?

I think it's fair to say in this period and virtually any historical period, capital expenditures for Copart will largely be focused on land development and technology. These expenditures are reflective of immediate needs and growth expectations as well. I wouldn't read a whole lot into quarter-to-quarter variations. You might imagine there are facilities that we have diligence and have been pursuing, negotiating for months, in some cases years, and in some cases decades, that finally come to fruition. We don’t necessarily schedule them, but rather buy the land when we can—being it land we've already leased, or land we can immediately use, or raw land that we subsequently have to develop before utilizing it. All of these factors are folded into that one number. It’s hard to read into it too much. However, we are delighted to invest in land, capacity, and technology. We think these investments equip us to serve our insurance clients, as I noted at the beginning of the call, to support their growth and to manage industry volatility over time, which requires us to invest more capital, always thoughtfully and diligently. But we are glad to do it because we believe it's necessary to serve our clients.

Thanks for all the color. Good luck.

Thank you.

This concludes the question-and-answer session. I'd like to turn the floor back to CEO Jeff Liaw for any closing comments.

Yes, thanks for joining us. We'll talk to you next quarter. Have a good afternoon.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you again for your participation.