LKQ Corp. has reported first quarter 2021 results that reflect strength for the company in a number of key metrics including overall profitability, segment margins and free cash flow.
“We significantly exceeded our expectations for the quarter as our segment teams continue to embrace operational excellence and execute on our key initiatives. Our North America team delivered a 19.9% Segment EBITDA margin in the first quarter, the highest level in the company’s history. Additionally, our Specialty team delivered its highest quarterly organic revenue growth at 30.9% and first quarter Segment EBITDA margin of 13.4%. I am also pleased with the Europe Segment EBITDA margin of 9.6% in the quarter, a year-over-year improvement of 390 basis points. This level of performance gives us confidence regarding the progress of our 1 LKQ Europe program and our team’s ability to achieve the longer-term margin targets we set forth in 2019,” said Dominick Zarcone, president and CEO.
First Quarter 2021 Financial Results
Revenue for the first quarter of 2021 was $3.2 billion, an increase of 5.7% as compared to $3 billion in the first quarter of 2020. For the first quarter of 2021, parts and services organic revenue increased 0.6% (2.2% on a per day basis), while the net impact of acquisitions and divestitures decreased revenue 0.6% and foreign exchange rates increased revenue 4.2%, for a total parts and services revenue increase of 4.2%. The organic revenue growth for the quarter reflects the annualization of the initial pandemic impact last March. Through February, organic parts and services revenue was 4.4% lower on a per day basis, primarily as a result of mobility restrictions from COVID-19. In March 2021, compared to a lower prior year period, organic parts and services revenue grew by 15.7% on a per day basis. Other revenue grew 27.0% in the first quarter of 2021, driven by higher scrap steel and precious metals prices.
Net income for the first quarter of 2021 was $266 million as compared to $146 million for the same period in 2020, an increase of 81.9%. Diluted earnings per share1 for the first quarter was $0.88 as compared to $0.48 for the same period of 2020, an increase of 83.3%.
On an adjusted basis, net income1 in the first quarter was $286 million compared to $176 million in the same period of 2020, a 62.4% increase. Adjusted diluted earnings per share1 for the first quarter was $0.94 as compared to $0.57 for the same period of 2020, a 64.9% increase.
1 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.
Varun Laroyia, executive vice president and CFO, commented, “I want to thank our team for driving our operational excellence initiatives to deliver yet another outstanding outcome in the quarter. Based on this strong start to the year and with confidence in our operating strengths and execution of our strategies, we are raising our 2021 outlook on profitability and free cash flow.”
For 2021, management is anticipating the following revised outlook:
- Full year parts and services revenue growth expected
Q2 growth on a light comparable period, followed by gradual recovery in the second half of the year
- Two fewer selling days in North America, one each in Q1 and Q4
- Diluted EPS attributable to LKQ stockholders in the range of $2.68 to $2.88 (a)
- Adjusted diluted EPS attributable to LKQ stockholders in the range of $3.00 to $3.20 (a)(b)
- Free cash flow in the range of $850 million to $950 million (b)
(a) Amounts reflect continuing operations
(b) Non-GAAP measure. See the table accompanying this release that reconciles the forecasted U.S. GAAP measure to the forecasted adjusted measure, which is non-GAAP.