Copart reports second quarter fiscal 2020 financial results
Dallas--(business wire)--copart, inc. (nasdaq: cprt) today reported financial results for the quarter ended january 31, 2020. for the three months ended january 31, 2020, revenue, gross profit, and net income were $575.1 million, $259.9 million, and $168.7 million, respectively. these represent an increase in revenue of $90.2 million, or 18.6%; an increase in gross profit of $51.7 million, or 24.8%; and an increase in net income of $37.3 million, or 28.4%, respectively, from the same period last year. fully diluted earnings per share for the three months were $0.71 compared to $0.55 last year, an increase of 29.1%. for the six months ended january 31, 2020, revenue, gross profit, and net income were $1.1 billion, $514.8 million, and $386.9 million, respectively. these represent an increase in revenue of $183.3 million, or 19.4%; an increase in gross profit of $110.6 million, or 27.4%; and an increase in net income of $141.4 million, or 57.6%, respectively, from the same period last year. fully diluted earnings per share for the six months were $1.62 compared to $1.01 last year, an increase of 60.4%. excluding the impact of discrete income tax items, disposal of non-operating assets, foreign currency-related gains, 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 six months ended january 31, 2020 and 2019, were $0.65, $0.52, $1.30 and $0.99, 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, february 20, 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/copart022020. a replay of the call will be available through april 20, 2020 by calling (877) 919-4059. use confirmation code: 44749280. 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, 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, 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, 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 amounts) (unaudited) three months ended january 31, six months ended january 31, 2020 2019 2020 2019 service revenues and vehicle sales: service revenues $ 510,034 $ 416,807 $ 997,890 $ 811,613 vehicle sales 65,106 68,091 131,674 134,653 total service revenues and vehicle sales 575,140 484,898 1,129,564 946,266 operating expenses: yard operations 237,683 199,383 460,562 388,860 cost of vehicle sales 57,900 61,212 116,664 118,968 yard depreciation and amortization 18,231 14,839 35,051 32,024 yard stock-based compensation 1,437 1,238 2,529 2,270 gross profit 259,889 208,226 514,758 404,144 general and administrative 39,242 33,236 78,085 68,041 general and administrative depreciation and amortization 6,051 5,560 12,245 10,244 general and administrative stock-based compensation 4,704 4,691 9,145 9,680 total operating expenses 365,248 320,159 714,281 630,087 operating income 209,892 164,739 415,283 316,179 other (expense) income: interest expense, net (4,464 ) (4,555 ) (8,490 ) (8,246 ) other (expense) income, net (354 ) 4,782 363 5,819 total other (expense) income (4,818 ) 227 (8,127 ) (2,427 ) income before income taxes 205,074 164,966 407,156 313,752 income tax expense 36,367 33,593 20,269 68,296 net income $ 168,707 $ 131,373 $ 386,887 $ 245,456 basic net income per common share $ 0.73 $ 0.57 $ 1.67 $ 1.06 weighted average common shares outstanding 232,671 230,798 231,920 232,343 diluted net income per common share $ 0.71 $ 0.55 $ 1.62 $ 1.01 diluted weighted average common shares outstanding 238,470 240,660 238,566 242,743 copart, inc. consolidated balance sheets (in thousands) (unaudited) january 31, 2020 july 31, 2019 assets current assets: cash and cash equivalents $ 93,511 $ 186,319 accounts receivable, net 445,963 367,265 vehicle pooling costs 90,595 76,548 inventories 18,515 20,941 income taxes receivable 68,415 19,526 prepaid expenses and other assets 14,964 16,568 total current assets 731,963 687,167 property and equipment, net 1,789,326 1,427,726 operating lease right-of-use assets 104,360 — intangibles, net 50,291 55,156 goodwill 338,262 333,321 deferred income taxes 348 411 other assets 34,055 43,836 total assets $ 3,048,605 $ 2,547,617 liabilities and stockholders’ equity current liabilities: accounts payable and accrued liabilities $ 296,977 $ 270,918 deferred revenue 7,603 6,466 income taxes payable 728 3,482 current portion of operating lease liabilities 23,314 — current portion of revolving loan facility and finance lease liabilities 14,215 1,138 total current liabilities 342,837 282,004 deferred income taxes 55,499 48,683 income taxes payable 43,650 35,116 operating lease liabilities, net of current portion 81,906 — long-term debt, revolving loan facility and finance lease liabilities, net of discount 399,846 400,091 other liabilities 138 3,342 total liabilities 923,876 769,236 commitments and contingencies stockholders' equity: preferred stock — — common stock 23 23 additional paid-in capital 617,714 572,559 accumulated other comprehensive loss (119,870 ) (132,529 ) retained earnings 1,626,862 1,338,328 total stockholders' equity 2,124,729 1,778,381 total liabilities and stockholders' equity $ 3,048,605 $ 2,547,617 copart, inc. consolidated statements of cash flows (in thousands) (unaudited) six months ended january 31, 2020 2019 cash flows from operating activities: net income $ 386,887 $ 245,456 adjustments to reconcile net income to net cash provided by operating activities: depreciation and amortization, including debt cost 48,097 42,487 allowance for doubtful accounts 1,301 96 equity in losses (earnings) of unconsolidated affiliates 3,124 (514 ) stock-based compensation 11,674 11,950 gain on sale of property and equipment (1,315 ) (3,890 ) deferred income taxes 6,719 6,632 changes in operating assets and liabilities: accounts receivable (78,510 ) (86,125 ) vehicle pooling costs (13,921 ) (20,218 ) inventories 2,765 (11,640 ) prepaid expenses and other current and non-current assets 7,184 (725 ) operating lease right-of-use assets and lease liabilities 331 — accounts payable and accrued liabilities 24,862 7,338 deferred revenue 1,021 2,843 income taxes receivable (48,722 ) 15,286 income taxes payable 5,794 6,890 other liabilities (371 ) (662 ) net cash provided by operating activities 356,920 215,204 cash flows from investing activities: purchases of property and equipment (400,352 ) (136,727 ) proceeds from sale of property and equipment 1,639 17,488 net cash used in investing activities (398,713 ) (119,239 ) cash flows from financing activities: proceeds from the exercise of stock options 32,594 5,220 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 (101,422 ) (27 ) net proceeds on revolving loan facility 13,600 93,300 net cash used in financing activities (51,273 ) (263,003 ) effect of foreign currency translation 258 692 net decrease in cash and cash equivalents (92,808 ) (166,346 ) cash and cash equivalents at beginning of period 186,319 274,520 cash and cash equivalents at end of period $ 93,511 $ 108,174 supplemental disclosure of cash flow information: interest paid $ 9,007 $ 9,018 income taxes paid, net of refunds $ 57,591 $ 39,327 copart, inc. additional financial information reconciliation of gaap to non-gaap financial measures (in thousands, except per share amounts) (unaudited) three months ended january 31, six months ended january 31, 2020 2019 2020 2019 gaap net income $ 168,707 $ 131,373 $ 386,887 $ 245,456 effect of discrete income tax items — — (3,008 ) — effect of disposal of non-operating assets, net of tax — (1,598 ) — (1,598 ) effect of foreign currency-related gains, net of tax (416 ) (56 ) (679 ) (399 ) effect of recognizing tax benefit on exercise of employee stock options (14,829 ) (4,847 ) (77,194 ) (5,022 ) effect of payroll taxes on certain executive stock compensation, net of tax — — 2,867 — non-gaap net income $ 153,462 $ 124,872 $ 308,873 $ 238,437 gaap net income per diluted common share $ 0.71 $ 0.55 $ 1.62 $ 1.01 non-gaap net income per diluted common share $ 0.65 $ 0.52 $ 1.30 $ 0.99 gaap diluted weighted average common shares outstanding 238,470 240,660 238,566 242,743 effect on common equivalent shares from asu 2016-09 (969 ) (1,675 ) (1,137 ) (2,058 ) non-gaap diluted weighted average common shares outstanding 237,501 238,985 237,429 240,685
