Market Overview

Copart Reports First Quarter Fiscal 2018 Financial Results

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Copart, Inc. (NASDAQ:CPRT) today reported financial results for the
quarter ended October 31, 2017.

For the three months ended October 31, 2017, revenue, gross margin, and
net income were $419.2 million, $163.3 million, and $77.5 million,
respectively. These represent an increase in revenue of $73.2 million,
or 21.1%; an increase in gross margin of $18.0 million, or 12.4%; and a
decrease in net income of $89.8 million, or 53.7%, respectively, from
the same quarter last year. Fully diluted earnings per share for the
three months were $0.32 compared to $0.70 last year, a decrease of 54.3%.

The operating results for the three months ended October 31, 2017 were
adversely affected by abnormal costs of approximately $35.8 million
incurred as a result of Hurricane Harvey. These costs included temporary
storage facilities; premiums for subhaulers; labor costs incurred from
overtime; travel and lodging due to the reassignment of employees to the
affected region; and equipment lease expenses to handle the increased
volume. These costs, net of the associated revenues of approximately
$18.6 million, generated a pre-tax loss of approximately $17.2 million
during the quarter.

Excluding the impact of disposals of non-operating assets, foreign
currency-related losses and gains, certain income tax benefits and
payroll taxes related to accounting for stock option exercises, non-GAAP
fully diluted earnings per share for the three months ended October 31,
2017 and 2016, were $0.33 and $0.28, respectively. 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, November 22, 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 and can be accessed at http://stream.conferenceamerica.com/copart112217.
A replay of the call will be available through January 21, 2018 by
calling (877) 919-4059. Use confirmation code # 20637230.

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.

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 disposals of non-operating assets, foreign currency-related
losses and gains, and certain income tax benefits 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 disposals of non-operating assets, foreign
currency-related losses and gains, and certain income tax benefits 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
October 31,
2017   2016
Service revenues and vehicle sales:
Service revenues $ 374,125 $ 307,078
Vehicle sales 45,043   38,913  

Total service revenues and vehicle sales

419,168 345,991
Operating expenses:
Yard operations 206,219 157,362
Cost of vehicle sales 38,297 33,087
Yard depreciation and amortization 10,536 9,448
Yard stock-based payment compensation 852   801  
Gross margin 163,264 145,293
General and administrative 29,502 30,924
General and administrative depreciation and amortization 5,366 5,261
General and administrative stock-based payment compensation 4,454   4,284  
Total operating expenses 295,226   241,167  
Operating income 123,942 104,824
Other (expense) income:
Interest expense, net (5,398 ) (5,622 )
Other (expense) income, net (4,416 ) 3,332  
Total other expenses (9,814 ) (2,290 )
Income before income taxes 114,128 102,534
Income tax expense (benefit) 36,568   (64,746 )
Net income 77,560 167,280
Net income attributable to noncontrolling interest 45    
Net income attributable to Copart, Inc. $ 77,515   $ 167,280  
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