Category: Uncategorized
- Published: 29 November -0001
LKQ Corporation Announces 2008 Second Quarter Net Income Results Up Over 121% and Increases Annual Earnings Guidance
LKQ Corporation (Nasdaq: LKQX) today announced results for its second quarter ended June 30, 2008, with revenue of $484.4 million, net income of $31.0 million and diluted earnings per share of $0.22.
\"Our second quarter results demonstrate the strength of our diversified business model. Both our revenue and our net income more than doubled compared to the second quarter of 2007, and we achieved 13.2% overall organic revenue growth in the quarter. Our operating margin improved this quarter over the second quarter of 2007 by close to 65 basis points, and would have been an additional 65 basis points higher without restructuring expenses. Our diluted earnings per share for the quarter puts us on track to exceed the earnings guidance that we previously issued by approximately $0.09 per share,\" said Joe Holsten, President and Chief Executive Officer. Commenting on the strong recycled products revenue growth, Holsten said, \"We believe higher fuel prices this quarter contributed to lower reported insurance claim activity which in turn adversely affected our growth on aftermarket, other new and refurbished parts revenue, which still grew by about 1% despite difficult market conditions. Organic revenue growth exceeded that of our first quarter as our recycled parts and other related revenue growth expanded significantly due to our processing of increased volumes of vehicles, along with higher demand for the commodities that we separate in our recycling processes.\"
2008 Reported Results
All earnings per share amounts, stock price amounts and share counts discussed herein reflect our December 2007 two-for-one stock split.
For the second quarter of 2008, revenue increased 107.6% to $484.4 million compared with $233.3 million for the second quarter of 2007. Our organic revenue growth for the quarter was 13.2%, and was calculated on a pro forma basis assuming we owned Keystone Automotive Industries, Inc. during the second quarter of 2007. Net income for the quarter increased 121.1% to $31.0 million compared with $14.0 million for the second quarter of 2007. Diluted earnings per share was $0.22 for the quarter compared with $0.12 for the second quarter of 2007.
For the six months ended June 30, 2008, revenue increased 108.3% to $976.3 million compared with $468.6 million for the same period in 2007. This included pro forma organic revenue growth of 11.2%. For the six months ended June 30, 2008, net income increased 107.5% to $61.9 million compared with $29.8 million for the same period in 2007. Diluted earnings per share was $0.44 for the six months ended June 30, 2008 compared with $0.27 for the same period a year ago.
For the second quarter of 2008 we recorded $3.1 million and for the six months ended June 30, 2008 we recorded $4.3 million of restructuring expenses, which were included in operating expenses and were all related to our Keystone acquisition in October 2007.
The weighted average diluted shares outstanding for the second quarter of 2008 was 140.3 million compared to 112.5 million for the second quarter of 2007, and for the six months ended June 30, 2008 was 140.0 million compared to 112.2 million for the six months ended June 30, 2007.
The number of weighted average diluted shares of common stock in 2008 increased from 2007 due to the issuance of 23.6 million new shares in our September 2007 follow-on public offering, the issuance of 838,073 new shares related to the acquisition of a business on March 4, 2008, exercises of stock options, and the increase in our stock price.
Business Acquisitions in 2008
On February 15, 2008 we acquired a retail oriented recycled parts business located in Orlando, FL, that operates on 3.5 acres of property adjoining our existing retail oriented recycled parts business.
On March 4, 2008 we acquired Texas Best Diesel, a heavy duty truck recycled parts business in Houston, TX that operates on an approximately 18 acre facility.
These two businesses reported approximately $10.6 million in trailing annual revenue just prior to our acquisition of them.
Company Outlook
We expect that 2008 organic revenue growth will again be in the low double digits, with the balance of revenue growth being the full year impact of 2007 business acquisitions and the business acquisitions we have completed to date in 2008. Excluding the effect of any 2008 restructuring expenses related to the Keystone acquisition, we expect full year 2008 net income to be within a range of $120.0 million to $124.0 million and diluted earnings per share to be between $0.85 and $0.88.
We anticipate that net cash provided by operating activities for 2008 will be over $100.0 million. We estimate our full year 2008 capital expenditures related to property and equipment, excluding expenditures for acquiring businesses, will be between $68.0 million to $78.0 million. This includes approximately $10.0 million related to capital expenditures planned for late 2007 on projects that were delayed and approximately $4.8 million related to restructuring our aftermarket business as a result of the Keystone acquisition.
We estimate the weighted average diluted shares outstanding for the full year 2008 will be approximately 141.0 million. These share numbers are estimates and will be affected by factors such as any future stock issuances, the number of our options exercised in subsequent periods, and changes in our stock price.
Quarterly Conference Call
We will host an audio webcast to discuss our second quarter 2008 earnings on Thursday, July 31, 2008 at 10:30 a.m. Eastern Time. The live audio webcast can be accessed on the internet at http://www.lkqcorp.com in the Investor Relations section. An online replay of the webcast will be available on our website approximately two hours after the live presentation and will remain on the site until August 14, 2008.
About LKQ Corporation
LKQ Corporation is the largest nationwide provider of aftermarket collision replacement products, recycled OEM products and refurbished OEM collision replacement products such as wheels, bumper covers and lights used to repair light vehicles. LKQ operates approximately 300 facilities offering its customers a broad range of replacement systems, components, and parts to repair light vehicles and trucks.
Forward Looking Statements
The statements in this press release that are not historical are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our expectations, beliefs, hopes, intentions or strategies. Forward looking statements involve risks and uncertainties, some of which are not currently known to us. Actual events or
results may differ materially from those expressed or implied in the forward looking statements as a result of various factors. These factors include:
-- the risk that Keystone\'s business will not be integrated successfully
or that LKQ will incur unanticipated costs of integration;
-- the ability to maintain Keystone\'s vendor relationships and retain key
employees;
-- the availability and cost of inventory;
-- pricing of new OEM replacement parts;
-- variations in vehicle accident rates;
-- changes in state or federal laws or regulations affecting our business;
-- fluctuations in fuel and other commodity prices;
-- changes in the demand for our products and the supply of our inventory
due to severity of weather and seasonality of weather patterns;
-- changes in the types of replacement parts that insurance carriers will
accept in the repair process;
-- the amount and timing of operating costs and capital expenditures
relating to the maintenance and expansion of our business, operations
and infrastructure;
-- declines in asset values;
-- uncertainty as to changes in U.S. general economic activity and the
impact of these changes on the demand for our products;
-- uncertainty as to our future profitability;
-- increasing competition in the automotive parts industry;
-- our ability to increase or maintain revenue and profitability at our
facilities;
-- uncertainty as to the impact on our industry of any terrorist attacks
or responses to terrorist attacks;
-- our ability to operate within the limitations imposed by financing
arrangements;
-- our ability to obtain financing on acceptable terms to finance our
growth;
-- our ability to integrate and successfully operate recently acquired
companies and any companies acquired in the future and the risks
associated with these companies;
-- our ability to develop and implement the operational and financial
systems needed to manage our growing operations; and
-- other risks that are described in our Form 10-K filed February 29, 2008
and in other reports filed by us from time to time with the Securities
and Exchange Commission.
You should not place undue reliance on the forward looking statements. We assume no obligation to update any forward looking statement to reflect events or circumstances arising after the date on which it was made.
CONTACT: LKQ Corporation
Mark T. Spears, Executive Vice President and Chief Financial
Officer
312-621-1950
This email address is being protected from spambots. You need JavaScript enabled to view it.
Financial Tables To Follow
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Income
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
Revenue $484,392 $233,278 $976,300 $468,596
Cost of goods sold 264,684 128,195 533,278 256,417
Gross margin 219,708 105,083 443,022 212,179
Facility and warehouse expenses 43,802 24,634 88,304 50,244
Distribution expenses 45,326 22,213 90,095 44,388
Selling, general and
administrative expenses 61,759 28,130 125,862 56,862
Restructuring expenses 3,149 - 4,323 -
Depreciation and amortization 7,258 3,464 14,516 6,781
Operating income 58,414 26,642 119,922 53,904
Other (income) expense:
Interest expense, net 8,411 2,093 18,712 3,826
Other income, net (451) (27) (720) (675)
Total other expense 7,960 2,066 17,992 3,151
Income before provision for
income taxes 50,454 24,576 101,930 50,753
Provision for income taxes 19,465 10,560 40,063 20,943
Net income $30,989 $14,016 $61,867 $29,810
Net income per share:
Basic $0.23 $0.13 $0.46 $0.28
Diluted $0.22 $0.12 $0.44 $0.27
Weighted average common shares
outstanding:
Basic 135,287 107,046 134,922 106,841
Diluted 140,301 112,494 140,035 112,247
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Cash Flows
(In thousands)
Six Months Ended June 30,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $61,867 $29,810
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 15,802 7,056
Share-based compensation expense 2,715 1,760
Deferred income taxes 1,239 1,985
Excess tax benefit from share-based
payment arrangements (1,958) (2,171)
Other adjustments 1,177 (48)
Changes in operating assets and
liabilities, net of effects from
purchase transactions:
Receivables (11,919) (4,173)
Inventory (10,975) (27,350)
Income taxes payable 20,166 4,917
Other operating assets and liabilities (10,741) 1,653
Net cash provided by operating
activities 67,373 13,439
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, equipment and other
long term assets (26,187) (18,106)
Purchases of investment securities - (5,885)
Cash used in acquisitions (4,418) (24,239)
Net cash used in investing activities (30,605) (48,230)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options
and warrants 1,408 1,988
Excess tax benefit from share-based
payment arrangements 1,958 2,171
Repurchase and retirement of
redeemable common stock - (1,125)
Debt issuance costs (219) (193)
Net (repayments) borrowings of
long-term debt (10,026) 36,773
Net cash (used in) provided by
financing activities (6,879) 39,614
Effect of exchange rate changes on
cash and equivalents (68) -
Net increase in cash and equivalents 29,821 4,823
Cash and equivalents, beginning of period 74,241 4,031
Cash and equivalents, end of period $104,062 $8,854
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Balance Sheets
(In thousands, except share and per share data)
June 30, December 31,
2008 2007
Assets
Current Assets:
Cash and equivalents $104,062 $74,241
Receivables, net 137,564 125,572
Inventory 333,476 320,238
Deferred income taxes 21,364 18,809
Prepaid income taxes - 6,344
Prepaid expenses 8,586 8,088
Total Current Assets 605,052 553,292
Property and Equipment, net 230,363 217,059
Intangibles 917,102 900,832
Other Assets 27,093 21,472
Total Assets $1,779,610 $1,692,655
Liabilities and Stockholders\' Equity
Current Liabilities:
Accounts payable $59,535 $68,871
Accrued expenses 74,267 73,172
Income taxes payable 11,879 -
Deferred revenue 6,106 4,844
Current portion of long-term obligations 18,055 16,936
Total Current Liabilities 169,842 163,823
Long-Term Obligations, Excluding
Current Portion 629,367 641,526
Deferred Income Tax Liability 31,291 25,607
Other Noncurrent Liabilities 9,982 11,922
Commitments and Contingencies
Stockholders\' Equity:
Common stock, $0.01 par value,
500,000,000 shares authorized,
135,513,917 and 134,149,066 shares
issued at June 30, 2008 and
December 31, 2007, respectively. 1,355 1,341
Additional paid-in capital 729,851 705,778
Retained earnings 203,905 142,039
Accumulated other comprehensive income 4,017 619
Total Stockholders\' Equity 939,128 849,777
Total Liabilities and
Stockholders\' Equity $1,779,610 $1,692,655
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
($ in thousands, except per share data)
Three Months Ended June 30,
Operating Highlights 2008 2007
% of % of
Revenue Revenue Growth% Growth
Revenue $484,392 100.0% $233,278 100.0% $251,114 107.6%
Cost of goods sold 264,684 54.6% 128,195 55.0% 136,489 106.5%
Gross margin 219,708 45.4% 105,083 45.0% 114,625 109.1%
Facility and
warehouse expenses 43,802 9.0% 24,634 10.6% 19,168 77.8%
Distribution
expenses 45,326 9.4% 22,213 9.5% 23,113 104.1%
Selling, general
and administrative
expenses 61,759 12.7% 28,130 12.1% 33,629 119.5%
Restructuring
expenses 3,149 0.7% - 0.0% 3,149
Depreciation and
amortization 7,258 1.5% 3,464 1.5% 3,794 109.5%
Operating income 58,414 12.1% 26,642 11.4% 31,772 119.3%
Other (income) expense:
Interest expense, net 8,411 1.7% 2,093 0.9% 6,318 301.9%
Other income, net (451) -0.1% (27) 0.0% (424)1570.4%
Total other expense 7,960 1.6% 2,066 0.9% 5,894 285.3%
Income before
provision for
income taxes 50,454 10.4% 24,576 10.5% 25,878 105.3%
Provision for
income taxes 19,465 4.0% 10,560 4.5% 8,905 84.3%
Net income $30,989 6.4% $14,016 6.0% $16,973 121.1%
Net income per share:
Basic $0.23 $0.13 $0.10 76.9%
Diluted $0.22 $0.12 $0.10 83.3%
Weighted average
common shares
outstanding:
Basic 135,287 107,046 28,241 26.4%
Diluted 140,301 112,494 27,807 24.7%
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
($ in thousands, except per share data )
Six Months Ended June 30,
Operating Highlights 2008 2007
% of % of
Revenue Revenue Growth % Growth
Revenue $976,300 100.0% $468,596 100.0% $507,704 108.3%
Cost of goods sold 533,278 54.6% 256,417 54.7% 276,861 108.0%
Gross margin 443,022 45.4% 212,179 45.3% 230,843 108.8%
Facility and
warehouse expenses 88,304 9.0% 50,244 10.7% 38,060 75.8%
Distribution
expenses 90,095 9.2% 44,388 9.5% 45,707 103.0%
Selling, general
and administrative
expenses 125,862 12.9% 56,862 12.1% 69,000 121.3%
Restructuring
expenses 4,323 0.4% - 0.0% 4,323
Depreciation and
amortization 14,516 1.5% 6,781 1.4% 7,735 114.1%
Operating income 119,922 12.3% 53,904 11.5% 66,018 122.5%
Other (income)
expense:
Interest expense,
net 18,712 1.9% 3,826 0.8% 14,886 389.1%
Other income, net (720) -0.1% (675) -0.1% (45) 6.7%
Total other
expense 17,992 1.8% 3,151 0.7% 14,841 471.0%
Income before
provision for
income taxes 101,930 10.4% 50,753 10.8% 51,177 100.8%
Provision for
income taxes 40,063 4.1% 20,943 4.5% 19,120 91.3%
Net income $61,867 6.3% $29,810 6.4% $32,057 107.5%
Net income per share:
Basic $0.46 $0.28 $0.18 64.3%
Diluted $0.44 $0.27 $0.17 63.0%
Weighted average
common shares
outstanding:
Basic 134,922 106,841 28,081 26.3%
Diluted 140,035 112,247 27,788 24.8%
The following unaudited table reconciles EBITDA to net income:
Three Months Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
(In thousands)
Net income $30,989 $14,016 $61,867 $29,810
Depreciation and amortization 7,927 3,604 15,802 7,056
Interest expense, net 8,411 2,093 18,712 3,826
Provision for income taxes 19,465 10,560 40,063 20,943
Earnings before interest, taxes,
depreciation
and amortization (EBITDA) $66,792 $30,273 $136,444 $61,635
EBITDA as a percentage of revenue 13.8% 13.0% 14.0% 13.2%
We have typically provided a reconciliation of Net income to EBITDA as we
believe it provides investors, security analysts and other interested
parties useful information regarding our results of operations because it
assists in analyzing our performance and the value of our business.
EBITDA provides insight into our profitability trends, and allows
management and investors to analyze our operating results with and
without the impact of depreciation, amortization, interest and income tax
expense. We believe EBITDA is used by security analysts, investors, and
other interested parties in evaluating companies, many of which present
EBITDA when reporting their results.
The following unaudited table compares certain revenue categories:
Three Months Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
(In thousands) (In thousands)
Included in Consolidated Income
Statements of LKQ Corporation
Recycled and related products
and services $159,425 $129,133 $314,287 $258,225
Aftermarket, other new and
refurbished products 241,211 59,161 516,290 122,066
Other 83,756 44,984 145,723 88,305
$484,392 $233,278 $976,300 $468,596
Three Months Six Months
Ended June 30, Ended June 30,
2008 2007 2008 2007
(In thousands) (In thousands)
On a Proforma Basis Assuming
Keystone Automotive Industries, Inc.
included in 2007 Amounts
Recycled and related products
and services $159,425 $129,133 $314,287 $258,225
Aftermarket, other new and
refurbished products 241,211 239,134 516,290 501,125
Other 83,756 44,984 145,723 88,305
$484,392 $413,251 $976,300 $847,655
SOURCE LKQ Corporation
