Incoming Copart CEO talks future plans for the company
Copart’s incoming CEO, Jay Adair, held a conference call with investors last week to provide a big picture plan for the company moving forward as he transitions into his new role with the company, which he said will be finalized by the end of July.
His current role is executive chairman, which he’s held since April 2024. Adair previously served as Copart’s CEO from February 2010 to April 2024, according to his LinkedIn profile. He’s also held three other positions with the company since June 1989.
Adair also noted to investors that his return to CEO was a decision he and current CEO Jeff Liaw made together.
“We both agreed that it was the right thing for Copart and my intent is to lead the company for the next 10-plus years,” he said. “This is not an interim arrangement and I won’t be going through a process of finding my successor. I’m just going to focus and double down on all of our initiatives to build Copart and to grow Copart.
“There’s really three growth pillars that we focus on: international expansion on insurance [salvage vehicles], whole car expansion domestically, and then technology services for our customers. I want to be very, very clear this is a growth company and there is a lot of noise and a lot of rhetoric out there. I have a pretty good history of saying I don’t listen to the noise and I don’t respond to things and I’m going to continue that.”
Some of the “noise” has been that customers aren’t happy with Copart, Adair said.
I know our customers personally and I believe our customer relationships are stronger than ever,” he said. “The idea that that is not the case, I believe, is just false. During our Q3 earnings call, we share that total loss frequency reached approximately 23.6% in the most recent period, up nearly five points over the past four years driven by repair costs and by the record auction returns we generate, which make the total loss decision more attractive to carriers.
“When I started, total loss frequency was 8%. And we’ve watched that continue to improve and continue to increase over the decades and we believe that’ll continue. Another point on our Q3 earnings call was that U.S. insurance ASPs reached an all time high in the most recent quarter up approximately 4.1% year over year. And international buyers, crossover buyers and finance buyers continue to be critical drivers of our auction returns.”
On the topic of insurance industry trends, Adair stated that the 2022 to 2024 inflationary cycle “pushed carrier combined ratios out of balance, driving rate increases which drove consumers to pull back their level of insurance coverage, which was observed through a shift toward higher deductibles and liability only policies.”
“I believe that is now softening and we are starting to see insurance companies become more aggressive again,” he said. “And much of this is from 2020, COVID, the impact of that, the impact of insurers cutting dividends back and reducing insurance rates.
“And now we’ve seen kind of the flip side of that as we have seen in the past year or two and I think we’re now going to see things kind of normalize. We believe the consumer retrenchment is cyclical, not structural.”
Adair later added that, as things normalize, people will buy more insurance coverage again.
“I just think when insurance rates get that outrageous, it causes people to drop their coverage and go with liability only,” he said. “I think as rates come back down and things normalize, you’ll see people saying, ‘OK, yeah, that’s only $X a year more. Go ahead and give me collision or comprehensive coverage.'”
When asked about plans for mergers and acquisitions, as well as new builds, Adair said Copart will be doing all of the above.
“We’re sitting on a ton of cash, and we have the ability to do both, so we will,” he said.
He said that in the last 10 years, Copart spend $500 million a year on buying land and developing those locations.
“That’s definitely going to slow down,” he said.
For now, Adair said he’s focused on on international and domestic Copart operations but said he would be able to better address that in one quarter.
Adair also touted Copart as “a phenomenal company.”
“We’ve got amazing people,” he said. “We’ve got phenomenal relationships with our customers. And we’re going to do what Copart has always done. We’re just going to execute. We’re not going to talk about it. We’re not going to tell people what we’re about to do. And then when we do win, we’re not going to tell people that we won. We’re just going to do it. Let the results speak for themselves.”
Adair confirmed in response to an investor’s question that the changes he plans to implement coming back on as CEO revolve around growth, international salvage, whole car salvage in the U.S., and tech services customers.
“We’re going to be speeding up some of those initiatives, and so to do that, we’ve got to have a more robust team,” he said. “I think that everyone in the company is excited. I think they’re already feeling like, ‘Let’s go do some of these things.’ …We’re promoting people already, but it’s going to take time to hire people. And so it’s not years, it’s quarters, but it’s going to take some time.”
Adair said Copart’s growth focus is split amongst three pillars: international, full car domestic, and tech services.
“I think we’ve got to focus on M&A for all three,” he said. “In addition to doing M&A for all three, we’ve got to focus on investing and making some of the products that we’ve got already more robust. So it’s hard for me to tell you it’s a third, a third, a third or 40/40/20. But I will tell you they’re all going to be material investments.’
When asked about Copart’s use of AI going forward, Adair said the company thinks of AI use increasing in quarters rather than years.
“It might be the only time in my life that I’ve thought in quarters and not years, but it’s happening that quick,” he said. “AI is something that if you’re not doing it, you’re missing out… We’ve actually given guidance to our team on what tools are the best. And we often refer to AI as if you’re not utilizing it, you’re doing the company a disservice, so there’s a big focus internally.
“We have a head of AI and so that’s something that we’ll continue. The obvious things are efficiencies and we’re doing that already. The less obvious is strategic, and that I won’t comment on, but we are looking at strategic availabilities in AI as well.”
On July 8, following the July 6 conference call, Copart announced a new president of the company, effective Aug. 1.
Copart UK Managing Director Jane Pocock has been promoted to the position. She joined the company in 2019.
According to a Copart press release, under Pocock’s leadership, Copart UK and Ireland have “strengthened its operational footprint, expanded capacity, and delivered exceptional customer journeys for insurance carriers and their policyholders, commercial sellers, and Copart members.”
“In her new role, Ms. Pocock brings proven experience pairing operational execution with technology-enabled products and services that help customers achieve better outcomes, while continuing to support the strong teams and customer relationships that have driven Copart’s success in the UK and Ireland,” the release states.
Copart also stated that Pocock has “paired significant growth with thoughtful, people-oriented leadership.”
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