8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

February 20, 2019

Date of Report (date of earliest event reported)              

COPART, INC.

(Exact name of Registrant as specified in its charter)

Delaware	000-23255	94-2867490
(State or other jurisdiction	(Commission File Number)	(IRS Employer
of incorporation or organization)		Identification No.)

14185 Dallas Parkway, Suite 300

Dallas, Texas 75254

(Address of principal executive offices, including zip code)

(972) 391-5000

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

INFORMATION INCLUDED IN THIS REPORT

Section 2 — Financial Information

Item 2.02 Results of Operations and Financial Condition

The following information and the exhibit attached hereto as Exhibit 99.1 are intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.” This information and the exhibit attached hereto as Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this report, regardless of any general incorporation language in the filing, except as shall be expressly set forth by specific reference in such filing.

On February 20, 2019, Copart, Inc. issued a press release announcing its financial results for the second quarter of fiscal year 2019, which ended January 31, 2019. The full text of the press release is furnished herewith as Exhibit 99.1.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibit is furnished herewith:

Exhibit Number	Description
99.1	Press release, dated February 20, 2019 of Copart, Inc. announcing its financial results for the second quarter of fiscal year 2019, which ended January 31, 2019.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:     February 20, 2019COPART, INC.

By:	/s/ Jeffrey Liaw
	Jeffrey Liaw
	Chief Financial Officer

INDEX TO EXHIBITS

Exhibit Number	Description
99.1	Press release, dated February 20, 2019 of Copart, Inc. announcing its financial results for the second quarter of fiscal year 2019, which ended January 31, 2019.

EX-99.1

Exhibit 99.1

Copart, Inc.

For Immediate Release

Copart Reports Second Quarter Fiscal 2019 Financial Results

Dallas, Texas. (February 20, 2019) — Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended January 31, 2019.

For the three months ended January 31, 2019, revenue, gross profit, and net income were $484.9 million, $208.2 million, and $131.4 million, respectively. These represent an increase in revenue of $25.8 million, or 5.6%; an increase in gross profit of $16.6 million, or 8.7%; and an increase in net income of $28.1 million, or 27.2%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $0.55 compared to $0.43 last year, an increase of 27.9%.

For the six months ended January 31, 2019, revenue, gross profit, and net income were $946.3 million, $404.1 million, and $245.5 million, respectively. These represent an increase in revenue of $68.0 million, or 7.7%; an increase in gross profit of $49.3 million, or 13.9%; and an increase in net income of $64.7 million, or 35.8%, respectively, from the same period last year. Fully diluted earnings per share for the six months were $1.01 compared to $0.75 last year, an increase of 34.7%.

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 for the six months ended January 31, 2018 of $8.9 million.

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 gains and losses, and certain income tax benefits related to accounting for stock option exercises, non-GAAP fully diluted earnings per share for the three months ended January 31, 2019 and 2018, were $0.52 and $0.47, respectively. Non-GAAP fully diluted earnings per share for the six months ended January 31, 2019 and 2018, were $0.99 and $0.79, 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, February 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/copart022119. A replay of the call will be available through April 22, 2019 by calling (877) 919-4059. Use confirmation code # 33529287.

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.

- 1 -

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 gains and losses, and certain income tax benefits 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 gains and losses, and certain income tax benefits 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 Hunter, Executive Support Manager, Office of the Chief Financial Officer
	972-391-5090 or melissa.hunter@copart.com

- 2 -

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

Copart, Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended  January 31,						Six Months Ended  January 31,
	2019			2018			2019			2018
Service revenues and vehicle sales:
Service revenues	$	416,807		$	401,954		$	811,613		$	776,079
Vehicle sales	68,091			57,152			134,653			102,195
Total service revenues and vehicle sales	484,898			459,106			946,266			878,274
Operating expenses:
Yard operations	199,383			204,289			388,860			410,508
Cost of vehicle sales	61,212			50,313			118,968			88,610
Yard depreciation and amortization	14,839			11,893			32,024			22,429
Yard stock-based compensation	1,238			1,002			2,270			1,854
Gross profit	208,226			191,609			404,144			354,873
General and administrative	33,236			29,694			68,041			59,196
General and administrative depreciation and amortization	5,560			5,978			10,244			11,344
General and administrative stock-based compensation	4,691			4,990			9,680			9,444
Total operating expenses	320,159			308,159			630,087			603,385
Operating income	164,739			150,947			316,179			274,889
Other (expense) income:
Interest expense, net	(4,555		)	(5,561		)	(8,246		)	(10,959		)
Other income (expense), net	4,782			(948		)	5,819			(5,364		)
Total other income (expense)	227			(6,509		)	(2,427		)	(16,323		)
Income before income taxes	164,966			144,438			313,752			258,566
Income tax expense	33,593			41,137			68,296			77,705
Net income	131,373			103,301			245,456			180,861
Net income attributable to noncontrolling interest	—			45			—			90
Net income attributable to Copart, Inc.	$	131,373		$	103,256		$	245,456		$	180,771
Basic net income per common share	$	0.57		$	0.45		$	1.06		$	0.78
Weighted average common shares outstanding	230,798			231,478			232,343			231,086
Diluted net income per common share	$	0.55		$	0.43		$	1.01		$	0.75
Diluted weighted average common shares outstanding	240,660			241,360			242,743			240,076

- 3 -

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

Copart, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

	January 31, 2019			July 31, 2018
ASSETS
Current assets:
Cash and cash equivalents	$	108,174		$	274,520
Accounts receivable, net	393,561			351,601
Vehicle pooling costs and inventories	108,925			51,018
Income taxes receivable	25			15,312
Prepaid expenses and other assets	17,781			16,665
Total current assets	628,466			709,116
Property and equipment, net	1,237,117			1,163,425
Intangibles, net	60,265			64,892
Goodwill	338,045			337,235
Deferred income taxes	348			470
Other assets	32,664			32,560
Total assets	$	2,296,905		$	2,307,698
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	266,126		$	270,944
Deferred revenue	7,344			4,488
Income taxes payable	4,441			673
Current portion of revolving loan facility and capital lease obligations	94,122			1,151
Total current liabilities	372,033			277,256
Deferred income taxes	32,314			19,733
Income taxes payable	30,390			27,277
Long-term debt, revolving loan facility and capital lease obligations, net of discount	398,740			398,747
Other liabilities	3,475			3,586
Total liabilities	836,952			726,599
Commitments and contingencies
Stockholders' equity:
Preferred stock	—			—
Common stock	23			23
Additional paid-in capital	530,102			526,858
Accumulated other comprehensive loss	(107,223		)	(107,928		)
Retained earnings	1,037,051			1,162,146
Total stockholders' equity	1,459,953			1,581,099
Total liabilities and stockholders' equity	$	2,296,905		$	2,307,698

- 4 -

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,
	2019			2018
Cash flows from operating activities:
Net income	$	245,456		$	180,861
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost	42,487			33,994
Allowance for doubtful accounts	96			1,013
Equity in (earnings) losses of unconsolidated affiliates	(514		)	251
Stock-based compensation	11,950			11,298
(Gain) loss on sale of property and equipment	(3,890		)	4,639
Deferred income taxes	6,632			2,666
Changes in operating assets and liabilities:
Accounts receivable	(86,125		)	(86,147		)
Vehicle pooling costs and inventories	(31,858		)	(9,073		)
Prepaid expenses and other current assets	(1,220		)	(1,437		)
Other assets	495			(4,320		)
Accounts payable and accrued liabilities	7,338			38,919
Deferred revenue	2,843			1,705
Income taxes receivable	15,286			2,575
Income taxes payable	6,890			9,365
Other liabilities	(662		)	84
Net cash provided by operating activities	215,204			186,393
Cash flows from investing activities:
Purchases of property and equipment	(136,727		)	(110,782		)
Proceeds from sale of property and equipment	17,488			2,812
Net cash used in investing activities	(119,239		)	(107,970		)
Cash flows from financing activities:
Proceeds from the exercise of stock options	5,220			16,603
Proceeds from the issuance of Employee Stock Purchase Plan shares	3,501			2,723
Repurchases of common stock	(364,997		)	—
Payments for employee stock-based tax withholdings	(27		)	(3		)
Net proceeds (repayments) on revolving loan facility	93,300			(120,300		)
Distributions to noncontrolling interest	—			(55		)
Net cash used in financing activities	(263,003		)	(101,032		)
Effect of foreign currency translation	692			7,809
Net decrease in cash and cash equivalents	(166,346		)	(14,800		)
Cash and cash equivalents at beginning of period	274,520			210,100
Cash and cash equivalents at end of period	$	108,174		$	195,300
Supplemental disclosure of cash flow information:
Interest paid	$	9,018		$	11,010
Income taxes paid, net of refunds	$	39,327		$	64,104

- 5 -

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 amounts)

(Unaudited)

	Three Months Ended  January 31,						Six Months Ended  January 31,
	2019			2018			2019			2018
GAAP net income attributable to Copart, Inc.	$	131,373		$	103,256		$	245,456		$	180,771
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	(1,598		)	—			(1,598		)	2,994
Effect of foreign currency-related (gains) losses, net of tax	(56		)	768			(399		)	1,076
Effect of recognizing tax benefit on exercise of employee stock options	(4,847		)	(2,596		)	(5,022		)	(6,363		)
Non-GAAP net income attributable to Copart, Inc.	$	124,872		$	111,428		$	238,437		$	188,478
GAAP diluted net income per common share	$	0.55		$	0.43		$	1.01		$	0.75
Non-GAAP diluted net income per common share	$	0.52		$	0.47		$	0.99		$	0.79
GAAP diluted weighted average common shares outstanding	240,660			241,360			242,743			240,076
Effect on common equivalent shares from ASU 2016-09	(1,675		)	(2,703		)	(2,058		)	(1,352		)
Non-GAAP diluted weighted average common shares outstanding	238,985			238,657			240,685			238,724

- 6 -

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