Copart announced more than just the third-quarter financial performance of its current fiscal year as the company also said late last week that it acquired Salvage Parent, which conducts business primarily as Quad City Salvage Auction, Crashed Toys and Desert View Auto Auction.

The move is leaving Copart management with the task of how to leverage the human capital, business practices and more at 39 locations in 14 states in the best way possible.

“We’re going to be sitting down with all of our customers and finding out what they like best about Copart and what they like best about Quad City in raising the bar in terms of the level of service that we want to bring,” Copart chief executive officer Jay Adair managed to say during a conference call last Friday with a voice that was noticeably hoarse.

While Adair wasn’t able to speak as much as usual when Copart conducts a quarterly session with investment analysts, president Vince Mitz and Will Franklin, the company’s senior vice president of finance and chief financial officer, chimed in with plenty of glowing comments about Quad City.

“Quad City is a serious player in our space,” Franklin said. “We compete with them all of the time. Insurance companies use them because they like what they do. We think this is a win for us to be able to understand what they do well and to incorporate that into our offerings as well.”

Quad City Salvage Auction operates 23 facilities in 10 states, primarily in the north-central and northeast U.S., and stores, processes and auctions predominantly salvaged vehicles on behalf of the insurance industry. Copart management highlighted some of Quad City’s top insurance customers include State Farm, Progressive, Farmers and Erie.

Crashed Toys operates 10 facilities in six states, primarily in the north-central U.S., and stores, processes and auctions salvaged motorcycles, boats, jet skis and other power sport crafts.

Desert View operates in six facilities, all of which are in California, and stores, processes and auctions charity cars. 

All together, Copart estimated that its new acquisition handles at least 100,000 units annually.

Mitz indicated that Copart’s deal for Quad City came together in less than four months, a process he described as finishing “very, very quickly.”

Mitz continued with, “After some recent national RFPs (request for proposal), market share throughout the country had been settled and redistributed, and the owners of Quad Cities were looking for what was best for their strategic future. They were looking to team up to continue and accelerate their growth and were actually looking for a partner who would be able to help and assist with that growth of their company separate from a normal acquisition integration.

“That opportunity came together very quickly once we agreed philosophically how to handle the transaction,” Mitz went on to say. “It was just a matter of working the financials.”

Copart chose not to discuss financial specifics late last week. The company did say QCSA chief executive officer John Lindle will remain at his post.

“We are very excited about teaming up with Copart,” Lindle said. “When it comes to technology innovation and their experienced management team, the decision to pick Copart was obvious.” 

Now Copart and QCSA intend to continue dialogue and strategic planning on what to do next.

“The plan is to come up with a plan by actually sitting down with both management teams and both management groups and figuring out what’s going to be best for the customers,” Mitz said when directly questioned about Copart’s next step.

“The point is they’ve been an attractive option in the marketplace. They’ve been growing as a standalone independent when many others haven’t been. Clearly they’re doing something that’s attractive to the marketplace,” Mitz continued about Quad City.

“We’re certainly not going to rush into some mass integration and lose that uniqueness. There is a customer perspective here that we have to take into account and really look hard at why they’ve been able to grow in this hypercompetitive market,” he went on to say.

Copart’s Q3 Results

For the three months that ended April 30, Copart reported that its revenue, operating income and net income came in at $277.6 million, $82.8 million and $53.2 million, respectively.

Those figures represent an increase in revenue of $33.5 million, or 13.7 percent; and decreases in operating income of $5.1 million, or 5.8 percent; and in net income of $2.2 million, or 4.0 percent, respectively, from the same quarter last year.

The company computed that fully diluted earnings per share for the three months were $0.41 compared to $0.43 last year, a decrease of 4.7 percent.

For the first nine months of its fiscal year, Copart determined its revenue, operating income and net income totaled $782.7 million, $219.9 million and $138.7 million, respectively.

Those sums represented increases in revenue of $85.1 million, or 12.2 percent; in operating income of $3.1, million or 1.4 percent; and in net income of $1.5 million, or 1.1 percent, respectively, from the same period last year.

Officials added fully diluted earnings per share for the first nine months of the fiscal year rose to $1.07 compared to $1.04 last year, an increase of 2.9 percent.

“The operating results for the third quarter were adversely affected by abnormal costs incurred as a result of Hurricane Sandy,” Franklin said.

“These costs include the additional towing, payroll, equipment, travel, housing and facilities expenses directly related to the operating conditions created by Hurricane Sandy,” he continued. Also included are costs associated with our international expansion and the incremental towing and processing costs tied to the 21 percent year-over-year growth in inventory."

Franklin also mentioned that included in general and administrative cost for Q3 are the non-capitalizable costs associated with the implementation of Copart’s ERP system and the incremental costs associated with the outsourcing of network infrastructure and technical support functions, which together totaled $1.7 million.

These costs are expected to abate upon completion of the implementation, which is currently expected to occur sometime in our 2014 fiscal year,” Franklin said.

“Also included are the costs associated with our expanded international operations which totaled $1.4 million and will continue,” he added.

Nick Zulovich can be reached at nzulovich@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.