Copart Reports Third Quarter Fiscal 2023 Financial Results

DALLAS--(BUSINESS WIRE)--Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended April 30, 2023.

For the three months ended April 30, 2023, revenue, gross profit, and net income were $1,021.8 million, $483.4 million, and $350.4 million, respectively. These represent an increase in revenue of $81.9 million, or 8.7%; an increase in gross profit of $47.2 million, or 10.8%; and an increase in net income of $71.8 million, or 25.8%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $0.72 compared to $0.58 last year, an increase of 24.1%.

For the nine months ended April 30, 2023, revenue, gross profit, and net income were $2,871.9 million, $1,279.4 million, and $890.0 million, respectively. These represent an increase in revenue of $254.4 million, or 9.7%; an increase in gross profit of $54.8 million, or 4.5%; and an increase in net income of $63.6 million, or 7.7%, respectively, from the same period last year. Fully diluted earnings per share for the nine months were $1.84 compared to $1.71 last year, an increase of 7.6%.

Excluding the impact of certain income tax benefits related to stock-based compensation, non-GAAP fully diluted earnings per share for the three months ended April 30, 2023 and 2022 were $0.72, and $0.58, respectively, which was an increase of 24.1%. Excluding the impact of certain income tax benefits related to stock-based compensation, non-GAAP fully diluted earnings per share for the nine months ended April 30, 2023 and 2022, were $1.83, and $1.67, respectively, which was an increase of 9.6%. 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 Wednesday, May 17, 2023, at 5 p.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 2023 by visiting www.copart.com/investorrelations.

About Copart

Copart, Inc., founded in 1982, is a global leader in online vehicle auctions and vehicle remarketing services. 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, fleet operators, dealers, vehicle rental companies, charities, 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 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 April 30,										Nine Months Ended April 30,
		2023			2022				% Change			2023				2022				% Change
Service revenues and vehicle sales:
Service revenues		$	847,249		$	766,316			10.6	%			2,363,886			$	2,145,224			10.2	%
Vehicle sales			174,582			173,625			0.6	%			508,041				472,309			7.6	%
Total service revenues and vehicle sales			1,021,831			939,941			8.7	%			2,871,927				2,617,533			9.7	%
Operating expenses:
Yard operations			343,617			313,365			9.7	%			1,020,674				878,740			16.2	%
Cost of vehicle sales			159,443			157,236			1.4	%			465,282				423,948			9.7	%
Yard depreciation and amortization			33,090			31,646			4.6	%			101,520				86,383			17.5	%
Yard stock-based compensation			2,251			1,417			58.9	%			5,038				3,813			32.1	%
Gross profit			483,430			436,277			10.8	%			1,279,413				1,224,649			4.5	%
General and administrative			52,395			50,188			4.4	%			144,772				134,057			8.0	%
General and administrative depreciation and amortization			4,281			4,933			(13.2	) %			13,323				15,269			(12.7	) %
General and administrative stock-based compensation			7,830			8,401			(6.8	) %			25,366				25,119			1.0	%
Total operating expenses			602,907			567,186			6.3	%			1,775,975				1,567,329			13.3	%
Operating income			418,924			372,755			12.4	%			1,095,952				1,050,204			4.4	%
Other expense:
Interest income (expense), net			17,878			(4,492	)		(498.0	) %			36,780				(14,032	)		(362.1	) %
Other income (expense), net			3,628			1,342			170.3	%			(2,096	)			1,314			(259.5	) %
Total other income (expense)			21,506			(3,150	)		(782.7	) %			34,684				(12,718	)		(372.7	) %
Income before income taxes			440,430			369,605			19.2	%			1,130,636				1,037,486			9.0	%
Income tax expense			89,999			90,985			(1.1	) %			240,680				211,091			14.0	%
Net income		$	350,431		$	278,620			25.8	%		$	889,956			$	826,395			7.7	%
Basic net income per common share		$	0.73		$	0.59			23.7	%		$	1.87			$	1.74			7.5	%
Weighted average common shares outstanding			476,787			475,010			0.4	%			476,417				474,554			0.4	%
Diluted net income per common share		$	0.72		$	0.58			24.1	%		$	1.84			$	1.71			7.6	%
Diluted weighted average common shares outstanding			483,690			481,448			0.5	%			482,718				482,576			-	%

Copart, Inc. Consolidated Balance Sheets (In thousands) (Unaudited)
		April 30, 2023				July 31, 2022
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash		$	2,114,183			$	1,384,236
Accounts receivable, net			693,834				578,573
Vehicle pooling costs			119,724				112,242
Inventories			44,999				58,791
Income taxes receivable			428				49,882
Prepaid expenses and other assets			27,862				18,731
Total current assets			3,001,030				2,202,455
Property and equipment, net			2,710,933				2,485,764
Operating lease right-of-use assets			105,260				116,303
Intangibles, net			49,676				54,680
Goodwill			406,640				401,954
Other assets			76,266				47,708
Total assets		$	6,349,805			$	5,308,864
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	441,466			$	399,034
Deferred revenue			25,664				20,061
Income taxes payable			18,534				-
Current portion of operating and finance lease liabilities			20,900				21,794
Total current liabilities			506,564				440,889
Deferred income taxes			76,690				80,060
Income taxes payable			65,745				64,637
Operating and finance lease liabilities, net of current portion			86,016				95,683
Long-term debt and other liabilities			22,368				1,996
Total liabilities			757,383				683,265
Commitments and contingencies
Stockholders' equity:
Preferred stock			-				-
Common stock			48				48
Additional paid-in capital			901,495				838,508
Accumulated other comprehensive loss			(152,459	)			(169,365	)
Retained earnings			4,843,338				3,956,408
Total stockholders' equity			5,592,422				4,625,599
Total liabilities and stockholders' equity		$	6,349,805			$	5,308,864

Copart, Inc. Consolidated Statements of Cash Flows (In thousands) (Unaudited)
		Nine Months Ended April 30,
		2023				2022
Cash flows from operating activities:
Net income		$	889,956			$	826,395
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost			115,320				102,333
Allowance for credit loss			1,480				1,456
Equity in losses of unconsolidated affiliates			5,446				794
Stock-based compensation			30,404				28,932
Gain on sale of property and equipment			(965	)			(1,280	)
Deferred income taxes			(3,236	)			14,582
Changes in operating assets and liabilities:
Accounts receivable			(115,098	)			(109,636	)
Vehicle pooling costs			(7,300	)			(20,029	)
Inventories			14,870				(13,367	)
Prepaid expenses, other current and non-current assets			(33,830	)			(37,842	)
Operating lease right-of-use assets and lease liabilities			595				436
Accounts payable, accrued liabilities and other liabilities			30,314				45,745
Deferred revenue			5,516				388
Income taxes receivable			49,430				18,416
Income taxes payable			22,731				6,531
Net cash provided by operating activities			1,005,633				863,854
Cash flows from investing activities:
Purchases of property and equipment			(346,524	)			(234,810	)
Purchase of assets in connection with acquisitions			-				(493	)
Proceeds from sale of property and equipment			20,509				2,622
Purchase of held to maturity securities			-				(374,866	)
Proceeds from the sale of held to maturity securities			-				149,977
Investment in unconsolidated affiliate			(2,744	)			-
Net cash used in investing activities			(328,759	)			(457,570	)
Cash flows from financing activities:
Proceeds from the exercise of stock options			27,220				16,108
Proceeds from the issuance of Employee Stock Purchase Plan shares			5,363				5,026
Payments for employee stock-based tax withholdings			(3,026	)			(872	)
Drawdown on revolving loan facility			21,481				-
Debt offering costs			-				(1,212	)
Payments of finance lease obligations			(18	)			(472	)
Net cash provided by financing activities			51,020				18,578
Effect of foreign currency translation			2,053				(18,304	)
Net increase in cash, cash equivalents, and restricted cash			729,947				406,558
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		$	2,114,183			$	1,454,818
Supplemental disclosure of cash flow information:
Interest paid		$	1,586			$	14,485
Income taxes paid, net of refunds		$	171,438			$	195,521

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,
		2023				2022				2023				2022
GAAP net income		$	350,431			$	278,620			$	889,956			$	826,395
Effect of certain discrete income tax items			-				-				-				(17,490	)
Effect of certain legal matters, net of tax			-				5,092				-				5,092
Effect of recognizing tax benefit on exercise of stock-based compensation			(4,370	)			(2,244	)			(5,110	)			(9,197	)
Non-GAAP net income		$	346,061			$	281,468			$	884,846			$	804,800
GAAP net income per diluted common share		$	0.72			$	0.58			$	1.84			$	1.71
Non-GAAP net income per diluted common share		$	0.72			$	0.58			$	1.83			$	1.67

Contacts

Brooke Boston, Executive Assistant, Office of the Chief Financial Officer
[e-mail]