Copart Inc 10-Q for FY2023 Q3

Copart Inc (CPRT)

10-Q 2023-05-25 For: 2023-04-30

Added on April 11, 2026

About this 10-Q

Copart Inc filed this 10-Q on May 25, 2023, covering the quarter ended April 30, 2023 (FY2023 Q3).

Headline figures

Quarter ended April 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.02B; up 8.7% from $939.94M a year earlier
Net income: $350.43M; up 25.8% from net income of $278.62M a year earlier
Diluted EPS: $0.72; up 24.1% from $0.58 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						21
Acquisitions and New Operations						23
Results of Operations						24
Liquidity and Capital Resources						29
Critical Accounting Policies and Estimates						30
Recently Issued Accounting Standards						31
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						32
Changes in Internal Control Over Financial Reporting						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)	April 30, 2023		July 31, 2022
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	2,114,183	$	1,384,236

Accounts receivable, net	693,834		578,573
Vehicle pooling costs	119,724		112,242
Inventories	44,999		58,791
Income taxes receivable	428		49,882
Prepaid expenses and other assets	27,862		18,731
Total current assets	3,001,030		2,202,455
Property and equipment, net	2,710,933		2,485,764
Operating lease right-of-use assets	105,260		116,303
Intangibles, net	49,676		54,680
Goodwill	406,640		401,954
Other assets	76,266		47,708
Total assets	$	6,349,805	$	5,308,864
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	441,466	$	399,034
Deferred revenue	25,664		20,061
Income taxes payable	18,534		—
Current portion of operating and finance lease liabilities	20,900		21,794

Total current liabilities	506,564		440,889
Deferred income taxes	76,690		80,060
Income taxes payable	65,745		64,637
Operating and finance lease liabilities, net of current portion	86,016		95,683
Long-term debt and other liabilities	22,368		1,996

Total liabilities	757,383		683,265
Commitments and contingencies
Stockholders’ equity:
Preferred stock: $0.0001 par value - 5,000,000 shares authorized; none issued	—		—
Common stock: $0.0001 par value - 1,600,000,000 shares authorized; 477,130,025 and 476,081,948 shares issued and outstanding, respectively.	48		48
Additional paid-in capital	901,495		838,508
Accumulated other comprehensive loss	(152,459)		(169,365)
Retained earnings	4,843,338		3,956,408
Total stockholders’ equity	5,592,422		4,625,599
Total liabilities and stockholders’ equity	$	6,349,805	$	5,308,864


	Three Months Ended April 30,				Nine Months Ended April 30,
(In thousands, except per share amounts)	2023		2022		2023		2022
Service revenues and vehicle sales:
Service revenues	$	847,249	$	766,316	$	2,363,886	$	2,145,224
Vehicle sales	174,582		173,625		508,041		472,309
Total service revenues and vehicle sales	1,021,831		939,941		2,871,927		2,617,533
Operating expenses:
Yard operations	378,958		346,428		1,127,232		968,936
Cost of vehicle sales	159,443		157,236		465,282		423,948
General and administrative	64,506		63,522		183,461		174,445

Total operating expenses	602,907		567,186		1,775,975		1,567,329
Operating income	418,924		372,755		1,095,952		1,050,204
Other expense:
Interest income (expense), net	17,878		(4,492)		36,780		(14,032)
Other income (expense), net	3,628		1,342		(2,096)		1,314
Total other income (expense)	21,506		(3,150)		34,684		(12,718)
Income before income taxes	440,430		369,605		1,130,636		1,037,486
Income tax expense	89,999		90,985		240,680		211,091
Net income	$	350,431	$	278,620	$	889,956	$	826,395

Basic net income per common share	$	0.73	$	0.59	$	1.87	$	1.74
Weighted average common shares outstanding	476,787		475,010		476,417		474,554

Diluted net income per common share	$	0.72	$	0.58	$	1.84	$	1.71
Diluted weighted average common shares outstanding	483,690		481,448		482,718		482,576


	Three Months Ended April 30,				Nine Months Ended April 30,
(In thousands)	2023		2022		2023		2022
Comprehensive income, net of tax:
Net income	$	350,431	$	278,620	$	889,956	$	826,395
Other comprehensive income:
Foreign currency translation adjustments	4,048		(29,094)		16,906		(51,736)
Comprehensive income	$	354,479	$	249,526	$	906,862	$	774,659


☒			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, 2022	476,081,948	$	48	$	838,508	$	(169,365)	$	3,956,408	$	4,625,599
Net income	—	—		—		—		245,848		245,848
Currency translation adjustment	—	—		—		(29,571)		—		(29,571)
Exercise of stock options, net of repurchased shares	75,554	—		1,061		—		(295)		766
Stock-based compensation	38,312	—		10,192		—		—		10,192

Balances at October 31, 2022	476,195,814	48		849,761		(198,936)		4,201,961		4,852,834
Net income	—	—		—		—		293,677		293,677
Currency translation adjustment	—	—		—		42,429		—		42,429
Exercise of stock options, net of repurchased shares	223,426	—		9,754		—		(536)		9,218
Stock-based compensation	30,351	—		10,131		—		—		10,131
Shares issued for Employee Stock Purchase Plan	114,557	—		5,363		—		—		5,363

Balances at January 31, 2023	476,564,148	48		875,009		(156,507)		4,495,102		5,213,652
Net income	—	—		—		—		350,431		350,431
Currency translation adjustment	—	—		—		4,048		—		4,048
Exercise of stock options, net of repurchased shares	507,109	—		16,405		—		(2,195)		14,210
Stock-based compensation	58,768	—		10,081		—		—		10,081
Shares issued for Employee Stock Purchase Plan	—	—		—		—		—		—
Shares repurchased	—	—		—		—		—		—
Balances at April 30, 2023	477,130,025	$	48	$	901,495	$	(152,459)	$	4,843,338	$	5,592,422


Balance as of July 31, 2022	$	4,778
Capitalized contract assets during the period	26,540
Costs amortized during the period	(4,101)
Effect of foreign currency exchange rates	87
Balance as of April 30, 2023	$	27,304


Cumulative loss on foreign currency translation as of July 31, 2021	$	(100,860)
Loss on foreign currency translation	(68,505)
Cumulative loss on foreign currency translation as of July 31, 2022	$	(169,365)
Gain on foreign currency translation	16,906
Cumulative loss on foreign currency translation as of April 30, 2023	$	(152,459)



Cash	$	8,960
Accounts receivable and prepaid expenses	5,348
Inventory	4,913
Property and equipment	22,259


Intangible assets	15,931
Goodwill	56,051
Liabilities assumed	(6,858)

Fair value of net assets and liabilities acquired	$	106,604


(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, 2022	11,394	$	29.31	5.50	$	398,331
Grants of options	294	65.49
Exercises	(806)	33.76
Forfeitures or expirations	(413)	53.47
Outstanding as of April 30, 2023	10,469	$	29.03	4.70	$	523,659
Exercisable as of April 30, 2023	8,710	$	24.78	4.11	$	472,682


(In thousands, except per share data)	Restricted Shares	Weighted Average Grant Date Fair Value
Outstanding as of July 31, 2022	354	$	60.28
Grants	270	65.04
Vested	(136)	60.53
Forfeitures or expirations	(31)	53.43
Outstanding as of April 30, 2023	457	$	63.47


	Three Months Ended April 30, 2023						Three Months Ended April 30, 2022
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	752,077	$	95,172	$	847,249	$	678,865	$	87,451	$	766,316
Vehicle sales	81,681		92,901		174,582		111,385		62,240		173,625
Total service revenues and vehicle sales	833,758		188,073		1,021,831		790,250		149,691		939,941
Yard operations	323,426		55,532		378,958		295,326		51,102		346,428
Cost of vehicle sales	74,951		84,492		159,443		101,781		55,455		157,236
General and administrative	50,590		13,916		64,506		52,706		10,816		63,522

Operating income	$	384,791	$	34,133	$	418,924	$	340,437	$	32,318	$	372,755

Depreciation and amortization	$	32,918	$	4,453	$	37,371	$	31,609	$	4,970	$	36,579
Capital expenditures and acquisitions	79,633		10,172		89,805		64,397		14,237		78,634


	Nine Months Ended April 30, 2023						Nine Months Ended April 30, 2022
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	2,109,467	$	254,419	$	2,363,886	$	1,900,330	$	244,894	$	2,145,224
Vehicle sales	261,069		246,972		508,041		295,767		176,542		472,309
Total service revenues and vehicle sales	2,370,536		501,391		2,871,927		2,196,097		421,436		2,617,533
Yard operations	973,067		154,165		1,127,232		830,040		138,896		968,936
Cost of vehicle sales	246,431		218,851		465,282		272,387		151,561		423,948
General and administrative	147,456		36,005		183,461		145,638		28,807		174,445

Operating income	$	1,003,582	$	92,370	$	1,095,952	$	948,032	$	102,172	$	1,050,204

Depreciation and amortization	$	101,974	$	12,869	$	114,843	$	88,655	$	12,997	$	101,652
Capital expenditures and acquisitions	305,344		41,180		346,524		205,457		29,846		235,303


(In thousands)	April 30, 2023		July 31, 2022
Advance charges receivable	$	528,575	$	440,650
Trade accounts receivable	168,160		137,243
Other receivables	5,217		7,257
	701,952		585,150
Less: Allowance for credit loss	(8,118)		(6,577)
Accounts receivable, net	$	693,834	$	578,573


(In thousands)	April 30, 2023		July 31, 2022
Land	$	1,698,253	$	1,526,446
Buildings and improvements	1,301,730		1,209,331
Transportation and other equipment	476,886		429,405
Office furniture and equipment	90,050		84,728
Software	86,828		78,216
	3,653,747		3,328,126
Less: Accumulated depreciation and amortization	(942,814)		(842,362)
Property and equipment, net	$	2,710,933	$	2,485,764


(In thousands)	April 30, 2023		July 31, 2022
Amortized intangibles:
Supply contracts and customer relationships	$	72,580	$	71,875
Trade names	18,919		18,896
Licenses and databases	683		633

Accumulated amortization	(42,506)		(36,724)
Intangibles, net	$	49,676	$	54,680


		Three Months Ended April 30,								Nine Months Ended April 30,
(In thousands)		2023		2022		Change		% Change		2023		2022		Change		% Change
Yard operations expenses
	United States	$	323,426	$	295,326	$	28,100	9.5	%	$	973,067	$	830,040	$	143,027	17.2	%
	International	55,532		51,102		4,430		8.7	%	154,165		138,896		15,269		11.0	%
	Total yard operations expenses	$	378,958	$	346,428	$	32,530	9.4	%	$	1,127,232	$	968,936	$	158,296	16.3	%

Yard operations expenses, excluding depreciation and amortization
	United States	$	294,604	$	268,452	$	26,152	9.7	%	$	883,925	$	756,064	$	127,861	16.9	%
	International	51,264		46,330		4,934		10.6	%	141,787		126,489		15,298		12.1	%

Yard depreciation and amortization
	United States	$	28,822	$	26,874	$	1,948	7.2	%	$	89,142	$	73,976	$	15,166	20.5	%
	International	4,268		4,772		(504)		(10.6)	%	12,378		12,407		(29)		(0.2)	%


	Three Months Ended April 30,				Nine Months Ended April 30,
(In percentages)	2023		2022		2023		2022
Service revenues and vehicle sales:
Service revenues	83	%	82	%	82	%	82	%
Vehicle sales	17	%	18	%	18	%	18	%
Total service revenues and vehicle sales	100	%	100	%	100	%	100	%

Operating expenses:
Yard operations	37	%	37	%	39	%	37	%
Cost of vehicle sales	16	%	17	%	16	%	16	%
General and administrative	6	%	7	%	7	%	7	%

Total operating expenses	59	%	61	%	62	%	60	%
Operating income	41	%	39	%	38	%	40	%
Other income (expense)	2	%	—	%	1	%	—	%
Income before income taxes	43	%	39	%	39	%	40	%
Income taxes	9	%	9	%	8	%	8	%
Net income	34	%	30	%	31	%	32	%


3.1						Amended and Restated Certificate of Incorporation of Copart, Inc. (incorporated by reference from Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on November 2, 2022)
3.2						Amended and Restated Bylaws of Copart, Inc. (incorporated by reference from Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed on March 31, 2022)
31.1*						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.3*						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**						Certification of Co-Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**						Certification of Co-Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.3**						Certification of Principal 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
*						Filed herewith
**						The certifications furnished in Exhibits 32.1, 32.2 and 32.3 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.


			COPART, INC.

			/s/ LEAH STEARNS
			Leah Stearns, Chief Financial Officer
			(Principal Financial and Accounting Officer and duly Authorized Officer)


			Date: May 25, 2023

			/s/ A. JAYSON ADAIR
			A. Jayson Adair
			Co-Chief Executive Officer
			(Principal Executive Officer), Director


			Date: May 25, 2023

			/s/ JEFFREY LIAW
			Jeffrey Liaw
			Co-Chief Executive Officer
			(Principal Executive Officer)


			Date: May 25, 2023

			/s/ LEAH STEARNS
			Leah Stearns
			Chief Financial Officer
			(Principal Financial and Accounting Officer)