Business Breakdowns
Episode 121 Copart: The Car Undertaker
Business Breakdowns

Episode 121: Copart: The Car Undertaker

Business Breakdowns

Episode 121

Copart: The Car Undertaker

Adam Mead is the CEO and CIO of Mead Capital Management. We cover Willis Johnson's tricks that set Copart up for success, why the business is growing despite lower vehicle utilization, and what it can teach all investors about good cash flow management.

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(00:02:32) - (First question) - An overview of Copart

(00:04:16) - The size and scope of the market 

(00:04:52) - The process of a vehicle entering into Copart’s system 

(00:06:36) - The other side of the marketplace, who buys from Copart

(00:08:16) - Selling cars whole or dismantling and how this has changed from the early days of the business

(00:09:55) - An overview of Willis Johnson’s career, forming Copart and his involvement today 

(00:13:26) - The financial structure of the business in the early days

(00:14:59) - Copart’s differences from the competition 

(00:18:42) - Biggest drivers of supply. Accidents, natural disasters, wear and tear  

(00:22:12) - Cashflow flow through, the economics for Copart

(00:24:08) - Associated costs with regards to the sale and movement of vehicles 

(00:26:12) - Average inventory numbers throughout the year

(00:27:32) - The margin profile of the business on a normalized basis

(00:29:29) - A breakdown of the CapEx budget on a yearly basis

(00:33:42) - The major drivers of growth for Copart 

(00:37:16) - The buyback history, stated goal and philosophy on dividends 

(00:38:38) - Historical and potential future risks to the business  

(00:42:00) - The insurance companies’ opinion of the business, net positive or net negative

(00:43:37) - The framework investors use when valuing this business

(00:47:17) - Lessons learned from the research and analysis of Copart 

Copart: The Car Undertaker

Introduction

Matt
This is Matt Reustle and today, we are breaking down the vehicle auction giant Copart. You may be unfamiliar with Copart. But at the time of this recording, the company has a $40 billion market cap. They operate in over 200 locations across the globe, and they sell north of 3 million cars per year on behalf of their unique customer base.

Copart is a unique story in a very concentrated industry, where they likely have 50% market share. It's a story defined by evolution. Its founder, Willis Johnson didn't merely adopt a junkyard mentality. He was born into it, molded by it. To break down Copart, I'm joined by Adam Mead, Head of Mead Capital Management. We cover all the angles of this unique industry giant. Please enjoy this breakdown of Copart.

What Copart Does and The Large Market It Serves

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