|
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)
|
Title of Each Class
|
|
Trading Symbol(s)
|
|
Name of each exchange on which registered
|
Common Stock, par value $.01 per share
|
|
LKQ
|
|
NASDAQ Global Select Market
|
Large accelerated filer
|
x
|
Accelerated filer
|
¨
|
Non-accelerated filer
|
¨
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
Emerging growth company
|
¨
|
|
|
|
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share data)
|
|||||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenue
|
$
|
3,100,303
|
|
|
$
|
2,720,764
|
|
Cost of goods sold
|
1,892,039
|
|
|
1,666,793
|
|
||
Gross margin
|
1,208,264
|
|
|
1,053,971
|
|
||
Selling, general and administrative expenses
|
896,532
|
|
|
766,891
|
|
||
Restructuring and acquisition related expenses
|
3,307
|
|
|
4,054
|
|
||
Impairment of net assets held for sale
|
15,023
|
|
|
—
|
|
||
Depreciation and amortization
|
71,002
|
|
|
56,458
|
|
||
Operating income
|
222,400
|
|
|
226,568
|
|
||
Other expense (income):
|
|
|
|
||||
Interest expense, net of interest income
|
36,089
|
|
|
28,515
|
|
||
Other income, net
|
(3,851
|
)
|
|
(2,882
|
)
|
||
Total other expense, net
|
32,238
|
|
|
25,633
|
|
||
Income before provision for income taxes
|
190,162
|
|
|
200,935
|
|
||
Provision for income taxes
|
51,550
|
|
|
49,584
|
|
||
Equity in (losses) earnings of unconsolidated subsidiaries
|
(39,549
|
)
|
|
1,412
|
|
||
Net income
|
99,063
|
|
|
152,763
|
|
||
Less: net income (loss) attributable to noncontrolling interest
|
1,015
|
|
|
(197
|
)
|
||
Net income attributable to LKQ stockholders
|
$
|
98,048
|
|
|
$
|
152,960
|
|
|
|
|
|
||||
Basic earnings per share:
(1)
|
|
|
|
||||
Net income
|
$
|
0.31
|
|
|
$
|
0.49
|
|
Less: net income (loss) attributable to noncontrolling interest
|
0.00
|
|
|
(0.00
|
)
|
||
Net income attributable to LKQ stockholders
|
$
|
0.31
|
|
|
$
|
0.49
|
|
|
|
|
|
||||
Diluted earnings per share:
(1)
|
|
|
|
||||
Net income
|
$
|
0.31
|
|
|
$
|
0.49
|
|
Less: net income (loss) attributable to noncontrolling interest
|
0.00
|
|
|
(0.00
|
)
|
||
Net income attributable to LKQ stockholders
|
$
|
0.31
|
|
|
$
|
0.49
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Comprehensive Income
(In thousands)
|
|||||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net income
|
$
|
99,063
|
|
|
$
|
152,763
|
|
Less: net income (loss) attributable to noncontrolling interest
|
1,015
|
|
|
(197
|
)
|
||
Net income attributable to LKQ stockholders
|
98,048
|
|
|
152,960
|
|
||
|
|
|
|
||||
Other comprehensive income (loss):
|
|
|
|
||||
Foreign currency translation, net of tax
|
(9,895
|
)
|
|
48,485
|
|
||
Net change in unrealized gains/losses on cash flow hedges, net of tax
|
(2,737
|
)
|
|
3,254
|
|
||
Net change in unrealized gains/losses on pension plans, net of tax
|
191
|
|
|
(621
|
)
|
||
Net change in other comprehensive loss from unconsolidated subsidiaries
|
(3,463
|
)
|
|
(605
|
)
|
||
Other comprehensive (loss) income
|
(15,904
|
)
|
|
50,513
|
|
||
|
|
|
|
||||
Comprehensive income
|
83,159
|
|
|
203,276
|
|
||
Less: comprehensive income (loss) attributable to noncontrolling interest
|
1,015
|
|
|
(197
|
)
|
||
Comprehensive income attributable to LKQ stockholders
|
$
|
82,144
|
|
|
$
|
203,473
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
|
|||||||
|
March 31,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
316,066
|
|
|
$
|
331,761
|
|
Receivables, net
|
1,353,491
|
|
|
1,154,083
|
|
||
Inventories
|
2,692,006
|
|
|
2,836,075
|
|
||
Prepaid expenses and other current assets
|
283,207
|
|
|
199,030
|
|
||
Total current assets
|
4,644,770
|
|
|
4,520,949
|
|
||
Property, plant and equipment, net
|
1,206,342
|
|
|
1,220,162
|
|
||
Operating lease assets, net
|
1,279,576
|
|
|
—
|
|
||
Intangible assets:
|
|
|
|
||||
Goodwill
|
4,354,306
|
|
|
4,381,458
|
|
||
Other intangibles, net
|
889,609
|
|
|
928,752
|
|
||
Equity method investments
|
134,234
|
|
|
179,169
|
|
||
Other assets
|
157,073
|
|
|
162,912
|
|
||
Total assets
|
$
|
12,665,910
|
|
|
$
|
11,393,402
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
952,688
|
|
|
$
|
942,398
|
|
Accrued expenses:
|
|
|
|
||||
Accrued payroll-related liabilities
|
143,026
|
|
|
172,005
|
|
||
Other accrued expenses
|
317,826
|
|
|
288,425
|
|
||
Refund liability
|
105,435
|
|
|
104,585
|
|
||
Other current liabilities
|
100,058
|
|
|
61,109
|
|
||
Current portion of operating lease liabilities
|
216,172
|
|
|
—
|
|
||
Current portion of long-term obligations
|
136,283
|
|
|
121,826
|
|
||
Total current liabilities
|
1,971,488
|
|
|
1,690,348
|
|
||
Long-term operating lease liabilities, excluding current portion
|
1,109,814
|
|
|
—
|
|
||
Long-term obligations, excluding current portion
|
4,092,766
|
|
|
4,188,674
|
|
||
Deferred income taxes
|
305,770
|
|
|
311,434
|
|
||
Other noncurrent liabilities
|
329,298
|
|
|
364,194
|
|
||
Commitments and contingencies
|
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 318,888,569 shares issued and 313,973,538 shares outstanding at March 31, 2019; 318,417,821 shares issued and 316,146,114 shares outstanding at December 31, 2018
|
3,189
|
|
|
3,184
|
|
||
Additional paid-in capital
|
1,420,685
|
|
|
1,415,188
|
|
||
Retained earnings
|
3,696,924
|
|
|
3,598,876
|
|
||
Accumulated other comprehensive loss
|
(190,854
|
)
|
|
(174,950
|
)
|
||
Treasury stock, at cost; 4,915,031 shares at March 31, 2019 and 2,271,707 shares at December 31, 2018
|
(130,462
|
)
|
|
(60,000
|
)
|
||
Total Company stockholders' equity
|
4,799,482
|
|
|
4,782,298
|
|
||
Noncontrolling interest
|
57,292
|
|
|
56,454
|
|
||
Total stockholders' equity
|
4,856,774
|
|
|
4,838,752
|
|
||
Total liabilities and stockholders’ equity
|
$
|
12,665,910
|
|
|
$
|
11,393,402
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)
|
|||||||
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
||||
Net income
|
$
|
99,063
|
|
|
$
|
152,763
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
76,207
|
|
|
61,066
|
|
||
Impairment of Mekonomen equity method investment
|
39,551
|
|
|
—
|
|
||
Impairment of net assets held for sale
|
15,023
|
|
|
—
|
|
||
Stock-based compensation expense
|
5,673
|
|
|
5,982
|
|
||
Other
|
(310
|
)
|
|
(3,134
|
)
|
||
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:
|
|
|
|
||||
Receivables, net
|
(205,029
|
)
|
|
(130,520
|
)
|
||
Inventories
|
71,811
|
|
|
5,016
|
|
||
Prepaid income taxes/income taxes payable
|
42,917
|
|
|
37,362
|
|
||
Accounts payable
|
23,291
|
|
|
23,924
|
|
||
Other operating assets and liabilities
|
9,028
|
|
|
(7,296
|
)
|
||
Net cash provided by operating activities
|
177,225
|
|
|
145,163
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of property, plant and equipment
|
(53,016
|
)
|
|
(62,189
|
)
|
||
Acquisitions, net of cash acquired
|
(4,785
|
)
|
|
(2,966
|
)
|
||
Other investing activities, net
|
17
|
|
|
534
|
|
||
Net cash used in investing activities
|
(57,784
|
)
|
|
(64,621
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Proceeds from exercise of stock options
|
1,334
|
|
|
2,255
|
|
||
Taxes paid related to net share settlements of stock-based compensation awards
|
(1,505
|
)
|
|
(3,292
|
)
|
||
Purchase of treasury stock
|
(70,462
|
)
|
|
—
|
|
||
Borrowings under revolving credit facilities
|
284,641
|
|
|
201,669
|
|
||
Repayments under revolving credit facilities
|
(312,339
|
)
|
|
(321,525
|
)
|
||
Repayments under term loans
|
(2,188
|
)
|
|
(4,405
|
)
|
||
Borrowings under receivables securitization facility
|
6,600
|
|
|
—
|
|
||
Repayments under receivables securitization facility
|
(36,910
|
)
|
|
—
|
|
||
(Repayments) borrowings of other debt, net
|
(625
|
)
|
|
4,409
|
|
||
Other financing activities, net
|
(1,277
|
)
|
|
3,383
|
|
||
Net cash used in financing activities
|
(132,731
|
)
|
|
(117,506
|
)
|
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
(2,513
|
)
|
|
2,877
|
|
||
Net decrease in cash, cash equivalents and restricted cash
|
(15,803
|
)
|
|
(34,087
|
)
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
337,250
|
|
|
279,766
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
321,447
|
|
|
$
|
245,679
|
|
|
|
|
|
||||
Reconciliation of cash, cash equivalents and restricted cash
|
|
|
|
||||
Cash and cash equivalents
|
$
|
316,066
|
|
|
$
|
245,679
|
|
Restricted cash included in Other assets
|
5,381
|
|
|
—
|
|
||
Cash, cash equivalents and restricted cash, end of period
|
$
|
321,447
|
|
|
$
|
245,679
|
|
|
|
|
|
||||
Supplemental disclosure of cash paid for:
|
|
|
|
||||
Income taxes, net of refunds
|
$
|
11,775
|
|
|
$
|
15,464
|
|
Interest
|
14,462
|
|
|
13,975
|
|
||
Supplemental disclosure of noncash investing and financing activities:
|
|
|
|
||||
Noncash property, plant and equipment additions
|
9,054
|
|
|
4,199
|
|
||
Other financing obligations, including debt assumed in connection with business acquisitions
|
8,424
|
|
|
—
|
|
||
Contingent consideration liabilities
|
—
|
|
|
34
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
|
||||||||||||||||||||||||||
|
LKQ Stockholders
|
|
|
|
|
|||||||||||||||||||||
|
Common Stock
|
|
Additional Paid-In Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive (Loss) Income
|
|
Noncontrolling Interest
|
|
Total Stockholders' Equity
|
|||||||||||||||
|
Shares
Issued
|
|
Amount
|
|
||||||||||||||||||||||
BALANCE, January 1, 2018
|
309,127
|
|
|
$
|
3,091
|
|
|
$
|
1,141,451
|
|
|
$
|
3,124,103
|
|
|
$
|
(70,476
|
)
|
|
$
|
8,484
|
|
|
$
|
4,206,653
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
152,960
|
|
|
—
|
|
|
(197
|
)
|
|
152,763
|
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,513
|
|
|
—
|
|
|
50,513
|
|
||||||
Vesting of restricted stock units, net of shares withheld for employee tax
|
300
|
|
|
3
|
|
|
(2,399
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,396
|
)
|
||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
5,982
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,982
|
|
||||||
Exercise of stock options
|
226
|
|
|
2
|
|
|
2,253
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,255
|
|
||||||
Shares withheld for net share settlement of stock option awards
|
(22
|
)
|
|
—
|
|
|
(896
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(896
|
)
|
||||||
Adoption of ASU 2018-02 (see Note 8)
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,345
|
)
|
|
5,345
|
|
|
—
|
|
|
—
|
|
||||||
Capital contributions from noncontrolling interest shareholder
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,107
|
|
|
4,107
|
|
||||||
BALANCE, March 31, 2018
|
309,631
|
|
|
$
|
3,096
|
|
|
$
|
1,146,391
|
|
|
$
|
3,271,718
|
|
|
$
|
(14,618
|
)
|
|
$
|
12,394
|
|
|
$
|
4,418,981
|
|
Note 1.
|
Interim Financial Statements
|
|
Year Ended
|
||||||||||
|
December 31, 2018
|
||||||||||
|
Stahlgruber
|
|
Other Acquisitions
(1)
|
|
Total
|
||||||
Receivables
|
$
|
144,826
|
|
|
$
|
19,171
|
|
|
$
|
163,997
|
|
Receivable reserves
|
(2,818
|
)
|
|
(918
|
)
|
|
(3,736
|
)
|
|||
Inventories
|
380,238
|
|
|
14,021
|
|
|
394,259
|
|
|||
Prepaid expenses and other current assets
|
10,970
|
|
|
1,851
|
|
|
12,821
|
|
|||
Property
,
plant and equipment
|
271,292
|
|
|
5,711
|
|
|
277,003
|
|
|||
Goodwill
|
908,253
|
|
|
64,637
|
|
|
972,890
|
|
|||
Other intangibles
|
285,255
|
|
|
35,159
|
|
|
320,414
|
|
|||
Other assets
|
16,625
|
|
|
37
|
|
|
16,662
|
|
|||
Deferred income taxes
|
(78,130
|
)
|
|
(5,285
|
)
|
|
(83,415
|
)
|
|||
Current liabilities assumed
|
(346,788
|
)
|
|
(20,116
|
)
|
|
(366,904
|
)
|
|||
Debt assumed
|
(79,925
|
)
|
|
(4,875
|
)
|
|
(84,800
|
)
|
|||
Other noncurrent liabilities assumed
(2)
|
(80,824
|
)
|
|
(10,306
|
)
|
|
(91,130
|
)
|
|||
Noncontrolling interest
|
(44,110
|
)
|
|
—
|
|
|
(44,110
|
)
|
|||
Contingent consideration liabilities
|
—
|
|
|
(3,107
|
)
|
|
(3,107
|
)
|
|||
Other purchase price obligations
|
(6,084
|
)
|
|
3,623
|
|
|
(2,461
|
)
|
|||
Stock issued
|
(251,334
|
)
|
|
—
|
|
|
(251,334
|
)
|
|||
Notes issued
|
—
|
|
|
(11,347
|
)
|
|
(11,347
|
)
|
|||
Gains on bargain purchases
(3)
|
—
|
|
|
(2,418
|
)
|
|
(2,418
|
)
|
|||
Settlement of other purchase price obligations (non-interest bearing)
|
—
|
|
|
1,711
|
|
|
1,711
|
|
|||
Cash used in acquisitions, net of cash and restricted cash acquired
|
$
|
1,127,446
|
|
|
$
|
87,549
|
|
|
$
|
1,214,995
|
|
(1)
|
The amounts recorded during the year ended December 31, 2018 include a
$5 million
adjustment to increase other intangibles related to our acquisition of Warn Industries, Inc. ("Warn") in 2017 and
$4 million
of adjustments to reduce other purchase price obligations related to other 2017 acquisitions.
|
(2)
|
The amount recorded for our acquisition of Stahlgruber includes a
$79 million
liability for certain pension obligations.
|
(3)
|
The amounts recorded during the year ended December 31, 2018 are due to the gains on bargain purchases related to (i) an acquisition in Europe completed in the second quarter of 2017 as a result of changes in the acquisition date fair value of the consideration, and (ii) three acquisitions in Europe completed during 2018 as a result of changes to our estimates of the fair values of the net assets acquired.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Revenue, as reported
|
$
|
3,100,303
|
|
|
$
|
2,720,764
|
|
Revenue of purchased businesses for the period prior to acquisition:
|
|
|
|
||||
Stahlgruber
|
—
|
|
|
489,534
|
|
||
Other acquisitions
|
5,980
|
|
|
43,005
|
|
||
Pro forma revenue
|
$
|
3,106,283
|
|
|
$
|
3,253,303
|
|
|
|
|
|
||||
Net income, as reported
|
$
|
99,063
|
|
|
$
|
152,763
|
|
Net income of purchased businesses for the period prior to acquisition, and pro forma purchase accounting adjustments:
|
|
|
|
||||
Stahlgruber
|
3,074
|
|
|
1,273
|
|
||
Other acquisitions
|
330
|
|
|
334
|
|
||
Acquisition related expenses, net of tax
(1)
|
224
|
|
|
1,526
|
|
||
Pro forma net income
|
102,691
|
|
|
155,896
|
|
||
Less: Net income (loss) attributable to noncontrolling interest, as reported
|
1,015
|
|
|
(197
|
)
|
||
Less: Pro forma net income attributable to noncontrolling interest
|
—
|
|
|
528
|
|
||
Pro forma net income attributable to LKQ stockholders
|
$
|
101,676
|
|
|
$
|
155,565
|
|
(1)
|
Includes expenses related to acquisitions closed in the period and excludes expenses for acquisitions not yet completed.
|
|
March 31,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Aftermarket and refurbished products
|
$
|
2,229,681
|
|
|
$
|
2,309,458
|
|
Salvage and remanufactured products
|
437,463
|
|
|
503,199
|
|
||
Manufactured products
|
24,862
|
|
|
23,418
|
|
||
Total inventories
(1)
|
$
|
2,692,006
|
|
|
$
|
2,836,075
|
|
(1)
|
During the first quarter of 2019,
$62 million
of inventory was classified as held for sale. Refer to the "Net Assets Held for Sale" section for further information.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
North America
|
$
|
1,155,698
|
|
|
$
|
1,172,585
|
|
Europe
|
1,440,841
|
|
|
1,037,046
|
|
||
Specialty
|
352,556
|
|
|
350,674
|
|
||
Parts and services
|
2,949,095
|
|
|
2,560,305
|
|
||
Other
|
151,208
|
|
|
160,459
|
|
||
Total revenue
|
$
|
3,100,303
|
|
|
$
|
2,720,764
|
|
Balance as of January 1, 2019
|
$
|
24,006
|
|
Additional warranty revenue deferred
|
10,875
|
|
|
Warranty revenue recognized
|
(9,370
|
)
|
|
Balance as of March 31, 2019
|
$
|
25,511
|
|
|
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, 2019
|
1,475,682
|
|
|
$
|
34.94
|
|
|
|
|
|
||
Granted
|
832,974
|
|
|
$
|
27.69
|
|
|
|
|
|
||
Vested
|
(343,552
|
)
|
|
$
|
33.47
|
|
|
|
|
|
||
Forfeited / Canceled
|
(15,499
|
)
|
|
$
|
34.01
|
|
|
|
|
|
||
Unvested as of March 31, 2019
|
1,949,605
|
|
|
$
|
32.11
|
|
|
|
|
|
||
Expected to vest after March 31, 2019
|
1,737,948
|
|
|
$
|
32.12
|
|
|
3.1
|
|
$
|
49,323
|
|
(1)
|
The aggregate intrinsic value of expected to vest RSUs represents the total pretax intrinsic value (the fair value of the Company's stock on the last day of each period multiplied by the number of units) that would have been received by the holders had all RSUs vested. This amount changes based on the market price of the Company’s common stock.
|
|
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, 2019
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Granted
(2)
|
116,094
|
|
|
$
|
27.69
|
|
|
|
|
|
||
Unvested as of March 31, 2019
|
116,094
|
|
|
$
|
27.69
|
|
|
|
|
|
||
Expected to vest after March 31, 2019
|
116,094
|
|
|
$
|
27.69
|
|
|
2.8
|
|
$
|
3,295
|
|
(1)
|
The aggregate intrinsic value of expected to vest PSUs represents the total pretax intrinsic value (the fair value of the Company's stock on the last day of each period multiplied by the number of units at target) that would have been received by the holders had all PSUs vested. This amount changes based on the market price of the Company’s common stock and the achievement of the performance metrics relative to the established targets.
|
(2)
|
Represents the number of PSUs at target payout.
|
|
Number
Outstanding
|
|
Weighted
Average Exercise Price
|
|
Weighted Average Remaining Contractual Term
(in years)
|
|
Aggregate Intrinsic Value
(in thousands)
(1)
|
|||||
Balance as of January 1, 2019
|
1,051,494
|
|
|
$
|
10.15
|
|
|
|
|
|
||
Exercised
|
(182,541
|
)
|
|
$
|
7.31
|
|
|
|
|
$
|
3,274
|
|
Canceled
|
(6,528
|
)
|
|
$
|
15.21
|
|
|
|
|
|
||
Balance as of March 31, 2019
|
862,425
|
|
|
$
|
10.72
|
|
|
0.7
|
|
$
|
15,362
|
|
Exercisable as of March 31, 2019
|
862,425
|
|
|
$
|
10.72
|
|
|
0.7
|
|
$
|
15,362
|
|
(1)
|
The aggregate intrinsic value of outstanding and exercisable options represents the total pretax intrinsic value (the difference between the fair value of the Company's stock on the last day of each period and the exercise price, multiplied by the number of options where the fair value exceeds the exercise price) that would have been received by the option holders had all option holders exercised their options as of the last day of the period indicated. This amount changes based on the market price of the Company’s common stock.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Net income
|
$
|
99,063
|
|
|
$
|
152,763
|
|
Denominator for basic earnings per share—Weighted-average shares outstanding
|
315,046
|
|
|
309,517
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
RSUs
|
414
|
|
|
619
|
|
||
PSUs
|
—
|
|
|
—
|
|
||
Stock options
|
558
|
|
|
1,211
|
|
||
Denominator for diluted earnings per share—Adjusted weighted-average shares outstanding
|
316,018
|
|
|
311,347
|
|
||
Earnings per share, basic
|
$
|
0.31
|
|
|
$
|
0.49
|
|
Earnings per share, diluted
|
$
|
0.31
|
|
|
$
|
0.49
|
|
|
Three Months Ended
|
||||
|
March 31,
|
||||
|
2019
|
|
2018
|
||
Antidilutive securities:
|
|
|
|
||
RSUs
|
599
|
|
|
—
|
|
Stock options
|
32
|
|
|
—
|
|
|
|
Three Months Ended
|
||||||||||||||||||
|
|
March 31, 2019
|
||||||||||||||||||
|
|
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
|
|
$
|
(177,597
|
)
|
|
$
|
14,374
|
|
|
$
|
(8,075
|
)
|
|
$
|
(3,652
|
)
|
|
$
|
(174,950
|
)
|
Pretax (loss) income
|
|
(9,895
|
)
|
|
15,593
|
|
|
—
|
|
|
—
|
|
|
5,698
|
|
|||||
Income tax effect
|
|
—
|
|
|
(3,654
|
)
|
|
—
|
|
|
—
|
|
|
(3,654
|
)
|
|||||
Reclassification of unrealized (gain) loss
|
|
—
|
|
|
(19,188
|
)
|
|
253
|
|
|
—
|
|
|
(18,935
|
)
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
4,512
|
|
|
(62
|
)
|
|
—
|
|
|
4,450
|
|
|||||
Other comprehensive loss from unconsolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,463
|
)
|
|
(3,463
|
)
|
|||||
Ending balance
|
|
$
|
(187,492
|
)
|
|
$
|
11,637
|
|
|
$
|
(7,884
|
)
|
|
$
|
(7,115
|
)
|
|
$
|
(190,854
|
)
|
|
|
Three Months Ended
|
||||||||||||||||||
|
|
March 31, 2018
|
||||||||||||||||||
|
|
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
|
|
$
|
(71,933
|
)
|
|
$
|
11,538
|
|
|
$
|
(8,772
|
)
|
|
$
|
(1,309
|
)
|
|
$
|
(70,476
|
)
|
Pretax income (loss)
|
|
48,435
|
|
|
(4,501
|
)
|
|
(629
|
)
|
|
—
|
|
|
43,305
|
|
|||||
Income tax effect
|
|
50
|
|
|
1,053
|
|
|
8
|
|
|
—
|
|
|
1,111
|
|
|||||
Reclassification of unrealized loss
|
|
—
|
|
|
8,747
|
|
|
—
|
|
|
—
|
|
|
8,747
|
|
|||||
Reclassification of deferred income taxes
|
|
—
|
|
|
(2,045
|
)
|
|
—
|
|
|
—
|
|
|
(2,045
|
)
|
|||||
Other comprehensive loss from unconsolidated subsidiaries
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(605
|
)
|
|
(605
|
)
|
|||||
Adoption of ASU 2018-02
|
|
2,859
|
|
|
2,486
|
|
|
—
|
|
|
—
|
|
|
5,345
|
|
|||||
Ending balance
|
|
$
|
(20,589
|
)
|
|
$
|
17,278
|
|
|
$
|
(9,393
|
)
|
|
$
|
(1,914
|
)
|
|
$
|
(14,618
|
)
|
|
March 31,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Senior secured credit agreement:
|
|
|
|
||||
Term loans payable
|
$
|
347,813
|
|
|
$
|
350,000
|
|
Revolving credit facilities
|
1,363,544
|
|
|
1,387,177
|
|
||
U.S. Notes (2023)
|
600,000
|
|
|
600,000
|
|
||
Euro Notes (2024)
|
560,900
|
|
|
573,350
|
|
||
Euro Notes (2026/28)
|
1,121,800
|
|
|
1,146,700
|
|
||
Receivables securitization facility
|
79,690
|
|
|
110,000
|
|
||
Notes payable through October 2030 at weighted average interest rates of 2.1% and 2.0%, respectively
|
21,701
|
|
|
23,056
|
|
||
Finance lease obligations
|
42,160
|
|
|
39,966
|
|
||
Other long-term debt at weighted average interest rate of 1.9% and 1.8%, respectively
|
126,540
|
|
|
117,448
|
|
||
Total debt
|
4,264,148
|
|
|
4,347,697
|
|
||
Less: long-term debt issuance costs
|
(34,810
|
)
|
|
(36,906
|
)
|
||
Less: current debt issuance costs
|
(289
|
)
|
|
(291
|
)
|
||
Total debt, net of debt issuance costs
|
4,229,049
|
|
|
4,310,500
|
|
||
Less: current maturities, net of debt issuance costs
|
(136,283
|
)
|
|
(121,826
|
)
|
||
Long term debt, net of debt issuance costs
|
$
|
4,092,766
|
|
|
$
|
4,188,674
|
|
|
Balance as of March 31, 2019
|
|
Fair Value Measurements as of March 31, 2019
|
||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash surrender value of life insurance
|
$
|
53,316
|
|
|
$
|
—
|
|
|
$
|
53,316
|
|
|
$
|
—
|
|
Interest rate swaps
|
11,350
|
|
|
—
|
|
|
11,350
|
|
|
—
|
|
||||
Cross currency swap agreements
|
9,911
|
|
|
—
|
|
|
9,911
|
|
|
—
|
|
||||
Total Assets
|
$
|
74,577
|
|
|
$
|
—
|
|
|
$
|
74,577
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities
|
$
|
5,274
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,274
|
|
Deferred compensation liabilities
|
56,493
|
|
|
—
|
|
|
56,493
|
|
|
—
|
|
||||
Cross currency swap agreements
|
29,586
|
|
|
—
|
|
|
29,586
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
91,353
|
|
|
$
|
—
|
|
|
$
|
86,079
|
|
|
$
|
5,274
|
|
|
Balance as of December 31, 2018
|
|
Fair Value Measurements as of December 31, 2018
|
||||||||||||
Level 1
|
|
Level 2
|
|
Level 3
|
|||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash surrender value of life insurance
|
$
|
47,649
|
|
|
$
|
—
|
|
|
$
|
47,649
|
|
|
$
|
—
|
|
Interest rate swaps
|
14,967
|
|
|
—
|
|
|
14,967
|
|
|
—
|
|
||||
Cross currency swap agreements
|
7,880
|
|
|
—
|
|
|
7,880
|
|
|
—
|
|
||||
Total Assets
|
$
|
70,496
|
|
|
$
|
—
|
|
|
$
|
70,496
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liabilities
|
$
|
5,209
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,209
|
|
Deferred compensation liabilities
|
48,984
|
|
|
—
|
|
|
48,984
|
|
|
—
|
|
||||
Cross currency swap agreements
|
40,997
|
|
|
—
|
|
|
40,997
|
|
|
—
|
|
||||
Total Liabilities
|
$
|
95,190
|
|
|
$
|
—
|
|
|
$
|
89,981
|
|
|
$
|
5,209
|
|
Leases
|
|
Classification
|
|
March 31, 2019
|
||
|
|
|
|
|
||
Assets
|
|
|
|
|
||
Operating lease assets, net
|
|
Operating lease assets, net
|
|
$
|
1,279,576
|
|
Finance lease assets, net
|
|
Property, plant and equipment, net
|
|
42,311
|
|
|
Total leased assets
|
|
|
|
$
|
1,321,887
|
|
Liabilities
|
|
|
|
|
||
Current
|
|
|
|
|
||
Operating
|
|
Current portion of operating lease liabilities
|
|
$
|
216,172
|
|
Finance
|
|
Current portion of long-term obligations
|
|
10,658
|
|
|
Noncurrent
|
|
|
|
|
||
Operating
|
|
Long-term operating lease liabilities
|
|
1,109,814
|
|
|
Finance
|
|
Long-term obligations, excluding current portion
|
|
31,502
|
|
|
Total lease liabilities
|
|
|
|
$
|
1,368,146
|
|
|
|
|
|
Three Months Ended
|
||
Lease Cost
|
|
Classification
|
|
March 31, 2019
|
||
|
|
|
|
|
||
Operating lease cost
|
|
Cost of goods sold
|
|
$
|
3,835
|
|
Operating lease cost
|
|
Selling, general and administrative expenses
|
|
73,282
|
|
|
Short-term lease cost
|
|
Selling, general and administrative expenses
|
|
667
|
|
|
Variable lease cost
|
|
Selling, general and administrative expenses
|
|
25,990
|
|
|
Finance lease cost
|
|
|
|
|
||
Amortization of leased assets
|
|
Depreciation and amortization
|
|
2,598
|
|
|
Interest on lease liabilities
|
|
Interest expense, net of interest income
|
|
448
|
|
|
Sublease income
|
|
Other income, net
|
|
(275
|
)
|
|
Net lease cost
|
|
|
|
$
|
106,545
|
|
Years ending December 31:
|
|
||
2019
|
$
|
294,269
|
|
2020
|
256,172
|
|
|
2021
|
210,632
|
|
|
2022
|
158,763
|
|
|
2023
|
131,518
|
|
|
Thereafter
|
777,165
|
|
|
Future Minimum Lease Payments
|
$
|
1,828,519
|
|
|
Operating leases
|
|
Finance leases
(1)
|
|
Total
|
||||||
Nine months ending December 31, 2019
|
$
|
222,074
|
|
|
$
|
9,087
|
|
|
$
|
231,161
|
|
Years ending December 31:
|
|
|
|
|
|
||||||
2020
|
265,133
|
|
|
10,705
|
|
|
275,838
|
|
|||
2021
|
217,839
|
|
|
8,571
|
|
|
226,410
|
|
|||
2022
|
166,904
|
|
|
6,214
|
|
|
173,118
|
|
|||
2023
|
138,834
|
|
|
2,676
|
|
|
141,510
|
|
|||
2024
|
115,318
|
|
|
2,210
|
|
|
117,528
|
|
|||
Thereafter
|
704,382
|
|
|
16,481
|
|
|
720,863
|
|
|||
Future minimum lease payments
|
1,830,484
|
|
|
55,944
|
|
|
1,886,428
|
|
|||
Less: Interest
|
504,498
|
|
|
13,784
|
|
|
518,282
|
|
|||
Present value of lease liabilities
|
$
|
1,325,986
|
|
|
$
|
42,160
|
|
|
$
|
1,368,146
|
|
(1)
|
Amounts are included in the scheduled maturities of long-term obligations in the “Liquidity and Capital Resources,” section of Management's Discussion and Analysis of Financial Condition and Results of Operations in Part I, Item 2 of this Quarterly Report on Form 10-Q.
|
Lease Term and Discount Rate
|
|
March 31, 2019
|
|
|
|
|
|
Weighted-average remaining lease term (years)
|
|
|
|
Operating leases
|
|
9.8
|
|
Finance leases
|
|
8.8
|
|
Weighted-average discount rate
|
|
|
|
Operating leases
|
|
5.4
|
%
|
Finance leases
|
|
4.5
|
%
|
|
|
Three Months Ended
|
||
Supplemental cash flows information (in thousands)
|
|
March 31, 2019
|
||
|
|
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
||
Operating cash flows from operating leases
|
|
$
|
73,976
|
|
Financing cash flows from finance leases
|
|
2,642
|
|
|
Leased assets obtained in exchange for new finance lease liabilities
|
|
5,245
|
|
|
Leased assets obtained in exchange for new operating lease liabilities
|
|
28,563
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2019
|
|
2018
|
||||
Service cost
|
$
|
587
|
|
|
$
|
468
|
|
Interest cost
|
985
|
|
|
670
|
|
||
Expected return on plan assets
|
(780
|
)
|
|
(717
|
)
|
||
Amortization of actuarial (gain) loss
|
253
|
|
|
—
|
|
||
Net periodic benefit cost
|
$
|
1,045
|
|
|
$
|
421
|
|
|
North America
|
|
Europe
|
|
Specialty
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Three Months Ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
1,302,206
|
|
|
$
|
1,445,541
|
|
|
$
|
352,556
|
|
|
$
|
—
|
|
|
$
|
3,100,303
|
|
Intersegment
|
103
|
|
|
—
|
|
|
1,181
|
|
|
(1,284
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
1,302,309
|
|
|
$
|
1,445,541
|
|
|
$
|
353,737
|
|
|
$
|
(1,284
|
)
|
|
$
|
3,100,303
|
|
Segment EBITDA
|
$
|
176,636
|
|
|
$
|
105,298
|
|
|
$
|
37,959
|
|
|
$
|
—
|
|
|
$
|
319,893
|
|
Depreciation and amortization
(1)
|
22,239
|
|
|
47,011
|
|
|
6,957
|
|
|
—
|
|
|
76,207
|
|
|||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
||||||||||
Third Party
|
$
|
1,329,660
|
|
|
$
|
1,040,430
|
|
|
$
|
350,674
|
|
|
$
|
—
|
|
|
$
|
2,720,764
|
|
Intersegment
|
183
|
|
|
—
|
|
|
1,118
|
|
|
(1,301
|
)
|
|
—
|
|
|||||
Total segment revenue
|
$
|
1,329,843
|
|
|
$
|
1,040,430
|
|
|
$
|
351,792
|
|
|
$
|
(1,301
|
)
|
|
$
|
2,720,764
|
|
Segment EBITDA
|
$
|
177,713
|
|
|
$
|
75,534
|
|
|
$
|
41,969
|
|
|
$
|
—
|
|
|
$
|
295,216
|
|
Depreciation and amortization
(1)
|
21,228
|
|
|
32,757
|
|
|
7,081
|
|
|
—
|
|
|
61,066
|
|
|
Three Months Ended
|
||||||
March 31,
|
|||||||
2019
|
|
2018
|
|||||
Net income
|
$
|
99,063
|
|
|
$
|
152,763
|
|
Less: net income (loss) attributable to noncontrolling interest
|
1,015
|
|
|
(197
|
)
|
||
Net income attributable to LKQ stockholders
|
98,048
|
|
|
152,960
|
|
||
Add:
|
|
|
|
||||
Depreciation and amortization
|
71,002
|
|
|
56,458
|
|
||
Depreciation and amortization - cost of goods sold
|
5,205
|
|
|
4,608
|
|
||
Interest expense, net of interest income
|
36,089
|
|
|
28,515
|
|
||
Provision for income taxes
|
51,550
|
|
|
49,584
|
|
||
EBITDA
|
261,894
|
|
|
292,125
|
|
||
Subtract:
|
|
|
|
||||
Equity in (losses) earnings of unconsolidated subsidiaries
(1)
|
(39,549
|
)
|
|
1,412
|
|
||
Add:
|
|
|
|
||||
Restructuring and acquisition related expenses
(2)
|
3,307
|
|
|
4,054
|
|
||
Inventory step-up adjustment - acquisition related
|
—
|
|
|
403
|
|
||
Impairment of net assets held for sale
(3)
|
15,023
|
|
|
—
|
|
||
Change in fair value of contingent consideration liabilities
|
120
|
|
|
46
|
|
||
Segment EBITDA
|
$
|
319,893
|
|
|
$
|
295,216
|
|
(1)
|
Refer to "Investments in Unconsolidated Subsidiaries" in
Note 3, "Financial Statement Information
," for further information.
|
(2)
|
Refer to
Note 5, "Restructuring and Acquisition Related Expenses
," for further information.
|
|
Three Months Ended
|
||||||
March 31,
|
|||||||
2019
|
|
2018
|
|||||
Capital Expenditures
|
|
|
|
||||
North America
|
$
|
31,234
|
|
|
$
|
29,662
|
|
Europe
|
19,577
|
|
|
28,815
|
|
||
Specialty
|
2,205
|
|
|
3,712
|
|
||
Total capital expenditures
|
$
|
53,016
|
|
|
$
|
62,189
|
|
|
March 31,
|
|
December 31,
|
||||
2019
|
|
2018
|
|||||
Receivables, net
|
|
|
|
||||
North America
|
$
|
445,056
|
|
|
$
|
411,818
|
|
Europe
|
770,543
|
|
|
649,174
|
|
||
Specialty
|
137,892
|
|
|
93,091
|
|
||
Total receivables, net
|
1,353,491
|
|
|
1,154,083
|
|
||
Inventories
|
|
|
|
||||
North America
|
994,438
|
|
|
1,076,306
|
|
||
Europe
|
1,363,929
|
|
|
1,410,264
|
|
||
Specialty
|
333,639
|
|
|
349,505
|
|
||
Total inventories
|
2,692,006
|
|
|
2,836,075
|
|
||
Property, plant and equipment, net
|
|
|
|
||||
North America
|
574,046
|
|
|
570,508
|
|
||
Europe
|
546,725
|
|
|
562,600
|
|
||
Specialty
|
85,571
|
|
|
87,054
|
|
||
Total property, plant and equipment, net
|
1,206,342
|
|
|
1,220,162
|
|
||
Operating lease assets, net
(1)
|
|
|
|
||||
North America
|
757,590
|
|
|
—
|
|
||
Europe
|
438,272
|
|
|
—
|
|
||
Specialty
|
83,714
|
|
|
—
|
|
||
Total operating lease assets, net
|
1,279,576
|
|
|
—
|
|
||
Equity method investments
|
|
|
|
||||
North America
|
17,551
|
|
|
16,404
|
|
||
Europe
(2)
|
116,683
|
|
|
162,765
|
|
||
Total equity method investments
|
134,234
|
|
|
179,169
|
|
||
Other unallocated assets
|
6,000,261
|
|
|
6,003,913
|
|
||
Total assets
|
$
|
12,665,910
|
|
|
$
|
11,393,402
|
|
(1)
|
Refer to "
Note 12, "Leases
," for further information.
|
(2)
|
Refer to "Investments in Unconsolidated Subsidiaries" in
Note 3, "Financial Statement Information
," for further information.
|
|
March 31,
|
|
December 31,
|
||||
|
2019
|
|
2018
|
||||
Long-lived assets
(1)
|
|
|
|
||||
United States
|
$
|
1,424,978
|
|
|
$
|
620,125
|
|
Germany
|
305,442
|
|
|
217,476
|
|
||
United Kingdom
|
339,147
|
|
|
165,145
|
|
||
Other countries
|
416,351
|
|
|
217,416
|
|
||
Total long-lived assets
|
$
|
2,485,918
|
|
|
$
|
1,220,162
|
|
(1)
|
The increase in long-lived assets is related to the net operating lease assets added as a result of the adoption of the new lease accounting standard. Refer to "
Note 12, "Leases
," for further information.
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2019
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
1,550,680
|
|
|
$
|
1,586,877
|
|
|
$
|
(37,254
|
)
|
|
$
|
3,100,303
|
|
Cost of goods sold
|
—
|
|
|
921,489
|
|
|
1,007,804
|
|
|
(37,254
|
)
|
|
1,892,039
|
|
|||||
Gross margin
|
—
|
|
|
629,191
|
|
|
579,073
|
|
|
—
|
|
|
1,208,264
|
|
|||||
Selling, general and administrative expenses
|
9,038
|
|
|
432,387
|
|
|
455,107
|
|
|
—
|
|
|
896,532
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
606
|
|
|
2,701
|
|
|
—
|
|
|
3,307
|
|
|||||
Impairment of net assets held for sale
|
—
|
|
|
8,461
|
|
|
6,562
|
|
|
—
|
|
|
15,023
|
|
|||||
Depreciation and amortization
|
54
|
|
|
25,073
|
|
|
45,875
|
|
|
—
|
|
|
71,002
|
|
|||||
Operating (loss) income
|
(9,092
|
)
|
|
162,664
|
|
|
68,828
|
|
|
—
|
|
|
222,400
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense (income), net of interest income
|
13,836
|
|
|
(336
|
)
|
|
22,589
|
|
|
—
|
|
|
36,089
|
|
|||||
Intercompany interest (income) expense, net
|
(15,086
|
)
|
|
9,189
|
|
|
5,897
|
|
|
—
|
|
|
—
|
|
|||||
Other expense (income), net
|
19
|
|
|
(7,831
|
)
|
|
3,961
|
|
|
—
|
|
|
(3,851
|
)
|
|||||
Total other (income) expense, net
|
(1,231
|
)
|
|
1,022
|
|
|
32,447
|
|
|
—
|
|
|
32,238
|
|
|||||
(Loss) income before (benefit) provision for income taxes
|
(7,861
|
)
|
|
161,642
|
|
|
36,381
|
|
|
—
|
|
|
190,162
|
|
|||||
(Benefit) provision for income taxes
|
(2,046
|
)
|
|
43,303
|
|
|
10,293
|
|
|
—
|
|
|
51,550
|
|
|||||
Equity in earnings (losses) of unconsolidated subsidiaries
|
—
|
|
|
1,147
|
|
|
(40,696
|
)
|
|
—
|
|
|
(39,549
|
)
|
|||||
Equity in earnings of subsidiaries
|
103,863
|
|
|
9,712
|
|
|
—
|
|
|
(113,575
|
)
|
|
—
|
|
|||||
Net income (loss)
|
98,048
|
|
|
129,198
|
|
|
(14,608
|
)
|
|
(113,575
|
)
|
|
99,063
|
|
|||||
Less: net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
1,015
|
|
|
—
|
|
|
1,015
|
|
|||||
Net income (loss) attributable to LKQ stockholders
|
$
|
98,048
|
|
|
$
|
129,198
|
|
|
$
|
(15,623
|
)
|
|
$
|
(113,575
|
)
|
|
$
|
98,048
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenue
|
$
|
—
|
|
|
$
|
1,577,595
|
|
|
$
|
1,180,242
|
|
|
$
|
(37,073
|
)
|
|
$
|
2,720,764
|
|
Cost of goods sold
|
—
|
|
|
945,915
|
|
|
757,951
|
|
|
(37,073
|
)
|
|
1,666,793
|
|
|||||
Gross margin
|
—
|
|
|
631,680
|
|
|
422,291
|
|
|
—
|
|
|
1,053,971
|
|
|||||
Selling, general and administrative expenses
|
9,130
|
|
|
426,797
|
|
|
330,964
|
|
|
—
|
|
|
766,891
|
|
|||||
Restructuring and acquisition related expenses
|
—
|
|
|
330
|
|
|
3,724
|
|
|
—
|
|
|
4,054
|
|
|||||
Depreciation and amortization
|
29
|
|
|
24,338
|
|
|
32,091
|
|
|
—
|
|
|
56,458
|
|
|||||
Operating (loss) income
|
(9,159
|
)
|
|
180,215
|
|
|
55,512
|
|
|
—
|
|
|
226,568
|
|
|||||
Other expense (income):
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense, net of interest income
|
18,008
|
|
|
212
|
|
|
10,295
|
|
|
—
|
|
|
28,515
|
|
|||||
Intercompany interest (income) expense, net
|
(15,400
|
)
|
|
9,680
|
|
|
5,720
|
|
|
—
|
|
|
—
|
|
|||||
Other (income) expense, net
|
(1,015
|
)
|
|
(5,882
|
)
|
|
4,015
|
|
|
—
|
|
|
(2,882
|
)
|
|||||
Total other expense, net
|
1,593
|
|
|
4,010
|
|
|
20,030
|
|
|
—
|
|
|
25,633
|
|
|||||
(Loss) income before (benefit) provision for income taxes
|
(10,752
|
)
|
|
176,205
|
|
|
35,482
|
|
|
—
|
|
|
200,935
|
|
|||||
(Benefit) provision for income taxes
|
(3,904
|
)
|
|
45,877
|
|
|
7,611
|
|
|
—
|
|
|
49,584
|
|
|||||
Equity in earnings of unconsolidated subsidiaries
|
—
|
|
|
—
|
|
|
1,412
|
|
|
—
|
|
|
1,412
|
|
|||||
Equity in earnings of subsidiaries
|
159,808
|
|
|
5,110
|
|
|
—
|
|
|
(164,918
|
)
|
|
—
|
|
|||||
Net income
|
152,960
|
|
|
135,438
|
|
|
29,283
|
|
|
(164,918
|
)
|
|
152,763
|
|
|||||
Less: net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(197
|
)
|
|
—
|
|
|
(197
|
)
|
|||||
Net income attributable to LKQ stockholders
|
$
|
152,960
|
|
|
$
|
135,438
|
|
|
$
|
29,480
|
|
|
$
|
(164,918
|
)
|
|
$
|
152,960
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2019
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
$
|
98,048
|
|
|
$
|
129,198
|
|
|
$
|
(14,608
|
)
|
|
$
|
(113,575
|
)
|
|
$
|
99,063
|
|
Less: net income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
1,015
|
|
|
—
|
|
|
1,015
|
|
|||||
Net income (loss) attributable to LKQ stockholders
|
98,048
|
|
|
129,198
|
|
|
(15,623
|
)
|
|
(113,575
|
)
|
|
98,048
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
(9,895
|
)
|
|
2,194
|
|
|
(10,466
|
)
|
|
8,272
|
|
|
(9,895
|
)
|
|||||
Net change in unrealized gains/losses on cash flow hedges, net of tax
|
(2,737
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,737
|
)
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
191
|
|
|
(4
|
)
|
|
195
|
|
|
(191
|
)
|
|
191
|
|
|||||
Net change in other comprehensive loss from unconsolidated subsidiaries
|
(3,463
|
)
|
|
—
|
|
|
(3,463
|
)
|
|
3,463
|
|
|
(3,463
|
)
|
|||||
Other comprehensive (loss) income
|
(15,904
|
)
|
|
2,190
|
|
|
(13,734
|
)
|
|
11,544
|
|
|
(15,904
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income (loss)
|
82,144
|
|
|
131,388
|
|
|
(28,342
|
)
|
|
(102,031
|
)
|
|
83,159
|
|
|||||
Less: comprehensive income attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
1,015
|
|
|
—
|
|
|
1,015
|
|
|||||
Comprehensive income (loss) attributable to LKQ stockholders
|
$
|
82,144
|
|
|
$
|
131,388
|
|
|
$
|
(29,357
|
)
|
|
$
|
(102,031
|
)
|
|
$
|
82,144
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Comprehensive Income
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income
|
$
|
152,960
|
|
|
$
|
135,438
|
|
|
$
|
29,283
|
|
|
$
|
(164,918
|
)
|
|
$
|
152,763
|
|
Less: net loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(197
|
)
|
|
—
|
|
|
(197
|
)
|
|||||
Net income attributable to LKQ stockholders
|
152,960
|
|
|
135,438
|
|
|
29,480
|
|
|
(164,918
|
)
|
|
152,960
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation, net of tax
|
48,485
|
|
|
(2,183
|
)
|
|
49,055
|
|
|
(46,872
|
)
|
|
48,485
|
|
|||||
Net change in unrealized gains/losses on cash flow hedges, net of tax
|
3,254
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,254
|
|
|||||
Net change in unrealized gains/losses on pension plans, net of tax
|
(621
|
)
|
|
(621
|
)
|
|
—
|
|
|
621
|
|
|
(621
|
)
|
|||||
Net change in other comprehensive loss from unconsolidated subsidiaries
|
(605
|
)
|
|
—
|
|
|
(605
|
)
|
|
605
|
|
|
(605
|
)
|
|||||
Other comprehensive income (loss)
|
50,513
|
|
|
(2,804
|
)
|
|
48,450
|
|
|
(45,646
|
)
|
|
50,513
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Comprehensive income
|
203,473
|
|
|
132,634
|
|
|
77,733
|
|
|
(210,564
|
)
|
|
203,276
|
|
|||||
Less: comprehensive loss attributable to noncontrolling interest
|
—
|
|
|
—
|
|
|
(197
|
)
|
|
—
|
|
|
(197
|
)
|
|||||
Comprehensive income attributable to LKQ stockholders
|
$
|
203,473
|
|
|
$
|
132,634
|
|
|
$
|
77,930
|
|
|
$
|
(210,564
|
)
|
|
$
|
203,473
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Balance Sheets
(In thousands)
|
|||||||||||||||||||
|
March 31, 2019
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
40,703
|
|
|
$
|
31,744
|
|
|
$
|
243,619
|
|
|
$
|
—
|
|
|
$
|
316,066
|
|
Receivables, net
|
386
|
|
|
366,235
|
|
|
986,870
|
|
|
—
|
|
|
1,353,491
|
|
|||||
Intercompany receivables, net
|
7,411
|
|
|
—
|
|
|
19,147
|
|
|
(26,558
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
1,245,544
|
|
|
1,446,462
|
|
|
—
|
|
|
2,692,006
|
|
|||||
Prepaid expenses and other current assets
|
4,668
|
|
|
162,616
|
|
|
115,923
|
|
|
—
|
|
|
283,207
|
|
|||||
Total current assets
|
53,168
|
|
|
1,806,139
|
|
|
2,812,021
|
|
|
(26,558
|
)
|
|
4,644,770
|
|
|||||
Property, plant and equipment, net
|
1,630
|
|
|
600,965
|
|
|
603,747
|
|
|
—
|
|
|
1,206,342
|
|
|||||
Operating lease assets, net
|
3,857
|
|
|
801,420
|
|
|
474,299
|
|
|
—
|
|
|
1,279,576
|
|
|||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
—
|
|
|
1,973,101
|
|
|
2,381,205
|
|
|
—
|
|
|
4,354,306
|
|
|||||
Other intangibles, net
|
234
|
|
|
260,491
|
|
|
628,884
|
|
|
—
|
|
|
889,609
|
|
|||||
Investment in subsidiaries
|
5,288,058
|
|
|
123,496
|
|
|
—
|
|
|
(5,411,554
|
)
|
|
—
|
|
|||||
Intercompany notes receivable
|
1,183,505
|
|
|
51,118
|
|
|
—
|
|
|
(1,234,623
|
)
|
|
—
|
|
|||||
Equity method investments
|
—
|
|
|
17,551
|
|
|
116,683
|
|
|
—
|
|
|
134,234
|
|
|||||
Other assets
|
72,335
|
|
|
40,183
|
|
|
44,555
|
|
|
—
|
|
|
157,073
|
|
|||||
Total assets
|
$
|
6,602,787
|
|
|
$
|
5,674,464
|
|
|
$
|
7,061,394
|
|
|
$
|
(6,672,735
|
)
|
|
$
|
12,665,910
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
2,111
|
|
|
$
|
339,448
|
|
|
$
|
611,129
|
|
|
$
|
—
|
|
|
$
|
952,688
|
|
Intercompany payables, net
|
—
|
|
|
19,147
|
|
|
7,411
|
|
|
(26,558
|
)
|
|
—
|
|
|||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued payroll-related liabilities
|
4,967
|
|
|
33,658
|
|
|
104,401
|
|
|
—
|
|
|
143,026
|
|
|||||
Other accrued expenses
|
12,930
|
|
|
105,465
|
|
|
199,431
|
|
|
—
|
|
|
317,826
|
|
|||||
Refund liability
|
—
|
|
|
51,082
|
|
|
54,353
|
|
|
—
|
|
|
105,435
|
|
|||||
Other current liabilities
|
16,590
|
|
|
22,596
|
|
|
60,872
|
|
|
—
|
|
|
100,058
|
|
|||||
Current portion of operating lease liabilities
|
204
|
|
|
116,053
|
|
|
99,915
|
|
|
—
|
|
|
216,172
|
|
|||||
Current portion of long-term obligations
|
10,649
|
|
|
3,326
|
|
|
122,308
|
|
|
—
|
|
|
136,283
|
|
|||||
Total current liabilities
|
47,451
|
|
|
690,775
|
|
|
1,259,820
|
|
|
(26,558
|
)
|
|
1,971,488
|
|
|||||
Long-term operating lease liabilities, excluding current portion
|
4,054
|
|
|
712,259
|
|
|
393,501
|
|
|
—
|
|
|
1,109,814
|
|
|||||
Long-term obligations, excluding current portion
|
1,624,269
|
|
|
16,248
|
|
|
2,452,249
|
|
|
—
|
|
|
4,092,766
|
|
|||||
Intercompany notes payable
|
—
|
|
|
577,301
|
|
|
657,322
|
|
|
(1,234,623
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
7,187
|
|
|
135,287
|
|
|
163,296
|
|
|
—
|
|
|
305,770
|
|
|||||
Other noncurrent liabilities
|
120,344
|
|
|
75,446
|
|
|
133,508
|
|
|
—
|
|
|
329,298
|
|
|||||
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Company stockholders’ equity
|
4,799,482
|
|
|
3,467,148
|
|
|
1,944,406
|
|
|
(5,411,554
|
)
|
|
4,799,482
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
57,292
|
|
|
—
|
|
|
57,292
|
|
|||||
Total stockholders’ equity
|
4,799,482
|
|
|
3,467,148
|
|
|
2,001,698
|
|
|
(5,411,554
|
)
|
|
4,856,774
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
6,602,787
|
|
|
$
|
5,674,464
|
|
|
$
|
7,061,394
|
|
|
$
|
(6,672,735
|
)
|
|
$
|
12,665,910
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Balance Sheets
(In thousands)
|
|||||||||||||||||||
|
December 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
25,633
|
|
|
$
|
29,285
|
|
|
$
|
276,843
|
|
|
$
|
—
|
|
|
$
|
331,761
|
|
Receivables, net
|
310
|
|
|
316,726
|
|
|
837,047
|
|
|
—
|
|
|
1,154,083
|
|
|||||
Intercompany receivables, net
|
6,978
|
|
|
—
|
|
|
12,880
|
|
|
(19,858
|
)
|
|
—
|
|
|||||
Inventories
|
—
|
|
|
1,343,612
|
|
|
1,492,463
|
|
|
—
|
|
|
2,836,075
|
|
|||||
Prepaid expenses and other current assets
|
18,611
|
|
|
99,356
|
|
|
81,063
|
|
|
—
|
|
|
199,030
|
|
|||||
Total current assets
|
51,532
|
|
|
1,788,979
|
|
|
2,700,296
|
|
|
(19,858
|
)
|
|
4,520,949
|
|
|||||
Property, plant and equipment, net
|
1,547
|
|
|
600,054
|
|
|
618,561
|
|
|
—
|
|
|
1,220,162
|
|
|||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
—
|
|
|
1,973,364
|
|
|
2,408,094
|
|
|
—
|
|
|
4,381,458
|
|
|||||
Other intangibles, net
|
260
|
|
|
272,451
|
|
|
656,041
|
|
|
—
|
|
|
928,752
|
|
|||||
Investment in subsidiaries
|
5,224,006
|
|
|
111,826
|
|
|
—
|
|
|
(5,335,832
|
)
|
|
—
|
|
|||||
Intercompany notes receivable
|
1,220,582
|
|
|
10,515
|
|
|
—
|
|
|
(1,231,097
|
)
|
|
—
|
|
|||||
Equity method investments
|
—
|
|
|
16,404
|
|
|
162,765
|
|
|
—
|
|
|
179,169
|
|
|||||
Other assets
|
70,283
|
|
|
40,548
|
|
|
52,081
|
|
|
—
|
|
|
162,912
|
|
|||||
Total assets
|
$
|
6,568,210
|
|
|
$
|
4,814,141
|
|
|
$
|
6,597,838
|
|
|
$
|
(6,586,787
|
)
|
|
$
|
11,393,402
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable
|
$
|
2,454
|
|
|
$
|
343,116
|
|
|
$
|
596,828
|
|
|
$
|
—
|
|
|
$
|
942,398
|
|
Intercompany payables, net
|
—
|
|
|
12,880
|
|
|
6,978
|
|
|
(19,858
|
)
|
|
—
|
|
|||||
Accrued expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued payroll-related liabilities
|
6,652
|
|
|
70,267
|
|
|
95,086
|
|
|
—
|
|
|
172,005
|
|
|||||
Other accrued expenses
|
5,454
|
|
|
105,672
|
|
|
177,299
|
|
|
—
|
|
|
288,425
|
|
|||||
Refund liability
|
—
|
|
|
50,899
|
|
|
53,686
|
|
|
—
|
|
|
104,585
|
|
|||||
Other current liabilities
|
283
|
|
|
17,860
|
|
|
42,966
|
|
|
—
|
|
|
61,109
|
|
|||||
Current portion of long-term obligations
|
8,459
|
|
|
2,932
|
|
|
110,435
|
|
|
—
|
|
|
121,826
|
|
|||||
Total current liabilities
|
23,302
|
|
|
603,626
|
|
|
1,083,278
|
|
|
(19,858
|
)
|
|
1,690,348
|
|
|||||
Long-term obligations, excluding current portion
|
1,628,677
|
|
|
13,532
|
|
|
2,546,465
|
|
|
—
|
|
|
4,188,674
|
|
|||||
Intercompany notes payable
|
—
|
|
|
597,283
|
|
|
633,814
|
|
|
(1,231,097
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
8,045
|
|
|
135,355
|
|
|
168,034
|
|
|
—
|
|
|
311,434
|
|
|||||
Other noncurrent liabilities
|
125,888
|
|
|
99,147
|
|
|
139,159
|
|
|
—
|
|
|
364,194
|
|
|||||
Stockholders' equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Company stockholders’ equity
|
4,782,298
|
|
|
3,365,198
|
|
|
1,970,634
|
|
|
(5,335,832
|
)
|
|
4,782,298
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
56,454
|
|
|
—
|
|
|
56,454
|
|
|||||
Total stockholders’ equity
|
4,782,298
|
|
|
3,365,198
|
|
|
2,027,088
|
|
|
(5,335,832
|
)
|
|
4,838,752
|
|
|||||
Total liabilities and stockholders' equity
|
$
|
6,568,210
|
|
|
$
|
4,814,141
|
|
|
$
|
6,597,838
|
|
|
$
|
(6,586,787
|
)
|
|
$
|
11,393,402
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Cash Flows
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2019
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
(1)
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
65,970
|
|
|
$
|
9,150
|
|
|
$
|
54,335
|
|
|
$
|
47,770
|
|
|
$
|
177,225
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(438
|
)
|
|
(30,128
|
)
|
|
(22,450
|
)
|
|
—
|
|
|
(53,016
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
23,342
|
|
|
—
|
|
|
—
|
|
|
(23,342
|
)
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(152
|
)
|
|
(4,633
|
)
|
|
—
|
|
|
(4,785
|
)
|
|||||
Receipts of deferred purchase price on receivables under factoring arrangements
|
—
|
|
|
75,123
|
|
|
—
|
|
|
(75,123
|
)
|
|
—
|
|
|||||
Other investing activities, net
|
—
|
|
|
89
|
|
|
(72
|
)
|
|
—
|
|
|
17
|
|
|||||
Net cash provided by (used in) investing activities
|
22,904
|
|
|
44,932
|
|
|
(27,155
|
)
|
|
(98,465
|
)
|
|
(57,784
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
1,334
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,334
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(1,505
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,505
|
)
|
|||||
Purchase of treasury stock
|
(70,462
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(70,462
|
)
|
|||||
Borrowings under revolving credit facilities
|
194,000
|
|
|
—
|
|
|
90,641
|
|
|
—
|
|
|
284,641
|
|
|||||
Repayments under revolving credit facilities
|
(194,966
|
)
|
|
—
|
|
|
(117,373
|
)
|
|
—
|
|
|
(312,339
|
)
|
|||||
Repayments under term loans
|
(2,188
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,188
|
)
|
|||||
Borrowings under receivables securitization facility
|
—
|
|
|
—
|
|
|
6,600
|
|
|
—
|
|
|
6,600
|
|
|||||
Repayments under receivables securitization facility
|
—
|
|
|
—
|
|
|
(36,910
|
)
|
|
—
|
|
|
(36,910
|
)
|
|||||
Borrowings (repayments) of other debt, net
|
—
|
|
|
763
|
|
|
(1,388
|
)
|
|
—
|
|
|
(625
|
)
|
|||||
Other financing activities, net
|
(17
|
)
|
|
—
|
|
|
(1,260
|
)
|
|
—
|
|
|
(1,277
|
)
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
(25,502
|
)
|
|
2,160
|
|
|
23,342
|
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(27,353
|
)
|
|
—
|
|
|
27,353
|
|
|
—
|
|
|||||
Net cash used in financing activities
|
(73,804
|
)
|
|
(52,092
|
)
|
|
(57,530
|
)
|
|
50,695
|
|
|
(132,731
|
)
|
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
—
|
|
|
469
|
|
|
(2,982
|
)
|
|
—
|
|
|
(2,513
|
)
|
|||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
15,070
|
|
|
2,459
|
|
|
(33,332
|
)
|
|
—
|
|
|
(15,803
|
)
|
|||||
Cash, cash equivalents and restricted cash, beginning of period
|
25,633
|
|
|
29,285
|
|
|
282,332
|
|
|
—
|
|
|
337,250
|
|
|||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
40,703
|
|
|
$
|
31,744
|
|
|
$
|
249,000
|
|
|
$
|
—
|
|
|
$
|
321,447
|
|
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidating Statements of Cash Flows
(In thousands)
|
|||||||||||||||||||
|
For the Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Parent
|
|
Guarantors
|
|
Non-Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by operating activities
|
$
|
95,942
|
|
|
$
|
35,802
|
|
|
$
|
243
|
|
|
$
|
13,176
|
|
|
$
|
145,163
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of property, plant and equipment
|
(163
|
)
|
|
(29,908
|
)
|
|
(32,118
|
)
|
|
—
|
|
|
(62,189
|
)
|
|||||
Investment and intercompany note activity with subsidiaries
|
24,333
|
|
|
—
|
|
|
—
|
|
|
(24,333
|
)
|
|
—
|
|
|||||
Acquisitions, net of cash acquired
|
—
|
|
|
(2,966
|
)
|
|
—
|
|
|
—
|
|
|
(2,966
|
)
|
|||||
Receipts of deferred purchase price on receivables under factoring arrangements
(1)
|
—
|
|
|
68,171
|
|
|
—
|
|
|
(68,171
|
)
|
|
—
|
|
|||||
Other investing activities, net
|
—
|
|
|
(145
|
)
|
|
679
|
|
|
—
|
|
|
534
|
|
|||||
Net cash provided by (used in) investing activities
|
24,170
|
|
|
35,152
|
|
|
(31,439
|
)
|
|
(92,504
|
)
|
|
(64,621
|
)
|
|||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from exercise of stock options
|
2,255
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,255
|
|
|||||
Taxes paid related to net share settlements of stock-based compensation awards
|
(3,292
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,292
|
)
|
|||||
Borrowings under revolving credit facilities
|
161,000
|
|
|
—
|
|
|
40,669
|
|
|
—
|
|
|
201,669
|
|
|||||
Repayments under revolving credit facilities
|
(291,966
|
)
|
|
—
|
|
|
(29,559
|
)
|
|
—
|
|
|
(321,525
|
)
|
|||||
Repayments under term loans
|
(4,405
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,405
|
)
|
|||||
(Repayments) borrowings of other debt, net
|
—
|
|
|
(30
|
)
|
|
4,439
|
|
|
—
|
|
|
4,409
|
|
|||||
Other financing activities, net
|
(724
|
)
|
|
—
|
|
|
4,107
|
|
|
—
|
|
|
3,383
|
|
|||||
Investment and intercompany note activity with parent
|
—
|
|
|
(21,759
|
)
|
|
(2,574
|
)
|
|
24,333
|
|
|
—
|
|
|||||
Dividends
|
—
|
|
|
(54,995
|
)
|
|
—
|
|
|
54,995
|
|
|
—
|
|
|||||
Net cash (used in) provided by financing activities
|
(137,132
|
)
|
|
(76,784
|
)
|
|
17,082
|
|
|
79,328
|
|
|
(117,506
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
(326
|
)
|
|
3,203
|
|
|
—
|
|
|
2,877
|
|
|||||
Net decrease in cash and cash equivalents
|
(17,020
|
)
|
|
(6,156
|
)
|
|
(10,911
|
)
|
|
—
|
|
|
(34,087
|
)
|
|||||
Cash and cash equivalents, beginning of period
|
34,360
|
|
|
35,131
|
|
|
210,275
|
|
|
—
|
|
|
279,766
|
|
|||||
Cash and cash equivalents, end of period
|
$
|
17,340
|
|
|
$
|
28,975
|
|
|
$
|
199,364
|
|
|
$
|
—
|
|
|
$
|
245,679
|
|
(1)
|
The amount was updated to reflect daily transactions compared to the monthly transactions as was initially calculated in the first quarter of 2018.
|
|
Three Months Ended
|
||||
|
March 31,
|
||||
|
2019
|
|
2018
|
||
Revenue
|
100.0
|
%
|
|
100.0
|
%
|
Cost of goods sold
|
61.0
|
%
|
|
61.3
|
%
|
Gross margin
|
39.0
|
%
|
|
38.7
|
%
|
Selling, general and administrative expenses
|
28.9
|
%
|
|
28.2
|
%
|
Restructuring and acquisition related expenses
|
0.1
|
%
|
|
0.1
|
%
|
Impairment of net assets held for sale
|
0.5
|
%
|
|
—
|
|
Depreciation and amortization
|
2.3
|
%
|
|
2.1
|
%
|
Operating income
|
7.2
|
%
|
|
8.3
|
%
|
Other expense, net
|
1.0
|
%
|
|
0.9
|
%
|
Income before provision for income taxes
|
6.1
|
%
|
|
7.4
|
%
|
Provision for income taxes
|
1.7
|
%
|
|
1.8
|
%
|
Equity in (losses) earnings of unconsolidated subsidiaries
|
(1.3
|
)%
|
|
0.1
|
%
|
Net income
|
3.2
|
%
|
|
5.6
|
%
|
Less: net income (loss) attributable to noncontrolling interest
|
0.0
|
%
|
|
(0.0
|
)%
|
Net income attributable to LKQ stockholders
|
3.2
|
%
|
|
5.6
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
|
Three months ended March 31,
|
|
|
||||||||
|
2019
|
|
2018
|
|
Change
|
||||||
Restructuring expenses
|
$
|
2,986
|
|
(1)
|
$
|
2,037
|
|
(2)
|
$
|
949
|
|
Acquisition related expenses
|
321
|
|
|
2,017
|
|
(3)
|
(1,696
|
)
|
|||
Total restructuring and acquisition related expenses
|
$
|
3,307
|
|
|
$
|
4,054
|
|
|
$
|
(747
|
)
|
(1)
|
Restructuring expenses for the
three months ended
March 31, 2019
primarily consisted of
$2 million
related to the integration of our acquisition of Andrew Page.
|
(2)
|
Restructuring expenses for the
three months ended
March 31, 2018
primarily related to the integration of our acquisition of Andrew Page.
|
(3)
|
Acquisition related expenses for the
three months ended
March 31, 2018
included $1 million of costs for our acquisition of Stahlgruber. The remaining acquisition related costs for the three months ended March 31, 2018 consisted of external costs for completed acquisitions, for pending acquisitions as of March 31, 2018, and for potential acquisitions that were terminated.
|
|
Three Months Ended
|
|
|
|
||||||||
|
March 31,
|
|
|
|
||||||||
|
2019
|
|
2018
|
|
Change
|
|
||||||
Depreciation
|
$
|
35,821
|
|
|
$
|
32,265
|
|
|
$
|
3,556
|
|
(1)
|
Amortization
|
35,181
|
|
|
24,193
|
|
|
10,988
|
|
(2)
|
|||
Total depreciation and amortization
|
$
|
71,002
|
|
|
$
|
56,458
|
|
|
$
|
14,544
|
|
|
(1)
|
The increase in depreciation expense primarily reflected (i) an increase of
$3 million
in our Europe segment, principally due to a
$4 million
increase in depreciation expense from our acquisition of Stahlgruber, partially offset by (ii) a decrease of
$1 million
related to the impact of foreign currency translation, primarily due to decreases in the pound sterling and euro exchange rates during the three months ended March 31, 2019 compared to the prior year period.
|
(2)
|
The increase in amortization expense primarily reflected (i) an increase of
$13 million
from our acquisition of Stahlgruber, partially offset by (ii) a decrease of
$2 million
related to the impact of foreign currency translation, primarily due to a decrease in the euro exchange rate during the three months ended March 31, 2019 compared to the prior year period, and (iii) a
$2 million
decrease due to our 2016 acquisition of Rhiag, which had higher amortization expense in the first three months of 2018 compared to first three months of 2019 as a result of the accelerated amortization on the customer relationship intangible assets.
|
Other expense, net for the three months ended March 31, 2018
|
$
|
25,633
|
|
|
|
Increase (decrease) due to:
|
|
|
|||
Interest expense, net of interest income
|
7,574
|
|
(1)
|
||
Other expense (income), net
|
(969
|
)
|
(2)
|
||
Net increase
|
6,605
|
|
|
||
Other expense, net for the three months ended March 31, 2019
|
$
|
32,238
|
|
|
(1)
|
Additional interest related to (i) a $10 million increase resulting from higher outstanding debt during the three months ended March 31, 2019 compared to the prior year period (including the borrowings under our Euro Notes (2026/28)), partially offset by (ii) a $2 million decrease from lower interest rates on borrowings under our senior secured credit agreement compared to the prior year quarter, and (iii) a
$1 million
decrease from foreign currency translation, primarily related to a decrease in the euro exchange rate during the first three months of 2019 compared to the prior year period.
|
(2)
|
The increase in other income primarily consisted of (i) $3 million of proceeds received in the first quarter of 2019 related to an insurance settlement in our North America segment, partially offset by (ii) a $2 million increase in foreign currency losses.
|
|
Three months ended March 31,
|
||||||||||||
|
2019
|
|
% of Total Segment Revenue
|
|
2018
|
|
% of Total Segment Revenue
|
||||||
Third Party Revenue
|
|
|
|
|
|
|
|
||||||
North America
|
$
|
1,302,206
|
|
|
|
|
$
|
1,329,660
|
|
|
|
||
Europe
|
1,445,541
|
|
|
|
|
1,040,430
|
|
|
|
||||
Specialty
|
352,556
|
|
|
|
|
350,674
|
|
|
|
||||
Total third party revenue
|
$
|
3,100,303
|
|
|
|
|
$
|
2,720,764
|
|
|
|
||
Total Revenue
|
|
|
|
|
|
|
|
||||||
North America
|
$
|
1,302,309
|
|
|
|
|
$
|
1,329,843
|
|
|
|
||
Europe
|
1,445,541
|
|
|
|
|
1,040,430
|
|
|
|
||||
Specialty
|
353,737
|
|
|
|
|
351,792
|
|
|
|
||||
Eliminations
|
(1,284
|
)
|
|
|
|
(1,301
|
)
|
|
|
||||
Total revenue
|
$
|
3,100,303
|
|
|
|
|
$
|
2,720,764
|
|
|
|
||
Segment EBITDA
|
|
|
|
|
|
|
|
||||||
North America
|
$
|
176,636
|
|
|
13.6
|
%
|
|
$
|
177,713
|
|
|
13.4
|
%
|
Europe
|
105,298
|
|
|
7.3
|
%
|
|
75,534
|
|
|
7.3
|
%
|
||
Specialty
|
37,959
|
|
|
10.7
|
%
|
|
41,969
|
|
|
11.9
|
%
|
|
Three months ended March 31,
|
|
Percentage Change in Revenue
|
|||||||||||||||||
North America
|
2019
|
|
2018
|
|
Organic
|
|
Acquisition
(3)
|
|
Foreign Exchange
|
|
Total Change
|
|||||||||
Parts & services revenue
|
$
|
1,155,698
|
|
|
$
|
1,172,585
|
|
|
(1.4
|
)%
|
(1
|
)
|
0.3
|
%
|
|
(0.4
|
)%
|
|
(1.4
|
)%
|
Other revenue
|
146,508
|
|
|
157,075
|
|
|
(6.6
|
)%
|
(2
|
)
|
0.0
|
%
|
|
(0.1
|
)%
|
|
(6.7
|
)%
|
||
Total third party revenue
|
$
|
1,302,206
|
|
|
$
|
1,329,660
|
|
|
(2.0
|
)%
|
|
0.2
|
%
|
|
(0.3
|
)%
|
|
(2.1
|
)%
|
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Parts and services organic revenue declined due to one fewer selling day in the first quarter of 2019 compared to the prior year period. On a per day basis, the organic growth rate was 0.1%. This relatively low growth rate was impacted by (i) lower revenue in our aviation and glass businesses, which had unfavorable effects on organic growth of 0.8% and 0.7%, respectively, and (ii) collision and liability related auto claims being 2.6% lower in the first quarter of 2019, which adversely impacted volume in our wholesale operations. Additionally, our North America segment generated a 6.5% organic growth rate for parts and services revenue in the first quarter of 2018, due in part to severe winter weather conditions. Facing a strong comparable period and with less favorable weather conditions in the first quarter of 2019, organic parts and services revenue growth was below our historical average.
|
(2)
|
The
$10 million
year over year organic decrease in other revenue primarily related to (i) a
$13 million
decrease in revenue from scrap steel and other metals primarily related to lower prices, partially offset by increased volumes, and (ii) a
$2 million
decrease in core revenue primarily related to decreased volumes, partially offset by (iii) a
$5 million
increase in revenue from metals found in catalytic converters (platinum, palladium, and rhodium) primarily due to higher prices, partially offset by decreased volumes.
|
(3)
|
Acquisition related growth in the first quarter of 2019 reflected revenue from our acquisition of four wholesale businesses since the beginning of 2018 through the one-year anniversary of the acquisitions.
|
(1)
|
The increase in gross margin primarily reflected a favorable impact of
1.3%
from our wholesale operations, partially offset by an unfavorable impact of
0.4%
from our self service operations. The increase in wholesale gross margin is primarily attributable to ongoing pricing initiatives. The decrease in self service gross margin was primarily attributable to sequential decreases in scrap steel prices as higher cost vehicles, which were purchased in the fourth quarter of 2018 during a period of higher scrap prices, were scrapped.
|
(2)
|
The increase in segment operating expenses as a percentage of revenue reflects an approximate 0.6% negative leverage effect resulting from the year over year decline in revenue. Having one fewer selling day in the first quarter of 2019 increased the expense as a percentage of revenue of fixed costs, such as facility rental expenses and administrative personnel salaries. The decline in other revenue of $11 million contributed to the negative leverage
|
(3)
|
The decrease in other expense, net and net income (loss) attributable to noncontrolling interest primarily reflected a favorable impact of
0.3%
due to $3 million of proceeds received in the first quarter of 2019 related to an insurance settlement.
|
|
Three months ended March 31,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Europe
|
2019
|
|
2018
|
|
Organic
(1)
|
|
Acquisition
(2)
|
|
Foreign Exchange
(3)
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
1,440,841
|
|
|
$
|
1,037,046
|
|
|
1.3
|
%
|
|
44.9
|
%
|
|
(7.3
|
)%
|
|
38.9
|
%
|
Other revenue
|
4,700
|
|
|
3,384
|
|
|
3.0
|
%
|
|
45.1
|
%
|
|
(9.2
|
)%
|
|
38.9
|
%
|
||
Total third party revenue
|
$
|
1,445,541
|
|
|
$
|
1,040,430
|
|
|
1.3
|
%
|
|
44.9
|
%
|
|
(7.3
|
)%
|
|
38.9
|
%
|
Note: In the table above, the sum of the individual percentages may not equal the total due to rounding.
|
(1)
|
Parts and services revenue growth for the quarter was affected by softening economic conditions across the continent. Additionally, we believe the U.K.'s potential exit from the European Union continues to have a negative impact on the overall U.K. market. Warmer weather also negatively impacted some markets. Selling days differ by market, but, on average, we had a lower number of selling days in our Europe segment in the first three months of 2019 than in the prior year period. On a per day basis, organic parts and services revenue growth was 2.1%. Each of our primary European platforms, with the exception of Stahlgruber, which was not included in the organic growth calculation in the first quarter of 2019, produced per day growth rates near the segment figure.
|
(2)
|
Acquisition related growth for the three months ended
March 31, 2019
was
$467 million
, or
44.9%
, primarily from our acquisition of Stahlgruber.
|
(3)
|
Compared to the prior year, exchange rates decreased our revenue growth by
$76 million
, or
7.3%
, primarily due to the stronger U.S. dollar against the euro, pound sterling and Czech koruna during the first quarter of 2019 relative to the first quarter of 2018.
|
(1)
|
The increase in gross margin was due to (i) a 0.5% favorable impact related to an increase in supplier rebates as a result of centralized procurement for our Europe segment, (ii) a 0.3% increase related to our U.K. operations primarily as a result of decreased inventory write-downs and decreased costs related to the national distribution facility, which had replenishment issues and related stock availability issues in the first quarter of 2018 that led to some temporary service issues and increased labor costs to manually stock and receive product, partially offset by higher customer incentives in the first quarter of 2019, and (iii) several individually immaterial factors that had a favorable impact of 0.1% in the aggregate.
|
(2)
|
The increase in segment operating expenses as a percentage of revenue was primarily due to a 1.0% increase in
|
(3)
|
The 0.3% increase in other expense, net and net income (loss) attributable to noncontrolling interest was primarily due to foreign currency losses.
|
|
Three months ended March 31,
|
|
Percentage Change in Revenue
|
||||||||||||||||
Specialty
|
2019
|
|
2018
|
|
Organic
(1)
|
|
Acquisition
|
|
Foreign Exchange
|
|
Total Change
|
||||||||
Parts & services revenue
|
$
|
352,556
|
|
|
$
|
350,674
|
|
|
1.0
|
%
|
|
—
|
%
|
|
(0.4
|
)%
|
|
0.5
|
%
|
Other revenue
|
—
|
|
|
—
|
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
||
Total third party revenue
|
$
|
352,556
|
|
|
$
|
350,674
|
|
|
1.0
|
%
|
|
—
|
%
|
|
(0.4
|
)%
|
|
0.5
|
%
|
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 expansion of our product line coverage, strong exclusive line performance, and continued roll-out of new product applications for new model year vehicles. Organic growth in parts and services revenue for our Specialty segment on a per day basis was 2.6% as there was one fewer selling day in the first quarter of 2019 compared to the prior year period.
|
(1)
|
The decrease in gross margin reflects unfavorable impacts of (i) 1.2% of higher product costs due to non-recurring benefits from supplier discounts resulting from strategic purchasing efforts in the fourth quarter of 2017, which had a favorable impact on the first quarter of 2018 as they were recognized over a turn of inventory, and (ii) 0.5% due to higher customer incentives and higher capitalized overhead expenses as a result of warehouse expansion projects that were completed in the second half of 2018.
|
(2)
|
The decrease in segment operating expenses reflects favorable impacts of (i) 0.2% in personnel costs primarily due to reduced headcount, (ii) 0.2% in advertising expenses primarily due to decreased spending for catalogs and trade shows, and (iii) several individually immaterial factors that had a favorable impact of 0.3% in the aggregate, partially offset by (iv) a 0.2% increase in facility expenses due to higher rent and property taxes as a result of the aforementioned warehouse expansion projects in 2018.
|
|
March 31, 2019
|
|
December 31, 2018
|
|
March 31, 2018
|
||||||
Cash and cash equivalents
|
$
|
316,066
|
|
|
$
|
331,761
|
|
|
$
|
245,679
|
|
Total debt
(1)
|
4,264,148
|
|
|
4,347,697
|
|
|
3,339,088
|
|
|||
Current maturities
(2)
|
136,572
|
|
|
122,117
|
|
|
145,143
|
|
|||
Capacity under credit facilities
(3)
|
3,260,000
|
|
|
3,260,000
|
|
|
2,850,000
|
|
|||
Availability under credit facilities
(3)
|
1,751,902
|
|
|
1,697,698
|
|
|
1,512,671
|
|
|||
Total liquidity (cash and cash equivalents plus availability under credit facilities)
|
2,067,968
|
|
|
2,029,459
|
|
|
1,758,350
|
|
(1)
|
Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of
$35 million
, $37 million, and $26 million as of
March 31, 2019
,
December 31, 2018
and
March 31, 2018
, respectively).
|
(2)
|
Debt amounts reflect the gross values to be repaid (excluding debt issuance costs of immaterial amounts as of
March 31, 2019
and
December 31, 2018
, and
$3 million
as of
March 31, 2018
).
|
(3)
|
Capacity under credit facilities includes our revolving credit facilities and our receivables securitization facility. Availability under credit facilities is reduced by our outstanding letters of credit.
|
•
|
Senior secured credit facilities maturing in January 2024, composed of term loans totaling
$350 million
(
$348 million
outstanding at
March 31, 2019
) and
$3.15 billion
in revolving credit (
$1.4 billion
outstanding at
March 31, 2019
), bearing interest at variable rates (although a portion of the outstanding debt is hedged through interest rate swap contracts), with availability 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 $
561 million
(
€500 million
), maturing in April 2024 and bearing interest at a 3.875% fixed rate
|
•
|
Euro Notes (2026/28) totaling
$1.1 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
$110 million
(
$80 million
outstanding as of
March 31, 2019
), maturing in November 2021 and bearing interest at variable commercial paper rates
|
(1)
|
The total debt amounts presented above reflect the gross values to be repaid (excluding debt issuance costs of
$35 million
as of
March 31, 2019
).
|
|
Covenant Level
|
|
Ratio Achieved as of March 31, 2019
|
Maximum net leverage ratio
|
4.5:1.0
|
|
2.9
|
Minimum interest coverage ratio
|
3.0:1.0
|
|
9.1
|
|
|
Three Months Ended
|
|
||||||||||
|
|
March 31,
|
|
||||||||||
|
|
2019
|
|
2018
|
|
Change
|
|
||||||
North America
|
|
$
|
336,100
|
|
|
$
|
358,800
|
|
|
$
|
(22,700
|
)
|
(1)
|
Europe
|
|
938,700
|
|
|
667,100
|
|
|
271,600
|
|
(2)
|
|||
Specialty
|
|
250,600
|
|
|
274,000
|
|
|
(23,400
|
)
|
(3)
|
|||
Total
|
|
$
|
1,525,400
|
|
|
$
|
1,299,900
|
|
|
$
|
225,500
|
|
|
(1)
|
In North America, aftermarket purchases during the
three months ended
March 31, 2019
decreased compared to the prior year period primarily as a result of an increased focus on inventory reduction.
|
(2)
|
In our Europe segment, the increase in purchases during the
three months ended
March 31, 2019
was primarily driven by (i) a
$340 million
increase attributable to incremental inventory purchases as a result of our acquisition of Stahlgruber in the second quarter of 2018, partially offset by (ii) a
$16 million
decrease attributable to our U.K operations primarily due to inventory reduction efforts. There was also a decrease of
$48 million
in inventory purchases driven by the decrease in the value of the euro and pound sterling in the three months ended March 31, 2019 compared to the prior year period.
|
(3)
|
Specialty inventory purchases decreased
$23 million
during the
three months ended March 31, 2019
compared to the prior year period primarily as a result of an increased focus on inventory reduction.
|
(1)
|
Refer to the Results of Operations - Consolidated section for further information on the decrease in operating income.
|
(2)
|
Non-cash depreciation and amortization expense increased compared to the prior year period as discussed in the Results of Operations - Consolidated section.
|
(3)
|
In the first quarter of 2019, we recorded an impairment charge on net assets held for sale. See "Net Assets Held for Sale" in Note 3, "Financial Statement Information" to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on the impairment charge.
|
(4)
|
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. The increased outflow related to accounts receivable is primarily attributable to Europe, mostly due to Stahlgruber. The timing of customer rebate settlements in the first quarter, and to a lesser extent, the unwind of a receivables factoring program produced an outflow of approximately $60 million for Stahlgruber that wasn't present in 2018, as the acquisition closed in May. Inventory produced a large inflow for 2019 because of active inventory management as described in the procurement section above.
|
(5)
|
Reflects a number of individually insignificant fluctuations in cash paid for other operating activities.
|
•
|
foreign exchange rates;
|
•
|
interest rates; and
|
•
|
commodity prices.
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
||||||
January 1, 2019 - January 31, 2019
|
|
1,000
|
|
|
$
|
25.76
|
|
|
1,000
|
|
|
$
|
414,236
|
|
February 1, 2019 - February 28, 2019
|
|
950
|
|
|
$
|
26.95
|
|
|
950
|
|
|
388,635
|
|
|
March 1, 2019 - March 31, 2019
|
|
693
|
|
|
$
|
27.54
|
|
|
693
|
|
|
369,538
|
|
|
Total
|
|
2,643
|
|
|
|
|
2,643
|
|
|
|
|
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)
|
1.
|
A change in accounting policy or GAAP;
|
2.
|
Dispositions of assets or businesses;
|
3.
|
Asset impairments;
|
4.
|
Amounts incurred in connection with any financing;
|
5.
|
Losses on interest rate swaps resulting from mark to market adjustments or discontinuing hedges;
|
6.
|
Board-approved restructuring, acquisition, or similar charges, including charges in conjunction with or in anticipation of an acquisition;
|
7.
|
Losses (and related fees and expenses) related to extraordinary environmental, legal, product liability or other contingencies;
|
8.
|
Changes in tax laws or regulations or interpretations of such laws or regulations;
|
9.
|
A Board-approved divestiture of a material business (i.e., the performance goals shall be adjusted to account for the divestiture, including, if appropriate, the pro-rata effect of targeted improvements);
|
10.
|
Changes in contingent consideration liabilities;
|
11.
|
Losses from discontinued operations;
|
12.
|
The imposition of tariffs or taxes on the importation of inventory;
|
13.
|
Amortization expense related to acquired intangible assets; and
|
14.
|
Other extraordinary, unusual, or infrequently occurring items as specifically disclosed in the Company’s financial statements or filings under the Exchange Act.
|
|
Threshold
|
Target PSUs
|
Maximum
|
Number of PSUs
|
1/2 Target PSUs
|
[[SHARESGRANTED AT TARGET]]
|
2X Target PSUs
|
Revenue Component
|
|||
|
Average Parts & Services Organic Revenue Growth over Performance Period
|
Earned Revenue Component (Shares)
|
Weighting of Revenue Component
|
Threshold
|
[[•]]%
|
[[•]]
|
40%
|
Target
|
[[•]]%
|
[[•]]
|
|
Maximum
|
[[•]]%
|
[[•]]
|
|
EPS Component
|
|||
|
Adjusted Diluted EPS
in year 2021
|
Earned EPS Component (Shares)
|
Weighting of EPS Component
|
Threshold
|
$[[•]]
|
[[•]]
|
40%
|
Target
|
$[[•]]
|
[[•]]
|
|
Maximum
|
$[[•]]
|
[[•]]
|
|
ROIC Component
|
|||
|
Average ROIC over Performance Period
|
Earned ROIC Component (Shares)
|
Weighting of ROIC Component
|
Threshold
|
[[•]]
|
[[•]]
|
20%
|
Target
|
[[•]]
|
[[•]]
|
|
Maximum
|
[[•]]
|
[[•]]
|
Target Award:
|
_________________________________
|
Performance Metrics:
|
(1) “EBITDA Dollars” defined as Segment EBITDA, as presented in our public filings, for the Performance Period. Segment EBITDA is calculated as EBITDA excluding restructuring and acquisition related expenses, change in fair value of contingent consideration liabilities, other gains and losses related to acquisitions, equity method investments, or divestitures, equity in losses and earnings of unconsolidated subsidiaries and impairment of goodwill. EBITDA, which is the basis for Segment EBITDA, is calculated as net income, less net income (loss) attributable to noncontrolling interest, excluding discontinued operations, depreciation, amortization, interest (which includes loss on debt extinguishment) and income tax expense.
|
Adjustments:
|
The calculation of each of the above Performance Metrics will be subject to adjustment by the Committee for extraordinary, unusual, infrequently occurring, or other items if such adjustment is deemed necessary or advisable by the Committee to more accurately achieve the purposes of this award.
|
EBITDA Dollars Component
|
|||
|
EBITDA Dollars for Performance Period
|
Earned % of EBITDA Dollars Component
|
Weighting of EBITDA Dollars Component
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
EBITDA Margin Component
|
|||
|
EBITDA Margin for Performance Period
|
Earned % of EBITDA Margin Component
|
Weighting of EBITDA Margin Component
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
Free Cash Flow Component
|
|||
|
Free Cash Flow for Performance Period
|
Earned % of Free Cash Flow Component
|
Weighting of Free Cash Flow Component
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
*
|
Payouts between Threshold and Target and between Target and Maximum shall be calculated using a linear function. There shall be no payouts for performance below Threshold and no payments higher than Maximum for performance above Maximum.
|
Participant:
|
_______________________
|
Performance Metrics:
|
(1) The average of the Company’s annual parts and services organic revenue growth during the Performance Period.
|
Adjustments:
|
The calculation of each of the above Performance Metrics will be subject to adjustment by the Committee for extraordinary, unusual, infrequently occurring, or other items if such adjustment is deemed necessary or advisable by the Committee to more accurately achieve the purposes of this award.
|
Revenue Component
|
|||
|
Average Annual Parts & Services Organic Revenue Growth over Performance Period
|
Earned Revenue Component
|
Weighting of Revenue Component
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
EPS Component
|
|||
|
Adjusted Diluted EPS
in year 2021
|
Earned EPS Component
|
Weighting of EPS Component
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
|
ROIC Component
|
|||
|
Average Annual ROIC over Performance Period
|
Earned ROIC Component
|
Weighting of ROIC Component
|
Threshold
|
|
|
|
Target
|
|
|
|
Maximum
|
|
|
*
|
Payouts between Threshold and Target and between Target and Maximum will be calculated using a linear function. There will be no payouts for performance below Threshold and no payments higher than Maximum for performance above Maximum.
|
/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
|