10-QPeriod: Q3 FY2012

COPART INC Quarterly Report for Q3 Ended Apr 30, 2012

Filed June 11, 2012For Securities:CPRT

Summary

Copart, Inc. reported its financial results for the quarterly period ended April 30, 2012. The company demonstrated revenue growth, primarily driven by an increase in service revenues due to higher revenue per vehicle. This was supported by factors such as improved commodity and used car pricing, and a favorable shift in the mix of vehicles sold. Despite a slight decrease in unit volume, the company managed to grow its top line through these pricing and mix dynamics. Financially, Copart saw an increase in net income, reflecting improved operational efficiencies and revenue growth. The company's liquidity position strengthened with a significant increase in cash and cash equivalents. Management expressed confidence in the company's ability to meet its operating and working capital requirements for the next 12 months, supported by operational cash flow and existing cash reserves. The company also continues to execute its expansion strategy, including facility acquisitions and development.

Financial Highlights

53 data points
Beta

Revenue

$244.10M

85.1% Gross Margin

Net Income

$55.47M

22.7% Net Margin

EPS (Diluted)

$0.05

Total Assets

$1.20B

Cash & Equivalents

$207.13M

Free Cash Flow

$92.95M

Financial Statements
Beta
Revenue$244.10M
Cost of Revenue$36.26M
Gross Profit$207.85M
Operating Income$87.94M
Interest Expense$3.01M
Net Income$55.47M
EPS (Basic)$0.06
EPS (Diluted)$0.05
Shares Outstanding (Basic)1.01B
Shares Outstanding (Diluted)1.04B

Key Highlights

  • 1Total service revenues and vehicle sales increased to $244.1 million for the three months ended April 30, 2012, up from $236.8 million in the prior year period.
  • 2Service revenues grew by 3.7% to $203.5 million, driven by higher revenue per car, offsetting a decline in unit volume.
  • 3Net income increased to $55.5 million for the quarter, compared to $50.1 million in the same period last year.
  • 4Cash and cash equivalents significantly increased to $207.1 million as of April 30, 2012, up from $74.0 million at the end of the previous fiscal year.
  • 5The company repurchased $134.9 million of common stock during the first nine months of fiscal 2012, a decrease from $137.7 million in the prior year period, under its ongoing stock repurchase program.
  • 6Copart is actively expanding its facility network, with 152 locations across North America and the United Kingdom as of April 30, 2012.
  • 7The company maintains compliance with its financial covenants under its credit facility, which includes a $500 million term loan facility.

Frequently Asked Questions

Revenue growth was primarily driven by an increase in service revenues, which rose by 3.7% to $203.5 million. This increase was mainly due to higher revenue per vehicle, stemming from improved commodity and used car pricing, and a favorable shift in the mix of vehicles sold, which more than compensated for a slight decline in unit volume.

Copart's cash and cash equivalents saw a substantial increase, rising to $207.1 million as of April 30, 2012, from $74.0 million at the end of the previous fiscal year (July 31, 2011). This strengthening of the liquidity position was supported by cash generated from operating activities.

Management believes that its current cash reserves and anticipated cash flow from operations are sufficient to meet its operating and working capital needs for at least the next 12 months. The company also notes the possibility of raising additional capital through debt or equity issuance if significant future growth requires it.

A significant ongoing matter is a sales and use tax audit by the Georgia Department of Revenue, which has proposed an assessment of $73.8 million for uncollected sales taxes. Copart believes it has strong defenses and is contesting the assessment, but an adverse resolution could materially impact its financial condition and results of operations. Additionally, there are ongoing legal proceedings related to employment and other claims, which the company believes will not have a material adverse effect, though specific outcomes are uncertain.