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LKQ Corporation Announces Record Results for First Quarter 2017

 

 

  •          Revenue growth of 21.9% to $2.34 billion
  •          Organic revenue growth for parts and services of 4.5%
  •          Income from continuing operations growth of 25.5% to $141 million
  •          First quarter 2017 diluted EPS from continuing operations of $0.45; adjusted diluted EPS of $0.49
  •          2017 annual earnings guidance increased

 

Chicago, IL (April 27, 2017) – LKQ Corporation (Nasdaq:LKQ) today reported record revenue for the first quarter of 2017 of $2.34 billion, an increase of 21.9% as compared to $1.92 billion in the first quarter of 2016. Income from continuing operations for the first quarter of 2017 was $140.8 million, an increase of 25.5% as compared to $112.2 million for the same period of 2016. Diluted earnings per share from continuing operations for the first quarter of 2017 was $0.45, an increase of 25.0% as compared to $0.36 for the same period of 2016. On an adjusted basis, diluted earnings per share from continuing operations was $0.49, an increase of 16.7% as compared to $0.42 for the same period of 2016.

 “I am proud of our ability to deliver excellent top line and bottom line growth, achieving record revenue and earnings in the first quarter of 2017," stated Robert Wagman, President and Chief Executive Officer of LKQ Corporation. “I am particularly pleased with the margin improvement in the quarter, notably North America which increased Segment EBITDA margin by 210 basis points sequentially and 110 basis points year-over-year. Global revenue growth in parts and services was a strong 24.5% on a constant currency basis. Also, despite the mild weather we again faced in North America during the first quarter, global organic revenue growth for parts and services was 4.5%, consistent with our annual guidance.”

 

Balance Sheet and Liquidity

Cash flow from operations totaled $172 million during the first quarter, and the Company invested approximately $41 million in capital expenditures and other long term assets for continuing operations and paid $77 million for acquisitions. Proceeds from the divestiture of PGW’s automotive glass manufacturing business were used to pay down debt. As of March 31, 2017, LKQ’s balance sheet reflected cash and equivalents of $265 million and outstanding debt of $3.0 billion. Total availability under the Company’s credit facilities at March 31, 2017 was approximately $1.4 billion.

 

Link to the full report: http://investor.lkqcorp.com/investor-relations/press-releases/default.aspx

 

Other Events

In addition to finalizing the previously announced divestiture of PGW’s automotive glass manufacturing business, during the first quarter of 2017 LKQ acquired parts recycling businesses in Michigan and Sweden, and a specialty products business in Pennsylvania. Also, in the first quarter, LKQ’s Rhiag operations opened 12 new Elit and Auto Kelly operations in Eastern Europe.

 

Company Outlook

The Company updated its guidance for 2017.

 

Updated Guidance

Prior Guidance

Organic revenue growth for parts & services

4.0% to 6.0%

4.0% to 6.0%

Adjusted income from continuing operations*

$565 million to $595 million

$560 million to $590 million

Adjusted diluted EPS from continuing operations*

$1.82 to $1.92

$1.80 to $1.90

Cash flow from operations

$615 million to $645 million

$610 million to $640 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 2017 guidance for adjusted income from continuing operations and adjusted diluted EPS is based on current conditions (including acquisitions completed through April 27, 2017) and excludes the impact of restructuring and acquisition related expenses; amortization of acquired intangibles; income tax effects related to excess tax benefits; and gains or losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities).The updated guidance for 2017 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.

 

Non-GAAP Financial Measures

This release contains and management’s presentation on the conference call will refer to non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included with this release are reconciliations of the difference between each non-GAAP financial measure with the most directly comparable financial measure calculated in accordance with GAAP.

 

Conference Call Details

LKQ will host a conference call and webcast on April 27, 2017 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) with members of senior management to discuss the Company's results. To access the investor conference call, please dial (877) 201-0168. International access to the call may be obtained by dialing (647) 788-4901.

 

Link to the full report: http://investor.lkqcorp.com/investor-relations/press-releases/default.aspx

 

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 (800) 585-8367 or (416) 621-4642 for international calls. The telephone replay will require you to enter conference ID: 6722550#. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through May 11, 2017. 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, Europe 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

Statements and information in this press release that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are made pursuant to the “safe harbor” provisions of such Act.

Forward-looking statements include, but are not limited to, statements regarding our outlook, guidance, expectations, beliefs, hopes, intentions and strategies. These statements are subject to a number of risks, uncertainties, assumptions and other factors including those identified below.  All forward-looking statements are based on information available to us at the time the statements are made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should not place undue reliance on our forward-looking statements. Actual events or results may differ materially from those expressed or implied in the forward-looking statements. The risks, uncertainties, assumptions and other factors that could cause actual results to differ from the results predicted or implied by our forward-looking statements include the factors set forth below, and other factors discussed in our filings with the SEC, including those disclosed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in our subsequent Quarterly Reports on Form 10-Q. These reports are available on our investor relations website at lkqcorp.com and on the SEC website at sec.gov.

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 (including the potential competitive advantage to OEMs with “connected car” technology);
  •      fluctuations in the pricing of new 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; 
  •      the implementation of a border tax or tariff on imports and the negative impact on our business due to the amount of inventory we import;
  •      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;
  •      the increase of accident avoidance systems being installed in vehicles;
  •      the potential loss of sales of certain mechanical parts due to the rise of electric vehicle sales;
  •      fluctuations in the prices of fuel, scrap metal and other commodities;
  •      changes in 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 vehicles or 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 arrangements; and
  •      other risks that are described in our Form 10-K filed February 27, 2017 and in other reports filed by us from time to time with the Securities and Exchange Commission.

 

Link to the full report: http://investor.lkqcorp.com/investor-relations/press-releases/default.aspx

 

Contact:

Joseph P. Boutross- Director, Investor Relations, LKQ Corporation

(312) 621-2793

jpboutross@lkqcorp.com