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LKQ's Q4 Earnings & Revenues Miss Estimates, Declines Y/Y

LKQ Corporation LKQ reported adjusted earnings of 78 cents per share in fourth-quarter 2022, missing the Zacks Consensus Estimate of 84 cents. The underperformance was due to lower-than-expected revenues from Specialty and Self-Service segments. The bottom line also declined 10.3% year over year. This aftermarket auto parts distributor registered quarterly revenues of $3,001 million, missing the Zacks Consensus Estimate of $3,014 million. The top line also fell 5.8% from the year-ago level. Meanwhile, parts and services organic revenues increased 4.5% year over year.

LKQ Corporation Price, Consensus and EPS Surprise

 

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

In the reported quarter, revenues from the Wholesale North American segment totaled $1,102 million, rising 0.4% from $1,097 million reported in the prior-year period and topping the consensus mark of $1,078 million. The segment’s EBITDA came in at $204 million, up from $166 million in the fourth quarter of 2021.

Revenues from the European segment were $1,390 million, down 7.14% from $1,497 million in the year-earlier quarter but beating the consensus mark of $1,363 million. The segment’s EBITDA came in at $139 million, up from $134 million in the year-ago period.

Revenues from the Specialty segment came in at $365 million, down 11% year over year and missing the consensus mark of $418 million. The segment’s EBITDA was $23 million, down from the year-ago figure of $30 million.

Revenues from the Self Service segment totaled $144 million, down nearly 21.7% from the year-earlier quarter’s sales and missing the consensus mark of $159 million. The segment’s EBITDA was $7 million, massively shrinking from $27 million.

Financial Position & Dividend

LKQ had cash and cash equivalents of $278 million on Dec 31, 2022, up from $274 million recorded as of Dec 31, 2021. The long-term debt (excluding the current portion) amounted to $2,622 million as of Dec 31, 2022, down from $2,777 million recorded on Dec 31, 2021. As of Dec 31, 2022, LKQ’s balance sheet reflected a net debt of $2,384 billion.

During the quarter, cash flow provided by operating activities totaled $240 million. The company recorded a positive free cash flow of $166 million.

During the reported quarter, the company repurchased 3 million shares worth $152 million. Between the period of initiating the stock buyback program in late October 2018 and Dec 31, 2022, it repurchased around 55 million shares for a total of $2.4 billion. In October 2022, the buyback program was boosted by another $1 billion.

On Feb 21, 2023, LKQ declared a quarterly cash dividend of 27.5 cents per share of common stock. The dividend is payable on Mar 30, 2023, to stockholders of record at the close of business on Mar 16, 2023.

2023 Guidance

For 2023, the company projects adjusted EPS to be in the range of $3.90-$4.20 per share. The company’s estimated free cash flow stood at approximately $975 million. The operating cash flow projection is $1.275 billion. Its forecast of organic revenue growth lies between 6% and 8%.

Zacks Rank & Key Picks

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

A few better-ranked players in the auto space include Wabash National WNC, Modine Manufacturing MOD and Hyliion HYLN. WNC and MOD sport a Zacks Rank #1 (Strong Buy) and HYLN carries a Zacks Rank #2 (Buy).

Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 sales and earnings implies year-over-year growth of 13.06% and 24%, respectively.

Modine designs and manufactures world-class thermal dynamic equipment for today's agricultural, mining & construction equipment. The Zacks Consensus Estimate for MOD’s 2023 sales and earnings implies year-over-year growth of 11.43% and 43.09%, respectively.

Hyliion provides electrified powertrain solutions for Class 8 commercial vehicles. The Zacks Consensus Estimate for HYLN’s 2023 sales implies year-over-year growth of 538.07%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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