CHICAGO, Feb. 27 /PRNewswire-FirstCall/ -- LKQ Corporation today announced results for its fourth quarter ended December 31, 2007, with revenue of $414.7 million, net income of $21.5 million and diluted earnings per share of $0.16. "We finished the year with over $1.1 billion in revenue and $0.55 diluted earnings per share. Our diluted earnings per share exceeded the high end of the range of our previously indicated financial guidance. We reported record revenue for the fourth quarter, and delivered revenue growth of approximately 103%, with organic revenue growth at 13% for the quarter. We are particularly pleased with our progress to date related to combining our aftermarket businesses with Keystone Automotive Industries, Inc.," said Joe Holsten, President and Chief Executive Officer. 2007 Reported Results All earnings per share amounts, stock price amounts and share counts discussed herein reflect our December 2007 two-for-one stock split. For the fourth quarter of 2007, revenue increased 102.8% to $414.7 million compared with $204.5 million for the fourth quarter of 2006. Our organic revenue growth for the quarter was 13.3%. Net income for the quarter increased 111.3% to $21.5 million compared with $10.2 million for the fourth quarter of 2006. Diluted earnings per share was $0.16 for the quarter compared with $0.09 for the fourth quarter of 2006. Our provision for income taxes for the fourth quarter of 2007 was lower than previously expected as a result of certain adjustments primarily related to valuation allowances. This benefit provided approximately $0.01 of diluted earnings per share to the quarter and the full year. For the full year ended December 31, 2007, revenue increased 42.7% to $1.1 billion compared with $789.4 million for the same period in 2006. Organic revenue growth for the year was 12.4%. For the year ended December 31, 2007, net income increased 48.4% to $65.9 million compared with $44.4 million for the same period in 2006. Diluted earnings per share was $0.55 for the year ended December 31, 2007 compared with $0.40 for the same period a year ago. Revenue from aftermarket collision replacement parts, paint, shop supplies, refurbished bumpers, refurbished wheels and refurbished lighting for the year ended December 31, 2007 was $401.3 million. In addition we operated an aluminum smelter that melts damaged and unusable wheel cores as a means of product disposal. For the year ended December 31, 2007, the smelter's revenue was $38.4 million at a gross margin of approximately 4.8%, compared to $28.2 million of revenue at a gross margin of approximately 7.1% for the eleven months we owned the smelter in 2006. The weighted average diluted shares outstanding for the fourth quarter of 2007 was 138.8 million compared to 112.3 million for the fourth quarter of 2006, and for the year ended December 31, 2007 was 119.9 million compared to 111.6 million for the year ended December 31, 2006. On September 25, 2007, we completed a public offering of 27.6 million shares of our common stock at a price per share to the public of $15.50. The offering included 23.6 million shares sold by us and 4.0 million shares sold by selling stockholders. The shares sold by us included 3.6 million shares sold pursuant to the exercise of the underwriters' over-allotment option. We received approximately $349.5 million in net proceeds from the sale of the shares by us in the offering, after deducting discounts and commissions and the estimated expenses of the offering. Business Acquisitions in 2007 During the first nine months of 2007, we acquired eight businesses. They consisted of five recycled parts businesses, two aftermarket businesses and a small light refurbishing business. These businesses reported approximately $53.1 million of trailing annual revenue just prior to our acquisition of them. On October 12, 2007 we acquired Keystone, the leader in the aftermarket vehicle collision replacement parts industry. For the fiscal year ended March 30, 2007, Keystone reported sales and net income of $714.0 million and $30.3 million, respectively. In November, we acquired a retail oriented recycled parts business located in Portland, OR. Late in December, we acquired a recycled parts business located on 35 acres near Birmingham, AL. We will relocate our existing Birmingham recycled parts business to this new property during the latter part of 2008. In late December, we also acquired a business with locations in California and Indiana that specializes in buying OE repair parts. These three businesses reported approximately $15.1 million of trailing annual revenue just prior to our acquisition of them. We obtained a senior secured debt financing facility from Lehman Brothers Inc. and Deutsche Bank Securities Inc. on October 12, 2007 to fund a portion of the Keystone acquisition. This facility consists of approximately $750 million of borrowing capacity. It is made up of a six year $610 million term loan, a six year CDN $40 million Canadian term loan, a six year $15 million dual currency (Canadian dollars and U.S. dollars) revolving credit facility, and a six year $85 million revolving credit facility. As of February 26, 2008, we had outstanding debt under our new debt facility of approximately $650 million. Company Outlook We expect that 2008 organic revenue growth will be approximately 10%, with the balance of revenue growth being the full year impact of 2007 business acquisitions. Excluding the effect of any 2008 restructuring expenses we may have related to the Keystone acquisition we expect full year 2008 net income to be within a range of $102.0 million to $108.0 million and diluted earnings per share to be between $0.73 and $0.77. We anticipate that net cash provided by operating activities for 2008 will be over $85.0 million. We estimate our full year 2008 capital expenditures related to property and equipment, excluding expenditures for acquiring businesses, will be between $65.0 million to $75.0 million. This includes approximately $10.0 million related to capital expenditures planned for late 2007 on projects that became delayed and approximately $4.8 million related to restructuring our aftermarket business as a result of the Keystone acquisition. We estimate the weighted average diluted shares outstanding for the full year 2008 will be approximately 140 million. These share numbers are estimates and will be affected by factors such as any future stock issuances, the number of our options exercised in subsequent periods, and changes in our stock price. 2007 Earnings Results and 2008 Financial Guidance Conference Call We will host an audio webcast to discuss our 2007 earnings results and our 2008 financial guidance on Wednesday, February 27, 2008 at 10:30 a.m. Eastern Time. The live audio webcast can be accessed on the internet at http://www.lkqcorp.com in the Investor Relations section. An online replay of the webcast will be available on our website approximately two hours after the live presentation and will remain on the site until March 12, 2008. About LKQ Corporation LKQ Corporation is the largest nationwide provider of aftermarket collision replacement products, recycled OEM products and refurbished OEM collision replacement products such as wheels, bumper covers and lights used to repair light vehicles. LKQ operates approximately 300 facilities offering its customers a broad range of replacement systems, components, and parts to repair light vehicles. Forward Looking Statements The statements in this press release that are not historical are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our expectations, beliefs, hopes, intentions or strategies. Forward looking statements involve risks and uncertainties, some of which are not currently known to us. Actual events or results may differ materially from those expressed or implied in the forward looking statements as a result of various factors. These factors include:
-- the risk that Keystone's business will not be integrated successfully
or that LKQ will incur unanticipated costs of integration;
-- the ability to maintain Keystone's vendor and key customer
relationships and retain key employees;
-- the availability and cost of inventory;
-- pricing of new OEM replacement parts;
-- variations in vehicle accident rates;
-- changes in state or federal laws or regulations affecting our business;
-- fluctuations in fuel prices;
-- changes in the demand for our products and the supply of our inventory
due to severity of weather and seasonality of weather patterns;
-- changes in the types of replacement parts that insurance carriers will
accept in the repair process;
-- the amount and timing of operating costs and capital expenditures
relating to the maintenance and expansion of our business, operations
and infrastructure;
-- declines in asset values;
-- uncertainty as to changes in U.S. general economic activity and the
impact of these changes on the demand for our products;
-- uncertainty as to our future profitability;
-- increasing competition in the automotive parts industry;
-- our ability to increase or maintain revenue and profitability at our
facilities;
-- uncertainty as to the impact on our industry of any terrorist attacks
or responses to terrorist attacks;
-- our ability to operate within the limitations imposed by financing
arrangements;
-- our ability to obtain financing on acceptable terms to finance our
growth;
-- our ability to integrate and successfully operate recently acquired
companies and any companies acquired in the future and the risks
associated with these companies;
-- our ability to develop and implement the operational and financial
systems needed to manage our growing operations; and
-- other risks that are described in our Form 10-K filed February 28, 2007
and in other reports filed by us from time to time with the Securities
and Exchange Commission.
You should not place undue reliance on the forward looking statements. We assume no obligation to update any forward looking statement to reflect events or circumstances arising after the date on which it was made.
CONTACT:
LKQ Corporation
Mark T. Spears, Executive Vice President and Chief Financial Officer
312-621-1950
irinfo@lkqcorp.com
Financial Tables To Follow
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Income
(In thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Revenue $414,735 $204,546 $1,126,825 $789,381
Cost of goods sold 229,621 112,960 621,076 431,832
Gross margin 185,114 91,586 505,749 357,549
Facility and warehouse expenses 40,145 23,273 116,577 86,298
Distribution expenses 39,995 19,967 108,185 80,088
Selling, general and
administrative expenses 54,874 26,929 140,843 102,174
Restructuring expenses 388 - 388 -
Depreciation and amortization 6,550 3,059 17,099 11,823
Operating income 43,162 18,358 122,657 77,166
Other (income) expense:
Interest expense, net 9,945 1,705 16,012 5,824
Other income, net (483) (307) (1,626) (1,479)
Total other expense 9,462 1,398 14,386 4,345
Income before provision for
income taxes 33,700 16,960 108,271 72,821
Provision for income taxes 12,168 6,770 42,370 28,426
Net income $21,532 $10,190 $65,901 $44,395
Net income per share:
Basic $0.16 $0.10 $0.58 $0.42
Diluted $0.16 $0.09 $0.55 $0.40
Weighted average common shares
outstanding:
Basic 133,401 106,661 114,161 105,655
Diluted 138,848 112,336 119,938 111,633
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Cash Flows
(In thousands)
Year Ended
December 31,
2007 2006
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $65,901 $44,395
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 18,018 12,086
Gain on sale of property and equipment (138) (20)
Stock-based compensation expense 3,039 2,461
Writeoff of debt issuance costs 424 -
Deferred income taxes 4,304 3,618
Gain on sale of investment securities - (719)
Excess tax benefit from exercise of stock options (19,257) (7,101)
Changes in operating assets and liabilities,
net of effects from purchase transactions:
Receivables (11,026) (4,133)
Inventory (35,134) (8,671)
Prepaid income taxes / income taxes payable 17,000 7,071
Other operating assets and liabilities 11,238 3,394
Net cash provided by operating activities 54,369 52,381
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property and equipment (38,401) (36,152)
Proceeds from sale of property and equipment 602 250
Proceeds from sale of investment securities - 848
Repayment of escrow - (2,561)
Decrease in restricted cash in escrow - 450
Cash used in acquisitions (868,022) (73,492)
Net cash used in investing activities (905,821) 110,657)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from the sale of common stock 349,529 -
Proceeds from exercise of stock
options and warrants 12,080 6,262
Retirement of redeemable common stock (1,125) -
Excesstax benefit from exercise of stock options 19,257 7,101
Debt issuance costs (12,832) -
Net borrowings of long-term debt 554,720 45,771
Net cash provided by financing activities 921,629 59,134
Effect of exchange rate changes on
cash and equivalents 33 -
Net increase in cash and equivalents 70,210 858
Cash and equivalents, beginning of period 4,031 3,173
Cash and equivalents, end of period $74,241 $4,031
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Balance Sheets
(In thousands, except share and per share data)
December 31,
2007 2006
Assets
Current Assets:
Cash and equivalents $74,241 $4,031
Receivables, net 125,572 49,254
Inventory 320,238 124,541
Deferred income taxes 18,809 2,619
Prepaid income taxes 6,344 -
Prepaid expenses 8,088 3,369
Total Current Assets 553,292 183,814
Property and Equipment, net 217,059 127,084
Intangibles 900,832 246,300
Other Assets 21,472 7,157
Total Assets $1,692,655 $564,355
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $68,871 $19,242
Accrued expenses 73,172 29,504
Income taxes payable - 304
Deferred revenue 4,844 3,859
Current portion of long-term obligations 16,936 8,485
Total Current Liabilities 163,823 61,394
Long-Term Obligations, Excluding Current Portion 641,526 91,962
Deferred Income Tax Liability 25,607 1,848
Other Noncurrent Liabilities 11,922 7,332
Redeemable Common Stock, $0.01 par value,
200,000 shares issued at December 31, 2006 - 617
Commitments and Contingencies
Stockholders' Equity:
Common stock, $0.01 par value, 500,000,000 shares
authorized, 134,149,066 and 106,599,654 shares
issued at December 31, 2007 and 2006,
respectively. 1,341 1,066
Additional paid-in capital 705,778 322,656
Retained earnings 142,039 76,422
Accumulated other comprehensive income 619 1,058
Total Stockholders' Equity 849,777 401,202
Total Liabilities and Stockholders' Equity $1,692,655 $564,355
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
($ in thousands)
Three Months Ended December 31,
Operating Highlights 2007 2006
% of % of
Revenue Revenue $ Growth % Growth
Revenue $414,735 100.0% $204,546 100.0% $210,189 102.8%
Cost of goods sold 229,621 55.4% 112,960 55.2% 116,661 103.3%
Gross margin 185,114 44.6% 91,586 44.8% 93,528 102.1%
Facility and
warehouse expenses 40,145 9.7% 23,273 11.4% 16,872 72.5%
Distribution expenses 39,995 9.6% 19,967 9.8% 20,028 100.3%
Selling, general
and administrative
expenses 54,874 13.2% 26,929 13.2% 27,945 103.8%
Restructuring expenses 388 0.1% - 0.0% 388 -
Depreciation and
amortization 6,550 1.6% 3,059 1.5% 3,491 114.1%
Operating income 43,162 10.4% 18,358 9.0% 24,804 135.1%
Other (income) expense:
Interest expense, net 9,945 2.4% 1,705 0.8% 8,240 483.3%
Other income, net (483) -0.1% (307) -0.2% (176) 57.3%
Total other expense 9,462 2.3% 1,398 0.7% 8,064 576.8%
Income before
provision for
income taxes 33,700 8.1% 16,960 8.3% 16,740 98.7%
Provision for
income taxes 12,168 2.9% 6,770 3.3% 5,398 79.7%
Net income $21,532 5.2% $10,190 5.0% $11,342 111.3%
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
($ in thousands)
Year Ended December 31,
Operating Highlights 2007 2006
% of % of
Revenue Revenue $ Growth % Growth
Revenue $ 1,126,825 100.0% $789,381 100.0% $337,444 42.7%
Cost of goods sold 621,076 55.1% 431,832 54.7% 189,244 43.8%
Gross margin 505,749 44.9% 357,549 45.3% 148,200 41.4%
Facility and
warehouse expenses 116,577 10.3% 86,298 10.9% 30,279 35.1%
Distribution expenses 108,185 9.6% 80,088 10.1% 28,097 35.1%
Selling, general
and administrative
expenses 140,843 12.5% 102,174 12.9% 38,669 37.8%
Restructuring expenses 388 0.0% - 0.0% 388 -
Depreciation
and amortization 17,099 1.5% 11,823 1.5% 5,276 44.6%
Operating income 122,657 10.9% 77,166 9.8% 45,491 59.0%
Other (income)
expense:
Interest
expense, net 16,012 1.4% 5,824 0.7% 10,188 174.9%
Other income, net (1,626) -0.1% (1,479) -0.2% (147) 9.9%
Total other expense 14,386 1.3% 4,345 0.6% 10,041 231.1%
Income before
provision
for income taxes 108,271 9.6% 72,821 9.2% 35,450 48.7%
Provision for
income taxes 42,370 3.8% 28,426 3.6% 13,944 49.1%
Net income $65,901 5.8% $44,395 5.6% $21,506 48.4%
The following table reconciles EBITDA to net income:
Three Months Year
Ended December 31, Ended December 31,
2007 2006 2007 2006
(In thousands)
Net income $21,532 $10,190 $65,901 $44,395
Depreciation and amortization 7,086 3,171 18,018 12,086
Interest, net 9,945 1,705 16,012 5,824
Provision for income taxes 12,168 6,770 42,370 28,426
Earnings before interest,
taxes, depreciation and
amortization (EBITDA) $50,731 $21,836 $142,301 $90,731
EBITDA as a percentage of revenue 12.2% 10.7% 12.6% 11.5%
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20051017/LKQLOGO
AP Archive: http:
LKQ Corporation
|
