Copart, Inc. (NASDAQ:CPRT) Q2 2019 Earnings Conference Call - Final Transcript

Feb 21, 2019 • 11:00 am ET

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Copart, Inc. (NASDAQ:CPRT) Q2 2019 Earnings Conference Call - Final Transcript

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Operator
Operator

Good day, everyone, and welcome to the Copart Incorporated Second Quarter Fiscal 2019 Earnings Call. Just a reminder, today's conference is being recorded.

For opening remarks and introduction, I would like to turn the call over to Mr. Jay Adair, Chief Executive Officer of Copart Incorporated. Please go ahead, sir.

Executive
Jay Adair

Thank you. Good morning, everyone, and welcome to the second quarter call for Copart. On the call with me today is Jeff Liaw, CFO; and Will Franklin, Executive Vice President.

I'm going to turn it over to Jeff Liaw for opening comments and then, Will Franklin will give us an update on operations and then, we'll be happy to answer any questions that we have at that time.

All right. Thanks so much. Jeff?

Executive
Jeffrey Liaw

Thanks, Jay. 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 effects of disposals of non-operating assets, foreign currency-related gains and losses, the impact of income taxes on the deemed repatriation of foreign earnings, net of deferred tax changes and certain income tax benefits related to accounting for stock option exercises.

We've provided a 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 afternoon. 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 analyzed our results on both the GAAP and non-GAAP basis described above.

In addition, this call contains forward-looking statements within the meaning of federal securities laws, which are subject to substantial risks and uncertainties that could cause actual results to differ materially from those projected or implied by our statements and comments. We do not undertake to update any forward-looking statements that may be made from time to time on our behalf. For a more complete discussion of the risks that could affect our business, please review the management's discussion and analysis portions in our related periodic reports filed with the SEC.

Now, I'll turn our attention to the second quarter of our fiscal 2019. We're pleased with our operating results. I'll start also with a reminder that the first six months of fiscal '18 were distorted by Hurricane Harvey. Over those first two quarters of fiscal 2018, we incurred losses of nearly $10 million on an operating basis.

Q2 in isolation would reflect a gain because the first quarter of 2018 would disproportionately capture storm-related costs, while the second quarter would disproportionately capture storm-related revenue. We'll -- I'll make it a point over the course of this call to communicate our key metrics with and without the effects of Hurricane Harvey.

We achieved a record second quarter in revenue, gross profits and operating income, starting with our nominal global revenue growth of 5.6%, with an unfavorable year-over-year currency effects of $4.9 million from foreign operations, primarily due to the relative