01—Abstract
Summary
Summary of the 10-K filed September 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Copart (CPRT) reported fiscal 2024 (year ended July 31, 2024) results that reflect continued top-line growth and strong profitability.
Total service revenues and vehicle sales rose to $4.24 billiona, up about 9.5% from $3.87 billion in fiscal 2023, driven mainly by U.S. service revenue growth of 10.0% on higher volume and fee optimization. Operating income reached $1.57 billion (37% operating margin, versus 39% in the prior two years), and net income attributable to Copart was $1.36 billion, or $1.40 per diluted share, up from $1.28. Margin compression came from yard operations expense rising 12.7% and G&A rising 33.9%, which included Purple Wave consolidation and higher labor and legal costs.
The balance sheet is conservative. Cash, cash equivalents and restricted cash were $1.51 billionb, held-to-maturity Treasury bills were $1.91 billion, and the company had no outstanding borrowings under its $1.25 billion revolving facility at year end. Operating cash flow was $1.47 billion and capital spending was $511 million.
Copart again paid no dividend and repurchased no shares during the year, retaining all capital for growth and an unused buyback authorization of about 326 million shares. Investors should weigh the strong cash generation and growth runway from new facilities and international expansion against several watch items.
The most notable is an ongoing U.S. Department of Justice investigation into possible money laundering violations tied to auction platform members, for which the company cannot yet estimate a loss range. Other risks include dependence on insurance company sellers (81%c of vehicles processed), weather-driven volume swings, and exposure to commodity, used-car and foreign exchange prices.
02—Key points
Key Highlights
- Revenue growth: Total service revenues and vehicle sales rose 9.5% to $4.24 billion, with service revenues up 11.3% to $3.56 billion, led by U.S. volume and fee optimization.
- Profitability: Operating income was $1.57 billion, but operating margin slipped to 37% from 39% as yard operations and G&A expenses grew faster than revenue.
- Earnings: Diluted EPS was $1.40, up from $1.28 in fiscal 2023, and net income attributable to Copart was $1.36 billion.
- Liquidity: Cash and restricted cash of $1.51 billion plus $1.91 billion in U.S. Treasury bills, with zero borrowings on the $1.25 billion revolver and operating cash flow of $1.47 billion.
- Capital allocation: No dividends paid and no share repurchases in fiscal 2024; $326 million of shares remain authorized for repurchase.
- Legal risk: The DOJ Consumer Protection Branch is investigating possible money laundering violations related to auction platform members; the company cannot predict the outcome or potential loss.
- Growth footprint: The company opened 9 new facilities during fiscal 2024 and acquired a controlling 80% stake in Purple Wave, expanding into heavy equipment auctions.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2024filed September 30, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $4.24B$3.87B | +9.5% |
| Operating Expenses | $2.66B$2.38B | +11.8% |
| Operating Income | $1.57B$1.49B | +5.7% |
| Net Income | $1.36B$1.24B | +10.1% |
| EPS (Basic) | $1.42$1.30 | +9.2% |
| EPS (Diluted) | $1.40$1.28 | +9.4% |
| Shares Outstanding (Basic) | 960.74M953.57M | +0.8% |
| Shares Outstanding (Diluted) | 974.80M966.65M | +0.8% |
05—Questions
Frequently Asked Questions
How did Copart perform financially in fiscal 2024?
Copart grew total revenue 9.5% to $4.24 billion and net income attributable to the company to $1.36 billion, with diluted EPS of $1.40 versus $1.28 a year earlier. Operating margin declined modestly to 37% from 39% due to faster growth in yard operations and G&A costs.
What is the main legal or regulatory risk disclosed?
The U.S. Department of Justice's Consumer Protection Branch is investigating potential violations of money laundering laws related to how Copart prevents and detects money laundering by its auction platform members. The company received a DOJ letter in October 2023, is cooperating, and says it cannot currently predict the scope, duration, or potential loss.
Does Copart pay dividends or buy back stock?
No. Copart has not paid a cash dividend since becoming public in 1994 and did not repurchase shares in fiscal 2022, 2023, or 2024. About 325.8 million shares remain available under the existing repurchase authorization.
How strong is Copart's balance sheet and cash position?
The balance sheet is strong. The company held $1.51 billion in cash and restricted cash and $1.91 billion in held-to-maturity Treasury bills at July 31, 2024, with no revolver borrowings outstanding. Its net leverage ratio was negative (1.81x net cash), and it was in compliance with all credit agreement covenants.
What drives Copart's revenue and what risks could affect it?
Revenue is driven by vehicle volume, which depends largely on insurance total-loss frequency, and by fees tied to auction selling prices. Insurance companies supplied 81% of vehicles processed. Key risks include loss of major seller relationships, weather and accident-rate swings, used-car and scrap-metal price volatility, and foreign currency fluctuations, since the company does not hedge.
06—Continue