EX-99.1 2 cprt01312018ex99-1.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
Copart, Inc.
For Immediate Release
Copart Reports Second Quarter Fiscal 2018 Financial Results
Dallas, Texas. (February 26, 2018) — Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended January 31, 2018.
For the three months ended January 31, 2018, revenue, gross margin, and net income were $459.1 million, $191.6 million, and $103.3 million, respectively. These represent an increase in revenue of $109.6 million, or 31.3%; an increase in gross margin of $44.8 million, or 30.6%; and an increase in net income of $37.2 million, or 56.3%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $0.43 compared to $0.28 last year, an increase of 53.6%.
For the six months ended January 31, 2018, revenue, gross margin, and net income were $878.3 million, $354.9 million, and $180.8 million, respectively. These represent an increase in revenue of $182.8 million, or 26.3%; an increase in gross margin of $62.8 million, or 21.5%; and a decrease in net income of $52.6 million, or 22.5%, respectively, from the same period last year. Fully diluted earnings per share for the six months were $0.75 compared to $0.99 last year, a decrease of 24.2%.
The operating results for the three and six months ended January 31, 2018 were adversely affected by abnormal costs of $36.5 million and $72.3 million, respectively, incurred as a result of Hurricane Harvey. These costs included temporary storage facilities; premiums for subhaulers; labor costs incurred from 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 $44.8 million and $63.4 million, respectively, generated pre-tax income for the three months ended January 31, 2018 of $8.3 million, and a pre-tax loss of $8.9 million for the six month period. The operating results for the three months ended January 31, 2018 were also adversely impacted by a charge of $10.0 million to income tax expense for the deemed repatriation of foreign earnings and profits under the Tax Cuts and Jobs Act of 2017, net of deferred tax changes, and was offset by the Act’s reduction of the federal corporate income tax rate. Because Copart’s fiscal year includes periods before and after the effective date of the Act, during which the U.S. federal corporate tax rate was 35% and 21%, respectively, our U.S. federal corporate tax rate for fiscal year 2018 will be 26.9%. The operating results for the three months ended January 31, 2018, include the benefit of this rate reduction, as well as a favorable adjustment of $7.6 million to account for previously accrued taxes at our prior federal corporate tax rate for the three months ended October 31, 2017.
Excluding the impact of income taxes on the deemed repatriation of foreign earnings, net of deferred tax changes, disposals of non-operating assets, foreign currency-related losses and gains, certain income tax benefits and payroll taxes related to accounting for stock option exercises, non-GAAP fully diluted earnings per share for the three months ended January 31, 2018 and 2017, were $0.47 and $0.29, respectively. Non-GAAP fully diluted earnings per share for the six months ended January 31, 2018 and 2017, were $0.79 and $0.57, 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 Monday, February 26, 2018, 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/copart022618. A replay of the call will be available through April 27, 2018 by calling (877) 919-4059. Use confirmation code # 77546245.
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 10 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), the Republic of Ireland (Copart.ie), Brazil (Copart.com.br), Germany (Copart.de), 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.

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Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000


Copart, Inc.
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, disposals of non-operating assets, foreign currency-related losses and gains, and certain income tax benefits and payroll taxes related to accounting for stock option exercises. 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, disposals of non-operating assets, foreign currency-related losses and gains, and certain income tax benefits and payroll taxes related to accounting for stock option exercises.
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.
Contact:       
Melissa Perry, Executive Support Manager, Office of the Chief Financial Officer
 
972-391-5090 or melissa.perry@copart.com



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Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000


Copart, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended
 January 31,
 
Six Months Ended
 January 31,
 
 
2018
 
2017
 
2018
 
2017
Service revenues and vehicle sales:
 
 
 
 
 
 
 
 
Service revenues
 
$
401,954

 
$
310,033

 
$
776,079

 
$
617,111

Vehicle sales
 
57,152

 
39,499

 
102,195

 
78,412

Total service revenues and vehicle sales
 
459,106

 
349,532

 
878,274

 
695,523

Operating expenses:
 
 
 
 
 
   
 
 
Yard operations
 
204,289

 
158,556

 
410,508

 
315,918

Cost of vehicle sales
 
50,313

 
33,686

 
88,610

 
66,773

Yard depreciation and amortization
 
11,893

 
9,717

 
22,429

 
19,165

Yard stock-based payment compensation
 
1,002

 
808

 
1,854

 
1,609

Gross margin
 
191,609

 
146,765

 
354,873

 
292,058

General and administrative
 
29,694

 
27,675

 
59,196

 
58,599

General and administrative depreciation and amortization
 
5,978

 
5,498

 
11,344

 
10,759

General and administrative stock-based payment compensation
 
4,990

 
4,712

 
9,444

 
8,996

Total operating expenses
 
308,159

 
240,652

 
603,385

 
481,819

Operating income
 
150,947

 
108,880

 
274,889

 
213,704

Other (expense) income:
 
 
 
 
 
   
 
 
Interest expense, net
 
(5,561
)
 
(5,760
)
 
(10,959
)
 
(11,382
)
Other (expense) income, net
 
(948
)
 
(3,021
)
 
(5,364
)
 
311

Total other expenses
 
(6,509
)
 
(8,781
)
 
(16,323
)
 
(11,071
)
Income before income taxes
 
144,438

 
100,099

 
258,566

 
202,633

Income tax expense (benefit)
 
41,137

 
34,033

 
77,705

 
(30,713
)
Net income
 
103,301

 
66,066

 
180,861

 
233,346

Net income attributable to noncontrolling interest
 
45

 
—

 
90

 
—

Net income attributable to Copart, Inc.
 
$
103,256

 
$
66,066

 
$
180,771

 
$
233,346

 
 
 
 
 
 
 
 
 
Basic net income per common share
 
$
0.45

 
$
0.29

 
$
0.78

 
$
1.03

Weighted average common shares outstanding
 
231,478

 
229,142

 
231,086

 
227,288

 
 
 
 
 
 
 
 
 
Diluted net income per common share
 
$
0.43

 
$
0.28

 
$
0.75

 
$
0.99

Diluted weighted average common shares outstanding
 
241,360

 
235,588

 
240,076

 
236,672



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Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000


Copart, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
January 31, 2018
 
July 31, 2017
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
195,300

 
$
210,100

Accounts receivable, net
 
398,972

 
311,846

Vehicle pooling costs and inventories
 
50,994

 
41,281

Income taxes receivable
 
3,836

 
6,418

Prepaid expenses and other assets
 
17,374

 
17,616

Total current assets
 
666,476

 
587,261

Property and equipment, net
 
1,024,564

 
944,056

Intangibles, net
 
69,934

 
75,938

Goodwill
 
344,499

 
340,243

Deferred income taxes
 
301

 
1,287

Other assets
 
37,767

 
33,716

Total assets
 
$
2,143,541

 
$
1,982,501

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
 
$
242,594

 
$
208,415

Deferred revenue
 
6,797

 
5,019

Income taxes payable
 
13,806

 
6,472

Deferred income taxes
 
—

 
92

Current portion of revolving loan facility and capital lease obligations
 
111,851

 
82,155

Total current liabilities
 
375,048

 
302,153

Deferred income taxes
 
5,196

 
3,192

Income taxes payable
 
27,128

 
24,573

Long-term debt, revolving loan facility and capital lease obligations, net of discount
 
400,646

 
550,883

Other liabilities
 
3,732

 
3,100

Total liabilities
 
811,750

 
883,901

Commitments and contingencies
 
 
 
 
Stockholders' equity:
 
 
 
 
Preferred stock
 
—

 
—

Common stock
 
23

 
23

Additional paid-in capital
 
483,895

 
453,349

Accumulated other comprehensive loss
 
(78,913
)
 
(100,676
)
Retained earnings
 
926,163

 
745,370

Noncontrolling interest
 
623

 
534

Total stockholders' equity
 
1,331,791

 
1,098,600

Total liabilities and stockholders' equity
 
$
2,143,541

 
$
1,982,501




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Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000


Copart, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
Six Months Ended January 31,
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net income
 
$
180,861

 
$
233,346

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization, including debt cost
 
33,994

 
30,146

Allowance for doubtful accounts
 
1,013

 
26

Equity in losses of unconsolidated affiliates
 
251

 
408

Stock-based payment compensation
 
11,298

 
10,605

Loss (gain) on sale of property and equipment
 
4,639

 
(79
)
Deferred income taxes
 
2,666

 
23,466

Changes in operating assets and liabilities, net of effects from acquisitions:
 
 
 
 
Accounts receivable
 
(86,147
)
 
(74,789
)
Vehicle pooling costs and inventories
 
(9,073
)
 
(4,944
)
Prepaid expenses and other current assets
 
(1,437
)
 
894

Other assets
 
(4,320
)
 
(801
)
Accounts payable and accrued liabilities
 
38,919

 
(4,599
)
Deferred revenue
 
1,705

 
1,350

Income taxes receivable
 
2,575

 
(64,757
)
Income taxes payable
 
9,365

 
5,934

Other liabilities
 
84

 
(678
)
Net cash provided by operating activities
 
186,393

 
155,528

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Purchases of property and equipment, including acquisitions
 
(110,782
)
 
(92,412
)
Proceeds from sale of property and equipment
 
2,812

 
386

Investment in unconsolidated affiliate
 
—

 
(1,050
)
Net cash used in investing activities
 
(107,970
)
 
(93,076
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from the exercise of stock options
 
16,603

 
20,381

Proceeds from the issuance of Employee Stock Purchase Plan shares
 
2,723

 
1,908

Payments for employee stock-based tax withholdings
 
(3
)
 
(134,638
)
Net (repayments) proceeds on revolving loan facility
 
(120,300
)
 
72,000

Distributions to noncontrolling interest
 
(55
)
 
—

Net cash used in financing activities
 
(101,032
)
 
(40,349
)
Effect of foreign currency translation
 
7,809

 
(3,000
)
Net (decrease) increase in cash and cash equivalents
 
(14,800
)
 
19,103

Cash and cash equivalents at beginning of period
 
210,100

 
155,849

Cash and cash equivalents at end of period
 
$
195,300

 
$
174,952

Supplemental disclosure of cash flow information:
 
 
 
 
Interest paid
 
$
11,010

 
$
11,810

Income taxes paid, net of refunds
 
$
64,104

 
$
4,616


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Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000


Copart, Inc.
Additional Financial Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended
 January 31,
 
Six Months Ended
 January 31,
 
 
2018
 
2017
 
2018
 
2017
GAAP net income attributable to Copart, Inc.
 
$
103,256

 
$
66,066

 
$
180,771

 
$
233,346

Effect of deemed repatriation of foreign earnings, net of deferred tax changes
 
10,000

 
—

 
10,000

 
—

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

 
—

 
2,994

 
—

Effect of foreign currency-related losses (gains), net of tax
 
768

 
2,720

 
1,076

 
(127
)
Effect of income tax benefit of ASU 2016-09 adoption, net of tax (1)
 
(2,596
)
 
(1,347
)
 
(6,363
)
 
(102,742
)
Effect of payroll taxes on certain executive stock compensation, net of tax
 
—

 
—

 
—

 
3,307

Non-GAAP net income attributable to Copart, Inc.
 
$
111,428

 
$
67,439

 
$
188,478

 
$
133,784

 
 
 
 
 
 
 
 
 
GAAP diluted net income per common share
 
$
0.43

 
$
0.28

 
$
0.75

 
$
0.99

Non-GAAP diluted net income per common share
 
$
0.47

 
$
0.29

 
$
0.79

 
$
0.57

 
 
 
 
 
 
 
 
 
GAAP diluted weighted average common shares outstanding
 
241,360

 
235,588

 
240,076

 
236,672

Effect on common equivalent shares from ASU 2016-09 adoption(1)
 
(2,703
)
 
(1,404
)
 
(1,352
)
 
(2,250
)
Non-GAAP diluted weighted average common shares outstanding
 
238,657

 
234,184

 
238,724

 
234,422

(1)
In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. Under this standard, all excess tax benefits and tax deficiencies related to exercises of stock options are recognized as income tax expense or benefit in the income statement as discrete items in the reporting period in which they occur. Additionally, excess tax benefits are classified as an operating activity on the consolidated statements of cash flows. The Company adopted ASU 2016-09 during the fourth quarter of fiscal 2016 on a modified retrospective basis. For a more complete discussion, please review the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on September 27, 2017.



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Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000