updated 2/24/2011 6:15:41 AM ET 2011-02-24T11:15:41

  • Revenue of $2.5 billion for the year
  • EPS of $1.15 for the year
  • Provides 2011 guidance

CHICAGO, Feb. 24, 2011 (GLOBE NEWSWIRE) -- LKQ Corporation (Nasdaq:LKQX) today announced results for its fourth quarter and full year ended December 31, 2010. Income from continuing operations for the fourth quarter was $41.3 million and diluted earnings per share from continuing operations was $0.28. For the full year, income from continuing operations was $167.1 million and diluted earnings per share from continuing operations was $1.15.

"I am very pleased with the quarter and the year, as we continued our stellar financial performance, with revenue for the year growing 20.6% to $2.5 billion," commented Joseph Holsten, Vice Chairman and Co-Chief Executive Officer of LKQ Corporation. "We continued to see increased usage of alternative collision parts in 2010, which has allowed us to grow despite challenging economic conditions. Our organic revenue growth rate for parts and services was 7.0% during the fourth quarter."

Mr. Holsten added, "We also continued to grow through acquisitions. In 2010 we completed 20 acquisitions, which helped us to continue to build out our North American footprint and to add depth and breadth to our product offering. Revenue growth attributable to acquisitions was 10.7% in the fourth quarter of 2010. I expect 2011 will be another busy year for acquisitions."  

2010 Reported Results

For the fourth quarter of 2010, revenue was $674 million compared with $556 million for the fourth quarter of 2009, an increase of 21.3%. Income from continuing operations for the quarter was $41.3 million compared with $36.5 million in the prior year, an increase of 13.2%. The results of the fourth quarter of 2009 included an after tax gain on bargain purchase of $4.3 million. 

For the full year of 2010, revenue was $2.47 billion compared with $2.05 billion for the full year of 2009, an increase of 20.6%. Income from continuing operations for the full year was $167.1 million compared with $127.1 million for the prior year, an increase of 31.4%. Income from continuing operations for the full year included $0.7 million, or $0.4 million after tax, of restructuring expenses compared to $2.6 million, or $1.6 million after tax, for the prior year. The results of 2009 also included an after tax gain on bargain purchase of $4.3 million.

Balance Sheet and Liquidity

As of December 31, 2010, LKQ's balance sheet reflected cash and equivalents of $95.7 million and long-term debt (including the current portion) of $601.0 million. The Company had no borrowings on its $100 million revolving credit facility although availability was reduced to $73 million due to outstanding letters of credit. 

Business Acquisitions

During the fourth quarter of 2010, LKQ acquired a total of eight businesses including a wholesale recycled products business in Arkansas and a self serve business with two facilities in southern California. These acquisitions were in addition to the previously announced fourth quarter acquisitions of Cross Canada, PROFormance Power Train, SPI Distribution, Best Bumper, a wholesale recycling business in Virginia, and a self service recycling operation in Colorado. Since the beginning of 2011, the Company has completed four additional acquisitions including ATK Vege, an engine remanufacturing business headquartered in Texas; an aftermarket distributor of heating and cooling products located in the Midwest; a heavy duty truck recycling business located in Texas; and a recycled parts business in Milwaukee, Wisconsin.

Company Outlook

"We continue to see opportunities for organic growth through increased use of alternative parts, an improving economy, additional geographic expansion and an enhanced product offering," said Robert Wagman, LKQ's President and Co-Chief Executive Officer. "Revenue from parts and services is anticipated to grow organically in 2011 at a rate of 6% to 8%."

Based on current conditions and excluding restructuring expenses and any gains or losses related to acquisitions or divestitures, LKQ anticipates full year 2011 income from continuing operations will be in the range of $194 million to $208 million and diluted earnings per share from continuing operations will be in the range of $1.31 to $1.39.

Net cash provided by operating activities for 2011 is projected to be approximately $195 million.  The Company estimates capital expenditures related to property and equipment will be between $85 million to $95 million. 

Quarterly Conference Call

The Company will host a conference call for the investment community at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) on February 24, 2011 and a simultaneous audio webcast. To access the investor conference call, please dial (877) 407-0315. International access to the call may be obtained by dialing (201) 689-8501. The audio webcast can be accessed via the Company's website at www.lkqcorp.com in the Investor Relations section.

A replay of the conference call will be available by telephone at (877) 660-6853 or (201) 612-7415 for international calls. The telephone replay will require you to enter -- account: 286, conference ID: 365353. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through March 23, 2011. Please allow approximately two hours after the live presentation before attempting to access the replay.

About LKQ Corporation

LKQ Corporation is the largest nationwide provider of aftermarket and recycled collision replacement parts, and refurbished collision replacement products such as wheels, bumper covers and lights, and a leading provider of mechanical replacement parts used to repair light vehicles. LKQ operates more than 325 facilities, offering its customers a broad range of replacement systems, components, and parts to repair automobiles and light, medium and heavy-duty trucks.

Forward Looking Statements

The statements in this press release that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include 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:

  • uncertainty as to changes in U.S. general economic activity and the impact of these changes on the demand for our products and our ability to obtain financing for operations;
  • fluctuations in the pricing of new original equipment manufacturer ("OEM") replacement parts;
  • the availability and cost of our inventory;
  • variations in vehicle accident rates or miles driven;
  • changes in state or federal laws or regulations affecting our business;
  • changes in the types of replacement parts that insurance carriers will accept in the repair process;
  • changes in the demand for our products and the supply of our inventory due to severity of weather and seasonality of weather patterns;
  • increasing competition in the automotive parts industry;
  • 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;
  • declines in the values of our assets;
  • fluctuations in fuel and other commodity prices;
  • fluctuations in the prices of scrap metal and other metals;
  • our ability to develop and implement the operational and financial systems needed to manage our operations;
  • our ability to integrate and successfully operate acquired companies and any companies acquired in the future and the risks associated with these companies; 
  • claims by OEMs or others that attempt to restrict or eliminate the sale of aftermarket products:
  • termination of business relationships with insurance companies that promote the use of our products;
  • product liability claims by the end users of our products or claims by other parties who we have promised to indemnify for product liability matters;
  • currency fluctuations in the U.S. dollar versus the Canadian dollar, the Mexican peso and the Taiwan dollar;
  • instability in regions in which we operate, such as Mexico, that can affect our supply of certain products; and
  • other risks that are described in our Form 10-K filed February 26, 2010 and in other reports filed by us from time to time with the Securities and Exchange Commission.

You should not place undue reliance on these forward-looking statements.  All of these forward-looking statements are based on our expectations as of the date of this press release.  We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Income
(In thousands, except per share data)
         
  Three Months Ended Year Ended
  December 31, December 31,
  2010 2009 2010 2009
         
Revenue  $ 674,063  $ 555,905  $ 2,469,881  $ 2,047,942
Cost of goods sold  386,563  303,015  1,376,401  1,120,129
Gross margin  287,500  252,890  1,093,480  927,813
Facility and warehouse expenses  63,868  55,955  233,993  201,056
Distribution expenses  58,578  49,311  212,718  181,919
Selling, general and administrative expenses  81,791  78,035  310,228  276,723
Restructuring expenses  75  644  668  2,554
Depreciation and amortization  10,056  9,220  37,996  34,113
Operating income  73,132  59,725  297,877  231,448
Other expense (income):        
Interest expense, net  6,699  7,817  28,316  30,899
Gain on bargain purchase  --   (4,339)  --   (4,339)
Other expense (income), net  9  (259)  (564)  (429)
Total other expense, net  6,708  3,219  27,752  26,131
Income from continuing operations before provision for income taxes  66,424  56,506  270,125  205,317
Provision for income taxes   25,096  19,983  103,007  78,180
Income from continuing operations   41,328  36,523  167,118  127,137
Discontinued operations:        
(Loss) income from discontinued operations, net of taxes  --   (1,790)  224  (2,088)
Gain on sale of discontinued operations, net of taxes  --   2,472  1,729  2,472
Income from discontinued operations  --   682  1,953  384
Net income  $ 41,328  $ 37,205  $ 169,071  $ 127,521
         
Basic earnings per share (1):        
Income from continuing operations  $ 0.29  $ 0.26  $ 1.17  $ 0.90
Income from discontinued operations 0.00 0.00 0.01 0.00
Total  $ 0.29  $ 0.26  $ 1.18  $ 0.91
         
Diluted earnings per share (1):        
Income from continuing operations  $ 0.28  $ 0.25  $ 1.15  $ 0.88
Income from discontinued operations 0.00 0.00 0.01 0.00
Total  $ 0.28  $ 0.26  $ 1.16  $ 0.89
         
Weighted average common shares outstanding:        
Basic  144,762  141,384  143,271  140,541
Diluted  147,056  144,598  145,857  143,990
         
(1) The sum of the individual earnings per share amounts may not equal the total due to rounding.
 
 
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Balance Sheets
(In thousands, except share and per share data)
     
  December 31, December 31,
  2010 2009
Assets    
     
Current Assets:    
Cash and equivalents  $ 95,689  $ 108,906
Receivables, net  191,085  152,443
Inventory  492,688  385,686
Deferred income taxes  32,506  31,847
Prepaid income taxes  10,923  4,663
Prepaid expenses  13,985  9,603
Assets of discontinued operations  --   9,720
     
 Total Current Assets  836,876  702,868
     
Property and Equipment, net  331,312  289,902
Intangibles  1,102,275  1,006,022
Other Assets  29,046  21,329
     
 Total Assets  $ 2,299,509  $ 2,020,121
     
Liabilities and Stockholders' Equity    
     
Current Liabilities:    
Accounts payable  $ 76,437  $ 51,300
Accrued expenses  84,028  94,027
Deferred revenue  9,224  9,259
Current portion of long-term obligations   52,888  10,063
Liabilities of discontinued operations  2,744  3,832
     
Total Current Liabilities  225,321  168,481
     
Long-Term Obligations, Excluding Current Portion  548,066  592,982
Deferred Income Tax Liabilities  66,059  52,209
Other Noncurrent Liabilities  45,902  27,015
     
Commitments and Contingencies    
     
Stockholders' Equity:    
Common stock, $0.01 par value, 500,000,000 shares authorized, 145,466,575 and 142,004,797 shares issued and outstanding at December 31, 2010 and December 31, 2009, respectively  1,455  1,420
Additional paid-in capital  869,798  815,952
Retained earnings  538,530  369,459
Accumulated other comprehensive loss  4,378  (7,397)
     
Total Stockholders' Equity  1,414,161  1,179,434
     
Total Liabilities and Stockholders' Equity  $ 2,299,509  $ 2,020,121
 
 
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Cash Flows
(In thousands)
   
  Year Ended
  December 31,
  2010 2009
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income  $ 169,071  $ 127,521
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization  41,428  38,062
Stock-based compensation expense  9,974  7,283
Deferred income taxes  8,963  5,882
Excess tax benefit from share-based payments  (15,000)  (9,628)
Gain on sale of discontinued operations  (2,744)  (3,924)
Gain on bargain purchase  --   (4,339)
Other  2,697  6,674
Changes in operating assets and liabilities, net of effects from acquisitions and divestitures:    
Receivables  (12,309)  (384)
Inventory  (67,795)  (20,428)
Prepaid income taxes/income taxes payable  7,492  24,111
Accounts payable  10,156  (18,067)
Other operating assets and liabilities  7,250  11,239
Net cash provided by operating activities  159,183  164,002
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment  (61,438)  (55,870)
Proceeds from sales of property and equipment  1,441  1,070
Proceeds from sales of businesses, net of cash sold  11,992  17,477
Cash used in acquisitions, net of cash acquired  (143,578)  (65,171)
Net cash used in investing activities  (191,583)  (102,494)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from exercise of stock options  13,962  8,247
Excess tax benefit from share-based payments  15,000  9,628
Debt issuance costs  (419)  (310)
Net repayments under line of credit  --   (6,736)
Repayments of long-term debt  (9,581)  (43,994)
Net cash provided by (used in) financing activities  18,962  (33,165)
     
Effect of exchange rate changes on cash and equivalents  221  1,496
     
Net (decrease) increase in cash and equivalents  (13,217)  29,839
     
Cash and equivalents, beginning of period  108,906  79,067
     
Cash and equivalents, end of period  $ 95,689  $ 108,906
 
 
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
( In thousands, except per share data )
             
  Three Months Ended December 31,
Operating Highlights 2010 2009    
    % of   % of    
    Revenue   Revenue Change % Change
Revenue  $ 674,063 100.0%  $ 555,905 100.0%  $ 118,158 21.3%
Cost of goods sold  386,563 57.3%  303,015 54.5%  83,548 27.6%
Gross margin  287,500 42.7%  252,890 45.5%  34,610 13.7%
Facility and warehouse expenses  63,868 9.5%  55,955 10.1%  7,913 14.1%
Distribution expenses  58,578 8.7%  49,311 8.9%  9,267 18.8%
Selling, general and administrative expenses  81,791 12.1%  78,035 14.0%  3,756 4.8%
Restructuring expenses  75 0.0%  644 0.1%  (569) -88.4%
Depreciation and amortization  10,056 1.5%  9,220 1.7%  836 9.1%
Operating income  73,132 10.8%  59,725 10.7%  13,407 22.4%
Other expense (income):          
Interest expense, net  6,699 1.0%  7,817 1.4%  (1,118) -14.3%
Gain on bargain purchase  --  0.0%  (4,339) -0.8%  4,339 n/m
Other expense (income), net  9 0.0%  (259) 0.0%  268 n/m
Total other expense, net  6,708 1.0%  3,219 0.6%  3,489 108.4%
Income from continuing operations before provision for income taxes  66,424 9.9%  56,506 10.2%  9,918 17.6%
Provision for income taxes   25,096 3.7%  19,983 3.6%  5,113 25.6%
Income from continuing operations   41,328 6.1%  36,523 6.6%  4,805 13.2%
Discontinued operations:          
Loss from discontinued operations, net of taxes  --  0.0%  (1,790) -0.3%  1,790 n/m
Gain on sale of discontinued operations, net of taxes  --  0.0%  2,472 0.4%  (2,472) n/m
Income from discontinued operations  --  0.0%  682 0.1%  (682) n/m
Net income  $ 41,328 6.1%  $ 37,205 6.7%  $ 4,123 11.1%
             
Basic earnings per share (1):          
Income from continuing operations  $ 0.29    $ 0.26    $ 0.03 11.5%
Income from discontinued operations 0.00   0.00   0.00 n/m
Total  $ 0.29    $ 0.26    $ 0.03 11.5%
             
Diluted earnings per share (1):          
Income from continuing operations  $ 0.28    $ 0.25    $ 0.03 12.0%
Income from discontinued operations 0.00   0.00   0.00 n/m
Total  $ 0.28    $ 0.26    $ 0.02 7.7%
             
Weighted average common shares outstanding:      
Basic  144,762    141,384    3,378 2.4%
Diluted  147,056    144,598    2,458 1.7%
             
(1) The sum of the individual earnings per share amounts may not equal the total due to rounding.
 
 
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
(In thousands, except per share data)
             
  Year Ended December 31,
Operating Highlights 2010 2009    
    % of   % of    
    Revenue   Revenue Change % Change
Revenue  $ 2,469,881 100.0%  $ 2,047,942 100.0%  $ 421,939 20.6%
Cost of goods sold  1,376,401 55.7%  1,120,129 54.7%  256,272 22.9%
Gross margin  1,093,480 44.3%  927,813 45.3%  165,667 17.9%
Facility and warehouse expenses  233,993 9.5%  201,056 9.8%  32,937 16.4%
Distribution expenses  212,718 8.6%  181,919 8.9%  30,799 16.9%
Selling, general and administrative expenses  310,228 12.6%  276,723 13.5%  33,505 12.1%
Restructuring expenses  668 0.0%  2,554 0.1%  (1,886) -73.8%
Depreciation and amortization  37,996 1.5%  34,113 1.7%  3,883 11.4%
Operating income  297,877 12.1%  231,448 11.3%  66,429 28.7%
Other expense (income):            
Interest expense, net  28,316 1.1%  30,899 1.5%  (2,583) -8.4%
Gain on bargain purchase  --  0.0%  (4,339) -0.2%  4,339 n/m
Other income, net  (564) 0.0%  (429) 0.0%  (135) 31.5%
Total other expense, net  27,752 1.1%  26,131 1.3%  1,621 6.2%
Income from continuing operations before provision for income taxes  270,125 10.9%  205,317 10.0%  64,808 31.6%
Provision for income taxes   103,007 4.2%  78,180 3.8%  24,827 31.8%
Income from continuing operations   167,118 6.8%  127,137 6.2%  39,981 31.4%
Discontinued operations:            
Income (loss) from discontinued operations, net of taxes  224 0.0%  (2,088) -0.1%  2,312 n/m
Gain on sale of discontinued operations, net of taxes  1,729 0.1%  2,472 0.1%  (743) -30.1%
Income from discontinued operations  1,953 0.1%  384 0.0%  1,569 408.6%
Net income  $ 169,071 6.8%  $ 127,521 6.2%  $ 41,550 32.6%
             
Basic earnings per share (1):            
Income from continuing operations  $ 1.17    $ 0.90    $ 0.27 30.0%
Income from discontinued operations 0.01   0.00   0.01 n/m
Total  $ 1.18    $ 0.91    $ 0.27 29.7%
             
Diluted earnings per share (1):            
Income from continuing operations  $ 1.15    $ 0.88    $ 0.27 30.7%
Income from discontinued operations 0.01   0.00   0.01 n/m
Total  $ 1.16    $ 0.89    $ 0.27 30.3%
             
Weighted average common shares outstanding:            
Basic  143,271    140,541    2,730 1.9%
Diluted  145,857    143,990    1,867 1.3%
             
(1) The sum of the individual earnings per share amounts may not equal the total due to rounding.
 
 
 The following unaudited table reconciles income from continuing operations to EBITDA: 
         
  Three Months Ended Year Ended
  December 31, December 31,
  2010 2009 2010 2009
  (In thousands)
         
Income from continuing operations   $ 41,328  $ 36,523  $ 167,118  $ 127,137
Depreciation and amortization  11,039 10,072 41,428 37,450
Interest expense, net   6,699  7,817 28,316 30,899
Provision for income taxes   25,096  19,983 103,007 78,180
         
Earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations   $ 84,162  $ 74,395  $ 339,869  $ 273,666
         
EBITDA as a percentage of revenue  12.5% 13.4% 13.8% 13.4%

We provide a reconciliation of Income from Continuing Operations to EBITDA as we believe it offers investors, securities 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 securities analysts, investors, and other interested parties in evaluating companies, many of which present EBITDA when reporting their results. EBITDA should not be construed as an alternative to operating income, net income or net cash provided by (used in) operating activities, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report EBITDA information calculate EBITDA in the same manner as we do and, accordingly, our calculation is not necessarily comparable to similarly named measures of other companies and may not be an appropriate measure for performance relative to other companies.

The following unaudited tables compare certain revenue categories:
         
  Three Months Ended    
  December 31,    
  2010 2009 Change % Change
  (In thousands)    
Included in Consolidated Statements of Income        
of LKQ Corporation        
         
Recycled and related products and services  $ 230,141  $ 200,972  $ 29,169 14.5%
Aftermarket, other new and refurbished products 342,555 293,204 49,351 16.8%
Parts and services 572,696 494,176 78,520 15.9%
Other  101,367 61,729 39,638 64.2%
Total  $ 674,063  $ 555,905  $ 118,158 21.3%
         
Revenue changes by category for the three months ended December 31, 2010 vs. 2009:
       
  Revenue Change Attributable to:  
  Acquisition Organic Foreign

Exchange
% Change
         
Recycled and related products and services 8.2% 6.1% 0.2% 14.5%
Aftermarket, other new and refurbished products 9.1% 7.7% 0.1% 16.8%
Parts and services 8.7% 7.0% 0.1% 15.9%
Other  26.7% 37.4% 0.1% 64.2%
Total 10.7% 10.4% 0.1% 21.3%
         
  Year Ended    
  December 31,    
  2010 2009 Change % Change
  (In thousands)    
Included in Consolidated Statements of Income        
of LKQ Corporation        
         
Recycled and related products and services  $ 888,320  $ 749,012  $ 139,308 18.6%
Aftermarket, other new and refurbished products 1,236,806 1,093,157 143,649 13.1%
Parts and services 2,125,126 1,842,169 282,957 15.4%
Other  344,755 205,773 138,982 67.5%
Total  $ 2,469,881  $ 2,047,942  $ 421,939 20.6%
         
Revenue changes by category for the year ended December 31, 2010 vs. 2009:
         
  Revenue Change Attributable to:  
  Acquisition Organic Foreign

Exchange
% Change
         
Recycled and related products and services 13.8% 4.2% 0.5% 18.6%
Aftermarket, other new and refurbished products 4.6% 8.2% 0.3% 13.1%
Parts and services 8.3% 6.6% 0.4% 15.4%
Other  15.2% 52.2% 0.2% 67.5%
Total 9.0% 11.2% 0.4% 20.6%
 
 
 Results of discontinued operations are as follows: 
         
  Three Months Ended Year Ended
  December 31, December 31,
  2010 2009 2010 2009
  (In thousands)
         
Revenue   $ --  $ 3,104  $ 686  $ 23,957
         
(Loss) income before income tax (benefit) provision   --  (2,841)  355  (3,314)
Income tax (benefit) provision   --  (1,051)  131  (1,226)
         
(Loss) income from discontinued operations, net of taxes, before gain on sale of discontinued operations   --  (1,790)  224  (2,088)
         
Gain on sale of discontinued operations, net of taxes   --  2,472  1,729  2,472
         
Income from discontinued operations, net of taxes   $ --  $ 682  $ 1,953  $ 384
         
The year ended December 31, 2009 include $3.5 million ($2.2 million, net of tax) in fixed asset impairment related to the discontinued operations.
         
The three months and year ended December 31, 2009, include $3.7 million ($2.3 million, net of tax) in restructuring expenses related to the discontinued operations.
CONTACT: Investors and Analysts:
         John Quinn
         EVP and Chief Financial Officer
         (312) 621-1950
         
         General Media Queries:
         LKQ Corporation
         Investor Relations Department
         (312) 621-1950

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