Copart reports third quarter fiscal 2020 financial results
Dallas--(business wire)--copart, inc. (nasdaq: cprt) today reported financial results for the quarter ended april 30, 2020. for the three months ended april 30, 2020, revenue, gross profit, and net income were $550.4 million, $242.6 million, and $147.5 million, respectively. these represent a decrease in revenue of $2.8 million, or 0.5%; a decrease in gross profit of $9.0 million, or 3.6%; and a decrease in net income of $45.3 million, or 23.5%, respectively, from the same period last year. fully diluted earnings per share for the three months were $0.62 compared to $0.81 last year, a decrease of 23.5%. for the nine months ended april 30, 2020, revenue, gross profit, and net income were $1.7 billion, $757.4 million, and $534.4 million, respectively. these represent an increase in revenue of $180.5 million, or 12.0%; an increase in gross profit of $101.6 million, or 15.5%; and an increase in net income of $96.2 million, or 21.9%, respectively, from the same period last year. fully diluted earnings per share for the nine months were $2.24 compared to $1.82 last year, an increase of 23.1%. excluding the impact of discrete income tax items, disposal of non-operating assets, foreign currency-related gains and losses, certain income tax benefits and payroll taxes related to accounting for stock option exercises, and the effect on common equivalent shares from asu 2016-09, non-gaap fully diluted earnings per share for the three and nine months ended april 30, 2020 and 2019, were $0.58, $0.66, $1.88 and $1.64, 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 thursday, may 21, 2020, 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/copart052120. a replay of the call will be available through july 20, 2020 by calling (877) 919-4059. use confirmation code: 48213700. 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 150,000 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 discrete income tax items, disposal of non-operating assets, foreign currency-related gains and losses, certain income tax benefits and payroll taxes related to accounting for stock option exercises, and the effect on common equivalent shares from asu 2016-09. 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 discrete income tax items, disposal of non-operating assets, foreign currency-related gains and losses, certain income tax benefits and payroll taxes related to accounting for stock option exercises, and the effect on common equivalent shares from asu 2016-09. 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, 2020 2019 2020 2019 service revenues and vehicle sales: service revenues $ 491,582 $ 473,682 $ 1,489,472 $ 1,285,295 vehicle sales 58,778 79,434 190,452 214,087 total service revenues and vehicle sales 550,360 553,116 1,679,924 1,499,382 operating expenses: yard operations 231,985 213,804 692,547 602,664 cost of vehicle sales 53,987 70,984 170,651 189,952 yard depreciation and amortization 20,333 15,398 55,384 47,422 yard stock-based compensation 1,442 1,351 3,971 3,621 gross profit 242,613 251,579 757,371 655,723 general and administrative 37,017 34,072 115,102 102,113 general and administrative depreciation and amortization 6,382 5,714 18,627 15,958 general and administrative stock-based compensation 4,113 4,299 13,258 13,979 total operating expenses 355,259 345,622 1,069,540 975,709 operating income 195,101 207,494 610,384 523,673 other expense: interest expense, net (5,578) (5,084) (14,068) (13,330) other income, net 2,277 1,719 2,640 7,538 total other expense (3,301) (3,365) (11,428) (5,792) income before income taxes 191,800 204,129 598,956 517,881 income tax expense 44,313 11,388 64,582 79,684 net income $ 147,487 $ 192,741 $ 534,374 $ 438,197 basic net income per common share $ 0.63 $ 0.85 $ 2.30 $ 1.90 weighted average common shares outstanding 234,133 227,984 232,647 230,922 diluted net income per common share $ 0.62 $ 0.81 $ 2.24 $ 1.82 diluted weighted average common shares outstanding 238,591 237,892 238,564 241,158 copart, inc. consolidated balance sheets (in thousands) (unaudited) april 30, 2020 july 31, 2019 assets current assets: cash and cash equivalents $ 306,387 $ 186,319 accounts receivable, net 346,244 367,265 vehicle pooling costs 75,357 76,548 inventories 19,809 20,941 income taxes receivable 31,578 19,526 prepaid expenses and other assets 14,777 16,568 total current assets 794,152 687,167 property and equipment, net 1,838,297 1,427,726 operating lease right-of-use assets 106,634 — intangibles, net 48,671 55,156 goodwill 338,039 333,321 deferred income taxes 310 411 other assets 35,480 43,836 total assets $ 3,161,583 $ 2,547,617 liabilities and stockholders’ equity current liabilities: accounts payable and accrued liabilities $ 250,841 $ 270,918 deferred revenue 7,884 6,466 income taxes payable 905 3,482 current portion of operating lease liabilities 23,395 — current portion of finance lease liabilities 3,543 1,138 total current liabilities 286,568 282,004 deferred income taxes 57,724 48,683 income taxes payable 46,795 35,116 operating lease liabilities, net of current portion 85,698 — long-term debt and finance lease liabilities, net of discount 403,653 400,091 other liabilities 134 3,342 total liabilities 880,572 769,236 commitments and contingencies stockholders' equity: preferred stock — — common stock 23 23 additional paid-in capital 646,331 572,559 accumulated other comprehensive loss (138,923) (132,529) retained earnings 1,773,580 1,338,328 total stockholders' equity 2,281,011 1,778,381 total liabilities and stockholders' equity $ 3,161,583 $ 2,547,617 copart, inc. consolidated statements of cash flows (in thousands) (unaudited) nine months ended april 30, 2020 2019 cash flows from operating activities: net income $ 534,374 $ 438,197 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization, including debt cost 76,756 63,709 allowance for doubtful accounts 1,332 341 equity in losses (earnings) of unconsolidated affiliates 1,918 (1,852) stock-based compensation 17,229 17,600 gain on sale of property and equipment (1,745) (3,753) deferred income taxes 9,265 14,583 changes in operating assets and liabilities: accounts receivable 19,102 (69,920) vehicle pooling costs 661 (15,026) inventories 1,209 (5,721) prepaid expenses and other current and non-current assets 6,268 (8,605) operating lease right-of-use assets and lease liabilities (221) — accounts payable and accrued liabilities (15,636) 17,747 deferred revenue 1,365 3,512 income taxes receivable (12,076) (3,578) income taxes payable 9,168 7,304 other liabilities 1,999 (1,042) net cash provided by operating activities 650,968 453,496 cash flows from investing activities: purchases of property and equipment, including acquisitions (490,998) (260,081) proceeds from sale of property and equipment 2,153 17,928 net cash used in investing activities (488,845) (242,153) cash flows from financing activities: proceeds from the exercise of stock options 55,656 17,261 proceeds from the issuance of employee stock purchase plan shares 3,955 3,501 repurchases of common stock — (364,997) payments for employee stock-based tax withholdings (102,191) (45,594) net proceeds on revolving loan facility — 7,000 net cash used in financing activities (42,580) (382,829) effect of foreign currency translation 525 (208) net increase (decrease) in cash and cash equivalents 120,068 (171,694) cash and cash equivalents at beginning of period 186,319 274,520 cash and cash equivalents at end of period $ 306,387 $ 102,826 supplemental disclosure of cash flow information: interest paid $ 14,514 $ 14,700 income taxes paid, net of refunds $ 59,302 $ 60,926 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, 2020 2019 2020 2019 gaap net income $ 147,487 $ 192,741 $ 534,374 $ 438,197 effect of discrete income tax items — (10,170) (3,008) (10,170) effect of disposal of non-operating assets, net of tax — — — (1,598) effect of foreign currency-related (gains) losses, net of tax (490) 94 (1,169) (304) effect of recognizing tax benefit on exercise of employee stock options (8,768) (29,074) (85,962) (34,096) effect of payroll taxes on certain executive stock compensation, net of tax — 1,295 2,867 1,295 non-gaap net income $ 138,229 $ 154,886 $ 447,102 $ 393,324 gaap net income per diluted common share $ 0.62 $ 0.81 $ 2.24 $ 1.82 non-gaap net income per diluted common share $ 0.58 $ 0.66 $ 1.88 $ 1.64 gaap diluted weighted average common shares outstanding 238,591 237,892 238,564 241,158 effect on common equivalent shares from asu 2016-09 (710) (1,731) (995) (1,949) non-gaap diluted weighted average common shares outstanding 237,881 236,161 237,569 239,209
