Copart, inc (CPRT) Q1 2022 Earnings Call Transcript

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Copart, inc (CPRT -0.60%)
Q1 2022 Earnings Call
Nov 18, 2021, 11:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Please standby. Good day everyone and welcome to the Copart Incorporated First Quarter Fiscal 2022 Earnings Call. [Operator Instructions]

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. During today's call, we'll discuss certain non-GAAP measures which include adjustments to reverse payroll tax benefits 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 31, 2021 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.

And with that, I'll turn it over to our President and CEO North America, Jeffrey Liaw.

Jeffrey Liaw -- President and Chief Executive Officer North America

Excellent. Thanks, John and good morning and thanks for joining us for the first quarter. We're pleased to report a strong first quarter for fiscal 2022, against a backdrop of various extremes persistent and evolving pandemic, changing global traffic patterns, supply chain disruptions, a strong used car price environment and an active storm season to name a few. We continue to serve our customers successfully to enhance auction liquidity and to continue our long-term trend of profitable growth.

I'll elaborate on a handful of key themes for the quarter and John will provide additional perspective. My comments will center around Hurricane Ida, brief commentary there. Secondly, the health of our auctions, third, the implications of the used car price environment, and fourth, our institutional commitment just a bit to sustainability.

First on Hurricane Ida. Hurricane Ida struck the Gulf states on August 29 and the Northeast region on September 1st and 2nd. This represents our most substantial storm since Hurricane Harvey in 2017 and our largest storm in the Northeast region since Hurricane Sandy in 2012. Having learned from those experiences and a litany of catastrophic events between then and now, we were better prepared for this event than any in our history, due to our very substantial investment over the years in land, in technology, in company-owned trucks, company employed drivers, heavy equipment and most importantly our dedicated CAT team who deployed at a moment's notice. Hundreds of us from around the countries met our Labor Day weekend on the ground and many weeks thereafter managing the retrieval of vehicles, receiving and imaging them and navigating the vehicles through the titling process to their eventual sale. As is often the case with major storms, we experienced an operating loss from the event in the quarter of a few million dollars. We view our pre-storm prep and our robust response to catastrophic events as investments in the strong and durable partnerships we have with our insurance sellers.

Our storm-related costs, as you know from prior experiences include lease expense for temporary storage facilities, premiums for towing, labor cost and over time for our people, travel expenses and lodging among others. These expenses of course, offset by revenue from incremental unit volume. Financially speaking, the impact of the storm in the quarter was approximately 100 basis points to 150 basis points of gross and operating margin rate compression. You all know we haven't provided further specifics in our press release or included adjustments in our non-GAAP earnings scheduled for the catastrophe. We believe that providing excellent service in difficult times is an intrinsic aspect of our value proposition to our customers and that these storms will become -- will increase in frequency and severity over time.

The second thing I wanted to tackle is, our unit volume growth in our auction liquidity. We experienced global unit sales increase of 21% year-over-year, of which approximately 2 points was explained by the hurricane itself. A US increase of almost 24%, again, 2 or 3 points of that growth explained by Hurricane Ida. We grew our international unit sales by just shy of 8%. The COVID responses in countries outside the US as a general matter continues to be more aggressive and more pronounced than what we've experienced here stateside. Our insurance business grew relative to the first quarter of last year at 23%. We are observing certainly continued increases in total loss frequency, I'll comment more about that in a moment, and benefit from share gain as well. Driving activity itself continues to rebound relative to last year, very significantly, but still just shy on measures such as gasoline consumption of what we experienced in the year prior. Total loss frequency has increased steadily including during the pandemic, though all else equal, as many folks on the phone already know, the strong used car price environment almost certainly is an inhibitor to assignment volume all else equal to Copart auctions.

Turning to our non-insurance volume. When we exclude lower value cars such as wholesalers and charities, our non-insurance business grew 7.5% year-over-year, with our dealer unit volume up slightly, approximately 1% versus last year and strong growth in our Copart Direct business. I'll note -- and you'll note, this represents solid absolute performance, but arguably the strongest relative performance in our history to other vehicle marketplaces given what is the pronounced shortage of available supply in the industry. We think this is a testament to the power of Copart's marketplace and we said it before, but it's worth reiterating. The cars we earn the right to sell on behalf of insurance companies along with rising total loss frequency, enable us to achieve superior returns for progressively more non-insurance cars as well. And it's also true in reverse. The dealer rental car, fleet, Bank and consumer cars we earn the right to sell, drive still more insurance volume and higher total loss frequency as the years go by.

The next theme, I wanted to address is prices themselves. So we are experiencing of course, high used vehicle prices across the world and certainly strong ASPs at Copart Auctions as well. Our ASPs worldwide grew 11% for the -- year-over-year for the quarter, with US ASPs up 10% year-over-year as well. The Manheim Index is one industry proxy is at all time highs with the November mid month reading of 234.8. The durability of ASPs is of course a natural question, they are certainly are longer term trends in favor of high as a -- higher ASPs including our auction liquidity, total loss frequency and the like as well as growing demand from emerging economies for wrecked vehicles from our origin countries. We also continue to invest significant resources in member registration -- member recruitment registration, retention and the like. But of course, we should acknowledge the technical forces as well. There remains a chip shortage which is affecting the production of new vehicles and driving higher prices for used vehicles around the world. Our perspective, doesn't diverge from the industry consensus which indicated this chip shortage will persist well into 2022 and likely into 2023 as well.

The important note here is that if and when used car prices do fall, we expect a corresponding increase in assignment volumes. Total loss frequency is negatively correlated with used car prices. The more a car is worth before the accident, the more prone it is to being repaired.

Last theme, I wanted to tackle before handing it to John is, the notion of sustainability. As a long-standing cultural matter, we at Copart have always asked to be judged on our actions and results, not our words or our PowerPoint presentations, but we recognize that we're at a moment in history in which companies are being challenged to articulate their ESG position more clearly, and I'll spend a few minutes on that theme.

Copart plays a critical role in the Automotive Circular Economy, enabling the reuse, recycling and responsible disposal of vehicles around the world. We sell well over 3 million vehicles per year and by matching those vehicles with their optimal owners, we enable the return to service of automobiles that would otherwise have been scrapped. The reuse of parts that otherwise would have ended up in landfills. As a result the reuse and recycling that Copart enables, displaces what otherwise would have been de novo resource extraction and energy consuming manufacturing as well. As climate events themselves increase in frequency and severity, Copart will play a growing role in assisting communities and recovering from them as we have in our past, by removing vehicles from roadways to storage facilities and repair shops, enabling the free flow of people and goods and services and economies in which we do business.

And finally, because of so many of our vehicles are ultimately purchased by buyers outside the US, our Auctions contribute to be physical and economic mobility of residents and countries of emerging economies, including in Central and South America, the Middle East, Africa and Eastern Europe. If you haven't read it already, please do see our Annual Shareholder Letter on our Investor Relations website, where we explained further on these things -- on these themes among others including diversity and inclusion. We will offer more substance in the coming days in the form of a sustainability report as well.

And with that, I'll turn it over to our CFO, John North to talk about the fourth quarter's financial results -- the first quarter's financial results.

John North -- Chief Financial Officer

Thanks, Jeff. Before I get into the numbers, I'd like to begin by also acknowledging, our teams effort relative to Hurricane Ida and thank them for their dedication and sacrifice. Being relatively new to the Copart family, this is my first opportunity to see us in action and to observe first-hand, the tremendous sense of ownership we take to ensure a positive outcome in the face of both disaster and tragedy. Our people and our culture have always been and will continue to be the key to our success.

Now I'll make a few comments on our operational results and then we'll open it up for questions. For the first quarter, global revenue increased $217 million or 37%, including a nearly $4 million benefit due to currency. Global service revenue increased $152 million or 30%, primarily due to higher average selling prices and increased volume. US service revenue was up 31% and international experienced an increase of 18%. Purchased vehicle sales increased $65 million or 84%, due to higher ASPs and increased volume. US purchased vehicle revenue was up 87% over the prior year and international grew 79%. As a result, purchased vehicle gross profit defined as vehicle sales less cost of vehicle sales increased by $2.7 million overall. As Jeff mentioned, we had significant relative growth in our purchased vehicle volume resulting in gross and operating margin rate contraction of approximately 150 to 200 basis points.

Global gross profit in the first quarter increased by $88 million or 30%, and our gross margin percentage decreased by approximately 250 basis points to 47.5%. US margins declined from 52.6% to 50.3% and international margins decreased from 37% to 33.1% due to a higher purchase vehicle mix at lower margins, partially offset by higher ASPs globally.

I'll now move to a discussion of G&A expenditures excluding stock compensation and depreciation expense. G&A spend increased $5.9 million from $35.2 million a year ago to $41.1 million in 2022. Yet is lower from 5.9% of revenue to 5.1% of revenue this year. We anticipate G&A to continue to improve as a percentage of revenue as we grow our business. As a result, our GAAP operating income increased by 33% from $248.6 million to $330.1 million.

First quarter income tax expense was $65.5 million at a 20.1% effective tax rate, which reflected a $3 million tax benefit on the exercise of employee stock options. Adjusting those to a non-GAAP measure included in our earnings release, change to our effective tax rate to 21%. First quarter GAAP net income increased from 30% from $200 million last year to $260 million this year. Adjusted to remove the tax benefit on the exercise of stock options, non-GAAP net income increased 37% from $188.5 million last year to $257.4 million in the first quarter of 2022.

Our global inventory at the end of October increased 12% from last year. This is comprised of the year-over-year increase of 14% for US inventory and a decline of 3% for international inventory. This increase in inventory is largely a function of US accident frequency and miles driven returning to normal supplemented with the effects of Ida and share gains, partially offset by declines in international driven by countries with longer duration lockdowns as a response to COVID.

Now to briefly update our liquidity and cash flow. As of the end of the quarter, we had $2.3 billion of liquidity, comprised of $1.3 billion in cash and cash equivalents and an undrawn revolving credit facility with capacity over $1 billion. Operating cash flow for the quarter increased by $54 million year-over-year to $312.5 million, driven by stronger earnings, that's $65 million in capital expenditures in the quarter, approximately 70% of this amount was attributable to capacity expansion. We are continuing to prioritize investments in physical infrastructure above other choices and believe this continued investment is helping to create durable advantages and our ability to handle increasing numbers of total loss vehicles and adjacent opportunities in the whole car marketplace. We're continuing to focus on investing for the future in both capacity and technology, while maintaining a conservative capital structure that allows operational flexibility regardless of economic changes or transitory market dynamics.

And with that, we're happy to open up the call for some questions.

Questions and Answers:

Operator

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Stephanie Moore with Truist. Please proceed with your question.

Stephanie Moore -- Truist Securities -- Analyst

Hi, good afternoon, and thank you.

Jeffrey Liaw -- President and Chief Executive Officer North America

Hey, Stephanie.

Stephanie Moore -- Truist Securities -- Analyst

I wanted to touch a bit on the overall inflationary and cost environment that you're currently experiencing and if you are in fact taking the impact of the Hurricane out of the equation, and thanks for quantifying that the impact that you saw from that event. But just looking at one, the dynamic that you called about on the last quarter was just operating deleverage as inventory levels increase as well as somewhat newer dynamics that we've heard whether it's higher towing cost, higher driving cost, you name it. So just kind of want to walk through if you could, what you're seeing from an inflationary standpoint and higher costs? And then some levers that you might have in place to offset on those costs would be helpful? Thank you.

Jeffrey Liaw -- President and Chief Executive Officer North America

Sure. In the cost categories you noted, Stephanie, certainly, I think all participants in all economies worldwide are experiencing inflation to some extent in the form of wages, towing expense, fuel, capital equipment and the like, and certainly, we aren't immune to that either. It's our job to manage that, to absorb it where necessary to with management productivity as we can and to deliver the results. So it's -- we are seeing and experiencing those things. I would note that inflation, that is certainly more pronounced today, it's not a brand new phenomenon for years we've experienced very meaningful inflation in healthcare costs for example, land has continued to grow and value capital equipment that the loaders we buy for example are more expensive than they were five and 10 years ago as well. So, inflation is more pronounced today, but it's not a radically new phenomenon. So we do have experience in managing through that with productivity being the most important long-term lever.

Stephanie Moore -- Truist Securities -- Analyst

Great. And then I guess maybe just talk a little bit about from an inventory standpoint, do you find that given where inventory levels are particularly in the US that you're seeing just as inventory build, just some operating leverage in the near term as well as maybe some seasonality. So just trying to think through the dynamic that impacted the fourth quarter and if that continued into the first?

Jeffrey Liaw -- President and Chief Executive Officer North America

Fair question and as you know Stephanie, we tend to -- we run the business to deliver service in our per se, trying to optimize any individual quarter or month or unit in our inventory. I think your observation about inventory growth and unit volume growth helping to absorb fixed or semi-fixed cost is real. There is also other noise in the system as you know from the inflation you just mentioned a moment ago, Hurricane Ida, among other things, but yes, all else equal, certainly unit volume growth on its own is a near medium-term accretive to margins.

Stephanie Moore -- Truist Securities -- Analyst

Absolutely. Thank you. And then lastly for me, kind of big picture, you put out a release in early November about a partnership with I believe Commerce Bank that just talked about some of the digital efforts that you have in place, kind of where, as I feel like most of the time you don't advertise some of the investments and initiatives you have in place. But maybe if you could talk about incremental investments that you're looking going forward? Is that focused on improving cycle times or what are areas where you find has the largest opportunity for improvement here for continued investments? Thanks.

Jeffrey Liaw -- President and Chief Executive Officer North America

Fair point. And Stephanie I'll talk perhaps in broader framework here. It's our job to serve our clients and there are, as you know, multiple types of clients. Starting with insurance companies, which still represent the strong majority of the units we sell for them, they care a lot about speed and execution. They care about auction returns, they care about policyholder experience. And on all dimensions, we are investing, there are different nuances to each, I think which you mentioned a moment ago about cycle times and the public notice you mentioned a moment ago about our partnership with Commerce Bank, for example. Those are investments to address the cycle times in particular for cars with outstanding liens on them, which also have derivative effects on the policyholder settlement timelines in some cases. So we certainly are investing there, lien holder cars are in particular, some of the most challenging vehicles in terms of cycle times and we invest all the time in initiatives like that. But anyway, the point of all that was, there are many dimensions to that and we invest across those dimensions as well.

Stephanie Moore -- Truist Securities -- Analyst

Great, thank you so much.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thanks Stephanie.

Operator

Thank you. Our next question comes from Bob Labick with CJS Securities. Please proceed with your question.

Bob Labick -- CJS Securities -- Analyst

Good morning. Thanks for taking my questions.

Jeffrey Liaw -- President and Chief Executive Officer North America

Hey, Bob.

Bob Labick -- CJS Securities -- Analyst

Hi. I wanted to start and dig a little further on the total loss frequency commentary you offered us in the prepared remarks. As it relates to used car prices and insurance carriers formulas to total a car, if you had said -- two years ago, used car prices would rise 40% now, 60% or 70% over a two-year period. I would have incorrectly said total loss frequency would crater unless repair costs went up equally to offset it. So I guess my question is, are repair cost up as much in terms of dollars as used car prices, I can't imagine that's true? Or are insurers adjusting their total loss calculation kind of real-time to the current salvage, your recovery rates that you're getting or is it something else? Because if it's dynamic, insurance calculations if they're changing it with used car prices much faster than they have in the past, would that potentially suggest that as used car prices fall then total loss frequency wouldn't rise as fast as anticipated, if that question makes sense?

Jeffrey Liaw -- President and Chief Executive Officer North America

Yes, it's a very perceptive question, Bob as usual. I think your statement is accurate and the total loss frequency I think had been impaired all else equal, because of high used car prices. And your question as to then, what tips the balance in the other direction? I think it is a combination of repair costs as well as rental car costs. The repair pack, so to speak, for an insurance carrier is also onerous and expense -- is onerous and expensive today relative to what it was two years ago. I think there is also just long-term secular trends in this direction. Anyway, Bob, as you know, which is the accident section and avoidance systems and the vehicle complexity substrate mix change from steel to aluminum and carbon and the like, electric vehicles, etc. So I think those are all contributing to the net effect, the total loss frequency is rising when this one variable in isolation would suggest that it shouldn't.

Now the other variable which is worth mentioning Bob, it's the mix between the -- it's the tension between the two as well in terms of what the used car prices are, but also our auction returns. Our auction returns are up. I think more than pre-accident vehicle prices have been over that same period. So we have also hope to close that gap with the auction results as well.

Bob Labick -- CJS Securities -- Analyst

Got it. Okay, that's great, very helpful. And just kind of going back to cycle times. So I think in general that's obviously a benefit and barrier to entry. But you're always trying to improve cycle times and obviously, they probably have over the last five, 10 years, as well. As cycle times do improve a little bit, they open up yard capacity, so just curious as to like when -- thinking about your overcapitalized balance sheet and the liquidity that you have, what are the primary uses of that liquidity as you run out of more land to buy or if cycle times pick up enough, you need less land at the same time? So just trying to balance those two and ask, I guess, other uses of capital beyond land, because eventually you don't have to always buy land?

Jeffrey Liaw -- President and Chief Executive Officer North America

Many puts and takes on the question of land. So, the business is growing and has been growing for years that by itself would necessitate more land not less. Cycle times have improved, but there is plenty of complexity in the ecosystem as well. So there are many examples, case studies in which cycle times are increasing. And today, arguably, the very strong used car prices are making lien settlements faster than they otherwise would be, relative to an environment in which you had a bunch of underwater loans for example about as you know. So I think in practice, we will continue to invest in land for years to come and probably very substantially. So that said, as you noted, overcapitalized Bob is more editorializing perhaps than I offer. But nonetheless, I think [Indecipherable] have a very robust balance sheet today that the answer over the next 10 years is sure that we'll buy stock back as we always have and you know from our share count ex the split that we have contracted the open market share -- the shares outstanding over the years and we'll continue to do so, that's a matter of timing and comparison to our relative investment options in land and otherwise. So we'll be good stewards of capital and return that via share buybacks at some point.

Bob Labick -- CJS Securities -- Analyst

Okay, super. And I meant to say well-capitalized but it slipped out as overcapitalized, my apologies. And thanks for answering. I'll jump back in queue. Thanks.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thanks, Bob.

Operator

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

Craig Kennison -- Robert W. Baird -- Analyst

Good morning. Thanks for taking my question. Some have already been asked. But I thought I'd shift to Europe. I think you mentioned 8% volume growth, which was slower than what you saw in the US and I think you identified COVID and the response there as a factor, but it's also a smaller business with potentially a lot of momentum to it. Could you just comment on maybe the secular shift in that business and whether you still feel like you have momentum with insurance carriers in shifting their priorities to -- shifting their practices to your platform?

Jeffrey Liaw -- President and Chief Executive Officer North America

Sure. And one technical clarification, when we said the growth rate that was for our quote international business, which includes Canada, Brazil, the UK, Finland, Spain and Germany, and the Middle East, so it's not just Europe alone. So I think underlying your question, Craig, is what's happening in Spain and Germany and our growth markets in Europe, for example. And there we've continued to experience very significant year-over-year growth. We continue to prove the economic model if anything, the gap between the auction returns we generate at Copart auctions growth to the listing services we've talked about in the past, that gap is expanding still. So the economic proposition I think is becoming more compelling, not less. But what you're seeing in terms of the overall growth rate is for sure that the UK and Canada for that matter and Brazil and certain areas have been more aggressive about COVID-19 countermeasures than the US has.

Craig Kennison -- Robert W. Baird -- Analyst

Thanks. And then you've had good success in the US with your non-insurance business. Is there a point when your international businesses mature such that you feel comfortable rolling out a service like that as well?

Jeffrey Liaw -- President and Chief Executive Officer North America

Which service now, Craig?

Craig Kennison -- Robert W. Baird -- Analyst

I'm talking about non-insurance volumes especially dealers selling cars on your platform.

Jeffrey Liaw -- President and Chief Executive Officer North America

Yes. And to some extent we have. So where we do have liquid auction marketplaces, we do -- we have pursued other sources of that volume including dealers and otherwise. So in Canada, in Brazil and the UK and for that matter the Middle East. So in most places, we do business the liquidity is -- comes in a hurry. And the cars that we can sell that extend beyond total loss units from insurance carriers happens pretty quickly as well.

Craig Kennison -- Robert W. Baird -- Analyst

And then lastly, I appreciate your commentary on sustainability. Clearly your story fits that narrative quite well, and thanks to here you articulated. I'm wondering if the Board or you have done any analysis on whether you are under-owned by that group of investors that put ESG as their number one priority?

Jeffrey Liaw -- President and Chief Executive Officer North America

A judgment call, tough to make from where we sit, right. I'm not sitting in their rooms and understand their criteria. But certainly from our understanding of what constitutes to sustainability, I think our businesses should be at the very top of that list. So I think that's a reasonable conclusion, Craig. But we don't spend a lot of energy with target list and trying to figure out who should own this and not, we trust this, we deliver the results long-term economically and sustainability wise and those questions will take care of themselves.

Craig Kennison -- Robert W. Baird -- Analyst

That's great. Thanks, Jeff.

Operator

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

Daniel Imbro -- Stephens -- Analyst

Hey, good morning, guys. Thanks for taking my questions. Jeff, I wanted to start on the non-insurance side of the business. You noted some pretty start outperformance versus the peers. And as you're growing into those reverse synergies back to the business, I guess a few questions. One right now, are you selling all of those dealer cars internationally? Or are you actually transacting some maybe US dealer stores cars to other dealers in the US? And the second question would be, given the reverse synergies and obviously the attractive unit economics, what are the limiting factors on maybe growing into that faster, as you think about the next three to five years outlook on your results?

Jeffrey Liaw -- President and Chief Executive Officer North America

Got it. Daniel, to your first question, the latter. So the US dealer cars are being sold both to US buyers and international buyers. Both are meaningful portions of the US dealer buyer base. On your second question about the limit, that's a -- there are dynamic circumstances. So as total loss frequency rises, as we win more dealer cars, we then can win more dealer cars. So the logic is a little bit circular, but are we the absolute sweet spot for a perfectly intact $75,000 Audi today when it comes to liquidity, perhaps not yet, I'd argue we can achieve a very strong result there too. But there are certainly many cars and an increasing number of cars for which we are the obvious answer, and I don't think we're yet the obvious answer for $75,000 Audi's. But there is no ceiling per se. Probably the same, conceptually Daniel as people ask, what is the ceiling for total loss frequency, can it get to 25%, can it get to 30%? I think this is a dynamic picture and we'll see that evolution over time, but there is no reason there is a hard asymptote.

Daniel Imbro -- Stephens -- Analyst

That makes sense. And I guess, just tied Bob's question earlier, as you think about land capacity though, you're not feeling -- right now given the trade-off, but we don't have enough land for continued growth in either dealer or insurance cars, your land gives you flexibility to pursue both?

Jeffrey Liaw -- President and Chief Executive Officer North America

Correct. The combination of our land and our logistics and our planning is such that we are in position to serve our customers.

Daniel Imbro -- Stephens -- Analyst

Perfect. And then last question, just wanted to touch on the percentage of vehicles, I think the 10-K that was filed, they are getting sold overseas. I think we're still kind of in the mid 30s that's pretty flat from the year before. I guess where are we -- it's a hard question to answer, but in terms of innings, where are we at in terms of opening up new countries to sell into. Are there still larger emerging market thinking like India that you guys aren't selling into today? And maybe could you talk about, as what the steps look like as you enter into these new countries to really start of scaling those buyer bases, where you're not maybe fully matured today?

Jeffrey Liaw -- President and Chief Executive Officer North America

I think it's not anywhere close to mature. I think if you compare -- we do this exercise internally, some years ago, but if you compare long-term GDP growth rates and have that on one axis, on the other axis have vehicles per capita, the very fastest-growing economies in the world tend to be the ones with a fewest cars and vice versa. The ones with the slowest growing economies have the most cars to say, US, Western Europe, Japan, for example. And so there will be a 50-year trend of more of our used, wrecked, damaged vehicles moving overseas where they are meaningful contributors to economic and physical mobility there. So that theme isn't going away anytime soon. As for tactically how we pursue individual countries, we do both. So we are responsive when we see activity from countries that previously didn't buy and we'll invest in online and physical marketing in some cases we will invest in physical resources on the ground there as well to cultivate that new buyer base. And in some cases we are simply proactively identifying countries that fit the parameters that obviously country X looks a whole lot like countries Y and Z that already by a lot, let's go dip our toe there proactively even before we see actual buyer activity, so we do both.

Daniel Imbro -- Stephens -- Analyst

That's helpful. Thanks so much and best of luck.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thank you.

Operator

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

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Hey, thanks for taking my question. Just one quick clerical one to start off with. The revenue impact on the CAT was at roughly like 2% as well in terms of the contribution to revenue, like you gave volumes?

Jeffrey Liaw -- President and Chief Executive Officer North America

Yes. Directionally, yes.

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Okay, got you. And then, so wanted to ask about what you're seeing in terms of like telling availability to what extent that's become a constraint as more brick and mortar dealers are going digital and online retailers that's putting pressure on the system. And then like relatedly, you have like a small but growing fleet in the US that's dedicated for CAT events. But what do you do with those selling [Phonetic] vehicles when you're not in a CAT right, the other 365 -- 364 days of the year. How do you use those towing trucks in other parts of the year? And is there any opportunity to expand that to vertically integrate or is it just -- don't have scale, how do you think about that trade-off?

Jeffrey Liaw -- President and Chief Executive Officer North America

We're not deployed, they support our business in markets in which we are facing the most pressure in terms of towing vehicles. So you're right that even when there are not active storms we make good use of those assets. Medium long-term, I think there is -- there may well be an opportunity to invest further still here. Historically, we have done very well with a third-party contractor model. They tend to be very resourceful and productive and it's a good alignment of interest as they want to grow and support their own businesses and to work productively for us. But that's always -- it's an evolving mix in one we continue to evaluate overtime, during the catastrophic events and certainly even afterwards as well. We are certainly happy that we have those trucks and those drivers employed in-house, they have been very productive members of our team.

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Got it. Thank you. That's helpful.

Operator

[Operator Instructions] Thank you. Our next question comes from Bret Jordan with Jefferies. Please proceed with your question.

Bret Jordan -- Jefferies -- Analyst

Hey, good morning, guys.

Jeffrey Liaw -- President and Chief Executive Officer North America

Good morning, Bret.

Bret Jordan -- Jefferies -- Analyst

On the Ida cars and I think you called out the 14% US inventory growth. Have most of Ida cars been processed or are there any of that flow into the second quarter that might come with margins but fewer expenses associated with them?

Jeffrey Liaw -- President and Chief Executive Officer North America

Many of those cars are -- we have not yet sold the majority of the cars. So they're coming in -- many of them in the second quarter and some no doubt will -- there'll be a tail that takes longer sold than that.

Bret Jordan -- Jefferies -- Analyst

Okay. And then you did comment that insurance growth of 23% included both a higher total loss rate as well as share. Could you maybe give us some -- what was share versus total loss in that growth?

Jeffrey Liaw -- President and Chief Executive Officer North America

No, we don't break that out. And Bret, the shared commentary I think as you know is a long comments and pipeline in literally every earnings call it's been true for a long time. The industry tends to move more slowly in terms of switching providers. But over the very long haul we have generally speaking grown our share both in the insurance realm and certainly non-insurance as well. And that was true in this quarter as it was in the past 30 quarters as well.

Bret Jordan -- Jefferies -- Analyst

Okay. And then I guess a question sort of a longer term, as you think about the purchase vehicle trend and purchase vehicles up 85%, if you were to think out three to five years, do you see this becoming a business where you are doing a greater percentage of your unit volume on purchased versus service?

Jeffrey Liaw -- President and Chief Executive Officer North America

No, I think that the long-term wins of history would suggest we move the other way, that we migrate eventually from principle to a consignment basis. The principal business, for example, in the UK, when we entered in 2007, it was largely principle oriented and today we shifted the strong majority over to a consignment basis instead, which we think is a better long-term alignment of our incentives with those of our sellers right, as opposed to being principle to trade against them, we are on the same side rooting for the highest possible sale price for those cars.

Now the realm in which we do have more principle activities tend to be places where we are less established as a known brand and a known quantity. So today we are not yet a prominent consumer brand. So it's tough to ask Bret Jordan to consign his car through us and assume that we'll get a good return for you. Instead, we can offer you a compelling price you sell the car to us and we sold in turn as a principle. And did well [Phonetic] in the UK in the early days, today, that's no longer necessary, because we certainly are well-established brand among the insurance industry and otherwise in the UK. So at the point being all long-term as liquidity grows, as our recognition grows in those sub-sections of the marketplace so to speak, we'll migrate to a consignment model.

Bret Jordan -- Jefferies -- Analyst

Okay, great. And I guess one final question, just percentage. As you think about the run and drive that what percentage of the cars that you are processing could be put back on the road in these emerging markets? I mean, obviously, some are beyond repair. But when you think about the mix is it 30% or 40% of cars that you see in theory could be roadworthy again?

Jeffrey Liaw -- President and Chief Executive Officer North America

Of the cars that are exported, I don't know off-hand. But, so I don't want to speculate, but it's higher. That number doesn't sound unreasonable to me in part because there is a natural filter as you might imagine for the kinds of cars that's even worth putting out of both to get the Eastern Europe period, you will filter out the cars that are pure metal content or a couple of recycled parts and then otherwise dispose of, they tend to by their nature be the more drivable repairable cars that would ever leave the country in the first place.

Bret Jordan -- Jefferies -- Analyst

Right. Okay, thank you.

Jeffrey Liaw -- President and Chief Executive Officer North America

Thanks, Bret.

Operator

Thank you. Our next question is from Ryan Brinkman with JPMorgan. Please proceed with your question.

Ryan Brinkman -- JPMorgan -- Analyst

Hi, thanks for taking my question. I wanted to ask on what you think are the biggest drivers of your non-insurance volume, in particular the dealer cars which we know from following Car Global and ACV are under significant pressure as the chip shortages weighed on new vehicle inventories and therefore new vehicle sales and used vehicle trade-ins. Given your significant outperformance of the trended dealer cars, I'm curious if you're doing anything differently or have changed your go-to-market strategy with regard to dealer cars? Or maybe it's a function of your greater capacity after the land purchases or just what has been the drivers there and what do you think the longer term potential for dealer cars might be?

Jeffrey Liaw -- President and Chief Executive Officer North America

Sure. Nothing, nothing radical in terms of our approach. We have a very capable sales team who approaches those dealers and communicates our value proposition to them, being our global auction liquidity, subjecting your car to a global buyer base and finding the best home for that car whether it's in Ohio, Florida, Poland or Honduras. I think there is a compelling value proposition there, but there's nothing radical that we had changed in the last quarter or two or three. This is the byproduct of the auction liquidity, we've talked about a moment ago as well as our own proactive sales efforts.

Ryan Brinkman -- JPMorgan -- Analyst

Okay, thanks. And I'm not sure what percent of the non-insurance cars you auction are whole cars as opposed to like non-insurance salvage cars. Maybe you can help us with that? And then of the whole cars what percent are dealer cars versus from other sources such as off lease, off rental and repossession, because I think these other non-dealer whole car categories are down even more than the dealer cars. So just curious what you're seeing there too? And if those other categories are also a potential source of share gain going forward beyond the opportunity in dealer cars?

Jeffrey Liaw -- President and Chief Executive Officer North America

The answer to your latter question is yes, those are also relevant and addressable for us. And all cars, as you well know are, on the spectrum. So even what you define as a salvage versus whole car is a more nuanced matter, then a binary distinction between the two, but we have grown our business very naturally, of course, the rental car company with a car that's slightly damaged or meaningful damaged, we are absolute obvious home for older car. We are a good and obvious home for it as well. The newer rental cars, those of course are very meaningfully compressed in terms of industry -- available industry volume because of the shortage of new cars where fleets are hanging on the cars they've got. But yes, long-term those are addressable for us as well -- addressable targets for us as well.

Ryan Brinkman -- JPMorgan -- Analyst

Okay, thanks. And just lastly, I want to follow-up on your comment about higher used car prices being a global phenomenon. I found that quite interesting. Curious if you could, identify any sort of trends that you're seeing in terms of used vehicle inflation by market. I think it is more severe in the US. I don't know if you have any ideas as to why that might be or if that's not what you're seeing and also if used vehicle prices aren't playing more in the US than internationally, and the US dollar has somehow outperformed all expectations hanging in their very strong rallying [Phonetic] recently. What -- how does that impact affordability overseas for these cars?

Jeffrey Liaw -- President and Chief Executive Officer North America

I would say that the -- I think of vehicles with some notable exceptions. The automotive industry is being a reasonably liquid global market. So I don't think you could see 50% inflation for two-year old Toyota Corolla in one market and 8% inflation in other currency adjusted. So I do think we have observed increases in used car values around the world in most countries in which we do business. There are sources of friction and distortion of course in comparing those trends, whether it's tariffs or shipping or otherwise. They can introduce discontinuities in that comparison, but by and large, I think of the vehicle business is being a global in nature.

In terms of the long-term trends -- short-term trends, I think that, we certainly can be affected by currency in any given auction, in any given week and given quarter. Maybe in any given year, but I think the long-term trends of our cars being in higher demand in other countries is still than they are in the US, that's not going away, that's over a multiple year horizon will do off any currency effects.

Ryan Brinkman -- JPMorgan -- Analyst

Very helpful, thank you.

Operator

Thank you. Our last question comes from Chris Bottiglieri with BNP Paribas. Please proceed with your question.

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Hey guys, thanks for fitting me back in. Sort of follow up to Bret's question. Just want to make sure I heard you correctly. You said the vast majority of the CAT cars hadn't been sold yet. So should we expect it to be...

Jeffrey Liaw -- President and Chief Executive Officer North America

We sold a bunch for the majority of not yet being sold.

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Got you. So I mean, I'd be thinking like it was 1 point or 2 point impact this quarter is it like 2 points to 3 points or is it just much more than that. Any sense and the margin rate should be similar headwind, like how do we think about that?

Jeffrey Liaw -- President and Chief Executive Officer North America

Yes. As you know we don't provide any kind of forward guidance. Those cars will sell, they will generate revenue. They do have cost associated with them. They'll have some modifications. We'll talk about it next quarter.

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Yes, OK. Thank you.

Operator

Thank you. There are no further questions at this time. I would like to turn the floor back over to Jeff Liaw for any closing comments.

Jeffrey Liaw -- President and Chief Executive Officer North America

Good, thanks everyone for joining us. We'll talk to you next quarter.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

John North -- Chief Financial Officer

Jeffrey Liaw -- President and Chief Executive Officer North America

Stephanie Moore -- Truist Securities -- Analyst

Bob Labick -- CJS Securities -- Analyst

Craig Kennison -- Robert W. Baird -- Analyst

Daniel Imbro -- Stephens -- Analyst

Chris Bottiglieri -- Exane BNP Paribas -- Analyst

Bret Jordan -- Jefferies -- Analyst

Ryan Brinkman -- JPMorgan -- Analyst

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