U.S. Markets open in 1 hr 5 mins

Copart Reports Fourth Quarter Fiscal 2019 Financial Results

DALLAS--(BUSINESS WIRE)--

Copart, Inc. (CPRT) today reported financial results for the quarter and year ended July 31, 2019.

For the three months ended July 31, 2019, revenue, gross profit, and net income were $542.6 million, $242.6 million, and $153.5 million, respectively. These represent an increase in revenue of $93.4 million, or 20.8%; an increase in gross profit of $54.2 million, or 28.8%; and an increase in net income of $43.7 million, or 39.9%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $0.64 compared to $0.45 last year, an increase of 42.2%.

For the year ended July 31, 2019, revenue, gross profit, and net income were $2.0 billion, $898.3 million, and $591.7 million, respectively. These represent an increase in revenue of $236.3 million, or 13.1%; an increase in gross profit of $136.0 million, or 17.8%; and an increase in net income of $173.8 million, or 41.6%, respectively, from the same period last year. Fully diluted earnings per share for the year ended July 31, 2019 were $2.46 compared to $1.73 last year, an increase of 42.2%.

The operating results for the year ended July 31, 2018 were adversely affected by abnormal costs of $79.7 million incurred as a result of Hurricane Harvey. These costs included temporary storage facilities; abnormally high costs for subhaulers; increased labor costs due to overtime; travel and lodging due to the reassignment of employees to the affected region; and equipment lease expenses to handle the increased volume, as well as cost of vehicle sales. These costs, net of the associated revenues of $66.9 million generated a pre-tax loss of $12.8 million for the year ended July 31, 2018.

Excluding the impact of income taxes on the deemed repatriation of foreign earnings, net of deferred tax changes, discrete income tax items, disposals of non-operating assets, impairment of long-lived assets, acquisition related fees and integration charges, reserve for legacy sales tax liabilities; foreign currency-related gains and losses, 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 July 31, 2019 and 2018, were $0.60 and $0.42, respectively. Non-GAAP fully diluted earnings per share for the year ended July 31, 2019 and 2018, were $2.25 and $1.73, 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, September 5, 2019, at 11:00 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/copart090519. A replay of the call will be available through October 29, 2019 by calling (877) 919-4059. Use confirmation code: 52506215.

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 125,000 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 (avk.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 income taxes on the deemed repatriation of foreign earnings, net of deferred tax changes, discrete income tax items, disposals of non-operating assets, impairment of long-lived assets, acquisition related fees and integration charges, reserve for legacy sales tax liabilities; foreign currency-related gains and losses, 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 income taxes on the deemed repatriation of foreign earnings, net of deferred tax changes, discrete income tax items, disposals of non-operating assets, impairment of long-lived assets, acquisition related fees and integration charges, reserve for legacy sales tax liabilities; foreign currency-related gains and losses, 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
July 31,

 

Twelve Months Ended
July 31,

 

 

2019

 

2018

 

2019

 

2018

Service revenues and vehicle sales:

 

 

 

 

 

 

 

 

Service revenues

 

$

470,399

 

 

$

391,661

 

 

$

1,755,694

 

 

$

1,578,502

 

Vehicle sales

 

72,176

 

 

57,562

 

 

286,263

 

 

227,193

 

Total service revenues and vehicle sales

 

542,575

 

 

449,223

 

 

2,041,957

 

 

1,805,695

 

Operating expenses:

 

 

 

 

 

 

 

 

Yard operations

 

217,089

 

 

185,914

 

 

819,753

 

 

785,768

 

Cost of vehicle sales

 

65,552

 

 

50,313

 

 

255,504

 

 

196,461

 

Yard depreciation and amortization

 

15,745

 

 

23,613

 

 

63,167

 

 

57,230

 

Yard stock-based compensation

 

1,570

 

 

958

 

 

5,191

 

 

3,870

 

Gross profit

 

242,619

 

 

188,425

 

 

898,342

 

 

762,366

 

General and administrative

 

39,772

 

 

42,794

 

 

141,885

 

 

136,171

 

General and administrative depreciation and amortization

 

5,770

 

 

4,639

 

 

21,728

 

 

21,368

 

General and administrative stock-based compensation

 

4,275

 

 

5,024

 

 

18,254

 

 

19,351

 

Impairment of long-lived assets

 

 

 

1,131

 

 

 

 

1,131

 

Total operating expenses

 

349,773

 

 

314,386

 

 

1,325,482

 

 

1,221,350

 

Operating income

 

192,802

 

 

134,837

 

 

716,475

 

 

584,345

 

Other (expense) income:

 

 

 

 

 

 

 

 

Interest expense, net

 

(4,255

)

 

(3,982

)

 

(17,585

)

 

(19,075

)

Other (expense) income, net

 

(1,477

)

 

1,874

 

 

6,061

 

 

(2,759

)

Total other expense

 

(5,732

)

 

(2,108

)

 

(11,524

)

 

(21,834

)

Income before income taxes

 

187,070

 

 

132,729

 

 

704,951

 

 

562,511

 

Income tax expense

 

33,574

 

 

22,988

 

 

113,258

 

 

144,504

 

Net income

 

153,496

 

 

109,741

 

 

591,693

 

 

418,007

 

Net (loss) income attributable to noncontrolling interest

 

 

 

(7

)

 

 

 

140

 

Net income attributable to Copart, Inc.

 

$

153,496

 

 

$

109,748

 

 

$

591,693

 

 

$

417,867

 

 

 

 

 

 

 

 

 

 

Basic net income per common share

 

$

0.67

 

 

$

0.47

 

 

$

2.57

 

 

$

1.80

 

Weighted average common shares outstanding

 

229,204

 

 

232,995

 

 

230,489

 

 

231,793

 

 

 

 

 

 

 

 

 

 

Diluted net income per common share

 

$

0.64

 

 

$

0.45

 

 

$

2.46

 

 

$

1.73

 

Diluted weighted average common shares outstanding

 

238,354

 

 

244,406

 

 

240,453

 

 

241,877

 

Copart, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

 

July 31, 2019

 

July 31, 2018

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

186,319

 

 

$

274,520

 

Accounts receivable, net

 

367,265

 

 

351,601

 

Vehicle pooling costs

 

76,548

 

 

34,284

 

Inventories

 

20,941

 

 

16,734

 

Income taxes receivable

 

19,526

 

 

15,312

 

Prepaid expenses and other assets

 

16,568

 

 

16,665

 

Total current assets

 

687,167

 

 

709,116

 

Property and equipment, net

 

1,427,726

 

 

1,163,425

 

Intangibles, net

 

55,156

 

 

64,892

 

Goodwill

 

333,321

 

 

337,235

 

Deferred income taxes

 

411

 

 

470

 

Other assets

 

43,836

 

 

32,560

 

Total assets

 

$

2,547,617

 

 

$

2,307,698

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable and accrued liabilities

 

$

270,918

 

 

$

270,944

 

Deferred revenue

 

6,466

 

 

4,488

 

Income taxes payable

 

3,482

 

 

673

 

Current portion of revolving loan facility and capital lease obligations

 

1,138

 

 

1,151

 

Total current liabilities

 

282,004

 

 

277,256

 

Deferred income taxes

 

48,683

 

 

19,733

 

Income taxes payable

 

35,116

 

 

27,277

 

Long-term debt, revolving loan facility, and capital lease obligations, net of discount

 

400,091

 

 

398,747

 

Other liabilities

 

3,342

 

 

3,586

 

Total liabilities

 

769,236

 

 

726,599

 

Commitments and contingencies

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock

 

 

 

 

Common stock

 

23

 

 

23

 

Additional paid-in capital

 

572,559

 

 

526,858

 

Accumulated other comprehensive loss

 

(132,529

)

 

(107,928

)

Retained earnings

 

1,338,328

 

 

1,162,146

 

Total stockholders’ equity

 

1,778,381

 

 

1,581,099

 

Total liabilities and stockholders’ equity

 

$

2,547,617

 

 

$

2,307,698

 

Copart, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Year Ended July 31,

 

 

2019

 

2018

Cash flows from operating activities:

 

 

 

 

Net income

 

$

591,693

 

 

$

418,007

 

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

 

 

 

 

Depreciation and amortization, including debt cost

 

85,334

 

 

79,040

 

Allowance for doubtful accounts

 

(429

)

 

1,142

 

Impairment of long-lived assets

 

 

 

1,157

 

Equity in losses of unconsolidated affiliates

 

419

 

 

750

 

Stock-based compensation

 

23,445

 

 

23,221

 

(Gain) loss on sale of property and equipment

 

(3,073

)

 

3,240

 

Deferred income taxes

 

23,167

 

 

16,717

 

Changes in operating assets and liabilities, net of effects from acquisitions:

 

 

 

 

Accounts receivable

 

(60,808

)

 

(40,335

)

Vehicle pooling costs

 

(16,418

)

 

(3,353

)

Inventories

 

(4,719

)

 

(3,959

)

Prepaid expenses and other current assets

 

(204

)

 

(776

)

Other assets

 

(12,061

)

 

70

 

Accounts payable and accrued liabilities

 

11,126

 

 

53,320

 

Deferred revenue

 

2,056

 

 

(520

)

Income taxes receivable

 

(4,215

)

 

(8,916

)

Income taxes payable

 

10,669

 

 

(3,149

)

Other liabilities

 

664

 

 

(587

)

Net cash provided by operating activities

 

646,646

 

 

535,069

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment, including acquisitions

 

(374,628

)

 

(296,697

)

Proceeds from sale of property and equipment

 

18,361

 

 

6,425

 

Proceeds from sale of majority-owned subsidiary

 

 

 

1,796

 

Net cash used in investing activities

 

(356,267

)

 

(288,476

)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

Proceeds from the exercise of stock options

 

34,398

 

 

44,459

 

Proceeds from the issuance of Employee Stock Purchase Plan shares

 

7,183

 

 

5,853

 

Repurchases of common stock

 

(364,997

)

 

 

Payments for employee stock-based tax withholdings

 

(46,888

)

 

(1,115

)

Net repayments on revolving loan facility

 

 

 

(231,000

)

Distributions to noncontrolling interest

 

 

 

(235

)

Net cash used in financing activities

 

(370,304

)

 

(182,038

)

Effect of foreign currency translation

 

(8,276

)

 

(135

)

Net (decrease) increase in cash and cash equivalents

 

(88,201

)

 

64,420

 

Cash and cash equivalents at beginning of period

 

274,520

 

 

210,100

 

Cash and cash equivalents at end of period

 

$

186,319

 

 

$

274,520

 

Supplemental disclosure of cash flow information:

 

 

 

 

Interest paid

 

$

19,289

 

 

$

20,343

 

Income taxes paid, net of refunds

 

$

82,448

 

 

$

142,161

 

Copart, Inc.

Additional Financial Information

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share amounts)

(Unaudited)

 

 

 

Three Months Ended
July 31,

 

Twelve Months Ended
July 31,

 

 

2019

 

2018

 

2019

 

2018

GAAP net income attributable to Copart, Inc.

 

$

153,496

 

 

$

109,748

 

 

$

591,693

 

 

$

417,867

 

Effect of deemed repatriation of foreign earnings, net of deferred tax changes

 

 

 

(2,870

)

 

 

 

8,131

 

Effect of discrete income tax items

 

 

 

 

 

(10,170

)

 

 

Effect of disposal of non-operating assets, net of tax

 

 

 

 

 

 

 

2,994

 

Effect of impairment of long-lived assets, net of tax

 

 

 

916

 

 

(1,598

)

 

916

 

Effect of acquisition related fees and integration charges, net of tax

 

 

 

1,521

 

 

 

 

1,521

 

Effect of reserve for legacy sales tax liabilities, net of tax

 

978

 

 

1,017

 

 

978

 

 

1,017

 

Effect of foreign currency-related losses (gains), net of tax

 

48

 

 

(415

)

 

(256

)

 

452

 

Effect of recognizing tax benefit on exercise of employee stock options

 

(12,007

)

 

(11,821

)

 

(46,103

)

 

(21,269

)

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

 

 

 

4,514

 

 

1,295

 

 

4,514

 

Non-GAAP net income attributable to Copart, Inc.

 

$

142,515

 

 

$

102,610

 

 

$

535,839

 

 

$

416,143

 

 

 

 

 

 

 

 

 

 

GAAP net income per diluted common share

 

$

0.64

 

 

$

0.45

 

 

$

2.46

 

 

$

1.73

 

Non-GAAP net income per diluted common share

 

$

0.60

 

 

$

0.42

 

 

$

2.25

 

 

$

1.73

 

 

 

 

 

 

 

 

 

 

GAAP diluted weighted average common shares outstanding

 

238,354

 

 

244,406

 

 

240,453

 

 

241,877

 

Effect on common equivalent shares from ASU 2016-09

 

(1,633

)

 

(2,586

)

 

(1,870

)

 

(646

)

Non-GAAP diluted weighted average common shares outstanding

 

236,721

 

 

241,820

 

 

238,583

 

 

241,231

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20190904005978/en/