10-QPeriod: Q2 FY2002

COPART INC Quarterly Report for Q2 Ended Jan 31, 2002

Filed March 18, 2002For Securities:CPRT

Summary

Copart, Inc. reported strong financial performance for the quarter ended January 31, 2002, demonstrating significant growth across key metrics. Revenue increased by 26% year-over-year, driven by higher gross proceeds from auctioned salvage vehicles and the successful integration of new facilities. This revenue growth was complemented by effective cost management, with yard and fleet expenses growing at a slightly lower rate than revenue, resulting in a notable increase in operating income. The company's balance sheet reflects substantial growth in assets, particularly in cash and cash equivalents, which surged due to a successful follow-on public offering in November 2001. This offering significantly bolstered the company's liquidity and provided capital for ongoing expansion. Copart's strategic focus on expanding its facility network through acquisitions and new openings appears to be yielding positive results, contributing to both revenue growth and broader market coverage.

Key Highlights

  • 1Revenue for the three months ended January 31, 2002, increased by 26% to $71.4 million compared to the prior year, driven by a 16% increase in gross proceeds from auctioned salvage vehicles.
  • 2Operating income grew by 29% to $19.2 million for the quarter, indicating efficient cost management alongside revenue expansion.
  • 3Net income significantly increased by 34% to $12.5 million for the quarter, with diluted earnings per share rising to $0.14 from $0.11 in the prior year.
  • 4Cash and cash equivalents experienced a substantial increase, rising from $15.2 million at the end of the prior fiscal year to $123.4 million as of January 31, 2002, largely due to a successful $126 million follow-on public offering.
  • 5The company continued its expansion strategy, with nine new facilities contributing $5.2 million in revenue during the quarter.
  • 6Yard and fleet expenses, while increasing by 26%, remained stable as a percentage of revenue at 60%, demonstrating effective cost control relative to volume growth.
  • 7Goodwill increased by $9.0 million to $91.8 million, reflecting acquisitions made during the period, with the company adopting new accounting standards for goodwill and intangibles (SFAS No. 142).

Frequently Asked Questions

Copart primarily processes and auctions salvage vehicles on a consignment basis, either through a Percentage Incentive Program (PIP) where they earn a percentage of the sale price, or a fixed fee consignment program. Revenues are generated from salvage fees charged to suppliers and buyers, transportation revenue, and purchased vehicle revenues.

Copart's liquidity has significantly improved, with cash and cash equivalents increasing from $15.2 million at the start of the fiscal year to $123.4 million by January 31, 2002. This was largely driven by a successful $126 million follow-on public offering in November 2001.

The company has been actively acquiring and opening new facilities as part of its growth strategy. These new locations contributed approximately $5.2 million in revenue during the current quarter and are seen as key drivers for expanding market coverage and overall growth.

Copart adopted SFAS No. 142, which requires goodwill to be tested for impairment annually rather than amortized. This change has eliminated goodwill amortization expense, positively impacting net income and earnings per share. The company performed an initial impairment test and found no impairment at adoption. Goodwill on the balance sheet increased due to acquisitions.