LKQ Posts Lower-Than-Expected Earnings in Q1, Revenues Beat

LKQ Corporation’s LKQ first-quarter 2018 adjusted earnings from continuing operations came in at 55 cents per share, missing the Zacks Consensus Estimate of 59 cents. However, the bottom line improved from the prior-year quarter figure of 49 cents.

 

Adjusted net income from continuing operations was $170 million in comparison to $153 million in the prior-year quarter.

 

In the fourth quarter, total revenues rose 16.1% to $2.72 billion from $2.34 billion a year ago and also outpaced Zacks Consensus Estimate of $2.6 billion. The company witnessed 3.7% organic revenue growth in parts and services, out of which its North American segment contributed 6.5%.

 

 

LKQ Corporation Price, Consensus and EPS Surprise

 

LKQ Corporation Price, Consensus and EPS Surprise | LKQ Corporation Quote

 

Business Developments

 

In the first quarter of 2018, LKQ Corp priced an offering of €1.0 billion in aggregate principal amount of senior notes. The offering consisted of €750 million 3.625% senior notes due 2026 (the “2026 notes”) and €250 million 4.125% senior notes due 2028 (the “2028 notes” and, together with the 2026 notes, the “notes”).

 

Also, during the quarter, European operations of LKQ Corp opened one and four new branches in Western Europe and Eastern Europe, respectively.

 

Financial Position

 

LKQ Corp had cash and cash equivalents of $245.7 million as of Mar 31, 2018, compared with $264.6 million as of Mar 31, 2017.

 

For the first quarter of 2018, LKQ Corp had net cash provided by operating activities of around $145 million.

 

2018 Outlook

 

For 2018, LKQ Corp expects organic revenue growth for parts & services in the range of 4-5.5%, in comparison to the prior guidance of 4-6%.

 

Further, adjusted net income from continuing operations is expected in the range of $685-$715 million down from the earlier guidance of $720-$750 million. Adjusted earnings per share from continuing operations in 2018 is expected to be in the band of $2.2 to $2.3 declining from the prior guidance of $2.3-$2.4.

 

Zacks Rank & Key Picks

 

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

 

Some better-ranked stocks in the auto space are BMW AG BAMXF, Dana Incorporated DAN and Allison Transmission Holdings, Inc. ALSN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

BMW has an expected long-term growth rate of 4.5%. Over a year, shares of the company have gained 13.7%.

 

Dana has an expected long-term growth rate of 10%. Shares of the company have risen 28.1% in the past year.

 

Allison Transmission has an expected long-term growth rate of 10%. Over a year, shares of the company have gained 0.7%.

 

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