Copart Reports Second Quarter Fiscal 2021 Financial Results

Rhea-AI Summary

Copart, Inc. (NASDAQ: CPRT) reported strong financial results for the quarter ending January 31, 2021. Revenue increased by 7.3% year-over-year to $617 million, while gross profit rose by 18.3% to $307.5 million. Net income also improved by 14.7%, reaching $193.4 million. Fully diluted EPS rose 14.1% to $0.81. For the six-month period, revenue, gross profit, and net income totaled $1.2 billion, $604.3 million, and $393.7 million, respectively, marking increases of 7.1%, 17.4%, and 1.8%. Non-GAAP EPS showed significant growth, increasing 25% for the quarter.

Positive

• Revenue increased by 7.3% to $617 million for the quarter.
• Gross profit rose by 18.3% to $307.5 million.
• Net income increased by 14.7% to $193.4 million.
• Fully diluted EPS increased by 14.1% to $0.81.
• For six months, revenue was $1.2 billion, up 7.1%.

Negative

• Net income growth for the six months was only 1.8%.

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

 

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FAQ

What were Copart's earnings for the quarter ending January 31, 2021?

Copart reported revenue of $617 million, gross profit of $307.5 million, and net income of $193.4 million for the quarter.

How much did Copart's earnings per share (EPS) increase in Q1 2021?

Fully diluted EPS increased by 14.1% to $0.81 compared to the same quarter last year.

What were the key financial metrics for Copart for the six months ending January 31, 2021?

For the six months, Copart reported revenue of $1.2 billion, gross profit of $604.3 million, and net income of $393.7 million.

When will Copart discuss its financial results in a conference call?

Copart will conduct a conference call on February 19, 2021, at 11 a.m. Eastern Time to discuss its results.

What is the non-GAAP EPS growth for Copart in Q1 2021?

Non-GAAP fully diluted EPS increased by 25% to $0.80 for the quarter.