ANTIOCH, Tenn. – LKQ Corporation (Nasdaq: LKQ), the parent Keystone Automotive and its NTP-STAG RV aftermarket distribution division, today reported third quarter 2024 financial results.
“Our third quarter results reflect softer overall volumes, which underscore the importance of executing on our strategic transformation discussed at our September investor day,” Justin Jude, president and chief executive officer, stated in a release. “Our focus on managing our operating expenses is critically important, especially in a period when the top line is facing uncontrollable market headwinds. The agility of the LKQ team was again validated by the growth witnessed in adjusted diluted earnings per share and overall Segment EBITDA margin relative to the prior year. We remain confident in the long-term earnings potential of our businesses as we navigate short-term industry dynamics and a difficult macro-economic environment that will continue to affect the business in the fourth quarter.”
Third Quarter 2024 Financial Results
Revenue for the third quarter of 2024 was $3.6 billion, an increase of 0.5% compared to $3.6 billion for the third quarter of 2023. Parts and services organic revenue decreased 2.8% (4.3% decrease on a per day basis), the net impact of acquisitions and divestitures increased revenue by 3.1%, and foreign exchange rates increased revenue by 0.4% year over year, for a total parts and services revenue increase of 0.6%. Other revenue fell 2.2% primarily due to lower commodities prices and volumes relative to the same period in 2023.
Net income2 was $191 million compared to $207 million for the same period of 2023. Diluted earnings per share2 was $0.73 compared to $0.77 for the same period of 2023, a decrease of 5.2%.
On an adjusted basis, net income1,2 was $230 million compared to $231 million for the same period of 2023, a decrease of 0.3%. Adjusted diluted earnings per share1,2 was $0.88 compared to $0.86 for the same period of 2023, an increase of 2.3%.
(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 $420 million and $341 million, respectively, for the third quarter of 2024. Cash flow from operations and free cash flow1 were $886 million and $661 million, respectively, for the nine months ended September 30, 2024. As of September 30, 2024, the balance sheet reflected total debt of $4.4 billion and total leverage, as defined in our credit facility, was 2.4x EBITDA.
Stock Repurchase and Dividend Programs
During the third quarter of 2024, the Company returned over $200 million to its shareholders by investing approximately $125 million to repurchase 3.0 million shares of its common stock and distributing $79 million in cash dividends. For the nine months ended September 30, 2024, the Company has repurchased 6.5 million shares of its common stock for $280 million, and since initiating the stock repurchase program in late October 2018, the Company has repurchased approximately 62 million shares of its common stock for a total of $2.7 billion through September 30, 2024. As of September 30, 2024, there was $796 million remaining on the authorization.
On October 22, 2024 the Board of Directors authorized a $1 billion increase to the stock repurchase program, raising the aggregate authorization to $4.5 billion and thus making available an aggregate balance of $1.8 billion for potential additional repurchases through October 25, 2026.
On October 22, 2024, the Board of Directors declared a quarterly cash dividend of $0.30 per share of common stock, payable on November 27, 2024, to stockholders of record at the close of business on November 14, 2024.
Other Events
In July 2024, we divested our operations in Poland to Mekonomen, and we closed on the divestiture of our Bosnia operations in September 2024. Terms of the transactions were not disclosed.
2024 Outlook
“The revenue headwinds we experienced across our global operations have been more impactful than projected in our prior guidance, and we currently do not expect these headwinds to abate in the fourth quarter. While our cost actions and synergy realization have boosted profitability, the benefits from these actions are not expected to offset the full impact of the lower revenue expectation in the fourth quarter,” stated Rick Galloway, Senior Vice President and Chief Financial Officer. “We are holding our prior cash flow guidance despite the decrease in profitability as we expect to mitigate the impact through working capital and capital expenditure management.”
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