CHICAGO, Oct. 29, 2009 (GLOBE NEWSWIRE) -- LKQ Corporation (Nasdaq:LKQX) today reported diluted earnings per share of $0.20 for the third quarter ended September 30, 2009, an 11.1% increase from $0.18 for the third quarter of 2008. Revenue for the third quarter of 2009 was $494.8 million, an increase of 2.7% as compared to $481.6 million in the third quarter of 2008. Net income in the third quarter of 2009 was $29.2 million as compared to $25.1 million in the third quarter of 2008. Excluding restructuring expenses from continuing operations and excluding a fixed asset impairment from discontinued operations, diluted earnings per share was $0.22 in the third quarter of 2009 as compared to $0.19 in the third quarter of 2008.
"I am pleased with the strong earnings growth we realized for the quarter, especially considering the solid results we had last year," stated Joseph Holsten, CEO and president of LKQ Corporation. "While there were many positive aspects of the quarter, I was most pleased with the strength of our same store sales growth of aftermarket parts sales, which I attribute to our successful integration of Keystone into LKQ coupled with our improved inventory management. Our business performance was also positively impacted by improvement in gross margins from both aftermarket operations as well as our self service business. Before restructuring expenses, operating margin improved by roughly 100 basis points as compared to the prior year. Cash flows from operations stand at $135 million year-to-date, and should easily exceed our previously issued forecast," added Mr. Holsten.
As previously announced, LKQ entered into an agreement to divest certain self-service recycling businesses, and LKQ has classified these divestitures as discontinued operations in its three and nine month financial statements ended September 30, 2008 and September 30, 2009.
Income from continuing operations was $30.1 million in the third quarter of 2009, an increase of 26.0% as compared to $23.9 million in the third quarter of 2008.
Organic revenue growth, excluding Other Revenue, was 5.5% for the third quarter of 2009. Aftermarket, other new and refurbished products organic revenue growth was 11.3% for the third quarter of 2009 as compared to the same period of the prior year. Organic revenue growth of recycled products of 6.6% for the third quarter of 2009 was offset by a reduction of related service revenue, resulting in a net 2.1% decline of organic revenue for recycled and related products and services as compared to the same period of the prior year.
During the third quarter of 2009, the company had restructuring expenses of $0.9 million in continuing operations related to its Keystone acquisition and a fixed asset impairment of $3.5 million included in discontinued operations related to a divested self-service business. For the third quarter of 2008, the company reported restructuring expenses of $2.4 million. These expenses reduced diluted earnings per share by $0.02 in the third quarter of 2009, and $0.01 in the third quarter of 2008. Earnings per share from discontinued operations excluding the fixed asset impairment was approximately $0.01 in both the third quarter of 2009 and the third quarter of 2008.
For the nine months ended September 30, 2009, revenue was $1,492.0 million, an increase of 3.3% as compared to $1,443.8 million in the same period of the prior year. Year to date 2009 net income was $90.3 million as compared to $86.9 million for the prior year. Year to date 2009 diluted earnings per share was $0.63 as compared to $0.62 in the prior year. Diluted earnings per share before restructuring expenses and the fixed asset impairment was $0.65 for both the year to date 2009 period and the same period of the prior year.
On a nine month, year to date basis, organic revenue declined by 1.4%; however, excluding Other Revenue, organic revenue grew by 6.1%.
Recent Business Acquisitions and Divestitures
During the third quarter of 2009, the company made two acquisitions: Superior Collision Parts, an aftermarket supplier with annualized revenue of $11.0 million and with operations in Atlanta, GA; Pittsburgh, PA; Columbus, OH; and Allentown, PA; and a heavy-duty truck business with historical annual revenue of $2.0 million in Maryland.
LKQ announced on October 2, 2009, the acquisition of Greenleaf Auto Recyclers, LLC ("Greenleaf") from Schnitzer Steel Industries ("SSI"). Greenleaf, a wholesale recycling business consisting of 17 operating locations in nine states, had trailing annual revenue of approximately $114.0 million.
"Greenleaf's focus on late model wholesale recycling provides a strong strategic fit with LKQ. It enhances our network in the mid-Atlantic states and increases our presence in a number of areas where both Greenleaf and LKQ already operate. As a result of dual facilities in many of the markets, we anticipate we will be able to consolidate up to 11 facilities as we merge operations. Our systems integration work is already well underway, and I anticipate that all of the Greenleaf operations will be converted onto LKQ yard management systems prior to the end of the year. Moving Greenleaf to the same systems sets the stage for our sales people to gain the benefits of selling from the combined inventories of the two companies, and allows our field management to focus on achieving routing and procurement synergies," commented Mr. Holsten.
LKQ also announced on October 2, 2009 the sale to SSI of four self-service facilities and certain business assets at three other facilities with plans to close two of the sites and to convert the remaining location to a wholesale recycling business. In addition, subject to customary closing conditions, LKQ agreed to sell to SSI two other self-service recycling facilities in Dallas, TX with an anticipated closing date in mid-January 2010. The results of the facilities sold, to be sold or closed and the related restructuring expenses and the fixed asset impairment have been classified as discontinued operations by LKQ.
Balance Sheet and Liquidity
As of September 30, 2009, LKQ's balance sheet reflected cash and equivalents of $166.0 million as compared to $79.1 million as of December 31, 2008. Debt as of September 30, 2009 was $635.6 million as compared to $642.9 million at the end of 2008. Liquidity available under LKQ's revolving credit agreement was $65.3 million at the end of the quarter.
Company Outlook
Organic revenue growth, excluding Other Revenue, is projected to grow at a rate of 6% to 8%. Excluding the impact of any restructuring expenses or the impact of fixed asset impairments and gains related to transactions with SSI, LKQ anticipates full year 2009 net income will be in the range of $120 million to $124 million and diluted earnings per share will be in the range of $0.83 to $0.86.
Net cash provided by operating activities from continuing and discontinued operations for 2009 is projected to be approximately $150 million. Capital expenditures from continuing and discontinued operations related to property and equipment, excluding expenditures for acquiring businesses, are projected to be in the range of $65 million to $70 million.
Weighted average diluted shares outstanding are anticipated to be approximately 144 million for 2009. Share numbers are estimates and will be affected by factors such as future stock issuances, the number of options exercised in subsequent periods, and changes in stock price.
Quarterly Conference Call
LKQ will host a conference call and audio webcast to discuss its third quarter 2009 financial results on Thursday, October 29, 2009 at 10:00 a.m. Eastern Time. To access the investor conference call, please dial (877) 551-8166. International access to the call may be obtained by dialing (201) 689-8789. The 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: #335449. An online replay of the webcast will be available on the Company's website. Both forms of the replay of the conference call will be available until November 29, 2009. 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 collision replacement products, recycled OEM products and refurbished OEM collision replacement products such as wheels, bumper covers and lights which are used to repair light vehicles. LKQ operates approximately 295 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 U.S. general economic activity and the impact of these changes on the demand for our products and our ability to obtain financing for operations; * fluctuations in the pricing of new original equipment manufacturers replacement parts; * the availability and cost of our inventory; * variations in vehicle accident rates; * 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; * the amount and timing of operating costs and capital expenditures relating to the maintenance and expansion of our business, operations and infrastructure; * increasing competition in the automotive parts industry; * our ability to increase or maintain revenue and profitability at our facilities; * uncertainty as to our future profitability on a consolidated basis; * 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, foreign exchange and other commodity prices; * fluctuations in the prices of scrap and other metals that could adversely affect our financial results; * 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 original equipment manufacturers that attempt to restrict or eliminate the sale of aftermarket products; * decreases in the supply of end of life and crush only vehicles that we process and sell for scrap; * termination of business relationships with insurance companies that promote the use of our products; and * other risks that are described in our Form 10-K filed February 27, 2009 and in other reports filed by us from time to time with the Securities and Exchange Commission.
You should not place undue reliance on the forward looking statements. We assume no obligation to update any forward-looking statement to reflect events or circumstances arising after the date on which it was made except as required by law.
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Income
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2009 2008 2009 2008
---- ---- ---- ----
Revenue $ 494,812 $ 481,614 $1,492,037 $1,443,766
Cost of goods sold 269,708 269,805 817,114 796,758
---------- ---------- ---------- ----------
Gross margin 225,104 211,809 674,923 647,008
Facility and
warehouse expenses 48,337 46,956 145,101 133,203
Distribution expenses 45,604 46,476 132,608 136,553
Selling, general and
administrative
expenses 65,893 60,423 198,688 185,512
Restructuring expenses 852 2,400 1,910 6,723
Depreciation and
amortization 8,373 7,387 24,893 21,719
---------- ---------- ---------- ----------
Operating income 56,045 48,167 171,723 163,298
Other expense
(income):
Interest expense,
net 7,780 8,190 23,082 26,891
Other (income) loss,
net (23) 22 (170) (688)
---------- ---------- ---------- ----------
Total other expense 7,757 8,212 22,912 26,203
---------- ---------- ---------- ----------
Income from
continuing
operations
before provision
for income taxes 48,288 39,955 148,811 137,095
Provision for income
taxes 18,147 16,027 58,197 54,318
---------- ---------- ---------- ----------
Income from
continuing
operations 30,141 23,928 90,614 82,777
(Loss) income from
discontinued
operations, net
of taxes (986) 1,140 (298) 4,158
---------- ---------- ---------- ----------
Net income $ 29,155 $ 25,068 $ 90,316 $ 86,935
========== ========== ========== ==========
Basic earnings per
share (1):
Income from
continuing
operations $ 0.21 $ 0.18 $ 0.65 $ 0.61
(Loss) income from
discontinued
operations (0.01) 0.01 -- 0.03
---------- ---------- ---------- ----------
Basic earnings per
share $ 0.21 $ 0.18 $ 0.64 $ 0.64
========== ========== ========== ==========
Diluted earnings per
share (1):
Income from
continuing
operations $ 0.21 $ 0.17 $ 0.63 $ 0.59
(Loss) income from
discontinued
operations (0.01) 0.01 -- 0.03
---------- ---------- ---------- ----------
Diluted earnings
per share $ 0.20 $ 0.18 $ 0.63 $ 0.62
========== ========== ========== ==========
Weighted average
common shares
outstanding:
Basic 140,746 136,585 140,257 135,481
========== ========== ========== ==========
Diluted 144,047 141,190 143,669 140,458
========== ========== ========== ==========
(1) The sum of the individual earnings per share amounts may not
equal the total due to rounding.
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Balance Sheets
(In thousands,except share and per share data)
Sept. 30, Dec. 31,
2009 2008
---- ----
Assets
Current Assets:
Cash and equivalents $ 166,005 $ 79,067
Receivables, net 127,434 147,886
Inventory 361,095 330,511
Deferred income taxes 19,732 19,644
Prepaid income taxes 6,839 21,164
Prepaid expenses 9,194 7,716
Assets of discontinued operations 24,597 24,129
---------- ----------
Total Current Assets 714,896 630,117
Property and Equipment, net 259,453 254,346
Intangibles 998,647 978,368
Other Assets 20,987 18,973
---------- ----------
Total Assets $1,993,983 $1,881,804
========== ==========
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 54,195 $ 65,363
Accrued expenses 84,141 74,829
Deferred revenue 6,152 4,733
Current portion of long-term obligations 29,515 21,934
Liabilities of discontinued operations 2,723 354
---------- ----------
Total Current Liabilities 176,726 167,213
Long-Term Obligations, Excluding Current
Portion 606,048 620,940
Deferred Income Tax Liability 47,254 43,518
Other Noncurrent Liabilities 32,519 29,627
Commitments and Contingencies
Stockholders' Equity:
Common stock, $0.01 par value, 500,000,000
shares authorized, 141,175,304 and
139,921,410 shares issued at September 30,
2009 and December 31, 2008, respectively 1,412 1,399
Additional paid-in capital 806,988 790,933
Retained earnings 332,254 241,938
Accumulated other comprehensive loss (9,218) (13,764)
---------- ----------
Total Stockholders' Equity 1,131,436 1,020,506
---------- ----------
Total Liabilities and Stockholders' Equity $1,993,983 $1,881,804
========== ==========
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Cash Flows
(In thousands)
Nine Months Ended
September 30,
----------------------
2009 2008
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 90,316 $ 86,935
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 27,931 23,998
Stock-based compensation expense 5,457 4,133
Deferred income taxes 2,663 9,375
Excess tax benefit from share-based
payment arrangements (5,744) (8,192)
Other adjustments 3,873 2,221
Changes in operating assets and
liabilities, net of effects from
purchase transactions:
Receivables 18,671 (5,738)
Inventory (24,302) (5,675)
Prepaid income taxes/income taxes payable 19,887 9,733
Accounts payable (12,722) (9,798)
Other operating assets and liabilities 9,434 (1,678)
---------- ----------
Net cash provided by operating activities 135,464 105,314
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (28,993) (42,212)
Proceeds from disposal of assets 952 1,993
Cash used in acquisitions (18,580) (40,258)
---------- ----------
Net cash used in investing activities (46,621) (80,477)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 4,986 4,722
Excess tax benefit from share-based
payment arrangements 5,744 8,192
Debt issuance costs -- (219)
Borrowings under line of credit 2,310 --
Repayments of long-term debt (16,212) (13,659)
---------- ----------
Net cash used in financing activities (3,172) (964)
---------- ----------
Effect of exchange rate changes on cash and
equivalents 1,267 (425)
Net increase in cash and equivalents 86,938 23,448
Cash and equivalents, beginning of period 79,067 74,241
---------- ----------
Cash and equivalents, end of period $ 166,005 $ 97,689
========== ==========
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
(In thousands, except per share data)
Three Months Ended September 30,
--------------------------------------------------
Operating
Highlights 2009 2008
----------------- ---------------- ----------------
% of % of %
Revenue Revenue Change Change
Revenue $494,812 100.0% $481,614 100.0% $13,198 2.7%
Cost of goods
sold 269,708 54.5% 269,805 56.0% (97) 0.0%
-------- ------ -------- ------ -------
Gross margin 225,104 45.5% 211,809 44.0% 13,295 6.3%
Facility and
warehouse
expenses 48,337 9.8% 46,956 9.7% 1,381 2.9%
Distribution
expenses 45,604 9.2% 46,476 9.7% (872) -1.9%
Selling, general
and
administrative
expenses 65,893 13.3% 60,423 12.5% 5,470 9.1%
Restructuring
expenses 852 0.2% 2,400 0.5% (1,548) -64.5%
Depreciation and
amortization 8,373 1.7% 7,387 1.5% 986 13.3%
-------- ------ -------- ------ -------
Operating income 56,045 11.3% 48,167 10.0% 7,878 16.4%
Other expense
(income):
Interest expense,
net 7,780 1.6% 8,190 1.7% (410) -5.0%
Other (income)
loss, net (23) 0.0% 22 0.0% (45) -204.5%
-------- ------ -------- ------ -------
Total other
expense 7,757 1.6% 8,212 1.7% (455) -5.5%
-------- ------ -------- ------ -------
Income from
continuing
operations
before
provision for
income taxes 48,288 9.8% 39,955 8.3% 8,333 20.9%
Provision for
income taxes 18,147 3.7% 16,027 3.3% 2,120 13.2%
-------- ------ -------- ------ -------
Income from
continuing
operations 30,141 6.1% 23,928 5.0% 6,213 26.0%
(Loss) income
from
discontinued
operations, net
of taxes (986) -0.2% 1,140 0.2% (2,126) -186.5%
-------- ------ -------- ------ -------
Net income $ 29,155 5.9% $ 25,068 5.2% $ 4,087 16.3%
======== ====== ======== ====== =======
Basic earnings
per share (1):
Income from
continuing
operations $ 0.21 $ 0.18 $ 0.03 16.7%
(Loss) income
from
discontinued
operations (0.01) 0.01 (0.02) -200.0%
-------- -------- -------
Basic earnings
per share $ 0.21 $ 0.18 $ 0.03 16.7%
======== ======== =======
Diluted earnings
per share (1):
Income from
continuing
operations $ 0.21 $ 0.17 $ 0.04 23.5%
(Loss) income
from
discontinued
operations (0.01) 0.01 (0.02) -200.0%
-------- -------- -------
Diluted earnings
per share $ 0.20 $ 0.18 $ 0.02 11.1%
======== ======== =======
Weighted average
common shares
outstanding:
Basic 140,746 136,585 4,161 3.0%
======== ======== =======
Diluted 144,047 141,190 2,857 2.0%
======== ======== =======
(1) The sum of the individual earnings per share amounts may not
equal the total due to rounding.
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
(In thousands, except per share data)
Nine Months Ended September 30,
-----------------------------------------------------
Operating
Highlights 2009 2008
-------------- ------------------ ------------------
% of % of %
Revenue Revenue Change Change
Revenue $1,492,037 100.0% $1,443,766 100.0% $48,271 3.3%
Cost of goods
sold 817,114 54.8% 796,758 55.2% 20,356 2.6%
---------- ------ ---------- ------ -------
Gross margin 674,923 45.2% 647,008 44.8% 27,915 4.3%
Facility and
warehouse
expenses 145,101 9.7% 133,203 9.2% 11,898 8.9%
Distribution
expenses 132,608 8.9% 136,553 9.5% (3,945) -2.9%
Selling,
general and
administra-
tive expenses 198,688 13.3% 185,512 12.8% 13,176 7.1%
Restructuring
expenses 1,910 0.1% 6,723 0.5% (4,813) -71.6%
Depreciation
and
amortization 24,893 1.7% 21,719 1.5% 3,174 14.6%
---------- ------ ---------- ------ -------
Operating
income 171,723 11.5% 163,298 11.3% 8,425 5.2%
Other expense
(income):
Interest
expense, net 23,082 1.5% 26,891 1.9% (3,809) -14.2%
Other (income)
loss, net (170) 0.0% (688) 0.0% 518 -75.3%
---------- ------ ---------- ------ -------
Total other
expense 22,912 1.5% 26,203 1.8% (3,291) -12.6%
---------- ------ ---------- ------ -------
Income from
continuing
operations
before
provision
for income
taxes 148,811 10.0% 137,095 9.5% 11,716 8.5%
Provision for
income taxes 58,197 3.9% 54,318 3.8% 3,879 7.1%
---------- ------ ---------- ------ -------
Income from
continuing
operations 90,614 6.1% 82,777 5.7% 7,837 9.5%
(Loss) income
from
discontinued
operations,
net of taxes (298) 0.0% 4,158 0.3% (4,456) -107.2%
---------- ------ ---------- ------ -------
Net income $ 90,316 6.1% $ 86,935 6.0% $ 3,381 3.9%
========== ====== ========== ====== =======
Basic earnings
per share (1):
Income from
continuing
operations $ 0.65 $ 0.61 $ 0.04 6.6%
(Loss)
income from
discontinued
operations -- 0.03 (0.03) -100.0%
---------- ---------- -------
Basic
earnings
per share $ 0.64 $ 0.64 $ -- 0.0%
========== ========== =======
Diluted
earnings per
share (1):
Income from
continuing
operations $ 0.63 $ 0.59 $ 0.04 6.8%
(Loss)
income from
discontinued
operations -- 0.03 (0.03) -100.0%
---------- ---------- -------
Diluted
earnings
per share $ 0.63 $ 0.62 $ 0.01 1.6%
========== ========== =======
Weighted
average
common shares
outstanding:
Basic 140,257 135,481 4,776 3.5%
========== ========== =======
Diluted 143,669 140,458 3,211 2.3%
========== ========== =======
(1) The sum of the individual earnings per share amounts may not
equal the total due to rounding.
The following unaudited table reconciles EBITDA to income from
continuing operations:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
2009 2008 2009 2008
---------- ---------- ----------- ----------
(In thousands)
Income from
continuing
operations $ 30,141 $ 23,928 $ 90,614 $ 82,777
Depreciation and
amortization 9,151 8,072 27,378 23,688
Interest expense,
net 7,780 8,190 23,082 26,891
Provision for
income taxes 18,147 16,027 58,197 54,318
---------- ---------- ----------- ----------
Earnings before
interest, taxes,
depreciation and
amortization
(EBITDA) from
continuing
operations $ 65,219 $ 56,217 $ 199,271 $ 187,674
========== ========== =========== ==========
EBITDA as a
percentage of
revenue 13.2% 11.7% 13.4% 13.0%
We provide a reconciliation of Income from Continuing Operations
to EBITDA as we believe it offers investors, security 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 security analysts,
investors, and other interested parties in evaluating companies,
many of which present EBITDA when reporting their results.
The following unaudited table compares certain revenue categories:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
(In thousands)
Included in
Consolidated Income
Statements of LKQ
Corporation
Recycled and related
products and
services $ 180,482 $ 172,322 $ 548,040 $ 482,652
Aftermarket, other
new and refurbished
products 257,670 230,292 799,953 746,512
Other 56,660 79,000 144,044 214,602
---------- ---------- ---------- -----------
$ 494,812 $ 481,614 $1,492,037 $ 1,443,766
---------- ---------- ---------- -----------
Results of operations for the discontinued operations are as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- -----------------------
2009 2008 2009 2008
---------- ---------- ---------- -----------
(In thousands)
Revenue $ 7,335 $ 9,087 $ 20,853 $ 23,235
(Loss) income
before taxes (1,565) 1,810 (473) 6,600
Income tax (benefit)
provision (579) 670 (175) 2,442
---------- ---------- ---------- -----------
(Loss) income from
discontinued
operations, net
of taxes $ (986) $ 1,140 $ (298) $ 4,158
========== ========== ========== ===========
The third quarter and nine month results for 2009 include $3.5
million ($2.2 million, net of tax) in fixed asset impairment
related to the discontinued operations.