LKQ Corporation Announces Results for First Quarter 2024

• Revenue of $3.7 billion (an 11% increase compared to the same period in 2023)

• Diluted EPS² of $0.59; adjusted diluted EPS^1,2 of $0.82

• Operating cash flow of $253 million; free cash flow¹ of $187 million

• Dividend of $0.30 per share approved to be paid in the second quarter of 2024

• Completed an offering of €750 million of unsecured 4.125% senior notes

• Uni-Select synergies accelerated and increased from $55 million to $65 million

• Repurchased $30 million of LKQ shares

Chicago, IL. LKQ Corporation (Nasdaq: LKQ) reported first quarter 2024 financial results on April 23. “Our first quarter results were below our expectations as our Wholesale – North America segment was confronted with a reduction in repairable claims and the resulting pressure on demand, which we believe is primarily attributable to record warm weather across the United States. On the upside, we experienced positive organic growth in our Europe segment and generated robust free cash flow. Our success since implementing the operational excellence strategy in 2019 has placed the Company on solid ground to recover from uncontrollable dynamics, such as those we faced in the first quarter. As a result, and despite the revenue headwinds we encountered in the first quarter, we are maintaining our adjusted earnings per share and free cash flow guidance. We have confidence in our team’s abilities and their track record of swiftly and effectively implementing action plans to address our cost-structure, and have already made meaningful changes to reflect current levels of demand,” noted Dominick Zarcone, President and Chief Executive Officer.

First Quarter 2024 Financial Results

Revenue for the first quarter of 2024 was $3.7 billion, an increase of 10.6% compared to $3.3 billion for the first quarter of 2023. For the first quarter of 2024, parts and services organic revenue decreased 0.3% (0.5% increase on a per day basis), foreign exchange rates increased revenue by 0.8% and the net impact of acquisitions and divestitures increased revenue by 11.6% year over year, for a total parts and services revenue increase of 12.1%. Other revenue for the first quarter of 2024 fell 14.6% primarily due to weaker precious metals prices relative to the same period in 2023.

Net income² for the first quarter of 2024 was $158 million compared to $270 million for the same period of 2023. Diluted earnings per share² for the first quarter of 2024 was $0.59 compared to $1.01 for the same period of 2023, a decrease of 41.6%.

On an adjusted basis, net income^1,2 for the first quarter of 2024 was $220 million compared to $279 million for the same period of 2023, a decrease of 21.1%. Adjusted diluted earnings per share^1,2 was $0.82 for the first quarter of 2024 compared to $1.04 for the same period of 2023, a decrease of 21.2%.

Cash Flow and Balance Sheet

Cash flow from operations and free cash flow¹ were $253 million and $187 million, respectively, for the first quarter of 2024. As of March 31, 2024, the balance sheet reflected total debt of $4.3 billion and total leverage, as defined in our credit facility, was 2.3x EBITDA.

Stock Repurchase and Dividend Programs

During the first quarter of 2024, the Company invested $30 million to repurchase 0.6 million shares of its common stock. Since initiating the stock repurchase program in late October 2018, the Company has repurchased approximately 57 million shares for a total of $2.5 billion through March 31, 2024.

On April 22, 2024, the Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock, payable on May 30, 2024, to stockholders of record at the close of business on May 16, 2024.

Other Events

“Confronted with soft demand, our Wholesale – North America team accelerated our FinishMaster footprint rationalization by consolidating 65 branches in the first quarter. To date, we have consolidated a total of 99 branches, representing 66% of the acquired locations, which is more than we anticipated completing in the first three-years. Through this effort, our team uncovered additional opportunities for synergies, which has given us the confidence to increase our previously disclosed synergies from $55 million to $65 million,” said Justin Jude, Executive Vice President and Chief Operating Officer.

On March 13, 2024, we completed an offering of €750 million aggregate principal amount of 4.125% Euro Notes due in 2031. We used the net proceeds from the offering to pay outstanding indebtedness, including all of the outstanding €500 million aggregate principal amount of the 3.875% Euro Notes (2024) as well as Euro revolver borrowings, and pay accrued interest and related fees, premiums and expenses.

On April 16, 2024, we divested our operations in Slovenia and simultaneously entered into an agreement to divest our operations in Bosnia, which we expect to close in the third quarter of this year subject to receipt of regulatory approvals. After thorough consideration, we determined our operations in Slovenia and Bosnia did not align with our long-term strategy and financial return objectives. Terms of the transactions were not disclosed.

2024 Outlook

Rick Galloway, Senior Vice President and Chief Financial Officer, commented, “We are reiterating our full year adjusted earnings per share and free cash flow guidance based on our confidence in the core strengths of our businesses and the action plans already in motion to recover the first quarter’s underperformance. We have lowered the range of our organic revenue growth guidance in recognition of the softer than expected first quarter demand and lowered our GAAP earnings per share guidance due to higher projected restructuring and transaction related expenses than prior guidance.”

For 2024, management updated the outlook as set forth below:

Our outlook for the full year 2024 is based on current conditions, recent trends and our expectations, and assumes a global effective tax rate of 26.8%, the prices of scrap and precious metals hold near the March average and no further deterioration due to the Ukraine/Russia conflict. We have applied foreign currency exchange rates near first quarter average levels, including $1.09, $1.27 and $0.74 for the euro, pound sterling and Canadian dollar, respectively, for the balance of the year, which are unchanged from prior guidance. Changes in these conditions may impact our ability to achieve the estimates. 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; and gains and losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities).

⁽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 investor 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.

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.

About LKQ Europe

LKQ Europe, a subsidiary of LKQ Corporation (www.lkqcorp.com), headquartered in Zug, Switzerland, is the leading distributor of automotive aftermarket parts for cars, commercial vans, and industrial vehicles in Europe. It currently employs approximately 27,500 people with a network of more than 1,000 branches and approximately $6.3 billion in revenue in 2023. The organization supplies more than 100,000 workshops in over 20 European countries in the following regions: Benelux-France, Central Eastern Europe, DACH, Italy, Scandinavia and UK & Ireland.

Investor Relations Contact            

Joseph P. Boutross
Vice President, Investor Relations

LKQ Corporation
T   +1 312 621-2793
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Media Contact Europe

LKQ Europe Communications

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