LKQ revenue up nearly 31 percent year over year in Q2

Chicago-based aftermarket and recycled auto parts supplier LKQ Corp. says its second-quarter 2021 financial results that reflect strength in a number of key metrics, including total revenue, segment margins and free cash flow.

Dominick Zarcone, president and chief executive officer at LKQ, says, "This performance marks two key milestones as the first quarterly period with EPS (earnings per share) of over $1 and the highest quarterly segment EBITDA (earnings before interest, taxes, depreciation and amortization) in the company’s history. The North America and Specialty segments achieved record segment EBITDA margins in the quarter, and Europe delivered a double-digit margin for the first time since the second quarter of 2016. The European performance further validates the margin targets provided at the start of the 1 LKQ Europe program and gives us confidence that we are on track with the overall goals of the program.”

Quarterly results

LKQ’s second-quarter revenue totaled $3.4 billion, an increase of 30.8 percent compared with the company’s $2.6 billion in earnings in the second quarter of 2020. The company says the gain reflects the annualization of the pandemic impact during the second quarter of 2020.

For the second quarter of 2021, parts and services organic revenue increased 21.9 percent, while the net impact of acquisitions and divestitures decreased revenue 0.3 percent, and foreign exchange rates increased revenue 5.4% percent, for a total parts and services revenue increase of 27 percent, LKQ reports. Other revenue grew 108.5 percent in the second quarter of 2021, driven by higher scrap steel and precious metals prices, the company adds.

LKQ’s net income for the second quarter was $305 million, or 157 percent more than in the comparable period of the prior year. In the same quarter in 2020, the company’s net income totaled $119 million. Diluted earnings per share for the second quarter totaled $1.01 versus 39 cents for the same period of 2020, an increase of 159 percent.

On an adjusted basis, net income in the second quarter of this year was $340 million compared with $161 million in the same period of 2020, a 110.7 percent increase. Adjusted quarterly diluted earnings per share totaled $1.13 versus 53 cents for the same period of 2020, a 113.2 percent increase.

Cash flow from operations totaled $411 million during the second quarter of 2021, and free cash flow in the quarter was $365 million. Cash flow from operations for the six months ended June 30 was $933 million, and free cash flow for the six months ended June 30 was $845 million.

2021 outlook

Varun Laroyia, LKQ executive vice president and chief financial officer, says, “Based on the strong performance in the second quarter and the expected sustainability of the operational excellence initiatives, we are raising the full year outlook for profitability and free cash flow. While inflationary pressures will continue to be a headwind in the second half of the year, we are cautiously optimistic that we have the ability to mitigate these pressures.”

For 2021, LKQ’s management is has revised its outlook, expecting diluted EPS attributable to LKQ stockholders in the range of $3.23 to $3.43 and adjusted diluted EPS attributable to LKQ stockholders in the range of $3.55 to $3.75. The company says it expects free cash flow in the range of $0.95 billion to $1.05 billion and has updated the full year 2021 segment EBITDA margin targets for Europe provided Sept. 10, 2020, to a range of 9.5 percent to 10.3 percent.