News Column

LKQ Corporation Announces Record Results for Second Quarter 2014

July 31, 2014

Revenue growth of 36.5% to a quarterly record of $1.71 billionDiluted EPS of $0.34 ($0.35, as adjusted) Net income growth of 38.5% to a record $104.9 millionOrganic revenue growth for parts and services of 8.1% Annual guidance updated

CHICAGO, July 31, 2014 (GLOBE NEWSWIRE) -- LKQ Corporation (Nasdaq:LKQ) today reported record revenue for the second quarter of 2014 of $1.71 billion, an increase of 36.5% as compared to $1.25 billion in the second quarter of 2013. Net income for the second quarter of 2014 was $104.9 million, an increase of 38.5% as compared to $75.7 million for the same period of 2013. Diluted earnings per share of $0.34 for the second quarter ended June 30, 2014 increased 36.0% from $0.25 for the second quarter of 2013. The Company noted that adjusted diluted earnings per share would have been $0.35 for second quarter 2014 compared to $0.26 for the second quarter of 2013 after adjusting for any net losses resulting from restructuring and acquisition related expenses, losses on debt extinguishment and changes in fair value of contingent consideration liabilities.

"Despite a tough second quarter 2013 comparative, we were able to achieve 8.1% organic revenue growth for parts and services. Total revenue growth of 36.5% converted to net income growth of 38.5% demonstrating the benefits of our organic growth and the success of our disciplined acquisition program. Our 2014 acquisition of Keystone Automotive in our specialty segment is performing well and ahead of our expectations," stated Robert L. Wagman, President and Chief Executive Officer of LKQ Corporation.

On a six month year-to-date basis, revenue was $3.33 billion, an increase of 36.2% from $2.45 billion for the comparable period of 2013. Parts and services organic revenue growth for the first six months of 2014 was 9.2%. Net income for the first six months of 2014 was $209.5 million, as compared to $160.3 million for the first half of 2013. Diluted earnings per share was $0.69 for the first six months of 2014, as compared to $0.53 for the comparable period of 2013.

Balance Sheet and Liquidity

As of June 30, 2014, LKQ's balance sheet reflected cash and equivalents of $110 million and outstanding debt of $1.95 billion, including obligations outstanding under the Company's credit facility of $1.18 billion ($444 million of term loans and $731 million of revolver borrowings), senior notes of $600 million, and outstanding borrowings under the Company's asset securitization program of $80 million. Total availability under the Company's credit facility at June 30, 2014 was approximately $1.1 billion.

Other Events

On May 30, 2014, the Company completed its acquisition of five Netherlands parts distributors, all of which were customers of and distributors for LKQ's Netherlands subsidiary, Sator Holding B.V. The companies acquired were Rijsbergen Cartal Beheer B.V., Pala Holding B.V., Primaparts Automaterialen B.V., Slager Automaterialen B.V. and VEAM B.V.

In addition to the acquisition of five Netherlands parts distributors, during the second quarter of 2014, LKQ made six acquisitions: a paint distributor in Texas; a self serve yard in Georgia; a paint distributor with six locations in Ontario, Canada; a paint distributor in New York; an aftermarket collision parts distributor with locations in Florida and Georgia; and a tire recycler in Ohio.

LKQ's European operations opened nine Euro Car Parts branches in the second quarter of 2014. As of June 30, 2014, the Company operated from 165 Euro Car Parts branches and 25 paint distribution branches in the United Kingdom. LKQ's Sator business opened a new distribution warehouse in Lyon, France in the quarter; the Company now has three branches in France.

On June 30, 2014, the Company entered into a Patent License Agreement with Chrysler Group LLC ("Chrysler") whereby LKQ was granted a license under certain Chrysler design patents in connection with LKQ's distribution and sale of aftermarket collision parts in the United States. As part of the agreement, Chrysler dismissed the complaint it filed in January 2014 against LKQ alleging that the distribution of certain aftermarket parts by LKQ infringed Chrysler's design patents relating to its Dodge Ram pickup truck.

Company Outlook

The Company updated its guidance for 2014.

  Updated Guidance Prior Guidance
Organic revenue growth (parts & services) 8.0% to 10.0% 8.0% to 10.0%
Adjusted net income$405 million to $430 million$400 million to $430 million
Adjusted diluted EPS$1.32 to $1.40$1.30 to $1.40
Cash flow from operations Approximately $375 million Approximately $375 million
Capital expenditures$110 million to $140 million$110 million to $140 million


Guidance is based on current conditions (including acquisitions completed through June 30, 2014) and excludes any impact of restructuring and acquisition related expenses; gains or losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities); loss on debt extinguishment; and capital spending related to future business acquisitions.

Quarterly Conference Call

LKQ will host a conference call and Webcast on July 31, 2014 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) with members of senior management to discuss the Company's results.

To access the investor conference call, please dial (877) 407-0668. International access to the call may be obtained by dialing (201) 689-8558. The audio webcast can be accessed via the Company's website at www.lkqcorp.com in the Investor Relations section.

A replay of the conference call will be available by telephone at (877) 660-6853 or (201) 612-7415 for international calls. The telephone replay will require you to enter conference ID: 13583005#. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through August 22, 2014. Please allow approximately two hours after the live presentation before attempting to access the replay.

About LKQ Corporation

LKQ Corporation (www.lkqcorp.com) is a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles.  LKQ has operations in North America, the United Kingdom, the Netherlands, Belgium, France, Australia and Taiwan. LKQ operates more than 700 facilities, offering its customers a broad range of replacement systems, components, equipment and parts to repair and accessorize automobiles, trucks, and recreational and performance vehicles.

Forward Looking Statements

The statements in this press release that are not historical in nature are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These include statements regarding our outlook or guidance, 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:

• uncertainty as to changes in North American and European general economic activity and the impact of these changes on the demand for our products and our ability to obtain financing for operations;• fluctuations in the pricing of new original equipment manufacturer ("OEM") replacement products;• the availability and cost of our inventory;• variations in the number of vehicles sold, vehicle accident rates, miles driven and the age profile of vehicles in accidents;• changes in state or federal laws or regulations affecting our business;• inaccuracies in the data relating to our industry published by independent sources upon which we rely;• changes in the level of acceptance and promotion of alternative automotive parts by insurance companies and auto repairers;• changes in the demand for our products and the supply of our inventory due to severity of weather and seasonality of weather patterns;• increasing competition in the automotive parts industry;• our ability to satisfy our debt obligations and to operate within the limitations imposed by financing agreements;• our ability to obtain financing on acceptable terms to finance our growth;• declines in the values of our assets;• fluctuations in fuel and other commodity prices;• fluctuations in the prices of scrap metal and other metals;• our ability to develop and implement the operational and financial systems needed to manage our operations;• our ability to identify sufficient acquisition candidates at reasonable prices to maintain our growth objectives;• our ability to integrate, realize expected synergies, and successfully operate acquired companies and any companies acquired in the future, and the risks associated with these companies;• claims by OEMs or others that attempt to restrict or eliminate the sale of alternative automotive products;• termination of business relationships with insurance companies that promote the use of our products;• product liability claims by the end users of our products or claims by other parties who we have promised to indemnify for product liability matters;• costs associated with recalls of the products we sell;• currency fluctuations in the U.S. dollar, pound sterling and euro versus other currencies;• instability in regions in which we operate that can affect our supply of certain products;• interruptions, outages or breaches of our operational systems, security systems, or infrastructure as a result of attacks on, or malfunctions of, our systems;• uncertainty as to the impact on our industry of any terrorist attacks or responses to terrorist attacks; and• other risks that are described in our Form 10-K filed March 3, 2014 and in other reports filed by us from time to time with the Securities and Exchange Commission.

You should not place undue reliance on these forward-looking statements. All of these forward-looking statements are based on our expectations as of the date of this press release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

         
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Income
( In thousands, except per share data )
         
         
 Three Months Ended Six Months Ended
 June 30,June 30,
 2014201320142013
         
Revenue  $ 1,709,132  $ 1,251,748  $ 3,334,909  $ 2,447,745
         
Cost of goods sold  1,038,073  741,875  2,011,966  1,435,923
         
Gross margin  671,059  509,873  1,322,943  1,011,822
         
Facility and warehouse expenses  128,506  102,885  254,665  203,131
         
Distribution expenses  146,544  106,583  283,873  210,440
         
Selling, general and administrative expenses  186,585  146,012  371,115  283,068
         
Restructuring and acquisition related expenses  5,901  3,680  9,222  5,185
         
Depreciation and amortization  29,927  19,335  56,638  37,032
         
Operating income  173,596  131,378  347,430  272,966
         
Other expense (income):        
Interest expense, net  15,628  12,492  31,746  21,087
Loss on debt extinguishment  --   2,795  324  2,795
Change in fair value of contingent consideration liabilities  (790)  230  (2,012)  1,053
Other income, net  (907)  (577)  (1,003)  (175)
         
Total other expense, net  13,931  14,940  29,055  24,760
         
Income before provision for income taxes  159,665  116,438  318,375  248,206
         
Provision for income taxes   54,341  40,716  108,362  87,892
         
Equity in earnings of unconsolidated subsidiaries  (442)  --   (478)  -- 
         
Net income  $ 104,882  $ 75,722  $ 209,535  $ 160,314
         
         
Earnings per share:        
Basic  $ 0.35  $ 0.25  $ 0.69  $ 0.54
         
Diluted  $ 0.34  $ 0.25  $ 0.69  $ 0.53
         
         
Weighted average common shares outstanding:        
Basic  302,030  299,159  301,719  298,690
         
Diluted  305,837  303,657  305,677  303,295
     
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
( In thousands, except share and per share data )
     
     
 June 30,December 31,
 20142013
Assets    
     
Current Assets:    
Cash and equivalents  $ 109,564  $ 150,488
Receivables, net  624,300  458,094
Inventory  1,346,723  1,076,952
Deferred income taxes  74,092  63,938
Prepaid expenses and other current assets  86,047  50,345
 Total Current Assets  2,240,726  1,799,817
     
Property and Equipment, net  621,600  546,651
Intangibles  2,539,372  2,091,183
Other Assets  97,147  81,123
     
 Total Assets  $ 5,498,845  $ 4,518,774
     
Liabilities and Stockholders' Equity    
     
Current Liabilities:    
Accounts payable  $ 392,659  $ 349,069
Accrued expenses  248,632  198,769
Contingent consideration liabilities  2,304  52,465
Other current liabilities  35,126  36,115
Current portion of long-term obligations   71,487  41,535
     
 Total Current Liabilities  750,208  677,953
     
Long-Term Obligations, Excluding Current Portion  1,879,837  1,264,246
Deferred Income Taxes  160,452  133,822
Other Noncurrent Liabilities  105,832  92,008
     
Commitments and Contingencies    
     
Stockholders' Equity:    
Common stock, $0.01 par value, 1,000,000,000    
shares authorized, 302,189,513 and 300,805,276     
shares issued and outstanding at June 30, 2014    
and December 31, 2013, respectively  3,022  3,008
Additional paid-in capital  1,031,807  1,006,084
Retained earnings  1,531,177  1,321,642
Accumulated other comprehensive income   36,510  20,011
     
 Total Stockholders' Equity  2,602,516  2,350,745
     
 Total Liabilities and Stockholders' Equity  $ 5,498,845  $ 4,518,774
     
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
( In thousands )
     
  Six Months Ended
 June 30,
 20142013
     
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net income  $ 209,535  $ 160,314
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization  58,893  39,711
Stock-based compensation expense  11,783  10,562
Excess tax benefit from stock-based payments  (9,747)  (10,902)
Other  1,645  6,126
Changes in operating assets and liabilities, net of effects from acquisitions:
 Receivables  (71,779)  (50,320)
 Inventory  (40,773)  (6,227)
 Prepaid income taxes/income taxes payable  9,653  34,521
 Accounts payable  (20,549)  14,361
 Other operating assets and liabilities  3,543  11,344
     
 Net cash provided by operating activities  152,204  209,490
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property and equipment  (67,331)  (40,151)
Proceeds from sales of property and equipment  2,581  1,251
Investments in unconsolidated subsidiaries  (2,240)  -- 
Acquisitions, net of cash acquired  (635,332)  (308,579)
     
Net cash used in investing activities  (702,322)  (347,479)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from exercise of stock options  4,207  10,604
Excess tax benefit from stock-based payments  9,747  10,902
Debt issuance costs  (3,715)  (16,521)
Net borrowings of long-term and other obligations  496,232  236,167
     
Net cash provided by financing activities  506,471  241,152
     
Effect of exchange rate changes on cash and equivalents  2,723  (1,343)
     
Net (decrease) increase in cash and equivalents  (40,924)  101,820
     
Cash and equivalents, beginning of period  150,488  59,770
     
Cash and equivalents, end of period  $ 109,564  $ 161,590
             
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
( In thousands, except per share data )
             
             
 Three Months Ended June 30,
Operating Highlights20142013    
   % of  % of    
   Revenue  RevenueChange% Change
             
Revenue  $ 1,709,132 100.0%  $ 1,251,748 100.0%  $ 457,384 36.5%
             
Cost of goods sold  1,038,073 60.7%  741,875 59.3%  296,198 39.9%
             
Gross margin  671,059 39.3%  509,873 40.7%  161,186 31.6%
             
Facility and warehouse expenses  128,506 7.5%  102,885 8.2%  25,621 24.9%
             
Distribution expenses  146,544 8.6%  106,583 8.5%  39,961 37.5%
             
Selling, general and administrative expenses  186,585 10.9%  146,012 11.7%  40,573 27.8%
             
Restructuring and acquisition related expenses  5,901 0.3%  3,680 0.3%  2,221 60.4%
             
Depreciation and amortization  29,927 1.8%  19,335 1.5%  10,592 54.8%
             
Operating income  173,596 10.2%  131,378 10.5%  42,218 32.1%
             
Other expense (income):            
Interest expense, net  15,628 0.9%  12,492 1.0%  3,136 25.1%
Loss on debt extinguishment  --  0.0%  2,795 0.2%  (2,795) n/m
Change in fair value of contingent consideration liabilities  (790) (0.0%)  230 0.0%  (1,020) n/m
Other income, net  (907) (0.1%)  (577) (0.0%)  (330) 57.2%
             
Total other expense, net  13,931 0.8%  14,940 1.2%  (1,009) (6.8%)
             
Income before provision for income taxes  159,665 9.3%  116,438 9.3%  43,227 37.1%
             
Provision for income taxes   54,341 3.2%  40,716 3.3%  13,625 33.5%
             
Equity in earnings of unconsolidated subsidiaries  (442) (0.0%)  --  0.0%  (442) n/m
             
             
Net income  $ 104,882 6.1%  $ 75,722 6.0%  $ 29,160 38.5%
             
             
Earnings per share:            
Basic  $ 0.35    $ 0.25    $ 0.10 40.0%
             
Diluted  $ 0.34    $ 0.25    $ 0.09 36.0%
             
Weighted average common shares outstanding:            
Basic  302,030    299,159    2,871 1.0%
             
Diluted  305,837    303,657    2,180 0.7%
             
LKQ CORPORATION AND SUBSIDIARIES
Unaudited Supplementary Data
( In thousands, except per share data )
             
             
 Six Months Ended June 30,
Operating Highlights20142013    
   % of  % of    
   Revenue  RevenueChange% Change
             
Revenue  $ 3,334,909 100.0%  $ 2,447,745 100.0%  $ 887,164 36.2%
             
Cost of goods sold  2,011,966 60.3%  1,435,923 58.7%  576,043 40.1%
             
Gross margin  1,322,943 39.7%  1,011,822 41.3%  311,121 30.7%
             
Facility and warehouse expenses  254,665 7.6%  203,131 8.3%  51,534 25.4%
             
Distribution expenses  283,873 8.5%  210,440 8.6%  73,433 34.9%
             
Selling, general and administrative expenses  371,115 11.1%  283,068 11.6%  88,047 31.1%
             
Restructuring and acquisition related expenses  9,222 0.3%  5,185 0.2%  4,037 77.9%
             
Depreciation and amortization  56,638 1.7%  37,032 1.5%  19,606 52.9%
             
Operating income  347,430 10.4%  272,966 11.2%  74,464 27.3%
             
Other expense (income):            
Interest expense, net  31,746 1.0%  21,087 0.9%  10,659 50.5%
Loss on debt extinguishment  324 0.0%  2,795 0.1%  (2,471) (88.4%)
Change in fair value of contingent consideration liabilities  (2,012) (0.1%)  1,053 0.0%  (3,065) n/m
Other income, net  (1,003) (0.0%)  (175) (0.0%)  (828) n/m
             
Total other expense, net  29,055 0.9%  24,760 1.0%  4,295 17.3%
             
Income before provision for income taxes  318,375 9.5%  248,206 10.1%  70,169 28.3%
             
Provision for income taxes   108,362 3.2%  87,892 3.6%  20,470 23.3%
             
Equity in earnings of unconsolidated subsidiaries  (478) (0.0%)  --  0.0%  (478) n/m
             
             
Net income  $ 209,535 6.3%  $ 160,314 6.5%  $ 49,221 30.7%
             
             
Earnings per share:            
Basic  $ 0.69    $ 0.54    $ 0.15 27.8%
             
Diluted  $ 0.69    $ 0.53    $ 0.16 30.2%
             
Weighted average common shares outstanding:            
Basic  301,719    298,690    3,029 1.0%
             
Diluted  305,677    303,295    2,382 0.8%
         
The following unaudited tables compare certain third party revenue categories:
         
 Three Months Ended  
 June 30,  
 20142013Change% Change
 (In thousands)  
Included in Unaudited Condensed Consolidated    
Statements of Income of LKQ Corporation    
         
North America  $ 858,193  $ 796,574  $ 61,619 7.7%
Europe  464,698  297,388  167,310 56.3%
Specialty  217,970  --   217,970 n/m
Parts and services  1,540,861  1,093,962  446,899 40.9%
Other   168,271  157,786  10,485 6.6%
Total  $ 1,709,132  $ 1,251,748  $ 457,384 36.5%
         
Revenue changes by category for the three months ended June 30, 2014 vs. 2013:
         
      
 Revenue Change Attributable to:  
 AcquisitionOrganicForeign Exchange% Change
         
North America 2.9% 5.3% (0.5%) 7.7%
Europe 32.3% 15.6% 8.4% 56.3%
Specialty n/m n/m n/m n/m
Parts and services 30.8% 8.1% 1.9% 40.9%
Other  10.6% (3.9%) (0.1%) 6.6%
Total 28.3% 6.6% 1.7% 36.5%
         
         
  Six Months Ended  
 June 30,  
 20142013Change% Change
 (In thousands)  
Included in Unaudited Condensed Consolidated    
Statements of Income of LKQ Corporation    
         
North America  $ 1,731,972  $ 1,606,831  $ 125,141 7.8%
Europe  883,675  509,523  374,152 73.4%
Specialty  394,767  --   394,767 n/m
Parts and services  3,010,414  2,116,354  894,060 42.2%
Other   324,495  331,391  (6,896) (2.1%)
Total  $ 3,334,909  $ 2,447,745  $ 887,164 36.2%
         
Revenue changes by category for the six months ended June 30, 2014 vs. 2013:
         
      
 Revenue Change Attributable to:  
 AcquisitionOrganicForeign Exchange% Change
         
North America 2.5% 5.8% (0.6%) 7.8%
Europe 46.1% 19.6% 7.7% 73.4%
Specialty n/m n/m n/m n/m
Parts and services 31.7% 9.2% 1.4% 42.2%
Other  9.9% (11.9%) (0.1%) (2.1%)
Total 28.7% 6.3% 1.2% 36.2%
         
 The following unaudited table reconciles Net Income to EBITDA: 
         
 Three Months EndedSix Months Ended
 June 30,June 30,
 2014201320142013
 (In thousands)
     
Net income  $ 104,882  $ 75,722  $ 209,535  $ 160,314
Depreciation and amortization  31,047  20,671  58,893 39,711
Interest expense, net  15,628  12,492  31,746  21,087
Loss on debt extinguishment (1)  --   2,795  324  2,795
Provision for income taxes   54,341  40,716  108,362 87,892
         
Earnings before interest, taxes, depreciation and amortization (EBITDA)   $ 205,898  $ 152,396  $ 408,860  $ 311,799
         
 EBITDA as a percentage of revenue  12.0% 12.2% 12.3% 12.7%
         
(1) Loss on debt extinguishment is considered a component of interest in calculating EBITDA, as the write-off of debt issuance costs is similar to the treatment of debt issuance cost amortization.
         
We provide a reconciliation of Net Income to EBITDA as we believe it offers investors, securities analysts and other interested parties useful information regarding our results of operations because it assists in analyzing our performance and the value of our business. EBITDA provides insight into our profitability trends, and allows management and investors to analyze our operating results with and without the impact of depreciation, amortization, interest and income tax expense. We believe EBITDA is used by securities analysts, investors, and other interested parties in evaluating companies, many of which present EBITDA when reporting their results. EBITDA should not be construed as an alternative to operating income, net income or net cash provided by (used in) operating activities, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report EBITDA information calculate EBITDA in the same manner as we do and, accordingly, our calculation is not necessarily comparable to similarly named measures of other companies and may not be an appropriate measure for performance relative to other companies.
         
The following unaudited table compares revenue and Segment EBITDA by reportable segment:
         
         
 Three Months Ended Six Months Ended
 June 30,June 30,
 2014201320142013
 (In thousands)
         
Revenue        
North America  $ 1,026,090  $ 953,918  $ 2,055,389  $ 1,937,306
Europe  465,173  297,830  884,887  510,439
Specialty  218,400  --   395,423  -- 
Eliminations  (531)  --   (790)  -- 
         
 Total revenue  $ 1,709,132  $ 1,251,748  $ 3,334,909  $ 2,447,745
         
Segment EBITDA        
North America  $ 137,150  $ 118,481  $ 283,288  $ 254,548
Europe  45,945  37,825  87,100  63,489
Specialty  28,356  --   46,160  -- 
         
 Total Segment EBITDA  211,451  156,306  416,548  318,037
         
Deduct:        
Restructuring and acquisition related expenses  5,901  3,680  9,222  5,185
Change in fair value of contingent consideration liabilities  (790)  230  (2,012)  1,053
         
Add:        
Equity in earnings of unconsolidated subsidiaries  (442)  --   (478)  -- 
         
Earnings before interest, taxes, depreciation and amortization (EBITDA)   $ 205,898  $ 152,396  $ 408,860  $ 311,799
         
         
The key measure of segment profit or loss reviewed by our chief operating decision maker, who is our Chief Executive Officer, is Segment EBITDA. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. Segment EBITDA excludes restructuring and acquisition related expenses, depreciation, amortization, interest, change in fair value of contingent consideration liabilities, taxes and equity in earnings of unconsolidated subsidiaries. Loss on debt extinguishment is considered a component of interest in calculating EBITDA, as the write-off of debt issuance costs is similar to the treatment of debt issuance cost amortization.
         
The following unaudited table reconciles Net Income and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, respectively:
         
 Three Months Ended Six Months Ended
 June 30,June 30,
 2014201320142013
(In thousands, except per share data)    
         
Net income  $ 104,882  $ 75,722  $ 209,535  $ 160,314
         
Adjustments:        
         
Restructuring and acquisition related expenses, net of tax  3,895  2,381  6,087  3,349
Loss on debt extinguishment, net of tax  --   1,808  214  1,808
Change in fair value of contingent consideration liabilities  (790)  230  (2,012)  1,053
         
Adjusted net income  $ 107,987  $ 80,141  $ 213,824  $ 166,524
         
         
Weighted average diluted common shares outstanding  305,837  303,657  305,677  303,295
         
Diluted earnings per share  $ 0.34  $ 0.25  $ 0.69  $ 0.53
         
Adjusted diluted earnings per share  $ 0.35  $ 0.26  $ 0.70  $ 0.55
         
         
We provide a reconciliation of Net Income and Diluted Earnings per Share ("EPS") to Adjusted Net Income and Adjusted Diluted EPS as we believe it offers investors, securities analysts and other interested parties useful information regarding our results of operations because it assists in analyzing our performance and the value of our business. Adjusted Net Income and Adjusted Diluted EPS are presented as supplemental measures of our performance that management believes are useful for evaluating and comparing our operating activities across reporting periods. In 2014 and 2013, the Company defines Adjusted Net Income and Adjusted Diluted EPS as Net Income and EPS adjusted to eliminate the impact of restructuring and acquisition related expenses, net of tax, loss on debt extinguishment, net of tax, and the change in fair value of contingent consideration liabilities. Because not all companies use identical calculations, this presentation of Adjusted Net Income and Adjusted Diluted EPS may not be comparable to similarly titled measures of other companies.

CONTACT: Joseph P. Boutross-Director, Investor Relations LKQ Corporation (312) 621-2793 jpboutross@lkqcorp.com



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