10-QPeriod: Q3 FY2021

COPART INC Quarterly Report for Q3 Ended Apr 30, 2021

Filed May 24, 2021For Securities:CPRT

Summary

Copart Inc. (CPRT) reported strong performance in its Q1 2021 (ending April 30, 2021) filing, demonstrating significant revenue growth driven by increased vehicle auction selling prices and recovering volumes. The company benefited from higher demand, a favorable vehicle mix, and reduced supply in the used car market, leading to substantial increases in both service revenues and vehicle sales. Despite some operational adjustments and increased expenses related to the ongoing COVID-19 pandemic, Copart managed to control yard operations expenses, especially on a year-over-year basis for the nine-month period. The company's liquidity remains robust, with a significant increase in cash, cash equivalents, and restricted cash, supported by strong operating cash flows. Copart continues its strategic expansion by opening new facilities in the U.S. and internationally, indicating a proactive approach to growth and market penetration.

Financial Highlights

47 data points
Beta

Revenue

$733.91M

Net Income

$286.80M

39.1% Net Margin

EPS (Diluted)

$0.30

Total Assets

$4.28B

Cash & Equivalents

$911.89M

Free Cash Flow

$287.98M

Financial Statements
Beta
Revenue$733.91M
Operating Expenses$405.80M
Operating Income$328.11M
Net Income$286.80M
EPS (Basic)$0.30
EPS (Diluted)$0.30
Shares Outstanding (Basic)945.58M
Shares Outstanding (Diluted)960.83M

Key Highlights

  • 1Significant increase in total service revenues, up 26.9% year-over-year for the three months ended April 30, 2021, reaching $623.8 million.
  • 2Total vehicle sales more than doubled, increasing by 87.3% to $110.1 million for the three months ended April 30, 2021.
  • 3U.S. service revenues grew by 27.4%, driven by higher revenue per car and recovering volumes.
  • 4Yard operations expenses saw a modest increase of 1.7% for the three-month period, with a notable decrease of 3.5% for the nine-month period.
  • 5Cost of vehicle sales increased by 75.0% for the three-month period, primarily due to higher purchase prices and increased volume.
  • 6General and administrative expenses increased by 12.0% for the three-month period, largely due to increased stock compensation and legal costs in the U.S.
  • 7Cash, cash equivalents, and restricted cash significantly increased by 90.9% to $911.9 million as of April 30, 2021.

Frequently Asked Questions

While the COVID-19 pandemic initially led to substantial declines in vehicle assignments due to reduced driving, Copart's operations were largely deemed essential. The company experienced a recovery in volumes and significant increases in vehicle average sales prices, which more than offset lower processed vehicle volumes. However, the pandemic necessitated adjustments in business processes which may affect efficiency or increase operating expenses, and future impacts remain uncertain.

Revenue growth is primarily driven by two key factors: an increase in revenue per car and a recovery in vehicle volumes, particularly in the U.S. This is supported by higher average auction selling prices, attributed to increased demand, a favorable mix of vehicles sold, and reduced supply in the used car market. International revenue also saw growth due to higher revenue per car, despite some volume decreases.

For the three months ended April 30, 2021, total yard operations expenses increased slightly by 1.7%, with increases in both the U.S. and international segments. However, when excluding depreciation and amortization, U.S. yard operations expenses decreased by 1.5% due to a lower cost to process each car, partially offset by increased volume. For the nine-month period, total yard operations expenses decreased by 3.5%, largely driven by cost reductions in the U.S.

Copart's liquidity position is strong. As of April 30, 2021, cash, cash equivalents, and restricted cash stood at $911.9 million, a substantial increase of 90.9% from July 31, 2020. Working capital also saw a significant rise of 78.8%. This strong liquidity is supported by healthy operating cash flows and is expected to be sufficient for ongoing operations and future expansion.