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Copart Reports Fourth Quarter Financial Results

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Copart, Inc. (NASDAQ:CPRT) today reported financial results for the quarter and year ended July 31, 2014.

For the three months ended July 31, 2014, revenue, gross margin and net income were $287.5 million, $116.9 million and $51.0 million, respectively. These represent increases in revenue of $23.8 million, or 9.0%; in gross margin of $13.9 million, or 13.5%; and in net income of $9.7 million, or 23.6%, respectively, from the same quarter last year. Fully diluted earnings per share for the three months were $0.39 compared to $0.32 last year, an increase of 21.9%.

For the twelve months ended July 31, 2014, revenue, gross margin and net income were $1,163.5 million, $468.6 million and $178.7 million, respectively. These represent increases in revenue of $117.1 million, or 11.2%; in gross margin of $47.7 million or 11.3%; and a decrease in net income of $1.3 million, or 0.7%, respectively, from the same period last year. Fully diluted earnings per share for the twelve months were $1.36 compared to $1.39 last year, a decrease of 2.2%.

Included in the operating results of the prior fiscal year were incremental revenues and operating expenses associated with unit volume generated by Hurricane Sandy, which were estimated to be $31.2 million and $35.6 million, respectively. Included in the operating results of the current year was an impairment charge of $29.1 million recorded in the third quarter resulting primarily from the abandonment of work previously capitalized in connection with the development of a third-party enterprise operating system.

On Wednesday, September 24, 2014, 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://live.conferenceamerica.com:5840/live. A replay of the call will be available through November 23, 2014 by calling (877) 919-4059. Use confirmation code #74916381.

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 VB3 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 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), the United Arab Emirates (www.copart.ae) and Spain (www.autoresiduos.com). 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 Twelve months ended
July 31, July 31,
2014 2013 2014 2013
Service revenues and vehicle sales:
Service revenues $ 241,273 $ 213,591 $ 958,413 $ 849,667
Vehicle sales 46,177 50,106 205,076 196,719

Total service revenues and vehicle sales

287,450 263,697 1,163,489 1,046,386
Operating costs and expenses:
Yard operations 123,463 107,292 484,207 417,462
Cost of vehicle sales 38,497 43,090 174,493 167,236
Yard depreciation and amortization 8,551 10,243 36,216 40,766
Gross margin 116,939 103,072 468,573 420,922
General and administrative 36,256 35,782 147,025 121,968

General and administrative depreciation and amortization

4,825 4,238 17,510 15,962
Impairment of long-lived assets 29,104
Total operating expenses 211,592 200,645 888,555 763,394
Operating income 75,858 63,052 274,934 282,992
Other income (expense):
Interest expense, net (2,051 ) (2,356 ) (8,277 ) (9,629 )
Other income 77 1,466 3,378 3,509
Total other expense (1,974 ) (890 ) (4,899 ) (6,120 )
Income before income taxes 73,884 62,162 270,035 276,872
Income taxes 22,841 20,858 91,348 96,847
Net income $ 51,043 $ 41,304 $ 178,687 $ 180,025
Earnings per share-basic
Basic net income per share $ 0.41 $ 0.33 $ 1.42 $ 1.44
Weighted average common shares outstanding 125,959 125,380 125,693 124,912
Earnings per share-diluted
Diluted net income per share $ 0.39 $ 0.32 $ 1.36 $ 1.39
Diluted weighted average common shares outstanding 131,629 130,613 131,230 129,781
Consolidated Balance Sheets

(in thousands)

(Unaudited)

July 31, July 31,
2014 2013

ASSETS

Current assets:
Cash and cash equivalents $ 158,668 $ 63,631
Accounts receivable, net 196,985 182,714
Vehicle pooling costs and inventories 31,697 31,202
Income taxes receivable 2,288 9,416
Deferred income taxes 1,803 2,216
Prepaid expenses and other assets 19,505 15,344
Assets held for sale 1,345 1,929
Total current assets 412,291 306,452
Property and equipment, net 692,383 677,517
Goodwill and intangibles, net 309,022 285,169
Deferred income taxes 36,721 30,117
Other assets 56,387 35,226
Total assets $ 1,506,804 $ 1,334,481
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 152,156 $ 136,648
Bank overdraft 16,291
Deferred revenue 4,170 4,832
Income taxes payable 8,284 4,741
Current portion of long-term debt and capital lease obligations 79,674 76,047
Total current liabilities 244,284 238,559
Deferred income taxes 7,372 8,071
Income taxes payable 23,771 23,091
Long-term debt and capital lease obligations 223,227 296,410
Other liabilities 4,651 5,949
Total liabilities 503,305 572,080
Commitments and contingencies
Stockholders’ equity:
Preferred stock
Common stock 13 13
Additional paid-in capital 404,542 368,769
Accumulated other comprehensive loss (20,060 ) (47,161 )
Retained earnings 619,004 440,780
Total stockholders’ equity 1,003,499 762,401
Total liabilities and stockholders’ equity $ 1,506,804 $ 1,334,481
Consolidated Statements of Cash Flows
(in thousands)
(Unaudited)
Twelve Months Ended
July 31,
2014 2013
Cash flows from operating activities:
Net income $ 178,687 $ 180,025
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 53,726 56,728
Allowance for doubtful accounts 1,087 (356 )
Impairment of long-lived assets 29,104
Stock-based compensation 22,099 19,557
Excess tax benefits from stock-based compensation (2,289 ) (6,097 )
Gain on sale of property and equipment (1,461 ) (962 )
Deferred income taxes (10,838 ) (3,605 )
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable (12,870 ) (31,171 )
Vehicle pooling costs and inventories 399 (5,403 )
Prepaid expenses and other current assets (4,500 ) (5,971 )
Other assets (8,900 ) (18,714 )
Accounts payable and accrued liabilities 5,425 14,749
Deferred revenue (661 ) (871 )
Income taxes receivable 9,267 (752 )
Income taxes payable 2,816 1,609
Other liabilities 1,503 560
Net cash provided by operating activities 262,594 199,326
Cash flows from investing activities:
Purchases of property and equipment including acquisitions (95,810 ) (214,287 )
Proceeds from sale of property and assets held for sale 3,707 6,266
Net cash used in investing activities (92,103 ) (208,021 )
Cash flows from financing activities:
Proceeds from the exercise of stock options 10,412 21,442
Excess tax benefits from stock-based compensation 2,289 6,097
Proceeds from the issuance of Employee Stock Purchase Plan shares 2,339 1,948
Repurchases of common stock (572 ) (15,009 )
Change in bank overdraft (16,291 ) 16,291
Principal payments on long-term debt (75,000 ) (96,660 )

Net cash used in financing activities

(76,823 ) (65,891 )
Effect of foreign currency translation 1,369 (1,895 )
Net increase (decrease) in cash and cash equivalents 95,037 (76,481 )
Cash and cash equivalents at beginning of period 63,631 140,112
Cash and cash equivalents at end of period $ 158,668 $ 63,631
Supplemental disclosure of cash flow information:
Interest paid $ 8,768 $ 10,267
Income taxes paid $ 82,813 $ 95,182

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