COPART INC Q2 FY2026 earnings call

• Insurance business: Global insurance units declined 9% or 4% excluding catastrophes, U.S. insurance units declined 10.7% or 4.8% excluding catastrophes, total loss frequency continues to rise, U.S. insurance ASPs increased 6% year-over-year excluding catastrophes, cycle times are critical drivers of economic value and policyholder satisfaction, operates largest tow network, Title Express is largest platform for obtaining loan payoff balances. - AI: Deployed at scale across enterprise, turbocharging productivity, launched total loss decision tool, respects privacy and regulatory considerations. - Financial results: Leah Stearns walked through consolidated, U.S. and International segment financials, Copart in strong liquidity position with $6.4 billion liquidity, repurchased over 13 million shares for over $500 million year-to-date.

Consolidated revenue declined 3.6% year-over-year to $1.12 billion, excluding CAT it increased 1.3%. Service revenue declined 4% and purchased vehicle sales decreased 1.4%. U.S. segment total units declined 9.5% or 4.5% excluding CAT and direct buy, insurance volumes decreased 10.7% or 4.8% excluding CAT, dealer services unit growth was 5%, commercial consignment units declined 11.8%, fleet and bank finance seller volume grew double-digit. U.S. total revenue declined 5.5% but was flat excluding prior year CAT events, insurance ASPs increased 6% or 9% excluding CAT, noninsurance ASPs increased 2%, gross profit decreased 7.2% to $430 million or 1.6% excluding CAT. International segment units declined less than 1% or grew 1% excluding prior year CAT events, insurance units decreased 2.6% or 1% excluding CAT, noninsurance units increased 9.1%, revenue increased 6.1% or 7.7% excluding CAT to $200 million including favorable FX impact, insurance ASPs rose 9%, gross profit grew 0.9%, operating income was $47.2 million with 23.6% operating margin.

• No specific upward/downward revision mentioned, focus on continued disciplined capital allocation, share repurchases as a way to distribute capital back to shareholders, growth in noninsurance and view on insurance cyclical trends. - Anticipate continuing to invest in portfolio on disciplined basis for land capacity needs.

Q: Bob Labick asked about macro factors impacting industry volumes and what to watch for growth.

A: Jeff Liaw discussed auto insurance cyclicality, rate increases, and carriers' potential reinvestment in growth.

Q: Craig Kennison asked about land capacity needs and AI disruption.

A: Leah Stearns and Jeff Liaw talked about disciplined land investment and Copart's moats including physical capacity, buyer base, platform, and regulatory knowledge.

Q: Bret Jordan asked about market share dynamics and CDS.

A: Jeffrey Liaw discussed market share due to insurance industry growth rates and Leah Stearns said CDS had 5% unit volume growth.

Q: John Healy asked about accident frequency and capital allocation.

A: Jeffrey Liaw talked about accident frequency trends and capital allocation tools.

Q: Jeff Lick asked about next year's changes and share buybacks.

A: Jeffrey Liaw said catalysts don't change long-term trajectory and share buybacks based on valuation multiples and capital return.

Q: Jash Patwa asked about uninsured customers and heavy equipment expansion.

A: Leah Stearns said lower value units have other disposal avenues and Jeffrey Liaw talked about heavy equipment challenges and M&A approach.