LKQ Corp (LKQ) Reports Q3 2023 Earnings: Revenue Up 15%, Adjusted EPS Down 11.3%
Q3 2023 revenue increased by 15% YoY to $3.6 billion, driven by parts and services organic revenue growth of 3.0%.
Adjusted diluted EPS for Q3 2023 was $0.86, down 11.3% from the same period in 2022.
Operating cash flow for the quarter stood at $441 million, with free cash flow of $344 million.
Company completed the acquisition of Uni-Select Inc. and divestiture of GSF Car Parts Limited.
On October 26, 2023, LKQ Corp (NASDAQ:LKQ) released its third quarter 2023 financial results. The company reported a 15% increase in revenue to $3.6 billion compared to the same period in 2022. Parts and services organic revenue saw a 3.0% increase. However, adjusted diluted EPS for the quarter was $0.86, marking an 11.3% decrease from the same period in 2022.
Financial Highlights
Net income for the third quarter of 2023 was $207 million, compared to $261 million for the same period in 2022. The decrease in diluted earnings per share in the third quarter of 2023 was attributed to unusual items in Europe related to a legacy value-added tax issue related to Italian operations and strikes in Germany, fluctuations in commodity prices, higher interest rates and average debt balances, and continued underperformance of the Specialty segment.
Cash flow from operations and free cash flow were $441 million and $344 million, respectively, for the third quarter of 2023. As of September 30, 2023, the balance sheet reflected total debt of $4.4 billion and total leverage, as defined in the company's credit facility, was 2.3x EBITDA.
Dividend and Acquisition Updates
LKQ Corp (NASDAQ:LKQ) increased its dividend by 9% to $0.30 per share, approved to be paid in the fourth quarter of 2023. The company also completed the acquisition of Uni-Select Inc. on August 1, 2023, and the divestiture of GSF Car Parts Limited on October 25, 2023.
2023 Outlook
For 2023, management updated the outlook due to underperformance in the third quarter and expected fourth quarter effects from additional strike activity in Germany, the anticipated dilution from the Uni-Select acquisition, soft commodity prices, and a continuation of difficult market conditions for the Specialty and Self Service segments. The company is now expecting organic revenue growth for parts and services to be between 4.75% and 5.75%, and adjusted diluted EPS to be between $3.68 and $3.82.
Explore the complete 8-K earnings release (here) from LKQ Corp for further details.
This article first appeared on GuruFocus.
