Revenue of $3.1 billion; revenue on a constant currency basis1 of $3.3billion
Parts and services organic revenue growth of 4.8% (5.3% on a per day basis)
Diluted EPS2 of $0.95 (down 1.0%); adjusted diluted EPS1,2 of $0.97 (down 4.9%)
Third quarter operating cash flow of $273million; free cash flow1 of $224million
Deployed $343 million in the quarter to repurchase 6.8 million shares
Stock repurchase program expanded by a further $1 billion through October 2025
Dividend increased by 10%; $0.275 per share approved to be paid in the fourth quarter of 2022
Full year 2022 guidance range updated
CHICAGO, Oct. 27, 2022 (GLOBE NEWSWIRE) -- LKQ Corporation (Nasdaq:LKQ) today reported third quarter 2022 financial results. “We are pleased with our third quarter results asthey once again highlight our ongoing ability to combine best-in-class customer service with operational excellence. Our strong same day organic revenue growth and segment EBITDA margins in Wholesale - North America and Europe demonstrate our ability to serve our stakeholders in any environment,” noted Dominick Zarcone, President and Chief Executive Officer. “I want to thank our global teams for delivering another quarter of strong performance in a challenging macro environment, including commodities and foreign exchange volatility as well as other inflationary pressures that impacted our reported earnings. Additionally, we remain committed to returning capital to our stockholders, as evidenced by the 10% increase of the quarterly dividend and the expansion of our stock repurchase program.”
Third Quarter 2022 Financial Results
Revenue for the third quarter of 2022 was $3.1 billion, a decrease of 5.9% as compared to $3.3 billion in the third quarter of 2021. On a constant currency basis1, third quarter revenue grew by 1.0% to $3.3billion. Parts and services organic revenue increased 4.8% on a reported basis (5.3% on a per day basis), while the net impact of acquisitions and divestitures decreased revenue by 2.3% and foreign exchange rates decreased revenue by 7.4%, for a total parts and services revenue decrease of 5.0%. Other revenue fell 17.4% primarily due to weaker commodity prices relative to the same period in 2021.
Net income2 for the quarter was $261million as compared to $284million for the same period in 2021. Diluted earnings per share2 for the quarter was $0.95 as compared to $0.96 for the same period of 2021, a decrease of 1.0%.
On an adjusted basis, net income1,2 in the quarter was $266 million as compared to $300 million for the same period of 2021, a decrease of 11.4%. Adjusted diluted earnings per share1,2 for the quarter was $0.97 as compared to $1.02 for the same period of 2021, a decrease of 4.9%.
1 Non-GAAP measure. See the table accompanying this release that reconciles the actual or forecasted U.S. GAAP measure to the actual or forecasted adjusted measure, which is non-GAAP.
2 References in this release to Net income and Diluted earnings per share, and the corresponding adjusted figures, reflect amounts from continuing operations attributable to LKQ stockholders.
Cash Flow and Balance Sheet
For the third quarter, cash flow from operations and free cash flow1 were $273million and $224million, respectively. Cash flow from operations and free cash flow1 were $1.01billion and $862million, respectively, for the nine months ended September30, 2022. As of September30, 2022, the balance sheet reflected total debt of $2.4 billion and net debt1 of $2.2 billion. Net leverage, as defined in the credit facility, was 1.3x EBITDA.
Stock Repurchase and Dividend Programs
During the third quarter of 2022, the Company invested $343 million to repurchase 6.8 million shares of its common stock. For the nine months ended September30, 2022, the Company has deployed $891million to repurchase 17.6 million shares. Since initiating the stock repurchase program in late October 2018, the Company has repurchased approximately 52million shares for a total of $2.2billion through September 30, 2022. On October 25, 2022, the Board of Directors authorized a $1 billion increase to the existing share repurchase program and extended the duration through October 25, 2025.
On October 25, 2022, the Board of Directors declared a quarterly cash dividend of $0.275 per share of common stock, payable on December 1, 2022, to stockholders of record at the close of business on November 17, 2022. This reflects a 10% increase over the prior quarterly dividend of $0.25 per share.
Other Events
On September 19, 2022, the Company announced new leadership appointments, effective immediately. Varun Laroyia, Executive Vice President and Chief Financial Officer, was appointed as Chief Executive Officer and Managing Director of LKQ Europe. Rick Galloway, Chief Financial Officer of LKQ’s Wholesale - North America and Self Service segments, was appointed as LKQ’s Senior Vice President and Chief Financial Officer.
2022 Outlook
Rick Galloway, Senior Vice President and Chief Financial Officer, commented: “The business continues to produce strong financial results in a difficult macro-economic environment. We anticipate the benefits associated with our operational excellence programs and capital allocation activities will be more than offset by the weak foreign exchange rates relative to the US dollar along with soft metals prices. Therefore, we have updated our guidance metrics to reflect these current market conditions, and also narrowed our guidance range for the balance of the year.”
For 2022, management updated the outlook as set forth below:
2022 Previous Full Year Outlook | 2022 Updated Full Year Outlook | |
Organic revenue growth for parts and services | 4.5% to 6.5% | 4.75% to 5.75% |
Diluted EPS2 | $4.09 to $4.29 | $4.12 to $4.22 |
Adjusted diluted EPS1,2 | $3.85 to $4.05 | $3.85 to $3.95 |
Operating cash flow | $1.3 billion | $1.25 billion |
Free cash flow1 | minimum $1.0 billion | approx. $1.0 billion |
Free cash flow conversion of EBITDA1 | 55%to 60% | 55%to 60% |
Our outlook for the full year 2022 is based on current conditions and recent trends, and assumes current U.S. federal tax legislation remains unchanged, the prices of scrap and precious metals hold near the September average, and no further deterioration due to the Ukraine/Russia conflict. We have applied foreign currency exchange rates near October spot levels, including $0.97 and $1.11 for the euro and pound sterling, respectively, for the balance of the year. Prior guidance issued on July 28, 2022 had currency exchange rate levels of $1.02 and $1.20 for the euro and pound sterling, respectively. Changes in these conditions may impact our ability to achieve the estimates. Adjusted figures exclude (to the extent applicable) the impact of restructuring and transaction related expenses; amortization expense related to acquired intangibles; excess tax benefits and deficiencies from stock-based payments; losses on debt extinguishment; impairment charges; direct impacts of the Ukraine/Russia conflict (including provisions for and subsequent adjustments to reserves for asset recoverability and expenditures to support our employees and their families) and gains and losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities and the gain on the PGW Auto Glass sale).
1 Non-GAAP measure. See the table accompanying this release that reconciles the actual or forecasted U.S. GAAP measure to the actual or forecasted adjusted measure, which is non-GAAP.
2 References in this release to Net income and Diluted earnings per share, and the corresponding adjusted figures, reflect amounts from continuing operations attributable to LKQ stockholders.
Non-GAAP Financial Measures
This release contains (and management’s presentation on the related conference call will refer to) non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included with this release are reconciliations of each non-GAAP financial measure with the most directly comparable financial measure calculated in accordance with GAAP.
Conference Call Details
LKQ will host a conference call and webcast on October27, 2022 at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) with members of senior management to discuss the Company's results. To access the investor conference call, please dial (888) 330-3494. International access to the call may be obtained by dialing (646) 960-0860. The investor conference call will require you to enter conference ID: 5232422#.
Webcast and Presentation Details
The audio webcast and accompanying slide presentation can be accessed at (www.lkqcorp.com) in the Investor Relations section.
A replay of the conference call will be available by telephone at (800) 770-2030 or (647) 362-9199 for international calls. The telephone replay will require you to enter conference ID: 5232422#. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through November 11, 2022. Please allow approximately two hours after the live presentation before attempting to access the replay.
About LKQ Corporation
LKQ Corporation (www.lkqcorp.com) is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. LKQ has operations in North America, Europe and Taiwan. LKQ offers its customers a broad range of OEM recycled and aftermarket parts, replacement systems, components, equipment, and services to repair and accessorize automobiles, trucks, and recreational and performance vehicles.
Forward Looking Statements
Statements and information in this press release and on the related conference call, including our outlook for 2022, as well as remarks by the Chief Executive Officer and other members of management, that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are made pursuant to the “safe harbor” provisions of such Act.
Forward-looking statements include, but are not limited to, statements regarding our outlook, guidance, expectations, beliefs, hopes, intentions and strategies. These statements are subject to a number of risks, uncertainties, assumptions and other factors including those identified below. All forward-looking statements are based on information available to us at the time the statements are made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
You should not place undue reliance on our forward-looking statements. Actual events or results may differ materially from those expressed or implied in the forward-looking statements. The risks, uncertainties, assumptions and other factors that could cause actual events or results to differ from the events or results predicted or implied by our forward-looking statements include the factors set forth below, and other factors discussed in our filings with the SEC, including those disclosed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2021 and in our subsequent Quarterly Reports on Form 10-Q. These reports are available on our investor relations website at lkqcorp.com and on the SEC website at sec.gov.
These factors include the following (not necessarily in order of importance):
effects on our business from the ongoing disruption to economic activity caused by the COVID-19 pandemic, including a decrease in the demand for our products and services and interruptions to our supply chain;
employment-related issues arising from the COVID-19 pandemic, including workforce shortages and health and safety issues at the workplace;
changes in economic, political and social conditions in the U.S. and other countries in which we are located or do business, including the U.K. withdrawal from the European Union (also known as Brexit), the Russian invasion of Ukraine and the resulting governmental sanctions imposed on Russia, and the geopolitical tension in Taiwan, and the impact of these changes on our businesses, the demand for our products and our ability to obtain financing for operations;
increasing competition in the automotive parts industry, including parts sold on online marketplaces and the potential competitive advantage to original equipment manufacturers ("OEMs") with "connected car" technology, as well as the various efforts by OEMs to restrict or prohibit the sale of aftermarket or recycled parts;
changes to our business relationships with insurance companies or changes by insurance companies to their business practices relating to the use of our products as well as changes in the level of acceptance and promotion of alternative automotive parts by insurance companies and vehicle repairers;
restrictions or prohibitions on selling or importing aftermarket products through enforcement by OEMs or governmental agencies of intellectual property rights or import laws;
variations in the number of vehicles manufactured and sold, vehicle accident rates, miles driven, and the age profile of vehicles in accidents, the increase of accident avoidance systems being installed in vehicles, the potential loss of sales of certain mechanical parts due to the rise of electric vehicle sales, or changes in the demand for our products and the supply of our inventory due to severity of weather and seasonality of weather patterns;
fluctuations in the prices of fuel, metals and other commodities;
changes in our relationships with our suppliers, disruption to our supply of inventory, or the misconduct, performance failures or negligence of our third party vendors or service providers could increase our expenses, impede our ability to serve our customers, or expose us to liability; as well as price increases, interruptions or disruptions to the supply of vehicle parts from aftermarket suppliers and vehicles from salvage auctions;
if our goodwill or other intangible assets become impaired, or there are declines in the values of our assets, including as a result of the effects of the COVID-19 pandemic on our business, we may incur significant charges to our pre-tax income;
product liability claims by the end users of our products or claims by other parties who we have promised to indemnify for product liability matters and costs associated with recalls of the products we sell;
our ability to identify acquisition candidates at reasonable prices and our ability to successfully divest businesses and our ability to integrate, realize expected synergies, and successfully operate acquired companies and any companies acquired in the future, and the risks associated with these companies;
inflationary pressure on our supply chain as the economy recovers from the initial impact of the COVID-19 pandemic;
inflationary pressures in product, labor, shipping, freight, and general overhead costs;
our ability to satisfy our debt obligations and to operate within the limitations imposed by financing arrangements, including the possibility of not satisfying one or more of the financial covenants in our credit facility or the terms of the indentures governing our senior notes;
our senior notes are subject to risks that could affect the value of the notes, require holders of the notes to return payments received from us or the guarantors, or affect our ability to repurchase the notes upon a change of control or pursuant to an asset sale offer;
our ability to obtain financing on acceptable terms to finance our growth;
our ability to issue dividend payments and fluctuations in the related payments;
changes in laws or regulations affecting our business;
our operations are subject to environmental regulations and we may incur costs relating to environmental matters;
our bylaws provide that the courts in the State of Delaware are the exclusive forums for substantially all disputes between us and our stockholders;
changes to applicable U.S. and foreign tax laws, changes to interpretations of tax laws, and changes in our mix of earnings among the jurisdictions in which we operate;
the implementation of a border tax or tariff on imports and the negative impact on our business due to the amount of inventory we import;
governmental agencies may refuse to grant or renew our operating licenses and permits for our salvage, self service and refurbishing businesses;
loss of key management personnel may affect our ability to successfully manage our business and achieve our objectives;
the risks associated with operating in foreign jurisdictions, including foreign laws and economic and political instabilities and currency fluctuations in the U.S. dollar, pound sterling and euro versus other currencies;
additional unionization efforts, new collective bargaining agreements, and work stoppages;
our ability to develop and implement the operational and financial systems needed to manage our operations; and interruptions, outages or breaches of our operational systems, security systems, or infrastructure as a result of attacks on, or malfunctions of, our systems;
costs of complying with laws relating to the security of personal information;
business interruptions affecting our distribution centers, computer systems and the availability of inventory;
problems with our fleet of trucks and other vehicles could affect our business;
potential losses of our right to operate at key locations if we are not able to negotiate lease renewals or due to environmental issues; and
disruptions to the management and operations of our business and the uncertainties caused by activist investors.
Contact:
Joseph P. Boutross - Vice President, Investor Relations
LKQ Corporation
(312) 621-2793
jpboutross@lkqcorp.com
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income, with Supplementary Data
(In millions, except per share data)
Three Months Ended September 30, | ||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||
% of | % of | $ Change | % Change | |||||||||||||||||
Revenue | $ | 3,104 | 100.0 | % | $ | 3,297 | 100.0 | % | $ | (193 | ) | (5.9) | % | |||||||
Cost of goods sold | 1,828 | 58.9 | % | 1,953 | 59.2 | % | (125 | ) | (6.4) | % | ||||||||||
Gross margin | 1,276 | 41.1 | % | 1,344 | 40.8 | % | (68 | ) | (5.0) | % | ||||||||||
Selling, general and administrative expenses | 861 | 27.8 | % | 898 | 27.2 | % | (37 | ) | (4.0) | % | ||||||||||
Restructuring and transaction related expenses | 3 | 0.1 | % | 3 | 0.1 | % | — | — | % | |||||||||||
Gain on disposal of businesses and impairment of net assets held for sale | (4 | ) | (0.1) | % | 1 | — | % | (5 | ) | n/m | ||||||||||
Depreciation and amortization | 58 | 1.9 | % | 64 | 1.9 | % | (6 | ) | (9.3) | % | ||||||||||
Operating income | 358 | 11.5 | % | 378 | 11.5 | % | (20 | ) | (5.5) | % | ||||||||||
Other expense (income): | ||||||||||||||||||||
Interest expense, net of interest income | 17 | 0.5 | % | 16 | 0.5 | % | 1 | 10.1 | % | |||||||||||
Other income, net | (6 | ) | (0.2) | % | (3 | ) | (0.1) | % | (3 | ) | n/m | |||||||||
Total other expense, net | 11 | 0.4 | % | 13 | 0.4 | % | (2 | ) | (11.3) | % | ||||||||||
Income from continuing operations before provision for income taxes | 347 | 11.2 | % | 365 | 11.1 | % | (18 | ) | (5.3) | % | ||||||||||
Provision for income taxes | 88 | 2.8 | % | 89 | 2.7 | % | (1 | ) | (2.3) | % | ||||||||||
Equity in earnings of unconsolidated subsidiaries | 2 | 0.1 | % | 8 | 0.2 | % | (6 | ) | (77.5) | % | ||||||||||
Income from continuing operations | 261 | 8.4 | % | 284 | 8.6 | % | (23 | ) | (8.2) | % | ||||||||||
Net income from discontinued operations | 1 | — | % | — | — | % | 1 | n/m | ||||||||||||
Net income | 262 | 8.4 | % | 284 | 8.6 | % | (22 | ) | (7.7) | % | ||||||||||
Less: net income attributable to continuing noncontrolling interest | — | — | % | — | — | % | — | n/m | ||||||||||||
Net income attributable to LKQ stockholders | $ | 262 | 8.4 | % | $ | 284 | 8.6 | % | $ | (22 | ) | (7.9) | % | |||||||
Basic earnings per share: (2) | ||||||||||||||||||||
Income from continuing operations | $ | 0.95 | $ | 0.97 | $ | (0.02 | ) | (2.1) | % | |||||||||||
Net income from discontinued operations | — | — | — | — | % | |||||||||||||||
Net income | 0.96 | 0.97 | (0.01 | ) | (1.0) | % | ||||||||||||||
Less: net income attributable to continuing noncontrolling interest | — | — | — | — | % | |||||||||||||||
Net income attributable to LKQ stockholders | $ | 0.96 | $ | 0.97 | $ | (0.01 | ) | (1.0) | % | |||||||||||
Diluted earnings per share: (2) | ||||||||||||||||||||
Income from continuing operations | $ | 0.95 | $ | 0.96 | $ | (0.01 | ) | (1.0) | % | |||||||||||
Net income from discontinued operations | — | — | — | — | % | |||||||||||||||
Net income | 0.95 | 0.96 | (0.01 | ) | (1.0) | % | ||||||||||||||
Less: net income attributable to continuing noncontrolling interest | — | — | — | — | % | |||||||||||||||
Net income attributable to LKQ stockholders | $ | 0.95 | $ | 0.96 | $ | (0.01 | ) | (1.0) | % | |||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||
Basic | 273.8 | 294.0 | (20.2 | ) | (6.9) | % | ||||||||||||||
Diluted | 274.6 | 294.9 | (20.3 | ) | (6.9) | % | ||||||||||||||
(1) The sum of the individual percentage of revenue components may not equal the total due to rounding. | ||||||||||||||||||||
(2) The sum of the individual earnings per share amounts may not equal the total due to rounding. | ||||||||||||||||||||
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income, with Supplementary Data
(In millions, except per share data)
Nine Months Ended September 30, | ||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||
% of | % of | $ Change | % Change | |||||||||||||||||
Revenue | $ | 9,793 | 100.0 | % | $ | 9,903 | 100.0 | % | $ | (110 | ) | (1.1) | % | |||||||
Cost of goods sold | 5,793 | 59.1 | % | 5,850 | 59.1 | % | (57 | ) | (1.0) | % | ||||||||||
Gross margin | 4,000 | 40.9 | % | 4,053 | 40.9 | % | (53 | ) | (1.3) | % | ||||||||||
Selling, general and administrative expenses | 2,683 | 27.4 | % | 2,648 | 26.7 | % | 35 | 1.4 | % | |||||||||||
Restructuring and transaction related expenses | 10 | 0.1 | % | 16 | 0.2 | % | (6 | ) | (37.3) | % | ||||||||||
Gain on disposal of businesses and impairment of net assets held for sale | (159 | ) | (1.6) | % | — | — | % | (159 | ) | n/m | ||||||||||
Depreciation and amortization | 178 | 1.8 | % | 195 | 2.0 | % | (17 | ) | (8.7) | % | ||||||||||
Operating income | 1,288 | 13.2 | % | 1,194 | 12.1 | % | 94 | 7.9 | % | |||||||||||
Other expense (income): | ||||||||||||||||||||
Interest expense, net of interest income | 46 | 0.5 | % | 56 | 0.6 | % | (10 | ) | (17.1) | % | ||||||||||
Loss on debt extinguishment | — | — | % | 24 | 0.2 | % | (24 | ) | n/m | |||||||||||
Other income, net | (4 | ) | — | % | (15 | ) | (0.1) | % | 11 | (72.3) | % | |||||||||
Total other expense, net | 42 | 0.4 | % | 65 | 0.7 | % | (23 | ) | (35.5) | % | ||||||||||
Income from continuing operations before provision for income taxes | 1,246 | 12.7 | % | 1,129 | 11.4 | % | 117 | 10.4 | % | |||||||||||
Provision for income taxes | 304 | 3.1 | % | 290 | 2.9 | % | 14 | 4.7 | % | |||||||||||
Equity in earnings of unconsolidated subsidiaries | 8 | 0.1 | % | 17 | 0.2 | % | (9 | ) | (53.3) | % | ||||||||||
Income from continuing operations | 950 | 9.7 | % | 856 | 8.6 | % | 94 | 11.0 | % | |||||||||||
Net income from discontinued operations | 5 | 0.1 | % | — | — | % | 5 | n/m | ||||||||||||
Net income | 955 | 9.8 | % | 856 | 8.6 | % | 99 | 11.7 | % | |||||||||||
Less: net income attributable to continuing noncontrolling interest | — | — | % | 1 | — | % | (1 | ) | n/m | |||||||||||
Net income attributable to LKQ stockholders | $ | 955 | 9.7 | % | $ | 855 | 8.6 | % | $ | 100 | 11.7 | % | ||||||||
Basic earnings per share: (2) | ||||||||||||||||||||
Income from continuing operations | $ | 3.39 | $ | 2.86 | $ | 0.53 | 18.5 | % | ||||||||||||
Net income from discontinued operations | 0.02 | — | 0.02 | n/m | ||||||||||||||||
Net income | 3.41 | 2.86 | 0.55 | 19.2 | % | |||||||||||||||
Less: net income attributable to continuing noncontrolling interest | — | — | — | — | % | |||||||||||||||
Net income attributable to LKQ stockholders | $ | 3.41 | $ | 2.86 | $ | 0.55 | 19.2 | % | ||||||||||||
Diluted earnings per share: (2) | ||||||||||||||||||||
Income from continuing operations | $ | 3.38 | $ | 2.85 | $ | 0.53 | 18.6 | % | ||||||||||||
Net income from discontinued operations | 0.02 | — | 0.02 | n/m | ||||||||||||||||
Net income | 3.40 | 2.85 | 0.55 | 19.3 | % | |||||||||||||||
Less: net income attributable to continuing noncontrolling interest | — | — | — | — | % | |||||||||||||||
Net income attributable to LKQ stockholders | $ | 3.40 | $ | 2.85 | $ | 0.55 | 19.3 | % | ||||||||||||
Weighted average common shares outstanding: | ||||||||||||||||||||
Basic | 280.2 | 299.2 | (19.0 | ) | (6.3) | % | ||||||||||||||
Diluted | 281.2 | 300.0 | (18.8 | ) | (6.3) | % | ||||||||||||||
(1) The sum of the individual percentage of revenue components may not equal the total due to rounding. | ||||||||||||||||||||
(2) The sum of the individual earnings per share amounts may not equal the total due to rounding. . | ||||||||||||||||||||
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In millions, except per share data)
September 30, 2022 | December 31, 2021 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 269 | $ | 274 | |||
Receivables, net | 1,051 | 1,073 | |||||
Inventories | 2,635 | 2,611 | |||||
Prepaid expenses and other current assets | 247 | 296 | |||||
Total current assets | 4,202 | 4,254 | |||||
Property, plant and equipment, net | 1,169 | 1,299 | |||||
Operating lease assets, net | 1,193 | 1,361 | |||||
Goodwill | 4,132 | 4,540 | |||||
Other intangibles, net | 626 | 746 | |||||
Equity method investments | 146 | 181 | |||||
Other noncurrent assets | 198 | 225 | |||||
Total assets | $ | 11,666 | $ | 12,606 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,356 | $ | 1,176 | |||
Accrued expenses: | |||||||
Accrued payroll-related liabilities | 224 | 261 | |||||
Refund liability | 108 | 107 | |||||
Other accrued expenses | 309 | 271 | |||||
Current portion of operating lease liabilities | 181 | 203 | |||||
Current portion of long-term obligations | 50 | 35 | |||||
Other current liabilities | 123 | 112 | |||||
Total current liabilities | 2,351 | 2,165 | |||||
Long-term operating lease liabilities, excluding current portion | 1,066 | 1,209 | |||||
Long-term obligations, excluding current portion | 2,390 | 2,777 | |||||
Deferred income taxes | 246 | 279 | |||||
Other noncurrent liabilities | 312 | 365 | |||||
Commitments and contingencies | |||||||
Redeemable noncontrolling interest | 24 | 24 | |||||
Stockholders’ equity: | |||||||
Common stock, $0.01 par value, 1,000.0 shares authorized, 322.3 shares issued and 270.1 shares outstanding at September30, 2022; 321.6 shares issued and 287.0 shares outstanding at December 31, 2021 | 3 | 3 | |||||
Additional paid-in capital | 1,499 | 1,474 | |||||
Retained earnings | 6,536 | 5,794 | |||||
Accumulated other comprehensive loss | (539 | ) | (153 | ) | |||
Treasury stock, at cost; 52.2 shares at September30, 2022 and 34.6 shares at December 31, 2021 | (2,237 | ) | (1,346 | ) | |||
Total Company stockholders’ equity | 5,262 | 5,772 | |||||
Noncontrolling interest | 15 | 15 | |||||
Total stockholders’ equity | 5,277 | 5,787 | |||||
Total liabilities and stockholders’ equity | $ | 11,666 | $ | 12,606 | |||
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(In millions)
Nine Months Ended September 30, | |||||||
2022 | 2021 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net income | $ | 955 | $ | 856 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 197 | 212 | |||||
Gain on disposal of businesses and impairment of net assets held for sale | (159 | ) | — | ||||
Stock-based compensation expense | 31 | 25 | |||||
Loss on debt extinguishment | — | 24 | |||||
Other | (22 | ) | (45 | ) | |||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions: | |||||||
Receivables, net | (118 | ) | (134 | ) | |||
Inventories | (349 | ) | (53 | ) | |||
Prepaid income taxes/income taxes payable | 63 | (29 | ) | ||||
Accounts payable | 378 | 378 | |||||
Other operating assets and liabilities | 34 | 128 | |||||
Net cash provided by operating activities | 1,010 | 1,362 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Purchases of property, plant and equipment | (148 | ) | (133 | ) | |||
Proceeds from disposals of property, plant and equipment | 5 | 16 | |||||
Acquisitions, net of cash acquired | (4 | ) | (67 | ) | |||
Proceeds from disposals of businesses | 399 | 6 | |||||
Other investing activities, net | (8 | ) | (23 | ) | |||
Net cash provided by (used in) investing activities | 244 | (201 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Early-redemption premium | — | (16 | ) | ||||
Repayment of Euro Notes (2026) | — | (883 | ) | ||||
Borrowings under revolving credit facilities | 1,323 | 4,098 | |||||
Repayments under revolving credit facilities | (1,451 | ) | (3,242 | ) | |||
Repayments under term loans | — | (324 | ) | ||||
Borrowings (repayments) of other debt, net | 9 | (18 | ) | ||||
Settlement of derivative instruments, net | — | (89 | ) | ||||
Dividends paid to LKQ stockholders | (210 | ) | — | ||||
Purchase of treasury stock | (872 | ) | (575 | ) | |||
Other financing activities, net | (16 | ) | (17 | ) | |||
Net cash used in financing activities | (1,217 | ) | (1,066 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | (42 | ) | (4 | ) | |||
Net (decrease) increase in cash and cash equivalents | (5 | ) | 91 | ||||
Cash and cash equivalents, beginning of period | 274 | 312 | |||||
Cash and cash equivalents, end of period | $ | 269 | |||||
