CPRT NDR Highlights: Meet the New Boss, Same as the Old Boss

Research evidence excerpt

CPRT NDR Highlights: Meet the New Boss, Same as the Old Boss

the expense of CPRT's primary

partners. We expect this eventually abates given signs of increased rate/price competitiveness

across the broader auto insurance market and note recent years of share gains have been driven

by opportunistic actions of Progressive to gain share that have largely played out as other large

auto underwriters react to volume losses. Similarly, insurance premiums are moderating after a

period of record inflation, which should support improved penetration of comprehensive insurance

coverage and help drive increased claim counts across the industry. Notably, we do not see ADAS

being a primary industry headwind to volumes as liability claims remain "strong" at -LSD%.

CPRT still has the better mousetrap in duopolistic market. Despite recent concerns around market

share losses to its only major competitor, CPRT remains confident that it offers superior economic

outcomes which will help stabilize volumes as written policies between carriers normalize. We

expect this will be supported by industry leading metrics including Title Express share gains and

higher ASPs as CPRT's robust international buyer pool and network support best in class liquidity.

Also, CPRT addressed discussion of IAA "pilot programs" with CPRT partners noting they are

standard industry practice, and often a critical part of the renewal process but noted they have

not seen any major carrier losses in recent history and do not expect any material carrier contract

losses in the NT.

Share repurchases have been the tool of choice YTD, but we note potential for M&A moving

forward with plenty of dry powder on hand. CPRT has ramped up its buyback activity recently with Bret Jordan, CFA * | Equity Analyst