Copart Reports Third Quarter Fiscal 2021 Financial Results

Rhea-AI Summary

Copart, Inc. (NASDAQ: CPRT) reported impressive financial results for the quarter ended April 30, 2021. Revenue surged to $733.9 million, marking a 33.4% increase, while gross profit rose to $381.3 million and net income climbed to $286.8 million, reflecting 57.2% and 94.5% increases, respectively. Fully diluted earnings per share reached $1.19, up 91.9% from the prior year. For the nine-month period, revenue totaled $1.9 billion, gross profit was $985.6 million, and net income stood at $680.5 million, all showing substantial growth.

Positive

• Quarterly revenue increased by $183.6 million, or 33.4%.
• Gross profit rose by $138.7 million, or 57.2%.
• Net income increased by $139.3 million, or 94.5%.
• Fully diluted EPS reached $1.19, reflecting a 91.9% increase.
• Nine-month revenue grew by $264 million, or 15.7%.
• Nine-month gross profit increased by $228.2 million, or 30.1%.
• Nine-month net income rose by $146.1 million, or 27.3%.

Negative

• None.

Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended April 30, 2021.

For the three months ended April 30, 2021, revenue, gross profit, and net income were $733.9 million, $381.3 million, and $286.8 million, respectively. These represent an increase in revenue of $183.6 million, or 33.4%; an increase in gross profit of $138.7 million, or 57.2%; and an increase in net income of $139.3 million, or 94.5%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $1.19 compared to $0.62 last year, an increase of 91.9%.

For the nine months ended April 30, 2021, revenue, gross profit, and net income were $1.9 billion, $985.6 million, and $680.5 million, respectively. These represent an increase in revenue of $264.0 million, or 15.7%; an increase in gross profit of $228.2 million, or 30.1%; and an increase in net income of $146.1 million, or 27.3%, respectively, from the same period last year. Fully diluted earnings per share for the nine months were $2.83 compared to $2.24 last year, an increase of 26.3%.

Excluding the impact of certain discrete income tax items, 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 three months ended April 30, 2021 and 2020, were $1.09, and $0.58, respectively, which was an increase of 87.9%. Excluding the impact of certain discrete income tax items, 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 nine months ended April 30, 2021 and 2020, were $2.67, and $1.87, respectively, which was an increase of 42.8%. 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 20, 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 via hyperlink at www.copart.com/investorrelations. A replay of the call will be available through August 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 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.

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, 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. From a financial planning and analysis perspective, Copart management analyzes its operating results with and without the impact of certain discrete income tax items, foreign currency-related gains and losses, certain income tax benefits and payroll taxes related to stock-based compensation.

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 April 30,										Nine Months Ended April 30,
		2021					2020					2021					2020
Service revenues and vehicle sales:
Service revenues		$	623,846				$	491,582				$	1,671,819				$	1,489,472
Vehicle sales		110,064					58,778					272,062					190,452
Total service revenues and vehicle sales		733,910					550,360					1,943,881					1,679,924
Operating expenses:
Yard operations		230,794					231,985					646,690					692,547
Cost of vehicle sales		94,498					53,987					232,487					170,651
Yard depreciation and amortization		25,876					20,333					74,350					55,384
Yard stock-based compensation		1,401					1,442					4,746					3,971
Gross profit		381,341					242,613					985,608					757,371
General and administrative		39,174					37,017					110,326					115,102
General and administrative depreciation and amortization		6,090					6,382					17,957					18,627
General and administrative stock-based compensation		7,966					4,113					22,399					13,258
Total operating expenses		405,799					355,259					1,108,955					1,069,540
Operating income		328,111					195,101					834,926					610,384
Other expense:
Interest expense, net		(5,346		)			(5,578		)			(15,227		)			(14,068		)
Other income, net		770					2,277					3,103					2,640
Total other expense		(4,576		)			(3,301		)			(12,124		)			(11,428		)
Income before income taxes		323,535					191,800					822,802					598,956
Income tax expense		36,739					44,313					142,281					64,582
Net income		$	286,796				$	147,487				$	680,521				$	534,374
Basic net income per common share		$	1.21				$	0.63				$	2.88				$	2.30
Weighted average common shares outstanding		236,396					234,133					236,110					232,647
Diluted net income per common share		$	1.19				$	0.62				$	2.83				$	2.24
Diluted weighted average common shares outstanding		240,208					238,591					240,149					238,564

Copart, Inc. Consolidated Balance Sheets (In thousands) (Unaudited)
		April 30, 2021					July 31, 2020
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash		$	911,890				$	477,718
Accounts receivable, net		434,873					350,207
Vehicle pooling costs		86,685					73,684
Inventories		39,229					20,080
Income taxes receivable		10,588					26,740
Prepaid expenses and other assets		16,106					15,330
Total current assets		1,499,371					963,759
Property and equipment, net		2,227,531					1,941,719
Operating lease right-of-use assets		125,709					118,455
Intangibles, net		42,535					47,772
Goodwill		347,515					343,622
Other assets		39,285					39,934
Total assets		$	4,281,946				$	3,455,261
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	359,239				$	318,530
Deferred revenue		20,660					8,233
Income taxes payable		9,140					3,709
Current portion of operating and finance lease liabilities		24,006					25,572
Total current liabilities		413,045					356,044
Deferred income taxes		57,767					71,686
Income taxes payable		55,637					44,965
Operating and finance lease liabilities, net of current portion		108,487					96,150
Long-term debt and other liabilities, net of discount		397,633					396,900
Total liabilities		1,032,569					965,745
Commitments and contingencies
Stockholders' equity:
Preferred stock		—					—
Common stock		24					24
Additional paid-in capital		733,581					672,727
Accumulated other comprehensive loss		(101,664		)			(121,088		)
Retained earnings		2,617,436					1,937,853
Total stockholders' equity		3,249,377					2,489,516
Total liabilities and stockholders' equity		$	4,281,946				$	3,455,261

Copart, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited)
		Nine Months Ended April 30,
		2021					2020
Cash flows from operating activities:
Net income		$	680,521				$	534,374
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost		93,141					76,756
Allowance for credit loss		(1,429		)			1,332
Equity in (earnings) losses of unconsolidated affiliates		(2,121		)			1,918
Stock-based compensation		27,145					17,229
Gain on sale of property and equipment		(1,257		)			(1,745		)
Deferred income taxes		(14,130		)			9,265
Changes in operating assets and liabilities:
Accounts receivable		(81,593		)			19,102
Vehicle pooling costs		(12,777		)			661
Inventories		(18,788		)			1,209
Prepaid expenses and other current and non-current assets		6,879					6,268
Operating lease right-of-use assets and lease liabilities		389					(221		)
Accounts payable and accrued liabilities		47,914					(15,636		)
Deferred revenue		8,467					1,365
Income taxes receivable		16,152					(12,076		)
Income taxes payable		13,692					9,168
Other liabilities		—					1,999
Net cash provided by operating activities		762,205					650,968
Cash flows from investing activities:
Purchases of property and equipment, including acquisitions		(364,395		)			(490,998		)
Proceeds from sale of property and equipment		599					2,153
Net cash used in investing activities		(363,796		)			(488,845		)
Cash flows from financing activities:
Proceeds from the exercise of stock options		28,829					55,656
Proceeds from the issuance of Employee Stock Purchase Plan shares		4,880					3,955
Payments for employee stock-based tax withholdings		(938		)			(102,191		)
Payments of finance lease obligations		(962		)			—
Net cash provided by (used in) financing activities		31,809					(42,580		)
Effect of foreign currency translation		3,954					525
Net increase in cash, cash equivalents, and restricted cash		434,172					120,068
Cash, cash equivalents, and restricted cash at beginning of period		477,718					186,319
Cash, cash equivalents, and restricted cash at end of period		$	911,890				$	306,387
Supplemental disclosure of cash flow information:
Interest paid		$	14,736				$	14,514
Income taxes paid, net of refunds		$	126,303				$	59,302

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,
		2021					2020					2021					2020
GAAP net income		$	286,796				$	147,487				$	680,521				$	534,374
Effect of certain discrete income tax items		(19,764		)			—					(19,764		)			(3,008		)
Effect of foreign currency-related losses (gains), net of tax		303					(490		)			351					(1,169		)
Effect of recognizing tax benefit on exercise of stock-based compensation		(4,910		)			(8,768		)			(18,850		)			(85,965		)
Effect of payroll taxes on certain executive stock-based compensation, net of tax		—					—					—					2,867
Non-GAAP net income		$	262,425				$	138,229				$	642,258				$	447,099
GAAP net income per diluted common share		$	1.19				$	0.62				$	2.83				$	2.24
Non-GAAP net income per diluted common share		$	1.09				$	0.58				$	2.67				$	1.87

 

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FAQ

What were Copart's earnings for the quarter ended April 30, 2021?

Copart reported earnings of $286.8 million for the quarter.

How much did Copart's revenue increase for the nine months ended April 30, 2021?

Copart's revenue increased by $264 million, or 15.7%, for the nine months.

What was Copart's fully diluted earnings per share for the quarter ended April 30, 2021?

The fully diluted earnings per share for the quarter were $1.19.

When will Copart discuss its financial results for the quarter?

Copart will hold a conference call on May 20, 2021, at 11 a.m. Eastern Time.