Jayson Adair - Chief Executive Officer and Director William Franklin - Senior Vice President and Chief Financial Officer

John Lovallo - Bank of America Merrill Lynch Jason Ursaner - CJS Securities Scott Ciccarelli – RBC Capital Markets Scott Stember - Sidoti & Company Gary Prestopino - Barrington Research Ryan Brinkman - Goldman Sachs William Armstrong - C.L. King & Associates Craig Kennison - Robert W.

Baird

Thank you, Lisa. Good morning everyone.

We’re going to change things up a little this morning; Will and I are in two different locations, and so he’s going run through the disclaimer, go through his update on the company, turn it over to me and then we’ll open it up for question and answers. So with that, it’s my pleasure to introduce Will Franklin.

Thank you, Jay. Before I begin our comments, I’d like to remind everyone on the call that our remarks will contain forward-looking statements, including the statements concerning our views and trends in our business.

These statements are neither promises nor guarantees and are subject to certain risk and uncertainties that could cause the final results to differ substantially from those projected or implied by our statements and comments. The key risks includes trends and average selling prices for cars, and factors that can affect our gross margins.

For a more complete discussion of the risk that could affect our business, please review the management's discussion analysis and the factors contained in our 10-Qs, 10-K and other SEC filings. I’ll now provide some brief comments on the financial performance in our second quarter.

Yesterday we reported our results for the second quarter of our 2012 fiscal year. Consolidated revenue was $227.9 million compared to $207.4 million for the same quarter last year, an increase of 9.9%.

Included in our second quarter of last fiscal year, there’s a beneficial settlement with the U.K. tax authorities respecting the proper apportionment of auction sales proceeds between revenue and VAT.

As a result of the settlement, we recognized in that quarter, $1.8 million in purchase car revenue relating to prior period’s activities. Excluding this settlement, revenue growth would have been 10.8%.

The growth in revenue was driven primarily by growth in unit volume, which increased 7.1%. On a same-store sales basis, unit volume grew by 5.2%.

In North America, insurance volume grew by 6% and was driven by market wins and by the severe weather we experienced last summer. Non-insurance volume grew by 8.1% and was driven primarily by growth and supply from franchise and independent car dealers, and from individual consigners.

Non-insurance volume represented 19.8% of our total North America volume. While the total number of purchased units sold increased by 2%, the decline is a percentage of our total units sold as we continue to migrate contracts in the U.K.

and the principal model to the agency model. Yard and fleet expenses grew from $85.1 million to $86.4 million, and reflect the higher volume of cars processed.

Our gross margin grew from $85.9 million to $99.7 million or 16.1%. Excluding the impact of the beneficial settlement in the U.K.

in our second of last year, our gross margin would have grown 18.5%. General and Administrative cost, excluding depreciation were $23.4 million compared to $23.7 million for the same quarter last year, and included approximately $500,000 in headquarter relocation cost.

In the current quarter we determined that certain assets, primarily our fleet of private airplanes, will be removed from operations and disposed. Consequently these assets, which also include certain real estate and computer hardware, were written down the fair value, resulting in an impairment of $8.8 million.

Our operating income, excluding the impairment, increased from $60.2 million to $72.3 million or 20.1%. Excluding the beneficial settlement in the U.K.

in the second quarter of last year, operating income grew by 23.8%. We ended the quarter with $127.6 million in cash, accounts receivable grew as we increased inventory.

During the quarter we generated $26.2 million in operating cash flow. We expended $7.8 million for capital assets, and $91.4 million for the repurchase of 1.97 million shares of our common stock.

At the end of the quarter, we had 53.3 million shares outstanding on an undiluted basis, and we had 25.5 million shares remaining in our share repurchase authorization. In the quarter, we fixed our interest rate – in the previous quarter we fixed our interest rate with respect to 75% our outstanding term debt at 2.35%.

During this quarter we fixed the interest rate with respect to the remaining 25% of our debt at 2.19%, all through interest rate swap arrangements. Our outstanding term debt obligation is $481 million, and we have $100 million available on a revolver.

That concludes my short comments; we’ll now turn the call over to Jayson Adair, our CEO for further discussion of our second quarter’s results.

Thank you, Will. Thank you, Will.

Again, good morning everyone, and welcome to the second quarter call. I’ve got seven points that I want to go over with you this morning.

We’ll talk about CapEx, facilities, costs, ASPs, the impairment, give you a little more color on that, the transition and Overdrive. Looking at CapEx for the second quarter was less than $10 million.

Will’s already discussed with you some of the details of that. My goal here is to explain the third quarter and fourth quarter trends.

We do anticipate that CapEx will be higher in the third and fourth quarters of this year. That is, primarily driven, to my second point, facilities.

We have currently over 12 facilities in the pipeline that we’ll either be opening or expanding in the next year, and so there’ll be capital requirements associated with that. We tend to give capital goals or trends that we think the amount will be, towards the end of the fiscal year, so we won’t be doing that on today’s call, I’ll just tell you that the trend will be higher in Q3 and Q4.

This is primarily due to market share gains across the company and increased volume associated with non-insurance company gains, as Will discussed in his opening remarks. Also as we stated in the first quarter, we believe that the strategy that we had in fiscals ’'09, ’10, and ’11 to take advantage of growing revenue by spending and further deploying our team and building up a network of sales people and operations teams has worked.

As you seen, we held cost down relative in Q1, and that has happened again relative in Q2. We anticipate this trend to continue, that we will grow revenue going forward.

And as we grow revenue, we’ll be able to leverage that and hold costs rather steady relative to the revenue growth as a percentage. Looking at our fourth point, ASPs, the average selling price in Q2 was high but in Q3 we are now on the last day of the first month of the quarter, and we are looking at record average selling prices for the company.

So that has continued to trend through the second quarter up, and it is doing so as we now come to the final day of the first month in the third quarter. We anticipate that that will continue throughout the quarter at this time.

Also, we discussed the impairment in the opening remarks from Will. We are selling off both airplanes that the company currently owns.

We’ve had a aviation department for well over a decade now. Being a California company, it’s almost imperative when you’re running a business that has so many locations across the country.

A typical day for team Copart, when we travel is to leave either on Sunday or very, very early on Monday morning, and at best, you’ll still end up reaching the East Coast by 2:00 or 3:00 in the afternoon, maybe with enough time for one meeting, then potentially dinner. And then what you’ll also do is you’ll tend to stay out on the road the whole week because of the travel time to go out and come back.

So having an aviation department was part and parcel, and critical to being as efficient as possible so that you weren’t wasting time in airports. Being in Dallas, Texas changes all of that.

It now allows us to be a couple of hours from the majority of the country, whether it be New York, Chicago, Miami. There’s flights in and out of Dallas on a regular basis.

So the ability to jump a plane and head out to a market and come back, it’s not only efficient, but it also can be done in a day or two, as opposed to staying out all week. Again, another one of our reasons for moving out, moving the company to Dallas, Texas that we talked about before’ there’ll be a savings of not having those planes going forward, obviously.

And currently, we’ve got those planes held for – held as assets for sale. We anticipate that we’ll be selling those planes off in the next year.

Let’s talk about transition. We’ve talked, as Will mentioned, the headquarters relocation had a $500,000 cost associated with it in the quarter.

We anticipate the move to Dallas will be complete by the end of the fiscal year, and you will not hear us talking about transition cost associated with that in the next fiscal year, fiscal ’13. So we anticipate being completely done and finished with our transition as we reach the end of the fiscal year, which is July 31.

We’ve already reincorporated in to Delaware, and we are now in our seventh month of Project Overdrive, my last point. Project Overdrive is an all-encompassing experience for the company.

We are replacing our operating systems, our financial systems, our CRM, our online experience, everything that is technology in Copart is being overhauled. And that is simply to make us a faster and easier, more comprehensive and more transparent company to do business with.

It will change the user experience at the facilities. It will change the user experience online.

It will change the user experience when on the phone, calling in to talk to our team. So we are really, really excited about that.

That is on time, as we expect. Most of these systems we think will be happening, most of these system changes, some of them have already taken place, but the ones that haven’t, most of them will be happening in calendar 2012.

And so we anticipate being fully complete with that in the end of fiscal ’13. We’ve talked about that on some previous calls, but wanted to give you an update and let you know that it’s going very well.

We’re excited about how the team is doing on that. And we’ve just got a lot of good stuff going on at Copart.

So right now, what I’ll do is I’ll turn it over to Lisa. And Lisa, we’d like to open it up for any questions that we might have.

Thanks.

Hey guys, thanks for taking the call.

Good morning, John.

Well, it seemed to be lighter than you expected?

A little bit, yes.

No, I think this is in line with our expectations, and actually, we had a nice growth in yard margin on the year-over-year basis expressed as a percentage. And that is result of accepting more volume going through our system which is primarily fixed cost.

Okay, fair enough, maybe I’m – maybe something is off in my calculation. Second question is given what the stock price is today, do you guys still consider yourselves to be buyers of this stock?

We talked about that in the past. The company generates a significant amount of cash, and that will be used to expand facilities, add new facilities to company, the potential to buy stock back is there, the potential to acquire companies is there, and you know, we don’t.

on the calls, break out, how we are going to do that and lay out our strategy, but that is definitely one of the options. You’ve seen the trend in the past, that’s probably the best way to think about it.

Great, and if I could just sneak one last one in here, it looks like the tax rate was a little bit lower than historical quarters, is that a reasonable rate to use going forward, around 35%?

It is, we’re fairly efficient in our tax strategy, we’ve been able to source a lot of our revenue to states with preferential tax rates, we’re able to source some of our revenue internationally at lower tax rates. So I think going forward, I think to up to 35% is probably fair.

Great, thanks very much, guys.

Thank you, John.

Good morning.

Good morning.

Congrats on a very strong quarter, thanks for taking my questions.

Thank you.

Well, our inventory grew, as it always does through the seasonality of our business. You are right, the growth this year is more modest than the growth it was the same quarter last year.

But without getting into specific numbers, which we don’t do, I can just address the trends, which I just did, so – and that has a somewhat beneficial impact on the margins as well as now with the accounting, we don’t – we don’t capitalize all of those costs a recovery in inventory, they flow through. So this quarter we had a little bit smaller amount of recovery costs expressed in our yard and fleet costs.

Okay, and just on the cash flow statement, where does sort of the towing and title change, where does that exactly flow through if it’s not a principle on unit?

In inventory and vehicle point cost.

You’re always trying to grow market share, and you’re always working with clients at the local level in addition to a national approach, and we’re very aggressive. I mean, we’re a very competitive company, and so yes, I think we definitely have influence on driving market share, as most companies, I would say do.

I’m also a little bit confused by the question to be honest.

I guess I am asking if there are less vehicles coming in in the winter period because of the weather – you know, if you could continue to fill your yards with incentives, or if…

It’s been a lighter winter. I mean, everyone knows that it’s been a lighter winter than normal years, but we continue to build inventory in the quarter, and we continue to have significant market share gains, and so, we anticipate volumes going forward are going to be up.

Okay, great, thanks a lot.

Hi, guys.

Hi, Scott.

How are you Jay. I guess one of the questions is probably a follow up to that last answer you just gave.

You know, we did see a nice improvement in unit volume, can you be any more specific regarding where the unit growth came from and how should we think about the sustainability of the improvement going forward?

Will gave you some pretty good specifics of 6% insurance, 8.1% non-insurance, so we’re growing units across the company, the non-insurance business is growing a little bit faster than the insurance business, which is to be expected. But, we’re continuing to grow volume across the company.

I think there is a conception our there that’s it a shrinking industry, and we just don’t believe that’s the case. We’ve talked about it in the annual report, we’ve talked about it on prior calls.

This is a market where ASP’s are increasing, there’s a demand for vehicles out there due to a short supply of new vehicles over the last three years, and the average vehicle in America is aging. And when vehicles age they are more likely to be total loss.

It’s much easier to total a five-year-old car then it is to total a one-year-old car with similar damage. So we don’t view it the way a lot of the analyst view it, and I don’t know what to tell you other than that – you know, the results, I think, are showing at this point.

But to be fair – I mean, you know, this quarter that the insurance was, I think, I will have to go back and check my notes, was better than what we’ve seen maybe the last two quarters, I’m just wondering if there is any kind of change that helped propel that?

Well, we’ve continued to see growth in our core business, and we had some very big wins back in calendar ’10, fiscal ’11 that we talked about, and some large market share gains and unit growth back then. I honestly don’t think about business quarter-to-quarter, I think of it much more over a year, to five-year horizon, But the volumes are continuing to come up.

As we said, you know, we want to make sure that we are giving as much information to the investment community as possible and we’ve had market share gains in the past, and we’ve had market share gains going forward. The company, at this point, we believe will be doing more volume over the next year.

Okay. And then, I guess, my second question is, are you all at all concerned that you are trying to touch so many different systems in a short period of time with Project Overdrive?

I mean, if you guys were to, you know, have an area of concern where your maybe pushing the envelope too much in terms of change with the organization. Could you kind of highlight that for us?

Sure, we internally talk about ourselves as change centric, and that’s an internal term that we use about Copart. I talk about they systems piece of Overdrive because I think it’s something that the street can see and it’s a very tangible thing, but we’re changing a lot more than that right now.

The move to Texas alone is a big deal as well. So there’s a lot of change happening at Copart right now.

We’re always concerned about making change and how we address change, and how we handle change. And when we do things that make sense, we’re happy and when we do things that don’t make sense we don’t continue with them, we change them, and we fine tune, and sometimes we even go back.

So we know how to manage change. I feel very confident in the team, they are really, really good when it comes to managing change.

So, I’m definitely of the mindset that it’s something that we need to watch, we are as a team doing that and so, am I concerned about how we implement that change, yes. I have concerns, but I'm not worried, if that gives you any feel for it.

Yep. That’s helpful.

All right. Thanks a lot, guys.

Thank you.

Hey, Scott.

Hey, Jay. How are you?

Good.

Will, could you just remind us of the new accounting rules – how we should look at the yard margin on a seasonal basis, you know particularly for the back half of the year versus the first half of the year?

Sure. It has to do with growth in inventory.

So in quarters in which you grow inventory, it has a suppressive impact on your margin percentage because you have to plus through much of the recovery costs as opposed to formally we capitalize that on the balance sheet and recognize that at the time we sold it. So consequently, you’ll see nice growth in our margins percentage in our third quarter when we sell off the inventory that was accumulated in our first and second quarter.

If you look at last year, I think there was about a 460 basis point increase on margin percentage in our second and our third quarters. And you’ll see that same movement, maybe not that magnitude, but that same movement this year.

Okay, but to that point, if you’re having – if there was less weather and less cars that possibly came in into inventory, there might be an offset with lower volume coming through but higher margins is pretty much what you’re saying?

That’s right. It has that effect on your financials.

So because there’s a difference in the period in which you collect the car and which you recognize the revenue, - I’ll just restate what I said previously. When you grow inventory, you have lower margin percentages.

Got you. Okay, and as far as G&A goes, can you just talk about what the move costs again are expected to be at the end of the day and as far as the new IT system in this Project Overdrive, it seems like most of it will be capitalized at this point.

And how much, if any will come through to the income statement?

We’re always said that we anticipate the cost of relocation being around $5 million. It may be a little less than that.

So far we’ve recognized $3 million. The timing of the balance of recognition of that is uncertain because it has to do when people decide to move.

In terms of the SAP project, we still think that total cost will be around $35 million range and once we start to utilize that system, which we think will be in towards the last half of fiscal 2013, those costs will roll through our income statement as amortization. So depending on the like that we described to it, seven or ten years, it could be anywhere between 1.2 and $1.6 million of extra amortization per quarter.

Got you. So alluding back to Jay’s comment about the SG&A leverage, we should see similar range for the backhalf of the year, but I guess it depends on the timing of when the balance of those relocations costs go through?

That’s correct.

Okay. And last question, Jay, could you talk about the UK?

The trends that you saw there and if anything has slowed down whatsoever?

Yes, sure. The UK is doing fantastic.

We’ve – as we’ve talked about in previous calls, we’ve got all of our locations fully integrated and we’ve continued to see growth in that market. We’ve got high ASPs, high average selling prices in the UK as well as high unit volumes.

So our team there has done a fantastic job and if there’s anything specifically that you want me to comment on I can, but in general they’re doing very, very well and we’re happy with the results.

Got you. That’s it, thank you.

All right.

Hi. Good afternoon.

Good morning, Jay and Will.

Good morning.

Good morning. A couple of things here.

Number one, Jay, you know, that large contract that you took a year or so ago or two years ago, have you lapped that in terms of full implementation on a quarter to quarter basis? What I’m getting at, are we looking at an apples-to-apples comparison on the until?

Yes. We are.

We had a full run of that account back in the second quarter of ’11 and a full run today in Q3 or Q2.

And then could you maybe address – I’m looking at the gross margins in the UK and I’m using sales minus cost of vehicles and it looks like it was running in the 14, 15% throughout fiscal ’11, 14.5 in first quarter and now it dropped to 12, 10. Could you maybe address what’s going on there?

Yeah, again, you’ve got rising ACVs right now, both in the US and in the UK and we pay a percentage of ACV. So when ACV’s drop, we get a significant benefit of that under a purchase because the cars typically don’t drop at the same rate.

And when ACVs go up, it has a negative effect and again, because vehicles don’t go up quite frankly at the same rate. And then part of it is just mix.

It’s the type of cars that we’re selling as well. But primarily it’s ACV.

Okay, so you, so, in the UK, what percentages of the cars are you still purchasing? I don’t know if you’ve mentioned that?

Will, Will, can you comment on that?

Yes, it’s in the high 20%’s. And let me add this, Jay, the absolute amount of contribution for the purchased cars on a per unit basis is higher this quarter than it was the same quarter last year, despite the fact that our percentage basis is lower.

That make sense, Gary?

Yes, got it. All right, a couple more questions here.

The price of your, your ASP’s, you said they’re up at record levels. But you know as, looking at, at least, the wholesale car data, it looks like prices have flattened out over the last say six months.

So, you know, obviously there’s probably increased demand there for the cars that you’re selling. Could you help us out?

Yes, I know. We believe that’s exactly the case.

We’ve been, due to our marketing efforts and we’ve made a number of changes in our strategies since we implemented a very aggressive marketing campaign in ’09. But we deployed a lot of money towards bringing in additional members that eventually become additional buyers.

And we’ve seen a lot of success in that, so we definitely believe in our technology, and our (auction) platform, and our ability to drive demand. And that is the case.

We are, again, it’s another reason for the increased market share on the insurance side. It’s another reason for the increased market share on the non-insurance.

This is all supply and demand, and if you can’t drive demand, you’re not going to, you’re not going to build ASPs. And so we think we are out-performing the market at this time.

We’re doing, we’ve got a team that’s really, really knocking the cover off the ball right now. And that’s a good thing.

So you’re seeing the network effect. Could you give us any idea of, just over the last two years or so, just how much you’ve increased your members, on the buy side?

Oh, yes. It’s six digits.

I mean, it’s over, it’s well over 200,000 new members a year. I mean, we’re doing some very aggressive marketing to bring in additional members, and we’re expanding that member base in a big, big way.

The last decade was about interstate selling and then, eventually, that became out of country bidding. And today, I would tell you, we’re in the third chapter, which is really just being very dynamic in our approach to bringing in members, and the way that we’ve put cars up on the Web; the way that we reach out to members to make sure that they see cars that maybe they missed, so that they bid on them before the auction comes up; that kind of thing.

We’ve got a lot of analytics that we’re working, a lot of metrics that we’re working. And yes, so we’re seeing some big, big improvement there.

Well, could you, I mean, I don’t know if you make this public, but do you talk about just how many members are buyers, are your buyer base?

Oh yes. I don’t have the number off the top of my head, but, you know, the member base is well over 20,000 new members a month.

And then our conversion ratios just continue to go up. Yes, our goal is to, is to get them to bid.

And I’ve talked about the process before. You want to sign up a member.

Then you want to get the member to browse the website and bid on a vehicle; then become second-high bidder; then become high bidder; and actually buy a vehicle. So that, you’ve got to walk through that process.

And we’re just continuing, we continue to improve there. And I think we’ll continue.

That’s the, that’s really the question is, are we going to continue to improve in that area? And I believe, fundamentally, we will.

Okay, I mean, this is an important part of what you’re doing. Could you talk about what the conversion rate is, or is that something you can’t share with us?

Yes, no, it’s, I can tell you that the conversion rate is improving dramatically, month to month to month. But no, we don’t give out all the numbers simply because there’s a lot of what we do, not just in acquiring a member and converting a member to becoming a buyer.

But there’s a lot in what we do in the interaction with members, in the data-sharing with members. There’s a lot of things we do that we think are (inaudible), you know, special sauce for the company.

And, you know, we’ll continue to do that, and the results will continue to reflect that. And we do share that information with customers, obviously, with sellers, and we’ve had market share gains in the past.

And we think we’ll continue to have market share gains, because of that.

Okay, and then one last question. You talk about you step up your capex.

Did you give a number for what that is going to be for the year?

We may have given a range, but I’m not sure. Will?

No, we did not.

Okay.

And I’d prefer, I’d prefer not. I’d prefer not to right now.

We’ve got plenty of cash. I’ll tell you that we’re not, we’re not worried about not having enough cash to manage the CapEx.

I just wanted to talk about it in the call because CapEx was below $10 million last quarter. And we’re very confident, at this point, that it will trend above that.

We’ve got some deals in the works that are coming out. We’ve got capacity across the organization, but we’ve had some significant market share gains recently.

And there is going to have to be some cash deployed towards expanding existing locations and even adding some locations to the company.

So does that, does that change, you know, your thoughts on capital allocation, maybe where you were six months ago to now, the fact that you’ve got these facilities that you need to spend some money on? And/or, you know, is there (an appetite to) add more depth to the balance sheet?

Well, okay, I was going to try and give you a quick answer, but that evolved into more than one question. As far as the, as far as our outlook on stock buyback, I wouldn’t say it changes it.

I would say that we, all through fiscal ’10 and fiscal ’11, saw this growth that was coming down the line. We created it by spending more than we had previously, and basically priming that pump.

And now, at this point, what we feel internally is that we can hold costs while growing revenues. But there will be, we knew that back then.

We’ve got over a dozen facilities that we own, that we don’t even talk about. They’re not listed as one of the Copart facilities.

We consider them in holding. So that the day that we need to add another location, that market will just turn that facility back on.

And so, we’ve got a number of those scenarios. We’ve got hundreds and hundreds, if not thousands, of acres that have not been developed yet, but are adjoining the yards that we own.

We’re very long-term in our view, and if there’s an opportunity to buy land next to a facility that is at 80% capacity, we’ll buy it, knowing that two, three, four, five years from now, we’re going to need to expand that. And we would prefer to have 150 hunded-acre locations than to have 1,000 15-acre locations, obviously.

So our goal is very much veered and driven towards expanding existing facilities before we add additional facilities. But, nonetheless, we’re going to be doing both in the next year.

We’re going to have to do both. And we’ll continue to look at our stock as another growth driver for the company, as we’ve done in the past.

Thank you, Jay.

Thanks, Gary.

Hi. Good morning.

Congratulations on an excellent quarter.

Thanks, Ryan.

Obviously you had a very strong gross margin rate quarter on the agency side. One way to look at this is that you’re able to grow your agency revenues by $15.9 million year over year while growing your yard and fleet expenses by just $0.1 million.

That seems really surprising. I would say that I would have thought that there would be more variable expenses associated with the increased volume.

So my question is, how are you able to achieve 99% incremental margins at the gross profit line? Is that at all sustainable?

And did you…

Yes, we said – well, we’ve said in the past in Fiscal ’11 calendar ’10 and calendar ’11 that we were gearing up. You’ve seen big increases in operations expense, you’ve seen bigger increases in G&A expense.

So we’ve geared up in a lot of markets to be able to handle additional volume that we believed at the time was going to come in. And we’ll be increasing it.

We’re not going to hold it that tight. There’ll be some increases.

We had a recent large market share gain that came on board, and so we’re going to be adding additional people to the company. So you’ll see some additional costs, but as I said in the opening remarks, we will be able to hold our expenses down relative.

You’ll see a margin improvement relative to the revenue growth in the company because of prior investment in the past and because it’s the nature of a fixed-cost business.

That’s great. In regards to this business, is this the first time you’ve referred to it, and how does it compare like in terms of scale to – for example, the All State business when it was fairly transformative?

Right. Well, it’s similar in size and it’s similar in size in terms of new units to the company.

Obviously, we’re a bigger company today, so it’s – as a percentage of the total company, it will be smaller in that regard. But yes, it is similar in size.

Okay, because I note that a caller on their call yesterday suggested that they recently lost in [inaudible]. So okay, so it’s going to be very significant in size.

Okay, and then, just my last question, in trying to understand the gross margin a little bit more, obviously you answered it very well; it seems like you’re taking off some of the more discretionary expenses. There were some very low expenses but you’re taking off some investments that you can now lever.

What about the building of inventory during the quarter? I mean, there’s an idea out there that there were fewer accidents in the month of December.

I know a lot of companies have talked about the warmer weather and I think LKQ, on their call, even mentioned there were fewer accidents. So you mentioned that you’re building inventory and I guess that’s because of your business wins.

But was there a less building of inventory because there were fewer accidents in December? And could that have somehow helped explain the awesome margin performance?

Or am I just barking up the wrong tree?

The awesome margin performance, I would say, is just the additional units going through a company where we’re holding costs. Why are those additional units taking place?

Well, it’s definitely not weather. We’ve seen the mildest winter I’ve seen in a long, long time; very, very mild winter.

So it’s not winter. It is market share gains.

The only way we can break that out is look at contracts where we have 100% of the business and then look at contracts where we’re adding volume and try to break that out. But you know, I would attribute our unit growth to some seasonality.

Even though it’s a mild winter, it’s seasonally going to be more volume in second and third quarters than in the first quarter. So some of it is seasonality, but the majority of our growth going forward is going to be market share gains.

It’s just the nature of where we’re at right now as a company.

And then just very, very last question, what’s your latest thinking in terms of the timing of when you would actually build the physical yard in an emerging market?

I don’t understand the question.

When would you expand your operations, not to sell to people in emerging markets, but to actually build yards, salvage facilities in an emerging market, like a Mexico?

Emerging markets like – yeah, other countries, international? Yes, we’ve talked about that in prior calls.

That could happen as early as this fiscal year. And you know, it will definitely happen in Fiscal ’13.

I mean, that will be something we’ll be pushing hard on. So how much of that – how much growth will we see and – that’s all to be seen.

But Copart has not been shy about the fact that we are going to have an international expansion. This is a unique business.

I don’t think when Wal-Mart opens up in England and has [inaudible], that they get additional buyers in England that help their Wal-Mart stores in the U.S. Copart’s the exact opposite of that experience.

As we open up locations in other countries, it is every bit an accumulator of members and buyers. So as we open up in other markets, we not only do business in those markets, but we bring additional buyers into the company and then, of course, that makes it a much more competitive environment.

This is a complete supply/demand story if there ever was one. So as we bring additional volume in through increasing the markets, through market share gains, through weather, whatever the scenario is that’s causing additional volume, you’ve got to have additional members.

So as we expand internationally, that will be the case. It has been in the past and we know it will be going forward.

Every time you open up a location in another market, they learn about you and then they start to buy from you. This is very much an interstate business today, somewhere around half of the cars that are sold in any given state on average will either end up being pushed by a buyer from another state or pushed by a buyer – or bought by a buyer from another state.

And that just excluding the international stuff for a minute. You don’t – it’s not a localized market.

When I got into the business, back in the day, it was very localized. You say buyers in the city that the auction was in, buying in that market.

They may drive 100 or 150 miles to another market, but it was a very localized market. Today, it’s very much not only a national marketplace on what’s product’s selling, but it’s very international.

So there’s no question in our mind as a team, we view the success of Copart as expanding that network of facilities across the globe and increasing the marketplace and making it much more of an international business.

Interesting. Thank you very much.

Okay. Thanks, Ryan.

Good morning, Jay and Will. Most of my questions has been answered, but did you not give out the same-store revenue increase for this quarter?

No, Bill, we stopped giving that because it was just too complex and there was too many variables when you’ve got FX and migration of contracts within agency and revenue. So in the last probably three or four quarters, we just talked about same-store sales in terms of units, which we gave out.

It was 5.2%.

Got it. And then on the volume growth, on the vehicle sales side for where you’re purchasing, buying for your own accounts, what was the volume growth there?

I’m not sure if you gave that out.

I did. It is 2%.

It primarily resulted from an acquisition that we made last March in the UK.

Okay, thank you.

Thanks, Bill.

Hi, Jay and Will. Thanks for taking my question.

Many have been asked, so I’ll shift gears and ask more of a cultural question. But how much of your staff in California has sort of turned over in the move to Texas?

And has that been a challenge to manage or to really preserve your culture in that move?

Yes, we’ve got an amazing culture. I won’t go into specifics, Craig, on the numbers and that portion of it, but I’ll just tell you, we have an amazing culture of folks and we’re maintaining the culture but we are changing it.

Copart has, through Overdrive, we’ve talked about being a faster, easier, more comprehensive, more transparent company. But if I were to sum it up into a couple of points, we want to be much more of a yes we can company.

If you want us to do something, we want to be able to do it. We don’t want to find the reasons why it’s a difficult process, we want to find the reasons why we can definitely do it and we want to be scrappy.

And I say, pun intended, but you know, it really is in the term, in the true sense of the word. We want to be as nimble as possible.

We want to be a company that we can change direction quickly, we can deliver products quickly and that culture is stronger today than it was six months ago. We are pushing harder and harder and harder to be a faster, more responsive company to our customers, to innovate at a quicker pace, to develop products at a quicker pace and I don’t just mean technology, I mean products at the locations, the way that we interact with the customer, the way that we service the customer.

So the culture is stronger than it’s ever been. It’s definitely changing.

There’s no question about that. We’re definitely in an evolutionary – in fact I – we had a meeting, an all-hands meeting last week and I told the team that Copart has gone through an evolution in the last decade.

We are now in a revolution. We are really, really changing the core of our company and how we’re thinking about our market and our customers and how we interact with those customers.

And we’re here to serve. We’re here to please and we’ve got a great team and we’re going to do that.

And the folks that are staying with the company will do it, the folks that are coming on board will be geared towards that culture for sure, without question.

Thank you. And then a different question on the topic of China.

One of your competitors has a partnership there. It sounds relatively small today, but it’s a deal to move end-of-life vehicles to that scrap market.

Is that an opportunity for you?

Yes. We have the same partnership with that company.

So we didn’t feel like it was really something that we would talk about simply because you haven’t seen us talk about the customers that buy from us in Ababa or Dubai or Lithuania, or Ghana or any of the other countries that we sell to. So it’s just another customer, another marketplace that we’ve got and we’ve, quite frankly, have been selling to Asia now for quite a few years through Twain and through some of the other nations in that marketplace.

So we’re comfortable with it. We like it, it’s a good thing and that’s really the story.

And then last question. Has there been any change to your fee structure or pricing ladder or is all the growth driven by other factors?

Yes. You know we don’t talk about pricing on the calls.

So I'm just going to move right along from that one, Buddy.

Thank you. Take care.

Okay. Thanks.

Hi. Thanks for letting me take a follow up here.

Just on the inventory growth and the impact on margin, you mentioned that insurance volume was stronger than normal seasonality since it was helped by the summer and that inventory did grow – it grew, but more slowly than normal because of the winter. But then I thought you also mentioned year-over-year volume growth in salvage as being sustainable.

I’m just a little…

You’re a little confused?

Yes.

Yes, so if I look at September right now, September will be more units sold. I’m sorry, September – February will be more units sold this year than last year.

It is a Leap Year so I haven’t broken it up per day, I just looked at it for the month so far and we’ve got one more day to go here, but it will be bigger. A number of things could happen between now and the end of the quarter.

We’ve got two more months in the quarter, but at this point, yes, we’ve had a soft winter, there’s no question. But we’ve had a lot of gains on the insurance and non-insurance side and so we anticipate going forward, not just Q3 or Q4, but going forward into the next year that we’ll be selling more volume year over year.

Okay. And then I guess maybe just a different way.

The inventory growth, can you put a number on it?

No.

I know you mentioned in your filings [inaudible] typically do 10 to 30% more.

No. We don’t give numbers in terms of inventory or units sold, or anything of that.

We just give you the trends.

Okay. thanks.

All right, thanks, Jason.

All right, thank you, Lisa. And thank you, everyone else who came on the call and for asking the questions.

We’re pleased, obviously, with being able to report the quarter to you. We look forward to reporting Q3 and 4 and then giving you some updates on how we think we’re be doing in Fiscal ’13.

That concludes our call. Thank you much.

Bye, bye.