[September 19, 2017] |
|
Copart Reports Fourth Quarter Fiscal 2017 Financial Results
Copart, Inc. (NASDAQ:CPRT) today reported financial results for the
quarter and year ended July 31, 2017.
For the three months ended July 31, 2017, revenue, gross margin, and net
income were $378.6 million, $167.5 million, and $70.3 million,
respectively. These represent an increase in revenue of $45.9 million,
or 13.8%; an increase in gross margin of $26.0 million, or 18.4%; and a
decrease in net income of $13.8 million, or 16.4%, respectively, from
the same quarter last year. Fully diluted earnings per share for the
three months were $0.30 compared to $0.35 last year, a decrease of
14.3%. Results for the three months ended July 31, 2017 include an
impairment charge of $19.4 million related primarily to costs previously
capitalized in connection with the development of business operating
software.
For the year ended July 31, 2017, revenue, gross margin, and net income
were $1.4 billion, $632.0 million, and $394.2 million, respectively.
These represent an increase in revenue of $179.5 million, or 14.2%; an
increase in gross margin of $87.4 million, or 16.1%; and an increase in
net income of $123.9 million, or 45.8%, respectively, from the same
period last year. Fully diluted earnings per share for the year ended
July 31, 2017 were $1.66 compared to $1.11 last year, an increase of
49.5%.
Excluding the impact of foreign currency-related gains; impairment of
long-lived assets; acquisition related fees; certain income tax
benefits, foreign income tax credit limitations, and payroll taxes
related to accounting for stock option exercises, non-GAAP fully diluted
earnings per share for the three months and year ended July 31, 2017,
were $0.35 and $1.29, respectively. These represent increases of 16.7%
and 22.9%, respectively, from the same periods last year. 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 20, 2017, 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 at http://stream.conferenceamerica.com/copart092017.
A replay of the call will be available through November 19, 2017 by
calling (877) 919-4059. Use confirmation code # 87851080.
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), the Republic of Ireland (Copart.ie), Brazil
(Copart.com.br), Germany (Copart.de), the United Arab Emirates, Oman and
Bahrain (Copartmea.com), India (Copart.in), and Spain (Copart.es). For
more information, or to become a Member, visit Copart.com/Register.
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 foreign currency-related gains; impairment of long-lived
assets; acquisition related fees; certain income tax benefits, foreign
income tax credit limitations, 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 foreign currency-related gains; impairment of
long-lived assets; acquisition related fees; certain income tax
benefits, foreign income tax credit limitations, 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.
|
Copart, Inc.
|
Consolidated Statements of Income
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
Twelve Months Ended July 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Service revenues and vehicle sales:
|
|
|
|
|
|
|
|
|
Service revenues
|
|
$
|
336,795
|
|
|
$
|
289,488
|
|
|
$
|
1,286,252
|
|
|
$
|
1,104,379
|
|
Vehicle sales
|
|
41,801
|
|
|
43,171
|
|
|
161,729
|
|
|
164,070
|
|
Total service revenues and vehicle sales
|
|
378,596
|
|
|
332,659
|
|
|
1,447,981
|
|
|
1,268,449
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Yard operations
|
|
163,449
|
|
|
144,859
|
|
|
635,160
|
|
|
546,576
|
|
Cost of vehicle sales
|
|
35,994
|
|
|
37,020
|
|
|
137,552
|
|
|
140,959
|
|
Yard depreciation and amortization
|
|
10,839
|
|
|
8,722
|
|
|
39,955
|
|
|
33,658
|
|
Yard stock-based payment compensation
|
|
849
|
|
|
594
|
|
|
3,286
|
|
|
2,670
|
|
Gross margin
|
|
167,465
|
|
|
141,464
|
|
|
632,028
|
|
|
544,586
|
|
General and administrative
|
|
29,818
|
|
|
26,561
|
|
|
116,697
|
|
|
105,005
|
|
General and administrative depreciation and amortization
|
|
3,029
|
|
|
4,276
|
|
|
17,045
|
|
|
14,917
|
|
General and administrative stock-based payment compensation
|
|
4,446
|
|
|
4,436
|
|
|
17,622
|
|
|
18,194
|
|
Impairment of long-lived assets
|
|
19,365
|
|
|
-
|
|
|
19,365
|
|
|
-
|
|
Total operating expenses
|
|
267,789
|
|
|
226,468
|
|
|
986,682
|
|
|
861,979
|
|
Operating income
|
|
110,807
|
|
|
106,191
|
|
|
461,299
|
|
|
406,470
|
|
Other (expense) income:
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
(5,485
|
)
|
|
(6,257
|
)
|
|
(22,373
|
)
|
|
(22,157
|
)
|
Other income, net
|
|
1,057
|
|
|
6,051
|
|
|
1,174
|
|
|
11,552
|
|
Total other expenses
|
|
(4,428
|
)
|
|
(206
|
)
|
|
(21,199
|
)
|
|
(10,605
|
)
|
Income before income tax expense
|
|
106,379
|
|
|
105,985
|
|
|
440,100
|
|
|
395,865
|
|
Income tax expense
|
|
36,010
|
|
|
21,863
|
|
|
45,839
|
|
|
125,505
|
|
Net income
|
|
70,369
|
|
|
84,122
|
|
|
394,261
|
|
|
270,360
|
|
Net income attributable to noncontrolling interest
|
|
34
|
|
|
-
|
|
|
34
|
|
|
-
|
|
Net income attributable to Copart, Inc.
|
|
$
|
70,335
|
|
|
$
|
84,122
|
|
|
$
|
394,227
|
|
|
$
|
270,360
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share
|
|
$
|
0.31
|
|
|
$
|
0.38
|
|
|
$
|
1.72
|
|
|
$
|
1.18
|
|
Weighted average common shares outstanding
|
|
230,286
|
|
|
219,156
|
|
|
228,686
|
|
|
228,846
|
|
|
|
|
|
|
|
|
|
|
Diluted net income per common share
|
|
$
|
0.30
|
|
|
$
|
0.35
|
|
|
$
|
1.66
|
|
|
$
|
1.11
|
|
Diluted weighted average common shares outstanding
|
|
237,634
|
|
|
237,038
|
|
|
237,019
|
|
|
244,295
|
|
|
Copart, Inc.
|
Consolidated Balance Sheets
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
July 31, 2017
|
|
July 31, 2016
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
210,100
|
|
|
$
|
155,849
|
|
Accounts receivable, net
|
|
311,846
|
|
|
266,270
|
|
Vehicle pooling costs and inventories
|
|
41,281
|
|
|
38,987
|
|
Income taxes receivable
|
|
6,418
|
|
|
18,751
|
|
Deferred income taxes
|
|
-
|
|
|
1,444
|
|
Prepaid expenses and other assets
|
|
17,616
|
|
|
18,005
|
|
Total current assets
|
|
587,261
|
|
|
499,306
|
|
Property and equipment, net
|
|
944,056
|
|
|
816,791
|
|
Intangibles, net
|
|
75,938
|
|
|
11,761
|
|
Goodwill
|
|
340,243
|
|
|
260,198
|
|
Deferred income taxes
|
|
1,287
|
|
|
23,506
|
|
Other assets
|
|
33,716
|
|
|
38,258
|
|
Total assets
|
|
$
|
1,982,501
|
|
|
$
|
1,649,820
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
208,415
|
|
|
$
|
192,379
|
|
Deferred revenue
|
|
5,019
|
|
|
4,628
|
|
Income taxes payable
|
|
6,472
|
|
|
5,625
|
|
Deferred income taxes
|
|
92
|
|
|
-
|
|
Current portion of revolving loan facility and capital lease
obligations
|
|
82,155
|
|
|
76,151
|
|
Total current liabilities
|
|
302,153
|
|
|
278,783
|
|
Deferred income taxes
|
|
3,192
|
|
|
3,816
|
|
Income taxes payable
|
|
24,573
|
|
|
25,641
|
|
Long-term debt, revolving loan facility, and capital lease
obligations, net of discount
|
|
550,883
|
|
|
564,341
|
|
Other liabilities
|
|
3,100
|
|
|
2,783
|
|
Total liabilities
|
|
883,901
|
|
|
875,364
|
|
Commitments and contingencies
|
|
|
|
|
Stockholders' equity:
|
|
|
|
|
Preferred stock
|
|
-
|
|
|
-
|
|
Common stock
|
|
23
|
|
|
22
|
|
Additional paid-in capital
|
|
453,349
|
|
|
392,434
|
|
Accumulated other comprehensive loss
|
|
(100,676
|
)
|
|
(109,194
|
)
|
Retained earnings
|
|
745,370
|
|
|
491,194
|
|
Noncontrolling interest
|
|
534
|
|
|
-
|
|
Total stockholders' equity
|
|
1,098,600
|
|
|
774,456
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,982,501
|
|
|
$
|
1,649,820
|
|
|
Copart, Inc.
|
Consolidated Statements of Cash Flows
|
(In thousands)
|
(Unaudited)
|
|
|
|
|
|
Twelve Months Ended July 31,
|
|
|
2017
|
|
2016
|
Cash flows from operating activities:
|
|
|
|
|
Net income
|
|
$
|
394,261
|
|
|
$
|
270,360
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
Depreciation and amortization, including debt cost
|
|
57,441
|
|
|
49,643
|
|
Allowance for doubtful accounts
|
|
187
|
|
|
1,175
|
|
Impairment of long-lived assets
|
|
19,365
|
|
|
-
|
|
Equity in losses of unconsolidated affiliates
|
|
671
|
|
|
895
|
|
Stock-based payment compensation
|
|
20,840
|
|
|
20,864
|
|
Loss (gain) on sale of property and equipment
|
|
184
|
|
|
(54
|
)
|
Deferred income taxes
|
|
19,901
|
|
|
5,740
|
|
Changes in operating assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
Accounts receivable
|
|
(38,542
|
)
|
|
(54,213
|
)
|
Vehicle pooling costs and inventories
|
|
(621
|
)
|
|
(6,646
|
)
|
Prepaid expenses and other current assets
|
|
1,760
|
|
|
(738
|
)
|
Other assets
|
|
1,085
|
|
|
4,164
|
|
Accounts payable and accrued liabilities
|
|
4,269
|
|
|
48,347
|
|
Deferred revenue
|
|
392
|
|
|
983
|
|
Income taxes receivable
|
|
12,343
|
|
|
(12,649
|
)
|
Income taxes payable
|
|
(333
|
)
|
|
2,788
|
|
Other liabilities
|
|
(1,145
|
)
|
|
1,839
|
|
Net cash provided by operating activities
|
|
492,058
|
|
|
332,498
|
|
Cash flows from investing activities:
|
|
|
|
|
Purchases of property and equipment
|
|
(172,178
|
)
|
|
(173,917
|
)
|
Purchases of assets and liabilities in connection with acquisitions,
net of cash acquired
|
|
(160,812
|
)
|
|
-
|
|
Investment in unconsolidated affiliate
|
|
(3,566
|
)
|
|
-
|
|
Proceeds from sale of property and equipment
|
|
765
|
|
|
662
|
|
Purchases of marketable securities
|
|
-
|
|
|
(21,119
|
)
|
Proceeds from sale of marketable securities
|
|
-
|
|
|
21,498
|
|
Net cash used in investing activities
|
|
(335,791
|
)
|
|
(172,876
|
)
|
Cash flows from financing activities:
|
|
|
|
|
Proceeds from the exercise of stock options
|
|
31,188
|
|
|
13,240
|
|
Proceeds from the issuance of Employee Stock Purchase Plan shares
|
|
4,270
|
|
|
3,369
|
|
Repurchases of common stock
|
|
-
|
|
|
(442,855
|
)
|
Payments for employee stock-based tax withholdings
|
|
(135,433
|
)
|
|
(15,039
|
)
|
Proceeds from the issuance of long-term debt, net of discount
|
|
-
|
|
|
93,468
|
|
Net (repayments) proceeds on revolving loan facility
|
|
(7,000
|
)
|
|
238,000
|
|
Debt offering costs
|
|
-
|
|
|
(1,179
|
)
|
Principal payments on long-term debt
|
|
-
|
|
|
(337,500
|
)
|
Net cash used in financing activities
|
|
(106,975
|
)
|
|
(448,496
|
)
|
Effect of foreign currency translation
|
|
4,959
|
|
|
(11,289
|
)
|
Net increase (decrease) in cash and cash equivalents
|
|
54,251
|
|
|
(300,163
|
)
|
Cash and cash equivalents at beginning of period
|
|
155,849
|
|
|
456,012
|
|
Cash and cash equivalents at end of period
|
|
$
|
210,100
|
|
|
$
|
155,849
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
Interest paid
|
|
$
|
23,221
|
|
|
$
|
23,606
|
|
Income taxes paid, net of refunds
|
|
$
|
14,011
|
|
|
$
|
127,981
|
|
|
|
|
|
|
Copart, Inc.
|
Additional Financial Information
|
Reconciliation of GAAP to Non-GAAP Financial Measures
|
(In thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended July 31,
|
|
Twelve Months Ended July 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
GAAP net income attributable to Copart, Inc.
|
|
$
|
70,335
|
|
|
$
|
84,122
|
|
|
$
|
394,227
|
|
|
$
|
270,360
|
|
Effect of foreign currency-related gains, net of tax
|
|
(585
|
)
|
|
(3,521
|
)
|
|
(880
|
)
|
|
(4,860
|
)
|
Effect of impairment of long-lived assets, net of tax
|
|
12,339
|
|
|
-
|
|
|
12,339
|
|
|
-
|
|
Effect of acquisition related fees, net of tax
|
|
1,241
|
|
|
-
|
|
|
1,241
|
|
|
-
|
|
Effect of income tax benefit of ASU 2016-09 adoption and limitations
of foreign income tax credits(1)
|
|
(428
|
)
|
|
(11,594
|
)
|
|
(107,177
|
)
|
|
(12,440
|
)
|
Effect of payroll taxes on certain executive stock compensation, net
of tax
|
|
-
|
|
|
-
|
|
|
3,307
|
|
|
48
|
|
Non-GAAP net income attributable to Copart, Inc.
|
|
$
|
82,902
|
|
|
$
|
69,007
|
|
|
$
|
303,057
|
|
|
$
|
253,108
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net income per common share
|
|
$
|
0.30
|
|
|
$
|
0.35
|
|
|
$
|
1.66
|
|
|
$
|
1.11
|
|
Non-GAAP diluted net income per common share
|
|
$
|
0.35
|
|
|
$
|
0.30
|
|
|
$
|
1.29
|
|
|
$
|
1.05
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted weighted average common shares outstanding
|
|
237,634
|
|
|
237,038
|
|
|
237,019
|
|
|
244,295
|
|
Effect on common equivalent shares from ASU 2016-09 adoption(1)
|
|
(1,771
|
)
|
|
(4,572
|
)
|
|
(1,992
|
)
|
|
(3,728
|
)
|
Non-GAAP diluted weighted average common shares outstanding
|
|
235,863
|
|
|
232,466
|
|
|
235,027
|
|
|
240,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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. Additionally, excess tax benefits are classified
as an operating activity on the consolidated statements of cash
flows. The Company adopted ASU 2016-09 during the fourth quarter
of fiscal 2016 on a modified retrospective basis. For a more
complete discussion, please review the Company's Annual Report on
Form 10-K, to be filed with the Securities and Exchange Commission
on or before September 29, 2017.
|
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