Copart Inc 10-Q for FY2021 Q2

Copart Inc (CPRT)

10-Q 2021-02-24 For: 2021-01-31

Added on April 11, 2026

About this 10-Q

Copart Inc filed this 10-Q on February 24, 2021, covering the quarter ended January 31, 2021 (FY2021 Q2).

Headline figures

Quarter ended January 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $617.03M; up 7.3% from $575.14M a year earlier
Net income: $193.44M; up 14.7% from net income of $168.71M a year earlier
Diluted EPS: $0.81; up 14.1% from $0.71 a year earlier

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Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001	CPRT	The NASDAQ Global Select Market


Table of Contents						Page Number
PART I - Financial Information
Item 1 - Financial Statements (Unaudited)
Consolidated Balance Sheets						3
Consolidated Statements of Income						4
Consolidated Statements of Comprehensive Income						5
Consolidated Statements of Stockholders’ Equity						6
Consolidated Statements of Cash Flows						7
Notes to Consolidated Financial Statements						8

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview						20
Acquisitions and New Operations						22
Results of Operations						23
Liquidity and Capital Resources						27
Critical Accounting Policies and Estimates						30
Recently Issued Accounting Standards						30
Contractual Obligations and Commitments						31
Off-Balance Sheet Arrangements						31

Item 3 - Quantitative and Qualitative Disclosures About Market Risk						31

Item 4 - Controls and Procedures
Evaluation of Disclosure Controls and Procedures						31
Changes in Internal Controls						31

PART II - Other Information
Item 1 - Legal Proceedings						32
Item 1A - Risk Factors						32
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds						44
Item 3 - Defaults Upon Senior Securities						44
Item 4 - Mine Safety Disclosures						44
Item 5 - Other Information						44
Item 6 - Exhibits						45
Signatures						46


(In thousands, except share amounts)	January 31, 2021		July 31, 2020
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	616,403	$	477,718

Accounts receivable, net	462,405		350,207
Vehicle pooling costs	92,928		73,684
Inventories	30,203		20,080
Income taxes receivable	6,498		26,740
Prepaid expenses and other assets	17,030		15,330
Total current assets	1,225,467		963,759
Property and equipment, net	2,175,346		1,941,719
Operating lease right-of-use assets	107,602		118,455
Intangibles, net	44,270		47,772
Goodwill	346,966		343,622
Deferred income taxes	221		213
Other assets	34,566		39,721
Total assets	$	3,934,438	$	3,455,261
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	324,108	$	318,530
Deferred revenue	14,431		8,233
Income taxes payable	8,672		3,709
Current portion of operating lease liabilities	22,554		24,821
Current portion of finance lease liabilities	1,250		751
Total current liabilities	371,015		356,044
Deferred income taxes	81,316		71,686
Income taxes payable	51,177		44,965
Operating lease liabilities, net of current portion	85,307		95,584
Long-term debt and finance lease liabilities, net of discount	402,703		397,036
Other liabilities	328		430
Total liabilities	991,846		965,745
Commitments and contingencies
Stockholders’ equity:
Preferred stock: $0.0001 par value - 5,000,000 shares authorized; none issued	—		—
Common stock: $0.0001 par value - 400,000,000 shares authorized; 236,307,042 and 235,315,337 shares issued and outstanding, respectively.	24		24
Additional paid-in capital	718,497		672,727
Accumulated other comprehensive loss	(106,720)		(121,088)
Retained earnings	2,330,791		1,937,853
Total stockholders’ equity	2,942,592		2,489,516
Total liabilities and stockholders’ equity	$	3,934,438	$	3,455,261


	Three Months Ended January 31,				Six Months Ended January 31,
(In thousands, except per share amounts)	2021		2020		2021		2020
Service revenues and vehicle sales:
Service revenues	$	532,601	$	510,034	$	1,047,973	$	997,890
Vehicle sales	84,430		65,106		161,998		131,674
Total service revenues and vehicle sales	617,031		575,140		1,209,971		1,129,564
Operating expenses:
Yard operations	235,904		257,351		467,715		498,142
Cost of vehicle sales	73,629		57,900		137,989		116,664
General and administrative	49,277		49,997		97,452		99,475

Total operating expenses	358,810		365,248		703,156		714,281
Operating income	258,221		209,892		506,815		415,283
Other expense:
Interest expense, net	(4,849)		(4,464)		(9,881)		(8,490)
Other income, net	(920)		(354)		2,333		363
Total other expense	(5,769)		(4,818)		(7,548)		(8,127)
Income before income taxes	252,452		205,074		499,267		407,156
Income tax expense	59,012		36,367		105,542		20,269
Net income	$	193,440	$	168,707	$	393,725	$	386,887

Basic net income per common share	$	0.82	$	0.73	$	1.67	$	1.67
Weighted average common shares outstanding	236,152		232,671		235,971		231,920

Diluted net income per common share	$	0.81	$	0.71	$	1.64	$	1.62
Diluted weighted average common shares outstanding	240,280		238,470		240,124		238,566


	Three Months Ended January 31,				Six Months Ended January 31,
(In thousands)	2021		2020		2021		2020
Comprehensive income, net of tax:
Net income	$	193,440	$	168,707	$	393,725	$	386,887
Other comprehensive income:
Foreign currency translation adjustments	21,774		(580)		14,368		12,659
Comprehensive income	$	215,214	$	168,127	$	408,093	$	399,546


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Common Stock					Accumulated Other Comprehensive Income (Loss)
				Additional Paid-in Capital
(In thousands, except share amounts)	Outstanding Shares	Amount						Retained Earnings		Stockholders’ Equity
Balances at July 31, 2020	235,315,337	$	24	$	672,727	$	(121,088)	$	1,937,853	$	2,489,516
Net income	—	—		—		—		200,285		200,285
Currency translation adjustment	—	—		—		(7,406)		—		(7,406)
Exercise of stock options, net of repurchased shares	802,670	—		20,014		—		(489)		19,525
Stock-based compensation	—	—		8,913		—		—		8,913

Balances at October 31, 2020	236,118,007	24		701,654		(128,494)		2,137,649		2,710,833
Net income	—	—		—		—		193,440		193,440
Currency translation adjustment	—	—		—		21,774		—		21,774
Exercise of stock options, net of repurchased shares	121,158	—		3,098		—		(298)		2,800
Stock-based compensation	—	—		8,865		—		—		8,865
Shares issued for Employee Stock Purchase Plan	67,877	—		4,880		—		—		4,880

Balances at January 31, 2021	236,307,042	$	24	$	718,497	$	(106,720)	$	2,330,791	$	2,942,592


Balance as of July 31, 2020	$	10,080
Capitalized contract assets during the period	100
Costs amortized during the period	(1,681)
Effect of foreign currency exchange rates	197
Balance as of January 31, 2021	$	8,696


Cumulative loss on foreign currency translation as of July 31, 2019	$	(132,529)
Gain on foreign currency translation	11,441
Cumulative loss on foreign currency translation as of July 31, 2020	$	(121,088)
Gain on foreign currency translation	14,368
Cumulative loss on foreign currency translation as of January 31, 2021	$	(106,720)


(In thousands, except per share and term data)	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (In years)	Aggregate Intrinsic Value
Outstanding as of July 31, 2020	8,059	$	41.44	6.72	$	417,529
Grants of options	550	108.41
Exercises	(889)	25.99
Forfeitures or expirations	(212)	47.14
Outstanding as of January 31, 2021	7,508	$	48.01	6.52	$	463,953
Exercisable as of January 31, 2021	4,326	$	31.20	5.20	$	339,848


(In thousands, except per share data)	Restricted Shares	Weighted Average Grant Date Fair Value
Outstanding as of July 31, 2020	105	$	69.86
Grants	26	115.58
Vested	(21)	70.71
Forfeitures or expirations	(5)	61.79
Outstanding as of January 31, 2021	105	$	41.92


Period	Options Exercised	Weighted Average Exercise Price		Shares Net Settled for Exercise	Shares Withheld for Taxes(1)	Net Shares to Employees	Weighted Average Share Price for Withholding		Employee Stock-Based Tax Withholding (in 000s)
FY 2020—Q1	4,000,000	$	17.81	865,719	1,231,595	1,902,686	$	82.29	$	101,348


	Three Months Ended January 31, 2021						Three Months Ended January 31, 2020
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	465,423	$	67,178	$	532,601	$	447,345	$	62,689	$	510,034
Vehicle sales	52,500		31,930		84,430		35,392		29,714		65,106
Total service revenues and vehicle sales	517,923		99,108		617,031		482,737		92,403		575,140
Yard operations	199,107		36,797		235,904		219,278		38,073		257,351
Cost of vehicle sales	48,601		25,028		73,629		33,887		24,013		57,900
General and administrative	40,763		8,514		49,277		40,583		9,414		49,997

Operating income	$	229,452	$	28,769	$	258,221	$	188,989	$	20,903	$	209,892

Depreciation and amortization	$	27,745	$	3,647	$	31,392	$	21,728	$	2,554	$	24,282
Capital expenditures	121,595		14,526		136,121		261,258		7,301		268,559


	Six Months Ended January 31, 2021						Six Months Ended January 31, 2020
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	915,658	$	132,315	$	1,047,973	$	878,148	$	119,742	$	997,890
Vehicle sales	99,520		62,478		161,998		68,753		62,921		131,674
Total service revenues and vehicle sales	1,015,178		194,793		1,209,971		946,901		182,663		1,129,564
Yard operations	393,526		74,189		467,715		424,108		74,034		498,142
Cost of vehicle sales	90,107		47,882		137,989		64,959		51,705		116,664
General and administrative	80,501		16,951		97,452		81,171		18,304		99,475

Operating income	$	451,044	$	55,771	$	506,815	$	376,663	$	38,620	$	415,283

Depreciation and amortization	$	53,907	$	6,434	$	60,341	$	42,337	$	4,959	$	47,296
Capital expenditures	244,054		39,160		283,214		374,631		25,721		400,352


(In thousands)	January 31, 2021		July 31, 2020
Advance charges receivable	$	368,360	$	260,196
Trade accounts receivable	98,412		94,281
Other receivables	2,587		2,120
	469,359		356,597
Less: Allowance for credit loss	(6,954)		(6,390)
Accounts receivable, net	$	462,405	$	350,207


(In thousands)	January 31, 2021		July 31, 2020
Land	$	1,378,632	$	1,235,315
Buildings and improvements	1,040,993		932,976
Transportation and other equipment	301,333		274,422
Office furniture and equipment	75,184		70,926
Software	60,043		52,621
	2,856,185		2,566,260
Less: Accumulated depreciation and amortization	(680,839)		(624,541)
Property and equipment, net	$	2,175,346	$	1,941,719


(In thousands)	January 31, 2021		July 31, 2020
Amortized intangibles:
Supply contracts and customer relationships	$	50,580	$	50,600
Trade names	23,700		23,635
Licenses and databases	7,652		7,630

Accumulated amortization	(37,662)		(34,093)
Net intangibles	$	44,270	$	47,772


	January 31, 2021				July 31, 2020
(In thousands)	Carrying Value Total		Fair Value Total		Carrying Value Total		Fair Value Total
Assets
Cash equivalents	$	308,019	$	308,027	$	11,483	$	11,483

Total Assets	$	308,019	$	308,027	$	11,483	$	11,483
Liabilities

Long-term fixed rate debt, including current portion	$	399,716	$	435,998	$	399,698	$	449,731

Total Liabilities	$	399,716	$	435,998	$	399,698	$	449,731


United States Locations						Date
Fort Wayne, Indiana						February 2020
Concord, North Carolina						March 2020
Salt Lake City, Utah						May 2020
Redding, California						August 2020
Dothan, Alabama						August 2020
Jacksonville, Florida						August 2020
Milwaukee, Wisconsin						September 2020
Houston, Texas						December 2020


3.1		Copart, Inc. Certificate of Incorporation
3.2		Certificate of Amendment to the Copart, Inc. Certificate of Incorporation
3.3		Bylaws of Copart, Inc.
4.1		Description of Capital Stock
31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	(1)	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	(1)	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Date File, formatted in Inline Extensible Business Reporting Language (iXBRL) and contained in Exhibit 101
(1)		In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release No. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.


			COPART, INC.

			/s/ John North
			John North, Chief Financial Officer
			(Principal Financial and Accounting Officer and duly Authorized Officer)