LKQ Corp. raises full-year 2021 outlook

LKQ Corp., which offers a broad range of recycled and aftermarket parts, replacement systems, components, equipment and services to repair and accessorize automobiles, trucks and recreational and performance vehicles, has reported third-quarter 2021 results that it says reflect continued strength in the key metrics of total revenue, segment profitability and free cash flow. The company, which has operations in North America, Europe and Taiwan, also revised its outlook for the year, updating its diluted earnings per share (EPS), adjusted diluted EPS, free cash flow and full-year 2021 segment earnings before interest, taxes, depreciation and amortization (EBITDA) for Europe.

"Our operating excellence initiatives continue to drive record results for LKQ; in the quarter, we recorded the highest third-quarter EPS and segment EBITDA margin in the company's history,” says Dominick Zarcone, president and chief executive officer of the company, which is headquartered in Chicago. “We are particularly pleased with the results of our Europe segment, as its third-quarter margin of 11.5 percent is the highest in over nine years. This performance validates our confidence in the 1 LKQ Europe program, the strategic initiatives that underpin it and the capabilities of the team driving the implementation.”

LKQ’s revenue for the third quarter totaled $3.3 billion, an increase of 8.2 percent compared with $3 billion in the third quarter of 2020. The company says the increase reflects the annualization of the pandemic impact during the third quarter of 2020. For the third quarter of 2021, parts and services organic revenue increased 4 percent, while the net impact of acquisitions and divestitures increased revenue 0.5 percent and foreign exchange rates increased revenue 1.5 percent for a total parts and services revenue increase of 6.1 percent. Other revenue grew 45.3 percent in the third quarter of 2021, driven by higher scrap steel and precious metals prices, LKQ reports.

Net income for the third quarter of 2021 was $284 million versus $193 million for the same period in 2020, an increase of 46.8 percent. Diluted earnings per share for the recently completed quarter increased 50 percent relative to 2020 at 96 cents compared with 64 cents.

On an adjusted basis, LKQ’s net income in the third quarter was $300 million compared with $228 million in the same period of 2020, a 31.6 percent increase. Adjusted diluted earnings per share for the third quarter totaled $1.02 versus 75 cents in the third quarter of 2020, a 36 percent increase.

Cash flow from operations totaled $429 million during the third quarter of 2021, while cash flow from operations for the nine months ended Sept. 30 was $1.4 billion.

Oct. 26, 2021, LKQ’s board of directors declared the company's first-ever quarterly cash dividend. The quarterly dividend of 25 cents per share will be paid Dec. 2 to stockholders of record at the close of business Nov. 11.

Varun Laroyia, executive vice president and chief financial officer, says, “We are increasing our full-year 2021 outlook—a clear testament to our teams' ability to drive operational excellence initiatives in the midst of an operating environment that includes challenging inflationary and supply chain pressures. The announcement of our inaugural quarterly dividend reflects our confidence in our strategy and strength of our business and underscores our commitment to deliver long-term value to stockholders while continuing to allow for the repurchase of shares.”

For 2021, LKQ says its management is anticipating this revised outlook:

• diluted EPS attributable to LKQ stockholders in the range of $3.48 to $3.58;
• adjusted diluted EPS attributable to LKQ stockholders in the range of $3.78 to $3.88;
• free cash flow in the range of $1.15 billion to $1.3 billion; and
• full year 2021 segment EBITDA margin targets for Europe updated to a range of 9.8 percent to 10.3 percent.