What happens after cars are totaled in wrecks or natural disasters? How about stolen cars recovered after the insurance settlement? Perhaps Copart happens -- it takes junked cars and auctions them for insurers, auto dealers, and car rental agencies. The buyers are mostly rebuilders, licensed dismantlers, and used-car dealers and exporters. It's replaced live auctions with Internet auctions using a platform known as Virtual Bidding Second Generation (VB2 for short). Copart also provides services such as towing and storage to buyers and other salvage companies, as well as an online database and search engine for used parts. Copart has more than 150 storage facilities throughout North America, Europe, and Brazil.
The US is by far Copart's largest market, accounting for more than 75% of sales. Europe accounts for about 20%. Copart operates about 135 storage facilities in the US, four in Canada, and 15 in the UK. It entered Brazil, Germany, and the Middle East in 2012 via acquisitions.
Sales and Marketing
Copart is going the extra mile to market its brand to car enthusiasts. The company produces Sold in Seconds, a weekly TV program that highlights purchases from Copart.com and follows up with buyers to see what they've done with their vehicles. The show, which started airing in 2010, complements Copart's racing sponsorships in the NASCAR Nationwide Series and NHRA Top Fuel Series.
Copart's sales increased 6% in fiscal 2012 (ends July) vs. the prior year, while net income grew by more than 9%. The online vehicle auction firm's sales and profits has increased steadily since fiscal 2009, when they slipped due to the falling US dollar-Great Britain pound exchange rate, lower unit volumes, and declining revenues per transaction. Indeed, 2012's $924 million in sales and $182 million in net income were all-time highs for fast-growing Copart. Sales growth was driven by increases in service and vehicle sales, up 6% and 5%, respectively, with growth in the US outpacing growth in Canada and the UK.
An aggressive acquisition program at home and abroad has made Copart a leader in its industry. Buoyed by the recovery at home, Copart is on a global hunt for junked vehicles and vehicle parts. Indeed, in 2012 the company made several acquisitions in international markets, including Brazil, Canada, Germany, and Dubai, UAE. Indeed, the UAE is the second-largest international destination for cars sold at Copart's North American salvage yards.
Copart is also expanding its customer base beyond the traditional salvage market by launching new services, such as CopartDirect. Launched in 2008, the program allows the company to sell cars to the general public, using its VB2 application, so that individuals can avoid the inconvenience of selling a vehicle themselves. Other services include Copart Dealer Services, which sells trade-ins for franchises and independent dealerships using VB2, and CoPartfinder, which enables customers to bid on a vehicle, search for parts from Keystone Automotive Industries, and receive e-mail notifications when cars matching their criteria come up for sale.
The majority of the vehicles Copart processes are auctioned under an incentive program in which Copart gets a percentage of the proceeds; the rest are auctioned under a fixed-fee consignment basis (generally $50 to $175). Insurance company suppliers represent the firm's largest customer segment and account for about 80% of the vehicles Copart processes each year.
Mergers and Acquisitions
In 2012 Copart expanded into Germany (the world's fourth largest auto market) with the purchase of WOM Wreck Online Marketing, a leading European salvage vehicle auction platform there. Earlier in the year it bought Canada's Diamond Auto Bids and Disposals, a privately-held automotive auction that gives Copart a foothold in Western Canada, specifically Calgary and Edmonton. It also extended the reach of its business into South America through its purchase of Central de Leiloes LTDA, based in Sao Paulo, Brazil. Central serves the Brazilian market through five facilities located in Sao Paulo states.
In 2011 Copart also purchased the Indiana-based auto auction firm Barodge Auto Pool, expanding its presence in Indiana and surrounding states. The company also broadened its existing range of farming equipment in the UK when it acquired Hewitt International, an auctioneer of agricultural vehicles and equipment based in central England, in 2011. Copart's previous acquisitions have included D Hales, an operator of five auto auction sites and parts centers in England, in 2010.
Founder and former-CEO Willis Johnson owns about 11% of Copart's shares. – less