LKQ Corporation Posts Record First Quarter 2012 Results
April 26 2012 - 7:30AM
- Revenue growth of 31% to $1.03 billion
- First quarter 2012 diluted EPS increases
38%
- Updates 2012 guidance
LKQ Corporation (Nasdaq:LKQX) today reported record revenue for the
first quarter of 2012 of $1.03 billion, an increase of 31% as
compared to $786.6 million in the first quarter of 2011. Net income
for the first quarter of 2012 was $81.0 million, an increase of
39.2% as compared to $58.2 million for the same period of 2011.
Diluted earnings per share of $0.54 for the first quarter ended
March 31, 2012 increased 38% from $0.39 for the first quarter of
2011. The Company noted that the first quarter 2012 diluted
earnings per share included a gain equal to $0.04 per share that
resulted from a favorable legal settlement ($0.03) and a change in
fair value of contingent consideration liabilities ($0.01).
Earnings per share in the first quarter of 2011 included a charge
of $0.02 per share as a result of loss on debt extinguishment.
"We are pleased to report that our quarterly revenue was in
excess of $1 billion for the first time in our history. Despite the
headwinds we faced in the quarter, we were able to generate record
earnings," stated Robert L. Wagman, President and Chief Executive
Officer of LKQ Corporation. "We are particularly pleased with the
organic growth of our recycled, remanufactured and related products
and services revenue. In the quarter, sales from those products
grew organically 8.5% compared to the same period in 2011. We
encountered softness in our collision product sales primarily due
to the mild winter and the subsequent drop in reported insurance
claims. Despite the mild winter and high gas prices, the Company
reported 3.2% total organic growth and 3.6% organic growth for
parts and services. Revenue growth from acquisitions was 28% in the
quarter."
"Cash flow from operations in excess of $110 million for the
quarter improved our leverage to below two times. Our availability
under our credit facility of over $500 million provides us with the
operational flexibility we need to execute our strategy," added
John S. Quinn, Executive Vice President and Chief Financial Officer
of LKQ Corporation.
Balance Sheet and Liquidity
As of March 31, 2012, LKQ's balance sheet reflected cash and
equivalents of $55.2 million, and the outstanding obligations under
the Company's credit facilities were $842.7 million ($437.5 million
of term loans and $405.2 million of revolver borrowings). Total
availability under the credit agreement at March 31, 2012 was
$503.7 million. During the quarter the Company borrowed $200
million in term loans under its credit facility and used those
proceeds to partially repay revolver debt.
Other Events
During the first quarter, LKQ acquired four North American
businesses that included a self-service operation in North
Carolina, a paint distribution business in Canada, a light vehicle
wholesale salvage operation with four locations in Quebec, and a
distributor of remanufactured engines based in California.
During the first quarter, LKQ's European operations opened nine
Euro Car Parts branches in the United Kingdom.
On March 5, 2012, Blythe J. McGarvie was elected to LKQ's Board
of Directors.
Company Outlook
The Company also announced that it is updating its guidance for
2012.
Based on current conditions and excluding restructuring expenses
and any gains or losses related to acquisitions or divestitures
(including changes in the fair value of contingent consideration
liabilities), LKQ anticipates full year 2012 organic revenue growth
from parts and services will be in the range of 5.0% to 7.0%, net
income will be in the range of $262 million to $282 million and
diluted earnings per share will be in the range of $1.75 to $1.88.
The revised guidance includes $0.03 per share from the legal
settlement gain recognized in the first quarter 2012. LKQ's
previous guidance was 5.5% to 7.5% for organic revenue growth for
parts and services, $258 million to $278 million for net income,
and $1.72 to $1.85 for diluted earnings per share.
The Company left unchanged its previous guidance of
approximately $250 million to $280 million for cash flows from
operating activities, and $100 million to $115 million in capital
expenditures (excluding any acquisition related expenditures).
Quarterly Conference Call
LKQ will host a conference call and Webcast on April 26, 2012 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. An 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: 391539 #. An online replay of the audio webcast will
be available on the Company's website. Both formats of replay will
be available through May 25, 2012. 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, recycled, and refurbished collision replacement parts,
and a leading provider of mechanical replacement parts including
remanufactured engines, all in connection with the repair of
automobiles and other vehicles. LKQ also has operations in the
United Kingdom, Canada, Mexico and Central America. LKQ operates
more than 450 facilities, offering its customers a broad range of
replacement systems, components and parts to repair automobiles and
light, medium and heavy-duty trucks.
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 North American and European
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 products;
- the availability and cost of our inventory;
- variations in the number of vehicles sold, vehicle accident
rates, miles driven, and the age profile of vehicles in
accidents;
- 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 arrangements;
- 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 pound
sterling, the Canadian dollar, the Mexican peso and the Taiwan
dollar;
- periodic adjustments to estimated contingent purchase price
amounts;
- 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
27, 2012 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, |
|
2012 |
2011 |
|
|
|
Revenue |
$ 1,031,777 |
$ 786,648 |
|
|
|
Cost of goods sold (1) |
584,394 |
443,002 |
|
|
|
Gross margin |
447,383 |
343,646 |
|
|
|
Facility and warehouse expenses |
85,108 |
69,818 |
|
|
|
Distribution expenses |
91,813 |
65,811 |
|
|
|
Selling, general and administrative
expenses |
121,714 |
89,761 |
|
|
|
Restructuring and acquisition related
expenses |
247 |
46 |
|
|
|
Depreciation and amortization |
14,893 |
10,839 |
|
|
|
Operating income |
133,608 |
107,371 |
|
|
|
Other expense (income): |
|
|
Interest expense, net |
7,367 |
6,409 |
Loss on debt
extinguishment |
-- |
5,345 |
Change in fair value of
contingent consideration liabilities |
(1,345) |
-- |
Other income, net |
(511) |
(106) |
|
|
|
Total other expense, net |
5,511 |
11,648 |
|
|
|
Income before provision for
income taxes |
128,097 |
95,723 |
|
|
|
Provision for income taxes |
47,106 |
37,541 |
|
|
|
Net income |
$ 80,991 |
$ 58,182 |
|
|
|
Earnings per share: |
|
|
Basic |
$ 0.55 |
$ 0.40 |
|
|
|
Diluted |
$ 0.54 |
$ 0.39 |
|
|
|
Weighted average common shares
outstanding: |
|
|
Basic |
147,139 |
145,611 |
|
|
|
Diluted |
149,671 |
147,920 |
|
|
|
(1) Cost of goods sold for the
three months ended March 31, 2012 includes a gain of $8.3 million
resulting from the settlement of a class action lawsuit against
several of our suppliers. |
|
LKQ CORPORATION AND
SUBSIDIARIES |
Unaudited Consolidated
Condensed Balance Sheets |
( In thousands, except
share and per share data ) |
|
|
|
|
March 31, 2012 |
December 31,
2011 |
Assets |
|
|
|
|
|
Current Assets: |
|
|
Cash and equivalents |
$ 55,169 |
$ 48,247 |
Receivables, net |
310,552 |
281,764 |
Inventory |
736,641 |
736,846 |
Deferred income taxes |
45,257 |
45,690 |
Prepaid income taxes |
-- |
17,597 |
Prepaid expenses and other
current assets |
26,659 |
19,591 |
Total Current Assets |
1,174,278 |
1,149,735 |
|
|
|
Property and Equipment, net |
430,777 |
424,098 |
Intangibles |
1,607,588 |
1,584,973 |
Other Assets |
47,358 |
40,898 |
|
|
|
Total Assets |
$ 3,260,001 |
$ 3,199,704 |
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
Current Liabilities: |
|
|
Accounts payable |
$ 212,538 |
$ 210,875 |
Accrued expenses |
123,186 |
131,025 |
Income taxes payable |
28,852 |
7,262 |
Contingent consideration
liabilities |
37,478 |
600 |
Other current liabilities |
14,522 |
18,407 |
Current portion of long-term
obligations |
40,498 |
29,524 |
|
|
|
Total Current Liabilities |
457,074 |
397,693 |
|
|
|
Long-Term Obligations, Excluding Current
Portion |
856,068 |
926,552 |
Deferred Income Taxes |
89,160 |
88,796 |
Contingent Consideration Liabilities |
45,431 |
81,782 |
Other Noncurrent Liabilities |
67,183 |
60,796 |
|
|
|
Commitments and Contingencies |
|
|
|
|
|
Stockholders' Equity: |
|
|
Common stock, $0.01 par value,
500,000,000 shares authorized, 147,404,921 and 146,948,608 shares
issued and outstanding at March 31, 2012 and December 31, 2011,
respectively |
1,474 |
1,470 |
Additional paid-in capital |
913,930 |
902,782 |
Retained earnings |
829,785 |
748,794 |
Accumulated other comprehensive
loss |
(104) |
(8,961) |
|
|
|
Total Stockholders' Equity |
1,745,085 |
1,644,085 |
|
|
|
Total Liabilities and
Stockholders' Equity |
$ 3,260,001 |
$ 3,199,704 |
|
LKQ CORPORATION AND
SUBSIDIARIES |
Unaudited Consolidated
Condensed Statements of Cash Flows |
( In thousands
) |
|
|
|
|
Three Months
Ended March 31, |
|
2012 |
2011 |
|
|
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
Net income |
$ 80,991 |
$ 58,182 |
Adjustments to reconcile net
income to net cash provided by operating activities: |
|
|
Depreciation and
amortization |
16,257 |
11,926 |
Stock-based compensation
expense |
4,010 |
3,342 |
Excess tax benefit from
stock-based payments |
(2,561) |
(2,460) |
Loss on debt
extinguishment |
-- |
5,345 |
Other |
(702) |
1,204 |
Changes in operating assets and
liabilities, net of effects from acquisitions: |
|
|
Receivables |
(22,694) |
(19,039) |
Inventory |
13,000 |
2,678 |
Prepaid income taxes/income
taxes payable |
41,324 |
33,769 |
Accounts payable |
(2,557) |
(9,658) |
Other operating assets and
liabilities |
(16,913) |
(7,974) |
|
|
|
Net cash provided by operating
activities |
110,155 |
77,315 |
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
Purchases of property and
equipment |
(21,329) |
(18,093) |
Proceeds from sales of property
and equipment |
233 |
91 |
Cash used in acquisitions, net
of cash acquired |
(24,930) |
(43,517) |
|
|
|
Net cash used in investing
activities |
(46,026) |
(61,519) |
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
Proceeds from exercise of stock
options |
4,581 |
2,610 |
Excess tax benefit from
stock-based payments |
2,561 |
2,460 |
Debt issuance costs |
-- |
(7,741) |
Borrowings under revolving
credit facility |
150,932 |
341,753 |
Repayments under revolving
credit facility |
(410,851) |
(44,328) |
Borrowings under term
loans |
200,000 |
250,000 |
Repayments under term
loans |
(3,125) |
(591,089) |
Payments of other
obligations |
(1,845) |
(652) |
|
|
|
Net cash used in financing
activities |
(57,747) |
(46,987) |
|
|
|
Effect of exchange rate changes on cash and
equivalents |
540 |
19 |
|
|
|
Net increase (decrease) in cash and
equivalents |
6,922 |
(31,172) |
|
|
|
Cash and equivalents, beginning of
period |
48,247 |
95,689 |
|
|
|
Cash and equivalents, end of period |
$ 55,169 |
$ 64,517 |
|
|
|
LKQ CORPORATION AND
SUBSIDIARIES |
|
|
Unaudited Supplementary
Data |
|
|
( In thousands, except
per share data ) |
|
|
|
|
|
|
|
|
|
|
Three Months
Ended March 31, |
Operating
Highlights |
2012 |
2011 |
|
|
|
|
% of Revenue |
|
% of Revenue |
Change |
% Change |
|
|
|
|
|
|
|
Revenue |
$ 1,031,777 |
100.0% |
$ 786,648 |
100.0% |
$ 245,129 |
31.2% |
|
|
|
|
|
|
|
Cost of goods sold (1) |
584,394 |
56.6% |
443,002 |
56.3% |
141,392 |
31.9% |
|
|
|
|
|
|
|
Gross margin |
447,383 |
43.4% |
343,646 |
43.7% |
103,737 |
30.2% |
|
|
|
|
|
|
|
Facility and warehouse expenses |
85,108 |
8.2% |
69,818 |
8.9% |
15,290 |
21.9% |
|
|
|
|
|
|
|
Distribution expenses |
91,813 |
8.9% |
65,811 |
8.4% |
26,002 |
39.5% |
|
|
|
|
|
|
|
Selling, general and administrative
expenses |
121,714 |
11.8% |
89,761 |
11.4% |
31,953 |
35.6% |
|
|
|
|
|
|
|
Restructuring and acquisition related
expenses |
247 |
0.0% |
46 |
0.0% |
201 |
437.0% |
|
|
|
|
|
|
|
Depreciation and amortization |
14,893 |
1.4% |
10,839 |
1.4% |
4,054 |
37.4% |
|
|
|
|
|
|
|
Operating income |
133,608 |
12.9% |
107,371 |
13.6% |
26,237 |
24.4% |
|
|
|
|
|
|
|
Other expense (income): |
|
|
|
|
|
|
Interest expense, net |
7,367 |
0.7% |
6,409 |
0.8% |
958 |
14.9% |
Loss on debt
extinguishment |
-- |
0.0% |
5,345 |
0.7% |
(5,345) |
-100.0% |
Change in fair value of
contingent consideration liabilities |
(1,345) |
-0.1% |
-- |
0.0% |
(1,345) |
n/m |
Other income, net |
(511) |
0.0% |
(106) |
0.0% |
(405) |
382.1% |
|
|
|
|
|
|
|
Total other expense, net |
5,511 |
0.5% |
11,648 |
1.5% |
(6,137) |
-52.7% |
|
|
|
|
|
|
|
Income before provision for
income taxes |
128,097 |
12.4% |
95,723 |
12.2% |
32,374 |
33.8% |
|
|
|
|
|
|
|
Provision for income taxes |
47,106 |
4.6% |
37,541 |
4.8% |
9,565 |
25.5% |
|
|
|
|
|
|
|
Net income |
$ 80,991 |
7.8% |
$ 58,182 |
7.4% |
$ 22,809 |
39.2% |
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
Basic |
$ 0.55 |
|
$ 0.40 |
|
$ 0.15 |
37.5% |
|
|
|
|
|
|
|
Diluted |
$ 0.54 |
|
$ 0.39 |
|
$ 0.15 |
38.5% |
|
|
|
|
|
|
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
Basic |
147,139 |
|
145,611 |
|
1,528 |
1.0% |
|
|
|
|
|
|
|
Diluted |
149,671 |
|
147,920 |
|
1,751 |
1.2% |
|
|
|
|
|
|
|
(1) Cost of goods sold for the
three months ended March 31, 2012 includes a gain of $8.3 million
resulting from the settlement of a class action lawsuit against
several of our suppliers. |
|
|
|
The following
unaudited table reconciles net income to
EBITDA: |
|
|
|
|
|
|
Three
Months Ended March 31, |
|
2012 |
2011 |
|
(In
thousands) |
|
|
|
Net income |
$ 80,991 |
$ 58,182 |
Depreciation and amortization |
16,257 |
11,926 |
Interest expense, net |
7,367 |
6,409 |
Loss on debt extinguishment (1) |
-- |
5,345 |
Provision for income taxes |
47,106 |
37,541 |
|
|
|
Earnings before interest, taxes,
depreciation and amortization (EBITDA) |
$ 151,721 |
$ 119,403 |
|
|
|
EBITDA as a percentage of
revenue |
14.7% |
15.2% |
|
|
|
(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
Net Income 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, |
|
|
|
2012 |
2011 |
Change |
% Change |
|
(In
thousands) |
|
|
|
|
|
|
|
Included in Unaudited Consolidated
Condensed |
|
|
|
|
Statements of Income of LKQ
Corporation |
|
|
|
|
|
|
|
|
|
Aftermarket, other new and refurbished
products |
$ 565,344 |
$ 381,116 |
$ 184,228 |
48.3% |
Recycled, remanufactured and related products
and services |
325,704 |
275,782 |
49,922 |
18.1% |
Parts and services |
891,048 |
656,898 |
234,150 |
35.6% |
Other |
140,729 |
129,750 |
10,979 |
8.5% |
Total |
$ 1,031,777 |
$ 786,648 |
$ 245,129 |
31.2% |
|
|
|
|
|
Revenue changes by
category for the three months ended March 31, 2012 vs.
2011: |
|
|
|
|
|
|
|
|
|
Revenue Change
Attributable to: |
|
|
Acquisition |
Organic |
Foreign
Exchange |
%
Change |
|
|
|
|
|
Aftermarket, other new and refurbished
products |
48.4% |
0.1% |
-0.1% |
48.3% |
Recycled, remanufactured and related products
and services |
9.7% |
8.5% |
-0.1% |
18.1% |
|
|
|
|
|
Parts and services |
32.2% |
3.6% |
-0.1% |
35.6% |
|
|
|
|
|
Other |
6.9% |
1.6% |
0.0% |
8.5% |
|
|
|
|
|
Total |
28.0% |
3.2% |
-0.1% |
31.2% |
|
The following unaudited
table compares our revenue and EBITDA by reportable
segment: |
|
|
|
|
Three Months
Ended March 31, |
|
2012 |
2011 |
|
(In
thousands) |
|
|
|
Revenue |
|
|
North America |
$ 871,084 |
$ 786,648 |
Europe |
160,693 |
-- |
Total revenue |
$ 1,031,777 |
$ 786,648 |
|
|
|
EBITDA |
|
|
North America (1) |
$ 132,188 |
$ 119,403 |
Europe (2) |
19,533 |
-- |
Total EBITDA |
$ 151,721 |
$ 119,403 |
|
|
|
|
|
|
(1) For the three months ended
March 31, 2012, North America EBITDA includes a gain of $8.3
million resulting from the settlement of a class action lawsuit
against several of our suppliers. |
|
|
|
(2) For the three months ended
March 31, 2012, Europe EBITDA includes $1.3 million of income from
the change in fair value of the Euro Car Parts contingent
consideration liability. |
CONTACT: Joseph P. Boutross
Director, Investor Relations
(312) 621-2793
jpboutross@lkqcorp.com
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