Copart (CPRT) Dan DeRose Jr. Presented December 5, 2006

Presentation Outline Company overview Company overview RCMP position RCMP position Market overview Market overview Industry overview Industry overview Porter’s five forces Porter’s five forces Firm strategy and development Firm strategy and development Stock Performance Stock Performance Portfolio fit Portfolio fit Firm Performance Firm Performance Dupont analysis Dupont analysis Margins analysis Margins analysis Valuation Valuation DCF DCF Recommendation Recommendation

Part 1: Company overview

Copart – The Business Business: salvage vehicle sales and services provider with 122 locations Business: salvage vehicle sales and services provider with 122 locations Suppliers: Financial institutions, vehicle leasing companies, automobile rental companies, charities, automobile dealers, insurance companies Suppliers: Financial institutions, vehicle leasing companies, automobile rental companies, charities, automobile dealers, insurance companies 83% of vehicles from insurance companies 83% of vehicles from insurance companies 14% from State Farm 14% from State Farm Vehicles either damaged in accident or stolen and claim already paid Vehicles either damaged in accident or stolen and claim already paid If in accident, deemed total loss if If in accident, deemed total loss if repair cost > ACV - salvage value

Copart – The Business Customers: vehicle dismantlers, rebuilders, used vehicle dealers, exporters Customers: vehicle dismantlers, rebuilders, used vehicle dealers, exporters

Sales Process VB 2 – Virtual Bidding Second Generation VB 2 – Virtual Bidding Second Generation Internet based auction-style model with registered participants Internet based auction-style model with registered participants Shows highest current price, enter highest amount willing to pay, BID4U feature will incrementally bid for you (EBAY) Shows highest current price, enter highest amount willing to pay, BID4U feature will incrementally bid for you (EBAY) Affect: increased pool of available buyers and added competition Affect: increased pool of available buyers and added competition FY 2006 – 50% of sales made to out of state buyers (24% out of country) FY 2006 – 50% of sales made to out of state buyers (24% out of country)

Sales Agreements Vehicle Processing Programs Percentage Incentive Program (PIP) – sell all salvage vehicles at a predetermined percentage of sales price Percentage Incentive Program (PIP) – sell all salvage vehicles at a predetermined percentage of sales price Revenues directly linked to sales price Revenues directly linked to sales price Provide transport of vehicle to facility, storage, DMV processing at no expense Provide transport of vehicle to facility, storage, DMV processing at no expense Fixed Fee Consignment – generally $50 - $175 Fixed Fee Consignment – generally $50 - $175 Charge extra for transportation, storage, processing Charge extra for transportation, storage, processing

Services CoPartFinder – search engine enabling users to locate used parts quickly and efficiently CoPartFinder – search engine enabling users to locate used parts quickly and efficiently Lists vehicles recently sold through VB 2 Lists vehicles recently sold through VB 2 Allows vehicle dismantlers and resellers to streamline parts sale process and access a large pool of buyers (incentive) Allows vehicle dismantlers and resellers to streamline parts sale process and access a large pool of buyers (incentive) Virtual Insured Exchange (VIX) – venue for insurance companies to enter vehicle into live auction to establish true value Virtual Insured Exchange (VIX) – venue for insurance companies to enter vehicle into live auction to establish true value ProQuote – proprietary software service that assists suppliers in vehicle claims evaluation process by providing online salvage value estimates ProQuote – proprietary software service that assists suppliers in vehicle claims evaluation process by providing online salvage value estimates

Part 2: RCMP Position

RCMP Position Transaction history Transaction history BOT 1000 at $7.82 BOT 1000 at $7.82 Gains & Losses Gains & Losses BV of holding: $7820 BV of holding: $7820 Realized capital gains: $0 Realized capital gains: $0 Unrealized capital gains: $21,980 Unrealized capital gains: $21,980 Market value of holdings: $29,800 Market value of holdings: $29,800

RCMP Postion Portion of portfolio market value: Portion of portfolio market value:

Part 3: Market overview

Market Overview Road congestion Road congestion Between , miles traveled increased 79% while highway lane miles increased 3% Between , miles traveled increased 79% while highway lane miles increased 3% Congested roads grew from 34% to 58% during same period Congested roads grew from 34% to 58% during same period Current situation Current situation 2000 Federal Highway Administration report states “the average annual Cost to Maintain Highways and Bridges projected for the period is $11.3 billion (17.5%) higher than 2000 expenditures, while the Cost to Improve Highways and Bridges exceeds current spending by $42.2 billion (65.3%)” 2000 Federal Highway Administration report states “the average annual Cost to Maintain Highways and Bridges projected for the period is $11.3 billion (17.5%) higher than 2000 expenditures, while the Cost to Improve Highways and Bridges exceeds current spending by $42.2 billion (65.3%)” “ Comparison of Spending and Investment Requirements”, 2002 Status of the Nation’s Highways, Bridges and Transit: Conditions and Performance.

Market Overview Automobile design Automobile design Manufacturers are incorporating certain design features that increase passenger safety Manufacturers are incorporating certain design features that increase passenger safety Unibody construction, passenger safety cages with crumble zones, plastic components, airbags, and computer systems Unibody construction, passenger safety cages with crumble zones, plastic components, airbags, and computer systems Safety features will make it more likely for vehicles to be deemed total losses if involved in accident Safety features will make it more likely for vehicles to be deemed total losses if involved in accident Gasoline prices Gasoline prices Shrink margins under PIP program Shrink margins under PIP program Significant increases could lead to reduction in miles driven per car and a reduction in accident rates Significant increases could lead to reduction in miles driven per car and a reduction in accident rates

Part 4: Industry Overview

Porter’s 5 Forces Overall Threat Level: High Threat of new entrants HIGH Power of Suppliers HIGH Threat of Substitutes HIGH Industry Rivalry MEDIUM Power of Customers LOW

Part 5: Firm strategy and development

Firm Strategy and development Acquire and develop new salvage vehicle facilities in key markets Acquire and develop new salvage vehicle facilities in key markets Opened 11 facilities is FY 2006 and 10 in FY 2005 Opened 11 facilities is FY 2006 and 10 in FY 2005 Pursue national and regional vehicle supply agreements Pursue national and regional vehicle supply agreements Primarily with insurance companies Primarily with insurance companies Expand service offerings to suppliers and buyers Expand service offerings to suppliers and buyers Expand offerings to include offering software that can assist suppliers in expediting claims and salvage management tools that integrate databases Expand offerings to include offering software that can assist suppliers in expediting claims and salvage management tools that integrate databases Refine VB 2 and continue to integrate into acquired facilities Refine VB 2 and continue to integrate into acquired facilities

Part 6: Stock performance

Stock performance Stock price: $29.80 Stock price: $ week range: $ $ week range: $ $30.39 CPRT vs. NASDAQ and S&P for 1 year and 5 year intervals CPRT vs. NASDAQ and S&P for 1 year and 5 year intervals

Stock performance CPRT vs. KAR (ADESA) for 1 year and 5 year intervals CPRT vs. KAR (ADESA) for 1 year and 5 year intervals Only pure player competitor Only pure player competitor

Part 7: Portfolio fit

Portfolio fit Correlation Matrix

Part 8: Firm performance

Firm performance ROE driven by increasing profit margin in recent periods. Profit margins hurt in FY 2006 by Hurricanes Rita and Katrina

Firm performance Decrease to operating and net profit margins in FY 2003 caused by “increase in yard and fleet expenses due to handling increased volume at existing operations and the costs of new facilities” CPRT FY k pg. 24 “The increases in yard expenses were primarily attributable to the cost of handling increased volume, a general increase in subhauling costs and the incremental abnormal costs incurred as a result of hurricanes Kartina Rita.” CPRT 10-k pg. 33

Part 10: Valuation

Discounted Cash Flow Basic assumptions Basic assumptions Revenues continue to show steady increase as CPRT continues to purchase and integrate new facilities Revenues continue to show steady increase as CPRT continues to purchase and integrate new facilities G&A decreases slightly over time as installation of VB2 becomes complete G&A decreases slightly over time as installation of VB2 becomes complete Must still maintain staff to service/upgrade Must still maintain staff to service/upgrade Vehicle pooling costs increase due to increases in gas prices and towing costs Vehicle pooling costs increase due to increases in gas prices and towing costs Under Percentage Incentive Program, can not pass these costs onto customer resulting in smaller margins Under Percentage Incentive Program, can not pass these costs onto customer resulting in smaller margins

Discounted Cash Flow Step 1: Forecast FCF Step 1: Forecast FCF Step 2: Find WACC

Discounted Cash Flow Step 3: Calculate PV of FCF Step 3: Calculate PV of FCF Step 4: Subtract L-T debt and divide by shares outstanding

Discounted Cash Flow Sensitivity analysis Sensitivity analysis

Discounted Cash Flow Downside scenario Downside scenario Gas prices rise significantly Gas prices rise significantly Worst case scenario CPRT loses big insurance companies as vehicle suppliers Remember, 83% from insurance companies and 14% from State Farm alone!

Recommendation HOLD all 1000 shares of CPRT HOLD all 1000 shares of CPRT CPRT has shown continued ability to purchase and integrate new facilities into current system without debt CPRT has shown continued ability to purchase and integrate new facilities into current system without debt CPRT continues to develop its service offerings setting the curve in the industry CPRT continues to develop its service offerings setting the curve in the industry

Questions?