COPART INC - FORM 8-K - EX-99.1 - May 20, 2020

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Exhibit 99.1
Copart, Inc.
For Immediate Release
Copart Reports Third Quarter Fiscal 2020 Financial Results
Dallas, Texas. (May 20, 2020) — 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.
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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 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.
Contact:Melissa Hunter, Executive Support Manager, Office of the Chief Financial Officer
972-391-5090 or melissa.hunter@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 amounts)
(Unaudited)
Three Months Ended 
April 30,		Nine Months Ended 
April 30,
2020201920202019
Service revenues and vehicle sales:
Service revenues$491,582  $473,682  $1,489,472  $1,285,295  
Vehicle sales58,778  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 operations231,985  213,804  692,547  602,664  
Cost of vehicle sales53,987  70,984  170,651  189,952  
Yard depreciation and amortization20,333  15,398  55,384  47,422  
Yard stock-based compensation1,442  1,351  3,971  3,621  
Gross profit
242,613  251,579  757,371  655,723  
General and administrative37,017  34,072  115,102  102,113  
General and administrative depreciation and amortization6,382  5,714  18,627  15,958  
General and administrative stock-based compensation4,113  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, net2,277  1,719  2,640  7,538  
Total other expense(3,301) (3,365) (11,428) (5,792) 
Income before income taxes191,800  204,129  598,956  517,881  
Income tax expense44,313  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 outstanding234,133  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 outstanding238,591  237,892  238,564  241,158  

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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)
April 30, 2020July 31, 2019
ASSETS
Current assets:
Cash and cash equivalents$306,387  $186,319  
Accounts receivable, net346,244  367,265  
Vehicle pooling costs75,357  76,548  
Inventories19,809  20,941  
Income taxes receivable31,578  19,526  
Prepaid expenses and other assets14,777  16,568  
Total current assets794,152  687,167  
Property and equipment, net1,838,297  1,427,726  
Operating lease right-of-use assets106,634  —  
Intangibles, net48,671  55,156  
Goodwill338,039  333,321  
Deferred income taxes310  411  
Other assets35,480  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 revenue7,884  6,466  
Income taxes payable905  3,482  
Current portion of operating lease liabilities23,395  —  
Current portion of finance lease liabilities3,543  1,138  
Total current liabilities286,568  282,004  
Deferred income taxes57,724  48,683  
Income taxes payable46,795  35,116  
Operating lease liabilities, net of current portion85,698  —  
Long-term debt and finance lease liabilities, net of discount403,653  400,091  
Other liabilities134  3,342  
Total liabilities880,572  769,236  
Commitments and contingencies
Stockholders' equity:
Preferred stock—  —  
Common stock23  23  
Additional paid-in capital646,331  572,559  
Accumulated other comprehensive loss(138,923) (132,529) 
Retained earnings1,773,580  1,338,328  
Total stockholders' equity2,281,011  1,778,381  
Total liabilities and stockholders' equity$3,161,583  $2,547,617  


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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)
Nine Months Ended April 30,
20202019
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 cost76,756  63,709  
Allowance for doubtful accounts1,332  341  
Equity in losses (earnings) of unconsolidated affiliates1,918  (1,852) 
Stock-based compensation17,229  17,600  
Gain on sale of property and equipment(1,745) (3,753) 
Deferred income taxes9,265  14,583  
Changes in operating assets and liabilities:
Accounts receivable19,102  (69,920) 
Vehicle pooling costs661  (15,026) 
Inventories1,209  (5,721) 
Prepaid expenses and other current and non-current assets6,268  (8,605) 
Operating lease right-of-use assets and lease liabilities(221) —  
Accounts payable and accrued liabilities(15,636) 17,747  
Deferred revenue1,365  3,512  
Income taxes receivable(12,076) (3,578) 
Income taxes payable9,168  7,304  
Other liabilities1,999  (1,042) 
Net cash provided by operating activities650,968  453,496  
Cash flows from investing activities:
Purchases of property and equipment, including acquisitions(490,998) (260,081) 
Proceeds from sale of property and equipment2,153  17,928  
Net cash used in investing activities(488,845) (242,153) 
Cash flows from financing activities:
Proceeds from the exercise of stock options55,656  17,261  
Proceeds from the issuance of Employee Stock Purchase Plan shares3,955  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 translation525  (208) 
Net increase (decrease) in cash and cash equivalents120,068  (171,694) 
Cash and cash equivalents at beginning of period186,319  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  



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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 amounts)
(Unaudited)
Three Months Ended 
April 30,		Nine Months Ended 
April 30,
2020201920202019
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 outstanding238,591  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 outstanding237,881  236,161  237,569  239,209  


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

COPART INC Reports