LKQ Corporation Announces Results for Third Quarter 2024
- Revenue of $3.6 billion (a 0.5% increase compared to the same period in 2023)
- Diluted EPS2 of $0.73; adjusted diluted EPS1,2 of $0.88
- Third quarter operating cash flow of $420 million; free cash flow1 of $341 million
- Repurchased $125 million of LKQ shares
- $1 billion increase to stock repurchase program announced, raising the aggregate authorization to $4.5 billion through October 25, 2026
- Dividend of $0.30 per share approved to be paid in the fourth quarter of 2024
Chicago,IL. LKQ Corporation (Nasdaq: LKQ) today reported third quarter 2024 financial results. “Our third quarter results reflect softer overall volumes, which underscore the importance of executing on our strategic transformation discussed at our September investor day. Our focus on managing our operating expenses is critically important, especially in a period when the top line is facing uncontrollable market headwinds. The agility of the LKQ team was again validated by the growth witnessed in adjusted diluted earnings per share and overall Segment EBITDA margin relative to the prior year. We remain confident in the long-term earnings potential of our businesses as we navigate short-term industry dynamics and a difficult macro-economic environment that will continue to affect the business in the fourth quarter,” noted Justin Jude, President and Chief Executive Officer.
Third Quarter 2024 Financial Results
Revenue for the third quarter of 2024 was $3.6 billion, an increase of 0.5% compared to $3.6 billion for the third quarter of 2023. Parts and services organic revenue decreased 2.8% (4.3% decrease on a per day basis), the net impact of acquisitions and divestitures increased revenue by 3.1%, and foreign exchange rates increased revenue by 0.4% year over year, for a total parts and services revenue increase of 0.6%. Other revenue fell 2.2% primarily due to lower commodities prices and volumes relative to the same period in 2023.
Net income2 was $191 million compared to $207 million for the same period of 2023. Diluted earnings per share2 was $0.73 compared to $0.77 for the same period of 2023, a decrease of 5.2%.
On an adjusted basis, net income1,2 was $230 million compared to $231 million for the same period of 2023, a decrease of 0.3%. Adjusted diluted earnings per share1,2 was $0.88 compared to $0.86 for the same period of 2023, an increase of 2.3%.
Cash Flow and Balance Sheet
Cash flow from operations and free cash flow1 were $420 million and $341 million, respectively, for the third quarter of 2024. Cash flow from operations and free cash flow1 were $886 million and $661 million, respectively, for the nine months ended September 30, 2024. As of September 30, 2024, the balance sheet reflected total debt of $4.4 billion and total leverage, as defined in our credit facility, was 2.4x EBITDA.
Stock Repurchase and Dividend Programs
During the third quarter of 2024, the Company returned over $200 million to its shareholders by investing approximately $125 million to repurchase 3.0 million shares of its common stock and distributing $79 million in cash dividends. For the nine months ended September 30, 2024, the Company has repurchased 6.5 million shares of its common stock for $280 million, and since initiating the stock repurchase program in late October 2018, the Company has repurchased approximately 62 million shares of its common stock for a total of $2.7 billion through September 30, 2024. As of September 30, 2024, there was $796 million remaining on the authorization.
On October 22, 2024 the Board of Directors authorized a $1 billion increase to the stock repurchase program, raising the aggregate authorization to $4.5 billion and thus making available an aggregate balance of $1.8 billion for potential additional repurchases through October 25, 2026.
On October 22, 2024, the Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock, payable on November 27, 2024, to stockholders of record at the close of business on November 14, 2024.
Other Events
In July 2024, we divested our operations in Poland to Mekonomen, and we closed on the divestiture of our Bosnia operations in September 2024. Terms of the transactions were not disclosed.
2024 Outlook
“The revenue headwinds we experienced across our global operations have been more impactful than projected in our prior guidance, and we currently do not expect these headwinds to abate in the fourth quarter. While our cost actions and synergy realization have boosted profitability, the benefits from these actions are not expected to offset the full impact of the lower revenue expectation in the fourth quarter,” stated Rick Galloway, Senior Vice President and Chief Financial Officer. “We are holding our prior cash flow guidance despite the decrease in profitability as we expect to mitigate the impact through working capital and capital expenditure management.”
For 2024, management updated the outlook as set forth below:
| 2024 Previous Full Year Outlook | 2024 Updated Full Year Outlook |
Organic revenue growth for parts and services | (1.25%) to 0.25% | (2.75%) to (1.75%) |
Diluted EPS2 | $2.71 to $2.91 | $2.59 to $2.73 |
Adjusted diluted EPS1,2 | $3.50 to $3.70 | $3.38 to $3.52 |
Operating cash flow | $1.20 billion | $1.175 billion |
Free cash flow1 | $0.85 billion | $0.85 billion |
Free cash flow conversion of Adjusted EBITDA1 | 50% to 60% | 50% to 60% |
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 27.0% and the prices of scrap and precious metals hold near the September average. We have applied foreign currency exchange rates near third quarter average levels, including $1.10, $1.29 and $0.73 for the euro, pound sterling and Canadian dollar, respectively, for the balance of the year. Prior guidance issued on July 25, 2024 had foreign currency exchange rate levels of $1.09, $1.27 and $0.73 for the euro, pound sterling and Canadian dollar, respectively. 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; 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 26,500 people with a network of more than 9000 branches and approximately $6.3 billion in revenue in 2023. The organization supplies more than 100,000 workshops in over 18 European countries.
The group includes LKQ UK & Ireland, LKQ Benelux-France, LKQ RHIAG Group, Elit, LKQ CZ, and LKQ DACH, as well as recycling specialist, Atracco.
Investor Relations Contact
Joseph P. Boutross
Vice President, Investor Relations
LKQ Corporation
T +1 312 621-2793
E jpboutross@lkqcorp.com
Media Contact Europe
LKQ Europe Communications
E lkqeurope@citypress.co.uk
