LKQ Corporation Posts Record First Quarter 2011 Results
April 28 2011 - 8:00AM
- Revenue growth of 30% to $787 million
- Diluted EPS from continuing operations of
$0.39
- EPS includes $0.02 loss on debt
extinguishment
- Increases 2011 outlook for income and EPS
LKQ Corporation (Nasdaq:LKQX) today reported revenue for the first
quarter of 2011 of $786.6 million, an increase of 30.3% as compared
to $603.5 million in the first quarter of 2010. Income from
continuing operations for the first quarter of 2011 was $58.2
million, an increase of 11.9% as compared to $52.0 million for the
same period of 2010. Diluted earnings per share from continuing
operations of $0.39 for the first quarter ended March 31, 2011
increased 8.3% from $0.36 for the first quarter of 2010. The
Company noted that the 2011 diluted earnings per share results
included a loss on debt extinguishment equal to $0.02 for the
write-off of debt issuance costs in conjunction with the previously
announced refinancing of its credit facility.
The Company attributed the high revenue growth to a combination
of acquisition activity and improved organic growth in its core
lines of business. "I am particularly pleased that our wholesale
parts and services organic growth exceeded ten percent," stated
Joseph Holsten, Vice Chairman & Co-Chief Executive Officer of
LKQ Corporation. "The quarter includes an additional $100 million
of acquisition revenue compared to the same quarter last year and
we are starting to see leverage in our results as we integrate
those transactions," commented Mr. Holsten.
Robert Wagman, President and Co-Chief Executive Officer of LKQ
Corporation added, "Despite a continued difficult buying
environment for salvage cars, the Company improved its margins
compared to Q4 2010."
Balance Sheet and Liquidity
As of March 31, 2011, LKQ's balance sheet reflected cash and
equivalents of $64.5 million, and the outstanding obligations under
the Company's credit facilities were $547.5 million ($250.0 million
of term loans and $297.5 million of revolver borrowings).
Availability under the revolver at March 31, 2011, including the
impact of outstanding letters of credit of $25.7 million, was
$426.8 million.
Other Events
During the quarter ended March 31, 2011, LKQ acquired four
businesses: an engine remanufacturer, an automotive heating and
cooling component distributor, a wholesale recycled products
business and a recycled heavy-duty truck business.
On March 25, 2011 the Company announced that it
entered into a definitive credit agreement with several lenders to
borrow up to $1.0 billion. The new facility replaced the Company's
$750 million facility that would have expired in October 2013.
Company Outlook
The Company also announced that it is raising earnings guidance
for 2011. Mr. Wagman commented "The revised guidance reflects our
strong first quarter results."
Income from continuing operations and diluted earnings per share
from continuing operations are anticipated to be within the range
of $197 million to $211 million and $1.33 to $1.42,
respectively. LKQ's previous guidance was $194 million to $208
million for income from continuing operations, and $1.31 to $1.39
for diluted earnings per share.
The Company left unchanged its previous guidance of
approximately $195 million for cash flows from continuing
operations, $85-$95 million in capital expenditures, and organic
growth of 6-8% from parts and services revenue. The Company noted
that it does not include sale of scrap or cores in its definition
of parts and services revenue. Additionally, the guidance provided
excludes restructuring expenses and any gains or losses or capital
expenditures related to acquisitions or divestitures.
Quarterly Conference Call
LKQ will host a conference call and Webcast on April 28, 2011 at
10:00 a.m. Eastern Time (9:00 a.m. Central Time) with members of
senior management to discuss the Company's results.
To access the investor conference call, please dial (877)
407-0315. International access to the call may be obtained by
dialing (201) 689-8501. The audio webcast can be accessed via the
Company's website at www.lkqcorp.com in the Investor Relations
section.
A replay of the conference call will be available by telephone
at (877) 660-6853 or (201) 612-7415 for international calls. The
telephone replay will require you to enter account: 286 #,
conference ID: 371279 #. An online replay of the audio webcast
will be available on the Company's website. Both formats of replay
will be available through May 27, 2011. Please allow approximately
two hours after the live presentation before attempting to access
the replay.
About LKQ Corporation
LKQ Corporation is the largest nationwide provider of
aftermarket and recycled collision replacement parts, refurbished
collision replacement products such as wheels, bumper covers and
lights, and a leading provider of mechanical replacement parts
including remanufactured engines, all in connection with the repair
of automobiles and other vehicles. LKQ operates more than 325
facilities, offering its customers a broad range of replacement
systems, components and parts to repair automobiles and light,
medium and heavy-duty trucks. LKQ's operations include
locations in Canada, Mexico and Central America.
Forward Looking Statements
The statements in this press release that are not historical in
nature are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These include
statements regarding our expectations, beliefs, hopes, intentions
or strategies. Forward-looking statements involve risks and
uncertainties, some of which are not currently known to us. Actual
events or results may differ materially from those expressed or
implied in the forward looking statements as a result of various
factors.
These factors include:
- uncertainty as to changes in U.S. general economic activity and
the impact of these changes on the demand for our products and our
ability to obtain financing for operations;
- fluctuations in the pricing of new original equipment
manufacturer ("OEM") replacement parts;
- the availability and cost of our inventory;
- variations in vehicle accident rates or miles driven;
- changes in state or federal laws or regulations affecting our
business;
- changes in the types of replacement parts that insurance
carriers will accept in the repair process;
- changes in the demand for our products and the supply of our
inventory due to severity of weather and seasonality of weather
patterns;
- increasing competition in the automotive parts industry;
- uncertainty as to the impact on our industry of any terrorist
attacks or responses to terrorist attacks;
- our ability to operate within the limitations imposed by
financing agreements;
- our ability to obtain financing on acceptable terms to finance
our growth;
- declines in the values of our assets;
- fluctuations in fuel and other commodity prices;
- fluctuations in the prices of scrap metal and other
metals;
- our ability to develop and implement the operational and
financial systems needed to manage our operations;
- our ability to integrate and successfully operate acquired
companies and any companies acquired in the future and the risks
associated with these companies;
- claims by OEMs or others that attempt to restrict or eliminate
the sale of aftermarket products:
- termination of business relationships with insurance companies
that promote the use of our products;
- product liability claims by the end users of our products or
claims by other parties who we have promised to indemnify for
product liability matters;
- currency fluctuations in the U.S. dollar versus the Canadian
dollar, the Mexican peso and the Taiwan dollar;
- instability in regions in which we operate, such as Mexico,
that can affect our supply of certain products; and
- other risks that are described in our Form 10-K filed February
25, 2011 and in other reports filed by us from time to time with
the Securities and Exchange Commission.
You should not place undue reliance on these forward-looking
statements. All of these forward-looking statements are based on
our expectations as of the date of this press release. We undertake
no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law.
|
LKQ CORPORATION AND
SUBSIDIARIES |
Unaudited Consolidated
Condensed Statements of Income |
( In thousands, except
per share data ) |
|
|
|
|
Three Months
Ended |
|
March
31, |
|
2011 |
2010 |
Revenue |
$ 786,648 |
$ 603,516 |
Cost of goods sold |
443,002 |
320,226 |
Gross margin |
343,646 |
283,290 |
Facility and warehouse expenses |
69,818 |
57,776 |
Distribution expenses |
65,811 |
51,189 |
Selling, general and administrative
expenses |
89,761 |
75,087 |
Restructuring expenses |
46 |
80 |
Depreciation and amortization |
10,839 |
9,229 |
Operating income |
107,371 |
89,929 |
Other expense (income): |
|
|
Interest expense, net |
6,409 |
7,276 |
Loss on debt
extinguishment |
5,345 |
-- |
Other income, net |
(106) |
(161) |
Total other expense, net |
11,648 |
7,115 |
Income from continuing operations before
provision for income taxes |
95,723 |
82,814 |
Provision for income taxes |
37,541 |
30,831 |
Income from continuing
operations |
58,182 |
51,983 |
Discontinued operations: |
|
|
Income from discontinued
operations, net of taxes |
-- |
224 |
Gain on sale of discontinued
operations, net of taxes |
-- |
1,729 |
Income from discontinued
operations |
-- |
1,953 |
Net income |
$ 58,182 |
$ 53,936 |
|
|
|
Basic earnings per share (1): |
|
|
Income from continuing
operations |
$ 0.40 |
$ 0.37 |
Income from discontinued
operations |
0.00 |
0.01 |
Total |
$ 0.40 |
$ 0.38 |
|
|
|
Diluted earnings per share (1): |
|
|
Income from continuing
operations |
$ 0.39 |
$ 0.36 |
Income from discontinued
operations |
0.00 |
0.01 |
Total |
$ 0.39 |
$ 0.37 |
|
|
Weighted average common shares
outstanding: |
|
Basic |
145,611 |
142,194 |
Diluted |
147,920 |
145,124 |
|
|
|
(1) The sum of the individual
earnings per share amounts may not equal the total due to
rounding. |
|
|
|
LKQ CORPORATION AND
SUBSIDIARIES |
Unaudited Consolidated
Condensed Balance Sheets |
(In thousands, except
share and per share data) |
|
|
|
|
March 31, |
December 31, |
|
2011 |
2010 |
Assets |
|
|
Current Assets: |
|
|
Cash and equivalents |
$ 64,517 |
$ 95,689 |
Receivables, net |
222,581 |
191,085 |
Inventory |
514,894 |
492,688 |
Deferred income taxes |
34,135 |
32,506 |
Prepaid income taxes |
-- |
10,923 |
Prepaid expenses |
15,990 |
13,985 |
Total Current Assets |
852,117 |
836,876 |
|
|
|
Property and Equipment, net |
342,181 |
331,312 |
Intangibles |
1,125,278 |
1,102,275 |
Other Assets |
35,803 |
29,046 |
Total Assets |
$ 2,355,379 |
$ 2,299,509 |
|
|
|
Liabilities and Stockholders'
Equity |
|
|
Current Liabilities: |
|
|
Accounts payable |
$ 75,377 |
$ 76,437 |
Accrued expenses |
85,518 |
84,028 |
Income taxes payable |
20,754 |
-- |
Deferred revenue |
9,245 |
9,224 |
Current portion of long-term
obligations |
14,817 |
52,888 |
Liabilities of discontinued
operations |
2,561 |
2,744 |
|
|
|
Total Current
Liabilities |
208,272 |
225,321 |
|
|
|
Long-Term Obligations, Excluding Current
Portion |
544,451 |
548,066 |
Deferred Income Tax Liabilities |
67,582 |
66,059 |
Other Noncurrent Liabilities |
49,704 |
45,902 |
|
|
|
Commitments and Contingencies |
|
|
|
|
|
Stockholders' Equity: |
|
|
Common stock, $0.01 par value,
500,000,000 shares authorized, 145,879,504 and 145,466,575 shares
issued and outstanding at March 31, 2011 and December 31, 2010,
respectively |
1,459 |
1,455 |
|
|
Additional paid-in capital |
878,206 |
869,798 |
Retained earnings |
596,712 |
538,530 |
Accumulated other comprehensive
income |
8,993 |
4,378 |
Total Stockholders'
Equity |
1,485,370 |
1,414,161 |
Total Liabilities and
Stockholders' Equity |
$ 2,355,379 |
$ 2,299,509 |
|
|
|
|
|
LKQ CORPORATION AND
SUBSIDIARIES |
Unaudited Consolidated
Condensed Statements of Cash Flows |
( In thousands
) |
|
|
|
Three Months
Ended |
|
March
31, |
|
2011 |
2010 |
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
Net income |
$ 58,182 |
$ 53,936 |
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
Depreciation and
amortization |
11,926 |
9,980 |
Stock-based compensation
expense |
3,342 |
2,524 |
Deferred income taxes |
562 |
418 |
Excess tax benefit from
share-based payments |
(2,460) |
(3,500) |
Gain on sale of discontinued
operations |
-- |
(2,744) |
Loss on debt
extinguishment |
5,345 |
-- |
Other |
642 |
785 |
Changes in
operating assets and liabilities, net of effects from acquisitions
and divestitures: |
Receivables |
(19,039) |
(3,306) |
Inventory |
2,678 |
(4,173) |
Prepaid income
taxes/income taxes payable |
33,769 |
30,276 |
Accounts payable |
(9,658) |
5,663 |
Other operating assets
and liabilities |
(7,974) |
(1,794) |
|
|
|
Net cash provided by operating
activities |
77,315 |
88,065 |
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
Purchases of property and
equipment |
(18,093) |
(10,902) |
Proceeds from sales of property
and equipment |
91 |
92 |
Proceeds from sales of
businesses, net of cash sold |
-- |
11,992 |
Cash used in acquisitions, net
of cash acquired |
(43,517) |
(3,746) |
|
|
|
Net cash used in investing
activities |
(61,519) |
(2,564) |
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
Proceeds from exercise of stock
options |
2,610 |
3,185 |
Excess tax benefit from
share-based payments |
2,460 |
3,500 |
Debt issuance costs |
(7,741) |
-- |
Borrowings under line of
credit |
341,753 |
-- |
Repayments under line of
credit |
(44,328) |
-- |
Borrowings under term
loans |
250,000 |
-- |
Repayments under term
loans |
(591,089) |
-- |
Repayments of other long-term
debt |
(652) |
(7,827) |
Net cash used in financing
activities |
(46,987) |
(1,142) |
|
|
|
Effect of exchange rate changes on cash and
equivalents |
19 |
271 |
|
|
|
Net (decrease) increase in cash and
equivalents |
(31,172) |
84,630 |
Cash and equivalents, beginning of
period |
95,689 |
108,906 |
Cash and equivalents, end of period |
$ 64,517 |
$ 193,536 |
|
|
LKQ CORPORATION
AND SUBSIDIARIES |
Unaudited Supplementary
Data |
(In thousands, except
per share data) |
|
|
|
|
|
|
|
|
Three Months
Ended March 31, |
Operating
Highlights |
2011 |
2010 |
|
|
|
|
% of |
|
% of |
|
|
|
|
Revenue |
|
Revenue |
Change |
% Change |
Revenue |
$ 786,648 |
100.0% |
$ 603,516 |
100.0% |
$ 183,132 |
30.3% |
Cost of goods sold |
443,002 |
56.3% |
320,226 |
53.1% |
122,776 |
38.3% |
Gross margin |
343,646 |
43.7% |
283,290 |
46.9% |
60,356 |
21.3% |
Facility and warehouse expenses |
69,818 |
8.9% |
57,776 |
9.6% |
12,042 |
20.8% |
Distribution expenses |
65,811 |
8.4% |
51,189 |
8.5% |
14,622 |
28.6% |
Selling, general and administrative
expenses |
89,761 |
11.4% |
75,087 |
12.4% |
14,674 |
19.5% |
Restructuring expenses |
46 |
0.0% |
80 |
0.0% |
(34) |
-42.5% |
Depreciation and amortization |
10,839 |
1.4% |
9,229 |
1.5% |
1,610 |
17.4% |
Operating income |
107,371 |
13.6% |
89,929 |
14.9% |
17,442 |
19.4% |
|
|
|
|
|
|
|
Other expense (income): |
|
|
|
|
|
|
Interest expense, net |
6,409 |
0.8% |
7,276 |
1.2% |
(867) |
-11.9% |
Loss on debt extinguishment |
5,345 |
0.7% |
-- |
0.0% |
5,345 |
n/m |
Other income, net |
(106) |
0.0% |
(161) |
0.0% |
55 |
34.2% |
Total other expense, net |
11,648 |
1.5% |
7,115 |
1.2% |
4,533 |
63.7% |
Income from continuing
operations before provision for income taxes |
95,723 |
12.2% |
82,814 |
13.7% |
12,909 |
15.6% |
Provision for income taxes |
37,541 |
4.8% |
30,831 |
5.1% |
6,710 |
21.8% |
Income from continuing
operations |
58,182 |
7.4% |
51,983 |
8.6% |
6,199 |
11.9% |
Discontinued operations: |
|
|
|
|
|
|
Income from discontinued operations, net
of taxes |
-- |
0.0% |
224 |
0.0% |
(224) |
n/m |
Gain on sale of discontinued operations,
net of taxes |
-- |
0.0% |
1,729 |
0.3% |
(1,729) |
n/m |
Income from discontinued operations |
-- |
0.0% |
1,953 |
0.3% |
(1,953) |
n/m |
Net income |
$ 58,182 |
7.4% |
$ 53,936 |
8.9% |
$ 4,246 |
7.9% |
|
|
|
|
|
|
|
Basic earnings per share (1): |
|
|
|
|
|
|
Income from continuing operations |
$ 0.40 |
|
$ 0.37 |
|
$ 0.03 |
8.1% |
Income from discontinued operations |
0.00 |
|
0.01 |
|
(0.01) |
n/m |
Total |
$ 0.40 |
|
$ 0.38 |
|
$ 0.02 |
5.3% |
|
|
|
|
|
|
|
Diluted earnings per share (1): |
|
|
|
|
|
|
Income from continuing operations |
$ 0.39 |
|
$ 0.36 |
|
$ 0.03 |
8.3% |
Income from discontinued operations |
0.00 |
|
0.01 |
|
(0.01) |
n/m |
Total |
$ 0.39 |
|
$ 0.37 |
|
$ 0.02 |
5.4% |
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
Basic |
145,611 |
|
142,194 |
|
3,417 |
2.4% |
Diluted |
147,920 |
|
145,124 |
|
2,796 |
1.9% |
|
|
|
|
|
|
|
(1) The sum of the individual
earnings per share amounts may not equal the total due to
rounding. |
|
|
|
The following
unaudited table reconciles income from continuing operations to
EBITDA: |
|
Three Months
Ended |
|
March
31, |
|
2011 |
2010 |
|
(In
thousands) |
|
|
|
Income from continuing operations |
$ 58,182 |
$ 51,983 |
Depreciation and amortization |
11,926 |
9,980 |
Interest expense, net |
6,409 |
7,276 |
Loss on debt extinguishment (1) |
5,345 |
-- |
Provision for income taxes |
37,541 |
30,831 |
Earnings before interest, taxes, depreciation
and amortization (EBITDA) from
continuing operations |
$ 119,403 |
$ 100,070 |
|
|
|
EBITDA as a percentage of revenue |
15.2% |
16.6% |
|
|
|
(1) Loss on debt extinguishment
is considered a component of interest in calculating EBITDA, as the
write-off of debt issuance costs is similar to the treatment of
debt issuance cost amortization. |
|
|
|
We provide a reconciliation of
Income from Continuing Operations to EBITDA as we believe it offers
investors, securities analysts and other interested parties useful
information regarding our results of operations because it assists
in analyzing our performance and the value of our business. EBITDA
provides insight into our profitability trends, and allows
management and investors to analyze our operating results with and
without the impact of depreciation, amortization, interest and
income tax expense. We believe EBITDA is used by securities
analysts, investors, and other interested parties in evaluating
companies, many of which present EBITDA when reporting their
results. EBITDA should not be construed as an alternative to
operating income, net income or net cash provided by (used in)
operating activities, as determined in accordance
with accounting principles generally accepted in the United
States. In addition, not all companies that report EBITDA
information calculate EBITDA in the same manner as we do and,
accordingly, our calculation is not necessarily comparable to
similarly named measures of other companies and may not be an
appropriate measure for performance relative to other
companies. |
|
|
|
|
The following unaudited
tables compare certain revenue categories: |
|
|
|
|
|
|
Three Months
Ended |
|
|
|
March
31, |
|
|
|
2011 |
2010 |
Change |
% Change |
|
(In
thousands) |
|
|
|
|
|
|
|
Included Unaudited in Consolidated
Condensed |
|
|
|
|
Statements of Income of LKQ
Corporation |
|
|
|
|
|
|
|
|
|
Recycled, remanufactured and related products
and services |
$ 275,782 |
$ 215,223 |
$ 60,559 |
28.1% |
Aftermarket, other new and refurbished
products |
381,116 |
312,373 |
68,743 |
22.0% |
Parts and services |
656,898 |
527,596 |
129,302 |
24.5% |
Other |
129,750 |
75,920 |
53,830 |
70.9% |
Total |
$ 786,648 |
$ 603,516 |
$ 183,132 |
30.3% |
|
|
|
|
|
Revenue changes by
category for the three months ended March 31, 2011 vs.
2010: |
|
|
|
|
|
|
Revenue Change
Attributable to: |
|
|
Acquisition |
Organic |
Foreign
Exchange |
% Change |
|
|
|
|
|
Recycled, remanufactured and related products
and services |
17.0% |
10.9% |
0.3% |
28.1% |
Aftermarket, other new and refurbished
products |
11.9% |
10.0% |
0.2% |
22.0% |
Parts and services |
14.0% |
10.3% |
0.2% |
24.5% |
Other |
34.1% |
36.7% |
0.1% |
70.9% |
Total |
16.5% |
13.6% |
0.2% |
30.3% |
CONTACT: Joseph P. Boutross
Director, Investor Relations
(312) 621-2793
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