Good day, everyone and welcome to the Copart Incorporated Q1 Fiscal 2013 Earnings Call. As a reminder, today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Mr. Jay Adair, Chief Executive Officer of Copart Incorporated. Please go ahead, sir.

Thank you, Jennifer. Good morning, everyone and welcome to the first quarter call for Copart. We've got some updates that we will give you this morning. I'm going to pass over to Will first for a financial update and then I'll go through some of the operational things happening within Copart. Will?

Thank you, Jay, and good morning everyone. Before we begin our comments, I would like to remind everyone on the call, that our remarks will contain forward-looking statements, including statements concerning our views of trends in our business. These statements are neither promises nor guarantees and are subject to certain risks and uncertainties that could cause the final results to differ substantially from those projected or implied by our statements and comments. These risks include trends in average selling prices for cars and other factors that can affect our gross margins. For a more complete discussion of the risks that could affect our business, please review the management's discussion and analysis and the risk factors contained in our 10-Q, 10-K and other SEC filings. With that, I will now provide a few brief comments about our financial performance for our first quarter of our 2013 fiscal year. Consolidated revenue grew from $225.6 million, compared to $238.9 million or 5.9%. The growth was primarily driven by increased unit volume in North America. Volume in U.K. remained flat despite the impact of the continuing recession which is leading to fewer accidents and a higher likelihood that cars involved in the accidents will be repaired rather than salvaged. The growth in North America continues to be broad based. We benefited from the additional volume provided by the exclusive contract we entered into with nationwide in our third quarter last year. But we also saw growth in the insurance segment excluding nationwide as well as the non-insurance segments of our business. Volume from non-insurance suppliers grew by almost 9% over the same quarter last year but remained at 20% of our total volume due to the overall growth in our insurance volume. By the end of the quarter, we saw the volume from the…

Thank you, Will. Again good morning everyone. I wanted to start the conversation with Hurricane Sandy and give you an update on that the impact of that super storm. We have [mobilized] for the storm in a bigger way than I have ever seen on historically. The biggest event that I’ve seen prior to this would have been Hurricane Katrina. So I want to start by giving you some comparisons to show the difference between the storm that affected the North East and the storm that hit Louisiana and Mississippi in 2005. For one, the size of the storm were smaller in the North East as opposed to the intensity of the storm and Katrina that hit the south, while the storm is not as or was not as high on the scalar in terms of degree of intensity, the population density of the two markets night and day, the population density obviously of the North East is so much higher than the south, so I will give you some statistics here that I think will play that out. The second thing I would say is that what we saw in Katrina was massive flooding. The city that stayed under water until the water was pumped out, what we saw in the North East was the storm (inaudible) came in and left. And so the ability to know whether or not there is a claim came much quicker and the ability to know whether we had claims in Hurricane Katrina took much longer to find out A. B, the cars had been sitting in water for days in Hurricane Katrina and Hurricane Sandy, it was simply an increase in tide and level of water and then a decrease and it was out. So these vehicles have not been sitting in…

(Operator Instructions) We will go to John Lovallo with Merrill Lynch.

Jay, I will start with you if you don't mind. Just another question on Katrina, sorry on Sandy if we look back at Katrina I think one of the challenges that Copart faced was that you had to relocate a lot of employees to help with the processing of these vehicles. I mean are you seeing the same type of efforts put in place now or do you have facilities that are kind of closer to where the impact was?

I mean, you cannot, you can't have your team on site in a bad situation like this. So I was in Long Island yesterday and we had folks from Albuquerque, Sacramento, Andrews, from Boston I mean just thinking off the top of my head we had people from Portland, all over the country. So we have shipped people in that are working in, not I mean our facility is not big enough for the amount of people that we've sent in, so we've got modular office space that we bring in that's being powered off generators and we've got a cap trailer that's hooked up, its satellite link to the company. So I mean to that kind of degree and in addition to that all of our facilities are open on the weekends, company wide to help clear cars. So you are trying to get a hold of insureds to find out where the vehicles are and a lot of these cars are, they think the car is in one location and now the car’s been impounded or the car got washed down the street and isn't in the same spot that it was supposed to be and so the degree of complexity that exists in a catch situation like this is just unheard of. I can tell you that Katrina was the biggest I had ever seen I mean before that I would say it was Andrew in ’92 and this is far in a way bigger, no comparison. You can't even begin to compare the two. It is that much bigger an event so it as an all on effort even the U.K. is helping us out of the process. So we've got every single resource in the company being utilized or shipping in loaders from around the country. We are shipping in loader operators to move vehicles from around the country so it’s a full on effort.

That's very helpful and then just one last one on Sandy, during Katrina I believe that there was some delay in title transfer because I think a backlog of some of the state agencies, I mean just given some of your comments earlier, it seems like this may not been the cases, would you comment on that?

That’s a great question because one of the things that’s nice about New York is it’s a state they have a [907A] process so that will be transferred very quickly. So we will be able to move the iron like I said we are already seeing 1,000 car sale today in Long Island, we will have 1,100 car sales tomorrow at Newburg. So the nice thing about New York is that the vehicles are going to move very quickly, they will be a little slower in Irvine, New Jersey but thankfully there is not as many vehicles. So we are going to see the profits of these vehicles being moved very quickly compared to Katrina which is a good thing because the volume so far and away higher. I don’t know people have asked me how many units you are going to get we are well over 60 now. I don’t know where the number is going to come in at, but I will report on that the next quarter.

We will take our next question from Bob Labick with CJS Securities.

Very exciting stuff on the international expansion and thank you for some of that color there. I was hoping you could may be talk a little bit more may be in terms of when we should start seeing revenues and may be roughly the total revenues you probably don’t want to break it up by country but may be in aggregate of the three and is this agency versus purchase and with the U.K. it took a couple of years to ramp to material profit contribution, what are your expectations for these markets?

Yeah, so Brazil is not a purchase scenario. So we are processing vehicles on a fee, very similar to the market we have with the US. There is a lot of work to be done. This is a high growth market. So this is a market that we are seeing an emerging middle class that’s getting insurance and because of that you have got this really high growth rate when it comes to insurance. So the biggest challenge we have right now is facility space. We got five locations we just bought a facility in the quarter we are in now which is just a literally a piece of dirt that were green fielding because the five facilities we bought were already full and don't really have room for future growth. The biggest we have in Brazil right now is the markets growing so fast that we have to have room to store the vehicles. So we got revenue down there, we will be talking about that in the future quarters, but right now I am not really thinking about that so much as we are thinking internally about how to get those vehicles switched over to more of our models. So right now it’s not on [VB2], we would like to introduce VB2 to that market like we did in the U.K. We like to make sure that we have logistics channel for storage because that's a huge challenge right now but just a huge opportunity. In Germany, it’s online platform, so there is really, it’s very simple, it’s very easy. You don't have the logistic issues that you have in the rest for the markets that we do business. So, I don't see a whole lot of difficulty with our current platform in Germany, really what we want to do is build relationships there and then start to introduce those customers to looking at data from the U.K. from the US and saying that there is a possibility to do business, the way we do it in other markets to see if that makes sense to do that way in Germany that’s really the opportunity that exist there.

And then just quickly in the US, the same-store sales, the unit volume was very strong and obviously even excluding nationwide, there have been some anecdotal evidence out there the claims may be flat or down this year, but you guys obviously have very strong insurance volume gains. Can you maybe talk a little bit about what you are seeing out there and how are you getting to that strength?

Yeah, I would say that up until Hurricane Sandy hit, yeah claims volumes have been flat to down. Now you get kind of a dual effect going forward, because not only do we have all the claims that are going through associated with Sandy that we've got to process, but it puts a strain on us as an industry, it puts a strain on the insurance industry and so we usually see even more total losses going forward because of that. I think that will be the case. Historically, claims have been relatively flat to down. There's a number of factors that we could discuss on that. We are up because we’ve had market share gains in the past two years and that's been the reasons for that growth. Why the market share gains I think Hurricane Sandy is a prime example, you know there's one of many reasons I could talk about BB2 in the returns and I could talk about a number of other areas Bob, but Hurricane Sandy is just a prime example. Putting the full force of Copart to work in a catch situation like this is really a big deal, and these cats they just seem to be getting. I mean I feel like we think we've got to figure it out and we have a cat like this and we go wow there's somewhere you know we start the Monday morning quarterbacking process and talk about how we could do the next cat even better and how we could improve it. So its getting to be where they are so big that I think its going to end up having a division of our company that literally is waiting for the next super storm to go ahead and launching these things, because it really brings a full barrel of our whole company to play, all of us are involved in it. In the past its been market share gains, if we look forward in Q2, Q3, Q4 this is going to be obviously a big year for us. I would imagine it will be a big year for the industry just because this cat, not only is it significant volume already its continuing to come in. We haven't seen it drop off that much. We've had over 1000 car assignment day just in the affected area this week. So, as long as we keep seeing that kind of volume come in its going to be a big, big year associated with the cat, its going to be a big year around the country because if you are putting strain on the industry as a whole for resources and so if you are borderline fiction totally, you are probably going to tow the vehicle. So there's really the effect of both of those going forward.

We will go next to Bret Jordan with BB&T Capital Markets. Bret Jordan - BB&T Capital Markets: Good morning. A couple of good questions and one just to how to think about the costs associated with Sandy. I think you made a comment about not focusing so much on making money on those recovery volumes so far, but it sounds as if you got tremendous assets deployed and the volume sell through comes in the third quarter. Is it large and dilutive from an overhead standpoint to bring all these cars in, in the current quarter or you sort of think about this as a real driver on Q3 but maybe an attractive from current.

Yeah, it should have some negative impact in the current quarter that we are in right now. I would expect that, simply because we are deploying so many resources and we are towing vehicles that have enormously high tow rates. Tow rates will triple and quadruple in a cat situation like this, its very common. Bret Jordan - BB&T Capital Markets: And one question on the GCC volume, talking about 100,000 unit market, is there a window to think about sort of in time to reach that type of volume, is that a three to five year or is it longer term or where you see the growth rate there.

No, three to five makes sense, that's how we look at the market.

We will go next to Bill Armstrong with C.L. King & Associates. Bill Armstrong - C.L. King & Associates: Good morning, Jay and Will most of my have been answered but just on Brazil. I was wondering if you can give us may be a sense of the size of that market down there, and what sort of managerial or operational challenges that might present to you managing something that’s so far away?

We are in Sao Paulo now that’s the largest market for us Bill, and we are not even in Rio yet. So its the large market, it’s based on our estimates around 200,000 vehicles currently, but it’s a high growth market. It’s growing at low double-digit growth every year right now due to insurance company, insurance coverage that’s coming into play, and as the market gets more and more familiar. Again this is something we have seen in the past, as we introduced (inaudible) and we see returns go up, it actually causes the total loss ratio to go up. So it’s a high growth market. It could be five years from now, we could be looking at a market that’s 300,000 to 400,000 units something like that. So it’s going to be a play for us like Brad asked earlier. It’s a three to five year play for us and it’s going to be somewhere in 10 to 15 locations to properly cover the market, and when we have done that then you are looking at similar volumes to the UK would be my guess that we end up handling. Bill Armstrong - C.L. King & Associates: Okay and why Brazil compared to I don’t know Mexico or some other types of markets, what’s the attraction of the Brazil out of all the markets you kind of have available to you?

Yeah, well Mexico is a high population low insurance, most people driving on without insurance. Brazil is a high population with a much higher insurance penetration, and so you want to take a market where you are going to have the chance to process vehicles, you don't want to pick a market where people drive cars and don't have insurance, and in Brazil not only do they have a lot of insured vehicles, so that we have a market we can immediately jump into, but it’s a high growth market, and so its very attractive to us.

Thank you. We will go next to Gary Prestopino with Barrington Research.

Just looking at what you guys did in the UK, it looks like you had a pretty significant expansion in the gross margin there actually the difference between the revenue and the cost of vehicle sales, is that more or less just the function of the currently impact with the pound getting stronger versus the dollar?

More or less that's impact on this financials.

So you are just getting a better yield on the car as you are selling it?

No, the absolute contribution on the purchase car remains about the same, it’s just the lower selling price which increases your contribution percentage.

Okay, and then in terms of Brazil as well as Germany, Jay, is there right now significant competition in both of those market, is it a fragmented market each of them, where you have an opportunity continue to buy other companies similarly like you did the UK?

Brazil is like the UK and U.S. it’s the same model and yes its totally fragmented. So you know how that goes. With respect to Germany the model doesn't exist. Right now vehicles are sold on line and they go directly from shops to end user and so there's a number of reasons why we think that there's issues with that model, a number of reasons why we think there's an opportunity to improve returns from the logistics that take place to having absolute sales where the buyer knows they are going to end up buying the vehicles as opposed to bidding and maybe getting the vehicle one in a 100 times. So what we've done is we've ended the market through the platform that is being utilized out there today. We have another large competitor in that market and what we will be doing is looking at that market to see if there's an opportunity to introduce some new ways of selling vehicles in Germany.

Is your platform in Germany just exclusively used to sell vehicles?

Yes, our platform right now yes it’s used exclusively to sell vehicles, yes.

(Operator Instructions) We will go to (inaudible) Research and Management.

Hi, just interested looking at the international expansion, which you've done rather cautiously before starting with the U.K. but now Germany, Dubai and Brazil, does this mark, is our confidence higher and we are ready to go after more foreign markets or is this enough for now?

No, we are going to continue to expand in the foreign markets. We have to have systems in place and so part of that reservation in the past was getting some of the process and the system in place and we've got more of that today. So you know, I'm not saying look forward to three more markets expanding in the next quarter but I'm saying we are going to continue to grow in these markets and then we will be looking at other markets as well.

Anything in particular in mind?

Sure. I would be happy to tell you on the call. No, we won't be disclosing that on the call today. Thanks.

Then it couldn’t help but wonder.

Sure, I understand.

At this time, I would like to turn the call back over to Mr. Jay Adair.

Thank you, Jennifer. Well, again we appreciate everybody coming on the call and again as we said in some of the remarks we look forward to reporting on total units for Hurricane Sandy and total impact and we will just keep working on that for the next month in making sure we pick up all those vehicles and get that process for our customers. So at this time, again I want to thank you for coming on the call and we look forward to reporting on the next quarterly call. Thank you.

That does conclude today's conference. Thank you for your participation.