LKQ Corporation Announces Third Quarter 2003 Results
CHICAGO--Oct. 2, 20038, 2003--LKQ Corporation today reported results for its third quarter ended September 30, 2003, with revenue of $83.5 million and net income of $3.5 million, representing growth over the third quarter of 2002 of 16.2% and 49.1%, respectively."We reported another quarter of year over year double digit revenue and earnings growth," said Joe Holsten, President and Chief Executive Officer.
2003 Reported Results
For the third quarter of 2003, revenue increased 16.2% to $83.5 million compared with $71.9 million for the third quarter of 2002. For the third quarter of 2003, net income increased 49.1% to $3.5 million compared with $2.4 million for the third quarter of 2002. Diluted earnings per share was $0.22 for the third quarter of 2003 compared with $0.12 for the third quarter of 2002.
For the nine months ended September 30, 2003, revenue increased 12.9% to $243.7 million compared with $216.0 million for the same period in 2002. For the nine months ended September 30, 2003, net income before cumulative effect of a change in accounting principle increased 32.7% to $11.6 million compared with $8.7 million for the same period in 2002. Diluted earnings per share before cumulative effect of a change in accounting principle was $0.68 for the nine months ended September 30, 2003 compared with $0.45 for the same period a year ago.
For the nine months ended September 30, 2003, net income increased by $52.8 million to $11.6 million compared with a $41.2 million net loss for the same period in 2002. Diluted earnings per share was $0.68 for the nine months ended September 30, 2003 compared with diluted loss per share of $2.12 for the same period in 2002. The 2002 net loss reflects the $49.9 million cumulative effect of change in accounting principle, net of tax in the first quarter of 2002 related to implementation of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets."
The number of outstanding shares of common stock in the first nine months of 2003 has declined significantly from the same period in 2002 due to shares repurchased in the first half of 2003. The number of outstanding shares in the fourth quarter of 2003 will be further affected by the 5,000,000 shares sold by LKQ Corporation in its initial public offering as discussed below.
Company Outlook
We expect full year 2003 revenue to be within a range of $323 million to $326 million, net income to be within a range between $14.2 million and $14.6 million and diluted earnings per share to be between $0.78 and $0.80.
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
( In thousands, except per share data )
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -------------------
2003 2002 2003 2002
--------- -------- --------- ---------
Revenue $83,472 $71,860 $243,746 $215,961
Cost of goods sold 44,431 38,715 128,907 116,158
--------- -------- --------- ---------
Gross margin 39,041 33,145 114,839 99,803
Facility and warehouse expenses 9,973 9,279 29,154 27,062
Distribution expenses 8,893 7,272 25,675 20,798
Selling, general and
administrative expenses 12,288 10,683 35,015 31,449
Depreciation and amortization 1,325 1,229 4,070 3,638
--------- -------- --------- ---------
Operating income 6,562 4,682 20,925 16,856
Other (income) expense
Interest expense 644 652 1,846 2,323
Stockholder loan guarantee
fee - 23 - 160
Interest income (3) (13) (14) (158)
Other (income) expense, net 50 (55) (111) (150)
--------- -------- --------- ---------
Total other expense 691 607 1,721 2,175
--------- -------- --------- ---------
Income before provision for
income taxes
and cumulative effect of
change in accounting
principle 5,871 4,075 19,204 14,681
Provision for income taxes 2,352 1,715 7,626 5,955
--------- -------- --------- ---------
Income before cumulative
effect of change in
accounting principle 3,519 2,360 11,578 8,726
Cumulative effect of change
in accounting
principle, net of tax - - - (49,899)
--------- -------- --------- ---------
Net income (loss) $3,519 $2,360 $11,578 $(41,173)
========= ======== ========= =========
Basic earnings (loss) per share:
Income before cumulative
effect of change in
accounting principle $0.25 $0.13 $0.76 $0.49
Cumulative effect of change
in accounting principle,
net of tax - - - (2.82)
--------- -------- --------- ---------
Net income (loss) $0.25 $0.13 $0.76 $(2.33)
========= ======== ========= =========
Diluted earnings (loss) per
share:
Income before cumulative
effect of change in
accounting principle $0.22 $0.12 $0.68 $0.45
Cumulative effect of change
in accounting principle,
net of tax - - - (2.57)
--------- -------- --------- ---------
Net income (loss) $0.22 $0.12 $0.68 $(2.12)
========= ======== ========= =========
Weighted average common shares
outstanding:
Basic 14,205 17,645 15,326 17,655
========= ======== ========= =========
Diluted 16,178 19,405 17,135 19,416
========= ======== ========= =========
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Statements of Cash Flows
( In thousands )
Nine Months Ended September 30,
-------------------------------
2003 2002
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $11,578 $(41,173)
Adjustments to reconcile net income
(loss) to net cash
provided by operating activities:
Depreciation and amortization 4,070 3,638
Deferred income taxes 1,356 1,462
Other adjustments (31) 176
Cumulative effect of change in
accounting principle - 49,899
Changes in operating assets and
liabilities, net of
effects from purchase
transactions:
Receivables (2,368) (1,478)
Inventory 1,066 (655)
Other operating assets and
liabilities 1,355 2,590
--------------- ---------------
Net cash provided by operating
activities 17,026 14,459
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment,
net (5,339) (3,939)
Cash used in acquisitions (3,285) -
--------------- ---------------
Net cash used in investing
activities (8,624) (3,939)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the sale of common
stock and warrant exercises 625 30
Debt issuance costs (131) (621)
Net borrowings (repayments) of long-
term debt 14,943 (8,900)
Repurchase of common stock (22,903) -
--------------- ---------------
Net cash used in financing
activities (7,466) (9,491)
--------------- ---------------
Net increase in cash and equivalents 936 1,029
Cash and equivalents, beginning of
period 584 1,587
--------------- ---------------
Cash and equivalents, end of period $1,520 $2,616
=============== ===============
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Consolidated Condensed Balance Sheets
( In thousands, except share data )
September 30, December 31,
2003 2002
------------- -------------
Assets
Current Assets:
Cash and equivalents $1,520 $584
Receivables, net 21,036 18,592
Inventory 53,681 53,779
Prepaid expenses and other current
assets 3,983 1,448
------------- -------------
Total Current Assets 80,220 74,403
Property and Equipment, net 41,666 39,861
Intangibles, net 50,814 49,328
Deferred Income Taxes 10,307 11,713
Other Assets 2,041 1,442
------------- -------------
Total Assets $185,048 $176,747
============= =============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $5,515 $4,536
Accrued expenses and other current
liabilities 15,113 12,749
Current portion of long-term obligations 17,810 6,449
------------- -------------
Total Current Liabilities 38,438 23,734
Long-Term Obligations, Excluding Current
Portion 31,301 27,756
Other Noncurrent Liabilities 4,392 4,128
Redeemable Common Stock, $0.01 par value,
50,000 shares issued at September 30, 2003 617 -
Commitments and Contingencies
Stockholders' Equity:
Common stock, $0.01 par value,
100,000,000 shares authorized,
14,230,287 and 17,644,885 shares
issued at September 30, 2003 and
December 31, 2002, respectively 142 176
Additional paid-in capital 132,053 154,492
Warrants 543 543
Deferred compensation expense (7) (73)
Retained earnings (Accumulated deficit) (22,431) (34,009)
------------- -------------
Total Stockholders' Equity 110,300 121,129
------------- -------------
Total Liabilities and Stockholders'
Equity $185,048 $176,747
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