Company Quick10K Filing
Copart
Price80.91 EPS3
Shares239 P/E28
MCap19,310 P/FCF43
Net Debt219 EBIT812
TEV19,529 TEV/EBIT24
TTM 2019-10-31, in MM, except price, ratios
10-Q 2021-01-31 Filed 2021-02-24
10-Q 2020-10-31 Filed 2020-11-20
10-K 2020-07-31 Filed 2020-09-28
10-Q 2020-04-30 Filed 2020-05-28
10-Q 2020-01-31 Filed 2020-02-27
10-Q 2019-10-31 Filed 2019-11-25
10-K 2019-07-31 Filed 2019-09-30
10-Q 2019-04-30 Filed 2019-05-29
10-Q 2019-01-31 Filed 2019-02-28
10-Q 2018-10-31 Filed 2018-11-29
10-K 2018-07-31 Filed 2018-10-01
10-Q 2018-04-30 Filed 2018-05-25
10-Q 2018-01-31 Filed 2018-02-27
10-Q 2017-10-31 Filed 2017-11-28
10-K 2017-07-31 Filed 2017-09-28
10-Q 2017-04-30 Filed 2017-05-25
10-Q 2017-01-31 Filed 2017-02-28
10-Q 2016-10-31 Filed 2016-11-30
10-K 2016-07-31 Filed 2016-09-28
10-Q 2016-04-30 Filed 2016-05-26
10-Q 2016-01-31 Filed 2016-02-25
10-Q 2015-10-31 Filed 2015-11-24
10-K 2015-07-31 Filed 2015-09-25
10-Q 2015-04-30 Filed 2015-05-28
10-Q 2015-01-31 Filed 2015-03-04
10-Q 2014-10-31 Filed 2014-11-26
10-K 2014-07-31 Filed 2014-09-29
10-Q 2014-04-30 Filed 2014-06-09
10-Q 2014-01-31 Filed 2014-03-05
10-Q 2013-10-31 Filed 2013-12-10
10-K 2013-07-31 Filed 2013-09-30
10-Q 2013-04-30 Filed 2013-06-05
10-Q 2013-01-31 Filed 2013-03-12
10-Q 2012-10-31 Filed 2012-12-07
10-K 2012-07-31 Filed 2012-10-01
10-Q 2012-04-30 Filed 2012-06-11
10-Q 2012-01-31 Filed 2012-03-09
10-Q 2011-10-31 Filed 2011-12-12
10-K 2011-07-31 Filed 2011-09-28
10-Q 2011-04-30 Filed 2011-06-09
10-Q 2011-01-31 Filed 2011-03-07
10-Q 2010-10-31 Filed 2010-12-03
10-K 2010-07-31 Filed 2010-09-23
10-Q 2010-04-30 Filed 2010-06-09
10-Q 2010-01-31 Filed 2010-03-12
8-K 2021-02-18 Earnings, Exhibits
8-K 2020-12-04 Shareholder Vote
8-K 2020-11-18
8-K 2020-10-07
8-K 2020-10-05
8-K 2020-09-02
8-K 2020-07-21
8-K 2020-05-20
8-K 2020-03-17
8-K 2020-02-19
8-K 2019-12-06
8-K 2019-11-20
8-K 2019-10-28
8-K 2019-09-04
8-K 2019-09-03
8-K 2019-07-20
8-K 2019-05-22
8-K 2019-02-20
8-K 2018-12-17
8-K 2018-11-20
8-K 2018-10-10
8-K 2018-09-19
8-K 2018-05-23
8-K 2018-02-26
8-K 2018-01-04

CPRT 10Q Quarterly Report

Note 1 - Summary of Significant Accounting Policies
Note 2 - Accounts Receivable, Net
Note 3 - Property and Equipment, Net
Note 4 - Leases
Note 5 - Goodwill and Intangible Assets
Note 6 - Long - Term Debt
Note 7 - Fair Value Measures
Note 8 - Net Income per Share
Note 9 - Stock - Based Compensation
Note 10 - Stock Repurchases
Note 11 - Income Taxes
Note 12 - Recent Accounting Pronouncements
Note 13 - Legal Proceedings
Note 14 - Segments and Other Geographic Reporting
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 cprt01312021-ex311.htm
EX-31.2 cprt01312021-ex312.htm
EX-32.1 cprt01312021-ex321.htm
EX-32.2 cprt01312021-ex322.htm

Copart Earnings 2021-01-31

Balance SheetIncome StatementCash Flow
2.92.31.71.20.60.02012201420172020
Assets, Equity
0.60.50.40.20.10.02012201420172020
Rev, G Profit, Net Income
0.50.30.20.0-0.1-0.32012201420172020
Ops, Inv, Fin

cprt-20210131
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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 January 31, 2021
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, including zip code)
(972) 391-5000
(Registrant’s telephone number, including area code)
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
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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 February 22, 2021, 236,316,965 shares of the registrant’s common stock were outstanding.



Copart, Inc.
Index to the Quarterly Report
January 31, 2021
Table of ContentsPage Number
2

Table of Contents


Copart, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share amounts)January 31, 2021July 31, 2020
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash$616,403 $477,718 
Accounts receivable, net462,405 350,207 
Vehicle pooling costs92,928 73,684 
Inventories30,203 20,080 
Income taxes receivable6,498 26,740 
Prepaid expenses and other assets17,030 15,330 
Total current assets1,225,467 963,759 
Property and equipment, net2,175,346 1,941,719 
Operating lease right-of-use assets107,602 118,455 
Intangibles, net44,270 47,772 
Goodwill346,966 343,622 
Deferred income taxes221 213 
Other assets34,566 39,721 
Total assets$3,934,438 $3,455,261 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities$324,108 $318,530 
Deferred revenue14,431 8,233 
Income taxes payable8,672 3,709 
Current portion of operating lease liabilities22,554 24,821 
Current portion of finance lease liabilities1,250 751 
Total current liabilities371,015 356,044 
Deferred income taxes81,316 71,686 
Income taxes payable51,177 44,965 
Operating lease liabilities, net of current portion85,307 95,584 
Long-term debt and finance lease liabilities, net of discount402,703 397,036 
Other liabilities328 430 
Total liabilities991,846 965,745 
Commitments and contingencies
Stockholders’ equity:
Preferred stock: $0.0001 par value - 5,000,000 shares authorized; none issued  
Common stock: $0.0001 par value - 400,000,000 shares authorized; 236,307,042 and 235,315,337 shares issued and outstanding, respectively.24 24 
Additional paid-in capital718,497 672,727 
Accumulated other comprehensive loss(106,720)(121,088)
Retained earnings2,330,791 1,937,853 
Total stockholders’ equity2,942,592 2,489,516 
Total liabilities and stockholders’ equity$3,934,438 $3,455,261 
The accompanying notes are an integral part of these consolidated financial statements.
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Copart, Inc.
Consolidated Statements of Income
(Unaudited)
Three Months Ended January 31,Six Months Ended January 31,
(In thousands, except per share amounts)2021202020212020
Service revenues and vehicle sales:
Service revenues$532,601 $510,034 $1,047,973 $997,890 
Vehicle sales84,430 65,106 161,998 131,674 
Total service revenues and vehicle sales617,031 575,140 1,209,971 1,129,564 
Operating expenses:
Yard operations235,904 257,351 467,715 498,142 
Cost of vehicle sales73,629 57,900 137,989 116,664 
General and administrative49,277 49,997 97,452 99,475 
Total operating expenses358,810 365,248 703,156 714,281 
Operating income258,221 209,892 506,815 415,283 
Other expense:
Interest expense, net(4,849)(4,464)(9,881)(8,490)
Other income, net(920)(354)2,333 363 
Total other expense(5,769)(4,818)(7,548)(8,127)
Income before income taxes252,452 205,074 499,267 407,156 
Income tax expense59,012 36,367 105,542 20,269 
Net income$193,440 $168,707 $393,725 $386,887 
Basic net income per common share$0.82 $0.73 $1.67 $1.67 
Weighted average common shares outstanding236,152 232,671 235,971 231,920 
Diluted net income per common share$0.81 $0.71 $1.64 $1.62 
Diluted weighted average common shares outstanding240,280 238,470 240,124 238,566 
The accompanying notes are an integral part of these consolidated financial statements.
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Copart, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended January 31,Six Months Ended January 31,
(In thousands)2021202020212020
Comprehensive income, net of tax:
Net income$193,440 $168,707 $393,725 $386,887 
Other comprehensive income:
Foreign currency translation adjustments21,774 (580)14,368 12,659 
Comprehensive income$215,214 $168,127 $408,093 $399,546 
The accompanying notes are an integral part of these consolidated financial statements.
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Copart, Inc.
Consolidated Statements of Stockholders’ Equity
(Unaudited)
Common StockAccumulated
Other
Comprehensive
Income (Loss)
Additional
Paid-in
Capital
(In thousands, except share amounts)Outstanding
Shares
AmountRetained
Earnings
Stockholders’
Equity
Balances at July 31, 2020235,315,337 $24 $672,727 $(121,088)$1,937,853 $2,489,516 
Net income— — — — 200,285 200,285 
Currency translation adjustment— — — (7,406)— (7,406)
Exercise of stock options, net of repurchased shares802,670 — 20,014 — (489)19,525 
Stock-based compensation— — 8,913 — — 8,913 
Balances at October 31, 2020236,118,007 24 701,654 (128,494)2,137,649 2,710,833 
Net income— — — — 193,440 193,440 
Currency translation adjustment— — — 21,774 — 21,774 
Exercise of stock options, net of repurchased shares121,158 — 3,098 — (298)2,800 
Stock-based compensation— — 8,865 — — 8,865 
Shares issued for Employee Stock Purchase Plan67,877 — 4,880 — — 4,880 
Balances at January 31, 2021236,307,042 $24 $718,497 $(106,720)$2,330,791 $2,942,592 
Common StockAccumulated
Other
Comprehensive
Income (Loss)
Additional
Paid-in
Capital
(In thousands, except share amounts)Outstanding
Shares
AmountRetained
Earnings
Stockholders’
Equity
Balances at July 31, 2019229,790,268 $23 $572,559 $(132,529)$1,338,328 $1,778,381 
Net income— — — — 218,180 218,180 
Currency translation adjustment— — — 13,239 — 13,239 
Exercise of stock options, net of repurchased shares2,643,310 — 9,551 — (98,285)(88,734)
Stock-based compensation— — 5,533 — — 5,533 
Balances at October 31, 2019232,433,578 23 587,643 (119,290)1,458,223 1,926,599 
Net income— — — — 168,707 168,707 
Currency translation adjustment— — — (580)— (580)
Exercise of stock options, net of repurchased shares1,141,040 — 19,975 — (68)19,907 
Stock-based compensation— — 6,141 — — 6,141 
Shares issued for Employee Stock Purchase Plan62,067 — 3,955 — — 3,955 
Balances at January 31, 2020233,636,685 $23 $617,714 $(119,870)$1,626,862 $2,124,729 
The accompanying notes are an integral part of these consolidated financial statements.
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Copart, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended January 31,
(In thousands)20212020
Cash flows from operating activities:
Net income$393,725 $386,887 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost60,898 48,097 
Allowance for credit loss213 1,301 
Equity in (earnings) losses of unconsolidated affiliates(1,343)3,124 
Stock-based compensation17,778 11,674 
Gain on sale of property and equipment(1,145)(1,315)
Deferred income taxes9,442 6,719 
Changes in operating assets and liabilities:
Accounts receivable(111,148)(78,510)
Vehicle pooling costs(19,099)(13,921)
Inventories(9,772)2,765 
Prepaid expenses and other current and non-current assets5,802 7,184 
Operating lease right-of-use assets and lease liabilities470 331 
Accounts payable and accrued liabilities10,041 24,862 
Deferred revenue6,098 1,021 
Income taxes receivable20,243 (48,722)
Income taxes payable10,838 5,794 
Other liabilities (371)
Net cash provided by operating activities393,041 356,920 
Cash flows from investing activities:
Purchases of property and equipment(283,214)(400,352)
Proceeds from sale of property and equipment129 1,639 
Net cash used in investing activities(283,085)(398,713)
Cash flows from financing activities:
Proceeds from the exercise of stock options23,112 32,594 
Proceeds from the issuance of Employee Stock Purchase Plan shares4,880 3,955 
Payments for employee stock-based tax withholdings(787)(101,422)
Net proceeds on revolving loan facility 13,600 
Payments of finance lease obligations(622) 
Net cash provided by (used in) financing activities26,583 (51,273)
Effect of foreign currency translation2,146 258 
Net increase (decrease) in cash, cash equivalents, and restricted cash138,685 (92,808)
Cash, cash equivalents, and restricted cash at beginning of period477,718 186,319 
Cash, cash equivalents, and restricted cash at end of period$616,403 $93,511 
Supplemental disclosure of cash flow information:
Interest paid$7,614 $9,007 
Income taxes paid, net of refunds$64,860 $57,591 
The accompanying notes are an integral part of these consolidated financial statements.
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Copart, Inc.
Notes to Consolidated Financial Statements
January 31, 2021
(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, and from some individuals. The Company sells principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters, and in some jurisdictions, the Company sells 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 its financial position as of January 31, 2021 and July 31, 2020, its consolidated statements of income, comprehensive income and stockholders’ equity for the three and six months ended January 31, 2021 and 2020, and its cash flows for the six months ended January 31, 2021 and 2020. Interim results for the three and six months ended January 31, 2021 are not necessarily indicative of the results that may be expected for any future period, or for the entire year ending July 31, 2021. 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, 2020. 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.
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; purchase price allocations; and contingencies. Actual results may differ from these estimates.
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.
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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, although the Company provides for credit loss expense in the case of non-performance by its buyers or sellers.
Three Months Ended January 31,Six Months Ended January 31,
(In thousands)2021202020212020
Service revenues
United States$465,423 $447,345 $915,658 $878,148 
International67,178 62,689 132,315 119,742 
Total service revenues$532,601 $510,034 $1,047,973 $997,890 
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 January 31,Six Months Ended January 31,
(In thousands)2021202020212020
Vehicle sales
United States$52,500 $35,392 $99,520 $68,753 
International31,930 29,714 62,478 62,921 
Total vehicle sales$84,430 $65,106 $161,998 $131,674 
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 statements of income.
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The change in the carrying amount of contract assets was as follows (In thousands):
Balance as of July 31, 2020$10,080 
Capitalized contract assets during the period100 
Costs amortized during the period(1,681)
Effect of foreign currency exchange rates197 
Balance as of January 31, 2021$8,696 
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, 2019$(132,529)
Gain on foreign currency translation11,441 
Cumulative loss on foreign currency translation as of July 31, 2020$(121,088)
Gain on foreign currency translation14,368 
Cumulative loss on foreign currency translation as of January 31, 2021$(106,720)
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.
The amounts recorded for financial instruments in the Company’s consolidated financial statements, which included cash, restricted cash, accounts receivable, accounts payable, accrued liabilities, and amounts outstanding under the Revolving Loan Facility approximated their fair values as of January 31, 2021 and July 31, 2020, 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. See Note 6 – Long-Term Debt and Note 7 – Fair Value Measures.
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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, domestic certificates of deposit, 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.
Capitalized Software Costs
The Company capitalizes system development costs and website development costs related to the enterprise computing services during the application development stage. Costs related to preliminary project activities and post implementation activities are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life, generally three to seven years. The Company evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that impact the recoverability of these assets.
Total gross capitalized software as of January 31, 2021 and July 31, 2020 was $60.0 million and $52.6 million, respectively. Accumulated amortization expense related to software as of January 31, 2021 and July 31, 2020 totaled $39.9 million and $33.5 million, respectively.
NOTE 2 — Accounts Receivable, Net
Accounts receivable, net consisted of:
(In thousands)January 31, 2021July 31, 2020
Advance charges receivable$368,360 $260,196 
Trade accounts receivable98,412 94,281 
Other receivables2,587 2,120 
469,359 356,597 
Less: Allowance for credit loss(6,954)(6,390)
Accounts receivable, net$462,405 $350,207 
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 3 — Property and Equipment, Net
Property and equipment, net consisted of the following:
(In thousands)January 31, 2021July 31, 2020
Land$1,378,632 $1,235,315 
Buildings and improvements1,040,993 932,976 
Transportation and other equipment301,333 274,422 
Office furniture and equipment75,184 70,926 
Software60,043 52,621 
 2,856,185 2,566,260 
Less: Accumulated depreciation and amortization(680,839)(624,541)
Property and equipment, net$2,175,346 $1,941,719 
Depreciation expense on property and equipment was $29.7 million and $22.0 million for the three months ended January 31, 2021 and 2020, respectively, and $56.8 million and $42.5 million for the six months ended January 31, 2021 and 2020, respectively.
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NOTE 4 – 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.
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 January 31,Six Months Ended January 31,
(In thousands)2021202020212020
Operating lease expense$7,024 $7,706 $14,281 $15,682 
Finance lease expense:
Amortization of right-of-use assets167 157 334 312 
Interest on finance lease liabilities23 7 44 14 
Short-term lease expense1,023 1,297 2,268 3,292 
Variable lease expense395 675 934 819 
Total lease expense$8,632 $9,842 $17,861 $20,119 
Supplemental cash flow information related to leases as of January 31, 2021 were as follows:
Six Months Ended January 31,
(In thousands)20212020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows related to operating leases$14,597 $14,797 
Operating cash flows related to finance leases17 14 
Financing cash flows related to finance leases622 312 
Right-of-use assets obtained in exchange for new operating lease liabilities12,812 13,601 
Right-of-use assets obtained in exchange for new finance lease liabilities6,251  
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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 January 31, 2021 and July 31, 2020 was $57.9 million and $64.8 million, respectively. The accumulated depreciation associated with the leased assets as of January 31, 2021 and July 31, 2020 was $1.6 million and $0.9 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 $3.6 million and $0.6 million for the three months ended January 31, 2021 and 2020, respectively, and $7.2 million and $0.6 million for the six months ended January 31, 2021 and 2020, respectively and is included within Service revenues on the consolidated statements of income.
NOTE 5 – Goodwill and Intangible Assets
The following table sets forth amortizable intangible assets by major asset class:
(In thousands)January 31, 2021July 31, 2020
Amortized intangibles:
Supply contracts and customer relationships$50,580 $50,600 
Trade names23,700 23,635 
Licenses and databases7,652 7,630 
Accumulated amortization(37,662)(34,093)
Net intangibles$44,270 $47,772 
Aggregate amortization expense on amortizable intangible assets was $1.7 million and $2.3 million for the three months ended January 31, 2021 and 2020, respectively, and $3.5 million and $4.8 million for the six months ended January 31, 2021 and 2020, respectively.
The change in the carrying amount of goodwill was as follows (In thousands):
Balance as of July 31, 2020$343,622 
Effect of foreign currency exchange rates3,344 
Balance as of January 31, 2021$346,966 
NOTE 6 – Long-Term Debt
Credit Agreement
On December 3, 2014, the Company entered into a Credit Agreement (as amended from time to time, the “Credit Amendment”) with Wells Fargo Bank, National Association, as administrative agent, and Bank of America, N.A., as syndication agent. The Credit Agreement provided for (a) a secured revolving loan facility in an aggregate principal amount of up to $300.0 million (the “Revolving Loan Facility”), and (b) a secured term loan facility in an aggregate principal amount of $300.0 million (the “Term Loan”).
On March 15, 2016, the Company entered into a First Amendment to Credit Agreement (the “Amendment to Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent and Bank of America, N.A. The Amendment to Credit Agreement amended certain terms of the Credit Agreement, dated as of December 3, 2014. The Amendment to Credit Agreement provided for (a) an increase in the secured revolving credit commitments by $50.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Credit Agreement to $350.0 million, (b) a new secured term loan (the “Incremental Term Loan”) in the aggregate principal amount of $93.8 million having a maturity date of March 15, 2021, and (c) an extension of the termination date of the Revolving Loan Facility and the maturity date of the Term Loan from December 3, 2019 to March 15, 2021.
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On July 21, 2016, the Company entered into a Second Amendment to Credit Agreement (the “Second Amendment to Credit Agreement”) with Wells Fargo Bank, National Association, SunTrust Bank, and Bank of America, N.A., as administrative agent (as successor in interest to Wells Fargo Bank). The Second Amendment to Credit Agreement amended certain terms of the Credit Agreement, dated as of December 3, 2014 as amended by the Amendment to Credit Agreement, dated as of March 15, 2016. The Second Amendment to Credit Agreement provided for, among other things, (a) an increase in the secured revolving credit commitments by $500.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Credit Agreement to $850.0 million, (b) the repayment of existing term loans outstanding under the Credit Agreement, (c) an extension of the termination date of the revolving credit facility under the Credit Agreement from March 15, 2021 to July 21, 2021, and (d) increased covenant flexibility. Concurrent with the closing of the Second Amendment to Credit Agreement, the Company prepaid in full the outstanding $242.5 million principal amount of the Term Loan and Incremental Term Loan under the Credit Agreement without premium or penalty.
On July 21, 2020, the Company entered into a First Amended and Restated Credit Agreement with Wells Fargo Bank, National Association, Truist Bank (as successor by merger to Suntrust Bank), BMO Harris Bank N.A., Santander Bank, N.A., and Bank of America, N.A., as administrative agent. The First Amended and Restated Credit Agreement amended certain terms of the Credit Agreement, dated as of December 3, 2014 as amended by the Amendment to Credit Agreement, dated as of March 15, 2016, as amended by the Second Amendment to Credit Agreement, dated as July 21, 2016. The First 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 Credit Agreement to $1,050.0 million, and (b) an extension of the termination date of the revolving credit facility under the Credit Agreement from July 21, 2021 to July 21, 2023. The First Amended and Restated Credit Agreement additionally increased the pricing levels under the Credit Agreement to a range of 0.25% to 0.35% in the case of the commitment fee, 1.50% to 2.25% in the case of the applicable margin for Eurodollar Rate Loans, and 0.50% to 1.25% in the case of the applicable margin for base rate loans, in each case depending on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter. The principal purposes of these financing transactions were to increase the size and availability under the Company’s Revolving Loan Facility and to provide additional long-term financing. 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.
The Revolving Loan Facility under the Credit Agreement bears interest, at the election of the Company, at either (a) the Base Rate, which is defined as a fluctuating rate per annum equal to the greatest of (i) the Prime Rate in effect on such day; (ii) the Federal Funds Rate in effect on such date plus 0.50%; or (iii) the Eurodollar Rate plus 1.0%, subject to an interest rate floor of 0.75%, in each case plus an applicable margin ranging from 0.50% to 1.25% based on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter; or (b) the Eurodollar Rate plus an applicable margin ranging from 1.50% to 2.25% depending on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter. Interest is due and payable in arrears, at the end of each calendar quarter for loans bearing interest at the Base Rate, and at the end of an interest period (or at each three month interval in the case of loans with interest periods greater than three months) in the case of Eurodollar Rate Loans. The interest rate as of January 31, 2021 on the Company’s Revolving Loan Facility was the Eurodollar Rate of 0.75% plus an applicable margin of 1.50%. The carrying amount of the Credit Agreement is comprised of borrowings under which interest accrues under a fluctuating interest rate structure. Accordingly, the carrying value approximated fair value at January 31, 2021, and was classified within Level II of the fair value hierarchy.
Amounts borrowed under the Revolving Loan Facility may be repaid and reborrowed until the maturity date of July 21, 2023. The Company is obligated to pay a commitment fee on the unused portion of the Revolving Loan Facility. The commitment fee rate ranges from 0.25% to 0.35%, depending on the Company’s consolidated total net leverage ratio during the preceding fiscal quarter, on the average daily unused portion of the revolving credit commitment under the Credit Agreement. The Company had no outstanding borrowings under the Revolving Loan Facility as of January 31, 2021 or July 31, 2020.
The Company’s obligations under the Credit Agreement are guaranteed by certain of the Company’s domestic subsidiaries meeting materiality thresholds set forth in the 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 Agreement as part of the First Amended and Restated Credit Agreement, dated July 21, 2020, among the Company, the subsidiary guarantors from time to time party thereto, and Bank of America, N.A., as collateral agent.
The 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 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 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
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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 January 31, 2021, the consolidated total net leverage ratio was (0.15):1. Minimum liquidity as of January 31, 2021 was $1.6 billion. Accordingly, the Company does not believe that the provisions of the 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 Credit Agreement as of January 31, 2021.
Note Purchase Agreement
On December 3, 2014, the Company entered into a Note Purchase Agreement and sold to certain purchasers (collectively, the “Purchasers”) $400.0 million in aggregate principal amount of senior secured notes (the “Senior Notes”) consisting of (i) $100.0 million aggregate principal amount of 4.07% Senior Notes, Series A, due December 3, 2024; (ii) $100.0 million aggregate principal amount of 4.19% Senior Notes, Series B, due December 3, 2026; (iii) $100.0 million aggregate principal amount of 4.25% Senior Notes, Series C, due December 3, 2027; and (iv) $100.0 million aggregate principal amount of 4.35% Senior Notes, Series D, due December 3, 2029. Interest is due and payable quarterly, in arrears, on each of the Senior Notes. Proceeds from the Note Purchase Agreement are being used for general corporate purposes.
On July 21, 2016, the Company entered into Amendment No. 1 to Note Purchase Agreement (the “First Amendment to Note Purchase Agreement”) which amended certain terms of the Note Purchase Agreement, including providing for increased flexibility substantially consistent with the changes included in the Second Amendment to Credit Agreement, including among other things increased covenant flexibility.
The Company may prepay the Senior Notes, in whole or in part, at any time, subject to certain conditions, including minimum amounts and payment of a make-whole amount equal to the discounted value of the remaining scheduled interest payments under the Senior Notes.
The Company’s obligations under the Note Purchase Agreement are guaranteed by certain of the Company’s domestic subsidiaries meeting materiality thresholds set forth in the Note Purchase Agreement. Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and assets of the subsidiary guarantors. The obligations of the Company and its subsidiary guarantors under the Note Purchase Agreement will be treated on a pari passu basis with the obligations of those entities under the Credit Agreement as well as any additional debt the Company may obtain.
The Note Purchase 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 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 Note Purchase 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 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 on a pro forma basis. As of January 31, 2021, the consolidated total net leverage ratio was (0.15):1. Minimum liquidity as of January 31, 2021 was $1.6 billion. Accordingly, the Company does not believe that the provisions of the Note Purchase 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 Note Purchase Agreement as of January 31, 2021.
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NOTE 7 – Fair Value Measures
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:
January 31, 2021July 31, 2020
(In thousands)Carrying Value TotalFair Value TotalCarrying Value TotalFair Value Total
Assets
Cash equivalents$308,019 $308,027 $11,483 $11,483 
Total Assets$308,019 $308,027 $11,483 $11,483 
Liabilities
Long-term fixed rate debt, including current portion$399,716 $435,998 $399,698 $449,731 
Total Liabilities$