LKQ Corporation Announces 2004 Fourth Quarter Net Income Results Up 68%
Chicago, IL--February 24, 2005--LKQ Corporation (NASDAQ: LKQX) today reported results for its fourth quarter and year ended December 31, 2004, with revenue of $113.8 million for the quarter and $424.8 million for the year. This represents growth over 2003 of 35% for the quarter and 30% for the full year. Net income was $5.0 million for the quarter and $20.6 million for the year, representing growth over 2003 of 68% and 41%, respectively.
“Our Company achieved an impressive revenue growth of 35% for the quarter and 30% for the year. Our organic revenue growth was 8% for the quarter and 11% for the year. While our net income for the full year increased by 41%, our EPS showed a 15% increase as we had a 23% increase in the number of shares outstanding. We made several excellent business acquisitions in 2004 as we continued our geographic and product line expansions,” said Joe Holsten, President and Chief Executive Officer.
2004 Reported Results
For the fourth quarter of 2004, revenue increased 35% to $113.8 million compared with $84.2 million for the fourth quarter of 2003. Approximately $23.0 million in revenue growth for the quarter was from businesses we acquired. For the quarter, net income increased 68% to $5.0 million compared with $3.0 million for the fourth quarter of 2003. Diluted earnings per share was $0.22 for the quarter compared with $0.14 for the fourth quarter of 2003.
During the fourth quarter of 2004, the Company recorded the effect of certain infrequent items. The net effect of these items increased income before provision for income taxes by $228,000 and increased net income by $290,000 or $0.01 in diluted earnings per share. These items were related to non-taxable proceeds from a life insurance policy partially offset by the cost of accelerating the vesting of certain stock options.
For the year ended 2004, revenue increased 30% to $424.8 million compared with $328.0 million in 2003. Approximately $60.6 million in revenue growth for the year was from business acquisitions. For the year ended December 31, 2004, net income increased 41% to $20.6 million compared with $14.6 million in 2003. Diluted earnings per share was $0.92 for the year ended December 31, 2004 compared with $0.80 in 2003.
The weighted average diluted shares outstanding for the quarter was 22.5 million compared to 21.5 million for the fourth quarter of 2003 and for the year was 22.4 million compared to 18.3 million for full year 2003. The number of outstanding shares of common stock in 2004 changed from 2003 due to several factors. In the first half of 2003, we repurchased 3.6 million shares from certain of our stockholders. In the fourth quarter of 2003, we issued 5.0 million shares in our initial public offering. We also issued approximately 187,000 shares in 2004 related to our business acquisitions. Other changes in weighted average diluted shares outstanding related primarily to the effect of the exercise of stock options and warrants.
Our consolidated aftermarket collision replacement parts revenue in 2004 was $43.0 million.
First Quarter 2005 Acquisition
On February 1, 2005, we acquired for approximately $15.4 million, net of acquired cash, Bodymaster Auto Parts, Inc. and a related company that operate in the aftermarket collision automotive replacement parts business. This business operates from two locations near Philadelphia and Washington, D.C. The revenue of this business in 2004 was approximately $19.5 million.
Company 2005 Outlook
Our 2005 guidance below is consistent with our January 10, 2005 financial guidance announcement, and the $0.03 to $0.04 increase in diluted earnings per share effect of our recent Bodymaster aftermarket business acquisition on February 1, 2005.
We expect that full year 2005 revenue will be within a range of $523.0 million to $529.0 million and that organic revenue growth will be in the low double digits, with the balance of the growth being the full year impact of 2004 business acquisitions and our 2005 aftermarket business acquisition. We expect net income to be within a range of $24.6 million to $25.7 million and diluted earnings per share to be between $1.07 and $1.12.
For the first quarter of 2005 we expect revenue to be between $129.0 million and $131.0 million, net income to be between $6.6 million and $7.0 million, and diluted earnings per share to be between $0.29 and $0.31.
Our 2005 guidance does not include the impact from SFAS No. 123R, Accounting for Stock-Based Compensation, which becomes effective July 1, 2005. We estimate this recent accounting statement will have a negative effect on net income of the Company in the second half of 2005 by approximately $0.5 million or $0.02 per share based on anticipated plans for our stock options. Our 2005 guidance also does not include the effect of any future business acquisitions.
We estimate the weighted average diluted shares outstanding for the full year 2005 to be approximately 23.0 million and for the first quarter to be approximately 22.9 million. These share numbers are estimates and as such will be affected by factors such as any future stock issuances, the number of our options and warrants exercised in subsequent periods, and changes in our stock price.
Quarterly Conference Call
We will host an audio webcast to discuss our fourth quarter results on Thursday, February 24, 2005 at 10:30 a.m. Eastern Time. The live audio webcast can be accessed on the internet atwww.lkqcorp.com in the Investor Relations section. An online replay of the webcast will be available on the website approximately two hours after the live presentation and will remain on the site until March 24, 2005.
About LKQ Corporation
LKQ Corporation is the largest nationwide provider of recycled OEM automotive replacement parts and related services, with 46 sales and processing facilities, 7 self-service retail automotive parts facilities and 12 redistribution centers that reach most major markets in the United States. In addition, we have 3 recycled OEM facilities in Central America. We also are one of the largest suppliers of aftermarket collision automotive replacement parts, operating in approximately 30 locations serving 19 states and the District of Columbia, primarily east of the Mississippi River.
Forward Looking Statements
The statements in this press release that are not historical are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our expectations, beliefs, hopes, intentions or strategies. Forward looking statements involve risks and uncertainties, some of which are not currently known to us. Actual events or results may differ materially from those expressed or implied in the forward looking statements as a result of various factors. These factors include:
| · | the availability and cost of inventory; |
| · | pricing of new OEM replacement parts; |
| · | variations in vehicle accident rates; |
| · | changes in state or federal laws or regulations affecting our business; |
| · | fluctuations in fuel prices; |
| · | severity of weather and seasonality of weather patterns; |
| · | the amount and timing of operating costs and capital expenditures relating to the maintenance and expansion of our business, operations and infrastructure; |
| · | declines in asset values; |
| · | uncertainty as to changes in U.S. general economic activity and the impact of these changes on the demand for our products; |
| · | increasing competition in the automotive parts industry; |
| · | our ability to increase or maintain revenue and profitability at our facilities; |
| · | uncertainty as to the impact on our industry of any terrorist attacks or responses to terrorist attacks; |
| · | our ability to operate within the limitations imposed by financing arrangements; |
| · | our ability to obtain financing on acceptable terms to finance our growth; |
| · | our ability to integrate and successfully operate recently acquired companies and any companies acquired in the future and the risks associated with these companies; |
| · | our ability to develop and implement the operational and financial systems needed to manage our growing operations; and |
| · | other risks that are described in our Form 10-K filed March 24, 2004 and in other reports filed by us from time to time with the Securities and Exchange Commission. |
You should not place undue reliance on the forward looking statements. We assume no obligation to update any forward looking statement to reflect events or circumstances arising after the date on which it was made.
Financial Tables To Follow
CONTACT: LKQ Corporation
Mark T. Spears, Senior Vice President and Chief Financial Officer
312-621-1950
irinfo@lkqcorp.com
