EX-99.1 2 cprt07312018ex99-1.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
Copart, Inc.
For Immediate Release
Copart Reports Fourth Quarter Fiscal 2018 Financial Results
Dallas, Texas. (September 19, 2018) — Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter and year ended July 31, 2018.
For the three months ended July 31, 2018, revenue, gross profit, and net income were $449.2 million, $188.4 million, and $109.7 million, respectively. These represent an increase in revenue of $70.6 million, or 18.7%; an increase in gross profit of $21.0 million, or 12.5%; and an increase in net income of $39.4 million, or 56.0%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $0.45 compared to $0.30 last year, an increase of 50.0%.
For the year ended July 31, 2018, revenue, gross profit, and net income were $1.8 billion, $762.4 million, and $417.9 million, respectively. These represent an increase in revenue of $357.7 million, or 24.7%; an increase in gross profit of $130.3 million, or 20.6%; and an increase in net income of $23.6 million, or 6.0%, respectively, from the same period last year. Fully diluted earnings per share for the year ended July 31, 2018 were $1.73 compared to $1.66 last year, an increase of 4.2%.
The operating results for the year ended July 31, 2018 were adversely affected by abnormal costs of $79.7 million 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 $66.9 million generated a pre-tax loss of $12.8 million for the year ended July 31, 2018. The operating results for the year ended July 31, 2018 were also adversely impacted by the recording of a provisional tax liability for the Transition Tax of $13.8 million for the deemed repatriation of foreign earnings and profits under the Tax Cuts and Jobs Act of 2017 and by non-recurring depreciation and amortization charges of $10.5 million, in the fourth quarter. Certain foreign tax credits of $1.4 million were made available by incurring the Transition Tax of $13.8 million, resulting in a net expense of $12.4 million for the year ended July 31, 2018. This expense was offset by the Act’s reduction of the federal corporate income tax rate. Because Copart’s fiscal year includes periods before and after December 22, 2017, 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 was 26.9%. The operating results for the year ended July 31, 2018, include the benefit of this rate reduction. In addition, the non-recurring depreciation and amortization charges of $10.5 million result from depreciation related to a combination of construction in progress placed in service in the fourth quarter of fiscal 2018 and a change in our estimate of the useful lives for certain fixed assets. The effect of the non-recurring depreciation, net of income tax benefit of $11.4 million, is an increase to net income of $0.9 million, as a result of bonus tax depreciation provided for in the Tax Cuts and Jobs Act of 2017.
Excluding the impact of income taxes on the deemed repatriation of foreign earnings, net of deferred tax changes, disposals of non-operating assets, impairment of long-lived assets, acquisition related fees and integration charges, reserve for legacy sales tax liabilities; foreign currency-related gains and losses, 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 July 31, 2018 and 2017, were $0.42 and $0.35, respectively. Non-GAAP fully diluted earnings per share for the year ended July 31, 2018 and 2017, were $1.73 and $1.29, 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 Wednesday, September 19, 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/copart091918. A replay of the call will be available through November 18, 2018 by calling (877) 919-4059. Use confirmation code # 18189145.
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.

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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, impairment of long-lived assets, acquisition related fees and integration charges, reserve for legacy sales tax liabilities; foreign currency-related gains and losses, 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, impairment of long-lived assets, acquisition related fees and integration charges, reserve for legacy sales tax liabilities; foreign currency-related gains and losses, 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 amounts)
(Unaudited)
 
 
Three Months Ended 
 July 31,
 
Twelve Months Ended 
 July 31,
 
 
2018
 
2017
 
2018
 
2017
Service revenues and vehicle sales:
 
 
 
 
 
 
 
 
Service revenues
 
$
391,661

 
$
336,795

 
$
1,578,502

 
$
1,286,252

Vehicle sales
 
57,562

 
41,801

 
227,193

 
161,729

Total service revenues and vehicle sales
 
449,223

 
378,596

 
1,805,695

 
1,447,981

Operating expenses:
 
 
 
 
 
   
 
 
Yard operations
 
185,914

 
163,449

 
785,768

 
635,160

Cost of vehicle sales
 
50,313

 
35,994

 
196,461

 
137,552

Yard depreciation and amortization
 
23,613

 
10,839

 
57,230

 
39,955

Yard stock-based payment compensation
 
958

 
849

 
3,870

 
3,286

Gross profit
 
188,425

 
167,465

 
762,366

 
632,028

General and administrative
 
42,794

 
29,818

 
136,171

 
116,697

General and administrative depreciation and amortization
 
4,639

 
3,029

 
21,368

 
17,045

General and administrative stock-based payment compensation
 
5,024

 
4,446

 
19,351

 
17,622

Impairment of long-lived assets
 
1,131

 
19,365

 
1,131

 
19,365

Total operating expenses
 
314,386

 
267,789

 
1,221,350

 
986,682

Operating income
 
134,837

 
110,807

 
584,345

 
461,299

Other (expense) income:
 
 
 
 
 
   
 
 
Interest expense, net
 
(3,982
)
 
(5,485
)
 
(19,075
)
 
(22,373
)
Other income (expense), net
 
1,874

 
1,057

 
(2,759
)
 
1,174

Total other expense
 
(2,108
)
 
(4,428
)
 
(21,834
)
 
(21,199
)
Income before income tax expense
 
132,729

 
106,379

 
562,511

 
440,100

Income tax expense
 
22,988

 
36,010

 
144,504

 
45,839

Net income
 
109,741

 
70,369

 
418,007

 
394,261

Net (loss) income attributable to noncontrolling interest
 
(7
)
 
34

 
140

 
34

Net income attributable to Copart, Inc.
 
$
109,748

 
$
70,335

 
$
417,867

 
$
394,227

 
 
 
 
 
 
 
 
 
Basic net income per common share
 
$
0.47

 
$
0.31

 
$
1.80

 
$
1.72

Weighted average common shares outstanding
 
232,995

 
230,286

 
231,793

 
228,686

 
 
 
 
 
 
 
 
 
Diluted net income per common share
 
$
0.45

 
$
0.30

 
$
1.73

 
$
1.66

Diluted weighted average common shares outstanding
 
244,406

 
237,634

 
241,877

 
237,019



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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)
 
 
July 31, 2018
 
July 31, 2017
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
274,520

 
$
210,100

Accounts receivable, net
 
351,601

 
311,846

Vehicle pooling costs and inventories
 
51,018

 
41,281

Income taxes receivable
 
15,312

 
6,418

Prepaid expenses and other assets
 
16,665

 
17,616

Total current assets
 
709,116

 
587,261

Property and equipment, net
 
1,163,425

 
944,056

Intangibles, net
 
64,892

 
75,938

Goodwill
 
337,235

 
340,243

Deferred income taxes
 
470

 
1,287

Other assets
 
32,560

 
33,716

Total assets
 
$
2,307,698

 
$
1,982,501

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
 
$
270,944

 
$
208,415

Deferred revenue
 
4,488

 
5,019

Income taxes payable
 
673

 
6,472

Deferred income taxes
 
—

 
92

Current portion of revolving loan facility and capital lease obligations
 
1,151

 
82,155

Total current liabilities
 
277,256

 
302,153

Deferred income taxes
 
19,733

 
3,192

Income taxes payable
 
27,277

 
24,573

Long-term debt, revolving loan facility, and capital lease obligations, net of discount
 
398,747

 
550,883

Other liabilities
 
3,586

 
3,100

Total liabilities
 
726,599

 
883,901

Commitments and contingencies
 
 
 
 
Stockholders’ equity:
 
 
 
 
Preferred stock
 
—

 
—

Common stock
 
23

 
23

Additional paid-in capital
 
526,858

 
453,349

Accumulated other comprehensive loss
 
(107,928
)
 
(100,676
)
Retained earnings
 
1,162,146

 
745,370

Noncontrolling interest
 
—

 
534

Total stockholders’ equity
 
1,581,099

 
1,098,600

Total liabilities and stockholders’ equity
 
$
2,307,698

 
$
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)
 
 
Year Ended July 31,
 
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
Net income
 
$
418,007

 
$
394,261

Adjustments to reconcile net income to net cash provided by operating activities:
 
   
 
   
Depreciation and amortization, including debt cost
 
79,040

 
57,441

Allowance for doubtful accounts
 
1,142

 
187

Impairment of long-lived assets
 
1,157

 
19,365

Equity in losses of unconsolidated affiliates
 
750

 
671

Stock-based payment compensation
 
23,221

 
20,840

Loss on sale of property and equipment
 
3,240

 
184

Deferred income taxes
 
16,717

 
19,901

Changes in operating assets and liabilities, net of effects from acquisitions:
 
 
 
 
Accounts receivable
 
(40,335
)
 
(38,542
)
Vehicle pooling costs and inventories
 
(7,312
)
 
(621
)
Prepaid expenses and other current assets
 
(776
)
 
1,760

Other assets
 
70

 
1,085

Accounts payable and accrued liabilities
 
53,320

 
4,269

Deferred revenue
 
(520
)
 
392

Income taxes receivable
 
(8,916
)
 
12,343

Income taxes payable
 
(3,149
)
 
(333
)
Other liabilities
 
(587
)
 
(1,145
)
Net cash provided by operating activities
 
535,069

 
492,058

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Purchases of property and equipment, including acquisitions
 
(296,697
)
 
(332,990
)
Proceeds from sale of property and equipment
 
6,425

 
765

Proceeds from sale of majority-owned subsidiary
 
1,796

 
—

Investment in unconsolidated affiliate
 
—

 
(3,566
)
Net cash used in investing activities
 
(288,476
)
 
(335,791
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from the exercise of stock options
 
44,459

 
31,188

Proceeds from the issuance of Employee Stock Purchase Plan shares
 
5,853

 
4,270

Payments for employee stock-based tax withholdings
 
(1,115
)
 
(135,433
)
Net (repayments) proceeds on revolving loan facility
 
(231,000
)
 
(7,000
)
Distributions to noncontrolling interest
 
(235
)
 
—

Net cash used in financing activities
 
(182,038
)
 
(106,975
)
Effect of foreign currency translation
 
(135
)
 
4,959

Net increase in cash and cash equivalents
 
64,420

 
54,251

Cash and cash equivalents at beginning of period
 
210,100

 
155,849

Cash and cash equivalents at end of period
 
$
274,520

 
$
210,100

Supplemental disclosure of cash flow information:
 
 
 
 
Interest paid
 
$
20,343

 
$
23,221

Income taxes paid, net of refunds
 
$
142,161

 
$
14,011


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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 amounts)
(Unaudited)
 
 
Three Months Ended 
 July 31,
 
Twelve Months Ended 
 July 31,
 
 
2018
 
2017
 
2018
 
2017
GAAP net income attributable to Copart, Inc.
 
$
109,748

 
$
70,335

 
$
417,867

 
$
394,227

Effect of deemed repatriation of foreign earnings, net of deferred tax changes
 
(2,870
)
 
—

 
8,131

 
—

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

 
—

 
2,994

 
—

Effect of impairment of long-lived assets, net of tax
 
916

 
12,339

 
916

 
12,339

Effect of acquisition related fees and integration charges, net of tax
 
1,521

 
1,241

 
1,521

 
1,241

Effect of reserve for legacy sales tax liabilities, net of tax
 
1,017

 
—

 
1,017

 
—

Effect of foreign currency-related (gains) losses, net of tax
 
(415
)
 
(585
)
 
452

 
(880
)
Effect of income tax benefit of ASU 2016-09 adoption, net of tax (1)
 
(11,821
)
 
(898
)
 
(21,269
)
 
(107,647
)
Effect of payroll taxes on certain executive stock compensation, net of tax
 
4,514

 
—

 
4,514

 
3,307

Non-GAAP net income attributable to Copart, Inc.
 
$
102,610

 
$
82,432

 
$
416,143

 
$
302,587

 
 
 
 
 
 
 
 
 
GAAP diluted net income per common share
 
$
0.45

 
$
0.30

 
$
1.73

 
$
1.66

Non-GAAP diluted net income per common share
 
$
0.42

 
$
0.35

 
$
1.73

 
$
1.29

 
 
 
 
 
 
 
 
 
GAAP diluted weighted average common shares outstanding
 
244,406

 
237,634

 
241,877

 
237,019

Effect on common equivalent shares from ASU 2016-09 adoption(1)
 
(2,586
)
 
(1,771
)
 
(646
)
 
(1,992
)
Non-GAAP diluted weighted average common shares outstanding
 
241,820

 
235,863

 
241,231

 
235,027

(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. For a more complete discussion, please review the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission.



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