Copart, Inc. (CPRT) on Q2 2021 Results - Earnings Call Transcript

Operator: Good day everyone, and welcome to the Copart Incorporated Second Quarter Fiscal 2021 Earnings Call. Just a reminder, today's conference is being recorded. For opening remarks and introductions, I would like to turn the call over to Mr. John North, Chief Financial Officer of Copart Incorporated. Please go ahead, sir. John North: Thanks. During today's call, we'll discuss certain non-GAAP measures, which include adjustments to reverse the effect of certain discrete income tax items, foreign currency-related gains, certain income tax benefits and payroll taxes related to accounting for stock option exercises. Jeff Liaw: Thanks, John, and thank you for joining us, everyone, for our second quarter call here. We are pleased with our -- very pleased with our results for the second quarter and look forward to discussing the trends in our business throughout today's discussion. As an appropriate cap to a bizarre 12 months, we are now experiencing a major weather system in the U.S., of course, including here at headquarters in Dallas, where four inches of snow qualifies as a snowstorm of epic proportions. So we start by extending our well wishes to our team, our customers and their families. And a special thanks this week to the Copart's headquarters team, including our tech people, operations, finance and accounting, for keeping us in business to serve our customers and in this case, our investors today as well without disruption. The today will, of course, focus on the pandemic. Since our last call in November, we have all experienced firsthand the holiday season and therefore, the accelerating and now decelerating caseloads across the world. We've seen new viral strains. And of course, we are observing the emerging logistics challenges of the global vaccine distribution phenomenon as well. And therefore, we've seen mobility modulate up and down over the course of that time as well. We have, throughout, remain honored to be recognized an essential business, as an essential business in serving our customers and the communities in which we do business. John North: Thanks Jeff and good morning everybody. I'll make a few brief comments on our operational results to provide a little more color and then we'll open it up for some questions. Global revenue increased $41.9 million or 7.3%, including a $2.2 million benefit due to currency. Global service revenue increased $22.6 million or 4.4% primarily due to higher ASPs. The US service revenue grew 4% and international experienced an increase of 7.2%. Purchased vehicle sales increased $19.3 million or 29.7% due to higher ASPs and increased volumes, partially offset by lower international volumes. US purchased vehicle revenue was up 48.3% over the prior year and international grew by 7.5%. As a result, purchased vehicle gross profit, defined as vehicle sales less cost of vehicle sales, increased by $3.6 million overall. Global gross profit increased by $47.6 million or 18.3%. And our gross margin percentage improved by approximately 160 basis points to 49.8%. US margins improved from 47.6% to 52.2% and international margins increased from 32.8% to 37.6%. Both segments margin was driven primarily through increased ASPs, but was partially offset due to volume declines over fixed cost components, leading to higher cost per unit processed. I'll now move to the discussion of G&A excluding stock compensation and depreciation expenses. We continue to believe that we can achieve additional operating leverage over the long-term and we encourage you to review trend lines rather than a single quarter metric for a more accurate view of the business, particularly given the impact of COVID. With that said, our G&A spend was down $3.2 million from $39.2 million a year ago to $36.0 million in 2021. As a result, our GAAP operating income increased by 23% from $209.9 million to $258.2 million. We delivered over 500 basis points of operating margin improvement due to revenue growth from strong fees, outpacing the impact of a lower absolute volume of vehicles, while controlling G&A costs. Question-and: Operator: Thank you. We’ll be having a question-and-answer session. Our first question comes from Bob Labick with CJS Securities. Please proceed with your question. Bob Labick: Congratulations on strong operating performance. Jeff Liaw: Thanks, Bob. Bob Labick: I wanted to start with one of the comments you made, just to dig a little further, Jeff. You mentioned total loss frequency is one of the -- has been rising for 40 years. It's one of the keys to the investment thesis to the secular growth that you have. But there's also been, a 30-plus percent ASP rise over the last nine months plus. Has total loss frequency risen proportionately? Do you think there's more to come? Do you think -- what's the correlation between those? And how do you think it's going to play out going forward? Jeff Liaw: It's a great and very thorny question you raised. So I mentioned used car prices. I would use my track carefully as well. So if you -- let's separate a bunch of different variables at the same -- start with the used car prices, used car prices being high, by itself, would lead to fewer cars being totaled. To the extent that it helps to bring salvage auction values up, that can then increase total loss frequency to some extent as well. But your question really is to what extent are today's auction returns, being incorporated by insurance companies, into their total loss decisions. And I think the answer is partially, so. But I don't think, broadly speaking, folks have fully accounted for today's auction returns in terms of the total loss frequency. You've seen the uptick in total loss frequency, but it's in the 1% kind of range. I think if and when these prices prove durable, I think we would see total loss frequency up meaningfully still. Bob Labick: Got it. That's great. Thank you. And then, obviously, you guys were all going into the pandemic, but it still was a largely disruptive event for everyone. Can you talk about some of the biggest changes you've made to the business model as a result? And where that positions you going forward? Jeff Liaw: Yes. I think the – we have the good benefit, Bob, in some respects of having been wired for disruptions like this even before we could expect them, meaning we have been an online-only auction platform, as you know, since 2003, so we didn't have to figure it out on the fly. We have been a global online auction house for literally decades. So that's been the single biggest help during the pandemic. Otherwise, we certainly had to make real-time accommodations to a number of our customers who have their own evolving workflows that now – they now wish to send fewer people to physical locations and so forth. So we have to find ways to accommodate that workflow and some mix of – through some mix of business process and technology deployments on our part to keep our own people safe and to reduce density in our facilities. We've deployed tools that help our members, our employees and our sellers reduce congestion. So they can go to the facilities at the right times and wait in their cars instead of coming into the facility and waiting in line physically. We certainly had to accommodate work-from-home arrangements for folks who have been quarantined, exposed or in high case count areas, where the restrictions are more severe. But by and large, we have, I'd say, much more business as usual in actionable practice than not in part because we had already been a digital business beforehand. Bob Labick: Okay. Got it. And then last one for me, I'll get back in queue. And I know you guys are always looking out three to five, 10 years in your planning. I was wondering if you could share with us the biggest changes in opportunities you see domestically and internationally over the next three to five or 10 years? Jeff Liaw: Incredibly open-ended question and probably a longer discussion than we can handle today, but we're certainly excited about our core business being the – I think you were citing our incumbent market, specifically. But in the US, I think we believe that, that rising total loss frequency is a huge opportunity for us, not just as the passive beneficiaries of it, but because we affect those results to some extent through our auction technology, our member recruitments. Building that global liquidity base is everything. And as we drive returns upwards, we can for our customers continue to achieve better returns and therefore, earn the right to sell still more of those cars. So bringing us back to the total loss frequency thesis you described a moment ago. Therefore, also, we can continue to grow our business in the non-insurance realms as well, including among automotive dealers. As our auction values rise as sort of liquidity grows and builds upon itself, we are the right outlet for cars as well. And that also is a large and substantial opportunity for us here in the US. Bob Labick: Okay. Terrific. I’ll jump back in queue. Thank you. Jeff Liaw: Most welcome. Operator: Thank you. Our next question comes from Stephanie Benjamin with Truist Financial. Please proceed with your question. Stephanie Benjamin: Hi. Good afternoon. Jeff Liaw: Hi, Stephanie. Stephanie Benjamin: Jeff, you got -- made an interesting comment. I don't think it's particularly unique, but you called out that your buyers are now buying at a greater rate than pre-COVID levels. Just given what we have seen with ASPs, I'd love to hear your thoughts on why you think the buyer base has been a little bit more active. I know you've made a lot of strides in building and expanding the buyer base, but the frequency is an interesting dynamic as well. So I would love to hear your thoughts. Thanks. Jeff Liaw: Sure. The observation was more – a part that in the height of the pandemic, which I think of as the – the pandemic uncertainty, perhaps the spring and summer of 2020, and also compounded then by many of our buyer currencies having - relative to the US dollar. We've seen -- and these are all in small percentage point changes definitely to be fair. These aren't titanic shifts of any sort. But we've seen their buying power compressed by virtue of their currencies. Now sitting here in – after this quarter, we've now seen international buyers purchasing the most cars on a percentage basis relative to our total units sold that they have bought since before pre – since pre-pandemic levels. So I think it's a reflection of ongoing demand, more the 40-year trends, more that our cars are incredibly valuable as drivable cars to many other countries around the world. So I think that's really the phenomenon as you note, supported by our marketing and technology efforts to build upon that buyer base. Stephanie Benjamin: Great. Thank you. And then I was wondering, if you could just provide a little bit of an update on your efforts to build out your presence in Germany? Jeff Liaw: Sure. In Germany, I think, the economic thesis, which we described at great length in a couple of calls in 2019 – or fiscal 2019, so certainly we would direct other – direct others to go there. I know you've read it carefully. But the underlying thesis is that the status quo today is a disservice to insurance carriers and to their policyholders both – both in economic terms and experiential ones. And at the Copart auction model, which we have deployed, as you know, at great scale in the U.S., U.K., Canada, Brazil and elsewhere. It generates better economic outcomes for everyone involved and better experiential outcomes as well. Our experience there, including during the pandemic, has done nothing, but reinforced that. We are – as noted a few calls ago, we are selling consigned vehicles on behalf of a number of the top insurance carriers in Germany. We are continuing to invest in our technology, our land, our people, our marketing efforts. Ultimately, we think it is our business process, our global buyer base and our technology which will ultimately allow us to prevail. We have the roles. We are incredibly excited. As you might imagine, the pandemic itself is an interesting catalyst. It is -- it shakes up the status quo to some extent. But in other respects, it also can rest – meetings that otherwise might have happened in working sessions and so forth with insurance carriers. But the underlying thesis is as strong as ever. Our results -- our auction results there continue to demonstrate a superior outcome relative to the status quo, which ultimately benefits the insurance carriers and benefits the policyholders as well because they don't have an owner-retained rect vehicle and ultimately, because this will drive insurance rates down as well. Stephanie Benjamin: Great. Thank you so much. Jeff Liaw: Thanks, Stephanie. Operator: Thank you. Our next question comes from Craig Kennison with Baird. Please proceed with your question. Craig Kennison: Good morning, Jeff and John. Thanks for taking my questions. I wanted to take another crack at deconstructing ARPU trends over the last several years really. To what extent is the higher ARPU due to services that you didn't even offer five years ago? I'm thinking like loan payoff or other fee-for-service opportunities that are available on the platform that maybe just weren't available five years ago? Jeff Liaw: Craig, clarifying question. ARPU, what's your arithmetic? Craig Kennison: Well, I'm just thinking, I mean, you've got a big trend, obviously, a big movement in your average selling price and overall revenue per unit, which I can't remember the number you cited on the call, but obviously, this quarter was up a lot. We know that there are several factors driving it, and I'm trying to just get a -- probe really one issue, which is maybe you're offering features and capabilities today that you didn't offer in the past, and that would partially explain the growth in that metric? Jeff Liaw: It does partially, but only partially. So a minority of that would be explained by additional services. We do think we offer the best suite of seller services in the business, including the loan payoff tool you mentioned a moment ago various title services and the like. But the majority of what I think you're calling ARPU growth, which is the comparison of our revenue change relative to our units sold change, there is some principal mix in there as well. So principal mix can throw that math off in ways that overstate its economic importance, as you know. But that aside, it is principally driven by strong auction returns, which then, in turn, of course, generates higher revenue for Copart as well. Craig Kennison: Okay. Thanks. And then maybe somewhat related, but it goes to the platform itself. I'm just -- you've continued to innovate this platform, but you don't like to talk as much about that innovation. I'd be curious to know what you achieved in 2020 that -- what features did you develop in 2020 that your buyers or sellers embraced? And I'm just thinking about the tools that build confidence in the buyer, especially whether it's pictures, sounds, facts or like inspection services. I'm just learning -- looking to learn more about innovation in 2020. Jeff Liaw: I think as you might know, Craig, I think we are quite delighted to invest aggressively in innovation and to talk about it at great length, but principally with the actual audiences themselves, with the sellers and the members alike. But when it comes to building member confidence, to us, it is a matter of reducing friction as well. So ensuring a seamless auction platform participation for those buyers, whether it's from their desktop or from their phones, increasingly, we are mobile-first as they are as well. So ensuring the frictionless experience for them in purchasing cars, paying for cars, registering as a member, et cetera. There are dozen scores of individual innovations that I won't cite in great detail here, the audience. But that is -- the principle of it is that, is that we want excellent visibility, excellent transparency and a frictionless experience from both the member and the seller side as well. Craig Kennison: Got it. Thank you. Jeff Liaw: Thanks, Craig. Operator: Thank you. Our next question comes from Bret Jordan with Jefferies. Please proceed with your question. Bret Jordan: Hey, good morning guys. Jeff Liaw: Hi, Bret. Bret Jordan: When you think about the dealer cars, I mean, still growing pretty significantly. How are they impacting ASPs? I would imagine -- or maybe you could give us some idea as sort of the average value of the dealer cars? And at what point does the dealer mix become large enough that it starts to support the ASP average by itself? Jeff Liaw: Yes, I think it's a good question. And one reason we went ahead and proactively disclosed, because I think the intuition is fair that if dealer volume is up 10% year-over-year and the ASPs are higher than those of your insurance cars, to what extent is it contributing to ASP growth? And the answer is, yes, it contributes, but it's offset by other mix effects as well. So that US insurance ASPs are up 36% year-over-year, right? So, it is not, by and large, the story for ASP change year-over-year for this quarter. Over time, it certainly could have that effect as well. As you know, the total of our non-insurance business is in the order of the 20% kind of range. So, it won't. We will still be largely driven by insurance changes for the next X quarters and years. But over time, yes, they will continue to grow that dealer business and it will nudge our ASPs upward as well. Bret Jordan: Okay. And then in the past, you've talked about what percentage of IP addresses were either foreign or maybe brokers on behalf of foreign buyers. Could you give us an update on that number, or at least maybe some idea what -- an idea maybe what percentage of vehicles sold windup in export now? Jeff Liaw: --: There are international IP addresses that we know are for buyers who intend to export cars. There are international IP addresses that we know are not. They're literally for US buyers who have outsourced or located their purchasing operations outside the US and we purposely exclude them as well. So, the output of that analysis is circa 40% of our units are purchased by those international buyers. Now, I qualify that by saying that 90% plus of our cars are -- have their values affected by international buyers, because they bid on many, many more cars still than they buy. Bret Jordan: Okay, great. Thank you. Jeff Liaw: Thanks Bret. Operator: Thank you. Our next question comes from Daniel Imbro with Stephens Inc. Please proceed with your question. Daniel Imbro: Yes. Hey, good morning, guys. Thanks for taking our question. I wanted to start on a bit more of a near-term one before a longer term question, Jeff. When we look at the volume backdrop near-term, miles driven appear to have stagnated here kind of down 10%-ish, but total loss rates going higher. I guess as we look forward, do you expect the gains we've seen in total loss rate just stay this year? We saw kind of a step function change during into pandemic. Do you think the industry holds onto the? And then related, what is your expectation for miles driven as we look out 12 to 24 months on the US business here? Jeff Liaw: On the first question, yes, is there some blip at some moment where somehow it is down slightly year-over-year or quarter-over-quarter when it -- suppose that's possible. But when I look at the 40-year trend line, which we mentioned a few moments ago, I think total loss frequency in 19 -- get my date straight, 1980 was 4% or so. And 40 years later, its north of 20%. So, it's a five-fold increase in the past 40 years. I think that's an inexorable march to 30%, 40% and beyond. Whether there are near-term technical blips that caused it to change in a given quarter, I think it's totally plausible, but I think the 40-year trend is unassailable. To your other question about miles driven, unfortunately, I think we see tons of data. So I think since November, we have tons of data. I'm not sure we have tons of incremental insight there beyond what you and others would cite as well in the EIA’s data, Google, Apple, INRIX, et cetera. We study those same trends. And I think underlying them are all the same questions about proliferation of the vaccine, when the kids go back to school, when leisure travel resumes, air travel resumes. I think they are so many variables that are upstream of that question, even driving activity to say nothing of Copart volume, that it's somewhat speculation on our part to give you any kind of number or even a range. That said, I think we are preparing ourselves. And when it comes to our business, investing in technology and in land for a growth -- ultimate growth environment, I don't know if that's coming in six months or more. That remains to be seen. But I think we are prepared for it. Daniel Imbro: Yes. That's helpful. Moving over to the international operations. I want to dig in, in the U.K., Brazil, Germany, how much are you doing on the non-insurance side over there? I would think with your global buyer base digitally native, you could probably give them a pretty good dealer market over there compared to what they have? But I'm curious how that opportunity looks and how achievable you think that will be? Jeff Liaw: I think the answer is similar that, in that, where we have very substantial liquidity as we do here in the U.S., Canada, Brazil, U.K., et cetera, we are, therefore, a very attractive platform for other non-insurance cars as well. So I think your hypothesis is fair and accurate. Daniel Imbro: Got it. And then last one for me. Jeff, you mentioned shipping rates and logistics headwinds are weighing on the international buyer. Is that -- frankly, I think the buyer bears the cost of shipping. So that's just a lack of available shipping containers. And then are you guys forecasting that sustains for a while here, or what, kind of, the shipping outlook look like from your standpoint? Jeff Liaw: Yes. You are correct that the logistics are the responsibility of the buyer. I think the disruptions were more severe, frankly, in the middle of last year than they are now. But that has weighed, to some extent, on those international buyers. And that -- the reason for sharing that context is that, against that backdrop, they are now at pre-pandemic levels in terms of the share of cars they're actually purchasing in the international markets. So I don't -- anything I can share with you would just be anecdotal, by and large, based on what we've heard from our members. I gather it's a condition today, but not a major one. Daniel Imbro: I appreciate it. Best of luck. Jeff Liaw: Thank you. Operator: Thank you. Our next question comes from Chris Bottiglieri with Exane BNP Paribas. Please proceed with your question. Chris Bottiglieri: Hey, guys. Thanks for taking the question. First one is clerical. Did you give the non-insurance mix this quarter for the U.S.? John North: Sorry, can you repeat that? You broke up a little bit? Chris Bottiglieri: Sorry. I’m having connection issues. Did you give a non-insurance mix in the call? John North: Yes. It's about 20%. Chris Bottiglieri: 20%. Got down a little bit. Okay. And I guess my question was, so dealer consignment was up more than insurance. It sounds like non-insurance was down a little bit, but what were some of the mitigating factors that hurt the ARPU growth? You talked about mix effects. Just trying to understand the channels that would have been weaker that would have hurt ARPU? John North: Well, our insurance ASPs are up in ARPU. We're probably completing a few things there, Chris. So if you start – let's just state ASPs, which are not revenue for us, right? And there, the insurance selling went up 36%. Dealer prices also went up. They didn't go up 36%, right? So that is a quite headwind relative to the overall 36%. That is offset by the mix shift benefits of those dealer cars. We did, as we noted during the prepared remarks, see a decline in sureties and wholesaler volumes to some extent. And that is also, frankly, ASP supportive by itself, right, because they are lower-value cars that are declining as a share of the overall mix. John North: Chris, this is John. Just to jump in. The number was 22% of total volume in the quarter, not – I said approximately 20%. It's 22%. Chris Bottiglieri: Okay. Perfect. That actually went up. Okay. That makes sense. And then just a big picture question. From what I could tell, it seems like you took more share in dealer consignment this quarter than last quarter just based on what one of your peers reported yesterday, a few days ago. Is that, what you're seeing? And then two, is there something that COVID that's eroding the barriers to entry in dealer consignment? Is there anything you're doing differently to win more accounts from dealers? Just want to hear your perspective on, how you're able to accelerate market share gains in dealer consignment right now? Jeff Liaw: Give me that first half of the question again, Chris? The second one I got. Chris Bottiglieri: Okay. Sorry, I apologize, if I'm breaking up. The snowstorms killed my service. Yes, the first question is, it seems that you're taking share in dealer consignment, right? It looks like relative to last quarter, your share actually accelerated just based on your growth rate and the market growth rate. So just trying to understand what – if that's what you're seeing from your own data that you're taking share was the first part. Jeff Liaw: Yes. I think, based on what we can tell from publicly available information for other dealer auction platforms, yes. We are outgrowing other participants in the industry. I would describe our practices during the pandemic as largely a continuation of our trends. We have a terrific internal sales team that pursues those dealers. I think we have benefited from having been this online auction platform, global auction platform forever. So if the right buyer for your car is 10 miles away, he or she will own it. If the right buyer for your car is in Poland or Nigeria, he or she will own it. So that global marketplace, I think, has been our most important tool in our belt, when it comes to winning those dealer accounts. It is not per se a major strategic shift. But because we were online throughout, there are certainly other participants in the industry who are more accustomed to physical auctions or hybrid auctions, et cetera. And we have been certainly relatively less disrupted than some of them. Chris Bottiglieri: Got you. Makes sense. Thank you. Operator: Thank you. Our next question comes from Gary Prestopino with Barrington Research. Please proceed with your question. Gary Prestopino: Hey, good morning all. Hey, Jeff, John, what was the US revenue growth and the international revenue growth? I couldn't write that down quick enough. John North: US service revenue was 4.4% – sorry, global was 4.4%. US was 4%, and international was 7.2%. Gary Prestopino: And revenue growth? Yes. Go ahead. John North: Yes, that was... Jeff Liaw: Service. John North: Service revenue. For purchased vehicles, it's 29.7 U.S. is 48.3, and international was 7.5. Gary Prestopino: Okay. Thank you. Just a question on your dealer vehicles, I mean, are you seeing your platform being used moving, I guess, up the value channel? The impression, I always had when this was initially started that you were kind of trying to dis-intermediate maybe the wholesaler that was getting the 12 to 15 year old car awful lot. It seems that as you're gaining share here. Are you seeing your platform almost play out to the extent that it's mimicking some of the other online services that are out there on a dealer-to-dealer market basis? Jeff Liaw: That direct comparison is harder for us to comment on, Gary. I think your general observation is fair, though, that – I agree, as our overall pool vehicles evolves over time, if you just took a picture of what a Copart car looked like in 1990 versus what a Copart – the median Copart car looks like in 2020, the car in 1990 was much more heavily wrecked, physically speaking, right? Cars were more readily repairable than they are today. And today, if a couple of sensors are knocked out, then the cars can be totaled much more readily in part because the returns are better on the back end as well. And therefore, the overall pool of the liquidity has evolved as well. And more and more whole cars are directly addressable by our buyer base as well. So to your overall question, yes, we are being up the value chain. Gary Prestopino: Okay. Thank you. Jeff Liaw: Thanks, Gary. Operator: Thank you. Our next question comes from Ryan Brinkman with JPMorgan. Please proceed with your question. Ryan Brinkman: Hi. Thanks for taking my questions. I know you've gotten a number already around the non-insurance business. I thought to ask a couple more, including if you're able to say what percent of your non-insurance volume is truly whole car as opposed to, I guess, salvage cars that are sourced outside of insurance companies? And are whole cars more profitable vehicles for you to sell because they transact at higher prices? Is there anything else to think about? Like, for example, on the self fee side, like if there are smaller dealers selling the vehicles, maybe they don't get the volume discounts that your customers are selling tens of thousands of vehicles do, making it even more profitable. And then just finally, I'm curious, if there are certain parts of the whole car market that you're targeting now such as dealers, but maybe there are other segments or categories of sellers that you've not gotten into yet, which might offer future growth opportunities? Jeff Liaw: Thanks, Ryan. Insightful questions, some we can address more transparently than others. In short, the – in short, we certainly believe that the – as total loss frequency rises, as the character of the vehicles that we sell changes and that pool of liquidity evolves over time, but yes, still more of transacted vehicles become addressable through Copart's platform in short. As for the profitability or the mix thereof, the dealers are not the majority of it, but a very important portion of our non-insurance business, of course, that business is profitable to us. We won't comment on relative fees paid by our customers, in part because the services we provide them also vary greatly as well. But it is a profitable business for us. It is important to us. It also, as I noted in the prepared remarks, also helps us serve insurance customers better as well. They are all mutually supportive of one another because of the liquidity phenomenon. When we win that dealer car, it attracts still more buyers who have been on insurance cars and vice-versa. And so as we total -- as we help insurance carriers, total cars that are more and more marginal from their point of view, that also attracts more buyers, which also, therefore, attracts more dealer cars as well as those other sources that you may have in mind. Ryan Brinkman: Okay, very helpful. Thanks. And then, just lastly on the winter weather outside your office window, should investors be thinking about that as a potential tailwind to both revenue and profits, or is it more of a surge or cat-type volume that also comes with a higher cost? Jeff Liaw: It's a fair question. I have to confess, despite having grown up here, to not have tremendous experience with Texas snowstorms to be fair. So I think we'll see how this unfolds over the course of the next few weeks. Typically, the major challenge in flooding, the major rainstorms and windstorms is that cars are stranded in all kinds of different places that require very urgent pickups. I think in this -- we have seen certainly reduced driving activity. This is pandemic effects turbo charge still in terms of driving activity and such. But we are deploying many of our resources to address this question. Many of our owned, company-owned trucks, our people who are on -- like this, we're deploying as well. So I don't know what the ultimate financial impact will be. But we're, I think, well-prepared to handle it regardless. Ryan Brinkman: Interesting. Thank you. Jeff Liaw: Thank you. Operator: Thank you. There are no further questions at this time. I'd like to turn the floor back over to management for any closing remarks. Jeff Liaw: Great. Well, thank you for joining us for the second quarter call. We look forward to talking to you in a few months. Thanks, everyone. Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's conference call. Have a great rest of your day.
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Copart, Inc. Q3 Fiscal Year 2024 Earnings Overview

  • Earnings per share (EPS) of $0.39 exceeded the estimated EPS of $0.3867.
  • Revenue reached approximately $1.13 billion, surpassing the estimated revenue and marking a significant year-over-year increase.
  • Net income rose to $382.1 million, reflecting a 9.1% increase from the previous year.

Copart, Inc. (NASDAQ:CPRT), a leading online vehicle auction services provider, recently reported its earnings for the third quarter of the fiscal year 2024. The company, headquartered in Dallas, specializes in selling damaged and total-loss vehicles to used-car dealers and dismantlers. With a slight increase in its earnings per share (EPS) to $0.39, Copart exceeded the estimated EPS of $0.3867. This performance is indicative of the company's robust financial health and its ability to surpass market expectations.

The reported revenue of approximately $1.13 billion for the quarter not only surpassed the estimated revenue of about $1.11 billion but also marked a significant increase from the previous year's figures. This growth in revenue is attributed to a 3.5% increase in vehicle sales, which reached $180.6 million. Such an increase underscores Copart's strong position in the salvage vehicle market, highlighting its efficiency in capitalizing on the demand for used and damaged vehicles.

Furthermore, Copart's net income for the quarter rose to $382.1 million, or 39 cents per share, up from $350.4 million, which was 36 cents per share, in the same period the previous year. This improvement in net income reflects the company's successful strategies in enhancing profitability and managing expenses effectively. The earnings surprise of 2.63%, as reported by Zacks Investment Research, further demonstrates Copart's ability to exceed analysts' expectations and maintain a positive trajectory in its financial performance.

The company's financial metrics, such as the price-to-earnings (P/E) ratio of approximately 37.81 and the price-to-sales (P/S) ratio of about 12.60, indicate a strong market valuation of Copart's earnings and sales, respectively. These ratios, along with a low debt-to-equity (D/E) ratio of approximately 0.016, showcase Copart's solid financial structure and investor confidence in its business model. The company's ability to generate significant revenue and net income growth year-over-year further solidifies its position as a key player in the Auction and Valuation Services industry.

Copart's performance in the third quarter of fiscal year 2024 highlights its continued growth and operational efficiency. With a revenue increase of 10.3%, or $105.4 million, from the previous year and a net income rise of 9.1%, or $31.9 million, Copart demonstrates its strength in the market and its potential for future growth. The company's strategic focus on expanding its vehicle sales division and enhancing its online auction platform has played a crucial role in achieving these financial outcomes.