Copart Reports First Quarter Fiscal 2020 Financial Results

DALLAS--(BUSINESS WIRE)--Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended October 31, 2019.

For the three months ended October 31, 2019, revenue, gross profit, and net income were $554.4 million, $254.9 million, and $218.2 million, respectively. These represent an increase in revenue of $93.1 million, or 20.2%; an increase in gross profit of $59.0 million, or 30.1%; and an increase in net income of $104.1 million, or 91.2%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $0.91 compared to $0.47 last year, an increase of 93.6%.

Excluding the impact of discrete income tax items, foreign currency-related gains, certain income tax benefits and payroll taxes related to accounting for stock option exercises, and the effect on common equivalent shares from ASU 2016-09, non-GAAP fully diluted earnings per share for the three months ended October 31, 2019 and 2018, were $0.65 and $0.47, respectively. A reconciliation of non-GAAP financial measures to the most directly comparable financial measures computed in accordance with U.S. generally accepted accounting principles (GAAP) can be found in the tables attached to this press release.

On Thursday, November 21, 2019, at 11 a.m. Eastern Time, Copart will conduct a conference call to discuss the results for the quarter. The call will be webcast live and can be accessed at http://stream.conferenceamerica.com/copart112119. A replay of the call will be available through January 20, 2020 by calling (877) 919-4059. Use confirmation code: 98898573.

About Copart

Copart, Inc., founded in 1982, is a global leader in online vehicle auctions. Copart’s innovative technology and online auction platform links sellers to more than 750,000 Members in over 170 countries. Copart offers services to process and sell salvage and clean title vehicles to dealers, dismantlers, rebuilders, exporters, and in some cases, to end users. Copart sells vehicles on behalf of insurance companies, banks, finance companies, charities, fleet operators, dealers and also sells vehicles sourced from individual owners. With operations at over 200 locations in 11 countries, Copart has more than 150,000 vehicles available online every day. Copart currently operates in the United States (Copart.com), Canada (Copart.ca), the United Kingdom (Copart.co.uk), Brazil (Copart.com.br), the Republic of Ireland (Copart.ie), Germany (Copart.de), Finland (Copart.fi), the United Arab Emirates, Oman and Bahrain (Copartmea.com), and Spain (Copart.es). For more information, or to become a Member, visit Copart.com/Register.

Use of Non-GAAP Financial Measures

Included in this release are certain non-GAAP financial measures, including non-GAAP net income per diluted share, which exclude the impact of discrete income tax items, foreign currency-related gains, certain income tax benefits and payroll taxes related to accounting for stock option exercises, and the effect on common equivalent shares from ASU 2016-09. These non-GAAP financial measures do not represent alternative financial measures under GAAP. In addition, these non-GAAP financial measures may be different from non-GAAP financial measures used by other companies. Furthermore, these non-GAAP financial measures do not reflect a comprehensive view of Copart’s operations in accordance with GAAP and should only be read in conjunction with the corresponding GAAP financial measures. This information constitutes non-GAAP financial measures within the meaning of Regulation G adopted by the U.S. Securities and Exchange Commission. Accordingly, Copart has presented herein, and will present in other information it publishes that contains these non-GAAP financial measures, a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures.

Copart believes the presentation of non-GAAP net income per diluted share included in this release in conjunction with the corresponding GAAP financial measures provides meaningful information for investors, analysts and management in assessing Copart’s business trends and financial performance. From a financial planning and analysis perspective, Copart management analyzes its operating results with and without the impact of discrete income tax items, foreign currency-related gains, certain income tax benefits and payroll taxes related to accounting for stock option exercises, and the effect on common equivalent shares from ASU 2016-09.

Cautionary Note About Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws, and these forward-looking statements are subject to substantial risks and uncertainties. These forward-looking statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those projected or implied by our statements and comments. For a more complete discussion of the risks that could affect our business, please review the “Management’s Discussion and Analysis” and the other risks identified in Copart’s latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, as filed with the Securities and Exchange Commission. We encourage investors to review these disclosures carefully. We do not undertake to update any forward-looking statement that may be made from time to time on our behalf.

Copart, Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended
October 31,

 

 

2019

 

2018

Service revenues and vehicle sales:

 

 

 

 

Service revenues

 

$

487,856

 

 

$

394,806

 

Vehicle sales

 

66,568

 

 

66,562

 

Total service revenues and vehicle sales

 

554,424

 

 

461,368

 

Operating expenses:

 

 

 

 

Yard operations

 

222,879

 

 

189,477

 

Cost of vehicle sales

 

58,764

 

 

57,756

 

Yard depreciation and amortization

 

16,820

 

 

17,185

 

Yard stock-based compensation

 

1,092

 

 

1,032

 

Gross profit

 

254,869

 

 

195,918

 

General and administrative

 

38,843

 

 

34,805

 

General and administrative depreciation and amortization

 

6,194

 

 

4,684

 

General and administrative stock-based compensation

 

4,441

 

 

4,989

 

Total operating expenses

 

349,033

 

 

309,928

 

Operating income

 

205,391

 

 

151,440

 

Other (expense) income:

 

 

 

 

Interest expense, net

 

(4,026

)

 

(3,691

)

Other income, net

 

717

 

 

1,037

 

Total other expense

 

(3,309

)

 

(2,654

)

Income before income taxes

 

202,082

 

 

148,786

 

Income tax (benefit) expense

 

(16,098

)

 

34,703

 

Net income

 

$

218,180

 

 

$

114,083

 

 

 

 

 

 

Basic net income per common share

 

$

0.94

 

 

$

0.49

 

Weighted average common shares outstanding

 

231,169

 

 

233,888

 

 

 

 

 

 

Diluted net income per common share

 

$

0.91

 

 

$

0.47

 

Diluted weighted average common shares outstanding

 

238,662

 

 

244,826

 

Copart, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

October 31, 2019

 

July 31, 2019

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

181,102

 

 

$

186,319

 

Accounts receivable, net

 

394,309

 

 

367,265

 

Vehicle pooling costs

 

86,035

 

 

76,548

 

Inventories

 

19,482

 

 

20,941

 

Income taxes receivable

 

48,370

 

 

19,526

 

Prepaid expenses and other assets

 

14,778

 

 

16,568

 

Total current assets

 

744,076

 

 

687,167

 

Property and equipment, net

 

1,545,714

 

 

1,427,726

 

Operating lease right-of-use assets

 

136,368

 

 

 

Intangibles, net

 

52,617

 

 

55,156

 

Goodwill

 

337,179

 

 

333,321

 

Deferred income taxes

 

404

 

 

411

 

Other assets

 

39,581

 

 

43,836

 

Total assets

 

$

2,855,939

 

 

$

2,547,617

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

289,247

 

 

$

270,918

 

Deferred revenue

 

5,113

 

 

6,466

 

Income taxes payable

 

1,313

 

 

3,482

 

Current portion of operating lease liabilities

 

27,055

 

 

 

Current portion of revolving loan facility and finance lease liabilities

 

590

 

 

1,138

 

Total current liabilities

 

323,318

 

 

282,004

 

Deferred income taxes

 

53,678

 

 

48,683

 

Income taxes payable

 

38,965

 

 

35,116

 

Operating lease liabilities, net of current portion

 

113,263

 

 

 

Long-term debt, revolving loan facility and finance lease liabilities, net of discount

 

399,979

 

 

400,091

 

Other liabilities

 

137

 

 

3,342

 

Total liabilities

 

929,340

 

 

769,236

 

Commitments and contingencies

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock

 

 

 

 

Common stock

 

23

 

 

23

 

Additional paid-in capital

 

587,643

 

 

572,559

 

Accumulated other comprehensive loss

 

(119,290

)

 

(132,529

)

Retained earnings

 

1,458,223

 

 

1,338,328

 

Total stockholders' equity

 

1,926,599

 

 

1,778,381

 

Total liabilities and stockholders' equity

 

$

2,855,939

 

 

$

2,547,617

 

Copart, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Three Months Ended October 31,

 

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

Net income

 

$

218,180

 

 

$

114,083

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization, including debt cost

 

23,704

 

 

21,978

 

Allowance for doubtful accounts

 

382

 

 

128

 

Equity in losses (earnings) of unconsolidated affiliates

 

855

 

 

(184

)

Stock-based compensation

 

5,533

 

 

6,021

 

Gain on sale of property and equipment

 

(272

)

 

(102

)

Deferred income taxes

 

4,839

 

 

(888

)

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

(25,408

)

 

(29,270

)

Vehicle pooling costs

 

(9,358

)

 

(10,313

)

Inventories

 

1,710

 

 

(3,268

)

Prepaid expenses and other current and non-current assets

 

4,079

 

 

614

 

Operating lease right-of-use assets and lease liabilities

 

256

 

 

 

Accounts payable and accrued liabilities

 

16,587

 

 

(20,611

)

Deferred revenue

 

(1,437

)

 

467

 

Income taxes receivable

 

(28,740

)

 

15,286

 

Income taxes payable

 

1,700

 

 

14,177

 

Other liabilities

 

(152

)

 

(435

)

Net cash provided by operating activities

 

212,458

 

 

107,683

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment, including acquisitions

 

(131,793

)

 

(62,336

)

Proceeds from sale of property and equipment

 

283

 

 

810

 

Net cash used in investing activities

 

(131,510

)

 

(61,526

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from the exercise of stock options

 

12,620

 

 

1,229

 

Payments for employee stock-based tax withholdings

 

(101,354

)

 

(2

)

Net cash (used in) provided by financing activities

 

(88,734

)

 

1,227

 

Effect of foreign currency translation

 

2,569

 

 

(1,595

)

Net (decrease) increase in cash and cash equivalents

 

(5,217

)

 

45,789

 

Cash and cash equivalents at beginning of period

 

186,319

 

 

274,520

 

Cash and cash equivalents at end of period

 

$

181,102

 

 

$

320,309

 

Supplemental disclosure of cash flow information:

 

 

 

 

Interest paid

 

$

4,506

 

 

$

4,525

 

Income taxes paid, net of refunds

 

$

7,465

 

 

$

6,053

 

Copart, Inc.

Additional Financial Information

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share amounts)

(Unaudited)

 

 

Three Months Ended
October 31,

 

 

2019

 

2018

GAAP net income

 

$

218,180

 

 

$

114,083

 

Effect of discrete income tax items

 

(3,008

)

 

 

Effect of foreign currency-related gains, net of tax

 

(263

)

 

(345

)

Effect of recognizing tax benefit on exercise of employee stock options

 

(62,365

)

 

(175

)

Effect of payroll taxes on certain executive stock compensation, net of tax

 

2,867

 

 

 

Non-GAAP net income

 

$

155,411

 

 

$

113,563

 

 

 

 

 

 

GAAP net income per diluted common share

 

$

0.91

 

 

$

0.47

 

Non-GAAP net income per diluted common share

 

$

0.65

 

 

$

0.47

 

 

 

 

 

 

GAAP diluted weighted average common shares outstanding

 

238,662

 

 

244,826

 

Effect on common equivalent shares from ASU 2016-09

 

(1,306

)

 

(2,441

)

Non-GAAP diluted weighted average common shares outstanding

 

237,356

 

 

242,385

 

 


Contacts

Melissa Hunter, Executive Support Manager, Office of the Chief Financial Officer
972-391-5090 or melissa.hunter@copart.com