Copart, Inc. (CPRT) reported earnings per share of 41 cents for the fiscal 2013-third quarter ended Apr 30, 2013, down 4.7% from 43 cents in the corresponding quarter last year. The EPS missed the Zacks Consensus Estimate by 9 cents.
The decline in year-over-year earnings was due to higher costs associated with hurricane Sandy and expansion in the international market. Net income declined 4% to $53.2 million from $55.5 million in the year-ago quarter.
The company’s revenues went up 13.7% to $277.6 million in the quarter, missing the Zacks Consensus Estimate of $281.0 million. Service revenues augmented 11.9% to $224.0 million and revenues from vehicles sale went up 22.1% to $53.7 million.
Gross profits increased marginally to $115.6 million (41.6% of sales) from $115.3 million (or 47.2%) in the year-ago quarter. General and administrative expenses went up 21.8% to $28.8 million from $23.6 million in the year-ago quarter.
The increase in expense was due to non-capitalized costs associated with the implementation of ERP system together with costs associated with the outsourcing of network infrastructure and technical support functions, which totaled $1.7 million. Cost associated with expansion in the international market totaled $1.4 million.
Consequently, operating income dropped 5.8% to $82.8 million from $87.9 million recorded in the third quarter of fiscal 2012. Operating margin was 29.8% compared with 36% in the year-ago quarter.
Financial Details
Copart had cash and cash equivalents of $139.3 million as of Apr 30, 2013 versus $140.1 million as of Jul 31, 2012. Total debt and capital lease obligations amounted to $390.2 million as of Apr 30, 2013 compared with $444.1 million as of Jul 31, 2012.
During the first nine months of fiscal 2013, the company generated net cash flow of $183.0 million from operations compared with $197.0 million in the same period a year ago. Capital spending was $140.0 million compared with $27.1 million in the first nine months of fiscal 2012.
Acquisition
Copart recently announced the acquisition of Salvage Parent, Inc., which operates mainly as Quad City Salvage Auction, Crashed Toys, and Desert View Auto Auction. This business operates in 39 locations in 14 states.
Our Take
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, shares of the company retain a Zacks Rank #4 (Sell).
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