[November 21, 2017] |
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Copart Reports First Quarter Fiscal 2018 Financial Results
Copart, Inc. (NASDAQ: CPRT) today reported financial results for the
quarter ended October 31, 2017.
For the three months ended October 31, 2017, revenue, gross margin, and
net income were $419.2 million, $163.3 million, and $77.5 million,
respectively. These represent an increase in revenue of $73.2 million,
or 21.1%; an increase in gross margin of $18.0 million, or 12.4%; and a
decrease in net income of $89.8 million, or 53.7%, respectively, from
the same quarter last year. Fully diluted earnings per share for the
three months were $0.32 compared to $0.70 last year, a decrease of 54.3%.
The operating results for the three months ended October 31, 2017 were
adversely affected by abnormal costs of approximately $35.8 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. These costs, net of the associated revenues of approximately
$18.6 million, generated a pre-tax loss of approximately $17.2 million
during the quarter.
Excluding the impact of disposals of non-operating assets, foreign
currency-related losses and gains, 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 October 31,
2017 and 2016, were $0.33 and $0.28, 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, November 22, 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 and can be accessed at http://stream.conferenceamerica.com/copart112217.
A replay of the call will be available through January 21, 2018 by
calling (877) 919-4059. Use confirmation code # 20637230.
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.
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 disposals of non-operating assets, foreign currency-related
losses and gains, and 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 disposals of non-operating assets, foreign
currency-related losses and gains, and 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.
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Copart, Inc.
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
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Three Months Ended October 31,
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2017
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2016
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Service revenues and vehicle sales:
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Service revenues
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$
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374,125
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|
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$
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307,078
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Vehicle sales
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45,043
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38,913
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Total service revenues and vehicle sales
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419,168
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345,991
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Operating expenses:
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|
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Yard operations
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206,219
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157,362
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Cost of vehicle sales
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38,297
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33,087
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Yard depreciation and amortization
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10,536
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9,448
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Yard stock-based payment compensation
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|
852
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|
|
801
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Gross margin
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163,264
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145,293
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General and administrative
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29,502
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30,924
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General and administrative depreciation and amortization
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5,366
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5,261
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General and administrative stock-based payment compensation
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4,454
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4,284
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Total operating expenses
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295,226
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241,167
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Operating income
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123,942
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104,824
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Other (expense) income:
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Interest expense, net
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(5,398
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)
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(5,622
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)
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Other (expense) income, net
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(4,416
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)
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3,332
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Total other expenses
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(9,814
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)
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(2,290
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)
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Income before income taxes
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114,128
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102,534
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Income tax expense (benefit)
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36,568
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(64,746
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)
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Net income
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77,560
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167,280
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Net income attributable to noncontrolling interest
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45
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-
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Net income attributable to Copart, Inc.
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$
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77,515
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$
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167,280
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Basic net income per common share
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$
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0.34
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$
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0.74
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Weighted average common shares outstanding
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230,694
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225,436
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Diluted net income per common share
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$
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0.32
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$
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0.70
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Diluted weighted average common shares outstanding
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238,791
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237,758
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Copart, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
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October 31, 2017
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July 31, 2017
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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224,246
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$
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210,100
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Accounts receivable, net
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366,641
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311,846
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Vehicle pooling costs and inventories
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47,817
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41,281
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Income taxes receivable
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139
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|
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6,418
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Prepaid expenses and other assets
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15,528
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17,616
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Total current assets
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654,371
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587,261
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Property and equipment, net
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959,716
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944,056
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Intangibles, net
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73,285
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75,938
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Goodwill
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339,024
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340,243
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Deferred income taxes
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-
|
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1,287
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Other assets
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36,274
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|
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33,716
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Total assets
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$
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2,062,670
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$
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1,982,501
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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Accounts payable and accrued liabilities
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$
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222,400
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$
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208,415
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Deferred revenue
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5,189
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|
|
5,019
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Income taxes payable
|
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28,430
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|
|
6,472
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Deferred income taxes
|
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-
|
|
|
92
|
|
Current portion of revolving loan facility and capital lease
obligations
|
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33,150
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82,155
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Total current liabilities
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289,169
|
|
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302,153
|
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Deferred income taxes
|
|
4,807
|
|
|
3,192
|
|
Income taxes payable
|
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26,086
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|
|
24,573
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Long-term debt, revolving loan facility and capital lease
obligations, net of discount
|
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550,704
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550,883
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Other liabilities
|
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2,995
|
|
|
3,100
|
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Total liabilities
|
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873,761
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883,901
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Commitments and contingencies
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Stockholders' equity:
|
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Preferred stock
|
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-
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|
-
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Common stock
|
|
23
|
|
|
23
|
|
Additional paid-in capital
|
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467,909
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453,349
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Accumulated other comprehensive loss
|
|
(102,156
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)
|
|
(100,676
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)
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Retained earnings
|
|
822,555
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745,370
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Noncontrolling interest
|
|
578
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|
|
534
|
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Total stockholders' equity
|
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1,188,909
|
|
|
1,098,600
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Total liabilities and stockholders' equity
|
|
$
|
2,062,670
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|
|
$
|
1,982,501
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Copart, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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Three Months Ended October 31,
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2017
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2016
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Cash flows from operating activities:
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|
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Net income
|
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$
|
77,560
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|
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$
|
167,280
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Adjustments to reconcile net income to net cash provided by
operating activities:
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Depreciation and amortization, including debt cost
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16,012
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14,820
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Allowance for doubtful accounts
|
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547
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22
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Equity in (earnings) losses of unconsolidated affiliates
|
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(109
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)
|
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349
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Stock-based payment compensation
|
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5,306
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|
|
5,085
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Loss on sale of property and equipment
|
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4,460
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|
38
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Deferred income taxes
|
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2,759
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|
|
22,088
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Changes in operating assets and liabilities, net of effects from
acquisitions:
|
|
|
|
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Accounts receivable
|
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(55,904
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)
|
|
(29,472
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)
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Vehicle pooling costs and inventories
|
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(6,532
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)
|
|
(1,783
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)
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Prepaid expenses and other current assets
|
|
(62
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)
|
|
1,392
|
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Other assets
|
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(2,420
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)
|
|
(202
|
)
|
Accounts payable and accrued liabilities
|
|
22,213
|
|
|
(14,828
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)
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Deferred revenue
|
|
166
|
|
|
(602
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)
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Income taxes receivable
|
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6,272
|
|
|
(92,172
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)
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Income taxes payable
|
|
23,460
|
|
|
2,615
|
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Other liabilities
|
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(368
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)
|
|
(337
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)
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Net cash provided by operating activities
|
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93,360
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|
|
74,293
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|
|
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Cash flows from investing activities:
|
|
|
|
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Purchases of property and equipment, including acquisitions
|
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(41,361
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)
|
|
(38,209
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)
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Proceeds from sale of property and equipment
|
|
2,019
|
|
|
190
|
|
Investment in unconsolidated affiliate
|
|
-
|
|
|
(1,050
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)
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Net cash used in investing activities
|
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(39,342
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)
|
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(39,069
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)
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Cash flows from financing activities:
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|
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Proceeds from the exercise of stock options
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9,253
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|
|
13,977
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Payments for employee stock-based tax withholdings
|
|
(3
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)
|
|
(134,615
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)
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Net (repayments) proceeds on revolving loan facility
|
|
(49,000
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)
|
|
103,900
|
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Net cash used in financing activities
|
|
(39,750
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)
|
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(16,738
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)
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Effect of foreign currency translation
|
|
(122
|
)
|
|
(5,914
|
)
|
Net increase in cash and cash equivalents
|
|
14,146
|
|
|
12,572
|
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Cash and cash equivalents at beginning of period
|
|
210,100
|
|
|
155,849
|
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Cash and cash equivalents at end of period
|
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$
|
224,246
|
|
|
$
|
168,421
|
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Supplemental disclosure of cash flow information:
|
|
|
|
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Interest paid
|
|
$
|
5,496
|
|
|
$
|
5,428
|
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Income taxes paid, net of refunds
|
|
$
|
4,167
|
|
|
$
|
2,677
|
|
|
|
|
|
|
|
|
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Copart, Inc.
Additional Financial Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
|
|
|
|
|
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Three Months Ended October 31,
|
|
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2017
|
|
2016
|
GAAP net income attributable to Copart, Inc.
|
|
$
|
77,515
|
|
|
$
|
167,280
|
|
Effect of disposal of non-operating assets, net of tax
|
|
2,994
|
|
|
-
|
|
Effect of foreign currency-related losses (gains), net of tax
|
|
308
|
|
|
(2,847
|
)
|
Effect of income tax benefit of ASU 2016-09 adoption, net of tax (1)
|
|
(3,767
|
)
|
|
(101,395
|
)
|
Effect of payroll taxes on certain executive stock compensation, net
of tax
|
|
-
|
|
|
3,307
|
|
Non-GAAP net income attributable to Copart, Inc.
|
|
$
|
77,050
|
|
|
$
|
66,345
|
|
|
|
|
|
|
GAAP diluted net income per common share
|
|
$
|
0.32
|
|
|
$
|
0.70
|
|
Non-GAAP diluted net income per common share
|
|
$
|
0.33
|
|
|
$
|
0.28
|
|
|
|
|
|
|
GAAP diluted weighted average common shares outstanding
|
|
238,791
|
|
|
237,758
|
|
Effect on common equivalent shares from ASU 2016-09 adoption(1)
|
|
(2,014
|
)
|
|
(3,098
|
)
|
Non-GAAP diluted weighted average common shares outstanding
|
|
236,777
|
|
|
234,660
|
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(1)
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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, filed with
the Securities and Exchange Commission on September 27, 2017.
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