LKQ Corporation (LKQ) Tops Q1 EPS by 8c, Revenues Beat

LKQ Corporation (NASDAQ: LKQ) reported Q1 EPS of $0.57, $0.08 better than the analyst estimate of $0.49. Revenue for the quarter came in at $3 billion versus the consensus estimate of $2.98 billion.

• First quarter 2020 revenue of $3.0 billion (down 3.2% year-over-year)
• Parts and services organic revenue declined 3.5% (4.7% on a per day basis)
• Net income1 attributable to LKQ stockholders of $146 million (up 49%); adjusted net income of $176 million (flat compared to the prior year)
• Diluted EPS attributable to LKQ stockholders of $0.48; adjusted diluted EPS of $0.57
• Operating cash flow of $195 million (up 10%); free cash flow of $150 million (up 21%)
• Reduced borrowings by $230 million
• Implemented targeted cost actions contributing to potential annualized savings run rate of over $1.0 billion
• Approximately $1.9 billion of liquidity as of March 31, 2020

COVID-19 Update

“As the COVID-19 pandemic spread rapidly across the globe during the first quarter, our number one priority was, and continues to be, the health and safety of our employees, customers, vendor partners and the communities where we operate. Our businesses got off to an excellent start in January and February, carrying the strong momentum from 2019 on all fronts and reinforcing our key priorities of profitable revenue growth, accretive margins and cash flow generation. Through February, each of our segments was in line with or ahead of our revenue and profit expectations. As the restrictions on movement of people were imposed resulting in the decline of demand for our parts across all business segments, our financial results during the second half of March deteriorated. This reduced level of demand has continued, with April revenue down approximately 40% compared to the prior year, significantly impacting our near-term financial results. We anticipate a gradual improvement in revenue and profitability as governments around the globe begin the process of lifting the restrictions on mobility and opening their economies,” stated Dominick Zarcone, President and Chief Executive Officer of LKQ Corporation.

Mr. Zarcone further commented, “To help mitigate the business disruption caused by the COVID-19 pandemic, and to position LKQ for earnings growth when the U.S. and European economies rebound, we have taken decisive action and implemented comprehensive cost reduction plans throughout the enterprise, including substantial staffing adjustments. This focus on our cost structure and the variable nature of certain expenses has resulted in a potential annualized run-rate savings of more than $1 billion. As market conditions improve, we look forward to bringing our people back, so we can both fulfill the anticipated increase in demand and continue to provide industry leading levels of customer service.”

For earnings history and earnings-related data on LKQ Corporation (LKQ) click here.

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