Copart Inc 10-Q for FY2022 Q3

Copart Inc (CPRT)

10-Q 2022-05-25 For: 2022-04-30

Added on April 11, 2026

About this 10-Q

Copart Inc filed this 10-Q on May 25, 2022, covering the quarter ended April 30, 2022 (FY2022 Q3).

Headline figures

Quarter ended April 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $939.94M; up 28.1% from $733.91M a year earlier
Net income: $278.62M; down 2.9% from net income of $286.8M a year earlier
Diluted EPS: $1.16; down 2.5% from $1.19 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)	April 30, 2022		July 31, 2021
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	1,454,818	$	1,048,260
Investment in held to maturity securities	224,889		—
Accounts receivable, net	585,914		480,628
Vehicle pooling costs	114,028		94,449
Inventories	56,988		44,968
Income taxes receivable	1,581		20,012
Prepaid expenses and other assets	19,208		14,294
Total current assets	2,457,426		1,702,611
Property and equipment, net	2,402,809		2,296,624
Operating lease right-of-use assets	121,006		119,487
Intangibles, net	40,854		45,873
Goodwill	348,000		355,717
Other assets	73,779		41,831
Total assets	$	5,443,874	$	4,562,143
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	398,414	$	369,826
Deferred revenue	21,087		20,973
Income taxes payable	6,907		7,760
Current portion of operating and finance lease liabilities	22,687		22,472
Total current liabilities	449,095		421,031
Deferred income taxes	78,023		63,969
Income taxes payable	61,359		52,345
Operating and finance lease liabilities, net of current portion	99,610		97,961
Long-term debt and other liabilities, net of discount	402,733		397,636

Total liabilities	1,090,820		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; 237,613,616 and 237,014,273 shares issued and outstanding, respectively.	24		24
Additional paid-in capital	811,900		761,834
Accumulated other comprehensive loss	(152,596)		(100,860)
Retained earnings	3,693,726		2,868,203
Total stockholders’ equity	4,353,054		3,529,201
Total liabilities and stockholders’ equity	$	5,443,874	$	4,562,143


	Three Months Ended April 30,				Nine Months Ended April 30,
(In thousands, except per share amounts)	2022		2021		2022		2021
Service revenues and vehicle sales:
Service revenues	$	766,316	$	623,846	$	2,145,224	$	1,671,819
Vehicle sales	173,625		110,064		472,309		272,062
Total service revenues and vehicle sales	939,941		733,910		2,617,533		1,943,881
Operating expenses:
Yard operations	346,428		258,071		968,936		725,786
Cost of vehicle sales	157,236		94,498		423,948		232,487
General and administrative	63,522		53,230		174,445		150,682

Total operating expenses	567,186		405,799		1,567,329		1,108,955
Operating income	372,755		328,111		1,050,204		834,926
Other expense:
Interest expense, net	(4,492)		(5,346)		(14,032)		(15,227)
Other income, net	1,342		770		1,314		3,103
Total other expense	(3,150)		(4,576)		(12,718)		(12,124)
Income before income taxes	369,605		323,535		1,037,486		822,802
Income tax expense	90,985		36,739		211,091		142,281
Net income	$	278,620	$	286,796	$	826,395	$	680,521

Basic net income per common share	$	1.17	$	1.21	$	3.48	$	2.88
Weighted average common shares outstanding	237,505		236,396		237,277		236,110

Diluted net income per common share	$	1.16	$	1.19	$	3.42	$	2.83
Diluted weighted average common shares outstanding	240,724		240,208		241,288		240,149


	Three Months Ended April 30,				Nine Months Ended April 30,
(In thousands)	2022		2021		2022		2021
Comprehensive income, net of tax:
Net income	$	278,620	$	286,796	$	826,395	$	680,521
Other comprehensive income:
Foreign currency translation adjustments	(29,094)		5,056		(51,736)		19,424
Comprehensive income	$	249,526	$	291,852	$	774,659	$	699,945


☒			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
Net income	—	—		—		—		278,620		278,620
Currency translation adjustment	—	—		—		(29,094)		—		(29,094)
Exercise of stock options, net of repurchased shares	132,955	—		4,123		—		(273)		3,850
Stock-based compensation	6,136	—		9,818		—		—		9,818
Shares issued for Employee Stock Purchase Plan	33	—		4		—		—		4

Balances at April 30, 2022	237,613,616	$	24	$	811,900	$	(152,596)	$	3,693,726	$	4,353,054


Balance as of July 31, 2021	$	7,485

Costs amortized during the period	(2,318)
Effect of foreign currency exchange rates	382
Balance as of April 30, 2022	$	5,549


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	(51,736)
Cumulative loss on foreign currency translation as of April 30, 2022	$	(152,596)


(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	6,427	$	50.69	5.69	$	619,019
Grants of options	340	133.96
Exercises	(525)	30.67
Forfeitures or expirations	(165)	56.11
Outstanding as of April 30, 2022	6,077	$	56.93	5.48	$	351,978
Exercisable as of April 30, 2022	4,429	$	44.46	4.59	$	308,452


(In thousands, except per share data)	Restricted Shares	Weighted Average Grant Date Fair Value
Outstanding as of July 31, 2021	102	$	90.46
Grants	141	133.60
Vested	(22)	74.24
Forfeitures or expirations	(13)	107.05
Outstanding as of April 30, 2022	208	$	120.50


	Three Months Ended April 30, 2022						Three Months Ended April 30, 2021
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	678,865	$	87,451	$	766,316	$	550,338	$	73,508	$	623,846
Vehicle sales	111,385		62,240		173,625		71,615		38,449		110,064
Total service revenues and vehicle sales	790,250		149,691		939,941		621,953		111,957		733,910
Yard operations	295,326		51,102		346,428		218,672		39,399		258,071
Cost of vehicle sales	101,781		55,455		157,236		63,012		31,486		94,498
General and administrative	52,706		10,816		63,522		43,543		9,687		53,230

Operating income	$	340,437	$	32,318	$	372,755	$	296,726	$	31,385	$	328,111

Depreciation and amortization	$	31,609	$	4,970	$	36,579	$	28,161	$	3,805	$	31,966
Capital expenditures and acquisitions	64,397		14,237		78,634		59,006		22,175		81,181


	Nine Months Ended April 30, 2022						Nine Months Ended April 30, 2021
(In thousands)	United States		International		Total		United States		International		Total
Service revenues	$	1,900,330	$	244,894	$	2,145,224	$	1,465,996	$	205,823	$	1,671,819
Vehicle sales	295,767		176,542		472,309		171,135		100,927		272,062
Total service revenues and vehicle sales	2,196,097		421,436		2,617,533		1,637,131		306,750		1,943,881
Yard operations	830,040		138,896		968,936		612,198		113,588		725,786
Cost of vehicle sales	272,387		151,561		423,948		153,119		79,368		232,487
General and administrative	145,638		28,807		174,445		124,044		26,638		150,682

Operating income	$	948,032	$	102,172	$	1,050,204	$	747,770	$	87,156	$	834,926

Depreciation and amortization	$	88,655	$	12,997	$	101,652	$	82,068	$	10,239	$	92,307
Capital expenditures and acquisitions	205,457		29,846		235,303		303,060		61,335		364,395


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
Augusta, Georgia						April 2022


(In thousands)	April 30, 2022		July 31, 2021
Advance charges receivable	$	452,103	$	385,002
Trade accounts receivable	136,563		97,249
Other receivables	3,959		4,013
	592,625		486,264
Less: Allowance for credit loss	(6,711)		(5,636)
Accounts receivable, net	$	585,914	$	480,628


(In thousands)	April 30, 2022		July 31, 2021
Land	$	1,484,617	$	1,428,262
Buildings and improvements	1,186,649		1,126,414
Transportation and other equipment	388,179		326,622
Office furniture and equipment	82,723		79,928
Software	74,760		66,170
	3,216,928		3,027,396
Less: Accumulated depreciation and amortization	(814,119)		(730,772)
Property and equipment, net	$	2,402,809	$	2,296,624


(In thousands)	April 30, 2022		July 31, 2021
Amortized intangibles:
Supply contracts and customer relationships	$	56,158	$	55,598
Trade names	18,906		18,944
Licenses and databases	657		736

Accumulated amortization	(34,867)		(29,405)
Intangibles, net	$	40,854	$	45,873


	April 30, 2022				July 31, 2021
(In thousands)	Carrying Value Total		Fair Value Total		Carrying Value Total		Fair Value Total
Assets
Cash equivalents	$	1,181,844	$	1,181,987	$	754,300	$	754,304
Treasury Bills	224,889		224,898		—		—
Total Assets	$	1,406,733	$	1,406,885	$	754,300	$	754,304
Liabilities

Long-term fixed rate debt, including current portion	$	399,726	$	391,891	$	399,733	$	432,027

Total Liabilities	$	399,726	$	391,891	$	399,733	$	432,027


	Three Months Ended April 30,				Nine Months Ended April 30,
(In percentages)	2022		2021		2022		2021
Service revenues and vehicle sales:
Service revenues	82	%	85	%	82	%	86	%
Vehicle sales	18	%	15	%	18	%	14	%
Total service revenues and vehicle sales	100	%	100	%	100	%	100	%

Operating expenses:
Yard operations	37	%	35	%	37	%	37	%
Cost of vehicle sales	17	%	13	%	16	%	12	%
General and administrative	7	%	7	%	7	%	8	%

Total operating expenses	61	%	55	%	60	%	57	%
Operating income	41	%	45	%	40	%	43	%
Other expense	—	%	(1)	%	—	%	(1)	%
Income before income taxes	40	%	44	%	39	%	42	%
Income taxes	10	%	5	%	8	%	7	%
Net income	31	%	39	%	31	%	35	%


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.
31.1		Certification of C o-Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Co-Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.3		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	(1)	Certification of Co-Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	(1)	Certification of Co-Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.3	(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)


			Date: May 25, 2022

			/s/ A. Jayson Adair
			A. Jayson Adair
			Co-Chief Executive Officer
			(Principal Executive Officer)


			Date: May 25, 2022

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


			Date: May 25, 2022

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