COPART INC

Results of Operations

The following table shows certain data from our consolidated statements of income expressed as a percentage of total service revenues and vehicle sales for the three and six months ended January 31, 2024 and 2023:

Comparison of the Three and Six Months Ended January 31, 2024 and 2023

The following table presents a comparison of service revenues for the three and six months ended January 31, 2024 and 2023:

Service Revenues. The increase in service revenues during the three months ended January 31, 2024 of $71.9 million, or 9.1%, as compared to the same period last year resulted from (i) an increase in the U.S. of $50.3 million and (ii) an increase in International of $21.6 million. The growth in the U.S. was driven primarily by (i) an increase in revenue per car due to fee optimization and (ii) an increase in volume. The growth in International, after excluding positive fluctuations in currency exchange rates of $4.1 million, was driven primarily by an increase in volume offset by a minor decrease in revenue per car.

The increase in service revenues during the six months ended January 31, 2024 of $204.6 million, or 13.5%, as compared to the same period last year resulted from (i) an increase in the U.S. of $161.2 million and (ii) an increase in International of $43.5 million. The growth in the U.S. was driven primarily by (i) an increase in volume and (ii) an increase in revenue per car due to fee optimization. The growth in International, after excluding positive fluctuations in currency exchange rates of $9.7 million, was driven primarily by an increase in volume offset by a minor decrease in revenue per car.

The following table presents a comparison of vehicle sales for the three and six months ended January 31, 2024 and 2023:

Vehicle Sales. The decrease in vehicle sales for the three months ended January 31, 2024 of $8.5 million, or 5.1%, as compared to the same period last year, resulted from (i) a decrease in the U.S. of $7.5 million and (ii) a decrease in International of $1.0 million. The decrease in the U.S. was primarily driven by a decrease in revenue per car due to lower auction selling prices, while performing favorably to the declining overall market trend, offset by an increase in volume. The decrease in international, after excluding positive fluctuations in currency exchange rates of $3.1 million, was primarily driven by a decrease in revenue per car due to lower auction selling prices, which we believe is due to change in mix of vehicles sold, offset by an increase in volume.

The decrease in vehicle sales for the six months ended January 31, 2024 of $14.2 million, or 4.3%, as compared to the same period last year, resulted from (i) a decrease in the U.S. of $26.3 million and (ii) an increase in International of $12.1 million. The decrease in the U.S. was primarily driven by (i) a decrease in revenue per car due to lower auction selling prices, while performing favorably to the declining overall market trend, and (ii) a decrease in volume as a result of a proactive approach to mitigate principle unit exposure. The growth in international, after excluding positive fluctuations in currency exchange rates of $8.7 million, was primarily driven by an increase in volume, offset by a decrease in revenue due to lower auction selling process, which we believe is due to a change in mix of vehicles sold.

The following table presents a comparison of yard operations expenses for the three and six months ended January 31, 2024 and 2023:

Yard Operations Expenses. The increase in yard operations expense for the three months ended January 31, 2024 of $33.7 million, or 9.0%, as compared to the same period last year resulted from (i) an increase in the U.S. of $20.3 million, and (ii) an increase in International of $13.4 million. The increase in the U.S. compared to the same period last year relates to an increase in volume, an increase in cost to process a car driven by increase in labor costs, supplies, and bank charges and investment in Purple Wave. The increase in International, after excluding negative fluctuations in currency exchange rate of $2.2 million, is the result of an increase in volume which is partially offset by a decrease in cost to process a car. Included in yard operations expenses were depreciation and amortization expenses. The increase in yard operations depreciation and amortization expenses during the three months ended January 31, 2024 as compared to the same period last year resulted primarily from depreciating new and expanded facilities placed into service in the U.S and International.

The increase in yard operations expense for the six months ended January 31, 2024 of $69.4 million, or 9.3%, as compared to the same period last year resulted from (i) an increase in the U.S. of $43.6 million, and (ii) an increase in International of $25.8 million. The increase in the U.S. compared to the same period last year relates to an increase in volume which is partially offset by a decrease in cost to process a car which is primarily the result of the first quarter of fiscal year 2023 bearing the associated cost of Hurricane Ian of $25 million. The increase in International, after excluding negative fluctuations in currency exchange rate of $5.5 million, is the result of an increase in volume which is partially offset by a decrease in cost to process a car. Included in yard operations expenses were depreciation and amortization expenses. The increase in yard operations depreciation and amortization expenses during the six months ended January 31, 2024 as compared to the same period last year resulted primarily from depreciating new and expanded facilities placed into service in the U.S and internationally.

The following table presents a comparison of cost of vehicle sales for the three and six months ended January 31, 2024 and 2023:

Cost of Vehicle Sales. The decrease in cost of vehicle sales for the three months ended January 31, 2024 of $7.9 million, or 5.1%, as compared to the same period last year resulted from (i) a decrease in the U.S. of $8.9 million and (ii) an increase in International of $1.0 million. The decrease in the U.S. was primarily the result of a lower average purchase price due to change in the mix of vehicles sold, offset by an increase in volume. The increase in International of $1.0 million, after excluding the negative fluctuations of currency exchange rates of $2.8 million, was primarily due to an increase in volume offset by lower average purchase prices due to the change in mix of vehicles sold.

The decrease in cost of vehicle sales for the six months ended January 31, 2024 of $11.1 million, or 3.6%, as compared to the same period last year resulted from (i) a decrease in the U.S. of $29.3 million and (ii) an increase in International of $18.2 million. The decrease in the U.S. was primarily the result of a lower average purchase price due to change in mix of vehicles sold and a decrease in volume. The increase in International of $18.2 million, after excluding the negative fluctuations of currency exchange rates of $7.9 million, was primarily due to an increase in volume and higher average purchase prices due to the change in mix of vehicles sold.

The following table presents a comparison of general and administrative expenses for the three and six months ended January 31, 2024 and 2023:

General and Administrative Expenses. The increase in general and administrative expenses for the three months ended January 31, 2024 of $23.3 million, or 38.2%, as compared to the same period last year resulted from (i) an increase in the U.S of $20.2 million and (ii) an increase in International of $3.0 million. Excluding depreciation and amortization, the increase in the U.S. of $20.6 million resulted primarily from increases in labor costs, computer software, legal, marketing costs and the consolidation of Purple Wave. The increase in International of $2.9 million, after excluding the negative fluctuations in currency exchange rates of $0.6 million, resulted primarily from increase in labor costs and legal. Depreciation and amortization expenses for the three months ended January 31, 2024 as compared to the same period last year declined slightly driven from fully depreciating certain intangible and technology assets in the U.S.

The increase in general and administrative expenses for the six months ended January 31, 2024 of $33.9 million, or 28.5%, as compared to the same period last year resulted from (i) an increase in the U.S of $29.7 million and (ii) an increase in International of $4.2 million. Excluding depreciation and amortization, the increase in the U.S. of $30.8 million resulted primarily from increases in labor costs, legal costs, marketing, computer software, bank charges and consolidation of Purple Wave. The increase in International of $4.0 million, after excluding the negative fluctuations in currency exchange rates of $1.2 million, resulted primarily from increase in labor and legal costs. Depreciation and amortization expenses for the six months ended January 31, 2024 as compared to the same period last year declined slightly driven from fully depreciating certain intangible and technology assets in the U.S.

The following table summarizes total other expense for the three and six months ended January 31, 2024 and 2023:

Other Expense. The increase in total other income for the three months ended January 31, 2024 of $19.3 million as compared to the same period last year was primarily due to higher interest income earned from T-bills and realized foreign currency gains offset by losses from equity method investments.

The increase in total other income for the six months ended January 31, 2024 of $45.6 million as compared to the same period last year was primarily due to higher interest income earned from T-bills and realized foreign currency gains offset by losses from equity method investments.

The following table summarizes income taxes for the three and six months ended January 31, 2024 and 2023:

Income Taxes. Our effective income tax rates were 20.8% and 22.1% for the three months ended January 31, 2024 and 2023, respectively, and 21.1% and 21.8% for the six months ended January 31, 2024 and 2023, respectively. The effective tax rates in the current and prior year were impacted by the recognition of excess tax benefits from stock-based compensation. The recognition of excess tax benefits from the exercise of employee stock options is $4.6 million and $0.1 million for the three months ended January 31, 2024 and 2023, respectively, and $5.7 million and $0.7 million for the six months ended January 31, 2024 and 2023, respectively.