LKQ Corp. has reported first quarter 2022 results that reflect year-over-year improvement in revenue and earnings per share.
“We are extremely pleased with our first quarter results, which built on the momentum from last year and are a validation of the resiliency of our operating model,” said Dominick Zarcone, president and CEO. “I am proud of our team’s commitment to operational excellence and ability to execute on our strategic priorities. Also, I am pleased with our team’s responsiveness to the challenging macroeconomic environment by quickly taking action to mitigate supply chain and inflationary headwinds. Based on our strong start to the year and confidence in our competitive position, we are raising our full year revenue and EPS outlook.”
First Quarter 2022 Financial Results
Revenue for the first quarter of 2022 was $3.3 billion, an increase of 5.6% as compared to $3.2 billion in the first quarter of 2021. Parts and services organic revenue increased 6.9% (5.6% on a per day basis), while the net impact of acquisitions and divestitures increased revenue by 1.7% and foreign exchange rates decreased revenue by 2.7%, for a total parts and services revenue increase of 5.9%. Other revenue grew 2% driven by higher sales of other scrap metals (including aluminum) and cores and higher scrap steel prices, partially offset by lower precious metals prices.
Net income for the quarter was $269 million as compared to $266 million for the same period in 2021. Diluted earnings per share1 for the quarter was $0.94 as compared to $0.88 for the same period of 2021, an increase of 6.8%.
2022 Outlook
Varun Laroyia, executive vice president and CFO, commented, “The business has delivered a solid start to the fiscal year, and we are encouraged by the demand outlook for our segments, as reflected in our increased full-year outlook. We continue to generate strong free cash flow and remain committed to investing in the business to drive long-term sustainable earnings growth, maintaining an investment grade debt rating, and returning excess free cash flow to shareholders via share repurchases and quarterly dividends.”
For 2022, management updated the outlook as set forth below:
| 2022 Original Full Year Outlook | 2022 Updated Full Year Outlook | |
| Organic revenue growth for parts and services | 3.0% to 5.0% | 4.5% to 6.5% |
| Diluted EPS1 | $3.50 to $3.80 | $3.57 to $3.87 |
| Adjusted diluted EPS1,2 | $3.72 to $4.02 | $3.80 to $4.10 |
| Operating cash flow | $1.3 billion | $1.3 billion |
| Free cash flow2 (at a minimum) | $1.0 billion | $1.0 billion |
| Free cash flow conversion of EBITDA2 | 55 – 60 % | 55 – 60 % |
“Our outlook for the full year 2022 is based on current conditions and recent trends, and assumes current U.S. federal tax legislation remains unchanged, the prices of scrap and precious metals hold near the first quarter average and the Ukraine/Russia conflict continues without further escalation,” said Laroyia. “We have applied exchange rates near March and April average levels, including $1.09 and $1.30 for the euro and pound sterling, respectively, for the balance of the year. Our outlook is also based on management’s current expectations regarding the recovery from the COVID-19 pandemic. Changes in these conditions may impact our ability to achieve the estimates. Our EPS outlook does not include the expected gain on the PGW Auto Glass sale as this amount has not been finalized. 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 reserves for asset recoverability and expenditures to support our employees and their families) and gains and losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities and the expected gain on the PGW Auto Glass sale).”
