Copart(CPRT) - 2023 Q3 - Quarterly Report

PART I - Financial Information Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for the quarterly period ended April 30, 2023 Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Account | April 30, 2023 | July 31, 2022 | | :--- | :--- | :--- | | Total Assets | $6,349,805 | $5,308,864 | | Cash, cash equivalents, and restricted cash | $2,114,183 | $1,384,236 | | Property and equipment, net | $2,710,933 | $2,485,764 | | Total Liabilities | $757,383 | $683,265 | | Total Stockholders' Equity | $5,592,422 | $4,625,599 | Consolidated Statements of Income Consolidated Income Statement Summary (in thousands, except per share data) | Metric | Three Months Ended April 30, 2023 | Three Months Ended April 30, 2022 | Nine Months Ended April 30, 2023 | Nine Months Ended April 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $1,021,831 | $939,941 | $2,871,927 | $2,617,533 | | Service Revenues | $847,249 | $766,316 | $2,363,886 | $2,145,224 | | Vehicle Sales | $174,582 | $173,625 | $508,041 | $472,309 | | Operating Income | $418,924 | $372,755 | $1,095,952 | $1,050,204 | | Net Income | $350,431 | $278,620 | $889,956 | $826,395 | | Diluted EPS | $0.72 | $0.58 | $1.84 | $1.71 | Consolidated Statements of Cash Flows Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended April 30, 2023 | Nine Months Ended April 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,005,633 | $863,854 | | Net cash used in investing activities | ($328,759) | ($457,570) | | Net cash provided by financing activities | $51,020 | $18,578 | | Net increase in cash | $729,947 | $406,558 | Notes to Consolidated Financial Statements - The company effected a two-for-one stock split in the form of a stock dividend on November 3, 2022[25] - On July 5, 2022, the Company acquired 100% of Hills Motors, a parts recycler in the United Kingdom, for a purchase price of $106.6 million[41][42] - The company did not repurchase any shares of its common stock during the nine months ended April 30, 2023[68] Revenue by Type and Segment (Nine Months Ended April 30, 2023, in thousands) | Revenue Type | United States | International | Total | | :--- | :--- | :--- | :--- | | Service Revenues | $2,109,467 | $254,419 | $2,363,886 | | Vehicle Sales | $261,069 | $246,972 | $508,041 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, covering revenue drivers, expense fluctuations, liquidity, and capital resources Overview - Copart is a leading provider of online vehicle auctions and remarketing services, operating in 11 countries with insurance companies as primary customers[79][80] - Key performance drivers include total loss frequency, average vehicle auction selling prices, and operational costs[82] - The company highlights its role in environmental stewardship by enabling the global re-use and recycling of vehicles and parts[79] Results of Operations - U.S. service revenue growth was driven by higher revenue per car, while international growth was primarily from increased volume[87] - Yard operations expenses increased 9.4% in Q3 2023 YoY, driven by higher subhaul (transportation) and labor costs[90] - Total other income increased by $24.7 million in Q3 2023 compared to the prior year, mainly due to higher interest income and foreign currency gains[96] Service Revenue Growth (YoY) | Region | Q3 2023 (in thousands) | Q3 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | United States | $752,077 | $678,865 | 10.8% | | International | $95,172 | $87,451 | 8.8% | | Total | $847,249 | $766,316 | 10.6% | Liquidity and Capital Resources - Cash from operating activities increased to $1.01 billion for the nine months ended April 30, 2023, up from $864 million in the prior-year period[99] - The company has a $1.25 billion Revolving Loan Facility maturing in December 2026, with $22.6 million outstanding as of April 30, 2023[102] Key Liquidity Metrics (in thousands) | Metric | April 30, 2023 | July 31, 2022 | | :--- | :--- | :--- | | Cash, cash equivalents, and restricted cash | $2,114,183 | $1,384,236 | | Working capital | $2,494,466 | $1,761,566 | Quantitative and Qualitative Disclosures About Market Risk The company states no material changes to its market risk disclosures since the last annual report - There have been no material changes to the company's market risk disclosures from the last Annual Report on Form 10-K[108] Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The Co-CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period[110] - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected internal controls[111] PART II - Other Information Legal Proceedings The company reports no material pending legal proceedings that would significantly impact its financial condition - The company states there are no material pending legal proceedings to which it is a party[72][113] Risk Factors This section outlines significant risks affecting the company's business, including industry, regulatory, technology, and economic factors - Business & Industry Risks: Dependence on major vehicle sellers, risks of international expansion, competition, and capacity constraints at storage facilities[115][120][128] - Regulatory & Legal Risks: Compliance with various domestic and international laws such as vehicle titling, environmental, and data privacy (GDPR, CCPA)[132][134][135] - Technology & IP Risks: Potential IT system disruptions from cyber-attacks, the need to protect intellectual property, and the risk of technological obsolescence[136][137][140] - General & Economic Risks: Fluctuations in used vehicle and commodity prices, adverse economic conditions, and foreign currency exchange rate volatility[148][149][150] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of its equity securities or issuer purchases during the period - The company reported no unregistered sales of equity securities or issuer purchases of equity securities for the period[152]