Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April 30, 2024

OR

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-23255

COPART, INC.

(Exact name of registrant as specified in its charter)

Delaware						000-23255						94-2867490
(State or other jurisdiction of incorporation or organization)						(Commission File Number)						(I.R.S. Employer Identification No.)
14185 Dallas Parkway			Suite 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 $0.0001			CPRT			The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer			☒						Accelerated filer			☐
Non-accelerated filer			☐						Smaller reporting company			☐
									Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 22, 2024, 962,297,603 shares of the registrant’s common stock were outstanding.

Copart, Inc.

Index to the Quarterly Report on Form 10-Q

April 30, 2024

Table of Contents						Page Number
PART I - Financial Information
Item 1 - Financial Statements (Unaudited)
Consolidated Balance Sheets						3
Consolidated Statements of Income						4
Consolidated Statements of Comprehensive Income						5
Consolidated Statement of Changes in Redeemable Noncontrolling Interests and Stockholders' Equity						6
Consolidated Statements of Cash Flows						8
Notes to Consolidated Financial Statements						9
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview						21
Acquisitions and New Operations						23
Results of Operations						24
Liquidity and Capital Resources						28
Critical Accounting Policies and Estimates						29
Contractual Obligations and Commitments						30
Off-Balance Sheet Arrangements						30
Item 3 - Quantitative and Qualitative Disclosures About Market Risk						30
Item 4 - Controls and Procedures
Evaluation of Disclosure Controls and Procedures						31
Changes in Internal Control Over Financial Reporting						31
PART II - Other Information
Item 1 - Legal Proceedings						32
Item 1A - Risk Factors						32
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds						44
Item 3 - Defaults Upon Senior Securities						44
Item 4 - Mine Safety Disclosures						44
Item 5 - Other Information						44
Item 6 - Exhibits						45
Signatures						46

Copart, Inc.

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share amounts)						April 30, 2024						July 31, 2023
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash						$	1,089,995					$	957,395
Investment in held to maturity securities						2,000,334						1,406,589
Accounts receivable, net						822,650						702,038
Vehicle pooling costs						125,001						123,725
Inventories						46,764						39,973
Income taxes receivable						23,402						6,574
Prepaid expenses and other assets						40,983						26,310
Total current assets						4,149,129						3,262,604
Property and equipment, net						3,073,090						2,844,339
Operating lease right-of-use assets						108,859						108,139
Intangibles, net						76,786						62,702
Goodwill						511,372						394,289
Other assets						91,396						65,806
Total assets						$	8,010,632					$	6,737,879
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities						$	506,795					$	440,810
Deferred revenue						28,761						26,117
Income taxes payable						7,388						4,374
Current portion of operating and finance lease liabilities						20,475						21,468
Total current liabilities						563,419						492,769
Deferred income taxes						92,014						89,492
Income taxes payable						67,455						69,193
Operating and finance lease liabilities, net of current portion						91,131						88,082
Long-term debt and other liabilities						427						10,903
Total liabilities						814,446						750,439
Commitments and contingencies
Redeemable non-controlling interest						24,933						—
Stockholders’ equity:
Preferred stock: $0.0001 par value - 5,000,000 shares authorized; none issued						—						—
Common stock: $0.0001 par value - 1,600,000,000 shares authorized; 962,268,657 and 957,344,162 shares issued and outstanding, respectively.						96						96
Additional paid-in capital						1,102,684						938,910
Accumulated other comprehensive loss						(156,807)						(141,006)
Retained earnings						6,225,280						5,189,440
Total stockholders’ equity						7,171,253						5,987,440
Total liabilities, redeemable noncontrolling interests and stockholders’ equity						$	8,010,632					$	6,737,879

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Consolidated Statements of Income

(Unaudited)

						Three Months Ended April 30,												Nine Months Ended April 30,
(In thousands, except per share amounts)						2024						2023						2024						2023
Service revenues and vehicle sales:
Service revenues						$	946,630					$	847,249					$	2,667,911					$	2,363,886
Vehicle sales						180,629						174,582						499,913						508,041
Total service revenues and vehicle sales						1,127,259						1,021,831						3,167,824						2,871,927
Operating expenses:
Yard operations						438,873						378,958						1,256,552						1,127,232
Cost of vehicle sales						162,881						159,443						457,596						465,282
General and administrative						88,302						64,506						241,197						183,461
Total operating expenses						690,056						602,907						1,955,345						1,775,975
Operating income						437,203						418,924						1,212,479						1,095,952
Other income (expense):
Interest income, net						36,218						17,878						102,179						36,780
Other (expense) income, net						(1,309)						3,628						(8,484)						(2,096)
Total other income						34,909						21,506						93,695						34,684
Income before income taxes						472,112						440,430						1,306,174						1,130,636
Income tax expense						90,002						89,999						266,005						240,680
Net income						382,110						350,431						1,040,169						889,956
Less: Net income/(loss) attributable to redeemable noncontrolling interest						(181)						—						(284)						—
Net income attributable to Copart, Inc.						$	382,291					$	350,431					$	1,040,453					$	889,956
Basic net income per common share						$	0.40					$	0.37					$	1.08					$	0.93
Weighted average common shares outstanding						961,813						953,574						960,143						952,834
Diluted net income per common share						$	0.39					$	0.36					$	1.07					$	0.92
Diluted weighted average common shares outstanding						976,445						967,380						974,226						965,436

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Consolidated Statements of Comprehensive Income

(Unaudited)

						Three Months Ended April 30,												Nine Months Ended April 30,
(In thousands)						2024						2023						2024						2023
Comprehensive income, net of tax:
Net income						$	382,110					$	350,431					$	1,040,169					$	889,956
Other comprehensive income:
Foreign currency translation adjustments						(11,528)						4,048						(15,801)						16,906
Comprehensive income						370,582						354,479						1,024,368						906,862
Less: Comprehensive income/(loss) attributable to redeemable noncontrolling interest						(181)						—						(284)						—
Comprehensive income attributable to Copart, Inc.						$	370,763					$	354,479					$	1,024,652					$	906,862

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Consolidated Statement of Changes in Redeemable Noncontrolling Interest and Stockholders’ Equity

(Unaudited)

						Common Stock																		Accumulated Other Comprehensive Income (Loss)																		Redeemable Noncontrolling Interest
									Additional Paid-in Capital															Total Stockholders’ Equity
(In thousands, except share amounts)						Outstanding Shares						Amount												Retained Earnings
Balances at July 31, 2023						957,344,162						$	96					$	938,910					$	(141,006)					$	5,189,440					$	5,987,440					$	—
Net income						—						—						—						—						332,527						332,527						5
Currency translation adjustment						—						—						—						(36,353)						—						(36,353)						—
Acquisition of noncontrolling interest						2,499,993						—						112,075						—						—						112,075						25,217
Exercise of stock options, net of repurchased shares						331,358						—						8,123						—						(711)						7,412						—
Stock-based compensation						32,761						—						8,316						—						—						8,316						—
Balances at October 31, 2023						960,208,274						96						1,067,424						(177,359)						5,521,256						6,411,417						25,222
Net income/(loss)						—						—						—						—						325,635						325,635						(108)
Currency translation adjustment						—						—						—						32,080						—						32,080						—
Exercise of stock options, net of repurchased shares						828,799						—						5,359						—						(1,453)						3,906						—
Stock-based compensation						119,004						—						8,601						—						—						8,601						—
Shares issued for Employee Stock Purchase Plan						155,419						—						5,961						—						—						5,961						—
Balances at January 31, 2024						961,311,496						96						1,087,345						(145,279)						5,845,438						6,787,600						25,114
Net income/(loss)						—						—						—						—						382,291						382,291						(181)
Currency translation adjustment						—						—						—						(11,528)						—						(11,528)						—
Exercise of stock options, net of repurchased shares						872,081						—						6,895						—						(2,449)						4,446						—
Stock-based compensation						85,183						—						8,448						—						—						8,448						—
Shares issued for Employee Stock Purchase Plan						(103)						—						(4)						—						—						(4)						—
Balances at April 30, 2024						962,268,657						$	96					$	1,102,684					$	(156,807)					$	6,225,280					$	7,171,253					$	24,933

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Consolidated Statement of Changes in Redeemable Noncontrolling Interest and Stockholders’ Equity (Continued)

(Unaudited)

						Common Stock																		Accumulated Other Comprehensive Income (Loss)
									Additional Paid-in Capital															Total Stockholders’ Equity
(In thousands, except share amounts)						Outstanding Shares						Amount												Retained Earnings
Balances at July 31, 2022						952,163,896						$	96					$	838,460					$	(169,365)					$	3,956,408					$	4,625,599
Net income						—						—						—						—						245,848						245,848
Currency translation adjustment						—						—						—						(29,571)						—						(29,571)
Exercise of stock options, net of repurchased shares						151,108						—						1,061						—						(295)						766
Stock-based compensation						76,624						—						10,192						—						—						10,192
Balances at October 31, 2022						952,391,628						96						849,713						(198,936)						4,201,961						4,852,834
Net income						—						—						—						—						293,677						293,677
Currency translation adjustment						—						—						—						42,429						—						42,429
Exercise of stock options, net of repurchased shares						446,852						—						9,754						—						(536)						9,218
Stock-based compensation						60,702						—						10,131						—						—						10,131
Shares issued for Employee Stock Purchase Plan						229,114						—						5,363						—						—						5,363
Balances at January 31, 2023						953,128,296						96						874,961						(156,507)						4,495,102						5,213,652
Net income						—						—						—						—						350,431						350,431
Currency translation adjustment						—						—						—						4,048						—						4,048
Exercise of stock options, net of repurchased shares						1,014,218						—						16,405						—						(2,195)						14,210
Stock-based compensation						117,536						—						10,081						—						—						10,081
Balances at April 30, 2023						954,260,050						$	96					$	901,447					$	(152,459)					$	4,843,338					$	5,592,422

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

						Nine Months Ended April 30,
(In thousands)						2024						2023
Cash flows from operating activities:
Net income						1,040,169						$	889,956
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost						139,178						115,320
Allowance for credit loss						2,513						1,480
Equity in losses of unconsolidated affiliates						2,580						5,446
Stock-based compensation						26,694						30,404
Gain on sale of property and equipment						(2,169)						(965)
Deferred income taxes						(3,093)						(3,236)
Changes in operating assets and liabilities:
Accounts receivable						(152,564)						(115,098)
Vehicle pooling costs						(1,784)						(7,300)
Inventories						(7,316)						14,870
Prepaid expenses, other current and non-current assets						(39,815)						(33,830)
Operating lease right-of-use assets and lease liabilities						1,377						595
Accounts payable and accrued liabilities						40,305						30,314
Deferred revenue						2,660						5,516
Income taxes receivable						(16,846)						49,430
Income taxes payable						1,454						22,731
Net cash provided by operating activities						1,033,343						1,005,633
Cash flows from investing activities:
Purchases of property and equipment						(373,104)						(346,524)
Cash acquired in connection with acquisition						17,662						—
Proceeds from sale of property and equipment						3,453						20,509
Investment in held to maturity securities						(2,478,505)						—
Proceeds from the sale of held to maturity securities						1,915,000						—
Investment in unconsolidated affiliate						(1,000)						(2,744)
Net cash used in investing activities						(916,494)						(328,759)
Cash flows from financing activities:
Proceeds from the exercise of stock options						20,377						27,220
Proceeds from the issuance of Employee Stock Purchase Plan shares						5,957						5,363
Payments for employee stock-based tax withholdings						(4,613)						(3,026)
Issuance of principal on revolver facility						—						21,481
Principal payments on revolver facility						(10,818)						—
Payments of finance lease obligations						(14)						(18)
Net cash provided by financing activities						10,889						51,020
Effect of foreign currency translation						4,862						2,053
Net increase in cash, cash equivalents, and restricted cash						132,600						729,947
Cash, cash equivalents, and restricted cash at beginning of period						957,395						1,384,236
Cash, cash equivalents, and restricted cash at end of period						1,089,995						$	2,114,183
Supplemental disclosure of cash flow information:
Interest paid						$	1,946					$	1,586
Income taxes paid, net of refunds						$	266,400					$	171,438

The accompanying notes are an integral part of these consolidated financial statements.

Copart, Inc.

Notes to Consolidated Financial Statements

April 30, 2024

(Unaudited)

NOTE 1 – Summary of Significant Accounting Policies

Basis of Presentation and Description of Business

Copart, Inc. (“the Company”) provides vehicle sellers with a full range of services to process and sell vehicles over the internet through the Company’s Virtual Bidding Third Generation (“VB3”) internet auction-style sales technology. Vehicle sellers consist primarily of insurance companies, but also include banks, finance companies, charities, fleet operators, dealers, vehicle rental companies, and individuals. The Company sells principally to licensed vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters, and directly to the general public. The majority of vehicles sold on behalf of insurance companies are either damaged vehicles deemed a total loss or not economically repairable by the insurance companies or are recovered stolen vehicles for which an insurance settlement with the vehicle owner has already been made. The Company offers vehicle sellers a full range of services that expedite each stage of the vehicle sales process, minimize administrative and processing costs and maximize the ultimate sales price through the online auction process. In the United States (“U.S.”), Canada, Brazil, the Republic of Ireland, Finland, the United Arab Emirates (“U.A.E.”), Oman, and Bahrain, the Company sells vehicles primarily as an agent and derives revenue primarily from auction and auction related sales transaction fees charged for vehicle remarketing services as well as fees for services subsequent to the auction, such as delivery and storage. In the United Kingdom (“U.K.”), Germany, and Spain, the Company operates both as an agent and on a principal basis, in some cases purchasing salvage vehicles outright and reselling the vehicles for its own account. In Germany and Spain, the Company also derives revenue from listing vehicles on behalf of insurance companies and insurance experts to determine the vehicle’s residual value and/or to facilitate a sale for the insured.

Principles of Consolidation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments of a normal recurring nature considered necessary for fair presentation of the Company’s financial position as of April 30, 2024 and July 31, 2023, its consolidated statements of income, comprehensive income, changes in redeemable noncontrolling interests and stockholders’ equity for the three and nine months ended April 30, 2024 and 2023, and its cash flows for the nine months ended April 30, 2024 and 2023. Interim results for the three and nine months ended April 30, 2024 are not necessarily indicative of the results that may be expected for any future period, or for the entire year ending July 31, 2024. These consolidated financial statements have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. The interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended July 31, 2023. Certain prior year amounts have been reclassified to conform to current year presentation.

The consolidated financial statements of the Company include the accounts of the parent company and its wholly-owned subsidiaries. Significant intercompany transactions and balances have been eliminated in consolidation.

On October 3, 2022, the Company’s Board of Directors approved a two-for-one common stock split effected in the form of a stock dividend subject to and contingent upon, among other things, obtaining stockholder approval of an amendment to the Company’s certificate of incorporation to increase the number of authorized shares of common stock. On October 31, 2022, the Company’s stockholders approved such increase at a special meeting of stockholders. As such, on November 3, 2022, the Company effected the two-for-one stock dividend to stockholders of record as of October 6, 2022.

On August 4, 2023, the Company’s Board of Directors approved a two-for-one common stock split effected in the form of a stock dividend entitling each stockholder of record to receive one additional share of common stock for every one share owned. On August 21, 2023, the Company effected the two-for-one stock dividend to stockholders of record as of August 14, 2023.

Both stock dividends increased the number of shares of common stock outstanding and all share and per share amounts have been retroactively adjusted for the stock dividend, as of the date earliest presented in these financial statements to conform to current year presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Estimates include, but are not limited to, vehicle pooling costs; income taxes; stock-based compensation; and contingencies. Actual results may differ from these estimates.

Revenue Recognition

The Company’s primary performance obligation is the auctioning of consigned vehicles through an online auction process. Service revenue and vehicle sales revenue are recognized at the date the vehicles are sold at auction, excluding annual registration fees. Costs to prepare the vehicles for auction, including inbound transportation costs and titling fees, are deferred and recognized at the time of revenue recognition at auction.

The Company’s disaggregation between service revenues and vehicle sales at the segment level reflects how the nature, timing, amount and uncertainty of its revenues and cash flows are impacted by economic factors. The Company reports sales taxes on relevant transactions on a net basis in the Company’s consolidated results of operations, and therefore does not include sales taxes in revenues or costs.

Service revenues

The Company’s service revenue consists of auction and auction related sales transaction fees charged for vehicle remarketing services. Within this revenue category, the Company’s primary performance obligation is the auctioning of consigned vehicles through an online auction process. These auction and auction related services may include a combination of vehicle purchasing fees, vehicle listing fees, and vehicle selling fees that can be based on a predetermined percentage of the vehicle sales price, tiered vehicle sales price driven fees, or at a fixed fee based on the sale of each vehicle regardless of the selling price of the vehicle; transportation fees for the cost of transporting the vehicle to or from the Company’s facility; title processing and preparation fees; vehicle storage fees; bidding fees; and vehicle loading fees. These services are not distinct within the context of the contract. Accordingly, revenue for these services is recognized when the single performance obligation is satisfied at the completion of the auction process. The Company does not take ownership of these consigned vehicles, which are stored at the Company’s facilities located throughout the U.S. and at its international locations. These fees are recognized as net revenue (not gross vehicle selling price) at the time of auction in the amount of such fees charged.

The Company has a separate performance obligation related to providing access to its online auction platform as the Company charges members an annual registration fee for the right to participate in its online auctions and access the Company’s bidding platform. This fee is recognized ratably over the term of the arrangement, generally one year, as each day of access to the online auction platform represents the best depiction of the transfer of the service.

No provision for returns has been established, as all sales are final with no right of return or warranty, except for separately identified vehicles subject to the arbitration policy, although the Company provides for credit loss expense in the case of non-performance by its buyers or sellers.

									Three months ended April 30,												Nine Months Ended April 30,
(In thousands)									2024						2023						2024						2023
Service revenues
			United States						830,680						$	752,077					2,349,241						$	2,109,467
			International						115,950						95,172						318,670						254,419
			Total service revenues						$	946,630					$	847,249					$	2,667,911					$	2,363,886

Vehicle sales

Certain vehicles are purchased and remarketed on the Company’s own behalf. The Company has a single performance obligation related to the sale of these vehicles, which is the completion of the online auction process. Vehicle sales revenue is recognized on the auction date. As the Company acts as a principal in vehicle sales transactions, the gross sales price at auction is recorded as revenue.

									Three Months Ended April 30,												Nine Months Ended April 30,
(In thousands)									2024						2023						2024						2023
Vehicle sales
			United States						88,236						$	81,681					241,307						$	261,069
			International						92,393						92,901						258,606						246,972
			Total vehicle sales						$	180,629					$	174,582					$	499,913					$	508,041

Contract assets

The Company capitalizes certain contract assets related to obtaining a contract, where the amortization period for the related asset is greater than one year. These assets are amortized over the expected life of the customer relationship. Contract assets are classified as current or long-term other assets, based on the timing of when the Company expects to recognize the related revenues and are amortized as an offset to the associated revenues on a straight-line basis. The Company assesses these costs for impairment at least quarterly and as “triggering” events occur that indicate it is more likely than not that an impairment exists. The contract asset costs where the amortization period for the related asset is one year or less are expensed as incurred and recorded within general and administrative expenses in the accompanying consolidated statements of income.

The change in the carrying amount of contract assets was as follows (In thousands):

Balance as of July 31, 2023						$	25,726
Capitalized contract assets during the period						32,260
Costs amortized during the period						(6,451)
Effect of foreign currency exchange rates						(65)
Balance as of April 30, 2024						$	51,470

Vehicle Pooling Costs

The Company defers costs that relate directly to the fulfillment of its contracts associated with vehicles consigned to and received by the Company, but not sold as of the end of the period. The Company quantifies the deferred costs using a calculation that includes the number of vehicles at its facilities at the beginning and end of the period, the number of vehicles sold during the period, and an allocation of certain yard operation costs of the period. The primary expenses allocated and deferred are inbound transportation costs, titling fees, certain facility costs, labor, and vehicle processing. If the allocation factors change, then yard operation expenses could increase or decrease correspondingly in the future. These costs are expensed into yard operations expenses as vehicles are sold in subsequent periods on an average cost basis.

Foreign Currency Translation

The Company records foreign currency translation adjustments from the process of translating the functional currency of the financial statements of its foreign subsidiaries into the U.S. dollar reporting currency. The British pound, Canadian dollar, Brazilian real, European Union euro, U.A.E. dirham, Omani rial, and Bahraini dinar are the functional currencies of the Company’s foreign subsidiaries as they are the primary currencies within the economic environment in which each subsidiary operates. The original equity investment in the respective subsidiaries is translated at historical rates. Assets and liabilities of the respective subsidiary’s operations are translated into U.S. dollars at period-end exchange rates, and revenues and expenses are translated into U.S. dollars at average exchange rates in effect during each reporting period. Adjustments resulting from the translation of each subsidiary’s financial statements are reported in other comprehensive income.

The cumulative effects of foreign currency exchange rate fluctuations were as follows (In thousands):

Cumulative loss on foreign currency translation as of July 31, 2022						$	(169,365)
Gain (Loss) on foreign currency translation						28,359
Cumulative loss on foreign currency translation as of July 31, 2023						$	(141,006)
Gain (Loss) on foreign currency translation						(15,801)
Cumulative loss on foreign currency translation as of April 30, 2024						$	(156,807)

Fair Value of Financial Instruments

The Company records its financial assets and liabilities at fair value in accordance with the framework for measuring fair value in U.S. GAAP. In accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurements and Disclosures, the Company considers fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions. This framework establishes a fair value hierarchy that prioritizes the inputs used to measure fair value:

Level I Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities traded in active markets.

Level II Inputs other than quoted prices included within Level I that are observable for the asset or liability, either directly or indirectly.

Level III Inputs that are generally unobservable. These inputs may be used with internally developed methodologies that result in management’s best estimate.

The amounts recorded for financial instruments in the Company’s consolidated financial statements, which included cash, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximated their fair values as of April 30, 2024 and July 31, 2023, due to the short-term nature of those instruments and are classified within Level II of the fair value hierarchy. Cash equivalents are classified within Level II of the fair value hierarchy because they are valued using quoted market prices of the underlying investments.

Redeemable Noncontrolling Interest

Redeemable noncontrolling interests represent a 20% noncontrolling ownership in Purple Wave, Inc., a consolidated subsidiary of the Company. Redeemable noncontrolling interests are presented outside of permanent equity on the consolidated balance sheet as they are redeemable by the holders of the noncontrolling interest and the redemption is outside the control of the Company. The redeemable noncontrolling interests were initially recorded at their issuance date fair value of $25.2 million. We record the carrying amount of the redeemable noncontrolling interests at the greater of (i) the initial carrying amount, increased or decreased for the noncontrolling interest’s share of net income or loss and its share of other comprehensive income or loss, and dividends or (ii) the redemption value. For interests that are redeemable in the future, we recognize changes in the redemption value immediately as they occur.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments purchased with original maturities of three months or less at the time of purchase to be cash equivalents. Cash, cash equivalents, and restricted cash include cash held in checking, U.S. Treasury Bills, and money market accounts. The Company periodically invests its excess cash in money market funds and U.S. Treasury Bills. The Company’s cash, cash equivalents, and restricted cash are placed with high credit quality financial institutions.

The Company has held to maturity securities comprised of U.S. Treasury Bills. These investments are classified as held to maturity as the Company has the intent and ability to hold these investments until they mature. The held to maturity securities mature within the next 12 months. The table below shows the amortized cost, associated gross unrealized gains and associated fair value of held to maturity securities.

(In thousands)			April 30, 2024
			Amortized Cost						Gross Unrealized Gains						Fair Value
Investment in held to maturity securities			$	2,000,334					$	18,075					$	2,018,409

(In thousands)			July 31, 2023
			Amortized Cost						Gross Unrealized Gains						Fair Value
Investment in held to maturity securities			$	1,406,589					$	8,314					$	1,414,903

NOTE 2 — Acquisitions

Fiscal Year 2024 Transactions

On October 6, 2023, the Company acquired an 80% controlling ownership in Purple Wave, Inc., an online offsite heavy equipment auction company. The Company acquired the controlling ownership by issuing 2.5 million shares of the Company’s common stock which was equal to the $108.0 million acquisition price divided by the 10-day volume average weighted price of the Company’s common stock prior to closing. Under U.S. GAAP, the fair value of the merger consideration paid for Purple Wave, Inc. was $112.1 million and was determined on the basis of the closing price of the Company’s common stock on October 6, 2023. Substantially all of the merger consideration has preliminarily been allocated to intangible assets, including goodwill. The fair value of the 20% redeemable noncontrolling interest in Purple Wave, Inc. was $25.2 million, and was estimated by applying the transaction method. Refer to Note 1 – Summary of Significant Accounting Policies for more details regarding the redeemable noncontrolling interests. Acquisition costs reflected in the general administrative line on the income statement were $1.2 million.

NOTE 3 — Accounts Receivable, Net

Accounts receivable, net consisted of:

(In thousands)						April 30, 2024						July 31, 2023
Advance charges receivable						$	616,324					$	537,261
Trade accounts receivable						193,334						157,083
Other receivables						25,324						16,334
						834,982						710,678
Less: Allowance for credit loss						(12,332)						(8,640)
Accounts receivable, net						$	822,650					$	702,038

Advance charges receivable represents amounts paid to third parties on behalf of insurance companies for which the Company will be reimbursed when the vehicle is sold. As advance charges are recovered within one year, the Company has not adjusted the amount of consideration received from the customer for a significant financing component. Trade accounts receivable includes fees and gross auction proceeds to be collected from insurance companies and buyers.

NOTE 4 — Property and Equipment, Net

Property and equipment, net consisted of the following:

(In thousands)						April 30, 2024						July 31, 2023
Land						$	1,972,821					$	1,812,001
Buildings and improvements						1,442,039						1,339,820
Transportation and other equipment						560,433						490,136
Office furniture and equipment						95,643						91,031
Software						98,667						89,575
						4,169,603						3,822,563
Less: Accumulated depreciation and amortization						(1,096,513)						(978,224)
Property and equipment, net						$	3,073,090					$	2,844,339

Depreciation expense on property and equipment was $47.4 million and $35.5 million for the three months ended April 30, 2024 and 2023, respectively, and $129.2 million and $109.2 million for the nine months ended April 30, 2024 and 2023, respectively.

NOTE 5 – Leases

The Company has both lessee and lessor arrangements. The Company determines whether a contract is or contains a lease at the inception of the contract or at any subsequent modification. A contract will be deemed to be or contain a lease if the contract conveys the right to control and direct the use of identified property, plant, or equipment for a period of time in exchange for consideration. The Company generally must also have the right to obtain substantially all of the economic benefits from the use of the property, plant, and equipment. Depending on the terms, leases are classified as either operating or finance leases if the Company is the lessee, or as operating, sales-type, or direct financing leases if the Company is the lessor. Certain of the Company’s lessee and lessor leases have renewal options to extend the leases for additional periods at the Company’s discretion.

Leases - Lessee

The Company leases certain facilities and certain equipment under non-cancelable finance and operating leases, which are recorded as right-of-use assets and lease liabilities. Certain leases provide the Company with either a right of first refusal to acquire or an option to purchase a facility at fair value. Certain leases also contain escalation clauses and renewal option clauses calling for increased rents. Where a lease contains an escalation clause or a concession, such as a rent holiday or tenant improvement allowance, the Company includes these items in the determination of the right-of-use asset and the lease liabilities. The effects of these escalation clauses or concessions have been reflected in lease expense on a straight-line basis over the expected lease term and any variable lease payments subsequent to establishing the lease liability are expensed as incurred. The lease term commences on the date when the Company has the right to control the use of the leased property, which is typically before lease payments are due under the terms of the lease. Certain of the Company’s leases have renewal periods up to 40 years, exercisable at the Company’s option, and generally require the Company to pay property taxes, insurance and maintenance costs, in addition to the lease payments. At lease inception, the Company includes all renewals or option periods that are reasonably certain to exercise when determining the expected lease term, as failure to renew the lease would impose an economic penalty.

Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the expected lease term. To determine the present value of lease payments not yet paid, the Company estimates incremental borrowing rates based on the information available at lease commencement date, as rates are not implicitly stated in the Company’s leases.

Components of lease expense were as follows:

									Three Months Ended April 30,												Nine Months Ended April 30,
(In thousands)									2024						2023						2024						2023
Operating lease expense									$	6,333					$	6,503					$	19,445					$	20,050
Finance lease expense:
			Amortization of right-of-use assets						3						5						13						17
			Interest on finance lease liabilities						—						1						—						1
Short-term lease expense									504						1,282						2,829						3,585
Variable lease expense									388						305						960						858
Total lease expense									$	7,228					$	8,096					$	23,247					$	24,511

Supplemental cash flow information related to leases as of April 30, 2024 was as follows:

									Nine Months Ended April 30,
(In thousands)									2024						2023
Cash paid for amounts included in the measurement of lease liabilities
			Operating cash flows related to operating leases						$	18,085					$	19,507
			Operating cash flows related to finance leases						—						1
			Financing cash flows related to finance leases						14						18
Right-of-use assets obtained in exchange for new operating lease liabilities									23,972						12,872
Right-of-use assets obtained in exchange for new finance lease liabilities									—						—

Leases - Lessor

The Company’s lessor arrangements include certain facilities and various land locations, of which each qualifies as an operating lease. Certain leases also contain escalation clauses and renewal option clauses calling for increased rents. Where a lease contains an escalation clause or a concession, such as a rent holiday or tenant improvement allowance, the Company includes these items in the determination of the straight-line rental income. The effects of these escalation clauses or concessions have been reflected in lease payments receivable on a straight-line basis over the expected lease term and any variable lease income subsequent to establishing the receivable will be recognized as earned.

The cost of the leased space as of April 30, 2024 and July 31, 2023 was $50.3 million and $51.2 million, respectively. The accumulated depreciation associated with the leased assets as of April 30, 2024 and July 31, 2023 was $4.4 million and $3.8 million, respectively. Both the leased assets and accumulated depreciation are included in Property and equipment, net on the consolidated balance sheet. Rental income from these operating leases was $4.4 million and $4.0 million for the three months ended April 30, 2024 and 2023, respectively, and $13.0 million and $12.3 million for the nine months ended April 30, 2024 and 2023, respectively, and is included within Service revenues on the consolidated statements of income.

NOTE 6 – Goodwill and Intangible Assets

The following table sets forth amortizable intangible assets by major asset class:

(In thousands)						April 30, 2024						July 31, 2023
Amortized intangibles:
Supply contracts and customer relationships						$	83,589					$	84,614
Trade names						18,910						19,304
Licenses and databases						16,562						682
Indefinite-lived intangibles:
Trade names						16,718						7,443
Accumulated amortization						(58,993)						(49,341)
Intangibles, net						$	76,786					$	62,702

Aggregate amortization expense on amortizable intangible assets was $3.3 million and $1.9 million for the three months ended April 30, 2024 and 2023, respectively, and $10 million and $5.6 million for the nine months ended April 30, 2024 and 2023, respectively.

The change in the carrying amount of goodwill was as follows:

(In thousands)
Balance as of July 31, 2023						$	394,289
Acquisitions during the period						120,634
Effect of foreign currency exchange rates						(3,551)
Balance as of April 30, 2024						$	511,372

NOTE 7 – Long-Term Debt

Credit Agreement

On December 21, 2021, the Company entered into a Second Amended and Restated Credit Agreement by and among the Company, certain subsidiaries of the Company party thereto, the lenders party thereto, and Bank of America, N.A., as administrative agent (the “Second Amended and Restated Credit Agreement”). The Second Amended and Restated Credit Agreement amends and restates certain terms of the First Amended and Restated Credit Agreement, dated as of July 21, 2020, by and among the Company, the lenders party thereto, and Bank of America, N.A., as administrative agent (as successor in interest to Wells Fargo Bank, National Association) (the “Existing Credit Agreement”). The Second Amended and Restated Credit Agreement provides for, among other things, (a) an increase in the secured revolving credit commitments by $200.0 million, bringing the aggregate principal amount of the revolving credit commitments under the Second Amended and Restated Credit Agreement (the “Revolving Loan Facility”) to $1,250.0 million, (b) an increase in the letter of credit sublimit from $60.0 million to $100.0 million, (c) addition of Copart UK Limited, CPRT GmbH and Copart Autos España, S.L.U., each a wholly-owned direct or indirect foreign subsidiary of the Company, as borrowers, (d) addition of the ability to borrow under the Second and Amended and Restated Credit Agreement in certain foreign currencies including Pounds Sterling, Euro and Canadian Dollars, (e) extension of the maturity date of the revolving credit facility under the Existing Credit Agreement from July 21, 2023 to December 21, 2026, (f) replacing the LIBOR interest rate applicable to U.S. Dollar denominated borrowings with a SOFR-based interest rate, and (g) changing the pricing levels with respect to the revolving loans as further described below.

The Second and Amended and Restated Credit Agreement provides for the Revolving Loan Facility of $1,250.0 million maturing on December 21, 2026 (including up to $550.0 million equivalent of borrowings in Pounds Sterling, Euro and Canadian Dollars) with a $150.0 million equivalent sub-facility available to CPRT GmbH, a $150.0 million equivalent sub-facility available to Copart Autos España, S.L.U. and a $250.0 million equivalent sub-facility available to Copart UK Limited. The proceeds may be used for general corporate purposes, including working capital and capital expenditures, potential share repurchases, acquisitions, or other investments relating to the Company’s expansion strategies in domestic and international markets.

Borrowings under the Second Amended and Restated Credit Agreement bear interest based on, at our option, either (1) the applicable fixed rate plus 1.00% to 1.75% or (2) the daily rate plus 0.0% to 0.75%, in each case, depending on the Company consolidated total net leverage ratio. Additionally, the unused revolving commitments under the Second Amended and Restated Credit Agreement are subject to the payment of a customary commitment fee at a range of 0.175% to 0.275%, depending on the Company consolidated total net leverage ratio. The applicable fixed rates described above with respect to borrowings denominated in (1) U.S. Dollars is SOFR plus certain “spread adjustments” described in the Second Amended and Restated Credit Agreement, (2) Pounds Sterling is SONIA plus certain “spread adjustments” described in the Second Amended and Restated Credit Agreement, (3) Euro is EURIBOR, and (4) Canadian Dollars is CDOR. The Company had $0.0 million and $11.0 million outstanding borrowings under the Revolving Loan Facility as of April 30, 2024 and July 31, 2023, respectively.

The Company’s obligations under the Second Amended and Restated Credit Agreement are guaranteed by certain of the Company’s domestic subsidiaries meeting materiality thresholds set forth in the Second Amended and Restated Credit Agreement. Such obligations, including the guaranties, are secured by substantially all of the assets of the Company and the assets of the subsidiary guarantors pursuant to a Security Documents Confirmation Agreement as part of the Second Amended and Restated Credit Agreement.

The Second Amended and Restated Credit Agreement contains customary affirmative and negative covenants, including covenants that limit or restrict the Company and its subsidiaries’ ability to, among other things, incur indebtedness, grant liens, merge or consolidate, dispose of assets, make investments, make acquisitions, enter into transactions with affiliates, pay dividends, or make distributions on and repurchase stock, in each case subject to certain exceptions. The Company is also required to maintain compliance, measured at the end of each fiscal quarter, with a consolidated total net leverage ratio and a consolidated interest coverage ratio. The Second Amended and Restated Credit Agreement contains no restrictions on the payment of dividends and other restricted payments, as defined, as long as (1) the consolidated total net leverage ratio, as defined, both before and after giving effect to any such

dividend or restricted payment on a pro forma basis, is less than 3.25:1, in an unlimited amount, (2) if clause (1) is not available, so long as the consolidated total net leverage ratio both before and after giving effect to any such dividend on a pro forma basis is less than 3.50:1, in an aggregate amount not to exceed the available amount, as defined, and (3) if clauses (1) and (2) are not available, in an aggregate amount not to exceed $50.0 million; provided, that, minimum liquidity, as defined, shall be not less than $75.0 million both before and after giving effect to any such dividend or restricted payment. As of April 30, 2024, the consolidated total net leverage ratio was (1.61):1. Minimum liquidity available as of April 30, 2024 was $4.3 billion. Accordingly, the Company does not believe that the provisions of the Second Amended and Restated Credit Agreement represent a significant restriction to its ability to pay dividends or to the successful future operations of the business. The Company has not paid a cash dividend since becoming a public company in 1994. The Company was in compliance with all covenants related to the Second Amended and Restated Credit Agreement as of April 30, 2024.

Related to execution of the Second Amended and Restated Credit Agreement, the Company incurred $2.7 million in costs, which were capitalized as debt issuance fees. The debt discount is amortized to interest expense over the term of the respective debt instruments and is included in other assets on the consolidated balance sheet.

NOTE 8 – Fair Value Measurements

The following table summarizes the carrying values and fair values of the Company’s financial instruments that were not carried at fair value in the consolidated balance sheets:

						April 30, 2024												July 31, 2023
(In thousands)						Carrying Value Total						Fair Value Total						Carrying Value Total						Fair Value Total
Assets
Cash equivalents						$	734,005					$	736,806					$	674,980					$	677,515
Investment in held to maturity securities						2,000,334						2,018,409						1,406,589						1,414,903
Total Assets						$	2,734,339					$	2,755,215					$	2,081,569					$	2,092,418
Liabilities
Long-term fixed rate debt, including current portion						$	—					$	—					$	11,006					$	11,006
Total Liabilities						$	—					$	—					$	11,006					$	11,006

The Company has investments in U.S. Treasury Bills some of which mature over a period greater than 90 days and are classified as short-term investments. The U.S. Treasury Bills are carried at amortized cost and classified as held to maturity as the Company has the intent and the ability to hold them until they mature. The carrying value of the U.S. Treasury Bills are adjusted for accretion of discounts over the remaining life of the investment. Income related to the Treasury Bills is recognized in interest income in the Company’s consolidated statement of income. The U.S. Treasury Bills classified within Level I of the fair value hierarchy.

During the nine months ended April 30, 2024, no transfers were made between any levels within the fair value hierarchy.

NOTE 9 – Net Income Per Share

The table below reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding:

						Three Months Ended April 30,												Nine Months Ended April 30,
(In thousands)						2024						2023						2024						2023
Weighted average common shares outstanding						961,813						953,574						960,143						952,834
Effect of dilutive securities						14,632						13,806						14,083						12,602
Weighted average common and dilutive potential common shares outstanding						976,445						967,380						974,226						965,436

There were no material adjustments to net income required in calculating diluted net income per share. Excluded from the dilutive earnings per share calculation were 631,147 and 3,451,940 options to purchase the Company’s common stock for the three months ended April 30, 2024 and 2023, respectively, and 1,937,294 and 15,946,536 options to purchase the Company’s common stock for the nine months ended April 30, 2024 and 2023, respectively, because their inclusion would have been anti-dilutive.

NOTE 10 – Stock-based Compensation

The Company recognizes compensation expense for stock option awards without a market condition on a straight-line basis over the requisite service period of the award. The following is a summary of activity for the Company’s stock options for the nine months ended April 30, 2024:

(In thousands, except per share and term data)						Shares						Weighted Average Exercise Price						Weighted Average Remaining Contractual Term (In years)						Aggregate Intrinsic Value
Outstanding as of July 31, 2023						17,825						$	15.47					4.67						$	512,045
Grants of options						1,031						49.60
Exercises						(2,047)						10.01
Forfeitures or expirations						—
Outstanding as of April 30, 2024						16,809						$	18.23					4.52						$	606,535
Exercisable as of April 30, 2024						14,279						$	14.89					3.87						$	562,931

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock. The number of options that were in-the-money was 22,804,605 at April 30, 2024.

The Company grants option awards to certain executives that contain service and market conditions. The options will become exercisable over five years, subject to continued service by the executive, with 20% vesting on the first anniversary of the grant date and the balance vesting monthly over the subsequent four years. Separate and apart from the time-based vesting schedule, the options are also subject to a market condition requiring the trading price of the Company common stock on the Nasdaq Global Select Market to be greater than or equal to 125% of the exercise price of the options, determined both (i) at the time of any exercise, and (ii) based on the closing price on each of the twenty consecutive trading days preceding the date of any exercise. The exercise price of the options is equivalent to the closing price of the Company’s common stock on the grant date. The fair value of the awards is determined at the grant date using either Lattice or Monte Carlo model, risk-free interest rates ranging from 0.71% to 4.37%, estimated volatility ranging from 25.2% to 29.8%, and no expected dividends. The total estimated compensation expense to be recognized by the Company over the five-year service period for these options is $50.1 million and will be recognized using the accelerated attribution method over each vesting tranche of the award. The Company recognized $5.9 million and $9.7 million in compensation expense related to these awards in the nine months ended April 30, 2024 and 2023, respectively.

The following is a summary of activity for the Company’s stock option awards subject to market conditions for the nine months ended April 30, 2024:

(In thousands, except per share and term data)						Shares						Weighted Average Exercise Price						Weighted Average Remaining Contractual Term (In years)						Aggregate Intrinsic Value
Outstanding as of July 31, 2023						5,920						$	24.37					7.43						$	117,389
Grants of options						75						50.89
Exercises						—						—
Forfeitures or expirations						—						—
Outstanding as of April 30, 2024						5,995						$	24.70					6.72						$	177,526
Exercisable as of April 30, 2024						3,864						$	23.14					6.45						$	120,445

The table below sets forth the stock-based compensation recognized by the Company for stock options, restricted stock, and restricted unit awards:

						Three Months Ended April 30,												Nine Months Ended April 30,
(In thousands)						2024						2023						2024						2023
General and administrative						$	7,201					$	7,830					$	21,693					$	25,366
Yard operations						1,817						2,251						5,001						5,038
Total stock-based compensation						$	9,018					$	10,081					$	26,694					$	30,404

Additionally, Purple Wave, Inc. maintains an equity-based compensation plan for certain executives. Compensation cost attributable to Purple Wave, Inc. equity-based compensation plan was $1.3 million and $0 included in stock based compensation for the nine months ended April 30, 2024 and 2023, respectively.

The Company’s restricted stock awards (“RSA”) and restricted stock unit awards (“RSU”), and performance stock units (“PSU”) have generally been issued with vesting periods ranging from two years to five years. RSA and RSU vest solely on service conditions while PSU will vest over five years, when and if certain financial performance targets are met. Accordingly, the Company recognizes compensation expense for RSA and RSU awards on a straight-line basis over the requisite service period of the award. Compensation expense for PSU is recognized on an accelerated attribution method when the achievement of certain financial performance targets appear probable and is recognized over the remaining requisite service period.

The following is a summary of activity for the Company’s RSA, RSU and PSU for the nine months ended April 30, 2024:

(In thousands, except per share data)						Restricted and Performance Shares						Weighted Average Grant Date Fair Value
Outstanding as of July 31, 2023						800						$	31.77
Grants						1,382						51.73
Vested						(278)						31.07
Forfeitures or expirations						(13)						34.02
Outstanding as of April 30, 2024						1,891						$	46.45

NOTE 11 – Stock Repurchases

On September 22, 2011, the Company’s Board of Directors approved a 320 million share increase in the stock repurchase program, bringing the total current authorization to 784 million shares. The repurchases may be effected through solicited or unsolicited transactions in the open market or in privately negotiated transactions. No time limit has been placed on the duration of the stock repurchase program. Subject to applicable securities laws, such repurchases will be made at such times and in such amounts as the Company deems appropriate and may be discontinued at any time. The Company did not repurchase any shares of its common stock under the program during the nine months ended April 30, 2024 or 2023. As of April 30, 2024, the total number of shares repurchased under the program was 458 million, and subject to applicable limitations under Delaware law, 326 million shares were available for repurchase under the program.

NOTE 12 – Income Taxes

The Company’s effective income tax rates were 20.4% and 21.3% for the nine months ended April 30, 2024 and 2023, respectively, which differs from the U.S. statutory rate of 21% primarily due to state income taxes, deduction for Foreign Derived Intangible Income, and excess tax benefits associated with equity-based compensation.

The Company applies the provisions of the accounting standard for uncertain tax positions to its income taxes. For benefits to be realized, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

The Company files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company is currently under examination by certain taxing authorities in the U.S. for fiscal years between 2019 and 2022. At this time, the Company does not believe that the outcome of any examination will have a material impact on the Company’s consolidated results of operations and financial position.

NOTE 13 – Recent Accounting Pronouncements

Pending

In March 2023 the FASB issued ASU 2023-02, Investments—Equity Method and Joint Ventures (Topic 323), which allows the option for reporting entities to elect to account for their tax equity investments, using the proportional amortization method if certain conditions are met. The amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company’s adoption of ASU 2023-02 is not expected to have a material impact on the Company’s consolidated results of operations and financial position.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.

On December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" to expand the disclosure requirements for income taxes, primarily related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.

NOTE 14 – Legal Proceedings

The Company is subject to threats of litigation and is involved in actual litigation and damage claims arising in the ordinary course of business, such as actions related to injuries, property damage, contract disputes, and handling or disposal of vehicles. Except as otherwise noted in this Note 13, there are no material pending legal proceedings to which the Company is a party, or with respect to which any of the Company’s property is subject.

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

The U.S. Department of Justice, Consumer Protection Branch (DOJ) is conducting an ongoing investigation into potential violations by the Company of certain money laundering laws related to its practices and procedures for preventing and detecting money-laundering activity by its members. In connection with this investigation, the Company received a letter from the DOJ in October 2023 in which they indicated the Company may have exposure as a result of potential violations to such money laundering statutes and regulations. The Company is cooperating with the DOJ’s investigation. At this time, we are unable to predict the duration, scope, or result of any potential governmental, criminal, or civil proceeding that may result, the imposition of fines and penalties, and/or other remedies, and as a result, are unable to predict the range of possible loss.

NOTE 15 – Segments and Other Geographic Reporting

The Company’s U.S. and International regions are considered two separate operating segments and are disclosed as two reportable segments. The segments represent geographic areas and reflect how the chief operating decision maker allocates resources and measures results, including total revenues and operating income.

The following table presents financial information by segment:

						Three Months Ended April 30, 2024																		Three Months Ended April 30, 2023
(In thousands)						United States						International						Total						United States						International						Total
Service revenues						830,680						115,950						$	946,630					$	752,077					$	95,172					$	847,249
Vehicle sales						88,236						92,393						180,629						81,681						92,901						174,582
Total service revenues and vehicle sales						918,916						208,343						1,127,259						833,758						188,073						1,021,831
Yard operations						369,577						69,296						438,873						323,426						55,532						378,958
Cost of vehicle sales						81,312						81,569						162,881						74,951						84,492						159,443
General and administrative						75,096						13,206						$	88,302					50,590						13,916						64,506
Operating income						$	392,931					$	44,272					$	437,203					$	384,791					$	34,133					$	418,924
Depreciation and amortization						$	43,477					$	7,256					$	50,733					$	32,918					$	4,453					$	37,371
Capital expenditures and acquisitions						72,186						15,629						87,815						79,633						10,172						89,805

						Nine Months Ended April 30, 2024																		Nine Months Ended April 30, 2023
(In thousands)						United States						International						Total						United States						International						Total
Service revenues						2,349,241						318,670						$	2,667,911					$	2,109,467					$	254,419					$	2,363,886
Vehicle sales						241,307						258,606						499,913						261,069						246,972						508,041
Total service revenues and vehicle sales						2,590,548						577,276						3,167,824						2,370,536						501,391						2,871,927
Yard operations						1,062,859						193,693						1,256,552						973,067						154,165						1,127,232
Cost of vehicle sales						223,462						234,134						457,596						246,431						218,851						465,282
General and administrative						201,667						39,530						241,197						147,456						36,005						183,461
Operating income						$	1,102,560					$	109,919					$	1,212,479					$	1,003,582					$	92,370					$	1,095,952
Depreciation and amortization						$	118,756					$	20,402					$	139,158					$	101,974					$	12,869					$	114,843
Capital expenditures and acquisitions						372,178						95,339						467,517						305,344						41,180						346,524

						April 30, 2024																		July 31, 2023
(In thousands)						United States						International						Total						United States						International						Total
Total assets						$	7,034,960					$	975,672					$	8,010,632					$	5,825,064					$	912,815					$	6,737,879
Goodwill						390,903						120,469						511,372						270,269						124,020						394,289