LKQ starts 2022 profitably

Chicago-based automotive recycler LKQ Corp. has reported first quarter 2022 results it says reflect year-over-year improvement in revenue and earnings per share.

“We are extremely pleased with our first quarter results, which built on the momentum from last year and are a validation of the resiliency of our operating model,” says Dominick Zarcone, the company’s president and CEO. “I am pleased with our team's responsiveness to the challenging macroeconomic environment by quickly taking action to mitigate supply chain and inflationary headwinds. Based on our strong start to the year and confidence in our competitive position, we are raising our full year revenue and earnings per share (EPS) outlook.”

LKQ’s revenue for the first quarter of 2022 was $3.3 billion, an increase of 5.6 percent compared with $3.2 billion in the first quarter of last year. The company’s adjusted net income of $287 million compares with $286 million in the first quarter of 2021, an increase of just 0.34 percent. However, LKQ’s adjusted diluted earnings per share figure of $1.00 for the quarter is a 6.4 percent increase compared with EPS of 94 cents in the first quarter of 2021.

On the revenue side, LKQ cites scrap metal sales as a factor in the 2.0 percent rise in its “other revenue” category year-on-year. That includes prices fetched for aluminum, “cores and higher scrap steel prices, partially offset by lower precious metals prices.”

Varun Laroyia, LKQ’s chief financial officer, says, “The business has delivered a solid start to the fiscal year, and we are encouraged by the demand outlook for our segments, as reflected in our increased full-year outlook. We continue to generate strong free cash flow and remain committed to investing in the business to drive long-term sustainable earnings growth, maintaining an investment grade debt rating, and returning excess free cash flow to shareholders via share repurchases and quarterly dividends.”

Baltimore-based recycling and waste sector analyst Michael E. Hoffman of Stifel Financial Corp. says of the latest LKQ results that they “demonstrate the recurring nature of the business and LKQ’s position to excel versus the competition.”

Adds Hoffman, “LKQ appears to be gaining [market] share in North America, Europe and the United Kingdom in [both] the parts and services” sectors.