0001065696-14-000066.txt : 20141030 0001065696-14-000066.hdr.sgml : 20141030 20141030073930 ACCESSION NUMBER: 0001065696-14-000066 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20141030 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20141030 DATE AS OF CHANGE: 20141030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LKQ CORP CENTRAL INDEX KEY: 0001065696 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLES & MOTOR VEHICLE PARTS & SUPPLIES [5010] IRS NUMBER: 364215970 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-50404 FILM NUMBER: 141181599 BUSINESS ADDRESS: STREET 1: 500 WEST MADISON STREET STREET 2: SUITE 2800 CITY: CHICAGO STATE: IL ZIP: 60661 BUSINESS PHONE: 312-621-1950 MAIL ADDRESS: STREET 1: 500 WEST MADISON STREET STREET 2: SUITE 2800 CITY: CHICAGO STATE: IL ZIP: 60661 8-K 1 lkq8-k.htm 8-K LKQ 8-K



 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________ 
FORM 8-K
 ________________________ 
Current Report
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 30, 2014
 
________________________ 
LKQ CORPORATION
(Exact name of registrant as specified in its charter)
 
________________________ 

 
 
 
 
 
Delaware
 
000-50404
 
36-4215970
(State or other jurisdiction of
incorporation or organization) 
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
500 West Madison Street, Suite 2800
Chicago, IL
 
60661
(Address of principal executive offices)
 
(Zip Code)
Registrant's telephone number, including area code: (312) 621-1950
N/A
(Former name or former address, if changed since last report)
 
 ________________________ 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 







Item 2.02
Results of Operations and Financial Condition.

On October 30, 2014, LKQ Corporation (the "Company") issued a press release regarding its third quarter 2014 earnings and 2014 financial guidance. A copy of the Company's press release is furnished as Exhibit 99.1 to this Current Report and is incorporated herein by reference.

Item 9.01
Financial Statements and Exhibits.

(d) Exhibits 

Exhibit
Number
 
Description of Exhibit
99.1
 
LKQ Corporation Press Release dated October 30, 2014.







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 30, 2014
 
 
LKQ CORPORATION
 
 
By: 
/s/ JOHN S. QUINN
 
John S. Quinn
 
Executive Vice President and Chief Financial Officer




EX-99.1 2 exhibit991.htm EXHIBIT Exhibit 99.1
Exhibit 99.1

LKQ CORPORATION ANNOUNCES RESULTS FOR THIRD QUARTER 2014

Revenue growth of 32.6% to a quarterly record of $1.72 billion
Diluted EPS of $0.30 ($0.31, as adjusted)
Net income growth of 24.6% to $91.5 million
Organic revenue growth for parts and services of 8.9%
Annual guidance updated

Chicago, IL (October 30, 2014) - LKQ Corporation (Nasdaq:LKQ) today reported record revenue for the third quarter of 2014 of $1.72 billion, an increase of 32.6% as compared to $1.30 billion in the third quarter of 2013. Net income for the third quarter of 2014 was $91.5 million, an increase of 24.6% as compared to $73.4 million for the same period of 2013. Diluted earnings per share of $0.30 for the third quarter ended September 30, 2014 increased 25.0% from $0.24 for the third quarter of 2013. The Company noted that adjusted diluted earnings per share would have been $0.31 for the third quarter of 2014 compared to $0.25 for the third quarter of 2013 after adjusting for any net losses resulting from restructuring and acquisition related expenses and changes in fair value of contingent consideration liabilities.

"We are pleased with our financial and operational performance in the quarter," stated Robert Wagman, President and Chief Executive Officer of LKQ Corporation. "We are particularly pleased to see the Company deliver organic revenue growth for parts and services of 8.9% and our North American segment report strong organic revenue growth of 6.7% for parts and services.”

On a nine month year-to-date basis, revenue was $5.06 billion, an increase of 35.0% from $3.75 billion for the comparable period of 2013. Parts and services organic revenue growth for the first nine months of 2014 was 9.1%. Net income for the first nine months of 2014 was $301.1 million, as compared to $233.8 million for the first nine months of 2013. Diluted earnings per share was $0.98 for the first nine months of 2014, as compared to $0.77 for the comparable period of 2013.

Balance Sheet and Liquidity

As of September 30, 2014, LKQ’s balance sheet reflected cash and equivalents of $245 million and outstanding debt of $1.90 billion, including obligations outstanding under the Company’s credit facility of $1.13 billion ($439 million of term loans and $693 million of revolver borrowings), senior notes of $600 million, and outstanding borrowings under the Company's asset securitization facility of $80 million. Total availability under the Company’s credit facilities at September 30, 2014 was approximately $1.1 billion.

On September 29, 2014, the Company amended its existing three-year asset securitization facility. The amendment, among other items, extended the termination date of the facility from September





28, 2015 to October 2, 2017 and increased the maximum amount available under the facility from $80 million to $97 million.

Other Events

On August 7, 2014, the Company assumed the leases of 27 former Unipart Automotive branch locations in the United Kingdom, of which 18 are expected to be permanent locations that will be rebranded as Euro Car Parts upon opening. The remaining locations will be used on a temporary basis and then returned to Unipart’s insolvency administrators.

LKQ’s European operations opened 15 Euro Car Parts branches, including 12 converted Unipart Automotive branches, in the third quarter of 2014. As of September 30, 2014, the Company operated from 179 Euro Car Parts branches and 25 paint distribution branches in the United Kingdom.

During the third quarter of 2014, LKQ made three acquisitions: a salvage yard in Nova Scotia, Canada; a heavy duty truck salvage yard in Illinois; and an automotive aftermarket products distributor with 11 locations in the Netherlands.

On October 3, 2014, the Company acquired Stag Parkway Holding Company, a leading supplier of replacement parts, supplies and accessories for recreational vehicles (“RVs”) to RV dealers, supply stores and service centers.

Company Outlook

The Company updated its guidance for 2014.

 
Updated Guidance
Prior Guidance
Organic revenue growth (parts & services)
8.0% to 10.0%
8.0% to 10.0%
Adjusted net income
$405 to $417 million
$405 million to $430 million
Adjusted diluted EPS
$1.32 to $1.36
$1.32 to $1.40
Cash flow from operations
Approximately $375 million
Approximately $375 million
Capital expenditures
$110 million to $140 million
$110 million to $140 million

Guidance is based on current conditions (including acquisitions completed through October 30, 2014) and excludes any impact of restructuring and acquisition related expenses; gains or losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities); loss on debt extinguishment; and capital spending related to future business acquisitions.

Quarterly Conference Call

LKQ will host a conference call and webcast on October 30, 2014 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) with members of senior management to discuss the Company's results.






To access the investor conference call, please dial (877) 407-0668. International access to the call may be obtained by dialing (201) 689-8558. The audio webcast can be accessed via the Company's website at www.lkqcorp.com in the Investor Relations section.

A replay of the conference call will be available by telephone at (877) 660-6853 or (201) 612-7415 for international calls. The telephone replay will require you to enter conference ID: 13591919#. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through November 21, 2014. Please allow approximately two hours after the live presentation before attempting to access the replay.

About LKQ Corporation

LKQ Corporation (www.lkqcorp.com) is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles.  LKQ has operations in North America, the United Kingdom, the Netherlands, Belgium, France, Australia and Taiwan. LKQ offers its customers a broad range of replacement systems, components, equipment and parts to repair and accessorize automobiles, trucks, and recreational and performance vehicles.

Forward Looking Statements

The statements in this press release that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding our outlook or guidance, 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:
changes in the economic and political activity in the U.S. and other countries in which we do business and the impact of these changes on the demand for our products and our ability to obtain financing for our operations;
fluctuations in the pricing of new original equipment manufacturer ("OEM") replacement products;
the availability and cost of our inventory;
variations in the number of vehicles sold, vehicle accident rates, miles driven and the age profile of vehicles in accidents;
changes in state or federal laws or regulations affecting our business;
inaccuracies in the data relating to our industry published by independent sources upon which we rely;
changes in the level of acceptance and promotion of alternative automotive parts by insurance companies and auto repairers;
changes in the demand for our products and the supply of our inventory due to severity of weather and seasonality of weather patterns;
increasing competition in the automotive parts industry;
our ability to satisfy our debt obligations and to operate within the limitations imposed by financing agreements;
our ability to obtain financing on acceptable terms to finance our growth;
declines in the values of our assets;
fluctuations in fuel and other commodity prices;





fluctuations in the prices of scrap metal and other metals;
our ability to develop and implement the operational and financial systems needed to manage our operations;
our ability to identify sufficient acquisition candidates at reasonable prices to maintain our growth objectives;
our ability to integrate, realize expected synergies, and successfully operate acquired companies and any companies acquired in the future, and the risks associated with these companies;
claims by OEMs or others that attempt to restrict or eliminate the sale of alternative automotive products;
termination of business relationships with insurance companies that promote the use of our products;
product liability claims by the end users of our products or claims by other parties that we have promised to indemnify for product liability matters;
costs associated with recalls of the products we sell;
currency fluctuations in the U.S. dollar, pound sterling and euro versus other currencies;
instability in regions in which we operate that can affect our supply of certain products;
interruptions, outages or breaches of our operational systems, security systems, or infrastructure as a result of attacks on, or malfunctions of, our systems;
increased costs and decreased operational flexibility caused by the unionization of our workforce to the extent union efforts are successful;
uncertainty as to the impact on our industry of any terrorist attacks or responses to terrorist attacks; and
other risks that are described in our Form 10-K filed March 3, 2014 and in other reports filed by us from time to time with the Securities and Exchange Commission.

You should not place undue reliance on these forward-looking statements. All of these forward-looking statements are based on our expectations as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
 

Contact:

Joseph P. Boutross-Director, Investor Relations
LKQ Corporation
(312) 621-2793
jpboutross@lkqcorp.com






LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share data)
 
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2014
 
2013
 
2014
 
2013
Revenue
$
1,721,024

 
$
1,298,094

 
$
5,055,933

 
$
3,745,839

Cost of goods sold
1,056,613

 
780,187

 
3,068,579

 
2,216,110

Gross margin
664,411

 
517,907

 
1,987,354

 
1,529,729

Facility and warehouse expenses
133,330

 
108,349

 
387,995

 
311,480

Distribution expenses
148,572

 
109,593

 
432,445

 
320,033

Selling, general and administrative expenses
192,229

 
153,546

 
563,344

 
436,614

Restructuring and acquisition related expenses
3,594

 
2,206

 
12,816

 
7,391

Depreciation and amortization
30,498

 
20,818

 
87,136

 
57,850

Operating income
156,188

 
123,395

 
503,618

 
396,361

Other expense (income):
 
 
 
 
 
 
 
Interest expense, net
16,394

 
15,200

 
48,140

 
36,287

Loss on debt extinguishment

 

 
324

 
2,795

Change in fair value of contingent consideration liabilities
12

 
712

 
(2,000
)
 
1,765

Other income, net
(18
)
 
(1,562
)
 
(1,021
)
 
(1,737
)
Total other expense, net
16,388

 
14,350

 
45,443

 
39,110

Income before provision for income taxes
139,800

 
109,045

 
458,175

 
357,251

Provision for income taxes
47,564

 
35,600

 
155,926

 
123,492

Equity in earnings of unconsolidated subsidiaries
(721
)
 

 
(1,199
)
 

Net income
$
91,515

 
$
73,445

 
$
301,050

 
$
233,759

Earnings per share:
 
 
 
 
 
 
 
Basic
$
0.30

 
$
0.24

 
$
1.00

 
$
0.78

Diluted
$
0.30

 
$
0.24

 
$
0.98

 
$
0.77

Weighted average common shares outstanding:
 
 
 
 
 
 
 
Basic
302,724

 
300,223

 
302,058

 
299,213

Diluted
306,206

 
304,685

 
305,857

 
303,771









LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
 
September 30,
2014
 
December 31,
2013
Assets
 
 
 
Current Assets:
 
 
 
Cash and equivalents
$
244,646

 
$
150,488

Receivables, net
609,434

 
458,094

Inventory
1,341,325

 
1,076,952

Deferred income taxes
73,997

 
63,938

Prepaid expenses and other current assets
76,136

 
50,345

Total Current Assets
2,345,538

 
1,799,817

Property and Equipment, net
612,292

 
546,651

Intangibles
2,478,202

 
2,091,183

Other Assets
98,546

 
81,123

Total Assets
$
5,534,578

 
$
4,518,774

Liabilities and Stockholders’ Equity
 
 
 
Current Liabilities:
 
 
 
Accounts payable
$
403,587

 
$
349,069

Accrued expenses
261,018

 
198,769

Contingent consideration liabilities
2,288

 
52,465

Other current liabilities
31,587

 
36,115

Current portion of long-term obligations
72,908

 
41,535

Total Current Liabilities
771,388

 
677,953

Long-Term Obligations, Excluding Current Portion
1,825,133

 
1,264,246

Deferred Income Taxes
159,270

 
133,822

Other Noncurrent Liabilities
111,093

 
92,008

Commitments and Contingencies
 
 
 
Stockholders’ Equity:
 
 
 
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 303,031,358 and 300,805,276 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively
3,030

 
3,008

Additional paid-in capital
1,044,004

 
1,006,084

Retained earnings
1,622,692

 
1,321,642

Accumulated other comprehensive (loss) income
(2,032
)
 
20,011

Total Stockholders’ Equity
2,667,694

 
2,350,745

Total Liabilities and Stockholders’ Equity
$
5,534,578

 
$
4,518,774







LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
 
Nine Months Ended
 
September 30,
 
2014
 
2013
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
Net income
$
301,050

 
$
233,759

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
90,647

 
61,868

Stock-based compensation expense
16,967

 
16,292

Excess tax benefit from stock-based payments
(14,455
)
 
(15,998
)
Other
3,440

 
7,424

Changes in operating assets and liabilities, net of effects from acquisitions:
 
 
 
Receivables
(69,680
)
 
(35,287
)
Inventory
(55,266
)
 
(18,207
)
Prepaid income taxes/income taxes payable
20,858

 
40,551

Accounts payable
1,433

 
1,641

Other operating assets and liabilities
27,648

 
48,886

Net cash provided by operating activities
322,642

 
340,929

CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
Purchases of property and equipment
(100,191
)
 
(61,126
)
Proceeds from sales of property and equipment
3,174

 
1,459

Investments in unconsolidated subsidiaries
(2,240
)
 
(9,136
)
Acquisitions, net of cash acquired
(650,614
)
 
(395,974
)
Net cash used in investing activities
(749,871
)
 
(464,777
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
Proceeds from exercise of stock options
6,520

 
13,647

Excess tax benefit from stock-based payments
14,455

 
15,998

Net borrowings of long-term and other obligations
509,316

 
156,586

Other financing activities, net
(6,881
)
 
(16,912
)
Net cash provided by financing activities
523,410

 
169,319

Effect of exchange rate changes on cash and equivalents
(2,023
)
 
2,096

Net increase in cash and equivalents
94,158

 
47,567

Cash and equivalents, beginning of period
150,488

 
59,770

Cash and equivalents, end of period
$
244,646

 
$
107,337







LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
(In thousands, except per share data)
 
Three Months Ended September 30,
Operating Highlights
2014
 
2013
 
 
 
 
 
 
 
% of Revenue
 
 
 
% of Revenue
 
Change
 
% Change
Revenue
$
1,721,024

 
100.0
 %
 
$
1,298,094

 
100.0
 %
 
$
422,930

 
32.6
 %
Cost of goods sold
1,056,613

 
61.4
 %
 
780,187

 
60.1
 %
 
276,426

 
35.4
 %
Gross margin
664,411

 
38.6
 %
 
517,907

 
39.9
 %
 
146,504

 
28.3
 %
Facility and warehouse expenses
133,330

 
7.7
 %
 
108,349

 
8.3
 %
 
24,981

 
23.1
 %
Distribution expenses
148,572

 
8.6
 %
 
109,593

 
8.4
 %
 
38,979

 
35.6
 %
Selling, general and administrative expenses
192,229

 
11.2
 %
 
153,546

 
11.8
 %
 
38,683

 
25.2
 %
Restructuring and acquisition related expenses
3,594

 
0.2
 %
 
2,206

 
0.2
 %
 
1,388

 
62.9
 %
Depreciation and amortization
30,498

 
1.8
 %
 
20,818

 
1.6
 %
 
9,680

 
46.5
 %
Operating income
156,188

 
9.1
 %
 
123,395

 
9.5
 %
 
32,793

 
26.6
 %
Other expense (income):
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
16,394

 
1.0
 %
 
15,200

 
1.2
 %
 
1,194

 
7.9
 %
Change in fair value of contingent consideration liabilities
12

 
0.0
 %
 
712

 
0.1
 %
 
(700
)
 
(98.3
)%
Other income, net
(18
)
 
(0.0
 )%
 
(1,562
)
 
(0.1
)%
 
1,544

 
98.8
 %
Total other expense, net
16,388

 
1.0
 %
 
14,350

 
1.1
 %
 
2,038

 
14.2
 %
Income before provision for income taxes
139,800

 
8.1
 %
 
109,045

 
8.4
 %
 
30,755

 
28.2
 %
Provision for income taxes
47,564

 
2.8
 %
 
35,600

 
2.7
 %
 
11,964

 
33.6
 %
Equity in earnings of unconsolidated subsidiaries
(721
)
 
(0.0
 )%
 

 
0.0
 %
 
(721
)
 
n/m

Net income
$
91,515

 
5.3
 %
 
$
73,445

 
5.7
 %
 
$
18,070

 
24.6
 %
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
0.30

 
 
 
$
0.24

 
 
 
$
0.06

 
25.0
 %
Diluted
$
0.30

 
 
 
$
0.24

 
 
 
$
0.06

 
25.0
 %
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
302,724

 
 
 
300,223

 
 
 
2,501

 
0.8
 %
Diluted
306,206

 
 
 
304,685

 
 
 
1,521

 
0.5
 %






LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
(In thousands, except per share data)
 
Nine Months Ended September 30,
Operating Highlights
2014
 
2013
 
 
 
 
 
 
 
% of Revenue
 
 
 
% of Revenue
 
Change
 
% Change
Revenue
$
5,055,933

 
100.0
 %
 
$
3,745,839

 
100.0
 %
 
$
1,310,094

 
35.0
 %
Cost of goods sold
3,068,579

 
60.7
 %
 
2,216,110

 
59.2
 %
 
852,469

 
38.5
 %
Gross margin
1,987,354

 
39.3
 %
 
1,529,729

 
40.8
 %
 
457,625

 
29.9
 %
Facility and warehouse expenses
387,995

 
7.7
 %
 
311,480

 
8.3
 %
 
76,515

 
24.6
 %
Distribution expenses
432,445

 
8.6
 %
 
320,033

 
8.5
 %
 
112,412

 
35.1
 %
Selling, general and administrative expenses
563,344

 
11.1
 %
 
436,614

 
11.7
 %
 
126,730

 
29.0
 %
Restructuring and acquisition related expenses
12,816

 
0.3
 %
 
7,391

 
0.2
 %
 
5,425

 
73.4
 %
Depreciation and amortization
87,136

 
1.7
 %
 
57,850

 
1.5
 %
 
29,286

 
50.6
 %
Operating income
503,618

 
10.0
 %
 
396,361

 
10.6
 %
 
107,257

 
27.1
 %
Other expense (income):
 
 


 
 
 


 


 


Interest expense, net
48,140

 
1.0
 %
 
36,287

 
1.0
 %
 
11,853

 
32.7
 %
Loss on debt extinguishment
324

 
0.0
 %
 
2,795

 
0.1
 %
 
(2,471
)
 
(88.4
)%
Change in fair value of contingent consideration liabilities
(2,000
)
 
(0.0
 )%
 
1,765

 
0.0
 %
 
(3,765
)
 
n/m

Other income, net
(1,021
)
 
(0.0
 )%
 
(1,737
)
 
(0.0
 )%
 
716

 
41.2
 %
Total other expense, net
45,443

 
0.9
 %
 
39,110

 
1.0
 %
 
6,333

 
16.2
 %
Income before provision for income taxes
458,175

 
9.1
 %
 
357,251

 
9.5
 %
 
100,924

 
28.3
 %
Provision for income taxes
155,926

 
3.1
 %
 
123,492

 
3.3
 %
 
32,434

 
26.3
 %
Equity in earnings of unconsolidated subsidiaries
(1,199
)
 
(0.0
 )%
 

 
0.0
 %
 
(1,199
)
 
n/m

Net income
$
301,050

 
6.0
 %
 
$
233,759

 
6.2
 %
 
$
67,291

 
28.8
 %
Earnings per share:
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.00

 
 
 
$
0.78

 
 
 
$
0.22

 
28.2
 %
Diluted
$
0.98

 
 
 
$
0.77

 
 
 
$
0.21

 
27.3
 %
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
Basic
302,058

 
 
 
299,213

 
 
 
2,845

 
1.0
 %
Diluted
305,857

 
 
 
303,771

 
 
 
2,086

 
0.7
 %






The following unaudited tables compare certain third party revenue categories:
 
Three Months Ended
 
 
 
September 30,
 
 
 
2014
 
2013
 
Change
 
% Change
 
(In thousands)
 
 
 
 
Included in Unaudited Condensed Consolidated
 
 
 
 
 
 
 
Statements of Income of LKQ Corporation
 
 
 
 
 
 
 
North America
$
847,626

 
$
773,986

 
$
73,640

 
9.5
%
Europe
495,300

 
369,350

 
125,950

 
34.1
%
Specialty
200,412

 

 
200,412

 
n/m

Parts and services
1,543,338

 
1,143,336

 
400,002

 
35.0
%
     Other
177,686

 
154,758

 
22,928

 
14.8
%
    Total
$
1,721,024

 
$
1,298,094

 
$
422,930

 
32.6
%

Revenue changes by category for the three months ended September 30, 2014 vs. 2013:
 
Revenue Change Attributable to:
 
 
 
Acquisition
 
Organic
 
Foreign Exchange
 
% Change
North America
3.2
%
 
6.7
%
 
(0.3
)%
 
9.5
%
Europe
15.3
%
 
13.4
%
 
5.3
 %
 
34.1
%
Specialty
n/m

 
n/m

 
n/m

 
n/m

Parts and services
24.6
%
 
8.9
%
 
1.5
 %
 
35.0
%
     Other
8.8
%
 
6.1
%
 
(0.1
)%
 
14.8
%
    Total
22.7
%
 
8.5
%
 
1.3
 %
 
32.6
%

 
Nine Months Ended
 
 
 
September 30,
 
 
 
2014
 
2013
 
Change
 
% Change
 
(In thousands)
 
 
 
 
Included in Unaudited Condensed Consolidated
 
 
 
 
 
 
 
Statements of Income of LKQ Corporation
 
 
 
 
 
 
 
North America
$
2,579,598

 
$
2,380,817

 
$
198,781

 
8.3
%
Europe
1,378,975

 
878,873

 
500,102

 
56.9
%
Specialty
595,179

 

 
595,179

 
n/m

Parts and services
4,553,752

 
3,259,690

 
1,294,062

 
39.7
%
     Other
502,181

 
486,149

 
16,032

 
3.3
%
    Total
$
5,055,933

 
$
3,745,839

 
$
1,310,094

 
35.0
%

Revenue changes by category for the nine months ended September 30, 2014 vs. 2013:
 
Revenue Change Attributable to:
 
 
 
Acquisition
 
Organic
 
Foreign Exchange
 
% Change
North America
2.7
%
 
6.1
 %
 
(0.5
)%
 
8.3
%
Europe
33.2
%
 
17.0
 %
 
6.7
 %
 
56.9
%
Specialty
n/m

 
n/m

 
n/m

 
n/m

Parts and services
29.2
%
 
9.1
 %
 
1.4
 %
 
39.7
%
     Other
9.5
%
 
(6.2
)%
 
(0.1
)%
 
3.3
%
    Total
26.6
%
 
7.1
 %
 
1.3
 %
 
35.0
%





The following unaudited table reconciles Net Income to EBITDA:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
Net income
$
91,515

 
$
73,445

 
$
301,050

 
$
233,759

Depreciation and amortization
31,754

 
22,157

 
90,647

 
61,868

Interest expense, net
16,394

 
15,200

 
48,140

 
36,287

Loss on debt extinguishment (1)

 

 
324

 
2,795

Provision for income taxes
47,564

 
35,600

 
155,926

 
123,492

Earnings before interest, taxes, depreciation and amortization (EBITDA)
$
187,227

 
$
146,402

 
$
596,087

 
$
458,201

EBITDA as a percentage of revenue
10.9
%
 
11.3
%
 
11.8
%
 
12.2
%

(1) 
Loss on debt extinguishment is considered a component of interest in calculating EBITDA, as the write-off of debt issuance costs is similar to the treatment of debt issuance cost amortization.

We provide a reconciliation of Net Income to EBITDA as we believe it offers investors, securities analysts and other interested parties useful information regarding our results of operations because it assists in analyzing our performance and the value of our business. EBITDA provides insight into our profitability trends, and allows management and investors to analyze our operating results with and without the impact of depreciation, amortization, interest and income tax expense. We believe EBITDA is used by securities analysts, investors, and other interested parties in evaluating companies, many of which present EBITDA when reporting their results. EBITDA should not be construed as an alternative to operating income, net income or net cash provided by (used in) operating activities, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report EBITDA information calculate EBITDA in the same manner as we do and, accordingly, our calculation is not necessarily comparable to similarly named measures of other companies and may not be an appropriate measure for performance relative to other companies.    








The following unaudited table compares revenue and Segment EBITDA by reportable segment:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
Revenue
 
 
 
 
 
 
 
North America
$
1,024,967

 
$
928,307

 
$
3,080,356

 
$
2,865,613

Europe
495,776

 
369,787

 
1,380,663

 
880,226

Specialty
201,007

 

 
596,430

 

Eliminations
(726
)
 

 
(1,516
)
 

Total revenue
$
1,721,024

 
$
1,298,094

 
$
5,055,933

 
$
3,745,839

Segment EBITDA
 
 
 
 
 
 
 
North America
$
131,851

 
$
108,863

 
$
415,139

 
$
363,411

Europe
41,726

 
40,457

 
128,826

 
103,946

Specialty
17,977

 

 
64,137

 

Total Segment EBITDA
191,554

 
149,320

 
608,102

 
467,357

Deduct:
 
 
 
 
 
 
 
Restructuring and acquisition related expenses
3,594

 
2,206

 
12,816

 
7,391

Change in fair value of contingent consideration liabilities
12

 
712

 
(2,000
)
 
1,765

Add:
 
 
 
 
 
 
 
Equity in earnings of unconsolidated subsidiaries
(721
)
 

 
(1,199
)
 

Earnings before interest, taxes, depreciation and amortization (EBITDA)
$
187,227

 
$
146,402

 
$
596,087

 
$
458,201


The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is Segment EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. Segment EBITDA excludes restructuring and acquisition related expenses, depreciation, amortization, interest, change in fair value of contingent consideration liabilities, taxes and equity in earnings of unconsolidated subsidiaries. Loss on debt extinguishment is considered a component of interest in calculating EBITDA, as the write-off of debt issuance costs is similar to the treatment of debt issuance cost amortization.







The following unaudited table reconciles Net Income and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, respectively:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
2014
 
2013
 
2014
 
2013
(In thousands, except per share data)
 
 
 
 
 
Net income
$
91,515

 
$
73,445

 
$
301,050

 
$
233,759

Adjustments:
 
 
 
 
 
 
 
Restructuring and acquisition related expenses, net of tax
2,372

 
1,427

 
8,459

 
4,776

Loss on debt extinguishment, net of tax

 

 
214

 
1,808

Change in fair value of contingent consideration liabilities
12

 
712

 
(2,000
)
 
1,765

Adjusted net income
$
93,899

 
$
75,584

 
$
307,723

 
$
242,108

Weighted average diluted common shares outstanding
306,206

 
304,685

 
305,857

 
303,771

Diluted earnings per share
$
0.30

 
$
0.24

 
$
0.98

 
$
0.77

Adjusted diluted earnings per share
$
0.31

 
$
0.25

 
$
1.01

 
$
0.80


We provide a reconciliation of Net Income and Diluted Earnings per Share ("EPS") to Adjusted Net Income and Adjusted Diluted EPS as we believe it offers investors, securities analysts and other interested parties useful information regarding our results of operations because it assists in analyzing our performance and the value of our business. Adjusted Net Income and Adjusted Diluted EPS are presented as supplemental measures of our performance that management believes are useful for evaluating and comparing our operating activities across reporting periods. In 2014 and 2013, the Company defines Adjusted Net Income and Adjusted Diluted EPS as Net Income and Diluted EPS adjusted to eliminate the impact of restructuring and acquisition related expenses, net of tax, loss on debt extinguishment, net of tax, and the change in fair value of contingent consideration liabilities. Adjusted Net Income and Adjusted Diluted EPS should not be construed as alternatives to Net Income or Diluted EPS as determined in accordance with accounting principles generally accepted in the United States. In addition, because not all companies use identical calculations, this presentation of Adjusted Net Income and Adjusted Diluted EPS may not be comparable to similarly titled measures of other companies.



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