Copart, Inc. (NASDAQ: CPRT) today reported financial results for the
quarter ended April 30, 2019.
For the three months ended April 30, 2019, revenue, gross profit, and
net income were $553.1 million, $251.6 million, and $192.7 million,
respectively. These represent an increase in revenue of $74.9 million,
or 15.7%; an increase in gross profit of $32.5 million, or 14.8%; and an
increase in net income of $65.4 million, or 51.3%, respectively, from
the same period last year. Fully diluted earnings per share for the
three months were $0.81 compared to $0.52 last year, an increase of
55.8%.
For the nine months ended April 30, 2019, revenue, gross profit, and net
income were $1.5 billion, $655.7 million, and $438.2 million,
respectively. These represent an increase in revenue of $142.9 million,
or 10.5%; an increase in gross profit of $81.8 million, or 14.2%; and an
increase in net income of $130.1 million, or 42.2%, respectively, from
the same period last year. Fully diluted earnings per share for the nine
months were $1.82 compared to $1.28 last year, an increase of 42.2%.
The operating results for the three and nine months ended April 30, 2018
were adversely affected by abnormal costs of $7.4 million and $79.7
million, respectively, 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 $3.5
million and $66.9 million, respectively, generated pre-tax loss for the
three months ended April 30, 2018 of $3.9 million and a pre-tax loss for
the nine months ended April 30, 2018 of $12.8 million.
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, 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 April 30, 2019 and 2018, were $0.66 and
$0.52, respectively. Non-GAAP fully diluted earnings per share for the
nine months ended April 30, 2019 and 2018, were $1.64 and $1.31,
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, May 23, 2019, at 9 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/copart052319.
A replay of the call will be available through July 22, 2019 by calling (877)
919-4059. Use confirmation code # 77347431.
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, 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, 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 April 30, |
Nine Months Ended April 30, |
|||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Service revenues and vehicle sales: | ||||||||||||||||
| Service revenues | $ | 473,682 | $ | 410,762 | $ | 1,285,295 | $ | 1,186,841 | ||||||||
| Vehicle sales | 79,434 | 67,436 | 214,087 | 169,631 | ||||||||||||
| Total service revenues and vehicle sales | 553,116 | 478,198 | 1,499,382 | 1,356,472 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Yard operations | 213,804 | 189,346 | 602,664 | 599,854 | ||||||||||||
| Cost of vehicle sales | 70,984 | 57,538 | 189,952 | 146,148 | ||||||||||||
| Yard depreciation and amortization | 15,398 | 11,188 | 47,422 | 33,617 | ||||||||||||
| Yard stock-based compensation | 1,351 | 1,058 | 3,621 | 2,912 | ||||||||||||
| Gross profit | 251,579 | 219,068 | 655,723 | 573,941 | ||||||||||||
| General and administrative | 34,072 | 34,181 | 102,113 | 93,377 | ||||||||||||
| General and administrative depreciation and amortization | 5,714 | 5,385 | 15,958 | 16,729 | ||||||||||||
| General and administrative stock-based compensation | 4,299 | 4,883 | 13,979 | 14,327 | ||||||||||||
| Total operating expenses | 345,622 | 303,579 | 975,709 | 906,964 | ||||||||||||
| Operating income | 207,494 | 174,619 | 523,673 | 449,508 | ||||||||||||
| Other (expense) income: | ||||||||||||||||
| Interest expense, net | (5,084 | ) | (4,134 | ) | (13,330 | ) | (15,093 | ) | ||||||||
| Other income (expense), net | 1,719 | 731 | 7,538 | (4,633 | ) | |||||||||||
| Total other expense | (3,365 | ) | (3,403 | ) | (5,792 | ) | (19,726 | ) | ||||||||
| Income before income taxes | 204,129 | 171,216 | 517,881 | 429,782 | ||||||||||||
| Income tax expense | 11,388 | 43,811 | 79,684 | 121,516 | ||||||||||||
| Net income | 192,741 | 127,405 | 438,197 | 308,266 | ||||||||||||
| Net income attributable to noncontrolling interest | — | 57 | — | 147 | ||||||||||||
| Net income attributable to Copart, Inc. | $ | 192,741 | $ | 127,348 | $ | 438,197 | $ | 308,119 | ||||||||
| Basic net income per common share | $ | 0.85 | $ | 0.55 | $ | 1.90 | $ | 1.33 | ||||||||
| Weighted average common shares outstanding | 227,984 | 232,010 | 230,922 | 231,387 | ||||||||||||
| Diluted net income per common share | $ | 0.81 | $ | 0.52 | $ | 1.82 | $ | 1.28 | ||||||||
| Diluted weighted average common shares outstanding | 237,892 | 242,960 | 241,158 | 241,030 | ||||||||||||
|
Copart, Inc. Consolidated Balance Sheets (In thousands) (Unaudited) |
||||||||
| April 30, 2019 | July 31, 2018 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 102,826 | $ | 274,520 | ||||
| Accounts receivable, net | 376,564 | 351,601 | ||||||
| Vehicle pooling costs | 75,289 | 34,284 | ||||||
| Inventories | 22,309 | 16,734 | ||||||
| Income taxes receivable | 18,902 | 15,312 | ||||||
| Prepaid expenses and other assets | 17,695 | 16,665 | ||||||
| Total current assets | 613,585 | 709,116 | ||||||
| Property and equipment, net | 1,340,692 | 1,163,425 | ||||||
| Intangibles, net | 57,627 | 64,892 | ||||||
| Goodwill | 337,725 | 337,235 | ||||||
| Deferred income taxes | 333 | 470 | ||||||
| Other assets | 41,801 | 32,560 | ||||||
| Total assets | $ | 2,391,763 | $ | 2,307,698 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 279,779 | $ | 270,944 | ||||
| Deferred revenue | 7,988 | 4,488 | ||||||
| Income taxes payable | 1,583 | 673 | ||||||
|
Current portion of revolving loan facility and capital lease obligations |
7,556 | 1,151 | ||||||
| Total current liabilities | 296,906 | 277,256 | ||||||
| Deferred income taxes | 40,165 | 19,733 | ||||||
| Income taxes payable | 33,634 | 27,277 | ||||||
|
Long-term debt, revolving loan facility and capital lease obligations, net of discount |
398,835 | 398,747 | ||||||
| Other liabilities | 3,371 | 3,586 | ||||||
| Total liabilities | 772,911 | 726,599 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock | — | — | ||||||
| Common stock | 23 | 23 | ||||||
| Additional paid-in capital | 545,895 | 526,858 | ||||||
| Accumulated other comprehensive loss | (113,191 | ) | (107,928 | ) | ||||
| Retained earnings | 1,186,125 | 1,162,146 | ||||||
| Total stockholders’ equity | 1,618,852 | 1,581,099 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,391,763 | $ | 2,307,698 | ||||
|
Copart, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
||||||||
| Nine Months Ended April 30, | ||||||||
| 2019 | 2018 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 438,197 | $ | 308,266 | ||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization, including debt cost | 63,709 | 50,678 | ||||||
| Allowance for doubtful accounts | 341 | 1,096 | ||||||
| Equity in (earnings) losses of unconsolidated affiliates | (1,852 | ) | 679 | |||||
| Stock-based compensation | 17,600 | 17,239 | ||||||
| (Gain) loss on sale of property and equipment | (3,753 | ) | 4,044 | |||||
| Deferred income taxes | 14,583 | (17 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (69,920 | ) | (43,361 | ) | ||||
| Vehicle pooling costs | (15,026 | ) | (1,590 | ) | ||||
| Inventories | (5,721 | ) | (6,700 | ) | ||||
| Prepaid expenses and other current assets | (1,436 | ) | (371 | ) | ||||
| Other assets | (7,169 | ) | (413 | ) | ||||
| Accounts payable and accrued liabilities | 17,747 | 27,981 | ||||||
| Deferred revenue | 3,512 | 849 | ||||||
| Income taxes receivable | (3,578 | ) | 5,043 | |||||
| Income taxes payable | 7,304 | 14,025 | ||||||
| Other liabilities | (1,042 | ) | (251 | ) | ||||
| Net cash provided by operating activities | 453,496 | 377,197 | ||||||
| Cash flows from investing activities: | ||||||||
| Purchases of property and equipment, including acquisitions | (260,081 | ) | (188,482 | ) | ||||
| Proceeds from sale of property and equipment | 17,928 | 3,368 | ||||||
| Net cash used in investing activities | (242,153 | ) | (185,114 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from the exercise of stock options | 17,261 | 23,816 | ||||||
| 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 | (45,594 | ) | (3 | ) | ||||
| Net proceeds (repayments) on revolving loan facility | 7,000 | (231,000 | ) | |||||
| Distributions to noncontrolling interest | — | (55 | ) | |||||
| Net cash used in financing activities | (382,829 | ) | (204,519 | ) | ||||
| Effect of foreign currency translation | (208 | ) | 6,611 | |||||
| Net decrease in cash and cash equivalents | (171,694 | ) | (5,825 | ) | ||||
| Cash and cash equivalents at beginning of period | 274,520 | 210,100 | ||||||
| Cash and cash equivalents at end of period | $ | 102,826 | $ | 204,275 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Interest paid | $ | 14,700 | $ | 15,406 | ||||
| Income taxes paid, net of refunds | $ | 60,926 | $ | 102,762 | ||||
|
Copart, Inc. Additional Financial Information Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts) (Unaudited) |
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|
Three Months Ended April 30, |
Nine Months Ended April 30, |
|||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| GAAP net income attributable to Copart, Inc. | $ | 192,741 | $ | 127,348 | $ | 438,197 | $ | 308,119 | ||||||||
|
Effect of deemed repatriation of foreign earnings, net of deferred tax changes |
— | 1,000 | — | 11,000 | ||||||||||||
| Effect of discrete income tax items | (10,170 | ) | — | (10,170 | ) | — | ||||||||||
| Effect of disposal of non-operating assets, net of tax | — | — | (1,598 | ) | 2,994 | |||||||||||
| Effect of foreign currency-related losses (gains), net of tax | 94 | (261 | ) | (304 | ) | 777 | ||||||||||
|
Effect of recognizing tax benefit on exercise of employee stock options |
(29,074 | ) | (3,085 | ) | (34,096 | ) | (9,448 | ) | ||||||||
|
Effect of payroll taxes on certain executive stock compensation, net of tax |
1,295 | — | 1,295 | — | ||||||||||||
| Non-GAAP net income attributable to Copart, Inc. | $ | 154,886 | $ | 125,002 | $ | 393,324 | $ | 313,442 | ||||||||
| GAAP net income per diluted common share | $ | 0.81 | $ | 0.52 | $ | 1.82 | $ | 1.28 | ||||||||
| Non-GAAP net income per diluted common share | $ | 0.66 | $ | 0.52 | $ | 1.64 | $ | 1.31 | ||||||||
| GAAP diluted weighted average common shares outstanding | 237,892 | 242,960 | 241,158 | 241,030 | ||||||||||||
| Effect on common equivalent shares from ASU 2016-09 | (1,731 | ) | (3,090 | ) | (1,949 | ) | (1,030 | ) | ||||||||
| Non-GAAP diluted weighted average common shares outstanding | 236,161 | 239,870 | 239,209 | 240,000 | ||||||||||||
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