CHICAGO - LKQ Corporation (NASDAQ:LKQ) reported its financial results for the first quarter of 2024, revealing earnings that fell short of analyst expectations.
The company's adjusted earnings per share (EPS) came in at $0.82, which was below the consensus estimate of $0.95. However, LKQ maintained its full-year adjusted EPS and free cash flow guidance despite the shortfall.
In the first quarter, LKQ saw its revenue climb to $3.7 billion, marking an 11% increase from the $3.3 billion reported in the same period last year. Despite this growth, the figure did not meet the analyst revenue consensus of $3.76 billion. The company attributed the revenue miss to a decrease in repairable claims within its Wholesale – North America segment, largely due to unusually warm weather conditions.
President and CEO Dominick Zarcone expressed confidence in the company's resilience, noting that the operational excellence strategy implemented in 2019 has prepared LKQ to recover from such uncontrollable dynamics. "Despite the revenue headwinds we encountered in the first quarter, we are maintaining our adjusted earnings per share and free cash flow guidance," Zarcone stated.
The company's net income for the quarter was $158 million, a significant drop from the $270 million reported in the first quarter of 2023. Adjusted net income also decreased by 21.1% to $220 million, compared to $279 million in the prior year. Adjusted diluted EPS decreased by 21.2% from $1.04 to $0.82 year-over-year (YoY).
LKQ's cash flow remained strong, with operating cash flow reaching $253 million and free cash flow at $187 million. The company continued its shareholder return programs, repurchasing $30 million of its shares and declaring a quarterly dividend of $0.30 per share.
Despite the first-quarter performance, LKQ is reiterating its full-year guidance, expecting an adjusted EPS range of $3.90 to $4.20, which aligns closely with the analyst consensus of $4.08. This guidance reflects the company's confidence in its business fundamentals and the effectiveness of the action plans in place to address the quarter's underperformance.
Senior Vice President and CFO Rick Galloway commented on the outlook, indicating that the company has lowered its organic revenue growth guidance due to softer demand but remains optimistic about its core business strengths and recovery plans.
InvestingPro Insights
In light of LKQ Corporation's recent earnings report, it's valuable to consider some key financial metrics and insights from InvestingPro. The company currently holds a market capitalization of $13.05 billion, and its Price to Earnings (P/E) ratio stands at 14.05, slightly below the adjusted P/E ratio for the last twelve months as of Q4 2023, which is 13.62. This indicates a reasonable valuation relative to earnings, which could be attractive to value-oriented investors.
The revenue growth for LKQ has been robust, with an 8.38% increase over the last twelve months as of Q4 2023, and an even more impressive quarterly revenue growth of 16.66% in Q1 2024. This demonstrates the company's ability to expand its sales despite the challenges faced in the recent quarter.
LKQ's gross profit margin for the last twelve months is a solid 40.24%, reflecting the company's efficiency in managing its cost of goods sold and maintaining profitability. This is a critical aspect, especially when navigating through periods of economic uncertainty or market fluctuations.
In terms of InvestingPro Tips, it's noteworthy that LKQ has raised its dividend for three consecutive years, showcasing a commitment to returning value to shareholders. Additionally, the stock generally trades with low price volatility, which could be a reassuring factor for investors seeking stability in their portfolio. For those interested in delving deeper into LKQ's financial health and future prospects, there are more InvestingPro Tips available at https://www.investing.com/pro/LKQ. Moreover, users can apply the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking an even broader array of insights and analysis.
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