LKQ Corporation Announces Results for Fourth Quarter and Full Year 2017

February 22, 2018

Annual revenue growth of 13.4% to $9.74 billion; fourth quarter growth of 14.9%
Annual organic revenue growth for parts and services of 4.1%; fourth quarter organic growth of 4.8%
Tax reform net benefit of $22 million recognized in the fourth quarter
Annual diluted EPS from continuing operations attributable to LKQ stockholders of $1.74; adjusted diluted EPS of $1.88
Fourth quarter 2017 diluted EPS from continuing operations attributable to LKQ stockholders of $0.41; adjusted diluted EPS of $0.41
2018 annual guidance provided

CHICAGO, Feb. 22, 2018 (GLOBE NEWSWIRE) — LKQ Corporation (Nasdaq:LKQ) today announced results for its fourth quarter and full year ended December 31, 2017. For the fourth quarter of 2017, revenue was $2.47 billion compared with $2.15 billion for the fourth quarter of 2016, an increase of 14.9%. For the fourth quarter, parts and services organic revenue growth was 4.8% and acquisition revenue growth was 6.1%, while the impact of exchange rates was 3.3%, for total parts and services revenue growth of 14.3%.

Net income from continuing operations attributable to LKQ stockholders for the fourth quarter of 2017 was $126 million, an increase of 31.2% as compared to $96 million for the same period of 2016. On an adjusted basis, net income from continuing operations attributable to LKQ stockholders was $126 million, an increase of 17.0% as compared to the $108 million for the same period of 2016. Diluted earnings per share from continuing operations attributable to LKQ stockholders for the fourth quarter of 2017 was $0.41, an increase of 32.3% as compared to the $0.31 for the same period of 2016. On an adjusted basis, diluted earnings per share from continuing operations attributable to LKQ stockholders for the fourth quarter of 2017 was $0.41, an increase of 17.1% as compared to the $0.35 for the same period of 2016. Dominick Zarcone, President and Chief Executive Officer of LKQ Corporation, stated, “I am particularly pleased with the 5.0% organic revenue growth for parts and services achieved by our North America segment during the fourth quarter.”

The Tax Cuts and Jobs Act, enacted in December 2017, made significant changes to federal income tax laws, including lowering the U.S. corporate income tax rate effective January 1, 2018. In the fourth quarter of 2017, the Company recorded a net benefit of $22 million to its income tax provision related to the net impact of revaluing deferred tax balances at the new rate and recording an estimated provision for the repatriation tax. These tax impacts have been excluded from the measurement of adjusted diluted earnings per share.

Full Year 2017 Reported Results

For the full year of 2017, revenue was $9.74 billion, an increase of 13.4% from $8.58 billion for 2016. For the full year of 2017, parts and services organic revenue growth was 4.1%, acquisition revenue growth was 9.1% and total parts and services revenue growth was 13.1%. On a per day basis, parts and services organic revenue growth was 4.5%. Diluted earnings per share from continuing operations attributable to LKQ stockholders for the full year 2017 was $1.74, an increase of 18.4% as compared to the $1.47 for the full year 2016. On an adjusted basis, diluted earnings per share from continuing operations attributable to LKQ stockholders for the full year 2017 was $1.88, an increase of 11.2% as compared to the $1.69 for the full year 2016.

Mr. Zarcone commented, “Our 2017 results reflect the underlying strength of our business and our ability to grow, both organically and through acquisitions, despite headwinds we faced earlier in the year. Additionally, during 2017 our North America and Specialty segments reported their highest annual EBITDA margins in the past five years. I believe we entered 2018 with strong operating momentum, a clear strategy across all of our segments, and an industry leading team of over 43,000 employees dedicated to delivering on our mission.”

Corporate Development

On November 1, 2017, the Company acquired the aftermarket business of Warn Industries, Inc., a leading designer, manufacturer and marketer of high performance vehicle equipment and accessories.

On December 11, 2017, the Company announced that it had signed a definitive agreement to acquire Stahlgruber GmbH (“Stahlgruber”) for an enterprise value of approximately €1.5 billion. Headquartered in Germany, Stahlgruber is a leading European wholesale distributor of aftermarket spare parts for passenger cars, tools, capital equipment and accessories with operations in Germany, Austria, Czech Republic, Italy, Slovenia, and Croatia with further sales to Switzerland. The Stahlgruber transaction is expected to be completed in the first half of 2018 and is subject to regulatory approvals.

In addition to the Warn Industries and pending Stahlgruber acquisitions, during the fourth quarter of 2017 LKQ acquired four businesses, including an aftermarket parts distributor in Bosnia and Herzegovina, an automotive glass distributor in Kansas, an aftermarket parts distributor in the Netherlands, and an automotive glass distributor in New Jersey. Also, in the fourth quarter, LKQ’s European operations opened six new branches in Western Europe and nine new branches in Eastern Europe.

Mr. Zarcone commented, “Clearly, 2017 was another very active year for our development team resulting in the completion of 26 acquisitions, which expanded our geographic footprint, broadened the depth of our product offerings, and extended our leadership position in each of our operating segments. We look forward to closing the Stahlgruber acquisition in the near term so we can get to work integrating that business into our European operations.”

Other Events

On December 1, 2017, the Company amended its credit facility to (i) extend the maturity date by approximately two years to January 29, 2023, (ii) increase the total availability under the revolving credit facility’s multicurrency component from $2.45 billion to $2.75 billion, (iii) increase the permitted net leverage ratio thresholds, including a temporary step-up in the allowable net leverage ratio in the case of permitted acquisitions, (iv) modify the applicable margins and fees in the pricing grid, (v) increase the ability for the Company and its subsidiaries to incur additional indebtedness, and (vi) make other immaterial or clarifying modifications and amendments to the credit agreement.

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For additional details, including financial and supplementary data, view the full Press Release on the LKQ Investor Relations website.