LKQ Corp (LKQ) Beats on Q1 Earnings & Sales, Raises '21 View

LKQ Corporation LKQ reported adjusted earnings of 94 cents per share in first-quarter 2020, surpassing the Zacks Consensus Estimate of 63 cents. This outperformance was driven by the higher-than-anticipated contribution from all of the company’s segments.

Moreover, the bottom line comes in higher than the year-ago quarter’s profit of 57 cents per share, up 64.9% year on year.
 
This aftermarket auto parts distributor registered quarterly revenues of $3,170.8 million, topping the Zacks Consensus Estimate of $2,952 million. Moreover, the top-line figure climbed 5.7% from the year-ago level of $3,000.9 million. Parts and services organic growth also inched up 0.6% year over year.

Segment Highlights

For the March-end quarter, revenues from the North American segment totaled $1,249.7 million, down from the $1,290.2 million reported in the prior-year period. Nonetheless, EBITDA from the segment came in at $249.2 million, up 17.8% year over year. The reported EBITDA figure also topped the Zacks Consensus Estimate of $206 million.

Revenues from the European segment summed $1,463.5 million for the reported quarter, up from the $1,363.6 million recorded in the year-earlier quarter. The segment’s EBITDA came in at $141 million, jumping 80.1% year over year. The reported EBITDA figure also beat the consensus mark of $97 million.

For the January-March period, revenues and EBITDA from the Specialty segment came in at $459 million and $61.5 million, higher than the year-ago figure of $348.6 million and $32.2 million, respectively. The reported EBITDA surpassed the consensus mark of $40.66 million.

Financial Position

LKQ Corp had cash and cash equivalents of $590.2 million as of Mar 31, 2021, up from the $312.2 million recorded as of Dec 31, 2020. Long-term debt (excluding current portion) amounted to $2,471.7 million as on Mar 31, 2021, down from the $2,812.6 million recorded as of Dec 31, 2020. In addition, as of Mar 31, 2021, LKQ Corp’s balance sheet reflects net debt of $2.1 billion.

During the first quarter, the company generated net cash of $532 million from operations, skyrocketing 169% from the year-ago period. It generated free cash flow of $481 million, up 220% year over year. During the reported quarter, the company repurchased 1.5 million shares of its common stock. Since the inception of its repurchase program, the company has repurchased 18.8 million shares for a total of $526 million.

2021 Outlook

For 2021, the company projects diluted EPS in the range of $2.68-$2.88 per share and adjusted diluted EPS of $3-$3.2 per share, up from the previous estimate of $2.40-$2.60 per share and $2.65-$2.85 per share respectively.

The company envisions generating free cash flow in the range of $850-$950 million.

Zacks Rank & Other Stocks to Consider

LKQ Corp currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the auto sector are Harley-Davidson HOG, CNH Industrial CNHI and BRP Inc. DOOO, all of which sport a Zacks Rank of 1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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