Online automotive auction company Copart (NASDAQ: CPRT) saw double-digit percentage growth in both sales and earnings as the company strengthened its business in the U.S. and expanded internationally in the third quarter. Quarterly results were reported this week.
Copart results: The raw numbers
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What happened with Copart this quarter?
- Total revenue came in at $478.2 million, which was up by 27.9% compared to the year-ago quarter.
- Revenue from the company's vehicle sales segment increased by 62% year over year to $67.4 million. Growth from this segment came mainly from European markets.
- As usual, the company earned most of its top line from its services sales, which were $410.8 million, an increase of 23.6% year over year.
- Gross profit increased by 27% from the third quarter of last year year, to $219.1 million.
- The company's global units sales were up by 12% compared to the year-ago quarter.
- Copart's operating income was $174.6 million in the third quarter, an increase of more than 27% year over year.
- The company's operating expenses rose by 28% in the quarter, to $303.6 million.
- Copart's gross margin decreased slightly from 46.1% last year to 45.8%. It was driven down mainly by $7.4 million in Hurricane Harvey-related costs.
What management had to say
Copart's management said that average selling prices (ASPs) in the U.S. were up 17% year over year. In addition to getting higher prices for vehicles, the company was also able to increase sales volume in its domestic market.
"In the U.S., our tremendous growth in revenue is primarily driven by increased volume, which on a year-over-year basis was 12.7%. Excluding Harvey, it was 11.9%, and was driven once again by organic growth and wins within the insurance market, the continued growth in most of our noninsurance segments, and acquisitions," Copart's executive vice president of U.S. operations, William Franklin, said on the conference call with analysts.
Management also emphasized the importance of the company's international expansion. Bidding for cars by international buyers is up 46% year over year, and the company believes it can continue to grow its international business, particularly in Europe.
"Our focus right now is Germany. If we're successful in Germany, we think that the rest of Europe will follow suit, just by virtue of the fact that many insurance companies are pan-European," Copart CFO Jeff Liaw said.
Copart's management typically doesn't provide even a sliver of guidance for investors, and this quarter was no exception. Liaw did mention, however, that most of the company's capital expenditures will continue to be for acquiring and developing new land as it continues to grow. He added, "We do expect that investment profile to remain elevated in the quarters and years to come."
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