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LKQ Corp's (LKQ) Q3 Earnings Surpass Estimates, Increase Y/Y

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Zacks Equity Research
·3 min read
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LKQ Corporation LKQ reported adjusted diluted earnings of 75 cents per share in third-quarter 2020, surpassing the Zacks Consensus Estimate of 52 cents.
 
This remarkable outperformance was driven by the higher-than-anticipated revenues from the parts and services segment in North America and Europe. Revenues from the North American and European markets came in at $1,007 million and $1,479.2 million, respectively, beating the Zacks Consensus Estimate of $994 million and $1,408 million. Moreover, the bottom line comes in higher than the year-ago quarter’s profit of 61 cents per share, up 23% year on year.

This aftermarket auto parts distributor registered quarterly revenues of $3,047.7 million, topping the Zacks Consensus Estimate of $2,941 million. However, the top-line figure decreased 3.2% from the year-ago level of $3,147.7 million. Parts and services organic growth also declined 4.5% year over year.

LKQ Corporation Price, Consensus and EPS Surprise

LKQ Corporation Price, Consensus and EPS Surprise
LKQ Corporation Price, Consensus and EPS Surprise

LKQ Corporation price-consensus-eps-surprise-chart | LKQ Corporation Quote

Segment Highlights

For the September-end quarter, revenues from the North American segment totaled $1,007 million, down from the $1,145.4 million reported in the prior-year quarter. EBITDA from the segment came in at $204.9 million, increasing 23.2% year over year.

Revenues from the European segment summed $1,479.2 million for the reported quarter, up from the $1,446.4 million recorded in the prior-year quarter. EBITDA from the segment came in at $136.2 million, up 9.2% year over year.

For the July-September period, revenues and EBITDA from the Specialty segment came in at $399.6 million and $48.3 million, higher than the year-ago respective figure of $394.2 million and $45.5 million.

Financial Position

LKQ Corp. had cash and cash equivalents of $421.4 million as of Sep 30, 2020, down from the $523 million recorded as of Dec 31, 2019. Long-term debt (excluding current portion) amounted to $3,009.7 million as on Sep 30, 2020, down from the $3,715.4 million recorded as of Dec 31, 2019. In addition, as of Sep 30, 2020, LKQ Corp’s balance sheet reflected net debt of $2.7 billion, the lowest net debt level since the second quarter of 2017.

During the third quarter, the company generated net cash of $221.6 million from operations, plunging 32.2% from the year-ago period. It generated free cash flow of $188.9 million in the quarter, down 28% year over year.

The company has decided to recommence the share-repurchase program in fourth-quarter 2020.

Zacks Rank & Other Stocks to Consider

LKQ Corp currently flaunts a Zacks Rank #1 (Strong Buy). Shares of the company have depreciated 16.6%, year to date, while the industry declined 17.2%.

Some other top-ranked stocks in the auto sector are Lear Corporation LEA, Autoliv Inc ALV and LCI Industries LCII, all of which sport a Zacks Rank of 1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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