Keenan Johnston
Shivam Khanna
David Light
September 25, 2008
Presentation Outline
Macroeconomic Review
 Current market conditions
 Industry Overview
 Copart Overview
 Historical Performance
 Recent Events/Performance
 Portfolio Positioning
 Financial Projections

Macroeconomic review
•
High oil prices, credit market turmoil and
weakness in financial sector has dragged
markets down in the recent months
•
The market is down 17% this year
•
Copart’s revenues however, are not materially
affected by economic slowdowns
Source: Yahoo Finance, Company filings
Current market conditions

Non-cyclical companies trading at a
premium
 Represents
insulation for economic
uncertainty

Volatility at a high (VIX below)
Source: Yahoo Finance
Industry Overview

Industry benefits with increasing demand for cars, More
cars = More accidents = More auctions = More revenue

Current economic conditions are not conducive to car
purchasing

Insurance companies are facing shrinking premium
margins and in order to cuts costs are purchasing
recycled parts from salvaged vehicles. More demand for
Copart’s auctions

Rising global oil prices have driven people to find
alternatives to driving, Less car accidents = fewer
opportunities for revenue
Key Market Players
23%
35%
Adesa/IAAI
Independent
Copart
42%
Source: Wikiinvest
Copart Overview

Runs a proprietary online auction system for salvaged
vehicles
 Damaged cars often termed by Insurance Companies as
“Total Loss”

Provides vehicle suppliers a full range of re-marketing
services to process and sell these vehicles

Earns Revenue from both buyers and sellers at the auction
(not dissimilar to StubHub or Ebay)
Source: Company filings
Copart Business Model - US
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
Source: Company filings
Exporters
Rebuilders
Used car
dealers
Copart Business Model - UK
Accident totally destroys car
Insurance Co. deems car too
costly to repair
Risk of
devaluation
Copart purchases car from Insurance company and
remarkets it to potential buyers
Dismantlers
Source: Company filings
Exporters
Rebuilders
Used car
dealers
North American Facilities



Source: R.W. Baird
Copart Plans to add 10-15
North American Facilities in
the next year
Management sees potential
for 150-200 facilities over
time
~35% market share
U.K. Facilities



Source: R.W. Baird
In 2008, increased
facilities from 10 to 15
Projected to acquire 5
more facilities in the next
year
30% market share by the
end of next year in U.K.
Historical financial performance

Historically strong financial performance
 Driven
Source: Company filings
by outstanding margins
Total Revenue
Y-2-Y growth rate
2003
347.4
-
2004
391.0
12.5%
2005
447.7
14.5%
2006
528.5
18.0%
2007
560.7
6.1%
Gross Profit
Gross margin
145.0
41.7%
163.4
41.8%
202.0
45.1%
230.5
43.6%
266.8
47.6%
EBITDA
EBITDA margin
116.3
33.5%
124.5
31.8%
186.9
41.7%
203.0
38.4%
240.3
42.8%
Net Income
Net margin
57.3
16.5%
49.7
12.7%
102.1
22.8%
96.9
18.3%
136.3
25.0%
Shareholder Base
8%
Institutions
21%
Insiders
71%
Source: Yahoo Finance
Retail
Recent events

September 18, 2008- Copart adds a new facility in
Kentucky due to growing demand

April 14, 2008- Copart acquires fourth facility in Missouri

March 7, 2008- Revenues declined after company declared
UK expansion had not gone according to plan

March 6, 2008- Copart entered into a $200 million revolving
line of credit with Bank of America.
Source: Company filings, Reuters
Stock performance
Source: Google Finance
Current Portfolio
Correlation
CPRT
AE E
AE O
DO
FR
J K HY
K MB
WF R
SRCL
WAG
C PRT
1.0000
0.1442
0.3105
0.0279
0.1958
0.1885
0.1858
0.3078
0.1535
0.2659
Source: Yahoo Finance
AE E
AE O
1.0000
0.2184
0.2051
0.3076
0.5134
0.5137
0.1972
0.1635
0.2537
1.0000
0.0266
0.3313
0.3828
0.2930
0.2604
0.1995
0.4046
DO
1.0000
0.1409
0.0333
0.0852
0.3172
0.0903
0.1101
FR
1.0000
0.3620
0.2836
0.1965
0.2293
0.1153
J K HY
K MB
WF R
SRCL
WAG
1.0000
0.4602
0.2135
0.1451
0.2410
1.0000
0.1995 1.0000
0.3501 0.2454 1.0000
0.3138 0.1702 0.2821 1.0000
Financial Projections
Base case
In-line with management projections
 Gross PP&E to remain at 95% of sales

 historically

Net goodwill at 38% of net PP&E
 historically

90-104%
33-45%
Tax rate: 38%
US & CA revenue growth
UK revenue growth
Total Revenue
Y-2-Y growth rate
COGS % of sales
SG&A % of sales
2008 E
7.5%
1177.2%
776.0
38.4%
2009 E
7.0%
20.0%
854.9
10.2%
2010 E
7.0%
14.0%
930.7
8.9%
2011 E
7.0%
12.0%
1,008.7
8.4%
2012 E
7.0%
10.0%
1,088.0
7.9%
2013 E
7.0%
8.0%
1,167.4
7.3%
2014 E
6.0%
7.0%
1,240.9
6.3%
2015 E
5.0%
6.0%
1,306.6
5.3%
52.0%
11.3%
52.0%
11.3%
52.0%
11.3%
52.0%
11.3%
52.0%
11.3%
52.0%
11.3%
52.0%
11.3%
52.0%
11.3%
Base case

With relatively optimistic assumptions our
model yielded a value well below market
Beta
RF
Rm
Re
Rd
1.06 Free Cash Flows ($MM)
5.0% Free Cash Flows
12%
12.4% Present Value of Cash Flows
n/a
MVE
MVD
VF
g
$3,899
$0
$3,899
4%
Tax Rate
Debt/TV
Equity/TV
WACC
38%
0.0%
100.0%
12.42%
2008E 2009E 2010E 2011E 2012E 2013E 2014E 2015E Terminal Value
16.6 186.8 213.1 231.6 252.0 273.9 284.7 312.1
$3,855
$15
$148
$150
$145
$140
DCF Valuation ($MM)
Sum of P.V. of FCF
Minus outstanding debt
Equity value
CPRT value per share
Equals Value +/- 10%
$2,177
$0
$2,177
23.29
25.62 / 20.96
$136
$125
$122
$1,196
Base case- sensitivity
Sensitivity Analysis- WACC/Growth
Growth
23.29
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
9.0%
32.76
34.45
36.42
38.75
41.54
44.96
49.23
54.72
62.04
10.0%
28.08
29.26
30.61
32.17
33.98
36.13
38.71
41.85
45.79
11.0%
24.49
25.35
26.31
27.40
28.64
30.07
31.75
33.72
36.10
WACC
12.0%
12.4%
21.66
20.64
22.29
21.20
23.00
21.82
23.78
22.52
24.67
23.29
25.67
24.17
26.82
25.16
28.14
26.29
29.69
27.60
13.0%
19.37
19.85
20.38
20.96
21.61
22.34
23.16
24.08
25.14
14.0%
17.48
17.85
18.26
18.70
19.19
19.73
20.33
21.00
21.76
15.0%
15.90
16.20
16.51
16.86
17.23
17.64
18.09
18.59
19.15
16.0%
14.57
14.80
15.05
15.32
15.61
15.93
16.28
16.66
17.08
RCMP Historical Transactions
Date
Buy/Sell
Price
Shares
Value
Feb 28, 2003
Buy
$7.82
(1000)
$7,820
Nov 15, 2007
Sell
$36.20
(300)
($10,860)
Apr 30, 2008
Sell
$41.30
(300)
($12,390)
Current Holdings
Date
Shares
Price
Market Value
Sep 22, 2008
400
$43.34
$17,336
Recommendation

Sell 200 shares with a $36 limit order

Gross proceeds of approximately $8,200
 Based

on market price of $41.00
Will realize a gain of approximately $6,630