Copart, Inc. (NASDAQ:CPRT) Q1 2018 Earnings Conference Call - Final Transcript
Nov 22, 2017 • 11:00 am ET
the period, with less than 1% of the inventory growth attributable to acquisitions. Our service revenue grew $67 million year-over-year or 21.8%. Our purchased car revenue growth of $6 million -- $6.1 million or 15.8%, continuing the trend you've seen in recent quarters as we've migrated business from principal to agency arrangements.
Our gross profit grew from $145.3 million to $163.3 million with a decrease in gross margins from 42.0% to 38.9%, which is a mix of offsetting factors. I'll start first with the favorable gross margin and gross profit driver of an increase in average selling prices for our cars. In the US, we experienced increased year-over-year of 13 -- almost 14% in average selling prices, largely due to increased selling prices for our insurance carrier-sourced cars due to a combination of factors, which Will will expound upon further along in this call.
But a few things of note. The first is that we are observing newer cars being totaled. We're also seeing less severely damaged cars being totaled. For our auctions, despite seeing substantial unit growth year-over-year, we're seeing heightened bidding activity in excess of unit growth, meaning we have more bidders and more bids per car than we are listing. We are also benefiting from what appears to be a strong used car price environment. The Manheim index is up almost 6% year-over-year with six consecutive record months. And lastly, we are experiencing a reasonably sound scrap environment, up 11% year-over-year.
The unfavorable driver of gross margin rate and gross profit for the period, of course, is the catastrophic expenses we incurred in the period of approximately $36 million. In the catastrophic events, we incurred two types of costs, including; first, unit-related expenses such as sub-haul expenses and flood cleanup services, as well as period expenses; such as rents for temporary facilities, personnel and travel-related expenses. In this period, we incurred substantial expenses on both fronts.
Per our prior discussion of our revenue, because we incurred majority of our sub-haul and flood cleanup expenses in this period, our future mix of catastrophic costs will shift more towards ongoing period expenses, including rent, people and travel. The net effect for us in this quarter of Hurricane Harvey was an approximately $17 million pretax loss. Over the full lifetime of Hurricane Harvey, we expect to incur a net loss to serve our customers.
Turning to general and administrative expenses. We were down from $35.2 million last year to $34 million this year, ex D&A. This is largely the result of lapping $5.2 million in payroll taxes from a year ago, in connection with certain executive stock options exercises. Excluding this change, G&A increased by $4 million, approximately half of which is attributable to acquisitions and a balanced organic.
Our GAAP operating income grew from $104.8 million to $123.9 million or 18%. If we normalize simply for the payroll expenses incurred last year, operating income was up 13%. As noted previously, our net catastrophic losses this quarter of $17 million,