# Copart (CPRT) Financial Model Free Excel 3-statement financial model and company analysis for Copart. - Canonical: https://finamodel.com/companies/copart - Industry: Marketplaces - Downloadable model: Yes - Excel download: https://finamodel.com/company-models/CPRT.xlsx ## Model Purpose This model evaluates the equity valuation and cash flow generation capacity of Copart, Inc. (CPRT) to determine if its premium valuation multiple is justified by its high-margin, land-backed, quasi-monopoly position in the salvage vehicle auction market. ## Company Overview - Copart is the global leader in online salvage vehicle auctions, connecting sellers (primarily auto insurance companies) with buyers (dismantlers, rebuilders, used car dealers, and exporters) through its proprietary online platform. - **Business segments:** The company operates two primary revenue lines: Service Revenues (consignment fees, ~85% of total revenue) and Vehicle Sales (purchased vehicles, ~15% of total revenue). - **Key geographies:** The business is segmented geographically into the United States (~83% of revenue) and International (~17% of revenue, including the UK, Canada, Brazil, Germany, and others). - **Business model type:** Asset-heavy (owns the physical land for salvage yards) but transaction-based (earns fees on auction volume and value). It operates primarily on a consignment model, taking no inventory risk on the majority of vehicles. - **Competitive position:** Operates as a duopoly in the US alongside IAA (owned by Ritchie Bros/RB Global), holding a dominant market share. Its competitive moat is driven by its massive network of owned real estate (salvage yards) and deep integration with major auto insurers. - **Recent major events:** In early 2026, Copart disclosed an ongoing US Department of Justice (DOJ) investigation into potential money laundering violations on its platform. The company also recently executed massive share repurchases (over $1.1 billion in late 2025/early 2026) and secured a new $1.25 billion revolving credit facility. ## Revenue Deep Dive ### Service Revenues - **Segment name:** Service Revenues (Reported under both U.S. and International segments). - **Revenue driver formula:** `Consignment Volume (Units) x Average Fee per Unit (Seller Fees + Buyer Fees + Towing/Storage Fees)`. - **Historical growth rate:** 6-11% CAGR over the last 3-5 years. - **Key growth levers and headwinds:** Driven by total loss frequency (percentage of accidents resulting in a total loss, increasing due to complex vehicle technology/EVs), miles driven, and rising salvage values (higher used car prices mean higher percentage-based buyer fees). Headwinds include mild weather (fewer accidents) and declining used car prices. - **Pricing dynamics:** Highly contractual with insurance suppliers (often multi-year agreements). Buyer fees are tiered and scale with the final auction price of the vehicle. - **Revenue recognition notes:** Recognized at the point in time when the vehicle is sold at auction. - **Seasonality:** Q2 and Q3 (winter months in the Northern Hemisphere) typically see higher accident volumes, leading to higher inventory and subsequent sales. Catastrophic weather events (hurricanes, hailstorms) create unpredictable spikes in volume. ### Vehicle Sales - **Segment name:** Vehicle Sales (Reported under both U.S. and International segments). - **Revenue driver formula:** `Purchased Volume (Units) x Average Selling Price (ASP)`. - **Historical growth rate:** Flat to low single-digit decline recently, as the company transitions certain international markets (like Germany) from a purchase model to a consignment model. - **Key growth levers and headwinds:** Primarily used to establish market presence in new international geographies or for specific non-insurance sellers (e.g., cash-for-cars programs). - **Pricing dynamics:** Spot pricing based on auction bidding. The company takes inventory risk on these units. - **Revenue recognition notes:** Recognized upon the sale of the vehicle at auction. - **Seasonality:** Similar to Service Revenues, but heavily influenced by the timing of bulk purchases from fleet operators or charities. ## Cost Structure ### Variable Costs / COGS - **Line-by-line breakdown:** Copart reports "Yard operations" and "Cost of vehicle sales". Yard operations include facility costs, towing and freight, title processing, and direct yard labour. Cost of vehicle sales represents the acquisition cost of vehicles sold under the purchase model. - **Gross margin range:** 44% - 48% (FY25 was 45.2% globally; U.S. segment runs higher at ~47.5%, International at ~34-35%). - **Key input costs and commodity exposures:** Fuel prices (impacts towing costs), real estate lease costs (for the minority of yards not owned), and labour. - **How COGS scales with revenue:** High operating leverage for Service Revenues. Once a yard is operational, the marginal cost of processing an additional consigned vehicle is very low. Vehicle Sales have a linear COGS relationship (inventory cost). ### Operating Expenses - **R&D:** Not explicitly broken out; technology and platform maintenance costs are generally embedded in General and Administrative (G&A) or capitalised. - **SG&A:** Reported as "General and administrative". Primarily corporate headcount, IT infrastructure, marketing, and legal/regulatory compliance costs. - **Depreciation & Amortisation:** Significant due to the massive real estate portfolio and yard infrastructure. Typically runs at 3-4% of revenue. - **Stock-Based Compensation:** Material, typically embedded within yard operations and G&A. - **Restructuring / one-time charges:** Rare, though legal and advisory fees related to the DOJ investigation may cause near-term G&A spikes. ### Margin Profile - **Gross margin:** ~45-46%. - **Operating margin:** ~35-37% (FY25/FY26 range). - **Net margin:** ~28-31%. - **Margin trend:** Stable to slightly expanding over the long term, driven by the shift toward higher-margin Service Revenues and operating leverage, though occasionally pressured by international expansion costs or lower used car pricing. ## Balance Sheet Structure - **Total assets:** ~$8.5 - $9.5 billion. - **Key asset categories:** Cash and cash equivalents (~$5.1 billion as of early 2026), Property and Equipment (massive land holdings for salvage yards), and Vehicle Inventory (for the Vehicle Sales segment). - **Goodwill & intangibles:** Relatively low (<5% of assets), as growth is primarily organic rather than through large acquisitions. - **Working capital profile:** - **DSO:** 10-15 days (buyers must pay quickly to release vehicles). - **DIO:** 45-60 days (only applies to the Vehicle Sales segment inventory). - **DPO:** 20-30 days. - **Net working capital:** Generally negative or neutral. The consignment model requires very little working capital. - **PP&E:** Dominated by land. Copart prefers to own rather than lease its salvage yards to prevent zoning issues and landlord leverage. Land is not depreciated, which benefits reported earnings. - **Right-of-use assets:** Minimal compared to peers, as the strategy is to own real estate. ## Capital Expenditure & Investment - **Capex as % of revenue:** 8-12% historically. - **Maintenance vs. growth capex:** ~20% maintenance (paving, yard equipment, IT), ~80% growth (land acquisition and yard development). - **Major capex programmes:** Continuous acquisition of large parcels of land near major metropolitan areas to expand storage capacity, especially critical for handling catastrophic weather events (e.g., hurricanes). - **Capitalised software:** Moderate, related to the Copart Access platform and AI bidding tools. - **M&A pattern:** Organic grower. Occasional small bolt-on acquisitions in international markets to establish a foothold. ## Debt & Capital Structure - **Total debt:** Effectively zero net debt. The company holds massive cash reserves ($5.1 billion). - **Debt/EBITDA ratio:** 0.0x. - **Key debt instruments:** A new $1.25 billion unsecured revolving credit facility maturing in 2031 (mostly undrawn, used for liquidity backstop). - **Interest rate profile:** Generates significant interest income from its cash pile (invested in US Treasury Bills). - **Share repurchase programme:** Highly active. Repurchased over $1.1 billion in stock in late 2025/early 2026. - **Dividend policy:** Does not pay a regular dividend; returns capital exclusively through share buybacks. ## Cash Flow Characteristics - **Operating cash flow conversion:** Excellent. OCF / Net Income is consistently >1.1x due to high depreciation, stock-based compensation add-backs, and low working capital needs. - **Free cash flow margin:** 20-25% (FCF / Revenue). - **Major non-cash items:** Depreciation of yard infrastructure, stock-based compensation. - **Working capital cash flow impact:** Minimal impact on a steady-state basis. - **Capex intensity:** High absolute dollar capex for land, but highly discretionary. If growth slows, growth capex can be immediately halted, resulting in massive FCF generation. ## Sheet Structure 1. **Assumptions:** Hardcoded drivers for volume, pricing, margins, and capital allocation. 2. **Revenue Build:** - U.S. Segment: Service Revenues, Vehicle Sales. - International Segment: Service Revenues, Vehicle Sales. - Volume (Units) and ASP/Fee per unit drivers for each. 3. **Income Statement:** Revenue, Yard operations, Cost of vehicle sales, Gross Profit, G&A, D&A, Operating Income, Interest Income, Tax, Net Income. 4. **Balance Sheet:** Cash & Equivalents, Accounts Receivable, Vehicle Inventory, Other Current Assets, PP&E (split by Land and Other), Total Assets. Accounts Payable, Accrued Liabilities, Long-Term Debt (Revolver), Equity. 5. **Cash Flow Statement:** Net Income, D&A, SBC, WC changes (OCF). Capex (Land vs. Other) (CFI). Share Repurchases, Revolver Draw/Paydown (CFF). 6. **Debt & Interest:** Revolver schedule, Cash interest income schedule (driven by Treasury yields on the $5B+ cash balance). 7. **PP&E & Capex:** Rollforward of Land (no depreciation) and Yard Equipment/Infrastructure (depreciated). 8. **DCF Valuation:** Unlevered FCF calculation, WACC, Terminal Value, Implied Share Price. ## Key Financial Relationships 1. `U.S. Service Revenue = U.S. Consignment Volume x U.S. Average Fee per Unit` 2. `U.S. Vehicle Sales Revenue = U.S. Purchased Volume x U.S. Average Selling Price` 3. `International Service Revenue = Intl Consignment Volume x Intl Average Fee per Unit` 4. `International Vehicle Sales Revenue = Intl Purchased Volume x Intl Average Selling Price` 5. `Total Revenue = U.S. Service Revenue + U.S. Vehicle Sales Revenue + International Service Revenue + International Vehicle Sales Revenue` 6. `Cost of Vehicle Sales = Total Vehicle Sales Revenue x (1 - Vehicle Sales Gross Margin)` (Historically very low margin, ~5-10%). 7. `Yard Operations Cost = Total Service Revenue x (1 - Service Gross Margin)` 8. `Total Gross Profit = Total Revenue - Cost of Vehicle Sales - Yard Operations Cost` 9. `Interest Income = Average Cash Balance x Average Yield on U.S. Treasury Bills` 10. `Ending Share Count = Beginning Share Count - (Share Repurchase $ / Average Share Price)` ## Cross-Sheet Dependencies - **Revenue Build** feeds the top line of the **Income Statement**. - **Revenue Build** volumes feed the **PP&E & Capex** sheet (higher volume requires more land acquisition). - **Income Statement** Net Income feeds the top of the **Cash Flow Statement** and Retained Earnings on the **Balance Sheet**. - **Cash Flow Statement** ending cash feeds the **Balance Sheet** cash line. - **Balance Sheet** cash line feeds the **Debt & Interest** sheet to calculate Interest Income, which flows back to the **Income Statement** (Circularity risk: Interest income increases Net Income, which increases Cash, which increases Interest Income. Use an average balance or a circularity breaker). ## Sign Convention - **Revenues and Assets:** Positive. - **Expenses and Liabilities:** Positive in their specific build schedules, but subtracted in aggregation formulas (e.g., `Gross Profit = Revenue - COGS`). - **Cash Flow:** Inflows are positive, outflows (Capex, Share Repurchases) are negative. ## Things Most Likely to Go Wrong - **Misunderstanding Land Capex:** Copart buys land; it does not lease it. Land is not depreciated. If the model depreciates total Capex, D&A will be artificially inflated, and Net Income will be understated. - **Blending Margins:** Service Revenues have ~50%+ gross margins; Vehicle Sales have <10% gross margins. A shift in the mix drastically alters consolidated margins. The model must forecast them separately. - **Ignoring Interest Income:** With ~$5.1 billion in cash, interest income is a material contributor to EPS. Failing to model yield on cash will understate EPS. - **Catastrophe (CAT) Volume:** Hurricanes cause massive, one-time spikes in volume and towing costs. Do not extrapolate a CAT-heavy quarter into a long-term CAGR. - **DOJ Investigation Risk:** The model should include a scenario toggle for potential regulatory fines or compliance cost increases related to the ongoing money laundering probe. - **Share Count Reduction:** Copart aggressively buys back stock. Holding share count flat will severely understate future EPS. - **Currency Translation:** The International segment is subject to FX swings (GBP, EUR, CAD). The model should assume constant currency for long-term forecasting. - **Total Loss Frequency Plateau:** Assuming total loss frequency grows indefinitely is dangerous; it will eventually cap out. ## Validation Checks - "Consolidated Gross Margin should be in the 44-47% range; flag if outside this band." - "Operating Margin should be between 34-38%." - "Cash balance should not drop below $1.0 billion unless a massive special dividend or acquisition is modeled." - "Debt/EBITDA should remain near 0.0x." - "Balance sheet must balance: Total Assets = Total Liabilities + Equity in every period." - "Effective tax rate should be 21-23%." - "Free Cash Flow conversion (FCF / Net Income) should be between 80-100%." - "Interest income should equal approximately 4-5% of the prior year's cash balance (assuming current T-bill rates)." ## Key Assumptions (Default Values) | Assumption | Default Value | Unit | Rationale | |---|---|---|---| | U.S. Service Revenue Growth | 7.0 | % | FY25 actual growth rate | | U.S. Vehicle Sales Growth | -2.0 | % | Reflects strategic shift away from purchased units | | Intl Service Revenue Growth | 11.4 | % | FY25 actual growth rate | | Intl Vehicle Sales Growth | -10.0 | % | Transition to consignment model in Germany/UK | | U.S. Gross Margin | 47.5 | % | FY25 actual | | Intl Gross Margin | 34.9 | % | FY25 actual | | G&A as % of Revenue | 8.5 | % | Historical average | | D&A as % of Revenue | 3.5 | % | Historical average | | Effective Tax Rate | 22.0 | % | Standard US corporate rate + state taxes | | Capex as % of Revenue | 10.0 | % | Historical average, heavily weighted to land | | Cash Yield (Interest Income) | 4.5 | % | Return on $5B+ cash pile in T-bills | | Annual Share Repurchases | 1,000 | $M | Run-rate based on recent $1.1B+ buybacks | | WACC | 8.5 | % | Low beta, zero debt capital structure | | Terminal Growth Rate | 3.0 | % | GDP+ growth due to pricing power and market duopoly | ## Data Sources & Benchmarks - **Filings:** SEC EDGAR (Form 10-K, 10-Q), Copart Investor Relations (copart.com/investorrelations). - **Key Peers:** RB Global (RBA) - owns IAA (Insurance Auto Auctions), Copart's only major competitor in the US. - **Industry Data:** Manheim Used Vehicle Value Index (tracks used car pricing, which impacts Copart's percentage-based fees). - **Macro Data:** US Department of Transportation (miles driven data), auto insurance industry reports on total loss frequency. ## Sources - Copart Q4 2025 Earnings Release and Call Transcript - Copart Q2 2026 Earnings Release and DOJ Investigation Disclosure - Copart FY2025 Form 10-K - Morningstar Equity Research on Copart (CPRT) - Seeking Alpha Analysis on Copart Business Model --- ## Frequently asked questions ### What is Copart's core business model and how does it generate revenue? Copart operates as the global leader in online salvage vehicle auctions, connecting sellers like insurance companies with various buyers. The company primarily generates revenue through service fees on consignment vehicles, which account for about 85% of its total revenue. Additionally, Copart earns revenue from the direct sale of vehicles it purchases, making up the remaining 15%. ### What are the primary factors driving Copart's revenue growth? Copart's revenue growth is primarily driven by the volume and value of vehicles processed through its online auction platform, especially from its dominant position in the US salvage vehicle market. Its extensive network of owned real estate for salvage yards and deep integration with major auto insurers are key competitive advantages that support continued transaction flow. ### What is the assumed capital expenditure as a percentage of revenue in the Copart financial model? The financial model for Copart assumes a capital expenditure (Capex) as a percentage of revenue of approximately 17.1%. This reflects the company's asset-heavy strategy, with a significant portion dedicated to growth investments like land acquisition and yard development. ### What is the forecast horizon for the Copart financial model and what is its main purpose? The Copart financial model provides a forecast horizon from fiscal year 2026 through fiscal year 2030. Its main purpose is to evaluate Copart's equity valuation and its capacity for cash flow generation, assessing whether its premium valuation is justified by its strong market position. ### Is a downloadable Excel financial model available for Copart (CPRT)? Yes, a downloadable Excel financial model is available for Copart (CPRT). This model evaluates the company's equity valuation and cash flow generation, providing insights into its financial performance. ### How does Copart's net working capital profile typically appear, according to the financial model context? Copart's net working capital is generally negative or neutral, reflecting its efficient consignment-based business model. This model requires very little working capital, as buyers typically pay quickly and the company takes minimal inventory risk on most vehicles. [Interactive forecast calculator](https://finamodel.com/companies/copart/forecast)