LKQ, a leading provider of vehicle parts and services, reported disappointing third-quarter results, falling short of market expectations. Adjusted earnings per share came in at 88 cents, missing the analyst consensus of 89 cents. Quarterly sales also lagged behind, reaching $3.584 billion compared to the anticipated $3.639 billion.
The company’s organic revenue for parts and services saw a decline of 2.8% (4.3% on a per-day basis). While acquisitions and divestitures contributed a 3.1% revenue increase, and foreign exchange rates boosted revenue by 0.4%, the overall increase in parts and services revenue was only 0.6%. Other revenue experienced a 2.2% decline, primarily driven by lower commodity prices and volumes compared to the same period in 2023.
On an adjusted basis, net income reached $230 million, a slight decrease of 0.3% compared to the $231 million recorded in the year-ago period.
As of September 30, LKQ’s balance sheet reflected a total debt of $4.4 billion, with total leverage standing at 2.4x EBITDA. During the third quarter, the company returned over $200 million to its shareholders through a combination of stock repurchases and cash dividends. Approximately $125 million was invested in repurchasing 3.0 million shares of common stock, while $79 million was distributed in cash dividends.
LKQ also announced a $1 billion increase to its stock repurchase program, bringing the total authorization to $4.5 billion. This leaves an available balance of $1.8 billion for potential repurchases until October 25, 2026. Additionally, the board declared a quarterly cash dividend of $0.30 per share of common stock, payable on November 27, to stockholders of record as of the close of business on November 14.
In light of the Q3 performance, LKQ revised its outlook for the full year. The company now projects adjusted EPS to be in the range of $3.38 to $3.52, compared to the previous estimate of $3.53. The prior range was $3.50 to $3.70. Additionally, for FY24, LKQ expects an organic revenue decline for parts and services of 2.75% to 1.75%, a shift from the previous forecast of a decline of 1.25% to an increase of 0.25%.
At last check on Thursday, LKQ shares were trading lower by 0.13% at $37.73.
Despite the disappointing results, LKQ remains committed to shareholder value, demonstrating this commitment through the stock repurchase program increase and dividend declaration. The company’s future performance will be closely watched by investors as it navigates the current economic climate and evolving automotive industry landscape.