NTP-STAG Parent Co. LKQ Corp. Announces Q1 2024 Results – RVBusiness – Breaking RV Industry News
CHICAGO – LKQ Corporation (Nasdaq: LKQ), the parent company of Keystone Automotive and its NTP-STAG RV distribution division, today reported first quarter 2024 financial results.
“Our first quarter results were below our expectations as our Wholesale – North America segment was confronted with a reduction in repairable claims and the resulting pressure on demand, which we believe is primarily attributable to record warm weather across the United States,” noted Dominick Zarcone, president and chief executive officer.
“On the upside,” he continued, “we experienced positive organic growth in our Europe segment and generated robust free cash flow. Our success since implementing the operational excellence strategy in 2019 has placed the Company on solid ground to recover from uncontrollable dynamics, such as those we faced in the first quarter. As a result, and despite the revenue headwinds we encountered in the first quarter, we are maintaining our adjusted earnings per share and free cash flow guidance. We have confidence in our team’s abilities and their track record of swiftly and effectively implementing action plans to address our cost-structure, and have already made meaningful changes to reflect current levels of demand.”
First Quarter 2024 Financial Results
Revenue for the first quarter of 2024 was $3.7 billion, an increase of 10.6% compared to $3.3 billion for the first quarter of 2023. For the first quarter of 2024, parts and services organic revenue decreased 0.3% (0.5% increase on a per day basis), foreign exchange rates increased revenue by 0.8% and the net impact of acquisitions and divestitures increased revenue by 11.6% year over year, for a total parts and services revenue increase of 12.1%. Other revenue for the first quarter of 2024 fell 14.6% primarily due to weaker precious metals prices relative to the same period in 2023.
Net income2 for the first quarter of 2024 was $158 million compared to $270 million for the same period of 2023. Diluted earnings per share2 for the first quarter of 2024 was $0.59 compared to $1.01 for the same period of 2023, a decrease of 41.6%.
On an adjusted basis, net income1,2 for the first quarter of 2024 was $220 million compared to $279 million for the same period of 2023, a decrease of 21.1%. Adjusted diluted earnings per share1,2 was $0.82 for the first quarter of 2024 compared to $1.04 for the same period of 2023, a decrease of 21.2%.
(1) Non-GAAP measure. See the table accompanying this release that reconciles the actual or forecasted U.S. GAAP measure to the actual or forecasted adjusted measure, which is non-GAAP.
(2) References in this release to Net income and Diluted earnings per share, and the corresponding adjusted figures, reflect amounts from continuing operations attributable to LKQ stockholders.
Cash Flow and Balance Sheet
Cash flow from operations and free cash flow1 were $253 million and $187 million, respectively, for the first quarter of 2024. As of March 31, 2024, the balance sheet reflected total debt of $4.3 billion and total leverage, as defined in our credit facility, was 2.3x EBITDA.
Stock Repurchase and Dividend Programs
During the first quarter of 2024, the Company invested $30 million to repurchase 0.6 million shares of its common stock. Since initiating the stock repurchase program in late October 2018, the Company has repurchased approximately 57 million shares for a total of $2.5 billion through March 31, 2024.
On April 22, 2024, the Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock, payable on May 30, 2024, to stockholders of record at the close of business on May 16, 2024.
Other Events
“Confronted with soft demand, our Wholesale – North America team accelerated our FinishMaster footprint rationalization by consolidating 65 branches in the first quarter. To date, we have consolidated a total of 99 branches, representing 66% of the acquired locations, which is more than we anticipated completing in the first three-years. Through this effort, our team uncovered additional opportunities for synergies, which has given us the confidence to increase our previously disclosed synergies from $55 million to $65 million,” said Justin Jude, Executive Vice President and Chief Operating Officer.
On March 13, 2024, LKQ completed an offering of €750 million aggregate principal amount of 4.125% Euro Notes due in 2031. LKQ used the net proceeds from the offering to pay outstanding indebtedness, including all of the outstanding €500 million aggregate principal amount of the 3.875% Euro Notes (2024) as well as Euro revolver borrowings, and pay accrued interest and related fees, premiums and expenses.
On April 16, 2024, LKQ divested our operations in Slovenia and simultaneously entered into an agreement to divest our operations in Bosnia, which LKQ expects to close in the third quarter of this year subject to receipt of regulatory approvals. After thorough consideration, LKQ determined our operations in Slovenia and Bosnia did not align with its long-term strategy and financial return objectives. Terms of the transactions were not disclosed.
2024 Outlook
Rick Galloway, Senior vice president and chief financial officer, commented, “We are reiterating our full year adjusted earnings per share and free cash flow guidance based on our confidence in the core strengths of our businesses and the action plans already in motion to recover the first quarter’s underperformance. We have lowered the range of our organic revenue growth guidance in recognition of the softer than expected first quarter demand and lowered our GAAP earnings per share guidance due to higher projected restructuring and transaction related expenses than prior guidance.”
