Jeremy S., an investment analyst here in Southern California, has started to contribute to Avondale’s company notes database. Below are quotes from some of the calls that Jeremy has read this week.
Copart’s (CPRT) CEO Jay Adair, whose firm sells salvaged vehicles, says the firm saw declining average selling prices across their business
“In the quarter we saw further softening of average selling price as what we refer to as ASPs (average selling prices), compared to the second quarter. Looking at May data, average selling price has dropped again, but we believe we are currently at the bottom in terms of where salvage values will end up for the fourth quarter.”
And he is predicting prices will stay weak
“Additionally, we expect this trend of low ASPs to continue into our future quarters and do not anticipate that average selling price will bounce back in the next couple of quarters. We believe the cause of this lower ASP or average selling price is due primarily to lower scrap prices and softer international bidding. The lower scrap prices affect many of the lower end vehicles that we sell. The lower scrap price is caused by weakening global demand and a strong U.S. dollar. The softer international bidding primarily affects the higher end units that we sell and is primarily caused by a stronger U.S. dollar.”
They are also forecasting that the average age of a car on the road will continue to increase
“Additionally, we have seen the age of U.S. fleet increase for the past seven years and as we discussed on previous calls older vehicles will sell for last and auction. With the older fleet, we have seen total loss frequency increase. We believe this trend will continue as the fleet ages and so with the likelihood of the vehicles becoming total losses. We also believe repair cost are up increasing the number of total loss vehicles and fuel prices being lower are causing miles driven to go up again causing more accidents and more total loss vehicles. We believe the trend of vehicles aging will continue. Therefore average selling price should continue to be soft and volume should be up for the foreseeable future.”
U-Haul (UHAL) Principal Financial Officer Jason Berg says the firm continues to build out their leading network
“Our retail distribution network continues to expand. During all of fiscal 2015, we increased our independent dealer network by 800 net outlets along with another 60 company-owned and operated locations, bringing our total system to nearly 19,800 locations. We once again increased the number of trucks, trailers and towing devices in our rental fleet.”
U-Haul (UHAL) Principal Financial Officer Jason Berg says the company’s small insurance business has a material investment portfolio
“On a combined basis, the annual operating results from our life and property and casualty insurance operations improved by $7 million to $53 million combined and both are performing to expectations. Together our insurance operations have a combined investment portfolio of just over $1.5 billion.”
U-Haul (UHAL) Principal Financial Officer Jason Berg says that prices for self-storage acquisitions have been going up and the company remains disciplined
“We’ve been mentioning over the last couple of years or the last year really that prices on self-storage project have been going up. So we have been a little bit more careful on acquisitions of existing storage.”
Deere (DE) Finance Manager Susan Karlix said the firm’s flexible cost structure has allowed it to remain enormously profitable even through this most recent downturn in agriculture markets