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Chicago, IL (February 25, 2016) - LKQ Corporation (Nasdaq:LKQ) today announced results for its fourth quarter and full year ended December 31, 2015. For the fourth quarter of 2015, net income was $95.1 million, an increase of 18.1% compared to the fourth quarter of 2014, and diluted earnings per share was $0.31, a 19.2% increase year over year. For the full year 2015, net income was $423.2 million, an increase of 10.9% compared to 2014, and diluted earnings per share was $1.38, a 10.4% increase over the $1.25 reported for 2014. The Company noted that full year 2015 and 2014 diluted earnings per share included charges equal to $0.04 and $0.02, respectively, per share resulting from restructuring and acquisition related expenses, losses on debt extinguishment and the change in fair value of contingent consideration liabilities. On an adjusted basis, EPS increased 11.8% to $1.42 in 2015 compared to $1.27 in 2014.
“We reached a major milestone in 2015 by surpassing $7 billion in annual revenue for the first time. I am particularly proud of the 19.2% growth in our diluted earnings per share in the fourth quarter, and the strong increase in the EBITDA margins of our European segment to 10.1% for full year 2015. These results are a testament to the hard work and dedication of our 31,000 plus employees,” stated Robert Wagman, President and Chief Executive Officer of LKQ Corporation.
Fourth Quarter 2015 Reported Results
For the fourth quarter of 2015, revenue was $1.75 billion compared with $1.68 billion for the fourth quarter of 2014, an increase of 3.8%. For the fourth quarter, parts and services organic revenue growth was 6.2% and acquisition revenue growth was 4.7%, while the impact of exchange rates was (2.9)%, for total parts and services revenue growth of 8.0%.
Full Year 2015 Reported Results
For the full year of 2015, revenue was $7.19 billion compared with $6.74 billion in 2014, an increase of 6.7%. Full year 2015 parts and services organic revenue growth was 7.0% and acquisition revenue growth was 7.1%, while the impact of exchange rates was (3.8)%, for total parts and services growth of 10.3%.
Balance Sheet and Liquidity
Cash flow from operations totaled $529.8 million in 2015, which after using approximately $330.0 million to finance acquisitions, capital expenditures and other long term assets, allowed the Company, together with some excess cash, to reduce its outstanding debt by $239.0 million. As of December 31, 2015, LKQ’s balance sheet reflected cash and equivalents of $87.4 million and outstanding debt of $1.6 billion. The unused capacity under the Company’s credit facilities at December 31, 2015 was approximately $1.3 billion.
The Company announced on November 13, 2015 that Robert M. Hanser was elected to LKQ’s Board of Directors.
On December 22, 2015, the Company announced that it had signed a definitive agreement to acquire the holding company of Rhiag-Inter Auto Parts Italia S.p.A (“Rhiag”), a leading pan-European business-to-business distributor of aftermarket spare parts for passenger cars and commercial vehicles, for an enterprise value of €1.04 billion. The Rhiag transaction is expected to be completed early in the second quarter of 2016 and is subject to customary closing conditions and necessary regulatory approvals.
In addition to the Rhiag announcement, during the fourth quarter of 2015 the Company acquired a wholesale salvage business in Sweden and an interest in a pan-European distributor and remanufacturer of engines and power train products.
Mr. Wagman added: “Our 2015 development efforts resulted in the completion of 18 acquisitions, which expanded our geographic footprint and extended our leadership position in each of our operating segments.”
On January 29, 2016, the Company completed an amendment to its credit facility that increased the aggregate amount available thereunder from $2.3 billion to $3.2 billion and extended the maturity to January 2021. The amended facility includes a $2.45 billion multi-currency revolver and a term loan facility of approximately $500 million and €230 million. The unused capacity under the new credit agreement at closing was approximately $2.2 billion.
Organic revenue growth for parts & services
6.0% to 8.0%
Adjusted net income
$490 to $520 million
Adjusted diluted EPS
$1.59 to $1.69
Cash flow from operations
$170 million to $180 million
Referring to the 2016 earnings per share guidance, Nick Zarcone, Executive Vice President and Chief Financial Officer of LKQ Corporation stated, "The declines we saw in the foreign currency rates in 2015 have continued into the first quarter of 2016, with the British pound and Canadian Dollar both trading lower than the 2015 averages when compared to the US Dollar. During 2015, we saw the markets for scrap steel, copper and other commodities trend materially lower and they have held at these levels into the first quarter. Despite these meaningful headwinds, we project solid EPS growth for 2016 with the mid-point of our guidance representing a 10.1% increase over the comparable 2015 EPS results.”
As disclosed on our investor call on December 22, 2015 relating to Rhiag, we are modifying our measure of adjusted diluted EPS for periods after 2015 to exclude the amortization expense related to acquired intangibles. Our guidance for 2016 adjusted net income and adjusted diluted EPS excludes the impact of restructuring and acquisition related expenses; gains or losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities) and amortization of acquired intangibles. Our guidance for capital expenditures excludes spending related to future business acquisitions. Our pending acquisition of Rhiag is not included in our guidance.
Guidance for 2016 is based on scrap prices remaining at current prices and exchange rates for the British pound, Euro and Canadian dollar holding near current levels. Changes in these figures may impact our ability to achieve the full year earnings and cash flow guidance.
Conference Call Details
On February 25, 2016 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) members of senior management will host a conference call and Webcast to discuss the Company's results. To access the investor conference call, please dial (877) 407-0668. International access to the call may be obtained by dialing (201) 689-8558.
Webcast and Presentation Details
The audio webcast and accompanying slide presentation can be accessed at www.lkqcorp.com in the Investor Relations section.
A replay of the conference call will be available by telephone at (877) 660-6853 or (201) 612-7415 for international calls. The telephone replay will require you to enter conference ID: 13628612#. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through March 25, 2016. Please allow approximately two hours after the live presentation before attempting to access the replay.
About LKQ Corporation
LKQ Corporation (www.lkqcorp.com) is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. LKQ has operations in North America, the United Kingdom, the Netherlands, Belgium, France, Scandinavia, and Taiwan. LKQ offers its customers a broad range of replacement systems, components, equipment and parts to repair and accessorize automobiles, trucks, and recreational and performance vehicles.
Forward Looking Statements
The statements in this press release that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding our outlook, guidance, expectations, beliefs, hopes, intentions and strategies. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us. Actual events or results may differ materially from those expressed or implied in the forward looking statements as a result of various factors.
These factors include the following (not necessarily in order of importance):
You should not place undue reliance on these forward-looking statements. All of these forward-looking statements are based on our expectations as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Joseph P. Boutross-LKQ Corporation
Director, Investor Relations