Copart Reports Third Quarter Fiscal 2021 Financial Results

May 19, 2021 at 16:31 PM EDT

Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended April 30, 2021.

For the three months ended April 30, 2021, revenue, gross profit, and net income were $733.9 million, $381.3 million, and $286.8 million, respectively. These represent an increase in revenue of $183.6 million, or 33.4%; an increase in gross profit of $138.7 million, or 57.2%; and an increase in net income of $139.3 million, or 94.5%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $1.19 compared to $0.62 last year, an increase of 91.9%.

For the nine months ended April 30, 2021, revenue, gross profit, and net income were $1.9 billion, $985.6 million, and $680.5 million, respectively. These represent an increase in revenue of $264.0 million, or 15.7%; an increase in gross profit of $228.2 million, or 30.1%; and an increase in net income of $146.1 million, or 27.3%, respectively, from the same period last year. Fully diluted earnings per share for the nine months were $2.83 compared to $2.24 last year, an increase of 26.3%.

Excluding the impact of certain discrete income tax items, foreign currency-related gains and losses, certain income tax benefits and payroll taxes related to stock-based compensation, non-GAAP fully diluted earnings per share for the three months ended April 30, 2021 and 2020, were $1.09, and $0.58, respectively, which was an increase of 87.9%. Excluding the impact of certain discrete income tax items, foreign currency-related gains and losses, certain income tax benefits and payroll taxes related to stock-based compensation, non-GAAP fully diluted earnings per share for the nine months ended April 30, 2021 and 2020, were $2.67, and $1.87, respectively, which was an increase of 42.8%. 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 20, 2021, 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 via hyperlink at www.copart.com/investorrelations. A replay of the call will be available through August 2021 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 salvage and clean title vehicles to dealers, dismantlers, rebuilders, exporters, and in some jurisdictions, to the general public. Copart sells vehicles on behalf of insurance companies, banks, finance companies, charities, fleet operators, dealers and individuals. With operations at over 200 locations in 11 countries, Copart has more than 175,000 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, foreign currency-related gains and losses, certain income tax benefits and payroll taxes 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. From a financial planning and analysis perspective, Copart management analyzes its operating results with and without the impact of certain discrete income tax items, foreign currency-related gains and losses, certain income tax benefits and payroll taxes related to stock-based compensation.

Cautionary Note About Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws, including statements concerning the potential impact of the COVID-19 pandemic on our business, operations, and operating results. 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,
	2021			2020			2021			2020
Service revenues and vehicle sales:
Service revenues	$	623,846		$	491,582		$	1,671,819		$	1,489,472
Vehicle sales	110,064			58,778			272,062			190,452
Total service revenues and vehicle sales	733,910			550,360			1,943,881			1,679,924
Operating expenses:
Yard operations	230,794			231,985			646,690			692,547
Cost of vehicle sales	94,498			53,987			232,487			170,651
Yard depreciation and amortization	25,876			20,333			74,350			55,384
Yard stock-based compensation	1,401			1,442			4,746			3,971
Gross profit	381,341			242,613			985,608			757,371
General and administrative	39,174			37,017			110,326			115,102
General and administrative depreciation and amortization	6,090			6,382			17,957			18,627
General and administrative stock-based compensation	7,966			4,113			22,399			13,258
Total operating expenses	405,799			355,259			1,108,955			1,069,540
Operating income	328,111			195,101			834,926			610,384
Other expense:
Interest expense, net	(5,346		)	(5,578		)	(15,227		)	(14,068		)
Other income, net	770			2,277			3,103			2,640
Total other expense	(4,576		)	(3,301		)	(12,124		)	(11,428		)
Income before income taxes	323,535			191,800			822,802			598,956
Income tax expense	36,739			44,313			142,281			64,582
Net income	$	286,796		$	147,487		$	680,521		$	534,374

Basic net income per common share	$	1.21		$	0.63		$	2.88		$	2.30
Weighted average common shares outstanding	236,396			234,133			236,110			232,647

Diluted net income per common share	$	1.19		$	0.62		$	2.83		$	2.24
Diluted weighted average common shares outstanding	240,208			238,591			240,149			238,564

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

	April 30, 2021			July 31, 2020
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	911,890		$	477,718
Accounts receivable, net	434,873			350,207
Vehicle pooling costs	86,685			73,684
Inventories	39,229			20,080
Income taxes receivable	10,588			26,740
Prepaid expenses and other assets	16,106			15,330
Total current assets	1,499,371			963,759
Property and equipment, net	2,227,531			1,941,719
Operating lease right-of-use assets	125,709			118,455
Intangibles, net	42,535			47,772
Goodwill	347,515			343,622
Other assets	39,285			39,934
Total assets	$	4,281,946		$	3,455,261

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	359,239		$	318,530
Deferred revenue	20,660			8,233
Income taxes payable	9,140			3,709
Current portion of operating and finance lease liabilities	24,006			25,572
Total current liabilities	413,045			356,044
Deferred income taxes	57,767			71,686
Income taxes payable	55,637			44,965
Operating and finance lease liabilities, net of current portion	108,487			96,150
Long-term debt and other liabilities, net of discount	397,633			396,900
Total liabilities	1,032,569			965,745
Commitments and contingencies
Stockholders' equity:
Preferred stock	—			—
Common stock	24			24
Additional paid-in capital	733,581			672,727
Accumulated other comprehensive loss	(101,664		)	(121,088		)
Retained earnings	2,617,436			1,937,853
Total stockholders' equity	3,249,377			2,489,516
Total liabilities and stockholders' equity	$	4,281,946		$	3,455,261

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

	Nine Months Ended April 30,
	2021			2020
Cash flows from operating activities:
Net income	$	680,521		$	534,374
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost	93,141			76,756
Allowance for credit loss	(1,429		)	1,332
Equity in (earnings) losses of unconsolidated affiliates	(2,121		)	1,918
Stock-based compensation	27,145			17,229
Gain on sale of property and equipment	(1,257		)	(1,745		)
Deferred income taxes	(14,130		)	9,265
Changes in operating assets and liabilities:
Accounts receivable	(81,593		)	19,102
Vehicle pooling costs	(12,777		)	661
Inventories	(18,788		)	1,209
Prepaid expenses and other current and non-current assets	6,879			6,268
Operating lease right-of-use assets and lease liabilities	389			(221		)
Accounts payable and accrued liabilities	47,914			(15,636		)
Deferred revenue	8,467			1,365
Income taxes receivable	16,152			(12,076		)
Income taxes payable	13,692			9,168
Other liabilities	—			1,999
Net cash provided by operating activities	762,205			650,968

Cash flows from investing activities:
Purchases of property and equipment, including acquisitions	(364,395		)	(490,998		)
Proceeds from sale of property and equipment	599			2,153
Net cash used in investing activities	(363,796		)	(488,845		)

Cash flows from financing activities:
Proceeds from the exercise of stock options	28,829			55,656
Proceeds from the issuance of Employee Stock Purchase Plan shares	4,880			3,955
Payments for employee stock-based tax withholdings	(938		)	(102,191		)
Payments of finance lease obligations	(962		)	—
Net cash provided by (used in) financing activities	31,809			(42,580		)
Effect of foreign currency translation	3,954			525
Net increase in cash, cash equivalents, and restricted cash	434,172			120,068
Cash, cash equivalents, and restricted cash at beginning of period	477,718			186,319
Cash, cash equivalents, and restricted cash at end of period	$	911,890		$	306,387
Supplemental disclosure of cash flow information:
Interest paid	$	14,736		$	14,514
Income taxes paid, net of refunds	$	126,303		$	59,302

Copart, Inc. Additional Financial Information Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts) (Unaudited)

	Three Months Ended April 30,						Nine Months Ended April 30,
	2021			2020			2021			2020
GAAP net income	$	286,796		$	147,487		$	680,521		$	534,374
Effect of certain discrete income tax items	(19,764		)	—			(19,764		)	(3,008		)
Effect of foreign currency-related losses (gains), net of tax	303			(490		)	351			(1,169		)
Effect of recognizing tax benefit on exercise of stock-based compensation	(4,910		)	(8,768		)	(18,850		)	(85,965		)
Effect of payroll taxes on certain executive stock-based compensation, net of tax	—			—			—			2,867
Non-GAAP net income	$	262,425		$	138,229		$	642,258		$	447,099

GAAP net income per diluted common share	$	1.19		$	0.62		$	2.83		$	2.24
Non-GAAP net income per diluted common share	$	1.09		$	0.58		$	2.67		$	1.87

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Contacts

Melissa Hunter, Executive Support Manager, Office of the Chief Financial Officer

972-391-5090 or melissa.hunter@copart.com