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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, 2023
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 February 23, 2023, 476,592,516 shares of the registrant’s common stock were outstanding.



Copart, Inc.
Index to the Quarterly Report on Form 10-Q
January 31, 2023
Table of ContentsPage Number
2

Table of Contents


Copart, Inc.
Consolidated Balance Sheets
(Unaudited)
(In thousands, except share amounts)January 31, 2023July 31, 2022
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash$1,660,952 $1,384,236 
Accounts receivable, net765,192 578,573 
Vehicle pooling costs133,598 112,242 
Inventories52,071 58,791 
Income taxes receivable436 49,882 
Prepaid expenses and other assets26,532 18,731 
Total current assets2,638,781 2,202,455 
Property and equipment, net2,656,273 2,485,764 
Operating lease right-of-use assets106,656 116,303 
Intangibles, net51,186 54,680 
Goodwill404,046 401,954 
Other assets75,466 47,708 
Total assets$5,932,408 $5,308,864 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities$439,271 $399,034 
Deferred revenue23,796 20,061 
Income taxes payable3,820  
Current portion of operating and finance lease liabilities20,736 21,794 
Total current liabilities487,623 440,889 
Deferred income taxes76,471 80,060 
Income taxes payable65,322 64,637 
Operating and finance lease liabilities, net of current portion87,394 95,683 
Long-term debt and other liabilities1,946 1,996 
Total liabilities718,756 683,265 
Commitments and contingencies
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; 476,564,148 and 476,081,948 shares issued and outstanding, respectively.
48 48 
Additional paid-in capital875,009 838,508 
Accumulated other comprehensive loss(156,507)(169,365)
Retained earnings4,495,102 3,956,408 
Total stockholders’ equity5,213,652 4,625,599 
Total liabilities and stockholders’ equity$5,932,408 $5,308,864 
The accompanying notes are an integral part of these consolidated financial statements.
3

Table of Contents
Copart, Inc.
Consolidated Statements of Income
(Unaudited)
Three Months Ended January 31,Six Months Ended January 31,
(In thousands, except per share amounts)2023202220232022
Service revenues and vehicle sales:
Service revenues$789,797 $711,090 $1,516,637 $1,378,908 
Vehicle sales166,927 156,370 333,459 298,684 
Total service revenues and vehicle sales956,724 867,460 1,850,096 1,677,592 
Operating expenses:
Yard operations375,497 323,814 748,274 622,508 
Cost of vehicle sales154,727 140,304 305,839 266,712 
General and administrative60,975 56,014 118,955 110,923 
Total operating expenses591,199 520,132 1,173,068 1,000,143 
Operating income365,525 347,328 677,028 677,449 
Other expense:
Interest income (expense), net14,480 (4,433)18,902 (9,540)
Other expense, net(2,902)(840)(5,724)(28)
Total other income (expense)11,578 (5,273)13,178 (9,568)
Income before income taxes377,103 342,055 690,206 667,881 
Income tax expense83,426 54,643 150,681 120,106 
Net income$293,677 $287,412 $539,525 $547,775 
Basic net income per common share$0.62 $0.61 $1.13 $1.15 
Weighted average common shares outstanding476,376 474,372 476,237 474,334 
Diluted net income per common share$0.61 $0.60 $1.12 $1.14 
Diluted weighted average common shares outstanding482,536 482,374 482,238 482,488 
The accompanying notes are an integral part of these consolidated financial statements.
4

Table of Contents
Copart, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended January 31,Six Months Ended January 31,
(In thousands)2023202220232022
Comprehensive income, net of tax:
Net income$293,677 $287,412 $539,525 $547,775 
Other comprehensive income:
Foreign currency translation adjustments42,429 (12,124)12,858 (22,642)
Comprehensive income$336,106 $275,288 $552,383 $525,133 
The accompanying notes are an integral part of these consolidated financial statements.
5

Table of Contents
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, 2022476,081,948 $48 $838,508 $(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 shares75,554 — 1,061 — (295)766 
Stock-based compensation38,312 — 10,192 — — 10,192 
Balances at October 31, 2022476,195,814 48 849,761 (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 shares223,426 — 9,754 — (536)9,218 
Stock-based compensation30,351 — 10,131 — — 10,131 
Shares issued for Employee Stock Purchase Plan114,557 — 5,363 — — 5,363 
Balances at January 31, 2023476,564,148 48 875,009 (156,507)4,495,102 5,213,652 
The accompanying notes are an integral part of these consolidated financial statements.

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, 2021474,028,546 $48 $761,810 $(100,860)$2,868,203 $3,529,201 
Net income— — — — 260,363 260,363 
Currency translation adjustment— — — (10,518)— (10,518)
Exercise of stock options, net of repurchased shares291,972 — 5,572 — (249)5,323 
Stock-based compensation42,182 — 9,452 — — 9,452 
Balances at October 31, 2021474,362,700 48 776,834 (111,378)3,128,317 3,793,821 
Net income— — — — 287,412 287,412 
Currency translation adjustment— — — (12,124)— (12,124)
Exercise of stock options, net of repurchased shares492,902 — 6,413 — (350)6,063 
Stock-based compensation5,534 — 9,662 — — 9,662 
Shares issued for Employee Stock Purchase Plan87,848 — 5,022 — — 5,022 
Balances at January 31, 2022474,948,984 48 797,931 (123,502)3,415,379 4,089,856 
The accompanying notes are an integral part of these consolidated financial statements.
6

Table of Contents
Copart, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended January 31,
(In thousands)20232022
Cash flows from operating activities:
Net income$539,525 $547,775 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost78,094 65,627 
Allowance for credit loss2,133 1,695 
Equity in losses of unconsolidated affiliates4,030 685 
Stock-based compensation20,323 19,114 
Gain on sale of property and equipment(748)(755)
Deferred income taxes(3,309)6,003 
Changes in operating assets and liabilities:
Accounts receivable(186,559)(152,763)
Vehicle pooling costs(21,268)(29,623)
Inventories8,001 (8,589)
Prepaid expenses, other current and non-current assets(29,176)(19,889)
Operating lease right-of-use assets and lease liabilities414 657 
Accounts payable and accrued liabilities27,619 10,741 
Deferred revenue3,709 (309)
Income taxes receivable49,430 4,577 
Income taxes payable7,615 1,655 
Other liabilities (53)
Net cash provided by operating activities499,833 446,548 
Cash flows from investing activities:
Purchases of property and equipment(256,719)(156,200)
Purchase of assets in connection with acquisitions (469)
Proceeds from sale of property and equipment16,343 1,252 
Investment in unconsolidated affiliate(1,993) 
Purchase of held to maturity securities (374,866)
Net cash used in investing activities(242,369)(530,283)
Cash flows from financing activities:
Proceeds from the exercise of stock options10,815 11,985 
Proceeds from the issuance of Employee Stock Purchase Plan shares5,363 5,022 
Payments for employee stock-based tax withholdings(831)(599)
Payments of finance lease obligations(13)(314)
Net cash provided by financing activities15,334 16,094 
Effect of foreign currency translation3,918 (8,968)
Net increase (decrease) in cash, cash equivalents, and restricted cash276,716 (76,609)
Cash, cash equivalents, and restricted cash at beginning of period1,384,236 1,048,260 
Cash, cash equivalents, and restricted cash at end of period$1,660,952 $971,651 
Supplemental disclosure of cash flow information:
Interest paid$706 $9,311 
Income taxes paid, net of refunds$98,324 $128,972 
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, 2023
(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 January 31, 2023 and July 31, 2022, its consolidated statements of income, comprehensive income and stockholders’ equity for the three and six months ended January 31, 2023 and 2022, and its cash flows for the six months ended January 31, 2023 and 2022. Interim results for the three and six months ended January 31, 2023 are not necessarily indicative of the results that may be expected for any future period, or for the entire year ending July 31, 2023. 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, 2022. 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. The stock dividend increased the number of shares of common stock outstanding. Certain prior year amounts have been retroactively adjusted 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.
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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, 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)2023202220232022
Service revenues
United States$705,733 $630,707 $1,357,390 $1,221,465 
International84,064 80,383 159,247 157,443 
Total service revenues$789,797 $711,090 $1,516,637 $1,378,908 
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)2023202220232022
Vehicle sales
United States$82,196 $96,679 $179,387 $184,382 
International84,731 59,691 154,072 114,302 
Total vehicle sales$166,927 $156,370 $333,459 $298,684 
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.
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The change in the carrying amount of contract assets was as follows (In thousands):
Balance as of July 31, 2022$4,778 
Capitalized contract assets during the period25,540 
Costs amortized during the period(2,545)
Effect of foreign currency exchange rates36 
Balance as of January 31, 2023$27,809 
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, 2021$(100,860)
Loss on foreign currency translation(68,505)
Cumulative loss on foreign currency translation as of July 31, 2022$(169,365)
Gain on foreign currency translation12,858 
Cumulative loss on foreign currency translation as of January 31, 2023$(156,507)
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, and accrued liabilities approximated their fair values as of January 31, 2023 and July 31, 2022, 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.
Cash, Cash Equivalents, and Restricted Cash
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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 carrying values of the Company’s cash equivalents that were not carried at fair value in the consolidated balance sheets were $1,477.5 million and $1,237.0 million as of January 31, 2023 and July 31, 2022, respectively, and fair values of the Company’s cash equivalents that were not carried at fair value in the consolidated balance sheets were $1,478.9 million and $1,237.3 million as of January 31, 2023 and July 31, 2022, respectively.
NOTE 2 — Acquisitions
Fiscal Year 2022 Transactions
On July 5, 2022, the Company acquired 100% of the voting stock of ILT Project Limited which conducts business primarily as Hills Motors (“Hills”), a leading parts recycler in the United Kingdom. Hills predominantly sells recycled parts to the public. The purchase price paid for Hills was $106.6 million.
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed for Hills (in thousands).
Cash$8,960 
Accounts receivable and prepaid expenses5,348 
Inventory4,913 
Property and equipment22,259 
Intangible assets15,931 
Goodwill56,051 
Liabilities assumed(6,858)
Fair value of net assets and liabilities acquired$106,604 
The Hills acquisition was undertaken for the strategic fit to the Company. This acquisition has been accounted for using the purchase method in accordance with ASC 805, Business Combinations, which resulted in the recognition of goodwill in the Company’s consolidated financial statements. Goodwill arose because the purchase price reflected a number of factors, including future earnings and cash flow potential; the comparable multiples of earnings, cash flow and other factors at which similar businesses have been purchased by other acquirers; and the complementary strategic fit and resulting synergies brought to existing operations. Goodwill is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired and is not amortized for financial reporting purposes. The acquisition of Hills is currently undergoing review by the U.K. Competition and Markets Authority. Given the timing of the acquisition the Company has not completed its determination of the fair value of assets acquired and liabilities assumed and the amount shown in the table above are preliminary amounts. The estimates and assumptions used in the preliminary purchase price allocation are subject to change if additional information, which existed as of the acquisition date, becomes known to the Company. However, the Company believes any changes to the preliminary purchase price allocation will not have a material impact to the Company’s consolidated financial position and results of operations.
The Hills acquisition did not result in a significant change in the Company’s consolidated results of operations; therefore, pro forma financial information has not been presented. The operating results have been included in the Company’s consolidated financial position and results of operations since the acquisition date.
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NOTE 3 — Accounts Receivable, Net
Accounts receivable, net consisted of:
(In thousands)January 31, 2023July 31, 2022
Advance charges receivable$580,966 $440,650 
Trade accounts receivable160,121 137,243 
Other receivables32,704 7,257 
773,791 585,150 
Less: Allowance for credit loss(8,599)(6,577)
Accounts receivable, net$765,192 $578,573 
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)January 31, 2023July 31, 2022
Land$1,647,906 $1,526,446 
Buildings and improvements1,288,499 1,209,331 
Transportation and other equipment459,597 429,405 
Office furniture and equipment86,091 84,728 
Software84,054 78,216 
 3,566,147 3,328,126 
Less: Accumulated depreciation and amortization(909,874)(842,362)
Property and equipment, net$2,656,273 $2,485,764 
Depreciation expense on property and equipment was $36.5 million and $31.4 million for the three months ended January 31, 2023 and 2022, respectively, and $73.7 million and $61.3 million for the six months ended January 31, 2023 and 2022, 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.
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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)2023202220232022
Operating lease expense$6,687 $6,943 $13,547 $13,997 
Finance lease expense:
Amortization of right-of-use assets5 155 12 309 
Interest on finance lease liabilities 2  4 
Short-term lease expense1,134 1,723 2,303 3,491 
Variable lease expense314 330 553 554 
Total lease expense$8,140 $9,153 $16,415 $18,355 
Supplemental cash flow information related to leases as of January 31, 2023 were as follows:
Six Months Ended January 31,
(In thousands)20232022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows related to operating leases$13,178 $13,344 
Operating cash flows related to finance leases 3 
Financing cash flows related to finance leases13 314 
Right-of-use assets obtained in exchange for new operating lease liabilities8,597 14,156 
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 January 31, 2023 and July 31, 2022 was $51.2 million and $51.2 million, respectively. The accumulated depreciation associated with the leased assets as of January 31, 2023 and July 31, 2022 was $3.3 million and $2.8 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 $4.1 million and $3.7 million for the three months ended January 31, 2023 and 2022, respectively, and $8.3 million and $7.2 million for the six months ended January 31, 2023 and 2022, 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)January 31, 2023July 31, 2022
Amortized intangibles:
Supply contracts and customer relationships$72,196 $71,875 
Trade names18,915 18,896 
Licenses and databases673 633 
Accumulated amortization(40,598)(36,724)
Intangibles, net$51,186 $54,680 
Aggregate amortization expense on amortizable intangible assets was $1.9 million and $1.8 million for the three months ended January 31, 2023 and 2022, respectively, and $3.8 million and $3.7 million for the six months ended January 31, 2023 and 2022, respectively.
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The change in the carrying amount of goodwill was as follows:
(In thousands)
Balance as of July 31, 2022$401,954 
Effect of foreign currency exchange rates2,092 
Balance as of January 31, 2023$404,046 
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 Copart, certain subsidiaries of Copart 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 Copart, 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 Copart, 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 Copart’s 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 Copart’s 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 no outstanding borrowings under the Revolving Loan Facility as of January 31, 2023 and July 31, 2022.
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 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
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both before and after giving effect to any such dividend or restricted payment. As of January 31, 2023, the consolidated total net leverage ratio was (1.05):1. Minimum liquidity available as of January 31, 2023 was $3.0 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 January 31, 2023.
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 balance sheet as no amounts are outstanding on the Revolving Loan Facility.

NOTE 8 – Net Income Per Share
The table below reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding:
Three Months Ended January 31,Six Months Ended January 31,
(In thousands)2023202220232022
Weighted average common shares outstanding476,376 474,372 476,237 474,334 
Effect of dilutive securities6,160 8,002 6,001 8,154 
Weighted average common and dilutive potential common shares outstanding
482,536 482,374 482,238 482,488 
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 3,091,704 and 300,500 options to purchase the Company’s common stock for the three months ended January 31, 2023 and 2022, respectively, and 6,247,298 and 411,000 options to purchase the Company’s common stock for the six months ended January 31, 2023 and 2022, respectively, because their inclusion would have been anti-dilutive.
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NOTE 9 – 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 six months ended January 31, 2023:
(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, 202211,394 $29.31 5.50$398,331 
Grants of options294 65.49 
Exercises(299)36.15 
Forfeitures or expirations(263)54.34 
Outstanding as of January 31, 202311,126 $29.49 5.01$414,798 
Exercisable as of January 31, 20238,910 $24.46 4.33$377,288 
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 13,689,922 at January 31, 2023.
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 Copart, Inc. 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 3.57%, estimated volatility ranging from 25.2% to 29.3%, 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 $48.4 million and will be recognized using the accelerated attribution method over each vesting tranche of the award. The Company recognized $6.5 million and $4.6 million in compensation expense related to these awards in the six months ended January 31, 2023 and 2022, respectively.

The following is a summary of activity for the Company’s stock option awards subject to market conditions for the six months ended January 31, 2023:
(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, 20222,810 $47.83 8.33$45,590 
Grants of options150 65.70 
Exercises  
Forfeitures or expirations  
Outstanding as of January 31, 20232,960 $48.73 7.92$52,920 
Exercisable as of January 31, 20231,092 $43.09 7.40$25,682 

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 January 31,Six Months Ended January 31,
(In thousands)2023202220232022
General and administrative$8,789 $8,247 $17,536 $16,718 
Yard operations1,342 1,415 2,787 2,396 
Total stock-based compensation$10,131 $9,662 $20,323 $19,114 
The Company’s restricted stock awards (“RSA”) and restricted stock unit awards (“RSU”) have generally been issued with vesting periods ranging from two years to five years and vest solely on service conditions. Accordingly, the Company recognizes compensation expense for RSA and RSU awards on a straight-line basis over the requisite service period of the award.
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The following is a summary of activity for the Company’s RSA and RSU for the six months ended January 31, 2023:
(In thousands, except per share data)Restricted SharesWeighted Average Grant Date Fair Value
Outstanding as of July 31, 2022354 $60.28 
Grants 263 64.01 
Vested(59)57.67 
Forfeitures or expirations(8)53.99 
Outstanding as of January 31, 2023550 $62.44 
NOTE 10 – Stock Repurchases
On September 22, 2011, the Company’s Board of Directors approved a 160 million share increase in the stock repurchase program, bringing the total current authorization to 392 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 six months ended January 31, 2023 or 2022. As of January 31, 2023, the total number of shares repurchased under the program was 229,098,396, and 162,901,604 shares were available for repurchase under the program.
NOTE 11 – Income Taxes
The Company’s effective income tax rates were 21.8% and 18.0% for the six months ended January 31, 2023 and 2022, 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 effective tax rate for the year ended July 31, 2022 was also impacted by the filing of amended returns in certain jurisdictions.
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 2014 and 2018. 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 12 – Recent Accounting Pronouncements
Pending
On October 28, 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 creates an exception to the general recognition and measurement principle for contract assets and liabilities from contracts with customers acquired in a business combination. Under this exception, an acquirer applies ASC 606, Revenue from Contracts with Customers, to recognize and measure contract assets and contract liabilities on the acquisition date instead of using fair value of the contract assets and contract liabilities as is required under ASC 805 Business combinations. The Company’s adoption of ASU 2021-08 is not expected to have a material impact on the Company’s consolidated results of operations and financial position.
Adopted
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. ASU 2019-12 eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. This guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years. The Company’s adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated results of operations and financial position.

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NOTE 13 – 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. 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 costs relating to 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, the amount of the liabilities associated with claims, if any, cannot be determined with certainty. 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.
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NOTE 14 – 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 January 31, 2023Three Months Ended January 31, 2022
(In thousands)United StatesInternationalTotalUnited StatesInternationalTotal
Service revenues$705,733 $84,064 $789,797 $630,707 $80,383 $711,090 
Vehicle sales82,196 84,731 166,927 96,679 59,691 156,370 
Total service revenues and vehicle sales787,929 168,795 956,724 727,386 140,074 867,460 
Yard operations323,397 52,100 375,497 278,093 45,721 323,814 
Cost of vehicle sales79,040 75,687 154,727 90,263 50,041 140,304 
General and administrative49,328 11,647 60,975 46,384 9,630 56,014 
Operating income$336,164 $29,361 $365,525 $312,646 $34,682 $347,328 
Depreciation and amortization$34,121 $4,293 $38,414 $29,316 $3,987 $33,303 
Capital expenditures and acquisitions