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LKQ Corp (LKQ) Beats on Q1 Earnings & Sales, Ups '22 View

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LKQ Corporation (LKQ - Free Report) reported adjusted earnings of $1 per share in first-quarter 2022, surpassing the Zacks Consensus Estimate of 91 cents and increasing 6.4% year over year from 94 cents. This outperformance was driven by the higher-than-anticipated revenues from the North American and European segments.

This aftermarket auto parts distributor registered quarterly revenues of $3,348 million, beating the Zacks Consensus Estimate of $3,279.7 million. In addition, the top line climbed 5.6% from the year-ago level of $3,170.8 million. The parts and services organic revenues also increased 6.9% year over year.

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

The company modified its reporting structure to include the Wholesale – North America and Self Service operating segments, which were earlier consolidated in the North America segment, as separate reportable units.

In the reported quarter, revenues from the Wholesale North American segment totaled $1,106 million, jumping around 14.2% from $969 million reported in the prior-year period and topping the consensus mark of $1,088 million. Also, the segment’s EBITDA came in at $218 million, up 12.4% year over year. The reported EBITDA beat the Zacks Consensus Estimate of $215 million.

Revenues from the European segment summed $1,481 million, rising 1.8% from $1,455 million in the year-earlier quarter and marginally topping the consensus mark of $1,480 million. The segment’s EBITDA came in at $131 million, shrinking 7.1% year over year and missing the consensus mark of $145 million.

Revenues from the Specialty segment came in at $460 million, rising 0.4% but missing the consensus mark of $475 million. The segment EBITDA was $58 million, 5% lower than the year-ago figure. The reported EBITDA also lagged the consensus mark of $60 million.

Revenues from the Self Service segment summed $57 million, rising 14.6% from $50 million in the year-earlier quarter. The segment’s EBITDA was $40 million, shrinking 28.5%.

Financial Position & Dividend

LKQ had cash and cash equivalents of $327 million on Mar 31, 2022, up from $274 million recorded as of Dec 31, 2021. The long-term debt (excluding the current portion) amounted to $2,680 million as of Mar 31, 2022, down from $2,777 million recorded on Dec 31, 2021. In addition, as of Mar 31, 2022, LKQ Corp’s balance sheet reflected net debt of $2.3 billion.

During the quarter, cash flow provided by operating activities totaled $409 million. Capital expenditure summed $59 million, with the company recording a positive free cash flow of $350 million.

During the reported quarter, the company repurchased 2.7 million shares worth $144 million. Between the period of initiating the stock buyback program in late October 2018 and Mar 31, 2022, it repurchased around 37 million shares for a total of $1.5 billion.

On Apr 26, 2022, for stockholders of record at the close of business on May 19, 2022, LKQ declared a quarterly cash dividend of 25 cents per share of common stock.

2022 Guidance

For 2022, the company updated its projection for adjusted EPS to $3.80-$4.10 from the earlier $3.72-$4.02 per share.

The company’s estimate of free cash flow remains same, at a minimum of $1 billion and an operating cash flow of $1.3 billion.

It forecasts organic revenue growth for parts and services in the range of 4.5%-6.5%, up from 3-5% estimated earlier.

Zacks Rank & Key Picks

LKQ currently carries a Zacks Rank #3 (Hold).

Better-ranked players in the auto space include BRP Group, Inc. (DOOO - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Dorman Products (DORM - Free Report) and Standard Motor Products (SMP - Free Report) , each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

BRP Group has an expected earnings growth rate of 9.1% for fiscal 2023. The Zacks Consensus Estimate for current-year earnings has been revised around 7.9% upward in the past 60 days.

BRP Group’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. DOOO pulled off a trailing four-quarter earnings surprise of 68%, on average. The stock has declined 13.4% over the past year.

Dorman Products has an expected earnings growth rate of 18.32% for the current year. The Zacks Consensus Estimate for current-year earnings has been marginally revised 0.4% upward in the past 60 days.

Dorman Products’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. DORM pulled off a trailing four-quarter earnings surprise of 3.1%, on average. The stock has lost 4.4% over the past year.

The Zacks Consensus Estimate for Standard Motor’s current-year earnings has been revised around 1.1% upward in the past 60 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 60.5%, on average. The stock has declined 1.8% over the past year.