The company reported first-quarter revenue of $3.5 billion, falling short of the anticipated $3.58 billion. Despite the revenue miss, the firm remains confident in its current trajectory, driven by strategic initiatives aimed at enhancing operational efficiency and creating long-term value. The President and CEO, Justin Jude, highlighted the team's focus on optimizing the company's cost structure, which resulted in growth in the year-over-year EBITDA percentage.
In response to fluctuating market conditions and potential tariff changes, the company has established a specialized task force. This team, comprised of leaders from across the global enterprise, is dedicated to addressing both the opportunities and challenges that may arise from the evolving tariff environment.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 6 analysts, the average target price for LKQ Corp (LKQ, Financial) is $53.29 with a high estimate of $60.00 and a low estimate of $48.00. The average target implies an upside of 26.48% from the current price of $42.13. More detailed estimate data can be found on the LKQ Corp (LKQ) Forecast page.
Based on the consensus recommendation from 9 brokerage firms, LKQ Corp's (LKQ, Financial) average brokerage recommendation is currently 1.9, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for LKQ Corp (LKQ, Financial) in one year is $57.92, suggesting a upside of 37.48% from the current price of $42.13. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the LKQ Corp (LKQ) Summary page.
LKQ Key Business Developments
Release Date: February 20, 2025
- Capital Returned to Shareholders: $678 million, with $360 million in share repurchases and $318 million in dividends.
- Share Repurchase: Approximately 2 million shares repurchased for about $80 million in the quarter.
- Quarterly Cash Dividend: $0.30 per share declared in October and February, totaling $78 million paid in November.
- North American Revenue Decline: 8.5% per day, with a 4% decline in collision parts revenue.
- European Segment EBITDA Margin: 10.1% in the quarter, highest Q4 segment EBITDA margin achieved in Europe.
- Specialty Organic Revenue Decline: 7.3% on a per day basis.
- Full Year Diluted EPS: $2.62; Adjusted Diluted EPS: $3.48.
- Q4 Diluted EPS: $0.60; Adjusted Diluted EPS: $0.80.
- North America Segment EBITDA Margin: 16.8%, a 50 basis point increase relative to last year.
- Free Cash Flow: $149 million in the quarter, $810 million year-to-date.
- Total Debt: $4.2 billion with a leverage ratio of 2.3 times EBITDA.
- 2025 Guidance for Adjusted Diluted EPS: $3.40 to $3.70.
- 2025 Free Cash Flow Expectation: $750 to $900 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LKQ Corp (LKQ, Financial) returned $678 million to shareholders in 2024 through share repurchases and dividends.
- The company successfully integrated Finishmaster into its network, closing 129 of 151 locations, achieving higher synergies than expected.
- LKQ Corp (LKQ) achieved a record fourth-quarter EBITDA margin of 10.1% in its European segment, marking the third consecutive quarter with double-digit margins.
- The company is expanding its mega yard operations, which are expected to drive growth in recycled parts and productivity.
- LKQ Corp (LKQ) is actively pursuing SKU rationalization in Europe, aiming to simplify operations and enhance procurement benefits.
Negative Points
- North American revenue declined by 8.5% per day in Q4, impacted by non-recurring benefits from UAW strikes and storm impacts.
- Specialty segment faced a 7.3% decline in organic revenue per day, with ongoing demand softness and competitive pricing pressures.
- The company experienced a brief cyber incident in Canada, affecting North American revenue.
- Tariff uncertainties remain a concern, with potential impacts on the company's supply chain and competitive positioning.
- The company anticipates continued headwinds in North America due to repairable claims and salvage margins, particularly in the first half of 2025.
