NPA parent Copart reveals fiscal Q1 2021 earnings

Dallas-based Copart, parent company of National Powersport Auctions (NPA) today reported financial results for the quarter ended Oct. 31, 2020.

For the three months ended Oct. 31, revenue, gross profit and net income were $592.9 million, $296.8 million, and $200.3 million, respectively. These represent an increase in revenue of $38.5 million, or 6.9%; an increase in gross profit of $41.9 million, or 16.4%; and a decrease in net income of $17.9 million, or 8.2%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $0.83 compared to $0.91 last year, a decrease of 8.8%.

Excluding the impact of discrete income tax items, foreign currency-related gains, certain income tax benefits and payroll taxes related to accounting for stock option exercises, and the effect on common equivalent shares from ASU 2016-09, non-GAAP fully diluted earnings per share for the three months ended Oct. 31, 2020 and 2019, were $0.79 and $0.65, respectively, an increase of 21.5%.

Copart, Inc.Consolidated Statements of Income(In thousands, except per share amounts)(Unaudited)
 
  Three Months Ended October 31,
  2020 2019
Service revenues and vehicle sales:    
Service revenues $515,372  $487,856 
Vehicle sales 77,568  66,568 
Total service revenues and vehicle sales 592,940  554,424 
Operating expenses:    
Yard operations 206,986  222,879 
Cost of vehicle sales 64,360  58,764 
Yard depreciation and amortization 23,294  16,820 
Yard stock-based compensation 1,531  1,092 
Gross profit 296,769  254,869 
General and administrative 35,138  38,843 
General and administrative depreciation and amortization 5,655  6,194 
General and administrative stock-based compensation 7,382  4,441 
Total operating expenses 344,346  349,033 
Operating income 248,594  205,391 
Other expense:    
Interest expense, net (5,032) (4,026)
Other income, net 3,253  717 
Total other expense (1,779) (3,309)
Income before income taxes 246,815  202,082 
Income tax expense (benefit) 46,530  (16,098)
Net income $200,285  $218,180 
     
Basic net income per common share $0.85  $0.94 
Weighted average common shares outstanding 235,791  231,169 
     
Diluted net income per common share $0.83  $0.91 
Diluted weighted average common shares outstanding 239,968  238,662 
Copart, Inc.Consolidated Balance Sheets(In thousands)(Unaudited)
 
  October 31, 2020 July 31, 2020
ASSETS    
Current assets:    
Cash, cash equivalents, and restricted cash $605,732  $477,718 
Accounts receivable, net 407,897  350,207 
Vehicle pooling costs 84,128  73,684 
Inventories 28,244  20,080 
Income taxes receivable 915  26,740 
Prepaid expenses and other assets 11,260  15,330 
Total current assets 1,138,176  963,759 
Property and equipment, net 2,072,059  1,941,719 
Operating lease right-of-use assets 112,275  118,455 
Intangibles, net 45,864  47,772 
Goodwill 342,576  343,622 
Deferred income taxes 212  213 
Other assets 30,026  39,721 
Total assets $3,741,188  $3,455,261 
     
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
Accounts payable and accrued liabilities $359,816  $318,530 
Deferred revenue 9,476  8,233 
Income taxes payable 12,640  3,709 
Current portion of operating lease liabilities 24,011  24,821 
Current portion of finance lease liabilities 1,593  751 
Total current liabilities 407,536  356,044 
Deferred income taxes 77,826  71,686 
Income taxes payable 44,347  44,965 
Operating lease liabilities, net of current portion 88,490  95,584 
Long-term debt and finance lease liabilities, net of discount 411,845  397,036 
Other liabilities 311  430 
Total liabilities 1,030,355  965,745 
Commitments and contingencies    
Stockholders' equity:    
Preferred stock    
Common stock 24  24 
Additional paid-in capital 701,654  672,727 
Accumulated other comprehensive loss (128,494) (121,088)
Retained earnings 2,137,649  1,937,853 
Total stockholders' equity 2,710,833  2,489,516 
Total liabilities and stockholders' equity $3,741,188  $3,455,261 
Copart, Inc.Consolidated Statements of Cash Flows(In thousands)(Unaudited)
 
  Three Months Ended October 31,
  2020 2019
Cash flows from operating activities:    
Net income $200,285  $218,180 
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization, including debt cost 29,227  23,704 
Allowance for credit loss (157) 382 
Equity in (earnings) losses of unconsolidated affiliates (1,741) 855 
Stock-based compensation 8,913  5,533 
Gain on sale of property and equipment (1,230) (272)
Deferred income taxes 6,239  4,839 
Changes in operating assets and liabilities:    
Accounts receivable (57,860) (25,408)
Vehicle pooling costs (10,600) (9,358)
Inventories (8,259) 1,710 
Prepaid expenses and other current and non-current assets 15,236  4,079 
Operating lease right-of-use assets and lease liabilities 153  256 
Accounts payable and accrued liabilities 42,880  16,587 
Deferred revenue 1,251  (1,437)
Income taxes receivable 25,825  (28,740)
Income taxes payable 8,371  1,700 
Other liabilities   (152)
Net cash provided by operating activities 258,533  212,458 
     
Cash flows from investing activities:    
Purchases of property and equipment, including acquisitions (147,093) (131,793)
Proceeds from sale of property and equipment 271  283 
Net cash used in investing activities (146,822) (131,510)
     
Cash flows from financing activities:    
Proceeds from the exercise of stock options 20,014  12,620 
Payments for employee stock-based tax withholdings (489) (101,354)
Payments of finance lease obligations (327)  
Net cash provided by (used in) financing activities 19,198  (88,734)
Effect of foreign currency translation (2,895) 2,569 
Net increase (decrease) in cash, cash equivalents, and restricted cash 128,014  (5,217)
Cash, cash equivalents, and restricted cash at beginning of period 477,718  186,319 
Cash, cash equivalents, and restricted cash at end of period $605,732  $181,102 
Supplemental disclosure of cash flow information:    
Interest paid $4,762  $4,506 
Income taxes paid, net of refunds $6,157  $7,465 
Copart, Inc.Additional Financial InformationReconciliation of GAAP to Non-GAAP Financial Measures(In thousands, except per share amounts)(Unaudited)
 
  Three Months Ended October 31,
  2020 2019
GAAP net income $200,285  $218,180 
Effect of discrete income tax items   (3,008)
Effect of foreign currency-related gains, net of tax (190) (263)
Effect of recognizing tax benefit on exercise of employee stock options (11,773) (62,365)
Effect of payroll taxes on certain executive stock compensation, net of tax   2,867 
Non-GAAP net income $188,322  $155,411 
     
GAAP net income per diluted common share $0.83  $0.91 
Non-GAAP net income per diluted common share $0.79  $0.65 
     
GAAP diluted weighted average common shares outstanding 239,968  238,662 
Effect on common equivalent shares from ASU 2016-09 (709) (1,306)
Non-GAAP diluted weighted average common shares outstanding 239,259  237,356 
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