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LKQ Corporation Posts Record Second Quarter 2011 Results
- Revenue growth of 30% to $760 million
- Organic revenue growth of 12%
- Diluted EPS from continuing operations increases 23%
Chicago, IL (July 28, 2011) - LKQ Corporation (Nasdaq:LKQX) today reported revenue for the second quarter of 2011 of $759.7 million, an increase of 29.9% as compared to $584.7 million in the second quarter of 2010. Income from continuing operations for the second quarter of 2011 was $46.7 million, an increase of 23.2% as compared to $37.9 million for the same period of 2010. Diluted earnings per share from continuing operations of $0.32 for the second quarter ended June 30, 2011 increased 23.1% from $0.26 for the second quarter of 2010.
"All of the operating groups performed well during the quarter," stated Robert Wagman, President and Co-Chief Executive Officer of LKQ Corporation. Mr. Wagman continued, "We believe higher fuel prices and lower miles driven created some challenges for certain segments of our business. Despite those challenges, the Company delivered total organic growth of 12.2% in the quarter, including 8.4% for parts and services.”
Joseph Holsten, Vice Chairman and Co-Chief Executive Officer of LKQ Corporation added, “We continued our acquisition plans which contributed 17.5% to our revenue growth year-over-year. While realizing the full potential of these businesses will take some time, we are on pace with our plans for integration.”
On a six month year-to-date basis, revenue was $1.55 billion, an increase of 30.1% from $1.19 billion for the same six month period of 2010. Income from continuing operations for the first six months of 2011 was $104.9 million, as compared to $89.9 million for the first half of 2010. Diluted earnings per share from continuing operations was $0.71 for the first six months of 2011, as compared to $0.62 for the same six month period of 2010.
Organic revenue growth on a six month year-to-date basis was 12.9%. Parts and services revenue grew organically by 9.4%. Acquisition revenue growth on a six month year-to-date basis was 17.0%.
Robert Wagman added: “Overall, we are excited about the industry dynamics we see today. Alternative parts usage continues to grow, our fill rates are at historical highs, and we continue to see strong insurance support as we explore alternative salvage solutions outside of the traditional auction environment.”
Balance Sheet and Liquidity
As of June 30, 2011, LKQ’s balance sheet reflected cash and equivalents of $42.3 million, and the outstanding obligations under the Company’s credit facilities were $574.6 million ($246.9 million of term loans and $327.7 million of revolver borrowings). Availability under the revolver at June 30, 2011, including the impact of outstanding letters of credit of $33.7 million, was $388.6 million.
During the second quarter, LKQ acquired three businesses: the U.S. paint distribution business of Akzo Nobel Coatings Inc., a wheel refinishing business in Ohio, and an aftermarket parts distributor in Ohio.
On May 25, 2011 Standard & Poor’s raised LKQ’s corporate credit rating to BB+ from BB reflecting the Company’s increasingly improved credit ratios.
The Company noted that on July 20, 2011 Robert M. Devlin retired from the Company’s Board of Directors. Mr. Devlin had been a director since 2007.
Regarding Mr. Devlin’s retirement, Mr. Donald F. Flynn, Chairman of the Board of Directors stated: “The Board of Directors wishes to acknowledge the significant contributions made by Bob during his tenure and thank him for his service. Bob's vast experience in the insurance industry and extensive career in management played a key role in LKQ’s success and growth.”
The Company announced that it is revising earnings guidance for 2011. Income from continuing operations and diluted earnings per share from continuing operations are anticipated to be within the range of $201 million to $211 million and $1.36 to $1.42, respectively. LKQ’s previous guidance was $197 million to $211 million for income from continuing operations, and $1.33 to $1.42 for diluted earnings per share.
In addition, the Company left unchanged its guidance of approximately $195 million for cash flows from continuing operations, $85-$95 million in capital expenditures, and organic growth of 6-8% from parts and services revenue.
The Company noted that it does not include sales of scrap or cores in its definition of parts and services revenue. Additionally, all guidance comments exclude restructuring expenses and any gains or losses or capital expenditures related to acquisitions or divestitures.
Quarterly Conference Call
LKQ will host a conference call and Webcast on July 28, 2011 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) 407-0315. International access to the call may be obtained by dialing (201) 689-8501. The audio webcast can be accessed via the Company's website 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 account: 286 #, conference ID: 374935 #. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through August 26, 2011. Please allow approximately two hours after the live presentation before attempting to access the replay.
About LKQ Corporation
LKQ Corporation is the largest nationwide provider of aftermarket and recycled collision replacement parts and refurbished collision replacement products such as wheels, bumper covers and lights, and a leading provider of mechanical replacement parts including remanufactured engines, all in connection with the repair of automobiles and other vehicles. LKQ also has operations in Canada, Mexico and Central America. LKQ operates more than 340 facilities, offering its customers a broad range of replacement systems, components and parts to repair automobiles and light, medium and heavy-duty trucks.
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 expectations, beliefs, hopes, intentions or 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:
- uncertainty as to changes in U.S. general economic activity and the impact of these changes on the demand for our products and our ability to obtain financing for operations;
- fluctuations in the pricing of new original equipment manufacturer ("OEM") replacement parts;
- the availability and cost of our inventory;
- variations in vehicle accident rates or miles driven;
- changes in state or federal laws or regulations affecting our business;
- changes in the types of replacement parts that insurance carriers will accept in the repair process;
- changes in the demand for our products and the supply of our inventory due to severity of weather and seasonality of weather patterns;
- increasing competition in the automotive parts industry;
- uncertainty as to the impact on our industry of any terrorist attacks or responses to terrorist attacks;
- our ability to operate within the limitations imposed by financing agreements;
- our ability to obtain financing on acceptable terms to finance our growth;
- declines in the values of our assets;
- fluctuations in fuel and other commodity prices;
- fluctuations in the prices of scrap metal and other metals;
- our ability to develop and implement the operational and financial systems needed to manage our operations;
- our ability to integrate and successfully operate acquired companies and any companies acquired in the future and the risks associated with these companies;
- claims by OEMs or others that attempt to restrict or eliminate the sale of aftermarket products:
- termination of business relationships with insurance companies that promote the use of our products;
- 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;
- currency fluctuations in the U.S. dollar versus the Canadian dollar, the Mexican peso and the Taiwan dollar;
- instability in regions in which we operate, such as Mexico, that can affect our supply of certain products; and
- other risks that are described in our Form 10-K filed February 25, 2011 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.
Joseph P. Boutross
Director, Investor Relations