CPRT

Copart, Inc. (CPRT)

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Copart, Inc. (CPRT)

F1Q2012 Earnings Call

November 29, 2011 11:00 a.m. ET

Executives

Jayson Adair - Chief Executive Officer and Director

William Franklin - Senior Vice President and Chief Financial Officer

Analysts

Craig Kennison - Robert W. Baird

Jason Ursaner - CJS Securities

Ryan Brinkman - Goldman Sachs

Tony Cristello - BB&T Capital Markets

John Lovallo - Bank of America Merrill Lynch

Scott Stember - Sidoti & Company

Gary Prestopino - Barrington Research

William Armstrong - C.L. King & Associates

Patrick Palfrey - RBC Capital Markets

Presentation

Operator

Good day everyone, and welcome to the Copart Incorporated First Quarter Fiscal 2012 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, Chief Executive Officer of Copart Incorporated. Please go ahead, sir.

Jayson Adair

Thank you, Roxanne. Good morning, everyone. It’s great to have you on the call. Welcome to our first quarter conference call for fiscal 2012. We have got some updates this morning, I am going to turn it over to Will Franklin first for a brief outline and then we will go through our prepared remarks and open it up for questions

William Franklin

Thank you, Jay. 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 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-Q, 10-K and other SEC filings.

With that, I’ll turn the call back over to Jay Adair, our CEO to begin the discussion of our first quarter results.

Jayson Adair

Thank you, Will. Well again, good morning, and as you can see we are happy to report the quarter. We are very pleased to see the growth in revenue to $225 million. Growth in operating income to $65 million and growth in net income to $41 million. EPS, very large growth year-over-year due to earnings improvement and due to the share buyback going from $0.45 to $0.62 in the quarter.

Just looking at the statement of cash flows for a minute, I would want to point out the accounts receivable build that took place this quarter, compared to the quarter last year. We talked about that a little bit in the last call, in the Q4 call that we saw a lot of volume coming in. We continued to build inventories in this quarter and burn cash in the process and that inventory we will be selling off in the second quarter that we are in now.

Will will also talk about our debt and the fact that we fixed our debt, so I won't go over that, he will elaborate on that. I did want to comment on the fact that we finished the quarter with over $200 million -- $212 million in cash on the balance sheet, and we bought back over 1 million shares in the quarter. So just some other points that I thought I would focus on operationally.

In the quarter we did see some increase costs associated with fuel and sub-haul but in addition to new development and new development costs. New business that we are developing in the company. So the company has been very focused on increasing segments that are non-insurance. We have done a lot of investment in that process and we believe we are at that point now. We believe we have been able to achieve that growth at the current run rate from a cost stand point.

So as we look forward into the year, we are comfortable that we are going to be able to hold our operational cost relatively flat, as associated with, on a per car basis. And that we won't be putting a lot of money into some of these new biz, new development portions of the company.

So as we add more units, just like any business you have got your initial cost but you have got your initial cost investment that you have got to make in a business. And now what we are thinking as we look forward is that we will be able to add units to the company without seeing a lot of additional costs in that area. We will be focusing on the home office, the G&A costs. We will be focusing on operational cost as well. But the reality is that we are heavy right now into project overdrive. It is doing exactly as we planned. It continues to push on all the fronts that we talked about on prior calls.

The Texas relocation is well underway. The processing centers are well under way. We will moving and transitioning into some of those in the quarter that we are in now in Q2 and we will be continuing to move into the Dallas market throughout the rest of this fiscal year. Our goal is that we would have most of that transition move completed by the end of the fiscal year July 31, 2012. There will be some transition I am sure that, some portions of that that may get delayed a little bit, but for the most part, the vast majority of that move will take place. The folks that will be working in Dallas will be moved, including myself, and the rest of the senior management team, and then we will be working on the next fronts that are part of overdrive both in technology and in marketing.

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