10-QPeriod: Q1 FY2015

COPART INC Quarterly Report for Q1 Ended Oct 31, 2014

Filed November 26, 2014For Securities:CPRT

Summary

Copart, Inc. (CPRT) reported solid financial performance for the third quarter ended October 31, 2014. The company demonstrated robust revenue growth, driven primarily by an 8.9% increase in service revenues, largely attributable to strong performance in North America and the UK. This growth was fueled by an increase in salvage frequency and an improved revenue per car. While vehicle sales revenue saw a decline of 18.2%, the overall service and vehicle sales revenue increased by 3.8% to $290.4 million. Operationally, Copart effectively managed its expenses, with total operating expenses decreasing by 3.2%. This resulted in a significant improvement in operating income, which grew by 26.3% to $82.4 million. Net income also saw a substantial increase of 27.0% to $52.6 million, translating to a diluted EPS of $0.40. The company's liquidity remains strong, with cash and cash equivalents increasing by 25.1% to $198.5 million, and a healthy working capital position. The company also reported compliance with all debt covenants.

Financial Highlights

51 data points
Beta

Revenue

$290.39M

42.1% Gross Margin

Net Income

$52.62M

18.1% Net Margin

EPS (Diluted)

$0.05

Total Assets

$1.54B

Cash & Equivalents

$198.48M

Free Cash Flow

$59.98M

Financial Statements
Beta
Revenue$290.39M
Cost of Revenue$37.07M
Gross Profit$122.31M
Operating Income$82.40M
Interest Expense$1.91M
Net Income$52.62M
EPS (Basic)$0.05
EPS (Diluted)$0.05
Shares Outstanding (Basic)1.01B
Shares Outstanding (Diluted)1.05B

Key Highlights

  • 1Service revenues increased by 8.9% to $246.6 million, driven by growth in North America and the UK, and an increase in revenue per car.
  • 2Total operating expenses decreased by 3.2% to $208.0 million, leading to improved operational efficiency.
  • 3Operating income grew by 26.3% to $82.4 million, reflecting effective cost management.
  • 4Net income increased by 27.0% to $52.6 million, with diluted EPS rising to $0.40 from $0.32 in the prior year.
  • 5Cash and cash equivalents increased by 25.1% to $198.5 million, indicating strong cash generation and liquidity.
  • 6The company had no outstanding borrowings under its $100 million revolving credit facility as of October 31, 2014.
  • 7Copart reported compliance with all financial covenants under its credit facility.

Frequently Asked Questions

Service revenues increased by 8.9% due to growth in North America ($12.3 million) and the UK ($6.2 million), supported by increased volume attributed to higher salvage frequency and improved revenue per car.

Vehicle sales revenue decreased by 18.2% primarily due to a decline in the UK driven by reduced open market purchase activity, and a decline in volume in North America and other international markets.

As of October 31, 2014, Copart had $275.0 million outstanding under its Term Loan and no outstanding borrowings under its revolving credit facility. The company's cash and cash equivalents stood at $198.5 million, and it reported strong working capital and compliance with all debt covenants.

Copart is involved in a significant sales and use tax audit in Georgia, with the Department of Revenue asserting $73.8 million in uncollected sales taxes, penalties, and interest. While the company believes it has strong defenses and has provided for a possible assessment, an adverse outcome could materially impact its financial condition and results of operations.