LKQ (LKQ) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue reached $3.6 billion, up 0.5% year-over-year, with adjusted diluted EPS rising 2.3% to $0.88 despite softer volumes and macro headwinds.

• Net income for Q3 was $191 million, down from $207 million year-over-year; adjusted net income was $230 million, nearly flat year-over-year.

• Over $200 million was returned to stockholders in Q3 via $125 million in share repurchases and $79 million in dividends.

• Portfolio simplification continued with completed divestitures in Poland, Bosnia, and Slovenia, and further small divestitures under review.

• Announced a $1 billion increase to the stock repurchase program, raising total authorization to $4.5 billion through October 2026.

Financial highlights

• Segment EBITDA for Q3 2024 was $434 million, up 2.9% year-over-year, with a margin of 12.1%.

• Q3 gross margin was 38.8%, and operating income margin was 8.6%.

• Free cash flow for Q3 was $341 million, totaling $661 million year-to-date; operating cash flow for YTD 2024 was $886 million.

• Q3 diluted EPS was $0.73, down from $0.78; nine-month diluted EPS was $2.02, down from $2.83.

• Q3 interest expense rose to $66 million from $62 million, reflecting higher debt levels.

Outlook and guidance

• 2024 organic parts and services revenue now expected to decline 2.75% to 1.75%, a reduction from prior guidance.

• Adjusted diluted EPS guidance lowered to $3.38–$3.52; GAAP diluted EPS forecast is $2.59–$2.73.

• Free cash flow target of $850 million and 50–60% EBITDA conversion reaffirmed; operating cash flow guidance held at $1.175 billion.

• Management expects revenue headwinds to persist into Q4 and 2025, with gradual recovery anticipated in the back half of 2025 as used car prices stabilize.

• 2024 Global Restructuring Plan expected to be substantially complete by end of 2025, with total costs between $100 million and $120 million.