10-QPeriod: Q2 FY2022

COPART INC Quarterly Report for Q2 Ended Jan 31, 2022

Filed March 3, 2022For Securities:CPRT

Summary

Copart, Inc. (CPRT) reported strong financial results for the third quarter and first half of fiscal year 2022, ending January 31, 2022. The company experienced significant growth in both service revenues and vehicle sales, driven by increased revenue per car and higher vehicle volumes. This growth is attributed to the reopening of economies, increased miles driven, and ongoing supply chain disruptions in the automotive sector, which have boosted demand for used and salvage vehicles. Despite increased operating expenses, particularly in yard operations and cost of vehicle sales, Copart maintained robust profitability. The company continues its strategic expansion, opening new facilities in the U.S. and internationally, and strengthening its credit facilities to support future growth and potential acquisitions. Liquidity remains strong, with substantial cash reserves and operating cash flow generation.

Financial Highlights

47 data points
Beta

Revenue

$867.46M

Net Income

$287.41M

33.1% Net Margin

EPS (Diluted)

$0.30

Total Assets

$5.14B

Cash & Equivalents

$971.65M

Free Cash Flow

$42.50M

Financial Statements
Beta
Revenue$867.46M
Operating Expenses$520.13M
Operating Income$347.33M
Net Income$287.41M
EPS (Basic)$0.30
EPS (Diluted)$0.30
Shares Outstanding (Basic)948.74M
Shares Outstanding (Diluted)964.75M

Key Highlights

  • 1Total service revenues increased by 33.5% to $711.1 million for the three months ended January 31, 2022, and by 31.6% to $1.38 billion for the six months ended January 31, 2022.
  • 2Vehicle sales saw substantial growth, up 85.2% to $156.4 million for the three months and 84.4% to $298.7 million for the six months ended January 31, 2022, driven by increased volume and higher average selling prices.
  • 3Yard operations expenses rose by 37.3% for the three months and 33.1% for the six months, primarily due to increased volume, higher subhaul and labor costs, and expenses related to Hurricane Ida.
  • 4Cost of vehicle sales more than doubled, increasing by 90.6% for the three months and 93.3% for the six months, reflecting higher volumes and purchase prices.
  • 5General and administrative expenses increased by 13.7% for the three months and 13.8% for the six months, largely due to higher labor and stock compensation costs.
  • 6The company expanded its revolving credit facility to $1.25 billion and extended its maturity date to December 21, 2026, providing enhanced financial flexibility.
  • 7Cash, cash equivalents, and restricted cash decreased by 7.3% to $971.7 million, while working capital significantly increased by 38.2% to $1.77 billion as of January 31, 2022, indicating strong operational cash flow.

Frequently Asked Questions

The primary drivers of Copart's revenue growth are an increase in revenue per car and a rise in vehicle volumes. This is attributed to the reopening of economies, increased miles driven, and supply chain disruptions in the automotive sector, which have increased demand for used and salvage vehicles.

While operating expenses, particularly in yard operations and cost of vehicle sales, have increased significantly due to higher volumes and associated costs (like subhaul and labor), Copart has still managed to deliver strong profitability. This suggests that revenue growth has outpaced expense increases, and/or the company has implemented cost efficiencies where possible.

Copart maintains strong liquidity with substantial cash reserves and operating cash flow. The company recently amended and restated its credit agreement, increasing its secured revolving credit facility to $1.25 billion and extending the maturity date, providing significant financial flexibility for working capital, capital expenditures, acquisitions, and other strategic initiatives.

Copart continues its international expansion, opening new facilities in Germany and Spain. International revenues have also grown, though at a slower pace than U.S. revenues. The company's strategy involves deploying its proprietary auction technologies globally and integrating acquired operations.