DISCUSSION AND ANALYSIS BY THE MANAGEMENT OF COPART INC OF THE FINANCIAL POSITION AND RESULTS OF OPERATIONS (Type 10-Q)

This Quarterly Report on Type 10-Q, together with the data integrated by
reference herein, accommodates forward-looking statements throughout the that means of
Part 27A of the Securities Act of 1933, as amended (the Securities Act), and
Part 21E of the Securities Trade Act of 1934, as amended (the Trade
Act), together with forward-looking statements in regards to the potential impression of
the COVID-19 pandemic on our enterprise, operations, and working outcomes. All
statements apart from statements of historic info are statements that would
be deemed forward-looking statements. In some instances, you may establish
forward-looking statements by phrases reminiscent of "could," "will," "ought to," "anticipate,"
"plan," "intend," "forecast," "anticipate," "imagine," "estimate," "predict,"
"potential," "proceed" or the unfavorable of those phrases or different comparable
terminology. The forward-looking statements contained on this Type 10-Q contain
recognized and unknown dangers, uncertainties and conditions that will trigger our or our
business's precise outcomes, stage of exercise, efficiency or achievements to be
materially totally different from any future outcomes, ranges of exercise, efficiency or
achievements expressed or implied by these statements. These forward-looking
statements are made in reliance upon the protected harbor provision of the Personal
Securities Litigation Reform Act of 1995. These elements embody these listed in
Half II, Merchandise 1A. underneath the caption entitled "Threat Elements" on this Type 10-Q
and people mentioned elsewhere on this Type 10-Q. Except the context in any other case
requires, references on this Type 10-Q to "Copart," the "Firm," "we," "us,"
or "our" seek advice from Copart, Inc. We encourage traders to overview these elements
fastidiously along with the opposite issues referred to herein, in addition to within the
different paperwork we file with the Securities and Trade Fee (the SEC).
We could every so often make extra written and oral forward-looking
statements, together with statements contained in our filings with the SEC. We do
not undertake to replace any forward-looking assertion which may be constituted of time
to time by or on behalf of us.
Though we imagine that, primarily based on data at present obtainable to us and our
administration, the expectations mirrored within the forward-looking statements are
cheap, we can't assure future outcomes, ranges of exercise, efficiency
or achievements. You shouldn't place undue reliance on these forward-looking
statements.
Overview
We're a number one supplier of on-line auctions and car remarketing companies
with operations in america ("U.S."), Canada, the United Kingdom
("U.Okay."), Brazil, the Republic of Eire, Germany, Finland, the United Arab
Emirates ("U.A.E."), Oman, Bahrain, and Spain.
Our objectives are to generate sustainable income for our stockholders, whereas additionally
offering environmental and social advantages for the world round us. With
respect to our environmental stewardship, we imagine our enterprise is a vital
enabler for the worldwide re-use and recycling of autos, components, and uncooked
supplies. We're not chargeable for the carbon emissions ensuing from new
car manufacturing, governmental gasoline emissions requirements or car use by
shoppers. Every car that enters our enterprise operations already exists, with
no matter gasoline know-how and effectivity it was designed and constructed to have, and
the substantial carbon emissions related to the car's manufacture have
already occurred. Nevertheless, upon our receipt of an current car, we assist
lower its complete environmental impression by extending its helpful life and thereby
avoiding the carbon emissions related to the choice of recent car and
auto components manufacturing. For instance, most of the vehicles we course of and remarket
are subsequently restored to drivable situation, lowering the brand new car
manufacturing burden the world would in any other case face. A lot of our vehicles are
bought by dismantlers, who recycle and refurbish components for car repairs,
once more lowering new and aftermarket components manufacturing. And eventually, a few of our
autos are returned to their uncooked materials inputs by way of scrapping, lowering
the necessity for additional new useful resource extraction. In every of those instances, our
enterprise reduces the carbon and different environmental footprint of the worldwide
transportation business. Past our environmental stewardship, we additionally help
the world's communities in two vital methods. First, we imagine that we
contribute to financial improvement and well-being by enabling extra reasonably priced
entry to mobility around the globe. For instance, most of the vehicles offered
by way of our public sale platform are bought to be used in creating nations the place
reasonably priced transportation is a vital enabler of schooling, well being care, and
well-being extra typically. Secondly, due to the particular position we play in
responding to catastrophic climate occasions, we imagine we contribute to catastrophe
restoration and resilience within the communities we serve. For instance, we mobilized
our folks, entered into emergency leases, and engaged with a mess of
service suppliers to well timed retrieve, retailer, and remarket tens of hundreds of
flood-damaged autos within the Houston, Texas metropolitan space within the wake of
Hurricane Harvey in the summertime of 2017.
We offer car sellers with a full vary of companies to course of and promote
autos primarily over the web by way of our Digital Bidding Third
Technology web auction-style gross sales know-how, which we seek advice from as VB3.
Car sellers consist primarily of insurance coverage corporations, but additionally embody
banks, finance corporations, charities, fleet operators, sellers, car rental
corporations, and people. We promote the autos principally to licensed car
dismantlers, rebuilders, restore licensees, used car sellers, exporters, and
to most of the people. Nearly all of the autos offered on behalf of insurance coverage
corporations are both broken autos deemed a complete loss; not economically
repairable by the insurance coverage corporations; or are recovered stolen autos for
which an insurance coverage settlement with the car proprietor has already been made. We
supply car sellers a full vary of companies that assist expedite every stage of
the car gross sales course of, reduce administrative and processing prices, and
maximize the final word gross sales worth by way of the net public sale course of.
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Within the U.S., Canada, Brazil, the Republic of Eire, Finland, the U.A.E., Oman,
and Bahrain, we promote autos primarily as an agent and derive income primarily
from public sale and public sale associated gross sales transaction charges charged for car
remarketing companies in addition to charges for companies subsequent to the public sale,
reminiscent of supply and storage. Within the U.Okay., Germany, and Spain we function each as
an agent and on a principal foundation, in some instances buying salvage autos
outright and reselling the autos for our personal account. In Germany and Spain,
we additionally derive income from itemizing autos on behalf of insurance coverage corporations
and insurance coverage specialists to find out the car's residual worth and/or to
facilitate a sale for the insured.
We monitor and analyze numerous key monetary efficiency indicators so as
to handle our enterprise and consider our monetary and working efficiency.
Such indicators embody:
Service and Car Gross sales Income: Our service income consists of public sale and
public sale associated gross sales transaction charges charged for car remarketing companies.
These public sale and public sale associated companies could embody a mixture of car
buying charges, car itemizing charges, and car promoting charges that may be
primarily based on a predetermined share of the car gross sales worth, tiered car
gross sales worth pushed charges, or at a hard and fast price primarily based on the sale of every car
whatever the promoting worth of the car; transportation charges for the fee
of transporting the car to or from our facility; title processing and
preparation charges; car storage charges; bidding charges; and car loading charges.
These charges are acknowledged as web income (not gross car promoting worth) at
the time of public sale within the quantity of such charges charged. Bought car
income contains the product sales worth of the autos which we now have bought
or are in any other case thought of to personal. Now we have sure contracts with insurance coverage
corporations, primarily within the U.Okay., by which we act as a principal, buying
autos and reselling them for our personal account. We additionally buy autos in
the open market, primarily from people, and resell them for our personal
account.
Our income is impacted by a number of elements, together with complete loss frequency and
the typical car public sale promoting worth, as a major quantity of our
service income is related in some method with the final word promoting worth of
the car. Car public sale promoting costs are pushed primarily by: (i) market
demand for rebuildable, driveable autos; (ii) used automobile pricing, which we additionally
imagine has an impression on complete loss frequency; (iii) finish market demand for
recycled and refurbished components as mirrored in demand from dismantlers; (iv) the
mixture of vehicles offered; (v) adjustments within the U.S. greenback trade fee to international
currencies, which we imagine has an impression on public sale participation by
worldwide patrons; and (vi) adjustments in commodity costs, significantly the per
ton worth for crushed automobile our bodies, as we imagine this has an impression on the
final promoting worth of autos offered for scrap and autos offered for
dismantling. We can't particularly quantify the monetary impression that commodity
pricing, used automobile pricing, and product gross sales combine has on the promoting worth of
autos, our service revenues, or monetary outcomes. Whole loss frequency is
the share of vehicles concerned in accidents that insurance coverage corporations salvage
moderately than restore and is pushed by the connection between restore prices, used
automobile values, and public sale returns. Over the past a number of years, we imagine there
has been a rise in total progress within the salvage market pushed by an
enhance in complete loss frequency. The rise in complete loss frequency could have
been pushed by the change in used automobile values and restore prices, which we imagine
are typically trending upward. Modifications in used automobile costs and restore prices, could
impression complete loss frequency and have an effect on our progress fee. Used automobile values are
decided by many elements, together with used automobile provide, which is tied on to
new automobile gross sales, and the typical age of vehicles on the highway. The typical age of vehicles
on the highway continued to extend, rising from 9.6 years in 2002 to 12.1 years
in 2021. Restore prices are typically primarily based on injury severity, car
complexity, restore components availability, restore components prices, labor prices, and
restore store lead occasions. The elements that may affect restore prices, used automobile
pricing, and public sale returns are many and diversified and we can't predict their
actions. Accordingly, we can't predict future tendencies in complete loss frequency.
Starting in March 2020, our enterprise and operations started to expertise the
impression of the worldwide COVID-19 pandemic. In materially all of our
jurisdictions, we now have been deemed by native authorities a necessary enterprise
as a result of our operations make sure the removing of autos from restore outlets, impound
yards, and streets and highways, enabling the vital operate of highway
infrastructure. Consequently, we now have continued to function our services as properly
as our online-only auctions, whereas following applicable well being and security
protocols to make sure protected working situations for our workers in addition to for our
sellers, patrons, and different enterprise companions with whom we are available in contact.
From a monetary perspective, our working outcomes have been adversely affected by
decrease processed car quantity, however these antagonistic results have been greater than offset
by corresponding will increase in car common gross sales costs. Though we
initially noticed substantial declines in car assignments following the onset of
the COVID-19 pandemic, which we attribute principally to lowered accident quantity
as miles pushed dramatically declined in response to shelter-in-place orders
throughout the globe, we now have typically seen car task volumes steadily
recovering; nonetheless extra subsequent shelter-in-place orders have
often stalled or regressed the task quantity commensurate with the
severity and period of such orders. We can't predict how the pandemic will
proceed to develop, whether or not and to what extent new shelter-in-place orders will
be issued, or to what extent the pandemic could have long run unanticipated
impacts on our markets, together with, for instance, the danger of long-term reductions
in miles pushed.
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Though we now have been deemed an "important enterprise" within the jurisdictions in
which we function and have largely been capable of proceed our yard operations, we
have been required to make changes in our enterprise processes that will cut back
effectivity or enhance working bills, significantly if the pandemic
continues over an extended time frame. We adjusted, however didn't make materials
modifications to, our working bills to have the ability to proceed offering
employment for our workers, service to our sellers, and course of incoming
autos on the market in future quarters. The pandemic could have an antagonistic impact on
our future revenues, with the magnitude and timing of those results dependent
upon the extent and period of suspended financial exercise throughout our markets.
We imagine that the longer-term impression on our enterprise will rely upon potential
antagonistic operational impacts from outbreaks of COVID-19 at any of our places;
extra outbreaks of COVID-19 in a number of of our geographic markets; a
discount in miles pushed on account of a number of elements regarding the COVID-19
pandemic; the connection of provide and demand for newly manufactured autos,
on the one hand, and used salvage autos, then again, on account of lowered
manufacturing capability and broader provide chain disruptions through the COVID-19
pandemic and the consequences of those provide and demand relationships on the typical
gross sales costs obtained at public sale for the autos assigned to us for
remarketing; any additional authorities actions in response to COVID-19 outbreaks
that limit enterprise exercise or journey; disruptions of governmental
administrative operations on account of COVID-19 outbreaks that adversely impression our
core enterprise actions, reminiscent of car title processing; and deteriorating
financial situations typically, and the potential availability, amongst different
issues, of vaccines or therapies, none of which we are able to predict. For an additional
dialogue of dangers to our enterprise and working outcomes arising from the
pandemic, please see the part of this Quarterly Report on Type 10-Q captioned
"Threat Elements."
Working Prices and Bills: Yard operations bills consist primarily of
working personnel (which incorporates yard administration, clerical, and yard
workers); hire; car transportation; insurance coverage; property associated taxes;
gasoline; gear upkeep and restore; advertising prices instantly associated to the
public sale course of; and prices of autos offered underneath the acquisition contracts.
Normal and administrative bills consist primarily of govt administration;
accounting; information processing; gross sales personnel; skilled companies; advertising
bills; and system upkeep and enhancements.
Different (Expense) Revenue: Different (expense) earnings consists primarily of curiosity
expense on long-term debt, see Notes to Unaudited Consolidated Monetary
Statements, Be aware 6 - Lengthy-Time period Debt; international trade fee positive aspects and losses;
positive aspects and losses from the disposal of property, which can fluctuate primarily based on the
nature of those actions every interval; and earnings from unconsolidated
associates.
Liquidity and Money Flows: Our major supply of working capital is money
working outcomes and debt financing. The first supply of our liquidity is our
money and money equivalents and Revolving Mortgage Facility. The first elements
affecting money working outcomes are: (i) seasonality; (ii) market wins and
losses; (iii) provider combine; (iv) accident frequency; (v) complete loss frequency;
(vi) quantity from our current suppliers; (vii) commodity pricing; (viii) used
automobile pricing; (ix) international foreign money trade charges; (x) product combine; (xi)
contract combine to the extent relevant; (xii) our capital expenditures; and
(xiii) different macroeconomic elements reminiscent of COVID-19. These elements are additional
mentioned within the Outcomes of Operations and Threat Elements sections of this
Quarterly Report on Type 10-Q.
Potential inner sources of extra working capital and liquidity are the
sale of property or the issuance of shares by way of choice workouts and shares
issued underneath our Worker Inventory Buy Plan. A possible exterior supply of
extra working capital and liquidity is the issuance of extra debt or
fairness. Nevertheless, we can't predict if these sources shall be obtainable within the
future or on commercially acceptable phrases.
Acquisitions and New Operations
As a part of our total enlargement technique of providing built-in companies to
car sellers, we anticipate buying and creating services in new
areas, in addition to the areas at present served by our services. We imagine
that these acquisitions and openings will strengthen our protection, as we now have
services positioned within the U.S., Canada, the U.Okay., Brazil, the Republic of
Eire, Germany, Finland, the U.A.E., Oman, Bahrain, and Spain with the
intention of offering international protection for our sellers.
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The next tables set forth operational services that we now have opened and
at the moment are operational from August 1, 2020 by way of October 31, 2021:
                      United States Areas             Date
                    Redding, California             August 2020
                    Dothan, Alabama                 August 2020
                    Jacksonville, Florida           August 2020
                    Milwaukee, Wisconsin            September 2020
                    Houston, Texas                  December 2020
                    Knightdale, North Carolina      March 2021
                    Gastonia, North Carolina        Could 2021
                    Bismarck, North Dakota          June 2021
                    Fairburn, Georgia               July 2021
                    Dyer, Indiana                   July 2021
                    Cellular South, Alabama           August 2021


                     Worldwide Areas                               Geographic Service Space                  Date
Bruchm├╝hlbach-Miesau, Rhineland-Palatinate (Mannheim)                   Germany                              February 2021
Mallorca, Balearic Islands                                              Spain                                April 2021
Halifax, Novia Scotia                                                   Canada                               September 2021


The period-to-period comparability of our consolidated working outcomes and
monetary place is affected by enterprise acquisitions, new openings, climate
and product introductions throughout such intervals.
Along with progress by way of enterprise acquisitions, we search to extend
revenues and profitability by, amongst different issues, (i) buying and creating
extra car storage services in key markets, together with international markets;
(ii) pursuing international, nationwide, and regional car vendor agreements; (iii)
growing our service choices; and (iv) increasing the appliance of VB3 into
new markets. As well as, we implement our pricing construction and public sale
procedures, and try and introduce value efficiencies at every of our acquired
services by implementing our operational procedures, integrating our
administration data methods, and redeploying personnel, when crucial.
Outcomes of Operations
The next desk exhibits sure information from our consolidated statements of
earnings expressed as a share of complete service revenues and car gross sales for
the three months ended October 31, 2021 and 2020:
                                                          Three Months Ended October 31,
(In percentages)                                                                        2021       2020
Service revenues and car gross sales:
Service revenues                                                                         82  %      87  %
Car gross sales                                                                            18  %      13  %
Whole service revenues and car gross sales                                                100  %     100  %

Working bills:
Yard operations                                                                          37  %      39  %
Price of car gross sales                                                                    16  %      11  %
Normal and administrative                                                                7  %       8  %

Whole working bills                                                                 60  %      58  %
Working earnings                                                                         40  %      42  %
Different expense                                                                            (1) %       -  %
Revenue earlier than earnings taxes                                                               39  %      42  %
Revenue taxes                                                                              8  %       8  %
Internet earnings                                                                               31  %      34  %


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Desk of contents Comparability of the three accomplished months October 31, 2021 and 2020 The next desk presents a comparability of service revenues for the three months ended October 31, 2021 and 2020:

                                                                                Three Months Ended October 31,
(In hundreds)                                                                                        2021               2020              Change             % Change
Service revenues
             United States                                                                        $ 590,758          $ 450,235          $ 140,523                 31.2  %
             Worldwide                                                                           77,060             65,137             11,923                 18.3  %
             Whole service revenues                                                               $ 667,818          $ 515,372          $ 152,446                 29.6  %


Service Revenues. The rise in service revenues through the three months ended
October 31, 2021 of $152.4 million, or 29.6%, as in comparison with the identical interval
final yr resulted from (i) a rise within the U.S. of $140.5 million and (ii)
a rise in Worldwide of $11.9 million. The expansion within the U.S. was pushed
primarily by (i) a rise in income per automobile, (ii) a rise in quantity
ensuing from increased miles pushed because of the reopening of america
economic system and restriction throughout the international provide chain for vehicles.
Excluding the helpful impression of $3.2 million on account of adjustments in international
foreign money trade charges, primarily from the change within the British pound,
Brazilian actual and Canadian greenback to U.S. greenback trade charges, the expansion in
Worldwide was pushed primarily by a rise in quantity from increased miles
pushed because of the reopening of the Worldwide economies and restrictions
throughout the international provide chain for vehicles.
The next desk presents a comparability of car gross sales for the three months
ended October 31, 2021 and 2020:
                                                                              Three Months Ended October 31,
(In hundreds)                                                                                      2021              2020             Change             % Change
Car gross sales
            United States                                                                       $  87,703          $ 47,020          $ 40,683                 86.5  %
            Worldwide                                                                          54,611            30,548            24,063                 78.8  %
            Whole car gross sales                                                                 $ 142,314          $ 77,568          $ 64,746                 83.5  %


Car Gross sales. The rise in car gross sales for the three months ended October
31, 2021 of $64.7 million, or 83.5%, as in comparison with the identical interval final yr,
resulted from (i) a rise within the U.S. of $40.7 million and (ii) a rise
in Worldwide of $24.1 million. The rise within the U.S. was primarily the
results of increased common public sale promoting costs, which we imagine was on account of a
change within the mixture of autos offered; elevated demand; and lowered provide.
Excluding a helpful impression of $0.7 million on account of adjustments in international foreign money
trade charges, primarily from the change within the British pound, Brazilian actual
and Canadian greenback to U.S. greenback trade charges, the rise in Worldwide
was primarily the results of increased common public sale promoting costs, a rise
in quantity ensuing from increased miles pushed because of the reopening of the
Worldwide economies and restrictions throughout the international provide chain for
vehicles.
The next desk presents a comparability of yard operations bills for the
three months ended October 31, 2021 and 2020:
                                                                        Three Months Ended October 31,
(In hundreds)                                                                                2021               2020             Change             % Change
Yard operations bills
         United States                                                                    $ 256,621          $ 194,419          $ 62,202                 32.0  %
         Worldwide                                                                       42,073             37,392             4,681                 12.5  %
         Whole yard operations bills                                                   $ 298,694          $ 231,811          $ 66,883                 28.9  %

Yard operations bills, excluding depreciation and
amortization
         United States                                                                    $ 234,019          $ 173,711          $ 60,308                 34.7  %
         Worldwide                                                                       38,233             34,806             3,427                  9.8  %

Depreciation and amortization of yard

         United States                                                                    $  22,602          $  20,708          $  1,894                  9.1  %
         Worldwide                                                                        3,840              2,586             1,254                 48.5  %


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Yard Operations Bills. The rise in yard operations expense for the three
months ended October 31, 2021 of $66.9 million, or 28.9%, as in comparison with the
identical interval final yr resulted from (i) a rise within the U.S. of $62.2
million, and (ii) a rise in Worldwide of $4.7 million. Excluding
depreciation and amortization, the rise within the U.S. in comparison with the identical
interval final yr pertains to a rise in quantity on account of the reopening
of america economic system mixed with a rise in the fee to course of
every automobile. The rise in value to course of every automobile was pushed by elevated
non-CAT associated subhaul prices mixed with a rise in premiums for CAT
associated subhaul, labor prices incurred from time beyond regulation, and elevated journey,
lodging, and gear lease value related to Hurricane Ida. The rise in
Worldwide was primarily pushed by the rise in quantity following the
reopening of Worldwide economies, mixed with a detrimental enhance in
international foreign money trade charges of $1.3 million primarily from the British pound
and Brazilian Actual to U.S. Greenback trade fee partially offset by a lower
in the fee to course of every automobile Included in yard operations bills have been
depreciation and amortization bills. The rise in yard operations
depreciation and amortization bills through the three months ended October 31,
2021 as in comparison with the identical interval final yr resulted primarily from
depreciating new and expanded services positioned into service within the U.S. and
Worldwide places.
The next desk presents a comparability of value of car gross sales for the three
months ended October 31, 2021 and 2020:
                                                                                 Three Months Ended October 31,
(In hundreds)                                                                                         2021              2020             Change             % Change
Price of car gross sales
                  United States                                                                    $  80,342          $ 41,506          $ 38,836                 93.6  %
                  Worldwide                                                                       46,066            22,854            23,212                101.6  %
                  Whole value of car gross sales                                                      $ 126,408          $ 64,360          $ 62,048                 96.4  %


Price of Car Gross sales. The rise in value of car gross sales for the three
months ended October 31, 2021 of $62.0 million, or 96.4%, as in comparison with the
identical interval final yr resulted from (i) a rise within the U.S. of $38.8 million
and (ii) a rise in Worldwide of $23.2 million. The rise within the U.S.
was primarily the results of elevated quantity and better common buy costs,
which we imagine was on account of a change within the mixture of autos offered, elevated
demand; and lowered provide. Excluding the detrimental impression of $0.4 million due
to adjustments in international foreign money trade charges, primarily from the change within the
British pound to U.S. greenback trade charges, the rise in Worldwide was
primarily the results of increased common buy costs, which we imagine was due
to a change within the mixture of autos offered, elevated demand; and lowered provide.
The next desk presents a comparability of normal and administrative bills
for the three months ended October 31, 2021 and 2020:
                                                                              Three Months Ended October
                                                                                          31,
(In hundreds)                                                                                    2021              2020             Change            % Change
Normal and administrative bills
            United States                                                                      $ 46,548          $ 39,738          $ 6,810                 17.1  %
            Worldwide                                                                         8,361             8,437              (76)                (0.9) %
            Whole normal and administrative bills                                          $ 54,909          $ 48,175          $ 6,734                 14.0  %

Normal and administrative bills, excluding depreciation and
amortization
            United States                                                                      $ 41,423          $ 34,284          $ 7,139                 20.8  %
            Worldwide                                                                         8,163             8,236              (73)                (0.9) %

Normal and administrative depreciation and amortization

            United States                                                                      $  5,125          $  5,454          $  (329)                (6.0) %
            Worldwide                                                                           198               201               (3)                (1.5) %


Normal and Administrative Bills. The rise on the whole and administrative
bills for the three months ended October 31, 2021 of $6.7 million, or 14.0%,
as in comparison with the identical interval final yr resulted from (i) a lower in
Worldwide of $0.1 million and (ii) a rise within the U.S. of $6.8 million.
Excluding depreciation and amortization, the lower in Worldwide of $0.1
million resulted primarily from decrease present interval prices together with decreased
journey prices. The rise within the U.S. of $7.1 million resulted primarily from
will increase in inventory compensation and elevated authorized prices. Depreciation and
amortization bills for the three months ended October 31, 2021 as in comparison with
the identical interval final yr have been comparatively flat in each the U.S. and
Worldwide places.
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Desk of Contents The next desk summarizes the full of different earnings taxes and costs for the quarter ended. October 31, 2021 and 2020:

                                         Three Months Ended October 31,
(In hundreds)                                                            2021          2020         Change       % Change

Whole different expense                                                    $ (4,295)     $ (1,779)     $ (2,516)      (141.4) %
Revenue taxes                                                             65,463        46,530        18,933         40.7  %


Different Expense. The rise in complete different expense for the three months ended
October 31, 2021 of $2.5 million as in comparison with the identical interval final yr was
primarily on account of decrease earnings of unconsolidated associates, and losses on
disposal of sure non-operating property within the present yr, partially offset
by increased foreign money positive aspects within the present yr.
Revenue Taxes. Our efficient earnings tax charges have been 20.1%, and 18.9% for the three
months ended October 31, 2021 and 2020, respectively. The efficient tax fee for
the three months ended October 31, 2021 was impacted by the popularity of
extra tax advantages from stock-based compensation. The popularity of extra tax
advantages from stock-based compensation was $3.0 million and $11.8 million for
the three months ended October 31, 2021 and 2020, respectively.
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Liquidity and Capital Assets
The next desk presents a comparability of key elements of our liquidity and
capital assets at October 31, 2021 and July 31, 2021 and for the three months
ended October 31, 2021 and 2020, respectively, excluding extra funds
obtainable to us by way of our Revolving Mortgage Facility:
(In hundreds)                                          October 31, 2021           July 31, 2021            Change             % Change
Money, money equivalents, and restricted money           $       1,298,373          $    1,048,260          $ 250,113                 23.9  %

Working capital                                               1,547,869               1,281,580            266,289                 20.8  %


                                                          Three Months Ended October 31,
(In hundreds)                                   2021             2020          Change       % Change
Working money flows                         $   312,540      $  258,533      $ 54,007         20.9  %
Investing money flows                             (63,883)       (146,822)       82,939         56.5  %
Financing money flows                               5,166          19,198    

(14,032) (73.1)%

Investments and acquisitions $ (64,696) (147,093) $

$ 82,397 56.0%


Money, money equivalents, and restricted money and dealing capital elevated $250.1
million and $266.3 million at October 31, 2021, respectively, as in comparison with
July 31, 2021. Money, money equivalents, and restricted money elevated primarily
on account of money generated from operations and proceeds from inventory choice workouts
not absolutely offset by capital expenditures. Working capital elevated primarily
from money generated from operations and timing of money receipts and funds,
partially offset by capital expenditures, sure earnings tax advantages associated to
inventory choice workouts, and timing of money funds. Money equivalents consisted
of financial institution deposits, home certificates of deposit, U.S. Treasury Payments, and
funds invested in cash market accounts, which bear curiosity at variable charges.
Traditionally, we now have financed our progress by way of money generated from
operations, public choices of widespread inventory, fairness issued along side
sure acquisitions and debt financing. Our major supply of money generated by
operations is from the gathering of service charges and reimbursable advances from
the proceeds of car gross sales. We anticipate to proceed to make use of money flows from
operations to finance our working capital wants and to develop and develop our
enterprise. Along with our inventory repurchase program, we're contemplating a
number of various potential makes use of for our remaining money balances and our
money flows from operations. These various potential makes use of embody extra
inventory repurchases, repayments of long-term debt, the cost of dividends, and
acquisitions. For additional element, see Notes to Unaudited Consolidated Monetary
Statements, Be aware 6 - Lengthy-Time period Debt and Be aware 10 - Inventory Repurchases and underneath
the subheadings "Credit score Settlement" and "Be aware Buy Settlement" under.
Our enterprise is seasonal as inclement climate through the winter months will increase
the frequency of accidents and consequently, the variety of vehicles concerned in
accidents which the insurance coverage corporations salvage moderately than restore. Throughout the
winter months, most of our services course of 5% to twenty% extra autos than at
different occasions of the yr. Extreme climate occasions, together with however not restricted to
tornadoes, hurricanes, and hailstorms, also can impression our volumes. These
elevated volumes require the elevated use of our money to pay out advances and
dealing with prices of the extra enterprise.
We imagine that our at present obtainable money and money equivalents and money
generated from operations shall be adequate to fulfill our working and
working capital necessities for the foreseeable future. We anticipate to amass or
develop extra places and develop a few of our present services within the
foreseeable future. We could also be required to boost extra money by way of
drawdowns on our Revolving Mortgage Facility or issuance of extra fairness to
fund this enlargement. Though the timing and magnitude of progress by way of
enlargement and acquisitions will not be predictable, the opening of recent greenfield
yards is contingent upon our potential to find property that (i) is in an space
by which we now have a necessity for extra capability; (ii) has satisfactory dimension given the
capability wants; (iii) has the suitable form and topography for our
operations; (iv) is fairly near a serious highway or freeway; and (v) most
importantly, has the suitable zoning for our enterprise. Prices to develop a brand new
yard can vary from $3.0 to $50.0 million, relying on dimension, location and
developmental infrastructure necessities.
As of October 31, 2021, $191.2 million of the $1.3 billion of money, money
equivalents, and restricted money was held by our international subsidiaries. If these
funds are wanted for our operations within the U.S., the repatriation of those funds
may nonetheless be topic to the international withholding tax following the U.S. Tax
Reform. Nevertheless, our intent is to completely reinvest these funds exterior of
the U.S. and our present plans don't require repatriation to fund our U.S.
operations.
Internet money offered by working actions elevated for the three months ended
October 31, 2021 as in comparison with the identical interval in 2020 on account of improved money
working outcomes primarily from a rise in service revenues and car
gross sales, and adjustments in working property and liabilities. The change in working
property and liabilities was primarily the results of a lower in funds acquired
in accounts receivable of $24.8. million; partially offset by decreases in funds
used to pay accounts payable of $18.0 million and enhance in funds to pay for
car pooling prices of $11 million.
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Internet money utilized in investing actions decreased for the three months ended
October 31, 2021 as in comparison with the identical interval in 2020 due primarily to
decreased capital expenditures. Our capital expenditures are primarily associated
to lease buyouts of sure services, buying land, opening and bettering
services, capitalized software program improvement prices for brand spanking new software program for inner
use and main software program enhancements, and buying yard gear. We proceed
to develop, develop and spend money on new and current services.
Internet money offered by (utilized in) financing actions elevated for the three
months ended October 31, 2021 as in comparison with the identical interval in 2020 due
primarily to decrease funds for worker inventory primarily based tax withholdings, as
mentioned in additional element underneath the subheading "Inventory Repurchases", and a
lower in proceeds from the train of inventory choices.
Credit score Settlement
On July 21, 2020, we entered right into a First Amended and Restated Credit score Settlement
with Wells Fargo Financial institution, Nationwide Affiliation, Truist Financial institution (as successor by merger
to Suntrust Financial institution), BMO Harris Financial institution N.A., Santander Financial institution, N.A., and Financial institution of
America, N.A., as administrative agent (as amended every so often, the
"Credit score Modification"), bringing the mixture principal quantity of the revolving
credit score commitments underneath the Credit score Settlement (the "Revolving Mortgage Facility") to
$1,050.0 million.
The carrying quantity of the Credit score Settlement is comprised of borrowings underneath
which curiosity accrues underneath a fluctuating rate of interest construction. Accordingly,
the carrying worth approximated honest worth at October 31, 2021, and was
categorised inside Degree II of the honest worth hierarchy.
The rate of interest as of October 31, 2021 on our Revolving Mortgage Facility was the
Eurodollar Fee of 0.75% plus an relevant margin of 1.50%. Quantities borrowed
underneath the Revolving Mortgage Facility could also be repaid and reborrowed till the
maturity date of July 21, 2023. We had no excellent borrowings underneath the
Revolving Mortgage Facility as of October 31, 2021 or July 31, 2021. The Credit score
Settlement accommodates customary affirmative and unfavorable covenants and we have been in
compliance with all covenants associated to the Credit score Settlement as of October 31,
2021.
Be aware Buy Settlement
On December 3, 2014, we entered right into a Be aware Buy Settlement and offered to
sure purchasers (collectively, the "Purchasers") $400.0 million in combination
principal quantity of senior secured notes (the "Senior Notes") consisting of (i)
$100.0 million combination principal quantity of 4.07% Senior Notes, Collection A, due
December 3, 2024; (ii) $100.0 million combination principal quantity of 4.19% Senior
Notes, Collection B, due December 3, 2026; (iii) $100.0 million combination principal
quantity of 4.25% Senior Notes, Collection C, due December 3, 2027; and (iv) $100.0
million combination principal quantity of 4.35% Senior Notes, Collection D, due
December 3, 2029. Curiosity is due and payable quarterly, in arrears, on every of
the Senior Notes. We could prepay the Senior Notes, in entire or partly, at any
time, topic to sure situations, together with minimal quantities and cost of a
make-whole quantity equal to the discounted worth of the remaining scheduled
curiosity funds underneath the Senior Notes. The Be aware Buy Settlement accommodates
customary affirmative and unfavorable covenants and we have been in compliance with all
covenants associated to the Be aware Buy Settlement as of October 31, 2021.
Inventory Repurchases
On September 22, 2011, our Board of Administrators accredited an 80 million share
enhance within the inventory repurchase program, bringing the full present
authorization to 196 million shares. The repurchases could also be effected by way of
solicited or unsolicited transactions within the open market or in privately
negotiated transactions. No time restrict has been positioned on the period of the
inventory repurchase program. Topic to relevant securities legal guidelines, such
repurchases shall be made at such occasions and in such quantities as we deem
applicable and could also be discontinued at any time. We didn't repurchase any
shares of our widespread inventory underneath this system through the three months ended
October 31, 2021 or 2020. As of October 31, 2021, the full variety of shares
repurchased underneath this system was 114,549,198, and 81,450,802 shares have been
obtainable for repurchase underneath this system.

Essential Accounting Insurance policies and Estimates
The preparation of consolidated monetary statements requires us to make
estimates and judgments that have an effect on the reported quantities of property, liabilities,
revenues and bills, and the associated disclosure of contingent property and
liabilities. On an ongoing foundation, we consider our estimates, together with prices
associated to car pooling prices; earnings taxes; stock-based compensation; and
contingencies. We base our estimates on historic expertise and on varied
different assumptions that we imagine are cheap underneath the circumstances, the
outcomes of which type the premise for making judgments in regards to the carrying worth of
property and liabilities that aren't readily obvious from different sources. Precise
outcomes could differ from these estimates underneath totally different assumptions or
situations.
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  Desk of Contents
Administration has mentioned the collection of vital accounting insurance policies and
estimates with the Audit Committee of the Board of Administrators and the Audit
Committee has reviewed our disclosure regarding vital accounting insurance policies
and estimates on this Quarterly Report on Type 10-Q. There have been no materials
adjustments to the vital accounting insurance policies and estimates from what was
disclosed in our Annual Report on   Type 10-Okay   for the fiscal yr ended
July 31, 2021 filed with the SEC on September 27, 2021. Our vital
accounting insurance policies are described within the Notes to Unaudited Consolidated
Monetary Statements, Be aware 1 - Abstract of Vital Accounting Insurance policies in
this Quarterly Report on Type 10-Q.
Not too long ago Issued Accounting Requirements
For an outline of the brand new accounting requirements that have an effect on us, seek advice from the
Notes to Unaudited Consolidated Monetary Statements, Be aware 11 - Latest
Accounting Pronouncements.
Contractual Obligations and Commitments
There have been no materials adjustments through the three months ended October 31,
2021 to our contractual obligations disclosed in our "Administration's Dialogue
and Evaluation of Monetary Situation and Outcomes of Operations" included in our
Annual Report on   Type 10-Okay   for the fiscal yr ended July 31, 2021, filed
with the SEC on September 27, 2021.
Off-Stability Sheet Preparations
As of October 31, 2021, we had no off-balance sheet preparations apart from a
letter of credit score and our funding commitments pursuant to surety bonds, none of
which have or are fairly more likely to have a present or future impact on our
monetary situation, adjustments in monetary situation, revenues or bills,
outcomes of operations, liquidity, capital expenditures or capital assets that
is materials to traders. .

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Dialogue and evaluation by the administration of WALT DISNEY CO of the monetary place and working outcomes (Type 10-Okay)

CONSOLIDATED RESULTS (in thousands and thousands, besides per share knowledge) % Change Higher 2021 2020 …