LKQ Corporation Announces Results for Third Quarter 2018

October 25, 2018

Revenue growth of 26.6% to $3.12 billion
Organic revenue growth for parts and services of 4.3%
Growth of net income attributable to LKQ stockholders of 9.6% to $134 million; adjusted net income increased 26.9%
Third quarter 2018 diluted EPS attributable to LKQ stockholders of $0.42; adjusted diluted EPS of $0.56
$500 million stock repurchase program announced
2018 annual earnings guidance updated

LKQ Corporation (Nasdaq:LKQ) today reported record revenue for the third quarter of 2018 of $3.12 billion, an increase of 26.6% as compared to $2.47 billion in the third quarter of 2017. For the third quarter of 2018, parts and services organic revenue growth was 4.3% and acquisition revenue growth was 23.2%, while the impact of exchange rates was (0.6%), for total parts and services revenue growth of 26.9%.

Net income attributable to LKQ stockholders for the third quarter of 2018 was $134 million, up 9.6% year-over-year. On an adjusted basis, net income attributable to LKQ stockholders was $177 million, an increase of 26.9% as compared to the $140 million for the same period of 2017. Diluted earnings per share attributable to LKQ stockholders for the third quarter of 2018 was $0.42 as compared to $0.39 for the same period of 2017, an increase of 7.7%. On an adjusted basis, diluted earnings per share attributable to LKQ stockholders for the third quarter of 2018 was $0.56, an increase of 24.4% as compared to $0.45 for the same period of 2017.

Dominick Zarcone, President and Chief Executive Officer of LKQ Corporation, stated, “I am pleased with the trajectory of our operational initiatives that are focused on a more balanced approach of delivering organic growth while simultaneously optimizing productivity and profitability. I am particularly pleased with the improvement in year-over-year Segment EBITDA margins for our Europe and Specialty segments. Additionally, North America’s Segment EBITDA margin decline was significantly less than the seasonal drop experienced in the prior two years. The continued narrowing of this seasonal gap validates our North America team’s efforts to drive margin improvement, despite the ongoing headwinds of wage and freight inflation, and the recent impact of lower scrap prices.”

On a nine-month year-to-date basis, revenue was $8.88 billion, an increase of 22.1% from $7.27 billion for the comparable period of 2017. Parts and services organic revenue growth for the first nine months of 2018 was 5.1%. Net income from continuing operations attributable to LKQ stockholders for the first nine months of 2018 was $444 million, an increase of 7.2% as compared to $414 million for the comparable period of 2017. Diluted earnings per share from continuing operations attributable to LKQ stockholders for the first nine months of 2018 was $1.41, an increase of 6.0% as compared to $1.33 for the same period of 2017. On an adjusted basis, diluted earnings per share from continuing operations attributable to LKQ stockholders for the first nine months of 2018 was $1.71, an increase of 16.3% as compared to $1.47 for the same period of 2017.

Balance Sheet and Liquidity

Cash flow from operations totaled $521 million on a nine-month year-to-date basis, compared to $449 million for the same period of 2017. During the third quarter of 2018, approximately $172 million was invested in capital expenditures and other long term assets and $199 million was used to pay down credit facility borrowings. As of September 30, 2018, we had approximately $1.5 billion available under our credit facilities. Combined with approximately $341 million of cash and cash equivalents at September 30, 2018, we had approximately $1.8 billion in available liquidity, an increase of $168 million over our available liquidity as of December 31, 2017.

Other Events

In the third quarter of 2018, the Company recorded a $23 million impairment charge related to its December 2016 equity investment in Mekonomen AB. During the fourth quarter, the Company participated in a rights offering by Mekonomen and exercised its right to purchase approximately 5.4 million shares of Mekonomen at a price of SEK 79 per share.

On August 6, 2018, the Company announced that it had appointed Meg Ann Divitto, John William Mendel, and Jody Greenstone Miller to its Board of Directors. LKQ’s Board of Directors regularly evaluates its composition with the objective of including the appropriate skills, experience and perspectives to enhance the prospects for the growth and profitability of the Company on behalf of its stockholders. With these director additions, six directors will have joined LKQ’s Board in the past five years.

On October 25, 2018, the Company announced that its Board of Directors authorized a stock repurchase program. Under the program, LKQ Corporation may purchase up to $500 million of its common stock from time to time through October 25, 2021. The timing and the amount of any repurchases of common stock will be determined by LKQ management based on its evaluation of market conditions and other factors. At September 30, 2018, the Company had 318.2 million shares of common stock outstanding.

During the third quarter of 2018, we acquired three wholesale businesses in Europe for a total net consideration of approximately $79 million. Also in the third quarter, LKQ’s European operations opened seven branches in Eastern Europe.

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.

…

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