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Copart Misses Earnings, Beats Revenues

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Copart, Inc. (CPRT - Free Report) reported earnings per share (EPS) of 32 cents for fiscal fourth quarter 2013 ended Jul 31, 2013, down 8.6% from 35 cents in the corresponding quarter last year. The EPS missed the Zacks Consensus Estimate by 8 cents. Net income declined 8% to $41.3 million from $44.9 million in the year-ago quarter.

Copart’s revenues went up 16.4% to $263.7 million in the quarter, beating the Zacks Consensus Estimate of $262 million. Revenues benefited from the acquisition of Salvage Parent, Inc., which operates mainly as Quad City Salvage Auction (QCSA), Crashed Toys, and Desert View Auto Auction. The acquisition closed on May 2013 and contributed $11.2 million to the revenues.  Service revenues augmented 13.9% to $213.6 million and revenues from vehicles sale went up 28.2% to $50.1 million.

Gross margins increased 3.7% to $103.1 million (39.1% of sales) from $99.4 million (or 43.9%) in the year-ago quarter. General and administrative expenses went up 35.5% to $35.8 million from $26.4 million in the year-ago quarter.

The increase in expense was partly due to the $13.7 million operational, general and administrative and deal-specific costs related to the QCSA acquisition. Meanwhile, the company expects that this acquisition will have favorable impacts on the operating margin from the third quarter of fiscal year 2014.

Operating income dropped 9.3% to $63.1 million from $69.5 million recorded in the fourth quarter of fiscal 2012. Operating margin was 23.9% compared with 30.7% in the year-ago quarter.

Fiscal 2013

Copart reported earnings per share of $1.39 for fiscal 2013, which was in line with last year, but missed the Zacks Consensus Estimate of $1.50. Net income declined 1.2% to $180 million from $182.1 million in the year-ago quarter. The company’s revenues went up 13.2% to $1 billion in fiscal 2013 from $924.2 million a year ago.

Financial Details

Copart had cash and cash equivalents of $63.6 million as of Jul 31, 2013 versus $140.1 million as of Jul 31, 2012. Total debt and capital lease obligations amounted to $372.5 million as of Jul 31, 2013 compared with $444.1 million as of Jul 31, 2012.

During fiscal 2013, the company generated net cash flow of $199.3 million from operations compared with $229.7 million in the same period a year ago. Capital spending was $208 million compared with $48.1 million in fiscal 2012.

Our Take

Copart is a prominent player in the online auctions and vehicle remarketing services in the U.S., Canada, U.K. and U.A.E. along with Sotheby's (BID - Free Report) , Ritchie Bros. Auctioneers Incorporated (RBA - Free Report) and Liquidity Services, Inc. (LQDT - Free Report) . The company provides a wide range of remarketing services to vehicle suppliers, primarily insurance companies, to process and sell salvage vehicles mainly over the Internet through the company's Virtual Bidding Internet auction-style sales technology. Currently, shares of the company retain a Zacks Rank #2 (Buy).

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