Copart (CPRT) Q3 FY26 earnings call: the analyst Q&A

How do rising fuel costs affect Copart's hybrid towing fleet and subcontractor network, and how does the company mitigate these costs or pass them on?

Copart operates a hybrid towing model (in-house, "Truck In a Box" program, third-party subcontractors). Fuel costs are relevant to all. The company thoughtfully adjusts rates with partners to ensure ongoing service and their prosperity, acknowledging it's a microeconomic decision market by market.

“So it's a microeconomic decision market by market, but we do have to account, of course, for that input cost in our business.”

asked by Bob Labick · answered by Jeffrey Liaw

How does the decline in new car sales from 2020 onwards affect expected salvage volumes in 2027 and beyond, considering other offsetting factors like insurance affordability?

The original sale year of a car is less consequential for Copart than the total number of vehicles on the road, miles driven, and collision/total loss rates. Disruptions in new car sales for a few years don't significantly impact supply, which is a layer cake of over a decade's worth of shipments.

“For us, the catalyst is much less when the cars enter the ecosystem in the first place... What really matters to us is that the vehicles are on the road period, right? There are cars being driven miles being traversed in the cars themselves and then, of course, collision rates, total loss rates as well.”

asked by Bob Labick · answered by Jeffrey Liaw

What are the main growth levers for Copart in the coming 5 years?

Key drivers include continued growth in the insurance business due to rising total loss frequency, expanding non-insurance markets (rental car companies, dealers, corporate fleets, financial institutions) as more drivable vehicles are sold, international expansion, and Copart's active role in driving total loss frequency upwards by enhancing auction economics. Logistics and financing improvements also reduce friction for buyers.

“The catalysts for that phenomenon, we think largely remain true. So that's the insurance business part 1 in all the markets in which we already do business today.”

asked by Bob Labick · answered by Jeffrey Liaw

What are insurance partners saying about the outlook for claims in 2026/2027, and what are the catalysts for change discussed at the Insurance Advisory Board meeting?

Insurance carriers recognize that many consumers have reduced coverage, leading to lower claims frequency, but view this as cyclical. Catalysts for change include global conflicts and significant discussion around Artificial Intelligence, which carriers are exploring across various dimensions, including claims, with a focus on auditable and accountable decision-making.

“I think they also recognize these trends tend to be cyclical, not secular that eventually folks are rational about the coverage they need and want to pay for and folks who ultimately pay for the insurance they need.”

asked by Craig Kennison · answered by Jeffrey Liaw

How do crossover buyers typically discover Copart, and how does their engagement and purchasing expand over time from non-insurance to insurance vehicles?

Crossover buyers discover Copart via search engines or social media, often initially seeking drivable non-insurance vehicles. Once engaged, they discover the breadth of inventory, including theft recovery or lightly damaged insurance vehicles, and expand their purchasing to different vehicle types, conditions, and geographies.

“You can imagine that a given buyer comes for one type of car. And then once he or she realizes the breadth of inventory available to him or her, they migrate outward in concentric circles from that Lexus to other insurance Lexuses, then to Toyotas, then to BMWs, then to cars further away geographically from where they originated.”

asked by Jash Patwa · answered by Jeffrey Liaw

Clarify Copart's definition of "whole car" (non-insurance) business, its size, source of units (e.g., hail damage), and the effectiveness of current platforms like Copart Dealer Services and BluCar for dealer-side growth.

The "whole car" business spans a spectrum from heavily damaged vehicles to excellent condition 3-year-old de-fleeted cars. Copart earns the right to sell "better and better cars" over time, reflected in rising ASPs. The total addressable market for non-insurance auction-mediated vehicles is 15 million+, and Copart is moving up that spectrum. BluCar GTV grew over 25% LTM, driven by territory expansion and enterprise accounts.

“The TAM, when you consider all of the auction-mediated vehicles that are not from insurance companies in the United States, that's 15 million plus, right?”

asked by John Healy · answered by Jeffrey Liaw