Copart Reports Fourth Quarter Fiscal 2023 Financial Results

September 14, 2023 at 16:10 PM EDT

Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter and year ended July 31, 2023.

For the three months ended July 31, 2023, revenue, gross profit, and net income were $997.6 million, $457.6 million, and $347.8 million, respectively. These represent an increase in revenue of $114.2 million, or 12.9%; an increase in gross profit of $76.0 million, or 19.9%; and an increase in net income of $84.1 million, or 31.9%, respectively, from the same period last year. Fully diluted earnings per share for the three months ended July 31, 2023 were $0.36 compared to $0.27 last year, an increase of 33.3%.

For the year ended July 31, 2023, revenue, gross profit, and net income were $3.9 billion, $1.7 billion, and $1.2 billion, respectively. These represent an increase in revenue of $368.6 million, or 10.5%; an increase in gross profit of $130.8 million, or 8.1%; and an increase in net income of $147.6 million, or 13.5%, respectively, from the same period last year. Fully diluted earnings per share for the year ended July 31, 2023 were $1.28 compared to $1.13 last year, an increase of 13.3%.

Excluding the impact of certain discrete income tax items, the effect of extinguishment of debt, and certain income tax benefits related to stock-based compensation, non-GAAP fully diluted earnings per share for the three months ended July 31, 2023 and 2022, were $0.34 and $0.28, respectively, which was an increase of 21.4%. Excluding the impact of certain discrete income tax items, income, certain legal matters, the effect of extinguishment of debt, and certain income tax benefits related to stock-based compensation, non-GAAP fully diluted earnings per share for the year ended July 31, 2023 and 2022, were $1.26 and $1.12, respectively, which was an increase of 12.5%. 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, September 14, 2023, at 5:30 p.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 www.copart.com/investorrelations. A replay of the call will be available through November 2023 by visiting www.copart.com/investorrelations.

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 vehicles to dealers, dismantlers, rebuilders, exporters, and to the general public. Copart sells vehicles on behalf of insurance companies, banks, finance companies, charities, fleet operators, dealers, vehicle rental companies, and individuals. With operations at over 200 locations in 11 countries, Copart has more than 250,000 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 certain discrete income tax items, income, certain legal matters, the effect of extinguishment of debt, and certain income tax benefits related to stock-based compensation. 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.

Cautionary Note About Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws. 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,
	2023		2022			% Change		2023		2022			% Change
Service revenues and vehicle sales:
Service revenues	$	834,242	$	707,816		17.9	%	$	3,198,128	$	2,853,040		12.1	%
Vehicle sales		163,349		175,572		(7.0	)%		671,390		647,881		3.6	%
Total service revenues and vehicle sales		997,591		883,388		12.9	%		3,869,518		3,500,921		10.5	%
Operating expenses:
Yard operations		348,332		307,717		13.2	%		1,369,006		1,186,457		15.4	%
Cost of vehicle sales		149,216		161,255		(7.5	)%		614,498		585,203		5.0	%
Yard depreciation and amortization		40,577		31,530		28.7	%		142,097		117,913		20.5	%
Yard stock-based compensation		1,888		1,314		43.7	%		6,926		5,127		35.1	%
Gross profit		457,578		381,572		19.9	%		1,736,991		1,606,221		8.1	%
General and administrative		55,522		43,257		28.4	%		200,294		177,314		13.0	%
General and administrative depreciation and amortization		4,058		4,803		(15.5	)%		17,381		20,072		(13.4	)%
General and administrative stock-based compensation		7,381		8,719		(15.3	)%		32,747		33,838		(3.2	)%
Total operating expenses		606,974		558,595		8.7	%		2,382,949		2,125,924		12.1	%
Operating income		390,617		324,793		20.3	%		1,486,569		1,374,997		8.1	%
Other income (expense):
Interest income (expense), net		29,148		(2,656	)	(1197.4	)%		65,928		(16,688	)	(495.1	)%
Loss on extinguishment of debt		—		(16,759	)	100.0	%		—		(16,759	)	100.0	%
Other income (expense), net		3,927		(1,910	)	(305.6	)%		1,831		(596	)	(407.2	)%
Total other income (expense)		33,075		(21,325	)	(255.1	)%		67,759		(34,043	)	(299.0	)%
Income before income taxes		423,692		303,468		39.6	%		1,554,328		1,340,954		15.9	%
Income tax expense		75,907		39,733		91.0	%		316,587		250,824		26.2	%
Net income	$	347,785	$	263,735		31.9	%	$	1,237,741	$	1,090,130		13.5	%

Basic net income per common share	$	0.36	$	0.28		28.6	%	$	1.30	$	1.15		13.0	%
Weighted average common shares outstanding		955,773		951,364		0.5	%		953,574		949,676		0.4	%

Diluted net income per common share	$	0.36	$	0.27		33.3	%	$	1.28	$	1.13		13.3	%
Diluted weighted average common shares outstanding		970,255		962,944		0.8	%		966,647		964,604		0.2	%

Copart, Inc. Consolidated Balance Sheets (In thousands) (Unaudited)

	July 31, 2023			July 31, 2022
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	957,395		$	1,384,236
Investment in held to maturity securities		1,406,589			—
Accounts receivable, net		702,038			578,573
Vehicle pooling costs		123,725			112,242
Inventories		39,973			58,791
Income taxes receivable		6,574			49,882
Prepaid expenses and other assets		26,310			18,731
Total current assets		3,262,604			2,202,455
Property and equipment, net		2,844,339			2,485,764
Operating lease right-of-use assets		108,139			116,303
Intangibles, net		62,702			54,680
Goodwill		394,289			401,954
Other assets		65,806			47,708
Total assets	$	6,737,879		$	5,308,864

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	440,810		$	399,034
Deferred revenue		26,117			20,061
Income taxes payable		4,374			—
Current portion of operating and finance lease liabilities		21,468			21,794
Total current liabilities		492,769			440,889
Deferred income taxes		89,492			80,060
Income taxes payable		69,193			64,637
Operating and finance lease liabilities, net of current portion		88,082			95,683
Long-term debt and other liabilities, net of discount		10,903			1,996
Total liabilities		750,439			683,265
Commitments and contingencies
Stockholders’ equity:
Preferred stock		—			—
Common stock		96			96
Additional paid-in capital		938,910			838,460
Accumulated other comprehensive loss		(141,006	)		(169,365	)
Retained earnings		5,189,440			3,956,408
Total stockholders’ equity		5,987,440			4,625,599
Total liabilities and stockholders’ equity	$	6,737,879		$	5,308,864

Copart, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited)

	Year Ended July 31,
	2023			2022
Cash flows from operating activities:
Net income	$	1,237,741		$	1,090,130
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost		159,684			138,605
Allowance for credit losses (gains)		1,946			1,349
Equity in losses (earnings) of unconsolidated affiliates		5,347			284
Stock-based compensation		39,673			38,965
Gain on sale of property and equipment		(1,846	)		(939	)
Loss on extinguishment of debt		—			16,759
Deferred income taxes		9,946			17,017
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable		(123,207	)		(97,750	)
Vehicle pooling costs		(10,989	)		(18,342	)
Inventories		26,549			(10,851	)
Prepaid expenses and other current and non-current assets		(59,949	)		(5,156	)
Operating lease right-of-use assets and lease liabilities		350			715
Accounts payable and accrued liabilities		18,010			36,306
Deferred revenue		5,896			(574	)
Income taxes receivable		33,193			(29,884	)
Income taxes payable		21,866			49
Net cash provided by operating activities		1,364,210			1,176,683

Cash flows from investing activities:
Purchase of short-term investments		(1,406,588	)		(374,866	)
Purchases of property and equipment		(516,636	)		(337,448	)
Purchases of assets and liabilities in connection with acquisitions		—			(106,604	)
Proceeds from sale of property and equipment		33,919			4,333
Proceeds from the sale of held to maturity securities		—			374,866
Investment in unconsolidated affiliate		(2,744	)		(2,591	)
Net cash used in investing activities		(1,892,049	)		(442,310	)

Cash flows from financing activities:
Proceeds from the exercise of stock options		49,679			28,108
Proceeds from the issuance of Employee Stock Purchase Plan shares		11,098			9,625
Payments for employee stock-based tax withholdings		(4,709	)		(1,925	)
Issuance of principal on revolver facility		44,494			—
Principal payments on revolver facility		(33,924	)		—
Debt offering costs		—			(1,212	)
Principal payments on long-term debt		—			(416,759	)
Payments of finance lease obligations		(23	)		(530	)
Net cash provided by (used in) financing activities		66,615			(382,693	)
Effect of foreign currency translation		34,383			(15,704	)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(426,841	)		335,976
Cash, cash equivalents, and restricted cash at beginning of period		1,384,236			1,048,260
Cash, cash equivalents, and restricted cash at end of period	$	957,395		$	1,384,236
Supplemental disclosure of cash flow information:
Interest paid	$	2,614		$	18,539
Income taxes paid, net of refunds	$	257,514		$	263,226

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,
	2023			2022			2023			2022
GAAP net income	$	347,785		$	263,735		$	1,237,741		$	1,090,130
Effect of certain discrete income tax items		(1,448	)		—			(1,448	)		(17,490	)
Effect of certain legal matters, net of tax		—			—			—			5,092
Effect of extinguishment of debt, net of tax		—			12,929			—			12,929
Effect of recognizing tax benefit on exercise of stock-based compensation		(15,911	)		(5,077	)		(21,021	)		(14,274	)
Non-GAAP net income	$	330,426		$	271,587		$	1,215,272		$	1,076,387

GAAP net income per diluted common share	$	0.36		$	0.27		$	1.28		$	1.13
Non-GAAP net income per diluted common share	$	0.34		$	0.28		$	1.26		$	1.12

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Contacts

Brooke Boston, Executive Assistant, Office of the Chief Financial Officer

brooke.boston@copart.com