Copart, Inc. (CPRT) reported adjusted earnings per share (EPS) of 35 cents for fiscal first quarter 2014 (ended Oct 31, 2013), down from 36 cents in the corresponding quarter last year. However, the EPS outpaced the Zacks Consensus Estimate of 33 cents.
The quarter’s earnings exclude severance and lease termination costs of $3.7 million due to the acquisition of Salvage Parent, Inc., which operates mainly as Quad City Salvage Auction (QCSA), Crashed Toys, and Desert View Auto Auction. The company expects that the impact of severance and lease termination costs will continue till the third quarter of 2014. The company anticipates that this acquisition will have favorable impacts on the operating margin from the third quarter of fiscal 2014.
Net income (on a reported basis) amounted to $41.4 million, up 9.6% over the prior-year quarter.
Copart’s revenues went up 17.2% to $279.9 million in the quarter, beating the Zacks Consensus Estimate of $273 million. Revenues increased $17.2 million due to the acquisition of QCSA, which was closed in May 2013. Service revenues augmented 16% to $226.4 million and revenues from vehicles sale went up 22.5% to $53.5 million.
Gross margins increased 2.3% to $107.8 million (38.5% of sales) from $105.4 million (or 44.1%) in the year-ago quarter. General and administrative expenses went up 40.7% to $38.5 million from $27.3 million in the year-ago quarter.
Operating income dropped 12.6% to $65 million from $74.4 million recorded in the first quarter of fiscal 2013. Operating margin was 23.2% compared with 31.1% in the year-ago quarter.
Financial Details
Copart had cash and cash equivalents of $77.1 million as of Oct 31, 2013 versus $63.6 million as of Jul 31, 2013. Total debt and capital lease obligations amounted to $357.4 million as of Oct 31, 2013 compared with $372.5 million as of Jul 31, 2013.
During first three months of fiscal 2014, the company generated net cash flow of $67.7 million from operations compared with $75.3 million in the same period a year ago. Capital spending was $20.7 million compared with $47.2 million in first three months of fiscal 2013.
Copart is a prominent player in the online auctions and vehicle remarketing services in the U.S., Canada, U.K. and U.A.E. along with Sotheby's (BID), Ritchie Bros. Auctioneers Incorporated (RBA) and Liquidity Services, Inc. (LQDT). The company provides a wide range of remarketing services to vehicle suppliers, primarily insurance companies, to process and sell salvage vehicles mainly over the Internet through the company's Virtual Bidding Internet auction-style sales technology. Currently, Copart retains a Zacks Rank #4 (Sell).
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