Copart, Inc. (NASDAQ:CPRT) Q1 2018 Earnings Conference Call - Final Transcript

Nov 22, 2017 • 11:00 am ET

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Copart, Inc. (NASDAQ:CPRT) Q1 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, everyone, and welcome to the Copart, Incorporated First Quarter Fiscal 2018 Earnings Call. Just a reminder, today's conference is being recorded.

For opening remarks and introductions, I would like to turn the call over to Mr. Jay Adair, CEO of Copart, Incorporate. Please go ahead, sir.

Executive
Jay Adair

Thank you, Chantelle. Good morning, everyone, and welcome to the first quarter earnings release conference call for 2018. With me in the room today is Jeff Liaw, CFO; and Will Franklin, EVP for Copart.

With that, I will turn it over to Jeff Liaw, who will give you some color commentary and then over to Will Franklin, and then we'll open it up for questions. So it's my pleasure to introduce Will -- Jeff Liaw.

Executive
Jeff Liaw

I'll start with the safe harbor. During today's call, we'll discuss certain non-GAAP measures, including non-GAAP net income per diluted share, which includes adjustments to reverse the effect of foreign currency-related gains and losses, impairment of long-lived assets, certain income tax benefits, foreign income tax credit limitations and payroll factors related to accounting for stock option exercises.

We've provided reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures on our website under the Investor Relations link and in our press release issued yesterday. We believe the presentation of these non-GAAP measures, together with our corresponding GAAP measures, is relevant in assessing Copart's business trends and financial performance. We analyze our results on both GAAP and non-GAAP bases described above.

(Forward-Looking Cautionary Statements)

Now turning to the first quarter. We -- Copart enjoyed another record first quarter in unit sales, revenue, gross profit and operating income. As you can see in the press release, we grew global revenue by 21% year-over-year for the first quarter. The underlying factors here are slightly beneficial year-over-year currency effect of $1.7 million on foreign operations, primarily due to relative strength in the British pound after lapping the Brexit event in June of last year, 2016.

Excluding the effect of the -- of Hurricane Harvey, revenue grew by 15.8%. A little color on this front. Under current revenue recognition guidelines, we do recognize revenue for certain preauction services we provide, including, for example, towing and flood cleanup services. As a result, we booked the revenue for a -- for some cars not yet sold through our auctions. We enjoyed global unit sales growth of 10%, with US growth of 11% and international growth of 5%. US unit growth was driven primarily by market growth, territory wins, new customer wins, as well as the effects of catastrophic events and acquisitions. If we exclude catastrophic events from both periods, last year and this year, for the first quarter, US unit sales grew by 10.6% year-over-year. Excluding acquisitions, unit -- US unit sales grew at 8.3%.

Turning to inventory. This is, again, a non-GAAP inventory measure. These are literally the cars in Copart facilities. Global inventory grew by 17.5%. Excluding CAT inventory from both periods, inventory growth would have been approximately 7% for