COPART INC MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

Unless the context otherwise requires, references in this Form 10-Q to “Copart,”
the “Company,” “we,” “us,” or “our” refer to Copart, Inc.

This Quarterly Report on Form 10-Q, including the information incorporated by
reference herein, contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended (the Securities Act), and
Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange
Act). All statements other than statements of historical facts are statements
that could be deemed forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as "may," "will," "should," "expect,"
"plan," "intend," "forecast," "anticipate," "believe," "estimate," "predict,"
"potential," "continue" or the negative of these terms or other comparable
terminology. The forward-looking statements contained in this Form 10-Q involve
known and unknown risks, uncertainties and situations that may cause our or our
industry's actual results, level of activity, performance or achievements to be
materially different from any future results, levels of activity, performance or
achievements expressed or implied by these statements. These forward-looking
statements are made in reliance upon the safe harbor provision of the Private
Securities Litigation Reform Act of 1995. These factors include those listed in
Part II, Item 1A. under the caption entitled "Risk Factors" in this Form 10-Q
and those discussed elsewhere in this Form 10-Q. We encourage investors to
review these factors carefully together with the other matters referred to
herein, as well as in the other documents we file with the Securities and
Exchange Commission (the "SEC"). We may from time to time make additional
written and oral forward-looking statements, including statements contained in
our filings with the SEC. We do not undertake to update any forward-looking
statement that may be made from time to time by or on behalf of us.

Although we believe that, based on information currently available to us and our
management, the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. You should not place undue reliance on these forward-looking
statements.

Overview

We are a leading provider of online auctions and vehicle remarketing services
with operations in the United States ("U.S."), Canada, the United Kingdom
("U.K."), Brazil, the Republic of Ireland, Germany, Finland, the United Arab
Emirates ("U.A.E."), Oman, Bahrain, and Spain.

Our goals are to generate sustainable profits for our stockholders, while also
providing environmental and social benefits for the world around us. With
respect to our environmental stewardship, we believe our business is a critical
enabler for the global re-use and recycling of vehicles, parts, and raw
materials. We are not responsible for the carbon emissions resulting from new
vehicle manufacturing, governmental fuel emissions standards or vehicle use by
consumers. Each vehicle that enters our business operations already exists, with
whatever fuel technology and efficiency it was designed and built to have, and
the substantial carbon emissions associated with the vehicle's manufacture have
already occurred. However, upon our receipt of an existing vehicle, we help
decrease its total environmental impact by extending its useful life and thereby
avoiding the carbon emissions associated with the alternative of new vehicle and
auto parts manufacturing. For example, many of the cars we process and remarket
are subsequently restored to drivable condition, reducing the new vehicle
manufacturing burden the world would otherwise face. Many of our cars are
purchased by dismantlers, who recycle and refurbish parts for vehicle repairs,
again reducing new and aftermarket parts manufacturing. And finally, some of our
vehicles are returned to their raw material inputs through scrapping, reducing
the need for further new resource extraction. In each of these cases, our
business reduces the carbon and other environmental footprint of the global
transportation industry.

Beyond our environmental stewardship, we also support the world's communities in
two important ways. First, we believe that we contribute to economic development
and well-being by enabling more affordable access to mobility around the world.
For example, many of the automobiles sold through our auction platform are
purchased for use in developing countries where affordable transportation is a
critical enabler of education, health care, and well-being more generally.
Secondly, because of the special role we play in responding to catastrophic
weather events, we believe we contribute to disaster recovery and resilience in
the communities we serve. For example, we mobilized our people, and engaged with
a multitude of service providers to timely retrieve, store, and remarket tens of
thousands of flood-damaged vehicles in South Florida in the wake of Hurricane
Ian in the fall of 2022.

We provide vehicle sellers with a full range of services to process and sell
vehicles primarily over the internet through our Virtual Bidding Third
Generation internet auction-style sales technology, which we refer to as VB3.
Vehicle sellers consist primarily of insurance companies, but also include
banks, finance companies, charities, fleet operators, dealers, vehicle rental
companies, and individuals. We sell the vehicles principally to licensed vehicle
dismantlers, rebuilders, repair licensees, used vehicle dealers, exporters, and
to the general public. The majority of the vehicles sold on behalf of insurance
companies are either damaged vehicles deemed a total loss; 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. We
offer vehicle sellers a full range of services that help expedite each stage of
the vehicle sales process, minimize administrative and processing costs, and
maximize the ultimate sales price through the online auction process.
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In the U.S., Canada, Brazil, the Republic of Ireland, Finland, the U.A.E., Oman,
and Bahrain, we sell vehicles primarily as an agent and derive 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 U.K., Germany, and Spain we operate both as
an agent and on a principal basis, in some cases purchasing salvage vehicles
outright and reselling the vehicles for our own account. In Germany and Spain,
we also derive 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.

We monitor and analyze a number of key financial performance indicators in order
to manage our business and evaluate our financial and operating performance.
Such indicators include:

Service and Vehicle Sales Revenue: Our service revenue consists of auction and
auction related sales transaction fees charged for vehicle remarketing services.
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 our facility; title processing and
preparation fees; vehicle storage fees; bidding fees; and vehicle loading fees.
These fees are recognized as net revenue (not gross vehicle selling price) at
the time of auction in the amount of such fees charged. Purchased vehicle
revenue includes the gross sales price of the vehicles which we have purchased
or are otherwise considered to own. We have certain contracts with insurance
companies, primarily in the U.K., in which we act as a principal, purchasing
vehicles and reselling them for our own account. We also purchase vehicles in
the open market, primarily from individuals, and resell them for our own
account.

Our revenue is impacted by several factors, including total loss frequency and
the average vehicle auction selling price, as a significant amount of our
service revenue is associated in some manner with the ultimate selling price of
the vehicle. Vehicle auction selling prices are driven primarily by: (i) market
demand for rebuildable, driveable vehicles; (ii) used car pricing, which we also
believe has an impact on total loss frequency; (iii) end market demand for
recycled and refurbished parts as reflected in demand from dismantlers; (iv) the
mix of cars sold; (v) changes in the U.S. dollar exchange rate to foreign
currencies, which we believe has an impact on auction participation by
international buyers; (vi) restrictions within the global supply chain; and
(vii) changes in commodity prices, particularly the per ton price for crushed
car bodies, as we believe this has an impact on the ultimate selling price of
vehicles sold for scrap and vehicles sold for dismantling. We cannot
specifically quantify the financial impact that commodity pricing, used car
pricing, and product sales mix has on the selling price of vehicles, our service
revenues, or financial results. Total loss frequency is the percentage of cars
involved in accidents that insurance companies salvage rather than repair and is
driven by the relationship between repair costs, used car values, and auction
returns. Over the past 30 years we believe there has been an increase in overall
growth in the salvage market driven by an increase in total loss frequency. This
increase in total loss frequency may have been driven by changes in used car
values and repair costs over the same long-term horizon, which we believe are
generally trending upward. Recently we have noted fluctuations in total loss
frequency. Nonetheless, we believe the long-term trend of increases in total
loss frequency will continue. In the near term changes in used car prices and
repair cost, may tend to reduce total loss frequency and thereby affect our
growth rate. Used car values are determined by many factors, including used car
supply, which is tied directly to new car sales, and the average age of cars on
the road. The average age of cars on the road has continued to increase, growing
from 9.6 years in 2002 to 12.2 years in 2022. Repair costs are generally based
on damage severity, vehicle complexity, repair parts availability, repair parts
costs, labor costs, and repair shop lead times. The factors that can influence
repair costs, used car pricing, and auction returns are many and varied and we
cannot predict their movements with precision.

Operating Costs and Expenses: Yard operations expenses consist primarily of
operating personnel (which includes yard management, clerical, and yard
employees); rent; vehicle transportation; insurance; property related taxes;
fuel; equipment maintenance and repair; marketing costs directly related to the
auction process; and costs of vehicles sold under the purchase contracts.
General and administrative expenses consist primarily of executive management;
accounting; data processing; sales personnel; professional services; marketing
expenses; and system maintenance and enhancements.

Other Income and Expense: Other income consists primarily of interest income on
T-bills, foreign exchange rate gains and losses; gains and losses from the
disposal of assets, which will fluctuate based on the nature of these activities
each period; fees and interest expense on the credit facility, and earnings from
unconsolidated affiliates.

Liquidity and Cash Flows: Our primary source of working capital is cash
operating results. The primary source of our liquidity is our cash and cash
equivalents and Revolving Loan Facility. The primary factors affecting cash
operating results are: (i) seasonality; (ii) market wins and losses; (iii)
supplier mix; (iv) accident frequency; (v) total loss frequency; (vi) volume
from our existing suppliers; (vii) commodity pricing; (viii) used car pricing;
(ix) foreign currency exchange rates; (x) product mix; (xi) contract mix to the
extent applicable; (xii) our capital expenditures; and (xiii) other
macroeconomic factors. These factors are further discussed in the Results of
Operations and Risk Factors sections of this Quarterly Report on Form 10-Q.

Potential internal sources of additional working capital and liquidity are the
sale of assets or the issuance of shares through option exercises and shares
issued under our Employee Stock Purchase Plan. A potential external source of
additional working capital and liquidity is the issuance of additional debt or
equity. However, we cannot predict if these sources will be available in the
future or on commercially acceptable terms.

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Acquisitions and New Operations

As part of our overall expansion strategy of offering integrated services to
vehicle sellers, we anticipate acquiring and developing facilities in new
regions, as well as the regions currently served by our facilities. We believe
that these acquisitions and openings will strengthen our coverage, as we have
facilities located in the U.S., Canada, the U.K., Brazil, the Republic of
Ireland, Germany, Finland, the U.A.E., Oman, Bahrain, and Spain with the
intention of providing global coverage for our sellers.

The following tables set forth operational facilities that we have opened and
are now operational from August 1, 2021 through January 31, 2023:

          United States Locations       Geographic Service Area            Date

         Mobile South                  Alabama                       August 2021
         Madison                       Wisconsin                     October 2021
         Augusta                       Georgia                       April 2022
         Milwaukee South               Wisconsin                     May 2022
         Punta Gorda                   Florida                       June 2022
         Anchorage                     Alaska                        August 2022
         Rapid City                    South Dakota                  August 2022
         Kansas City                   Missouri                      September 2022
         Grenada                       Mississippi                   January 2023


 International Locations       Geographic Service Area            Date

Barcelona, Spain              Spain                         September 2021
Halifax, Novia Scotia         Canada                        April 2022
Büdingen, Hesse               Germany                       January 2023

The following table sets forth the operational facilities obtained through
business acquisitions from August 1, 2021 through January 31, 2023:

       Locations            Geographic Service Area          Date
Skelmersdale, England      United Kingdom                July 2022
Dumfries, England          United Kingdom                July 2022


The period-to-period comparability of our consolidated operating results and
financial position is affected by business acquisitions, new openings, weather
and product introductions during such periods.

In addition to growth through business acquisitions, we seek to increase
revenues and profitability by, among other things, (i) acquiring and developing
additional vehicle storage facilities in key markets, including foreign markets;
(ii) pursuing global, national, and regional vehicle seller agreements; (iii)
increasing our service offerings; and (iv) expanding the application of VB3 into
new markets. In addition, we implement our pricing structure and auction
procedures, and attempt to introduce cost efficiencies at each of our acquired
facilities by implementing our operational procedures, integrating our
management information systems, and redeploying personnel, when necessary.
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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, 2023 and 2022:

                                                      Three Months Ended January 31,              Six Months Ended January 31,
(In percentages)                                        2023                  2022                 2023                  2022
Service revenues and vehicle sales:
Service revenues                                             83  %                82  %                 82  %                82  %
Vehicle sales                                                17  %                18  %                 18  %                18  %
Total service revenues and vehicle sales                    100  %               100  %                100  %               100  %

Operating expenses:
Yard operations                                              39  %                37  %                 40  %                37  %
Cost of vehicle sales                                        16  %                16  %                 17  %                16  %
General and administrative                                    6  %                 6  %                  6  %                 7  %

Total operating expenses                                     61  %                59  %                 63  %                60  %
Operating income                                             39  %                41  %                 37  %                40  %
Other income (expense)                                        1  %                (1) %                  1  %                (1) %
Income before income taxes                                   40  %                40  %                 38  %                39  %
Income taxes                                                  9  %                 6  %                  8  %                 7  %
Net income                                                   31  %                34  %                 30  %                32  %

Comparison of the Three and Six Months Ended January 31, 2023 and 2022

The following table presents a comparison of service revenues for the three and
six months ended January 31, 2023 and 2022:

                                                                        Three Months Ended January 31,                                                      Six Months Ended January 31,
(In thousands)                                          2023                 2022             Change             % Change                2023                 2022               Change             % Change

Service revenues

             United States                        $   705,733            $ 630,707          $ 75,026                  11.9  %       $ 1,357,390          $ 1,221,465          $ 135,925                  11.1  %
             International                             84,064               80,383             3,681                   4.6  %           159,247              157,443              1,804                   1.1  %
             Total service revenues               $   789,797            $ 711,090          $ 78,707                  11.1  %       $ 1,516,637          $ 1,378,908          $ 137,729                  10.0  %


Service Revenues. The increase in service revenue during the three months ended
January 31, 2023 of $78.7 million, or 11.1%, as compared to the same period last
year resulted from (i) an increase in the U.S. of $75.0 million and (ii) an
increase in International of $3.7 million. The growth in the U.S. was driven
primarily by (i) an increase in revenue per car due to higher auction selling
prices, driven by the relative scarcity of vehicles due to global supply chain
disruptions and a change in the mix of vehicles sold and (ii) an increase in
volume. Excluding the unfavorable impact of $7.0 million due to changes in
foreign currency exchange rates, primarily from the change in the European Union
euro, Canadian dollar and British Pound to U.S. dollar exchange rates, net
against a favorable impact of the Brazilian Real to the U.S. dollar exchange
rate, the growth in International was driven primarily by an increase in volume
resulting from higher miles driven and an increase in revenue per car due to a
change in mix of vehicles sold.

The increase in service revenues during the six months ended January 31, 2023 of
$137.7 million, or 10.0%, as compared to the same period last year resulted from
(i) an increase in the U.S. of $135.9 million and (ii) an increase in
International of $1.8 million. The growth in the U.S. was driven primarily by
(i) an increase in revenue per car due to higher auction selling prices, which
we believe is due to a change in mix of vehicles sold and restrictions within
the global supply chain for automobiles and (ii) an increase in volume.
Excluding the unfavorable impact of $17.9 million due to changes in foreign
currency exchange rates, primarily from the change in the European Union euro,
Canadian dollar and British Pound to U.S. dollar exchange rates, net against a
favorable impact of the Brazilian Real to the U.S. dollar exchange rate, the
growth in International was driven primarily by an increase in revenue per car
due to a change in mix of vehicles sold and an increase in volume.

The following table presents a comparison of vehicle sales for the three and six
months ended January 31, 2023 and 2022:

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                                                                     Three Months Ended January 31,                                                   Six Months Ended January 31,
(In thousands)                                      2023                2022              Change             % Change               2023                2022             Change             % Change
Vehicle sales
            United States                      $    82,196          $  96,679          $ (14,483)                (15.0) %       $  179,387          $ 184,382          $ (4,995)                 (2.7) %
            International                           84,731             59,691             25,040                  41.9  %          154,072            114,302            39,770                  34.8  %

            Total vehicle sales                $   166,927          $ 156,370          $  10,557                   6.8  %       $  333,459          $ 298,684          $ 34,775                  11.6  %


Vehicle Sales. The increase in vehicle sales for the three months ended January
31, 2023 of $10.6 million, or 6.8%, as compared to the same period last year
resulted from (i) a decrease in the U.S. of $14.5 million and an (ii) an
increase in International of $25.0 million. The decrease in the U.S. was
primarily (i) driven by a decrease in volume as a result of a proactive approach
to mitigate principle unit exposure and (ii) offset by higher average auction
selling prices, which we believe was due to a change in the mix of vehicles
sold. Excluding an unfavorable impact of $7.9 million due to changes in foreign
currency exchange rates, primarily from the unfavorable change in the European
Union euro, Canadian dollar and British Pound to U.S. dollar exchange rates, the
increase in International was primarily the result of higher average auction
selling prices, which we believe was due to a change in mix of vehicles sold and
an increase in volume.

The increase in vehicle sales for the six months ended January 31, 2023 of $34.8
million, or 11.6%, as compared to the same period last year, resulted from (i) a
decrease in the U.S. of $5.0 million and (ii) an increase in International of
$39.8 million. The a decrease in the U.S. was primarily (i) the result of a
decrease in volume as a result of a proactive approach to mitigate principle
unit exposure, offset by higher average auction selling prices, which we believe
was due to a change in the mix of vehicles sold. Excluding an unfavorable impact
of $20.7 million due to changes in foreign currency exchange rates, primarily
from the unfavorable change in the European Union euro, Canadian dollar and
British Pound to U.S. dollar exchange rates, the increase in International was
primarily the result of (i) an increase in volume and (ii) higher average
auction selling prices, which we believe was due to a change in mix of vehicles
sold combined with increased prices resulting from the restrictions within the
global supply chain for automobiles.

The following table presents a comparison of yard operations expenses for the
three and six months ended January 31, 2023 and 2022:

                                                                        Three Months Ended January 31,                                                    Six Months Ended January 31,
(In thousands)                                          2023                 2022             Change             % Change               2023               2022              Change             % Change

Yard operations expenses

                  United States                   $   323,397            $ 278,093          $ 45,304                  16.3  %       $ 649,641          $ 534,714          $ 114,927                  21.5  %
                  International                        52,100               45,721             6,379                  14.0  %          98,633             87,794             10,839                  12.3  %
                  Total yard operations
                  expenses                        $   375,497            $ 323,814          $ 51,683                  16.0  %       $ 748,274          $ 622,508          $ 125,766                  20.2  %

Yard operations expenses, excluding depreciation and amortization

                  United States                   $   293,472            $ 253,596          $ 39,876                  15.7  %       $ 589,322          $ 487,612          $ 101,710                  20.9  %
                  International                        47,955               41,928             6,027                  14.4  %          90,522             80,158             10,364                  12.9  %

Yard depreciation and amortization

                  United States                   $    29,925            $  24,497          $  5,428                  22.2  %       $  60,319          $  47,102          $  13,217                  28.1  %
                  International                         4,145                3,793               352                   9.3  %           8,111              7,636                475                   6.2  %


Yard Operations Expenses. The increase in yard operations expense for the three
months ended January 31, 2023 of $51.7 million, or 16.0%, as compared to the
same period last year resulted from (i) increase in the U.S. of $45.3 million
and (ii) increase in International of $6.4 million. The increase in the U.S.
compared to the same period last year relates to an increase in volume combined
with an increase in the cost to process each car. The increase in cost to
process each car was driven by increased subhaul costs primarily in relation to
the fluctuation of fuel costs, and labor costs. The increase in International
relates primarily to an increase in volume and an increase in subhaul and labor
costs. Excluding a favorable impact of $4.0 million due to changes in foreign
currency exchange rates, primarily from the favorable change in the European
Union euro, and British Pound to U.S. dollar exchange rate. 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, 2023 as compared to the same period last year resulted
primarily from depreciating new and expanded facilities placed into service in
the U.S.

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The increase in yard operations expense for the six months ended January 31,
2023 of $125.8 million, or 20.2%, as compared to the same period last year
resulted from (i) an increase in the U.S. of $114.9 million, and (ii) an
increase in International of $10.8 million. The increase in the U.S. compared to
the same period last year relates to an increase in volume combined with an
increase in the cost to process each car. The increase in cost to process each
car was driven by increased subhaul costs primarily related to the fluctuation
of fuel costs, and labor costs, combined with an increase in premiums for
catastrophic related subhaul, labor costs incurred from overtime, and increased
travel, lodging, and equipment lease cost associated with Hurricane Ian. The
increase in International relates primarily to an increase in volume and an
increase in subhaul and labor costs. Excluding a favorable impact of $10.4
million due to changes in foreign currency exchange rates, primarily from the
favorable change in the European Union euro and British Pound to U.S. dollar
exchange rate. 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, 2023 as compared
to the same period last year resulted primarily from depreciating new and
expanded facilities placed into service in the U.S.

The following table presents a comparison of cost of vehicle sales for the three
and six months ended January 31, 2023 and 2022:

                                                                        Three Months Ended January 31,                                                   Six Months Ended January 31,
(In thousands)                                         2023                2022              Change             % Change               2023                2022             Change             % Change

Cost of vehicle sales

                  United States                   $    79,040          $  90,263          $ (11,223)                (12.4) %       $  171,480          $ 170,605          $    875                   0.5  %
                  International                        75,687             50,041             25,646                  51.2  %          134,359             96,107            38,252                  39.8  %
                  Total cost of vehicle
                  sales                           $   154,727          $ 140,304          $  14,423                  10.3  %       $  305,839          $ 266,712          $ 39,127                  14.7  %


Cost of Vehicle Sales. The increase in cost of vehicle sales for the three
months ended January 31, 2023 of $14.4 million, or 10.3%, as compared to the
same period last year resulted from (i) a decrease in the U.S. of $11.2 million
and (ii) an increase in International of $25.6 million. The decrease in the U.S.
was primarily the result of a decrease in volume as a result of a proactive
approach to mitigate principle unit exposure, offset by higher average purchase
prices, which we believe was due to a change in the mix of vehicles sold, and
increased demand. Excluding the favorable impact of $6.8 million due to changes
in foreign currency exchange rates, primarily from the favorable change in the
European Union euro, and British Pound to U.S. dollar exchange rates, the
increase in International of $25.6 million was primarily driven by higher
average purchase prices due to the change in mix of vehicles sold, increased
demand, and an increase in volume.

The increase in cost of vehicle sales for the six months ended January 31, 2023
of $39.1 million, or 14.7%, as compared to the same period last year resulted
from (i) an increase in the U.S. of $0.9 million and (ii) an increase in
International of $38.3 million. The increase in the U.S. was primarily the
result of higher average purchase prices, which we believe was due to increased
demand and a change in the mix of vehicles sold, offset by decrease in volume as
result of purchase price pressure. Excluding the favorable impact of $17.6
million due to changes in foreign currency exchange rates, primarily from the
favorable change in the European Union euro, and British Pound to U.S. dollar
exchange rates, the increase in International of $38.3 million was primarily due
to higher 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, 2023 and 2022:

                                                                   Three Months Ended January 31,                                                   Six Months Ended January 31,
(In thousands)                                      2023                  2022             Change            % Change              2023                2022             Change             % Change

General and administrative expenses

               United States                 $    49,328               $ 46,384          $ 2,944                  6.3  %       $   96,865          $  92,932          $  3,933                  4.2  %
               International                      11,647                  9,630            2,017                 20.9  %           22,090             17,991             4,099                 22.8  %
               Total general and
               administrative expenses       $    60,975               $ 56,014          $ 4,961                  8.9  %       $  118,955          $ 110,923          $  8,032                  7.2  %

General and administrative expenses, excluding depreciation and amortization
               United States                 $    45,132               $ 41,566          $ 3,566                  8.6  %       $   88,128          $  82,989          $  5,139                  6.2  %
               International                      11,499                  9,436            2,063                 21.9  %           21,785             17,599             4,186                 23.8  %

General and administrative depreciation and amortization

               United States                 $     4,196               $  4,819          $  (623)               (12.9) %       $    8,738          $   9,944          $ (1,206)               (12.1) %
               International                         148                    194              (46)               (23.7) %              304                392               (88)               (22.4) %


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General and Administrative Expenses. The increase in general and administrative
expenses for the three months ended January 31, 2023 of $5.0 million, or 8.9%,
as compared to the same period last year resulted from (i) an increase in
International of $2.0 million, and (ii) an increase in the U.S. of $2.9 million.
Excluding depreciation and amortization, the increase in International of $2.1
million resulted primarily from increases in legal costs. The increase in the
U.S. of $3.6 million resulted primarily from increases in labor costs and legal
costs. Depreciation and amortization expenses for the three months ended January
31, 2023 as compared to the same period last year declined slightly driven from
fully depreciating certain intangible and technology assets in the U.S. and
international locations.

The increase in general and administrative expenses for the six months ended
January 31, 2023 of $8.0 million, or 7.2%, as compared to the same period last
year resulted from (i) an increase in International of $4.1 million and (ii) an
increase in the U.S. of $3.9 million. Excluding depreciation and amortization,
the increase in International of $4.2 million resulted primarily from increases
in stock compensation, labor costs, legal costs, travel costs and marketing
costs. The increase in the U.S. of $5.1 million resulted primarily from
increases in stock compensation, labor costs, legal and travel costs.
Depreciation and amortization expenses for the six months ended January 31, 2023
as compared to the same period last year declined slightly driven from fully
depreciating certain intangible and technology assets in the U.S. and
international locations.

The following table summarizes total other expense for the three and six months
ended January 31, 2023 and 2022:

                                                     Three Months Ended January 31,                                                    Six Months Ended January 31,
(In thousands)                        2023                 2022             Change             % Change               2023                2022             Change             % Change

Total other income
(expense)                      $    11,578              $ (5,273)         $ 16,851                319.6  %       $   13,178            $ (9,568)         $ 22,746                237.7  %


Other Expense. The increase in total other income for the three months ended
January 31, 2023 of $16.9 million as compared to the same period last year was
primarily due to higher interest income earned from T-bills offset by unrealized
foreign currency losses.

The increase in total other income for the six months ended January 31, 2023 of
$22.7 million as compared to the same period last year was primarily due to
higher interest income earned from T-bills offset by unrealized foreign currency
losses.

The following table summarizes income taxes for the three and six months ended
January 31, 2023 and 2022:

                                                      Three Months Ended January 31,                                                  Six Months Ended January 31,
(In thousands)                        2023               2022              Change             % Change               2023                2022              Change             % Change
Income taxes                     $    83,426            54,643            28,783                  52.7  %            150,681           120,106            30,575                  25.5  %


Income Taxes. Our effective income tax rates were 22.1% and 16.0% for the three
months ended January 31, 2023 and 2022, respectively, and 21.8% and 18.0% for
the six months ended January 31, 2023 and 2022, 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 $0.1 million and $4.0
million for the three months ended January 31, 2023 and 2022, respectively, and
$0.7 million and $7.0 million for the six months ended January 31, 2023 and
2022, respectively. The effective tax rate in the prior year was also impacted
by the filing of amended returns in certain jurisdictions for a benefit of $17.5
million.
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Liquidity and Capital Resources

The following table presents a comparison of key components of our liquidity and
capital resources at January 31, 2023 and July 31, 2022 and for the six months
ended January 31, 2023 and 2022, respectively, excluding additional funds
available to us through our Revolving Loan Facility:

(In thousands)                                          January 31, 2023           July 31, 2022            Change             % Change
Cash, cash equivalents, and restricted cash           $       1,660,952          $    1,384,236          $ 276,716                 20.0  %

Working capital                                               2,151,158               1,761,566            389,592                 22.1  %


                                                            Six Months Ended January 31,
(In thousands)                                   2023            2022           Change        % Change
Operating cash flows                         $  499,833      $  446,548      $   53,285         11.9  %
Investing cash flows                           (242,369)       (530,283)        287,914         54.3  %
Financing cash flows                             15,334          16,094     

(760) (4.7) %

Capital expenditures and acquisitions $ (256,719) $ (156,669)

$ (100,050) (63.9) %

Cash, cash equivalents, and restricted cash and working capital increased $276.7
million and $389.6 million at January 31, 2023, respectively, as compared to
July 31, 2022. Cash, cash equivalents, and restricted cash increased primarily
due to cash generated from operations and proceeds from stock option exercises
not fully offset by capital expenditures. Working capital increased primarily
from cash generated from operations and timing of cash receipts and payments,
partially offset by capital expenditures, certain income tax benefits related to
stock option exercises, and timing of cash payments. Cash equivalents consisted
of bank deposits, U.S. Treasury Bills, and funds invested in money market
accounts, which bear interest at variable rates.

Historically, we have financed our growth through cash generated from
operations, public offerings of common stock, equity issued in conjunction with
certain acquisitions and debt financing. Our primary source of cash generated by
operations is from the collection of service fees and funds received from the
sale of vehicles. We expect to continue to use cash flows from operations to
finance our working capital needs and to develop and grow our business. In
addition to our stock repurchase program, we are considering a variety of
alternative potential uses for our remaining cash balances and our cash flows
from operations. These alternative potential uses include additional stock
repurchases, acquisitions and the payment of dividends. For further detail, see
Notes to Unaudited Consolidated Financial Statements, Note 7 - Long-Term Debt
and Note 10 - Stock Repurchases and under the subheadings "Credit Agreement"
below.

Our business is seasonal as inclement weather during the winter months increases
the frequency of accidents and consequently, the number of cars involved in
accidents which the insurance companies salvage rather than repair. During the
winter months, most of our facilities process 5% to 20% more vehicles than at
other times of the year. Severe weather events, including but not limited to
tornadoes, hurricanes, and hailstorms, can also impact our volumes. These
increased volumes require the increased use of our cash to pay out advances and
handling costs of the additional business.

We believe that our currently available cash and cash equivalents and cash
generated from operations will be sufficient to satisfy our operating and
working capital requirements for the foreseeable future. We expect to acquire or
develop additional locations and expand some of our current facilities in the
foreseeable future. We may be required to raise additional cash through
drawdowns on our Revolving Loan Facility or potentially issue equity to fund
this expansion. Although the timing and magnitude of growth through expansion
and acquisitions are not predictable, the opening of new greenfield yards is
contingent upon our ability to locate property that (i) is in an area in which
we have a need for more capacity; (ii) has adequate size given the capacity
needs; (iii) has the appropriate shape and topography for our operations; (iv)
is reasonably close to a major road or highway; and (v) most importantly, has
the appropriate zoning for our business.

As of January 31, 2023, $113.6 million of the $1.7 billion of cash, cash
equivalents, and restricted cash was held by our foreign subsidiaries. If these
funds are needed for our operations in the U.S., the repatriation of these funds
could still be subject to the foreign withholding tax following the U.S. Tax
Reform. However, our intent is to permanently reinvest these funds outside of
the U.S. and our current plans do not require repatriation to fund our U.S.
operations.

Net cash provided by operating activities increased for the six months ended
January 31, 2023 as compared to the same period in 2022 due to higher costs
associated with Hurricane Ian. The change in operating assets and liabilities
was primarily the result of an increase in cash provided by income tax
receivable of $44.9 million and decrease in cash used of $8.4 million vehicle
pooling and $16.8 million in inventory. This is offset by increase in accounts
receivable of $33.8 million.
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Net cash used in investing activities decreased for the six months ended January
31, 2023 as compared to the same period in 2022 due primarily to increased
capital expenditures. Our capital expenditures are primarily related to lease
buyouts of certain facilities, acquiring land, opening and improving facilities,
capitalized software development costs for new software for internal use and
major software enhancements, and acquiring yard equipment. We continue to
develop, expand and invest in new and existing facilities.

Net cash provided by financing activities decreased for the six months ended
January 31, 2023 as compared to the same period in 2022 due primarily to a
decrease in proceeds from the exercise of stock options.

Credit Agreement

On July 21, 2020, we entered into a First Amended and Restated Credit Agreement
with Wells Fargo Bank, National Association, Truist Bank (as successor by merger
to Suntrust Bank), BMO Harris Bank N.A., Santander Bank, N.A., and Bank of
America, N.A., as administrative agent (as amended from time to time, the
"Credit Agreement"), bringing the aggregate principal amount of the revolving
credit commitments under the Credit Agreement ( the "Revolving Loan Facility")
to $1,050.0 million.

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

We had no outstanding borrowings under the Revolving Loan Facility as of
January 31, 2023 and July 31, 2022. The Credit Agreement contains customary
affirmative and negative covenants and we were in compliance with all covenants
related to the Credit Agreement as of January 31, 2023.

Stock Repurchases

On September 22, 2011, our Board of Directors approved a 160 million share
increase in the stock repurchase program, bringing the total current
authorization to 392 million shares. The repurchases may be effected through
solicited or unsolicited transactions in the open market or in privately
negotiated transactions. No time limit has been placed on the duration of the
stock repurchase program. Subject to applicable securities laws, such
repurchases will be made at such times and in such amounts as we deem
appropriate and may be discontinued at any time. We did not repurchase any
shares of our common stock under the program during the six months ended
January 31, 2023 or 2022. As of January 31, 2023, the total number of shares
repurchased under the program was 229,098,396, and 162,901,604 shares were
available for repurchase under the program.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and the related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate our estimates, including costs
related to vehicle pooling costs; income taxes; stock-based compensation; and
contingencies. We base our estimates on historical experience and on various
other assumptions that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions.

Management has discussed the selection of critical accounting policies and
estimates with the Audit Committee of the Board of Directors and the Audit
Committee has reviewed our disclosure relating to critical accounting policies
and estimates in this Quarterly Report on Form 10-Q. There have been no material
changes to the critical accounting policies and estimates from what was
disclosed in our Annual Report on   Form 10-K   for the fiscal year ended
July 31, 2022 filed with the SEC on September 27, 2022. Our significant
accounting policies are described in the Notes to Unaudited Consolidated
Financial Statements, Note 1 - Summary of Significant Accounting Policies in
this Quarterly Report on Form 10-Q.
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Recently Issued Accounting Standards

For a description of the new accounting standards that affect us, refer to the
Notes to Unaudited Consolidated Financial Statements, Note 12 – Recent
Accounting Pronouncements in this Quarterly Report on Form 10-Q.

Contractual Obligations and Commitments

There have been no material changes during the six months ended January 31, 2023
to our contractual obligations disclosed in our "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in our
Annual Report on   Form 10-K   for the fiscal year ended July 31, 2022, filed
with the SEC on September 27, 2022.

Off-Balance Sheet Arrangements

As of January 31, 2023, we had no off-balance sheet arrangements other than a
letter of credit and our funding commitments pursuant to surety bonds, none of
which have or are reasonably likely to have a current or future effect on our
financial condition, changes in financial condition, revenues or expenses,
results of operations, liquidity, capital expenditures or capital resources that
is material to investors.

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