Source: LKQ Corporation
April 25, 2019
- Revenue growth of 14% to $3.1 billion
- Organic revenue growth for parts and services of 0.1%; 1.3% on a per day basis
- Non-cash impairment charges of $52 million including assets held for sale
- Net income attributable to LKQ stockholders of $98 million (down 36%); adjusted net income of $176 million (up 4%)
- Diluted EPS attributable to LKQ stockholders of $0.31; adjusted diluted EPS of $0.56
- Operating cash flow of $177 million (up 22%); free cash flow of $124 million (up 50%)
- Repurchased 2.6 million shares for $70 million; paid down $60 million of debt
CHICAGO, April 25, 2019 — LKQ Corporation (Nasdaq:LKQ) today reported record revenue for the first quarter of 2019 of $3.1 billion, an increase of 14% as compared to $2.7 billion in the first quarter of 2018. For the first quarter, parts and services organic revenue growth was 0.1% and acquisition revenue growth was 18.3%, while the impact of exchange rates was a negative 3.2%, for total parts and services revenue growth of 15.2%. When adjusting for one fewer selling day in the quarter, organic revenue growth for parts and services was 1.3%.
Net income attributable to LKQ stockholders for the first quarter of 2019 was $98 million, a decrease of 36% year-over-year. Diluted earnings per share attributable to LKQ stockholders for the first quarter of 2019 was $0.31 as compared to $0.49 for the same period of 2018, a decrease of 37%. The first quarter 2019 results included non-cash impairment charges (net of tax) of $40 million related to the Company’s equity investment in Mekonomen AB and $12 million for net assets held for sale. These impairment charges reduced diluted earnings per share for the first quarter of 2019 by $0.17. On an adjusted basis net income attributable to LKQ stockholders was $176 million, an increase of 4% as compared to the $170 million for the same period of 2018. On an adjusted basis, diluted earnings per share attributable to LKQ stockholders for the first quarter of 2019 was $0.56, an increase of 2% as compared to $0.55 for the same period of 2018.
Dominick Zarcone, President and Chief Executive Officer of LKQ Corporation, stated, “The business performed in-line with our expectations and we continue to make progress with our key productivity initiatives, despite tough revenue growth comparisons in North America, a challenging macro-economic environment in Europe, and the negative year-over-year impact of scrap and exchange rates. I am particularly pleased with the 90 basis points year-over-year improvement in our North America gross margins, a direct result of our ongoing margin enhancement and pricing initiatives to offset inflationary pressures. Additionally, during the quarter, Euro Car Parts continued to make progress towards optimizing the T2 distribution center, which had a positive impact on year-over-year European organic revenue growth and margins.”
Cash Flow and Balance Sheet
Cash flow from operations totaled $177 million during the first quarter of 2019, up 22%, from a year ago. Free cash flow totaled $124 million, up 50%, year-over-year. The Company paid down $60 million of borrowings on its credit facilities during the quarter, and as of March 31, 2019, LKQ’s balance sheet reflected net debt of $3.9 billion. Net leverage as defined in the credit facility held at 2.9x EBITDA.
During the first quarter of 2019, the Company repurchased approximately 2.6 million shares of its common stock at an average price per share of $26.66, returning approximately $70 million of capital to our stockholders. Since initiating our plan in late October 2018, the Company has repurchased 4.9 million shares for a total of $130 million.
Upon adoption of the new lease accounting standard as of January 1, 2019, the Company added $1.3 billion in operating lease assets and liabilities.
During the first quarter of 2019, the Company identified several businesses that it intends to sell over the course of the next year. By disposing of these small, non-core businesses, the Company intends to simplify its operating model and improve margins. At this time, there are no completed transactions to disclose.
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.