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Copart, Inc. (CPRT) Q3 2021 Earnings Call Transcript

By Motley Fool Transcribers - May 20, 2021 at 4:30PM

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CPRT earnings call for the period ending April 30, 2021.

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Copart, Inc. (CPRT 1.85%)
Q3 2021 Earnings Call
May 20, 2021, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day, everyone and welcome to the Copart Incorporated Third Quarter Fiscal 2021 Earnings Call. Just a reminder, today's conference is being recorded. For opening remarks, I would like to turn the call over to Mr. John North, Chief Financial Officer of Copart Incorporated. Please go ahead, sir.

John North -- Chief Financial Officer

Good morning. Thanks for joining us today. During today's call, we'll discuss certain non-GAAP measures, which include adjustments to reverse the effects of certain discrete income tax items, foreign currency related gains, certain income tax benefits and payroll taxes related to accounting for stock option exercises. We provided a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures on our Investor Relations website and in our press release issued yesterday. We believe these non-GAAP measures together with our corresponding GAAP measures are relevant in analyzing our results and assessing our business trends and performance. In addition, our 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 our markets including the COVID-19 pandemic. These forward-looking statements involve substantial risks and uncertainties. For more detail on the risks associated with our business, we refer you to the section titled Risk Factors in our Annual Report on Form 10-K for the year ended July 31st, 2020 and each of our subsequent quarterly reports on Form 10-Q. Any forward-looking statements are made as of today and we have no obligation to update or revise any forward-looking statements.

So with the disclosure out of the way, I'll turn the call over to Jeff Liaw, President.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thank you, John. We're pleased to report our record financial results for the third quarter of fiscal 2021. I want to start first with -- by extending a thank you to our team in the field around the world and here at headquarters for their resilience and agility over the past 14 months. For over a year now we face the challenge of providing excellent service to our customers while keeping our people and communities safe and I'm grateful and proud for our team for having delivered on both. We take very seriously our responsibility as an essential business in keeping our roads and support infrastructure clear for the movement of people and things.

I'll start with some of the key statistics that we share each quarter and I'll close with some remarks about the future before turning it over to John for a review of the financial results specifically.

For the quarter, we experienced global unit sales increase of 3% for the quarter, with the US increase of 4.5% and an international decline of 5%. We have observed more pronounced shutdowns internationally in certain countries in which we operate and they are likewise adopting more protracted reopening plans than we're experiencing here in the US. Our insurance business specifically was slightly below the third quarter 2020 volumes, down approximately 3% but effectively flat with 2019. This is the product of lower driving activity, of course, as driving activity remains suppressed relative to the norm and also decreased claims frequency, offset by increases in total loss frequency and share gain.

Our US non-insurance business grew approximately 30% in unit volume year-over-year. This is also a reflection of strong used vehicle price -- a strong used vehicle price environment combined with our auction liquidity and sales efforts across non-insurance categories. Our dealer business, in particular, increased 26% in unit volume year-over-year compared to what we believe were significant declines for other whole car auction platforms that serve dealers. This is a reflection of the flywheel effect we've talked about on earnings calls previously. Our growing auction liquidity enables us to serve an expanding set of vehicles and then those additional vehicles, of course, further enhance our liquidity as well.

Our global inventory at the end of April increased 16% versus a year ago. That's comprised of a year-over-year increase of 21% for US inventory and a decline of 13% for international inventory, a reflection of the dynamics described a moment ago. On average selling prices, our ASPs increased worldwide 48% year-over-year for the quarter. Our ASP strength is a reflection of both market dynamics as well as our own member recruitment and -- member recruitment and retention efforts as we cultivate more buyers worldwide. We will comment more on that in a moment as well. The ASP increase is not primarily due to mix shift effects. Our insurance ASPs in the US, for example, were up more than 50% year-over-year.

And while growth in used car prices have, of course, contributed to our ASP growth, our selling price growth has far exceeded the overall used car price environment, a reflection again of our marketing and member recruitment capabilities and our broad global reach to emerging economies, who are increasingly buyers of vehicles from our markets. Our auction liquidity itself also continues to grow as we observed sequentially and year-over-year more domestic and international bidders and bids per unit, a reflection both of supply growth for us as well as our active cultivation of those buyers.

The natural questions that we would all pose would be what's the aftermath of the pandemic might be to our business. It's certainly challenging to separate signal from noise given the abundance of confounding and extreme variables at the moment. My comments will largely be US centric, but will apply by and large to the rest of our markets as well. I thought I'd take a minute to talk about some of our long-term assumptions and how they may have been affected or not by the pandemic.

First on driving activity. It does appear to be rebounding but certainly still suppressed relative to pre-pandemic levels, in particular with commuting traffic still down 25% to 30% or more based on sources like Google Maps, among others. Due to increasing vaccine availability there is certainly line of sight to reopening more fully here in the US and our other markets appear to be three to six months or thereabouts behind the reopening sequence of the US. Longer term, we continue to expect modest increases in per capita driving as we've observed over the past 50 years. Mobility remains essential for employment, education, healthcare, leisure and every other aspect of our existence. We do anticipate perhaps some increase in virtual work arrangements but offset by a shift from various forms of other mass transit in favor of driving.

Accident and claims frequency have declined during the pandemic, as you know, though with increasing severity due to higher speed driving and increase in distracted driving. Long-term, we expect a continuation of a decade-long trend to a very modest decline in accident frequency over time due to the gradual penetration of safety technologies and new car shipments, which then in turn eventually make their way to the operating fleet. We do, however, expect an increasing severity over time as well as those safety technologies also become more expensive to repair as well.

On the question of our average selling prices, I would note the longer-term trend in favor of higher ASPs, certainly there have been near term pandemic effects. But over time, say over 10 years plus, it has been demand from emerging economies for wrecked vehicles from our markets, from the US, from UK, Canada, Germany, Spain, the Middle East in Finland and elsewhere, combined with our member cultivation efforts that have driven ASP growth over time.

I'd acknowledge that we're seeing an unusual historic moment for used car valuations given the supply shortage for new cars, but we have experienced with the exception of the third quarter of last year the very beginning of the pandemic, we've now experienced year-over-year increases in prices for 17 straight quarters. So we think that there are elements of the selling prices certainly that will prove much more durable over time.

Our operating and strategic decisions are predicated on the expectation of volume recovery post pandemic as well as long-term growth post pandemic largely consistent dramatically with what we've experienced over the past 40 years. We are grateful for our strong financial performance this quarter and excited to continue investing in our customers' future and our own.

And with that, I'll turn it over to our CFO, John North.

John North -- Chief Financial Officer

Thank you, Jeff. As we mentioned, I'll make a few brief comments on our results to provide a little more color on the earlier remarks and then we'll be happy to take a few questions this morning.

Global revenue increased $184 million or 33%, including an $8 million benefit due to currency. Global service revenue increased $132 million or 27% primarily due to higher ASPs. The US service revenue grew 27% and international experienced an increase of 23%. Purchased vehicle sales increased $51 million or 87% due to higher ASPs and increased volumes. US purchased vehicle revenue was up 103% over the prior year and international grew by 64%. As a result, purchased vehicle gross profit, defined as vehicle sales less cost of vehicle sales, increased by almost $11 million overall.

Global gross profit increased by $138 million or 57% and our gross margin percentage improved by approximately 788 basis points to 52%. US margins improved from 46% to 55% and international margins increased from 32% to 37%. Both segments' margin improvement was driven primarily by higher ASPs.

Moving to G&A expenditures. Excluding stock compensation and G&A -- and depreciation expense, our spend increased $2.2 million from $37 million a year ago to $39 million in 2021. We anticipate G&A will be lumpy quarter to quarter but will continue to improve as a percentage of revenue over time as we grow. As a result, our GAAP operating income increased by 68% from $195 million to $328 million. We delivered 926 basis points of operating margin improvement due to revenue growth from strong ASPs and controlling cost.

Net interest expense decreased $0.2 million or 4% year-over-year primarily due to lapping last year's decision to draw on our revolver in the initial days of the pandemic to ensure adequate liquidity.

Q3 income tax expense was $36.7 million, at an 11.4% effective tax rate reflecting a $20 million tax benefit from the effect of certain discrete income tax items and a $5 million tax benefit on the exercise of employee stock options, both of which have been adjusted out for purposes of the non-GAAP earnings included in our earnings release. On a non-GAAP basis, our effective tax rate would have been 19%.

In summary, GAAP net income increased 95% from $147 million last year to $267 million this year. Adjusted to remove the effects of currency and the tax benefits described above, non-GAAP net income increased $89.8 million from $138 million last year to $262 million in the third quarter of '21. For the first nine months of fiscal '21 GAAP net income increased 27% from $534 million last year to $681 million this year and non-GAAP net income increased 44% from $447 million last year to $642 million this year.

Now to briefly highlight our liquidity and cash flow. As of April 30, we had $2 billion of liquidity comprised of $912 million of cash and cash equivalents and an undrawn revolving credit facility with capacity of over $1 billion. This is an increase of $434 million over July 31, 2020. Operating cash flow for the quarter increased by $75 million year-over-year to $369 million, primarily driven by stronger earnings or partially offset by working capital consumed by building consignment on inventory.

We invested $81.2 million in capital expenditures for the quarter. Approximately 95% of this amount was attributable to capacity expansion. This investment continues to ensure adequate capacity for additional business and creates a wider economic moat for potential market entrants given the difficulty in sourcing appropriately zoned facilities.

In conclusion, our conservative capital structure and strong durable cash flow enable us to continue to make decisions for the long-term interest of both our customers and our shareholders.

And with that that's the end of our prepared remarks. We're happy to take some questions.

Questions and Answers:

Operator

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

Peter Lucas -- CJS Securities -- Analyst

Yes. Hi. Good morning. It's Pete Lucas for Bob. Just wondering if you could discuss how -- if you could just talk about how increased supply demand imbalance impact auctions other than price, i.e. are cars selling faster, is less service needed, your ability to raise fees, anything you can comment there?

Jeffrey Liaw -- President and Chief Executive Officer North America

Pete, thanks for the question. I'm not sure I entirely follow, but certainly the high -- if you're talking about the strong used car price environment, I think it has helped with conversion on the margin of consigned vehicles, customer dealers, but by and large, I don't think there are any unusual effects other than what has already been reflected in price. Everything else in terms of bidding activity, of course, has been true for many years where we talk about having more domestic and international bidders and bids and bids per unit, that's been a recurring theme since before the pandemic.

Peter Lucas -- CJS Securities -- Analyst

Great. Thanks. And sticking with dealers you mentioned there, can you just kind of talk about I think you've mentioned Copart taking some significant share there. What advantages or disadvantages does Copart have? And in terms of dealer cars, are you seeing them sell disproportionately internationally or domestically or a similar mix to your overall?

Jeffrey Liaw -- President and Chief Executive Officer North America

I'd say in the first instance similar but indexed more internationally because they tend to be higher-value cars than our insurance cars. So the insurance mix will include some very low-value cars end up transacting almost locally though economically the ones that matter, of course, are the higher-end units. Those tend to go internationally as do the dealer cars as well.

In terms of the share factor you described as with all of our customers the -- what matters to them are the results in the end, what are the delivered prices that we can achieve at auction. So it's auction liquidity and prices that matter the most to dealers by far and we continue to deliver for them and thus earn the right to sell still more of their cars.

Peter Lucas -- CJS Securities -- Analyst

Great. And just one last one for me, sticking with the dealer cars. Do all your dealer cars go to a Copart location or can you sell them without bringing them to a yard? And if not, do you anticipate being able to do that in the future?

Jeffrey Liaw -- President and Chief Executive Officer North America

I think we're today not commenting long term on where our product might go. Today when a vehicle sells either before or after it is sold, it is still -- it is brought to a Copart location.

Peter Lucas -- CJS Securities -- Analyst

Great. Very helpful. Thanks. Congrats on the quarter and I'll jump back in the queue.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thanks, Peter.

Operator

Our next question is from Stephanie Benjamin with Truist. Please proceed with your question.

Stephanie Benjamin -- Truist Securities -- Analyst

Hi. Good afternoon.

Jeffrey Liaw -- President and Chief Executive Officer North America

Hi, Stephanie.

Stephanie Benjamin -- Truist Securities -- Analyst

I wanted to touch a little bit on some of the demand levels you're seeing, particularly from international buyers. Do you feel like they're buying at a greater rate than we saw pre-COVID level? I'm just trying to get a function of what has been lower assignments versus the supply side and just the demand level. So I'm just trying to get an idea of how healthy the buyers are at this time.

Jeffrey Liaw -- President and Chief Executive Officer North America

I would describe the buyers as very healthy in the aggregate. The international buyers are purchasing -- are bidding and purchasing at plus or minus the same rates as they were pre-pandemic. Now that's with everything having shifted very meaningfully. With ASPs up 48%, they tend to buy higher-value cars on average than our domestic buyers and their activity has grown proportionately during the pandemic.

Stephanie Benjamin -- Truist Securities -- Analyst

Great. Thank you. And then I'd love to get an update on where you stand internationally, particularly with the Germany -- the Germany operation and continuing to switch over to consignment model. I believe beforehand, you were doing some pilots with the consignment model. So, any update there?

Jeffrey Liaw -- President and Chief Executive Officer North America

Briefly so. We continue to invest in Germany in the form of land, technology, people and infrastructure. We are, as you know, selling vehicles on a consignment basis for multiple insurance carriers as well as selling vehicles as a principle there as well, as I think we described in much, much greater detail probably six, seven, eight earnings calls ago. But we continue to make good progress there. We are -- the key linchpin as you noted being to convert the market to a Copart style auction and gross settlement away from the historical listings -- listing service/net settlement model. The results continue to bear up. This is an economically superior path for insurance carriers long term as well as a superior policyholder experience as well. So nothing has particularly changed in our approach and our results continue to warrant further investment in Germany and elsewhere in Western Europe.

Stephanie Benjamin -- Truist Securities -- Analyst

Got it. And then last for me, more high level. I'm curious, especially given the events over the last year as well as some significant investments that you guys have made, but when you guys have conversations with your insurance customers as well as even some of your non-insurance customers where clearly [Phonetic] that business is growing, what are they asking for from you guys as a preferred partner and what are they looking for in terms of services, digital tools and has that changed at all in the last year?

Jeffrey Liaw -- President and Chief Executive Officer North America

Great question, Stephanie. I think it has changed. I think there is certainly much more virtual work being done by all participants in the ecosystem, ourselves included, but certainly our insurance carriers among others of our sellers. They want more handled virtually, more by phone, more by text, more through our various applications that we provide to them. So that's certainly one of the demands that is -- that we have met. It has helped that we've been natively digital, so to speak. We've been operating online only auctions since 2003. So this is already a language that we spoke fluently. We've already been operating internationally. So we know what it means to operate this business remotely in many cases and we're able to do so well and to accommodate our customers who, in some cases, had not been accustomed to such an approach. So those are some of the specific pandemic-related requests we've gotten for certainly video services or virtual communication in lieu of in-person interaction.

Stephanie Benjamin -- Truist Securities -- Analyst

Great. Thank you so much.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thanks, Stephanie.

Operator

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

Craig Kennison -- Baird -- Analyst

Hey. Good morning and thanks for taking my questions as well. It's really a big-picture question that goes to one of your core advantages, which I think is your member consolidation and cultivation globally. How would you frame the size and scale of your global buyer network and how does it compare to your competition?

Jeffrey Liaw -- President and Chief Executive Officer North America

I think the latter half of your question, Craig, harder for us to opine on since we don't have first-hand visibility into their own buyer network. But I would say this is largely the result of having what I think is a multiple-decade advantage in pursuing the international markets. Being online, I think, is essential to accessing that portion of the marketplace. We have been investing for years in physical and digital media, in physical infrastructure and physical presence in those markets. We respond to early signs of a market showing promise as buyers of Copart vehicles. We also will anticipate certain markets that makes sense for Copart vehicles and plant seeds there. So this is the product of multiple decades of investments in that regard, which we think ultimately manifests itself at auction in the form of returns, but comparatively difficult for us to know. We do believe it's a distinct advantage for us.

Craig Kennison -- Baird -- Analyst

Thanks, Jeff. And then, John, maybe could you frame your capex outlook for this year and maybe next couple of years and where you expect to target your investment dollars?

John North -- Chief Financial Officer

I think in short, Craig, we are still very much in investment mode. You may remember from, if I get my date straight, probably the May 2016 earnings call when we launched the 20/20/20 initiative, which was to open 20 new yards and expand 20 yards inside of 20 months. As it turns out that was not nearly ambitious enough. We have far exceeded that and continue to expect to invest in land and infrastructure for at least the next few years.

I think this is always a dynamic question. As you know, Craig, it takes a long time to permit and acquire land. We've taken the pandemic as an opportunity to opportunistically turn it up to buy land perhaps or buy or permit land perhaps would have previously been difficult to pursue. So we view ourselves very much still in investment mode.

Craig Kennison -- Baird -- Analyst

And lastly, maybe just to follow up on the land acquisition piece. When you buy land, to what extent you have knowledge of potential share gains that would immediately consume that land or is it not the case that you can kind of align your share gain opportunity with where you acquire that property?

John North -- Chief Financial Officer

I think the -- our aperture is wider than that. It's not per se customer-specific or even time bound or narrowly so. I think we buy land when we are currently congested or foresee potential congestion in our serving the industry broadly and that could include market share gain in certain markets. But it's about being a good steward of industry owning this land to make sure that we can control our own destiny and deliver that service for our customers for the next 50 years, not the next three. So in short, yes, those kinds of account-specific considerations certainly factor into our decisions, but overwhelmingly it's more about just having enough to serve the industry today and tomorrow.

Craig Kennison -- Baird -- Analyst

Got it. Thank you.

Operator

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

Bret Jordan -- Jefferies -- Analyst

Hi. Good morning, guys.

Jeffrey Liaw -- President and Chief Executive Officer North America

Hey, Bret.

Bret Jordan -- Jefferies -- Analyst

To follow up on that capex question, I guess, if you could talk maybe about land investment in US versus international markets sort of how much of that capex is weighted to geographic expansion. And then if you could talk a little bit about capacity utilization. You talked about when you feel congestion building out incremental real estate, but could you just maybe give us a feeling for capacity utilization as we stand?

John North -- Chief Financial Officer

Sure. To your first question, the strong majority of the capital expenditure is still in what I think, in your mind, we would characterize as incumbent Copart markets. So that's the UK, Canada, US, Brazil with growth to come in Germany and Spain and Western Europe, but that is certainly not a very substantial portion of the capex to date.

Jeffrey Liaw -- President and Chief Executive Officer North America

Your second question, Bret, was?

Bret Jordan -- Jefferies -- Analyst

Capacity utilization. We sort of looked at your existing real estate footprint, what are we utilizing?

Jeffrey Liaw -- President and Chief Executive Officer North America

Capacity utilization, a challenging subject to address directly in part because our land is not fungible as you know. So having excess capacity in city one, or in Salt Lake City, for example, does not benefit you at all in Minneapolis or in Miami and so end up being a microeconomic decision, not a macroeconomic one. So we don't actually track measure or reports per se on capacity utilization US wider [Phonetic] certainly globally speaking. We look so within metropolitan areas.

And so, capacity utilization then we target our capex based on where capacity utilization is either higher today or could be high or could be high in a catastrophic event. We will factor all of that into those microeconomic decisions, but it isn't by and large an overall global. We are 2% higher than we were a year ago. That's not a metric that guides our business.

Bret Jordan -- Jefferies -- Analyst

Okay. And then a quick question on ASP. You've said that it was not really mix driven, but it sounds like the dealer cars are typically higher value.

Jeffrey Liaw -- President and Chief Executive Officer North America

Correct.

Bret Jordan -- Jefferies -- Analyst

Could you sort of just give us sort of a description of how -- what a dealer car looks like versus the Company average, maybe transaction value or -- and is the fee structure comparable for dealer cars as it is for the insurance business?

Jeffrey Liaw -- President and Chief Executive Officer North America

The -- our auction platform, regardless of the source of the vehicle, has the same fee structure, so to speak. So as a buyer at one of our auctions you would be indifferent as to the source of the vehicle.

In terms of the selling price. we haven't provided that specific disclosure. But it is higher -- meaningfully higher than our average insurance car, though they over time, I think it is the rising insurance values as well. It is decreasing total loss frequency. It is the safety technology that makes the, quote, typical Copart salvage car look a whole lot more like a drivable car than a wrecked vehicle that will be parted or dismantled or melted down for metal. It's that big shift over time, I think, is expanding the relevant dealer universe to us as well. So there is some overlap, certainly [Phonetic] right, view them as both curves. The curve for the dealer cars certainly has its midpoint higher than the curve for insurance vehicles, but with heavy and increasing overlap, as well.

Bret Jordan -- Jefferies -- Analyst

Great. Thank you.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thanks, Bret.

Operator

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

Daniel Imbro -- Stephens Inc. -- Analyst

Yeah. Good morning, guys. Thanks for taking our questions. Jeff, you noted the increased buyers, particularly in emerging markets, are improving liquidity. First, sorry if I missed this, but did you provide global bidder growth or buyer activity growth in the quarter? And then secondly, are you seeing the mix of international bidders increase from newer countries or is it further penetration of existing markets we already kind of have a foothold?

Jeffrey Liaw -- President and Chief Executive Officer North America

We didn't -- OK, fair question. We didn't disclose specifically the percentage increase, so to speak, but did note that we're increasing domestic buyers' bids and bids per unit both domestically and internationally per [Phonetic] quarter. So I think we -- and that has been true for many quarters. You can go back and check the transcripts that we've said that virtually every time we've been on the phone.

In terms of the mix of countries that is -- both are true. It is -- and it's -- there are some microeconomic considerations here. Some countries will have a stronger currency one quarter than others or one year than others. And so you'll see some shift over time, you'll see local economic variables also fluctuate, obviously all dwarfed by the pandemic. So that's the ultimate confounding variable. But in general, we'll see countries ebb and flow. I think that's the benefit of having a true global platform that's online is that we smooth all of that activity in effect by accessing the world's economy [Phonetic] in this period.

Daniel Imbro -- Stephens Inc. -- Analyst

That's helpful. And to follow up on that, just a theoretical question on the international buyer. If prices keep going up at auction which -- it makes sense why they are and maybe why they will, is there a limit or a natural limit where based on need to make money on the backside of that purchase to where ARPU or ASPs cannot continue to increase or maybe how do you guys think about that just longer term as a factor in your business?

Jeffrey Liaw -- President and Chief Executive Officer North America

I think the specific answer to the question is for an individual buyer, certainly there is some truth to that that they have to make a margin for whatever their ultimate activity is to rebuild the car, restore the car and sell it again into a used car price environment. So certainly for a given buyer, they would tap out at some point. I think the reason, however, that our international demand has grown so much is that that's not a static buyer. The number of countries and the population share of that country which has access to an automobile and will want access to an automobile is what drives international demand over time. So it's that there are more countries with more of a desire for US, UK, Canadian, Middle East used cars, that's what drives the growth over time, not a specific buyer per se. But there are more countries -- as countries grow wealthier. As you well know, the US and Western Europe have the richest economies and certainly China, Japan and Asian countries as well. But in many -- in most cases the wealthiest country's per capita have the most cars per capita, also have the slowest GDP growth rates as well. So the faster-growing economies with an appetite for vehicles that you and I and everyone on this call takes for granted, very much wants access to a vehicle for education, for employment, for healthcare, leisure, all the reasons we cited a moment ago. And that's trend, I think it's a 50-year trend that will not abate.

Daniel Imbro -- Stephens Inc. -- Analyst

That's perfect. Really helpful color. And then last one on the non-insurance, I think you mentioned total units were up 30%, dealers were up 26%. Both are impressive. But that does imply that something else within the non-insurance is, as you know, up well over 30% to bring that average up. Curious what other sources of volume within non-insurance were outperforming this quarter to get you to that 30% unit growth.

John North -- Chief Financial Officer

I think probably not -- I think sharing that level of detail I think will -- maybe sharing more noise than signal. But in general, the rest of that segment includes charities cars, wholesalers, rental car fleets, banks and the like. So it's -- as you know, non-insurance is a bit of a catch-all for us. We certainly think of them individually as separate businesses or separate customer sets to serve. And collectively, as you know, they grew more than that 26%. But I think more detail on that would be more confusing than helpful.

Daniel Imbro -- Stephens Inc. -- Analyst

Got it. Fair enough. Thanks so much and best of luck.

John North -- Chief Financial Officer

Thank you.

Operator

Our next question is from Ali Faghri with Guggenheim. Please proceed which your question.

Ali Faghri -- Guggenheim Partners -- Analyst

Hi. Thanks for taking my questions. I guess starting on the pricing strength, is there anything that's occurred during the pandemic, changes in the industry dynamics, or your Company specifically that would suggest ASPs could remain structurally higher even after some of the more cyclical factors like constrained used car supply and higher pricing normalized?

Jeffrey Liaw -- President and Chief Executive Officer North America

Ali, I think the -- what I'd point you to is the -- before the pandemic even, I think it would have been three straight years, maybe more than that, every quarter, year-over-year increases in ASPs. I think the total loss frequency dynamic is the most important driver of our business long term and it naturally drives ASPs upward. As insurance carriers find it more economically rational -- more economically favorable to total more cars over time, those marginal cars are better and better vehicles, less damaged. They are ones with cameras and sensors taken out, not drivetrains. And those have a very wide-ranging set of buyers who want those vehicles. So I think there is a lot to our ASP growth over the years, which is secular.

There certainly are cyclical factors. Five years ago we used to talk about scrap metal prices, which obviously less relevant today. Today we're talking about used car prices clearly relevant to us. But I think there are secular portions of this ASP growth which will prove more durable. How exactly, I think is -- what is exactly attributable to either, I think is obviously a difficult intellectual exercise to isolate those variables.

Ali Faghri -- Guggenheim Partners -- Analyst

Okay. Great. And I guess just as a follow-up. Has the recent surge in pricing caused the insurance companies to maybe change the way they think about the total loss formula, perhaps factoring in salvage pricing to a greater degree than what they've done historically, which should help increase total losses maybe at a faster rate than in the past?

Jeffrey Liaw -- President and Chief Executive Officer North America

I'd say overall we have seen total loss frequency increase during the pandemic and as we anniversary the pandemic we haven't seen a dramatic shift either. It's more a continuation of the many-decade long trend that I think you're well aware of, Ali, as well. If we were in 1980, a total loss frequency of 4%, today north of 20%, total loss frequency over 40 years has grown five-fold.

I'd say over the course of the past year, we've seen a continuation of that trend. not a dramatic shift. The reason for that is that of course the used car price environment has been strong as well. And as you know, the higher -- the higher the value of the intact car before the accident the more prone the carriers are to repair it. So we have had the offsetting effect of very strong salvage returns, which would otherwise, all else equal, drive more volume to total loss. We've also had increase in used car values themselves, which all else equal would drive more cars to repair. The net effect of that I think is a gradual continuation of the favorable trend we've seen for 40 years.

Ali Faghri -- Guggenheim Partners -- Analyst

Do all insurance companies factor in salvage returns into their total loss formula?

Jeffrey Liaw -- President and Chief Executive Officer North America

I think to varying degrees. Some carriers will evaluate that economic proposition on every car. Others, meaning they will literally assess. Our machine learning enabled pricing tool we call ProQuote which estimates the value that an insurance carrier can achieve at auction, some carriers will run their ProQuote for every perspective, total loss or literally every claim to see if it makes economic sense to total the car. Others will rely more on rules of thumb that the repair cost exceeds x% of the intact value of the car and use those guideposts to make total loss decisions. Over time more and more are accessing that specific economic decision, which I think leads to a better economic outcome for them.

Ali Faghri -- Guggenheim Partners -- Analyst

Great. Appreciate that color. And last one for me is with nearly $1 billion of cash on the balance sheet, can you talk about your priorities for deploying that capital? I know, investing in capacity is your priority and you're still very much in investment mode for your earlier comments. But it does seem like you're going to have excess cash beyond that. So want to see how you think about maybe potential M&A buyback specifically and how you balance those two.

John North -- Chief Financial Officer

Hey, Ali. It's John. I think obviously the first priority is capacity investment as you mentioned. As we've talked about and it has been the trend over the past number of years [Indecipherable] to '16 with 20/20/20 plan. That still remains a primary focus. There are obviously other markets in Western Europe. Our expansion in Germany, Spain and otherwise that are there as well. And then we've been opportunistic to share [Phonetic] capital to shareholders at times in our past. We think that makes sense. I think overall, we like the flexibility. We think that we've been able to take actions in the pandemic that wouldn't have otherwise been possible out of the balance sheet that we had. And so I think we view that as a structural advantage we want to maintain. And other than that we're capitalists. So we're certainly thinking about how to generate the highest return on capital overall, return on invested capital for our shareholders.

Ali Faghri -- Guggenheim Partners -- Analyst

Great. Thanks, Jeff and John for taking my questions.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thanks, Ali.

Operator

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

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Hey, guys. Thanks for taking the question. The first one -- hey. The first one is on the deployment of 360 technology, just wanted to see where you stand in terms of roll another technology, how prevalent do you think this will be across inventory. And early, but are you seeing any kind of measurable impact on selling prices because of the technology?

Jeffrey Liaw -- President and Chief Executive Officer North America

In a word, I think those are the kind of variables that are very hard to isolate, Chris, in a very dynamic environment, right, in which there are a number of variables changing at the same time. For us, the technology, including one you described like, 360 among other such technologies, important for us in terms of the service that we provide sellers. They have use cases for images like that. And so we track that certainly very carefully to make sure we're providing them the best possible service. I don't think we're in a good position to talk about differential auction returns. I don't think there is a fundamental -- there is not a fundamental shift attributable to 360 images in particular.

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Got you. That is interesting. And then two, can you talk more about the dealer consignment channel? Are you seeing increased engagement on the buy side of the equation, the sourcing of the buyside of the equation as inventories become more constrained in the industry? And is this how they are going to get a flywheel effect on your ability to source more vehicles from these same dealers?

Jeffrey Liaw -- President and Chief Executive Officer North America

I think in a word, yes, but I'm not sure -- I'm not sure it's unique to the moment. By that I mean the dealers have grown as a share of our activity on both the sell-side and buy-side and define more broadly to include not just US and Canadian dealers but dealers all around the world, right, a dealer who buys a car and sells it as is or a dealer who buys it will recondition to some extent and then sell as is. That has been very much part of the flywheel effect over the past 10 years, 20 years plus.

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Yeah. That's really helpful. Thank you.

Operator

And our next question is from Ryan Brinkman with JP Morgan. Please proceed with your question.

Ryan Brinkman -- J.P. Morgan -- Analyst

Hi. Thanks for taking my question. Wanted to ask again around inflation just given it is now a larger part of the national conversation and given the quarter looks to have benefited from higher used car and metals prices. But primarily I'd like to try to zero in, if I can, on the value of your land holdings.

So I've been seeing these headlines about how the average price of a home has risen by an incredible like 16.2% year-over-year in April. And haven't really seen or done much research into what the price of, say, undeveloped land or land generally has done. But have seen some other articles recently about your big increases, the value of farmland etc.

So just wanted to get your sense of what might be happening with the value of your land. Given that you've been out there in the marketplace so much in recent years buying land, I would think that you have a good sense of the value of your existing properties too. So what is happening with the value of the land?

And given that it doesn't get captured into the P&L, how are you thinking about -- or are you thinking about any actions to ensure the increased value gets reflected into the equity value of the Company. I know you have historically preferred to be conservatively capitalized, but would you ever consider maybe like sale leasebacks to raise capital for shareholder-friendly actions or any other kind of actions to try to tap into the value of that land or even just put some estimates out there for shareholders to see so that they could better appreciate any increase in the value that you might have captured here.

Jeffrey Liaw -- President and Chief Executive Officer North America

Certainly appreciate the question and appreciate the thoughts. I think history would show that the shareholder-friendliest action we have taken is to buy the land and hold it forever. And we view that also as the customer-friendliest approach as well and that we own the land, we control it. We are the stewards of that facility, that capacity on behalf of the insurance industry for the next 50 years plus. So that to me is overwhelmingly the default approach that we would take.

As to your question, your IR question more narrowly, about how to ensure that that value is reflected in our stock price. I think to some extent that's academic for us. We own it, we use it, we have virtually never repurposed land that have been permitted for Copart use in part because it's so hard to achieve that. We don't repurpose it for other uses. We will -- we are there today and tomorrow to serve the insurance carriers and to serve our expanding non-insurance sellers as well. So I think -- unfortunately, I think the intention, I know your question is good, but the outcome is effectively academic for us. That land is there to serve our customers.

Ryan Brinkman -- J.P. Morgan -- Analyst

Very helpful. Thank you. And then would be curious if you have any thoughts on this emerging digital dealer to dealer marketplace that ACV Auctions and KAR Global, TradeRev and BacklotCars businesses operate. And is that a market that you might be interested in participating in? I was just thinking that given that you're primarily a salvage car auction company and need to have, I think, capacity including surge capacity for cat type events, etc. If that might be a way to sort of participate more in the whole car market without crowding out space on your lots for salvage cars?

Jeffrey Liaw -- President and Chief Executive Officer North America

We certainly evaluate and consider strategic extensions of the sort that you described a moment ago. So I think we recognize that the world is evolving in terms of how vehicles transact. As we noted earlier on the call, we were the first to move rather dramatically in 2003. I think it was less conventionally obvious at the time to move to a pure digital auction platform. We did that 18 years ago.

So as for additional shifts from here, we certainly evaluate, experiment etc. as to how we can achieve still greater share of the market over time. I would note that it is against the backdrop of companies of the sort you described who are running digital-only auctions who are performing services on site of the dealer and so forth. It is against that backdrop that we continue to grow that dealer business healthy double-digit rates for years now. So I think that speaks to the power of auction liquidity as well.

So the one thing that -- with money you can replicate an app and inspectors and so forth. With money I'm not sure you can replicate auction liquidity and many thousands of bidders and buyers attending online auctions globally. But we will help you achieve the absolute highest and best use and value for your car whether it's here or Estonia or Honduras or Poland or wherever it might be. I think many of the other platforms out there cannot achieve the same.

Ryan Brinkman -- J.P. Morgan -- Analyst

Okay. Interesting. Thank you. And then just last question, I wanted to ask about the types of things that you consider within your wheelhouse to auction. I know that you've obviously focused on salvage cars, but now also increasingly on whole cars and have gotten more into sort of the crash toys market, right with the personal watercraft and the motorcycles. I don't know if you're doing ATVs or just what other things you might potentially consider doing, heavier equipment, RVs, I don't know. I was at one of your auction yards. It was 10-plus years ago, but you were auctioning then some like fire damaged or smoke damaged furniture or something like that. I don't know if that's ever anything that you would consider again, any sort of tangential moves or you've got enough [Indecipherable] there already? What do you think?

Jeffrey Liaw -- President and Chief Executive Officer North America

I think that's a long-term possibility, though I think furniture is low on the priority list. But we have extended our auction technology and approach to other arenas. As you know, we acquired a National Powersport Auctions which is not per se in the salvage business, but sells motorcycles, watercraft and other powersports equipment on behalf of financial institutions as well as dealers and that we continue to expand that business as well.

So with -- we do believe that our auction technology, our logistics management, our understanding of the regulatory environment, etc. could well be applicable to other markets. We would experiment cautiously and thoughtfully because our core business is obviously critical to us in serving our existing customers in our existing markets as well as priority number one. But we would consider other such extensions as well.

Ryan Brinkman -- J.P. Morgan -- Analyst

Very helpful. Thank you.

Operator

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

Gary Prestopino -- Barrington Research -- Analyst

Hi, Jeff, John. Hey. Could I get what your global inventories were up or down in the quarter? I didn't get a chance to write that down.

Jeffrey Liaw -- President and Chief Executive Officer North America

Global inventory at the end of April, at the end of the quarter was up 16% year-over-year.

Gary Prestopino -- Barrington Research -- Analyst

16% year-over-year. Okay. And then just a question on the dealer market. How has -- over the years, how has the profile changed of the kind of car you're selling? My understanding of it is that initially it was -- the target market was the 10 to 15-year-old car that the wholesaler was taking off the dealers' hands. Have you, I guess, down-streamed that to a younger kind of vehicle? Are you seeing a lot more of that now? And the real competitive advantage that you have is that auction liquidity that allows you to compete with some of these online platforms that are proliferating in the market?

Jeffrey Liaw -- President and Chief Executive Officer North America

Yes. In a word, yes. So the cars have become younger so to speak over time in accordance with our insurance volume as well. So as insurance industry it used to total quote old cars, badly damaged cars and increasingly we're seeing lighter damaged and newer vehicles because of the severity and repair costs and sensors [Indecipherable] that market has shifted in that direction and therefore buyers to bear so too then do more of the dealer cars become addressable as well.

If you went back 20 years ago, I imagine a good portion of the dealer cars would have been actual wrecked cars that were -- for which the policy holder only had liability coverage, perhaps didn't have collision, didn't want fund the money to repair the car himself or herself, ended up at a dealer, sold for cash or traded in for another car. Those might have been a meaningful portion of the cars that we were selling. Nowadays, however, I think it is now more like drivable whole cars, certainly newer than they were a decade ago.

Gary Prestopino -- Barrington Research -- Analyst

Okay. Thank you.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thanks, Gary.

Operator

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

John Healy -- Northcoast Research -- Analyst

Thank you, guys. Wanted to ask, kind of a big picture trend question. Jeff, when you look at kind of electrification and think about how that's coming into the car population, how do you see electric vehicles compared to combustion engine vehicles in terms of stacking up, in terms of total loss frequency? And are the proceeds of those vehicles materially different than what you see with kind of your historical book of business? Just kind of curious what the initial findings are there.

Jeffrey Liaw -- President and Chief Executive Officer North America

Sure. In short, the electric vehicles outperform the average combustion engine vehicle at auction. The returns are meaningfully higher. I think the -- that the root cause of that I think may well be that electric vehicles tend to be cars with a lot of sensors, a lot of technology on the perimeter, more exotic materials in the car to lower the weight and so forth. So in many cases they total more easily. But the return we generated at auction are some of the highest that we achieved for any kinds of -- any kinds of vehicles we sell. So I think the total loss proposition is promising there. I think repairs are difficult. So severity tends to be high.

Our repair infrastructure, the handful of public companies as well as the extensive mom and pop network around the US the insurance carriers rely on -- the US, UK, Canada, everywhere that the insurance carriers rely on in most cases are well equipped to manage repairs of combustion engine vehicles. Not yet so for electric cars. So if anything I think that's a tailwind in our favor and the severity will prove to be more extreme still for electric cars.

John Healy -- Northcoast Research -- Analyst

Great. And then just another theoretical question. With the non-insurance business becoming an even bigger part of the puzzle for you guys, as you look at that business how do you react and how do you feel about potentially getting into aspects of the floor plan financing business? I think it's a polarizing business but it's proven has some pretty good returns to it. So just kind of curious how you see that is -- how you would break that as an opportunity for the Company going forward?

Jeffrey Liaw -- President and Chief Executive Officer North America

Sure. I think it's -- floorplan for financing certainly broadly available by and large for a given credit-qualified dealer buyer for a car. So that's the space that we would consider but carefully so. It's obviously different in many respects from what we do day to day and so the banking business, not something that has to date been a priority for us to enter. But the kind of thing that's along with auctioning other products and so forth it's in our strategic window, but has not has not been a priority.

John Healy -- Northcoast Research -- Analyst

Great. Thank you, guys.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thanks, John.

Operator

And we have reached the end of the question-and-answer session. And I will now turn the call over to Jeff Liaw for closing remarks.

Jeffrey Liaw -- President and Chief Executive Officer North America

Great. Thanks everyone for joining our call. We'll look forward to talking to you after the fourth quarter as well. Thanks. Have a good day.

Operator

[Operator Closing Remarks]

Duration: 52 minutes

Call participants:

John North -- Chief Financial Officer

Jeffrey Liaw -- President and Chief Executive Officer North America

Peter Lucas -- CJS Securities -- Analyst

Stephanie Benjamin -- Truist Securities -- Analyst

Craig Kennison -- Baird -- Analyst

Bret Jordan -- Jefferies -- Analyst

Daniel Imbro -- Stephens Inc. -- Analyst

Ali Faghri -- Guggenheim Partners -- Analyst

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Ryan Brinkman -- J.P. Morgan -- Analyst

Gary Prestopino -- Barrington Research -- Analyst

John Healy -- Northcoast Research -- Analyst

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