10-QPeriod: Q3 FY2022

COPART INC Quarterly Report for Q3 Ended Apr 30, 2022

Filed May 25, 2022For Securities:CPRT

Summary

Copart, Inc. reported strong performance for the third quarter and first nine months of fiscal year 2022, driven by significant increases in both service revenues and vehicle sales. Service revenues grew by 22.8% for the quarter and 28.3% year-to-date, largely attributed to higher revenue per car and increased volumes, fueled by the reopening of economies and persistent global supply chain disruptions affecting new vehicle availability. Vehicle sales also saw substantial growth, up 57.7% for the quarter and 73.6% year-to-date, benefiting from increased volumes and higher average auction selling prices. The company's operational expenses, particularly yard operations, increased due to higher volumes, subhaul costs, and labor costs. Despite these rising expenses, Copart maintained a healthy operating income margin. The company also continues its strategic expansion, adding new facilities in the U.S. and internationally. Financially, Copart ended the quarter with a robust cash position and significant working capital, demonstrating strong liquidity and cash flow generation from operations. The company also amended its credit agreement, increasing its revolving credit facility to $1.25 billion.

Financial Highlights

47 data points
Beta

Revenue

$939.94M

Net Income

$278.62M

29.6% Net Margin

EPS (Diluted)

$0.29

Total Assets

$5.44B

Cash & Equivalents

$1.45B

Free Cash Flow

$338.70M

Financial Statements
Beta
Revenue$939.94M
Operating Expenses$567.19M
Operating Income$372.75M
Net Income$278.62M
EPS (Basic)$0.29
EPS (Diluted)$0.29
Shares Outstanding (Basic)950.02M
Shares Outstanding (Diluted)962.90M

Key Highlights

  • 1Service revenues increased by 22.8% year-over-year for the three months ended April 30, 2022, reaching $766.3 million, and by 28.3% year-to-date to $2.15 billion.
  • 2Vehicle sales experienced a significant jump of 57.7% year-over-year for the quarter, totaling $173.6 million, and a 73.6% increase year-to-date to $472.3 million.
  • 3Growth in both service revenue and vehicle sales was driven by increased revenue per car (partly due to vehicle scarcity from supply chain issues) and higher volumes from economic reopenings.
  • 4Yard operations expenses rose by 34.2% for the quarter and 33.5% year-to-date, reflecting increased volume, higher subhaul and fuel costs, and labor cost adjustments.
  • 5The company's cash, cash equivalents, and restricted cash increased by 38.8% to $1.45 billion, and working capital increased by 56.7% to $2.01 billion as of April 30, 2022.
  • 6Copart amended its credit agreement, increasing its revolving credit facility to $1.25 billion, extending the maturity date to December 21, 2026, and adding foreign currency borrowing capabilities.
  • 7The company opened multiple new facilities in the U.S. and internationally during the period, supporting its ongoing expansion strategy.

Frequently Asked Questions

Copart's revenue growth was primarily driven by an increase in both revenue per car and vehicle volumes. The scarcity of new and used vehicles due to global supply chain disruptions contributed to higher auction prices, while the reopening of economies led to increased miles driven and, consequently, more vehicles entering Copart's remarketing channels.

While yard operations expenses increased significantly due to higher volumes, increased subhaul costs, and labor costs, Copart appears to have managed these costs relative to revenue growth, maintaining healthy operating income. The company also reported increased depreciation and amortization related to new and expanded facilities.

Copart ended the period with a strong liquidity position, showing substantial increases in cash, cash equivalents, and working capital. The company also enhanced its financial flexibility by amending its credit agreement to increase its revolving credit facility to $1.25 billion, with a maturity extended to December 2026. Notably, the company had no outstanding borrowings under this facility as of April 30, 2022.

Key risks include potential impacts from the ongoing COVID-19 pandemic, dependence on a limited number of major vehicle sellers for a substantial portion of revenue, and risks associated with international operations. Additionally, the company faces competitive pressures, regulatory compliance, and cybersecurity risks. Fluctuations in macroeconomic factors, foreign currency exchange rates, and weather patterns are also noted as potential challenges.