Earnings Buzz: LKQ Corporation (NASDAQ: LKQ)

Consumer Goods
Luther Mize

CHICAGO, April 1, 2020 – Shares of LKQ Corporation (NASDAQ: LKQ) declined -2.33% to $20.51. The stock traded total volume of 4.170M shares higher than the average volume of 2.70M shares.

LKQ Corporation (NASDAQ: LKQ) reported revenue for the third quarter of 2019 of $3.15B, a boost of 0.8% as contrast to $3.12B in the third quarter of 2018. For the third quarter of 2019, parts and services organic revenue increased 2.3% (0.9% on a per day basis), and acquisition revenue growth was 0.8%, while the impact of exchange rates was (2.3%), for total parts and services revenue growth of 0.8%.

Net income for the third quarter of 2019 was $152.0M, a boost of 13% year-over-year. On an adjusted basis, net income was $189.0M, a boost of 6% as contrast to the $177.0M for the same period of 2018. Diluted earnings per share for the third quarter of 2019 was $0.49 as contrast to $0.42 for the same period of 2018, a boost of 17%. On an adjusted basis, diluted earnings per share for the third quarter of 2019 was $0.61, a boost of 9% as contrast to $0.56 for the same period of 2018.

On a nine-month year-to-date basis, revenue was $9.50B, a boost of 7.0% from $8.90B for the comparable period of 2018.

Net income for the first nine months of 2019 was $400.0M, a decrease of 10% as contrast to $444.0M for the first nine months of 2018 owing to the non-cash impairment charges in the first and second quarters of 2019. On an adjusted basis, net income for the first nine months of 2019 was $569.0M, a boost of 5% as contrast to the $539.0M for the same period of 2018. Diluted earnings per share for the first nine months of 2019 was $1.28, a decrease of 9% as contrast to $1.41 for the same period of 2018. On an adjusted basis, diluted earnings per share for the first nine months of 2019 was $1.82, a boost of 6% as contrast to $1.71 for the same period of 2018.

Cash Flow and Balance Sheet:

Cash flow from operations totaled $965.0M on a nine-month year-to-date basis, up 85% from a year ago. Free cash flow totaled $800.0M, up 129% year-over-year. The Company paid down $109.0M of borrowings during the quarter, and as of September 30, 2019, the Company’s balance sheet reflected net debt of $3.50B. Net leverage as defined in the credit facility reduced to 2.6x EBITDA.

During the third quarter of 2019, the Company repurchased 3.90M shares of common stock for a total consideration of $101.0M. Since initiating the share repurchase program in October 2018, the Company has repurchased 13.20M shares for a total of $352.0M. On October 25, 2019, the Board of Directors authorized a $500.0M increase to the repurchase program, raising the aggregate authorization to $1.0B and thus making available an aggregate balance of $648.0M for potential additional repurchases anytime through October 2022.

LKQ has the market capitalization of $10.38B and its EPS growth ratio for the past five years was 8.40%. The return on assets ratio of the Company was 3.60% while its return on investment ratio stands at 7.60%. Price to sales ratio was 0.83 while 94.20% of the stock was owned by institutional investors.

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