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LKQ CORPORATION ANNOUNCES FINANCIAL RESULTS FOR SECOND QUARTER 2016

 

LKQ CORPORATION ANNOUNCES FINANCIAL RESULTS FOR SECOND QUARTER 2016

 

  •    Revenue growth of 33.3% to $2.45 billion
  •    Organic revenue growth for parts and services of 5.4%
  •    Net income growth of 17.6%; adjusted net income growth of 34.0%
  •    Second quarter 2016 diluted EPS of $0.46; adjusted diluted EPS of $0.55
  •    Annual earnings guidance increased

 

Chicago, IL (July 28, 2016) – LKQ Corporation (Nasdaq:LKQ) today reported record revenue for the second quarter of 2016 of $2.45 billion, an increase of 33.3% as compared to $1.84 billion in the second quarter of 2015. Net income for the second quarter of 2016 was $140.7 million, an increase of 17.6% as compared to $119.7 million for the same period of 2015. On an adjusted basis, net income was $169.2 million, an increase of 34.0% as compared to the $126.3 million for the same period of 2015. Diluted earnings per share for the second quarter of 2016 was $0.46, an increase of 17.9% as compared to the $0.39 for the same period of 2015. On an adjusted basis, diluted earnings per share was $0.55 in the second quarter of 2016 reflecting a 34.1% increase over $0.41 for the same period 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.

“Despite tough comparable periods and the carryover impact of the mild winter in North America, organic revenue growth for parts and services was a respectable 5.4% during the quarter, demonstrating the resiliency of our operating and diversification strategy," stated Robert Wagman, President and Chief Executive Officer of LKQ Corporation. “We improved gross margins in our North American operations, which included 40 basis points of improvement from the aftermarket procurement initiatives implemented during 2016. Our European segment continued to show solid improvement in the second quarter, with its segment EBITDA margins increasing 40 basis points sequentially and 30 basis points year-over-year, even after absorbing the incremental cost associated with the new distribution facility in Tamworth, England. I am also pleased with the overall earnings growth achieved in the quarter, which is partly attributable to the smooth integration of the Rhiag and PGW acquisitions we completed earlier this year.”

On a six month year-to-date basis, revenue was $4.37 billion, an increase of 21.0% from $3.61 billion for the comparable period of 2015. Parts and services organic revenue growth for the first six months of 2016 was 5.8%. Net income for the first six months of 2016 was $248.5 million, as compared to $226.8 million for the first half of 2015. Diluted earnings per share was $0.81 for the first six months of 2016, reflecting a 9.5% increase as compared to $0.74 for the comparable period of 2015. On an adjusted basis, diluted earnings per share was $0.97 in the first six months of 2016 reflecting a 22.8% increase over $0.79 for the same period of 2015.

Balance Sheet and Liquidity

Cash flow from operations totaled $355.2 million on a six month year-to-date basis, of which approximately $102 million was invested in capital expenditures and other long term assets. As of June 30, 2016, the balance sheet reflected cash and equivalents of $273 million and outstanding debt of $3.3 billion. Total availability under the Company’s credit facility at June 30, 2016 was approximately $1.1 billion.

Other Events

In addition to the PGW acquisition, during the second quarter of 2016, LKQ acquired a distributor of aftermarket automotive products in Belgium, and LKQ’s European operations opened seven new Euro Car Parts branches.

On May 23, 2016, the Company announced that S&P Dow Jones Indices added LKQ Corporation to the S&P 500 Index. The addition became effective at the close of trading on May 20, 2016.

Company Outlook

The Company updated its guidance for 2016.

 

Updated Guidance

Prior Guidance

Organic revenue growth (parts & services)

5.5% to 7.0%

6.0% to 8.0%

Adjusted net income*

$555 million to $580 million

$545 million to $575 million

Adjusted diluted EPS*

$1.79 to $1.87

$1.76 to $1.86

Cash flow from operations

$585 million to $635 million

$575 million to $625 million

Capital expenditures

$200 million to $225 million

$200 million to $225 million

*Non-GAAP measures. See the table accompanying this release that reconciles forecasted net income and diluted EPS to forecasted adjusted net income and adjusted diluted EPS.

Our revised 2016 guidance is based on current conditions (including acquisitions completed through June 30, 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.

The updated 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 updated guidance.

Conference Call Details

On July 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: 13640380#. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through August 18, 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 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, including the U.K. withdrawal from the European Union, and the impact of these changes on our businesses, 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