Good day, everyone, and welcome to the Copart Incorporated Q2 Fiscal 20 13 Earnings Call. As a reminder, today's call is being recorded. For opening remarks and introductions, I'd like to turn the call over to Mr. Jay Adair, Chief Executive Officer of Copart Incorporated. Please go ahead sir.
Thank you, Melissa. Well, good morning everyone and welcome to the Q2 earnings call for Copart. I'm going to turn it over to Will Franklin, our CFO, for opening remarks. He'll pass it back to me and then we'll open it up for questions. Will?
All right. Thank you, Jay, and good morning, everyone. Before we begin, I'd like to make the following comments. I'd like to remind everyone on the call that our remarks will contain forward looking statements, including statements concerning our views of trends and our business. These statements are neither promises nor guarantees and are subject to certain risks and uncertainties that could cause final results to differ substantially from those projected or implied by our statements and comments.
The company expressly disclaims any obligation to update or revise these statements and comments. For a more complete discussion of the risks that could affect our business, please review management's discussion and analysis and the risk factors contained in our 10 ks, 10 Q and other SEC filings. With that done, we'll now begin our comments on the quarter and I'd like to go over some of the financial results as well as make some comments about our recent acquisitions. During the quarter, we announced the expansion of our business into Brazil with the acquisition of Central de Liois. These include 5 locations in the Sao Paulo area.
The Brazilian salvage and insurance markets are structured very similar to the United States. In that the insurance companies settle with their policyholders, gain possession of the damaged asset and then have a need to monetize that asset. In Brazil, the settlement process between the insurance companies and the policyholders takes far longer than in the United States. Consequently, the ability to store cars is even more important. In addition to providing storage, we have found that insurance companies in Brazil are looking for the same value from their salvage provider as those of the United States, namely quick pickup cars left at the repair shop incur storage fees and tend to lose parts.
They want their assets protected from both theft and weather. Transparency. They want to note at every step of the process the location, status, condition of the car and the salvage decision, to make sure they salvage the cars that should be salvaged and repair the cars that should be repaired. They want data about the settlement and salvage process, days in yard, returns by make, model and year, adjuster performance and many other metrics. They want a collusion pre process.
They want to know that they are selling the car for its true value unfettered by buyer or seller collusion and finally the returns. The insurance companies want to give their car to the company that can sell it for the most money. These are exactly the values we provide to the insurance industry in the United States. We expect to compete and to expand our market share based on our ability to provide these values and because we have the capital to support expansion. We chose the Brazilian market for our first emerging market expansion not only because of our ability to provide value to the insurance customer, but also because of its dynamic growth.
We measure growth potential in a market not by the growth in Park, but by the growth in the auto insurance premiums, which have been growing between 15% 25% a year as the emerging middle class gains the ability to finance and purchase a car. While we are excited about the opportunity in Brazil, we do not expect immediate material contribution to our EBIT. Much like our entry into the U. K, it takes time to reintroduce our systems and processes and to gain the scale needed to move the market. In the U.
K, it took nearly 3 years for it to be a meaningful contributor to our financial performance. We expect similar maturation process of our Brazilian business. Also in the quarter, we announced the acquisition in Germany of Rex Online Marketing or WAM. This is an online selling platform for salvage cars. The insurance market in Germany is structured differently than the United States.
In that market, the insurance companies pay the policyholder for the difference between the pre accident value and the post for it. In this scenario, our ability to pick up, protect and store the car does not provide value to the insurance companies. Nevertheless, the ability to obtain higher returns for the auction card does, as higher auction proceeds reduce the payout to the policyholder. We believe that the ultimate introduction of our technology and buyer base will increase the returns yielded by Wong and increase its competitiveness in the market. We also believe that the Copart model, the model on which the insurance company is responsible for the disposition of the salvage car is the preferred model from the policyholder's perspective.
And ultimately market competition will drive insurance companies to adopt that model. We intend to contribute to that process. Our revenue for the quarter was 200 and $66,200,000 compared to $227,900,000 for the same quarter last year, an increase of 16.8%. The growth in revenue was driven by both increased volume and increased revenue per car. In North America, we grew 9.2% in volume.
We estimate that approximately 3 fourths of that growth came from incremental Sandy cars. The balance came from growth in market share. We estimate incremental volume from Sandy to be over 50,000 cars and we sold through less than half during the current quarter. Most of the remainder of the Sandy cars will be sold in our 3rd fiscal quarter. In North America, non insurance volume declined slightly as the hurricane had a negative impact on normal used car trading activity in the Northeast region, which is an important region for our non salvage business.
We also saw an increase in revenue per transaction as gross proceeds per car increased both year over and sequentially, consistent with trends in used car and commodity pricing. Internationally, our growth was driven by volume and came primarily from our acquisition in Brazil, as the U. K. Market remained relatively flat. Revenue per car was down slightly as cars from Brazil command a lower yield.
The purchased car sales increase was primarily due to supply mix in the U. K. As purchased car volume grew to 33% of total volume as compared to 29% in the same quarter last year. Unit same store sales in North America, excluding the incremental standing units was 2% and was negatively impacted by the disruption in non insurance car sales in the Northeast as well as the general impact Sandy had on driving activity in the surrounding areas. Internationally, unit same store sales were flat.
Hurricane Sandy required us to incur abnormal costs to process the additional volume. In addition to the normal cost to process the additional Sandy volume, we estimate that we incurred an additional $20,000,000 in abnormal cost. These incremental costs obviously comprised the majority of our $30,100,000 increase in yard operations expense. The balance of the increase was driven by non sandy volume growth as the average cost to process a car absent the increased the incremental cost from Sandy actually declined. This is consistent with expectations as our fixed cost structure generally yields a more efficient operating cost per unit at higher volumes.
General and administrative costs grew by $6,700,000 over the same quarter last year. There are 3 primary drivers for the increase. The first is the expanded administrative infrastructure required by international operations, which resulted in an increase of $1,000,000 The second is a $4,000,000 increase in technology and development cost as we expanded our resources to develop new products like the new mobile app and to support expanded operations throughout the world. Also included in the $4,000,000 increase are the incremental costs associated with the rollout of our new ERP system, which we have previously discussed and which will allow us to operate worldwide on a common platform and to provide scalability and functionality that we currently do not have. It now also includes the outsourcing of our technology infrastructure and internal support.
This means that in general our enterprise computers, servers and routers and also the help desks for our internal users will be provided by others. Outsourcing this technology will also provide scalability and functionality we currently do not have and ultimately reduce cost. We expect to incur incremental costs associated with these projects to continue throughout fiscal 2013 and into 2014. These costs will fluctuate from period to period depending on the phase of the rollout. During our Q2, these incremental costs were $1,800,000 In addition to the incremental costs associated with outsourcing of technology and functions, we have accelerated the depreciation of our data centers in Reno and Las Vegas in anticipation of their expected shutdown in fiscal 2014.
This acceleration resulted in an increase of depreciation of $2,000,000 in the quarter and will continue until the Q2 of 2014. Finally, during the quarter, we incurred $1,400,000 increase in marketing expenses much of it associated with the design of new auction products. We ended the quarter with over $49,000,000 in cash, accounts receivable inventory and vehicle pulling cost increased on a sequential basis as we grew inventory. During the quarter, we consumed $22,000,000 in operating cash flows as we funded the large growth in inventory and accounts receivable associated with Sandy and we made 2 estimated tax payments. We expended over $57,000,000 for our expansion into Brazil and Germany and other capital expenditures.
Included was almost $12,000,000 to buy out 2 leases. We currently own over 70 6% of the land on which we operate. We have purchase options for most of the leases we do not own and intend to exercise those options when it makes economic sense. During the quarter, we had no open market share repurchases. We have almost $48,000,000 40,000,000 shares remaining on our current repurchase authorization.
That concludes my comments. I'll now turn the call back over to Jay Darrin, our CEO for further comments. Thank you, Jay.
Thanks, Will. Great update. There was a lot of information there. So what I've done on my portion of the call is I'm going to basically focus on Sandy and I'll give you an update on mobile and just quickly comment on the REIT that you've heard about recently. So in the last call, I informed you that at the 21 day mark, the sandy affected yards had received over 50,000 assignments.
That experience of handling Hurricane Sandy, which basically was all of November, December January for us. So we had 3 full months of handling Fendi
and cars affected from
the hurricane, was huge. We ended up with over 15 temporary locations to store vehicles, over 3 50 additional acres that we had to bring in, over 500 sub haulers. So I won't get into all the details because I think everyone's pretty familiar with just how much went on. The important part of this is that we did a great job in handling the cat, but we also learned a lot about how to handle future catastrophes. This is very different than Katrina, because the storm waters came in and receded so quickly as opposed to a cap that's either not up to scale or a catastrophe that takes much longer for the waters to clear and for the claims to come in.
This is one of those catastrophes that happens so quickly. What we've seen so far in the vehicles that we've sold in the quarter and the vehicles that we sold in February are a couple of things. 1, we've got higher returns as Will talked about, but we're seeing higher returns on the sandy affected cars. The second thing that I think is a big deal is we've been first to market on those vehicles. So when you're setting up a bunch of sub lots without our virtual auction technology, without VB2 and that ability, you've got to wait until you've got enough vehicles and then you've got to set up auctions where you physically would have an auctioneer come in and people show up.
Because of our virtual technology, we've been able to hold auctions Monday, Tuesday, Wednesday, Thursday, Friday in New York. This is an auction that typically is on Wednesday. And instead of waiting for auctions to be every Wednesday, we've been able to hold auctions Monday through Friday. And we've done that right out the gate as soon as we get cars. Because we're a virtual company, we don't have the restriction of trying to deal with setting up areas for people to come for a live auction.
We're able to rather just set it all up virtually and hold those auctions right out the gate. And you want to be 1st to market with the product. That's A, that's going to allow there's an interest in those vehicles. There's a demand for those vehicles and it's going to allow higher returns for those initial vehicles that come to market. The second thing is our clients want those vehicles sold.
They want to close the claims and they want to shrink that cycle time as much as possible. And so that's been the case. As Will stated, we anticipate that the majority of the vehicles that are left over from Hurricane Sandy will be sold in the quarter we're in now that ends April. So that's the update on Sandy. There may be some questions regarding the hurricane.
We'll try to answer those. With respect to the REIT, it recently became public that Jana Partners incidentally is a firm managed by Barry Rosenstein and who was a Director with Copart from September of 2007 to December of 2009 bought shares of Copart and recommended in an investor letter that potential value could be achieved or Copart to convert to a REIT. We are currently investigating this option internally, but have no comment at this time and we will not answer any questions on the subject on today's call. So I just want to make sure that that's clear. Last point I want to talk to you about mobile.
We launched our mobile app at the end of the quarter and we're really excited with the results. And so I wanted to share some of those with you. In the 1st 2 weeks of launching the mobile app, we downloaded over or our customers downloaded over 30,000 applications or 30,000 versions of the app. Out of that, a lot of you have downloaded apps on your droid or your iPhone before and you'll check out the app and you immediately delete the app and you think, why did I even bother? That has been the exact opposite case for us.
So out of the 1st 2 weeks, as I said over 30,000, we're now well into a month of it. So out of total, it's more than 30,000. But the total number of apps that have been downloaded over 90% of our users continue to use the mobile app on a daily basis, which is a really big deal. It just shows the stickiness of the product and again the desire for the product. We were the 1st in the industry to have an iPad app that allows you to join and attend live auctions.
So we're excited about that because it's an iPad and an iPhone app that we've launched with the virtual auction technology. You can go in and you can watch the auctions. And this was something that we couldn't do before. So not only did we not have mobile, a product that will allow you to do that, but if you came to our website and you clicked on an auction, we require that you become a member. And now that is not the case.
So you can come in, everybody on the call today can download the iPhone app or the iPad app and start watching the auctions immediately. And that's really bumped our attendance. I'll talk about that in a minute. But another statistic that I think is very powerful, over 10% of auction attendance is now from our mobile app, over 10%. This is an app that's been out literally less than 2 months.
This is those are to me just incredible numbers. And new member registration is up 10% since the launch of the mobile app. Again, another very big statistic. Talking about total participation, looking at Q2, 2012 versus Q2, 2013, total participation, meaning the total number of participants in our auctions is up year over year of 30%. So we're seeing some really big improvements there and this is really 1st generation for the app.
I was asked I said this recently, I was asked back in the late 90s at a conference, how big can the Internet become in Copart's life? How big how many cars you think could sell online? At the time, we were 2% or 3 percent. I remember thinking, we may get 10%, not knowing that we would eventually go 100% Internet. That's how I feel about the mobile app is really going to be a user experience change for us.
Obviously, it's mobile that's great, but the ability to flip through multiple auctions and we're going to be coming out with some releases in the future that really make that easy. And so it's exciting stuff. I want to share those numbers with you. And I'd be happy at this time Melissa to open it up for questions.
And our first question will come from Robert Labick with CJS Securities.
Good morning.
Good morning, Bob.
Hi. Thanks for that new color on the international sales. I wanted to stick with that first. Is there any chance you can give us a sense of the total revenues from the 3 new international markets that you put in there? And then just also would like to know, could you outline your next steps?
Are you going to be buying land in each of these? And how long might that take? And what's the process to build up these markets over the next few years?
You want to comment on the financials? Yes.
I mean, it's not a meaningful amount at this point. I mean, Germany is Internet revenue. It's compared to the amount per transaction is very small. And Brazil is still growing. So it's just not a meaningful amount.
I don't know if we'll break that out at this point on a per century basis.
Yes. I'll comment on the process. So we have acquired some land as Will stated on the call. And I think it's pretty clear to everybody our preference is to own the facilities. We think that they're critical to the operation of the company because of the zoning etcetera.
But it doesn't mean that we'll only buy there'll be opportunities where we may lease with an option to purchase down the road. So we will be doing that in these markets, continuing that. This is really right now a technology play for us. We've got to get and we talked a little bit about it in Will's opening remarks. We've got to get overdrive completed.
And Project Overdrive, as we talked about, we're at halftime for Overdrive. It's a 3 year process. We've got 18 months basically for Overdrive to quit. And in the process of doing that, we've come out with a mobile app and we've upgraded a number of systems in the company. But one of them is the operating system that we've got for our location.
So we've got a great operating system, but it's not localized. And so it IT is that it speaks 3 languages: English, Canadian and American. And we need a system that will be localized for the different markets like Portuguese and Brazil. So when that system comes out, then we'll be integrating those facilities and that will bring our auction technology, our reporting and everything else that Will talked about in his comments that our clients want. That will bring that tech and those needs to those markets.
And that will speed up the process. So we've made those acquisitions. As Will said, it's really a similar play to the U. K. It took us about a year to integrate the U.
K. When we first stepped into that market. And so now we're talking about new technology that has to be installed and then converting hearts and minds of customers over seeing these benefits and basically making changes.
Okay, great. That's very helpful. And then switching gears back to North America. Obviously Sandy disrupted a lot in the quarter. But can you give us you still have very strong volumes even with the disruptions.
Any sense of the kind of tailwinds this year or from the lack of winter last year or where you expect industry volumes to be going?
Yes. I mean the volumes seem higher and it seems it may be weather related. Our experience whether it's a major earthquake, whether it's a hurricane event, our experience is that it slows volumes down because it disrupts the marketplace, stops people from driving and doing what they normally do and it's a catastrophe. I mean, they get into that mode. So our experience is that it negatively impacts markets typically.
But we are seeing volumes up, I mean, across the country. So I'm not sure so much that it's weather or isn't weather. I just know that 2 fundamental things are happening right now. Returns are up and volumes are up.
Great. Thanks very much.
You're welcome.
And now we'll go to John Lovallo with Bank of America Merrill Lynch.
Hey, guys. Thanks for taking the call. First question is for you Will. The $20,000,000 of other items that you identified in yard ops that weren't specifically called out in the release, Can you give a little bit more color on those? I mean are those items that you do not expect to repeat?
Yes, absolutely. So I mean the large element of those costs is additional sub haul. So we brought in sub haulers I think about 550 sub haulers from as far away as Washington State to help us address the additional Sandy volume. We moved 300 people from the other parts of our company including the U. K.
Into that area to help address the volume. We opened up 17 temporary facilities over 3 50 acres and that was expensive land. And all those are well above the normal cost that you would expect with processing these cars and the way the accounting rules work because you can't put those costs up on the balance sheet. You have to flush it through as a period of cost. And therefore, you have this choppiness in reporting the results of these types of storms.
So that's what led to the $11,900,000 loss for the processing of these incremental cars.
Got you. So but then above and beyond
that $11,900,000
did I misunderstand that there were about $20,000,000 of other charges that you were speaking of?
No. They were included in that $11,900,000 Included
in $11,900,000 Okay, great. And then if we look at the $1,800,000 in SG and A from the ERP systems and the $1,400,000 from the international operations, so I know you said there's going to be some lumpiness. But from a modeling standpoint, I mean is that a reasonable run rate to kind of think of these items?
Well, we look at the IT and we break it on different components. And internally, we look at it in what we call keep the lights on. Keep the lights on is to run provide services internally to run the auctions at our current level with our current international footprint. And based on those assumptions, we're going to spend about $8,000,000 more this year than we would expect to spend in 2015. And we'll have some incremental costs in 2014 as well.
Now when those costs will present themselves in the quarter is the problem we have in predicting because it depends on the nature of the activity that's taking place. Some of it's capitalizable and some is not. So if it's capitalizable then it doesn't have as large impact during that quarter.
Okay. That's very helpful. And if I could just finish up one with Jay. Jay, are you seeing any kind of trend in the industry with kind of national insurance companies starting to lean more towards multiple vendors?
Starting to lean towards Using Already with multiple vendors. I mean, you don't see if I rephrase the question, we don't see a trend where people that are doing business nationally are splitting that with multiple vendors. The industry tends to be split where customers are doing business with multiple vendors. And occasionally, you will see an insurance company choose 1 supplier for all of their business. But it's pretty rare.
I mean, it's not something that happens on a frequent basis. We've talked about it in the past. We've got well over 100 national contracts for supply. But a lot of those are very, very small insurance companies that are not multistate. They may just be doing business or I should say not national.
They may be just doing business in 2 or 3 states. And then some are very large like Allstate Insurance where we handle all their cars. So I wouldn't say there's a trend either direction right now. But clearly there's not a trend to go from national to multi vendor.
That's very helpful. Thanks a lot guys.
You're welcome.
And we'll now go to Scott Stember from Sidoti and Company.
Good morning. Good morning, Scott. Jay, you made comments about how the returns on the Sandy vehicles have been higher. Are you referring to traditional vehicles coming in? Yes.
Or are you referring to versus Katrina?
No, no. It's a good I hadn't thought about it that way. It's a good question. Yes, I was referring to traditional salvage vehicles that we process. These are most of these vehicles were not wrecked per se.
They were flood damaged and so they brought more money than traditional damaged vehicles. I was not referring to Katrina.
And that even considers the saltwater damage to the drivetrain and so forth?
Partially, pardon me?
And that would even consider some of the water damage from saltwater?
How would I consider it?
No, no that is also those comments that you were saying also factors that in there you're saying.
Yes. I don't I mean we've sold saltwater damage cars a lot of times Katrina was. So that's nothing new per se.
Okay. And on the share repurchases, obviously there was nothing that happened this quarter. Was that just a function of the acquisitions that you've been taking place and deciding to deploy the capital towards that and towards Sandy?
Yes. If you think about Will's comments, his opening remarks, without me getting into the details again, we spent a lot of cash in the quarter. We finished the quarter with less than $50,000,000 in cash. So we take a pretty conservative approach towards our balance sheet as most investors know at this point. And so that was the reason.
Okay. That's all I have at this time. Thank you.
Thanks, Scott.
And Bret Jordan with BB and T Capital Markets will have our next question.
Good morning. What was the total volume of Sandy cars that you wound up recovering and are in the process of processing? I think you'd said at 21 days you're over 50,000 and your commentary was you saw over 50,000 in total, but was it materially over 50?
Dollars? The way that you break out a vehicle as a Sandy law, you try to do it based on data loss. But there are a lot of vehicles that come in later. And so it's hard to determine. So we're comfortable it's over 50,000 cars.
But we don't want to get into trying to narrow it down tighter than that.
Okay. And I guess trying to read the commentary from Sandy in the quarter with the expectation that the recovery in the current Q3 is going to offset the expenses. Do you see Sandy net net being a profitable experience? Or will the 3rd quarter recovery still be less than the expenses attached to the 2nd quarter?
We have historically said and it hasn't changed that we don't make money on these cats. And I think that's the case for everybody in the industry. When you end up having a cat, it's just not a pleasant experience.
Okay. Great. And then one last question. What percentage in the quarter was buyer fee versus the seller side of the transaction? We've only disclosed previously that the buyer fees in North America are more than half.
Right. And that's consistent this quarter. Okay, great. Thank you.
You're welcome.
And next we'll go to Bill Armstrong from C. L. King and Associates.
Good morning, guys. I was wondering if you could break out the revenues that came from Brazil and Germany since those are new markets for you for this quarter?
Yes. I don't know if we'll break them out by country going forward. It's with respect to they're less than $5,000,000 during the quarter.
Less than $5,000,000 combined?
Combined all international excluding Canada and the U. K. Okay.
I think just maybe getting back to an earlier question as far as the kind of the returns that these Sandy cars bring. Earlier this morning, LKQ was saying that they weren't buying too many of them. And they were basically saying they weren't worth very much because the mechanical and electronic parts get fried in these saltwater catastrophes. And basically they don't have that much parts value. Now you guys and also insurance auto auctions were saying that they're actually relatively high value.
So I guess we're trying to reconcile those 2 perspective.
Sure. I would say that they're for the most part, you're going to have an older vehicle that gets flooded. You realize that. So it's not on every car, but for the most part, these cars are out of their price range. These are vehicles that are going to be highly desired by exporters.
So the international community bids heavily on these vehicles. So, yes, I mean, I can't really comment on their statement Bill, but I'll just tell you what we're saying. This is stuff that is probably outside of the majority of them are outside of the demand for a dismantler buyer. There's going to be some vehicles there that dismantlers will buy. They're going to be older vehicles and they'll be in that range.
But I would say the majority of these vehicles are outside of that range.
Yes. And Bill, I just wanted to add in addition to Jay's comments that we did have an uplift in our international activity. So for the quarter about 25% of the volume and over 30% of the value of everything we sold went to buyers registered outside the
percentage of those cars that are going to the international buyers or maybe just being repaired and then put on the roads in those other countries? And then that's why they're
My guess would be they'll definitely repair them. When you're talking late model, if you're talking older stuff then it's probably going to get parted out. But a lot of these vehicles are going to be repairable. There's no question about that.
Okay. All right. Thank you.
And I'll just add that they're going to have we're selling them on salvage titles. They will be branded. So there's no question repairable.
Okay. Thank you.
And our next question will come from Gary Prestopino from Barrington Research.
Hey, good morning, Jay and Will. Hi, Gary.
Jay, could you
possibly size the markets in Brazil in terms of units on an annual basis?
Yes. Well, first of all, I'd say somewhere between 100,000, 200,000 vehicles. 2nd, I would say the majority of the Brazilian market is Sao Paulo. And then 3rd, I would say is it's a monster market in terms of growth. That's the that was the reason for us going down there.
It's a high growth market. You're seeing an emerging middle class that are buying vehicles and the average selling price of vehicles down in Brazil is very, very high. They have some pretty aggressive import duty laws that are in effect. So the vehicles that are in Sao Paulo or in Brazil are vehicles that when they do get an accident sold, they're selling for a lot more than they would in the U. S.
So really for those three factors, there's some others, but those are really the three factors that got us excited. And as Will said, it takes us a few years to get into a market, to get our process in place, just like it did in the U. K. And so it's not the largest market right now, but it's a high growth market and it will become a very large market in the future.
What about Germany?
Well, Germany is a very mature market, so it's kind of the opposite. It's not a high growth market. But it's got 600,000, 700,000 somewhere in that range, total lost vehicles in that market, which is that gets our attention. I'll put it that way.
Is most of Germany done on well, first of all, my understanding is they don't pull the cars in Germany. So that's why you have this you have a couple of online auctioneers that are working this market. Is that correct?
Yes. We're one of them. That's our WAN model does that. What we will be doing in that market, we'll continue to use our product and innovate in that market with that product. But what we'll be doing is testing that market to see if there's desire to not leave the vehicle with the insured, like we do in Australia, the U.
S, Canada, the UK, South Africa and Brazil. These are all markets where they're not pushing the vehicle to the insured. In Germany, as Will stated earlier, you end up being told this is the value of your car now, this is the value of the car before the wreck and they pay the difference and let you keep the car and assist you through that bidding platform in disposing of it. So the question is, is there a desire to strip that away completely and allow us to liquidate the vehicle and just pay the insured directly and then they don't have to deal with the buyer of the vehicle and disposing of it, etcetera.
Okay. And then in terms
of the mobile app that you've got out there and you're talking about some of the uptake on that, Is there any way to delineate between existing members or auction users versus new? Are you I guess the question is, are you bringing in new participants through the mobile app? Or is it just a shift between using a laptop or a desktop to do the auction versus the mobile application?
Yes. Let me I'm just writing in a note because let me gather that data for the next quarterly call. And when we have our next earnings release, I'll comment on a full quarter of mobile activity and talk about the impact of new members and give you some color on that, because I don't have that in front of me. And I think that there'd be some good points to bring up in the next call. Thank you, Jay.
Thanks, Gary.
Our next question will come from Craig Kennison from Robert W. Baird.
Good morning and thanks for taking my questions as well. Jay with respect to Brazil and Germany, what sort of insurance relationships did you inherit when you moved there? And to what extent are you able to add to those relationships as you grow?
Well, with respect to Jeremy in Brazil, those acquisitions obviously got us into the marketplace and got us in with different from each market. So in Brazil, I would say we know everybody, because we ended up making such a large acquisition into the market. So we know all the insurance players in that market. In Germany, that's not the case, but we're working to make that the case. So we got into that market through the acquisition of WOM.
We got a number of clients and contacts and then we're working further to get to know everybody in that marketplace. And in one, we're just introducing our platform. In Brazil, we're just introducing our platform, our technology, our auction, everything Will mentioned, all those points that they want. In Brazil, we're talking about a real change in the way the marketplace would operate. And so we'll be introducing that at some point.
That's helpful. And then as a follow-up,
That's helpful. And then as a follow-up, would you prioritize on your international growth plans getting more density in Brazil and Germany or opening up new footholds in other countries?
Well, what I'd like to see first is our technology implemented. And so before overdrive comes to an end in 18 months, we'll be implementing our operating systems and our ERP and all the things that we've talked about. I'd like to get that done, I'd like to get the countries that we're doing business in converted and then we can look at further expansion. We may make a little bit of further expansion internationally. So I don't want to make you think that we wouldn't do that.
But we don't want to get really spread out into another 10 countries as an example until we've got our existing company implemented with our tech.
Thanks. And finally, Will, could you comment on your expectations for CapEx this year?
No. I mean, there's so much uncertainty that surrounds our CapEx spend, Craig. I mean, we've looked at yards in Los Angeles for Southern California for years years, haven't been able to find 1. But if we did find 1, we would be spending $25,000,000 to obtain that. But there's no way we can predict that.
So it's difficult for us because of the uncertainty and the nature of these negotiations to determine when we'll actually be spending money.
Okay. Thank you.
And that does conclude our question and answer session at this time. I'd like to turn the conference back over to Mr. Adair for any additional or closing remarks.
That's great. Thanks Melissa. Yes, we appreciate it guys. Great questions. Appreciate you coming to the call.
We look forward to reporting the following quarter. And as we said, we'll get some information on mobile bidding for that call and vehicles sold to new members etcetera. So again, thank you for attending the call and we appreciate it.
That does conclude our conference for today. Thank you for your participation. You may now disconnect.