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Copart Reports Second Quarter Fiscal 2015 Financial Results

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Copart, Inc. (NASDAQ:CPRT) today reported financial results for the quarter and six months ended January 31, 2015.

For the three months ended January 31, 2015, revenue, gross margin and net income were $276.3 million, $114.9 million and $52.2 million, respectively. These represent a decrease in revenue of $10.2 million, or 3.6%; and increases in gross margin of $3.3 million, or 3.0%; and in net income of $6.8 million, or 15.1%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $0.40 compared to $0.35 last year, an increase of 14.3%.

For the six months ended January 31, 2015, revenue, gross margin and net income were $566.6 million, $237.2 million and $104.8 million, respectively. These represent increases in revenue of $0.3 million, or 0.1%; in gross margin of $17.8 million, or 8.1%; and in net income of $18.0 million, or 20.8%, respectively, from the same period last year. Fully diluted earnings per share for the six months were $0.80 compared to $0.66 last year, an increase of 21.2%.

On Wednesday, February 25, 2015, 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 at http://stream.conferenceamerica.com/copart022515. A replay of the call will be available through April 26, 2015 by calling (877) 919-4059. Use confirmation code # 51385268.

About Copart

Copart, founded in 1982, provides vehicle sellers with a full range of remarketing services to process and sell salvage and clean title vehicles to dealers, dismantlers, rebuilders, exporters and, in some states, to end users. Copart remarkets the vehicles through Internet sales utilizing its VB3 technology. Copart sells vehicles on behalf of insurance companies, banks, finance companies, fleet operators, dealers, car dealerships and others as well as cars sourced from the general public. The company currently operates in the United States and Canada (www.copart.com), the United Kingdom (www.copart.co.uk), Brazil (www.copart.com.br), Germany (www.copart.de), the United Arab Emirates (www.copart.ae), and Spain (www.autoresiduos.com). Copart links sellers to more than 750,000 members in over 150 countries worldwide through its multi-channel platform. Copart was recently ranked at the top of Deloitte’s “Exceptional 100″ list of companies, which reviewed U.S. publicly traded companies based upon a multidimensional approach to measuring financial performance. For more information, or to become a member, visit www.copart.com.

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.

Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

Three Months Ended
January 31,

Six Months Ended
January 31,

2015 2014 2015 2014
Service revenues and vehicle sales:
Service revenues $ 238,508 $ 235,732 $ 485,128 $ 462,095
Vehicle sales 37,750 50,702 81,516 104,222

Total service revenues and vehicle sales

276,258 286,434 566,644 566,317
Operating expenses:
Yard operations 120,181 121,240 241,780 236,466
Cost of vehicle sales 32,118 43,642 69,191 89,733
Yard depreciation and amortization 8,543 9,460 17,403 19,555
Yard stock-based payment compensation 549 546 1,095 1,181
Gross margin 114,867 111,546 237,175 219,382
General and administrative 27,587 31,221 60,804 65,456
General and administrative depreciation and amortization 2,857 3,615 5,727 8,025
General and administrative stock-based payment compensation 3,955 5,226 7,775 9,458
Total operating expenses 195,790 214,950 403,775 429,874
Operating income 80,468 71,484 162,869 136,443
Other (expense) income:
Interest expense, net (4,505 ) (2,066 ) (6,276 ) (4,203 )
Other income, net 4,141 1,170 5,734 2,593
Total other expense (364 ) (896 ) (542 ) (1,610 )
Income before income taxes 80,104 70,588 162,327 134,833
Income taxes 27,911 25,243 57,519 48,066
Net income $ 52,193 $ 45,345 $ 104,808 $ 86,767
Basic net income per common share $ 0.41 $ 0.36 $ 0.83 $ 0.69
Weighted average common shares outstanding 126,300 125,564 126,258 125,512
Diluted net income per common share $ 0.40 $ 0.35 $ 0.80 $ 0.66
Diluted weighted average common shares outstanding 131,872 131,101 131,694 130,904

Consolidated Balance Sheets

(In thousands)

(Unaudited)

January 31,

2015

July 31,

2014

ASSETS
Current assets:
Cash and cash equivalents $ 590,366 $ 158,668
Accounts receivable, net 235,477 196,985
Vehicle pooling costs and inventories 34,106 31,697
Income taxes receivable 7,803 2,288
Deferred income taxes 2,769 1,803
Prepaid expenses and other assets 17,904 20,850
Total current assets 888,425 412,291
Property and equipment, net 688,244 692,383
Intangibles, net 21,425 25,242
Goodwill 270,492 283,780
Deferred income taxes 37,524 36,721
Other assets 45,961 56,387
Total assets $ 1,952,071 $ 1,506,804
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 148,180 $ 152,156
Deferred revenue 4,515 4,170
Income taxes payable 5,858 8,284
Current portion of long-term debt and capital lease obligations 76,171 79,674
Total current liabilities 234,724 244,284
Deferred income taxes 6,324 7,372
Income taxes payable 25,499 23,771
Long-term debt and capital lease obligations, net of discount 608,236 223,227
Other liabilities 4,051 4,651
Total liabilities 878,834 503,305
Commitments and contingencies
Stockholders’ equity:
Preferred stock
Common stock 13 13
Additional paid-in capital 416,958 404,542
Accumulated other comprehensive loss (66,525 ) (20,060 )
Retained earnings 722,791 619,004
Total stockholders’ equity 1,073,237 1,003,499
Total liabilities and stockholders’ equity $ 1,952,071 $ 1,506,804

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Six Months Ended
January 31,
2015 2014
Cash flows from operating activities:
Net income $ 104,808 $ 86,767
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 25,367 27,580
Allowance for doubtful accounts (242 ) 884
Stock-based payment compensation 8,870 10,639
Excess tax benefits from stock-based payment compensation (534 ) (1,171 )
Gain on sale of property and equipment (457 ) (1,743 )
Deferred income taxes (2,317 ) (5,982 )
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable (40,908 ) (38,928 )
Vehicle pooling costs and inventories (3,351 ) (1,718 )
Prepaid expenses and other current assets 1,747 (4,266 )
Other assets 5,368 (12,602 )
Accounts payable and accrued liabilities (4,173 ) 7,724
Deferred revenue 351 347
Income taxes receivable (4,938 ) 4,799
Income taxes payable 103 1,494
Other liabilities (811 ) 1,967
Net cash provided by operating activities 88,883 75,791
Cash flows from investing activities:
Purchases of property and equipment including acquisitions, net of cash acquired (39,459 ) (65,996 )
Proceeds from sale of property and equipment 742 2,576
Net cash used in investing activities (38,717 ) (63,420 )
Cash flows from financing activities:
Proceeds from the exercise of stock options 2,303 4,550
Excess tax benefit from stock-based payment compensation 534 1,171
Proceeds from the issuance of Employee Stock Purchase Plan shares 1,495 1,115
Principal payments on long-term debt (312,500 ) (37,500 )
Proceeds from the issuance of long-term debt, net of discount 698,939
Debt offering costs (955 )
Change in bank overdraft 743
Repurchases of common stock (1,121 ) (80 )
Net cash provided by (used in) financing activities 388,695 (30,001 )
Effect of foreign currency translation (7,163 ) 198
Net increase (decrease) in cash and cash equivalents 431,698 (17,432 )
Cash and cash equivalents at beginning of period 158,668 63,631
Cash and cash equivalents at end of period $ 590,366 $ 46,199
Supplemental disclosure of cash flow information:
Interest paid $ 3,788 $ 4,495
Income taxes paid, net of refunds $ 64,432 $ 47,891

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