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Copart Inc.$110.36($.92)(.83%)

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 Copart Reports Fourth Quarter Fiscal 2017 Financial Results
   Tuesday, September 19, 2017 6:04:00 PM ET

Copart, Inc. (CPRT ) today reported financial results for the quarter and year ended July 31, 2017.

For the three months ended July 31, 2017, revenue, gross margin, and net income were $378.6 million, $167.5 million, and $70.3 million, respectively. These represent an increase in revenue of $45.9 million, or 13.8%; an increase in gross margin of $26.0 million, or 18.4%; and a decrease in net income of $13.8 million, or 16.4%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $0.30 compared to $0.35 last year, a decrease of 14.3%. Results for the three months ended July 31, 2017 include an impairment charge of $19.4 million related primarily to costs previously capitalized in connection with the development of business operating software.

For the year ended July 31, 2017, revenue, gross margin, and net income were $1.4 billion, $632.0 million, and $394.2 million, respectively. These represent an increase in revenue of $179.5 million, or 14.2%; an increase in gross margin of $87.4 million, or 16.1%; and an increase in net income of $123.9 million, or 45.8%, respectively, from the same period last year. Fully diluted earnings per share for the year ended July 31, 2017 were $1.66 compared to $1.11 last year, an increase of 49.5%.

Excluding the impact of foreign currency-related gains; impairment of long-lived assets; acquisition related fees; certain income tax benefits, foreign income tax credit limitations, and payroll taxes related to accounting for stock option exercises, non-GAAP fully diluted earnings per share for the three months and year ended July 31, 2017, were $0.35 and $1.29, respectively. These represent increases of 16.7% and 22.9%, respectively, from the same periods last year. 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 Wednesday, September 20, 2017, 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 at http://stream.conferenceamerica.com/copart092017 . A replay of the call will be available through November 19, 2017 by calling (877) 919-4059. Use confirmation code # 87851080.

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 cases, to end users. Copart sells vehicles on behalf of insurance companies, banks, finance companies, charities, fleet operators, dealers and also sells vehicles sourced from individual owners. With operations at over 200 locations in 11 countries, Copart has more than 125,000 vehicles available online every day. Copart currently operates in the United States (Copart.com), Canada (Copart.ca), the United Kingdom (Copart.co.uk), the Republic of Ireland (Copart.ie), Brazil (Copart.com.br), Germany (Copart.de), the United Arab Emirates, Oman and Bahrain (Copartmea.com), India (Copart.in), 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 foreign currency-related gains; impairment of long-lived assets; acquisition related fees; certain income tax benefits, foreign income tax credit limitations, 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 foreign currency-related gains; impairment of long-lived assets; acquisition related fees; certain income tax benefits, foreign income tax credit limitations, 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, and 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 data)
                                                                                                                                             (Unaudited)
                                                                                                                                                              
                                                                                                                         Three Months Ended                                                                                                 Twelve Months Ended
                                                                                                                              July 31,                                                                                                           July 31,
                                                                                     ------------------------------------------------------------------------------------                            -----------------------------------------------------------------------------------------
                                                                                                   2017                                 2016                                                      2017                                   2016
                                                                                     ---------------------------------                     -------------------------------------                     ------------------------------------                     ---------------------------------------
Service revenues and vehicle sales:
    Service revenues                                                                   $ 336,795                                                 $ 289,488                                              $ 1,286,252                                                 $ 1,104,379
    Vehicle sales                                                                         41,801                                 43,171                               161,729                                  164,070  
                                                                                     --------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
        Total service revenues and vehicle sales                                         378,596                                                   332,659                                                1,447,981                                                   1,268,449
Operating expenses:
    Yard operations                                                                      163,449                                                   144,859                                                  635,160                                                     546,576
    Cost of vehicle sales                                                                 35,994                                                    37,020                                                  137,552                                                     140,959
    Yard depreciation and amortization                                                    10,839                                                     8,722                                                   39,955                                                      33,658
    Yard stock-based payment compensation                                                    849                                    594                                 3,286                                    2,670  
                                                                                     --------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
            Gross margin                                                                 167,465                                                   141,464                                                  632,028                                                     544,586
    General and administrative                                                            29,818                                                    26,561                                                  116,697                                                     105,005
    General and administrative depreciation and amortization                               3,029                                                     4,276                                                   17,045                                                      14,917
    General and administrative stock-based payment compensation                            4,446                                                     4,436                                                   17,622                                                      18,194
    Impairment of long-lived assets                                                       19,365                         --                                19,365                           --  
                                                                                     --------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
            Total operating expenses                                                     267,789                                226,468                               986,682                                  861,979  
                                                                                     --------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
            Operating income                                                             110,807                                                   106,191                                                  461,299                                                     406,470
Other (expense) income:
    Interest expense, net                                                                 (5,485 )                                                  (6,257 )                                                (22,373 )                                                   (22,157 )
    Other income, net                                                                      1,057                                  6,051                                 1,174                                   11,552  
                                                                                     --------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
            Total other expenses                                                          (4,428 )                                                    (206 )                                                (21,199 )                                                   (10,605 )
                                                                                     --------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
            Income before income tax expense                                             106,379                                                   105,985                                                  440,100                                                     395,865
Income tax expense                                                                        36,010                                 21,863                                45,839                                  125,505  
                                                                                     --------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
    Net income                                                                            70,369                                                    84,122                                                  394,261                                                     270,360
            Net income attributable to noncontrolling interest                                34                         --                                    34                           --  
                                                                                     --------------------------------                      ------------------------------------                      -----------------------------------                      --------------------------------------
    Net income attributable to Copart, Inc.                                            $  70,335                              $  84,122                           $   394,227                              $   270,360  
                                                                                     === ======= ====================                      ======= ======= ====================                      ==== ========= ====================                      ======= ========= ====================
                                                                                                                                                                                                                                                               
Basic net income per common share                                                      $    0.31                              $    0.38                           $      1.72                              $      1.18  
                                                                                     === ======= ====================                      ======= ======= ====================                      ==== ========= ====================                      ======= ========= ====================
Weighted average common shares outstanding                                               230,286                                219,156                               228,686                                  228,846  
                                                                                     ================================                      ====================================                      ===================================                      ======================================
                                                                                                                                                                                                                                                               
Diluted net income per common share                                                    $    0.30                              $    0.35                           $      1.66                              $      1.11  
                                                                                     === ======= ====================                      ======= ======= ====================                      ==== ========= ====================                      ======= ========= ====================
Diluted weighted average common shares outstanding                                       237,634                                237,038                               237,019                                  244,295  
                                                                                     ================================                      ====================================                      ===================================                      ======================================
 
                                                                                              Copart, Inc.
                                                                                       Consolidated Balance Sheets
                                                                                             (In thousands)
                                                                                               (Unaudited)
                                                                                                                          
                                                                                                                  July 31, 2017                                               July 31, 2016
                                                                                                     ---------------------------------------                     ---------------------------------------
                                     ASSETS
Current assets:
    Cash and cash equivalents                                                                              $   210,100                                                 $   155,849
    Accounts receivable, net                                                                                   311,846                                                     266,270
    Vehicle pooling costs and inventories                                                                       41,281                                                      38,987
    Income taxes receivable                                                                                      6,418                                                      18,751
    Deferred income taxes                                                                               --                                                       1,444
    Prepaid expenses and other assets                                                                           17,616                                   18,005  
                                                                                                     --------------------------------------                      --------------------------------------
          Total current assets                                                                                 587,261                                                     499,306
Property and equipment, net                                                                                    944,056                                                     816,791
Intangibles, net                                                                                                75,938                                                      11,761
Goodwill                                                                                                       340,243                                                     260,198
Deferred income taxes                                                                                            1,287                                                      23,506
Other assets                                                                                                    33,716                                   38,258  
                                                                                                     --------------------------------------                      --------------------------------------
          Total assets                                                                                     $ 1,982,501                              $ 1,649,820  
                                                                                                     ======= ========= ====================                      ======= ========= ====================
                                                                                                                                                                  
         LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
    Accounts payable and accrued liabilities                                                               $   208,415                                                 $   192,379
    Deferred revenue                                                                                             5,019                                                       4,628
    Income taxes payable                                                                                         6,472                                                       5,625
    Deferred income taxes                                                                                           92                                              --
    Current portion of revolving loan facility and capital lease                                                82,155                                   76,151  
    obligations
                                                                                                     ----------------  --------------------                      ----------------  --------------------
          Total current liabilities                                                                            302,153                                                     278,783
Deferred income taxes                                                                                            3,192                                                       3,816
Income taxes payable                                                                                            24,573                                                      25,641
Long-term debt, revolving loan facility, and capital lease                                                     550,883                                                     564,341
obligations, net of discount
Other liabilities                                                                                                3,100                                    2,783  
                                                                                                     --------------------------------------                      --------------------------------------
          Total liabilities                                                                                    883,901                                                     875,364
Commitments and contingencies
Stockholders’ equity:
    Preferred stock                                                                                     --                                              --
    Common stock                                                                                                    23                                                          22
    Additional paid-in capital                                                                                 453,349                                                     392,434
    Accumulated other comprehensive loss                                                                      (100,676 )                                                  (109,194 )
    Retained earnings                                                                                          745,370                                                     491,194
    Noncontrolling interest                                                                                        534                           --  
                                                                                                     --------------------------------------                      --------------------------------------
          Total stockholders’ equity                                              1,098,600                                  774,456  
                                                                                                     --------------------------------------                      --------------------------------------
          Total liabilities and stockholders’ equity                            $ 1,982,501                              $ 1,649,820  
                                                                                                     ======= ========= ====================                      ======= ========= ====================
 
                                                                                        Copart, Inc.
                                                                            Consolidated Statements of Cash Flows
                                                                                       (In thousands)
                                                                                         (Unaudited)
                                                                          
                                                                                                                                    Twelve Months Ended
                                                                                                                                         July 31,
                                                                                              ----------------------------------------------------------------------------------------
                                                                                                              2017                                   2016
                                                                                              -------------------------------------                     -------------------------------------
Cash flows from operating activities:
    Net income                                                                                      $ 394,261                                                 $ 270,360
    Adjustments to reconcile net income to net cash provided by
    operating activities:
        Depreciation and amortization, including debt cost                                             57,441                                                    49,643
        Allowance for doubtful accounts                                                                   187                                                     1,175
        Impairment of long-lived assets                                                                19,365                                            --
        Equity in losses of unconsolidated affiliates                                                     671                                                       895
        Stock-based payment compensation                                                               20,840                                                    20,864
        Loss (gain) on sale of property and equipment                                                     184                                                       (54 )
        Deferred income taxes                                                                          19,901                                                     5,740
        Changes in operating assets and liabilities, net of effects from
        acquisitions:
            Accounts receivable                                                                       (38,542 )                                                 (54,213 )
            Vehicle pooling costs and inventories                                                        (621 )                                                  (6,646 )
            Prepaid expenses and other current assets                                                   1,760                                                      (738 )
            Other assets                                                                                1,085                                                     4,164
            Accounts payable and accrued liabilities                                                    4,269                                                    48,347
            Deferred revenue                                                                              392                                                       983
            Income taxes receivable                                                                    12,343                                                   (12,649 )
            Income taxes payable                                                                         (333 )                                                   2,788
            Other liabilities                                                                          (1,145 )                                                   1,839  
                                                                                              ------------------------------------                      ------------------------------------
                Net cash provided by operating activities                                             492,058                                                   332,498
Cash flows from investing activities:
    Purchases of property and equipment                                                              (172,178 )                                                (173,917 )
    Purchases of assets and liabilities in connection with acquisitions,                             (160,812 )                                          --
    net of cash acquired
    Investment in unconsolidated affiliate                                                             (3,566 )                                          --
    Proceeds from sale of property and equipment                                                          765                                                       662
    Purchases of marketable securities                                                         --                                                   (21,119 )
    Proceeds from sale of marketable securities                                                --                                 21,498  
                                                                                              ------------------------------------                      ------------------------------------
                Net cash used in investing activities                                                (335,791 )                                                (172,876 )
Cash flows from financing activities:
    Proceeds from the exercise of stock options                                                        31,188                                                    13,240
    Proceeds from the issuance of Employee Stock Purchase Plan shares                                   4,270                                                     3,369
    Repurchases of common stock                                                                --                                                  (442,855 )
    Payments for employee stock-based tax withholdings                                               (135,433 )                                                 (15,039 )
    Proceeds from the issuance of long-term debt, net of discount                              --                                                    93,468
    Net (repayments) proceeds on revolving loan facility                                               (7,000 )                                                 238,000
    Debt offering costs                                                                        --                                                    (1,179 )
    Principal payments on long-term debt                                                       --                               (337,500 )
                                                                                              ------------------------------------                      ------------------------------------
                Net cash used in financing activities                                                (106,975 )                                                (448,496 )
Effect of foreign currency translation                                                                  4,959                                (11,289 )
                                                                                              ------------------------------------                      ------------------------------------
Net increase (decrease) in cash and cash equivalents                                                   54,251                                                  (300,163 )
Cash and cash equivalents at beginning of period                                                      155,849                                456,012  
                                                                                              ------------------------------------                      ------------------------------------
Cash and cash equivalents at end of period                                                          $ 210,100                              $ 155,849  
                                                                                              ======= ======= ====================                      ======= ======= ====================
Supplemental disclosure of cash flow information:
    Interest paid                                                                                   $  23,221                              $  23,606  
                                                                                              ======= ======= ====================                      ======= ======= ====================
    Income taxes paid, net of refunds                                                               $  14,011                              $ 127,981  
                                                                                              ======= ======= ====================                      ======= ======= ====================
                                                                                                                                                                       
                                                                                                                                               Copart, Inc.
                                                                                                                                     Additional Financial Information
                                                                                                                           Reconciliation of GAAP to Non-GAAP Financial Measures
                                                                                                                                   (In thousands, except per share data)
                                                                                                                                                (Unaudited)
                                                                                                                                                                                                               
                                                                                                                                Three Months Ended                                                                                                 Twelve Months Ended
                                                                                                                                     July 31,                                                                                                           July 31,
                                                                                          ----------------------------------------------------------------------------------------                            -------------------------------------------------------------------------------------
                                                                                                          2017                                   2016                                                     2017                                 2016
                                                                                          -------------------------------------                     -------------------------------------                     ----------------------------------                     -------------------------------------
GAAP net income attributable to Copart, Inc.                                                    $  70,335                                                 $  84,122                                              $ 394,227                                                 $ 270,360
Effect of foreign currency-related gains, net of tax                                                 (585 )                                                  (3,521 )                                                 (880 )                                                  (4,860 )
Effect of impairment of long-lived assets, net of tax                                              12,339                                            --                                                 12,339                                            --
Effect of acquisition related fees, net of tax                                                      1,241                                            --                                                  1,241                                            --
Effect of income tax benefit of ASU 2016-09 adoption and limitations                                 (428 )                                                 (11,594 )                                             (107,177 )                                                 (12,440 )
of foreign income tax credits(1)
Effect of payroll taxes on certain executive stock compensation, net                       --                         --                               3,307                                     48  
of tax
                                                                                          --------------  --------------------                      --------------  --------------------                      -----------  --------------------                      --------------  --------------------
Non-GAAP net income attributable to Copart, Inc.                                                $  82,902                              $  69,007                           $ 303,057                              $ 253,108  
                                                                                          ======= ======= ====================                      ======= ======= ====================                      ==== ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                                                                                      
GAAP diluted net income per common share                                                        $    0.30                              $    0.35                           $    1.66                              $    1.11  
                                                                                          ======= ======= ====================                      ======= ======= ====================                      ==== ======= ====================                      ======= ======= ====================
Non-GAAP diluted net income per common share                                                    $    0.35                              $    0.30                           $    1.29                              $    1.05  
                                                                                          ======= ======= ====================                      ======= ======= ====================                      ==== ======= ====================                      ======= ======= ====================
                                                                                                                                                                                                                                                                      
GAAP diluted weighted average common shares outstanding                                           237,634                                                   237,038                                                237,019                                                   244,295
Effect on common equivalent shares from ASU 2016-09 adoption(1)                                    (1,771 )                                                  (4,572 )                                               (1,992 )                                                  (3,728 )
                                                                                          ------------------------------------                      ------------------------------------                      ---------------------------------                      ------------------------------------
Non-GAAP diluted weighted average common shares outstanding                                       235,863                                232,466                             235,027                                240,567  
                                                                                          ====================================                      ====================================                      =================================                      ====================================
                                                                                                                                                                                                                                                                                      
 
(1)   In March 2016, the FASB issued ASU No. 2016-09, Improvements to
                         Employee Share-Based Payment Accounting. Under this standard, all
                         excess tax benefits and tax deficiencies related to exercises of
                         stock options are recognized as income tax expense or benefit in
                         the income statement as discrete items in the reporting period in
                         which they occur. Additionally, excess tax benefits are classified
                         as an operating activity on the consolidated statements of cash
                         flows. The Company adopted ASU 2016-09 during the fourth quarter
                         of fiscal 2016 on a modified retrospective basis. For a more
                         complete discussion, please review the Company’s Annual Report on
                         Form 10-K, to be filed with the Securities and Exchange Commission
                         on or before September 29, 2017.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170919006691r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170919006691/en/

SOURCE: Copart, Inc.

Copart, Inc. 
Melissa Perry, 972-391-5090 
Executive Support Manager, Office of the Chief Financial Officer 
melissa.perry@copart.com


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