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TMCNet:  Copart Reports Second Quarter Financial Results

[February 27, 2013]

Copart Reports Second Quarter Financial Results

DALLAS --(Business Wire)--

Copart, Inc. (NASDAQ: CPRT) today reported the results for the quarter ended January 31, 2013, the second quarter of its 2013 fiscal year.

For the three months ended January 31, 2013, revenue, operating income and net income were $266.2 million, $62.8 million and $39.6 million, respectively. These represent an increase in revenue of $38.3 million, or 16.8%; and decreases in operating income of $0.8 million, or 1.2%; and in net income of $1.0 million, or 2.4%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $0.31 compared to $0.31 last year.

For the six months ended January 31, 2013, revenue, operating income and net income were $505.1 million, $137.1 million and $85.5 million, respectively. These represent increases in revenue of $51.5 million, or 11.4%; in operating income of $8.2, million or 6.4%; and in net income of $3.7 million, or 4.6%, respectively, from the same period last year. Fully diluted earnings per share for the six months ended January 31, 2013 were $0.66 compared to $0.62 last year, an increase of 6.5%.

The operating results for the second quarter were adversely affected by abnormal costs incurred as a result of hurricane Sandy. These costs include the additional towing, payroll, equipment, travel, housing and facilities expenses directly related to the operating conditions created by hurricane Sandy. These costs, net of the associated revenues, generated a loss of $11.9 million during the quarter and had a negative after tax impact on diluted earnings per share in the quarter of $0.06. We expect these additional costs to continue into future quarters. However, we believe they will be completely offset by auction revenues and, accordingly, no future loss is anticipated.

Included in general and administrative cost for our second quarter are the non-capitalizable costs associated with the implementation of our ERP system and the incremental costs associated with the outsourcing of our network infrastructure and our technical support functions, which together totaled $1.8 million and which had a negative after tax impact on diluted earnings per share in the quarter of $0.01. These costs will abate upon completion, which is expected to be some time in our 2014 fiscal year. Also included are the costs associated with our expanded international operations which totaled $1.4 million and will continue.

On Thursday, February 28, 2013, 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://w.on24.com/r.htm e=587593&s=1&k=BC15C71DA1CD41A3F45BD29D977FD5EA. A replay of the call will be available through March 28, 2013 by calling (888) 203-1112. Use confirmation code #8426731.

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 patented VB2 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 162 facilities; with operations 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) and the United Arab Emirates (www.copart.ae). 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.




       

Consolidated Statements of Income
(in thousands, except per share data)
(Unaudited)

 

Three months ended
January 31,

Six months ended
January 31,

2013   2012     2013   2012
Service revenues and vehicle sales:
Service revenues $ 216,920 $ 186,852 $ 412,099 $ 369,668
Vehicle sales   49,265   41,052   92,952   83,862
Total service revenues and vehicle

sales

$ 266,185 $ 227,904 $ 505,051 $ 453,530
Operating costs and expenses:
Yard operations 116,501 86,422 204,522 174,427
Cost of vehicle sales 42,204 33,605 78,515 67,799
Yard depreciation and amortization 10,663 8,181 19,761 16,383
Gross margin 96,817 99,696 202,253 194,921
General and administrative 30,098 23,415 57,436 49,371
General and administrative depreciation and amortization 3,949 3,971 7,690 7,864
Impairment of long-lived assets - 8,771 - 8,771
Total operating expenses 203,415 164,365 367,924 324,615
Operating income 62,770 63,539 137,127 128,915
Other income (expense):
Interest expense, net (2,397 ) (2,914

)

 

(4,873 ) (5,039 )
Other income 744 1,591 451 2,155
Total other expense (1,653 ) (1,323

)

 

(4,422 ) (2,884 )
Income before income taxes 61,117 62,216 132,705 126,031
Income taxes 21,477 21,613 47,220 44,279
Net income $ 39,640 $ 40,603 $ 85,485 $ 81,752
Earnings per share-basic                
Basic net income per share $ 0.32 $ 0.32 $ 0.69 $ 0.63
 
Weighted average common shares outstanding 124,709 128,306 124,505 129,870
 
Earnings per share-diluted                
Diluted net income per share $ 0.31 $ 0.31 $ 0.66 $ 0.62
Diluted weighted average common shares outstanding 129,520 131,590 128,997 132,696
         

Consolidated Balance Sheets
(in thousands)
(Unaudited)

 

January 31,
2013

July 31,
2012

ASSETS
 
Current assets:
Cash and cash equivalents $ 49,510 $ 140,112
Accounts receivable, net 198,805 138,966
Inventories and vehicle pooling costs 31,103 24,222
Income taxes receivable 12,462 2,312
Deferred income taxes 4,207 3,600
Prepaid expenses and other assets 11,633 9,155
Assets held for sale 4,185 3,926
Total current assets 311,905 322,293
Property and equipment, net 657,424 587,163
Intangibles, net 14,925 7,985
Goodwill 210,188 196,438
Deferred income taxes 27,596 22,280
Other assets 31,908 18,907
Total assets $ 1,253,946 $ 1,155,066
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 125,400 $ 102,958
Deferred revenue 5,363 5,390
Income taxes payable 6,083 3,082
Current portion of long-term debt and capital lease obligations 75,177 75,170
Other current liabilities 788 785
Total current liabilities 212,811 187,385
Deferred income taxes 9,153 7,186
Income taxes payable 24,434 22,531
Long-term debt and capital lease obligations 333,068 368,950
Other liabilities 6,977 7,897
Total liabilities 586,443 593,949
Commitments and contingencies
Stockholders' equity:

Preferred stock, $0.0001 par value - 5,000,000 shares authorized; no
shares issued and outstanding at January 31, 2013 and July 31,
2012, respectively

- -

Common stock, $0.0001 par value - 180,000,000 shares authorized;
125,284,122 and 124,393,700 shares issued and outstanding at
January 31, 2013 and July 31, 2012, respectively

13 12
Additional paid in capital 353,111 326,187
Accumulated other comprehensive loss (32,270) (38,043)
Retained earnings 346,649 272,961
Total stockholders' equity 667,503 561,117
Total liabilities and stockholders' equity $ 1,253,946 $ 1,155,066
 
     

Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)

 
Six Months Ended
January 31,
2013   2012
Cash flows from operating activities:
Net income $ 85,485 $ 81,752
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 27,451 24,247
Allowance for doubtful accounts 184 (99 )
Stock-based compensation 9,920 11,028
Excess tax benefits from stock-based compensation (5,293 ) (1,104 )
Impairment of long-lived assets - 8,771
Gain on sale of property and equipment (183 ) (963 )
Deferred income taxes (6,986 ) (9,068 )
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable (59,165 ) (29,549 )
Vehicle pooling costs and inventories (6,860 ) 766
Prepaid expenses and other current assets (3,529 ) 5,933
Other assets (7,014 ) 247
Accounts payable and accrued liabilities 18,695 (5,431 )
Deferred revenue (28 ) 697
Income taxes receivable (4,776 ) 3,281
Income taxes payable 4,918 (12 )
Other liabilities 271 (148 )
Net cash provided by operating activities 53,090 90,348
 
Cash flows from investing activities:
Purchases of property and equipment including acquisitions (110,554 ) (15,055 )
Proceeds from sale of property and equipment 1,851 761
Investment in escrow (6,371 ) -
Net cash used in investing activities (115,074 ) (14,294 )
 
Cash flows from financing activities:
Proceeds from the exercise of stock options 16,358 6,335
Proceeds from the issuance of Employee Stock Purchase Plan shares 951 1,019
Repurchase of common stock (14,512 ) (135,395 )
Excess tax benefit from stock-based payment arrangements 5,293 1,104
Proceeds from issuance of debt - 125,000
Debt offering costs - (313 )
Principal payments on long-term debt (37,505 ) (18,750 )
Net cash used in financing activities (29,415 ) (21,000 )
 
Effect of foreign currency translation 797 (1,423 )
 
Net (decrease) increase in cash and cash equivalents (90,602 ) 53,631
 
Cash and cash equivalents at beginning of period 140,112 74,009
Cash and cash equivalents at end of period $ 49,510 $ 127,640
 
Supplemental disclosure of cash flow information:
Interest paid $ 5,220 $ 5,221
Income taxes paid $ 55,874 $ 50,019
 


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