CHICAGO, May 1 /PRNewswire-FirstCall/ -- LKQ Corporation today announced results for its first quarter ended March 31, 2008, with revenue of $491.9 million, net income of $30.9 million and diluted earnings per share of $0.22.
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"We reported record revenue and earnings for the quarter with revenue growth at 109% and net income growth at just over 95%. Our operating margin improved this quarter over the first quarter of 2007 by 90 basis points and, excluding restructuring expenses, by 110 basis points. Our diluted earnings per share for the quarter puts us on track to exceed the earnings guidance that we previously issued by approximately $0.02 per share," said Joe Holsten, President and Chief Executive Officer.
Commenting on business acquisitions, Holsten said, "We continue to be pleased with our progress to date related to combining our aftermarket businesses with Keystone Automotive Industries, Inc. In addition we acquired a heavy truck recycling business in Houston, TX that gives us a solid platform from which to expand into a new type of product line."
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 first quarter of 2008, revenue increased 109.0% to $491.9 million compared with $235.3 million for the first quarter of 2007. Our organic revenue growth for the quarter was 9.0% and was calculated assuming we owned Keystone for the first quarter of 2007. Net income for the quarter increased 95.5% to $30.9 million compared with $15.8 million for the first quarter of 2007. Diluted earnings per share was $0.22 for the quarter compared with $0.14 for the first quarter of 2007.
Revenue from aftermarket collision replacement parts, paint, shop supplies, refurbished bumpers, refurbished wheels and refurbished lighting for the first quarter was $272.3 million.
During the quarter, we recorded $1.2 million of restructuring expenses which were included in operating expenses and are all related to our Keystone acquisition in October 2007.
The weighted average diluted shares outstanding for the first quarter of 2008 was 139.7 million compared to 112.0 million for the first quarter of 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, 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, 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 be approximately 10%, with the balance of revenue growth being the full year impact of 2007 and 2008 business acquisitions. Excluding the effect of any 2008 restructuring expenses we may record related to the Keystone acquisition, we expect full year 2008 net income to be within a range of $106.0 million to $111.0 million and diluted earnings per share to be between $0.75 and $0.79.
We anticipate that net cash provided by operating activities for 2008 will be over $85.0 million. We estimate our full year 2008 capital expenditures related to property and equipment, excluding expenditures for acquiring businesses, will be between $65.0 million to $75.0 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 first quarter 2008 earnings on Thursday, May 1, 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 May 15, 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 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
irinfo@lkqcorp.com
Financial Tables To Follow
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Income
( In thousands, except per share data )
Three Months Ended
March 31,
2008 2007
Revenue $491,908 $235,318
Cost of goods sold 268,594 128,222
Gross margin 223,314 107,096
Facility and warehouse expenses 44,502 25,610
Distribution expenses 44,769 22,175
Selling, general and administrative expenses 64,103 28,732
Restructuring expenses 1,174 -
Depreciation and amortization 7,258 3,317
Operating income 61,508 27,262
Other (income) expense:
Interest expense, net 10,301 1,733
Other income, net (269) (648)
Total other expense 10,032 1,085
Income before provision for income taxes 51,476 26,177
Provision for income taxes 20,598 10,383
Net income $30,878 $15,794
Net income per share:
Basic $0.23 $0.15
Diluted $0.22 $0.14
Weighted average common shares outstanding:
Basic 134,558 106,633
Diluted 139,682 112,004
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Cash Flows
( In thousands )
Three Months Ended March 31,
2008 2007
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $30,878 $15,794
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,875 3,453
Share-based compensation expense 1,303 1,167
Deferred income taxes 399 686
Excess tax benefit from share-based payment
arrangements (1,103) (157)
Other adjustments (67) 3
Changes in operating assets and liabilities,
net of effects from purchase transactions:
Receivables (8,338) (8,167)
Inventory (8,772) (10,807)
Income taxes payable 18,625 7,453
Other operating assets and liabilities (8,448) 1,005
Net cash provided by operating
activities 32,352 10,430
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, equipment and other
long term assets (13,196) (9,080)
Cash used in acquisitions (4,186) (14,574)
Net cash used in investing activities (17,382) (23,654)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and
warrants 939 201
Excess tax benefit from share-based payment
arrangements 1,103 157
Repurchase and retirement of redeemable
common stock - (1,125)
Debt issuance costs (173) -
Net (repayments) borrowings of long-term debt (5,549) 15,841
Net cash (used in) provided by financing
activities (3,680) 15,074
Effect of exchange rate changes on cash and
equivalents (121) -
Net increase in cash and equivalents 11,169 1,850
Cash and equivalents, beginning of period 74,241 4,031
Cash and equivalents, end of period $85,410 $5,881
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Balance Sheets
(In thousands, except share and per share data)
March 31, December 31,
2008 2007
Assets
Current Assets:
Cash and equivalents $85,410 $74,241
Receivables, net 133,894 125,572
Inventory 331,427 320,238
Deferred income taxes 19,731 18,809
Prepaid income taxes - 6,344
Prepaid expenses 9,504 8,088
Total Current Assets 579,966 553,292
Property and Equipment, net 224,292 217,059
Intangibles 917,483 900,832
Other Assets 21,274 21,472
Total Assets $1,743,015 $1,692,655
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $62,963 $68,871
Accrued expenses 73,154 73,172
Income taxes payable 11,181 -
Deferred revenue 5,343 4,844
Current portion of long-term obligations 17,452 16,936
Total Current Liabilities 170,093 163,823
Long-Term Obligations, Excluding Current
Portion 634,151 641,526
Deferred Income Tax Liability 26,862 25,607
Other Noncurrent Liabilities 10,011 11,922
Commitments and Contingencies
Stockholders' Equity:
Common stock, $0.01 par value, 500,000,000
shares authorized, 135,381,538 and
134,149,066 shares issued at March 31, 2008
and December 31, 2007, respectively. 1,354 1,341
Additional paid-in capital 727,117 705,778
Retained earnings 172,917 142,039
Accumulated other comprehensive income 510 619
Total Stockholders' Equity 901,898 849,777
Total Liabilities and Stockholders'
Equity $1,743,015 $1,692,655
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
( $ in thousands, except per share data )
Three Months Ended March 31,
Operating Highlights 2008 2007
% of % of
Revenue Revenue Growth % Growth
Revenue $491,908 100.0% $235,318 100.0% $256,590 109.0%
Cost of goods sold 268,594 54.6% 128,222 54.5% 140,372 109.5%
Gross margin 223,314 45.4% 107,096 45.5% 116,218 108.5%
Facility and
warehouse expenses 44,502 9.0% 25,610 10.9% 18,892 73.8%
Distribution
expenses 44,769 9.1% 22,175 9.4% 22,594 101.9%
Selling, general
and administrative
expenses 64,103 13.0% 28,732 12.2% 35,371 123.1%
Restructuring
expenses 1,174 0.2% - 0.0% 1,174 -
Depreciation and
amortization 7,258 1.5% 3,317 1.4% 3,941 118.8%
Operating income 61,508 12.5% 27,262 11.6% 34,246 125.6%
Other (income) expense:
Interest expense,
net 10,301 2.1% 1,733 0.7% 8,568 494.4%
Other income, net (269) -0.1% (648) -0.3% 379 -58.5%
Total other expense 10,032 2.0% 1,085 0.5% 8,947 824.6%
Income before
provision for
income taxes 51,476 10.5% 26,177 11.1% 25,299 96.6%
Provision for
income taxes 20,598 4.2% 10,383 4.4% 10,215 98.4%
Net income $30,878 6.3% $15,794 6.7% $15,084 95.5%
Net income per share:
Basic $0.23 $0.15 $0.08 53.3%
Diluted $0.22 $0.14 $0.08 57.1%
Weighted average
common shares
outstanding:
Basic 134,558 106,633 27,925 26.2%
Diluted 139,682 112,004 27,678 24.7%
The following unaudited table reconciles EBITDA to net income:
Three Months
Ended March 31,
2008 2007
(In thousands)
Net income $30,878 $15,794
Depreciation and amortization 7,875 3,453
Interest expense, net 10,301 1,733
Provision for income taxes 20,598 10,383
Earnings before interest, taxes, depreciation
and amortization (EBITDA) $69,652 $31,363
EBITDA as a percentage of revenue 14.2% 13.3%
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.
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