Copart, Inc. (CPRT)

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Copart, Inc. (CPRT)

F4Q 2011 Earnings Call

September 21, 2011 11:00 am ET


A. Jayson Adair, Chief Executive Officer and Director

William E. Franklin, Senior Vice President and Chief Financial Officer


William Armstrong – C.L. King & Associates, Inc.

Tony Cristello – BB&T Capital Markets

Jason Ursaner – CJS Securities

Craig Kennison – Robert W. Baird & Co.

Scott Stember – Sidoti & Company

Gary Prestopino – Barrington Research

Patrick Palfrey – RBC Capital Markets

Ryan Brinkman – Goldman Sachs Group Inc.



Good day everyone and welcome to the Copart Incorporated Fourth Quarter Fiscal 2011 Earnings Call. As a reminder, today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Mr. Jay Adair, CEO of Copart Incorporated. Please go ahead, sir.

A. Jayson Adair

Thank you, [Mat]. Good morning, everyone and welcome to our fourth quarter for fiscal 2011. We’ve got a lot to talk about and I know there will be a lot of questions, so before I start off I’ll turn it over to Will Franklin, CFO for a brief disclosure.

William E. Franklin

Thank you, Jay. Before we begin our comments, I would like to remind everyone on the call that our remarks will contain forward-looking statements. These statements are neither promises nor guarantees and are subject to certain risk, trends and uncertainties that could cause the final results to differ materially from those projected or implied by our statements and comments. For a more complete discussion of the risk that could affect our business, please review the management's discussion and analysis and the factors affecting future results contained in our 10-K, 10-Q and other SEC filings.

With that, I'll turn the call back over to you, Jay to begin discussion of our fourth quarter results.

A. Jayson Adair

Thanks, Will. While we were talking about this morning it seems like the year has just been extremely fast and it was just a year ago that we were talking about fiscal ’10 and here we are in fiscal ’11 and a lot has taken place. It’s been a year of very upgrade achievement and a lot of change that’s taking place in the company. So we’re really excited about that, but we are in a transition and when you’re in a transition and doing so much, its much more than moving headquarters, its new systems that were integrating in the company, its some allocation of how we look at ops expense versus G&A expense, so it’s a number of things that are happening in the business. But the first thing I want to talk about this morning was our G&A.

For the quarter, G&A was $23.7 million versus $27 million and that includes transition cost of around $800,000 that we absorbed in the quarter. For the year, it was $98.9 million versus a $106 million and that includes roughly $2.2 million in transition costs. That will continue in the next year. Our goal is to continue to refine how we operate and run the business and in that refinement we’ll be looking for obvious savings, but there will be costs associated with all the different things that we are doing in the company.

Will will talk to you about all the stock that we’ve repurchased in the year, we just love this company. We think that we’ve got a wonderful future and we believe that and so as the old saying goes, we put our money where our mouth is so he’ll talk about the stock that we bought back not only in the quarter, but in the year I just want to note that we have 8.5 million shares authorized for buyback at this time.

Finished the quarter with $74 million in cash. If you recall last year we made a large purchase of stock in Q1 and finished the quarter with relatively the same amount of cash that we came into the quarter. So this is a quarter where we generate or as (inaudible) says, one of our largest, if not the largest quarter where we generate a lot of cash and that’s Q1 and that is August, September, October. So that we have a lot of cash that we will be generating in Q1. So this $74 million in cash obviously depends on what we do with cash in the quarter, but if all things stay constant there will be a lot of cash that is generated in the quarter.

The Dallas move for the company is on track, the plans are the same. We still are looking at process centers where we’ll be placing a lot of the functions that are from payments to receiving, call center et cetera, et cetera and then the HQ will be all the folks that are associated with either integration growth, buying companies, expanding. We’re looking at lot of different areas company wise for expansion into other markets and we’re also continuing to push hard on our U.S. and UK operations, I should say North American and UK operations to expand not only in insurance, but outside of the insurance market.

The Dallas move as I said is on track and we should be relocated with our HQ by the summer of 2012. There is a little delay in our integration of our new technology systems. The system that we’ve got in the company was implemented over a decade ago. So it’s time to take advantage of the new technologies that are out there in our enterprise system. Our auction inventory management unless we were expecting it to be done sometime in fiscal ’12 that will probably take place now sometime in fiscal ’13. So its not a huge delay by any stretch, its about doing it right anyway and this is all about the future, its not about something that we have to have today, its about by making these changes the same way that we did this back in the late 90s, by making these changes that will give us the ability to catapult over the next decade with all the new technologies that are out there.

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