Copart (CPRT, Financial) reported +23% growth in quarterly operating income driven by extremely strong average selling prices (+35%) at its online salvage vehicle auctions. The Company maintains an effective duopoly in U.S. salvage vehicle auctions (along with IAA). The outsized increase in ASPs is due to Copart's unique, two-sided network platform that consists of the largest North American P&C insurance carriers and automobile dealerships, which are getting increasing access to less price-sensitive foreign salvage buyers. As automobiles are becoming more sophisticated with hard-to-repair electronics and computers onboard, Copart is helping insurance partners find a life "after salvage" with consumers, particularly outside the U.S., who place a higher value on these vehicles, often simply due to softer safety regulatory regimes. We expect Copart to grow at attractive double-digit rates as this phenomenon continues for the foreseeable future.
From David Rolfe (Trades, Portfolio)'s Wedgewood Funds first-quarter 2021 shareholder letter.
