Originally Posted by Socks

He counts the number of face down cards between the last face up card and when penn and teller put their cards back into the deck. So he knows for example the ace of clubs is 5 or 6 cards or whatever past the 9 of diamonds (the last face up card).

Also when he's going through the cards he's sorting them in his hand by faceup/down.

He cuts the cards, does the flip, and it's all sorted.