10-KPeriod: FY2019

COPART INC Annual Report, Year Ended Jul 31, 2019

Filed September 30, 2019For Securities:CPRT

Summary

Copart, Inc. (CPRT) operates as a leading provider of online auctions and vehicle remarketing services globally. For the fiscal year ending July 31, 2019, the company reported revenues of $2.04 billion and operating income of $716.5 million. Copart's business model centers on facilitating the sale of vehicles, primarily from insurance companies, through its proprietary Virtual Bidding Third Generation (VB3) internet auction platform. The company's strategy emphasizes growth through acquiring and developing new facilities, pursuing supply agreements, and expanding its service offerings, leveraging technology to enhance operational efficiency and buyer reach. Copart's extensive geographic coverage across the U.S., Canada, U.K., Brazil, and several European and Middle Eastern countries, coupled with its robust technological infrastructure, positions it as a key player in the salvage and remarketing industry. The company highlights its role in promoting environmental sustainability through vehicle reuse and recycling, and its contribution to economic development by enabling affordable mobility. While the company demonstrates strong revenue and profit growth, investors should note potential risks related to international expansion, competition, and reliance on major vehicle sellers, as detailed in the risk factors section.

Financial Statements
Beta
Revenue$2.04B
Cost of Revenue$255.50M
Gross Profit$1.79B
Operating Income$716.48M
Interest Expense$19.81M
Net Income$591.69M
EPS (Basic)$0.64
EPS (Diluted)$0.61
Shares Outstanding (Basic)921.96M
Shares Outstanding (Diluted)961.81M

Key Highlights

  • 1For fiscal year 2019, Copart reported revenues of $2.04 billion and operating income of $716.5 million, indicating continued strong financial performance.
  • 2The company operates a global network of facilities in the U.S., Canada, U.K., Brazil, and other international markets, with U.S. operations accounting for 81.1% of revenues in fiscal 2019.
  • 3Copart's core business relies on its proprietary VB3 online auction platform, which expands the buyer pool and enhances operational efficiency compared to traditional live auctions.
  • 4Growth strategy focuses on acquiring and developing new facilities, securing national and regional vehicle supply agreements, and expanding service offerings to both sellers and members.
  • 5The company has a proven track record of acquiring and integrating businesses, which has been a key driver of its expansion and market position.
  • 6In fiscal 2019, Copart repurchased 7,635,596 shares of its common stock under its stock repurchase program, totaling $365.0 million.
  • 7No single customer accounted for more than 10% of consolidated revenues in fiscal 2019, diversifying revenue streams but highlighting potential concentration risk from major sellers.

Frequently Asked Questions

Copart is a leading provider of online vehicle auctions and remarketing services. Its primary revenue stream comes from auction and auction-related sales transaction fees charged for its remarketing services. These fees can be based on a percentage of the vehicle's sales price, tiered pricing, or a fixed fee. The company also generates revenue from purchased vehicle sales where it buys vehicles outright and resells them.

While Copart serves a variety of vehicle sellers including insurance companies, banks, finance companies, charities, and fleet operators, insurance companies are its primary source of vehicles, accounting for approximately 80% of the total vehicles processed in fiscal 2019. However, the company states that no single customer accounted for more than 10% of its consolidated revenues in fiscal 2019, indicating a degree of diversification among its major seller relationships.

Copart's growth strategy is multifaceted and includes acquiring and developing new facilities in key domestic and international markets, pursuing national and regional vehicle supply agreements with sellers, and expanding its online auction and vehicle remarketing service offerings. The company also focuses on leveraging its technology, particularly its VB3 platform, to enhance operational efficiency and reach a broader buyer base.

Key risks identified by Copart include dependence on a limited number of major vehicle sellers, risks associated with international expansion, intense competition from other remarketers and dismantlers, potential disruptions to its IT systems and cybersecurity threats, and the impact of macroeconomic factors and weather events on vehicle supply and demand. The company also notes potential regulatory and environmental risks.