LKQ Corporation Announces Results for Fourth Quarter and Full Year 2014

• Annual revenue growth of 33% to a record $6.74 billion
• Full year 2014 diluted EPS increases 22%
• Annual organic revenue growth for parts and services of 9%
• Announces 13 new Euro Car Parts branches for 2015

CHICAGO, Feb. 26, 2015 (GLOBE NEWSWIRE) --  LKQ Corporation (Nasdaq:LKQ) today announced results for its fourth quarter and full year ended December 31, 2014. For the fourth quarter, net income was $80.5 million, an increase of 3.3% compared to the fourth quarter of 2013, and diluted earnings per share was $0.26, flat year over year. For the full year 2014, net income was $381.5 million, an increase of 22.4% compared to 2013, and diluted earnings per share was $1.25, a 22.5% increase over the $1.02 reported for 2013. The Company noted that full year 2014 and 2013 diluted earnings per share included charges equal to $0.02 and $0.04, respectively, per share resulting from restructuring and acquisition related expenses, losses on debt extinguishment and the change in fair value of contingent consideration liabilities.

"Despite the worse than expected headwinds of deteriorating scrap prices and currency devaluations we faced during the fourth quarter and their negative effects on our fourth quarter earnings, we delivered solid results for full year 2014 with double digit revenue and diluted earnings per share growth. I am particularly pleased with our parts and services growth of 8.7% for the fourth quarter and 9% for the full year. We also reached a major milestone in 2014 by surpassing $6 billion in annual revenue for the first time," stated Robert Wagman, President and Chief Executive Officer of LKQ Corporation.

Fourth Quarter 2014 Reported Results

For the fourth quarter of 2014, revenue was $1.68 billion compared with $1.32 billion for the fourth quarter of 2013, an increase of 27.9%. Net income for the fourth quarter was $80.5 million compared with $77.9 million in the prior year, an increase of 3.3%. For the fourth quarter, total organic revenue growth was 7.1%, including parts and services revenue growth of 8.7%. Acquisition revenue growth for the fourth quarter was 22.2%.

Full Year 2014 Reported Results

For the full year of 2014, revenue was $6.74 billion compared with $5.06 billion in 2013, an increase of 33.1%. Net income for the full year was $381.5 million compared with $311.6 million for the prior year, an increase of 22.4%. For the full year, total organic revenue growth was 7.1%, including parts and services revenue growth of 9.0%. Acquisition revenue growth for 2014 was 25.5%.

Balance Sheet and Liquidity

As of December 31, 2014, LKQ's balance sheet reflected cash and equivalents of $115 million and outstanding debt of $1.86 billion, including obligations outstanding under the Company's credit facilities of $1.10 billion ($433 million of term loans and $664 million of revolver borrowings), senior notes of $600 million, and outstanding borrowings under the Company's asset securitization facility of $95 million. Total availability under the Company's credit facilities at December 31, 2014 was approximately $1.1 billion.

Other Events

In addition to the previously announced acquisition of Stag Parkway Holding Company, a supplier of RV parts and accessories, during the fourth quarter of 2014, LKQ acquired a specialty aftermarket distributor with locations in Ohio and Pennsylvania; and a salvage business with locations in Sweden and Norway. LKQ's European operations opened ten Euro Car Parts branches in the fourth quarter of 2014 and plans to open 13 new branches during 2015.

Mr. Wagman added, "Our acquisition of the European salvage business demonstrates our commitment to replicating the success of our collision model in Europe and to actively grow the use of alternative collision parts beyond North America."

On November 10, 2014, Sukhpal Singh Ahluwalia was elected to LKQ's Board of Directors.

Company Outlook

Referring to the 2015 earnings per share guidance Mr. Wagman commented, "The declines we saw in the foreign currency rates in the fourth quarter of 2014 have continued into the first quarter of 2015 with the British Pound, Euro, and Canadian Dollar all weakening compared to the US Dollar.  During that same period we have also seen the markets for scrap steel, copper and other commodities trend lower. We estimate that these headwinds will negatively impact 2015 EPS approximately four cents per share due to weaker foreign currencies and an additional six cents per share related to lower commodity prices compared to 2014."

Guidance for 2015 is based on current conditions (including 2015 acquisitions completed to date) and excludes the 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); and capital spending related to future business acquisitions.

Quarterly Conference Call

LKQ will host a conference call and webcast on February 26, 2015 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: 13599524#. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through March 27, 2015. 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, Scandinavia, Australia and Taiwan. LKQ offers 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:

• Changes in economic and political activity in the U.S. and other countries in which we are located or do business, 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 the prices of fuel, scrap metal and other commodities;
• 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;
• restrictions or prohibitions on selling certain aftermarket products to the extent OEMs seek and obtain more design patents than they have in the past and are successful in asserting infringement of these patents and defending their validity;
• changes to our business relationships with insurance companies or changes by insurance companies to their business practices relating to 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;
• additional unionization efforts, new collective bargaining agreements, and work stoppages;
• higher costs and  the resulting potential inability to service our customers to the extent that our suppliers decide to discontinue business relationships with us; 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.

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 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 is calculated as EBITDA excluding restructuring and acquisition related expenses, change in fair value of contingent consideration liabilities and equity in earnings of unconsolidated subsidiaries. EBITDA, which is the basis for Segment EBITDA, is calculated as net income excluding depreciation, amortization, interest (including loss on debt extinguishment) and taxes. 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 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 Diluted 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. Adjusted Net Income and Adjusted Diluted EPS should not be construed as alternatives to Net Income or Diluted EPS as determined in accordance with accounting principles generally accepted in the United States. In addition, 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.