Copart Reports Second Quarter Fiscal 2023 Financial Results

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

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Copart Reports Second Quarter Fiscal 2023 Financial Results