8-K - CPRT - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

September 2, 2020

Date of Report (date of earliest event reported)

COPART, INC.

(Exact name of registrant as specified in its charter)

Delaware		000-23255			94-2867490
(State or other jurisdiction of incorporation or organization)		(Commission File Number)			(I.R.S. Employer Identification No.)
14185 Dallas Parkway	Suite 300	Dallas	Texas	75254
(Address of principal executive offices, including zip code)

(972) 391-5000

(Registrant’s telephone number, including area code)

Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001	CPRT	The NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

INFORMATION INCLUDED IN THIS REPORT

Section 2 — Financial Information

Item 2.02 Results of Operations and Financial Condition

The following information and the exhibit attached hereto as Exhibit 99.1 are intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.” This information and the exhibit attached hereto as Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date of this report, regardless of any general incorporation language in the filing, except as shall be expressly set forth by specific reference in such filing.

On September 2, 2020, Copart, Inc. issued a press release announcing its financial results for the fourth quarter of fiscal year 2020, which ended July 31, 2020. The full text of the press release is furnished herewith as Exhibit 99.1.

Section 9 — Financial Statements and Exhibits

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

The following exhibits are furnished herewith:

Exhibit<br>Number	Description
99.1	Press release, dated September 2, 2020 of Copart, Inc. announcing its financial results for the fourth quarter of fiscal year 2020, which ended July 31, 2020.
104	Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: September 2, 2020 COPART, INC.

By:	/s/ Jeffrey Liaw
	Jeffrey Liaw
	President and Chief Financial Officer

INDEX TO EXHIBITS

Exhibit<br>Number	Description
99.1	Press release, dated September 2, 2020 of Copart, Inc. announcing its financial results for the fourth quarter of fiscal year 2020, which ended July 31, 2020.
104	Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL).

Document

Exhibit 99.1

Copart, Inc.

For Immediate Release

Copart Reports Fourth Quarter Fiscal 2020 Financial Results

Dallas, Texas. (September 2, 2020) — Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter and year ended July 31, 2020.

For the three months ended July 31, 2020, revenue, gross profit, and net income were $525.7 million, $250.4 million, and $165.5 million, respectively. These represent a decrease in revenue of $16.9 million, or 3.1%; an increase in gross profit of $7.8 million, or 3.2%; and an increase in net income of $12.0 million, or 7.8%, respectively, from the same period last year. Fully diluted earnings per share for the three months ended July 31, 2020 were $0.69 compared to $0.64 last year, an increase of 7.8%.

For the year ended July 31, 2020, revenue, gross profit, and net income were $2.2 billion, $1.0 billion, and $699.9 million, respectively. These represent an increase in revenue of $163.6 million, or 8.0%; an increase in gross profit of $109.5 million, or 12.2%; and an increase in net income of $108.2 million, or 18.3%, respectively, from the same period last year. Fully diluted earnings per share for the year ended July 31, 2020 were $2.93 compared to $2.46 last year, an increase of 19.1%.

Excluding the impact of discrete income tax items, disposal of non-operating assets, reserve for legacy sales tax liabilities, foreign currency-related gains and losses, 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 and year ended July 31, 2020 and 2019, were $0.69, $0.60, $2.57 and $2.25, 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 Thursday, September 3, 2020, at 11:00 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/copart090320. A replay of the call will be available through November 2, 2020 by calling (877) 919-4059. Use confirmation code: 38708517.

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 150,000 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. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000

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 discrete income tax items, disposal of non-operating assets, reserve for legacy sales tax liabilities, foreign currency-related gains and losses, 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. 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 discrete income tax items, disposal of non-operating assets, reserve for legacy sales tax liabilities, foreign currency-related gains and losses, 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.

Cautionary Note About Forward-Looking Statements

This press release contains forward-looking statements within the meaning of federal securities laws, including statements concerning the potential impact of the COVID-19 pandemic on our business, operations, and operating results. 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.

Contact:	Melissa Hunter, Executive Support Manager, Office of the Chief Financial Officer
	972-391-5090 or melissa.hunter@copart.com

Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000

Copart, Inc.

Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended <br>July 31,						Twelve Months Ended <br>July 31,
	2020		2019		2020		2019
Service revenues and vehicle sales:
Service revenues	$	457,668	$	470,399	$	1,947,140	$	1,755,694
Vehicle sales	67,991		72,176		258,443		286,263
Total service revenues and vehicle sales	525,659		542,575		2,205,583		2,041,957
Operating expenses:
Yard operations	197,186		217,089		889,733		819,753
Cost of vehicle sales	54,643		65,552		225,294		255,504
Yard depreciation and amortization	21,615		15,745		76,999		63,167
Yard stock-based compensation	1,784		1,570		5,755		5,191
Gross profit	250,431		242,619		1,007,802		898,342
General and administrative	34,643		39,772		149,745		141,885
General and administrative depreciation and amortization	5,764		5,770		24,391		21,728
General and administrative stock-based compensation	4,309		4,275		17,567		18,254
Total operating expenses	319,944		349,773		1,389,484		1,325,482
Operating income	205,715		192,802		816,099		716,475
Other expense:
Interest expense, net	(4,803)		(4,255)		(18,871)		(17,585)
Other income (expense), net	971		(1,477)		3,611		6,061
Total other expense	(3,832)		(5,732)		(15,260)		(11,524)
Income before income taxes	201,883		187,070		800,839		704,951
Income tax expense	36,350		33,574		100,932		113,258
Net income	$	165,533	$	153,496	$	699,907	$	591,693
Basic net income per common share	$	0.70	$	0.67	$	3.00	$	2.57
Weighted average common shares outstanding	234,863		229,204		233,202		230,489
Diluted net income per common share	$	0.69	$	0.64	$	2.93	$	2.46
Diluted weighted average common shares outstanding	238,927		238,354		238,656		240,453

Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000

Copart, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

	July 31, 2020		July 31, 2019
ASSETS
Current assets:
Cash, cash equivalents, and restricted cash	$	477,718	$	186,319
Accounts receivable, net	350,207		367,265
Vehicle pooling costs	73,684		76,548
Inventories	20,080		20,941
Income taxes receivable	26,740		19,526
Prepaid expenses and other assets	15,330		16,568
Total current assets	963,759		687,167
Property and equipment, net	1,941,719		1,427,726
Operating lease right-of-use assets	118,455		—
Intangibles, net	47,772		55,156
Goodwill	343,622		333,321
Deferred income taxes	213		411
Other assets	39,721		43,836
Total assets	$	3,455,261	$	2,547,617
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	318,530	$	270,918
Deferred revenue	8,233		6,466
Income taxes payable	3,709		3,482
Current portion of operating lease liabilities	24,821		—
Current portion of finance lease obligations	751		1,138
Total current liabilities	356,044		282,004
Deferred income taxes	71,686		48,683
Income taxes payable	44,965		35,116
Operating lease liabilities, net of current portion	95,584		—
Long-term debt and finance lease obligations, net of discount	397,036		400,091
Other liabilities	430		3,342
Total liabilities	965,745		769,236
Commitments and contingencies
Stockholders’ equity:
Preferred stock	—		—
Common stock	24		23
Additional paid-in capital	672,727		572,559
Accumulated other comprehensive loss	(121,088)		(132,529)
Retained earnings	1,937,853		1,338,328
Total stockholders’ equity	2,489,516		1,778,381
Total liabilities and stockholders’ equity	$	3,455,261	$	2,547,617

Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000

Copart, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Year Ended July 31,
	2020		2019
Cash flows from operating activities:
Net income	$	699,907	$	591,693
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt cost	104,257		85,334
Allowance for doubtful accounts	1,670		(429)
Impairment of long-lived assets	—		—
Equity in losses of unconsolidated affiliates	1,401		419
Stock-based compensation	23,322		23,445
Gain on sale of property and equipment	(1,913)		(3,073)
Deferred income taxes	23,082		23,167
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	15,993		(60,808)
Vehicle pooling costs	2,590		(16,418)
Inventories	1,348		(4,719)
Prepaid expenses and other current and non-current assets	141		(12,265)
Operating lease right-of-use assets and lease liabilities	(572)		—
Accounts payable and accrued liabilities	41,648		11,126
Deferred revenue	1,615		2,056
Income taxes receivable	(7,216)		(4,215)
Income taxes payable	10,114		10,669
Other liabilities	498		664
Net cash provided by operating activities	917,885		646,646
Cash flows from investing activities:
Purchases of property and equipment, including acquisitions	(603,674)		(374,628)
Proceeds from sale of property and equipment	2,466		18,361
Net cash used in investing activities	(601,208)		(356,267)
Cash flows from financing activities:
Proceeds from the exercise of stock options	71,640		34,398
Proceeds from the issuance of Employee Stock Purchase Plan shares	8,276		7,183
Repurchases of common stock	—		(364,997)
Payments for employee stock-based tax withholdings	(103,451)		(46,888)
Debt offering costs	(2,814)		—
Payments of finance lease obligations	(1,065)		—
Net cash used in financing activities	(27,414)		(370,304)
Effect of foreign currency translation	2,136		(8,276)
Net increase (decrease) in cash, cash equivalents, and restricted cash	291,399		(88,201)
Cash, cash equivalents, and restricted cash at beginning of period	186,319		274,520
Cash, cash equivalents, and restricted cash at end of period	$	477,718	$	186,319
Supplemental disclosure of cash flow information:
Interest paid	$	19,728	$	19,289
Income taxes paid, net of refunds	$	83,770	$	82,448

Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000

Copart, Inc.

Additional Financial Information

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended <br>July 31,						Twelve Months Ended <br>July 31,
	2020		2019		2020		2019
GAAP net income	$	165,533	$	153,496	$	699,907	$	591,693
Effect of discrete income tax items	4,740		—		1,732		(10,170)
Effect of disposal of non-operating assets, net of tax	—		—		—		(1,598)
Effect of reserve for legacy sales tax liabilities, net of tax	—		978		—		978
Effect of foreign currency-related (gains) losses, net of tax	(268)		48		(1,436)		(256)
Effect of recognizing tax benefit on exercise of employee stock options	(6,586)		(12,007)		(92,548)		(46,103)
Effect of payroll taxes on certain executive stock compensation, net of tax	—		—		2,867		1,295
Non-GAAP net income	$	163,419	$	142,515	$	610,522	$	535,839
GAAP net income per diluted common share	$	0.69	$	0.64	$	2.93	$	2.46
Non-GAAP net income per diluted common share	$	0.69	$	0.60	$	2.57	$	2.25
GAAP diluted weighted average common shares outstanding	238,927		238,354		238,656		240,453
Effect on common equivalent shares from ASU 2016-09	(656)		(1,633)		(911)		(1,870)
Non-GAAP diluted weighted average common shares outstanding	238,271		236,721		237,745		238,583

Copart, Inc. ~ 14185 Dallas Parkway, Suite 300, Dallas TX 75254 ~ (972) 391-5000