COPART INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 21, 2017

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Exhibit 99.1
Copart, Inc.
For Immediate Release
Copart Reports First Quarter Fiscal 2018 Financial Results
Dallas, Texas. (November 21, 2017) — 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.




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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 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.
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.
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended
 October 31,
 
 
2017
 
2016
Service revenues and vehicle sales:
 
 
 
 
Service revenues
 
$
374,125

 
$
307,078

Vehicle sales
 
45,043

 
38,913

Total service revenues and vehicle sales
 
419,168

 
345,991

Operating expenses:
 
   
 
 
Yard operations
 
206,219

 
157,362

Cost of vehicle sales
 
38,297

 
33,087

Yard depreciation and amortization
 
10,536

 
9,448

Yard stock-based payment compensation
 
852

 
801

Gross margin
 
163,264

 
145,293

General and administrative
 
29,502

 
30,924

General and administrative depreciation and amortization
 
5,366

 
5,261

General and administrative stock-based payment compensation
 
4,454

 
4,284

Total operating expenses
 
295,226

 
241,167

Operating income
 
123,942

 
104,824

Other (expense) income:
 
   
 
 
Interest expense, net
 
(5,398
)
 
(5,622
)
Other (expense) income, net
 
(4,416
)
 
3,332

Total other expenses
 
(9,814
)
 
(2,290
)
Income before income taxes
 
114,128

 
102,534

Income tax expense (benefit)
 
36,568

 
(64,746
)
Net income
 
77,560

 
167,280

Net income attributable to noncontrolling interest
 
45

 
—

Net income attributable to Copart, Inc.
 
$
77,515

 
$
167,280

 
 
 
 
 
Basic net income per common share
 
$
0.34

 
$
0.74

Weighted average common shares outstanding
 
230,694

 
225,436

 
 
 
 
 
Diluted net income per common share
 
$
0.32

 
$
0.70

Diluted weighted average common shares outstanding
 
238,791

 
237,758



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


Copart, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
 
October 31, 2017
 
July 31, 2017
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
224,246

 
$
210,100

Accounts receivable, net
 
366,641

 
311,846

Vehicle pooling costs and inventories
 
47,817

 
41,281

Income taxes receivable
 
139

 
6,418

Prepaid expenses and other assets
 
15,528

 
17,616

Total current assets
 
654,371

 
587,261

Property and equipment, net
 
959,716

 
944,056

Intangibles, net
 
73,285

 
75,938

Goodwill
 
339,024

 
340,243

Deferred income taxes
 
—

 
1,287

Other assets
 
36,274

 
33,716

Total assets
 
$
2,062,670

 
$
1,982,501

 
 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable and accrued liabilities
 
$
222,400

 
$
208,415

Deferred revenue
 
5,189

 
5,019

Income taxes payable
 
28,430

 
6,472

Deferred income taxes
 
—

 
92

Current portion of revolving loan facility and capital lease obligations
 
33,150

 
82,155

Total current liabilities
 
289,169

 
302,153

Deferred income taxes
 
4,807

 
3,192

Income taxes payable
 
26,086

 
24,573

Long-term debt, revolving loan facility and capital lease obligations, net of discount
 
550,704

 
550,883

Other liabilities
 
2,995

 
3,100

Total liabilities
 
873,761

 
883,901

Commitments and contingencies
 
 
 
 
Stockholders' equity:
 
 
 
 
Preferred stock
 
—

 
—

Common stock
 
23

 
23

Additional paid-in capital
 
467,909

 
453,349

Accumulated other comprehensive loss
 
(102,156
)
 
(100,676
)
Retained earnings
 
822,555

 
745,370

Noncontrolling interest
 
578

 
534

Total stockholders' equity
 
1,188,909

 
1,098,600

Total liabilities and stockholders' equity
 
$
2,062,670

 
$
1,982,501




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


Copart, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
Three Months Ended October 31,
 
 
2017
 
2016
Cash flows from operating activities:
 
 
 
 
Net income
 
$
77,560

 
$
167,280

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization, including debt cost
 
16,012

 
14,820

Allowance for doubtful accounts
 
547

 
22

Equity in (earnings) losses of unconsolidated affiliates
 
(109
)
 
349

Stock-based payment compensation
 
5,306

 
5,085

Loss on sale of property and equipment
 
4,460

 
38

Deferred income taxes
 
2,759

 
22,088

Changes in operating assets and liabilities, net of effects from acquisitions:
 
 
 
 
Accounts receivable
 
(55,904
)
 
(29,472
)
Vehicle pooling costs and inventories
 
(6,532
)
 
(1,783
)
Prepaid expenses and other current assets
 
(62
)
 
1,392

Other assets
 
(2,420
)
 
(202
)
Accounts payable and accrued liabilities
 
22,213

 
(14,828
)
Deferred revenue
 
166

 
(602
)
Income taxes receivable
 
6,272

 
(92,172
)
Income taxes payable
 
23,460

 
2,615

Other liabilities
 
(368
)
 
(337
)
Net cash provided by operating activities
 
93,360

 
74,293

 
 
 
 
 
Cash flows from investing activities:
 
 
 
 
Purchases of property and equipment, including acquisitions
 
(41,361
)
 
(38,209
)
Proceeds from sale of property and equipment
 
2,019

 
190

Investment in unconsolidated affiliate
 
—

 
(1,050
)
Net cash used in investing activities
 
(39,342
)
 
(39,069
)
 
 
 
 
 
Cash flows from financing activities:
 
 
 
 
Proceeds from the exercise of stock options
 
9,253

 
13,977

Payments for employee stock-based tax withholdings
 
(3
)
 
(134,615
)
Net (repayments) proceeds on revolving loan facility
 
(49,000
)
 
103,900

Net cash used in financing activities
 
(39,750
)
 
(16,738
)
Effect of foreign currency translation
 
(122
)
 
(5,914
)
Net increase in cash and cash equivalents
 
14,146

 
12,572

Cash and cash equivalents at beginning of period
 
210,100

 
155,849

Cash and cash equivalents at end of period
 
$
224,246

 
$
168,421

Supplemental disclosure of cash flow information:
 
 
 
 
Interest paid
 
$
5,496

 
$
5,428

Income taxes paid, net of refunds
 
$
4,167

 
$
2,677


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


Copart, Inc.
Additional Financial Information
Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share data)
(Unaudited)
 
 
Three Months Ended
 October 31,
 
 
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

(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, filed with the Securities and Exchange Commission on September 27, 2017.



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

COPART INC Reports