Copart, Inc. (CPRT) - Form 10-Q Summary
Business Context and Reporting Period
Company: Copart, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three and nine months ended April 30, 2026
Business Overview: Copart provides internet-based vehicle remarketing services, primarily to insurance companies, through its Virtual Bidding Third Generation (VB3) platform. The company operates in two reportable segments: United States and International.
Key Financial Metrics
| Metric (in thousands) | Three Months Ended April 30, 2026 |
Nine Months Ended April 30, 2026 |
Nine Months Ended April 30, 2025 |
|---|---|---|---|
| Total Revenues | $1,237,066 | $3,513,770 | $3,521,861 |
| Operating Income | $464,282 | $1,283,686 | $1,284,123 |
| Net Income (Attributable to Copart) | $402,401 | $1,156,847 | $1,156,095 |
| Diluted EPS | $0.43 | $1.20 | $1.18 |
| Operating Cash Flow | N/A | $1,246,951 | $1,361,274 |
| Cash & Equivalents (Ending) | $3,354,142 | $3,354,142 | $2,366,499 |
| Working Capital | $4,531,414 | $4,531,414 | $5,071,347 |
Margins (Nine Months 2026): Operating margin was approximately 36.5%. Net income margin was approximately 32.9%.
Material Changes vs. Prior Period
- Revenue: Total revenues for the nine months ended April 30, 2026, decreased slightly by 0.2% ($8.1 million) compared to the prior year. This was driven by a 2.1% decrease in U.S. service revenues, partially offset by an 11.4% increase in International service revenues. The U.S. decline was attributed to the absence of one-time revenue from Hurricanes Helene and Milton recognized in the prior fiscal year.
- Expenses: Total operating expenses decreased by 0.3% year-over-year. Facility operations expenses declined 1.2% due to lower one-time costs in the U.S., while General and Administrative expenses increased 4.2% due to higher labor and third-party service costs.
- Profitability: Net income attributable to Copart remained relatively flat, increasing by only 0.1% ($0.75 million) year-over-year, despite the slight revenue decline, due to effective cost management.
- Capital Allocation: The company significantly increased share repurchases, buying back 43.4 million shares for $1.63 billion during the nine-month period, compared to zero repurchases in the same period of the prior year.
Guidance, Outlook, and Risks
- Debt Facility: On January 23, 2026, Copart entered into a new $1.25 billion unsecured Senior Revolving Credit Agreement maturing in 2031, replacing the previous facility. As of April 30, 2026, $1.228 billion was available.
- Outlook: Management expects to continue using cash flows from operations to finance working capital and business growth. The company is considering alternative uses for cash, including additional repurchases, acquisitions, or dividends.
- Seasonality: The business is seasonal, with higher volumes typically occurring during winter months due to increased accident frequency.
- Legal Proceedings: The U.S. Department of Justice (DOJ) is conducting an ongoing investigation into potential violations of money laundering laws related to the company's auction platform practices. The company is cooperating but cannot predict the outcome or potential financial impact.
- Risk Factors: Key risks include dependence on a limited number of major vehicle sellers, international expansion challenges (currency, regulation), cybersecurity threats, and the impact of weather events on vehicle supply.
Investor Verification Checklist
- DOJ Investigation Status: Verify the current status and potential financial exposure of the ongoing DOJ money laundering investigation.
- U.S. Volume Trends: Confirm whether the decline in U.S. service revenue is a temporary post-hurricane normalization or a structural shift in volume.
- Share Repurchase Impact: Assess the sustainability of the aggressive $1.63 billion share buyback program and its impact on future liquidity and capital expenditure plans.
- International Growth: Evaluate the drivers of International revenue growth (volume vs. price vs. currency) to determine organic performance.
- Debt Covenants: Review the specific financial covenants of the new 2026 Credit Agreement to ensure continued compliance.