Copart Reports First Quarter Fiscal 2018 Financial Results
For the three months ended
The operating results for the three months ended
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
On
About Copart
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
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
Consolidated Statements of Income (In thousands, except per share data) (Unaudited) |
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Three Months Ended |
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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 |
$ | 77,515 | $ | 167,280 | ||||
Basic net income per common share | $ | 0.34 | $ | 0.74 | ||||
Weighted average common shares outstanding | 230,694 | 225,436 | ||||||
Diluted net income per common share | $ | 0.32 | $ | 0.70 | ||||
Diluted weighted average common shares outstanding | 238,791 | 237,758 | ||||||
Consolidated Balance Sheets (In thousands) (Unaudited) |
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ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 224,246 | $ | 210,100 | ||||
Accounts receivable, net | 366,641 | 311,846 | ||||||
Vehicle pooling costs and inventories | 47,817 | 41,281 | ||||||
Income taxes receivable | 139 | 6,418 | ||||||
Prepaid expenses and other assets | 15,528 | 17,616 | ||||||
Total current assets | 654,371 | 587,261 | ||||||
Property and equipment, net | 959,716 | 944,056 | ||||||
Intangibles, net | 73,285 | 75,938 | ||||||
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339,024 | 340,243 | ||||||
Deferred income taxes | — | 1,287 | ||||||
Other assets | 36,274 | 33,716 | ||||||
Total assets | $ | 2,062,670 | $ | 1,982,501 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued liabilities | $ | 222,400 | $ | 208,415 | ||||
Deferred revenue | 5,189 | 5,019 | ||||||
Income taxes payable | 28,430 | 6,472 | ||||||
Deferred income taxes | — | 92 | ||||||
Current portion of revolving loan facility and capital lease obligations | 33,150 | 82,155 | ||||||
Total current liabilities | 289,169 | 302,153 | ||||||
Deferred income taxes | 4,807 | 3,192 | ||||||
Income taxes payable | 26,086 | 24,573 | ||||||
Long-term debt, revolving loan facility and capital lease obligations, net of discount | 550,704 | 550,883 | ||||||
Other liabilities | 2,995 | 3,100 | ||||||
Total liabilities | 873,761 | 883,901 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Preferred stock | — | — | ||||||
Common stock | 23 | 23 | ||||||
Additional paid-in capital | 467,909 | 453,349 | ||||||
Accumulated other comprehensive loss | (102,156 | ) | (100,676 | ) | ||||
Retained earnings | 822,555 | 745,370 | ||||||
Noncontrolling interest | 578 | 534 | ||||||
Total stockholders' equity | 1,188,909 | 1,098,600 | ||||||
Total liabilities and stockholders' equity | $ | 2,062,670 | $ | 1,982,501 | ||||
Consolidated Statements of Cash Flows (In thousands) (Unaudited) |
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Three Months Ended |
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2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 77,560 | $ | 167,280 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization, including debt cost | 16,012 | 14,820 | ||||||
Allowance for doubtful accounts | 547 | 22 | ||||||
Equity in (earnings) losses of unconsolidated affiliates | (109 | ) | 349 | |||||
Stock-based payment compensation | 5,306 | 5,085 | ||||||
Loss on sale of property and equipment | 4,460 | 38 | ||||||
Deferred income taxes | 2,759 | 22,088 | ||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | ||||||||
Accounts receivable | (55,904 | ) | (29,472 | ) | ||||
Vehicle pooling costs and inventories | (6,532 | ) | (1,783 | ) | ||||
Prepaid expenses and other current assets | (62 | ) | 1,392 | |||||
Other assets | (2,420 | ) | (202 | ) | ||||
Accounts payable and accrued liabilities | 22,213 | (14,828 | ) | |||||
Deferred revenue | 166 | (602 | ) | |||||
Income taxes receivable | 6,272 | (92,172 | ) | |||||
Income taxes payable | 23,460 | 2,615 | ||||||
Other liabilities | (368 | ) | (337 | ) | ||||
Net cash provided by operating activities |
93,360 | 74,293 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment, including acquisitions | (41,361 | ) | (38,209 | ) | ||||
Proceeds from sale of property and equipment | 2,019 | 190 | ||||||
Investment in unconsolidated affiliate | — | (1,050 | ) | |||||
Net cash used in investing activities | (39,342 | ) | (39,069 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from the exercise of stock options | 9,253 | 13,977 | ||||||
Payments for employee stock-based tax withholdings | (3 | ) | (134,615 | ) | ||||
Net (repayments) proceeds on revolving loan facility | (49,000 | ) | 103,900 | |||||
Net cash used in financing activities | (39,750 | ) | (16,738 | ) | ||||
Effect of foreign currency translation | (122 | ) | (5,914 | ) | ||||
Net increase in cash and cash equivalents | 14,146 | 12,572 | ||||||
Cash and cash equivalents at beginning of period | 210,100 | 155,849 | ||||||
Cash and cash equivalents at end of period | $ | 224,246 | $ | 168,421 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Interest paid | $ | 5,496 | $ | 5,428 | ||||
Income taxes paid, net of refunds | $ | 4,167 | $ | 2,677 | ||||
Additional Financial Information Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share data) (Unaudited) |
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Three Months Ended |
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2017 | 2016 | |||||||
GAAP net income attributable to |
$ | 77,515 | $ | 167,280 | ||||
Effect of disposal of non-operating assets, net of tax | 2,994 | — | ||||||
Effect of foreign currency-related losses (gains), net of tax | 308 | (2,847 | ) | |||||
Effect of income tax benefit of ASU 2016-09 adoption, net of tax (1) | (3,767 | ) | (101,395 | ) | ||||
Effect of payroll taxes on certain executive stock compensation, net of tax | — | 3,307 | ||||||
Non-GAAP net income attributable to |
$ | 77,050 | $ | 66,345 | ||||
GAAP diluted net income per common share | $ | 0.32 | $ | 0.70 | ||||
Non-GAAP diluted net income per common share | $ | 0.33 | $ | 0.28 | ||||
GAAP diluted weighted average common shares outstanding | 238,791 | 237,758 | ||||||
Effect on common equivalent shares from ASU 2016-09 adoption(1) | (2,014 | ) | (3,098 | ) | ||||
Non-GAAP diluted weighted average common shares outstanding | 236,777 | 234,660 |
(1) | In |
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