In anticipation of future volume, and to stay prepared in the event of future catastrophic events, Copart plans to continue its expansion activity this year, according to the company’s recent quarterly earnings call.

“Year-to-date, we have announced opening of 12 new yards and seven major expansions, totaling almost 600 acres,” said Will Franklin, executive vice president, Copart.  “Our expansion activity will continue, as we believe industry trends will drive future volume growth.”

During Copart’s third fiscal quarter, the company announced the opening of six new yards. Four of the new yards were in the U.S., in Ogden, Utah; Long Beach, Calif.; Alorton, Ill.; and Okeechobee, Fla.  One was opened in the U.K., in Newbury, England, and the last opened in Minas Gerais of Brazil.

“I think it's fair to think about our land acquisition program, broadly speaking, in three different ways. It's a strategic matter for us, it's taxable and it's also opportunistic,” said Jay Adair, CEO, Copart.

The three different ways to think about the company’s acquisition program, he noted,  are strategic, tactical, and opportunistic.

Copart’s land acquisition program is strategic, he said, because it’s strategic to have enough land at a given facility, in order to provide the level of customer service that  customers are accustomed to. A recent acquisition of a large plot of land in Florida, for example, will allow the company to accomplish this, but it will also allow for the company to be better prepared in the event of a catastrophic event, such as a natural disaster.

The tactical aspect, Adair noted, comes from the fact that the company is aware of exactly which facilities are congested and require expansions. And the opportunistic aspect comes from acquiring land when the right moment presents itself. Just last year, the company acquired a major plot of land in Los Angeles after pursuing the idea of growing its presence in the region, according to Adair.

Catastrophic Events

There were no substantial effects to Copart’s unit sales from catastrophic weather events during the company’s third fiscal quarter, according to Jeff Liaw, CFO, Copart. The company's global inventory grew by 7.9% during its third fiscal quarter.

Still, even though catastrophic events did not have a substantial effect on the company during its third fiscal quarter, the company is still preparing for what the future might bring.

“So you heard us announce a while ago, the acquisition of a large plot of land in Florida, which is both relevant for day-to-day capacity, but especially for catastrophic events, so we want to be ahead of the curve, five, 10, 15 years out,” said Adair.

The company is also has an action plan for events that could happen on a shorter time table. Copart has formed a special team of employees that the company can deploy to one of their locations in the event that it is hit by some form of natural disaster. The company has also developed an internal fleet of 50 trucks that it can use if such an event were to occur.

“So that in a [catastrophic] situation, we are not negotiating with others or bartering with others to get volume, we can dedicate our own volume to that area to address the extra needs,” said Franklin.

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