Copart Reports Second Quarter Fiscal 2023 Financial Results

Rhea-AI Summary

Copart, Inc. (NASDAQ: CPRT) reported its financial results for the quarter ended January 31, 2023. Revenue reached $956.7 million, a 10.3% increase year-over-year, while gross profit rose to $426.5 million, up 5.7%. Net income also saw a slight rise of 2.2%, totaling $293.7 million. For the six months ended January 31, 2023, revenue was $1,850.1 million, with a 10.3% year-over-year increase, although net income decreased by 1.5% to $539.5 million. Fully diluted earnings per share were $0.61 for the quarter, a 1.7% increase, while for six months, it decreased by 1.8% to $1.12.

Positive

• Quarterly revenue increased by $89.3 million, or 10.3%.
• Gross profit rose by $23.2 million, or 5.7%, for the quarter.
• Quarterly net income increased by $6.3 million, or 2.2%.
• Non-GAAP EPS for the quarter increased by 10.9% to $0.61.

Negative

• Net income for the six-month period decreased by $8.3 million, or 1.5%.
• Fully diluted EPS for six months decreased by 1.8% to $1.12.

DALLAS--(BUSINESS WIRE)-- Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended January 31, 2023.

For the three months ended January 31, 2023, revenue, gross profit, and net income were $956.7 million, $426.5 million, and $293.7 million, respectively. These represent an increase in revenue of $89.3 million, or 10.3%; an increase in gross profit of $23.2 million, or 5.7%; and an increase in net income of $6.3 million, or 2.2%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $0.61 compared to $0.60 last year, an increase of 1.7%.

For the six months ended January 31, 2023, revenue, gross profit, and net income were $1,850.1 million, $796.0 million, and $539.5 million, respectively. These represent an increase in revenue of $172.5 million, or 10.3%; an increase in gross profit of $7.6 million, or 1.0%; and a decrease in net income of $8.3 million, or (1.5)%, respectively, from the same period last year. Fully diluted earnings per share for the six months were $1.12 compared to $1.14 last year, a decrease of (1.8)%.

Excluding the impact of certain discrete income tax items and certain income tax benefits related to stock-based compensation, non-GAAP fully diluted earnings per share for the three months ended January 31, 2023 and 2022 were $0.61, and $0.55, respectively, which was an increase of 10.9%. Excluding the impact of certain discrete income tax items and certain income tax benefits related to stock-based compensation, non-GAAP fully diluted earnings per share for the six months ended January 31, 2023 and 2022, were $1.12, and $1.08, respectively, which was an increase of 3.7%. 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 Tuesday, February 21, 2023, 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 via hyperlink at www.copart.com/investorrelations. A replay of the call will be available through May 2023 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 190 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.

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 certain discrete income tax items and certain income tax benefits 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. 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,
			2023				2022			% Change				2023				2022			% Change
Service revenues and vehicle sales:
Service revenues		$	789,797			$	711,090			11.1	%		$	1,516,637			$	1,378,908			10.0	%
Vehicle sales			166,927				156,370			6.8	%			333,459				298,684			11.6	%
Total service revenues and vehicle sales			956,724				867,460			10.3	%			1,850,096				1,677,592			10.3	%
Operating expenses:
Yard operations			340,085				294,098			15.6	%			677,057				565,374			19.8	%
Cost of vehicle sales			154,727				140,304			10.3	%			305,839				266,712			14.7	%
Yard depreciation and amortization			34,070				28,301			20.4	%			68,430				54,738			25.0	%
Yard stock-based compensation			1,342				1,415			(5.2	)%			2,787				2,396			16.3	%
Gross profit			426,500				403,342			5.7	%			795,983				788,372			1.0	%
General and administrative			47,842				42,754			11.9	%			92,377				83,869			10.1	%
General and administrative depreciation and amortization			4,344				5,013			(13.3	)%			9,042				10,336			(12.5	)%
General and administrative stock-based compensation			8,789				8,247			6.6	%			17,536				16,718			4.9	%
Total operating expenses			591,199				520,132			13.7	%			1,173,068				1,000,143			17.3	%
Operating income			365,525				347,328			5.2	%			677,028				677,449			(0.1	)%
Other expense:
Interest income (expense), net			14,480				(4,433	)		(426.6	)%			18,902				(9,540	)		(298.1	)%
Other expense, net			(2,902	)			(840	)		245.5	%			(5,724	)			(28	)		20342.9	%
Total other income (expense)			11,578				(5,273	)		(319.6	)%			13,178				(9,568	)		237.7	%
Income before income taxes			377,103				342,055			10.2	%			690,206				667,881			3.3	%
Income tax expense			83,426				54,643			52.7	%			150,681				120,106			25.5	%
Net income		$	293,677			$	287,412			2.2	%		$	539,525			$	547,775			(1.5	)%
Basic net income per common share		$	0.62			$	0.61			1.6	%		$	1.13			$	1.15			(1.7	)%
Weighted average common shares outstanding			476,376				474,372			0.4	%			476,237				474,334			0.4	%
Diluted net income per common share		$	0.61			$	0.60			1.7	%		$	1.12			$	1.14			(1.8	)%
Diluted weighted average common shares outstanding			482,536				482,374			—	%			482,238				482,488			(0.1	)%

Copart, Inc. Consolidated Balance Sheets (In thousands) (Unaudited)
		January 31, 2023				July 31, 2022
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash		$	1,660,952			$	1,384,236
Accounts receivable, net			765,192				578,573
Vehicle pooling costs			133,598				112,242
Inventories			52,071				58,791
Income taxes receivable			436				49,882
Prepaid expenses and other assets			26,532				18,731
Total current assets			2,638,781				2,202,455
Property and equipment, net			2,656,273				2,485,764
Operating lease right-of-use assets			106,656				116,303
Intangibles, net			51,186				54,680
Goodwill			404,046				401,954
Other assets			75,466				47,708
Total assets		$	5,932,408			$	5,308,864
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	439,271			$	399,034
Deferred revenue			23,796				20,061
Income taxes payable			3,820				—
Current portion of operating and finance lease liabilities			20,736				21,794
Total current liabilities			487,623				440,889
Deferred income taxes			76,471				80,060
Income taxes payable			65,322				64,637
Operating and finance lease liabilities, net of current portion			87,394				95,683
Long-term debt and other liabilities			1,946				1,996
Total liabilities			718,756				683,265
Commitments and contingencies
Stockholders' equity:
Preferred stock			—				—
Common stock			48				48
Additional paid-in capital			875,009				838,508
Accumulated other comprehensive loss			(156,507	)			(169,365	)
Retained earnings			4,495,102				3,956,408
Total stockholders' equity			5,213,652				4,625,599
Total liabilities and stockholders' equity		$	5,932,408			$	5,308,864

Copart, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited)
		Six Months Ended January 31,
			2023				2022
Cash flows from operating activities:
Net income		$	539,525			$	547,775
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost			78,094				65,627
Allowance for credit loss			2,133				1,695
Equity in losses of unconsolidated affiliates			4,030				685
Stock-based compensation			20,323				19,114
Gain on sale of property and equipment			(748	)			(755	)
Deferred income taxes			(3,309	)			6,003
Changes in operating assets and liabilities:
Accounts receivable			(186,559	)			(152,763	)
Vehicle pooling costs			(21,268	)			(29,623	)
Inventories			8,001				(8,589	)
Prepaid expenses, other current and non-current assets			(29,176	)			(19,889	)
Operating lease right-of-use assets and lease liabilities			414				657
Accounts payable, accrued liabilities and other liabilities			27,619				10,741
Deferred revenue			3,709				(309	)
Income taxes receivable			49,430				4,577
Income taxes payable			7,615				1,655
Other liabilities			—				(53	)
Net cash provided by operating activities			499,833				446,548
Cash flows from investing activities:
Purchases of property and equipment			(256,719	)			(156,200	)
Purchase of assets in connection with acquisitions			—				(469	)
Proceeds from sale of property and equipment			16,343				1,252
Purchase of held to maturity securities			—				(374,866	)
Investment in unconsolidated affiliate			(1,993	)			—
Net cash used in investing activities			(242,369	)			(530,283	)
Cash flows from financing activities:
Proceeds from the exercise of stock options			10,815				11,985
Proceeds from the issuance of Employee Stock Purchase Plan shares			5,363				5,022
Payments for employee stock-based tax withholdings			(831	)			(599	)
Payments of finance lease obligations			(13	)			(314	)
Net cash provided by financing activities			15,334				16,094
Effect of foreign currency translation			3,918				(8,968	)
Net increase (decrease) in cash, cash equivalents, and restricted cash			276,716				(76,609	)
Cash, cash equivalents, and restricted cash at beginning of period			1,384,236				1,048,260
Cash, cash equivalents, and restricted cash at end of period		$	1,660,952			$	971,651
Supplemental disclosure of cash flow information:
Interest paid		$	706			$	9,311
Income taxes paid, net of refunds		$	98,324			$	128,972

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,
			2023				2022				2023				2022
GAAP net income		$	293,677			$	287,412			$	539,525			$	547,775
Effect of certain discrete income tax items			—				(17,490	)			—				(17,490	)
Effect of recognizing tax benefit on exercise of stock-based compensation			(115	)			(3,965	)			(740	)			(6,952	)
Non-GAAP net income		$	293,562			$	265,957			$	538,785			$	523,333
GAAP net income per diluted common share		$	0.61			$	0.60			$	1.12			$	1.14
Non-GAAP net income per diluted common share		$	0.61			$	0.55			$	1.12			$	1.08

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230220005276/en/

Brooke Boston, Executive Assistant, Office of the Chief Financial Officer

brooke.boston@copart.com

Source: Copart, Inc.

FAQ

What were Copart's earnings results for Q2 2023?

In Q2 2023, Copart reported revenue of $956.7 million, gross profit of $426.5 million, and net income of $293.7 million.

How did Copart's revenue change compared to last year?

Copart's revenue increased by 10.3% compared to the same quarter last year.

What is Copart's EPS for the quarter ended January 31, 2023?

The fully diluted EPS for the quarter ended January 31, 2023, was $0.61, an increase of 1.7% from $0.60 last year.

What was the net income trend for Copart in the last six months?

For the six months ended January 31, 2023, net income decreased by 1.5% to $539.5 million.

What is the next conference call date for Copart?

Copart will conduct a conference call on February 21, 2023, at 11 a.m. Eastern Time to discuss the results.