|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
|
36-4215970
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
500 WEST MADISON STREET,
SUITE 2800, CHICAGO, IL
|
|
60661
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
x
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
Emerging growth company
|
¨
|
|
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share data)
|
|||||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2018
|
|
2017
|
||||
Revenue
|
$
|
2,720,764
|
|
|
$
|
2,342,843
|
|
Cost of goods sold
|
1,666,793
|
|
|
1,412,750
|
|
||
Gross margin
|
1,053,971
|
|
|
930,093
|
|
||
Selling, general and administrative expenses
(1)
|
766,891
|
|
|
642,817
|
|
||
Restructuring and acquisition related expenses
|
4,054
|
|
|
2,928
|
|
||
Depreciation and amortization
|
56,458
|
|
|
48,656
|
|
||
Operating income
|
226,568
|
|
|
235,692
|
|
||
Other expense (income):
|
|
|
|
||||
Interest expense, net
|
28,515
|
|
|
23,988
|
|
||
Other income, net
|
(2,882
|
)
|
|
(1,046
|
)
|
||
Total other expense, net
|
25,633
|
|
|
22,942
|
|
||
Income from continuing operations before provision for income taxes
|
200,935
|
|
|
212,750
|
|
||
Provision for income taxes
|
49,584
|
|
|
72,155
|
|
||
Equity in earnings of unconsolidated subsidiaries
|
1,412
|
|
|
214
|
|
||
Income from continuing operations
|
152,763
|
|
|
140,809
|
|
||
Net loss from discontinued operations
|
—
|
|
|
(4,531
|
)
|
||
Net income
|
152,763
|
|
|
136,278
|
|
||
Less: net loss attributable to noncontrolling interest
|
(197
|
)
|
|
—
|
|
||
Net income attributable to LKQ stockholders
|
$
|
152,960
|
|
|
$
|
136,278
|
|
|
|
|
|
||||
Basic earnings per share:
(2)
|
|
|
|
||||
Income from continuing operations
|
$
|
0.49
|
|
|
$
|
0.46
|
|
Net loss from discontinued operations
|
—
|
|
|
(0.01
|
)
|
||
Net income
|
0.49
|
|
|
0.44
|
|
||
Less: net loss attributable to noncontrolling interest
|
(0.00
|
)
|
|
—
|
|
||
Net income attributable to LKQ stockholders
|
$
|
0.49
|
|
|
$
|
0.44
|
|
|
|
|
|
||||
Diluted earnings per share:
(2)
|
|
|
|
||||
Income from continuing operations
|
$
|
0.49
|
|
|
$
|
0.45
|
|
Net loss from discontinued operations
|
—
|
|
|
(0.01
|
)
|
||
Net income
|
0.49
|
|
|
0.44
|
|
||
Less: net loss attributable to noncontrolling interest
|
(0.00
|
)
|
|
—
|
|
||
Net income attributable to LKQ stockholders
|
$
|
0.49
|
|
|
$
|
0.44
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Comprehensive Income
(In thousands)
|
|||||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2018
|
|
2017
|
||||
Net income
|
$
|
152,763
|
|
|
$
|
136,278
|
|
Less: net loss attributable to noncontrolling interest
|
(197
|
)
|
|
—
|
|
||
Net income attributable to LKQ stockholders
|
152,960
|
|
|
136,278
|
|
||
|
|
|
|
||||
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation, net of tax
|
48,485
|
|
|
21,579
|
|
||
Net change in unrealized gains/losses on cash flow hedges, net of tax
|
3,254
|
|
|
3,163
|
|
||
Net change in unrealized gains/losses on pension plans, net of tax
|
(621
|
)
|
|
(3,041
|
)
|
||
Net change in other comprehensive loss from unconsolidated subsidiaries
|
(605
|
)
|
|
(162
|
)
|
||
Other comprehensive income
|
50,513
|
|
|
21,539
|
|
||
|
|
|
|
||||
Comprehensive income
|
203,276
|
|
|
157,817
|
|
||
Less: comprehensive loss attributable to noncontrolling interest
|
(197
|
)
|
|
—
|
|
||
Comprehensive income attributable to LKQ stockholders
|
$
|
203,473
|
|
|
$
|
157,817
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
|
|||||||
|
March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
245,679
|
|
|
$
|
279,766
|
|
Receivables, net
|
1,211,788
|
|
|
1,027,106
|
|
||
Inventories
|
2,401,309
|
|
|
2,380,783
|
|
||
Prepaid expenses and other current assets
|
180,367
|
|
|
134,479
|
|
||
Total current assets
|
4,039,143
|
|
|
3,822,134
|
|
||
Property, plant and equipment, net
|
929,756
|
|
|
913,089
|
|
||
Intangible assets:
|
|
|
|
||||
Goodwill
|
3,572,198
|
|
|
3,536,511
|
|
||
Other intangibles, net
|
740,804
|
|
|
743,769
|
|
||
Equity method investments
|
208,210
|
|
|
208,404
|
|
||
Other assets
|
146,067
|
|
|
142,965
|
|
||
Total assets
|
$
|
9,636,178
|
|
|
$
|
9,366,872
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
812,661
|
|
|
$
|
788,613
|
|
Accrued expenses:
|
|
|
|
||||
Accrued payroll-related liabilities
|
112,140
|
|
|
143,424
|
|
||
Other accrued expenses
|
267,364
|
|
|
218,600
|
|
||
Refund liability
|
99,179
|
|
|
—
|
|
||
Other current liabilities
|
41,167
|
|
|
45,727
|
|
||
Current portion of long-term obligations
|
142,277
|
|
|
126,360
|
|
||
Total current liabilities
|
1,474,788
|
|
|
1,322,724
|
|
||
Long-term obligations, excluding current portion
|
3,170,788
|
|
|
3,277,620
|
|
||
Deferred income taxes
|
242,226
|
|
|
252,359
|
|
||
Other noncurrent liabilities
|
329,395
|
|
|
307,516
|
|
||
Commitments and contingencies
|
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 309,630,976 and 309,126,386 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively
|
3,096
|
|
|
3,091
|
|
||
Additional paid-in capital
|
1,146,391
|
|
|
1,141,451
|
|
||
Retained earnings
|
3,271,718
|
|
|
3,124,103
|
|
||
Accumulated other comprehensive loss
|
(14,618
|
)
|
|
(70,476
|
)
|
||
Total Company stockholders' equity
|
4,406,587
|
|
|
4,198,169
|
|
||
Noncontrolling interest
|
12,394
|
|
|
8,484
|
|
||
Total stockholders' equity
|
4,418,981
|
|
|
4,206,653
|
|
||
Total liabilities and stockholders’ equity
|
$
|
9,636,178
|
|
|
$
|
9,366,872
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
|
||||||||||||||||||||||||||
|
|
|
|
|
LKQ Stockholders
|
|
|
|
|
|||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive (Loss) Income
|
|
Noncontrolling Interest
|
|
Total Stockholders' Equity
|
|||||||||||||||
|
Shares
Issued
|
|
Amount
|
|
||||||||||||||||||||||
BALANCE, January 1, 2018
|
309,127
|
|
|
$
|
3,091
|
|
|
$
|
1,141,451
|
|
|
$
|
3,124,103
|
|
|
$
|
(70,476
|
)
|
|
$
|
8,484
|
|
|
$
|
4,206,653
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
152,960
|
|
|
—
|
|
|
(197
|
)
|
|
152,763
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,513
|
|
|
—
|
|
|
50,513
|
|
||||||
Vesting of restricted stock units, net of shares withheld for employee tax
|
300
|
|
|
3
|
|
|
(2,399
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,396
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
5,982
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,982
|
|
||||||
Exercise of stock options
|
226
|
|
|
2
|
|
|
2,253
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,255
|
|
||||||
Shares withheld for net share settlement of stock option awards
|
(22
|
)
|
|
—
|
|
|
(896
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(896
|
)
|
||||||
Adoption of ASU 2018-02 (see Note 4)
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,345
|
)
|
|
5,345
|
|
|
—
|
|
|
—
|
|
||||||
Capital contributions from noncontrolling interest shareholder
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,107
|
|
|
4,107
|
|
||||||
BALANCE, March 31, 2018
|
309,631
|
|
|
$
|
3,096
|
|
|
$
|
1,146,391
|
|
|
$
|
3,271,718
|
|
|
$
|
(14,618
|
)
|
|
$
|
12,394
|
|
|
$
|
4,418,981
|
|
Note 1.
|
Interim Financial Statements
|
|
Year Ended
|
||
|
December, 31, 2017
|
||
|
All
Acquisitions (1) |
||
Receivables
|
$
|
73,782
|
|
Receivable reserves
|
(7,032
|
)
|
|
Inventories
(2)
|
150,342
|
|
|
Prepaid expenses and other current assets
|
(295
|
)
|
|
Property
,
plant and equipment
|
41,039
|
|
|
Goodwill
|
314,817
|
|
|
Other intangibles
|
181,216
|
|
|
Other assets
|
3,257
|
|
|
Deferred income taxes
|
(65,087
|
)
|
|
Current liabilities assumed
|
(111,484
|
)
|
|
Debt assumed
|
(33,586
|
)
|
|
Other noncurrent liabilities assumed
|
(1,917
|
)
|
|
Contingent consideration liabilities
|
(6,234
|
)
|
|
Other purchase price obligations
|
(5,074
|
)
|
|
Notes issued
|
(20,187
|
)
|
|
Settlement of pre-existing balances
|
242
|
|
|
Gains on bargain purchases
(3)
|
(3,870
|
)
|
|
Settlement of other purchase price obligations (non-interest bearing)
|
3,159
|
|
|
Cash used in acquisitions, net of cash acquired
|
$
|
513,088
|
|
(1)
|
The amounts recorded during the year ended December 31, 2017 include
$6 million
and
$3 million
of adjustments to reduce property, plant and equipment and other assets for Rhiag-Inter Auto Parts Italia S.p.A. (“Rhiag”) and Pittsburgh Glass Works LLC (“PGW”), respectively.
|
(2)
|
The amount for our 2017 acquisitions includes a
$4 million
step-up adjustment related to our Warn acquisition.
|
(3)
|
The amount recorded during the year ended December 31, 2017 includes a
$2 million
increase to the gain on bargain purchase recorded for our Andrew Page acquisition as a result of changes to our estimate of the fair value of the net assets acquired. The remainder of the gain on bargain purchase recorded during the year ended December 31, 2017 is an immaterial amount related to another acquisition in Europe completed in the second quarter of 2017.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2018
|
|
2017
|
||||
Revenue, as reported
|
$
|
2,720,764
|
|
|
$
|
2,342,843
|
|
Revenue of purchased businesses for the period prior to acquisition:
|
|
|
|
||||
All acquisitions
|
26
|
|
|
139,216
|
|
||
Pro forma revenue
|
$
|
2,720,790
|
|
|
$
|
2,482,059
|
|
|
|
|
|
||||
Income from continuing operations, as reported
|
$
|
152,763
|
|
|
$
|
140,809
|
|
Income from continuing operations of purchased businesses for the period prior to acquisition, and pro forma purchase accounting adjustments:
|
|
|
|
||||
All acquisitions
|
0
|
|
|
7,470
|
|
||
Acquisition related expenses, net of tax
(1)
|
623
|
|
|
1,243
|
|
||
Pro forma income from continuing operations
|
$
|
153,386
|
|
|
$
|
149,522
|
|
|
|
|
|
||||
Earnings per share from continuing operations, basic - as reported
|
$
|
0.49
|
|
|
$
|
0.46
|
|
Effect of purchased businesses for the period prior to acquisition:
|
|
|
|
||||
All acquisitions
|
0.00
|
|
|
0.02
|
|
||
Acquisition related expenses, net of tax
(1)
|
0.00
|
|
|
0.00
|
|
||
Pro forma earnings per share from continuing operations, basic
(2)
|
$
|
0.50
|
|
|
$
|
0.49
|
|
|
|
|
|
||||
Earnings per share from continuing operations, diluted - as reported
|
$
|
0.49
|
|
|
$
|
0.45
|
|
Effect of purchased businesses for the period prior to acquisition:
|
|
|
|
||||
All acquisitions
|
0.00
|
|
|
0.02
|
|
||
Acquisition related expenses, net of tax
(1)
|
0.00
|
|
|
0.00
|
|
||
Pro forma earnings per share from continuing operations, diluted
(2)
|
$
|
0.49
|
|
|
$
|
0.48
|
|
(1)
|
Includes expenses related to acquisitions closed in the period and excludes expenses for acquisitions not yet completed.
|
(2)
|
The sum of the individual earnings per share amounts may not equal the total due to rounding.
|
|
Three Months Ended
|
||
|
March 31, 2017
|
||
Revenue
|
$
|
111,130
|
|
Cost of goods sold
|
100,084
|
|
|
Selling, general and administrative expenses
|
8,369
|
|
|
Operating income
|
2,677
|
|
|
Interest and other income, net
(1)
|
1,204
|
|
|
Income from discontinued operations before taxes
|
3,881
|
|
|
Provision for income taxes
|
3,598
|
|
|
Equity in loss of unconsolidated subsidiaries
|
(534
|
)
|
|
Loss from discontinued operations, net of tax
|
(251
|
)
|
|
Loss on sale of discontinued operations, net of tax
(2)
|
(4,280
|
)
|
|
Net loss from discontinued operations
|
$
|
(4,531
|
)
|
|
March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Aftermarket and refurbished products
|
$
|
1,915,537
|
|
|
$
|
1,877,653
|
|
Salvage and remanufactured products
|
469,648
|
|
|
487,108
|
|
||
Manufactured products
|
16,124
|
|
|
16,022
|
|
||
Total inventories
|
$
|
2,401,309
|
|
|
$
|
2,380,783
|
|
|
North America
|
|
Europe
|
|
Specialty
|
|
Total
|
||||||||
Balance as of January 1, 2018
|
$
|
1,709,354
|
|
|
$
|
1,414,898
|
|
|
$
|
412,259
|
|
|
$
|
3,536,511
|
|
Business acquisitions and adjustments to previously recorded goodwill
|
584
|
|
|
259
|
|
|
(4,977
|
)
|
|
(4,134
|
)
|
||||
Exchange rate effects
|
(2,891
|
)
|
|
42,510
|
|
|
202
|
|
|
39,821
|
|
||||
Balance as of March 31, 2018
|
$
|
1,707,047
|
|
|
$
|
1,457,667
|
|
|
$
|
407,484
|
|
|
$
|
3,572,198
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Intangible assets subject to amortization
|
$
|
658,704
|
|
|
$
|
664,969
|
|
Indefinite-lived intangible assets
|
|
|
|
||||
Trademarks
|
81,300
|
|
|
78,800
|
|
||
Other indefinite-lived intangible assets
|
800
|
|
|
—
|
|
||
Total
|
$
|
740,804
|
|
|
$
|
743,769
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Trade names and trademarks
|
$
|
333,802
|
|
|
$
|
(79,437
|
)
|
|
$
|
254,365
|
|
|
$
|
327,332
|
|
|
$
|
(75,095
|
)
|
|
$
|
252,237
|
|
Customer and supplier relationships
|
520,386
|
|
|
(185,417
|
)
|
|
334,969
|
|
|
510,113
|
|
|
(167,532
|
)
|
|
342,581
|
|
||||||
Software and other technology related assets
|
129,851
|
|
|
(65,070
|
)
|
|
64,781
|
|
|
124,049
|
|
|
(59,081
|
)
|
|
64,968
|
|
||||||
Covenants not to compete
|
13,920
|
|
|
(9,331
|
)
|
|
4,589
|
|
|
14,981
|
|
|
(9,798
|
)
|
|
5,183
|
|
||||||
Total
|
$
|
997,959
|
|
|
$
|
(339,255
|
)
|
|
$
|
658,704
|
|
|
$
|
976,475
|
|
|
$
|
(311,506
|
)
|
|
$
|
664,969
|
|
|
Method of Amortization
|
|
Useful Life
|
Trade names and trademarks
|
Straight-line
|
|
4-30 years
|
Customer and supplier relationships
|
Accelerated
|
|
6-20 years
|
Software and other technology related assets
|
Straight-line
|
|
3-15 years
|
Covenants not to compete
|
Straight-line
|
|
2-5 years
|
Balance as of December 31, 2017
|
$
|
23,151
|
|
Warranty expense
|
10,000
|
|
|
Warranty claims
|
(9,294
|
)
|
|
Balance as of March 31, 2018
|
$
|
23,857
|
|
|
Balance as of December 31, 2017
|
|
Adjustments Due to ASC 606
|
|
Balance as of January 1, 2018
|
||||||
Balance Sheet
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
1,027,106
|
|
|
$
|
38,511
|
|
|
$
|
1,065,617
|
|
Prepaid expenses and other current assets
|
134,479
|
|
|
44,508
|
|
|
178,987
|
|
|||
Liabilities
|
|
|
|
|
|
||||||
Refund liability
|
—
|
|
|
83,019
|
|
|
83,019
|
|
|
Balance as of March 31, 2018
|
||||||||||
|
As Reported
|
|
Amounts Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
Balance Sheet
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
1,211,788
|
|
|
$
|
1,165,618
|
|
|
$
|
46,170
|
|
Prepaid expenses and other current assets
|
180,367
|
|
|
127,358
|
|
|
53,009
|
|
|||
Liabilities
|
|
|
|
|
|
||||||
Refund liability
|
99,179
|
|
|
—
|
|
|
99,179
|
|
|
For the three months ended March 31, 2018
|
||||||||||
|
As Reported
|
|
Amounts Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
Income Statement
|
|
|
|
|
|
||||||
Revenue
|
$
|
2,720,764
|
|
|
$
|
2,728,712
|
|
|
$
|
(7,948
|
)
|
Cost of goods sold
|
1,666,793
|
|
|
1,674,173
|
|
|
(7,380
|
)
|
|||
Selling, general and administrative expenses
|
766,891
|
|
|
767,459
|
|
|
(568
|
)
|
1.
|
Identifying contracts with customers,
|
2.
|
Identifying performance obligations within those contracts,
|
3.
|
Determining the transaction price,
|
4.
|
Allocating the transaction price to the performance obligation in the contract, which may include an estimate of variable consideration, and
|
5.
|
Recognizing revenue when or as each performance obligation is satisfied.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2018
|
|
2017
|
||||
North America
|
$
|
1,172,585
|
|
|
$
|
1,079,875
|
|
Europe
|
1,037,046
|
|
|
819,167
|
|
||
Specialty
|
350,674
|
|
|
313,899
|
|
||
Parts and services
|
2,560,305
|
|
|
2,212,941
|
|
||
Other
|
160,459
|
|
|
129,902
|
|
||
Total revenue
|
$
|
2,720,764
|
|
|
$
|
2,342,843
|
|
|
|
||
Balance January 1, 2018
|
$
|
19,465
|
|
Additional warranty revenue deferred
|
10,097
|
|
|
Warranty revenue recognized
|
(8,055
|
)
|
|
Balance March 31, 2018
|
$
|
21,507
|
|
|
Number
Outstanding
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Weighted Average Remaining Contractual Term
(in years)
|
|
Aggregate Intrinsic Value
(in thousands)
(1)
|
|||||
Unvested as of January 1, 2018
|
1,624,390
|
|
|
$
|
29.94
|
|
|
|
|
|
||
Granted
|
562,380
|
|
|
$
|
43.35
|
|
|
|
|
|
||
Vested
|
(359,863
|
)
|
|
$
|
29.00
|
|
|
|
|
|
||
Forfeited / Canceled
|
(18,015
|
)
|
|
$
|
31.29
|
|
|
|
|
|
||
Unvested as of March 31, 2018
|
1,808,892
|
|
|
$
|
34.28
|
|
|
|
|
|
||
Expected to vest after March 31, 2018
|
1,630,647
|
|
|
$
|
34.26
|
|
|
3.0
|
|
$
|
61,883
|
|
|
Number
Outstanding
|
|
Weighted
Average Exercise Price
|
|
Weighted Average Remaining Contractual Term
(in years)
|
|
Aggregate Intrinsic Value
(in thousands)
(1)
|
|||||
Balance as of January 1, 2018
|
1,738,073
|
|
|
$
|
9.20
|
|
|
|
|
|
||
Exercised
|
(226,260
|
)
|
|
$
|
9.97
|
|
|
|
|
$
|
7,123
|
|
Canceled
|
(509
|
)
|
|
$
|
32.31
|
|
|
|
|
|
||
Balance as of March 31, 2018
|
1,511,304
|
|
|
$
|
9.08
|
|
|
1.4
|
|
$
|
43,631
|
|
Exercisable as of March 31, 2018
|
1,511,304
|
|
|
$
|
9.08
|
|
|
1.4
|
|
$
|
43,631
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2018
|
|
2017
|
||||
Income from continuing operations
|
$
|
152,763
|
|
|
$
|
140,809
|
|
Denominator for basic earnings per share—Weighted-average shares outstanding
|
309,517
|
|
|
308,028
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
RSUs
|
619
|
|
|
564
|
|
||
Stock options
|
1,211
|
|
|
1,708
|
|
||
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding
|
311,347
|
|
|
310,300
|
|
||
Basic earnings per share from continuing operations
|
$
|
0.49
|
|
|
$
|
0.46
|
|
Diluted earnings per share from continuing operations
|
$
|
0.49
|
|
|
$
|
0.45
|
|
|
Three Months Ended
|
||||
|
March 31,
|
||||
|
2018
|
|
2017
|
||
Antidilutive securities:
|
|
|
|
||
RSUs
|
—
|
|
|
147
|
|
Stock options
|
—
|
|
|
78
|
|
|
|
Three Months Ended
|
||||||||||||||||||
|
|
March 31, 2018
|
||||||||||||||||||
|
|
Foreign
Currency Translation |
|
Unrealized (Loss) Gain
on Cash Flow Hedges |
|
Unrealized (Loss) Gain on Pension Plans
|
|
Other Comprehensive Loss from Unconsolidated Subsidiaries
|
|
Accumulated
Other Comprehensive (Loss) Income |
||||||||||
Beginning balance
|
|
$
|
(71,933
|
)
|
|
$
|
11,538
|
|
|
$
|
(8,772
|
)
|
|
$
|
(1,309
|
)
|
|
$
|
(70,476
|
)
|
Pretax income (loss)
|
|
48,435
|
|
|
(4,501
|
)
|
|
(629
|
)
|
|
—
|
|
|
43,305
|
|
|||||
Income tax effect
|
|
50
|
|
|
1,053
|
|
|
8
|
|
|
—
|
|
|
1,111
|
|
|||||
Reclassification of unrealized loss
|
|
—
|
|
|
8,747
|
|
|
—
|
|
|
—
|
|
|
8,747
|
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
(2,045
|
)
|
|
—
|
|
|
—
|
|
|
(2,045
|
)
|
|||||
Other comprehensive loss from unconsolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(605
|
)
|
|
(605
|
)
|
|||||
Adoption of ASU 2018-02
|
|
2,859
|
|
|
2,486
|
|
|
—
|
|
|
—
|
|
|
5,345
|
|
|||||
Ending balance
|
|
$
|
(20,589
|
)
|
|
$
|
17,278
|
|
|
$
|
(9,393
|
)
|
|
$
|
(1,914
|
)
|
|
$
|
(14,618
|
)
|
|
|
Three Months Ended
|
||||||||||||||||||
|
|
March 31, 2017
|
||||||||||||||||||
|
|
Foreign
Currency Translation |
|
Unrealized Gain
(Loss) on Cash Flow Hedges |
|
Unrealized (Loss) Gain
on Pension Plans |
|
Other Comprehensive Loss from Unconsolidated Subsidiaries
|
|
Accumulated
Other Comprehensive (Loss) Income |
||||||||||
Beginning balance
|
|
$
|
(272,529
|
)
|
|
$
|
8,091
|
|
|
$
|
(2,737
|
)
|
|
$
|
—
|
|
|
$
|
(267,175
|
)
|
Pretax income
|
|
20,068
|
|
|
832
|
|
|
836
|
|
|
—
|
|
|
21,736
|
|
|||||
Income tax effect
|
|
—
|
|
|
(356
|
)
|
|
(318
|
)
|
|
—
|
|
|
(674
|
)
|
|||||
Reclassification of unrealized loss (gain)
|
|
—
|
|
|
4,257
|
|
|
(171
|
)
|
|
—
|
|
|
4,086
|
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
(1,570
|
)
|
|
48
|
|
|
—
|
|
|
(1,522
|
)
|
|||||
Disposal of business, net
|
|
1,511
|
|
|
—
|
|
|
(3,436
|
)
|
|
—
|
|
|
(1,925
|
)
|
|||||
Other comprehensive (loss) income from unconsolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(162
|
)
|
|
(162
|
)
|
|||||
Ending balance
|
|
$
|
(250,950
|
)
|
|
$
|
11,254
|
|
|
$
|
(5,778
|
)
|
|
$
|
(162
|
)
|
|
$
|
(245,636
|
)
|
|
March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Senior secured credit agreement:
|
|
|
|
||||
Term loans payable
|
$
|
700,395
|
|
|
$
|
704,800
|
|
Revolving credit facilities
|
1,172,140
|
|
|
1,283,551
|
|
||
U.S. Notes (2023)
|
600,000
|
|
|
600,000
|
|
||
Euro Notes (2024)
|
616,200
|
|
|
600,150
|
|
||
Receivables securitization facility
|
100,000
|
|
|
100,000
|
|
||
Notes payable through October 2025 at weighted average interest rates of 1.4% and 1.4%, respectively
|
29,413
|
|
|
29,146
|
|
||
Other long-term debt at weighted average interest rates of 1.9% and 1.7%, respectively
|
120,940
|
|
|
110,633
|
|
||
Total debt
|
3,339,088
|
|
|
3,428,280
|
|
||
Less: long-term debt issuance costs
|
(23,157
|
)
|
|
(21,476
|
)
|
||
Less: current debt issuance costs
|
(2,866
|
)
|
|
(2,824
|
)
|
||
Total debt, net of debt issuance costs
|
3,313,065
|
|
|
3,403,980
|
|
||
Less: current maturities, net of debt issuance costs
|
(142,277
|
)
|
|
(126,360
|
)
|
||
Long term debt, net of debt issuance costs
|
$
|
3,170,788
|
|
|
$
|
3,277,620
|
|
|
Balance as of March 31, 2018
|
|
Fair Value Measurements as of March 31, 2018
|
||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash surrender value of life insurance
|
$
|
46,196
|
|
|
$
|
—
|
|
|
$
|
46,196
|
|
|
$
|
—
|
|
Interest rate swaps
|
24,253
|
|
|
—
|
|
|
24,253
|
|
|
—
|
|
||||
Cross currency swap agreements
|
9,208
|
|
|
—
|
|
|
9,208
|
|
|
—
|
|
||||
Total Assets
|
$
|
79,657
|
|
|
$
|
—
|
|
|
$
|
79,657
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities
|
$
|
2,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,700
|
|
Deferred compensation liabilities
|
50,676
|
|
|
—
|
|
|
50,676
|
|
|
—
|
|
||||
Cross currency swap agreements
|
77,812
|
|
|
—
|
|
|
77,812
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
131,188
|
|
|
$
|
—
|
|
|
$
|
128,488
|
|
|
$
|
2,700
|
|
|
Balance as of December 31, 2017
|
|
Fair Value Measurements as of December 31, 2017
|
||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash surrender value of life insurance
|
$
|
45,984
|
|
|
$
|
—
|
|
|
$
|
45,984
|
|
|
$
|
—
|
|
Interest rate swaps
|
19,102
|
|
|
—
|
|
|
19,102
|
|
|
—
|
|
||||
Cross currency swap agreements
|
5,504
|
|
|
—
|
|
|
5,504
|
|
|
—
|
|
||||
Total Assets
|
$
|
70,590
|
|
|
$
|
—
|
|
|
$
|
70,590
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities
|
$
|
2,636
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,636
|
|
Deferred compensation liabilities
|
47,199
|
|
|
—
|
|
|
47,199
|
|
|
—
|
|
||||
Cross currency swap agreements
|
61,492
|
|
|
—
|
|
|
61,492
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
111,327
|
|
|
$
|
—
|
|
|
$
|
108,691
|
|
|
$
|
2,636
|
|
Nine months ending December 31, 2018
|
$
|
186,038
|
|
Years ending December 31:
|
|
||
2019
|
207,724
|
|
|
2020
|
171,530
|
|
|
2021
|
132,755
|
|
|
2022
|
107,405
|
|
|
2023
|
91,007
|
|
|
Thereafter
|
532,760
|
|
|
Future Minimum Lease Payments
|
$
|
1,429,219
|
|
|
North America
|
|
Europe
|
|
Specialty
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
1,329,660
|
|
|
$
|
1,040,430
|
|
|
$
|
350,674
|
|
|
$
|
—
|
|
|
$
|
2,720,764
|
|
Intersegment
|
183
|
|
|
—
|
|
|
1,118
|
|
|
(1,301
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
1,329,843
|
|
|
$
|
1,040,430
|
|
|
$
|
351,792
|
|
|
$
|
(1,301
|
)
|
|
$
|
2,720,764
|
|
Segment EBITDA
|
$
|
177,713
|
|
|
$
|
75,534
|
|
|
$
|
41,969
|
|
|
$
|
—
|
|
|
$
|
295,216
|
|
Depreciation and amortization
(1)
|
21,228
|
|
|
32,757
|
|
|
7,081
|
|
|
—
|
|
|
61,066
|
|
|||||
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
1,208,047
|
|
|
$
|
820,897
|
|
|
$
|
313,899
|
|
|
$
|
—
|
|
|
$
|
2,342,843
|
|
Intersegment
|
193
|
|
|
—
|
|
|
1,035
|
|
|
(1,228
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
1,208,240
|
|
|
$
|
820,897
|
|
|
$
|
314,934
|
|
|
$
|
(1,228
|
)
|
|
$
|
2,342,843
|
|
Segment EBITDA
|
$
|
176,135
|
|
|
$
|
78,694
|
|
|
$
|
35,441
|
|
|
$
|
—
|
|
|
$
|
290,270
|
|
Depreciation and amortization
(1)
|
20,378
|
|
|
24,751
|
|
|
5,475
|
|
|
—
|
|
|
50,604
|
|
(1)
|
Amounts presented include depreciation and amortization expense recorded within cost of goods sold.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
2018
|
|
2017
|
|||||
Net income
|
$
|
152,763
|
|
|
$
|
136,278
|
|
Less: net loss attributable to noncontrolling interest
|
(197
|
)
|
|
—
|
|
||
Net income attributable to LKQ stockholders
|
152,960
|
|
|
136,278
|
|
||
Subtract:
|
|
|
|
||||
Net loss from discontinued operations
|
—
|
|
|
(4,531
|
)
|
||
Net income from continuing operations attributable to LKQ stockholders
|
152,960
|
|
|
140,809
|
|
||
Add:
|
|
|
|
||||
Depreciation and amortization
|
56,458
|
|
|
48,656
|
|
||
Depreciation and amortization - cost of goods sold
|
4,608
|
|
|
1,948
|
|
||
Interest expense, net
|
28,515
|
|
|
23,988
|
|
||
Provision for income taxes
|
49,584
|
|
|
72,155
|
|
||
EBITDA
|
292,125
|
|
|
287,556
|
|
||
Subtract:
|
|
|
|
||||
Equity in earnings of unconsolidated subsidiaries
|
1,412
|
|
|
214
|
|
||
Add:
|
|
|
|
||||
Restructuring and acquisition related expenses
(1)
|
4,054
|
|
|
2,928
|
|
||
Inventory step-up adjustment - acquisition related
|
403
|
|
|
—
|
|
||
Change in fair value of contingent consideration liabilities
|
46
|
|
|
—
|
|
||
Segment EBITDA
|
$
|
295,216
|
|
|
$
|
290,270
|
|
(1)
|
See
Note 6, "Restructuring and Acquisition Related Expenses
," for further information.
|
|
Three Months Ended
|
||||||
March 31,
|
|||||||
2018
|
|
2017
|
|||||
Capital Expenditures
|
|
|
|
||||
North America
|
$
|
29,662
|
|
|
$
|
16,760
|
|
Europe
|
28,815
|
|
|
20,458
|
|
||
Specialty
|
3,712
|
|
|
3,582
|
|
||
Discontinued operations
|
—
|
|
|
3,598
|
|
||
Total capital expenditures
|
$
|
62,189
|
|
|
$
|
44,398
|
|
|
March 31,
|
|
December 31,
|
||||
2018
|
|
2017
|
|||||
Receivables, net
|
|
|
|
||||
North America
|
$
|
448,973
|
|
|
$
|
379,666
|
|
Europe
|
622,592
|
|
|
555,372
|
|
||
Specialty
|
140,223
|
|
|
92,068
|
|
||
Total receivables, net
(1)
|
1,211,788
|
|
|
1,027,106
|
|
||
Inventories
|
|
|
|
||||
North America
|
1,053,322
|
|
|
1,076,393
|
|
||
Europe
|
998,617
|
|
|
964,068
|
|
||
Specialty
|
349,370
|
|
|
340,322
|
|
||
Total inventories
|
2,401,309
|
|
|
2,380,783
|
|
||
Property, Plant and Equipment, net
|
|
|
|
||||
North America
|
542,453
|
|
|
537,286
|
|
||
Europe
|
304,048
|
|
|
293,539
|
|
||
Specialty
|
83,255
|
|
|
82,264
|
|
||
Total property, plant and equipment, net
|
929,756
|
|
|
913,089
|
|
||
Equity Method Investments
|
|
|
|
||||
North America
|
336
|
|
|
336
|
|
||
Europe
|
207,874
|
|
|
208,068
|
|
||
Total equity method investments
|
208,210
|
|
|
208,404
|
|
||
Other unallocated assets
|
4,885,115
|
|
|
4,837,490
|
|
||
Total assets
|
$
|
9,636,178
|
|
|
$
|
9,366,872
|
|
(1)
|
Refer to Note 4, "Financial Statement Information," for the increase in total receivables, net compared to December 31, 2017 as a result of the adoption of ASC 606.
|
|
March 31,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Long-lived Assets
|
|
|
|
||||
United States
|
$
|
589,848
|
|
|
$
|
583,236
|
|
United Kingdom
|
186,347
|
|
|
178,021
|
|
||
Other countries
|
153,561
|
|
|
151,832
|
|
||
Total long-lived assets
|
$
|
929,756
|
|
|
$
|
913,089
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
1,577,595
|
|
|
$
|
1,180,242
|
|
|
$
|
(37,073
|
)
|
|
$
|
2,720,764
|
|
Cost of goods sold
|
—
|
|
|
945,915
|
|
|
757,951
|
|
|
(37,073
|
)
|
|
1,666,793
|
|
|||||
Gross margin
|
—
|
|
|
631,680
|
|
|
422,291
|
|
|
—
|
|
|
1,053,971
|
|
|||||
Selling, general and administrative expenses
|
9,130
|
|
|
426,797
|
|
|
330,964
|
|
|
—
|
|
|
766,891
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
330
|
|
|
3,724
|
|
|
—
|
|
|
4,054
|
|
|||||
Depreciation and amortization
|
29
|
|
|
24,338
|
|
|
32,091
|
|
|
—
|
|
|
56,458
|
|
|||||
Operating (loss) income
|
(9,159
|
)
|
|
180,215
|
|
|
55,512
|
|
|
—
|
|
|
226,568
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
18,008
|
|
|
212
|
|
|
10,295
|
|
|
—
|
|
|
28,515
|
|
|||||
Intercompany interest (income) expense, net
|
(15,400
|
)
|
|
9,680
|
|
|
5,720
|
|
|
—
|
|
|
—
|
|
|||||
Other (income) expense, net
|
(1,015
|
)
|
|
(5,882
|
)
|
|
4,015
|
|
|
—
|
|
|
(2,882
|
)
|
|||||
Total other expense, net
|
1,593
|
|
|
4,010
|
|
|
20,030
|
|
|
—
|
|
|
25,633
|
|
|||||
(Loss) income before (benefit) provision for income taxes
|
(10,752
|
)
|
|
176,205
|
|
|
35,482
|
|
|
—
|
|
|
200,935
|
|
|||||
(Benefit) provision for income taxes
|
(3,904
|
)
|
|
45,877
|
|
|
7,611
|
|
|
—
|
|
|
49,584
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
—
|
|
|
—
|
|
|
1,412
|
|
|
—
|
|
|
1,412
|
|
|||||
Equity in earnings (loss) of subsidiaries
|
159,808
|
|
|
5,110
|
|
|
—
|
|
|
(164,918
|
)
|
|
—
|
|
|||||
Net income
|
152,960
|
|
|
135,438
|
|
|
29,283
|
|
|
(164,918
|
)
|
|
152,763
|
|
|||||
Less: net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(197
|
)
|
|
—
|
|
|
(197
|
)
|
|||||
Net income attributable to LKQ stockholders
|
$
|
152,960
|
|
|
$
|
135,438
|
|
|
$
|
29,480
|
|
|
$
|
(164,918
|
)
|
|
$
|
152,960
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
1,453,516
|
|
|
$
|
929,971
|
|
|
$
|
(40,644
|
)
|
|
$
|
2,342,843
|
|
Cost of goods sold
|
—
|
|
|
863,375
|
|
|
590,019
|
|
|
(40,644
|
)
|
|
1,412,750
|
|
|||||
Gross margin
|
—
|
|
|
590,141
|
|
|
339,952
|
|
|
—
|
|
|
930,093
|
|
|||||
Selling, general and administrative expenses
|
9,183
|
|
|
385,528
|
|
|
248,106
|
|
|
—
|
|
|
642,817
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
1,883
|
|
|
1,045
|
|
|
—
|
|
|
2,928
|
|
|||||
Depreciation and amortization
|
30
|
|
|
23,481
|
|
|
25,145
|
|
|
—
|
|
|
48,656
|
|
|||||
Operating (loss) income
|
(9,213
|
)
|
|
179,249
|
|
|
65,656
|
|
|
—
|
|
|
235,692
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
16,180
|
|
|
198
|
|
|
7,610
|
|
|
—
|
|
|
23,988
|
|
|||||
Intercompany interest (income) expense, net
|
(5,672
|
)
|
|
1,019
|
|
|
4,653
|
|
|
—
|
|
|
—
|
|
|||||
Other expense (income), net
|
291
|
|
|
(169
|
)
|
|
(1,168
|
)
|
|
—
|
|
|
(1,046
|
)
|
|||||
Total other expense, net
|
10,799
|
|
|
1,048
|
|
|
11,095
|
|
|
—
|
|
|
22,942
|
|
|||||
(Loss) income from continuing operations before (benefit) provision for income taxes
|
(20,012
|
)
|
|
178,201
|
|
|
54,561
|
|
|
—
|
|
|
212,750
|
|
|||||
(Benefit) provision for income taxes
|
(7,437
|
)
|
|
70,038
|
|
|
9,554
|
|
|
—
|
|
|
72,155
|
|
|||||
Equity in (loss) earnings of unconsolidated subsidiaries
|
(182
|
)
|
|
—
|
|
|
396
|
|
|
—
|
|
|
214
|
|
|||||
Equity in earnings of subsidiaries
|
153,566
|
|
|
4,813
|
|
|
—
|
|
|
(158,379
|
)
|
|
—
|
|
|||||
Income from continuing operations
|
140,809
|
|
|
112,976
|
|
|
45,403
|
|
|
(158,379
|
)
|
|
140,809
|
|
|||||
Net (loss) income from discontinued operations
|
(4,531
|
)
|
|
(4,531
|
)
|
|
2,050
|
|
|
2,481
|
|
|
(4,531
|
)
|
|||||
Net income
|
$
|
136,278
|
|
|
$
|
108,445
|
|
|
$
|
47,453
|
|
|
$
|
(155,898
|
)
|
|
$
|
136,278
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
152,960
|
|
|
$
|
135,438
|
|
|
$
|
29,283
|
|
|
$
|
(164,918
|
)
|
|
$
|
152,763
|
|
Less: net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(197
|
)
|
|
—
|
|
|
(197
|
)
|
|||||
Net income attributable to LKQ stockholders
|
152,960
|
|
|
135,438
|
|
|
29,480
|
|
|
(164,918
|
)
|
|
152,960
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
48,485
|
|
|
(2,183
|
)
|
|
49,055
|
|
|
(46,872
|
)
|
|
48,485
|
|
|||||
Net change in unrealized gains/losses on cash flow hedges, net of tax
|
3,254
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,254
|
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
(621
|
)
|
|
(621
|
)
|
|
—
|
|
|
621
|
|
|
(621
|
)
|
|||||
Net change in other comprehensive loss from unconsolidated subsidiaries
|
(605
|
)
|
|
—
|
|
|
(605
|
)
|
|
605
|
|
|
(605
|
)
|
|||||
Other comprehensive income (loss)
|
50,513
|
|
|
(2,804
|
)
|
|
48,450
|
|
|
(45,646
|
)
|
|
50,513
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income
|
203,473
|
|
|
132,634
|
|
|
77,733
|
|
|
(210,564
|
)
|
|
203,276
|
|
|||||
Less: comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(197
|
)
|
|
—
|
|
|
(197
|
)
|
|||||
Comprehensive income attributable to LKQ stockholders
|
$
|
203,473
|
|
|
$
|
132,634
|
|
|
$
|
77,930
|
|
|
$
|
(210,564
|
)
|
|
$
|
203,473
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
136,278
|
|
|
$
|
108,445
|
|
|
$
|
47,453
|
|
|
$
|
(155,898
|
)
|
|
$
|
136,278
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
21,579
|
|
|
3,878
|
|
|
21,132
|
|
|
(25,010
|
)
|
|
21,579
|
|
|||||
Net change in unrealized gains/losses on cash flow hedges, net of tax
|
3,163
|
|
|
(133
|
)
|
|
—
|
|
|
133
|
|
|
3,163
|
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
(3,041
|
)
|
|
(2,805
|
)
|
|
(236
|
)
|
|
3,041
|
|
|
(3,041
|
)
|
|||||
Net change in other comprehensive loss from unconsolidated subsidiaries
|
(162
|
)
|
|
—
|
|
|
(162
|
)
|
|
162
|
|
|
(162
|
)
|
|||||
Other comprehensive income
|
21,539
|
|
|
940
|
|
|
20,734
|
|
|
(21,674
|
)
|
|
21,539
|
|
|||||
Total comprehensive income
|
$
|
157,817
|
|
|
$
|
109,385
|
|
|
$
|
68,187
|
|
|
$
|
(177,572
|
)
|
|
$
|
157,817
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Balance Sheets
(In thousands)
|
|||||||||||||||||||
|
March 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
17,340
|
|
|
$
|
28,975
|
|
|
$
|
199,364
|
|
|
$
|
—
|
|
|
$
|
245,679
|
|
Receivables, net
|
843
|
|
|
372,264
|
|
|
838,681
|
|
|
—
|
|
|
1,211,788
|
|
|||||
Intercompany receivables, net
|
6,747
|
|
|
—
|
|
|
21,170
|
|
|
(27,917
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
1,319,468
|
|
|
1,081,841
|
|
|
—
|
|
|
2,401,309
|
|
|||||
Prepaid expenses and other current assets
|
1,864
|
|
|
94,231
|
|
|
84,272
|
|
|
—
|
|
|
180,367
|
|
|||||
Total current assets
|
26,794
|
|
|
1,814,938
|
|
|
2,225,328
|
|
|
(27,917
|
)
|
|
4,039,143
|
|
|||||
Property, plant and equipment, net
|
904
|
|
|
569,829
|
|
|
359,023
|
|
|
—
|
|
|
929,756
|
|
|||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
—
|
|
|
2,005,814
|
|
|
1,566,384
|
|
|
—
|
|
|
3,572,198
|
|
|||||
Other intangibles, net
|
—
|
|
|
289,057
|
|
|
451,747
|
|
|
—
|
|
|
740,804
|
|
|||||
Investment in subsidiaries
|
5,355,015
|
|
|
105,772
|
|
|
—
|
|
|
(5,460,787
|
)
|
|
—
|
|
|||||
Intercompany notes receivable
|
1,143,818
|
|
|
32,777
|
|
|
—
|
|
|
(1,176,595
|
)
|
|
—
|
|
|||||
Equity method investments
|
—
|
|
|
336
|
|
|
207,874
|
|
|
—
|
|
|
208,210
|
|
|||||
Other assets
|
79,657
|
|
|
36,403
|
|
|
30,007
|
|
|
—
|
|
|
146,067
|
|
|||||
Total assets
|
$
|
6,606,188
|
|
|
$
|
4,854,926
|
|
|
$
|
4,840,363
|
|
|
$
|
(6,665,299
|
)
|
|
$
|
9,636,178
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
8,407
|
|
|
$
|
358,971
|
|
|
$
|
445,283
|
|
|
$
|
—
|
|
|
$
|
812,661
|
|
Intercompany payables, net
|
—
|
|
|
21,170
|
|
|
6,747
|
|
|
(27,917
|
)
|
|
—
|
|
|||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued payroll-related liabilities
|
5,224
|
|
|
34,590
|
|
|
72,326
|
|
|
—
|
|
|
112,140
|
|
|||||
Other accrued expenses
|
12,360
|
|
|
101,274
|
|
|
153,730
|
|
|
—
|
|
|
267,364
|
|
|||||
Refund liability
|
—
|
|
|
54,270
|
|
|
44,909
|
|
|
—
|
|
|
99,179
|
|
|||||
Other current liabilities
|
6,224
|
|
|
19,255
|
|
|
15,688
|
|
|
—
|
|
|
41,167
|
|
|||||
Current portion of long-term obligations
|
20,863
|
|
|
1,912
|
|
|
119,502
|
|
|
—
|
|
|
142,277
|
|
|||||
Total current liabilities
|
53,078
|
|
|
591,442
|
|
|
858,185
|
|
|
(27,917
|
)
|
|
1,474,788
|
|
|||||
Long-term obligations, excluding current portion
|
1,956,376
|
|
|
7,341
|
|
|
1,207,071
|
|
|
—
|
|
|
3,170,788
|
|
|||||
Intercompany notes payable
|
—
|
|
|
657,601
|
|
|
518,994
|
|
|
(1,176,595
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
13,345
|
|
|
115,736
|
|
|
113,145
|
|
|
—
|
|
|
242,226
|
|
|||||
Other noncurrent liabilities
|
176,802
|
|
|
102,559
|
|
|
50,034
|
|
|
—
|
|
|
329,395
|
|
|||||
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Company stockholders’ equity
|
4,406,587
|
|
|
3,380,247
|
|
|
2,080,540
|
|
|
(5,460,787
|
)
|
|
4,406,587
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
12,394
|
|
|
—
|
|
|
12,394
|
|
|||||
Total stockholders’ equity
|
4,406,587
|
|
|
3,380,247
|
|
|
2,092,934
|
|
|
(5,460,787
|
)
|
|
4,418,981
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
6,606,188
|
|
|
$
|
4,854,926
|
|
|
$
|
4,840,363
|
|
|
$
|
(6,665,299
|
)
|
|
$
|
9,636,178
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Balance Sheets
(In thousands)
|
|||||||||||||||||||
|
December 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
34,360
|
|
|
$
|
35,131
|
|
|
$
|
210,275
|
|
|
$
|
—
|
|
|
$
|
279,766
|
|
Receivables, net
|
—
|
|
|
290,958
|
|
|
736,148
|
|
|
—
|
|
|
1,027,106
|
|
|||||
Intercompany receivables, net
|
2,669
|
|
|
3,010
|
|
|
230
|
|
|
(5,909
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
1,334,766
|
|
|
1,046,017
|
|
|
—
|
|
|
2,380,783
|
|
|||||
Prepaid expenses and other current assets
|
34,136
|
|
|
44,849
|
|
|
55,494
|
|
|
—
|
|
|
134,479
|
|
|||||
Total current assets
|
71,165
|
|
|
1,708,714
|
|
|
2,048,164
|
|
|
(5,909
|
)
|
|
3,822,134
|
|
|||||
Property, plant
and equipment, net
|
910
|
|
|
563,262
|
|
|
348,917
|
|
|
—
|
|
|
913,089
|
|
|||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
—
|
|
|
2,010,209
|
|
|
1,526,302
|
|
|
—
|
|
|
3,536,511
|
|
|||||
Other intangibles, net
|
—
|
|
|
291,036
|
|
|
452,733
|
|
|
—
|
|
|
743,769
|
|
|||||
Investment in subsidiaries
|
5,952,687
|
|
|
102,931
|
|
|
—
|
|
|
(6,055,618
|
)
|
|
—
|
|
|||||
Intercompany notes receivable
|
1,156,550
|
|
|
782,638
|
|
|
—
|
|
|
(1,939,188
|
)
|
|
—
|
|
|||||
Equity method investments
|
—
|
|
|
336
|
|
|
208,068
|
|
|
—
|
|
|
208,404
|
|
|||||
Other assets
|
70,590
|
|
|
33,597
|
|
|
38,778
|
|
|
—
|
|
|
142,965
|
|
|||||
Total assets
|
$
|
7,251,902
|
|
|
$
|
5,492,723
|
|
|
$
|
4,622,962
|
|
|
$
|
(8,000,715
|
)
|
|
$
|
9,366,872
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
5,742
|
|
|
$
|
340,951
|
|
|
$
|
441,920
|
|
|
$
|
—
|
|
|
$
|
788,613
|
|
Intercompany payables, net
|
—
|
|
|
230
|
|
|
5,679
|
|
|
(5,909
|
)
|
|
—
|
|
|||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued payroll-related liabilities
|
9,448
|
|
|
65,811
|
|
|
68,165
|
|
|
—
|
|
|
143,424
|
|
|||||
Other accrued expenses
|
5,219
|
|
|
95,900
|
|
|
117,481
|
|
|
—
|
|
|
218,600
|
|
|||||
Other current liabilities
|
282
|
|
|
27,066
|
|
|
18,379
|
|
|
—
|
|
|
45,727
|
|
|||||
Current portion of long-term obligations
|
16,468
|
|
|
1,912
|
|
|
107,980
|
|
|
—
|
|
|
126,360
|
|
|||||
Total current liabilities
|
37,159
|
|
|
531,870
|
|
|
759,604
|
|
|
(5,909
|
)
|
|
1,322,724
|
|
|||||
Long-term obligations, excluding current portion
|
2,095,826
|
|
|
7,372
|
|
|
1,174,422
|
|
|
—
|
|
|
3,277,620
|
|
|||||
Intercompany notes payable
|
750,000
|
|
|
677,708
|
|
|
511,480
|
|
|
(1,939,188
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
12,402
|
|
|
116,021
|
|
|
123,936
|
|
|
—
|
|
|
252,359
|
|
|||||
Other noncurrent liabilities
|
158,346
|
|
|
101,189
|
|
|
47,981
|
|
|
—
|
|
|
307,516
|
|
|||||
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Company stockholders’ equity
|
4,198,169
|
|
|
4,058,563
|
|
|
1,997,055
|
|
|
(6,055,618
|
)
|
|
4,198,169
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
8,484
|
|
|
—
|
|
|
8,484
|
|
|||||
Total stockholders’ equity
|
4,198,169
|
|
|
4,058,563
|
|
|
2,005,539
|
|
|
(6,055,618
|
)
|
|
4,206,653
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
7,251,902
|
|
|
$
|
5,492,723
|
|
|
$
|
4,622,962
|
|
|
$
|
(8,000,715
|
)
|
|
$
|
9,366,872
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Cash Flows
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
95,942
|
|
|
$
|
96,517
|
|
|
$
|
243
|
|
|
$
|
(47,539
|
)
|
|
$
|
145,163
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(163
|
)
|
|
(29,908
|
)
|
|
(32,118
|
)
|
|
—
|
|
|
(62,189
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
24,333
|
|
|
—
|
|
|
—
|
|
|
(24,333
|
)
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(2,966
|
)
|
|
—
|
|
|
—
|
|
|
(2,966
|
)
|
|||||
Payments of deferred purchase price on receivables securitization
|
—
|
|
|
7,456
|
|
|
—
|
|
|
(7,456
|
)
|
|
—
|
|
|||||
Other investing activities, net
|
—
|
|
|
(145
|
)
|
|
679
|
|
|
—
|
|
|
534
|
|
|||||
Net cash provided by (used in) investing activities
|
24,170
|
|
|
(25,563
|
)
|
|
(31,439
|
)
|
|
(31,789
|
)
|
|
(64,621
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
2,255
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,255
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(3,292
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,292
|
)
|
|||||
Debt issuance costs
|
(724
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(724
|
)
|
|||||
Borrowings under revolving credit facilities
|
161,000
|
|
|
—
|
|
|
40,669
|
|
|
—
|
|
|
201,669
|
|
|||||
Repayments under revolving credit facilities
|
(291,966
|
)
|
|
—
|
|
|
(29,559
|
)
|
|
—
|
|
|
(321,525
|
)
|
|||||
Repayments under term loans
|
(4,405
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,405
|
)
|
|||||
(Repayments) borrowings of other debt, net
|
—
|
|
|
(30
|
)
|
|
4,439
|
|
|
—
|
|
|
4,409
|
|
|||||
Other financing activities, net
|
—
|
|
|
—
|
|
|
4,107
|
|
|
—
|
|
|
4,107
|
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
(21,759
|
)
|
|
(2,574
|
)
|
|
24,333
|
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(54,995
|
)
|
|
—
|
|
|
54,995
|
|
|
—
|
|
|||||
Net cash (used in) provided by financing activities
|
(137,132
|
)
|
|
(76,784
|
)
|
|
17,082
|
|
|
79,328
|
|
|
(117,506
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
(326
|
)
|
|
3,203
|
|
|
—
|
|
|
2,877
|
|
|||||
Net decrease in cash and cash equivalents
|
(17,020
|
)
|
|
(6,156
|
)
|
|
(10,911
|
)
|
|
—
|
|
|
(34,087
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
34,360
|
|
|
35,131
|
|
|
210,275
|
|
|
—
|
|
|
279,766
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
17,340
|
|
|
$
|
28,975
|
|
|
$
|
199,364
|
|
|
$
|
—
|
|
|
$
|
245,679
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Cash Flows
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
118,537
|
|
|
$
|
106,243
|
|
|
$
|
35,789
|
|
|
$
|
(88,276
|
)
|
|
$
|
172,293
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
—
|
|
|
(18,226
|
)
|
|
(26,172
|
)
|
|
—
|
|
|
(44,398
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
249,828
|
|
|
—
|
|
|
—
|
|
|
(249,828
|
)
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(74,937
|
)
|
|
(2,119
|
)
|
|
—
|
|
|
(77,056
|
)
|
|||||
Proceeds from disposals of business/investment
|
—
|
|
|
305,740
|
|
|
(4,443
|
)
|
|
—
|
|
|
301,297
|
|
|||||
Payments of deferred purchase price on receivables securitization
(1)
|
—
|
|
|
6,362
|
|
|
—
|
|
|
(6,362
|
)
|
|
—
|
|
|||||
Other investing activities, net
|
—
|
|
|
1,008
|
|
|
306
|
|
|
—
|
|
|
1,314
|
|
|||||
Net cash provided by (used in) investing activities
|
249,828
|
|
|
219,947
|
|
|
(32,428
|
)
|
|
(256,190
|
)
|
|
181,157
|
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
2,464
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,464
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(3,644
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,644
|
)
|
|||||
Borrowings under revolving credit facilities
|
10,000
|
|
|
—
|
|
|
35,239
|
|
|
—
|
|
|
45,239
|
|
|||||
Repayments under revolving credit facilities
|
(376,966
|
)
|
|
—
|
|
|
(12,347
|
)
|
|
—
|
|
|
(389,313
|
)
|
|||||
Repayments under term loans
|
(9,295
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,295
|
)
|
|||||
Repayments under receivables securitization facility
|
—
|
|
|
—
|
|
|
(150
|
)
|
|
—
|
|
|
(150
|
)
|
|||||
(Repayments) borrowings of other debt, net
|
(1,698
|
)
|
|
(1,099
|
)
|
|
26,110
|
|
|
—
|
|
|
23,313
|
|
|||||
Other financing activities, net
|
—
|
|
|
5,000
|
|
|
—
|
|
|
—
|
|
|
5,000
|
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
(246,463
|
)
|
|
(3,365
|
)
|
|
249,828
|
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(94,638
|
)
|
|
—
|
|
|
94,638
|
|
|
—
|
|
|||||
Net cash (used in) provided by financing activities
|
(379,139
|
)
|
|
(337,200
|
)
|
|
45,487
|
|
|
344,466
|
|
|
(326,386
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
30
|
|
|
3,004
|
|
|
—
|
|
|
3,034
|
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(10,774
|
)
|
|
(10,980
|
)
|
|
51,852
|
|
|
—
|
|
|
30,098
|
|
|||||
Cash and cash equivalents of continuing operations, beginning of period
|
33,030
|
|
|
35,360
|
|
|
159,010
|
|
|
—
|
|
|
227,400
|
|
|||||
Add: Cash and cash equivalents of discontinued operations, beginning of period
|
—
|
|
|
149
|
|
|
6,967
|
|
|
—
|
|
|
7,116
|
|
|||||
Cash and cash equivalents of continuing and discontinued operations, beginning of period
|
33,030
|
|
|
35,509
|
|
|
165,977
|
|
|
—
|
|
|
234,516
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
22,256
|
|
|
$
|
24,529
|
|
|
$
|
217,829
|
|
|
$
|
—
|
|
|
$
|
264,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
(1)
Reflects the impact of adopting ASU 2016-15
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
||||||||
|
March 31,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Restructuring expenses
|
$
|
2,037
|
|
(1)
|
$
|
315
|
|
|
$
|
1,722
|
|
Acquisition related expenses
|
2,017
|
|
(2)
|
2,613
|
|
(3)
|
(596
|
)
|
|||
Total restructuring and acquisition related expenses
|
$
|
4,054
|
|
|
$
|
2,928
|
|
|
$
|
1,126
|
|
(1)
|
Restructuring expenses for the three months ended
March 31, 2018
primarily related to the integration of our acquisition of Andrew Page. This integration included the closure of duplicate facilities and termination of employees.
|
(2)
|
Acquisition related expenses for the three months ended
March 31, 2018
included $1 million of costs for our pending acquisition of Stahlgruber. The remaining acquisition related costs for the three months ended March 31, 2018 consisted of external costs for completed acquisitions; pending acquisitions as of March 31, 2018; and potential acquisitions that were terminated.
|
(3)
|
Acquisition related expenses for the first quarter of 2017 included $2 million related to our North America acquisitions, primarily related to acquisitions that were not completed as of March 31, 2017, and $1 million related to our Europe acquisitions.
|
|
Three Months Ended
|
|
|
|
||||||||
|
March 31,
|
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
|
||||||
Depreciation
|
$
|
32,265
|
|
|
$
|
25,393
|
|
|
$
|
6,872
|
|
(1)
|
Amortization
|
24,193
|
|
|
23,263
|
|
|
930
|
|
|
|||
Total depreciation and amortization
|
$
|
56,458
|
|
|
$
|
48,656
|
|
|
$
|
7,802
|
|
|
(1)
|
The increas
e in depreciation expense primarily reflected an increase of $6 million in our Europe segment, composed of (i) a $4 million increase in our Eastern Europe operations, primarily due to a $3 million measurement period adjustment that reduced depreciation expense recorded in the first quarter of 2017 related to our valuation procedures for our acquisition of Rhiag, and (ii) a $2 million increase related to the impact of foreign currency translation, primarily due to increases in the euro and pound sterling exchange rates during the first three months of 2018 compared to the prior year period.
|
(1)
|
Additional interest primarily related to (i) higher interest rates on borrowings under our senior secured credit agreement compared to the prior year quarter, (ii) higher outstanding debt during the first quarter of 2018 compared to the prior year period, and (iii) a $1 million impact of foreign currency translation, primarily related to an increase in the euro exchange rate during the first three months of 2018 compared to the prior year period.
|
|
Three Months Ended March 31,
|
||||||||||
|
2018
|
|
% of Total Segment Revenue
|
|
2017
|
|
% of Total Segment Revenue
|
||||
Third Party Revenue
|
|
|
|
|
|
|
|
||||
North America
|
$
|
1,329,660
|
|
|
|
|
$
|
1,208,047
|
|
|
|
Europe
|
1,040,430
|
|
|
|
|
820,897
|
|
|
|
||
Specialty
|
350,674
|
|
|
|
|
313,899
|
|
|
|
||
Total third party revenue
|
$
|
2,720,764
|
|
|
|
|
$
|
2,342,843
|
|
|
|
Total Revenue
|
|
|
|
|
|
|
|
||||
North America
|
$
|
1,329,843
|
|
|
|
|
$
|
1,208,240
|
|
|
|
Europe
|
1,040,430
|
|
|
|
|
820,897
|
|
|
|
||
Specialty
|
351,792
|
|
|
|
|
314,934
|
|
|
|
||
Eliminations
|
(1,301
|
)
|
|
|
|
(1,228
|
)
|
|
|
||
Total revenue
|
$
|
2,720,764
|
|
|
|
|
$
|
2,342,843
|
|
|
|
Segment EBITDA
|
|
|
|
|
|
|
|
||||
North America
|
$
|
177,713
|
|
|
13.4%
|
|
$
|
176,135
|
|
|
14.6%
|
Europe
|
75,534
|
|
|
7.3%
|
|
78,694
|
|
|
9.6%
|
||
Specialty
|
41,969
|
|
|
11.9%
|
|
35,441
|
|
|
11.3%
|
|
Three Months Ended March 31,
|
|
Percentage Change in Revenue
|
|||||||||||||||||
North America
|
2018
|
|
2017
|
|
Organic
|
|
Acquisition
(3)
|
|
Foreign Exchange
|
|
Total Change
|
|||||||||
Parts & services revenue
|
$
|
1,172,585
|
|
|
$
|
1,079,875
|
|
|
6.5
|
%
|
(1
|
)
|
1.8
|
%
|
|
0.3
|
%
|
|
8.6
|
%
|
Other revenue
|
157,075
|
|
|
128,172
|
|
|
21.8
|
%
|
(2
|
)
|
0.6
|
%
|
|
0.1
|
%
|
|
22.6
|
%
|
||
Total third party revenue
|
$
|
1,329,660
|
|
|
$
|
1,208,047
|
|
|
8.1
|
%
|
|
1.6
|
%
|
|
0.3
|
%
|
|
10.1
|
%
|
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Organic growth in parts and services revenue was largely attributable to increased sales volumes in our wholesale operations, primarily driven by (i) severe winter weather conditions in the first quarter of 2018 compared to mild winter weather conditions in the prior year period, and (ii) to a lesser extent, incremental sales related to an agreement signed in December 2017 for the distribution of batteries.
|
(2)
|
The $29 million increase in other revenue primarily related to (i) a $20 million increase in revenue from scrap steel and other metals primarily related to higher prices and, to a lesser extent, increased volumes, year over year and (ii) an $8 million increase in revenue from metals found in catalytic converters (platinum, palladium, and rhodium) primarily due to higher prices and, to a lesser extent, increased volumes, year over year.
|
(3)
|
Acquisition related growth in the first quarter of 2018 reflected revenue from our acquisition of seven wholesale businesses from the beginning of the first quarter of 2017 up to the one-year anniversary of the acquisition dates.
|
(1)
|
The decrease in gross margin reflected unfavorable impacts of 0.7% and 0.3% from our aftermarket and self service operations, respectively. The decrease in aftermarket gross margin is primarily attributable to (i) higher input costs from suppliers, as net selling prices did not increase to match the increase in input costs, and (ii) a shift in our sales toward lower margin products compared to the prior year first quarter. The decrease in self service gross margin is primarily attributable to higher car costs as a result of increases in scrap prices. While higher car costs can produce more gross margin dollars, these cars tend to have a dilutive effect on the gross margin percentage as parts revenue will typically increase at a lesser rate than the rise in average car cost.
|
(2)
|
The increase in segment operating expenses as a percentage of revenue reflected (i) a 0.4% and 0.2% increase in freight and vehicle expenses, respectively, primarily due to higher use of third party freight and increased vehicle
|
(3)
|
The decrease in other expense, net was primarily due to a nonrecurring asset write-off recorded in the first quarter of 2017.
|
|
Three Months Ended March 31,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Europe
|
2018
|
|
2017
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
1,037,046
|
|
|
$
|
819,167
|
|
|
1.2
|
%
|
|
11.3
|
%
|
|
14.1
|
%
|
|
26.6
|
%
|
Other revenue
|
3,384
|
|
|
1,730
|
|
|
66.6
|
%
|
|
18.1
|
%
|
|
10.9
|
%
|
|
95.6
|
%
|
||
Total third party revenue
|
$
|
1,040,430
|
|
|
$
|
820,897
|
|
|
1.3
|
%
|
|
11.3
|
%
|
|
14.1
|
%
|
|
26.7
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Parts and services revenue grew organically across our aftermarket businesses in Europe from both existing locations and new branches. Revenue at our existing locations grew primarily as a result of increased volumes in our Benelux operations as a result of favorable weather conditions and favorable market conditions. In Eastern Europe, we added 41 branches since the beginning of the first quarter of 2017, and organic revenue growth included revenue from those locations. Organic revenue growth in our U.K. operations was essentially flat compared to the prior year primarily due to replenishment issues and related stock availability at our national distribution center and branches that led to some temporary service issues, which had an unfavorable impact on revenue. Also, harsh winter weather, which closed certain branches for a couple of days, and the timing of the Easter holiday, had a negative impact on revenue.
|
(2)
|
Acquisition related growth for the three months ended March 31, 2018 included $35 million, or 4.3%, and $31 million, or 3.8%, from our acquisitions of aftermarket parts distribution businesses in Belgium and Poland, respectively. The remainder of our acquired revenue growth included revenue from our acquisitions of 11 wholesale businesses in our Europe segment since the beginning of 2017 through the one-year anniversary of the acquisitions.
|
(3)
|
Compared to the prior year, exchange rates increased our revenue growth by $116 million, or 14.1%, primarily due to the weaker U.S. dollar against the euro, pound sterling and Czech koruna during the first three months of 2018 relative to the comparable period of 2017.
|
(1)
|
The decline in gross margin was due to (i) a 1.6% decrease due to our U.K. operations primarily as a result of the national distribution center operational issues noted in the revenue discussion above that led to increased labor costs to manually stock and receive product and higher customer incentives, (ii) a 0.5% net decrease due to mix related to our acquisition of an aftermarket parts distribution business in Poland during the third quarter of 2017, partially offset by (iii) a 0.7% increase in gross margin in our Benelux operations primarily due to increased private label sales, which have higher gross margins, and the ongoing move from a three-step to a two-step distribution model and (iv) a 0.4% increase due to a favorable impact related to an increase in supplier rebates as a result of centralized procurement for our Europe segment.
|
(2)
|
The increase in segment operating expenses as a percentage of revenue reflected (i) an increase of 0.9% in personnel expenses due to increased headcount as new branches were opened and, in our Benelux operations, the transition from a three-step to two-step distribution model, which has higher SG&A costs but higher gross margins, (ii) a 0.2% increase in professional fees for new information technology projects and other system enhancements, and (iii) a 0.2% increase in facility expenses primarily due to repairs and maintenance expenses in our U.K. operations and the expansion of branches in Eastern Europe.
|
|
Three Months Ended March 31,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Specialty
|
2018
|
|
2017
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
350,674
|
|
|
$
|
313,899
|
|
|
0.3
|
%
|
|
11.0
|
%
|
|
0.4
|
%
|
|
11.7
|
%
|
Other revenue
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||
Total third party revenue
|
$
|
350,674
|
|
|
$
|
313,899
|
|
|
0.3
|
%
|
|
11.0
|
%
|
|
0.4
|
%
|
|
11.7
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Organic growth in parts and services revenue was essentially flat compared to the prior year, primarily due to volume. Parts and services revenue was negatively impacted by unfavorable weather conditions experienced across most of the U.S. throughout the first quarter of 2018. Unlike our other segments, which typically benefit from inclement weather conditions, sales in our Specialty operations were negatively impacted during such weather, both on the demand side for our RV focused products and our ability to distribute in certain markets. Further contributing to the low organic revenue growth was the effect of implementing customer and product mix rationalization decisions to improve gross margin.
|
(2)
|
Acquisition related growth in 2018 included $34 million, or 10.8%, from our acquisition of Warn. The remainder of our acquired revenue growth reflected an immaterial amount of acquired revenue from our acquisitions of three wholesale businesses from the beginning of 2017 up to the one-year anniversary of the acquisition dates.
|
(1)
|
The increase in gross margin reflects favorable impacts of (i) 0.9% from our acquisition of Warn, which has a higher gross margin than our existing Specialty operations, (ii) 0.7% favorable impact from our initiatives to improve gross margin, which had an unfavorable impact on revenue as noted above, but benefited gross margin, and (iii) 0.4% lower product costs due to strategic purchase efforts in the fourth quarter of 2017, which are being recognized over a turn in inventory. These favorable effects are partially offset by several individually immaterial factors that had an unfavorable impact of 0.2% in the aggregate.
|
(2)
|
The increase in segment operating expenses reflects unfavorable impacts of (i) 0.4% in personnel costs primarily as a result of a negative leverage effect, as personnel costs in our sales and marketing and warehouse functions grew at a greater rate than organic revenue in the quarter, (ii) a 0.2% nonrecurring gain we recognized in the first quarter of 2017 when we sold an exited facility, (iii) 0.2% unfavorable vehicle and fuel expenses primarily due to increased fuel prices, and (iv) 0.2% from our acquisition of Warn, which has higher operating expenses as a percentage of revenue than our existing Specialty operations.
|
|
March 31, 2018
|
|
December 31, 2017
|
|
March 31, 2017
|
||||||
Cash and cash equivalents
|
$
|
245,679
|
|
|
$
|
279,766
|
|
|
$
|
264,614
|
|
Total debt
(1)
|
3,339,088
|
|
|
3,428,280
|
|
|
3,048,183
|
|
|||
Current maturities
(2)
|
145,143
|
|
|
129,184
|
|
|
94,302
|
|
|||
Capacity under credit facilities
(3)
|
2,850,000
|
|
|
2,850,000
|
|
|
2,550,000
|
|
|||
Availability under credit facilities
(3)
|
1,512,671
|
|
|
1,395,081
|
|
|
1,359,806
|
|
|||
Total liquidity (cash and cash equivalents plus availability under credit facilities)
|
1,758,350
|
|
|
1,674,847
|
|
|
1,624,420
|
|
(1)
|
Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of
$26 million
, $24 million and $23 million as of
March 31, 2018
,
December 31, 2017
and
March 31, 2017
, respectively).
|
(2)
|
Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of
$3 million
, $3 million and $2 million as of
March 31, 2018
,
December 31, 2017
and
March 31, 2017
, respectively).
|
(3)
|
Capacity under credit facilities includes our revolving credit facilities and our receivables securitization facility. Availability under credit facilities is reduced by our letters of credit.
|
•
|
Senior secured credit facilities maturing in January 2023, composed of term loans totaling $750 million (
$700 million
outstanding at
March 31, 2018
) and $2.75 billion in revolving credit (
$1.17 billion
outstanding at
March 31, 2018
), bearing interest at variable rates (although a portion of this debt is hedged through interest rate swap contracts), reduced by
$65 million
of amounts outstanding under letters of credit
|
•
|
U.S. Notes (2023) totaling
$600 million
, maturing in May 2023 and bearing interest at a 4.75% fixed rate
|
•
|
Euro Notes (2024) totaling $
616 million
(€500 million), maturing in April 2024 and bearing interest at a 3.875% fixed rate
|
•
|
Receivables securitization facility with availability up to $100 million (
$100 million
outstanding as of
March 31, 2018
), maturing in November 2019 and bearing interest at variable commercial paper rates
|
Nine months ending December 31, 2018
|
$
|
133,401
|
|
Years ending December 31:
|
|
||
2019
|
146,721
|
|
|
2020
|
40,595
|
|
|
2021
|
38,288
|
|
|
2022
|
36,978
|
|
|
2023
|
2,319,736
|
|
|
Thereafter
|
623,369
|
|
|
Total debt
(1)
|
$
|
3,339,088
|
|
(1)
|
The total debt amounts presented above reflect the gross values to be repaid (excluding debt issuance costs of
$26 million
as of
March 31, 2018
).
|
|
Three Months Ended
|
|
||||||||||
|
March 31,
|
|
||||||||||
|
2018
|
|
2017
|
|
Change
|
|
||||||
North America
|
$
|
358,800
|
|
|
$
|
265,800
|
|
|
$
|
93,000
|
|
(1)
|
Europe
|
667,100
|
|
|
527,400
|
|
|
139,700
|
|
(2)
|
|||
Specialty
|
274,000
|
|
|
231,900
|
|
|
42,100
|
|
(3)
|
|||
Total
|
$
|
1,299,900
|
|
|
$
|
1,025,100
|
|
|
$
|
274,800
|
|
|
(1)
|
In North America, aftermarket purchases during the three months ended March 31, 2018 increased compared to the comparable prior year period to support growth across our operations.
|
(2)
|
In our Europe segment, the increase in purchases during the three months ended March 31, 2018 was primarily driven by (i) a $59 million increase in purchases at our Benelux operations, of which $19 million was attributable to incremental inventory purchases in the first quarter of 2018 as a result of our acquisitions of aftermarket parts distribution businesses in Belgium in the third quarter of 2017, and (ii) a $57 million increase primarily attributable to our Eastern Europe operations, of which $27 million was due to incremental inventory purchases in the first quarter of 2018 as a result of our acquisition of an aftermarket parts distribution business in Poland in 2018; the remaining increase was primarily due to to branch expansion in Eastern Europe. The increase in inventory purchases is also driven by the increase in the value of the euro and pound sterling in the first quarter of 2018 compared to the first quarter of 2017.
|
(3)
|
Specialty inventory purchases increased during the three months ended March 31, 2018 compared to the first three months of 2017 to support growth in our operations. Additionally, the acquisition of Warn in November 2017 added incremental purchases of $16 million, which includes purchases of aftermarket inventory and raw materials used in the manufacturing of specialty products.
|
|
Three Months Ended
|
|
|||||||
|
March 31,
|
|
|||||||
|
2018
|
|
2017
|
|
% Change
|
|
|||
North America wholesale salvage cars and trucks
|
73
|
|
|
75
|
|
|
(2.7
|
)%
|
|
Europe wholesale salvage cars and trucks
|
8
|
|
|
7
|
|
|
14.3
|
%
|
|
Self service and "crush only" cars
|
141
|
|
|
133
|
|
|
6.0
|
%
|
(1)
|
Net cash provided by operating activities for the three months ended March 31, 2017
|
$
|
172
|
|
|
Increase (decrease) due to:
(1)
|
|
|
||
Discontinued operations
|
4
|
|
(2)
|
|
Operating income
|
(9
|
)
|
(3)
|
|
Non-cash depreciation and amortization expense
|
10
|
|
(4)
|
|
Cash paid for taxes
|
(2
|
)
|
|
|
Cash paid for interest
|
(3
|
)
|
|
|
Working capital accounts:
(5)
|
|
|
||
Accounts receivable
|
(39
|
)
|
|
|
Inventory
|
1
|
|
|
|
Accounts payable
|
19
|
|
|
|
Other operating activities
|
(8
|
)
|
(6)
|
|
Net cash provided by operating activities for the three months ended March 31, 2018
|
$
|
145
|
|
|
(1)
|
Other than discontinued operations, the amounts presented represent increases (decreases) in operating cash flows attributable to our continuing operations only.
|
(2)
|
In the first quarter of 2017, our glass manufacturing business generated operating cash outflows of $4 million. We disposed of this business on March 1, 2017, and therefore, the discontinued operations had no impact on our current year operating cash flows.
|
(3)
|
Refer to the Results of Operations - Consolidated section for further information on the decrease in operating income.
|
(4)
|
Non-cash depreciation and amortization expense increased compared to the prior year period as discussed in the Results of Operations - Consolidated section.
|
(5)
|
Cash flows related to our primary working capital accounts can be volatile as the purchases, payments and collections can be timed differently from period to period and can be influenced by factors outside of our control. However, we expect that the net change in these working capital items will generally be a cash outflow as we expect to grow our business each year.
|
(6)
|
Reflects a number of individually insignificant fluctuations in cash paid for other operating activities.
|
•
|
foreign exchange rates;
|
•
|
interest rates; and
|
•
|
commodity prices.
|
|
LKQ CORPORATION
|
|
|
|
/s/ Varun Laroyia
|
|
Varun Laroyia
|
|
Executive Vice President and Chief Financial Officer
|
|
(As duly authorized officer and Principal Financial Officer)
|
|
|
|
/s/ Michael S. Clark
|
|
Michael S. Clark
|
|
Vice President - Finance and Controller
|
|
(As duly authorized officer and Principal Accounting Officer)
|
By:
|
/s/ Varun Laroyia
Name: Varun Laroyia Title: Vice President and Chief Financial Officer |
By:
|
/s/ Varun Laroyia
Name: Varun Laroyia Title: Executive Vice President and Chief Financial Officer |
By:
|
/s/ Varun Laroyia
Name: Varun Laroyia Title: Vice President and Chief Financial Officer |
By:
|
/s/ Varun Laroyia
Name: Varun Laroyia Title: Vice President and Chief Financial Officer |
By:
|
/s/ Varun Laroyia
Name: Varun Laroyia Title: Vice President and Chief Financial Officer |
By:
|
/s/ Linda E. Garcia
Name: Linda E. Garcia Title: Vice President |
/s/ DOMINICK ZARCONE
|
|
Dominick Zarcone
|
|
President and Chief Executive Officer
|
|
/
S
/ VARUN LAROYIA
|
|
Varun Laroyia
|
|
Executive Vice President and Chief Financial Officer
|
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/
S
/ DOMINICK ZARCONE
|
|
Dominick Zarcone
|
|
President and Chief Executive Officer
|
(1)
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
|
(2)
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/
S
/ VARUN LAROYIA
|
|
Varun Laroyia
|
|
Executive Vice President and Chief Financial Officer
|