PART I [CAUTION REGARDING FORWARD-LOOKING STATEMENTS](index=3&type=section&id=CAUTION%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section highlights that the Annual Report on Form 10-K contains forward-looking statements, which involve known and unknown risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements subject to known and unknown risks and uncertainties, which may cause actual results to differ materially[11](index=11&type=chunk) - Investors should not place undue reliance on forward-looking statements and are encouraged to review the 'Risk Factors' section[11](index=11&type=chunk)[12](index=12&type=chunk) [Item 1. Business](index=3&type=section&id=Item%201.%20Business) Copart, Inc. is a leading global provider of online vehicle auctions and remarketing services, operating in multiple countries, focusing on environmental stewardship and social benefits - Copart is a leading global provider of online vehicle auctions and remarketing services, with operations in the U.S., U.K., Germany, Brazil, Canada, U.A.E., Spain, Finland, Oman, Republic of Ireland, and Bahrain[14](index=14&type=chunk) - The company's business model emphasizes environmental stewardship by facilitating vehicle reuse and recycling, and social benefits by providing affordable mobility and disaster recovery support[15](index=15&type=chunk)[17](index=17&type=chunk)[18](index=18&type=chunk) - Copart primarily obtains vehicles (**81% in fiscal 2025**) from insurance companies, selling them through its VB3 online auction platform to licensed dismantlers, rebuilders, dealers, exporters, and the general public[19](index=19&type=chunk)[80](index=80&type=chunk) [Corporate Information](index=3&type=section&id=Corporate%20Information) Copart, Inc. was incorporated in California in 1982, went public in 1994, reincorporated in Delaware in 2012, and has its principal executive offices in Dallas, Texas - Copart, Inc. was incorporated in California in 1982, became public in 1994, and reincorporated in Delaware in January 2012[13](index=13&type=chunk) - The principal executive offices are located in Dallas, Texas, and the company provides SEC filings on its website[13](index=13&type=chunk) [Overview](index=3&type=section&id=Overview) Copart operates globally, providing online vehicle auctions and remarketing services through its VB3 platform, supporting environmental sustainability and operational efficiency - Copart operates globally, providing online auctions and vehicle remarketing services across North America, Europe, and the Middle East[14](index=14&type=chunk) - The company's business model supports environmental sustainability by extending vehicle useful life and facilitating recycling, reducing the carbon footprint of the transportation industry[15](index=15&type=chunk)[17](index=17&type=chunk) - Copart's VB3 online auction platform enables a two-step bidding process, increasing buyer participation and operational efficiency by eliminating physical auction requirements[21](index=21&type=chunk) Fiscal Year 2025 Key Financials and Sales Distribution | Metric | Value | | :----- | :---- | | Revenues (FY2025) | $4.6 billion | | Operating Income (FY2025) | $1.7 billion | | U.S. Vehicles Sold (Out-of-State) | 69.8% | | U.S. Vehicles Sold (International) | 38.8% | [Industry Overview](index=6&type=section&id=Industry%20Overview) The vehicle remarketing industry facilitates the liquidation of vehicles to a broad buyer pool, with insurance companies as primary sellers and Copart utilizing a virtual marketplace - The vehicle remarketing industry provides a platform for sellers to liquidate vehicles to a broad buyer pool, with Copart primarily using a virtual marketplace (VB3) to eliminate physical auction requirements[28](index=28&type=chunk) - Insurance companies are the primary sellers, typically disposing of total loss or recovered stolen vehicles, while buyers include dismantlers, rebuilders, dealers, and exporters[19](index=19&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[33](index=33&type=chunk) - Newer vehicles are more likely to be deemed a total loss due to increasing repair costs associated with advanced features and complex construction[34](index=34&type=chunk) - Key factors for insurance companies selecting a remarketing service include anticipated salvage return, service quality, pricing, disaster response capability, geographic coverage, and data analytics[35](index=35&type=chunk)[39](index=39&type=chunk) [Operating and Growth Strategy](index=9&type=section&id=Operating%20and%20Growth%20Strategy) Copart's growth strategy focuses on global expansion through facility acquisition, seller agreements, service enhancement, and leveraging its VB3 platform in new markets - Copart's growth strategy focuses on increasing revenues and profitability through acquiring and developing new vehicle storage facilities globally, pursuing global seller agreements, expanding service offerings, and applying VB3 to new markets[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) - The company aims to integrate new acquisitions into its global network, capitalize on operating efficiencies, and enhance services with real-time data access and claims/salvage management tools[41](index=41&type=chunk)[43](index=43&type=chunk) [Our Competitive Advantages](index=9&type=section&id=Our%20Competitive%20Advantages) Copart's competitive advantages include extensive geographic coverage, comprehensive value-added services, a proven acquisition integration track record, and proprietary management information systems - Copart leverages its extensive geographic coverage across multiple countries to offer integrated services and efficient disaster response, enhancing selling prices and reducing administrative effort for sellers[44](index=44&type=chunk)[46](index=46&type=chunk) - The company provides a comprehensive range of value-added services, including internet bidding (VB3), mobile apps, predictive analytics, 'Buy It Now' and 'Make An Offer' options, online payment, and expedited total loss assessment tools (Total Loss Express 360, Co.ai)[46](index=46&type=chunk) - Copart has a proven track record of successfully acquiring and integrating facilities globally, utilizing its corporate and technology infrastructure to introduce comprehensive services and operational expertise[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk) - Proprietary management information and software systems (G2, CAS) provide online access to data and reports for vehicle sellers, streamlining the sales process and minimizing costs[48](index=48&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) [Our Business Segments](index=12&type=section&id=Our%20Business%20Segments) Copart operates and reports its financial performance in two primary geographic segments: U.S. and International - Copart operates and reports in two primary geographic segments: U.S. and International[49](index=49&type=chunk) Revenue Distribution by Segment (FY2025) | Segment | Revenue Percentage | | :-------- | :----------------- | | U.S. | 83.0% | | International | 17.0% | [Our Service Offerings](index=12&type=section&id=Our%20Service%20Offerings) Copart provides a comprehensive suite of services to vehicle sellers, including online inventory management, AI-powered salvage estimation, transportation, and flexible processing programs - Copart offers a comprehensive suite of services to vehicle sellers, including online inventory management (Copart Access), AI-powered salvage estimation (Co.ai), and automated auction decision tools (IntelliSeller)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - Services also include transportation, on-site vehicle inspection stations, real-time data reporting, expedited title processing (Title Express), and loan payoff facilitation[56](index=56&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk)[59](index=59&type=chunk)[60](index=60&type=chunk)[61](index=61&type=chunk) - Flexible vehicle processing programs (Percentage Incentive, Consignment, Purchase) are offered, with merchandising efforts to maximize sales prices[62](index=62&type=chunk)[63](index=63&type=chunk)[64](index=64&type=chunk)[65](index=65&type=chunk) - Specialized services cater to financial institutions (BluCar), dealers (Copart Dealer Services), the general public (Cash For Cars), powersports (National Powersport Auctions), and heavy equipment (Purple Wave Inc.)[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk)[74](index=74&type=chunk) - Technological enhancements include Copart 360 for immersive vehicle views and tiered membership benefits (Guest, Basic, Premier) offering varied access and support levels[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) [Sales](index=18&type=section&id=Sales) Copart maintains a diversified customer base with no single customer exceeding 10% of consolidated revenues, primarily serving insurance companies through an in-house sales force and online channels - No single customer accounted for more than **10% of consolidated revenues** for fiscal years 2023-2025, indicating a diversified customer base[80](index=80&type=chunk) - Insurance companies were the source for **81% of vehicles processed in fiscal 2025 and 2024**, and **83% in fiscal 2023**[80](index=80&type=chunk) - Copart markets its services through an in-house sales force, online channels, and industry events, offering detailed analysis to improve net returns for vehicle sellers[82](index=82&type=chunk) [Members](index=18&type=section&id=Members) Copart's platform serves approximately 1 million registered buyers, including dismantlers, rebuilders, dealers, exporters, and the general public, with membership requiring identification and licenses - Copart maintains a database of approximately **1 million registered buyers**, including dismantlers, rebuilders, dealers, exporters, and the general public[84](index=84&type=chunk) - Membership requires application and identification, with business members needing relevant licenses, to ensure legitimate transactions and prevent frivolous bids[84](index=84&type=chunk) [Competition](index=18&type=section&id=Competition) Copart faces significant competition from other vehicle remarketers and large vehicle dismantlers for supply agreements and storage facility acquisitions in a highly competitive industry - Copart faces significant competition from other vehicle remarketers and large vehicle dismantlers for supply agreements and acquisition of storage facilities[85](index=85&type=chunk) - Principal competitors in the U.S. include RB Global (Insurance Auto Auctions), Carvana, Openlane, Manheim, and ACV Auctions, with LKQ Corporation being the largest national dismantler[85](index=85&type=chunk) [Management Information Systems](index=18&type=section&id=Management%20Information%20Systems) Copart's core management information system, the G2 platform, is an integrated, distributed system accessed globally by employees, members, and sellers, supported by a hybrid infrastructure for redundancy - Copart's primary management information system runs on the G2 platform, an integrated mesh of proprietary, distributed systems based on services architecture and open standards, with some legacy functionality in CAS[86](index=86&type=chunk) - The G2 platform is accessed globally by employees, members for bidding and payment, and sellers via B2B APIs for vehicle assignment and monitoring[87](index=87&type=chunk) - The company has invested in co-located data centers and multiple cloud platforms to create a hybrid infrastructure designed for redundancy and continuous operation[88](index=88&type=chunk) [Employees and Human Capital](index=19&type=section&id=Employees%20and%20Human%20Capital) As of July 31, 2025, Copart had approximately 11,600 global employees, fostering a culture of integrity and diversity, with a People and Culture department focused on talent management and development - As of July 31, 2025, Copart had approximately **11,600 full and part-time employees globally**, with **64% in the U.S.** and **36% internationally**[90](index=90&type=chunk) - The company emphasizes a strong culture built on integrity, ownership, challenging norms, results, and celebrating people, promoting diversity and inclusion across its global workforce[89](index=89&type=chunk) Workforce Demographics (July 31, 2025) | Category | U.S. Workforce | International Workforce | | :--------- | :------------- | :---------------------- | | Total Employees | ~7,400 | ~4,200 | | Male | 54% | 65% | | Female | 45% | 35% | | White | 48% | 45% | | Hispanic/Latino | 3% | 3% | | Black/African American | 14% | 5% | | Asian | 6% | 40% | | Two or more races | 3% | 0% | | Other/Undisclosed | 26% | 7% | | U.S. Management (Male) | 61% | N/A | | U.S. Management (Female) | 39% | N/A | | International Management (Male) | N/A | 70% | | International Management (Female) | N/A | 30% | - The People and Culture department focuses on talent acquisition, employee development and training, performance management, engagement initiatives, and competitive benefits packages[96](index=96&type=chunk)[97](index=97&type=chunk)[98](index=98&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) [Environmental Matters](index=20&type=section&id=Environmental%20Matters) Copart's operations are subject to environmental laws, requiring active management of potential impacts and substantial expenditures for preventative or remedial actions, despite mitigation efforts - Copart's operations are subject to various environmental laws and regulations across its global storage facilities, requiring active monitoring and management of potential environmental impacts[103](index=103&type=chunk) - The company could incur substantial expenditures for preventative, investigative, or remedial actions and face liability from operations, prior contamination, or waste disposal[103](index=103&type=chunk) - Efforts to mitigate environmental risk include due diligence on new sites, actions to avoid prior owner liability, and acquiring insurance, though no assurance exists these efforts will be sufficient[103](index=103&type=chunk) [Governmental Regulations](index=20&type=section&id=Governmental%20Regulations) Copart's operations are subject to extensive international, federal, provincial, state, and local regulations, with zoning requirements for storage facilities posing expansion challenges - Copart's operations are subject to extensive international, federal, provincial, state, and local regulations concerning vehicle acquisition, sale, licensing, titling, zoning, and environmental matters[104](index=104&type=chunk) - The company's expertise in title processing is a competitive advantage, but zoning requirements for storage facilities can make expansion challenging and expensive[104](index=104&type=chunk) [Intellectual Property and Proprietary Rights](index=22&type=section&id=Intellectual%20Property%20and%20Proprietary%20Rights) Copart protects its VB3 virtual bidding auction platform with a U.S. patent and relies on trade secret, copyright, trademark laws, and contractual agreements for its proprietary technology - Copart holds a U.S. patent for its VB3 virtual bidding auction platform, issued in 2008, effective for **20 years** from the earliest filing date[106](index=106&type=chunk) - The company also relies on trade secret, copyright, and trademark laws, along with contractual agreements, to protect its proprietary technology and products[107](index=107&type=chunk) [Seasonality](index=22&type=section&id=Seasonality) Copart's operating results are subject to quarterly variations influenced by seasonal weather patterns and severe weather events, which impact vehicle volumes and demand for services - Copart's operating results are subject to quarterly variations, primarily influenced by seasonal weather patterns, with higher demand for services during winter months due to increased accidents[108](index=108&type=chunk) - Severe weather events like tornadoes, floods, hurricanes, and hailstorms can also significantly impact vehicle volumes[108](index=108&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could adversely affect Copart's business, financial condition, and operating results, including dependence on major sellers, international expansion challenges, and cybersecurity threats - Dependence on a limited number of major vehicle sellers for a substantial portion of revenues poses a risk, as loss of these sellers or changes in agreements could adversely affect financial results[110](index=110&type=chunk) - International expansion exposes the company to risks such as integration failures, managing foreign offices, compliance with complex laws, foreign currency exchange rate risk, and geopolitical issues[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - Cybersecurity threats, including online commerce security breaches, credit card fraud, and ransomware attacks, could disrupt business, damage reputation, and lead to significant legal and financial exposure[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - The vehicle sales industry is highly competitive, with risks from other remarketers and dismantlers, potentially leading to market share loss or increased acquisition costs for facilities[134](index=134&type=chunk)[135](index=135&type=chunk) - Regulatory compliance and legal matters, including privacy laws (GDPR, CCPA, LGPD), anti-bribery laws, and vehicle import/export regulations, can impair operations, increase costs, and create potential liabilities[137](index=137&type=chunk)[139](index=139&type=chunk)[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) [Risks Related to Our Business and Industry](index=22&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Industry) Copart faces risks from dependence on major sellers, international expansion, capacity constraints, acquisition challenges, subhauler issues, new member programs, weather, talent retention, and intense competition - Dependence on a limited number of major vehicle sellers for a substantial portion of revenues poses a risk, as loss of these sellers or changes in agreements could adversely affect financial results[110](index=110&type=chunk) - International expansion exposes the company to risks such as integration failures, managing foreign offices, compliance with complex laws, foreign currency exchange rate risk, and geopolitical issues[111](index=111&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk)[115](index=115&type=chunk) - The company's online auction model may not yield the same synergies and benefits in new markets as it did in the U.S., Canada, and U.K[119](index=119&type=chunk)[120](index=120&type=chunk) - Failure to maintain sufficient capacity at storage facilities, especially after adverse weather events, could harm relationships with sellers[121](index=121&type=chunk) - Growth rate may decline if the company cannot successfully complete acquisitions and develop new facilities on favorable terms, or if it faces regulatory hurdles[122](index=122&type=chunk)[125](index=125&type=chunk) - Problems with subhaulers and the trucking fleet, including increased fuel costs or disruptions, could harm business and increase operating expenses[128](index=128&type=chunk)[129](index=129&type=chunk) - New member programs, such as opening auctions to the general public, involve material expenditures and could introduce heightened regulatory and litigation risks[130](index=130&type=chunk) - Mild weather reduces salvage vehicle supply, negatively impacting revenues, while extreme weather can lead to oversupply and abnormal expenses due to capacity constraints[131](index=131&type=chunk) - Loss of key management or inability to attract and retain talent, particularly for the core technology platform, could hinder business management and objective achievement[132](index=132&type=chunk)[133](index=133&type=chunk) - The vehicle sales industry is highly competitive, with national, regional, and local competitors, including large dismantlers, potentially having greater financial resources and established relationships[134](index=134&type=chunk)[135](index=135&type=chunk) [Risks Related to Regulatory Compliance and Legal Matters](index=28&type=section&id=Risks%20Related%20to%20Regulatory%20Compliance%20and%20Legal%20Matters) Copart faces risks from public opposition to facility expansion, non-compliance with anti-bribery and data protection laws, inventory risks from principal-based transactions, and environmental liabilities - Business activities and facility expansions may face public opposition, leading to reputational and political risks, and impacting the ability to obtain necessary permits[136](index=136&type=chunk) - International operations expose the company to risks of non-compliance with anti-bribery laws (e.g., U.S. FCPA, U.K. Bribery Act) and trade controls, potentially leading to penalties and reputational harm[137](index=137&type=chunk)[139](index=139&type=chunk) - Transacting on a principal basis (purchasing and reselling vehicles) exposes the company to inventory risks and may not be readily adopted in new markets where insurers are less involved in vehicle disposition[140](index=140&type=chunk)[141](index=141&type=chunk) - Compliance with evolving domestic and international privacy and data protection laws (e.g., GDPR, CCPA, LGPD) may incur substantial costs, require business practice changes, and lead to penalties for noncompliance[142](index=142&type=chunk) - The vehicle sales industry is subject to complex laws and regulations (e.g., land use, licensing, titling, environmental), with non-compliance potentially resulting in investigations, penalties, and operational impairment[143](index=143&type=chunk) - Changes in laws or interpretations affecting vehicle import and export could reduce demand for vehicles and impact the international buyer base[144](index=144&type=chunk) - Operation of storage facilities carries environmental risks, including potential for substantial expenditures for remediation and liabilities from contamination, which could materially affect financial results[145](index=145&type=chunk) - Changes in tax laws, interpretations, or adverse determinations by tax authorities could increase the tax burden and negatively affect financial condition[146](index=146&type=chunk)[147](index=147&type=chunk) [Risks Related to Our Intellectual Property and Technology](index=31&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property%20and%20Technology) Copart faces risks from IT system disruptions, cyber-attacks, inability to protect intellectual property, costly IP claims, difficulties in system implementation, and rapid technological changes - Disruptions to IT systems, including cyber-attacks (e.g., ransomware), employee error, or technological failures, could render the auction platform inoperable, damage reputation, and lead to financial and legal liabilities[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk) - Inability to protect intellectual property rights (patents, trademarks, trade secrets) could have a material adverse effect on the business, especially with increased reliance on auction technologies[154](index=154&type=chunk)[155](index=155&type=chunk) - The company may face costly intellectual property rights claims, which could require damages payments, limit technology use, or necessitate developing expensive alternative technologies[156](index=156&type=chunk) - Difficulties in designing, developing, and implementing the proprietary enterprise operating system could cause disruptions, delays, or deficiencies, impacting business operations and financial performance[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - Rapid technological changes, including the emergence of AI, machine learning, and generative AI, could render existing technology obsolete or decrease competitiveness, requiring significant resources for adaptation and compliance with evolving regulations[160](index=160&type=chunk)[161](index=161&type=chunk) [Risks Related to Ownership of Our Common Stock](index=33&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Copart's stock performance may fluctuate due to external factors, and significant insider ownership or anti-takeover provisions could influence stockholder-approved matters or limit actions - Annual and quarterly performance may fluctuate due to various factors beyond control, including market value of vehicles, commodity prices, foreign exchange, supply chain disruptions, and weather, potentially causing stock price decline[162](index=162&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[167](index=167&type=chunk) - Executive officers, directors, and their affiliates collectively own over **10% of common stock**, giving them significant influence over stockholder-approved matters, which may differ from other stockholders' interests[166](index=166&type=chunk)[168](index=168&type=chunk) - Certain provisions in the company's certificate of incorporation and bylaws, such as authorized preferred stock and advance notice requirements, may have anti-takeover effects or limit stockholder actions[169](index=169&type=chunk) - The designation of the Delaware Court of Chancery as the exclusive forum for certain disputes could limit stockholders' choice of judicial forum, potentially increasing costs or discouraging lawsuits[170](index=170&type=chunk)[172](index=172&type=chunk) [General Risk Factors](index=36&type=section&id=General%20Risk%20Factors) Copart's financial results are exposed to risks from cash investments, self-insurance estimates, macroeconomic factors, adverse economic conditions, and foreign currency exchange rate fluctuations - Cash investments are subject to risks like interest rate fluctuations, credit risk, and market risk, which could lead to losses or impairment of invested cash[173](index=173&type=chunk) - Being partially self-insured for certain losses means that if estimates of future claims differ from actual trends, operating results could be harmed[174](index=174&type=chunk) - Macroeconomic factors such as fuel prices, commodity prices, used car prices, and vehicle technological advances (e.g., accident avoidance systems) can adversely affect revenues and operating results by impacting accident rates and total loss frequency[175](index=175&type=chunk) - Adverse U.S. and international economic conditions, including downturns, inflation, and volatile credit markets, may negatively affect business by reducing miles driven, increasing uninsured motorists, and impacting buyer financing[176](index=176&type=chunk) - Fluctuations in foreign currency exchange rates, particularly for Pounds Sterling, Canadian dollar, Brazilian real, European Union euro, U.A.E. dirham, Omani rial, and Bahraini dinar, could result in declines in reported revenues and earnings, as the company does not engage in hedging[177](index=177&type=chunk) [Item 1B. Unresolved Staff Comments](index=37&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report for the fiscal year ended July 31, 2025 - No unresolved staff comments were reported[178](index=178&type=chunk) [Item 1C. Cybersecurity](index=37&type=section&id=Item%201C.%20Cybersecurity) Copart proactively manages cybersecurity risks through a comprehensive program based on defense-in-depth and resilience strategies, with Board Audit Committee oversight and management responsibility - Copart proactively identifies, evaluates, and manages cybersecurity threats, including disruption, intellectual property theft, fraud, and data breaches[179](index=179&type=chunk) - The company's cybersecurity strategy employs defense-in-depth (layered security controls) and resilience (business continuity and disaster recovery) to protect against and respond to threats[180](index=180&type=chunk) - The Board's Audit Committee oversees the cybersecurity program, receiving quarterly updates and annual detailed presentations from the Chief Information Security Officer, with one committee member being a cybersecurity subject matter expert[182](index=182&type=chunk) - Management, led by the Chief Information Security Officer, is responsible for assessing and managing risks, with an incident response team for addressing and recovering from cybersecurity incidents[183](index=183&type=chunk)[184](index=184&type=chunk) [Risk Management and Strategy](index=37&type=section&id=Risk%20Management%20and%20Strategy) Copart employs holistic processes to identify, assess, manage, and disclose cybersecurity risks, utilizing a defense-in-depth and resilience strategy based on the NIST security framework - Copart employs holistic and focused processes for identifying, assessing, managing, and disclosing material cybersecurity risks, involving executive leadership, finance, legal, tech, operations teams, and external advisors[179](index=179&type=chunk) - The cybersecurity strategy is built on defense in depth (layered security controls) and resilience (business continuity and disaster recovery) to protect against and recover from cyber threats[180](index=180&type=chunk) - The company uses the National Institute for Standards in Technology security framework to evaluate and continuously enhance its cybersecurity controls[180](index=180&type=chunk) [Governance](index=38&type=section&id=Governance) The Board's Audit Committee oversees Copart's cybersecurity program, receiving regular updates from the Chief Information Security Officer, who leads management's risk assessment and incident response efforts - The Board of Directors has delegated cybersecurity program oversight to the Audit Committee, which receives quarterly updates and annual detailed presentations from the Chief Information Security Officer[182](index=182&type=chunk) - The Audit Committee includes a member with expertise in technology and cybersecurity[182](index=182&type=chunk) - Management, led by the Chief Information Security Officer, is responsible for assessing and managing cybersecurity risks and leads an incident response team for addressing and recovering from incidents[183](index=183&type=chunk)[184](index=184&type=chunk) [Item 2. Properties](index=38&type=section&id=Item%202.%20Properties) Copart's corporate headquarters is in Dallas, Texas, and it operates 281 facilities globally, including owned or leased properties across every U.S. state, several Canadian provinces, the U.K., Brazil, Republic of Ireland, U.A.E., Oman, Bahrain, Finland, Germany, and Spain. The company believes its current facilities are adequate and that additional space will be available for expansion - Copart's corporate headquarters is in Dallas, Texas[185](index=185&type=chunk) - The company operates **281 total operating facilities globally**, including owned or leased properties in the U.S., Canada, U.K., Brazil, Republic of Ireland, U.A.E., Oman, Bahrain, Finland, Germany, and Spain[185](index=185&type=chunk) - Existing facilities are considered adequate, and suitable additional or substitute space is expected to be available for future expansion[185](index=185&type=chunk) [Item 3. Legal Proceedings](index=38&type=section&id=Item%203.%20Legal%20Proceedings) For a discussion of legal proceedings, refer to Note 15 — Commitments and Contingencies in the Notes to Consolidated Financial Statements - Legal proceedings are discussed in Note 15 — Commitments and Contingencies[186](index=186&type=chunk) [Item 4. Mine Safety Disclosure](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to Copart, Inc - Mine Safety Disclosure is not applicable[187](index=187&type=chunk) PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=40&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section provides information on Copart's common stock market, including outstanding shares, trading symbol, and shareholder count, details its stock repurchase program, dividend policy, and presents a performance graph - As of July 31, 2025, **967,478,690 shares of common stock** were issued and outstanding, with **714 holders of record**[189](index=189&type=chunk) - Copart's common stock is quoted on the NASDAQ Global Select Market under the symbol '**CPRT**'[189](index=189&type=chunk) - The Board approved a stock repurchase program for up to **784 million shares**, but no repurchases were made in fiscal years 2023, 2024, or 2025[190](index=190&type=chunk) - Copart has not paid a cash dividend since becoming a public company in 1994 and intends to retain earnings for business use, subject to credit agreement covenants[192](index=192&type=chunk) 5-Year Cumulative Total Return Comparison (July 31, 2020 - July 31, 2025) | Index | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | :----------------- | :----- | :----- | :----- | :----- | :----- | :----- | | Copart, Inc. | $100.00 | $157.64 | $137.37 | $189.58 | $224.47 | $194.45 | | NASDAQ Composite | $100.00 | $137.53 | $116.97 | $136.63 | $168.91 | $204.14 | | NASDAQ Industrial | $100.00 | $125.18 | $102.33 | $106.91 | $112.73 | $135.38 | | S&P 500 Index | $100.00 | $136.45 | $130.12 | $147.05 | $179.62 | $208.96 | [Market Information](index=40&type=section&id=Market%20Information) As of July 31, 2025, Copart had 967,478,690 shares of common stock outstanding, traded on the NASDAQ Global Select Market under 'CPRT' at $45.33 per share - As of July 31, 2025, there were **967,478,690 shares of common stock** issued and outstanding[189](index=189&type=chunk) - The common stock is traded on the NASDAQ Global Select Market under the symbol '**CPRT**'[189](index=189&type=chunk) - The closing sales price on July 31, 2025, was **$45.33 per share**[189](index=189&type=chunk) [Repurchases of Our Common Stock](index=40&type=section&id=Repurchases%20of%20Our%20Common%20Stock) The Board approved a stock repurchase program for 784 million shares, with 325,803,208 shares remaining available, but no repurchases were made in fiscal years 2023-2025 - The Board of Directors approved a stock repurchase program with a total authorization of **784 million shares**[190](index=190&type=chunk) - No shares were repurchased under the program in fiscal years 2025, 2024, or 2023[190](index=190&type=chunk) - As of July 31, 2025, **325,803,208 shares** remained available for repurchase[190](index=190&type=chunk) [Dividend Policies](index=40&type=section&id=Dividend%20Policies) Copart has not paid cash dividends since its 1994 public offering, intending to retain earnings for business use, subject to limitations under its credit agreement - Copart has not paid a cash dividend since becoming a public company in 1994[192](index=192&type=chunk) - The company intends to retain any earnings for use in its business[192](index=192&type=chunk) - Dividend payments are subject to limitations and restrictions under the Second Amended and Restated Credit Agreement[192](index=192&type=chunk) [Issuances of Unregistered Securities](index=41&type=section&id=Issuances%20of%20Unregistered%20Securities) There were no issuances of unregistered securities by Copart in the year ended July 31, 2025 - There were no issuances of unregistered securities in the year ended July 31, 2025[194](index=194&type=chunk) [Performance Graph](index=41&type=section&id=Performance%20Graph) A line graph compares Copart's cumulative total return against the NASDAQ Composite, NASDAQ Industrial, and S&P 500 Indices for the five years ended July 31, 2025 - A line graph compares the cumulative total return of Copart's common stock against the NASDAQ Composite Index, NASDAQ Industrial Index, and S&P 500 Index for the five years ended July 31, 2025[196](index=196&type=chunk)[197](index=197&type=chunk) 5-Year Cumulative Total Return (July 31, 2020 - July 31, 2025) | Index | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | :----------------- | :----- | :----- | :----- | :----- | :----- | :----- | | Copart, Inc. | $100.00 | $157.64 | $137.37 | $189.58 | $224.47 | $194.45 | | NASDAQ Composite | $100.00 | $137.53 | $116.97 | $136.63 | $168.91 | $204.14 | | NASDAQ Industrial | $100.00 | $125.18 | $102.33 | $106.91 | $112.73 | $135.38 | | S&P 500 Index | $100.00 | $136.45 | $130.12 | $147.05 | $179.62 | $208.96 | [Item 6. Reserved](index=41&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information - Item 6 is reserved[200](index=200&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=43&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of Copart's financial condition and operating results for fiscal years 2023-2025, covering performance, acquisitions, liquidity, and accounting policies - Copart is a leading global provider of online auctions and vehicle remarketing services, operating in multiple countries[203](index=203&type=chunk) - The company's business model aims for sustainable profits while providing environmental benefits through vehicle reuse and recycling, and social benefits through affordable mobility and disaster response[204](index=204&type=chunk)[205](index=205&type=chunk) - Copart primarily serves insurance companies, processing and selling vehicles through its VB3 online auction platform[206](index=206&type=chunk) [Overview](index=43&type=section&id=Overview) Copart is a leading global provider of online vehicle auctions and remarketing services, focused on sustainable profits, environmental benefits, and community support through its VB3 platform - Copart operates as a leading global provider of online vehicle auctions and remarketing services across the U.S., U.K., Germany, Brazil, Canada, U.A.E., Spain, Finland, Oman, Republic of Ireland, and Bahrain[203](index=203&type=chunk) - The company's core mission includes generating sustainable profits, enabling global vehicle reuse and recycling, and supporting communities through affordable mobility and catastrophic weather event management[204](index=204&type=chunk)[205](index=205&type=chunk) - Copart utilizes its Virtual Bidding Third Generation (VB3) internet auction technology to process and sell vehicles, primarily from insurance companies (**81% of total vehicles in FY2025**)[206](index=206&type=chunk) - Revenue is primarily derived from auction and auction-related sales transaction fees for remarketing services, with some operations (U.K., Germany, Spain) also involving principal-based vehicle purchases and resale[207](index=207&type=chunk)[208](index=208&type=chunk) [Key Financial Performance Measures](index=45&type=section&id=Key%20Financial%20Performance%20Measures) Copart's revenue is driven by auction fees and vehicle sales, influenced by total loss frequency and selling prices, while operating costs include facility operations, vehicle costs, and general administrative expenses - Service revenues include auction and auction-related fees, while purchased vehicle revenue includes gross sales price of vehicles owned by Copart[209](index=209&type=chunk) - Revenue is influenced by total loss frequency, average vehicle auction selling price (driven by market demand, used car pricing, parts demand, car mix, exchange rates, and commodity prices), and repair costs[210](index=210&type=chunk) - Operating costs consist of facility operations (labor, transportation, facilities, marketing) and cost of vehicles sold. General and administrative expenses cover executive, accounting, data processing, sales, professional services, and technology[211](index=211&type=chunk) - Other income primarily includes interest income on U.S. Treasury Bills, foreign exchange gains/losses, asset disposal gains/losses, and earnings from unconsolidated affiliates[212](index=212&type=chunk) - Liquidity and cash flows are primarily driven by cash flow from operations, influenced by seasonality, market wins/losses, supplier mix, accident/total loss frequency, volume, pricing, and foreign currency rates[213](index=213&type=chunk)[214](index=214&type=chunk) [Acquisitions and New Operations](index=46&type=section&id=Acquisitions%20and%20New%20Operations) Copart's expansion strategy involves acquiring and developing new facilities globally to strengthen coverage and integrate services, with several new operational facilities opened across various regions - Copart's expansion strategy involves acquiring and developing new facilities globally to strengthen coverage and provide integrated services[216](index=216&type=chunk)[219](index=219&type=chunk) New Operational Facilities Opened (August 1, 2022 - July 31, 2025) | Location | Geographic Service Area | Date Opened | | :----------------------- | :---------------------- | :---------- | | Anchorage, Alaska | United States | August 2022 | | Rapid City, South Dakota | United States | August 2022 | | Kansas City, Missouri | United States | September 2022 | | Brasília, Brazil | Brazil | September 2022 | | Grenada, Mississippi | United States | January 2023 | | Büdingen, Hesse | Germany | January 2023 | | Ottawa, Ontario | Canada | February 2023 | | Windham, New England | United States | March 2023 | | Las Vegas West, Nevada | United States | June 2023 | | Akron, Ohio | United States | July 2023 | | Wayland, Michigan | United States | July 2023 | | Rutland, Vermont | United States | August 2023 | | Corby, England | United Kingdom | October 2023 | | Phoenix, Arizona | United States | November 2023 | | Glasgow, Scotland | United Kingdom | December 2023 | | Alhendin, Granada | Spain | January 2024 | | Gloucester, England | United Kingdom | March 2024 | | Barcelona, Spain | Spain | May 2024 | | Austin, Texas | United States | June 2024 | | Cookstown, Ontario | Canada | July 2024 | | Casper, Wyoming | United States | July 2024 | | Napa, California | United States | October 2024 | | St. Helens, England | United Kingdom | October 2024 | | Laurel, Maryland | United States | November 2024 | | Castellón, Spain | Spain | November 2024 | | Vitoria, Spain | Spain | December 2024 | | Chicago, Illinois | United States | May 2025 | [Results of Operations](index=47&type=section&id=Results%20of%20Operations) This section details the consolidated statements of income, comparing service revenues, vehicle sales, operating expenses, other income, and income taxes for fiscal years 2023-2025 Consolidated Statements of Income (Percentage of Total Service Revenues and Vehicle Sales) | (In percentages) | 2025 | 2024 | 2023 | | :-------------------------------- | :--- | :--- | :--- | | Service revenues | 85 % | 84 % | 83 % | | Vehicle sales | 15 % | 16 % | 17 % | | Total service revenues and vehicle sales | 100 % | 100 % | 100 % | | Operating expenses: | | | | | Facility operations | 42 % | 40 % | 39 % | | Cost of vehicle sales | 13 % | 15 % | 15 % | | General and administrative | 9 % | 8 % | 7 % | | Total operating expenses | 64 % | 63 % | 61 % | | Operating income | 36 % | 37 % | 39 % | | Total other income | 4 % | 3 % | 3 % | | Income before income taxes | 40 % | 40 % | 42 % | | Income tax expense | 7 % | 8 % | 8 % | | Net income | 33 % | 32 % | 34 % | Service Revenues Comparison (FY2025 vs. FY2024 vs. FY2023) | (In thousands) | 2025 | 2024 | 2023 | Change (2025 vs. 2024) | % Change (2025 vs. 2024) | Change (2024 vs. 2023) | % Change (2024 vs. 2023) | | :------------- | :---------- | :---------- | :---------- | :--------------------- | :----------------------- | :--------------------- | :----------------------- | | United States | $3,451,558 | $3,126,102 | $2,841,641 | $325,456 | 10.4 % | $284,461 | 10.0 % | | International | $517,104 | $434,900 | $356,487 | $82,204 | 18.9 % | $78,413 | 22.0 % | | Total | $3,968,662 | $3,561,002 | $3,198,128 | $407,660 | 11.4 % | $362,874 | 11.3 % | - Total service revenues increased by **$407.7 million (11.4%)** in fiscal 2025 compared to fiscal 2024, driven by increased revenue per car and volume in both U.S. and International segments, with a positive currency exchange rate fluctuation of **$2.7 million** for International[221](index=221&type=chunk) Vehicle Sales Comparison (FY2025 vs. FY2024 vs. FY2023) | (In thousands) | 2025 | 2024 | 2023 | Change (2025 vs. 2024) | % Change (2025 vs. 2024) | Change (2024 vs. 2023) | % Change (2024 vs. 2023) | | :------------- | :-------- | :-------- | :-------- | :--------------------- | :----------------------- | :--------------------- | :----------------------- | | United States | $403,546 | $338,633 | $348,007 | $64,913 | 19.2 % | $(9,374) | (2.7)% | | International | $274,750 | $337,188 | $323,383 | $(62,438) | (18.5)% | $13,805 | 4.3 % | | Total | $678,296 | $675,821 | $671,390 | $2,475 | 0.4 % | $4,431 | 0.7 % | - Total vehicle sales increased by **$2.5 million (0.4%)** in fiscal 2025 compared to fiscal 2024, with a U.S. increase driven by volume and higher auction selling prices, and an International decrease due to lower auction selling prices and sellers switching to consignment, partially offset by positive currency fluctuations of **$5.7 million**[222](index=222&type=chunk) Facility Operations Expenses Comparison (FY2025 vs. FY2024 vs. FY2023) | (In thousands) | 2025 | 2024 | 2023 | Change (2025 vs. 2024) | % Change (2025 vs. 2024) | Change (2024 vs. 2023) | % Change (2024 vs. 2023) | | :------------- | :---------- | :---------- | :---------- | :--------------------- | :----------------------- | :--------------------- | :----------------------- | | United States | $1,646,183 | $1,440,707 | $1,292,527 | $205,476 | 14.3 % | $148,180 | 11.5 % | | International | $298,135 | $269,377 | $225,502 | $28,758 | 10.7 % | $43,875 | 19.5 % | | Total | $1,944,318 | $1,710,084 | $1,518,029 | $234,234 | 13.7 % | $192,055 | 12.7 % | - Total facility operations expenses increased by **$234.2 million (13.7%)** in fiscal 2025 compared to fiscal 2024, primarily due to increased volume, non-CAT related costs (subhaul, labor, facility), and **$56 million** in one-time CAT costs from Hurricanes Helene and Milton in the U.S[223](index=223&type=chunk) Cost of Vehicle Sales Comparison (FY2025 vs. FY2024 vs. FY2023) | (In thousands) | 2025 | 2024 | 2023 | Change (2025 vs. 2024) | % Change (2025 vs. 2024) | Change (2024 vs. 2023) | % Change (2024 vs. 2023) | | :------------- | :-------- | :-------- | :-------- | :--------------------- | :----------------------- | :--------------------- | :----------------------- | | United States | $378,100 | $313,449 | $326,764 | $64,651 | 20.6 % | $(13,315) | (4.1)% | | International | $224,897 | $306,038 | $287,734 | $(81,141) | (26.5)% | $18,304 | 6.4 % | | Total | $602,997 | $619,487 | $614,498 | $(16,490) | (2.7)% | $4,989 | 0.8 % | - Total cost of vehicle sales decreased by **$16.5 million (2.7%)** in fiscal 2025 compared to fiscal 2024, driven by an increase in the U.S. due to higher average purchase price and volume, offset by a decrease in International due to lower average purchase price and volume from sellers switching to consignment[224](index=224&type=chunk)[225](index=225&type=chunk) General and Administrative Expenses Comparison (FY2025 vs. FY2024 vs. FY2023) | (In thousands) | 2025 | 2024 | 2023 | Change (2025 vs. 2024) | % Change (2025 vs. 2024) | Change (2024 vs. 2023) | % Change (2024 vs. 2023) | | :------------- | :-------- | :-------- | :-------- | :--------------------- | :----------------------- | :--------------------- | :----------------------- | | United States | $349,935 | $282,545 | $202,260 | $67,390 | 23.9 % | $80,285 | 39.7 % | | International | $52,994 | $52,684 | $48,162 | $310 | 0.6 % | $4,522 | 9.4 % | | Total | $402,929 | $335,229 | $250,422 | $67,700 | 20.2 % | $84,807 | 33.9 % | - Total general and administrative expenses increased by **$67.7 million (20.2%)** in fiscal 2025 compared to fiscal 2024, primarily due to increases in third-party services, labor costs, facility costs, and travel in the U.S., and labor costs and computer software in International[227](index=227&type=chunk) Other Income (Expenses) and Income Taxes Comparison (FY2025 vs. FY2024 vs. FY2023) | (In thousands) | 2025 | 2024 | 2023 | Change (2025 vs. 2024) | % Change (2025 vs. 2024) | Change (2024 vs. 2023) | % Change (2024 vs. 2023) | | :------------- | :---------- | :---------- | :---------- | :--------------------- | :----------------------- | :--------------------- | :----------------------- | | Total other income (expenses) | $198,867 | $142,578 | $67,759 | $56,289 | 39.5 % | $74,819 | 110.4 % | | Income taxes | $347,218 | $352,254 | $316,587 | $(5,036) | (1.4)% | $35,667 | 11.3 % | - Total other income increased by **$56.3 million (39.5%)** in fiscal 2025 compared to fiscal 2024, mainly due to higher interest income from U.S. Treasury Bills, gains on fixed asset sales, and foreign currency gains[228](index=228&type=chunk) - The effective income tax rate was **18.3% in fiscal 2025**, down from **20.5% in fiscal 2024**, favorably impacted by a **$55.0 million tax benefit** from the Foreign Derived Intangible Income (FDII) deduction and **$36.7 million** in excess tax benefits from stock option exercises[229](index=229&type=chunk) [Liquidity and Capital Resources](index=50&type=section&id=Liquidity%20and%20Capital%20Resources) Copart's liquidity and cash flows are primarily driven by operating activities, with cash, cash equivalents, and working capital showing significant increases in fiscal 2025, supported by its Revolving Loan Facility Liquidity and Capital Resources (FY2025 vs. FY2024 vs. FY2023) | (In thousands) | 2025 | 2024 | 2023 | Change (2025 vs. 2024) | % Change (2025 vs. 2024) | Change (2024 vs. 2023) | % Change (2024 vs. 2023) | | :------------- | :---------- | :---------- | :---------- | :--------------------- | :----------------------- | :--------------------- | :----------------------- | | Cash, cash equivalents, and restricted cash | $2,780,531 | $1,514,111 | $957,395 | $1,266,420 | 83.6 % | $556,716 | 58.1 % | | Working capital | $5,071,347 | $3,789,617 | $2,769,835 | $1,281,730 | 33.8 % | $1,019,782 | 36.8 % | | Operating cash flows | $1,799,750 | $1,472,564 | $1,364,210 | $327,186 | 22.2 % | $108,354 | 7.9 % | | Investing cash flows | $(587,448) | $(940,079) | $(1,892,049) | $352,631 | 37.5 % | $951,970 | 50.3 % | | Financing cash flows | $52,107 | $19,273 | $66,615 | $32,834 | 170.4 % | $(47,342) | (71.1)% | | Capital expenditures and acquisitions | $(570,213) | $(493,328) | $(516,636) | $(76,885) | (15.6)% | $23,308 | 4.5 % | - Cash, cash equivalents, and restricted cash increased by **$1,266.4 million (83.6%)** in fiscal 2025, primarily from operations, proceeds from held-to-maturity securities, and stock option exercises[232](index=232&type=chunk) - Working capital increased by **$1,281.7 million (33.8%)** in fiscal 2025, mainly from operations and timing of cash receipts/payments, partially offset by capital expenditures and investments[232](index=232&type=chunk) - Net cash provided by operating activities increased by **$327.2 million (22.2%)** in fiscal 2025 due to improved cash operating results from increased service and vehicle sales revenues[237](index=237&type=chunk) - Net cash used in investing activities decreased by **$352.6 million (37.5%)** in fiscal 2025, driven by increased proceeds from held-to-maturity securities and reduced purchases, despite increased capital expenditures[238](index=238&type=chunk) - Net cash provided by financing activities increased by **$32.8 million (170.4%)** in fiscal 2025, mainly from increased proceeds from stock option exercises and reduced revolver facility payments[239](index=239&type=chunk) - The company expects to finance growth through cash from operations and may use its Revolving Loan Facility or equity issuance for expansion[233](index=233&type=chunk)[235](index=235&type=chunk) - As of July 31, 2025, **$314.9 million of cash** was held by foreign subsidiaries, intended for permanent reinvestment outside the U.S[236](index=236&type=chunk) [Credit Agreement](index=51&type=section&id=Credit%20Agreement) Copart's Second Amended and Restated Credit Agreement provides a $1,250.0 million revolving loan facility for general corporate purposes, with no outstanding borrowings as of July 31, 2025 - Copart entered into a Second Amended and Restated Credit Agreement on December 21, 2021, providing a **$1,250.0 million revolving loan facility** maturing on December 21, 2026[240](index=240&type=chunk) - The facility includes sub-facilities for international subsidiaries and allows borrowings in Pounds Sterling, European Union Euro, and Canadian dollars[240](index=240&type=chunk) - Proceeds can be used for general corporate purposes, including working capital, capital expenditures, share repurchases, and acquisitions[240](index=240&type=chunk) - There were no outstanding borrowings under the Revolving Loan Facility as of July 31, 2025, and July 31, 2024, and the company was in compliance with all covenants[241](index=241&type=chunk) [Critical Accounting Policies and Estimates](index=51&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The preparation of Copart's financial statements requires estimates and judgments for tax provisions, vehicle pooling costs, income taxes, stock-based compensation, and contingencies, with revenue recognized at auction date - The preparation of financial statements requires estimates and judgments for tax provisions, tax liabilities, vehicle pooling costs, income taxes, stock-based compensation, and contingencies[242](index=242&type=chunk)[243](index=243&type=chunk)[341](index=341&type=chunk) - Revenue recognition for service and vehicle sales occurs at the auction date, with costs to prepare vehicles deferred and recognized concurrently[245](index=245&type=chunk)[342](index=342&type=chunk) - Deferred income tax assets and liabilities are recognized based on temporary differences and measured using enacted tax rates, with a valuation allowance provided when recoverability is uncertain[255](index=255&type=chunk)[362](index=362&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Copart's primary financial market risks are interest rate risk and foreign currency exchange rate and translation risk. The company aims to preserve principal in investments, which are primarily in variable-rate instruments, and does not engage in foreign currency hedging, exposing reported results to exchange rate fluctuations - Copart's principal exposures to financial market risk are interest rate risk and foreign currency exchange rate and translation risk[259](index=259&type=chunk) - The primary objective of investment activities is to preserve principal, with cash and cash equivalents held in bank deposits, U.S. Treasury Bills, and money market funds, bearing variable interest rates[260](index=260&type=chunk) - A hypothetical **10% adverse change** in interest yield would not materially affect operating results for fiscal 2025[260](index=260&type=chunk) - The company had no outstanding borrowings under the Revolving Loan Facility as of July 31, 2025, and a hypothetical **10% interest rate increase** would not materially affect operating results[261](index=261&type=chunk) - Copart does not engage in foreign currency hedging, making reported revenues and earnings subject to fluctuations in exchange rates, particularly for Pounds Sterling, Canadian dollar, Brazilian real, European Union euro, U.A.E. dirham, Omani rial, and Bahraini dinar[262](index=262&type=chunk)[263](index=263&type=chunk) [Interest Income Risk](index=53&type=section&id=Interest%20Income%20Risk) Copart's investment objective is to preserve principal, with cash and cash equivalents held in variable-rate instruments, and a hypothetical 10% adverse change in interest yield would not materially affect operating results - Copart's investment objective is to preserve principal while maximizing yields, with cash and cash equivalents held in bank deposits, U.S. Treasury Bills, and money market accounts[260](index=260&type=chunk) - Interest rates on a material portion of cash and cash equivalents are variable, meaning changes in interest rates would impact interest income but not materially affect the fair market value of underlying instruments[260](index=260&type=chunk) - A hypothetical **10% adverse change** in interest yield would not have materially affected operating results for fiscal 2025[260](index=260&type=chunk) [Interest Expense Risk](index=54&type=section&id=Interest%20Expense%20Risk) Copart had no outstanding borrowings under its Revolving Loan Facility as of July 31, 2025, and a hypothetical 10% increase in interest rates would not materially affect operating results - There were no borrowings outstanding under the Revolving Loan Facility as of July 31, 2025[261](index=261&type=chunk) - Borrowings under the Revolving Loan Facility bear interest at variable rates (Base Rate or SOFR plus applicable margins)[261](index=261&type=chunk) - A hypothetical **10% increase** in interest rates would not materially affect Copart's operating results[261](index=261&type=chunk) [Foreign Currency and Translation Exposure](index=54&type=section&id=Foreign%20Currency%20and%20Translation%20Exposure) Copart's reported results are subject to volatility from foreign currency fluctuations, as the company does not engage in hedging, but a hypothetical 10% adverse change would not materially affect operating results - Fluctuations in foreign currencies create volatility in reported results of operations due to consolidation of foreign currency denominated subsidiaries[262](index=262&type=chunk) - Copart does not engage in foreign currency hedging arrangements, exposing revenues and earnings to exchange rate volatility[262](index=262&type=chunk)[263](index=263&type=chunk) - A hypothetical **10% adverse change** in the U.S. dollar's value relative to key foreign currencies would not materially affect operating results for fiscal 2025 or consolidated financial position[262](index=262&type=chunk)[263](index=263&type=chunk) - As of July 31, 2025, the cumulative effect of foreign exchange rate fluctuations on consolidated financial position was a net translation loss of **$120.3 million**, recognized in accumulated other comprehensive income[263](index=263&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The financial statements and supplementary data are submitted as a separate section in Item 15 of this Annual Report on Form 10-K - Financial statements and supplementary data are located in Item 15[264](index=264&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=54&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There are no changes in or disagreements with accountants on accounting and financial disclosure to report - No changes in or disagreements with accountants on accounting and financial disclosure[265](index=265&type=chunk) [Item 9A. Controls and Procedures](index=54&type=section&id=Item%209A.%20Controls%20and%20Procedures) Copart's CEO and CFO concluded that the company's disclosure controls and procedures were effective as of July 31, 2025. Management also assessed and concluded that internal control over financial reporting was effective, with an attestation report from Ernst & Young LLP. The company is implementing a new financial system in stages, which will become a significant component of internal control over financial reporting - The CEO and CFO concluded that Copart's disclosure controls and procedures were effective at the reasonable assurance level as of July 31, 2025[266](index=266&type=chunk)[267](index=267&type=chunk) - Management assessed and concluded that the company maintained effective internal control over financial reporting as of July 31, 2025, based on COSO criteria, with an unqualified attestation report from Ernst & Young LLP[268](index=268&type=chunk)[270](index=270&type=chunk)[276](index=276&type=chunk)[320](index=320&type=chunk) - Copart began implementing a new financial system in the first quarter of fiscal 2025, starting with U.S. member billing, which will be a significant component of internal control over financial reporting as it is completed in stages[271](index=271&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=54&type=section&id=Evalua

Group 1: AI Investment Opportunity - Artificial intelligence is considered the greatest investment opportunity of our lifetime, with a strong emphasis on the urgency to invest now [1] - Wall Street is investing hundreds of billions into AI, but there is a critical question regarding the energy supply needed to support this technology [2] - AI data centers consume as much energy as small cities, leading to concerns about power grid strain and rising electricity prices [2] Group 2: Company Overview - A specific company, largely overlooked by AI investors, is positioned to benefit from the increasing demand for energy due to AI [3] - This company owns critical energy infrastructure assets and is involved in the U.S. LNG exportation sector, which is expected to grow under the current administration's energy policies [7] - The company is debt-free and has a significant cash reserve, amounting to nearly one-third of its market cap, making it financially robust [8] Group 3: Market Position and Valuation - The company is trading at less than 7 times earnings, which is considered undervalued compared to its potential in the AI and energy sectors [10] - It has a substantial equity stake in another AI-related company, providing indirect exposure to multiple growth engines without a premium [9] - Wall Street is beginning to take notice of this company as it benefits from various market trends without the high valuations typical of the sector [8] Group 4: Future Outlook - The future of energy is closely tied to AI, with a focus on the need for infrastructure to support this technological shift [6] - The influx of talent into the AI sector is expected to drive rapid advancements and innovative ideas, reinforcing the importance of investing in this area [12] - The company is positioned to capitalize on the upcoming AI energy boom, making it a compelling investment opportunity [14]

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgent need for energy to support its growth [1][2][3] - A specific company is highlighted as a key player in the AI energy sector, owning critical energy infrastructure assets that are essential for meeting the increasing energy demands of AI technologies [3][7][8] Investment Opportunity - Wall Street is investing heavily in AI, but there is a looming question regarding the energy supply needed to sustain this growth [2] - The company in focus is positioned to benefit from the surge in demand for electricity driven by AI data centers, making it a potentially lucrative investment [3][8] Energy Infrastructure - The company owns significant nuclear energy infrastructure, which is crucial for America's future power strategy [7] - It is capable of executing large-scale engineering, procurement, and construction projects across various energy sectors, including oil, gas, and renewables [7][8] Financial Position - The company is noted for being debt-free and having a substantial cash reserve, amounting to nearly one-third of its market capitalization [8] - It is trading at a low valuation of less than 7 times earnings, indicating a potentially undervalued investment opportunity [10] Market Trends - The company is well-positioned to capitalize on the onshoring trend driven by tariffs, as well as the increasing U.S. LNG exports under the current administration [5][14] - The influx of talent into the AI sector is expected to drive continuous innovation and advancements, further solidifying the importance of energy infrastructure [12][14] Conclusion - The combination of AI's energy demands, the company's strategic assets, and favorable market conditions presents a compelling investment narrative [1][3][14]

Core Insights - The investment approach focuses on identifying businesses with potential for long-term growth and significant terminal value generation [1] - Emphasis is placed on understanding core business economics, including competitive advantages, unit economics, reinvestment opportunities, and management quality [1] - The goal is to generate long-term free cash flow and create shareholder value through fundamental research in sectors with strong secular tailwinds [1] Investment Philosophy - The investor is self-educated and has been active in the investment field for 10 years, currently managing personal funds sourced from friends and family [1] - The motivation for sharing insights on platforms like Seeking Alpha is to provide valuable analysis and receive feedback from other investors [1] - The focus is on helping readers understand the drivers of long-term equity value and ensuring that analysis is both analytical and accessible [1]

Core Insights - The investment approach focuses on identifying businesses with potential for long-term growth and significant terminal value generation [1] - Emphasis is placed on understanding core business economics, including competitive advantages, unit economics, reinvestment opportunities, and management quality [1] - The analyst aims to provide accessible and analytical insights to help investors focus on long-term equity value drivers [1] Investment Strategy - The investment strategy is fundamentally driven, concentrating on sectors with strong secular growth trends [1] - The analyst has a decade of self-education in investing and currently manages personal funds sourced from friends and family [1] - The goal of sharing insights on platforms like Seeking Alpha is to engage with fellow investors and enhance the quality of investment analysis [1]

Core Viewpoint - Copart's stock has declined despite better-than-expected earnings, indicating potential investor disappointment with sales figures [1][4]. Financial Performance - Analysts had forecasted Copart to earn $0.36 per share on $1.14 billion in sales, but the company reported earnings of $0.41 per share with sales of $1.13 billion [2]. - For the fiscal fourth quarter, Copart achieved a 5% year-over-year sales growth and a 24% increase in profits [4]. - Total sales growth for the full year approached 10%, but the Q4 growth rate slowed to half of that [5]. - Full-year earnings were reported at $1.59 per share, reflecting a 14% growth compared to fiscal 2024 [5]. Valuation and Investment Outlook - Copart's stock is currently priced at 33 times earnings, which is considered high given the annual growth rate of 14% [6]. - The company's free cash flow stands at $1.2 billion, approximately 20% less than reported earnings, leading to a valuation closer to a 40x multiple based on free cash flow [6][7]. - Analysts predict a long-term growth rate closer to 13%, suggesting that the current stock price may be too high [7].

Core Insights - Copart, Inc. (CPRT) reported adjusted earnings per share of 41 cents for Q4 fiscal 2025, exceeding the Zacks Consensus Estimate of 37 cents, with a year-over-year increase of 24.24% [1][9] - The company generated revenues of $1.13 billion, slightly missing the Zacks Consensus Estimate of $1.15 billion, but reflecting a 5.25% increase from the previous year [1] Revenue Breakdown - Service revenues for the fourth quarter were $956.2 million, up from $893.1 million in the same period last year, but below the Zacks Consensus Estimate of $969 million, accounting for 84.98% of total revenues [2] - Vehicle sales totaled $168.89 million, a decline from $175.91 million in the prior-year quarter and below the Zacks Consensus Estimate of $178 million [2] Industry Context - Global insurance volumes decreased by approximately 2% year over year in Q4 fiscal 2025, while total loss frequency in the U.S. rose to 22.2% from 21.5% in the previous year, indicating a trend that may benefit Copart due to increased salvage vehicles [3] Cost and Profit Analysis - Yard operations expenses increased by 2.8% year over year to $418.5 million, while the cost of vehicle sales decreased by 9% to $147.4 million [4] - Gross profit rose by 12.4% year over year to $509.72 million, with total operating expenses increasing by 0.4% to $712.5 million [4] Income and Cash Position - Operating income increased to $412.6 million from $359.5 million in the prior year, with net income growing by 22.7% year over year to $395.31 million [5] - As of July 31, 2025, Copart had cash, cash equivalents, and restricted cash totaling $2.78 billion, up from $1.51 billion a year earlier [5]

Core Insights - Copart Inc. is a leading online vehicle auction provider, focusing on the resale and remarketing of vehicles through a technology-driven platform [1] Financial Performance - For the quarter ending September 4, 2025, Copart reported an EPS of $0.41, exceeding the estimated $0.36 and the Zacks Consensus Estimate of $0.37, marking a +10.81% earnings surprise [2][6] - The company generated $1.13 billion in revenue, slightly missing the estimated $1.14 billion, but showing growth from $1.07 billion in the same quarter last year [3][6] - Over the past four quarters, Copart has surpassed consensus revenue estimates twice, indicating a consistent upward trend in revenue generation [3] Financial Health - Copart maintains a low debt-to-equity ratio of 0.012, ensuring financial stability with minimal debt relative to its equity [4][6] - The current ratio of 8.16 highlights the company's strong ability to cover short-term liabilities with its short-term assets [4] Valuation Metrics - The company has a P/E ratio of 32.65 and a price-to-sales ratio of 10.52, reflecting a positive market outlook on its earnings and revenue potential [5] - The enterprise value to sales ratio is 10.03, and the enterprise value to operating cash flow ratio is 25.58, emphasizing the company's strong market position and efficient cash flow management [5]

Core Insights - Copart, Inc. reported quarterly earnings of $0.41 per share, exceeding the Zacks Consensus Estimate of $0.37 per share, and up from $0.33 per share a year ago, representing an earnings surprise of +10.81% [1] - The company posted revenues of $1.13 billion for the quarter ended July 2025, which missed the Zacks Consensus Estimate by 1.85%, but was an increase from $1.07 billion year-over-year [2] - Copart shares have underperformed the market, losing about 16.2% since the beginning of the year compared to the S&P 500's gain of 9.6% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.42 on revenues of $1.24 billion, and for the current fiscal year, it is $1.73 on revenues of $5.06 billion [7] - The estimate revisions trend for Copart was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Auction and Valuation Services industry, to which Copart belongs, is currently in the top 40% of over 250 Zacks industries, suggesting a favorable outlook as the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - For fiscal year 2025, global revenue increased to $4.65 billion, reflecting a growth of 9.7% compared to the previous year [17] - Global service revenue increased by approximately $407.7 million, or 11.4% for the full fiscal year [18] - Fourth quarter GAAP net income attributable to Copart, Inc. increased by 22.9% to $396.4 million, or $0.41 per diluted common share [23] Business Line Data and Key Metrics Changes - Global unit sales increased by 4.8% for fiscal year 2025 but declined by 0.9% in the fourth quarter [13] - U.S. insurance volume grew by 4.2% for fiscal year 2025 but decreased by approximately 2% in the fourth quarter [14] - Non-insurance unit volume increased by 2.8% for fiscal year 2025 but decreased by 2.1% in the fourth quarter [14] Market Data and Key Metrics Changes - International segment units sold grew by 8.1% for fiscal year 2025 and by 3.3% for the fourth quarter [15] - Global average selling prices (ASPs) increased by 5.6% in the fourth quarter and 2.4% for the full year [16] - Global inventory decreased by 13.1% year over year, with U.S. inventory levels decreasing by 14.8% [16] Company Strategy and Development Direction - The company emphasizes the importance of auction liquidity as a competitive advantage, aiming to enhance service to insurance clients and drive selling prices [10][39] - Investments are being made in technology, including AI, to improve operational efficiency and decision-making processes [29] - The company is focused on expanding its market presence by enhancing service offerings to both insurance and non-insurance clients [39] Management's Comments on Operating Environment and Future Outlook - Management noted a cyclical disconnect between accident activity and insurance claims frequency, indicating a potential impact on future insurance volumes [5][6] - The company anticipates continued growth in auction liquidity and service offerings, which are expected to drive future performance [39] - Management expressed cautious optimism regarding the insurance market, noting potential competitive responses from carriers as profitability improves [68][69] Other Important Information - The company reported a significant increase in liquidity, with $6 billion available, including $4.8 billion in cash and securities [23] - Facility-related costs increased by 13.7% for the full fiscal year, reflecting ongoing investments in operational capacity [20][21] Q&A Session Summary Question: Discussion on AI and technology advancements - Management highlighted the deployment of AI in decision support tools, enhancing efficiency and service delivery [28][29] Question: Total loss frequency of electric vehicles (EVs) - Management noted that EVs tend to be totaled more easily due to advanced technology, which may impact future total loss frequency [32][33] Question: Key operational milestones for the new fiscal year - Management emphasized the importance of auction liquidity and service to insurance clients as key operational focuses [39] Question: Cash levels and capital returns - Management indicated a long-term strategy of returning cash to shareholders through buybacks and is always exploring M&A opportunities [42] Question: Decline in assignments - Management clarified that the assignment decline was low single digits, not double digits [50] Question: ASP growth compared to peers - Management confirmed that Copart's ASP growth significantly outpaced that of similar service providers [52] Question: Impact of autonomous vehicles on crash rates - Management stated that current data on autonomous vehicles is limited, and their impact on auction activity is minimal at this time [58] Question: Insurance market dynamics - Management acknowledged that competitive behaviors among insurance carriers are expected to evolve as profitability improves [68][69] Question: Market structure and share growth opportunities - Management discussed the expansive view of opportunities in the salvage auction industry, emphasizing the importance of delivering excellent auction returns [73] Question: Strategy behind auction platform changes - Management explained that the strategy focuses on matching the right buyers to the right products to enhance auction returns [76]