Copart Reports Second Quarter Fiscal 2021 Financial Results

February 18, 2021

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

For the three months ended January 31, 2021, revenue, gross profit, and net income were $617.0 million, $307.5 million, and $193.4 million, respectively. These represent an increase in revenue of $41.9 million, or 7.3%; an increase in gross profit of $47.6 million, or 18.3%; and an increase in net income of $24.7 million, or 14.7%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $0.81 compared to $0.71 last year, an increase of 14.1%.

For the six months ended January 31, 2021, revenue, gross profit, and net income were $1.2 billion, $604.3 million, and $393.7 million, respectively. These represent an increase in revenue of $80.4 million, or 7.1%; an increase in gross profit of $89.5 million, or 17.4%; and an increase in net income of $6.8 million, or 1.8%, respectively, from the same period last year. Fully diluted earnings per share for the six months were $1.64 compared to $1.62 last year, an increase of 1.2%.

Excluding the impact of discrete income tax items, foreign currency-related gains and losses, 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 January 31, 2021 and 2020, were $0.80, and $0.64, respectively, which was an increase of 25.0%. Excluding the impact of discrete income tax items, foreign currency-related gains and losses, certain income tax benefits and payroll taxes related to accounting for stock option exercises, non-GAAP fully diluted earnings per share for the six months ended January 31, 2021 and 2020, were $1.58, and $1.29, respectively, which was an increase of 22.5%. 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 Friday, February 19, 2021, 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://public.viavid.com/index.php?id=143555 or via hyperlink at www.copart.com/investorrelations. A replay of the call will be available through May 2021 by visiting www.copart.com/investorrelations or http://public.viavid.com/index.php?id=143555.

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 jurisdictions, to the general public. Copart sells vehicles on behalf of insurance companies, banks, finance companies, charities, fleet operators, dealers and individuals. With operations at over 200 locations in 11 countries, Copart has more than 175,000 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.

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, foreign currency-related gains and losses, 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 discrete income tax items, foreign currency-related gains and losses, 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, 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 January 31,				Six Months Ended January 31,
	2021		2020		2021		2020
Service revenues and vehicle sales:
Service revenues	$	532,601	$	510,034	$	1,047,973	$	997,890
Vehicle sales	84,430		65,106		161,998		131,674
Total service revenues and vehicle sales	617,031		575,140		1,209,971		1,129,564
Operating expenses:
Yard operations	208,910		237,683		415,896		460,562
Cost of vehicle sales	73,629		57,900		137,989		116,664
Yard depreciation and amortization	25,180		18,231		48,474		35,051
Yard stock-based compensation	1,814		1,437		3,345		2,529
Gross profit	307,498		259,889		604,267		514,758
General and administrative	36,014		39,242		71,152		78,085
General and administrative depreciation and amortization	6,212		6,051		11,867		12,245
General and administrative stock-based compensation	7,051		4,704		14,433		9,145
Total operating expenses	358,810		365,248		703,156		714,281
Operating income	258,221		209,892		506,815		415,283
Other expense:
Interest expense, net	(4,849)		(4,464)		(9,881)		(8,490)
Other income, net	(920)		(354)		2,333		363
Total other expense	(5,769)		(4,818)		(7,548)		(8,127)
Income before income taxes	252,452		205,074		499,267		407,156
Income tax expense	59,012		36,367		105,542		20,269
Net income	$	193,440	$	168,707	$	393,725	$	386,887

Basic net income per common share	$	0.82	$	0.73	$	1.67	$	1.67
Weighted average common shares outstanding	236,152		232,671		235,971		231,920

Diluted net income per common share	$	0.81	$	0.71	$	1.64	$	1.62
Diluted weighted average common shares outstanding	240,280		238,470		240,124		238,566

Copart, Inc. Consolidated Balance Sheets (In thousands) (Unaudited)

	January 31, 2021		July 31, 2020
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	616,403	$	477,718
Accounts receivable, net	462,405		350,207
Vehicle pooling costs	92,928		73,684
Inventories	30,203		20,080
Income taxes receivable	6,498		26,740
Prepaid expenses and other assets	17,030		15,330
Total current assets	1,225,467		963,759
Property and equipment, net	2,175,346		1,941,719
Operating lease right-of-use assets	107,602		118,455
Intangibles, net	44,270		47,772
Goodwill	346,966		343,622
Deferred income taxes	221		213
Other assets	34,566		39,721
Total assets	$	3,934,438	$	3,455,261

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	324,108	$	318,530
Deferred revenue	14,431		8,233
Income taxes payable	8,672		3,709
Current portion of operating lease liabilities	22,554		24,821
Current portion of finance lease liabilities	1,250		751
Total current liabilities	371,015		356,044
Deferred income taxes	81,316		71,686
Income taxes payable	51,177		44,965
Operating lease liabilities, net of current portion	85,307		95,584
Long-term debt and finance lease liabilities, net of discount	402,703		397,036
Other liabilities	328		430
Total liabilities	991,846		965,745
Commitments and contingencies
Stockholders’ equity:
Preferred stock	—		—
Common stock	24		24
Additional paid-in capital	718,497		672,727
Accumulated other comprehensive loss	(106,720)		(121,088)
Retained earnings	2,330,791		1,937,853
Total stockholders’ equity	2,942,592		2,489,516
Total liabilities and stockholders’ equity	$	3,934,438	$	3,455,261

Copart, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited)

	Six Months Ended January 31,
	2021		2020
Cash flows from operating activities:
Net income	$	393,725	$	386,887
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost	60,898		48,097
Allowance for credit loss	213		1,301
Equity in (earnings) losses of unconsolidated affiliates	(1,343)		3,124
Stock-based compensation	17,778		11,674
Gain on sale of property and equipment	(1,145)		(1,315)
Deferred income taxes	9,442		6,719
Changes in operating assets and liabilities:
Accounts receivable	(111,148)		(78,510)
Vehicle pooling costs	(19,099)		(13,921)
Inventories	(9,772)		2,765
Prepaid expenses and other current and non-current assets	5,802		7,184
Operating lease right-of-use assets and lease liabilities	470		331
Accounts payable and accrued liabilities	10,041		24,862
Deferred revenue	6,098		1,021
Income taxes receivable	20,243		(48,722)
Income taxes payable	10,838		5,794
Other liabilities	—		(371)
Net cash provided by operating activities	393,041		356,920

Cash flows from investing activities:
Purchases of property and equipment, including acquisitions	(283,214)		(400,352)
Proceeds from sale of property and equipment	129		1,639
Net cash used in investing activities	(283,085)		(398,713)

Cash flows from financing activities:
Proceeds from the exercise of stock options	23,112		32,594
Proceeds from the issuance of Employee Stock Purchase Plan shares	4,880		3,955
Payments for employee stock-based tax withholdings	(787)		(101,422)
Net proceeds on revolving loan facility	—		13,600
Payments of finance lease obligations	(622)		—
Net cash provided by (used in) financing activities	26,583		(51,273)
Effect of foreign currency translation	2,146		258
Net increase (decrease) in cash, cash equivalents, and restricted cash	138,685		(92,808)
Cash, cash equivalents, and restricted cash at beginning of period	477,718		186,319
Cash, cash equivalents, and restricted cash at end of period	$	616,403	$	93,511
Supplemental disclosure of cash flow information:
Interest paid	$	7,614	$	9,007
Income taxes paid, net of refunds	$	64,860	$	57,591

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,
	2021		2020		2021		2020
GAAP net income	$	193,440	$	168,707	$	393,725	$	386,887
Effect of discrete income tax items	—		—		—		(3,008)
Effect of foreign currency-related losses (gains), net of tax	238		(416)		48		(679)
Effect of recognizing tax benefit on exercise of employee stock options	(2,167)		(14,829)		(13,939)		(77,194)
Effect of payroll taxes on certain executive stock compensation, net of tax	—		—		—		2,867
Non-GAAP net income	$	191,511	$	153,462	$	379,834	$	308,873

GAAP net income per diluted common share	$	0.81	$	0.71	$	1.64	$	1.62
Non-GAAP net income per diluted common share	$	0.80	$	0.64	$	1.58	$	1.29