On July 25, 2024, LKQ Corp (LKQ, Financial) released its 8-K filing announcing its financial results for the second quarter of 2024. LKQ Corp, a global distributor of non-OEM automotive parts, reported revenue of $3.7 billion, an 8% increase compared to the same period in 2023. However, this figure fell short of the analyst estimate of $3.87 billion. The company reported a diluted EPS of $0.70, while the adjusted diluted EPS was $0.98, surpassing the analyst estimate of $0.95.
Company Overview
LKQ Corp (LKQ, Financial) is a leading global distributor of non-OEM automotive parts. Initially formed in 1998 as a consolidator of auto salvage operations in the United States, the company has expanded its scope to include the distribution of new mechanical and collision parts, specialty auto equipment, and remanufactured and recycled parts in both Europe and North America. LKQ maintains its auto salvage business and owns over 70 LKQ pick-your-part junkyards. The company purchases over 300,000 salvage automobiles annually for parts resale and operates approximately 1,700 facilities globally.
Performance and Challenges
Despite the revenue growth, LKQ Corp faced significant challenges during the quarter. Lower repairable claims in North America and difficult macroeconomic conditions in Europe led to declines in overall volumes. This impacted the company's performance, as highlighted by Justin Jude, President and CEO, who noted, "Our second quarter performance did not meet expectations as lower repairable claims in North America and difficult macroeconomic conditions in Europe led to declines in overall volumes."
Financial Achievements
LKQ Corp's financial achievements in the second quarter include an operating cash flow of $213 million and free cash flow of $133 million. The company also repurchased $125 million of its shares and approved a dividend of $0.30 per share to be paid in the third quarter of 2024. These achievements are crucial for maintaining shareholder value and ensuring the company's financial stability amidst market challenges.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | % Change |
|---|---|---|---|
| Revenue | $3.7 billion | $3.4 billion | 7.6% |
| Net Income | $185 million | $281 million | -34.2% |
| Diluted EPS | $0.70 | $1.05 | -33.3% |
| Adjusted Diluted EPS | $0.98 | $1.09 | -10.1% |
Balance Sheet and Cash Flow
As of June 30, 2024, LKQ Corp reported total assets of $15.21 billion, with total liabilities and stockholders' equity also at $15.21 billion. The company's balance sheet reflected total debt of $4.3 billion and a total leverage ratio of 2.3x EBITDA. Cash flow from operations for the first half of 2024 was $466 million, with free cash flow at $320 million.
Stock Repurchase and Dividend Programs
During the second quarter, LKQ Corp returned over $200 million to its shareholders by repurchasing $125 million worth of shares and distributing approximately $80 million in cash dividends. Since initiating the stock repurchase program in late October 2018, the company has repurchased approximately 59 million shares for a total of $2.6 billion through June 30, 2024.
Outlook and Strategic Focus
Looking ahead, LKQ Corp has updated its annual guidance, projecting a continuation of revenue headwinds for the remainder of 2024. The company has lowered its full-year outlook for organic revenue growth, diluted EPS, adjusted diluted EPS, operating cash flow, and free cash flow. Despite these challenges, LKQ remains focused on its strategic pillars of profitable revenue growth, margin enhancement, and cash flow generation.
For more detailed financial information, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from LKQ Corp for further details.
