Copart held its fourth-quarter earnings call on September 10 and disclosed an all-cash agreement to acquire ACV, a digital automotive marketplace platform. ACV facilitated approximately $10 billion in vehicle transactions during the prior year without maintaining physical auction facilities. The company brings more than 22,000 active buyers along with inspection and valuation technology, while Copart contributes over 275 locations, roughly 4 million annually sold vehicles, and approximately 1 million members across more than 185 countries. Management structured the transaction as an all-cash tender offer using existing cash reserves, with closing targeted by year-end and earnings accretion expected in fiscal 2028.
Copart’s quarterly results revealed mixed performance across its business segments. Consolidated revenue rose 2.4% to $1.2 billion, yet net income declined 17.4% to $327.4 million and diluted earnings per share fell 14.6% to $0.35. International operations showed stronger momentum, with revenue climbing 11.7% to $222.1 million and service revenue growing 15%. International buyers represented 45.7% of total US sales dollars despite constituting only 38.2% of units, indicating demand for higher-priced vehicles. Domestically, non-insurance units returned to slight growth of 0.2% following a full-year decline, while dealer units advanced 5.8% and BluCar, serving banks and fleets, expanded nearly 20%.
The company’s core insurance business segment faced headwinds during the quarter. Global insurance units declined 4.2%, with domestic insurance assignments falling 7.5%, though management indicated this figure would have increased 2.3% excluding a single lost customer. Operating expenses rose faster than revenue, with operating expense per car jumping 12.7% year-over-year due to investments in long-haul delivery, TitleExpress, and dedicated wholesale facilities. US facility costs alone increased 7.7% in the quarter. The company also faced lower interest income stemming from $1.63 billion spent on share buybacks during the fiscal year.
Global average selling prices climbed 3.5%, demonstrating continued pricing power in Copart’s auctions despite softening volumes. Collision claim frequency declined 3.4%, while total loss frequency reached a record 23.3% for a second consecutive quarter and severity topped $6,300 per claim, up 8.8%. Hedge fund ownership increased modestly from 57 funds to 60 in the most recent quarter. Short interest remained limited at 5.09% of the float. Shares traded at a forward price-to-earnings ratio of 17.83 as of September 11, reflecting investor expectations that international expansion and the ACV acquisition will offset deteriorating domestic insurance volumes.
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