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Copart Reports First Quarter Fiscal 2021 Financial Results

·9 min read

Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended October 31, 2020.

For the three months ended October 31, 2020, revenue, gross profit, and net income were $592.9 million, $296.8 million, and $200.3 million, respectively. These represent an increase in revenue of $38.5 million, or 6.9%; an increase in gross profit of $41.9 million, or 16.4%; and a decrease in net income of $17.9 million, or 8.2%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $0.83 compared to $0.91 last year, a decrease of 8.8%.

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, 2020 and 2019, were $0.79 and $0.65, respectively, an increase of 21.5%. 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 19, 2020, 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 https://78449.themediaframe.com/dataconf/productusers/copart/mediaframe/41926/indexl.html or via hyperlink at www.copart.com/investorrelation. A replay of the call will be available through January 21, 2021 by calling (877) 660-6853. Use confirmation code: 13713059.

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 jurisdictions, to the general public. Copart sells vehicles on behalf of insurance companies, banks, finance companies, charities, fleet operators, dealers and individuals. 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, including statements concerning the potential impact of the COVID-19 pandemic on our business, operations, and operating results. 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,

2020

2019

Service revenues and vehicle sales:

Service revenues

$

515,372

$

487,856

Vehicle sales

77,568

66,568

Total service revenues and vehicle sales

592,940

554,424

Operating expenses:

Yard operations

206,986

222,879

Cost of vehicle sales

64,360

58,764

Yard depreciation and amortization

23,294

16,820

Yard stock-based compensation

1,531

1,092

Gross profit

296,769

254,869

General and administrative

35,138

38,843

General and administrative depreciation and amortization

5,655

6,194

General and administrative stock-based compensation

7,382

4,441

Total operating expenses

344,346

349,033

Operating income

248,594

205,391

Other expense:

Interest expense, net

(5,032

)

(4,026

)

Other income, net

3,253

717

Total other expense

(1,779

)

(3,309

)

Income before income taxes

246,815

202,082

Income tax expense (benefit)

46,530

(16,098

)

Net income

$

200,285

$

218,180

Basic net income per common share

$

0.85

$

0.94

Weighted average common shares outstanding

235,791

231,169

Diluted net income per common share

$

0.83

$

0.91

Diluted weighted average common shares outstanding

239,968

238,662

Copart, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

October 31, 2020

July 31, 2020

ASSETS

Current assets:

Cash, cash equivalents, and restricted cash

$

605,732

$

477,718

Accounts receivable, net

407,897

350,207

Vehicle pooling costs

84,128

73,684

Inventories

28,244

20,080

Income taxes receivable

915

26,740

Prepaid expenses and other assets

11,260

15,330

Total current assets

1,138,176

963,759

Property and equipment, net

2,072,059

1,941,719

Operating lease right-of-use assets

112,275

118,455

Intangibles, net

45,864

47,772

Goodwill

342,576

343,622

Deferred income taxes

212

213

Other assets

30,026

39,721

Total assets

$

3,741,188

$

3,455,261

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable and accrued liabilities

$

359,816

$

318,530

Deferred revenue

9,476

8,233

Income taxes payable

12,640

3,709

Current portion of operating lease liabilities

24,011

24,821

Current portion of finance lease liabilities

1,593

751

Total current liabilities

407,536

356,044

Deferred income taxes

77,826

71,686

Income taxes payable

44,347

44,965

Operating lease liabilities, net of current portion

88,490

95,584

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

411,845

397,036

Other liabilities

311

430

Total liabilities

1,030,355

965,745

Commitments and contingencies

Stockholders' equity:

Preferred stock

Common stock

24

24

Additional paid-in capital

701,654

672,727

Accumulated other comprehensive loss

(128,494

)

(121,088

)

Retained earnings

2,137,649

1,937,853

Total stockholders' equity

2,710,833

2,489,516

Total liabilities and stockholders' equity

$

3,741,188

$

3,455,261

Copart, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended October 31,

2020

2019

Cash flows from operating activities:

Net income

$

200,285

$

218,180

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

Depreciation and amortization, including debt cost

29,227

23,704

Allowance for credit loss

(157

)

382

Equity in (earnings) losses of unconsolidated affiliates

(1,741

)

855

Stock-based compensation

8,913

5,533

Gain on sale of property and equipment

(1,230

)

(272

)

Deferred income taxes

6,239

4,839

Changes in operating assets and liabilities:

Accounts receivable

(57,860

)

(25,408

)

Vehicle pooling costs

(10,600

)

(9,358

)

Inventories

(8,259

)

1,710

Prepaid expenses and other current and non-current assets

15,236

4,079

Operating lease right-of-use assets and lease liabilities

153

256

Accounts payable and accrued liabilities

42,880

16,587

Deferred revenue

1,251

(1,437

)

Income taxes receivable

25,825

(28,740

)

Income taxes payable

8,371

1,700

Other liabilities

(152

)

Net cash provided by operating activities

258,533

212,458

Cash flows from investing activities:

Purchases of property and equipment, including acquisitions

(147,093

)

(131,793

)

Proceeds from sale of property and equipment

271

283

Net cash used in investing activities

(146,822

)

(131,510

)

Cash flows from financing activities:

Proceeds from the exercise of stock options

20,014

12,620

Payments for employee stock-based tax withholdings

(489

)

(101,354

)

Payments of finance lease obligations

(327

)

Net cash provided by (used in) financing activities

19,198

(88,734

)

Effect of foreign currency translation

(2,895

)

2,569

Net increase (decrease) in cash, cash equivalents, and restricted cash

128,014

(5,217

)

Cash, cash equivalents, and restricted cash at beginning of period

477,718

186,319

Cash, cash equivalents, and restricted cash at end of period

$

605,732

$

181,102

Supplemental disclosure of cash flow information:

Interest paid

$

4,762

$

4,506

Income taxes paid, net of refunds

$

6,157

$

7,465

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,

2020

2019

GAAP net income

$

200,285

$

218,180

Effect of discrete income tax items

(3,008

)

Effect of foreign currency-related gains, net of tax

(190

)

(263

)

Effect of recognizing tax benefit on exercise of employee stock options

(11,773

)

(62,365

)

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

2,867

Non-GAAP net income

$

188,322

$

155,411

GAAP net income per diluted common share

$

0.83

$

0.91

Non-GAAP net income per diluted common share

$

0.79

$

0.65

GAAP diluted weighted average common shares outstanding

239,968

238,662

Effect on common equivalent shares from ASU 2016-09

(709

)

(1,306

)

Non-GAAP diluted weighted average common shares outstanding

239,259

237,356

View source version on businesswire.com: https://www.businesswire.com/news/home/20201118006105/en/

Contacts

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