1. Brandon Honey Matt Byford Rob Main Presented April 16, 2009
Copart, Inc.
Brandon Honey
Matt Byford
Rob Main
Presented April 16, 2009

2. Presentation Overview
Recommendation
Company Overview
Industry Overview
Macroeconomic Overview
Management’s Strategy for the Future
Recent Company News and Financial Results

3. Recommendation Sell 200 shares at the market Keep on watch list
Reconsider if the company issues debt in the future
Decreases overall cost of capital

4. Copart Overview
Founded in 1982 and headquartered in Fairfield, California
Operates in more than 140 facilities across the US, Canada, and the UK with 2500 employees
Provides remarketing services to process and sell vehicles over the Internet through its online auctions to vehicle suppliers - (similar to StubHub or eBay)
Services include online supplier access, salvage estimation services, end-of-life vehicle processing, virtual insured exchange, transportation services, vehicle inspection stations, on-demand reporting, and DMV processing
Offers CoPartfinder, an Internet-based used vehicle parts locator that provides vehicle dismantlers with resale opportunities for their salvage purchases

5. Copart Business Model Accident totally destroys car
Insurance Co. deems car too
costly to repair
Copart auctions car to buyers all around the globe
and earns income from both parties
Dismantlers
Exporters
Rebuilders
Used car
dealers

6. SWOT Analysis Strengths Can acquire without issuing debt
Strong brand name as a public company
Large market share
Non-cyclical
Opportunities
Extensive supply of small competitors as buyout targets
Market domestically and globally is not saturated
Share repurchase program
Weaknesses
Does not hedge FX risk
Lack of experience operating outside of North America
Simple capital structure
Threats
Limited number of major vehicle sellers
Fuel and steel costs
Asset impairment risk UK

7. Industry Overview Auto remarketing industry is relatively non-cyclical
Slightly correlated with auto sales and with the driving season
Increased car purchases leads to an increase in accidents
Increase drivers on the road leads to an increase in accidents
Copart customers have increased purchases of recycled parts to cut costs
Potential of fuel prices rising back to summer 2008 highs
Fewer drivers on the road will limit accidents, which limit suppies for Copart

8. Market Share

9. Macroeconomic Conditions
Some domestic macroeconomic indicators seeming to near a bottom
Unemployment rate continues to rise towards 10%
Commodity prices (fuel) remain depressed but stable
Equity markets experiencing a bear market rally
Credit markets beginning to thaw as LIBOR creeps lower

10. Management’s Strategy for the Future
Continue growth by acquisition
Facilities
Software
Further expansion throughout Canada and UK, and into continental Europe
Considering issuing long-term debt to finance continued growth and/or repurchase shares
Planning to continue share buyback program
Repurchased 6.5 million shares in 2008
Repurchased 3 million shares in 2007

11. Recent Company News
12/5/08 - Former Governor of Missouri Matt Blunt joins Board of Directors
2/17/09 - Reaches settlement with Auto Auction Services concerning an anti-trust suit
2/09 - Adds facilities in Alabama and South Carolina
2/09 - Signed an agreement with uShip to feature uShip as a preferred transport solution for Copart's buyers
3/5/09 - Announced $.32/share earnings on a 2.1% decrease in revenue, predominately in the UK, and an asset impairment charge

12. Recent Financial Results
2009 Q2
Net Income – $65.5 million
Net Profit Margin – 18%
EBIT Margin – 29%
2008
Net Income – $156.9 million
Net Profit Margin – 18.1%
EBIT Margin – 30.3%

13. Stock Performance

15. Correlation

16. Competitors Auto Dealers Exchange Services of America
Offers used- and salvage-vehicle redistribution services to automakers, lessors, and dealers in the US, Canada, and Mexico. ADESA operates about 60 used-vehicle auctions and more than 40 salvage auctions
Insurance Auto Auctions, Inc.
Leading US auto salvage company that auctions off cars declared a total loss for insurance purposes; it auctions either whole vehicles or, if they can't be fixed, just the parts. IAA has about 150 auction sites throughout North America
Manheim
remarkets vehicles for wholesale consignors, including car dealers and makers, rental-car and fleet companies, and financial institutions. The company offers auction-related services, as well, such as reconditioning, wholesale inspections and certifications, and used car valuation

17. Comparables

18. Projections Valuation is extremely dependent on growth rate
Copart will see higher volume
Revenues will depend on the price of steel
50% of UK revenues have been related to the value of the selling price
Selling price is dependent on the price of steel
Margins will decline due to a higher % of business in the UK
Copart, Inc. acts as a principal in the UK

19. Projections Growth depends on: Acquisitions
Entered UK market in June 2007
Volume changes in the salvage car market
Growth in market share
Fees dependent car selling prices
Growth in non-insurance company sellers

20. Projections Higher Volume = More Fee Revenue
More cars are declared totaled because difference between value before accident and value after accident widens
Lower used-car pricing
Auto manufacturers providing more features in cars

21. Assumptions

22. Valuation CAPM DCF Valuation: $26.87 ROE DCF Valuation: $15.56
“Goal Post Valuation”: $19.70
Comparables Valuation:
Current Price:

23. RCMP Historical Transactions
FEB 2003: Bought 1000 shares at $7.82
NOV 2007: Sold 300 shares at $36.20
APR 2008: Sold 300 shares at $41.30
SEP 2008: Sold 200 shares at $41.05
Current Holdings: 200 shares at $30.18

24. Recommendation Sell 200 shares at the market Keep on watch list
Reconsider if the company issues debt in the future
Decreases overall cost of capital