01—Abstract
Summary
Summary of the 10-Q filed February 26, 2025. Cited figures are marked; the original filing is the authoritative source.
Copart's 10-Q for the quarter ended January 31, 2025 shows a strong second quarter (fiscal 2025 Q2).
Total service revenues and vehicle sales rose 14.1% year over year to $1.163 billiona, driven by a 15.0% increase in service revenues to $991.3 million, with U.S. service revenue up 14.8% and International up 16.5% (partly offset by currency). Operating income grew 12.2% to $426.2 million, and net income attributable to Copart rose 19.0% to $387.4 million, or $0.40 diluted EPS versus $0.33 a year earlier. Six-month results were similarly solid, with net income of $749.5 million and diluted EPS of $0.77.
Margins were mixed. Facility operations expense grew faster than revenue (19.8% in the quarter), and management attributed about $27 millionb of one-time costs in the quarter (and $56 million for the six months) to Hurricanes Helene and Milton. General and administrative expense rose 17.9% in the quarter, mainly from U.S. outside services, labor, and travel.
The effective tax rate fell to 16.5% from 20.8%, largely due to excess tax benefits from stock option exercises ($23.7 millionc in the quarter), which flattered EPS. The balance sheet strengthened considerably. Cash, cash equivalents and restricted cash reached $3.34 billion, up from $1.51 billion at fiscal year-end July 31, 2024, mainly because held-to-maturity Treasury bills of $1.9 billion matured.
The company has no borrowings under its $1.25 billiond revolver, a consolidated net leverage ratio of (1.92):1 (net cash), and no share repurchases during the period. Capital expenditures of $353 million continue to fund facility expansion. Investors should also note the ongoing U.S. Department of Justice investigation into potential anti-money laundering violations, for which the company cannot estimate a possible loss.
02—Key points
Key Highlights
- Revenue growth: Total service revenues and vehicle sales increased 14.1% to $1.16 billion in the quarter; service revenues grew 15.0%, with U.S. up 14.8% and International up 16.5%.
- Profitability: Operating income rose 12.2% to $426.2 million, and diluted EPS was $0.40 versus $0.33, up about 21% year over year.
- Hurricane-related costs: Facility operations included roughly $27 million of one-time costs in the quarter (about $56 million for six months) tied to Hurricanes Helene and Milton.
- Tax benefit: The effective tax rate fell to 16.5% from 20.8%, aided by $23.7 million of excess tax benefits from stock option exercises, which boosted EPS.
- Liquidity: Cash, cash equivalents and restricted cash climbed to $3.34 billion from $1.51 billion at fiscal year-end, with $1.25 billion of undrawn revolver capacity and no debt outstanding.
- Cost pressure: Facility operations expense grew 19.8% and G&A grew 17.9%, outpacing revenue growth and compressing operating margin to 36.6% from 37.3%.
- Legal risk: The U.S. DOJ is investigating potential money laundering violations related to auction platform members; the company cannot predict the outcome or range of loss.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed February 26, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $1.16B$1.02B | +14.0% |
| Operating Expenses | $737.11M$640.25M | +15.1% |
| Operating Income | $426.21M$379.90M | +12.2% |
| Net Income | $387.40M$325.63M | +19.0% |
| EPS (Basic) | $0.40$0.34 | +17.6% |
| EPS (Diluted) | $0.40$0.33 | +21.2% |
| Shares Outstanding (Basic) | 964.75M960.52M | +0.4% |
| Shares Outstanding (Diluted) | 977.91M974.59M | +0.3% |
05—Questions
Frequently Asked Questions
How did Copart perform in the quarter ended January 31, 2025?
Copart grew revenue 14.1% to $1.16 billion and net income attributable to the company 19.0% to $387.4 million. Diluted EPS was $0.40, compared with $0.33 a year earlier. Growth came from both higher U.S. volume and revenue per car, plus International expansion.
Are the hurricane costs a one-time issue, and how material are they?
Management characterized about $27 million in the quarter, and $56 million for the six months, as one-time costs tied to Hurricanes Helene and Milton. They are meaningful relative to quarterly operating income of $426 million, roughly 6% of it. Investors should watch whether similar costs recur in future weather events, which the filing notes can affect volumes and capacity.
Is the higher EPS sustainable given the lower tax rate?
Part of the EPS improvement reflects a 16.5% effective tax rate versus 20.8% last year, helped by $23.7 million of excess tax benefits from stock option exercises. These benefits depend on employee exercise activity and stock price, so they are not fully recurring. Pre-tax income growth of about 12.7% is the more durable measure of performance.
What does the DOJ investigation mean for Copart?
The U.S. Department of Justice Consumer Protection Branch is investigating whether Copart violated money laundering laws in how it prevents and detects laundering by its auction platform members. Copart is cooperating, and the company says it cannot predict the timing, scope, outcome, or potential loss. Any fines, penalties, or remedies could be material, so this is a key risk to monitor.
How strong is Copart's balance sheet and capacity to fund growth?
Copart had $3.34 billion in cash and cash equivalents, no outstanding borrowings, and a consolidated net leverage ratio of (1.92):1, meaning it holds net cash. Capital expenditures were $353 million in the first half, and the company has $1.25 billion of undrawn revolver capacity. It also has about 326 million shares remaining under its buyback authorization but made no repurchases this period.
06—Continue