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LKQ Q3 Earnings Miss Estimates, Sales Beat, Guidance Revised
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LKQ Corporation (LKQ - Free Report) delivered adjusted earnings of 86 cents per share for third-quarter 2023, down from 97 cents reported in the year-ago period and missing the Zacks Consensus Estimate of 95 cents.
The aftermarket auto parts distributor registered quarterly revenues of $3,568 million, surpassing the Zacks Consensus Estimate of $3,489 million. The top line also grew from the year-ago level of $3,104 million. Parts and services organic revenues increased 3% year over year.
In the reported quarter, revenues from the Wholesale North American segment totaled $1,387 million, rising 25% year over year and topping our estimate of $1,335 million. The segment’s EBITDA was $236 million, below our forecast of $241.6 million but higher than $216 million generated in the third quarter of 2022.
Revenues from the European segment were $1,584 million, up 14.8% year over year, beating our estimate of $1,537.3 million. The segment’s EBITDA came in at $147 million, down from $155 million in the year-ago period and missed our forecast of $166 million.
Revenues from the Specialty segment came in at $457 million, rising 1.1% year over year and beating our projection of $402.7 million. The segment’s EBITDA was $40 million, down from the year-ago figure of $49 million, but beat our forecast of $37.8 million.
Revenues from the Self-Service segment totaled $141 million, down 14% year over year. The metric also fell short of our prediction of $158.3 million. The segment incurred $1 million loss before interest, taxes, depreciation and amortization compared with the EBITDA of $4 million generated in the year-ago period.
Financial Position & Dividend
LKQ had cash and cash equivalents of $401 million on Sep 30, 2023, up from $278 million recorded as of Dec 31, 2022. The long-term obligations (excluding the current portion) amounted to $3,763 million as of Sep 30, 2023, up from $2,622 million recorded on Dec 31, 2022. As of Sep 30, 2023, LKQ’s balance sheet reflected a total debt of $4.4 billion.
During the quarter, cash flow provided by operating activities totaled $441 million. The company recorded a positive free cash flow of $344 million.
During the first nine months of 2023, the company repurchased 0.1 million shares worth $5 million. LKQ did not buy back shares in the third quarter of 2023. In the period between initiating the stock buyback program in late October 2018 and Sep 30, 2023, it repurchased around 55 million shares for a total of $2.4 billion.
On Oct 24, 2023, LKQ hiked its quarterly cash dividend by 9% to 30 cents per share. The dividend will be paid out on Nov 30, 2023, to stockholders of record at the close of business on Nov 16, 2023.
Updated 2023 Guidance
For 2023, the company lowered its adjusted EPS guidance to the range of $3.68-$3.82 from the prior guidance of $3.90-$4.10. The company’s estimated free cash flow is pinned at approximately $1 billion, up from prior guidance of approximately $975 million. The operating cash flow projection is approximately pegged at $1.3 billion, up from prior guidance of approximately $1.275 billion. Its forecast of organic revenue growth for parts and services lies between 4.75% -5.75%, down from the prior guidance range of 6%-7.5%.
The Zacks Consensus Estimate for TM’s 2023 sales and earnings implies year-over-year growth of 10.6% and 27.6%, respectively. The EPS estimates for 2023 and 2024 have increased by 18 cents and 37 cents, respectively, in the past seven days.
The Zacks Consensus Estimate for HMC’s 2023 sales and earnings suggests year-over-year improvements of 7.7% and 29.4%, respectively. The EPS estimates for 2023 and 2024 have moved up by 4 cents each in the past seven days.
The Zacks Consensus Estimate for ALSN’s 2023 sales and earnings indicates year-over-year rises of 9.6% and 26.8%, respectively. The EPS estimate for 2023 increased by a cent in the past seven days. The EPS estimate for 2024 increased by 32 cents in the past 30 days.
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LKQ Q3 Earnings Miss Estimates, Sales Beat, Guidance Revised
LKQ Corporation (LKQ - Free Report) delivered adjusted earnings of 86 cents per share for third-quarter 2023, down from 97 cents reported in the year-ago period and missing the Zacks Consensus Estimate of 95 cents.
The aftermarket auto parts distributor registered quarterly revenues of $3,568 million, surpassing the Zacks Consensus Estimate of $3,489 million. The top line also grew from the year-ago level of $3,104 million. Parts and services organic revenues increased 3% year over year.
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 $1,387 million, rising 25% year over year and topping our estimate of $1,335 million. The segment’s EBITDA was $236 million, below our forecast of $241.6 million but higher than $216 million generated in the third quarter of 2022.
Revenues from the European segment were $1,584 million, up 14.8% year over year, beating our estimate of $1,537.3 million. The segment’s EBITDA came in at $147 million, down from $155 million in the year-ago period and missed our forecast of $166 million.
Revenues from the Specialty segment came in at $457 million, rising 1.1% year over year and beating our projection of $402.7 million. The segment’s EBITDA was $40 million, down from the year-ago figure of $49 million, but beat our forecast of $37.8 million.
Revenues from the Self-Service segment totaled $141 million, down 14% year over year. The metric also fell short of our prediction of $158.3 million. The segment incurred $1 million loss before interest, taxes, depreciation and amortization compared with the EBITDA of $4 million generated in the year-ago period.
Financial Position & Dividend
LKQ had cash and cash equivalents of $401 million on Sep 30, 2023, up from $278 million recorded as of Dec 31, 2022. The long-term obligations (excluding the current portion) amounted to $3,763 million as of Sep 30, 2023, up from $2,622 million recorded on Dec 31, 2022. As of Sep 30, 2023, LKQ’s balance sheet reflected a total debt of $4.4 billion.
During the quarter, cash flow provided by operating activities totaled $441 million. The company recorded a positive free cash flow of $344 million.
During the first nine months of 2023, the company repurchased 0.1 million shares worth $5 million. LKQ did not buy back shares in the third quarter of 2023. In the period between initiating the stock buyback program in late October 2018 and Sep 30, 2023, it repurchased around 55 million shares for a total of $2.4 billion.
On Oct 24, 2023, LKQ hiked its quarterly cash dividend by 9% to 30 cents per share. The dividend will be paid out on Nov 30, 2023, to stockholders of record at the close of business on Nov 16, 2023.
Updated 2023 Guidance
For 2023, the company lowered its adjusted EPS guidance to the range of $3.68-$3.82 from the prior guidance of $3.90-$4.10. The company’s estimated free cash flow is pinned at approximately $1 billion, up from prior guidance of approximately $975 million. The operating cash flow projection is approximately pegged at $1.3 billion, up from prior guidance of approximately $1.275 billion. Its forecast of organic revenue growth for parts and services lies between 4.75% -5.75%, down from the prior guidance range of 6%-7.5%.
Zacks Rank & Key Picks
LKQ currently carries a Zacks Rank #3 (Hold).
Some top-ranked players in the auto space are Toyota Motor (TM - Free Report) , Honda Motor (HMC - Free Report) and Allison Transmission Holdings (ALSN - Free Report) . While TM and HMC sport a Zacks Rank #1 (Strong Buy), ALSN carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TM’s 2023 sales and earnings implies year-over-year growth of 10.6% and 27.6%, respectively. The EPS estimates for 2023 and 2024 have increased by 18 cents and 37 cents, respectively, in the past seven days.
The Zacks Consensus Estimate for HMC’s 2023 sales and earnings suggests year-over-year improvements of 7.7% and 29.4%, respectively. The EPS estimates for 2023 and 2024 have moved up by 4 cents each in the past seven days.
The Zacks Consensus Estimate for ALSN’s 2023 sales and earnings indicates year-over-year rises of 9.6% and 26.8%, respectively. The EPS estimate for 2023 increased by a cent in the past seven days. The EPS estimate for 2024 increased by 32 cents in the past 30 days.