LKQ Shares Fall Despite Q2 Earnings Beat on Trimmed '23 View
LKQ Corporation LKQ reported adjusted earnings of $1.09 per share for second-quarter 2023, same as the year-ago period. Earnings outpaced the Zacks Consensus Estimate of $1.06. The outperformance stemmed from better-than-expected revenues from the Wholesale North American unit and the European unit.
The aftermarket auto parts distributor registered quarterly revenues of $3,448 million, surpassing the Zacks Consensus Estimate of $3,418 million. The top line also grew from the year-ago level of $3,341 million. Parts and services organic revenues increased 4.8% year over year.
While the company delivered a comprehensive beat, shares declined 4% as the company cut its full-year 2023 earnings and sales projections amid supply chain issues and commodity cost inflation.
LKQ currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
LKQ Corporation Price, Consensus and EPS Surprise
LKQ Corporation price-consensus-eps-surprise-chart | LKQ Corporation Quote
Segment Highlights
In the reported quarter, revenues from the Wholesale North American segment totaled $1,199 million, rising 4.8% year over year and topping our estimate of $1,191 million. The segment’s EBITDA was $248 million, slightly above our forecast of $243.6 million and higher than $214 million generated in the second quarter of 2022.
Revenues from the European segment were $1,638 million, up 10.9% year over year, beating our estimate of $1,507 million. The segment’s EBITDA came in at $188 million, up from $160 million in the year-ago period and exceeded our forecast of $166.3 million.
Revenues from the Specialty segment came in at $443 million, declining 13.6% year over year and narrowly missing our projection of $447 million. The segment’s EBITDA was $42 million, down from the year-ago figure of $69 million and lagging our forecast of $46.2 million.
Revenues from the Self-Service segment totaled $169 million, down nearly 18.7% year over year. The metric fell short of our prediction of $176.8 million. The segment’s EBITDA was $7 million, declining from $32 million and below our estimate of $17 million.
Financial Position & Dividend
LKQ had cash and cash equivalents of $1,904 million on Jun 30, 2023, up from $278 million recorded as of Dec 31, 2022. The long-term obligations (excluding the current portion) amounted to $3,421 million as of Jun 30, 2023, up from $2,622 million recorded on Dec 31, 2022. As of Jun 30, 2023, LKQ’s balance sheet reflected a total debt of $4 billion.
During the quarter, cash flow provided by operating activities totaled $480 million. The company recorded a positive free cash flow of $414 million.
During the first half of 2023, the company repurchased 0.1 million shares worth $5 million. Notably, LKQ did not buy back shares in the second quarter of 2023. In the period between initiating the stock buyback program in late October 2018 and Jun 30, 2023, it repurchased around 55 million shares for a total of $2.4 billion.
On Jul 25, 2023, LKQ declared a quarterly cash dividend of 27.5 cents per share of common stock. The dividend will be paid out on Aug 31, 2023, to stockholders of record at the close of business on Aug 17, 2023.
2023 Guidance
For 2023, the company tightened its adjusted EPS guidance to the range of $3.90-$4.10 from the prior guidance of $3.90-$4.20. The company’s estimated free cash flow stands at approximately $975 million. The operating cash flow projection is approximately $1.27 billion. Its forecast of organic revenue growth for parts and services lies between 6% and 7.5%, down from 6-8% guided earlier.
Key Releases From the Auto Space
Tesla TSLA reported second-quarter 2023 earnings of 91 cents per share, which rose from the year-ago figure of 76 cents and outpaced the Zacks Consensus Estimate of 83 cents. This marked the 10th consecutive earnings beat for this electric vehicle behemoth. Record deliveries and revenues, which topped expectations, resulted in this outperformance. Total revenues came in at $24,927 million, witnessing year-over-year growth of 47%. The top line exceeded the consensus mark of $24,884 million.
Tesla had cash and cash equivalents of $23,075 million as of Jun 30, 2023 compared with $22,402 million on Mar 31, 2023. Net cash provided by operating activities amounted to $3,065 million in second-quarter 2023. Capital expenditure totaled $2,060 million in the quarter under review.
General Motors GM reported second-quarter 2023 adjusted earnings of $1.91 per share, which surpassed the Zacks Consensus Estimate of $1.73. The outperformance can be primarily attributed to better-than-expected results from the North America market. The bottom line also rose from the year-ago quarter’s earnings of $1.14 per share. Revenues of $44,746 million beat the Zacks Consensus Estimate of $42,478 million and increased from $35,759 million recorded in the year-ago period.
General Motors had cash and cash equivalents of $23,074 million as of Jun 30, 2023, compared with $19,153 million as of Dec 31, 2022. The long-term automotive debt at the end of the quarter was $15,976 million compared with $15,885 million as of Dec 31, 2022.
AutoNation AN reported second-quarter 2023 adjusted earnings of $6.29 per share, which decreased 2.9% year over year but topped the Zacks Consensus Estimate of $5.83. This outperformance can be primarily attributed to higher-than-expected new vehicle revenues and profits. In the reported quarter, revenues amounted to $6,890.1 million, surpassing the Zacks Consensus Estimate of $6,645 million. The company had recorded revenues of $6,869.2 million in the second quarter of 2022.
AutoNation’s cash and cash equivalents were $63.7 million as of Jun 30, 2023, declining from $72.6 million recorded as of Dec 31, 2022. The company’s liquidity was $1.4 billion, including $64 million in cash and nearly $1.3 billion available under its revolving credit facility.
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