10-KPeriod: FY2017

COPART INC Annual Report, Year Ended Jul 31, 2017

Filed September 28, 2017For Securities:CPRT

Summary

Copart, Inc. (CPRT) operates as a leading online auto auction and remarketing service, primarily facilitating the sale of vehicles for insurance companies. The company has demonstrated consistent revenue growth, reaching $1.4 billion in fiscal year 2017. This growth is attributed to strategic expansion through acquisitions and greenfield development of facilities, both domestically and internationally. Copart's proprietary VB3 technology enhances its online auction platform, increasing buyer participation and driving sales efficiency. Financially, the company reported robust operating income of $461.3 million in FY2017. While international operations represent a smaller but growing portion of revenue, the U.S. remains the dominant market. Copart continues to invest in its infrastructure and technology to maintain its competitive edge. The company's financial health appears strong, supported by consistent operating cash flows and a substantial debt facility, although it has not historically paid dividends, preferring to reinvest earnings.

Financial Highlights

54 data points
Beta

Revenue

$1.45B

90.5% Gross Margin

Net Income

$394.23M

27.2% Net Margin

EPS (Diluted)

$0.41

Total Assets

$1.98B

Cash & Equivalents

$210.10M

Free Cash Flow

$319.88M

Financial Statements
Beta
Revenue$1.45B
Cost of Revenue$137.55M
Gross Profit$1.31B
Operating Income$461.30M
Interest Expense$23.78M
Net Income$394.23M
EPS (Basic)$0.43
EPS (Diluted)$0.41
Shares Outstanding (Basic)914.74M
Shares Outstanding (Diluted)948.08M

Key Highlights

  • 1Copart reported revenues of $1.4 billion and operating income of $461.3 million in fiscal year 2017, showcasing strong financial performance.
  • 2The company is actively expanding its global footprint, with a significant presence in the U.S. (82.4% of revenue in FY2017) and growing operations in international markets including the U.K., Brazil, Germany, India, and Spain.
  • 3Copart leverages proprietary technology, such as its VB3 (Virtual Bidding Third Generation) auction platform, to enhance online sales and attract a global buyer base.
  • 4The company's growth strategy includes acquiring and developing new facilities, pursuing vehicle supply agreements, and expanding its service offerings.
  • 5No single customer accounted for more than 10% of revenues in FY2017, indicating a diversified seller base, though insurance companies remain the primary source of vehicles (84% of units processed).
  • 6Copart has a history of strategic acquisitions, including the acquisition of Cycle Express, LLC (National Powersport Auctions) in FY2017, to broaden its service capabilities.
  • 7The company maintains a strong liquidity position with $210.1 million in cash and cash equivalents as of July 31, 2017, and a substantial revolving credit facility.

Frequently Asked Questions

Copart operates as a leading online auto auction and vehicle remarketing service. Its primary revenue comes from fees charged to both vehicle sellers and buyers for its auction services. For most sellers, particularly insurance companies, Copart acts as an agent, earning fees based on the sale of the vehicle. In some regions, like the UK, Copart may also purchase vehicles outright and resell them for its own account.

Copart's growth strategy involves a multi-pronged approach: acquiring and developing new facilities in key domestic and international markets, pursuing national and regional vehicle supply agreements with major sellers like insurance companies, and continuously expanding its online auction technology and service offerings for both sellers and buyers. Strategic acquisitions, such as the purchase of National Powersport Auctions, also play a key role in broadening its market reach and service capabilities.

Key risks for Copart include reliance on a limited number of major vehicle sellers (though no single customer exceeded 10% of revenue in FY2017), operational and regulatory challenges associated with international expansion, potential impacts of foreign currency fluctuations, cybersecurity threats to its online platform, and the highly competitive nature of the vehicle remarketing industry. The company also faces risks related to economic downturns and environmental regulations.

Technology is central to Copart's business model. Its proprietary VB3 (Virtual Bidding Third Generation) internet auction-style sales technology allows buyers worldwide to participate in auctions online in real-time. This technology enhances bidding efficiency, expands the buyer pool, and allows for greater detail (multiple auction windows, more photos) for participants. Copart also utilizes technology for online seller access, salvage estimation, and data reporting.