LKQ Corporation reported second quarter 2022 financial results, spotlighting these highlights:

• Revenue of $3.3 billion; revenue on a constant currency basis² of $3.5 billion
• Parts and services organic revenue growth of 3.8% (4.2% on a per day basis)
• Diluted EPS¹ of $1.49 (up 47.5%); adjusted diluted EPS^1,2 of $1.09 (down 3.5%)
• Second quarter operating cash flow of $328 million; free cash flow² of $288 million
• Repurchased 8.1 million shares for $404 million in the quarter
• Dividend of $0.25 per share approved to be paid in the third quarter of 2022
  

“We had a solid second quarter delivering strong organic growth, and I am extremely proud of the results the LKQ team achieved in a challenging operating environment, which included significant inflationary pressures, supply chain disruptions, and volatile commodity and currency markets. Despite these challenges, we continued to drive our strategic initiatives forward,” noted Dominick Zarcone, president and CEO. “As we enter the back half of the year, we are well positioned with our market leading businesses, experienced management teams, strong balance sheet, and balanced capital allocation strategy, giving us the confidence to maintain our full year 2022 guidance.”

Second Quarter 2022 Financial Results

LKQ reported revenue for the second quarter of 2022 was $3.3 billion, a decrease of 2.7% as compared to $3.4 billion in the second quarter of 2021. On a constant currency basis², second quarter revenue grew by 2.5% to $3.5 billion. Parts and services organic revenue increased 3.8%, while the net impact of acquisitions and divestitures decreased revenue by 1.0% and foreign exchange rates decreased revenue by 5.6%, for a total parts and services revenue decrease of 2.7%. Other revenue fell 2.9% owing to changes in commodity prices relative to the same period in 2021.

Net income¹ for the quarter was $420 million as compared to $305 million for the same period in 2021. Diluted earnings per share¹ for the quarter was $1.49 as compared to $1.01 for the same period of 2021, an increase of 47.5%. On April 18, 2022, the Company completed the sale of PGW Auto Glass, which generated a pretax gain of $155 million ($127 million after tax), or $0.45 per share.

On an adjusted basis, net income^1,2 in the quarter was $307 million as compared to $340 million for the same period of 2021, a decrease of 9.6%. Adjusted diluted earnings per share^1,2 for the quarter was $1.09 as compared to $1.13 for the same period of 2021, a decrease of 3.5%.

Cash Flow and Balance Sheet

For the second quarter, LKQ also reported cash flow from operations and free cash flow² were $328 million and $288 million, respectively. Cash flow from operations and free cash flow² were $737 million and $638 million, respectively, for the six months ended June 30, 2022. As of June 30, 2022, the balance sheet reflected total debt of $2.4 billion and net debt² of $2.1 billion. Net leverage, as defined in the credit facility, was 1.2x EBITDA.

Stock Repurchase and Dividend Programs

During the second quarter of 2022, the Company deployed $404 million to repurchase 8.1 million shares of its common stock. For the six months ended June 30, 2022, the Company has repurchased 10.8 million shares for $548 million, and since initiating the stock repurchase program in late October 2018, the Company has repurchased approximately 45 million shares for a total of $1.9 billion. In May 2022, the Board of Directors increased the total share repurchase authorization to $2.5 billion, effective through October 2024.

On July 26, 2022, our Board of Directors declared a quarterly cash dividend of $0.25 per share of common stock, payable on September 1, 2022, to stockholders of record at the close of business on August 11, 2022.

2022 Outlook

“By focusing on our operational excellence initiatives, the business continues to deliver profitable growth and solid free cash flow. Notwithstanding the significant headwinds from foreign currency exchange rates and commodity price fluctuations, we are holding the midpoint of our adjusted diluted EPS range and our free cash flow guidance for the full year,” said Varun Laroyia, executive vice president and chief financial officer.

“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 June average, and no further deterioration due to the Ukraine/Russia conflict. We have applied exchange rates near July spot levels, including $1.02 and $1.20 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. 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 and subsequent adjustments to 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 gain on the PGW Auto Glass sale).”

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.
² 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.