Copart Reports Third Quarter Fiscal 2022 Financial Results

DALLAS--(BUSINESS WIRE)--Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended April 30, 2022.

For the three months ended April 30, 2022, revenue, gross profit, and net income were $939.9 million, $436.3 million, and $278.6 million, respectively. These represent an increase in revenue of $206.0 million, or 28.1%; an increase in gross profit of $54.9 million, or 14.4%; and a decrease in net income of $(8.2) million, or (2.9)%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $1.16 compared to $1.19 last year, a decrease of (2.5)%.

For the nine months ended April 30, 2022, revenue, gross profit, and net income were $2,617.5 million, $1,224.6 million, and $826.4 million, respectively. These represent an increase in revenue of $673.7 million, or 34.7%; an increase in gross profit of $239.0 million, or 24.3%; and an increase in net income of $145.9 million, or 21.4%, respectively, from the same period last year. Fully diluted earnings per share for the nine months were $3.42 compared to $2.83 last year, an increase of 20.8%.

Excluding the impact of certain income tax benefits related to stock-based compensation and certain legal matters, non-GAAP fully diluted earnings per share for the three months ended April 30, 2022 and 2021 were $1.17, and $1.09, respectively, which was an increase of 7.3%. Excluding the impact of certain income tax benefits related to stock-based compensation, certain legal matters and discrete income tax items, non-GAAP fully diluted earnings per share for the nine months ended April 30, 2022 and 2021, were $3.34, and $2.68, respectively, which was an increase of 24.6%. 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 19, 2022, 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 2022 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 income tax benefits related to stock-based compensation, certain legal matters and discrete income tax items. 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 April 30,								Nine Months Ended April 30,
	2022			2021			% Change		2022			2021			% Change
Service revenues and vehicle sales:
Service revenues	$	766,316		$	623,846		22.8	%	$	2,145,224		$	1,671,819		28.3	%
Vehicle sales		173,625			110,064		57.7	%		472,309			272,062		73.6	%
Total service revenues and vehicle sales		939,941			733,910		28.1	%		2,617,533			1,943,881		34.7	%
Operating expenses:
Yard operations		313,365			230,794		35.8	%		878,740			646,690		35.9	%
Cost of vehicle sales		157,236			94,498		66.4	%		423,948			232,487		82.4	%
Yard depreciation and amortization		31,646			25,876		22.3	%		86,383			74,350		16.2	%
Yard stock-based compensation		1,417			1,401		1.1	%		3,813			4,746		(19.7	)%
Gross profit		436,277			381,341		14.4	%		1,224,649			985,608		24.3	%
General and administrative		50,188			39,174		28.1	%		134,057			110,326		21.5	%
General and administrative depreciation and amortization		4,933			6,090		(19.0	)%		15,269			17,957		(15.0	)%
General and administrative stock-based compensation		8,401			7,966		5.5	%		25,119			22,399		12.1	%
Total operating expenses		567,186			405,799		39.8	%		1,567,329			1,108,955		41.3	%
Operating income		372,755			328,111		13.6	%		1,050,204			834,926		25.8	%
Other expense:
Interest expense, net		(4,492	)		(5,346	)	(16.0	)%		(14,032	)		(15,227	)	(7.8	)%
Other income, net		1,342			770		74.3	%		1,314			3,103		(57.7	)%
Total other expense		(3,150	)		(4,576	)	(31.2	)%		(12,718	)		(12,124	)	4.9	%
Income before income taxes		369,605			323,535		14.2	%		1,037,486			822,802		26.1	%
Income tax expense		90,985			36,739		147.7	%		211,091			142,281		48.4	%
Net income	$	278,620		$	286,796		(2.9	)%	$	826,395		$	680,521		21.4	%
Basic net income per common share	$	1.17		$	1.21		(3.3	)%	$	3.48		$	2.88		20.8	%
Weighted average common shares outstanding		237,505			236,396		0.5	%		237,277			236,110		0.5	%
Diluted net income per common share	$	1.16		$	1.19		(2.5	)%	$	3.42		$	2.83		20.8	%
Diluted weighted average common shares outstanding		240,724			240,208		0.2	%		241,288			240,149		0.5	%

Copart, Inc.
Consolidated Balance Sheets
(In thousands)
(Unaudited)
	April 30, 2022			July 31, 2021
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	1,454,818		$	1,048,260
Investment in held to maturity securities		224,889			—
Accounts receivable, net		585,914			480,628
Vehicle pooling costs		114,028			94,449
Inventories		56,988			44,968
Income taxes receivable		1,581			20,012
Prepaid expenses and other assets		19,208			14,294
Total current assets		2,457,426			1,702,611
Property and equipment, net		2,402,809			2,296,624
Operating lease right-of-use assets		121,006			119,487
Intangibles, net		40,854			45,873
Goodwill		348,000			355,717
Other assets		73,779			41,831
Total assets	$	5,443,874		$	4,562,143
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	398,414		$	369,826
Deferred revenue		21,087			20,973
Income taxes payable		6,907			7,760
Current portion of operating and finance lease liabilities		22,687			22,472
Total current liabilities		449,095			421,031
Deferred income taxes		78,023			63,969
Income taxes payable		61,359			52,345
Operating and finance lease liabilities, net of current portion		99,610			97,961
Long-term debt and other liabilities, net of discount		402,733			397,636
Total liabilities		1,090,820			1,032,942
Commitments and contingencies
Stockholders' equity:
Preferred stock		—			—
Common stock		24			24
Additional paid-in capital		811,900			761,834
Accumulated other comprehensive loss		(152,596	)		(100,860	)
Retained earnings		3,693,726			2,868,203
Total stockholders' equity		4,353,054			3,529,201
Total liabilities and stockholders' equity	$	5,443,874		$	4,562,143

Copart, Inc.
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Nine Months Ended April 30,
	2022			2021
Cash flows from operating activities:
Net income	$	826,395		$	680,521
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost		102,333			93,141
Allowance for credit loss		1,456			(1,429	)
Equity in losses (earnings) of unconsolidated affiliates		794			(2,121	)
Stock-based compensation		28,932			27,145
Gain on sale of property and equipment		(1,280	)		(1,257	)
Deferred income taxes		14,582			(14,130	)
Changes in operating assets and liabilities:
Accounts receivable		(109,636	)		(81,593	)
Vehicle pooling costs		(20,029	)		(12,777	)
Inventories		(13,367	)		(18,788	)
Prepaid expenses, other current and non-current assets		(37,842	)		6,879
Operating lease right-of-use assets and lease liabilities		436			389
Accounts payable, accrued liabilities and other liabilities		45,745			47,914
Deferred revenue		388			8,467
Income taxes receivable		18,416			16,152
Income taxes payable		6,531			13,692
Net cash provided by operating activities		863,854			762,205
Cash flows from investing activities:
Purchases of property and equipment		(234,810	)		(364,395	)
Purchase of assets in connection with acquisitions		(493	)		—
Proceeds from sale of property and equipment		2,622			599
Purchase of held to maturity securities		(374,866	)		—
Proceeds from the sale of held to maturity securities		149,977			—
Net cash used in investing activities		(457,570	)		(363,796	)
Cash flows from financing activities:
Proceeds from the exercise of stock options		16,108			28,829
Proceeds from the issuance of Employee Stock Purchase Plan shares		5,026			4,880
Payments for employee stock-based tax withholdings		(872	)		(938	)
Debt offering costs		(1,212	)		—
Payments of finance lease obligations		(472	)		(962	)
Net cash provided by financing activities		18,578			31,809
Effect of foreign currency translation		(18,304	)		3,954
Net increase in cash, cash equivalents, and restricted cash		406,558			434,172
Cash, cash equivalents, and restricted cash at beginning of period		1,048,260			477,718
Cash, cash equivalents, and restricted cash at end of period	$	1,454,818		$	911,890
Supplemental disclosure of cash flow information:
Interest paid	$	14,485		$	14,736
Income taxes paid, net of refunds	$	195,521		$	126,303

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,
	2022			2021			2022			2021
GAAP net income	$	278,620		$	286,796		$	826,395		$	680,521
Effect of certain discrete income tax items		—			(19,764	)		(17,490	)		(19,764	)
Effect of certain legal matters, net of tax		5,092			—			5,092			—
Effect of recognizing tax benefit on exercise of stock-based compensation		(2,244	)		(4,910	)		(9,197	)		(18,850	)
Non-GAAP net income	$	281,468		$	262,122		$	804,800		$	641,907
GAAP net income per diluted common share	$	1.16		$	1.19		$	3.42		$	2.83
Non-GAAP net income per diluted common share	$	1.17		$	1.09		$	3.34		$	2.68