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LKQ Falls Short of Q2 Earnings Estimates, Cuts 2024 Guidance

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LKQ Corporation (LKQ - Free Report) delivered adjusted earnings of 98 cents per share for second-quarter 2024, which missed the Zacks Consensus Estimate of $1.03 and decreased from $1.09 reported in the year-ago period. The aftermarket auto parts distributor registered quarterly revenues of $3.70 billion, missing the Zacks Consensus Estimate of $3.86 billion. The top line, however, grew from the year-ago level of $3.44 billion. Parts and services organic revenues decreased 2.1% year over year.

LKQ Corporation Price, Consensus and EPS Surprise

LKQ Corporation Price, Consensus and EPS Surprise

LKQ Corporation price-consensus-eps-surprise-chart | LKQ Corporation Quote

Segment Highlights

In the reported quarter, revenues from the Wholesale North American segment totaled $1.47 billion, rising 23% year over year and surpassing our estimate of $1.43 billion. The segment’s EBITDA was $256 million, which was above our forecast of $252.2 million and $248 million generated in the second quarter of 2023.

Revenues from the European segment were $1.64 billion, flat year over year but below our estimate of $1.79 billion. The segment’s EBITDA came in at $174 million, which decreased from the year-ago level of $188 million but topped our forecast of $169.5 million.

Revenues from the Specialty segment came in at $466 million, rising 5.2% year over year but lagging our projection of $474 million. The segment’s EBITDA was $41 million, which inched down from the year-ago figure of $42 million but beat our forecast of $36 million.

Revenues from the Self-Service segment totaled $133 million, down 21.3% year over year. The metric also missed our prediction of $146.3 million. The segment’s EBITDA was $13 million, which lagged our estimate of $28.7 million but increased from $7 million reported in the year-ago period.

Financial Position & Dividend

LKQ had cash and cash equivalents of $276 million as of Jun 30, 2024, down from $299 million recorded as of Dec 31, 2023. The long-term obligations (excluding the current portion) amounted to $4.25 billion as of Jun 30, 2024, up from $3.65 billion recorded as of Dec 31, 2023. As of Jun 30, 2024, LKQ’s balance sheet reflected a total debt of $4.3 billion.

During the second quarter of 2024, cash flow provided by operating activities totaled $213 million. The company recorded a positive free cash flow of $133 million.

During the second quarter of 2024, the company repurchased 2.9 million shares worth $125 million. In the period between initiating the stock buyback program in late October 2018 and Jun 30, 2024, it repurchased around 59 million shares for a total of $2.6 billion.

On Jul 23, 2024, LKQ announced a quarterly cash dividend of 30 cents per share. The dividend will be paid out on Aug 29, 2024, to stockholders of record at the close of business on Aug 15, 2024.

Revised 2024 Guidance

For full-year 2024, the company now anticipates parts and services organic revenues to be down 1.25% to up 0.25%. This indicates a downward revision from the prior guided range of 2.5-4.5% increase year over year. It now expects adjusted EPS in the range of $3.50-$3.70, down from $3.90-$4.20 guided earlier. The company envisions operating cash flow and free cash flow to be $1.2 billion and $850 million, down from $1.35 billion and $1 billion, respectively.

Zacks Rank & Other Key Picks

LKQ currently carries a Zacks Rank #2 (Buy).

Other top-ranked players in the auto market are Honda (HMC - Free Report) , Allison Transmission (ALSN - Free Report) and Ferrari (RACE - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for HMC’s fiscal 2025 and 2026 EPS has moved up by 5 cents and 4 cents, respectively, in the past seven days. The Japanese auto biggie surpassed earnings estimates in the trailing four quarters, with the average surprise being 66.6%.

The Zacks Consensus Estimate for ALSN’s 2024 and 2025 EPS implies a year-over-year uptick of 4% and 12.5%, respectively. The automotive equipment supplier surpassed earnings estimates in the trailing four quarters, with the average surprise being 14.3%.

The Zacks Consensus Estimate for RACE’s 2024 and 2025 EPS implies a year-over-year increase of 10.3% and 10.8%, respectively. The luxury automaker surpassed earnings estimates in the trailing four quarters, with the average surprise being 12.6%.

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