Copart, Inc. (CPRT) reported earnings per share (EPS) of 35 cents for second-quarter fiscal 2014 (ended Jan 31, 2014), up from 31 cents in the corresponding quarter last year. However, the EPS lagged the Zacks Consensus Estimate of 38 cents.
The quarter’s earnings include severance, relocation and lease termination costs of $4.5 million due to the relocation of the company’s technology department from Fairfield, Calif. to Dallas, Texas and the acquisition of Salvage Parent, Inc., which operates mainly through Quad City Salvage Auction (QCSA), Crashed Toys, and Desert View Auto Auction. The company expects the impact of severance and lease termination costs to continue till the fourth quarter of 2014.
Net income (on a reported basis) amounted to $45.3 million, up 14.4% over the prior-year quarter.
Copart’s revenues went up 7.6% to $286.4 million in the quarter, lagging the Zacks Consensus Estimate of $298 million. Service revenues augmented 8.7% to $235.7 million and revenues from vehicles sale went up 2.9% to $50.7 million.
Gross margins increased 15.2% to $111.5 million (38.9% of sales) from $96.8 million (or 36.4%) in the year-ago quarter. General and administrative expenses went up 21.1% to $36.4 million from $30.1 million in the year-ago quarter.
Operating income increased 13.9% to $71.5 million from $62.8 million recorded in the second quarter of fiscal 2013. Operating margin was 25.0% compared with 23.6% in the year-ago quarter.
Financial Details
Copart had cash and cash equivalents of $46.2 million as of Jan 31, 2014 versus $63.6 million as of Jul 31, 2013. Total debt and capital lease obligations amounted to $338.2 million as of Jan 31, 2014 compared with $372.5 million as of Jul 31, 2013.
During the second quarter of fiscal 2014, the company generated net cash flow of $75.8 million from operations compared with $53.1 million in the same period a year ago. Capital spending was $63.4 million compared with $115.1 million in second quarter of fiscal 2013.
Copart is a prominent player in 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 carries a Zacks Rank #3 (Hold).
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