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LKQ's Q4 Earnings and Sales Beat Estimates, Increase Y/Y

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LKQ Corporation (LKQ - Free Report) reported adjusted earnings of 87 cents per share in fourth-quarter 2021, surpassing the Zacks Consensus Estimate of 77 cents and increasing 26.1% year over year from 69 cents. This outperformance was driven by the higher-than-anticipated revenues from the North American, European and Specialty segments.

This aftermarket auto parts distributor registered quarterly revenues of $3,185 million, beating the Zacks Consensus Estimate of $3,068.6 million. In addition, the top line climbed 7.9% from the year-ago level of $ 2,953.8 million. The parts and services organic revenues also increased 6.6% year over year.

Segment Highlights

In the reported quarter, revenues from the North American segment totaled $1,281 million, jumping around 10% from $1,166.5 million reported in the prior-year period and topping the consensus mark of $1,237 million. Also, the segment’s EBITDA came in at $194 million, down 9.3% year over year. The reported EBITDA missed the Zacks Consensus Estimate of $200 million.

Revenues from the European segment summed $1,496.5 million , rising 4.4% from $1,433.3 million in the year-earlier quarter and topping the consensus mark of $1,459 million. The segment’s EBITDA came in at $133.7 million, growing 8% year over year. The reported figure marginally beat the consensus mark of $135 million.

In the given period, revenues from the Specialty segment came in at $410 million, increasing 15.5% and beating the consensus mark of $380 million. The segment EBITDA was $30.6 million, 3% higher than the year-ago figure. The reported EBITDA, however, lagged the consensus mark of $35 million.

Financial Position & Dividend

LKQ Corp had cash and cash equivalents of $274.1 million on Dec 31, 2021, down from $312.2 million recorded as of Dec 31, 2020. The long-term debt (excluding the current portion) amounted to $2,777.1 million as of Dec 31, 2021, down from $2,812.6 million recorded on Dec 31, 2020. In addition, as of Dec 31, 2021, LKQ Corp’s balance sheet reflected net debt of $2.5 billion.

During the fourth quarter, cash flow provided by operating activities totaled $5 million. Capital expenditure summed $160 million, with the company recording a negative free cash flow of $155.7 million. During the reported quarter, the company repurchased shares worth $297 million. Between the period of initiating the stock buyback program in late October 2018 and Dec 31, 2021, it repurchased around 35 million shares for a total of $1.3 billion.

On Dec 2, 2021, for stockholders of record at the close of business on Nov 11, 2021, LKQ paid its first-ever quarterly cash dividend of 25 cents per share of common stock.

2022 Guidance

For 2022, the company projects diluted EPS in the range of $3.5-$3.8 per share and adjusted diluted EPS of $3.72-$4.02 per share.

The company envisions generating free cash flow of a minimum of $1 billion an operating cash flow of $1.3 billion.

It also forecasts organic revenue growth for parts and services in the range of 3-5%.

Zacks Rank & Key Picks

Currently, LKQ has a Zacks Rank #3 (Hold).

Some better-ranked players in the auto space are Tesla (TSLA - Free Report) , sporting a Zacks Rank #1(Strong Buy) and Dorman Products (DORM - Free Report) and Allison Transmission Holdings (ALSN - Free Report) , each carrying a Zacks Rank #2 (Buy) currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tesla has an expected earnings growth rate of 40.7% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 22% upward in the past 30 days.

Tesla’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 33.6%, on average. The stock has also rallied 17.3% over a year.

Dorman has an expected earnings growth rate of 15.9% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 0.2% upward in the past 30 days.

Dorman’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and met the consensus mark in one. DORM pulled off a trailing four-quarter earnings surprise of 10.41%, on average.

Allison has an expected earnings growth rate of 19.1% for the current year. The Zacks Consensus Estimate for earnings for the current year have been stable in the past 30 days.

Allison’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and met the consensus mark in one. ALSN pulled off a trailing four-quarter earnings surprise of around 13.4%, on average. The stock has also rallied 7% over a year.