10-Q 1 cprt-20240430.htm 10-Q cprt-20240430
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                         to                        
Commission file number: 000-23255
COPART, INC.
(Exact name of registrant as specified in its charter)
Delaware
000-23255
94-2867490
(State or other jurisdiction of incorporation or organization)
(Commission File Number)
(I.R.S. Employer Identification No.)
14185 Dallas ParkwaySuite 300
Dallas
Texas
75254
        (Address of principal executive offices) (zip code)
(972) 391-5000
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.0001CPRTThe Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of May 22, 2024, 962,297,603 shares of the registrant’s common stock were outstanding.



Copart, Inc.
Index to the Quarterly Report on Form 10-Q
April 30, 2024
Table of ContentsPage Number
2



Copart, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share amounts)April 30, 2024July 31, 2023
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash$1,089,995 $957,395 
Investment in held to maturity securities2,000,334 1,406,589 
Accounts receivable, net822,650 702,038 
Vehicle pooling costs125,001 123,725 
Inventories46,764 39,973 
Income taxes receivable23,402 6,574 
Prepaid expenses and other assets40,983 26,310 
Total current assets4,149,129 3,262,604 
Property and equipment, net3,073,090 2,844,339 
Operating lease right-of-use assets108,859 108,139 
Intangibles, net76,786 62,702 
Goodwill511,372 394,289 
Other assets91,396 65,806 
Total assets$8,010,632 $6,737,879 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities$506,795 $440,810 
Deferred revenue28,761 26,117 
Income taxes payable7,388 4,374 
Current portion of operating and finance lease liabilities20,475 21,468 
Total current liabilities563,419 492,769 
Deferred income taxes92,014 89,492 
Income taxes payable67,455 69,193 
Operating and finance lease liabilities, net of current portion91,131 88,082 
Long-term debt and other liabilities427 10,903 
Total liabilities814,446 750,439 
Commitments and contingencies
Redeemable non-controlling interest24,933  
Stockholders’ equity:
Preferred stock: $0.0001 par value - 5,000,000 shares authorized; none issued
  
Common stock: $0.0001 par value - 1,600,000,000 shares authorized; 962,268,657 and 957,344,162 shares issued and outstanding, respectively.
96 96 
Additional paid-in capital1,102,684 938,910 
Accumulated other comprehensive loss(156,807)(141,006)
Retained earnings6,225,280 5,189,440 
Total stockholders’ equity7,171,253 5,987,440 
Total liabilities, redeemable noncontrolling interests and stockholders’ equity$8,010,632 $6,737,879 
The accompanying notes are an integral part of these consolidated financial statements.
3

Copart, Inc.
Consolidated Statements of Income
(Unaudited)
Three Months Ended April 30,Nine Months Ended April 30,
(In thousands, except per share amounts)2024202320242023
Service revenues and vehicle sales:
Service revenues$946,630 $847,249 $2,667,911 $2,363,886 
Vehicle sales180,629 174,582 499,913 508,041 
Total service revenues and vehicle sales1,127,259 1,021,831 3,167,824 2,871,927 
Operating expenses:
Yard operations438,873 378,958 1,256,552 1,127,232 
Cost of vehicle sales162,881 159,443 457,596 465,282 
General and administrative88,302 64,506 241,197 183,461 
Total operating expenses690,056 602,907 1,955,345 1,775,975 
Operating income437,203 418,924 1,212,479 1,095,952 
Other income (expense):
Interest income, net36,218 17,878 102,179 36,780 
Other (expense) income, net(1,309)3,628 (8,484)(2,096)
Total other income 34,909 21,506 93,695 34,684 
Income before income taxes472,112 440,430 1,306,174 1,130,636 
Income tax expense90,002 89,999 266,005 240,680 
Net income382,110 350,431 1,040,169 889,956 
Less: Net income/(loss) attributable to redeemable noncontrolling interest(181) (284) 
Net income attributable to Copart, Inc.$382,291 $350,431 $1,040,453 $889,956 
Basic net income per common share$0.40 $0.37 $1.08 $0.93 
Weighted average common shares outstanding961,813 953,574 960,143 952,834 
Diluted net income per common share$0.39 $0.36 $1.07 $0.92 
Diluted weighted average common shares outstanding976,445 967,380 974,226 965,436 
The accompanying notes are an integral part of these consolidated financial statements.
4

Copart, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended April 30,Nine Months Ended April 30,
(In thousands)2024202320242023
Comprehensive income, net of tax:
Net income$382,110 $350,431 $1,040,169 $889,956 
Other comprehensive income:
Foreign currency translation adjustments(11,528)4,048 (15,801)16,906 
Comprehensive income370,582 354,479 1,024,368 906,862 
Less: Comprehensive income/(loss) attributable to redeemable noncontrolling interest(181) (284) 
Comprehensive income attributable to Copart, Inc.$370,763 $354,479 $1,024,652 $906,862 
The accompanying notes are an integral part of these consolidated financial statements.
5

Copart, Inc.
Consolidated Statement of Changes in Redeemable Noncontrolling Interest and Stockholders’ Equity
(Unaudited)
Common StockAccumulated
Other
Comprehensive
Income (Loss)
Redeemable Noncontrolling Interest
Additional
Paid-in
Capital
Total Stockholders’
Equity
(In thousands, except share amounts)Outstanding
Shares
AmountRetained
Earnings
Balances at July 31, 2023957,344,162 $96 $938,910 $(141,006)$5,189,440 $5,987,440 $ 
Net income— — — — 332,527 332,527 5 
Currency translation adjustment— — — (36,353)— (36,353)— 
Acquisition of noncontrolling interest2,499,993 — 112,075 — — 112,075 25,217 
Exercise of stock options, net of repurchased shares331,358 — 8,123 — (711)7,412 — 
Stock-based compensation32,761 — 8,316 — — 8,316 — 
Balances at October 31, 2023960,208,274 96 1,067,424 (177,359)5,521,256 6,411,417 25,222 
Net income/(loss)— — — — 325,635 325,635 (108)
Currency translation adjustment— — — 32,080 — 32,080 — 
Exercise of stock options, net of repurchased shares828,799 — 5,359 — (1,453)3,906 — 
Stock-based compensation119,004 — 8,601 — — 8,601 — 
Shares issued for Employee Stock Purchase Plan155,419 — 5,961 — — 5,961 — 
Balances at January 31, 2024961,311,496 96 1,087,345 (145,279)5,845,438 6,787,600 25,114 
Net income/(loss)— — — — 382,291 382,291 (181)
Currency translation adjustment— — — (11,528)— (11,528)— 
Exercise of stock options, net of repurchased shares872,081 — 6,895 — (2,449)4,446 — 
Stock-based compensation85,183 — 8,448 — — 8,448 — 
Shares issued for Employee Stock Purchase Plan(103)— (4)— — (4)— 
Balances at April 30, 2024962,268,657 $96 $1,102,684 $(156,807)$6,225,280 $7,171,253 $24,933 
The accompanying notes are an integral part of these consolidated financial statements.
6

Copart, Inc.
Consolidated Statement of Changes in Redeemable Noncontrolling Interest and Stockholders’ Equity (Continued)
(Unaudited)
Common StockAccumulated
Other
Comprehensive
Income (Loss)
Additional
Paid-in
Capital
Total Stockholders’
Equity
(In thousands, except share amounts)Outstanding
Shares
AmountRetained
Earnings
Balances at July 31, 2022952,163,896 $96 $838,460 $(169,365)$3,956,408 $4,625,599 
Net income— — — — 245,848 245,848 
Currency translation adjustment— — — (29,571)— (29,571)
Exercise of stock options, net of repurchased shares151,108 — 1,061 — (295)766 
Stock-based compensation76,624 — 10,192 — — 10,192 
Balances at October 31, 2022952,391,628 96 849,713 (198,936)4,201,961 4,852,834 
Net income— — — — 293,677 293,677 
Currency translation adjustment— — — 42,429 — 42,429 
Exercise of stock options, net of repurchased shares446,852 — 9,754 — (536)9,218 
Stock-based compensation60,702 — 10,131 — — 10,131 
Shares issued for Employee Stock Purchase Plan229,114 — 5,363 — — 5,363 
Balances at January 31, 2023953,128,296 96 874,961 (156,507)4,495,102 5,213,652 
Net income— — — — 350,431 350,431 
Currency translation adjustment— — — 4,048 — 4,048 
Exercise of stock options, net of repurchased shares1,014,218 — 16,405 — (2,195)14,210 
Stock-based compensation117,536 — 10,081 — — 10,081 
Balances at April 30, 2023954,260,050 $96 $901,447 $(152,459)$4,843,338 $5,592,422 
The accompanying notes are an integral part of these consolidated financial statements.
7

Copart, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended April 30,
(In thousands)20242023
Cash flows from operating activities:
Net income1,040,169 $889,956 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost139,178 115,320 
Allowance for credit loss2,513 1,480 
Equity in losses of unconsolidated affiliates2,580 5,446 
Stock-based compensation26,694 30,404 
Gain on sale of property and equipment(2,169)(965)
Deferred income taxes(3,093)(3,236)
Changes in operating assets and liabilities:
Accounts receivable(152,564)(115,098)
Vehicle pooling costs(1,784)(7,300)
Inventories(7,316)14,870 
Prepaid expenses, other current and non-current assets(39,815)(33,830)
Operating lease right-of-use assets and lease liabilities1,377 595 
Accounts payable and accrued liabilities40,305 30,314 
Deferred revenue2,660 5,516 
Income taxes receivable(16,846)49,430 
Income taxes payable1,454 22,731 
Net cash provided by operating activities1,033,343 1,005,633 
Cash flows from investing activities:
Purchases of property and equipment(373,104)(346,524)
Cash acquired in connection with acquisition17,662  
Proceeds from sale of property and equipment3,453 20,509 
Investment in held to maturity securities(2,478,505) 
Proceeds from the sale of held to maturity securities1,915,000  
Investment in unconsolidated affiliate(1,000)(2,744)
Net cash used in investing activities(916,494)(328,759)
Cash flows from financing activities:
Proceeds from the exercise of stock options20,377 27,220 
Proceeds from the issuance of Employee Stock Purchase Plan shares5,957 5,363 
Payments for employee stock-based tax withholdings(4,613)(3,026)
Issuance of principal on revolver facility 21,481 
Principal payments on revolver facility(10,818) 
Payments of finance lease obligations(14)(18)
Net cash provided by financing activities10,889 51,020 
Effect of foreign currency translation4,862 2,053 
Net increase in cash, cash equivalents, and restricted cash132,600 729,947 
Cash, cash equivalents, and restricted cash at beginning of period957,395 1,384,236 
Cash, cash equivalents, and restricted cash at end of period1,089,995 $2,114,183 
Supplemental disclosure of cash flow information:
Interest paid$1,946 $1,586 
Income taxes paid, net of refunds$266,400 $171,438 
The accompanying notes are an integral part of these consolidated financial statements.
8

Copart, Inc.
Notes to Consolidated Financial Statements
April 30, 2024
(Unaudited)
NOTE 1 – Summary of Significant Accounting Policies
Basis of Presentation and Description of Business
Copart, Inc. (“the Company”) provides vehicle sellers with a full range of services to process and sell vehicles over the internet through the Company’s Virtual Bidding Third Generation (“VB3”) internet auction-style sales technology. Vehicle sellers consist primarily of insurance companies, but also include banks, finance companies, charities, fleet operators, dealers, vehicle rental companies, and individuals. The Company sells principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters, and directly to the general public. The majority of vehicles sold on behalf of insurance companies are either damaged vehicles deemed a total loss or not economically repairable by the insurance companies or are recovered stolen vehicles for which an insurance settlement with the vehicle owner has already been made. The Company offers vehicle sellers a full range of services that expedite each stage of the vehicle sales process, minimize administrative and processing costs and maximize the ultimate sales price through the online auction process. In the United States (“U.S.”), Canada, Brazil, the Republic of Ireland, Finland, the United Arab Emirates (“U.A.E.”), Oman, and Bahrain, the Company sells vehicles primarily as an agent and derives revenue primarily from auction and auction related sales transaction fees charged for vehicle remarketing services as well as fees for services subsequent to the auction, such as delivery and storage. In the United Kingdom (“U.K.”), Germany, and Spain, the Company operates both as an agent and on a principal basis, in some cases purchasing salvage vehicles outright and reselling the vehicles for its own account. In Germany and Spain, the Company also derives revenue from listing vehicles on behalf of insurance companies and insurance experts to determine the vehicle’s residual value and/or to facilitate a sale for the insured.
Principles of Consolidation
In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments of a normal recurring nature considered necessary for fair presentation of the Company’s financial position as of April 30, 2024 and July 31, 2023, its consolidated statements of income, comprehensive income, changes in redeemable noncontrolling interests and stockholders’ equity for the three and nine months ended April 30, 2024 and 2023, and its cash flows for the nine months ended April 30, 2024 and 2023. Interim results for the three and nine months ended April 30, 2024 are not necessarily indicative of the results that may be expected for any future period, or for the entire year ending July 31, 2024. These consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2023. Certain prior year amounts have been reclassified to conform to current year presentation.
The consolidated financial statements of the Company include the accounts of the parent company and its wholly-owned subsidiaries. Significant intercompany transactions and balances have been eliminated in consolidation.
On October 3, 2022, the Company’s Board of Directors approved a two-for-one common stock split effected in the form of a stock dividend subject to and contingent upon, among other things, obtaining stockholder approval of an amendment to the Company’s certificate of incorporation to increase the number of authorized shares of common stock. On October 31, 2022, the Company’s stockholders approved such increase at a special meeting of stockholders. As such, on November 3, 2022, the Company effected the two-for-one stock dividend to stockholders of record as of October 6, 2022.
On August 4, 2023, the Company’s Board of Directors approved a two-for-one common stock split effected in the form of a stock dividend entitling each stockholder of record to receive one additional share of common stock for every one share owned. On August 21, 2023, the Company effected the two-for-one stock dividend to stockholders of record as of August 14, 2023.
Both stock dividends increased the number of shares of common stock outstanding and all share and per share amounts have been retroactively adjusted for the stock dividend, as of the date earliest presented in these financial statements to conform to current year presentation.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates include, but are not limited to, vehicle pooling costs; income taxes; stock-based compensation; and contingencies. Actual results may differ from these estimates.

9

Revenue Recognition
The Company’s primary performance obligation is the auctioning of consigned vehicles through an online auction process. Service revenue and vehicle sales revenue are recognized at the date the vehicles are sold at auction, excluding annual registration fees. Costs to prepare the vehicles for auction, including inbound transportation costs and titling fees, are deferred and recognized at the time of revenue recognition at auction.
The Company’s disaggregation between service revenues and vehicle sales at the segment level reflects how the nature, timing, amount and uncertainty of its revenues and cash flows are impacted by economic factors. The Company reports sales taxes on relevant transactions on a net basis in the Company’s consolidated results of operations, and therefore does not include sales taxes in revenues or costs.
Service revenues
The Company’s service revenue consists of auction and auction related sales transaction fees charged for vehicle remarketing services. Within this revenue category, the Company’s primary performance obligation is the auctioning of consigned vehicles through an online auction process. These auction and auction related services may include a combination of vehicle purchasing fees, vehicle listing fees, and vehicle selling fees that can be based on a predetermined percentage of the vehicle sales price, tiered vehicle sales price driven fees, or at a fixed fee based on the sale of each vehicle regardless of the selling price of the vehicle; transportation fees for the cost of transporting the vehicle to or from the Company’s facility; title processing and preparation fees; vehicle storage fees; bidding fees; and vehicle loading fees. These services are not distinct within the context of the contract. Accordingly, revenue for these services is recognized when the single performance obligation is satisfied at the completion of the auction process. The Company does not take ownership of these consigned vehicles, which are stored at the Company’s facilities located throughout the U.S. and at its international locations. These fees are recognized as net revenue (not gross vehicle selling price) at the time of auction in the amount of such fees charged.
The Company has a separate performance obligation related to providing access to its online auction platform as the Company charges members an annual registration fee for the right to participate in its online auctions and access the Company’s bidding platform. This fee is recognized ratably over the term of the arrangement, generally one year, as each day of access to the online auction platform represents the best depiction of the transfer of the service.
No provision for returns has been established, as all sales are final with no right of return or warranty, except for separately identified vehicles subject to the arbitration policy, although the Company provides for credit loss expense in the case of non-performance by its buyers or sellers.
Three months ended April 30,Nine Months Ended April 30,
(In thousands)2024202320242023
Service revenues
United States830,680$752,077 2,349,241$2,109,467 
International115,95095,172 318,670254,419 
Total service revenues$946,630 $847,249 $2,667,911 $2,363,886 
Vehicle sales
Certain vehicles are purchased and remarketed on the Company’s own behalf. The Company has a single performance obligation related to the sale of these vehicles, which is the completion of the online auction process. Vehicle sales revenue is recognized on the auction date. As the Company acts as a principal in vehicle sales transactions, the gross sales price at auction is recorded as revenue.
Three Months Ended April 30,Nine Months Ended April 30,
(In thousands)2024202320242023
Vehicle sales
United States88,236$81,681 241,307$261,069 
International92,39392,901 258,606246,972 
Total vehicle sales$180,629 $174,582 $499,913 $508,041 
10

Contract assets
The Company capitalizes certain contract assets related to obtaining a contract, where the amortization period for the related asset is greater than one year. These assets are amortized over the expected life of the customer relationship. Contract assets are classified as current or long-term other assets, based on the timing of when the Company expects to recognize the related revenues and are amortized as an offset to the associated revenues on a straight-line basis. The Company assesses these costs for impairment at least quarterly and as “triggering” events occur that indicate it is more likely than not that an impairment exists. The contract asset costs where the amortization period for the related asset is one year or less are expensed as incurred and recorded within general and administrative expenses in the accompanying consolidated statements of income.
The change in the carrying amount of contract assets was as follows (In thousands):
Balance as of July 31, 2023$25,726 
Capitalized contract assets during the period32,260 
Costs amortized during the period(6,451)
Effect of foreign currency exchange rates(65)
Balance as of April 30, 2024$51,470 
Vehicle Pooling Costs
The Company defers costs that relate directly to the fulfillment of its contracts associated with vehicles consigned to and received by the Company, but not sold as of the end of the period. The Company quantifies the deferred costs using a calculation that includes the number of vehicles at its facilities at the beginning and end of the period, the number of vehicles sold during the period, and an allocation of certain yard operation costs of the period. The primary expenses allocated and deferred are inbound transportation costs, titling fees, certain facility costs, labor, and vehicle processing. If the allocation factors change, then yard operation expenses could increase or decrease correspondingly in the future. These costs are expensed into yard operations expenses as vehicles are sold in subsequent periods on an average cost basis.
Foreign Currency Translation
The Company records foreign currency translation adjustments from the process of translating the functional currency of the financial statements of its foreign subsidiaries into the U.S. dollar reporting currency. The British pound, Canadian dollar, Brazilian real, European Union euro, U.A.E. dirham, Omani rial, and Bahraini dinar are the functional currencies of the Company’s foreign subsidiaries as they are the primary currencies within the economic environment in which each subsidiary operates. The original equity investment in the respective subsidiaries is translated at historical rates. Assets and liabilities of the respective subsidiary’s operations are translated into U.S. dollars at period-end exchange rates, and revenues and expenses are translated into U.S. dollars at average exchange rates in effect during each reporting period. Adjustments resulting from the translation of each subsidiary’s financial statements are reported in other comprehensive income.
The cumulative effects of foreign currency exchange rate fluctuations were as follows (In thousands):
Cumulative loss on foreign currency translation as of July 31, 2022$(169,365)
Gain (Loss) on foreign currency translation28,359 
Cumulative loss on foreign currency translation as of July 31, 2023$(141,006)
Gain (Loss) on foreign currency translation(15,801)
Cumulative loss on foreign currency translation as of April 30, 2024$(156,807)
Fair Value of Financial Instruments
The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value in U.S. GAAP. In accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, the Company considers fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value:
Level I    Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.
Level II    Inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly or indirectly.
Level III    Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate.
11

The amounts recorded for financial instruments in the Company’s consolidated financial statements, which included cash, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximated their fair values as of April 30, 2024 and July 31, 2023, due to the short-term nature of those instruments and are classified within Level II of the fair value hierarchy. Cash equivalents are classified within Level II of the fair value hierarchy because they are valued using quoted market prices of the underlying investments.
Redeemable Noncontrolling Interest
Redeemable noncontrolling interests represent a 20% noncontrolling ownership in Purple Wave, Inc., a consolidated subsidiary of the Company. Redeemable noncontrolling interests are presented outside of permanent equity on the consolidated balance sheet as they are redeemable by the holders of the noncontrolling interest and the redemption is outside the control of the Company. The redeemable noncontrolling interests were initially recorded at their issuance date fair value of $25.2 million. We record the carrying amount of the redeemable noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and dividends or (ii) the redemption value. For interests that are redeemable in the future, we recognize changes in the redemption value immediately as they occur.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be cash equivalents. Cash, cash equivalents, and restricted cash include cash held in checking, U.S. Treasury Bills, and money market accounts. The Company periodically invests its excess cash in money market funds and U.S. Treasury Bills. The Company’s cash, cash equivalents, and restricted cash are placed with high credit quality financial institutions.
The Company has held to maturity securities comprised of U.S. Treasury Bills. These investments are classified as held to maturity as the Company has the intent and ability to hold these investments until they mature. The held to maturity securities mature within the next 12 months. The table below shows the amortized cost, associated gross unrealized gains and associated fair value of held to maturity securities.
(In thousands)April 30, 2024
Amortized CostGross Unrealized Gains Fair Value
Investment in held to maturity securities$2,000,334 $18,075 $2,018,409 
(In thousands)July 31, 2023
Amortized CostGross Unrealized Gains Fair Value
Investment in held to maturity securities$1,406,589 $8,314 $1,414,903 
NOTE 2 — Acquisitions
Fiscal Year 2024 Transactions
On October 6, 2023, the Company acquired an 80% controlling ownership in Purple Wave, Inc., an online offsite heavy equipment auction company. The Company acquired the controlling ownership by issuing 2.5 million shares of the Company’s common stock which was equal to the $108.0 million acquisition price divided by the 10-day volume average weighted price of the Company’s common stock prior to closing. Under U.S. GAAP, the fair value of the merger consideration paid for Purple Wave, Inc. was $112.1 million and was determined on the basis of the closing price of the Company’s common stock on October 6, 2023. Substantially all of the merger consideration has preliminarily been allocated to intangible assets, including goodwill. The fair value of the 20% redeemable noncontrolling interest in Purple Wave, Inc. was $25.2 million, and was estimated by applying the transaction method. Refer to Note 1 – Summary of Significant Accounting Policies for more details regarding the redeemable noncontrolling interests. Acquisition costs reflected in the general administrative line on the income statement were $1.2 million.
12

NOTE 3 — Accounts Receivable, Net
Accounts receivable, net consisted of:
(In thousands)April 30, 2024July 31, 2023
Advance charges receivable$616,324 $537,261 
Trade accounts receivable193,334 157,083 
Other receivables25,324 16,334 
834,982 710,678 
Less: Allowance for credit loss(12,332)(8,640)
Accounts receivable, net$822,650 $702,038 
Advance charges receivable represents amounts paid to third parties on behalf of insurance companies for which the Company will be reimbursed when the vehicle is sold. As advance charges are recovered within one year, the Company has not adjusted the amount of consideration received from the customer for a significant financing component. Trade accounts receivable includes fees and gross auction proceeds to be collected from insurance companies and buyers.
NOTE 4 — Property and Equipment, Net
Property and equipment, net consisted of the following:
(In thousands)April 30, 2024July 31, 2023
Land$1,972,821 $1,812,001 
Buildings and improvements1,442,039 1,339,820 
Transportation and other equipment560,433 490,136 
Office furniture and equipment95,643 91,031 
Software98,667 89,575 
 4,169,603 3,822,563 
Less: Accumulated depreciation and amortization(1,096,513)(978,224)
Property and equipment, net$3,073,090 $2,844,339 
Depreciation expense on property and equipment was $47.4 million and $35.5 million for the three months ended April 30, 2024 and 2023, respectively, and $129.2 million and $109.2 million for the nine months ended April 30, 2024 and 2023, respectively.
NOTE 5 – Leases
The Company has both lessee and lessor arrangements. The Company determines whether a contract is or contains a lease at the inception of the contract or at any subsequent modification. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment. Depending on the terms, leases are classified as either operating or finance leases if the Company is the lessee, or as operating, sales-type, or direct financing leases if the Company is the lessor. Certain of the Company’s lessee and lessor leases have renewal options to extend the leases for additional periods at the Company’s discretion.
Leases - Lessee
The Company leases certain facilities and certain equipment under non-cancelable finance and operating leases, which are recorded as right-of-use assets and lease liabilities. Certain leases provide the Company with either a right of first refusal to acquire or an option to purchase a facility at fair value. Certain leases also contain escalation clauses and renewal option clauses calling for increased rents. Where a lease contains an escalation clause or a concession, such as a rent holiday or tenant improvement allowance, the Company includes these items in the determination of the right-of-use asset and the lease liabilities. The effects of these escalation clauses or concessions have been reflected in lease expense on a straight-line basis over the expected lease term and any variable lease payments subsequent to establishing the lease liability are expensed as incurred. The lease term commences on the date when the Company has the right to control the use of the leased property, which is typically before lease payments are due under the terms of the lease. Certain of the Company’s leases have renewal periods up to 40 years, exercisable at the Company’s option, and generally require the Company to pay property taxes, insurance and maintenance costs, in addition to the lease payments. At lease inception, the Company includes all renewals or option periods that are reasonably certain to exercise when determining the expected lease term, as failure to renew the lease would impose an economic penalty.
13

Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the expected lease term. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the information available at lease commencement date, as rates are not implicitly stated in the Company’s leases.
Components of lease expense were as follows:
Three Months Ended April 30,Nine Months Ended April 30,
(In thousands)2024202320242023
Operating lease expense$6,333 $6,503 $19,445 $20,050 
Finance lease expense:
Amortization of right-of-use assets3 5 13 17 
Interest on finance lease liabilities 1  1 
Short-term lease expense504 1,282 2,829 3,585 
Variable lease expense388 305 960 858 
Total lease expense$7,228 $8,096 $23,247 $24,511 
Supplemental cash flow information related to leases as of April 30, 2024 was as follows:
Nine Months Ended April 30,
(In thousands)20242023
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows related to operating leases$18,085 $19,507 
Operating cash flows related to finance leases 1 
Financing cash flows related to finance leases14 18 
Right-of-use assets obtained in exchange for new operating lease liabilities23,972 12,872 
Right-of-use assets obtained in exchange for new finance lease liabilities  
Leases - Lessor
The Company’s lessor arrangements include certain facilities and various land locations, of which each qualifies as an operating lease. Certain leases also contain escalation clauses and renewal option clauses calling for increased rents. Where a lease contains an escalation clause or a concession, such as a rent holiday or tenant improvement allowance, the Company includes these items in the determination of the straight-line rental income. The effects of these escalation clauses or concessions have been reflected in lease payments receivable on a straight-line basis over the expected lease term and any variable lease income subsequent to establishing the receivable will be recognized as earned.
The cost of the leased space as of April 30, 2024 and July 31, 2023 was $50.3 million and $51.2 million, respectively. The accumulated depreciation associated with the leased assets as of April 30, 2024 and July 31, 2023 was $4.4 million and $3.8 million, respectively. Both the leased assets and accumulated depreciation are included in Property and equipment, net on the consolidated balance sheet. Rental income from these operating leases was $4.4 million and $4.0 million for the three months ended April 30, 2024 and 2023, respectively, and $13.0 million and $12.3 million for the nine months ended April 30, 2024 and 2023, respectively, and is included within Service revenues on the consolidated statements of income.
NOTE 6 – Goodwill and Intangible Assets
The following table sets forth amortizable intangible assets by major asset class:
(In thousands)April 30, 2024July 31, 2023
Amortized intangibles:
Supply contracts and customer relationships$83,589 $84,614 
Trade names18,910 19,304 
Licenses and databases16,562 682 
Indefinite-lived intangibles:
Trade names16,718 7,443 
Accumulated amortization(58,993)(49,341)
Intangibles, net$76,786 $62,702 
14

Aggregate amortization expense on amortizable intangible assets was $3.3 million and $1.9 million for the three months ended April 30, 2024 and 2023, respectively, and $10 million and $5.6 million for the nine months ended April 30, 2024 and 2023, respectively.
The change in the carrying amount of goodwill was as follows:
(In thousands)
Balance as of July 31, 2023$394,289 
Acquisitions during the period120,634 
Effect of foreign currency exchange rates(3,551)
Balance as of April 30, 2024$511,372 
NOTE 7 – Long-Term Debt
Credit Agreement
On December 21, 2021, the Company entered into a Second Amended and Restated Credit Agreement by and among the Company, certain subsidiaries of the Company party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement amends and restates certain terms of the First Amended and Restated Credit Agreement, dated as of July 21, 2020, by and among the Company, the lenders party thereto, and Bank of America, N.A., as administrative agent (as successor in interest to Wells Fargo Bank, National Association) (the “Existing Credit Agreement”). The Second Amended and Restated Credit Agreement provides for, among other things, (a) an increase in the secured revolving credit commitments by $200.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Second Amended and Restated Credit Agreement (the “Revolving Loan Facility”) to $1,250.0 million, (b) an increase in the letter of credit sublimit from $60.0 million to $100.0 million, (c) addition of Copart UK Limited, CPRT GmbH and Copart Autos España, S.L.U., each a wholly-owned direct or indirect foreign subsidiary of the Company, as borrowers, (d) addition of the ability to borrow under the Second and Amended and Restated Credit Agreement in certain foreign currencies including Pounds Sterling, Euro and Canadian Dollars, (e) extension of the maturity date of the revolving credit facility under the Existing Credit Agreement from July 21, 2023 to December 21, 2026, (f) replacing the LIBOR interest rate applicable to U.S. Dollar denominated borrowings with a SOFR-based interest rate, and (g) changing the pricing levels with respect to the revolving loans as further described below.
The Second and Amended and Restated Credit Agreement provides for the Revolving Loan Facility of $1,250.0 million maturing on December 21, 2026 (including up to $550.0 million equivalent of borrowings in Pounds Sterling, Euro and Canadian Dollars) with a $150.0 million equivalent sub-facility available to CPRT GmbH, a $150.0 million equivalent sub-facility available to Copart Autos España, S.L.U. and a $250.0 million equivalent sub-facility available to Copart UK Limited. The proceeds may be used for general corporate purposes, including working capital and capital expenditures, potential share repurchases, acquisitions, or other investments relating to the Company’s expansion strategies in domestic and international markets.
Borrowings under the Second Amended and Restated Credit Agreement bear interest based on, at our option, either (1) the applicable fixed rate plus 1.00% to 1.75% or (2) the daily rate plus 0.0% to 0.75%, in each case, depending on the Company consolidated total net leverage ratio. Additionally, the unused revolving commitments under the Second Amended and Restated Credit Agreement are subject to the payment of a customary commitment fee at a range of 0.175% to 0.275%, depending on the Company consolidated total net leverage ratio. The applicable fixed rates described above with respect to borrowings denominated in (1) U.S. Dollars is SOFR plus certain “spread adjustments” described in the Second Amended and Restated Credit Agreement, (2) Pounds Sterling is SONIA plus certain “spread adjustments” described in the Second Amended and Restated Credit Agreement, (3) Euro is EURIBOR, and (4) Canadian Dollars is CDOR. The Company had $0.0 million and $11.0 million outstanding borrowings under the Revolving Loan Facility as of April 30, 2024 and July 31, 2023, respectively.
The Company’s obligations under the Second Amended and Restated Credit Agreement are guaranteed by certain of the Company’s domestic subsidiaries meeting materiality thresholds set forth in the Second Amended and Restated Credit Agreement. Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and the assets of the subsidiary guarantors pursuant to a Security Documents Confirmation Agreement as part of the Second Amended and Restated Credit Agreement.
The Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends, or make distributions on and repurchase stock, in each case subject to certain exceptions. The Company is also required to maintain compliance, measured at the end of each fiscal quarter, with a consolidated total net leverage ratio and a consolidated interest coverage ratio. The Second Amended and Restated Credit Agreement contains no restrictions on the payment of dividends and other restricted payments, as defined, as long as (1) the consolidated total net leverage ratio, as defined, both before and after giving effect to any such
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dividend or restricted payment on a pro forma basis, is less than 3.25:1, in an unlimited amount, (2) if clause (1) is not available, so long as the consolidated total net leverage ratio both before and after giving effect to any such dividend on a pro forma basis is less than 3.50:1, in an aggregate amount not to exceed the available amount, as defined, and (3) if clauses (1) and (2) are not available, in an aggregate amount not to exceed $50.0 million; provided, that, minimum liquidity, as defined, shall be not less than $75.0 million both before and after giving effect to any such dividend or restricted payment. As of April 30, 2024, the consolidated total net leverage ratio was (1.61):1. Minimum liquidity available as of April 30, 2024 was $4.3 billion. Accordingly, the Company does not believe that the provisions of the Second Amended and Restated Credit Agreement represent a significant restriction to its ability to pay dividends or to the successful future operations of the business. The Company has not paid a cash dividend since becoming a public company in 1994. The Company was in compliance with all covenants related to the Second Amended and Restated Credit Agreement as of April 30, 2024.
Related to execution of the Second Amended and Restated Credit Agreement, the Company incurred $2.7 million in costs, which were capitalized as debt issuance fees. The debt discount is amortized to interest expense over the term of the respective debt instruments and is included in other assets on the consolidated balance sheet.
NOTE 8 – Fair Value Measurements
The following table summarizes the carrying values and fair values of the Company’s financial instruments that were not carried at fair value in the consolidated balance sheets:
April 30, 2024July 31, 2023
(In thousands)Carrying Value TotalFair Value TotalCarrying Value TotalFair Value Total
Assets
Cash equivalents$734,005 $736,806 $674,980 $677,515 
Investment in held to maturity securities2,000,334 2,018,409 1,406,589 1,414,903 
Total Assets$2,734,339 $2,755,215 $2,081,569 $2,092,418 
Liabilities
Long-term fixed rate debt, including current portion$ $ $11,006 $11,006 
Total Liabilities$ $ $11,006 $11,006 
The Company has investments in U.S. Treasury Bills some of which mature over a period greater than 90 days and are classified as short-term investments. The U.S. Treasury Bills are carried at amortized cost and classified as held to maturity as the Company has the intent and the ability to hold them until they mature. The carrying value of the U.S. Treasury Bills are adjusted for accretion of discounts over the remaining life of the investment. Income related to the Treasury Bills is recognized in interest income in the Company’s consolidated statement of income. The U.S. Treasury Bills classified within Level I of the fair value hierarchy.

During the nine months ended April 30, 2024, no transfers were made between any levels within the fair value hierarchy.
NOTE 9 – Net Income Per Share
The table below reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding:
Three Months Ended April 30,Nine Months Ended April 30,
(In thousands)2024202320242023
Weighted average common shares outstanding961,813 953,574 960,143 952,834 
Effect of dilutive securities14,632 13,806 14,083 12,602 
Weighted average common and dilutive potential common shares outstanding
976,445 967,380 974,226 965,436 
There were no material adjustments to net income required in calculating diluted net income per share. Excluded from the dilutive earnings per share calculation were 631,147 and 3,451,940 options to purchase the Company’s common stock for the three months ended April 30, 2024 and 2023, respectively, and 1,937,294 and 15,946,536 options to purchase the Company’s common stock for the nine months ended April 30, 2024 and 2023, respectively, because their inclusion would have been anti-dilutive.
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NOTE 10 – Stock-based Compensation
The Company recognizes compensation expense for stock option awards without a market condition on a straight-line basis over the requisite service period of the award. The following is a summary of activity for the Company’s stock options for the nine months ended April 30, 2024:
(In thousands, except per share and term data)SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Term (In years)Aggregate Intrinsic Value
Outstanding as of July 31, 202317,825 $15.47 4.67$512,045 
Grants of options1,031 49.60 
Exercises(2,047)10.01 
Forfeitures or expirations 
Outstanding as of April 30, 202416,809 $18.23 4.52$606,535 
Exercisable as of April 30, 202414,279 $14.89 3.87$562,931 
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock. The number of options that were in-the-money was 22,804,605 at April 30, 2024.
The Company grants option awards to certain executives that contain service and market conditions. The options will become exercisable over five years, subject to continued service by the executive, with 20% vesting on the first anniversary of the grant date and the balance vesting monthly over the subsequent four years. Separate and apart from the time-based vesting schedule, the options are also subject to a market condition requiring the trading price of the Company common stock on the Nasdaq Global Select Market to be greater than or equal to 125% of the exercise price of the options, determined both (i) at the time of any exercise, and (ii) based on the closing price on each of the twenty consecutive trading days preceding the date of any exercise. The exercise price of the options is equivalent to the closing price of the Company’s common stock on the grant date. The fair value of the awards is determined at the grant date using either Lattice or Monte Carlo model, risk-free interest rates ranging from 0.71% to 4.37%, estimated volatility ranging from 25.2% to 29.8%, and no expected dividends. The total estimated compensation expense to be recognized by the Company over the five-year service period for these options is $50.1 million and will be recognized using the accelerated attribution method over each vesting tranche of the award. The Company recognized $5.9 million and $9.7 million in compensation expense related to these awards in the nine months ended April 30, 2024 and 2023, respectively.

The following is a summary of activity for the Company’s stock option awards subject to market conditions for the nine months ended April 30, 2024:
(In thousands, except per share and term data)SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Term (In years)Aggregate Intrinsic Value
Outstanding as of July 31, 20235,920 $24.37 7.43$117,389 
Grants of options75 50.89 
Exercises  
Forfeitures or expirations  
Outstanding as of April 30, 20245,995 $24.70 6.72$177,526 
Exercisable as of April 30, 20243,864 $23.14 6.45$120,445 

The table below sets forth the stock-based compensation recognized by the Company for stock options, restricted stock, and restricted unit awards:
Three Months Ended April 30,Nine Months Ended April 30,
(In thousands)2024202320242023
General and administrative$7,201 $7,830 $21,693 $25,366 
Yard operations1,817 2,251 5,001 5,038 
Total stock-based compensation$9,018 $10,081 $26,694 $30,404 
Additionally, Purple Wave, Inc. maintains an equity-based compensation plan for certain executives. Compensation cost attributable to Purple Wave, Inc. equity-based compensation plan was $1.3 million and $0 included in stock based compensation for the nine months ended April 30, 2024 and 2023, respectively.

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The Company’s restricted stock awards (“RSA”) and restricted stock unit awards (“RSU”), and performance stock units (“PSU”) have generally been issued with vesting periods ranging from two years to five years. RSA and RSU vest solely on service conditions while PSU will vest over five years, when and if certain financial performance targets are met. Accordingly, the Company recognizes compensation expense for RSA and RSU awards on a straight-line basis over the requisite service period of the award. Compensation expense for PSU is recognized on an accelerated attribution method when the achievement of certain financial performance targets appear probable and is recognized over the remaining requisite service period.
The following is a summary of activity for the Company’s RSA, RSU and PSU for the nine months ended April 30, 2024:
(In thousands, except per share data)Restricted and Performance SharesWeighted Average Grant Date Fair Value
Outstanding as of July 31, 2023800 $31.77 
Grants 1,382 51.73 
Vested(278)31.07 
Forfeitures or expirations(13)34.02 
Outstanding as of April 30, 20241,891 $46.45 
NOTE 11 – Stock Repurchases
On September 22, 2011, the Company’s Board of Directors approved a 320 million share increase in the stock repurchase program, bringing the total current authorization to 784 million shares. The repurchases may be effected through solicited or unsolicited transactions in the open market or in privately negotiated transactions. No time limit has been placed on the duration of the stock repurchase program. Subject to applicable securities laws, such repurchases will be made at such times and in such amounts as the Company deems appropriate and may be discontinued at any time. The Company did not repurchase any shares of its common stock under the program during the nine months ended April 30, 2024 or 2023. As of April 30, 2024, the total number of shares repurchased under the program was 458 million, and subject to applicable limitations under Delaware law, 326 million shares were available for repurchase under the program.
NOTE 12 – Income Taxes
The Company’s effective income tax rates were 20.4% and 21.3% for the nine months ended April 30, 2024 and 2023, respectively, which differs from the U.S. statutory rate of 21% primarily due to state income taxes, deduction for Foreign Derived Intangible Income, and excess tax benefits associated with equity-based compensation.
The Company applies the provisions of the accounting standard for uncertain tax positions to its income taxes. For benefits to be realized, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.
The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is currently under examination by certain taxing authorities in the U.S. for fiscal years between 2019 and 2022. At this time, the Company does not believe that the outcome of any examination will have a material impact on the Company’s consolidated results of operations and financial position.
NOTE 13 – Recent Accounting Pronouncements
Pending
In March 2023 the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323), which allows the option for reporting entities to elect to account for their tax equity investments, using the proportional amortization method if certain conditions are met. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company’s adoption of ASU 2023-02 is not expected to have a material impact on the Company’s consolidated results of operations and financial position.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.


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On December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.
NOTE 14 – Legal Proceedings
The Company is subject to threats of litigation and is involved in actual litigation and damage claims arising in the ordinary course of business, such as actions related to injuries, property damage, contract disputes, and handling or disposal of vehicles. Except as otherwise noted in this Note 13, there are no material pending legal proceedings to which the Company is a party, or with respect to which any of the Company’s property is subject.

The Company provides for an accrual for matters when a loss is probable and the amount can be reasonably estimated. The effect of the outcome of any such matters on the Company’s future consolidated results of operations and cash flows cannot be predicted because any such effect depends on future results of operations and the amount and timing of the resolution of any such matters. The Company believes that any ultimate liability regarding existing litigation and claims would not have a material effect on its consolidated results of operations, financial position, or cash flows. However, legal and regulatory proceedings are inherently unpredictable, and the amount of the liabilities associated with claims, if any, cannot be determined with certainty. If one or more matters were resolved against us for amounts in excess of the Company’s expectations, the impact on the Company’s consolidated results of operations, financial position, or cash flow could be material. The Company maintains insurance which may or may not provide coverage for claims made against the Company. There is no assurance that there will be insurance coverage available when and if needed. Additionally, the insurance that the Company carries requires that the Company pay for costs and/or claims exposure up to the amount of the insurance deductibles.

The U.S. Department of Justice, Consumer Protection Branch (DOJ) is conducting an ongoing investigation into potential violations by the Company of certain money laundering laws related to its practices and procedures for preventing and detecting money-laundering activity by its members. In connection with this investigation, the Company received a letter from the DOJ in October 2023 in which they indicated the Company may have exposure as a result of potential violations to such money laundering statutes and regulations. The Company is cooperating with the DOJ’s investigation. At this time, we are unable to predict the duration, scope, or result of any potential governmental, criminal, or civil proceeding that may result, the imposition of fines and penalties, and/or other remedies, and as a result, are unable to predict the range of possible loss.
NOTE 15 – Segments and Other Geographic Reporting
The Company’s U.S. and International regions are considered two separate operating segments and are disclosed as two reportable segments. The segments represent geographic areas and reflect how the chief operating decision maker allocates resources and measures results, including total revenues and operating income.
The following table presents financial information by segment:
Three Months Ended April 30, 2024Three Months Ended April 30, 2023
(In thousands)United StatesInternationalTotalUnited StatesInternationalTotal
Service revenues830,680115,950$946,630 $752,077 $95,172 $847,249 
Vehicle sales88,23692,393180,629 81,681 92,901 174,582 
Total service revenues and vehicle sales918,916 208,343 1,127,259 833,758 188,073 1,021,831 
Yard operations369,57769,296438,873 323,426 55,532 378,958 
Cost of vehicle sales81,31281,569162,881 74,951 84,492 159,443 
General and administrative75,096 13,206 $88,302 50,590 13,916 64,506 
Operating income$392,931 $44,272 $437,203 $384,791 $34,133 $418,924 
Depreciation and amortization$43,477 $7,256 $50,733 $32,918 $4,453 $37,371 
Capital expenditures and acquisitions72,186 15,629 87,815 79,633 10,172 89,805 
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Nine Months Ended April 30, 2024Nine Months Ended April 30, 2023
(In thousands)United StatesInternationalTotalUnited StatesInternationalTotal
Service revenues2,349,241318,670$2,667,911 $2,109,467 $254,419 $2,363,886 
Vehicle sales241,307 258,606 499,913 261,069 246,972 508,041 
Total service revenues and vehicle sales2,590,548577,2763,167,824 2,370,536 501,391 2,871,927 
Yard operations1,062,859193,6931,256,552 973,067 154,165 1,127,232 
Cost of vehicle sales223,462234,134457,596 246,431 218,851 465,282 
General and administrative201,667 39,530 241,197 147,456 36,005 183,461 
Operating income$1,102,560 $109,919 $1,212,479 $1,003,582 $92,370 $1,095,952 
Depreciation and amortization$118,756 $20,402 $139,158 $101,974 $12,869 $114,843 
Capital expenditures and acquisitions372,178 95,339 467,517 305,344 41,180 346,524 
April 30, 2024July 31, 2023
(In thousands)United StatesInternationalTotalUnited StatesInternationalTotal
Total assets$7,034,960 $975,672 $8,010,632 $5,825,064 $912,815 $6,737,879 
Goodwill390,903 120,469 511,372 270,269 124,020 394,289 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Copart,” the “Company,” “we,” “us,” or “our” refer to Copart, Inc.
This Quarterly Report on Form 10-Q, including the information incorporated by reference herein, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). All statements other than statements of historical facts are statements that could be deemed forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “forecast,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms or other comparable terminology. The forward-looking statements contained in this Form 10-Q involve known and unknown risks, uncertainties and situations that may cause our or our industry’s actual results, level of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these statements. These forward-looking statements are made in reliance upon the safe harbor provision of the Private Securities Litigation Reform Act of 1995. These factors include those listed in Part II, Item 1A. under the caption entitled “Risk Factors” in this Quarterly Report on Form 10-Q and those discussed elsewhere in this Quarterly Report on Form 10-Q. We encourage investors to review these factors carefully together with the other matters referred to herein, as well as in the other documents we file with the Securities and Exchange Commission (the “SEC”). We may from time to time make additional written and oral forward-looking statements, including statements contained in our filings with the SEC. We do not undertake to update any forward-looking statement that may be made from time to time by or on behalf of us.
Although we believe that, based on information currently available to us and our management, the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements.
Overview
We are a leading provider of online auctions and vehicle remarketing services with operations in the United States (“U.S.”), Canada, the United Kingdom (“U.K.”), Brazil, the Republic of Ireland, Germany, Finland, the United Arab Emirates (“U.A.E.”), Oman, Bahrain, and Spain.
Our goals are to generate sustainable profits for our stockholders, while also providing environmental and social benefits for the world around us. With respect to our environmental stewardship, we believe our business is a critical enabler for the global re-use and recycling of vehicles, parts, and raw materials. We are not responsible for the carbon emissions resulting from new vehicle manufacturing, governmental fuel emissions standards or vehicle use by consumers. Each vehicle that enters our business operations already exists, with whatever fuel technology and efficiency it was designed and built to have, and the substantial carbon emissions associated with the vehicle’s manufacture have already occurred. However, upon our receipt of an existing vehicle, we help facilitate the decrease of its total environmental impact by extending its useful life and thereby avoiding the carbon emissions associated with the alternative of new vehicle and auto parts manufacturing. For example, many of the cars we process and remarket are subsequently restored to drivable condition, reducing the new vehicle manufacturing burden the world would otherwise face. Many of our cars are purchased by dismantlers, who recycle and refurbish parts for vehicle repairs, again reducing new and aftermarket parts manufacturing. And finally, some of our vehicles are returned to their raw material inputs through scrapping, reducing the need for further new resource extraction. In each of these cases, our business facilitates the reduction of the carbon and other environmental footprint of the global transportation industry.
Beyond our environmental stewardship, we also support the world’s communities in two important ways. First, we believe that we contribute to economic development and well-being by enabling more affordable access to mobility around the world. For example, many of the automobiles sold through our auction platform are purchased for use in developing countries where affordable transportation is a critical enabler of education, health care, and well-being more generally. Secondly, we believe we play an important role in the catastrophic weather events response infrastructure, which contributes to disaster recovery and resilience in the communities we serve. For example, we mobilized our people, and engaged with a multitude of service providers to timely retrieve, store, and remarket tens of thousands of flood-damaged vehicles in South Florida in the wake of Hurricane Ian in the fall of 2022.
We provide vehicle sellers with a full range of services to process and sell vehicles primarily over the internet through our Virtual Bidding Third Generation internet auction-style sales technology, which we refer to as VB3. Vehicle sellers consist primarily of insurance companies, but also include banks, finance companies, charities, fleet operators, dealers, vehicle rental companies, and individuals. We sell the vehicles principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters, and to the general public. The majority of the vehicles sold on behalf of insurance companies are either damaged vehicles deemed a total loss; not economically repairable by the insurance companies; or are recovered stolen vehicles for which an insurance settlement with the vehicle owner has already been made. We offer vehicle sellers a full range of services that help expedite each stage of the vehicle sales process, minimize administrative and processing costs, and maximize the ultimate sales price through the online auction process.
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In the U.S., Canada, Brazil, the Republic of Ireland, Finland, the U.A.E., Oman, and Bahrain, we sell vehicles primarily as an agent and derive revenue primarily from auction and auction related sales transaction fees charged for vehicle remarketing services as well as fees for services subsequent to the auction, such as delivery and storage. In the U.K., Germany, and Spain we operate both as an agent and on a principal basis, in some cases purchasing salvage vehicles outright and reselling the vehicles for our own account. In Germany and Spain, we also derive revenue from listing vehicles on behalf of insurance companies and insurance experts to determine the vehicle’s residual value and/or to facilitate a sale for the insured.
We monitor and analyze a number of key financial performance indicators in order to manage our business and evaluate our financial and operating performance. Such indicators include:
Service and Vehicle Sales Revenue: Our service revenue consists of auction and auction related sales transaction fees charged for vehicle remarketing services. These auction and auction related services may include a combination of vehicle purchasing fees, vehicle listing fees, and vehicle selling fees that can be based on a predetermined percentage of the vehicle sales price, tiered vehicle sales price driven fees, or at a fixed fee based on the sale of each vehicle regardless of the selling price of the vehicle; transportation fees for the cost of transporting the vehicle to or from our facility; title processing and preparation fees; vehicle storage fees; bidding fees; and vehicle loading fees. These fees are recognized as net revenue (not gross vehicle selling price) at the time of auction in the amount of such fees charged. Purchased vehicle revenue includes the gross sales price of the vehicles which we have purchased or are otherwise considered to own. We have certain contracts with insurance companies, primarily in the U.K., in which we act as a principal, purchasing vehicles and reselling them for our own account. We also purchase vehicles in the open market, primarily from individuals, and resell them for our own account.
Our revenue is impacted by several factors, including total loss frequency and the average vehicle auction selling price, as a significant amount of our service revenue is associated in some manner with the ultimate selling price of the vehicle. Vehicle auction selling prices are driven primarily by: (i) market demand for rebuildable, drivable vehicles; (ii) used car pricing, which we also believe has an impact on total loss frequency; (iii) end market demand for recycled and refurbished parts as reflected in demand from dismantlers; (iv) the mix of cars sold; (v) changes in the U.S. dollar exchange rate to foreign currencies, which we believe has an impact on auction participation by international buyers; (vi) restrictions within the global supply chain; and (vii) changes in commodity prices, particularly the per ton price for crushed car bodies, as we believe this has an impact on the ultimate selling price of vehicles sold for scrap and vehicles sold for dismantling. We cannot specifically quantify the financial impact that commodity pricing, used car pricing, and product sales mix has on the selling price of vehicles, our service revenues, or financial results. Total loss frequency is the percentage of cars involved in accidents that insurance companies salvage rather than repair and is driven by the relationship between repair costs used car values, and auction returns. Over the past 30 years we believe there has been an increase in overall growth in the salvage market driven by an increase in total loss frequency. This increase in total loss frequency may have been driven by changes in used car values and repair costs over the same long-term horizon, which we believe are generally trending upward. Recently we have noted fluctuations in total loss frequency. Nonetheless, we believe the long-term trend of increases in total loss frequency will continue. In the near term changes in used car prices and repair cost, are inversely related but may impact total loss frequency and thereby affect our growth rate. Used car values are determined by many factors, including used car supply, which is tied directly to new car sales, and the average age of cars on the road. The average age of cars on the road has continued to increase, growing from 9.7 years in 2003 to 12.5 years in 2023. Repair costs are generally based on damage severity, vehicle complexity, repair parts availability, repair parts costs, labor costs, and repair shop lead times. The factors that can influence repair costs, used car pricing, and auction returns are many and varied and we cannot predict their movements with precision.
Operating Costs and Expenses: Yard operations expenses consist primarily of (1) labor (operating personnel at yards), (2) transportation (miles traveled and fuel rates), (3) facilities (maintenance, property related taxes, rent, and insurance), (4) other (to include marketing costs); and costs of vehicles sold under the purchase contracts. General and administrative expenses consist primarily of executive management; accounting; data processing; sales personnel; professional services; marketing expenses; and system maintenance and enhancements.
Other Income and Expense: Other income consists primarily of interest income on U.S. Treasury Bills, foreign exchange rate gains and losses; gains and losses from the disposal of assets, which will fluctuate based on the nature of these activities each period; fees and interest expense on the credit facility, and earnings from unconsolidated affiliates.
Liquidity and Cash Flows: Our primary source of working capital is cash operating results. The primary source of our liquidity is our cash and cash equivalents and our revolving credit commitments under the Second Amended and Restated Credit Agreement (the “Revolving Loan Facility”). The primary factors affecting cash operating results are: (i) seasonality; (ii) market wins and losses; (iii) supplier mix; (iv) accident frequency; (v) total loss frequency; (vi) volume from our existing suppliers; (vii) commodity pricing; (viii) used car pricing; (ix) foreign currency exchange rates; (x) product mix; (xi) contract mix to the extent applicable; (xii) our capital expenditures; and (xiii) other macroeconomic factors. These factors are further discussed in “Results of Operations” below and in the “Risk Factors” sections of this Quarterly Report on Form 10-Q.
Potential internal sources of additional working capital and liquidity are the sale of assets or the issuance of shares through option exercises and shares issued under our Employee Stock Purchase Plan. A potential external source of additional working capital
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and liquidity is the issuance of additional debt or equity. However, we cannot predict if these sources will be available in the future or on commercially acceptable terms.

Acquisitions and New Operations
As part of our overall expansion strategy of offering integrated services to vehicle sellers, we anticipate acquiring and developing facilities in new regions, as well as the regions currently served by our facilities. We believe that these acquisitions and openings will strengthen our coverage, as we have facilities located in the U.S., Canada, the U.K., Brazil, the Republic of Ireland, Germany, Finland, the U.A.E., Oman, Bahrain, and Spain with the intention of providing global coverage for our sellers.
The following tables set forth operational facilities that we have opened and are now operational from August 1, 2022 through April 30, 2024:
United States LocationsGeographic Service AreaDate
AnchorageAlaskaAugust 2022
Rapid CitySouth DakotaAugust 2022
Kansas CityMissouriSeptember 2022
GrenadaMississippiJanuary 2023
WindhamNew HampshireMarch 2023
Las Vegas WestNevadaJune 2023
AkronOhioJuly 2023
WaylandMichiganJuly 2023
RutlandVermontAugust 2023
International LocationsGeographic Service AreaDate
Brasília, BrazilBrazilSeptember 2022
Büdingen, HesseGermanyJanuary 2023
Ottawa, OntarioCanadaFebruary 2023
Corby, EnglandUnited KingdomOctober 2023
Glasgow, ScotlandUnited KingdomDecember 2023
Alhendin, GranadaSpainJanuary 2024
Gloucester, England United KingdomMarch 2024
In October 2023, we acquired a controlling interest in Purple Wave, Inc., an online offsite heavy equipment auction company (“Purple Wave”).
The period-to-period comparability of our consolidated operating results and financial position is affected by business acquisitions, new openings, weather and product introductions during such periods.
In addition to growth through business acquisitions, we seek to increase revenues and profitability by, among other things, (i) acquiring and developing additional vehicle storage facilities in key markets, including foreign markets; (ii) pursuing global, national, and regional vehicle seller agreements; (iii) increasing our service offerings; and (iv) expanding the application of VB3 into new markets. In addition, we implement our pricing structure and auction procedures, and attempt to introduce cost efficiencies at each of our acquired facilities by implementing our operational procedures, integrating our management information systems, and redeploying personnel, when necessary.
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Results of Operations
The following table shows certain data from our consolidated statements of income expressed as a percentage of total service revenues and vehicle sales for the three and nine months ended April 30, 2024 and 2023:
Three Months Ended April 30,Nine Months Ended April 30,
(In percentages)2024202320242023
Service revenues and vehicle sales:
Service revenues84 %83 %84 %82 %
Vehicle sales16 %17 %16 %18 %
Total service revenues and vehicle sales100 %100 %100 %100 %
Operating expenses:
Yard operations40 %37 %41 %39 %
Cost of vehicle sales14 %16 %14 %16