LKQ Corporation announces record fourth quarter revenues

LKQ Corporation recently announced record revenue for the fourth quarter, far exceeding its previously indicated financial guidance. The company's revenue for the fourth quarter ended Dec. 31, 2007, totalled $414.7 million, net income of $21.5 million and diluted earnings per share of $0.16.

"We finished the year with over $1.1 billion in revenue and $0.55 diluted earnings per share. Our diluted earnings per share exceeded the high end of the range of our previously indicated financial guidance. We reported record revenue for the fourth quarter, and delivered revenue growth of approximately 103 percent, with organic revenue growth at 13 percent for the quarter. We are particularly pleased with our progress to date related to combining our aftermarket businesses with Keystone Automotive Industries, Inc.," says Joe Holsten, president and chief executive officer.

For the fourth quarter of 2007, revenue increased 102.8 percent to $414.7 million compared with $204.5 million for the fourth quarter of 2006. The company's organic revenue growth for the quarter was 13.3 percent. Net income for the quarter increased 111.3 percent to $21.5 million compared with $10.2 million for the fourth quarter of 2006. Diluted earnings per share was $0.16 for the quarter compared with $0.09 for the fourth quarter of 2006.

LKQ's provision for income taxes for the fourth quarter of 2007 was lower than previously expected as a result of certain adjustments primarily related to valuation allowances. This benefit provided approximately $0.01 of diluted earnings per share to the quarter and the full year.

For the full year ended Dec. 31, 2007, revenue increased 42.7 percent to $1.1 billion compared with $789.4 million for the same period in 2006. Organic revenue growth for the year was 12.4 percent. For the year ended Dec. 31, 2007, net income increased 48.4 percent to $65.9 million compared with $44.4 million for the same period in 2006. Diluted earnings per share was $0.55 for the year ended Dec. 31, 2007 compared with $0.40 for the same period a year ago.

Revenue from aftermarket collision replacement parts, paint, shop supplies, refurbished bumpers, refurbished wheels and refurbished lighting for the year ended Dec. 31, 2007 was $401.3 million. In addition, the company operated an aluminum smelter that melts damaged and unusable wheel cores as a means of product disposal. For the year ended Dec. 31, 2007, the smelter's revenue was $38.4 million at a gross margin of approximately 4.8 percent, compared to $28.2 million of revenue at a gross margin of approximately 7.1 percent for the 11 months LKQ owned the smelter in 2006.

The weighted average diluted shares outstanding for the fourth quarter of 2007 was 138.8 million compared to 112.3 million for the fourth quarter of 2006, and for the year ended Dec. 31, 2007 was 119.9 million compared to 111.6 million for the year ended Dec. 31, 2006.

On Sept. 25, 2007, LKQ completed a public offering of 27.6 million shares of its common stock at a price per share to the public of $15.50. The offering included 23.6 million shares sold by the company and 4.0 million shares sold by selling stockholders. The shares sold by the compnay included 3.6 million shares sold pursuant to the exercise of its underwriters' over-allotment option. LKQ received approximately $349.5 million in net proceeds from the sale of the shares in the offering, after deducting discounts and commissions and the estimated expenses of the offering.

During the first nine months of 2007, the company acquired eight businesses. They consisted of five recycled parts businesses, two aftermarket businesses and a small light refurbishing business. These businesses reported approximately $53.1 million of trailing annual revenue just prior to the company's acquisition of them.

On Oct. 12, 2007 LKQ acquired Keystone, an aftermarket vehicle collision replacement parts business. For the fiscal year ended March 30, 2007, Keystone reported sales and net income of $714.0 million and $30.3 million, respectively.

In November, LKQ acquired a retail oriented recycled parts business located in Portland, Ore. Late in December, the company acquired a recycled parts business located on 35 acres near Birmingham, Ala. LKQ will relocate our its Birmingham recycled parts business to this new property during the latter part of 2008. In late December, the company also acquired a business with locations in California and Indiana that specializes in buying OE repair parts. These three businesses reported approximately $15.1 million of trailing annual revenue just prior to the company's acquisition of them.

LKQ obtained a senior secured debt financing facility from Lehman Brothers Inc. and Deutsche Bank Securities Inc. on Oct. 12, 2007 to fund a portion of the Keystone acquisition. This facility consists of approximately $750 million of borrowing capacity. It is made up of a six year $610 million term loan, a six year CDN $40 million Canadian term loan, a six year $15 million dual currency (Canadian dollars and U.S. dollars) revolving credit facility, and a six year $85 million revolving credit facility. As of Feb. 26, 2008, the company had outstanding debt under its new debt facility of approximately $650 million.

LKQ expects that 2008 organic revenue growth will be approximately 10 percent, with the balance of revenue growth being the full year impact of 2007 business acquisitions. Excluding the effect of any 2008 restructuring expenses it may have related to the Keystone acquisition, the company expects full year 2008 net income to be within a range of $102.0 million to $108.0 million and diluted earnings per share to be between $0.73 and $0.77.

The company anticipates that net cash provided by operating activities for 2008 will be over $85.0 million. Company executives estimate that full year 2008 capital expenditures related to property and equipment, excluding expenditures for acquiring businesses, will be between $65.0 million to $75.0 million. This includes approximately $10.0 million related to capital expenditures planned for late 2007 on projects that became delayed and approximately $4.8 million related to restructuring its aftermarket business as a result of the Keystone acquisition.

LKQ estimates the weighted average diluted shares outstanding for the full year 2008 will be approximately 140 million. These share numbers are estimates and will be affected by factors such as any future stock issuances, the number of our options exercised in subsequent periods, and changes in its stock price.

For more information about LKQ Corporation, visit the company's Web site.