|
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
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
$
|
3,030,751
|
|
|
$
|
2,458,411
|
|
|
$
|
5,751,515
|
|
|
$
|
4,801,254
|
|
Cost of goods sold
|
1,868,872
|
|
|
1,493,402
|
|
|
3,535,665
|
|
|
2,906,152
|
|
||||
Gross margin
|
1,161,879
|
|
|
965,009
|
|
|
2,215,850
|
|
|
1,895,102
|
|
||||
Selling, general and administrative expenses
(1)
|
826,044
|
|
|
664,270
|
|
|
1,592,935
|
|
|
1,307,087
|
|
||||
Restructuring and acquisition related expenses
|
15,878
|
|
|
2,521
|
|
|
19,932
|
|
|
5,449
|
|
||||
Depreciation and amortization
|
63,163
|
|
|
53,645
|
|
|
119,621
|
|
|
102,301
|
|
||||
Operating income
|
256,794
|
|
|
244,573
|
|
|
483,362
|
|
|
480,265
|
|
||||
Other expense (income):
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
38,272
|
|
|
24,596
|
|
|
66,787
|
|
|
48,584
|
|
||||
Gains on bargain purchases
|
(328
|
)
|
|
(3,077
|
)
|
|
(328
|
)
|
|
(3,077
|
)
|
||||
Other expense (income), net
|
755
|
|
|
(2,731
|
)
|
|
(2,127
|
)
|
|
(3,777
|
)
|
||||
Total other expense, net
|
38,699
|
|
|
18,788
|
|
|
64,332
|
|
|
41,730
|
|
||||
Income from continuing operations before provision for income taxes
|
218,095
|
|
|
225,785
|
|
|
419,030
|
|
|
438,535
|
|
||||
Provision for income taxes
|
60,775
|
|
|
75,862
|
|
|
110,359
|
|
|
148,017
|
|
||||
Equity in earnings of unconsolidated subsidiaries
|
546
|
|
|
991
|
|
|
1,958
|
|
|
1,205
|
|
||||
Income from continuing operations
|
157,866
|
|
|
150,914
|
|
|
310,629
|
|
|
291,723
|
|
||||
Net loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,531
|
)
|
||||
Net income
|
157,866
|
|
|
150,914
|
|
|
310,629
|
|
|
287,192
|
|
||||
Less: net income attributable to noncontrolling interest
|
859
|
|
|
—
|
|
|
662
|
|
|
—
|
|
||||
Net income attributable to LKQ stockholders
|
$
|
157,007
|
|
|
$
|
150,914
|
|
|
$
|
309,967
|
|
|
$
|
287,192
|
|
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share:
(2)
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.51
|
|
|
$
|
0.49
|
|
|
$
|
1.00
|
|
|
$
|
0.95
|
|
Net loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
||||
Net income
|
0.51
|
|
|
0.49
|
|
|
1.00
|
|
|
0.93
|
|
||||
Less: net income attributable to noncontrolling interest
|
0.00
|
|
|
—
|
|
|
0.00
|
|
|
—
|
|
||||
Net income attributable to LKQ stockholders
|
$
|
0.50
|
|
|
$
|
0.49
|
|
|
$
|
1.00
|
|
|
$
|
0.93
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted earnings per share:
(2)
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations
|
$
|
0.50
|
|
|
$
|
0.49
|
|
|
$
|
0.99
|
|
|
$
|
0.94
|
|
Net loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01
|
)
|
||||
Net income
|
0.50
|
|
|
0.49
|
|
|
0.99
|
|
|
0.93
|
|
||||
Less: net income attributable to noncontrolling interest
|
0.00
|
|
|
—
|
|
|
0.00
|
|
|
—
|
|
||||
Net income attributable to LKQ stockholders
|
$
|
0.50
|
|
|
$
|
0.49
|
|
|
$
|
0.99
|
|
|
$
|
0.93
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income
|
$
|
157,866
|
|
|
$
|
150,914
|
|
|
$
|
310,629
|
|
|
$
|
287,192
|
|
Less: net income attributable to noncontrolling interest
|
859
|
|
|
—
|
|
|
662
|
|
|
—
|
|
||||
Net income attributable to LKQ stockholders
|
157,007
|
|
|
150,914
|
|
|
309,967
|
|
|
287,192
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation, net of tax
|
(105,164
|
)
|
|
93,597
|
|
|
(56,679
|
)
|
|
115,176
|
|
||||
Net change in unrealized gains/losses on cash flow hedges, net of tax
|
2,406
|
|
|
(930
|
)
|
|
5,660
|
|
|
2,233
|
|
||||
Net change in unrealized gains/losses on pension plans, net of tax
|
(807
|
)
|
|
(862
|
)
|
|
(1,428
|
)
|
|
(3,903
|
)
|
||||
Net change in other comprehensive income (loss) from unconsolidated subsidiaries
|
2,122
|
|
|
(439
|
)
|
|
1,517
|
|
|
(601
|
)
|
||||
Other comprehensive (loss) income
|
(101,443
|
)
|
|
91,366
|
|
|
(50,930
|
)
|
|
112,905
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
56,423
|
|
|
242,280
|
|
|
259,699
|
|
|
400,097
|
|
||||
Less: comprehensive income attributable to noncontrolling interest
|
859
|
|
|
—
|
|
|
662
|
|
|
—
|
|
||||
Comprehensive income attributable to LKQ stockholders
|
$
|
55,564
|
|
|
$
|
242,280
|
|
|
$
|
259,037
|
|
|
$
|
400,097
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
|
|||||||
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
345,202
|
|
|
$
|
279,766
|
|
Receivables, net
|
1,301,514
|
|
|
1,027,106
|
|
||
Inventories
|
2,718,158
|
|
|
2,380,783
|
|
||
Prepaid expenses and other current assets
|
228,732
|
|
|
134,479
|
|
||
Total current assets
|
4,593,606
|
|
|
3,822,134
|
|
||
Property, plant and equipment, net
|
1,188,464
|
|
|
913,089
|
|
||
Intangible assets:
|
|
|
|
||||
Goodwill
|
4,421,976
|
|
|
3,536,511
|
|
||
Other intangibles, net
|
973,031
|
|
|
743,769
|
|
||
Equity method investments
|
202,653
|
|
|
208,404
|
|
||
Other assets
|
168,901
|
|
|
142,965
|
|
||
Total assets
|
$
|
11,548,631
|
|
|
$
|
9,366,872
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
981,643
|
|
|
$
|
788,613
|
|
Accrued expenses:
|
|
|
|
||||
Accrued payroll-related liabilities
|
163,294
|
|
|
143,424
|
|
||
Other accrued expenses
|
312,702
|
|
|
218,600
|
|
||
Refund liability
|
103,694
|
|
|
—
|
|
||
Other current liabilities
|
49,603
|
|
|
45,727
|
|
||
Current portion of long-term obligations
|
177,372
|
|
|
126,360
|
|
||
Total current liabilities
|
1,788,308
|
|
|
1,322,724
|
|
||
Long-term obligations, excluding current portion
|
4,261,176
|
|
|
3,277,620
|
|
||
Deferred income taxes
|
332,602
|
|
|
252,359
|
|
||
Other noncurrent liabilities
|
389,570
|
|
|
307,516
|
|
||
Commitments and contingencies
|
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 317,820,824 and
309,126,386 s
hares issued and outstanding at June 30, 2018 and December 31, 2017, respectively
|
3,178
|
|
|
3,091
|
|
||
Additional paid-in capital
|
1,403,630
|
|
|
1,141,451
|
|
||
Retained earnings
|
3,428,725
|
|
|
3,124,103
|
|
||
Accumulated other comprehensive loss
|
(116,061
|
)
|
|
(70,476
|
)
|
||
Total Company stockholders' equity
|
4,719,472
|
|
|
4,198,169
|
|
||
Noncontrolling interest
|
57,503
|
|
|
8,484
|
|
||
Total stockholders' equity
|
4,776,975
|
|
|
4,206,653
|
|
||
Total liabilities and stockholders’ equity
|
$
|
11,548,631
|
|
|
$
|
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
|
—
|
|
|
—
|
|
|
—
|
|
|
309,967
|
|
|
—
|
|
|
662
|
|
|
310,629
|
|
||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
(50,930
|
)
|
|
—
|
|
|
(50,930
|
)
|
||||||
Stock issued in acquisitions
|
8,056
|
|
|
81
|
|
|
251,253
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
251,334
|
|
||||||
Vesting of restricted stock units, net of shares withheld for employee tax
|
344
|
|
|
3
|
|
|
(2,780
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,777
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
11,844
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,844
|
|
||||||
Exercise of stock options
|
321
|
|
|
3
|
|
|
2,919
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,922
|
|
||||||
Shares withheld for net share settlement of stock option awards
|
(27
|
)
|
|
—
|
|
|
(1,057
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,057
|
)
|
||||||
Adoption of ASU 2018-02 (see Note 4)
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,345
|
)
|
|
5,345
|
|
|
—
|
|
|
—
|
|
||||||
Capital contributions from noncontrolling interest shareholder
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,107
|
|
|
4,107
|
|
||||||
Acquired noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
44,250
|
|
|
44,250
|
|
||||||
BALANCE, June 30, 2018
|
317,821
|
|
|
$
|
3,178
|
|
|
$
|
1,403,630
|
|
|
$
|
3,428,725
|
|
|
$
|
(116,061
|
)
|
|
$
|
57,503
|
|
|
$
|
4,776,975
|
|
Note 1.
|
Interim Financial Statements
|
|
Six Months Ended
|
|
Year Ended
|
||||||||||||
|
June 30, 2018
|
|
December, 31, 2017
|
||||||||||||
|
Stahlgruber
|
|
Other Acquisitions
(2)
|
|
Total
|
|
All
Acquisitions (1) |
||||||||
Receivables
|
$
|
143,785
|
|
|
$
|
3,276
|
|
|
$
|
147,061
|
|
|
$
|
73,782
|
|
Receivable reserves
|
(2,818
|
)
|
|
(663
|
)
|
|
(3,481
|
)
|
|
(7,032
|
)
|
||||
Inventories
(3)
|
352,053
|
|
|
4,168
|
|
|
356,221
|
|
|
150,342
|
|
||||
Prepaid expenses and other current assets
|
7,287
|
|
|
28
|
|
|
7,315
|
|
|
(295
|
)
|
||||
Property
,
plant and equipment
|
260,638
|
|
|
2,046
|
|
|
262,684
|
|
|
41,039
|
|
||||
Goodwill
|
930,567
|
|
|
(676
|
)
|
|
929,891
|
|
|
314,817
|
|
||||
Other intangibles
|
280,399
|
|
|
5,134
|
|
|
285,533
|
|
|
181,216
|
|
||||
Other assets
|
16,625
|
|
|
265
|
|
|
16,890
|
|
|
3,257
|
|
||||
Deferred income taxes
|
(98,497
|
)
|
|
(1,605
|
)
|
|
(100,102
|
)
|
|
(65,087
|
)
|
||||
Current liabilities assumed
|
(315,175
|
)
|
|
(6,915
|
)
|
|
(322,090
|
)
|
|
(111,484
|
)
|
||||
Debt assumed
|
(65,852
|
)
|
|
—
|
|
|
(65,852
|
)
|
|
(33,586
|
)
|
||||
Other noncurrent liabilities assumed
(4)
|
(83,637
|
)
|
|
—
|
|
|
(83,637
|
)
|
|
(1,917
|
)
|
||||
Noncontrolling interest
|
(44,250
|
)
|
|
—
|
|
|
(44,250
|
)
|
|
—
|
|
||||
Contingent consideration liabilities
|
—
|
|
|
(34
|
)
|
|
(34
|
)
|
|
(6,234
|
)
|
||||
Other purchase price obligations
|
(2,349
|
)
|
|
3,312
|
|
|
963
|
|
|
(5,074
|
)
|
||||
Stock issued
|
(251,334
|
)
|
|
—
|
|
|
(251,334
|
)
|
|
—
|
|
||||
Notes issued
|
—
|
|
|
(571
|
)
|
|
(571
|
)
|
|
(20,187
|
)
|
||||
Settlement of pre-existing balances
|
—
|
|
|
—
|
|
|
—
|
|
|
242
|
|
||||
Gains on bargain purchases
(5)
|
—
|
|
|
(328
|
)
|
|
(328
|
)
|
|
(3,870
|
)
|
||||
Settlement of other purchase price obligations (non-interest bearing)
|
—
|
|
|
1,091
|
|
|
1,091
|
|
|
3,159
|
|
||||
Cash used in acquisitions, net of cash acquired
|
$
|
1,127,442
|
|
|
$
|
8,528
|
|
|
$
|
1,135,970
|
|
|
$
|
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 amounts recorded during the six months ended June 30, 2018 include a
$5 million
adjustment to increase other intangibles related to our Warn acquisition and
$4 million
of adjustments to reduce other purchase price obligations related to other 2017 acquisitions.
|
(3)
|
The amounts for our 2017 acquisitions include a
$4 million
step-up adjustment related to our Warn acquisition.
|
(4)
|
The amount recorded for our acquisition of Stahlgruber includes a
$75 million
liability for certain pension obligations. See Note 13, "Employee Benefit Plans" for information related to our defined benefit plans.
|
(5)
|
The amount recorded during the six months ended June 30, 2018 is due to the gain on bargain purchase related to an acquisition in Europe completed in the second quarter of 2017 as a result of a change in the acquisition date fair value of the consideration. 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 Limited ("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
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue, as reported
|
$
|
3,030,751
|
|
|
$
|
2,458,411
|
|
|
$
|
5,751,515
|
|
|
$
|
4,801,254
|
|
Revenue of purchased businesses for the period prior to acquisition:
|
|
|
|
|
|
|
|
||||||||
Stahlgruber
|
336,318
|
|
|
432,658
|
|
|
815,405
|
|
|
813,042
|
|
||||
Other acquisitions
|
2,687
|
|
|
127,358
|
|
|
8,844
|
|
|
272,063
|
|
||||
Pro forma revenue
|
$
|
3,369,756
|
|
|
$
|
3,018,427
|
|
|
$
|
6,575,764
|
|
|
$
|
5,886,359
|
|
|
|
|
|
|
|
|
|
||||||||
Income from continuing operations, as reported
(1)
|
$
|
157,866
|
|
|
$
|
150,914
|
|
|
$
|
310,629
|
|
|
$
|
291,723
|
|
Income from continuing operations of purchased businesses for the period prior to acquisition, and pro forma purchase accounting adjustments:
|
|
|
|
|
|
|
|
||||||||
Stahlgruber
|
9,864
|
|
|
1,267
|
|
|
2,635
|
|
|
(6,321
|
)
|
||||
Other acquisitions
|
69
|
|
|
5,067
|
|
|
238
|
|
|
12,579
|
|
||||
Acquisition related expenses, net of tax
(2)
|
11,744
|
|
|
1,465
|
|
|
13,305
|
|
|
2,709
|
|
||||
Pro forma income from continuing operations
|
$
|
179,543
|
|
|
$
|
158,713
|
|
|
$
|
326,807
|
|
|
$
|
300,690
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share from continuing operations, basic - as reported
|
$
|
0.51
|
|
|
$
|
0.49
|
|
|
$
|
1.00
|
|
|
$
|
0.95
|
|
Effect of purchased businesses for the period prior to acquisition:
|
|
|
|
|
|
|
|
||||||||
Stahlgruber
|
0.03
|
|
|
0.00
|
|
|
0.01
|
|
|
(0.02
|
)
|
||||
Other acquisitions
|
0.00
|
|
|
0.02
|
|
|
0.00
|
|
|
0.04
|
|
||||
Acquisition related expenses, net of tax
(2)
|
0.04
|
|
|
0.00
|
|
|
0.04
|
|
|
0.01
|
|
||||
Impact of share issuance from acquisition of Stahlgruber
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
(0.02
|
)
|
||||
Pro forma earnings per share from continuing operations, basic
(3)
|
$
|
0.56
|
|
|
$
|
0.50
|
|
|
$
|
1.03
|
|
|
$
|
0.95
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share from continuing operations, diluted - as reported
|
$
|
0.50
|
|
|
$
|
0.49
|
|
|
$
|
0.99
|
|
|
$
|
0.94
|
|
Effect of purchased businesses for the period prior to acquisition:
|
|
|
|
|
|
|
|
||||||||
Stahlgruber
|
0.03
|
|
|
0.00
|
|
|
0.01
|
|
|
(0.02
|
)
|
||||
Other acquisitions
|
0.00
|
|
|
0.02
|
|
|
0.00
|
|
|
0.04
|
|
||||
Acquisition related expenses, net of tax
(2)
|
0.04
|
|
|
0.00
|
|
|
0.04
|
|
|
0.01
|
|
||||
Impact of share issuance from acquisition of Stahlgruber
|
(0.01
|
)
|
|
(0.01
|
)
|
|
(0.02
|
)
|
|
(0.02
|
)
|
||||
Pro forma earnings per share from continuing operations, diluted
(3)
|
$
|
0.56
|
|
|
$
|
0.50
|
|
|
$
|
1.02
|
|
|
$
|
0.94
|
|
(1)
|
Includes interest expense for the period from April 9, 2018 through June 30, 2018 recorded on the senior notes issued as part of our acquisition of Stahlgruber.
|
(2)
|
Includes expenses related to acquisitions closed in the period and excludes expenses for acquisitions not yet completed.
|
(3)
|
The sum of the individual earnings per share amounts may not equal the total due to rounding.
|
|
Six Months Ended
|
||
|
June 30, 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
|
)
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Aftermarket and refurbished products
|
$
|
2,208,122
|
|
|
$
|
1,877,653
|
|
Salvage and remanufactured products
|
490,325
|
|
|
487,108
|
|
||
Manufactured products
|
19,711
|
|
|
16,022
|
|
||
Total inventories
|
$
|
2,718,158
|
|
|
$
|
2,380,783
|
|
Land improvements
|
10-20 years
|
Buildings and improvements
|
20-40 years
|
Machinery and equipment
|
3-20 years
|
Computer equipment and software
|
3-10 years
|
Vehicles and trailers
|
3-10 years
|
Furniture and fixtures
|
5-7 years
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Land and improvements
|
$
|
187,210
|
|
|
$
|
137,790
|
|
Buildings and improvements
|
367,550
|
|
|
233,078
|
|
||
Machinery and equipment
|
601,967
|
|
|
521,526
|
|
||
Computer equipment and software
|
142,363
|
|
|
133,753
|
|
||
Vehicles and trailers
|
171,639
|
|
|
161,269
|
|
||
Furniture and fixtures
|
50,772
|
|
|
31,794
|
|
||
Leasehold improvements
|
279,259
|
|
|
257,506
|
|
||
|
1,800,760
|
|
|
1,476,716
|
|
||
Less—Accumulated depreciation
|
(661,819
|
)
|
|
(606,112
|
)
|
||
Construction in progress
|
49,523
|
|
|
42,485
|
|
||
Total property, plant and equipment, net
|
$
|
1,188,464
|
|
|
$
|
913,089
|
|
|
|
||
|
Gross Amount
|
||
Land and improvements
|
$
|
47,281
|
|
Buildings and improvements
|
125,649
|
|
|
Machinery and equipment
|
49,384
|
|
|
Computer equipment and software
|
3,760
|
|
|
Vehicles and trailers
|
643
|
|
|
Furniture and fixtures
|
28,535
|
|
|
Leasehold improvements
|
1,890
|
|
|
|
257,142
|
|
|
Construction in progress
|
3,496
|
|
|
Total property, plant and equipment
|
$
|
260,638
|
|
|
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
|
714
|
|
|
934,844
|
|
|
(5,667
|
)
|
|
929,891
|
|
||||
Exchange rate effects
|
(5,078
|
)
|
|
(39,536
|
)
|
|
188
|
|
|
(44,426
|
)
|
||||
Balance as of June 30, 2018
|
$
|
1,704,990
|
|
|
$
|
2,310,206
|
|
|
$
|
406,780
|
|
|
$
|
4,421,976
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Intangible assets subject to amortization
|
$
|
890,931
|
|
|
$
|
664,969
|
|
Indefinite-lived intangible assets
|
|
|
|
||||
Trademarks
|
81,300
|
|
|
78,800
|
|
||
Other indefinite-lived intangible assets
|
800
|
|
|
—
|
|
||
Total
|
$
|
973,031
|
|
|
$
|
743,769
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
Trade names and trademarks
|
$
|
494,456
|
|
|
$
|
(82,715
|
)
|
|
$
|
411,741
|
|
|
$
|
327,332
|
|
|
$
|
(75,095
|
)
|
|
$
|
252,237
|
|
Customer and supplier relationships
|
580,314
|
|
|
(196,983
|
)
|
|
383,331
|
|
|
510,113
|
|
|
(167,532
|
)
|
|
342,581
|
|
||||||
Software and other technology related assets
|
160,110
|
|
|
(68,163
|
)
|
|
91,947
|
|
|
124,049
|
|
|
(59,081
|
)
|
|
64,968
|
|
||||||
Covenants not to compete
|
13,550
|
|
|
(9,638
|
)
|
|
3,912
|
|
|
14,981
|
|
|
(9,798
|
)
|
|
5,183
|
|
||||||
Total
|
$
|
1,248,430
|
|
|
$
|
(357,499
|
)
|
|
$
|
890,931
|
|
|
$
|
976,475
|
|
|
$
|
(311,506
|
)
|
|
$
|
664,969
|
|
|
Gross Amount
|
||
Trade names and trademarks
|
$
|
173,382
|
|
Customer and supplier relationships
|
78,239
|
|
|
Software and other technology related assets
|
28,778
|
|
|
|
$
|
280,399
|
|
|
Six Months Ended
|
|
Year Ended
|
|
June 30, 2018
|
|
December 31, 2017
|
|
Stahlgruber
|
|
All Acquisitions
|
Trade names and trademarks
|
19.9
|
|
11.2
|
Customer and supplier relationships
|
3.0
|
|
18.6
|
Software and other technology related assets
|
7.4
|
|
11.1
|
Covenants not to compete
|
-
|
|
4.4
|
Total intangible assets
|
13.9
|
|
16.5
|
|
Method of Amortization
|
|
Useful Life
|
Trade names and trademarks
|
Straight-line
|
|
4-30 years
|
Customer and supplier relationships
|
Accelerated
|
|
3-20 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
|
22,992
|
|
|
Warranty claims
|
(21,088
|
)
|
|
Balance as of June 30, 2018
|
$
|
25,055
|
|
|
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 June 30, 2018
|
||||||||||
|
As Reported
|
|
Amounts Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
Balance Sheet
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
1,301,514
|
|
|
$
|
1,254,189
|
|
|
$
|
47,325
|
|
Prepaid expenses and other current assets
|
228,732
|
|
|
172,363
|
|
|
56,369
|
|
|||
Liabilities
|
|
|
|
|
|
||||||
Refund liability
|
103,694
|
|
|
—
|
|
|
103,694
|
|
|
For the three months ended June 30, 2018
|
||||||||||
|
As Reported
|
|
Amounts Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
Income Statement
|
|
|
|
|
|
||||||
Revenue
|
$
|
3,030,751
|
|
|
$
|
3,030,378
|
|
|
$
|
373
|
|
Cost of goods sold
|
1,868,872
|
|
|
1,867,781
|
|
|
1,091
|
|
|||
Selling, general and administrative expenses
|
826,044
|
|
|
826,762
|
|
|
(718
|
)
|
|
For the six months ended June 30, 2018
|
||||||||||
|
As Reported
|
|
Amounts Without Adoption of ASC 606
|
|
Effect of Change Higher/(Lower)
|
||||||
Income Statement
|
|
|
|
|
|
||||||
Revenue
|
$
|
5,751,515
|
|
|
$
|
5,759,091
|
|
|
$
|
(7,576
|
)
|
Cost of goods sold
|
3,535,665
|
|
|
3,541,955
|
|
|
(6,290
|
)
|
|||
Selling, general and administrative expenses
|
1,592,935
|
|
|
1,594,221
|
|
|
(1,286
|
)
|
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 obligations 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
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
North America
|
$
|
1,165,422
|
|
|
$
|
1,075,656
|
|
|
$
|
2,338,007
|
|
|
$
|
2,155,531
|
|
Europe
|
1,279,996
|
|
|
887,872
|
|
|
2,317,042
|
|
|
1,707,039
|
|
||||
Specialty
|
411,633
|
|
|
362,355
|
|
|
762,307
|
|
|
676,254
|
|
||||
Parts and services
|
2,857,051
|
|
|
2,325,883
|
|
|
5,417,356
|
|
|
4,538,824
|
|
||||
Other
|
173,700
|
|
|
132,528
|
|
|
334,159
|
|
|
262,430
|
|
||||
Total revenue
|
$
|
3,030,751
|
|
|
$
|
2,458,411
|
|
|
$
|
5,751,515
|
|
|
$
|
4,801,254
|
|
Balance as of January 1, 2018
|
$
|
19,465
|
|
Additional warranty revenue deferred
|
19,271
|
|
|
Warranty revenue recognized
|
(16,381
|
)
|
|
Balance as of June 30, 2018
|
$
|
22,355
|
|
|
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
|
593,131
|
|
|
$
|
42.72
|
|
|
|
|
|
||
Vested
|
(414,625
|
)
|
|
$
|
28.95
|
|
|
|
|
|
||
Forfeited / Canceled
|
(25,961
|
)
|
|
$
|
32.62
|
|
|
|
|
|
||
Unvested as of June 30, 2018
|
1,776,935
|
|
|
$
|
34.40
|
|
|
|
|
|
||
Expected to vest after June 30, 2018
|
1,618,650
|
|
|
$
|
34.34
|
|
|
2.8
|
|
$
|
51,633
|
|
|
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
|
(321,267
|
)
|
|
$
|
9.10
|
|
|
|
|
$
|
9,450
|
|
Canceled
|
(509
|
)
|
|
$
|
32.31
|
|
|
|
|
|
||
Balance as of June 30, 2018
|
1,416,297
|
|
|
$
|
9.22
|
|
|
1.2
|
|
$
|
32,126
|
|
Exercisable as of June 30, 2018
|
1,416,297
|
|
|
$
|
9.22
|
|
|
1.2
|
|
$
|
32,126
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income from continuing operations
|
$
|
157,866
|
|
|
$
|
150,914
|
|
|
$
|
310,629
|
|
|
$
|
291,723
|
|
Denominator for basic earnings per share—Weighted-average shares outstanding
|
312,556
|
|
|
308,407
|
|
|
311,045
|
|
|
308,218
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
RSUs
|
406
|
|
|
453
|
|
|
512
|
|
|
509
|
|
||||
Stock options
|
1,050
|
|
|
1,536
|
|
|
1,131
|
|
|
1,622
|
|
||||
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding
|
314,012
|
|
|
310,396
|
|
|
312,688
|
|
|
310,349
|
|
||||
Basic earnings per share from continuing operations
|
$
|
0.51
|
|
|
$
|
0.49
|
|
|
$
|
1.00
|
|
|
$
|
0.95
|
|
Diluted earnings per share from continuing operations
|
$
|
0.50
|
|
|
$
|
0.49
|
|
|
$
|
0.99
|
|
|
$
|
0.94
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||
|
June 30,
|
|
June 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Antidilutive securities:
|
|
|
|
|
|
|
|
||||
RSUs
|
575
|
|
|
—
|
|
|
288
|
|
|
73
|
|
Stock options
|
—
|
|
|
76
|
|
|
—
|
|
|
77
|
|
|
|
Three Months Ended
|
||||||||||||||||||
|
|
June 30, 2018
|
||||||||||||||||||
|
|
Foreign
Currency Translation |
|
Unrealized Gain (Loss)
on Cash Flow Hedges |
|
Unrealized (Loss) Gain on Pension Plans
|
|
Other Comprehensive Loss (Income) from Unconsolidated Subsidiaries
|
|
Accumulated
Other Comprehensive (Loss) Income |
||||||||||
Beginning balance
|
|
$
|
(20,589
|
)
|
|
$
|
17,278
|
|
|
$
|
(9,393
|
)
|
|
$
|
(1,914
|
)
|
|
$
|
(14,618
|
)
|
Pretax (loss) income
|
|
(107,167
|
)
|
|
30,721
|
|
|
(690
|
)
|
|
—
|
|
|
(77,136
|
)
|
|||||
Income tax effect
|
|
2,003
|
|
|
(7,183
|
)
|
|
(174
|
)
|
|
—
|
|
|
(5,354
|
)
|
|||||
Reclassification of unrealized (gain) loss
|
|
—
|
|
|
(27,580
|
)
|
|
76
|
|
|
—
|
|
|
(27,504
|
)
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
6,448
|
|
|
(19
|
)
|
|
—
|
|
|
6,429
|
|
|||||
Other comprehensive income from unconsolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,122
|
|
|
2,122
|
|
|||||
Adoption of ASU 2018-02
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Ending balance
|
|
$
|
(125,753
|
)
|
|
$
|
19,684
|
|
|
$
|
(10,200
|
)
|
|
$
|
208
|
|
|
$
|
(116,061
|
)
|
|
|
Three Months Ended
|
||||||||||||||||||
|
|
June 30, 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
|
|
$
|
(250,950
|
)
|
|
$
|
11,254
|
|
|
$
|
(5,778
|
)
|
|
$
|
(162
|
)
|
|
$
|
(245,636
|
)
|
Pretax income (loss)
|
|
93,597
|
|
|
(30,179
|
)
|
|
(724
|
)
|
|
—
|
|
|
62,694
|
|
|||||
Income tax effect
|
|
—
|
|
|
11,136
|
|
|
275
|
|
|
—
|
|
|
11,411
|
|
|||||
Reclassification of unrealized loss (gain)
|
|
—
|
|
|
28,702
|
|
|
(550
|
)
|
|
—
|
|
|
28,152
|
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
(10,589
|
)
|
|
137
|
|
|
—
|
|
|
(10,452
|
)
|
|||||
Other comprehensive loss from unconsolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(439
|
)
|
|
(439
|
)
|
|||||
Ending balance
|
|
$
|
(157,353
|
)
|
|
$
|
10,324
|
|
|
$
|
(6,640
|
)
|
|
$
|
(601
|
)
|
|
$
|
(154,270
|
)
|
|
|
Six Months Ended
|
||||||||||||||||||
|
|
June 30, 2018
|
||||||||||||||||||
|
|
Foreign
Currency Translation |
|
Unrealized Gain (Loss) on Cash Flow Hedges
|
|
Unrealized (Loss) Gain on Pension Plans
|
|
Other Comprehensive (Loss) Income from Unconsolidated Subsidiaries
|
|
Accumulated
Other Comprehensive (Loss) Income |
||||||||||
Beginning balance
|
|
$
|
(71,933
|
)
|
|
$
|
11,538
|
|
|
$
|
(8,772
|
)
|
|
$
|
(1,309
|
)
|
|
$
|
(70,476
|
)
|
Pretax (loss) income
|
|
(58,732
|
)
|
|
26,220
|
|
|
(1,319
|
)
|
|
—
|
|
|
(33,831
|
)
|
|||||
Income tax effect
|
|
2,053
|
|
|
(6,130
|
)
|
|
(166
|
)
|
|
—
|
|
|
(4,243
|
)
|
|||||
Reclassification of unrealized (gain) loss
|
|
—
|
|
|
(18,833
|
)
|
|
76
|
|
|
—
|
|
|
(18,757
|
)
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
4,403
|
|
|
(19
|
)
|
|
—
|
|
|
4,384
|
|
|||||
Other comprehensive income from unconsolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,517
|
|
|
1,517
|
|
|||||
Adoption of ASU 2018-02
|
|
2,859
|
|
|
2,486
|
|
|
—
|
|
|
—
|
|
|
5,345
|
|
|||||
Ending balance
|
|
$
|
(125,753
|
)
|
|
$
|
19,684
|
|
|
$
|
(10,200
|
)
|
|
$
|
208
|
|
|
$
|
(116,061
|
)
|
|
|
Six Months Ended
|
||||||||||||||||||
|
|
June 30, 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 (loss)
|
|
113,665
|
|
|
(29,347
|
)
|
|
112
|
|
|
—
|
|
|
84,430
|
|
|||||
Income tax effect
|
|
—
|
|
|
10,780
|
|
|
(43
|
)
|
|
—
|
|
|
10,737
|
|
|||||
Reclassification of unrealized loss (gain)
|
|
—
|
|
|
32,959
|
|
|
(721
|
)
|
|
—
|
|
|
32,238
|
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
(12,159
|
)
|
|
185
|
|
|
—
|
|
|
(11,974
|
)
|
|||||
Disposal of business, net
|
|
1,511
|
|
|
—
|
|
|
(3,436
|
)
|
|
—
|
|
|
(1,925
|
)
|
|||||
Other comprehensive loss from unconsolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(601
|
)
|
|
(601
|
)
|
|||||
Ending balance
|
|
$
|
(157,353
|
)
|
|
$
|
10,324
|
|
|
$
|
(6,640
|
)
|
|
$
|
(601
|
)
|
|
$
|
(154,270
|
)
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Senior secured credit agreement:
|
|
|
|
||||
Term loans payable
|
$
|
695,990
|
|
|
$
|
704,800
|
|
Revolving credit facilities
|
1,120,911
|
|
|
1,283,551
|
|
||
U.S. Notes (2023)
|
600,000
|
|
|
600,000
|
|
||
Euro Notes (2024)
|
584,200
|
|
|
600,150
|
|
||
Euro Notes (2026/28)
|
1,168,400
|
|
|
—
|
|
||
Receivables securitization facility
|
100,000
|
|
|
100,000
|
|
||
Notes payable through October 2025 at weighted average interest rates of 1.5% and 1.4%, respectively
|
26,998
|
|
|
29,146
|
|
||
Other long-term debt at weighted average interest rates of 2.1% and 1.7%, respectively
|
179,501
|
|
|
110,633
|
|
||
Total debt
|
4,476,000
|
|
|
3,428,280
|
|
||
Less: long-term debt issuance costs
|
(32,832
|
)
|
|
(21,476
|
)
|
||
Less: current debt issuance costs
|
(4,620
|
)
|
|
(2,824
|
)
|
||
Total debt, net of debt issuance costs
|
4,438,548
|
|
|
3,403,980
|
|
||
Less: current maturities, net of debt issuance costs
|
(177,372
|
)
|
|
(126,360
|
)
|
||
Long term debt, net of debt issuance costs
|
$
|
4,261,176
|
|
|
$
|
3,277,620
|
|
|
|
Notional Amount
|
|
Fair Value at June 30, 2018 (USD)
|
|
Fair Value at December 31, 2017 (USD)
|
||||||||||||||||||
|
|
June 30, 2018
|
|
December 31, 2017
|
|
Other Assets
|
|
Other Noncurrent Liabilities
|
|
Other Assets
|
|
Other Noncurrent Liabilities
|
||||||||||||
Interest rate swap agreements
|
|
|
|
|
|
|
|
|
||||||||||||||||
USD denominated
|
|
$
|
590,000
|
|
|
$
|
590,000
|
|
|
$
|
25,415
|
|
|
$
|
—
|
|
|
$
|
19,102
|
|
|
$
|
—
|
|
Cross currency swap agreements
|
|
|
|
|
|
|
|
|
||||||||||||||||
USD/euro
|
|
$
|
398,614
|
|
|
$
|
406,546
|
|
|
10,382
|
|
|
52,208
|
|
|
5,504
|
|
|
61,492
|
|
||||
Total cash flow hedges
|
|
$
|
35,797
|
|
|
$
|
52,208
|
|
|
$
|
24,606
|
|
|
$
|
61,492
|
|
|
Balance as of June 30, 2018
|
|
Fair Value Measurements as of June 30, 2018
|
||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash surrender value of life insurance
|
$
|
50,233
|
|
|
$
|
—
|
|
|
$
|
50,233
|
|
|
$
|
—
|
|
Interest rate swaps
|
25,415
|
|
|
—
|
|
|
25,415
|
|
|
—
|
|
||||
Cross currency swap agreements
|
10,382
|
|
|
—
|
|
|
10,382
|
|
|
—
|
|
||||
Total Assets
|
$
|
86,030
|
|
|
$
|
—
|
|
|
$
|
86,030
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities
|
$
|
2,725
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,725
|
|
Deferred compensation liabilities
|
51,564
|
|
|
—
|
|
|
51,564
|
|
|
—
|
|
||||
Cross currency swap agreements
|
52,208
|
|
|
—
|
|
|
52,208
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
106,497
|
|
|
$
|
—
|
|
|
$
|
103,772
|
|
|
$
|
2,725
|
|
|
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
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Service cost
|
$
|
516
|
|
|
$
|
889
|
|
|
$
|
984
|
|
|
$
|
1,776
|
|
Interest cost
|
776
|
|
|
833
|
|
|
1,446
|
|
|
1,341
|
|
||||
Expected return on plan assets
|
(783
|
)
|
|
(249
|
)
|
|
(1,500
|
)
|
|
(552
|
)
|
||||
Amortization of prior service credit
|
—
|
|
|
(66
|
)
|
|
—
|
|
|
(130
|
)
|
||||
Amortization of actuarial (gain) loss
|
76
|
|
|
(484
|
)
|
|
76
|
|
|
(591
|
)
|
||||
Net periodic benefit expense
|
$
|
585
|
|
|
$
|
923
|
|
|
$
|
1,006
|
|
|
$
|
1,844
|
|
Six months ending December 31, 2018
|
$
|
142,000
|
|
Years ending December 31:
|
|
||
2019
|
248,418
|
|
|
2020
|
206,988
|
|
|
2021
|
161,302
|
|
|
2022
|
128,298
|
|
|
2023
|
107,904
|
|
|
Thereafter
|
611,801
|
|
|
Future Minimum Lease Payments
|
$
|
1,606,711
|
|
|
North America
|
|
Europe
|
|
Specialty
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Three Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
1,334,965
|
|
|
$
|
1,284,153
|
|
|
$
|
411,633
|
|
|
$
|
—
|
|
|
$
|
3,030,751
|
|
Intersegment
|
201
|
|
|
—
|
|
|
1,240
|
|
|
(1,441
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
1,335,166
|
|
|
$
|
1,284,153
|
|
|
$
|
412,873
|
|
|
$
|
(1,441
|
)
|
|
$
|
3,030,751
|
|
Segment EBITDA
|
$
|
175,010
|
|
|
$
|
110,893
|
|
|
$
|
56,068
|
|
|
$
|
—
|
|
|
$
|
341,971
|
|
Depreciation and amortization
(1)
|
21,606
|
|
|
39,801
|
|
|
7,031
|
|
|
—
|
|
|
68,438
|
|
|||||
Three Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
1,206,305
|
|
|
$
|
889,751
|
|
|
$
|
362,355
|
|
|
$
|
—
|
|
|
$
|
2,458,411
|
|
Intersegment
|
209
|
|
|
—
|
|
|
1,115
|
|
|
(1,324
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
1,206,514
|
|
|
$
|
889,751
|
|
|
$
|
363,470
|
|
|
$
|
(1,324
|
)
|
|
$
|
2,458,411
|
|
Segment EBITDA
|
$
|
173,732
|
|
|
$
|
83,549
|
|
|
$
|
48,578
|
|
|
$
|
—
|
|
|
$
|
305,859
|
|
Depreciation and amortization
(1)
|
21,823
|
|
|
28,732
|
|
|
5,447
|
|
|
—
|
|
|
56,002
|
|
|
North America
|
|
Europe
|
|
Specialty
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Six Months Ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
2,664,625
|
|
|
$
|
2,324,583
|
|
|
$
|
762,307
|
|
|
$
|
—
|
|
|
$
|
5,751,515
|
|
Intersegment
|
384
|
|
|
—
|
|
|
2,358
|
|
|
(2,742
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
2,665,009
|
|
|
$
|
2,324,583
|
|
|
$
|
764,665
|
|
|
$
|
(2,742
|
)
|
|
$
|
5,751,515
|
|
Segment EBITDA
|
$
|
352,723
|
|
|
$
|
186,427
|
|
|
$
|
98,037
|
|
|
$
|
—
|
|
|
$
|
637,187
|
|
Depreciation and amortization
(1)
|
42,834
|
|
|
72,558
|
|
|
14,112
|
|
|
—
|
|
|
129,504
|
|
|||||
Six Months Ended June 30, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
2,414,352
|
|
|
$
|
1,710,648
|
|
|
$
|
676,254
|
|
|
$
|
—
|
|
|
$
|
4,801,254
|
|
Intersegment
|
402
|
|
|
—
|
|
|
2,150
|
|
|
(2,552
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
2,414,754
|
|
|
$
|
1,710,648
|
|
|
$
|
678,404
|
|
|
$
|
(2,552
|
)
|
|
$
|
4,801,254
|
|
Segment EBITDA
|
$
|
349,867
|
|
|
$
|
162,243
|
|
|
$
|
84,019
|
|
|
$
|
—
|
|
|
$
|
596,129
|
|
Depreciation and amortization
(1)
|
42,201
|
|
|
53,483
|
|
|
10,922
|
|
|
—
|
|
|
106,606
|
|
(1)
|
Amounts presented include depreciation and amortization expense recorded within cost of goods sold.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Net income
|
$
|
157,866
|
|
|
$
|
150,914
|
|
|
$
|
310,629
|
|
|
$
|
287,192
|
|
Less: net income attributable to noncontrolling interest
|
859
|
|
|
—
|
|
|
662
|
|
|
—
|
|
||||
Net income attributable to LKQ stockholders
|
157,007
|
|
|
150,914
|
|
|
309,967
|
|
|
287,192
|
|
||||
Subtract:
|
|
|
|
|
|
|
|
||||||||
Net loss from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,531
|
)
|
||||
Net income from continuing operations attributable to LKQ stockholders
|
157,007
|
|
|
150,914
|
|
|
309,967
|
|
|
291,723
|
|
||||
Add:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
63,163
|
|
|
53,645
|
|
|
119,621
|
|
|
102,301
|
|
||||
Depreciation and amortization - cost of goods sold
|
5,275
|
|
|
2,357
|
|
|
9,883
|
|
|
4,305
|
|
||||
Interest expense, net
|
38,272
|
|
|
24,596
|
|
|
66,787
|
|
|
48,584
|
|
||||
Provision for income taxes
|
60,775
|
|
|
75,862
|
|
|
110,359
|
|
|
148,017
|
|
||||
EBITDA
|
324,492
|
|
|
307,374
|
|
|
616,617
|
|
|
594,930
|
|
||||
Subtract:
|
|
|
|
|
|
|
|
||||||||
Equity in earnings of unconsolidated subsidiaries
|
546
|
|
|
991
|
|
|
1,958
|
|
|
1,205
|
|
||||
Gains on bargain purchases
(1)
|
328
|
|
|
3,077
|
|
|
328
|
|
|
3,077
|
|
||||
Add:
|
|
|
|
|
|
|
|
||||||||
Restructuring and acquisition related expenses
(2)
|
15,878
|
|
|
2,521
|
|
|
19,932
|
|
|
5,449
|
|
||||
Inventory step-up adjustment - acquisition related
|
—
|
|
|
—
|
|
|
403
|
|
|
—
|
|
||||
Impairment of net assets held for sale
|
2,438
|
|
|
—
|
|
|
2,438
|
|
|
—
|
|
||||
Change in fair value of contingent consideration liabilities
|
37
|
|
|
32
|
|
|
83
|
|
|
32
|
|
||||
Segment EBITDA
|
$
|
341,971
|
|
|
$
|
305,859
|
|
|
$
|
637,187
|
|
|
$
|
596,129
|
|
(1)
|
Reflects the gains on bargain purchases related to our acquisitions of a wholesale business in Europe and Andrew Page. See Note 2, "Business Combinations," for further information.
|
(2)
|
See Note 6, "Restructuring and Acquisition Related Expenses," for further information.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
June 30,
|
|
June 30,
|
|||||||||||||
2018
|
|
2017
|
|
2018
|
|
2017
|
|||||||||
Capital Expenditures
|
|
|
|
|
|
|
|
||||||||
North America
|
$
|
29,206
|
|
|
$
|
22,153
|
|
|
$
|
58,868
|
|
|
$
|
38,913
|
|
Europe
|
16,863
|
|
|
22,676
|
|
|
45,678
|
|
|
43,134
|
|
||||
Specialty
|
7,163
|
|
|
2,318
|
|
|
10,875
|
|
|
5,900
|
|
||||
Discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
3,598
|
|
||||
Total capital expenditures
|
$
|
53,232
|
|
|
$
|
47,147
|
|
|
$
|
115,421
|
|
|
$
|
91,545
|
|
|
June 30,
|
|
December 31,
|
||||
2018
|
|
2017
|
|||||
Receivables, net
|
|
|
|
||||
North America
|
$
|
443,651
|
|
|
$
|
379,666
|
|
Europe
(1)
|
716,609
|
|
|
555,372
|
|
||
Specialty
|
141,254
|
|
|
92,068
|
|
||
Total receivables, net
(2)
|
1,301,514
|
|
|
1,027,106
|
|
||
Inventories
|
|
|
|
||||
North America
|
1,068,146
|
|
|
1,076,393
|
|
||
Europe
(1)
|
1,296,608
|
|
|
964,068
|
|
||
Specialty
|
353,404
|
|
|
340,322
|
|
||
Total inventories
|
2,718,158
|
|
|
2,380,783
|
|
||
Property, Plant and Equipment, net
|
|
|
|
||||
North America
|
548,981
|
|
|
537,286
|
|
||
Europe
(1)
|
553,448
|
|
|
293,539
|
|
||
Specialty
|
86,035
|
|
|
82,264
|
|
||
Total property, plant and equipment, net
|
1,188,464
|
|
|
913,089
|
|
||
Equity Method Investments
|
|
|
|
||||
North America
|
336
|
|
|
336
|
|
||
Europe
|
202,317
|
|
|
208,068
|
|
||
Total equity method investments
|
202,653
|
|
|
208,404
|
|
||
Other unallocated assets
|
6,137,842
|
|
|
4,837,490
|
|
||
Total assets
|
$
|
11,548,631
|
|
|
$
|
9,366,872
|
|
(1)
|
The increase in assets for the Europe segment is primarily attributable to the Stahlgruber acquisition. Refer to Note 2, “Business Combinations,” for further detail on the opening balance sheet amounts.
|
(2)
|
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.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30,
|
|
June 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
United States
|
$
|
1,621,343
|
|
|
$
|
1,456,065
|
|
|
$
|
3,181,370
|
|
|
$
|
2,873,105
|
|
United Kingdom
|
454,689
|
|
|
390,022
|
|
|
885,681
|
|
|
772,674
|
|
||||
Other countries
|
954,719
|
|
|
612,324
|
|
|
1,684,464
|
|
|
1,155,475
|
|
||||
Total revenue
|
$
|
3,030,751
|
|
|
$
|
2,458,411
|
|
|
$
|
5,751,515
|
|
|
$
|
4,801,254
|
|
|
June 30,
|
|
December 31,
|
||||
|
2018
|
|
2017
|
||||
Long-lived Assets
|
|
|
|
||||
United States
|
$
|
599,515
|
|
|
$
|
583,236
|
|
Germany
|
212,133
|
|
|
41
|
|
||
United Kingdom
|
175,782
|
|
|
178,021
|
|
||
Other countries
|
201,034
|
|
|
151,791
|
|
||
Total long-lived assets
|
$
|
1,188,464
|
|
|
$
|
913,089
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended June 30, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
1,640,396
|
|
|
$
|
1,426,650
|
|
|
$
|
(36,295
|
)
|
|
$
|
3,030,751
|
|
Cost of goods sold
|
—
|
|
|
988,671
|
|
|
916,496
|
|
|
(36,295
|
)
|
|
1,868,872
|
|
|||||
Gross margin
|
—
|
|
|
651,725
|
|
|
510,154
|
|
|
—
|
|
|
1,161,879
|
|
|||||
Selling, general and administrative expenses
|
9,683
|
|
|
430,693
|
|
|
385,668
|
|
|
—
|
|
|
826,044
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
—
|
|
|
15,878
|
|
|
—
|
|
|
15,878
|
|
|||||
Depreciation and amortization
|
21
|
|
|
24,526
|
|
|
38,616
|
|
|
—
|
|
|
63,163
|
|
|||||
Operating (loss) income
|
(9,704
|
)
|
|
196,506
|
|
|
69,992
|
|
|
—
|
|
|
256,794
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense (income), net
|
17,805
|
|
|
(113
|
)
|
|
20,580
|
|
|
—
|
|
|
38,272
|
|
|||||
Intercompany interest (income) expense, net
|
(15,406
|
)
|
|
9,865
|
|
|
5,541
|
|
|
—
|
|
|
—
|
|
|||||
Gains on bargain purchases
|
—
|
|
|
—
|
|
|
(328
|
)
|
|
—
|
|
|
(328
|
)
|
|||||
Other expense (income), net
|
117
|
|
|
(4,397
|
)
|
|
5,035
|
|
|
—
|
|
|
755
|
|
|||||
Total other expense, net
|
2,516
|
|
|
5,355
|
|
|
30,828
|
|
|
—
|
|
|
38,699
|
|
|||||
(Loss) income before (benefit) provision for income taxes
|
(12,220
|
)
|
|
191,151
|
|
|
39,164
|
|
|
—
|
|
|
218,095
|
|
|||||
(Benefit) provision for income taxes
|
(3,744
|
)
|
|
53,543
|
|
|
10,976
|
|
|
—
|
|
|
60,775
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
—
|
|
|
—
|
|
|
546
|
|
|
—
|
|
|
546
|
|
|||||
Equity in earnings of subsidiaries
|
165,483
|
|
|
4,451
|
|
|
—
|
|
|
(169,934
|
)
|
|
—
|
|
|||||
Net income
|
157,007
|
|
|
142,059
|
|
|
28,734
|
|
|
(169,934
|
)
|
|
157,866
|
|
|||||
Less: net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
859
|
|
|
—
|
|
|
859
|
|
|||||
Net income attributable to LKQ stockholders
|
$
|
157,007
|
|
|
$
|
142,059
|
|
|
$
|
27,875
|
|
|
$
|
(169,934
|
)
|
|
$
|
157,007
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended June 30, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
1,487,435
|
|
|
$
|
1,001,733
|
|
|
$
|
(30,757
|
)
|
|
$
|
2,458,411
|
|
Cost of goods sold
|
—
|
|
|
889,087
|
|
|
635,072
|
|
|
(30,757
|
)
|
|
1,493,402
|
|
|||||
Gross margin
|
—
|
|
|
598,348
|
|
|
366,661
|
|
|
—
|
|
|
965,009
|
|
|||||
Selling, general and administrative expenses
|
9,165
|
|
|
385,443
|
|
|
269,662
|
|
|
—
|
|
|
664,270
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
654
|
|
|
1,867
|
|
|
—
|
|
|
2,521
|
|
|||||
Depreciation and amortization
|
30
|
|
|
24,586
|
|
|
29,029
|
|
|
—
|
|
|
53,645
|
|
|||||
Operating (loss) income
|
(9,195
|
)
|
|
187,665
|
|
|
66,103
|
|
|
—
|
|
|
244,573
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
16,492
|
|
|
26
|
|
|
8,078
|
|
|
—
|
|
|
24,596
|
|
|||||
Intercompany interest (income) expense, net
|
(2,160
|
)
|
|
(2,735
|
)
|
|
4,895
|
|
|
—
|
|
|
—
|
|
|||||
Gain on bargain purchase
|
—
|
|
|
—
|
|
|
(3,077
|
)
|
|
—
|
|
|
(3,077
|
)
|
|||||
Other (income) expense, net
|
(37
|
)
|
|
(4,067
|
)
|
|
1,373
|
|
|
—
|
|
|
(2,731
|
)
|
|||||
Total other expense (income), net
|
14,295
|
|
|
(6,776
|
)
|
|
11,269
|
|
|
—
|
|
|
18,788
|
|
|||||
(Loss) income from continuing operations before (benefit) provision for income taxes
|
(23,490
|
)
|
|
194,441
|
|
|
54,834
|
|
|
—
|
|
|
225,785
|
|
|||||
(Benefit) provision for income taxes
|
(11,161
|
)
|
|
73,363
|
|
|
13,660
|
|
|
—
|
|
|
75,862
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
182
|
|
|
—
|
|
|
809
|
|
|
—
|
|
|
991
|
|
|||||
Equity in earnings of subsidiaries
|
163,061
|
|
|
5,795
|
|
|
—
|
|
|
(168,856
|
)
|
|
—
|
|
|||||
Net income
|
$
|
150,914
|
|
|
$
|
126,873
|
|
|
$
|
41,983
|
|
|
$
|
(168,856
|
)
|
|
$
|
150,914
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
3,217,991
|
|
|
$
|
2,606,892
|
|
|
$
|
(73,368
|
)
|
|
$
|
5,751,515
|
|
Cost of goods sold
|
—
|
|
|
1,934,586
|
|
|
1,674,447
|
|
|
(73,368
|
)
|
|
3,535,665
|
|
|||||
Gross margin
|
—
|
|
|
1,283,405
|
|
|
932,445
|
|
|
—
|
|
|
2,215,850
|
|
|||||
Selling, general and administrative expenses
|
18,813
|
|
|
857,490
|
|
|
716,632
|
|
|
—
|
|
|
1,592,935
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
330
|
|
|
19,602
|
|
|
—
|
|
|
19,932
|
|
|||||
Depreciation and amortization
|
50
|
|
|
48,864
|
|
|
70,707
|
|
|
—
|
|
|
119,621
|
|
|||||
Operating (loss) income
|
(18,863
|
)
|
|
376,721
|
|
|
125,504
|
|
|
—
|
|
|
483,362
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
35,813
|
|
|
99
|
|
|
30,875
|
|
|
—
|
|
|
66,787
|
|
|||||
Intercompany interest (income) expense, net
|
(30,806
|
)
|
|
19,545
|
|
|
11,261
|
|
|
—
|
|
|
—
|
|
|||||
Gains on bargain purchases
|
—
|
|
|
—
|
|
|
(328
|
)
|
|
—
|
|
|
(328
|
)
|
|||||
Other (income) expense, net
|
(898
|
)
|
|
(10,279
|
)
|
|
9,050
|
|
|
—
|
|
|
(2,127
|
)
|
|||||
Total other expense, net
|
4,109
|
|
|
9,365
|
|
|
50,858
|
|
|
—
|
|
|
64,332
|
|
|||||
(Loss) income before (benefit) provision for income taxes
|
(22,972
|
)
|
|
367,356
|
|
|
74,646
|
|
|
—
|
|
|
419,030
|
|
|||||
(Benefit) provision for income taxes
|
(7,648
|
)
|
|
99,420
|
|
|
18,587
|
|
|
—
|
|
|
110,359
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
—
|
|
|
—
|
|
|
1,958
|
|
|
—
|
|
|
1,958
|
|
|||||
Equity in earnings of subsidiaries
|
325,291
|
|
|
9,561
|
|
|
—
|
|
|
(334,852
|
)
|
|
—
|
|
|||||
Net income
|
309,967
|
|
|
277,497
|
|
|
58,017
|
|
|
(334,852
|
)
|
|
310,629
|
|
|||||
Less: net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
662
|
|
|
—
|
|
|
662
|
|
|||||
Net income attributable to LKQ stockholders
|
$
|
309,967
|
|
|
$
|
277,497
|
|
|
$
|
57,355
|
|
|
$
|
(334,852
|
)
|
|
$
|
309,967
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
2,940,951
|
|
|
$
|
1,931,704
|
|
|
$
|
(71,401
|
)
|
|
$
|
4,801,254
|
|
Cost of goods sold
|
—
|
|
|
1,752,462
|
|
|
1,225,091
|
|
|
(71,401
|
)
|
|
2,906,152
|
|
|||||
Gross margin
|
—
|
|
|
1,188,489
|
|
|
706,613
|
|
|
—
|
|
|
1,895,102
|
|
|||||
Selling, general and administrative expenses
|
18,348
|
|
|
770,971
|
|
|
517,768
|
|
|
—
|
|
|
1,307,087
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
2,537
|
|
|
2,912
|
|
|
—
|
|
|
5,449
|
|
|||||
Depreciation and amortization
|
60
|
|
|
48,067
|
|
|
54,174
|
|
|
—
|
|
|
102,301
|
|
|||||
Operating (loss) income
|
(18,408
|
)
|
|
366,914
|
|
|
131,759
|
|
|
—
|
|
|
480,265
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net
|
32,672
|
|
|
224
|
|
|
15,688
|
|
|
—
|
|
|
48,584
|
|
|||||
Intercompany interest (income) expense, net
|
(7,832
|
)
|
|
(1,716
|
)
|
|
9,548
|
|
|
—
|
|
|
—
|
|
|||||
Gains on bargain purchases
|
—
|
|
|
—
|
|
|
(3,077
|
)
|
|
—
|
|
|
(3,077
|
)
|
|||||
Other expense (income), net
|
254
|
|
|
(4,236
|
)
|
|
205
|
|
|
—
|
|
|
(3,777
|
)
|
|||||
Total other expense (income), net
|
25,094
|
|
|
(5,728
|
)
|
|
22,364
|
|
|
—
|
|
|
41,730
|
|
|||||
(Loss) income from continuing operations before (benefit) provision for income taxes
|
(43,502
|
)
|
|
372,642
|
|
|
109,395
|
|
|
—
|
|
|
438,535
|
|
|||||
(Benefit) provision for income taxes
|
(18,598
|
)
|
|
143,401
|
|
|
23,214
|
|
|
—
|
|
|
148,017
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
—
|
|
|
—
|
|
|
1,205
|
|
|
—
|
|
|
1,205
|
|
|||||
Equity in earnings of subsidiaries
|
316,627
|
|
|
10,608
|
|
|
—
|
|
|
(327,235
|
)
|
|
—
|
|
|||||
Income from continuing operations
|
291,723
|
|
|
239,849
|
|
|
87,386
|
|
|
(327,235
|
)
|
|
291,723
|
|
|||||
Net (loss) income from discontinued operations
|
(4,531
|
)
|
|
(4,531
|
)
|
|
2,050
|
|
|
2,481
|
|
|
(4,531
|
)
|
|||||
Net income
|
$
|
287,192
|
|
|
$
|
235,318
|
|
|
$
|
89,436
|
|
|
$
|
(324,754
|
)
|
|
$
|
287,192
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended June 30, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
157,007
|
|
|
$
|
142,059
|
|
|
$
|
28,734
|
|
|
$
|
(169,934
|
)
|
|
$
|
157,866
|
|
Less: net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
859
|
|
|
—
|
|
|
859
|
|
|||||
Net income attributable to LKQ stockholders
|
157,007
|
|
|
142,059
|
|
|
27,875
|
|
|
(169,934
|
)
|
|
157,007
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
(105,164
|
)
|
|
(2,303
|
)
|
|
(106,610
|
)
|
|
108,913
|
|
|
(105,164
|
)
|
|||||
Net change in unrealized gains/losses on cash flow hedges, net of tax
|
2,406
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,406
|
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
(807
|
)
|
|
(864
|
)
|
|
57
|
|
|
807
|
|
|
(807
|
)
|
|||||
Net change in other comprehensive income from unconsolidated subsidiaries
|
2,122
|
|
|
—
|
|
|
2,122
|
|
|
(2,122
|
)
|
|
2,122
|
|
|||||
Other comprehensive loss
|
(101,443
|
)
|
|
(3,167
|
)
|
|
(104,431
|
)
|
|
107,598
|
|
|
(101,443
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss)
|
55,564
|
|
|
138,892
|
|
|
(75,697
|
)
|
|
(62,336
|
)
|
|
56,423
|
|
|||||
Less: comprehensive income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
859
|
|
|
—
|
|
|
859
|
|
|||||
Comprehensive income (loss) attributable to LKQ stockholders
|
$
|
55,564
|
|
|
$
|
138,892
|
|
|
$
|
(76,556
|
)
|
|
$
|
(62,336
|
)
|
|
$
|
55,564
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended June 30, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
150,914
|
|
|
$
|
126,873
|
|
|
$
|
41,983
|
|
|
$
|
(168,856
|
)
|
|
$
|
150,914
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
93,597
|
|
|
10,097
|
|
|
92,903
|
|
|
(103,000
|
)
|
|
93,597
|
|
|||||
Net change in unrecognized gains/losses on cash flow hedges, net of tax
|
(930
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(930
|
)
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
(862
|
)
|
|
(448
|
)
|
|
(414
|
)
|
|
862
|
|
|
(862
|
)
|
|||||
Net change in other comprehensive loss from unconsolidated subsidiaries
|
(439
|
)
|
|
—
|
|
|
(439
|
)
|
|
439
|
|
|
(439
|
)
|
|||||
Total other comprehensive income
|
91,366
|
|
|
9,649
|
|
|
92,050
|
|
|
(101,699
|
)
|
|
91,366
|
|
|||||
Total comprehensive income
|
$
|
242,280
|
|
|
$
|
136,522
|
|
|
$
|
134,033
|
|
|
$
|
(270,555
|
)
|
|
$
|
242,280
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
309,967
|
|
|
$
|
277,497
|
|
|
$
|
58,017
|
|
|
$
|
(334,852
|
)
|
|
$
|
310,629
|
|
Less: net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
662
|
|
|
—
|
|
|
662
|
|
|||||
Net income attributable to LKQ stockholders
|
309,967
|
|
|
277,497
|
|
|
57,355
|
|
|
(334,852
|
)
|
|
309,967
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
(56,679
|
)
|
|
(4,486
|
)
|
|
(57,555
|
)
|
|
62,041
|
|
|
(56,679
|
)
|
|||||
Net change in unrealized gains/losses on cash flow hedges, net of tax
|
5,660
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,660
|
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
(1,428
|
)
|
|
(1,485
|
)
|
|
57
|
|
|
1,428
|
|
|
(1,428
|
)
|
|||||
Net change in other comprehensive income from unconsolidated subsidiaries
|
1,517
|
|
|
—
|
|
|
1,517
|
|
|
(1,517
|
)
|
|
1,517
|
|
|||||
Other comprehensive loss
|
(50,930
|
)
|
|
(5,971
|
)
|
|
(55,981
|
)
|
|
61,952
|
|
|
(50,930
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
259,037
|
|
|
271,526
|
|
|
2,036
|
|
|
(272,900
|
)
|
|
259,699
|
|
|||||
Less: comprehensive income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
662
|
|
|
—
|
|
|
662
|
|
|||||
Comprehensive income attributable to LKQ stockholders
|
$
|
259,037
|
|
|
$
|
271,526
|
|
|
$
|
1,374
|
|
|
$
|
(272,900
|
)
|
|
$
|
259,037
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
287,192
|
|
|
$
|
235,318
|
|
|
$
|
89,436
|
|
|
$
|
(324,754
|
)
|
|
$
|
287,192
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
115,176
|
|
|
13,975
|
|
|
114,035
|
|
|
(128,010
|
)
|
|
115,176
|
|
|||||
Net change in unrecognized gains/losses on cash flow hedges, net of tax
|
2,233
|
|
|
(133
|
)
|
|
—
|
|
|
133
|
|
|
2,233
|
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
(3,903
|
)
|
|
(3,253
|
)
|
|
(650
|
)
|
|
3,903
|
|
|
(3,903
|
)
|
|||||
Net change in other comprehensive loss from unconsolidated subsidiaries
|
(601
|
)
|
|
—
|
|
|
(601
|
)
|
|
601
|
|
|
(601
|
)
|
|||||
Total other comprehensive income
|
112,905
|
|
|
10,589
|
|
|
112,784
|
|
|
(123,373
|
)
|
|
112,905
|
|
|||||
Total comprehensive income
|
$
|
400,097
|
|
|
$
|
245,907
|
|
|
$
|
202,220
|
|
|
$
|
(448,127
|
)
|
|
$
|
400,097
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Balance Sheets
(In thousands)
|
|||||||||||||||||||
|
June 30, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
33,859
|
|
|
$
|
38,302
|
|
|
$
|
273,041
|
|
|
$
|
—
|
|
|
$
|
345,202
|
|
Receivables, net
|
65
|
|
|
380,076
|
|
|
921,373
|
|
|
—
|
|
|
1,301,514
|
|
|||||
Intercompany receivables, net
|
6,946
|
|
|
—
|
|
|
28,589
|
|
|
(35,535
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
1,337,934
|
|
|
1,380,224
|
|
|
—
|
|
|
2,718,158
|
|
|||||
Prepaid expenses and other current assets
|
32,457
|
|
|
95,198
|
|
|
101,077
|
|
|
—
|
|
|
228,732
|
|
|||||
Total current assets
|
73,327
|
|
|
1,851,510
|
|
|
2,704,304
|
|
|
(35,535
|
)
|
|
4,593,606
|
|
|||||
Property, plant and equipment, net
|
979
|
|
|
578,952
|
|
|
608,533
|
|
|
—
|
|
|
1,188,464
|
|
|||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
—
|
|
|
2,005,253
|
|
|
2,416,723
|
|
|
—
|
|
|
4,421,976
|
|
|||||
Other intangibles, net
|
—
|
|
|
284,460
|
|
|
688,571
|
|
|
—
|
|
|
973,031
|
|
|||||
Investment in subsidiaries
|
5,573,396
|
|
|
108,485
|
|
|
—
|
|
|
(5,681,881
|
)
|
|
—
|
|
|||||
Intercompany notes receivable
|
1,094,619
|
|
|
26,716
|
|
|
—
|
|
|
(1,121,335
|
)
|
|
—
|
|
|||||
Equity method investments
|
—
|
|
|
336
|
|
|
202,317
|
|
|
—
|
|
|
202,653
|
|
|||||
Other assets
|
86,030
|
|
|
37,286
|
|
|
45,585
|
|
|
—
|
|
|
168,901
|
|
|||||
Total assets
|
$
|
6,828,351
|
|
|
$
|
4,892,998
|
|
|
$
|
6,666,033
|
|
|
$
|
(6,838,751
|
)
|
|
$
|
11,548,631
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
15,084
|
|
|
$
|
342,529
|
|
|
$
|
624,030
|
|
|
$
|
—
|
|
|
$
|
981,643
|
|
Intercompany payables, net
|
—
|
|
|
28,589
|
|
|
6,946
|
|
|
(35,535
|
)
|
|
—
|
|
|||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued payroll-related liabilities
|
6,143
|
|
|
57,909
|
|
|
99,242
|
|
|
—
|
|
|
163,294
|
|
|||||
Other accrued expenses
|
6,163
|
|
|
99,766
|
|
|
206,773
|
|
|
—
|
|
|
312,702
|
|
|||||
Refund liability
|
—
|
|
|
53,660
|
|
|
50,034
|
|
|
—
|
|
|
103,694
|
|
|||||
Other current liabilities
|
282
|
|
|
19,050
|
|
|
30,271
|
|
|
—
|
|
|
49,603
|
|
|||||
Current portion of long-term obligations
|
24,886
|
|
|
1,561
|
|
|
150,925
|
|
|
—
|
|
|
177,372
|
|
|||||
Total current liabilities
|
52,558
|
|
|
603,064
|
|
|
1,168,221
|
|
|
(35,535
|
)
|
|
1,788,308
|
|
|||||
Long-term obligations, excluding current portion
|
1,891,254
|
|
|
8,012
|
|
|
2,361,910
|
|
|
—
|
|
|
4,261,176
|
|
|||||
Intercompany notes payable
|
—
|
|
|
637,495
|
|
|
483,840
|
|
|
(1,121,335
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
12,251
|
|
|
115,736
|
|
|
204,615
|
|
|
—
|
|
|
332,602
|
|
|||||
Other noncurrent liabilities
|
152,816
|
|
|
106,007
|
|
|
130,747
|
|
|
—
|
|
|
389,570
|
|
|||||
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Company stockholders’ equity
|
4,719,472
|
|
|
3,422,684
|
|
|
2,259,197
|
|
|
(5,681,881
|
)
|
|
4,719,472
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
57,503
|
|
|
—
|
|
|
57,503
|
|
|||||
Total stockholders’ equity
|
4,719,472
|
|
|
3,422,684
|
|
|
2,316,700
|
|
|
(5,681,881
|
)
|
|
4,776,975
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
6,828,351
|
|
|
$
|
4,892,998
|
|
|
$
|
6,666,033
|
|
|
$
|
(6,838,751
|
)
|
|
$
|
11,548,631
|
|
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 Six Months Ended June 30, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
149,253
|
|
|
$
|
244,304
|
|
|
$
|
68,285
|
|
|
$
|
(133,173
|
)
|
|
$
|
328,669
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(260
|
)
|
|
(62,744
|
)
|
|
(52,417
|
)
|
|
—
|
|
|
(115,421
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
48,339
|
|
|
—
|
|
|
—
|
|
|
(48,339
|
)
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(2,527
|
)
|
|
(1,133,443
|
)
|
|
—
|
|
|
(1,135,970
|
)
|
|||||
Payments of deferred purchase price on receivables securitization
|
—
|
|
|
14,926
|
|
|
—
|
|
|
(14,926
|
)
|
|
—
|
|
|||||
Other investing activities, net
|
887
|
|
|
423
|
|
|
864
|
|
|
—
|
|
|
2,174
|
|
|||||
Net cash provided by (used in) investing activities
|
48,966
|
|
|
(49,922
|
)
|
|
(1,184,996
|
)
|
|
(63,265
|
)
|
|
(1,249,217
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
2,922
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,922
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(3,834
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,834
|
)
|
|||||
Debt issuance costs
|
(682
|
)
|
|
—
|
|
|
(16,077
|
)
|
|
—
|
|
|
(16,759
|
)
|
|||||
Proceeds from issuance of Euro Notes (2026/28)
|
—
|
|
|
—
|
|
|
1,232,100
|
|
|
—
|
|
|
1,232,100
|
|
|||||
Borrowings under revolving credit facilities
|
264,000
|
|
|
—
|
|
|
349,658
|
|
|
—
|
|
|
613,658
|
|
|||||
Repayments under revolving credit facilities
|
(451,931
|
)
|
|
—
|
|
|
(314,666
|
)
|
|
—
|
|
|
(766,597
|
)
|
|||||
Repayments under term loans
|
(8,810
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,810
|
)
|
|||||
(Repayments) borrowings of other debt, net
|
(385
|
)
|
|
289
|
|
|
(2,348
|
)
|
|
—
|
|
|
(2,444
|
)
|
|||||
Other financing activities, net
|
—
|
|
|
—
|
|
|
4,107
|
|
|
—
|
|
|
4,107
|
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
(42,596
|
)
|
|
(5,743
|
)
|
|
48,339
|
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(148,099
|
)
|
|
—
|
|
|
148,099
|
|
|
—
|
|
|||||
Net cash (used in) provided by financing activities
|
(198,720
|
)
|
|
(190,406
|
)
|
|
1,247,031
|
|
|
196,438
|
|
|
1,054,343
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
(805
|
)
|
|
(67,554
|
)
|
|
—
|
|
|
(68,359
|
)
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(501
|
)
|
|
3,171
|
|
|
62,766
|
|
|
—
|
|
|
65,436
|
|
|||||
Cash and cash equivalents, beginning of period
|
34,360
|
|
|
35,131
|
|
|
210,275
|
|
|
—
|
|
|
279,766
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
33,859
|
|
|
$
|
38,302
|
|
|
$
|
273,041
|
|
|
$
|
—
|
|
|
$
|
345,202
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Cash Flows
(In thousands)
|
|||||||||||||||||||
|
For the Six Months Ended June 30, 2017
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
156,127
|
|
|
$
|
284,227
|
|
|
$
|
114,476
|
|
|
$
|
(192,733
|
)
|
|
$
|
362,097
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(64
|
)
|
|
(41,718
|
)
|
|
(49,763
|
)
|
|
—
|
|
|
(91,545
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
276,377
|
|
|
—
|
|
|
—
|
|
|
(276,377
|
)
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(78,121
|
)
|
|
(22,607
|
)
|
|
—
|
|
|
(100,728
|
)
|
|||||
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
|
—
|
|
|
(395
|
)
|
|
5,107
|
|
|
—
|
|
|
4,712
|
|
|||||
Net cash provided by (used in) investing activities
|
276,313
|
|
|
191,868
|
|
|
(71,706
|
)
|
|
(282,739
|
)
|
|
113,736
|
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
5,151
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,151
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(3,955
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,955
|
)
|
|||||
Borrowings under revolving credit facilities
|
97,000
|
|
|
—
|
|
|
65,794
|
|
|
—
|
|
|
162,794
|
|
|||||
Repayments under revolving credit facilities
|
(515,931
|
)
|
|
—
|
|
|
(69,523
|
)
|
|
—
|
|
|
(585,454
|
)
|
|||||
Repayments under term loans
|
(18,590
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,590
|
)
|
|||||
Borrowings under receivables securitization facility
|
—
|
|
|
—
|
|
|
150
|
|
|
—
|
|
|
150
|
|
|||||
Repayments under receivables securitization facility
|
—
|
|
|
—
|
|
|
(5,000
|
)
|
|
—
|
|
|
(5,000
|
)
|
|||||
(Repayments) borrowings of other debt, net
|
(1,700
|
)
|
|
(1,161
|
)
|
|
22,452
|
|
|
—
|
|
|
19,591
|
|
|||||
Payments of other obligations
|
—
|
|
|
(1,336
|
)
|
|
(743
|
)
|
|
—
|
|
|
(2,079
|
)
|
|||||
Other financing activities, net
|
—
|
|
|
5,000
|
|
|
(684
|
)
|
|
—
|
|
|
4,316
|
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
(269,668
|
)
|
|
(6,709
|
)
|
|
276,377
|
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(199,095
|
)
|
|
—
|
|
|
199,095
|
|
|
—
|
|
|||||
Net cash (used in) provided by financing activities
|
(438,025
|
)
|
|
(466,260
|
)
|
|
5,737
|
|
|
475,472
|
|
|
(423,076
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
521
|
|
|
15,750
|
|
|
—
|
|
|
16,271
|
|
|||||
Net (decrease) increase in cash and cash equivalents
|
(5,585
|
)
|
|
10,356
|
|
|
64,257
|
|
|
—
|
|
|
69,028
|
|
|||||
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
|
$
|
27,445
|
|
|
$
|
45,865
|
|
|
$
|
230,234
|
|
|
$
|
—
|
|
|
$
|
303,544
|
|
|
Three Months Ended
|
|
|
||||||||
|
June 30,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Restructuring expenses
|
$
|
2,095
|
|
(1)
|
$
|
381
|
|
|
$
|
1,714
|
|
Acquisition related expenses
|
13,783
|
|
(2)
|
2,140
|
|
(3)
|
11,643
|
|
|||
Total restructuring and acquisition related expenses
|
$
|
15,878
|
|
|
$
|
2,521
|
|
|
$
|
13,357
|
|
(1)
|
Restructuring expenses for the three months ended
June 30, 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
June 30, 2018
included $13 million of costs for our acquisition of Stahlgruber.
|
(3)
|
Acquisition related expenses for the quarter ended June 30, 2017 consisted of external costs for completed acquisitions and acquisitions that were pending as of June 30, 2017.
|
|
Three Months Ended
|
|
|
|
||||||||
|
June 30,
|
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
|
||||||
Depreciation
|
$
|
33,536
|
|
|
$
|
28,975
|
|
|
$
|
4,561
|
|
(1)
|
Amortization
|
29,627
|
|
|
24,670
|
|
|
4,957
|
|
(2)
|
|||
Total depreciation and amortization
|
$
|
63,163
|
|
|
$
|
53,645
|
|
|
$
|
9,518
|
|
|
(1)
|
The increase in depreciation expense primarily reflected an increase of $4 million in our Europe segment, composed of (i) a $2 million increase from our acquisition of Stahlgruber, (ii) a $1 million increase from our acquisitions of aftermarket parts distribution businesses in Belgium and Poland in the third quarter of 2017, and (iii) a $1 million increase related to the impact of foreign currency translation, primarily due to increases in the euro and pound sterling exchange rates during the second quarter of 2018 compared to the prior year period.
|
(2)
|
The increase in amortization expense primarily reflected an increase of $5 million from our acquisition of Stahlgruber.
|
(1)
|
Additional interest primarily related to (i) an $11 million increase resulting from higher outstanding debt during the second quarter of 2018 compared to the prior year period (including the borrowings under our Euro Notes (2026/28)), (ii) a $2 million increase from higher interest rates on borrowings under our senior secured credit agreement compared to the prior year quarter, and (iii) a $1 million increase from foreign currency translation, primarily related to an increase in the euro exchange rate during the second quarter of 2018 compared to the prior year period.
|
(2)
|
In October 2016, we acquired Andrew Page out of receivership. We recorded a gain on bargain purchase of $8 million in the fourth quarter of 2016, as the fair value of the net assets acquired exceeded the purchase price. During the second quarter of 2017, we increased the gain on bargain purchase for this acquisition by $2 million as a result of changes to our estimate of the fair value of net assets acquired. We also recorded a gain on bargain purchase for another acquisition in Europe completed in the second quarter of 2017, as the fair value of the net assets acquired exceeded the purchase price. In the second quarter of 2018, we increased the gain on bargain purchase for this acquisition by an immaterial amount.
|
(3)
|
The increase in other expense (income), net primarily consisted of a $2 million impairment loss recorded during the second quarter of 2018 related to the pending divestiture of certain Andrew Page locations as a result of the U.K. Competition and Markets Authority review. The remaining increase was primarily related to higher foreign currency losses in 2018.
|
|
Six Months Ended
|
|
|
||||||||
|
June 30,
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
||||||
Restructuring expenses
|
$
|
4,132
|
|
(1)
|
$
|
696
|
|
|
$
|
3,436
|
|
Acquisition related expenses
|
15,800
|
|
(2)
|
4,753
|
|
(3)
|
11,047
|
|
|||
Total restructuring and acquisition related expenses
|
$
|
19,932
|
|
|
$
|
5,449
|
|
|
$
|
14,483
|
|
(1)
|
Restructuring expenses for the six months ended
June 30, 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 six months ended
June 30, 2018
included $15 million of costs for our acquisition of Stahlgruber.
|
(3)
|
Acquisition related expenses for the six months ended June 30, 2017 consisted of external costs for completed acquisitions and acquisitions that were pending as of June 30, 2017.
|
|
Six Months Ended
|
|
|
|
||||||||
|
June 30,
|
|
|
|
||||||||
|
2018
|
|
2017
|
|
Change
|
|
||||||
Depreciation
|
$
|
65,801
|
|
|
$
|
54,368
|
|
|
$
|
11,433
|
|
(1)
|
Amortization
|
53,820
|
|
|
47,933
|
|
|
5,887
|
|
(2)
|
|||
Total depreciation and amortization
|
$
|
119,621
|
|
|
$
|
102,301
|
|
|
$
|
17,320
|
|
|
(1)
|
The increase in depreciation expense primarily reflected an increase of $10 million in our Europe segment, composed of (i) a $3 million increase due to a measurement period adjustment recorded in the first half of 2017 related to our valuation procedures for our acquisition of Rhiag that reduced depreciation expense, (ii) a $3 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 half of 2018 compared to the prior year period, (iii) $2 million of incremental depreciation expense from our acquisition of Stahlgruber, and (iv) $2 million of incremental depreciation expense from our acquisitions of aftermarket parts distribution businesses in Belgium and Poland in the third quarter of 2017.
|
(2)
|
The increase in amortization expense primarily reflected (i) an increase of $5 million from our acquisition of Stahlgruber, and (ii) an increase of $2 million from our acquisition of Warn, partially offset by (iii) individually insignificant fluctuations in amortization expense across our other businesses that netted to a $1 million decrease.
|
(1)
|
Additional interest primarily related to (i) an $11 million increase resulting from higher outstanding debt during the first half of 2018 compared to the prior year period (including the borrowings under our Euro Notes (2026/28)), (ii) a $4 million increase from higher interest rates on borrowings under our senior secured credit agreement compared to the prior year quarter, and (iii) a $3 million increase from foreign currency translation, primarily related to an increase in the euro exchange rate during the first half of 2018 compared to the prior year period.
|
(2)
|
In October 2016, we acquired Andrew Page out of receivership. We recorded a gain on bargain purchase of $8 million in the fourth quarter of 2016, as the fair value of the net assets acquired exceeded the purchase price. During the second quarter of 2017, we increased the gain on bargain purchase for this acquisition by $2 million as a result of changes to our estimate of the fair value of net assets acquired. We also recorded a gain on bargain purchase for another acquisition in Europe completed in the second quarter of 2017, as the fair value of the net assets acquired exceeded the purchase price. In the second quarter of 2018, we increased the gain on bargain purchase for this acquisition by an immaterial amount.
|
(3)
|
The increase in other expense (income), net primarily consisted of a $3 million increase in foreign currency losses, partially offset by an increase in other miscellaneous income.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||
|
2018
|
|
% of Total Segment Revenue
|
|
2017
|
|
% of Total Segment Revenue
|
|
2018
|
|
% of Total Segment Revenue
|
|
2017
|
|
% of Total Segment Revenue
|
||||||||||||
Third Party Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
North America
|
$
|
1,334,965
|
|
|
|
|
$
|
1,206,305
|
|
|
|
|
$
|
2,664,625
|
|
|
|
|
$
|
2,414,352
|
|
|
|
||||
Europe
|
1,284,153
|
|
|
|
|
889,751
|
|
|
|
|
2,324,583
|
|
|
|
|
1,710,648
|
|
|
|
||||||||
Specialty
|
411,633
|
|
|
|
|
362,355
|
|
|
|
|
762,307
|
|
|
|
|
676,254
|
|
|
|
||||||||
Total third party revenue
|
$
|
3,030,751
|
|
|
|
|
$
|
2,458,411
|
|
|
|
|
$
|
5,751,515
|
|
|
|
|
$
|
4,801,254
|
|
|
|
||||
Total Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
North America
|
$
|
1,335,166
|
|
|
|
|
$
|
1,206,514
|
|
|
|
|
$
|
2,665,009
|
|
|
|
|
$
|
2,414,754
|
|
|
|
||||
Europe
|
1,284,153
|
|
|
|
|
889,751
|
|
|
|
|
2,324,583
|
|
|
|
|
1,710,648
|
|
|
|
||||||||
Specialty
|
412,873
|
|
|
|
|
363,470
|
|
|
|
|
764,665
|
|
|
|
|
678,404
|
|
|
|
||||||||
Eliminations
|
(1,441
|
)
|
|
|
|
(1,324
|
)
|
|
|
|
(2,742
|
)
|
|
|
|
(2,552
|
)
|
|
|
||||||||
Total revenue
|
$
|
3,030,751
|
|
|
|
|
$
|
2,458,411
|
|
|
|
|
$
|
5,751,515
|
|
|
|
|
$
|
4,801,254
|
|
|
|
||||
Segment EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
North America
|
$
|
175,010
|
|
|
13.1
|
%
|
|
$
|
173,732
|
|
|
14.4
|
%
|
|
$
|
352,723
|
|
|
13.2
|
%
|
|
$
|
349,867
|
|
|
14.5
|
%
|
Europe
|
110,893
|
|
|
8.6
|
%
|
|
83,549
|
|
|
9.4
|
%
|
|
186,427
|
|
|
8.0
|
%
|
|
162,243
|
|
|
9.5
|
%
|
||||
Specialty
|
56,068
|
|
|
13.6
|
%
|
|
48,578
|
|
|
13.4
|
%
|
|
98,037
|
|
|
12.8
|
%
|
|
84,019
|
|
|
12.4
|
%
|
|
Three Months Ended June 30,
|
|
Percentage Change in Revenue
|
|||||||||||||||||
North America
|
2018
|
|
2017
|
|
Organic
|
|
Acquisition
(3)
|
|
Foreign Exchange
|
|
Total Change
|
|||||||||
Parts & services revenue
|
$
|
1,165,422
|
|
|
$
|
1,075,656
|
|
|
7.4
|
%
|
(1
|
)
|
0.7
|
%
|
|
0.3
|
%
|
|
8.3
|
%
|
Other revenue
|
169,543
|
|
|
130,649
|
|
|
29.3
|
%
|
(2
|
)
|
0.5
|
%
|
|
0.0
|
%
|
|
29.8
|
%
|
||
Total third party revenue
|
$
|
1,334,965
|
|
|
$
|
1,206,305
|
|
|
9.8
|
%
|
|
0.7
|
%
|
|
0.2
|
%
|
|
10.7
|
%
|
|
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 largely attributable to increased sales volumes and, to a lesser extent, favorable pricing in our wholesale operations. The volume increases were primarily driven by (i) more severe winter weather conditions in the first quarter of 2018 compared to milder winter weather conditions in the prior year period, which impacted backlog into the second quarter, and (ii) to a lesser extent, incremental sales related to an agreement signed in December 2017 for the distribution of batteries.
|
(2)
|
The $39 million increase in other revenue primarily related to (i) a $25 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) a
|
(3)
|
Acquisition related growth in the second quarter of 2018 reflected revenue from our acquisition of six wholesale businesses from the beginning of the second quarter of 2017 up to the one-year anniversary of the acquisition dates.
|
(1)
|
The decrease in gross margin reflected an unfavorable impact of 0.8% from our wholesale operations. The decrease in wholesale gross margin is primarily due to (i) a mix shift to lower margin product lines, including remanufactured engines, and batteries, compared to the prior year second quarter, and (ii) higher car costs in our salvage operations.
|
(2)
|
The increase in segment operating expenses as a percentage of revenue reflected (i) a 0.3% increase in both freight and vehicle expenses, primarily due to higher use of third party freight and increased vehicle rental leases to handle incremental volumes as well as increases in fuel prices, partially offset by (ii) a 0.3% decrease related to a non-recurring expense related to a contingent liability recorded in the second quarter of 2017.
|
(3)
|
The increase in other expense, net was primarily due to net income attributable to noncontrolling interest and other miscellaneous non-operating expenses.
|
|
Three Months Ended June 30,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Europe
|
2018
|
|
2017
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
1,279,996
|
|
|
$
|
887,872
|
|
|
8.3
|
%
|
|
28.8
|
%
|
|
7.1
|
%
|
|
44.2
|
%
|
Other revenue
|
4,157
|
|
|
1,879
|
|
|
97.4
|
%
|
|
20.5
|
%
|
|
3.3
|
%
|
|
121.2
|
%
|
||
Total third party revenue
|
$
|
1,284,153
|
|
|
$
|
889,751
|
|
|
8.4
|
%
|
|
28.8
|
%
|
|
7.1
|
%
|
|
44.3
|
%
|
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 in our U.K. operations grew primarily as a result of increased volumes due to an increase in online catalog sales and the timing of the Easter holiday compared to the prior year period. In Eastern Europe, we added 44 branches since the beginning of the second quarter of 2017, and organic
|
(2)
|
Acquisition related growth for the
three months ended
June 30, 2018
included $168 million, or 18.9%, $35 million, or 4.0%, and $35 million, or 3.9%, from our acquisitions of Stahlgruber and aftermarket parts distribution businesses in Poland and Belgium, respectively. The remainder of our acquired revenue growth included revenue from our acquisitions of 14 wholesale businesses in our Europe segment since the beginning of the second quarter of 2017 through the one-year anniversary of the acquisitions.
|
(3)
|
Compared to the prior year, exchange rates increased our revenue growth by $63 million, or 7.1%, primarily due to the weaker U.S. dollar against the euro, pound sterling and Czech koruna during the second quarter of 2018 relative to the comparable period of 2017.
|
(1)
|
The decline in gross margin was due to (i) an 0.8% decrease related to our U.K. operations primarily as a result of incremental costs related to the national distribution facility as well as higher customer incentives to drive volume recovery after we experienced operational issues at the national distribution center in the first quarter of 2018, (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, and (iii) a 0.3% decrease in our Italy and Eastern Europe operations due to higher customer incentives and decreased prices as a result of increased market competition. The unfavorable effects were partially offset by (i) a 0.3% increase in gross margin in our Benelux operations primarily due to the ongoing move from a three-step to a two-step distribution model and increased private label sales, which have higher gross margins, and (ii) a 0.3% 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 decrease in segment operating expenses as a percentage of revenue was primarily due to a positive leverage effect of 0.4%, as facility, freight, and advertising expenses grew at a lower rate than organic revenue in the quarter.
|
|
Three Months Ended June 30,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Specialty
|
2018
|
|
2017
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
411,633
|
|
|
$
|
362,355
|
|
|
4.1
|
%
|
|
9.0
|
%
|
|
0.5
|
%
|
|
13.6
|
%
|
Other revenue
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||
Total third party revenue
|
$
|
411,633
|
|
|
$
|
362,355
|
|
|
4.1
|
%
|
|
9.0
|
%
|
|
0.5
|
%
|
|
13.6
|
%
|
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 primarily due to higher volumes across both our automotive and RV businesses, largely due to improved weather conditions, favorable economic conditions across most of the U.S., and year over year growth of new vehicle sales of pickups, sport utility vehicles and other highly accessorized vehicles.
|
(2)
|
Acquisition related growth in the second quarter of 2018 included $32 million, or 8.7%, from our acquisition of Warn. The remainder of our acquired revenue growth reflected an immaterial amount of acquired revenue from our acquisitions of two wholesale businesses from the beginning of the second quarter 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 other Specialty operations, and (ii) 0.8% from our initiatives to improve gross margin, which has slowed organic revenue growth, but benefited gross margin, partially offset by (iii) 0.2% of non-recurring favorable adjustments for sales allowances in the second quarter of 2017.
|
(2)
|
The increase in segment operating expenses reflects unfavorable impacts of (i) 0.6% 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) 0.4% from our acquisition of Warn, which has higher operating expenses as a percentage of revenue than our existing Specialty operations, and (iii) 0.2% in vehicle and fuel expenses primarily due to increased fuel prices.
|
|
Six Months Ended June 30,
|
|
Percentage Change in Revenue
|
|||||||||||||||||
North America
|
2018
|
|
2017
|
|
Organic
|
|
Acquisition
(3)
|
|
Foreign Exchange
|
|
Total Change
|
|||||||||
Parts & services revenue
|
$
|
2,338,007
|
|
|
$
|
2,155,531
|
|
|
7.0
|
%
|
(1
|
)
|
1.2
|
%
|
|
0.3
|
%
|
|
8.5
|
%
|
Other revenue
|
326,618
|
|
|
258,821
|
|
|
25.6
|
%
|
(2
|
)
|
0.5
|
%
|
|
0.1
|
%
|
|
26.2
|
%
|
||
Total third party revenue
|
$
|
2,664,625
|
|
|
$
|
2,414,352
|
|
|
9.0
|
%
|
|
1.2
|
%
|
|
0.3
|
%
|
|
10.4
|
%
|
|
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 $68 million increase in other revenue primarily related to (i) a $45 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) a $15 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 half of 2018 reflected revenue from our acquisition of seven wholesale businesses from the beginning of 2017 up to the one-year anniversary of the acquisition dates.
|
(1)
|
The decrease in gross margin reflected unfavorable impacts of 0.8% and 0.2% from our wholesale and self service operations, respectively. The decrease in wholesale gross margin is primarily attributable to (i) higher input costs from suppliers in our aftermarket operations, as net selling prices in the first quarter did not increase to match the increase in input costs, (ii) a shift in our sales toward lower margin products, including batteries and remanufactured engines, compared to the prior year period, and (iii) higher car costs in our salvage operations. 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 0.3% and 0.2% increase in freight and vehicle expenses, respectively, primarily due to higher use of third party freight and increased vehicle rental leases to handle incremental volumes as well as increases in fuel prices, partially offset by (ii) a 0.2% decrease in personnel costs primarily attributable to shared PGW corporate personnel expenses incurred during the first quarter of 2017; these shared costs ceased being incurred upon the closing of the sale of the glass manufacturing business on March 1, 2017.
|
|
Six Months Ended June 30,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Europe
|
2018
|
|
2017
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
2,317,042
|
|
|
$
|
1,707,039
|
|
|
4.9
|
%
|
|
20.4
|
%
|
|
10.5
|
%
|
|
35.7
|
%
|
Other revenue
|
7,541
|
|
|
3,609
|
|
|
82.6
|
%
|
|
19.4
|
%
|
|
6.9
|
%
|
|
108.9
|
%
|
||
Total third party revenue
|
$
|
2,324,583
|
|
|
$
|
1,710,648
|
|
|
5.0
|
%
|
|
20.4
|
%
|
|
10.5
|
%
|
|
35.9
|
%
|
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 in our U.K. operations grew primarily as a result of increased volumes due to an increase in online catalog sales. In Eastern Europe, we added 56 branches since the beginning of 2017, and organic revenue growth included revenue from those locations. Revenue at our existing locations in our Benelux operations grew primarily as a result of increased volumes as a result of favorable weather conditions in the first quarter and favorable market conditions during the first half of 2018.
|
(2)
|
Acquisition related growth for the
six months ended
June 30, 2018
included $168 million, or 9.8%, $70 million, or 4.1%, and $66 million, or 3.9%, from our acquisitions of Stahlgruber and aftermarket parts distribution businesses in Belgium and Poland, respectively. The remainder of our acquired revenue growth included revenue from our acquisitions of 15 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 $179 million, or 10.5%, primarily due to the weaker U.S. dollar against the euro, pound sterling and Czech koruna during the first half of 2018 relative to the comparable period of 2017.
|
(1)
|
The decline in gross margin was due to (i) a 1.2% decrease related to our U.K. operations primarily as a result of
replenishment issues and related stock availability in the first quarter at our national distribution center and branches that led to some temporary service issues and increased labor costs to manually stock and receive product, higher customer incentives, and incremental costs related to the national distribution facility, (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, and (iii) a 0.2% decrease in our Italy and Eastern Europe operations due to higher customer incentives and decreased prices as a result of increased market competition. The unfavorable effects were partially offset by (i) a 0.5% 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 (ii) a 0.3% increase due to a
|
(2)
|
The increase in segment operating expenses as a percentage of revenue reflected a 0.4% increase 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. This unfavorable effect is partially offset by several individually immaterial factors that had a favorable impact of 0.1% in the aggregate.
|
|
Six Months Ended June 30,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Specialty
|
2018
|
|
2017
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
762,307
|
|
|
$
|
676,254
|
|
|
2.3
|
%
|
|
9.9
|
%
|
|
0.5
|
%
|
|
12.7
|
%
|
Other revenue
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||
Total third party revenue
|
$
|
762,307
|
|
|
$
|
676,254
|
|
|
2.3
|
%
|
|
9.9
|
%
|
|
0.5
|
%
|
|
12.7
|
%
|
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 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. The organic revenue growth rate was higher in the second quarter than the first quarter due to the factors discussed in the three months results section.
|
(2)
|
Acquisition related growth in the six months ended June 30, 2018 included $66 million, or 9.7%, 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 the second quarter 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, and (ii) 0.7% from our initiatives to improve gross margin, which has slowed organic revenue growth, but benefited gross margin.
|
(2)
|
The increase in segment operating expenses reflects unfavorable impacts of (i) 0.6% 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
|
|
June 30, 2018
|
|
December 31, 2017
|
|
June 30, 2017
|
||||||
Cash and cash equivalents
|
$
|
345,202
|
|
|
$
|
279,766
|
|
|
$
|
303,544
|
|
Total debt
(1)
|
4,476,000
|
|
|
3,428,280
|
|
|
3,009,927
|
|
|||
Current maturities
(2)
|
181,992
|
|
|
129,184
|
|
|
99,254
|
|
|||
Capacity under credit facilities
(3)
|
2,850,000
|
|
|
2,850,000
|
|
|
2,550,000
|
|
|||
Availability under credit facilities
(3)
|
1,563,926
|
|
|
1,395,081
|
|
|
1,431,674
|
|
|||
Total liquidity (cash and cash equivalents plus availability under credit facilities)
|
1,909,128
|
|
|
1,674,847
|
|
|
1,735,218
|
|
(1)
|
Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of
$37 million
, $24 million and $22 million as of
June 30, 2018
,
December 31, 2017
and
June 30, 2017
, respectively).
|
(2)
|
Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of
$5 million
, $3 million and $2 million as of
June 30, 2018
,
December 31, 2017
and
June 30, 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 (
$696 million
outstanding at
June 30, 2018
) and $2.75 billion in revolving credit (
$1.1 billion
outstanding at
June 30, 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 $
584 million
(€500 million), maturing in April 2024 and bearing interest at a 3.875% fixed rate
|
•
|
Euro Notes (2026/28) totaling
$1.2 billion
(€1.0 billion), consisting of (i) €750 million maturing in April 2026 and bearing interest at a 3.625% fixed rate, and (ii) €250 million maturing in April 2028 and bearing interest at a 4.125% fixed rate
|
•
|
Receivables securitization facility with availability up to $100 million (
$100 million
outstanding as of
June 30, 2018
), maturing in November 2019 and bearing interest at variable commercial paper rates
|
Six months ending December 31, 2018
|
$
|
156,309
|
|
Years ending December 31:
|
|
||
2019
|
150,088
|
|
|
2020
|
59,914
|
|
|
2021
|
40,198
|
|
|
2022
|
38,888
|
|
|
2023
|
2,269,327
|
|
|
Thereafter
|
1,761,276
|
|
|
Total debt
(1)
|
$
|
4,476,000
|
|
(1)
|
The total debt amounts presented above reflect the gross values to be repaid (excluding debt issuance costs of
$37 million
as of
June 30, 2018
).
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||||||||||||||||||
|
June 30,
|
|
June 30,
|
|
||||||||||||||||||||
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
|
||||||||||||
North America
|
$
|
363,000
|
|
|
$
|
393,300
|
|
|
$
|
(30,300
|
)
|
|
$
|
721,800
|
|
|
$
|
659,100
|
|
|
$
|
62,700
|
|
(1)
|
Europe
|
827,100
|
|
|
536,100
|
|
|
291,000
|
|
|
1,494,200
|
|
|
1,063,500
|
|
|
430,700
|
|
(2)
|
||||||
Specialty
|
296,600
|
|
|
263,100
|
|
|
33,500
|
|
|
570,600
|
|
|
495,000
|
|
|
75,600
|
|
(3)
|
||||||
Total
|
$
|
1,486,700
|
|
|
$
|
1,192,500
|
|
|
$
|
294,200
|
|
|
$
|
2,786,600
|
|
|
$
|
2,217,600
|
|
|
$
|
569,000
|
|
|
(1)
|
In North America, aftermarket purchases during the
six months ended June 30, 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
six months ended June 30, 2018
was primarily driven by (i) a $108 million increase in purchases at our Benelux operations, of which $41 million was attributable to incremental inventory purchases in the first half of 2018 as a result of our acquisitions of aftermarket parts distribution businesses in Belgium in the third quarter of 2017, (ii) a $124 million increase primarily attributable to our Eastern Europe operations, of which $49 million was due to incremental inventory purchases in the first half of 2018 as a result of our acquisition of an aftermarket parts distribution business in Poland in the third quarter of 2017; the remaining increase was primarily due to branch expansion in Eastern Europe, and (iii) a $122 million increase attributable to inventory purchases at Stahlgruber from the date of acquisition through June 30, 2018. The increase in inventory purchases is also driven by the increase in the value of the euro and pound sterling in the first half of 2018 compared to the first half of 2017.
|
(3)
|
Specialty inventory purchases increased during the
six months ended June 30, 2018
compared to the first six months of 2017 to support growth in our operations. Additionally, the acquisition of Warn in November 2017 added incremental purchases of $35 million, which includes purchases of aftermarket inventory and raw materials used in the manufacturing of specialty products.
|
|
Three Months Ended
|
|
Six Months Ended
|
|
||||||||||||||
|
June 30,
|
|
June 30,
|
|
||||||||||||||
|
2018
|
|
2017
|
|
% Change
|
|
2018
|
|
2017
|
|
% Change
|
|
||||||
North America wholesale salvage cars and trucks
|
83
|
|
|
77
|
|
|
7.8
|
%
|
|
156
|
|
|
152
|
|
|
2.6
|
%
|
|
Europe wholesale salvage cars and trucks
|
7
|
|
|
5
|
|
|
40.0
|
%
|
|
15
|
|
|
12
|
|
|
25.0
|
%
|
|
Self service and "crush only" cars
|
150
|
|
|
141
|
|
|
6.4
|
%
|
|
291
|
|
|
274
|
|
|
6.2
|
%
|
(1)
|
Net cash provided by operating activities for the six months ended June 30, 2017
|
$
|
362
|
|
|
Increase (decrease) due to:
(1)
|
|
|
||
Discontinued operations
|
4
|
|
(2)
|
|
Operating income
|
3
|
|
(3)
|
|
Non-cash depreciation and amortization expense
|
23
|
|
(4)
|
|
Cash paid for taxes
|
40
|
|
|
|
Cash paid for interest
|
(9
|
)
|
|
|
Working capital accounts:
(5)
|
|
|
||
Accounts receivable
|
(31
|
)
|
|
|
Inventory
|
3
|
|
|
|
Accounts payable
|
(69
|
)
|
|
|
Other operating activities
|
3
|
|
(6)
|
|
Net cash provided by operating activities for the six months ended June 30, 2018
|
$
|
329
|
|
|
(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 increase 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.
|
|
Total
|
|
Less than
1 Year
|
|
1-3 Years
|
|
3-5 Years
|
|
More than
5 Years
|
||||||||||
Contractual obligations
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-term debt
(1)
|
$
|
1,666
|
|
|
$
|
87
|
|
|
$
|
108
|
|
|
$
|
148
|
|
|
$
|
1,323
|
|
Capital lease obligations
(2)
|
6
|
|
|
1
|
|
|
4
|
|
|
1
|
|
|
—
|
|
|||||
Operating leases
(3)
|
114
|
|
|
27
|
|
|
41
|
|
|
19
|
|
|
27
|
|
|||||
Purchase obligations
(4)
|
33
|
|
|
33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other long-term obligations
(5)
|
3
|
|
|
3
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
$
|
1,822
|
|
|
$
|
151
|
|
|
$
|
153
|
|
|
$
|
168
|
|
|
$
|
1,350
|
|
(1)
|
Our long-term debt under contractual obligations above includes interest of $380 million on the balances outstanding as of
June 30, 2018
. The long-term debt balance excludes debt issuance costs, as these expenses have already been paid. Interest on our long-term debt is calculated based on the respective stated rates. Future estimated interest expense for the next year, one to three years, and three to five years is $45 million, $90 million and $89 million, respectively. Estimated interest expense beyond five years is $156 million.
|
(2)
|
Interest on capital lease obligations is included based on implied rates. Future estimated interest expense is immaterial.
|
(3)
|
The operating lease payments above do not include certain tax, insurance and maintenance costs, which are also required contractual obligations under our operating leases but are generally not fixed and can fluctuate from year to year.
|
(4)
|
Our purchase obligations include open purchase orders for aftermarket inventory.
|
(5)
|
Our other long-term obligations consist of other asset purchase commitments and payments for pension plans.
|
•
|
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
|
By:
|
/s/ Varun Laroyia
|
By:
|
/s/ Varun Laroyia
|
By:
|
/s/ Varun Laroyia
|
By:
|
/s/ Varun Laroyia
|
By:
|
/s/ Linda Garcia
|
/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
|