Copart Reports Second Quarter Financial Results

FAIRFIELD, Calif.--Copart, Inc. today reported the results for the quarter ended January 31, 2010, the second quarter of its 2010 fiscal year.

For the three months ended January 31, 2010, revenue, operating income and net income were $176.6 million, $53.2 million and $35.7 million, respectively. These represent increases in revenue of $6.7 million, or 4.0%; in operating income of $7.7 million, or 16.8%; and in net income of $8.6 million, or 31.6%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $0.42 compared to $0.32 last year, an increase of 31.3%.

For the six months ended January 31, 2010, revenue, operating income and net income were $362.1 million, $109.7 million and $71.0 million, respectively. These represent increases in revenue of $0.6 million, or 0.2%; in operating income of $4.7, million or 4.4%; and in net income of $6.6 million, or 10.2%, respectively, from the same period last year. Fully diluted earnings per share for the six months ended January 31, 2010 were $0.84 compared to $0.76 last year, an increase of 10.5%.

During the quarter ended January 31, 2010 the company recognized the benefit from a favorable tax ruling in the United Kingdom which reduced income tax expense by approximately $2.6 million. This benefit increased fully diluted earnings per share for the three and six months ended January 31, 2010 by $0.03.

Also, included during the quarter ended January 31, 2010 are the legal, integration and severance costs associated with the D Hales acquisition totaling approximately $1.0 million. These additional costs reduced fully diluted earnings per share for the quarter by $0.01.

On Wednesday, March 3, 2010, 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://webcast.premiereglobal.com/r.htm?e=194623&s=1&k=8BB6383EAE698952EC9EE2C873FFF298. A replay of the call will be available through April 3, 2010 by calling (888) 203-1112. Use confirmation code #5152840.

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 patented VB² technology. Copart sells vehicles on behalf of insurance companies, banks, finance companies, fleet operators, dealers, car dealerships, the general public and others. The company currently operates 153 facilities in the United States, Canada and the United Kingdom. Salvage vehicles are either damaged vehicles deemed a total loss for insurance or business purposes or are recovered stolen vehicles for which an insurance settlement with the vehicle owner has already been made. 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.

Copart, Inc.
Consolidated Statements of Income (in thousands, except per share data) (Unaudited)
		Three months ended January 31,									Six months ended January 31,
		2010					2009				2010			2009
Net sales and revenue:
Service revenues		$	149,468				$	142,686			$	303,233		$	299,011
Vehicle sales			27,133					27,169				58,830			62,413
Total service revenues and vehicle sales		$	176,601				$	169,855			$	362,063		$	361,424
Operating costs and expenses:
Yard operations		67,279					70,800				137,204			144,518
Cost of vehicle sales		22,181					23,778				46,610			53,722
Yard depreciation and amortization		8,454					7,985				16,976			16,321
Gross margin		78,687					67,292				161,273			146,863
General and administrative		23,364					19,505				47,283			37,048
General and administrative depreciation and amortization		2,091					2,218				4,264			4,759
Total operating expenses		123,369					124,286				252,337			256,368
Operating income		53,232					45,569				109,726			105,056
Other income (expense):
Interest income (expense), net		42					407				(29		)	989
Other income (expense)		(102			)		(1,798		)		529			(544		)
Total other income (expense)		(60			)		(1,391		)		500			445
Income before income taxes		53,172					44,178				110,226			105,501
Income taxes		17,439					17,028				39,221			41,094
Net income		$	35,733				$	27,150			$	71,005		$	64,407
Earnings per share-basic
Basic net income per share		$	0.42				$	0.33			$	0.84		$	0.77
Weighted average common shares outstanding		84,108					83,443				84,077			83,363
Earnings per share-diluted
Diluted net income per share		$		0.42			$	0.32			$	0.84		$	0.76
Weighted average common shares and dilutive potential common shares outstanding		84,927					84,206				84,937			84,742

Copart, Inc. Consolidated Balance Sheets (in thousands) (Unaudited)
		January 31, 2010				July 31, 2009
ASSETS
Current assets:
Cash and cash equivalents		$	189,290			$	162,691
Accounts receivable, net		121,753				109,248
Inventories and vehicle pooling costs		35,053				33,352
Income taxes receivable		9,822				5,426
Prepaid expenses and other assets		9,190				5,216
Total current assets		365,108				315,933
Property and equipment, net		558,302				530,886
Intangibles, net		15,294				15,212
Goodwill		176,697				166,327
Deferred income taxes		12,363				7,759
Other assets		20,125				21,915
Total assets		$	1,147,889			$	1,058,032
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities		$	92,061			$	82,773
Deferred revenue		12,917				13,165
Income taxes payable		4,503				5,269
Deferred income taxes		1,738				1,948
Other current liabilities		427				429
Total current liabilities		111,646				103,584
Deferred income taxes		10,504				10,997
Income taxes payable		22,859				20,266
Other liabilities		1,457				1,726
Total liabilities		146,466				136,573
Commitments and contingencies
Shareholders’ equity:
Common stock, no par value - 180,000 shares authorized; 84,237 and 83,939 shares issued and outstanding at January 31, 2010 and July 31, 2009, respectively		349,406				334,440
Accumulated other comprehensive loss		(29,939		)		(27,082		)
Retained earnings		681,956				614,101
Total shareholders’ equity		1,001,423				921,459
Total liabilities and shareholders’ equity		$	1,147,889			$	1,058,032

Copart, Inc. Consolidated Statements of Cash Flows (in thousands) (Unaudited)
		Six Months Ended January 31,
		2010				2009
Cash flows from operating activities:
Net income		$	71,005			$	64,407
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		21,078				20,834
Allowance for doubtful accounts		304				(260		)
Deferred rent		(244		)		(577		)
Share-based compensation		8,883				3,193
Excess tax benefits from stock-based compensation		(2,449		)		(5,011		)
(Gain) Loss on sale of property and equipment		(77		)		730
Deferred income taxes		(5,006		)		(3,561		)
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable		(10,010		)		(28,901		)
Vehicle pooling costs		(2,065		)		(7,665		)
Inventory		583				(132		)
Prepaid expenses and other current assets		(3,854		)		736
Land purchase options and other assets		353				1,741
Accounts payable and accrued liabilities		6,106				(8,339		)
Deferred revenue		(248		)		1,835
Income taxes receivable		(1,323		)		3,517
Income taxes payable		(232		)		2,253
Net cash provided by operating activities		82,804				44,800
Cash flows from investing activities:
Purchases of property and equipment including acquisitions		(61,214		)		(57,114		)
Proceeds from sale of property and equipment		1,711				4,926
Net cash used in investing activities		(59,503		)		(52,188		)
Cash flows from financing activities:
Proceeds from the exercise of stock options		2,479				819
Proceeds from the issuance of Employee Stock Purchase Plan shares		1,087				942
Repurchase of common stock		(3,544		)		(6,000		)
Excess tax benefit from share-based payment arrangements		2,449				5,011
Change in book overdraft		—				(7,592		)
Net cash provided by (used in) financing activities		2,471				(6,820		)
Effect of foreign currency translation		827				(2,297		)
Net increase (decrease) in cash and cash equivalents		26,599				(16,505		)
Cash and cash equivalents at beginning of period		162,691				38,954
Cash and cash equivalents at end of period		$	189,290			$	22,449
Supplemental disclosure of cash flow information:
Interest paid		$	163			$	60
Income taxes paid		$	45,748			$	39,169