COPART INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 21, 2016

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Exhibit 99.1
Copart, Inc.
For Immediate Release
Copart Reports First Quarter Fiscal 2017 Financial Results
Dallas, Texas. (November 21, 2016) — Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended October 31, 2016.
For the three months ended October 31, 2016, revenue, gross margin, and net income were $346.0 million, $145.3 million, and $167.3 million, respectively. These represent an increase in revenue of $57.2 million, or 19.8%; an increase in gross margin of $24.4 million, or 20.2%; and an increase in net income of $114.7 million, or 218.0%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $1.41 compared to $0.41 last year, an increase of 243.9%.
Excluding the impact of foreign currency-related 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, 2016 and 2015, were $0.57 and $0.41, 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 Tuesday, November 22, 2016, 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/copart112216. A replay of the call will be available through January 20, 2017 by calling (877) 919-4059. Use confirmation code # 16477400.
About Copart
Copart, founded in 1982, provides vehicle sellers with a full range of remarketing services to process and sell salvage and clean title vehicles to dealers, dismantlers, rebuilders, exporters, and in some states, to end users. Copart remarkets the vehicles through Internet sales using its VB3 technology. Copart sells vehicles on behalf of insurance companies, banks, financial institutions, charities, car dealerships, fleet operators, vehicle rental companies, as well as vehicles sourced from the general public. The company currently operates in the United States (www.copart.com), Canada (www.copart.ca), the United Kingdom (www.copart.co.uk), Brazil (www.copart.com.br), Germany (www.copart.de), the United Arab Emirates, Oman and Bahrain (www.copartmea.com), Spain (www.copart.es), Ireland (www.copart.ie), and India (www.copart.in). Copart links sellers to more than 750,000 Members in more than 150 countries worldwide through its multi-channel platform. In 2015, Copart was ranked at the top of Deloitte’s “The Exceptional 100” list of companies, which reviewed U.S. publicly traded companies based upon a multidimensional approach to measuring financial performance. For more information, or to become a Member, visit www.copart.com.




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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 reflect the impact of foreign currency-related gains, 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 foreign currency-related gains, 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.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended 
 October 31,
 
 
2016
 
2015
Service revenues and vehicle sales:
 
 
 
 
Service revenues
 
$
307,078

 
$
250,967

Vehicle sales
 
38,913

 
37,871

Total service revenues and vehicle sales
 
345,991

 
288,838

Operating expenses:
 
 
 
 
Yard operations
 
157,362

 
126,878

Cost of vehicle sales
 
33,087

 
32,068

Yard depreciation and amortization
 
9,448

 
8,345

Yard stock-based payment compensation
 
801

 
686

Gross margin
 
145,293

 
120,861

General and administrative
 
30,924

 
26,711

General and administrative depreciation and amortization
 
5,261

 
3,176

General and administrative stock-based payment compensation
 
4,284

 
4,728

Total operating expenses
 
241,167

 
202,592

Operating income
 
104,824

 
86,246

Other (expense) income:
 
 
 
 
Interest expense, net
 
(5,622
)
 
(5,513
)
Other income, net
 
3,332

 
1,027

Total other expenses
 
(2,290
)
 
(4,486
)
Income before income taxes
 
102,534

 
81,760

Income tax (benefit) expense
 
(64,746
)
 
29,150

Net income
 
$
167,280

 
$
52,610

 
 
 
 
 
Basic net income per common share
 
$
1.48

 
$
0.44

Weighted average common shares outstanding
 
112,718

 
120,155

 
 
 
 
 
Diluted net income per common share
 
$
1.41

 
$
0.41

Diluted weighted average common shares outstanding
 
118,879

 
127,144



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



Copart, Inc.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
October 31, 2016
 
July 31, 2016
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
168,421

 
$
155,849

Accounts receivable, net
 
294,358

 
266,270

Vehicle pooling costs and inventories
 
40,202

 
38,987

Income taxes receivable
 
110,923

 
18,751

Deferred income taxes
 
711

 
1,444

Prepaid expenses and other assets
 
16,096

 
18,005

Total current assets
 
630,711

 
499,306

Property and equipment, net
 
840,587

 
816,791

Intangibles, net
 
10,241

 
11,761

Goodwill
 
255,093

 
260,198

Deferred income taxes
 
1,912

 
23,506

Other assets
 
31,852

 
38,258

Total assets
 
$
1,770,396

 
$
1,649,820

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
 
$
175,969

 
$
192,379

Deferred revenue
 
3,975

 
4,628

Income taxes payable
 
6,583

 
5,625

Current portion of long-term debt, revolving credit facility, and capital lease obligations
 
171,151

 
76,151

Total current liabilities
 
357,678

 
278,783

Deferred income taxes
 
3,380

 
3,816

Income taxes payable
 
26,867

 
25,641

Long-term debt and capital lease obligations, net of discount
 
573,030

 
564,341

Other liabilities
 
2,034

 
2,783

Total liabilities
 
962,989

 
875,364

Commitments and contingencies
 
 
 
 
Stockholders' equity:
 
 
 
 
Preferred stock
 
—

 
—

Common stock
 
11

 
11

Additional paid-in capital
 
416,125

 
392,445

Accumulated other comprehensive loss
 
(127,969
)
 
(109,194
)
Retained earnings
 
519,240

 
491,194

Total stockholders' equity
 
807,407

 
774,456

Total liabilities and stockholders' equity
 
$
1,770,396

 
$
1,649,820




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



Copart, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
Three Months Ended October 31,
 
 
2016
 
2015
Cash flows from operating activities:
 
 
 
 
Net income
 
$
167,280

 
$
52,610

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization, including debt cost
 
14,820

 
11,562

Allowance for doubtful accounts
 
22

 
1,032

Equity in losses of unconsolidated affiliates
 
349

 
158

Stock-based payment compensation
 
5,085

 
5,414

Loss (gain) on sale of property and equipment
 
38

 
(60
)
Deferred income taxes
 
22,088

 
(870
)
Changes in operating assets and liabilities:
 
 
 
 
Accounts receivable
 
(29,472
)
 
(16,910
)
Vehicle pooling costs and inventories
 
(1,783
)
 
(2,252
)
Prepaid expenses and other current assets
 
1,392

 
(1,115
)
Other assets
 
(202
)
 
(1,036
)
Accounts payable and accrued liabilities
 
(14,828
)
 
77

Deferred revenue
 
(602
)
 
(5
)
Income taxes receivable
 
(92,172
)
 
5,136

Income taxes payable
 
2,615

 
23,483

Other liabilities
 
(337
)
 
(433
)
Net cash provided by operating activities
 
74,293

 
76,791

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Purchases of property and equipment
 
(38,209
)
 
(20,167
)
Investment in unconsolidated affiliate
 
(1,050
)
 
—

Proceeds from sale of property and equipment
 
190

 
443

Purchases of marketable securities
 
—

 
(21,119
)
Net cash used in investing activities
 
(39,069
)
 
(40,843
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from the exercise of stock options
 
13,977

 
368

Payments for employee stock-based tax withholdings
 
(134,615
)
 
—

Proceeds from revolving loan facility, net of repayments
 
103,900

 
—

Principal payments on long-term debt
 
—

 
(18,750
)
Net cash used in financing activities
 
(16,738
)
 
(18,382
)
Effect of foreign currency translation
 
(5,914
)
 
(662
)
Net increase in cash and cash equivalents
 
12,572

 
16,904

Cash and cash equivalents at beginning of period
 
155,849

 
456,012

Cash and cash equivalents at end of period
 
$
168,421

 
$
472,916

Supplemental disclosure of cash flow information:
 
 
 
 
Interest paid
 
$
4,333

 
$
5,723

Income taxes paid, net of refunds
 
$
2,677

 
$
1,292


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



Additional Financial Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands)
(Unaudited)
 
 
Three Months Ended 
 October 31,
 
 
2016
 
2015
GAAP net income
 
$
167,280

 
$
52,610

Effect of foreign currency-related gains, net of tax
 
(2,847
)
 
(560
)
Effect of income tax benefit of ASU 2016-09 adoption, net of tax (1)
 
(101,395
)
 
(197
)
Effect of payroll taxes on executive stock compensation, net of tax
 
3,307

 
48

Non-GAAP net income
 
$
66,345

 
$
51,901

 
 
 
 
 
GAAP diluted net income per common share
 
$
1.41

 
$
0.41

Non-GAAP diluted net income per common share
 
$
0.57

 
$
0.41

 
 
 
 
 
GAAP diluted weighted average common shares outstanding
 
118,879

 
127,144

Effect on common equivalent shares from ASU 2016-09 adoption(1)
 
(1,549
)
 
(1,572
)
Non-GAAP diluted weighted average commons shares outstanding
 
117,330

 
125,572

(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 early 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 28, 2016.



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

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