October 28, 2021
- Third quarter 2021 revenue of $3.3 billion (up 8.2% year-over-year)
- Diluted EPS 1 of $0.96 (up 50.0%); adjusted diluted EPS 1,2 of $1.02 (up 36.0%)
- Third quarter operating cash flow of $429 million; free cash flow 2 of $384 million
- Net leverage decreased to 1.1x EBITDA
- Repurchased 4.3 million shares for $219 million in the quarter
- Full year 2021 financial outlook raised
- Announced inaugural quarterly dividend of $0.25 per share
CHICAGO — LKQ Corporation (Nasdaq:LKQ) today reported third quarter 2021 results that reflect continued strength for the Company in a number of key metrics including total revenue, segment profitability and free cash flow.
“Our operating excellence initiatives continue to drive record results for LKQ; in the quarter, we recorded the highest third quarter EPS and Segment EBITDA2 margin in the Company’s history. We are particularly pleased with the results of our Europe segment, as its third quarter margin of 11.5% is the highest in over nine years. This performance validates our confidence in the 1 LKQ Europe program, the strategic initiatives that underpin it, and the capabilities of the team driving the implementation,” noted Dominick Zarcone, President and Chief Executive Officer.
Third Quarter 2021 Financial Results
Revenue for the third quarter of 2021 was $3.3 billion, an increase of 8.2% as compared to $3.0 billion in the third quarter of 2020, reflecting the annualization of the pandemic impact during the third quarter of 2020. For the third quarter of 2021, parts and services organic revenue increased 4.0%, while the net impact of acquisitions and divestitures increased revenue 0.5% and foreign exchange rates increased revenue 1.5%, for a total parts and services revenue increase of 6.1%. Other revenue grew 45.3% in the third quarter of 2021, driven by higher scrap steel and precious metals prices.
Net income1 for the third quarter of 2021 was $284 million as compared to $193 million for the same period in 2020, an increase of 46.8%. Diluted earnings per share1 for the third quarter was $0.96 as compared to $0.64 for the same period of 2020, an increase of 50.0%.
On an adjusted basis, net income1,2 in the third quarter was $300 million compared to $228 million in the same period of 2020, a 31.6% increase. Adjusted diluted earnings per share1,2 for the third quarter was $1.02 as compared to $0.75 for the same period of 2020, a 36.0% increase.
Cash Flow and Balance Sheet
Cash flow from operations totaled $429 million during the third quarter of 2021, and free cash flow2 in the quarter was $384 million. Cash flow from operations for the nine months ended September 30, 2021 was $1.4 billion, and free cash flow2 for the nine months ended September 30, 2021 was $1.2 billion.
Net repayments on borrowings totaled $23 million during the quarter and, as of September 30, 2021, net debt2 was $2.0 billion. Net leverage, as defined in our credit facility, decreased to 1.1x EBITDA.
Stock Repurchase and Dividend Programs
In the third quarter of 2021, we repurchased 4.3 million shares of common stock. Since initiating the stock repurchase plan in October 2018, 29.3 million shares have been repurchased for a total consideration of $1.05 billion through September 30, 2021.
On October 26, 2021, our Board of Directors declared the Company’s first ever quarterly cash dividend. The quarterly dividend of $0.25 per share will be paid on December 2, 2021, to stockholders of record at the close of business on November 11, 2021.
2021 Outlook
Varun Laroyia, Executive Vice President and Chief Financial Officer commented, “We are increasing our full year 2021 outlook – a clear testament to our teams’ ability to drive operational excellence initiatives in the midst of an operating environment that includes challenging inflationary and supply chain pressures. The announcement of our inaugural quarterly dividend reflects our confidence in our strategy and strength of our business and underscores our commitment to deliver long-term value to stockholders while continuing to allow for the repurchase of shares.”
For 2021, management is anticipating the following revised outlook:
- Diluted EPS1 attributable to LKQ stockholders in the range of $3.48 to $3.58
- Adjusted diluted EPS1,2 attributable to LKQ stockholders in the range of $3.78 to $3.88
- Free cash flow2 in the range of $1.15 billion to $1.30 billion
- Full year 2021 Segment EBITDA margin targets for Europe updated to a range of 9.8% to 10.3%
Our outlook for the full year 2021 is based on current conditions and recent trends, and it assumes current U.S. federal tax legislation remains unchanged, exchange rates for the Canadian dollar, euro, and pound sterling hold near recent levels, and the price of scrap and precious metals hold near recent levels. Our outlook is also based on management’s current expectations regarding the recovery from the coronavirus outbreak. Changes in these conditions may impact our ability to achieve the estimates. Adjusted figures exclude (to the extent applicable) the impact of restructuring and acquisition related expenses; amortization expense related to acquired intangibles; excess tax benefits and deficiencies from stock-based payments; losses on debt extinguishment; impairment charges; and gains and losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities).
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 OEM recycled and aftermarket parts, replacement systems, components, equipment, and services to repair and accessorize automobiles, trucks, and recreational and performance vehicles.
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1 References in this release to Net income and Diluted earnings per share, and the corresponding adjusted figures, reflect amounts from continuing operations attributable to LKQ stockholders.
2 Non-GAAP measure. See the table accompanying this release that reconciles the actual or forecasted U.S. GAAP measure to the actual or forecasted adjusted measure, which is non-GAAP.
For additional details, including financial and supplementary data, view the full Press Release on the LKQ website.
