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Copart Reports Fourth Quarter Fiscal 2018 Financial Results

September 19, 2018

DALLAS--(BUSINESS WIRE)--Sep 19, 2018--Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter and year ended July 31, 2018.

For the three months ended July 31, 2018, revenue, gross profit, and net income were $449.2 million, $188.4 million, and $109.7 million, respectively. These represent an increase in revenue of $70.6 million, or 18.7%; an increase in gross profit of $21.0 million, or 12.5%; and an increase in net income of $39.4 million, or 56.0%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $0.45 compared to $0.30 last year, an increase of 50.0%.

For the year ended July 31, 2018, revenue, gross profit, and net income were $1.8 billion, $762.4 million, and $417.9 million, respectively. These represent an increase in revenue of $357.7 million, or 24.7%; an increase in gross profit of $130.3 million, or 20.6%; and an increase in net income of $23.6 million, or 6.0%, respectively, from the same period last year. Fully diluted earnings per share for the year ended July 31, 2018 were $1.73 compared to $1.66 last year, an increase of 4.2%.

The operating results for the year ended July 31, 2018 were adversely affected by abnormal costs of $79.7 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, as well as cost of vehicle sales. These costs, net of the associated revenues of $66.9 million generated a pre-tax loss of $12.8 million for the year ended July 31, 2018. The operating results for the year ended July 31, 2018 were also adversely impacted by the recording of a provisional tax liability for the Transition Tax of $13.8 million for the deemed repatriation of foreign earnings and profits under the Tax Cuts and Jobs Act of 2017 and by non-recurring depreciation and amortization charges of $10.5 million, in the fourth quarter. Certain foreign tax credits of $1.4 million were made available by incurring the Transition Tax of $13.8 million, resulting in a net expense of $12.4 million for the year ended July 31, 2018. This expense was offset by the Act’s reduction of the federal corporate income tax rate. Because Copart’s fiscal year includes periods before and after December 22, 2017, the effective date of the Act, during which the U.S. federal corporate tax rate was 35% and 21%, respectively, our U.S. federal corporate tax rate for fiscal year 2018 was 26.9%. The operating results for the year ended July 31, 2018, include the benefit of this rate reduction. In addition, the non-recurring depreciation and amortization charges of $10.5 million result from depreciation related to a combination of construction in progress placed in service in the fourth quarter of fiscal 2018 and a change in our estimate of the useful lives for certain fixed assets. The effect of the non-recurring depreciation, net of income tax benefit of $11.4 million, is an increase to net income of $0.9 million, as a result of bonus tax depreciation provided for in the Tax Cuts and Jobs Act of 2017.

Excluding the impact of income taxes on the deemed repatriation of foreign earnings, net of deferred tax changes, disposals of non-operating assets, impairment of long-lived assets, acquisition related fees and integration charges, 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, non-GAAP fully diluted earnings per share for the three months ended July 31, 2018 and 2017, were $0.42 and $0.35, respectively. Non-GAAP fully diluted earnings per share for the year ended July 31, 2018 and 2017, were $1.73 and $1.29, 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, September 19, 2018, 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/copart091918. A replay of the call will be available through November 18, 2018 by calling (877) 919-4059. Use confirmation code # 18189145.

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), Brazil (Copart.com.br), the Republic of Ireland (Copart.ie), Germany (Copart.de), Finland (AVK.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.

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 income taxes on the deemed repatriation of foreign earnings, net of deferred tax changes, disposals of non-operating assets, impairment of long-lived assets, acquisition related fees and integration charges, 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. 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 income taxes on the deemed repatriation of foreign earnings, net of deferred tax changes, disposals of non-operating assets, impairment of long-lived assets, acquisition related fees and integration charges, 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.

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.

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