Copart Inc 10-Q for FY2022 Q2

Copart Inc (CPRT)

10-Q 2022-03-03 For: 2022-01-31

Added on April 11, 2026

About this 10-Q

Copart Inc filed this 10-Q on March 3, 2022, covering the quarter ended January 31, 2022 (FY2022 Q2).

Headline figures

Quarter ended January 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $867.46M; up 40.6% from $617.03M a year earlier
Net income: $287.41M; up 48.6% from net income of $193.44M a year earlier
Diluted EPS: $1.19; up 46.9% from $0.81 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						8
Notes to Consolidated Financial Statements						9

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						28
Critical Accounting Policies and Estimates						30
Recently Issued Accounting Standards						30
Contractual Obligations and Commitments						30
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						32
Changes in Internal Controls						32

PART II - Other Information
Item 1 - Legal Proceedings						33
Item 1A - Risk Factors						33
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds						46
Item 3 - Defaults Upon Senior Securities						46
Item 4 - Mine Safety Disclosures						46
Item 5 - Other Information						46
Item 6 - Exhibits						47
Signatures						48


(In thousands, except share amounts)	January 31, 2022		July 31, 2021
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	971,651	$	1,048,260
Investment in held to maturity securities	374,866		—
Accounts receivable, net	630,629		480,628
Vehicle pooling costs	123,896		94,449
Inventories	52,979		44,968
Income taxes receivable	15,426		20,012
Prepaid expenses and other assets	19,926		14,294
Total current assets	2,189,373		1,702,611
Property and equipment, net	2,376,013		2,296,624
Operating lease right-of-use assets	120,309		119,487
Intangibles, net	42,731		45,873
Goodwill	352,908		355,717
Other assets	55,622		41,831
Total assets	$	5,136,956	$	4,562,143
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	367,699	$	369,826
Deferred revenue	20,577		20,973
Income taxes payable	6,458		7,760
Current portion of operating and finance lease liabilities	23,126		22,472
Total current liabilities	417,860		421,031
Deferred income taxes	69,759		63,969
Income taxes payable	57,193		52,345
Operating and finance lease liabilities, net of current portion	98,459		97,961
Long-term debt and other liabilities, net of discount	403,829		397,636

Total liabilities	1,047,100		1,032,942
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; 237,474,492 and 237,014,273 shares issued and outstanding, respectively.	24		24
Additional paid-in capital	797,955		761,834
Accumulated other comprehensive loss	(123,502)		(100,860)
Retained earnings	3,415,379		2,868,203
Total stockholders’ equity	4,089,856		3,529,201
Total liabilities and stockholders’ equity	$	5,136,956	$	4,562,143


	Three Months Ended January 31,				Six Months Ended January 31,
(In thousands, except per share amounts)	2022		2021		2022		2021
Service revenues and vehicle sales:
Service revenues	$	711,090	$	532,601	$	1,378,908	$	1,047,973
Vehicle sales	156,370		84,430		298,684		161,998
Total service revenues and vehicle sales	867,460		617,031		1,677,592		1,209,971
Operating expenses:
Yard operations	323,814		235,904		622,508		467,715
Cost of vehicle sales	140,304		73,629		266,712		137,989
General and administrative	56,014		49,277		110,923		97,452

Total operating expenses	520,132		358,810		1,000,143		703,156
Operating income	347,328		258,221		677,449		506,815
Other expense:
Interest expense, net	(4,433)		(4,849)		(9,540)		(9,881)
Other income, net	(840)		(920)		(28)		2,333
Total other expense	(5,273)		(5,769)		(9,568)		(7,548)
Income before income taxes	342,055		252,452		667,881		499,267
Income tax expense	54,643		59,012		120,106		105,542
Net income	$	287,412	$	193,440	$	547,775	$	393,725

Basic net income per common share	$	1.21	$	0.82	$	2.31	$	1.67
Weighted average common shares outstanding	237,186		236,152		237,167		235,971

Diluted net income per common share	$	1.19	$	0.81	$	2.27	$	1.64
Diluted weighted average common shares outstanding	241,187		240,280		241,244		240,124


	Three Months Ended January 31,				Six Months Ended January 31,
(In thousands)	2022		2021		2022		2021
Comprehensive income, net of tax:
Net income	$	287,412	$	193,440	$	547,775	$	393,725
Other comprehensive income:
Foreign currency translation adjustments	(12,124)		21,774		(22,642)		14,368
Comprehensive income	$	275,288	$	215,214	$	525,133	$	408,093


☒			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, 2021	237,014,273	$	24	$	761,834	$	(100,860)	$	2,868,203	$	3,529,201
Net income	—	—		—		—		260,363		260,363
Currency translation adjustment	—	—		—		(10,518)		—		(10,518)
Exercise of stock options, net of repurchased shares	145,986	—		5,572		—		(249)		5,323
Stock-based compensation	21,091	—		9,452		—		—		9,452

Balances at October 31, 2021	237,181,350	24		776,858		(111,378)		3,128,317		3,793,821
Net income	—	—		—		—		287,412		287,412
Currency translation adjustment	—	—		—		(12,124)		—		(12,124)
Exercise of stock options, net of repurchased shares	246,451	—		6,413		—		(350)		6,063
Stock-based compensation	2,767	—		9,662		—		—		9,662
Shares issued for Employee Stock Purchase Plan	43,924	—		5,022		—		—		5,022

Balances at January 31, 2022	237,474,492	24		797,955		(123,502)		3,415,379		4,089,856


Balance as of July 31, 2021	$	7,485

Costs amortized during the period	(1,760)
Effect of foreign currency exchange rates	272
Balance as of January 31, 2022	$	5,997


Cumulative loss on foreign currency translation as of July 31, 2020	$	(121,088)
Gain on foreign currency translation	20,228
Cumulative loss on foreign currency translation as of July 31, 2021	$	(100,860)
Loss on foreign currency translation	(22,642)
Cumulative loss on foreign currency translation as of January 31, 2022	$	(123,502)


(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, 2021	7,557	$	56.19	6.53	$	686,269
Grants of options	145	145.21
Exercises	(392)	30.87
Forfeitures or expirations	(107)	55.14
Outstanding as of January 31, 2022	7,203	$	59.38	6.08	$	505,604
Exercisable as of January 31, 2022	4,545	$	43.84	4.97	$	388,501


(In thousands, except per share data)	Restricted Shares	Weighted Average Grant Date Fair Value
Outstanding as of July 31, 2021	102	$	90.46
Grants	66	143.24
Vested	(13)	66.16
Forfeitures or expirations	(7)	115.40
Outstanding as of January 31, 2022	148	$	115.24


	Three Months Ended January 31, 2022						Three Months Ended January 31, 2021
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	630,707	$	80,383	$	711,090	$	465,423	$	67,178	$	532,601
Vehicle sales	96,679		59,691		156,370		52,500		31,930		84,430
Total service revenues and vehicle sales	727,386		140,074		867,460		517,923		99,108		617,031
Yard operations	278,093		45,721		323,814		199,107		36,797		235,904
Cost of vehicle sales	90,263		50,041		140,304		48,601		25,028		73,629
General and administrative	46,384		9,630		56,014		40,763		8,514		49,277

Operating income	$	312,646	$	34,682	$	347,328	$	229,452	$	28,769	$	258,221

Depreciation and amortization	$	29,316	$	3,987	$	33,303	$	27,745	$	3,647	$	31,392
Capital expenditures and acquisitions	86,788		5,185		91,973		121,595		14,526		136,121


	Six Months Ended January 31, 2022						Six Months Ended January 31, 2021
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	1,221,465	$	157,443	$	1,378,908	$	915,658	$	132,315	$	1,047,973
Vehicle sales	184,382		114,302		298,684		99,520		62,478		161,998
Total service revenues and vehicle sales	1,405,847		271,745		1,677,592		1,015,178		194,793		1,209,971
Yard operations	534,714		87,794		622,508		393,526		74,189		467,715
Cost of vehicle sales	170,605		96,107		266,712		90,107		47,882		137,989
General and administrative	92,932		17,991		110,923		80,501		16,951		97,452

Operating income	$	607,595	$	69,854	$	677,449	$	451,044	$	55,771	$	506,815

Depreciation and amortization	$	57,046	$	8,028	$	65,074	$	53,907	$	6,434	$	60,341
Capital expenditures and acquisitions	141,060		15,609		156,669		244,054		39,160		283,214


United States Locations						Date
Redding, California						August 2020
Dothan, Alabama						August 2020
Jacksonville, Florida						August 2020
Milwaukee, Wisconsin						September 2020
Houston, Texas						December 2020
Knightdale, North Carolina						March 2021
Gastonia, North Carolina						May 2021
Bismarck, North Dakota						June 2021
Fairburn, Georgia						July 2021
Dyer, Indiana						July 2021
Mobile South, Alabama						August 2021


(In thousands)	January 31, 2022		July 31, 2021
Advance charges receivable	$	506,841	$	385,002
Trade accounts receivable	127,196		97,249
Other receivables	3,629		4,013
	637,666		486,264
Less: Allowance for credit loss	(7,037)		(5,636)
Accounts receivable, net	$	630,629	$	480,628


(In thousands)	January 31, 2022		July 31, 2021
Land	$	1,479,387	$	1,428,262
Buildings and improvements	1,157,589		1,126,414
Transportation and other equipment	371,230		326,622
Office furniture and equipment	82,136		79,928
Software	71,838		66,170
	3,162,180		3,027,396
Less: Accumulated depreciation and amortization	(786,167)		(730,772)
Property and equipment, net	$	2,376,013	$	2,296,624


(In thousands)	January 31, 2022		July 31, 2021
Amortized intangibles:
Supply contracts and customer relationships	$	56,145	$	55,598
Trade names	18,926		18,944
Licenses and databases	696		736

Accumulated amortization	(33,036)		(29,405)
Net intangibles	$	42,731	$	45,873


	January 31, 2022				July 31, 2021
(In thousands)	Carrying Value Total		Fair Value Total		Carrying Value Total		Fair Value Total
Assets
Cash equivalents	$	709,241	$	709,241	$	754,300	$	754,304
Treasury Bills	374,866		374,734		—		—
Total Assets	$	1,084,107	$	1,083,975	$	754,300	$	754,304
Liabilities

Long-term fixed rate debt, including current portion	$	399,726	$	414,439	$	399,733	$	432,027

Total Liabilities	$	399,726	$	414,439	$	399,733	$	432,027


	Three Months Ended January 31,				Six Months Ended January 31,
(In percentages)	2022		2021		2022		2021
Service revenues and vehicle sales:
Service revenues	82	%	86	%	82	%	87	%
Vehicle sales	18	%	14	%	18	%	13	%
Total service revenues and vehicle sales	100	%	100	%	100	%	100	%

Operating expenses:
Yard operations	37	%	38	%	37	%	39	%
Cost of vehicle sales	16	%	12	%	16	%	11	%
General and administrative	6	%	8	%	7	%	8	%

Total operating expenses	59	%	58	%	60	%	58	%
Operating income	41	%	42	%	40	%	42	%
Other expense	(1)	%	(1)	%	(1)	%	(1)	%
Income before income taxes	40	%	41	%	39	%	41	%
Income taxes	6	%	10	%	7	%	9	%
Net income	34	%	31	%	32	%	32	%


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
10.1		Second Amended and Restated Credit Agreement, dated as of December 21, 2021, by and among Copart, Inc., the subsidiaries of Copart, Inc. party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 of the Form 8-K filed on December 27, 2021).
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)