LKQ Corporation Announces Results for Fourth Quarter and Full Year 2021

February 17, 2022

Fourth quarter 2021 revenue of $3.2 billion (up 7.9% year-over-year); annual revenue of $13.1 billion (up 12.6% year-over-year)
Fourth quarter 2021 parts and services organic revenue increased 6.6% (7.3% on a per day basis); annual increase of 7.9% (8.3% on a per day basis)
Fourth quarter 2021 diluted EPS of $0.81 (up 37.3%); adjusted diluted EPS of $0.87 (up 26.1%)
Annual diluted EPS of $3.66 (up 75.1% ); adjusted diluted EPS of $3.96 (up 55.3%)
Annual operating cash flow of $1.4 billion; free cash flow of $1.1 billion
Stock buyback program invested $877 million for 17.2 million shares in 2021
Dividend of $0.25 per share approved to be paid in the first quarter of 2022
2022 outlook provided

CHICAGO — LKQ Corporation (Nasdaq:LKQ) today reported fourth quarter and full year 2021 results that reflect continued progress with our operational excellence program and strategic initiatives.

“We delivered solid results in the fourth quarter, and it was a strong finish to a great year. Despite facing significant supply chain disruptions, labor shortages, and inflationary pressures, we delivered the most profitable year in the history of the Company. I want to thank our global teams for delivering on our strategic initiatives in 2021 by focusing on profitable revenue growth, sustainable margin expansion, and driving high levels of cash flow,” noted Dominick Zarcone, President and Chief Executive Officer. “The continued robust cash flow generation enabled us to maintain our balanced capital allocation policy, and through our stock repurchase program and inaugural quarterly dividend payment, we returned $950 million to our stockholders in 2021.”

Fourth Quarter and Full Year 2021 Financial Results

Revenue for the fourth quarter of 2021 was $3.2 billion, an increase of 7.9% as compared to $3.0 billion in the fourth quarter of 2020. For the fourth quarter of 2021, parts and services organic revenue increased 6.6% (7.3% on a per day basis), while the net impact of acquisitions and divestitures increased revenue 1.7% and foreign exchange rates decreased revenue 0.8%, for a total parts and services revenue increase of 7.5%. Other revenue grew 13.1% in the fourth quarter of 2021 driven by higher scrap steel prices, partially offset by lower precious metal prices.

Net income for the fourth quarter of 2021 was $236 million as compared to $180 million for the same period in 2020, an increase of 30.6%. Diluted earnings per share1 for the fourth quarter was $0.81 as compared to $0.59 for the same period of 2020, an increase of 37.3%.

On an adjusted basis, net income in the fourth quarter of 2021 was $254 million compared to $212 million in the same period of 2020, a 20.0% increase. Adjusted diluted earnings per share for the fourth quarter was $0.87 as compared to $0.69 for the same period of 2020, a 26.1% increase.

Revenue for the full year of 2021 was $13.1 billion, an increase of 12.6% as compared to $11.6 billion for the full year of 2020. For the full year of 2021, parts and services organic revenue increased 7.9% (8.3% on a per day basis), while the net impact of acquisitions and divestitures increased revenue 0.3% and foreign exchange rates increased revenue 2.5%, for a total parts and services revenue increase of 10.7%. Other revenue grew 42.5% for the full year of 2021 driven by higher scrap steel and precious metals prices.

Net income for the full year of 2021 was $1.1 billion as compared to $639 million for the same period in 2020, an increase of 70.7%. Diluted earnings per share for the full year of 2021 was $3.66 as compared to $2.09 for the same period of 2020, an increase of 75.1%.

On an adjusted basis, net income for the full year of 2021 was $1.2 billion compared to $777 million in the same period of 2020, a 51.8% increase. Adjusted diluted earnings per share for the full year of 2021 was $3.96 as compared to $2.55 for the same period of 2020, a 55.3% increase.

Fourth quarter and full year diluted earnings per share included $0.07 in discrete tax benefits, which reduced the reported full year effective tax rate of 23.6% by approximately 150 basis points.

Cash Flow and Balance Sheet

Cash flow from operations and free cash flow were $1.4 billion and $1.1 billion, respectively, for the full year of 2021. As of December 31, 2021, LKQ’s balance sheet reflected total debt, net of debt issuance costs, of $2.8 billion and net debt of $2.5 billion. Net leverage, as defined in our credit facility, was 1.4x EBITDA.

2022 Outlook

Varun Laroyia, Executive Vice President and Chief Financial Officer, commented: “We’ve continued to outpace our markets organically and make significant progress on our operational excellence program, driving record revenue and profitability in 2021. As noted throughout the year, we benefited from favorable commodity prices, exchange rates, and discrete tax adjustments, though even excluding these benefits, our 2021 diluted EPS was our best ever. Our 2022 guidance reflects continued strong organic growth and productivity improvements more than offsetting inflation while the year over year earnings comparison is negatively affected by the expected nonrecurrence of some of the tailwinds experienced in 2021. With the demonstrated success in improving our structural economics over the past two years, we are confident in our 2022 outlook and our ability to continue to deliver long-term value for all our stakeholders.”

For 2022, management is anticipating the following outlook:

Organic revenue growth for parts and services in the range of 3% to 5%
Diluted EPS attributable to LKQ stockholders in the range of $3.50 to $3.80
Adjusted diluted EPS attributable to LKQ stockholders in the range of $3.72 to $4.02
Operating cash flow of $1.3 billion, and free cash flow at a minimum of $1.0 billion; targeting free cash flow conversion of EBITDA at 55 – 60%

Our outlook for the full year 2022 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 decrease from 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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For additional details, including financial and supplementary data, view the full Press Release on the LKQ website.