Copart, Inc. (NASDAQ:CPRT) Q3 2025 Earnings Call Transcript

Copart, Inc. (NASDAQ:CPRT) Q3 2025 Earnings Call Transcript May 22, 2025

Operator: Please standby. Good day, everyone, and welcome to the Copart, Inc. Third 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 in 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 will now turn the call over to the company’s CEO, Jeff Liaw. Welcome, and thank you for joining us. I’ll begin with some remarks on our insurance business, including comments about our preparation for the 2025 cat season.

Jeff Liaw: Before passing it to Leah to describe the results of our financial performance for the quarter. Starting with our insurance business, our global insurance volume remained relatively flat year over year with a nominal decline of 0.3% globally in unit sales and 0.9% in the United States. Accounting for the extra business day of leap year 2024, global insurance and US insurance units sold grew by 1.3% and 0.6%, respectively. At the same time, total loss frequency continues to rise, as it has throughout the vast majority of the history of our industry. In the United States, total loss frequency reached 22.8% in the first calendar quarter of 2025, up 100 basis points or thereabouts in comparison to last year. And while individual quarters can fluctuate, and from time to time, we observe even seasonal effects, the underlying drivers of total loss frequency remain quite consistent over time.

First, the economics of vehicle repairs become less economically attractive to our client base, the insurance industry, with increasing vehicle complexity, rising parts prices, rising labor rates, storage fees, rental car expenses as well. At the same time, on the other side of the ledger, the economics of total loss become more attractive over time. For emerging economies around the world, our salvaged vehicles are an essential source of mobility for them. Copart’s auction technology and our ecosystem of sellers and members is uniquely well suited to finding the highest and best use for every vehicle we touch. In anticipating a question about why nominal insurance volumes haven’t kept pace with what appears to be rising total loss frequency, we’d offer a couple of notes.

First, the precision of total loss frequency measures do vary or does vary. They vary in nature of the calculation. Is to assess what portion of the claims in any individual quarter are ultimately resolved to be a total loss in the end. Meaning some figures are even revised after the fact for historical periods. And, notably, we observed that there are cyclical forces that work as well, including an increase in the rate of uninsured and underinsured drivers. According to the Insurance Research Council, they observed meaningful increases in both over the course of the past four years, and we would know cyclical trends over the decades in terms of the rate of uninsured and underinsured drivers. What that means in practice is that drivers with coverage of that type may never bring their vehicles into the traditional insurance claims settlement pathway in the first place.

We would expect over time, as has been proven over the decades, that these typical forces will reverse. At some point as well. I wanted to turn my attention to the 2025 storm season. Meteorologists and experts have released a number of forecasts for how they expect the 2025 storm season to unfold. Noting that 2024 was an active season itself. Most would expect, based on above-average oceanic temperatures, that this storm season could well be an active one as well, perhaps as active as 2024. In anticipation of these types of events, we continue to invest in real estate infrastructure, technology, our people, and other aspects of operational readiness. Our preparation is not an ad hoc spring event, but in fact a year-round exercise for us as a company.

One tangible example is our acquisition of Hall Ranch, a property located in South Florida, which offers nearly 400 usable acres of vehicle storage for a storm. With this addition, we now have the physical footprint to handle a storm more than three times the size of the largest Florida storms on record in Copart history. In closing, we are excited to continue to invest our time and resources in growing and enhancing our capabilities both for storms and for our day-to-day business. We’ll invest in our physical storage capacity, our technology platform, our people, and our seller member ecosystem. Each of which is essential to delivering superior auction outcomes to our sellers and a superior purchasing experience for our members. With that, I’ll turn it over to our CFO, Leah Stearns, and we’ll both take your questions thereafter.

Leah Stearns: Thank you, Jeff. I’ll begin with our third quarter sales trends. During the quarter, our global unit sales increased 1%, which reflects the modest headwind from the prior period being leap year. On a per business day basis, our global unit sales increased over 2%. Consignment or fee units continue to constitute most of our global unit volume. In our U.S. Segment, unit sales were flat reflecting flat fee unit growth, and purchase unit growth. Nearly 7%. Our US insurance unit volume decreased close to 1% year over year and decreased approximately 2%. We continue to see non-insurance U.S. unit volume growth outpaced that of our US insurance business. BlueCar, which services our bank, rental, and fleet partners, continues its strong trend with year-over-year growth of almost 14%.

Dealer sales volume consisting of Copart dealer services and National Power Sport auctions grew over 3% year over year. Low-value units increased just over 4%. Turning to our international segment. We saw unit sales growth of 6% in the quarter, about 5% excluding cat units. With fee units increasing 9% and purchase units decreasing 13% for the quarter. Our purchase units continued to decline as certain insurance customers shift from purchase contracts to consigning units. On a final note, we have observed softness in the heavy equipment auction space due in part to widespread uncertainty regarding infrastructure spending and tariffs. Our partner in the equipment space, Purple Wave, nevertheless maintained flat GTV year over year for the trailing twelve months ending April 30th.

Our global ASPs increased by approximately 3% for the quarter, compared to the year-ago period. Our US insurance ASPs increased over 2% over the same period, and our international segment insurance ASPs increased approximately 5%. We believe our options are outperforming other platforms on delivered ASPs to our sellers. Attributable to the active participation of our global member base as well as our unique digital auction platform. We have not observed any hesitation from our buyers which we would attribute to proposed or enacted tariffs. Our global inventory decreased nearly 10% from the year-ago period. Overall inventory levels in the US decreased approximately 11%. There are three main drivers of the inventory decline. Lower assignments, faster cycle times, and the reduction in low-value unit aged inventory.

As we’ve noted previously, year-over-year changes in inventory levels can be a direct indicator of prospective unit sales trends. The trends we are observing in our inventory levels reflect the cyclical impacts associated with an increasing share of and non-insured motorists and varying growth trajectories amongst insurance carriers. We continue to believe that the secular trends in favor of rising total loss frequency will drive our long-term growth. In addition, our continuous focus on reducing our operational cycle times has reduced inventory levels. For example, deploying our Title Express solution to a number of new carriers has reduced in-yard cycle times, and physical inventory. Our international business ended the quarter with inventory levels flat from the prior year.

In Turning to our financial performance. Global revenue increased to $1.2 billion. Global service revenue increased nearly $88 million or over 9% from the third quarter of 2024 due to increased international volume, and overall higher revenue per unit. US service revenue grew by 8% for the quarter and 7% when excluding cat units. And international service revenue grew by about 18%. Global purchased vehicle sales for the third quarter decreased approximately 2%. While global purchase vehicle gross profit decreased 60% in the third quarter. In the US, purchase vehicle revenue was up about $20 million or 22%, while purchased vehicle gross profit decreased $13 million or about 187% in the quarter. This includes the impact of a $12 million out-of-period adjustment which was related to the cost of vehicles sold in Q1 and Q2 of this year.

Year to date, our US purchase unit margins were just over 6%. Internationally, purchase vehicle revenue decreased by over $23 million or 25%, and gross profit increased by over $2 million or about 22% in the third quarter. The reduction in international purchase vehicle revenue accompanied by an increase in gross margin continues to be driven by higher ASP insurance vehicles in Germany, which have transitioned from a purchase contract to a consignment model. As well as stronger purchase unit margins in the UK. Global facility-related costs which includes facility operations, depreciation and amortization, and stock-based compensation increased $51 million or about 12%. And about 10% pro forma if you reflect cap costs. In the US, facility-related costs increased $43 million or nearly 12%.

During the quarter, we recognized $6 million in incremental costs associated with hurricane Sweeny and Milton. Reflects the recognition of deferred expenses associated with cat units sold during the period. Excluding the costs associated with the hurricanes, facility-related costs per unit increased about 10% from the prior year. On a per unit basis reflects our ongoing investments and expanded operational capacity to support our continued growth. International facility-related costs were up almost $8 million, an increase of nearly 11% or less than 5% on a per unit basis. An increase of $27 million or about 5% and our gross profit, sorry, our gross margin percentage was 46% for the quarter. In the US, our gross profit was approximately $480 million, an increase of about 3%.

And gross margin was about 48% for the quarter. Our international gross profit was approximately $73 million, an increase of about 26%. And our gross margin was about 35% in the quarter. Third quarter GAAP operating income increased over 3% to dollars, which reflects the growth and gross profit in our general administrative expenditures of $101 million, which are up about $12 million year over year. Finally, third quarter GAAP net income increased by over 6% to $407 million or $0.42 per diluted common share. During the quarter, we benefited from an increase of nearly $7 million from interest income, as we have actively invested our cash into treasury securities. For the quarter, our tax rate was a little over 19%. During the quarter, global gross profit was approximately $552 million.

Turning to our capital structure. As of the end of April, we had over $5.6 billion of liquidity, which is comprised of nearly $4.4 billion in cash and our capacity under a revolving credit facility of approximately $1.3 billion. With that, Jeff and I would be happy to take some questions.

Operator: And our first question comes from the line of Bob Labick with CJS Securities.

Q&A Session

Bob Labick: Great. Good afternoon. Thanks for taking our questions.

Jeff Liaw: Hey, Bob. Hi. So obviously, you guys have a tremendous asset in your land and you keep purchasing more and it’s a clear benefit to your insurance, you know, salvage customers, which is, you know, why you keep buying it. I was hoping you could talk about how do you think about this, you know, land asset? You know, are there any current or future benefits from this land for your, you know, your growing BlueCar or whole car customers, particularly with the shift of, you know, to digital for whole car auctions going on?

Jeff Liaw: Thanks, Bob. Dave, great question. We think that physical storage and logistics are essential to our value proposition for many sellers, insurance companies as well as the BlueCar, that finance companies, rental car companies, corporate fleets, and the like. In many instances, physical storage is a necessity. We, of course, as you know, in the past have also developed products for purely virtual sales. But as it turns out, physical storage, certainly in the case of insurance when salvaged titles and processing through state’s DMV is a necessary step as well. Proves essential there, but also in many cases for the other types of sellers you described. So we view it as an essential portion of our service offering. Certainly, the digital product platform you described as well as ePolice so, but it is a two-pronged approach to serving that universe.

I’d also, to perhaps add some further context, would say that that storage is increasingly difficult to procure. Anywhere in the United States, anywhere in any of the countries we serve, frankly. So we view it also as we view it as our responsibility in being stewards of the industry as well to make sure that we can continue to support insurance companies and the other companies you described, as well to make sure that we can continue to offer the service that we do for decades and for generations to come.

Bob Labick: Okay. Great. And then you touched on this in your opening remarks a little bit and last call, but could you just maybe elaborate a little further on the shift of insured, how that’s typically played out over, you know, less collision insurance, insured motorists. And previous cycles and where you see it, you know, impacting volumes in the near or medium term?

Jeff Liaw: Yes. I think, Bob, it’s unfortunately, this exercise is necessarily precise. So we have pieced together a number of different sources, including the insurance counsel we described in the prepared remarks as well as other sources for registered vehicles for the types of coverage folks have. So whether it’s collision, liability, comprehensive, and so forth, we can derive then the portion of the registered vehicle fleet that has or doesn’t have insurance and to what extent they’re underinsured. As well. So we see cyclicality in it. It won’t surprise you that around the time of the global financial crisis and Kuwait in 2009, there is a local trough in insurance coverage. I think it’s not a surprise that we’re experiencing that again now.

As I think you know, Bob, from following the insurance industry as well, though the rest of the world experienced very meaningful inflation in 2021, 2022, in many cases, insurance rates lagged that inflation. Because the insurance carriers in turn had to obtain regulatory approval to make modifications to their books of business. And so on the tail end of inflation with an already stressed consumer in some cases, I think we are seeing and they are seeing folks with higher deductibles or opting for liability on the coverage or in some cases, despite statutory requirements, going without insurance altogether. So we think that’s a cyclical phenomenon, at least it has been for the past 20, 30 years for long we can see the data. It does go up and down.

Over time.

Bob Labick: Great. Thank you very much.

Jeff Liaw: Thanks, Paul.

Operator: Thank you. Our next question comes from the line of Craig Kennison with Baird. Proceed with your question.

Craig Kennison: Hey, good afternoon. Thanks for taking our question as well. Wanted to ask about Purple Wave. I think you’re about a year into that partnership, and I’m curious what you’ve learned so far and how you expect to invest in that business going forward, understanding that at this moment, it’s not growing.

Jeff Liaw: Yes. Craig, I think it’s a very fair question. We were, as you know, the original thesis here is that Purple Wave for really for any kind of M and A activity we pursue, NPA now seven years ago, eight years ago or so, when we made that investment as well, the two-pronged tests that we always subject any investment like this to is one, do we like it fundamentally as an investment in and of itself? Meaning if this were simply a growth equity or control equity acquisition, would we like the nature of the risk-adjusted expected returns from the business itself? And then secondarily, we asked the question to what extent does this help Copart’s core business, and then you start to evaluate this strategic overlap to what extent Copart’s capabilities can help the business, to what extent can the business capabilities help Copart as it stands now.

And for Boiv, I think the logic for the Purple Wave transaction was very much on both fronts. It was that we affirmatively liked the investment on its own merits and we also thought it was beneficial to Copart. We are even just day to day a huge purveyor of equipment of construction, agricultural equipment, heavy-duty trucks, and the like, the expertise that they brought. Was meaningful to us and certainly the expertise that we bring in the form of managing large physical storage facilities, large liquid digital auctions, and so forth. Made for a very good fit. And so I think it’s probably not quite fair to say that it’s flat. I think they are operating in a very uncertain environment courtesy of the tariffs as you know. So there are a lot of folks in a lot of these businesses who are awaiting more certainty on both infrastructure spending as well as tariffs.

To decide what to do with their equipment, whether to buy, to sell, etcetera. So I think they’re facing some inertia, which other public companies I think have certainly seen as well in their results in terms of the volume of activity. In the heavy equipment arena.

Craig Kennison: And you mentioned tariffs. Are you thinking about the very broad implications of trade policy as it relates to your business? As it currently stands knowing that it’s been changing a little bit?

Jeff Liaw: Yes. I think that’s I think that it’s an understatement, Craig. It is a certainly very dynamic picture, and I’d say that is probably first and foremost. The most important observation here is that it has created meaningful uncertainty for our clients, the insurance industry, and otherwise. We now are facing or the industry broadly is facing tariffs on parts. The parts industry, I think, 2024 day would say the two twenty billion dollars industry or thereabouts for both new and replacement parts. The vast majority of which come from a half dozen countries. Canada, Mexico, China, South Korea, Japan, Germany, I think account for the vast majority of those parts. Virtually all of those parts as it stands now are facing tariffs to some extent.

Which increases the cost of the repair for the insurance industry. So for any given claim, they’re evaluating their choices, considering their choices, which can be to repair the car or to total it. It assuredly has made the repair path less attractive because the parts are more expensive. In some cases, the parts will be delayed. And delayed parts, of course, compromises the policyholder experience and likely extends the duration of the rental as well. That’s that side of the ledger. On Copart’s side of the ledger, when you consider the total loss, I think there are offsetting considerations there. On the one hand, if used car prices should rise and ACVs should rise because new cars become more scarce, then the cost of a total loss indemnity may be higher.

But by the same token, our salvage returns will be higher as well. So I think the best analogy we can draw is to the 2021 or thereabouts to the semiconductor crisis you may certainly recall. That was less about parts per se. So it wasn’t all repair parts. It was a very narrow subset of the parts that go into the production of a vehicle. And in that moment, I would say, we experienced higher ASPs for the cars that we sell. Probably all else equal, we experienced a mild suppression of demand relative to where it otherwise would have been. I think today’s catalyst is probably marginally more favorable to us than the semiconductor shortage. Because it is repair parts, the vast majority of which comes from places outside of the United States. So we think the repair path will become relatively less attractive in comparison to the total loss path.

By virtue of the tariffs. That said, overwhelmingly, the conclusion is for now that there’s tremendous uncertainty. But the federal government, I think, is intending to provide guidance as to what constitutes exceptions under USMCA, you know, what counts as USMCA content for parts. So there’s still much of this picture that’s still left to be painted.

Craig Kennison: Great. Thank you. Thanks, Greg.

Operator: Thank you. And our next question comes from the line of Chris Bottiglieri with B and D. Parevos. Please proceed with your question.

Chris Bottiglieri: Thanks for taking my question. So the first one, Jeff, Copart’s taken a lot of share over the last five years you’ve been CEO. In the ten years before that, what do you currently see from a market share perspective and is there any reason why your peer could be putting higher reporting growth numbers? Like, how would you think about that?

Jeff Liaw: Martin, Chris, a very, very question. I think market share, as you might imagine, is a very complicated, very downstream metric. Right? So it is affected by things like the relative growth of individual insurance carriers that we serve. And so if on any given day we happen to be serving an insurance carrier, who’s growing faster or slower, that can affect the overall volume trends for us relative to the rest of the industry. I think we’ve gained share frankly for many years and decades before I arrived even at the company at all. So that’s a long-standing trend. And I think the drivers there won’t surprise me. We are committed to delivering the very best possible net returns to our clients by investing in the land we’ve already talked about by investing in the digital auction platform, and by making our partners, our clients, faster, more accurate, more efficient at what they do.

Talked in previous calls, I won’t drag you through all of it here, about advanced charges and how important they are to our insurance companies and the suite of tools in some cases, computer vision and artificial intelligence enabled that empower them to address those opportunity sets as well. We know that if we take care of those particular objectives, if we are exceptional along those dimensions, like our stock price, the stock price and market share will take care of itself. We know what the input variables are. We know where to invest our time, attention, and resources. And we have high confidence if we execute on those fronts that market share dynamic will take care of itself. But I think the short answer to your question is that it is more the random fluctuations and the misalignment of reporting period and so forth.

You know, we don’t line up precisely. It’s underlying insurance carrier growth trends, all of which I think are generally cyclical by nature. Right? All of those kinds of variables will move in both directions over time.

Chris Bottiglieri: Gotcha. Okay. And then bigger picture question. What sets prices in your end markets? Like, is it somehow derived off of US vehicle prices or is it derived by the local economies of your buyers? Just trying to think if, like, the tariffs primarily affect US vehicle prices. Like, you know, how does that affect what the international buyers, which might not see new car prices rise in their local markets? Like, what does that do? Kinda curious with your thoughts.

Leah Stearns: Chris, I’ll take a portion of that, and I’ll let Jeff jump in if there’s anything he wants to add. But I think what we’ve seen historically is that the arbitrage that’s available for our global buyer base because the affordability of mobility solutions locally is so out of reach that they have a significant amount of ability to maximize the value of that vehicle in an emerging market relative to what a domestic buyer would be able to. Monetize that vehicle for. And so if you look at simply just the relative price of a newer used vehicle in some of the markets like in Eastern Europe, or in Latin America. The affordability index, if you index that to what a consumer in the US would be able to achieve, is drastically more expensive.

And as a result, they default to seeking out repairable vehicles, and Copart is a key source for them to go to to find them. So the I would say the sensitivity of price don’t have a perfect answer to, but we do think that the spread between the alternative is quite dramatic and therefore we have not seen any significant impact to buyer activity bidding activity as a result of the pending or an active tariff so far.

Jeff Liaw: Chris, I’d add to that illustration with two, just consider this a stylized illustration. Or two extremes. In one case, you have a very old car very entirely destroyed for which the value is entirely the metal, maybe a few parts, maybe some precious metals from the catalytic converter or otherwise. The value of that car is largely domestic. In fact, it’s largely local. It’s unlikely this car for a few hundred dollars will move more than ten, twenty, thirty miles from the side of the Copart facility. That is a nearly entirely domestic even quasi-local asset. That is also a very, very tiny fragment of the value of Copart’s auction overall or and of our business overall. At the other extreme, consider a lightly damaged hail car or a vehicle we have consigned to us from a rental car company that is at the end of its rental fleet.

Life. That vehicle then is valuable to a host of different places in including locals, including folks in other states, including folks in Poland and Lithuania and otherwise. That vehicle then is subject to these specific substitutes available to each of those buyers. So in the US, assuredly, those buyers are now facing cars will cost more on the new market courtesy of tariffs, at least on certain a portion of the parts. For our international buyers, they, of course, will have to bid against those domestic buyers as well. So that’s to compete for that vehicle. The individual circumstances in any given country, I think we’ve tend to find that the biggest purchasing countries for Copart vehicles are fast-growing economies that don’t have local domestic auto production.

So their alternatives aren’t fantastic, where they can buy vehicles from other salvage market. They can buy cars from the UK, subject to the right hand, left hand drive problem. They can buy cars from Copart, Germany, and Spain. And there are certainly other sources of vehicles like it. But it’s a long-winded way of saying that it varies very much by car. But it’s ultimately it’s ultimately an auction. So whatever your highest use is, whatever the highest and best use is for that given vehicle, anywhere in the world, we’ll generally find it.

Chris Bottiglieri: Gotcha. Okay. You so much for the thorough explanations. Thanks, Chris.

Operator: Thank you. And our next question comes from the line of Josh Pokrzy with JPMorgan Chase and Company. Proceed with your question.

Josh Pokrzy: Hi. Good evening, and thanks for taking my questions. I was just curious about the trends in G&A spend. Typically, we’ve seen a seasonal sequential uptick in the third quarter, but this time around, the trends appear flat. Was this stability driven by the reduction of some one-time expenses related to projects you’ve alluded to previously? And is the 3Q run rate a new baseline or other additional one-time expenses that are yet to roll off? Thanks, and I have a follow-up.

Leah Stearns: Sure, Josh. I’ll take that. With respect to G&A, I would say year over year the main driver of the increase was attributable to our continued investment in the sales force within Purple Wave. The rest was really just some minor investments across our platform services to support our global organization. Don’t necessarily look to that or provide guidance in terms of whether or not that is a steady state number. We make investments from time to time in projects and solutions that we think and believe will drive greater operating leverage for the business in the future. So I wouldn’t point you to that as being a run rate, but each individual investment that we do make into G&A, we do take an investment mindset approach to it and ensure that there are tangible returns we will achieve whether it’s through cost reduction efficiency or other opportunities for the business. More generally.

Josh Pokrzy: Understood. That’s helpful. And just as a follow-up, reflecting on a few quarters back, based on Jeff’s commentary, I was under the impression that despite the increasing number of underinsured and uninsured motorists on the road, these vehicles would eventually end up at Copart Auctions as it seemed to be the most economically efficient outcome. However, based on your comments, today, it appears that’s not the case. Could you provide some insight into the channels that are effectively facilitating the scrappage or potentially the remarketing of these vehicles?

Jeff Liaw: Yeah. I think that’s a fair question. I think the vehicles in many cases could or should still end up back at Copart via our cash for cars business. Which purchases vehicles directly from consumers. Our Copart dealer services business, I think, in some cases, the policyholders will also ultimately monetize their vehicles by trading in even a damaged car to a local dealer, independent franchise, or otherwise. So we do have multiple shots on goal, so to speak, to earn the right to sell that car. I do and we continue to argue that we are the right liquid marketplace to dispose of that vehicle wherever it ends up. It’s certainly less efficient. But that it wouldn’t be an immediate consignment if you Josh, god forbid, were in a car accident tomorrow and notified your carrier right away.

We might be selling that car two weeks from now, you know, depending on the state in which you live. In some cases, other states take far longer than that. But the point is that there’s an immediacy to that assignment that simply won’t exist if that vehicle does not enter the traditional insurance company phone, so to speak.

Josh Pokrzy: Thanks a lot for that, Jeff. Appreciate it. If I could just sneak one more in, there are several potential legislative actions being considered in various states. That could potentially gap storage fees, which I believe would be beneficial for Copart. And on the other hand, there’s also legislation actions being considered that could raise the threshold for total losses, which might be a downside. Could you walk us through how these changes, if applied on a broader basis, could impact Copart’s business model? Thank you.

Jeff Liaw: Yeah. I think your observation about storage is likely accurate. That the I think the legislation you have in mind would cap what inbound to facilities probably unaffiliated repair shops can charge insurance companies for storing vehicles. In that case, I think that benefits the insurance industry more broadly. I know, naturally, we, in some sense, we compete against all alternatives for a car. We compete against it being sold elsewhere. We compete against the car being repaired. But in this case, reducing the cost of storage, I think, would affirmatively benefit the insurance companies. We likely would equip them with the tools to still move quickly to resolve those claims as fast as possible. There’s a lot of value in shortening the intervals by which the insurance companies manage their claims.

To your second question about the total loss thresholds, in general, I think our belief is that our principled approach to this is that the insurance companies should make the best total of decisions for their business. In many cases, we think they aren’t totaling enough vehicles. Right, for a host of reasons that we’ve talked about on prior calls. Legislation in the past has generally been such that the insurance companies are required to total a car above a certain repair threshold. But that’s, I think, what you’re referring to in this case. In most cases, insurance companies should economically total cars at lower thresholds than the statutorily required thresholds. So we think that left this on devices that should not have a huge distortion on the decisions that an insurance company may make.

If on the other hand, you had mandatory repair legislation which by and large did not exist in the United States. As the insurance companies were required to repair a vehicle for a certain percentage threshold that could alter the picture somewhat. We think the insurance industry is certainly motivated enough to want to preserve discretion to make that decision on their own as opposed to allowing the states to dictate that decision for them. So we don’t think that’s a meaningful distortion, but we certainly do track that aspect of our business.

Josh Pokrzy: Thanks a lot, Jeff and Leah. Appreciate your insights, and good luck.

Operator: Great. Thank you, Josh.

Operator: Thank you. And with that, there are no further questions at this time. I’d like to pass the call back to Jeff Liaw for closing remarks.

Jeff Liaw: Great. Thank you, everybody. We’ll talk to you next quarter.

Operator: Thank you. And with that, this does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time.