Copart Reports Fourth Quarter Fiscal 2021 Financial Results

September 8, 2021

DALLAS–(BUSINESS WIRE)–#CopartEarnings–Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter and year ended July 31, 2021.

For the three months ended July 31, 2021, revenue, gross profit, and net income were $748.6 million, $357.5 million, and $256.0 million, respectively. These represent an increase in revenue of $223.0 million, or 42.4%; an increase in gross profit of $107.1 million, or 42.7%; and an increase in net income of $90.4 million, or 54.6%, respectively, from the same period last year. Fully diluted earnings per share for the three months ended July 31, 2021 were $1.06 compared to $0.69 last year, an increase of 53.6%.

For the year ended July 31, 2021, revenue, gross profit, and net income were $2.7 billion, $1.3 billion, and $936.5 million, respectively. These represent an increase in revenue of $486.9 million, or 22.1%; an increase in gross profit of $335.3 million, or 33.3%; and an increase in net income of $236.6 million, or 33.8%, respectively, from the same period last year. Fully diluted earnings per share for the year ended July 31, 2021 were $3.90 compared to $2.93 last year, an increase of 33.1%.

Excluding the impact of certain discrete income tax items, acquisition related integration charges, foreign currency-related gains and losses, and certain income tax benefits, non-GAAP fully diluted earnings per share for the three months ended July 31, 2021 and 2020, were $1.03 and $0.68, respectively, which was an increase of 51.5%. Excluding the impact of certain discrete income tax items, acquisition related integration charges, foreign currency-related gains and losses, certain income tax benefits and payroll taxes related to stock-based compensation, non-GAAP fully diluted earnings per share for the year ended July 31, 2021 and 2020, were $3.70 and $2.56, respectively, which was an increase of 44.5%. 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, September 9, 2021, at 11:00 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 www.copart.com/investorrelations. A replay of the call will be available through December 2021 by visiting www.copart.com/investorrelations.

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 vehicles to dealers, dismantlers, rebuilders, exporters, and to the general public. Copart sells vehicles on behalf of insurance companies, banks, finance companies, charities, fleet operators, dealers, vehicle rental companies, and individuals. With operations at over 200 locations in 11 countries, Copart has more than 250,000 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 certain discrete income tax items, acquisition related integration charges, foreign currency-related gains and losses, certain income tax benefits and payroll taxes related to stock-based compensation. 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.

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 July 31,								Twelve Months Ended July 31,
	2021			2020			% Change		2021			2020			% Change
Service revenues and vehicle sales:
Service revenues	$	620,048		$	457,668		35.5	%	$	2,291,867		$	1,947,140		17.7	%
Vehicle sales	128,582			67,991			89.1	%	400,644			258,443			55.0	%
Total service revenues and vehicle sales	748,630			525,659			42.4	%	2,692,511			2,205,583			22.1	%
Operating expenses:
Yard operations	250,396			197,186			27.0	%	897,086			889,733			0.8	%
Cost of vehicle sales	113,641			54,643			108.0	%	346,128			225,294			53.6	%
Yard depreciation and amortization	26,567			21,615			22.9	%	100,917			76,999			31.1	%
Yard stock-based compensation	543			1,784			(69.6	)%	5,289			5,755			(8.1	)%
Gross profit	357,483			250,431			42.7	%	1,343,091			1,007,802			33.3	%
General and administrative	39,652			34,643			14.5	%	149,978			149,745			0.2	%
General and administrative depreciation and amortization	3,097			5,764			(46.3	)%	21,054			24,391			(13.7	)%
General and administrative stock-based compensation	13,234			4,309			207.1	%	35,633			17,567			102.8	%
Total operating expenses	447,130			319,944			39.8	%	1,556,085			1,389,484			12.0	%
Operating income	301,500			205,715			46.6	%	1,136,426			816,099			39.3	%
Other expense:
Interest expense, net	(5,020		)	(4,803		)	4.5	%	(20,247		)	(18,871		)	7.3	%
Other income, net	2,564			971			164.1	%	5,667			3,611			56.9	%
Total other expense	(2,456		)	(3,832		)	(35.9	)%	(14,580		)	(15,260		)	(4.5	)%
Income before income taxes	299,044			201,883			48.1	%	1,121,846			800,839			40.1	%
Income tax expense	43,070			36,350			18.5	%	185,351			100,932			83.6	%
Net income	$	255,974		$	165,533		54.6	%	$	936,495		$	699,907		33.8	%

Basic net income per common share	$	1.08		$	0.70		54.3	%	$	3.96		$	3.00		32.0	%
Weighted average common shares outstanding	236,679			234,863			0.8	%	236,252			233,202			1.3	%

Diluted net income per common share	$	1.06		$	0.69		53.6	%	$	3.90		$	2.93		33.1	%
Diluted weighted average common shares outstanding	240,714			238,927			0.7	%	240,290			238,656			0.7	%

Copart, Inc. Consolidated Balance Sheets (In thousands) (Unaudited)
	July 31, 2021		July 31, 2020
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	1,048,260	$	477,718
Accounts receivable, net	480,628		350,207
Vehicle pooling costs	94,449		73,684
Inventories	44,968		20,080
Income taxes receivable	20,012		26,740
Prepaid expenses and other assets	14,294		15,330
Total current assets	1,702,611		963,759
Property and equipment, net	2,296,624		1,941,719
Operating lease right-of-use assets	119,487		118,455
Intangibles, net	45,873		47,772
Goodwill	355,717		343,622
Other assets	41,831		39,934
Total assets	$	4,562,143	$	3,455,261

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	369,826	$	318,530
Deferred revenue	20,973		8,233
Income taxes payable	7,760		3,709
Current portion of operating and finance lease liabilities	22,472		25,572
Total current liabilities	421,031		356,044
Deferred income taxes	63,969		71,686
Income taxes payable	52,345		44,965
Operating and finance lease liabilities, net of current portion	97,961		96,150
Long-term debt and other liabilities, net of discount	397,636		396,900
Total liabilities	1,032,942		965,745
Commitments and contingencies
Stockholders’ equity:
Preferred stock	—		—
Common stock	24		24
Additional paid-in capital	761,834		672,727
Accumulated other comprehensive loss	(100,860)		(121,088)
Retained earnings	2,868,203		1,937,853
Total stockholders’ equity	3,529,201		2,489,516
Total liabilities and stockholders’ equity	$	4,562,143	$	3,455,261

Copart, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited)
	Year Ended July 31,
	2021			2020
Cash flows from operating activities:
Net income	$	936,495		$	699,907
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost	123,084			104,257
Allowance for credit loss	(1,121		)	1,670
Equity in (earnings) losses of unconsolidated affiliates	(3,240		)	1,401
Stock-based compensation	40,922			23,322
Gain on sale of property and equipment	(1,480		)	(1,913		)
Deferred income taxes	(7,951		)	23,082
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(127,513		)	15,993
Vehicle pooling costs	(20,476		)	2,590
Inventories	(24,602		)	1,348
Prepaid expenses and other current and non-current assets	7,025			141
Operating lease right-of-use assets and lease liabilities	570			(572		)
Accounts payable and accrued liabilities	44,613			41,648
Deferred revenue	8,781			1,615
Income taxes receivable	6,739			(7,216		)
Income taxes payable	9,045			10,114
Other liabilities	—			498
Net cash provided by operating activities	990,891			917,885

Cash flows from investing activities:
Purchases of property and equipment	(462,996		)	(591,972		)
Purchases of assets and liabilities in connection with acquisitions, net of cash acquired	(5,000		)	(11,702		)
Proceeds from sale of property and equipment	2,530			2,466
Net cash used in investing activities	(465,466		)	(601,208		)

Cash flows from financing activities:
Proceeds from the exercise of stock options	39,049			71,640
Proceeds from the issuance of Employee Stock Purchase Plan shares	9,136			8,276
Payments for employee stock-based tax withholdings	(6,145		)	(103,451		)
Debt offering costs	—			(2,814		)
Payments of finance lease obligations	(1,118		)	(1,065		)
Net cash provided by (used in) financing activities	40,922			(27,414		)
Effect of foreign currency translation	4,195			2,136
Net increase in cash, cash equivalents, and restricted cash	570,542			291,399
Cash, cash equivalents, and restricted cash at beginning of period	477,718			186,319
Cash, cash equivalents, and restricted cash at end of period	$	1,048,260		$	477,718
Supplemental disclosure of cash flow information:
Interest paid	$	19,723		$	19,728
Income taxes paid, net of refunds	$	178,241		$	83,770

Copart, Inc. Additional Financial Information Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts) (Unaudited)
	Three Months Ended July 31,						Twelve Months Ended July 31,
	2021			2020			2021			2020
GAAP net income	$	255,974		$	165,533		$	936,495		$	699,907
Effect of certain discrete income tax items	—			4,740			(19,764		)	1,732
Effect of acquisition related integration charges, net of tax	2,713			—			2,713			—
Effect of foreign currency-related losses (gains), net of tax	(422		)	(268		)	73			(1,436		)
Effect of recognizing tax benefit on exercise of stock-based compensation	(10,962		)	(6,586		)	(29,812		)	(92,548		)
Effect of payroll taxes on certain executive stock-based compensation, net of tax	—			—			—			2,867
Non-GAAP net income	$	247,303		$	163,419		$	889,705		$	610,522

GAAP net income per diluted common share	$	1.06		$	0.69		$	3.90		$	2.93
Non-GAAP net income per diluted common share	$	1.03		$	0.68		$	3.70		$	2.56