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LKQ Corporation Announces Results for First Quarter 2016

 

  •       Revenue growth of 8.3% to $1.92 billion; 10.0% on a constant currency basis
  •       Organic revenue growth for parts and services of 6.3%
  •       Net income growth of 0.6%; adjusted net income growth of 10.2%
  •       First quarter 2016 diluted EPS of $0.35; adjusted diluted EPS of $0.42
  •       Annual guidance increased due to recent acquisitions

 

Chicago, IL (April 28, 2016) – LKQ Corporation (Nasdaq:LKQ) today reported record revenue for the first quarter of 2016 of $1.92 billion, an increase of 8.3% as compared to $1.77 billion in the first quarter of 2015. Net income for the first quarter of 2016 was $107.7 million, an increase of 0.6% as compared to $107.1 million for the same period of 2015. On an adjusted basis, net income was $128.7 million, an increase of 10.2% as compared to $116.8 million for the same period of 2015. Diluted earnings per share of $0.35 for the first quarter ended March 31, 2016 was unchanged from the $0.35 for the first quarter of 2015.  On an adjusted basis, diluted earnings per share was $0.42 in the first quarter of 2016 reflecting a 10.5% increase over $0.38 for the first quarter of 2015.  See the reconciliation of net income and diluted earnings per share to adjusted net income and adjusted diluted earnings per share included with this press release.

"Our first quarter results were impressive, and I believe that our recently-completed strategic acquisitions, credit facility amendment and European bond offering position us to continue delivery of organic and acquisition-related revenue growth," stated Robert Wagman, President and Chief Executive Officer of LKQ Corporation. “I am particularly pleased with the 12.3% revenue growth in parts and services on a constant currency basis. Our Europe segment continued to show solid improvement, with its EBITDA margins for the quarter increasing 100 basis points over the prior year. Despite the mild weather we faced globally, organic revenue growth for parts and services was a solid 6.3%, including 10.8% in our Specialty segment.”

Balance Sheet and Liquidity

In January 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 Company borrowed $1.2 billion on its credit facilities to fund its March acquisition of Rhiag-Inter Auto Parts Italia S.p.A (“Rhiag”).

Cash flow from operations totaled $119 million during the first quarter, and the Company invested approximately $50 million in capital expenditures and other long term assets. As of March 31, 2016, LKQ’s balance sheet reflected cash and equivalents of $229 million and outstanding debt of $2.8 billion. Total availability under the Company’s credit facility at March 31, 2016 was approximately $1.1 billion.

Other Events

On March 18, 2016, the Company completed its previously announced acquisition of Rhiag, a leading Pan-European business-to-business distributor of aftermarket spare parts for passenger cars and commercial vehicles. Rhiag operates through 252 distribution centers and 10 warehouses, and serves more than 100,000 professional clients in 10 European countries.

On April 14, 2016, LKQ Italia Bondco S.p.A., an indirect, wholly-owned subsidiary of LKQ Corporation, completed an offering of €500 million aggregate principal amount of 3.875% senior notes due 2024.

On April 21, 2016, the Company completed its previously-announced acquisition of Pittsburgh Glass Works LLC (“PGW”). PGW is a leading global distributor and manufacturer of automotive glass products. PGW operates approximately 120 distribution branches serving over 7,000 automotive glass retailer shops across North America. In addition, PGW operates 12 manufacturing, fabrication and assembly facilities.

In addition to the Rhiag and PGW acquisitions, during the first quarter of 2016 the Company acquired a wholesale salvage business in Sweden.

Company Outlook

Now that we have completed the acquisitions of Rhiag and PGW, we have updated our guidance for several financial metrics to include the impact of those transactions.

 

Updated Guidance

Prior Guidance

Organic revenue growth (parts & services)

6.0% to 8.0%

6.0% to 8.0%

Adjusted net income

$545 million to $575 million

$490 million to $520 million

Adjusted diluted EPS

$1.76 to $1.86

$1.59 to $1.69

Cash flow from operations

$575 million to $625 million

$520 to $550 million

Capital expenditures

$200 million to $225 million

$170 million to $180 million

 

Our revised 2016 guidance is based on current conditions (including acquisitions completed through April 28, 2016) and excludes the impact of restructuring and acquisition related expenses; loss on debt extinguishment; amortization of acquired intangibles; gains or losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities); and capital spending related to future business acquisitions.

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 April 28, 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: 13634367#. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through May 20, 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, and automotive glass to repair and accessorize automobiles and other vehicles.  LKQ is also a leader in the design, production and supply of automotive glass to OEMs. LKQ has operations in North America, Europe, China 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):

 

  •      changes in economic and political activity in the U.S. and other countries in which we are located or do business, and the impact of these changes on the demand for our products and our ability to obtain financing for operations;
  •      increasing competition in the automotive parts industry;
  •      fluctuations in the pricing of new original equipment manufacturer (“OEM”) replacement products;
  •      changes in the level of acceptance and promotion of alternative automotive parts by insurance companies and auto repairers;
  •      changes to our business relationships with insurance companies or changes by insurance companies to their business practices relating to the use of our products;
  •      our ability to identify sufficient acquisition candidates at reasonable prices to maintain our growth objectives;
  •      our ability to integrate, realize expected synergies, and successfully operate acquired companies and any companies acquired in the future, and the risks associated with these companies;
  •      restrictions or prohibitions on selling certain aftermarket products to the extent OEMs seek and obtain more design patents than they have in the past and are successful in asserting infringement of these patents and defending their validity;
  •      variations in the number of vehicles manufactured and sold, vehicle accident rates, miles driven, and the age profile of vehicles in accidents;
  •      fluctuations in the prices of fuel, scrap metal and other commodities;
  •      changes in state or federal laws or regulations affecting our business;
  •      higher costs and the resulting potential inability to service our customers to the extent that our suppliers decide to discontinue business relationships with us;
  •      price increases, interruptions or disruptions to the supply of vehicle parts from aftermarket suppliers and from salvage auctions;
  •      changes in the demand for our products and the supply of our inventory due to severity of weather and seasonality of weather patterns;
  •      the risks associated with operating in foreign jurisdictions, including foreign laws and economic and political instabilities;
  •      declines in the values of our assets;
  •      additional unionization efforts, new collective bargaining agreements, and work stoppages;
  •      our ability to develop and implement the operational and financial systems needed to manage our operations;
  •      interruptions, outages or breaches of our operational systems, security systems, or infrastructure as a result of attacks on, or malfunctions of, our systems;
  •      product liability claims by the end users of our products or claims by other parties who we have promised to indemnify for product liability matters;
  •      costs associated with recalls of the products we sell;
  •      inaccuracies in the data relating to our industry published by independent sources upon which we rely;
  •      currency fluctuations in the U.S. dollar, pound sterling and euro versus other currencies;
  •      our ability to obtain financing on acceptable terms to finance our growth;
  •      our ability to satisfy our debt obligations and to operate within the limitations imposed by financing agreements; and
  •      other risks that are described in our Form 10-K filed February 25, 2016 and in other reports filed by us from time to time with the Securities and Exchange Commission.

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.

 

 

Contact:

 

Joseph P. Boutross-LKQ Corporation

Director, Investor Relations

(312) 621-2793

jpboutross@lkqcorp.com