LKQ Corp. Reports Q3 Revenue of $3.1B

LKQ Corp. Reports Q3 Revenue of $3.1B 

The company reported third quarter parts and services organic revenue growth of 4.8%.

LKQ Corp. has reported third quarter 2022 financial results. 

Third Quarter 2022 Financial Results

Revenue for the third quarter of 2022 was $3.1 billion, a decrease of 5.9% as compared to $3.3 billion in the third quarter of 2021. On a constant currency basis, third quarter revenue grew by 1% to $3.3 billion. Parts and services organic revenue increased 4.8% on a reported basis (5.3% on a per day basis), while the net impact of acquisitions and divestitures decreased revenue by 2.3% and foreign exchange rates decreased revenue by 7.4%, for a total parts and services revenue decrease of 5%. Other revenue fell 17.4% primarily due to weaker commodity prices relative to the same period in 2021.

Net income for the quarter was $261 million as compared to $284 million for the same period in 2021. Diluted earnings per share2 for the quarter was $0.95 as compared to $0.96 for the same period of 2021, a decrease of 1%.

On an adjusted basis, net income in the quarter was $266 million, as compared to $300 million for the same period of 2021, a decrease of 11.4%. Adjusted diluted earnings per share for the quarter was $0.97 as compared to $1.02 for the same period of 2021, a decrease of 4.9%.

“We are pleased with our third quarter results as they once again highlight our ongoing ability to combine best-in-class customer service with operational excellence. Our strong same day organic revenue growth and segment EBITDA margins in Wholesale – North America and Europe demonstrate our ability to serve our stakeholders in any environment,” noted Dominick Zarcone, president and CEO. “I want to thank our global teams for delivering another quarter of strong performance in a challenging macro environment, including commodities and foreign exchange volatility as well as other inflationary pressures that impacted our reported earnings. Additionally, we remain committed to returning capital to our stockholders, as evidenced by the 10% increase of the quarterly dividend and the expansion of our stock repurchase program.”

Other Events

On Sept. 19, 2022, the company announced new leadership appointments, effective immediately. Varun Laroyia, executive vice president and CFO, was appointed as CEO and managing director of LKQ Europe. Rick Galloway, CFO of LKQ’s Wholesale – North America and Self-Service segments, was appointed as LKQ’s senior vice president and CFO.

2022 Outlook

Galloway commented: “The business continues to produce strong financial results in a difficult macro-economic environment. We anticipate the benefits associated with our operational excellence programs and capital allocation activities will be more than offset by the weak foreign exchange rates relative to the US dollar along with soft metals prices. Therefore, we have updated our guidance metrics to reflect these current market conditions, and also narrowed our guidance range for the balance of the year.”

For 2022, management updated the outlook as set forth below:

 2022 Previous Full Year Outlook2022 Updated Full Year Outlook
Organic revenue growth for parts and services4.5% to 6.5%4.75% to 5.75%
Diluted EPS2$4.09 to $4.29$4.12 to $4.22
Adjusted diluted EPS1,2$3.85 to $4.05$3.85 to $3.95
Operating cash flow$1.3 billion$1.25 billion
Free cash flow1 minimum $1.0 billionapprox. $1.0 billion
Free cash flow conversion of EBITDA155% to 60%55% to 60%

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Third Quarter 2022 Financial Highlights

Net sales increased 14% to $228.1 million, compared with $200.1 million for the third quarter of 2021On an organic basis, net sales increased 4% compared with the third quarter of 2021Earnings per diluted share increased 68% to $0.37, compared with $0.22 for the third quarter of 2021Adjusted earnings per diluted share increased 78% to $0.41, compared with $0.23 for the third quarter of 2021Adjusted EBITDA increased 57% to $27.2 million, compared with $17.3 million for the third quarter of 2021Cash flow provided by operations was $16.5 million and free cash flow was $9.8 million, compared with cash flow used for operations of $7.8 million and negative free cash flow of $13.8 million for the third quarter of 2021

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