Lkq Corporation · NASDAQ:LKQ
Lkq — Q1 2024 Earnings Presentation
31 slides from Lkq's earnings presentation, Apr 23, 2024
Slide 1: First Quarter 2024 Earnings Call Presentation
First Quarter 2024 Earnings Call Presentation April 23, 2024
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
Forward Looking Statements and Non-GAAP Financial Measures Statements and information in this presentation 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 A
Slide 3: Q1 2024 Highlights
Q1 2024 Highlights • Organic revenue for parts and services declined 0.3% (0.5% growth on a per day basis) ◦ Europe: growth of 2.7% (4.4% on a per day basis) ◦ Wholesale - North America: decrease of 3.3% reflecting repairable claims drop / mild winter weather conditions • Segment EBITDA(1) of $430 m
Slide 4: Outlook 2024
Outlook 2024(1) (effective only on the date issued: April 23, 2024) Full Year 2024 Outlook Organic parts and services revenue growth 2.5% to 4.5% Diluted EPS(2) $3.32 to $3.62 Adjusted Diluted EPS(2)(3) $3.90 to $4.20 Operating cash flow $1.35 billion Free cash flow(4) $1.0 billion Free cash flow co
Slide 5: Consolidated Results Q1 2024
Consolidated Results Q1 2024 Revenue(1) EPS • Organic growth: (1.1)% +10.6% • Currency translation (41.6)% (21.2)% $4,000 effect: 0.8% $1.20 $1.20 • Acquisition and divestiture: 10.9% $3,800 $3,703 $1.04 $3,600 $1.01 $1.00 $1.00 $3,400 $3,349 $3,200 $0.82 $0.80 $0.80 $3,000 $2,800 $0.59 $2,600 $0.60
Slide 6: Financial Results Q1 2024
Financial Results Q1 2024 LKQ
Slide 7: Q1 2024 Revenue
Q1 2024 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign Organic Divestiture Exchange Total(1) 100.0% 4.5% 5.9% Wholesale - North America (3.3)% 27.1% —% 23.8% 1.5% 1.8% Europe 2.7% 1.4% 1.7% 5.7% 11.4% 11.8% Specialty (1.4)% 8.1% —% 6.7% 75.0% Self Service (10.5)% —%
Slide 8: Operating Results - Q1
Operating Results - Q1 First Quarter ($ in millions, except per share data) 2024 2023 Change F/(U) Revenue $3,703 $3,349 10.6% Gross Margin 1,452 1,372 5.8% Operating Expenses 1,044 931 (12.1)% Operating Income 289 365 (20.8)% Income before provision for income taxes 231 361 (36.0)% Net income 158 2
Slide 9: Wholesale – North America – Q1
Wholesale – North America – Q1 Gross Margin Change % of Revenue 56.0% ($ in millions) 2024 2023 F/(U) 2024 2023 54.0% 52.0% 49.8% Total Revenue $1,500 $1,229 22.0% 50.0% Gross Margin $663 $608 8.9% 44.2% 49.5% 48.0% 49.5% 45.0% 46.0% 44.2% Operating Expenses $426 $366 (16.0)% 28.3% 29.8% 44.0% 44.6%
Slide 10: Europe – Q1
Europe – Q1 Gross Margin 42.0% Change % of Revenue 41.0% 40.0% 39.4% ($ in millions) 2024 2023 F/(U) 2024 2023 39.0% Total Revenue(1) $1,644 $1,555 5.7% 38.0% 38.7% Gross Margin $623 $588 6.1% 37.9% 37.8% 38.3% 37.0% 37.8% 37.9% Operating Expenses $493 $441 (11.9)% 30.0% 28.4% 36.0% (2) Segment EBIT
Slide 11: Specialty – Q1
Specialty – Q1 Change % of Revenue Gross Margin ($ in millions) 2024 2023 F/(U) 2024 2023 30.0% Total Revenue $423 $397 6.7% 28.0% 26.7% Gross Margin $106 $106 —% 25.0% 26.7% 26.0% 25.7% 26.0% 24.8% 25.0% Operating Expenses $81 $76 (6.2)% 19.1% 19.2% 24.0% Segment EBITDA(1) $27 $31 (13.2)% 6.4% 7.9%
Slide 12: Self Service – Q1
Self Service – Q1 Change % of Revenue Gross Margin ($ in millions) 2024 2023 F/(U) 2024 2023 48.0% 43.9% Total Revenue(1) $137 $169 (19.3)% 45.0% 41.3% 41.3% 42.0% Gross Margin $60 $70 (13.6)% 43.9% 41.3% 39.0% Operating Expenses $44 $48 7.7% 32.3% 28.2% 36.0% Segment EBITDA(2) $16 $22 (28.3)% 11.7%
Slide 13: Q1 2024 Capital Allocation
Q1 2024 Capital Allocation $2,000 ($ in millions) $1,500 $816 $1,000 $253 $(547) $(66) $(17) $500 $299 $(234) $344 $(81) $(30) $(49) $0 Beginning Cash Operating Proceeds from Repayment of Capex Acquisitions, Other Debt Dividends Share Other Activity, Ending Cash 12/31/23 Cash issuance of Euro Notes
Slide 14: Operating Cash Flow & Free Cash Flow
(1) Operating Cash Flow & Free Cash Flow (1) ($ in millions) ($ in millions) $1,600 100% $1,600 *Full Year Outlook 90% Actual FCF $1,400 conversion of $1,400 $1,350* 80% Adjusted $1,200 EBITDA(2) $1,200 70% $1,000* $1,000 60% 59% Targeted annual $1,000 60% FCF conversion of Adjusted EBITDA $800 50%
Slide 15: Leverage & Liquidity
Leverage & Liquidity ($ in millions) ($ in millions) Total Capacity(1) $4,500 $4,281 $4,287 $4,500 $4,000 $4,000 $3,500 $3,500 $3,000 $3,000 $2,500 2.3x 2.3x $2,500 $2,000 $2,000 $2,000 $2,000 $1,500 $1,500 $976 $1,246 $1,000 $1,000 $110 $114 $500 $500 $914 $640 $0 $0 December 31, 2023 March 31, 202
Slide 16: Liquidity as of March 31, 2024
Liquidity as of March 31, 2024 • Rated Baa3 (investment grade) by Moody's; Outlook Neutral Credit Rating • Rated BBB- (investment grade) by S&P Global Ratings; Outlook Neutral • Rated BBB- (investment grade) by Fitch; Outlook Positive • Fixed Rate Instruments: ◦ $1.4 billion in aggregate ($800 milli
Slide 17: Supplementary Information
Supplementary Information LKQ
Slide 18: Metals Prices & Foreign Exchange
Metals Prices & Foreign Exchange Average Metals Prices $250 Q1 2024 vs Q1 2023 Segment EBITDA Impact Wholesale - North $239 ($ in millions) Self Service America Total $227 $229 $200 Scrap Steel $(7) $— $(7) $209 $196 Precious Metals $(8) $(7) $(15) $151 $150 $138 $126 Total $(15) $(7) $(22) $110 $99
Slide 19: Inventory Procurement
Inventory Procurement ($ in millions, vehicles purchased in 000s) Q1 2024 2023 % Change Total aftermarket procurement $1,815 $1,444 25.7% Wholesale - North America salvage vehicles 61 64 (4.7)% Europe wholesale salvage vehicles 9 8 12.5% Self Service salvage vehicles 111 137 (19.0)% • Aftermarket pu
Slide 20: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Following are reconciliations of each non-GAAP financial measure with the most directly comparable financial measure calculated in accordance with GAAP. 20
Slide 21: Constant Currency Reconciliation
Appendix 1 Constant Currency Reconciliation The following unaudited table reconciles revenue and revenue growth for parts & services and total revenue to constant currency revenue and revenue growth for the same measures: Three Months Ended March 31, 2024 (in millions) Consolidated Europe Parts & Se
Slide 22: Constant Currency Reconciliation (cont.)
Appendix 1(cont.) Constant Currency Reconciliation Three Months Ended March 31, 2024 Consolidated Europe Parts & Services Revenue growth as reported 12.1% 5.7% Less: Currency impact 0.8% 1.7% Revenue growth at constant currency 11.3% 4.0% Total Revenue growth as reported 10.6% Less: Currency impact
Slide 23: Revenue and Segment EBITDA by segment
Appendix 2 Revenue and Segment EBITDA by segment Three Months Ended March 31 % of % of (in millions) 2024 revenue 2023 revenue Revenue Wholesale - North America $1,500 $1,229 Europe 1,644 1,555 Specialty 423 397 Self Service 137 169 Eliminations (1) (1) Total Revenue $3,703 $3,349 Segment EBITDA Who
Slide 24: Reconciliation of Net Income to Segment EBITDA
Appendix 3 Reconciliation of Net Income to Segment EBITDA Three Months Ended March 31 (in millions) 2024 2023 Net income $158 $270 Adjustments: Depreciation and amortization 100 65 Interest expense, net of interest income 61 33 Loss on debt extinguishment — 1 Provision for income taxes 71 94 Equity
Slide 25: Segment EBITDA Reconciliation
Appendix 3 Segment EBITDA Reconciliation We have presented Segment EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our segment profit and loss and underlying trends in our ongoing operations. Refer to p
Slide 26: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS
Appendix 4 Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS Three Months Ended March 31 (in millions, except per share data) 2024 2023 Net income $158 $270 Adjustments: Amortization of acquired intangibles 37 15 Restructuring and transaction related expens
Slide 27: Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS
Appendix 4 Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS We have presented Adjusted Net Income and Adjusted Diluted Earnings per Share as we believe these measures are useful for evaluating the core operating performance of our continuing business acros
Slide 28: Forecasted EPS Reconciliation
Appendix 5 Forecasted EPS Reconciliation Forecasted Fiscal Year 2024 (in millions, except per share data) Minimum Outlook Maximum Outlook (1) Net income $889 $969 Adjustments: Amortization of acquired intangibles 145 145 Restructuring and transaction related expenses 59 59 Tax effect of adjustments
Slide 29: Reconciliations of Operating Cash Flow to Free Cash Flow and Adjusted EBITDA
Appendix 6 Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Net Income to Adjusted EBITDA Three Months Ended March 31 (in millions) 2024 2023 Net cash provided by operating activities $253 $223 Less: purchases of property, plant and equipment 66 70 Free cash flow $1
Slide 30: Reconciliations of Operating Cash Flow to Free Cash Flow and Adjusted EBITDA
Appendix 6 Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Net Income to Adjusted EBITDA Year Ended December 31 (in millions) 2023 2022 Net cash provided by operating activities $1,356 $1,250 Less: purchases of property, plant and equipment 358 222 Free cash flow $
Slide 31: Reconciliation of Operating Cash Flow to Free Cash Flow and Adjusted EBITDA
Appendix 6 Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow and Net Income to Adjusted EBITDA We have presented free cash flow solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our l