LKQ Corporation (Nasdaq:LKQ) today reported second quarter 2023
financial results. “I am pleased to report strong operational
performance for the quarter despite several headwinds, which is a
testament to the strength and resilience of our diversified
portfolio of businesses. Our largest segments, Wholesale - North
America and Europe, produced exceptional second quarter revenue
growth and margins by focusing on operational excellence. These
outstanding performances offset a steep year over year downturn in
commodity prices impacting our Self Service segment and the
decrease in demand for our Specialty segment's offerings, headwinds
that will impact these segments for the balance of 2023,” noted
Dominick Zarcone, President and Chief Executive Officer. “We also
had excellent cash flow during the quarter. Taken as a whole, I am
very pleased with the results and extremely proud of our global
teams.”
Second Quarter
2023 Financial Results
Revenue for the second quarter of 2023 was $3.4
billion, an increase of 3.2% as compared to $3.3 billion in the
second quarter of 2022. For the second quarter of 2023, parts and
services organic revenue increased 4.8% (5.4% on a per day basis),
foreign exchange rates increased revenue by 0.6% and the net impact
of acquisitions and divestitures was flat year over year, for a
total parts and services revenue increase of 5.4%. Other revenue
for the second quarter of 2023 fell 23.9% primarily due to weaker
commodity prices relative to the same period in 2022.
Net income2 for the second quarter of 2023 was
$281 million as compared to $420 million for the same period
in 2022. Diluted earnings per share2 for the second quarter of 2023
was $1.05 as compared to $1.49 for the same period of 2022, a
decrease of 29.5%. The Company completed the sale of PGW Auto Glass
on April 18, 2022, which generated a pretax gain of
$155 million ($127 million after-tax), or $0.45 per share
in the second quarter of 2022.
On an adjusted basis, net income1,2 in the second quarter of
2023 was $291 million as compared to $307 million for the same
period of 2022, a decrease of 5.1%. Adjusted diluted earnings per
share1,2 was $1.09 for both the second quarter of 2023 and
2022.
Operating improvements had a positive year over
year impact on diluted earnings per share1 in the second quarter to
mitigate the net headwind generated by: (i) decreases in commodity
prices, which had a negative effect of approximately $0.08, (ii)
higher interest rates and average debt balances in the second
quarter of 2023, which drove a year over year increase in net
interest expense resulting in an unfavorable effect of $0.07 ($0.05
on an adjusted basis) and (iii) the lower share count in 2023,
which provided a $0.04 benefit.
Cash Flow and Balance Sheet
Cash flow from operations and free cash flow1
were $480 million and $414 million, respectively, for the
second quarter of 2023. Cash flow from operations and free cash
flow1 were $703 million and $567 million, respectively,
for the six months ended June 30, 2023. As of June 30,
2023, the balance sheet reflected total debt of $4.0 billion and
total leverage, as defined in our credit facility, was 2.3x
EBITDA.
Stock Repurchase and Dividend
Programs
During the six months ended June 30, 2023,
the Company invested $5 million to repurchase 0.1 million
shares of its common stock. Since initiating the stock repurchase
program in late October 2018, the Company has repurchased
approximately 55 million shares for a total of
$2.4 billion through June 30, 2023.
On July 25, 2023, the Board of Directors
declared a quarterly cash dividend of $0.275 per share of common
stock, payable on August 31, 2023, to stockholders of record at the
close of business on August 17, 2023.
Uni-Select Inc. Acquisition
Update
On February 26, 2023, we entered into an
arrangement agreement in order to implement a plan of arrangement
(the "Arrangement") under the provisions of the Québec Business
Corporations Act pursuant to which we will acquire all of
Uni-Select Inc.’s ("Uni-Select") issued and outstanding shares for
Canadian dollar ("CAD") 48.00 per share in cash, representing a
total enterprise value of approximately CAD 2.8 billion ($2.1
billion at the June 30, 2023 exchange rate). During the second
quarter of 2023, we received the required approvals from
Uni-Select's shareholders, the Superior Court of Québec and
regulators in the United States and Canada with respect to the
Arrangement. On July 21, 2023, the United Kingdom’s ("U.K. ")
Competition and Markets Authority ("CMA") issued its Phase 1
decision on the Arrangement, and in response we submitted proposed
undertakings relating to the divestiture of Uni-Select’s GSF Car
Parts business in the U.K. As a result of the satisfaction or
waiver of all the closing conditions relating to required
regulatory approvals on July 26, 2023, Uni-Select and LKQ
Corporation will proceed with the remaining procedures
necessary to give effect to the Arrangement. Subject to the
satisfaction or waiver of the remaining closing conditions pursuant
to its terms, the Arrangement is currently anticipated to be
completed on or around August 1, 2023 and we plan to divest the GSF
Car Parts business soon thereafter.
Other Events
On May 24, 2023, we completed an offering of
$1.4 billion aggregate principal amount of senior unsecured
notes, consisting of $800 million senior notes due 2028 (the
"U.S. Notes (2028)") and $600 million senior notes due 2033
(the "U.S. Notes (2033)") and together with the 2028 Notes, (the
"U.S. Notes (2028/33)"). The net proceeds from the offering of the
U.S. Notes (2028/33) will be used, together with borrowings under
our delayed draw term loan, (i) to finance a portion of the
consideration payable for the Uni-Select acquisition, including
repaying existing Uni-Select indebtedness, (ii) to pay associated
fees and expenses, including fees and expenses incurred in
connection with the offering, and (iii) for general corporate
purposes.
2023
Outlook
Rick Galloway, Senior Vice President and Chief
Financial Officer, commented, “The Wholesale - North America and
Europe segments continue to perform ahead of expectations and are
mitigating softness in our Specialty segment. However, continued
effects from falling commodity prices and higher interest expense
are driving changes to our prior EPS guidance range.”
For 2023, management updated the outlook as set forth below:
|
2023 Previous Full Year Outlook |
2023 Updated Full Year Outlook |
Organic revenue growth for parts and services |
6.0% to 8.0% |
6.0% to 7.5% |
Diluted EPS2 |
$3.68 to $3.98 |
$3.65 to $3.85 |
Adjusted diluted EPS1,2 |
$3.90 to $4.20 |
$3.90 to $4.10 |
Operating cash flow |
approx. $1.275 billion |
approx. $1.275 billion |
Free cash flow1 |
approx. $975 million |
approx. $975 million |
Free cash flow conversion of Adjusted EBITDA1 |
55% to 60% |
55% to 60% |
Our outlook for the full year 2023 is based on
current conditions and recent trends, and assumes a global
effective tax rate of 27.0%, the prices of scrap and precious
metals hold near the June average, and no further deterioration due
to the Ukraine/Russia conflict. We have applied foreign currency
exchange rates near June average levels, including $1.09 and $1.25
for the euro and pound sterling, respectively, for the balance of
the year. Prior guidance issued on April 27, 2023 had currency
exchange rate levels of $1.08 and $1.23 for the euro and pound
sterling, respectively. Changes in these conditions may impact our
ability to achieve the estimates. The full year GAAP outlook
includes transactions and costs related to the potential Uni-Select
acquisition that occurred through June 30, 2023 but does not
include any projected operational results for Uni-Select, which
will only be incorporated after the closing date. Adjusted figures
exclude (to the extent applicable) the impact of restructuring and
transaction related expenses; amortization expense related to
acquired intangibles; excess tax benefits and deficiencies from
stock-based payments; losses on debt extinguishment; impairment
charges; direct impacts of the Ukraine/Russia conflict (including
provisions for and subsequent adjustments to reserves for asset
recoverability and expenditures to support our employees and their
families), interest and financing costs related to the Uni-Select
transaction prior to closing and gains and losses related to
acquisitions or divestitures (including changes in the fair value
of contingent consideration liabilities and gains or losses on
foreign currency forward contracts related to the Uni-Select
acquisition).
(1) |
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. |
|
|
(2) |
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. |
Non-GAAP Financial Measures
This release contains (and management’s
presentation on the related conference call will refer to) non-GAAP
financial measures within the meaning of Regulation G promulgated
by the Securities and Exchange Commission. Included with this
release are reconciliations of each non-GAAP financial measure with
the most directly comparable financial measure calculated in
accordance with GAAP.
Conference Call Details
LKQ will host an investor conference call and
webcast on July 27, 2023 at 8:00 a.m. Eastern Time (7:00 a.m.
Central Time) with members of senior management to discuss the
Company's results. To access the investor conference call, please
dial (888) 330-3494. International access to the call may be
obtained by dialing (646) 960-0860. The investor conference call
will require you to enter conference ID: 5232422.
Webcast and Presentation
Details
The audio webcast and accompanying slide
presentation can be accessed at (www.lkqcorp.com) in the Investor
Relations section.
A replay of the investor conference call will be
available by telephone at (800) 770-2030 or (647) 362-9199 for
international calls. The telephone replay will require you to enter
conference ID: 5232422. An online replay of the audio webcast will
be available on the Company's website. Both formats of replay will
be available through August 11, 2023. Please allow approximately
two hours after the live presentation before attempting to access
the replay.
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.
Forward Looking Statements
Statements and information in this press release
and on the related conference call, including our outlook for 2023,
as well as remarks by the Chief Executive Officer and other members
of management, that are not historical are forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995 and are made pursuant to the “safe harbor”
provisions of such Act.
Forward-looking statements include, but are not
limited to, statements regarding our outlook, guidance,
expectations, beliefs, hopes, intentions and strategies. These
statements are subject to a number of risks, uncertainties,
assumptions and other factors including those identified below. All
forward-looking statements are based on information available to us
at the time the statements are made. We undertake no obligation to
update any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
You should not place undue reliance on our
forward-looking statements. Actual events or results may differ
materially from those expressed or implied in the forward-looking
statements. The risks, uncertainties, assumptions and other factors
that could cause actual events or results to differ from the events
or results predicted or implied by our forward-looking statements
include the factors set forth below, and other factors discussed in
our filings with the SEC, including those disclosed under the
captions “Risk Factors” and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in our Annual
Report on Form 10-K for the year ended December 31, 2022 and in our
subsequent Quarterly Reports on Form 10-Q. These reports are
available at the Investor Relations section on our website
(www.lkqcorp.com) and on the SEC's website (www.sec.gov).
These factors include the following (not
necessarily in order of importance):
- our operating results and financial
condition have been and will likely continue to be adversely
affected by the COVID-19 pandemic and could be adversely affected
by other public health emergencies;
- our operating results and financial
condition have been and could continue to be adversely affected by
the economic, political and social conditions in North America,
Europe, Taiwan and elsewhere, as well as the economic health of
vehicle owners and numbers and types of vehicles sold;
- we face competition from local,
national, international, and internet-based vehicle products
providers, and this competition could negatively affect our
business;
- we rely upon our customers and
insurance companies to promote the usage of alternative parts;
- intellectual property claims
relating to aftermarket products could adversely affect our
business;
- if the number of vehicles involved
in accidents or being repaired declines, or the mix of the types of
vehicles in the overall vehicle population changes, our business
could suffer;
- fluctuations in the prices of
metals and other commodities could adversely affect our financial
results;
- an adverse change in our
relationships with our suppliers, disruption to our supply of
inventory, or the misconduct, performance failures or negligence of
our third party vendors or service providers could increase our
expenses, impede our ability to serve our customers, or expose us
to liability;
- if we determine that our goodwill
or other intangible assets have become impaired, we may incur
significant charges to our pre-tax income;
- we could be subject to product
liability claims and involved in product recalls;
- we may not be able to successfully
acquire new businesses or integrate acquisitions, including our
pending acquisition of Uni-Select, and we may not be able to
successfully divest certain businesses;
- our ability to divest Uni-Select’s
GSF Car Parts business on acceptable terms on or shortly after the
closing date for our pending acquisition of Uni-Select;
- we have a substantial amount of
indebtedness, which could have a material adverse effect on our
financial condition and our ability to obtain financing in the
future and to react to changes in our business;
- our senior notes do not impose any
limitations on our ability to incur additional debt or protect
against certain other types of transactions, and we may incur
additional indebtedness under our credit agreement subject to
certain limitations;
- our credit agreement imposes
operating and financial restrictions on us and our subsidiaries,
which may prevent us from capitalizing on business
opportunities;
- we may not be able to generate
sufficient cash to service all of our indebtedness, and may be
forced to take other actions to satisfy our obligations under our
indebtedness, which may not be successful;
- our future capital needs may
require that we seek to refinance our debt or obtain additional
debt or equity financing, events that could have a negative effect
on our business;
- our variable rate indebtedness
subjects us to interest rate risk, which could cause our
indebtedness service obligations to increase significantly;
- repayment of our indebtedness is
dependent on cash flow generated by our subsidiaries;
- a downgrade in our credit rating
would impact our cost of capital;
- the amount and frequency of our
share repurchases and dividend payments may fluctuate;
- existing or new laws and
regulations, or changes to enforcement or interpretation of
existing laws or regulations, may prohibit, restrict or burden the
sale of aftermarket, recycled, refurbished or remanufactured
products;
- we are subject to environmental
regulations and incur costs relating to environmental matters;
- we may be adversely affected by
legal, regulatory or market responses to global climate
change;
- our amended and restated bylaws
provide that the courts in the State of Delaware are the exclusive
forums for substantially all disputes between us and our
stockholders, which could limit our stockholders’ ability to obtain
a favorable judicial forum for disputes with us or our directors,
officers or employees;
- our effective tax rate could
materially increase as a consequence of various factors, including
U.S. and/or international tax legislation, applicable
interpretations and administrative guidance, our mix of earnings by
jurisdiction, and U.S. and foreign jurisdictional audits;
- if significant tariffs or other
restrictions are placed on products or materials we import or any
related counter-measures are taken by countries to which we export
products, our revenue and results of operations may be materially
harmed.
- governmental agencies may refuse to
grant or renew our operating licenses and permits;
- our employees are important to
successfully manage our business and achieve our objectives;
- we operate in foreign
jurisdictions, which exposes us to foreign exchange and other
risks;
- our business may be adversely
affected by union activities and labor and employment laws;
- we rely on information technology
and communication systems in critical areas of our operations and a
disruption relating to such technology could harm our
business;
- the costs of complying with the
requirements of laws pertaining to the privacy and security of
personal information and the potential liability associated with
the failure to comply with such laws could materially adversely
affect our business and results of operations;
- business interruptions in our
distribution centers or other facilities may affect our operations,
the function of our computer systems, and/or the availability and
distribution of merchandise, which may affect our business;
- if we experience problems with our
fleet of trucks and other vehicles, our business could be
harmed;
- we may lose the right to operate at
key locations; and
- activist investors could cause us
to incur substantial costs, divert management’s attention, and have
an adverse effect on our business.
Contact:Joseph P. Boutross - Vice President,
Investor RelationsLKQ Corporation(312)
621-2793jpboutross@lkqcorp.com
|
LKQ CORPORATION AND SUBSIDIARIESUnaudited
Condensed Consolidated Statements of Income, with Supplementary
Data (In millions, except per share
data) |
|
|
Three Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
% of Revenue (4) |
|
|
|
% of Revenue (4) |
|
$ Change |
|
% Change |
Revenue |
$ |
3,448 |
|
|
100.0 |
% |
|
$ |
3,341 |
|
|
100.0 |
% |
|
$ |
107 |
|
|
3.2 |
% |
Cost of
goods sold |
|
2,034 |
|
|
59.0 |
% |
|
|
1,974 |
|
|
59.1 |
% |
|
|
60 |
|
|
3.0 |
% |
Gross margin |
|
1,414 |
|
|
41.0 |
% |
|
|
1,367 |
|
|
40.9 |
% |
|
|
47 |
|
|
3.5 |
% |
Selling,
general and administrative expenses |
|
938 |
|
|
27.2 |
% |
|
|
898 |
|
|
26.8 |
% |
|
|
40 |
|
|
4.5 |
% |
Restructuring and transaction related expenses |
|
8 |
|
|
0.2 |
% |
|
|
4 |
|
|
0.1 |
% |
|
|
4 |
|
|
n/m |
Gain on
disposal of businesses (1) |
|
— |
|
|
— |
% |
|
|
(155 |
) |
|
(4.6)% |
|
|
155 |
|
|
n/m |
Depreciation and amortization |
|
61 |
|
|
1.8 |
% |
|
|
61 |
|
|
1.8 |
% |
|
|
— |
|
|
— |
% |
Operating income |
|
407 |
|
|
11.8 |
% |
|
|
559 |
|
|
16.7 |
% |
|
|
(152 |
) |
|
(27.2)% |
Other
expense (income): |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
52 |
|
|
1.5 |
% |
|
|
16 |
|
|
0.5 |
% |
|
|
36 |
|
|
n/m |
Gains on foreign exchange contracts - acquisition related (2) |
|
(23 |
) |
|
(0.7)% |
|
|
— |
|
|
— |
% |
|
|
(23 |
) |
|
n/m |
Interest income and other income, net |
|
(11 |
) |
|
(0.3)% |
|
|
— |
|
|
— |
% |
|
|
(11 |
) |
|
n/m |
Total other expense, net |
|
18 |
|
|
0.5 |
% |
|
|
16 |
|
|
0.5 |
% |
|
|
2 |
|
|
13.1 |
% |
Income from continuing operations before provision for income
taxes |
|
389 |
|
|
11.3 |
% |
|
|
543 |
|
|
16.3 |
% |
|
|
(154 |
) |
|
(28.4)% |
Provision for income taxes |
|
109 |
|
|
3.2 |
% |
|
|
127 |
|
|
3.8 |
% |
|
|
(18 |
) |
|
(14.3)% |
Equity
in earnings of unconsolidated subsidiaries |
|
2 |
|
|
— |
% |
|
|
4 |
|
|
0.1 |
% |
|
|
(2 |
) |
|
(63.5)% |
Income from continuing operations |
|
282 |
|
|
8.2 |
% |
|
|
420 |
|
|
12.6 |
% |
|
|
(138 |
) |
|
(33.0)% |
Net
income from discontinued operations |
|
— |
|
|
— |
% |
|
|
— |
|
|
— |
% |
|
|
— |
|
|
— |
% |
Net income |
|
282 |
|
|
8.2 |
% |
|
|
420 |
|
|
12.6 |
% |
|
|
(138 |
) |
|
(33.0)% |
Less:
net income attributable to continuing noncontrolling interest |
|
1 |
|
|
— |
% |
|
|
— |
|
|
— |
% |
|
|
1 |
|
|
n/m |
Net income attributable to LKQ stockholders |
$ |
281 |
|
|
8.1 |
% |
|
$ |
420 |
|
|
12.6 |
% |
|
$ |
(139 |
) |
|
(33.1)% |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share: (3) |
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations |
$ |
1.05 |
|
|
|
|
$ |
1.49 |
|
|
|
|
$ |
(0.44 |
) |
|
(29.5)% |
Net
income from discontinued operations |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
n/m |
Net income |
|
1.05 |
|
|
|
|
|
1.49 |
|
|
|
|
|
(0.44 |
) |
|
(29.5)% |
Less:
net income attributable to continuing noncontrolling interest |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
n/m |
Net income attributable to LKQ stockholders |
$ |
1.05 |
|
|
|
|
$ |
1.49 |
|
|
|
|
$ |
(0.44 |
) |
|
(29.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share: (3) |
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations |
$ |
1.05 |
|
|
|
|
$ |
1.49 |
|
|
|
|
$ |
(0.44 |
) |
|
(29.5)% |
Net
income from discontinued operations |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
n/m |
Net income |
|
1.05 |
|
|
|
|
|
1.49 |
|
|
|
|
|
(0.44 |
) |
|
(29.5)% |
Less:
net income attributable to continuing noncontrolling interest |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
n/m |
Net income attributable to LKQ stockholders |
$ |
1.05 |
|
|
|
|
$ |
1.49 |
|
|
|
|
$ |
(0.44 |
) |
|
(29.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
267.6 |
|
|
|
|
|
281.4 |
|
|
|
|
|
(13.8 |
) |
|
(4.9)% |
Diluted |
|
268.2 |
|
|
|
|
|
282.3 |
|
|
|
|
|
(14.1 |
) |
|
(5.0)% |
(1) Related to
the sale of PGW Auto Glass ("PGW"). |
(2) Related to
the Uni-Select acquisition. |
(3) The sum of
the individual earnings per share amounts may not equal the total
due to rounding. |
(4) The sum of
the individual percentage of revenue components may not equal the
total due to rounding. |
|
LKQ CORPORATION AND SUBSIDIARIESUnaudited
Condensed Consolidated Statements of Income, with Supplementary
Data (In millions, except per share data) |
|
|
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
% of Revenue (4) |
|
|
|
% of Revenue (4) |
|
$ Change |
|
% Change |
Revenue |
$ |
6,797 |
|
|
100.0 |
% |
|
$ |
6,689 |
|
|
100.0 |
% |
|
$ |
108 |
|
|
1.6 |
% |
Cost of
goods sold |
|
4,011 |
|
|
59.0 |
% |
|
|
3,965 |
|
|
59.3 |
% |
|
|
46 |
|
|
1.2 |
% |
Gross margin |
|
2,786 |
|
|
41.0 |
% |
|
|
2,724 |
|
|
40.7 |
% |
|
|
62 |
|
|
2.3 |
% |
Selling,
general and administrative expenses |
|
1,869 |
|
|
27.5 |
% |
|
|
1,822 |
|
|
27.2 |
% |
|
|
47 |
|
|
2.6 |
% |
Restructuring and transaction related expenses |
|
26 |
|
|
0.4 |
% |
|
|
7 |
|
|
0.1 |
% |
|
|
19 |
|
|
n/m |
Gain on
disposal of businesses (1) |
|
— |
|
|
— |
% |
|
|
(155 |
) |
|
(2.3)% |
|
|
155 |
|
|
n/m |
Depreciation and amortization |
|
119 |
|
|
1.7 |
% |
|
|
120 |
|
|
1.8 |
% |
|
|
(1 |
) |
|
(0.7)% |
Operating income |
|
772 |
|
|
11.4 |
% |
|
|
930 |
|
|
13.9 |
% |
|
|
(158 |
) |
|
(17.0)% |
Other
expense (income): |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
88 |
|
|
1.3 |
% |
|
|
32 |
|
|
0.5 |
% |
|
|
56 |
|
|
n/m |
Gains on foreign exchange contracts - acquisition related (2) |
|
(46 |
) |
|
(0.7)% |
|
|
— |
|
|
— |
% |
|
|
(46 |
) |
|
n/m |
Interest income and other income, net |
|
(20 |
) |
|
(0.3)% |
|
|
(1 |
) |
|
— |
% |
|
|
(19 |
) |
|
n/m |
Total other expense, net |
|
22 |
|
|
0.3 |
% |
|
|
31 |
|
|
0.5 |
% |
|
|
(9 |
) |
|
(30.3)% |
Income from continuing operations before provision for income
taxes |
|
750 |
|
|
11.0 |
% |
|
|
899 |
|
|
13.4 |
% |
|
|
(149 |
) |
|
(16.6)% |
Provision for income taxes |
|
203 |
|
|
3.0 |
% |
|
|
216 |
|
|
3.2 |
% |
|
|
(13 |
) |
|
(6.0)% |
Equity
in earnings of unconsolidated subsidiaries |
|
5 |
|
|
0.1 |
% |
|
|
6 |
|
|
0.1 |
% |
|
|
(1 |
) |
|
(21.9)% |
Income from continuing operations |
|
552 |
|
|
8.1 |
% |
|
|
689 |
|
|
10.3 |
% |
|
|
(137 |
) |
|
(19.9)% |
Net
income from discontinued operations |
|
— |
|
|
— |
% |
|
|
4 |
|
|
0.1 |
% |
|
|
(4 |
) |
|
n/m |
Net income |
|
552 |
|
|
8.1 |
% |
|
|
693 |
|
|
10.4 |
% |
|
|
(141 |
) |
|
(20.4)% |
Less:
net income attributable to continuing noncontrolling interest |
|
1 |
|
|
— |
% |
|
|
— |
|
|
— |
% |
|
|
1 |
|
|
n/m |
Net income attributable to LKQ stockholders |
$ |
551 |
|
|
8.1 |
% |
|
$ |
693 |
|
|
10.4 |
% |
|
$ |
(142 |
) |
|
(20.5)% |
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share: (3) |
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations |
$ |
2.06 |
|
|
|
|
$ |
2.43 |
|
|
|
|
$ |
(0.37 |
) |
|
(15.2)% |
Net
income from discontinued operations |
|
— |
|
|
|
|
|
0.02 |
|
|
|
|
|
(0.02 |
) |
|
n/m |
Net income |
|
2.06 |
|
|
|
|
|
2.45 |
|
|
|
|
|
(0.39 |
) |
|
(15.9)% |
Less:
net income attributable to continuing noncontrolling interest |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
n/m |
Net income attributable to LKQ stockholders |
$ |
2.06 |
|
|
|
|
$ |
2.44 |
|
|
|
|
$ |
(0.38 |
) |
|
(15.6)% |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share: (3) |
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations |
$ |
2.06 |
|
|
|
|
$ |
2.42 |
|
|
|
|
$ |
(0.36 |
) |
|
(14.9)% |
Net
income from discontinued operations |
|
— |
|
|
|
|
|
0.02 |
|
|
|
|
|
(0.02 |
) |
|
n/m |
Net income |
|
2.06 |
|
|
|
|
|
2.44 |
|
|
|
|
|
(0.38 |
) |
|
(15.6)% |
Less:
net income attributable to continuing noncontrolling interest |
|
— |
|
|
|
|
|
— |
|
|
|
|
|
— |
|
|
n/m |
Net income attributable to LKQ stockholders |
$ |
2.06 |
|
|
|
|
$ |
2.44 |
|
|
|
|
$ |
(0.38 |
) |
|
(15.6)% |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
267.5 |
|
|
|
|
|
283.5 |
|
|
|
|
|
(16.0 |
) |
|
(5.7)% |
Diluted |
|
268.3 |
|
|
|
|
|
284.5 |
|
|
|
|
|
(16.2 |
) |
|
(5.7)% |
(1) Related to
the sale of PGW. |
(2) Related to
the Uni-Select acquisition. |
(3) The sum of
the individual earnings per share amounts may not equal the total
due to rounding. |
(4) The sum of
the individual percentage of revenue components may not equal the
total due to rounding. |
|
LKQ CORPORATION AND SUBSIDIARIESUnaudited
Condensed Consolidated Balance Sheets(In millions,
except per share data) |
|
|
June 30, 2023 |
|
December 31, 2022 |
Assets |
|
|
|
Current
assets: |
|
|
|
Cash and cash equivalents |
$ |
1,904 |
|
|
$ |
278 |
|
Receivables, net of allowance for credit losses |
|
1,257 |
|
|
|
998 |
|
Inventories |
|
2,681 |
|
|
|
2,752 |
|
Prepaid expenses and other current assets |
|
314 |
|
|
|
230 |
|
Total current assets |
|
6,156 |
|
|
|
4,258 |
|
Property, plant and equipment, net |
|
1,298 |
|
|
|
1,236 |
|
Operating lease assets, net |
|
1,277 |
|
|
|
1,227 |
|
Goodwill |
|
4,400 |
|
|
|
4,319 |
|
Other
intangibles, net |
|
648 |
|
|
|
653 |
|
Equity
method investments |
|
155 |
|
|
|
141 |
|
Other
noncurrent assets |
|
221 |
|
|
|
204 |
|
Total assets |
$ |
14,155 |
|
|
$ |
12,038 |
|
Liabilities and Stockholders’ Equity |
|
|
|
Current
liabilities: |
|
|
|
Accounts payable |
$ |
1,475 |
|
|
$ |
1,339 |
|
Accrued expenses: |
|
|
|
Accrued payroll-related liabilities |
|
200 |
|
|
|
218 |
|
Refund liability |
|
120 |
|
|
|
109 |
|
Other accrued expenses |
|
343 |
|
|
|
294 |
|
Current portion of operating lease liabilities |
|
199 |
|
|
|
188 |
|
Current portion of long-term obligations |
|
579 |
|
|
|
34 |
|
Other current liabilities |
|
112 |
|
|
|
89 |
|
Total current liabilities |
|
3,028 |
|
|
|
2,271 |
|
Long-term operating lease liabilities, excluding current
portion |
|
1,131 |
|
|
|
1,091 |
|
Long-term obligations, excluding current portion |
|
3,421 |
|
|
|
2,622 |
|
Deferred
income taxes |
|
300 |
|
|
|
280 |
|
Other
noncurrent liabilities |
|
283 |
|
|
|
283 |
|
Commitments and contingencies |
|
|
|
Redeemable noncontrolling interest |
|
24 |
|
|
|
24 |
|
Stockholders’ equity: |
|
|
|
Common stock, $0.01 par value, 1,000.0 shares authorized, 322.9
shares issued and 267.7 shares outstanding at June 30, 2023;
322.4 shares issued and 267.3 shares outstanding at December 31,
2022 |
|
3 |
|
|
|
3 |
|
Additional paid-in capital |
|
1,520 |
|
|
|
1,506 |
|
Retained earnings |
|
7,059 |
|
|
|
6,656 |
|
Accumulated other comprehensive loss |
|
(235 |
) |
|
|
(323 |
) |
Treasury stock, at cost; 55.2 shares at June 30, 2023 and 55.1
shares at December 31, 2022 |
|
(2,394 |
) |
|
|
(2,389 |
) |
Total Company stockholders’ equity |
|
5,953 |
|
|
|
5,453 |
|
Noncontrolling interest |
|
15 |
|
|
|
14 |
|
Total stockholders’ equity |
|
5,968 |
|
|
|
5,467 |
|
Total liabilities and stockholders’ equity |
$ |
14,155 |
|
|
$ |
12,038 |
|
|
LKQ CORPORATION AND SUBSIDIARIESUnaudited
Condensed Consolidated Statements of Cash Flows(In
millions) |
|
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
CASH
FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net income |
$ |
552 |
|
|
$ |
693 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
Depreciation and amortization |
|
135 |
|
|
|
133 |
|
Gain on disposal of businesses |
|
— |
|
|
|
(155 |
) |
Stock-based compensation expense |
|
20 |
|
|
|
23 |
|
Gains on foreign exchange contracts - acquisition related |
|
(46 |
) |
|
|
— |
|
Other |
|
37 |
|
|
|
(9 |
) |
Changes in operating assets
and liabilities, net of effects from acquisitions and
dispositions: |
|
|
|
Receivables |
|
(223 |
) |
|
|
(186 |
) |
Inventories |
|
132 |
|
|
|
(259 |
) |
Prepaid income taxes/income taxes payable |
|
(5 |
) |
|
|
74 |
|
Accounts payable |
|
104 |
|
|
|
412 |
|
Other operating assets and liabilities |
|
(3 |
) |
|
|
11 |
|
Net cash provided by operating activities |
|
703 |
|
|
|
737 |
|
CASH
FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
Purchases of property, plant and equipment |
|
(136 |
) |
|
|
(99 |
) |
Proceeds from disposals of property, plant and equipment |
|
6 |
|
|
|
3 |
|
Acquisitions, net of cash acquired |
|
(52 |
) |
|
|
(5 |
) |
Proceeds from disposals of businesses |
|
— |
|
|
|
372 |
|
Other investing activities, net |
|
(3 |
) |
|
|
(6 |
) |
Net cash (used in) provided by investing activities |
|
(185 |
) |
|
|
265 |
|
CASH
FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Debt issuance costs |
|
(30 |
) |
|
|
— |
|
Proceeds from issuance of U.S. Notes (2028/33), net of unamortized
bond discount |
|
1,394 |
|
|
|
— |
|
Borrowings under revolving credit facilities |
|
1,693 |
|
|
|
808 |
|
Repayments under revolving credit facilities |
|
(2,267 |
) |
|
|
(1,117 |
) |
Borrowings under term loans |
|
500 |
|
|
|
— |
|
(Repayments) borrowings of other debt, net |
|
(16 |
) |
|
|
8 |
|
Settlement of derivative instruments |
|
(13 |
) |
|
|
— |
|
Dividends paid to LKQ stockholders |
|
(148 |
) |
|
|
(142 |
) |
Purchase of treasury stock |
|
(8 |
) |
|
|
(528 |
) |
Other financing activities, net |
|
(6 |
) |
|
|
(14 |
) |
Net cash provided by (used in) financing activities |
|
1,099 |
|
|
|
(985 |
) |
Effect
of exchange rate changes on cash and cash equivalents |
|
9 |
|
|
|
(26 |
) |
Net increase (decrease) in cash and cash equivalents |
|
1,626 |
|
|
|
(9 |
) |
Cash and
cash equivalents, beginning of period |
|
278 |
|
|
|
274 |
|
Cash and
cash equivalents, end of period |
$ |
1,904 |
|
|
$ |
265 |
|
The following unaudited tables compare certain third
party revenue categories:
|
Three Months Ended June 30, |
|
|
(In
millions) |
|
2023 |
|
|
2022 |
|
$ Change |
|
% Change |
Wholesale - North America |
$ |
1,121 |
|
$ |
1,050 |
|
$ |
71 |
|
|
6.7 |
% |
Europe |
|
1,633 |
|
|
1,470 |
|
|
163 |
|
|
11.1 |
% |
Specialty |
|
442 |
|
|
512 |
|
|
(70 |
) |
|
(13.5)% |
Self Service |
|
63 |
|
|
60 |
|
|
3 |
|
|
4.7 |
% |
Parts and services |
|
3,259 |
|
|
3,092 |
|
|
167 |
|
|
5.4 |
% |
Wholesale - North America |
|
78 |
|
|
94 |
|
|
(16 |
) |
|
(16.7)% |
Europe |
|
5 |
|
|
7 |
|
|
(2 |
) |
|
(26.2)% |
Self Service |
|
106 |
|
|
148 |
|
|
(42 |
) |
|
(28.3)% |
Other |
|
189 |
|
|
249 |
|
|
(60 |
) |
|
(23.9)% |
Total revenue |
$ |
3,448 |
|
$ |
3,341 |
|
$ |
107 |
|
|
3.2 |
% |
Revenue changes by category for the three months
ended June 30, 2023
vs. 2022:
|
Revenue Change Attributable to: |
|
|
|
Organic (1) |
|
Acquisition and Divestiture |
|
Foreign Exchange |
|
Total Change (2) |
Wholesale - North America |
8.3 |
% |
|
(1.3)% |
|
(0.3)% |
|
6.7 |
% |
Europe |
8.5 |
% |
|
0.9 |
% |
|
1.6 |
% |
|
11.1 |
% |
Specialty |
(12.9)% |
|
(0.2)% |
|
(0.5)% |
|
(13.5)% |
Self Service |
4.7 |
% |
|
— |
% |
|
— |
% |
|
4.7 |
% |
Parts and services |
4.8 |
% |
|
— |
% |
|
0.6 |
% |
|
5.4 |
% |
Wholesale - North America |
(16.5)% |
|
0.1 |
% |
|
(0.3)% |
|
(16.7)% |
Europe |
(24.1)% |
|
(0.2)% |
|
(1.9)% |
|
(26.2)% |
Self Service |
(20.9)% |
|
(7.3)% |
|
— |
% |
|
(28.3)% |
Other |
(19.4)% |
|
(4.3)% |
|
(0.2)% |
|
(23.9)% |
Total revenue |
3.0 |
% |
|
(0.4)% |
|
0.5 |
% |
|
3.2 |
% |
(1) |
We define organic revenue growth as total revenue growth from
continuing operations excluding the effects of acquisitions and
divestitures (i.e., revenue generated from the date of acquisition
to the first anniversary of that acquisition, net of reduced
revenue due to the disposal of businesses) and foreign currency
movements (i.e., impact of translating revenue at different
exchange rates). Organic revenue growth includes incremental sales
from both existing and new (i.e., opened within the last twelve
months) locations and is derived from expanding business with
existing customers, securing new customers and offering additional
products and services. We believe that organic revenue growth
is a key performance indicator as this statistic measures our
ability to serve and grow our customer base successfully. |
|
|
(2) |
The sum of the individual revenue change components may not equal
the total percentage change due to rounding. |
The following unaudited tables compare
certain third party revenue categories:
|
Six Months Ended June 30, |
|
|
(In
millions) |
|
2023 |
|
|
2022 |
|
$ Change |
|
% Change |
Wholesale - North America |
$ |
2,269 |
|
$ |
2,156 |
|
$ |
113 |
|
|
5.2 |
% |
Europe |
|
3,181 |
|
|
2,951 |
|
|
230 |
|
|
7.8 |
% |
Specialty |
|
838 |
|
|
972 |
|
|
(134 |
) |
|
(13.7)% |
Self Service |
|
123 |
|
|
117 |
|
|
6 |
|
|
4.8 |
% |
Parts and services |
|
6,411 |
|
|
6,196 |
|
|
215 |
|
|
3.5 |
% |
Wholesale - North America |
|
159 |
|
|
189 |
|
|
(30 |
) |
|
(15.7)% |
Europe |
|
12 |
|
|
14 |
|
|
(2 |
) |
|
(17.6)% |
Self Service |
|
215 |
|
|
290 |
|
|
(75 |
) |
|
(25.6)% |
Other |
|
386 |
|
|
493 |
|
|
(107 |
) |
|
(21.6)% |
Total revenue |
$ |
6,797 |
|
$ |
6,689 |
|
$ |
108 |
|
|
1.6 |
% |
Revenue changes by category for the six months
ended June 30, 2023
vs. 2022:
|
Revenue Change Attributable to: |
|
|
|
Organic (1) |
|
Acquisition and Divestiture |
|
Foreign Exchange |
|
Total Change (2) |
Wholesale - North America |
11.4 |
% |
|
(5.9)% |
|
(0.3)% |
|
5.2 |
% |
Europe |
9.1 |
% |
|
0.8 |
% |
|
(2.2)% |
|
7.8 |
% |
Specialty |
(13.2)% |
|
(0.1)% |
|
(0.5)% |
|
(13.7)% |
Self Service |
4.8 |
% |
|
— |
% |
|
— |
% |
|
4.8 |
% |
Parts and services |
6.4 |
% |
|
(1.7)% |
|
(1.2)% |
|
3.5 |
% |
Wholesale - North America |
(15.4)% |
|
— |
% |
|
(0.3)% |
|
(15.7)% |
Europe |
(12.7)% |
|
— |
% |
|
(5.0)% |
|
(17.6)% |
Self Service |
(17.8)% |
|
(7.8)% |
|
— |
% |
|
(25.6)% |
Other |
(16.7)% |
|
(4.6)% |
|
(0.3)% |
|
(21.6)% |
Total revenue |
4.7 |
% |
|
(1.9)% |
|
(1.1)% |
|
1.6 |
% |
(1) |
We define organic revenue growth as total revenue growth from
continuing operations excluding the effects of acquisitions and
divestitures (i.e., revenue generated from the date of acquisition
to the first anniversary of that acquisition, net of reduced
revenue due to the disposal of businesses) and foreign currency
movements (i.e., impact of translating revenue at different
exchange rates). Organic revenue growth includes incremental sales
from both existing and new (i.e., opened within the last twelve
months) locations and is derived from expanding business with
existing customers, securing new customers and offering additional
products and services. We believe that organic revenue growth
is a key performance indicator as this statistic measures our
ability to serve and grow our customer base successfully. |
|
|
(2) |
The sum of the individual revenue change components may not equal
the total percentage change due to rounding. |
The following unaudited table reconciles
revenue and revenue growth for parts & services and total
revenue to constant currency revenue and revenue growth for the
same measures:
|
|
Three Months Ended June 30, 2023 |
|
Six Months Ended June 30, 2023 |
(In
millions) |
|
Consolidated |
|
Europe |
|
Consolidated |
|
Europe |
Parts &
Services |
|
|
|
|
|
|
|
|
Revenue as reported |
|
$ |
3,259 |
|
$ |
1,633 |
|
$ |
6,411 |
|
|
$ |
3,181 |
|
Less: Currency impact |
|
|
19 |
|
|
23 |
|
|
(75 |
) |
|
|
(64 |
) |
Revenue at constant
currency |
|
$ |
3,240 |
|
$ |
1,610 |
|
$ |
6,486 |
|
|
$ |
3,245 |
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
Revenue as reported |
|
$ |
3,448 |
|
|
|
$ |
6,797 |
|
|
|
Less: Currency impact |
|
|
17 |
|
|
|
|
(77 |
) |
|
|
Revenue at constant
currency |
|
$ |
3,431 |
|
|
|
$ |
6,874 |
|
|
|
|
|
Three Months Ended June 30, 2023 |
|
Six Months Ended June 30, 2023 |
|
|
Consolidated |
|
Europe |
|
Consolidated |
|
Europe |
Parts &
Services |
|
|
|
|
|
|
|
|
Revenue growth as reported |
|
5.4 |
% |
|
11.1 |
% |
|
3.5 |
% |
|
7.8 |
% |
Less: Currency impact |
|
0.6 |
% |
|
1.6 |
% |
|
(1.2)% |
|
(2.2)% |
Revenue growth at constant
currency |
|
4.8 |
% |
|
9.5 |
% |
|
4.7 |
% |
|
10.0 |
% |
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
Revenue growth as
reported |
|
3.2 |
% |
|
|
|
1.6 |
% |
|
|
Less: Currency impact |
|
0.5 |
% |
|
|
|
(1.1)% |
|
|
Revenue growth at constant
currency |
|
2.7 |
% |
|
|
|
2.7 |
% |
|
|
We have presented our revenue and the growth
rate on both an as reported and a constant currency basis. The
constant currency presentation, which is a non-GAAP financial
measure, excludes the impact of fluctuations in foreign currency
exchange rates. We believe providing constant currency revenue
information provides valuable supplemental information regarding
our growth, consistent with how we evaluate our performance, as
this statistic removes the translation impact of exchange rate
fluctuations, which are outside of our control and do not reflect
our operational performance. Constant currency revenue results are
calculated by translating prior year revenue in local currency
using the current year's currency conversion rate. This non-GAAP
financial measure has limitations as an analytical tool and should
not be considered in isolation or as a substitute for an analysis
of our results as reported under GAAP. Our use of this term may
vary from the use of similarly-titled measures by other issuers due
to the potential inconsistencies in the method of calculation and
differences due to items subject to interpretation. In addition,
not all companies that report revenue growth on a constant currency
basis calculate such measure in the same manner as we do and,
accordingly, our calculations are not necessarily comparable to
similarly-named measures of other companies and may not be
appropriate measures for performance relative to other
companies.
The following unaudited table compares revenue and
Segment EBITDA by reportable segment:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
(In
millions) |
|
% of Revenue |
|
|
% of Revenue |
|
|
% of Revenue |
|
|
% of Revenue |
Revenue |
|
|
|
|
|
|
|
|
|
|
|
Wholesale - North America |
$ |
1,199 |
|
|
|
$ |
1,144 |
|
|
|
$ |
2,428 |
|
|
|
$ |
2,345 |
|
|
Europe |
|
1,638 |
|
|
|
|
1,477 |
|
|
|
|
3,193 |
|
|
|
|
2,965 |
|
|
Specialty |
|
443 |
|
|
|
|
513 |
|
|
|
|
840 |
|
|
|
|
974 |
|
|
Self
Service |
|
169 |
|
|
|
|
208 |
|
|
|
|
338 |
|
|
|
|
407 |
|
|
Eliminations |
|
(1 |
) |
|
|
|
(1 |
) |
|
|
|
(2 |
) |
|
|
|
(2 |
) |
|
Total revenue |
$ |
3,448 |
|
|
|
$ |
3,341 |
|
|
|
$ |
6,797 |
|
|
|
$ |
6,689 |
|
|
Segment EBITDA |
|
|
|
|
|
|
|
|
|
|
|
Wholesale - North America |
$ |
248 |
|
20.6 |
% |
|
$ |
214 |
|
18.7 |
% |
|
$ |
500 |
|
20.6 |
% |
|
$ |
432 |
|
18.4 |
% |
Europe |
|
188 |
|
11.5 |
% |
|
|
160 |
|
10.8 |
% |
|
|
339 |
|
10.6 |
% |
|
|
291 |
|
9.8 |
% |
Specialty |
|
42 |
|
9.5 |
% |
|
|
69 |
|
13.4 |
% |
|
|
73 |
|
8.7 |
% |
|
|
127 |
|
13.1 |
% |
Self
Service |
|
7 |
|
4.1 |
% |
|
|
32 |
|
15.3 |
% |
|
|
29 |
|
8.7 |
% |
|
|
72 |
|
17.6 |
% |
Total Segment EBITDA |
$ |
485 |
|
14.1 |
% |
|
$ |
475 |
|
14.2 |
% |
|
$ |
941 |
|
13.8 |
% |
|
$ |
922 |
|
13.8 |
% |
We have presented Segment EBITDA solely as a
supplemental disclosure that offers investors, securities analysts
and other interested parties useful information to evaluate our
segment profit and loss and underlying trends in our ongoing
operations. We calculate Segment EBITDA as Net Income attributable
to LKQ stockholders excluding discontinued operations;
depreciation, amortization; interest; gains and losses on debt
extinguishment; income tax expense; restructuring and transaction
related expenses (which includes restructuring expenses recorded in
Cost of goods sold); change in fair value of contingent
consideration liabilities; other gains and losses related to
acquisitions, equity method investments, or divestitures; equity in
losses and earnings of unconsolidated subsidiaries; equity
investment fair value adjustments; impairment charges; and direct
impacts of the Ukraine/Russia conflict and related sanctions
(including provisions for and subsequent adjustments to reserves
for asset recoverability and expenditures to support our employees
and their families). Our chief operating decision maker, who is our
Chief Executive Officer, uses Segment EBITDA as the key measure of
our segment profit or loss. We use Segment EBITDA to compare
profitability among our segments and evaluate business strategies.
This financial measure is included in the metrics used to determine
incentive compensation for our senior management. We also consider
Segment EBITDA to be a useful financial measure in evaluating our
operating performance, as it provides investors, securities
analysts and other interested parties with supplemental information
regarding the underlying trends in our ongoing operations. Segment
EBITDA includes revenue and expenses that are controllable by the
segment. Corporate general and administrative expenses are
allocated to the segments based on usage, with shared expenses
apportioned based on the segment's percentage of consolidated
revenue. Refer to the table on the following page for a
reconciliation of net income to Segment EBITDA.
The following unaudited table reconciles Net Income to
Segment EBITDA:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(In millions) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
282 |
|
|
$ |
420 |
|
|
$ |
552 |
|
|
$ |
693 |
|
Less: net income attributable to continuing noncontrolling
interest |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Net income attributable to LKQ
stockholders |
|
281 |
|
|
|
420 |
|
|
|
551 |
|
|
|
693 |
|
Less: net income from discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
Net income from continuing
operations attributable to LKQ stockholders |
|
281 |
|
|
|
420 |
|
|
|
551 |
|
|
|
689 |
|
Adjustments - continuing
operations attributable to LKQ stockholders: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
70 |
|
|
|
68 |
|
|
|
135 |
|
|
|
133 |
|
Interest expense, net of interest income |
|
42 |
|
|
|
14 |
|
|
|
75 |
|
|
|
29 |
|
Loss on debt extinguishment |
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Provision for income taxes |
|
109 |
|
|
|
127 |
|
|
|
203 |
|
|
|
216 |
|
Equity in earnings of unconsolidated subsidiaries |
|
(2 |
) |
|
|
(4 |
) |
|
|
(5 |
) |
|
|
(6 |
) |
Gains on foreign exchange contracts - acquisition related (1) |
|
(23 |
) |
|
|
— |
|
|
|
(46 |
) |
|
|
— |
|
Equity investment fair value adjustments |
|
— |
|
|
|
2 |
|
|
|
1 |
|
|
|
3 |
|
Restructuring and transaction related expenses |
|
8 |
|
|
|
4 |
|
|
|
26 |
|
|
|
7 |
|
Gain on disposal of businesses |
|
— |
|
|
|
(155 |
) |
|
|
— |
|
|
|
(155 |
) |
Losses on previously held equity interests |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Direct impacts of Ukraine/Russia conflict (2) |
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
5 |
|
Segment EBITDA |
$ |
485 |
|
|
$ |
475 |
|
|
$ |
941 |
|
|
$ |
922 |
|
|
|
|
|
|
|
|
|
Net income from continuing
operations attributable to LKQ stockholders as a percentage of
revenue |
|
8.1 |
% |
|
|
12.6 |
% |
|
|
8.1 |
% |
|
|
10.3 |
% |
Segment EBITDA as a percentage
of revenue |
|
14.1 |
% |
|
|
14.2 |
% |
|
|
13.8 |
% |
|
|
13.8 |
% |
Note: In the table above, the sum of the individual amounts may not
equal the total due to rounding. |
|
|
(1) |
Related to the Uni-Select acquisition. |
(2) |
Adjustments include provisions for and subsequent adjustments to
reserves for asset recoverability (receivables and inventory) and
expenditures to support our employees and their families in
Ukraine. |
We have presented Segment EBITDA solely as a
supplemental disclosure that offers investors, securities analysts
and other interested parties useful information to evaluate our
segment profit and loss and underlying trends in our ongoing
operations. See paragraph under the previous table (revenue and
Segment EBITDA by reportable segment) for details on the
calculation of Segment EBITDA.
Segment EBITDA should not be construed as an
alternative to operating income, net income or net cash provided by
operating activities, as determined in accordance with accounting
principles generally accepted in the United States. In addition,
not all companies that report Segment EBITDA information calculate
Segment 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 table reconciles
Net Income and Diluted Earnings per Share to Adjusted Net Income
from Continuing Operations Attributable to LKQ Stockholders and
Adjusted Diluted Earnings per Share from Continuing Operations
Attributable to LKQ Stockholders, respectively:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(In millions, except per share data) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
282 |
|
|
$ |
420 |
|
|
$ |
552 |
|
|
$ |
693 |
|
Less: net income attributable to continuing noncontrolling
interest |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Net
income attributable to LKQ stockholders |
|
281 |
|
|
|
420 |
|
|
|
551 |
|
|
|
693 |
|
Less: net income from discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
Net income from continuing
operations attributable to LKQ stockholders |
|
281 |
|
|
|
420 |
|
|
|
551 |
|
|
|
689 |
|
Adjustments - continuing
operations attributable to LKQ stockholders: |
|
|
|
|
|
|
|
Amortization of acquired intangibles |
|
15 |
|
|
|
16 |
|
|
|
30 |
|
|
|
33 |
|
Restructuring and transaction related expenses |
|
8 |
|
|
|
4 |
|
|
|
26 |
|
|
|
7 |
|
Loss on debt extinguishment |
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Pre-acquisition interest expense, net of interest income (1) |
|
9 |
|
|
|
— |
|
|
|
12 |
|
|
|
— |
|
Gains on foreign exchange contracts - acquisition related (1) |
|
(23 |
) |
|
|
— |
|
|
|
(46 |
) |
|
|
— |
|
Losses on previously held equity interests |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Direct impacts of Ukraine/Russia conflict (2) |
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
5 |
|
Gain on disposal of businesses |
|
— |
|
|
|
(155 |
) |
|
|
— |
|
|
|
(155 |
) |
Excess tax benefit from stock-based payments |
|
— |
|
|
|
— |
|
|
|
(2 |
) |
|
|
(2 |
) |
Tax effect of adjustments |
|
1 |
|
|
|
23 |
|
|
|
(2 |
) |
|
|
16 |
|
Adjusted net income from
continuing operations attributable to LKQ stockholders |
$ |
291 |
|
|
$ |
307 |
|
|
$ |
570 |
|
|
$ |
594 |
|
|
|
|
|
|
|
|
|
Weighted average diluted
common shares outstanding |
|
268.2 |
|
|
|
282.3 |
|
|
|
268.3 |
|
|
|
284.5 |
|
|
|
|
|
|
|
|
|
Diluted earnings per share
from continuing operations attributable to LKQ stockholders: |
|
|
|
|
|
|
|
Reported |
$ |
1.05 |
|
|
$ |
1.49 |
|
|
$ |
2.06 |
|
|
$ |
2.42 |
|
Adjusted |
$ |
1.09 |
|
|
$ |
1.09 |
|
|
$ |
2.12 |
|
|
$ |
2.09 |
|
(1) |
Related to the Uni-Select acquisition. |
(2) |
Adjustments include provisions for and subsequent adjustments to
reserves for asset recoverability (receivables and inventory) and
expenditures to support our employees and their families in
Ukraine. |
We have presented Adjusted Net Income and
Adjusted Diluted Earnings per Share from Continuing Operations
Attributable to LKQ Stockholders as we believe these measures are
useful for evaluating the core operating performance of our
continuing business across reporting periods and in analyzing our
historical operating results. We define Adjusted Net Income and
Adjusted Diluted Earnings per Share from Continuing Operations
Attributable to LKQ Stockholders as Net Income and Diluted Earnings
per Share adjusted to eliminate the impact of discontinued
operations, restructuring and transaction related expenses,
amortization expense related to all acquired intangible assets,
gains and losses on debt extinguishment, the change in fair value
of contingent consideration liabilities, other gains and losses
related to acquisitions, equity method investments, or divestitures
(including gains or losses on foreign currency forward contracts
related to the Uni-Select transaction), impairment charges, direct
impacts of the Ukraine/Russia conflict and related sanctions
(including provisions for and subsequent adjustments to reserves
for asset recoverability and expenditures to support our employees
and their families), interest and financing costs related to the
Uni-Select transaction prior to closing, excess tax benefits and
deficiencies from stock-based payments and any tax effect of these
adjustments. The tax effect of these adjustments is calculated
using the effective tax rate for the applicable period or for
certain discrete items the specific tax expense or benefit for the
adjustment. Given the variability and volatility of the amount
related transactions in a particular period, management believes
that these costs are not core operating expenses and should be
adjusted in our calculation of Adjusted Net Income from Continuing
Operations Attributable to LKQ Stockholders. Our adjustment of the
amortization of all acquisition-related intangible assets does not
exclude the amortization of other assets, which represents expense
that is directly attributable to ongoing operations. Management
believes that the adjustment relating to amortization of
acquisition-related intangible assets supplements the GAAP
information with a measure that can be used to assess the
comparability of operating performance. The acquired intangible
assets were recorded as part of purchase accounting and contribute
to revenue generation. Amortization of intangible assets that
relate to past acquisitions will recur in future periods until such
intangible assets have been fully amortized. Any future
acquisitions may result in the amortization of additional
intangible assets. These financial measures are used by management
in its decision making and overall evaluation of our operating
performance and are included in the metrics used to determine
incentive compensation for our senior management. Adjusted Net
Income and Adjusted Diluted Earnings per Share from Continuing
Operations Attributable to LKQ Stockholders should not be construed
as alternatives to Net Income or Diluted Earnings per Share as
determined in accordance with accounting principles generally
accepted in the United States. In addition, not all companies that
report measures similar to Adjusted Net Income and Adjusted Diluted
Earnings per Share from Continuing Operations Attributable to LKQ
Stockholders calculate such measures in the same manner as we do
and, accordingly, our calculations are not necessarily comparable
to similarly-named measures of other companies and may not be
appropriate measures for performance relative to other
companies.
The following unaudited table reconciles
Forecasted Net Income and Diluted Earnings per Share from
Continuing Operations Attributable to LKQ Stockholders to
Forecasted Adjusted Net Income from Continuing Operations
Attributable to LKQ Stockholders and Adjusted Diluted Earnings per
Share from Continuing Operations Attributable to LKQ Stockholders,
respectively:
|
Forecasted |
|
Fiscal Year 2023 |
(In millions, except
per share data) |
Minimum Outlook |
|
Maximum Outlook |
Net income from continuing operations attributable to LKQ
stockholders |
$ |
981 |
|
|
$ |
1,035 |
|
Adjustments: |
|
|
|
Amortization of acquired intangibles |
|
60 |
|
|
|
60 |
|
Restructuring and transaction related expenses |
|
48 |
|
|
|
48 |
|
Gains on foreign exchange contracts - acquisition related |
|
(46 |
) |
|
|
(46 |
) |
Pre-acquisition interest expense, net of interest income |
|
22 |
|
|
|
22 |
|
Other adjustments |
|
(2 |
) |
|
|
(2 |
) |
Tax effect of adjustments |
|
(14 |
) |
|
|
(14 |
) |
Adjusted net income from
continuing operations attributable to LKQ stockholders |
$ |
1,049 |
|
|
$ |
1,103 |
|
|
|
|
|
Weighted average diluted
common shares outstanding |
|
269.0 |
|
|
|
269.0 |
|
|
|
|
|
Diluted EPS from continuing
operations attributable to LKQ stockholders: |
|
|
|
U.S. GAAP |
$ |
3.65 |
|
|
$ |
3.85 |
|
Non-GAAP (Adjusted) |
$ |
3.90 |
|
|
$ |
4.10 |
|
We have presented forecasted Adjusted Net Income
and forecasted Adjusted Diluted Earnings per Share from Continuing
Operations Attributable to LKQ Stockholders in our financial
outlook. Refer to the discussion of Adjusted Net Income and
Adjusted Diluted Earnings per Share from Continuing Operations
Attributable to LKQ Stockholders for details on the calculation of
these non-GAAP financial measures. In the calculation of forecasted
Adjusted Net Income and forecasted Adjusted Diluted Earnings per
Share from Continuing Operations Attributable to LKQ Stockholders,
we included estimates of net income from continuing operations
attributable to LKQ stockholders, amortization of acquired
intangibles for the full fiscal year 2023, restructuring expenses
under previously announced plans, interest and financing costs
related to the Uni-Select transaction prior to closing, and the
related tax effect; we included for all other components the
amounts incurred through June 30, 2023.
The following unaudited tables reconciles Net Cash
Provided by Operating Activities to Free Cash Flow and Net Income
to Adjusted EBITDA:
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(In millions) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by operating
activities |
$ |
480 |
|
|
$ |
328 |
|
|
$ |
703 |
|
|
$ |
737 |
|
Less: purchases of property, plant and equipment |
|
66 |
|
|
|
40 |
|
|
|
136 |
|
|
|
99 |
|
Free cash flow |
$ |
414 |
|
|
$ |
288 |
|
|
$ |
567 |
|
|
$ |
638 |
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
(In millions) |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
282 |
|
|
$ |
420 |
|
|
$ |
552 |
|
|
$ |
693 |
|
Less: net income attributable to continuing noncontrolling
interest |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Net income attributable to LKQ
stockholders |
|
281 |
|
|
|
420 |
|
|
|
551 |
|
|
|
693 |
|
Less: net income from discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4 |
|
Net income from continuing
operations attributable to LKQ stockholders |
|
281 |
|
|
|
420 |
|
|
|
551 |
|
|
|
689 |
|
Adjustments - continuing
operations attributable to LKQ stockholders: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
70 |
|
|
|
68 |
|
|
|
135 |
|
|
|
133 |
|
Interest expense, net of interest income |
|
42 |
|
|
|
14 |
|
|
|
75 |
|
|
|
29 |
|
Loss on debt extinguishment |
|
— |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Provision for income taxes |
|
109 |
|
|
|
127 |
|
|
|
203 |
|
|
|
216 |
|
Gain on disposal of businesses |
|
— |
|
|
|
(155 |
) |
|
|
— |
|
|
|
(155 |
) |
Gains on foreign exchange contracts - acquisition related (1) |
|
(23 |
) |
|
|
— |
|
|
|
(46 |
) |
|
|
— |
|
Adjusted EBITDA |
$ |
479 |
|
|
$ |
474 |
|
|
$ |
919 |
|
|
$ |
912 |
|
(1) |
Related to the Uni-Select acquisition. |
We have presented free cash flow solely as a
supplemental disclosure that offers investors, securities analysts
and other interested parties useful information to evaluate our
liquidity. We calculate free cash flow as net cash provided by
operating activities, less purchases of property, plant and
equipment. We believe free cash flow provides insight into our
liquidity and provides useful information to management and
investors concerning our cash flow available to meet future debt
service obligations and working capital requirements, make
strategic acquisitions, pay dividends and repurchase stock. We
believe free cash flow is used by investors, securities analysts
and other interested parties in evaluating the liquidity of other
companies, many of which present free cash flow when reporting
their results. This financial measure is included in the metrics
used to determine incentive compensation for our senior management.
Free cash flow should not be construed as an alternative to net
cash provided by operating activities, as determined in accordance
with accounting principles generally accepted in the United States.
In addition, not all companies that report free cash flow
information calculate free cash flow 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 liquidity relative to other companies.
We also evaluate our free cash flow by measuring
the conversion of Adjusted EBITDA into free cash flow. For the
denominator of our conversion ratio, we calculate Adjusted EBITDA
as net income attributable to LKQ stockholders excluding
discontinued operations, depreciation, amortization, interest,
gains and losses on debt extinguishment, income tax expense, gains
and losses on the disposal of businesses, and other unusual income
and expense items that affect investing or financing cash flows. We
exclude gains and losses on the disposal of businesses as the
proceeds are included in investing cash flows, which is outside of
free cash flow. Adjusted EBITDA should not be construed as an
alternative to operating income, net income or net cash provided by
operating activities, as determined in accordance with accounting
principles generally accepted in the United States. In addition,
not all companies that report Adjusted EBITDA information calculate
Adjusted 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 table reconciles Forecasted Net
Cash Provided by Operating Activities to Forecasted Free Cash
Flow:
|
Forecasted |
|
Fiscal Year 2023 |
(In millions) |
Outlook |
Net cash provided by operating activities |
$ |
1,275 |
Less: purchases of property, plant and equipment |
|
300 |
Free cash flow |
$ |
975 |
We have presented forecasted free cash flow in
our financial outlook. Refer to the paragraph above for details on
the calculation of free cash flow.
LKQ (NASDAQ:LKQ)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
LKQ (NASDAQ:LKQ)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024