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TheStreet Open House

Copart Reports Second Quarter Fiscal 2014 Financial Results

Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter ended January 31, 2014.

For the three months ended January 31, 2014, revenue, operating income and net income were $286.4 million, $71.5 million and $45.3 million, respectively. These represent increases in revenue of $20.2 million, or 7.6%; in operating income of $8.7 million, or 13.9%; and in net income of $5.7 million, or 14.4%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $0.35 compared to $0.31 last year, an increase of 12.9%.

For the six months ended January 31, 2014, revenue, operating income and net income were $566.3 million, $136.4 million and $86.8 million, respectively. These represent an increase in revenue of $61.3 million, or 12.1%; a decrease in operating income of $0.7 million, or 0.5%; and an increase in net income of $1.3 million, or 1.5%, respectively, from the same quarter last year. Fully diluted earnings per share for the six months were $0.66 for both periods.

Included in the financial results for the most recent quarter are the severance, relocation and lease termination costs of $4.5 million associated with the integration of the QCSA acquisition, which we closed on May 30, 2013, and the relocation of the technology department from Fairfield, California to Dallas, Texas. We expect severance and lease termination costs to continue into our fourth quarter of this fiscal year.

On Wednesday, February 26, 2014, 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://64.202.98.81/conferenceamerica. A replay of the call will be available through April 27, 2014 by calling (877) 919-4059. Use confirmation code #91488337.

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 140 countries worldwide through our online multi-channel platform. 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   Six months ended
January 31, January 31,
2014   2013 2014   2013
Service revenues and vehicle sales:
Service revenues $ 235,732 $ 216,920 $ 462,095 $ 412,099
Vehicle sales   50,702   49,265   104,222   92,952

Total service revenues and vehicle sales

$ 286,434 $ 266,185 $ 566,317 $ 505,051
Operating costs and expenses:
Yard operations 121,786 116,501 237,647 204,522
Cost of vehicle sales 43,642 42,204 89,733 78,515
Yard depreciation and amortization   9,460   10,663   19,555   19,761
Gross margin 111,546 96,817 219,382 202,253

General and administrative

36,447 30,098 74,914 57,436
General and administrative depreciation and amortization   3,615   3,949   8,025   7,690
Total operating expenses   214,950   203,415   429,874   367,924
Operating income 71,484 62,770 136,443 137,127
Other income (expense):
Interest expense, net (2,066 ) (2,397 ) (4,203 ) (4,873 )
Other income   1,170   744   2,593   451
Total other expense   (896 )   (1,653 )   (1,610 )   (4,422 )
Income before income taxes 70,588 61,117 134,833 132,705
Income taxes   25,243   21,477   48,066   47,220
Net income $ 45,345 $ 39,640 $ 86,767 $ 85,485
Earnings per share-basic        
Basic net income per share $ 0.36 $ 0.32 $ 0.69 $ 0.69
 
Weighted average common shares outstanding   125,550   124,709   125,505   124,505
 
Earnings per share-diluted        
Diluted net income per share $ 0.35 $ 0.31 $ 0.66 $ 0.66
Diluted weighted average common shares outstanding   131,087   129,520   130,751   128,997
 
 

Copart, Inc.

 
Consolidated Balance Sheets

(in thousands)

(Unaudited)

 
    January 31,   July 31,
2014 2013
ASSETS
 
Current assets:
Cash and cash equivalents $ 46,199 $ 63,631
Accounts receivable, net 222,104 182,714
Vehicle pooling costs and inventories 33,597 31,202
Income taxes receivable 5,628 9,416
Deferred income taxes 3,829 2,216
Prepaid expenses and other assets 20,069 15,344
Assets held for sale   1,503   1,929
Total current assets 332,929 306,452
Property and equipment, net 707,379 677,517
Intangibles, net 19,709 17,706
Goodwill 291,227 267,463
Deferred income taxes 30,654 30,117
Other assets   56,595   35,226
Total assets $ 1,438,493 $ 1,334,481
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 154,871 $ 136,648
Bank overdraft 17,034 16,291
Deferred revenue 5,179 4,832
Income taxes payable 5,539 4,741
Current portion of long-term debt and capital lease obligations   77,028   76,047
Total current liabilities 259,651 238,559
Deferred income taxes 7,461 8,071
Income taxes payable 24,165 23,091
Long-term debt and capital lease obligations 261,182 296,410
Other liabilities   5,310   5,949
Total liabilities   557,769   572,080
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value – 5,000,000 shares authorized; no shares issued and outstanding at January 31, 2014 and July 31, 2013 respectively
Common stock, $0.0001 par value – 180,000,000 shares authorized; 125,860,010 and 125,494,995 shares issued and outstanding at January 31, 2014 and July 31, 2013, respectively 13 13
Additional paid-in capital 384,947 368,769
Accumulated other comprehensive loss (31,718 ) (47,161 )
Retained earnings   527,482   440,780
Total stockholders’ equity   880,724   762,401
Total liabilities and stockholders’ equity $ 1,438,493 $ 1,334,481
 
 

Copart, Inc.

 
Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 
    Three Months Ended
January 31,
2014   2013
Cash flows from operating activities:
Net income $ 86,767 $ 85,485
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 27,580 27,451
Allowance for doubtful accounts 884 184
Stock-based compensation 10,639 9,920
Excess tax benefits from stock-based compensation (1,171 ) (5,293 )
Gain on sale of property and equipment (1,743 ) (183 )
Deferred income taxes (5,982 ) (6,986 )
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable (38,928 ) (58,315 )
Vehicle pooling costs and inventories (1,718 ) (6,860 )
Prepaid expenses and other current assets (4,266 ) (3,529 )
Other assets (12,602 ) (7,014 )
Accounts payable and accrued liabilities 7,724 17,845
Deferred revenue 347 (28 )
Income taxes receivable 4,799 (4,776 )
Income taxes payable 1,494 4,918
Other liabilities   1,967   271

Net cash provided by operating activities

  75,791   53,090
 
Cash flows from investing activities:
Purchases of property and equipment including acquisitions (65,996 ) (116,925 )
Proceeds from sale of property and assets held for sale   2,576   1,851
Net cash used in investing activities   (63,420 )   (115,074 )
 
Cash flows from financing activities:
Proceeds from the exercise of stock options 4,550 16,358
Excess tax benefit from stock-based payment compensation 1,171 5,293
Proceeds from the issuance of Employee Stock Purchase Plan shares 1,115 951
Change in bank overdraft 743
Principal payments on long-term debt (37,500 ) (37,505 )
Repurchases of common stock   (80 )   (14,512 )
Net cash used in financing activities   (30,001 )   (29,415 )
 
Effect of foreign currency translation   198   797
 
Net decrease in cash and cash equivalents (17,432) (90,602 )
 
Cash and cash equivalents at beginning of period   63,631   140,112
Cash and cash equivalents at end of period $46,199 $ 49,510
 
Supplemental disclosure of cash flow information:
Interest paid $4,495 $ 5,220
Income taxes paid $47,891 $ 55,874
 




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