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LKQ : +31% au 2eme trimestre (3,4 Md€ de CA)

Distributeurs

Le chiffre d'affaires du deuxième trimestre 2021 s'est élevé à 3,4 milliards de dollars, soit une augmentation de 30,8% par rapport à 2,6 milliards de dollars au deuxième trimestre 2020, reflétant l'annualisation de l'impact de la pandémie au deuxième trimestre 2020. Pour le deuxième trimestre 2021, les pièces et les revenus organiques des services ont augmenté de 21,9%.

LKQ Corporation (Nasdaq:LKQ) today reported second quarter 2021 results that reflect strength for the Company in a number of key metrics including total revenue, segment margins and free cash flow. In other second quarter developments, MSCI increased the Company's ESG rating from A to AA, and Fitch Ratings, Inc. assigned LKQ an initial rating of ‘BBB-’ (outlook stable).

"We were able to produce yet another record performance in the second quarter. This performance marks two key milestones as the first quarterly period with EPS of over $1 and the highest quarterly Segment EBITDA in the Company’s history. The North America and Specialty segments achieved record Segment EBITDA margins in the quarter, and Europe delivered a double-digit margin for the first time since the second quarter of 2016. The European performance further validates the margin targets provided at the start of the 1 LKQ Europe program and gives us confidence that we are on track with the overall goals of the program,” noted Dominick Zarcone, President and Chief Executive Officer.

Second Quarter 2021 Financial Results

Revenue for the second quarter of 2021 was $3.4 billion, an increase of 30.8% as compared to $2.6 billion in the second quarter of 2020, reflecting the annualization of the pandemic impact during the second quarter of 2020. For the second quarter of 2021, parts and services organic revenue increased 21.9%, while the net impact of acquisitions and divestitures decreased revenue 0.3% and foreign exchange rates increased revenue 5.4%, for a total parts and services revenue increase of 27.0%. Other revenue grew 108.5% in the second quarter of 2021, driven by higher scrap steel and precious metals prices.

Net income1 for the second quarter of 2021 was $305 million as compared to $119 million for the same period in 2020, an increase of 157.0%. Diluted earnings per share1 for the second quarter was $1.01 as compared to $0.39 for the same period of 2020, an increase of 159.0%.

On an adjusted basis, net income1 in the second quarter was $340 million compared to $161 million in the same period of 2020, a 110.7% increase. Adjusted diluted earnings per share1 for the second quarter was $1.13 as compared to $0.53 for the same period of 2020, a 113.2% increase.

1 References in this release to Net income and Diluted earnings per share, and the corresponding adjusted figures, reflect amounts from continuing operations attributable to LKQ stockholders.

Cash Flow and Balance Sheet

Cash flow from operations totaled $411 million during the second quarter of 2021, and free cash flow in the quarter was $365 million. Cash flow from operations for the six months ended June 30, 2021 was $933 million, and free cash flow for the six months ended June 30, 2021 was $845 million. Net repayments on borrowings totaled $264 million during the quarter and, as of June 30, 2021, net debt was $2.1 billion. Net leverage, as defined in our credit facility, decreased to 1.2x EBITDA. 

On April 1, 2021, the €750 million 3.625% Senior Notes due 2026 were redeemed. The redemption was financed by lower cost revolver borrowings and cash on hand.

Stock Repurchase Program

In the second quarter of 2021, we repurchased a quarterly record of 6.2 million shares of common stock. Since initiating the stock repurchase plan in October 2018, 25.0 million shares have been repurchased for a total consideration of $830 million through June 30, 2021.

On July 28, 2021, the Board of Directors authorized a $1 billion increase to the existing share repurchase program and extended the duration through October 25, 2024. Under the repurchase program, we are authorized to repurchase shares in the open market as well as in privately negotiated transactions. The timing and the amount of any repurchases of common stock will be determined by LKQ management based on its evaluation of market conditions and other factors. The repurchase program will be effected in compliance with SEC Rule 10b-18 and other applicable legal requirements. The repurchase program does not obligate us to acquire any specific number of shares and may be suspended or discontinued at any time. Stock purchased as part of this program will be held as treasury stock.

2021 Outlook

Varun Laroyia, Executive Vice President and Chief Financial Officer commented, “Based on the strong performance in the second quarter and the expected sustainability of the operational excellence initiatives, we are raising the full year outlook for profitability and free cash flow. While inflationary pressures will continue to be a headwind in the second half of the year, we are cautiously optimistic that we have the ability to mitigate these pressures.”

For 2021, management is anticipating the following revised outlook:

  • Diluted EPS attributable to LKQ stockholders in the range of $3.23 to $3.43 (a)
  • Adjusted diluted EPS attributable to LKQ stockholders in the range of $3.55 to $3.75 (a)(b)
  • Free cash flow in the range of $0.95 billion to $1.05 billion (b)
  • Full year 2021 Segment EBITDA margin targets for Europe provided at the September 10, 2020 investor day updated to a range of 9.5% to 10.3%

(a) Amounts reflect continuing operations

(b) Non-GAAP measure. See the table accompanying this release that reconciles the forecasted U.S. GAAP measure to the forecasted adjusted measure, which is non-GAAP.

Our outlook for the full year 2021 is based on current conditions and recent trends, and it assumes current U.S. federal tax legislation remains unchanged, exchange rates for the Canadian dollar, euro, and pound sterling hold near recent levels, and the price of scrap and precious metals trend lower in the second half of the year. Our outlook is also based on management’s current expectations regarding the recovery from the coronavirus outbreak. Changes in these conditions may impact our ability to achieve the estimates. Adjusted figures exclude (to the extent applicable) the impact of restructuring and acquisition related expenses; amortization expense related to acquired intangibles; excess tax benefits and deficiencies from stock-based payments; losses on debt extinguishment; impairment charges; and gains and losses related to acquisitions or divestitures (including changes in the fair value of contingent consideration liabilities).

Non-GAAP Financial Measures

This release contains and management’s presentation on the related conference call will refer to non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. Included with this release are reconciliations of each non-GAAP financial measure with the most directly comparable financial measure calculated in accordance with GAAP.

Conference Call Details

LKQ will host a conference call and webcast on July 29, 2021 at 8:00 a.m. Eastern Time (7:00 a.m. Central Time) with members of senior management to discuss the Company's results. To access the investor conference call, please dial (833) 236-5754. International access to the call may be obtained by dialing (647) 689-4182. The investor conference call will require you to enter conference ID: 5091036#.

Webcast and Presentation Details

The audio webcast and accompanying slide presentation can be accessed at (www.lkqcorp.com) in the Investor Relations section.

A replay of the conference call will be available by telephone at (800) 585-8367 or (416) 621-4642 for international calls. The telephone replay will require you to enter conference ID: 5091036#. An online replay of the audio webcast will be available on the Company's website. Both formats of replay will be available through August 12, 2021. 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, Europe and Taiwan. LKQ offers its customers a broad range of OEM recycled and aftermarket parts, replacement systems, components, equipment, and services to repair and accessorize automobiles, trucks, and recreational and performance vehicles.

Forward Looking Statements

Statements and information in this press release and on the related conference call, including our outlook for 2021, as well as remarks by the Chief Executive Officer and other members of management, that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are made pursuant to the “safe harbor” provisions of such Act.

Forward-looking statements include, but are not limited to, statements regarding our outlook, guidance, expectations, beliefs, hopes, intentions and strategies. These statements are subject to a number of risks, uncertainties, assumptions and other factors including those identified below.  

All forward-looking statements are based on information available to us at the time the statements are made. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should not place undue reliance on our forward-looking statements. Actual events or results may differ materially from those expressed or implied in the forward-looking statements. The risks, uncertainties, assumptions and other factors that could cause actual events or results to differ from the events or results predicted or implied by our forward-looking statements include the factors set forth below, and other factors discussed in our filings with the SEC, including those disclosed under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in our subsequent Quarterly Reports on Form 10-Q. These reports are available on our investor relations website at lkqcorp.com and on the SEC website at sec.gov.

These factors include the following (not necessarily in order of importance):

  • effects on our business from the disruption to economic activity caused by the COVID-19 pandemic, including a substantial decrease in the demand for our products and services, interruptions to supply chains, and the inability of customers to pay for products and services;
  • employment-related issues arising from the COVID-19 pandemic, including employment law claims resulting from the layoffs and furloughs of employees to reduce costs during the period of decreased demand, increased healthcare costs, workforce shortages, and health and safety issues at the workplace;
  • changes in economic, political and social conditions in the U.S. and other countries in which we are located or do business, including the U.K. withdrawal from the European Union (also known as Brexit), and the impact of these changes on our businesses, the demand for our products and our ability to obtain financing for operations;
  • increasing competition in the automotive parts industry, including parts sold on online marketplaces and the potential competitive advantage to original equipment manufacturers ("OEMs") with "connected car" technology, as well as the various efforts by OEMs to restrict or prohibit the sale of aftermarket or recycled parts;
  • changes to our business relationships with insurance companies or changes by insurance companies to their business practices relating to the use of our products as well as changes in the level of acceptance and promotion of alternative automotive parts by insurance companies and vehicle repairers;
  • restrictions or prohibitions on selling or importing aftermarket products through enforcement by OEMs or governmental agencies of intellectual property rights or import laws;
  • variations in the number of vehicles manufactured and sold, vehicle accident rates, miles driven, and the age profile of vehicles in accidents, the increase of accident avoidance systems being installed in vehicles, the potential loss of sales of certain mechanical parts due to the rise of electric vehicle sales, or changes in the demand for our products and the supply of our inventory due to severity of weather and seasonality of weather patterns;
  • fluctuations in the prices of fuel, scrap metal and other commodities;
  • changes in our relationships with our suppliers, disruption to our supply of inventory, or the misconduct, performance failures or negligence of our third party vendors or service providers could increase our expenses, impede our ability to serve our customers, or expose us to liability; as well as price increases, interruptions or disruptions to the supply of vehicle parts from aftermarket suppliers and vehicles from salvage auctions;
  • if our goodwill or other intangible assets become impaired, or there are declines in the values of our assets, including as a result of the effects of the COVID-19 pandemic on our business, we may incur significant charges to our pre-tax income;
  • 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 and costs associated with recalls of the products we sell;
  • our ability to identify acquisition candidates at reasonable prices and our ability to successfully divest underperforming businesses and 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;
  • our ability to satisfy our debt obligations and to operate within the limitations imposed by financing arrangements, including the possibility of not satisfying one or more of the financial covenants in our credit facility or the terms of the indentures governing our senior notes;
  • our senior notes are subject to risks that could affect the value of the notes, require holders of the notes to return payments received from us or the guarantors, or affect our ability to repurchase the notes upon a change of control or pursuant to an asset sale offer;
  • our ability to obtain financing on acceptable terms to finance our growth;
  • changes in laws or regulations affecting our business;
  • our operations are subject to environmental regulations and we may incur costs relating to environmental matters;
  • our bylaws provide that the courts in the State of Delaware are the exclusive forums for substantially all disputes between us and our stockholders;
  • changes to applicable U.S. and foreign tax laws, changes to interpretations of tax laws, and changes in our mix of earnings among the jurisdictions in which we operate;
  • the implementation of a border tax or tariff on imports and the negative impact on our business due to the amount of inventory we import;
  • governmental agencies may refuse to grant or renew our operating licenses and permits for our salvage, self service and refurbishing businesses;
  • loss of key management personnel may affect our ability to successfully manage our business and achieve our objectives;
  • the risks associated with operating in foreign jurisdictions, including foreign laws and economic and political instabilities and currency fluctuations in the U.S. dollar, pound sterling and euro versus other currencies;
  • additional unionization efforts, new collective bargaining agreements, and work stoppages;
  • our ability to develop and implement the operational and financial systems needed to manage our operations; and interruptions, outages or breaches of our operational systems, security systems, or infrastructure as a result of attacks on, or malfunctions of, our systems;
  • costs of complying with laws relating to the security of personal information;
  • business interruptions affecting our distribution centers, computer systems and the availability of inventory;
  • problems with our fleet of trucks and other vehicles could affect our business;
  • potential losses of our right to operate at key locations if we are not able to negotiate lease renewals or due to environmental issues; and
  • disruptions to the management and operations of our business and the uncertainties caused by activist investors.

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

 

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated
Statements of Income, with Supplementary Data
(In thousands, except per share data)

  Three Months Ended June 30,
  2021   2020        
      % of
Revenue
(1)
      % of
Revenue
(1)
  $ Change   % Change
Revenue $ 3,435,114     100.0%     $ 2,626,323     100.0%     $ 808,791     30.8%
Cost of goods sold 2,019,405     58.8%     1,609,614     61.3%     409,791     25.5%
Restructuring expenses - cost of goods sold     0.0%     5,705     0.2%     (5,705)     n/m
Gross margin 1,415,709     41.2%     1,011,004     38.5%     404,705     40.0%
Selling, general and administrative expenses 901,667     26.2%     737,369     28.1%     164,298     22.3%
Restructuring and acquisition related expenses 5,069     0.1%     24,950     0.9%     (19,881)     (79.7%)
(Gain) loss on disposal of businesses and impairment of net assets held for sale (597)     (0.0%)     2,485     0.1%     (3,082)     n/m
Depreciation and amortization 64,896     1.9%     65,747     2.5%     (851)     (1.3%)
Operating income 444,674     12.9%     180,453     6.9%     264,221     146.4%
Other expense (income):                      
Interest expense, net of interest income 16,172     0.5%     25,616     1.0%     (9,444)     (36.9%)
Loss on debt extinguishment 23,564     0.7%         0.0%     23,564     n/m
Other income, net (4,311)     (0.1%)     (8,174)     (0.3%)     3,863     (47.3%)
Total other expense, net 35,425     1.0%     17,442     0.7%     17,983     n/m
Income from continuing operations before provision for income taxes 409,249     11.9%     163,011     6.2%     246,238     151.1%
Provision for income taxes 107,719     3.1%     41,869     1.6%     65,850     157.3%
Equity in earnings (losses) of unconsolidated subsidiaries 3,478     0.1%     (2,649)     (0.1%)     6,127     n/m
Income from continuing operations 305,008     8.9%     118,493     4.5%     186,515     157.4%
Net income from discontinued operations     0.0%     277     0.0%     (277)     n/m
Net income 305,008     8.9%     118,770     4.5%     186,238     156.8%
Less: net income (loss) attributable to continuing noncontrolling interest 384     0.0%     (22)     (0.0%)     406     n/m
Less: net income attributable to discontinued noncontrolling interest     0.0%         0.0%         n/m
Net income attributable to LKQ stockholders $ 304,624     8.9%     $ 118,792     4.5%     $ 185,832     156.4%
                       
Basic earnings per share: (2)                      
Income from continuing operations $ 1.01         $ 0.39         $ 0.62     159.0%
Net income from discontinued operations         0.00         (0.00)     n/m
Net income 1.01         0.39         0.62     159.0%
Less: net income (loss) attributable to continuing noncontrolling interest 0.00         (0.00)         0.00     n/m
Less: net income attributable to discontinued noncontrolling interest                     n/m
Net income attributable to LKQ stockholders $ 1.01         $ 0.39         $ 0.62     159.0%
                       
Diluted earnings per share: (2)                      
Income from continuing operations $ 1.01         $ 0.39         $ 0.62     159.0%
Net income from discontinued operations         0.00         (0.00)     n/m
Net income 1.01         0.39         0.62     159.0%
Less: net income (loss) attributable to continuing noncontrolling interest 0.00         (0.00)         0.00     n/m
Less: net income attributable to discontinued noncontrolling interest                     n/m
Net income attributable to LKQ stockholders $ 1.01         $ 0.39         $ 0.62     159.0%
                       
Weighted average common shares outstanding:                      
Basic 300,581         304,001         (3,420)     (1.1%)
Diluted 301,467         304,190         (2,723)     (0.9%)
                       
(1) The sum of the individual percentage of revenue components may not equal the total due to rounding.
(2) The sum of the individual earnings per share amounts may not equal the total due to rounding.

 

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated
Statements of Income, with Supplementary Data
(In thousands, except per share data)

  Six Months Ended June 30,
  2021   2020        
      % of
Revenue
(1)
      % of
Revenue
(1)
  $ Change   % Change
Revenue $ 6,605,900     100.0%   $ 5,627,258     100.0%   $ 978,642     17.4%
Cost of goods sold 3,896,640     59.0%   3,396,637     60.4%   500,003     14.7%
Restructuring expenses - cost of goods sold (163)     (0.0%)   5,741     0.1%   (5,904)     n/m
Gross margin 2,709,423     41.0%   2,224,880     39.5%   484,543     21.8%
Selling, general and administrative expenses 1,750,232     26.5%   1,637,180     29.1%   113,052     6.9%
Restructuring and acquisition related expenses 12,954     0.2%   31,920     0.6%   (18,966)     (59.4%)
(Gain) loss on disposal of businesses and impairment of net assets held for sale (582)     (0.0%)   2,236     0.0%   (2,818)     n/m
Depreciation and amortization 130,697     2.0%   131,242     2.3%   (545)     (0.4%)
Operating income 816,122     12.4%   422,302     7.5%   393,820     93.3%
Other expense (income):                      
Interest expense, net of interest income 40,351     0.6%   51,547     0.9%   (11,196)     (21.7%)
Loss on debt extinguishment 23,564     0.4%   12,751     0.2%   10,813     84.8%
Other income, net (10,524)     (0.2%)   (11,796)     (0.2%)   1,272     (10.8%)
Total other expense, net 53,391     0.8%   52,502     0.9%   889     1.7%
Income from continuing operations before provision for income taxes 762,731     11.5%   369,800     6.6%   392,931     106.3%
Provision for income taxes 200,688     3.0%   102,280     1.8%   98,408     96.2%
Equity in earnings (losses) of unconsolidated subsidiaries 9,297     0.1%   (2,133)     (0.0%)   11,430     n/m
Income from continuing operations 571,340     8.6%   265,387     4.7%   305,953     115.3%
Net loss from discontinued operations     0.0%   (638)     (0.0%)   638     n/m
Net income 571,340     8.6%   264,749     4.7%   306,591     115.8%
Less: net income attributable to continuing noncontrolling interest 803     0.0%   718     0.0%   85     11.8%
Less: net income attributable to discontinued noncontrolling interest     0.0%   103     0.0%   (103)     n/m
Net income attributable to LKQ stockholders $ 570,537     8.6%   $ 263,928     4.7%   $ 306,609     116.2%
                       
Basic earnings per share: (2)                      
Income from continuing operations $ 1.89         $ 0.87         $ 1.02     117.2%
Net loss from discontinued operations         (0.00)         0.00     n/m
Net income 1.89         0.87         1.02     117.2%
Less: net income attributable to continuing noncontrolling interest 0.00         0.00         0.00     n/m
Less: net income attributable to discontinued noncontrolling interest         0.00         (0.00)     n/m
Net income attributable to LKQ stockholders $ 1.89         $ 0.86         $ 1.03     119.8%
                       
Diluted earnings per share: (2)                      
Income from continuing operations $ 1.89         $ 0.87         $ 1.02     117.2%
Net loss from discontinued operations         (0.00)         0.00     n/m
Net income 1.89         0.87         1.02     117.2%
Less: net income attributable to continuing noncontrolling interest 0.00         0.00         0.00     n/m
Less: net income attributable to discontinued noncontrolling interest         0.00         (0.00)     n/m
Net income attributable to LKQ stockholders $ 1.89         $ 0.86         $ 1.03     119.8%
                       
Weighted average common shares outstanding:                      
Basic 301,805         305,123         (3,318)     (1.1%)
Diluted 302,609         305,477         (2,868)     (0.9%)
                       
(1) The sum of the individual percentage of revenue components may not equal the total due to rounding.
(2) The sum of the individual earnings per share amounts may not equal the total due to rounding.

 

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)

  June 30,
2021
  December 31,
2020
Assets      
Current assets:      
Cash and cash equivalents $ 328,700     $ 312,154  
Receivables, net 1,225,735     1,073,389  
Inventories 2,394,147     2,414,612  
Prepaid expenses and other current assets 219,952     233,877  
Total current assets 4,168,534     4,034,032  
Property, plant and equipment, net 1,207,156     1,248,703  
Operating lease assets, net 1,368,143     1,353,124  
Intangible assets:      
Goodwill 4,568,087     4,591,569  
Other intangibles, net 768,471     814,219  
Equity method investments 168,467     155,224  
Other noncurrent assets 189,201     163,662  
Total assets $ 12,438,059     $ 12,360,533  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 1,191,250     $ 932,406  
Accrued expenses:      
Accrued payroll-related liabilities 214,288     208,718  
Refund liability 106,331     102,148  
Other accrued expenses 363,891     334,890  
Other current liabilities 110,500     130,021  
Current portion of operating lease liabilities 201,071     221,811  
Current portion of long-term obligations 90,825     58,497  
Total current liabilities 2,278,156     1,988,491  
Long-term operating lease liabilities, excluding current portion 1,215,279     1,197,963  
Long-term obligations, excluding current portion 2,360,685     2,812,641  
Deferred income taxes 285,426     291,421  
Other noncurrent liabilities 380,427     374,640  
Commitments and contingencies      
Redeemable noncontrolling interest 24,077     24,077  
Stockholders’ equity:      
Common stock, $0.01 par value, 1,000,000,000 shares authorized, 321,260,012 shares issued and 296,287,913 shares outstanding at June 30, 2021; 320,867,602 shares issued and 303,553,000 shares outstanding at December 31, 2020 3,212     3,208  
Additional paid-in capital 1,458,993     1,444,584  
Retained earnings 5,346,577     4,776,040  
Accumulated other comprehensive loss (101,090)     (99,009)  
Treasury stock, at cost; 24,972,099 shares at June 30, 2021 and 17,314,602 shares at December 31, 2020 (829,768)     (469,105)  
Total Company stockholders’ equity 5,877,924     5,655,718  
Noncontrolling interest 16,085     15,582  
Total stockholders’ equity 5,894,009     5,671,300  
Total liabilities and stockholders’ equity $ 12,438,059     $ 12,360,533  
       
       

LKQ CORPORATION AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
(In thousands)

  Six Months Ended
  June 30,
  2021   2020
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net income $ 571,340     $ 264,749  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization 142,340     144,309  
Stock-based compensation expense 16,793     15,763  
Loss on debt extinguishment 23,564     12,751  
Other (24,516)     (1,318)  
Changes in operating assets and liabilities, net of effects from acquisitions and dispositions:      
Receivables, net (161,334)     (5,111)  
Inventories 7,284     445,493  
Prepaid income taxes/income taxes payable (18,800)     84,125  
Accounts payable 284,472     (172,140)  
Other operating assets and liabilities 91,947     124,431  
Net cash provided by operating activities 933,090     913,052  
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchases of property, plant and equipment (87,854)     (77,301)  
Proceeds from disposals of property, plant and equipment 11,820     6,110  
Acquisitions, net of cash acquired (29,480)     (5,465)  
Other investing activities, net (3,502)     685  
Net cash used in investing activities (109,016)     (75,971)  
CASH FLOWS FROM FINANCING ACTIVITIES:      
Early-redemption premium (16,014)     (9,498)  
Repayment of Euro Notes (2026) (883,275)      
Repayment of U.S. Notes (2023)     (600,000)  
Borrowings under revolving credit facilities 3,613,568     494,485  
Repayments under revolving credit facilities (2,792,867)     (601,480)  
Repayments under term loans (323,750)     (8,750)  
Borrowings under receivables securitization facility     111,300  
Repayments under receivables securitization facility     (111,300)  
Borrowings (repayments) of other debt, net 39,533     (66,073)  
Settlement of derivative instruments, net (88,743)      
Purchase of treasury stock (343,830)     (88,006)  
Other financing activities, net (13,329)     (10,832)  
Net cash used in financing activities (808,707)     (890,154)  
Effect of exchange rate changes on cash, cash equivalents and restricted cash 1,179     (5,358)  
Net increase (decrease) in cash, cash equivalents and restricted cash 16,546     (58,431)  
Cash, cash equivalents and restricted cash of continuing operations, beginning of period 312,154     528,387  
Add: Cash, cash equivalents and restricted cash of discontinued operations, beginning of period     6,470  
Cash, cash equivalents and restricted cash of continuing and discontinued operations, beginning of period 312,154     534,857  
Cash, cash equivalents and restricted cash, end of period $ 328,700     $ 476,426  

 

The following unaudited tables compare certain third party revenue categories:

  Three Months Ended    
  June 30,    
  2021   2020   $ Change   % Change
  (In thousands)        
Included in Unaudited Condensed Consolidated              
Statements of Income of LKQ Corporation              
North America $ 1,077,171     $ 892,826     $ 184,345     20.6%
Europe 1,569,697     1,206,330     363,367     30.1%
Specialty 531,403     404,002     127,401     31.5%
Parts and services 3,178,271     2,503,158     675,113     27.0%
Other 256,843     123,165     133,678     108.5%
Total $ 3,435,114     $ 2,626,323     $ 808,791     30.8%

 

Revenue changes by category for the three months ended June 30, 2021 vs. 2020:

  Revenue Change Attributable to:    
  Organic (1)   Acquisition and
Divestiture
  Foreign
Exchange
  Total Change (2)
North America 19.7%   0.2%   0.7%   20.6%
Europe 20.7%   (0.9%)   10.3%   30.1%
Specialty 30.1%   0.4%   1.1%   31.5%
Parts and services 21.9%   (0.3%)   5.4%   27.0%
Other 108.0%   0.0%   0.5%   108.5%
Total 25.9%   (0.3%)   5.2%   30.8%

 

The following unaudited tables compare certain third party revenue categories:

  Six Months Ended    
  June 30,    
  2021   2020   $ Change   % Change
  (In thousands)        
Included in Unaudited Condensed Consolidated              
Statements of Income of LKQ Corporation              
North America $ 2,095,608   $ 2,000,168   $ 95,440   4.8%
Europe 3,025,067   2,564,299   460,768   18.0%
Specialty 989,362   751,408   237,954   31.7%
Parts and services 6,110,037   5,315,875   794,162   14.9%
Other 495,863   311,383   184,480   59.2%
Total $ 6,605,900   $ 5,627,258   $ 978,642   17.4%

 

Revenue changes by category for the six months ended June 30, 2021 vs. 2020:

  Revenue Change Attributable to:    
  Organic (1)   Acquisition and
Divestiture
  Foreign
Exchange
  Total Change (2)
North America 4.1%   0.1%   0.5%   4.8%
Europe 9.9%   (1.2%)   9.2%   18.0%
Specialty 30.5%   0.4%   0.8%   31.7%
Parts and services 10.6%   (0.5%)   4.8%   14.9%
Other 58.8%   0.0%   0.4%   59.2%
Total 13.3%   (0.4%)   4.5%   17.4%

(1) We define organic revenue growth as total revenue growth from continuing operations excluding the effects of acquisitions and divestitures (i.e., revenue generated from the date of acquisition to the first anniversary of that acquisition, net of reduced revenue due to the disposal of businesses) and foreign currency movements (i.e., impact of translating revenue at prior period exchange rates). Organic revenue growth includes incremental sales from both existing and new (i.e., opened within the last twelve months) locations and is derived from expanding business with existing customers, securing new customers and offering additional products and services. We believe that organic revenue growth is a key performance indicator as this statistic measures our ability to serve and grow our customer base successfully.

(2) The sum of the individual revenue change components may not equal the total percentage change due to rounding.

The following unaudited table reconciles revenue growth for parts & services to constant currency revenue growth for the same measure:

    Three Months Ended   Six Months Ended
    June 30, 2021   June 30, 2021
    Consolidated   Europe   Consolidated   Europe
Parts & Services                
Revenue growth as reported   27.0%   30.1%   14.9%   18.0%
Less: Currency impact   5.4%   10.3%   4.8%   9.2%
Revenue growth at constant currency   21.6%   19.8%   10.1%   8.8%

 

We have presented the growth of our revenue on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP financial measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency revenue information provides valuable supplemental information regarding our growth, consistent with how we evaluate our performance, as this statistic removes the translation impact of exchange rate fluctuations, which are outside of our control and do not reflect our operational performance. Constant currency revenue results are calculated by translating prior year revenue in local currency using the current year's currency conversion rate. This non-GAAP financial measure has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. Our use of this term may vary from the use of similarly-named measures by other issuers due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. In addition, not all companies that report revenue growth on a constant currency basis calculate such measure in the same manner as we do and, accordingly, our calculations are not necessarily comparable to similarly-named measures of other companies and may not be appropriate measures 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,
  2021   2020   2021   2020
(In thousands)   % of
Revenue
    % of
Revenue
    % of
Revenue
    % of
Revenue
Revenue                      
North America $ 1,327,694       $ 1,011,395       $ 2,577,387       $ 2,301,590    
Europe 1,576,661       1,211,185       3,040,114       2,574,779    
Specialty 532,279       404,874       991,218       753,456    
Eliminations (1,520)       (1,131)       (2,819)       (2,567)    
Total revenue $ 3,435,114       $ 2,626,323       $ 6,605,900       $ 5,627,258    
Segment EBITDA                      
North America $ 276,186   20.8%   $ 149,554   14.8%   $ 525,353   20.4%   $ 360,992   15.7%
Europe 168,106   10.7%   89,387   7.4%   309,064   10.2%   167,649   6.5%
Specialty 79,399   14.9%   52,233   12.9%   140,881   14.2%   84,465   11.2%
Total Segment EBITDA $ 523,691   15.2%   $ 291,174   11.1%   $ 975,298   14.8%   $ 613,106   10.9%

 

We have presented Segment EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our segment profit and loss and underlying trends in our ongoing operations. We calculate Segment EBITDA as EBITDA excluding restructuring and acquisition related expenses (which includes restructuring expenses recorded in Cost of goods sold); change in fair value of contingent consideration liabilities; other gains and losses related to acquisitions, equity method investments or divestitures; equity in losses and earnings of unconsolidated subsidiaries; equity investment mark to market adjustments; and impairment charges. EBITDA, which is the basis for Segment EBITDA, is calculated as net income attributable to LKQ stockholders excluding discontinued operations and discontinued noncontrolling interest, depreciation, amortization, interest (which includes gains and losses on debt extinguishment) and income tax expense. Our chief operating decision maker, who is our Chief Executive Officer, uses Segment EBITDA as the key measure of our segment profit or loss. We use Segment EBITDA to compare profitability among our segments and evaluate business strategies. This financial measure is included in the metrics used to determine incentive compensation for our senior management. We also consider Segment EBITDA to be a useful financial measure in evaluating our operating performance, as it provides investors, securities analysts and other interested parties with supplemental information regarding the underlying trends in our ongoing operations. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate general and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue. Refer to the table on the following page for a reconciliation of net income to EBITDA and Segment EBITDA.

The following unaudited table reconciles Net Income to EBITDA and Segment EBITDA:

  Three Months Ended   Six Months Ended
  June 30,   June 30,
  2021   2020   2021   2020
(In thousands)              
Net income $ 305,008     $ 118,770     $ 571,340     $ 264,749  
Less: net income (loss) attributable to continuing noncontrolling interest 384     (22)     803     718  
Less: net income attributable to discontinued noncontrolling interest             103  
Net income attributable to LKQ stockholders 304,624     118,792     570,537     263,928  
Subtract:              
Net income (loss) from discontinued operations     277         (638)  
Net income attributable to discontinued noncontrolling interest             (103)  
Net income from continuing operations attributable to LKQ stockholders 304,624     118,515     570,537     264,669  
Add:              
Depreciation and amortization 64,896     65,747     130,697     131,242  
Depreciation and amortization - cost of goods sold 5,649     4,010     11,264     9,095  
Depreciation and amortization - restructuring expenses (1) 198     3,173     379     3,972  
Interest expense, net of interest income 16,172     25,616     40,351     51,547  
Loss on debt extinguishment 23,564         23,564     12,751  
Provision for income taxes 107,719     41,869     200,688     102,280  
EBITDA 522,822     258,930     977,480     575,556  
Subtract:              
Equity in earnings (losses) of unconsolidated subsidiaries 3,478     (2,649)     9,297     (2,133)  
Equity investment mark to market adjustments 1,061         5,800      
Add:              
Restructuring and acquisition related expenses (1) 4,871     21,777     12,575     27,948  
Restructuring expenses - cost of goods sold     5,665     (163)     5,661  
(Gain) loss on disposal of businesses and impairment of net assets held for sale (597)     2,485     (582)     2,236  
Change in fair value of contingent consideration liabilities 1,134     (332)     1,085     (428)  
Segment EBITDA $ 523,691     $ 291,174     $ 975,298     $ 613,106  
               
Net income from continuing operations attributable to LKQ stockholders as a percentage of revenue 8.9%     4.5%     8.6%     4.7%  
               
EBITDA as a percentage of revenue 15.2%     9.9%     14.8%     10.2%  
               
Segment EBITDA as a percentage of revenue 15.2%     11.1%     14.8%     10.9%  
               
(1) The sum of these two captions represents the total amount that is reported in Restructuring and acquisition related expenses in the Unaudited Condensed Consolidated Statements of Income.

 

We have presented EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our operating performance and the value of our business. We calculate EBITDA as net income attributable to LKQ stockholders excluding discontinued operations and discontinued noncontrolling interest, depreciation, amortization, interest (which includes gains and losses on debt extinguishment) and income tax expense. We believe EBITDA provides insight into our profitability trends and allows management and investors to analyze our operating results with the impact of continuing noncontrolling interest and without the impact of discontinued noncontrolling interest, discontinued operations, depreciation, amortization, interest (which includes gains and losses on debt extinguishment) and income tax expense. We believe EBITDA is used by investors, securities analysts and other interested parties in evaluating the operating performance and the value of other companies, many of which present EBITDA when reporting their results.

We have presented Segment EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our segment profit and loss and underlying trends in our ongoing operations. We calculate Segment EBITDA as EBITDA excluding restructuring and acquisition related expenses (which includes restructuring expenses recorded in Cost of goods sold); change in fair value of contingent consideration liabilities; other gains and losses related to acquisitions, equity method investments or divestitures; equity in losses and earnings of unconsolidated subsidiaries; equity investment mark to market adjustments; and impairment charges. Our chief operating decision maker, who is our Chief Executive Officer, uses Segment EBITDA as the key measure of our segment profit or loss. We use Segment EBITDA to compare profitability among our segments and evaluate business strategies. This financial measure is included in the metrics used to determine incentive compensation for our senior management. Segment EBITDA includes revenue and expenses that are controllable by the segment. Corporate general and administrative expenses are allocated to the segments based on usage, with shared expenses apportioned based on the segment's percentage of consolidated revenue.

EBITDA and Segment EBITDA should not be construed as alternatives to operating income, net income or net cash provided by operating activities, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report EBITDA or Segment EBITDA information calculate EBITDA or Segment EBITDA in the same manner as we do and, accordingly, our calculations are not necessarily comparable to similarly-named measures of other companies and may not be appropriate measures for performance relative to other companies.

The following unaudited table reconciles Net Income and Diluted Earnings per Share to Adjusted Net Income from Continuing Operations Attributable to LKQ Stockholders and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders, respectively:

  Three Months Ended   Six Months Ended
  June 30,   June 30,
  2021   2020   2021   2020
(In thousands, except per share data)              
Net income $ 305,008     $ 118,770     $ 571,340     $ 264,749  
Less: net income (loss) attributable to continuing noncontrolling interest 384     (22)     803     718  
Less: net income attributable to discontinued noncontrolling interest             103  
Net income attributable to LKQ stockholders 304,624     118,792     570,537     263,928  
Subtract:              
Net income (loss) from discontinued operations     277         (638)  
Net income attributable to discontinued noncontrolling interest             (103)  
Net income from continuing operations attributable to LKQ stockholders 304,624     118,515     570,537     264,669  
Adjustments - continuing operations attributable to LKQ stockholders:              
Amortization of acquired intangibles 19,646     23,903     40,086     48,322  
Restructuring and acquisition related expenses 5,069     24,950     12,954     31,920  
Restructuring expenses - cost of goods sold     5,705     (163)     5,741  
Change in fair value of contingent consideration liabilities 1,134     (332)     1,085     (428)  
Loss on debt extinguishment 23,564         23,564     12,751  
(Gain) loss on disposal of businesses and impairment of net assets held for sale (597)     2,485     (582)     2,236  
Excess tax (benefit) expense from stock-based payments (290)     11     (860)     (701)  
Tax effect of adjustments (13,055)     (13,788)     (20,503)     (26,960)  
Adjusted net income from continuing operations attributable to LKQ stockholders $ 340,095     $ 161,449     $ 626,118     $ 337,550  
               
Weighted average diluted common shares outstanding 301,467     304,190     302,609     305,477  
               
Diluted earnings per share from continuing operations attributable to LKQ stockholders              
Reported $ 1.01     $ 0.39     $ 1.89     $ 0.87  
               
Adjusted $ 1.13     $ 0.53     $ 2.07     $ 1.10  

 

We have presented Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders as we believe these measures are useful for evaluating the core operating performance of our continuing business across reporting periods and in analyzing our historical operating results. We define Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders as Net Income and Diluted Earnings per Share adjusted to eliminate the impact of continuing and discontinued noncontrolling interest, discontinued operations, restructuring and acquisition related expenses, amortization expense related to all acquired intangible assets, gains and losses on debt extinguishment, the change in fair value of contingent consideration liabilities, other gains and losses related to acquisitions, equity method investments or divestitures, impairment charges, excess tax benefits and deficiencies from stock-based payments and any tax effect of these adjustments. The tax effect of these adjustments is calculated using the effective tax rate for the applicable period or for certain discrete items the specific tax expense or benefit for the adjustment. Given the variability and volatility of the amount and frequency of costs related to acquisitions, management believes that these costs are not normal operating expenses and should be adjusted in our calculation of Adjusted Net Income from Continuing Operations Attributable to LKQ Stockholders. Our adjustment of the amortization of all acquisition-related intangible assets does not exclude the amortization of other assets, which represents expense that is directly attributable to ongoing operations. Management believes that the adjustment relating to amortization of acquisition-related intangible assets supplements the GAAP information with a measure that can be used to assess the comparability of operating performance. The acquired intangible assets were recorded as part of purchase accounting and contribute to revenue generation. Amortization of intangible assets that relate to past acquisitions will recur in future periods until such intangible assets have been fully amortized. Any future acquisitions may result in the amortization of additional intangible assets. These financial measures are used by management in its decision making and overall evaluation of our operating performance and are included in the metrics used to determine incentive compensation for our senior management. Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders should not be construed as alternatives to Net Income or Diluted Earnings per Share as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report measures similar to Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders calculate such measures in the same manner as we do and, accordingly, our calculations are not necessarily comparable to similarly-named measures of other companies and may not be appropriate measures for performance relative to other companies.

The following unaudited table reconciles Forecasted Net Income and Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders to Forecasted Adjusted Net Income from Continuing Operations Attributable to LKQ Stockholders and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders, respectively:

 

  Forecasted
  Fiscal Year 2021
  Minimum
Outlook
  Maximum
Outlook
(In millions, except per share data)      
Net income from continuing operations attributable to LKQ stockholders $ 967     $ 1,027  
Adjustments:      
Amortization of acquired intangibles 77     77  
Restructuring expenses 28     28  
Loss on debt extinguishment 24     24  
Other adjustments (1)     (1)  
Tax effect of adjustments (34)     (34)  
Adjusted net income from continuing operations attributable to LKQ stockholders $ 1,061     $ 1,121  
       
Weighted average diluted common shares outstanding 299     299  
       
Diluted earnings per share from continuing operations attributable to LKQ stockholders:      
U.S. GAAP $ 3.23     $ 3.43  
Non-GAAP (Adjusted) $ 3.55     $ 3.75  

 

We have presented forecasted Adjusted Net Income and forecasted Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders in our financial outlook. Refer to the discussion of Adjusted Net Income and Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders for details on the calculation of these non-GAAP financial measures. In the calculation of forecasted Adjusted Net Income and forecasted Adjusted Diluted Earnings per Share from Continuing Operations Attributable to LKQ Stockholders, we included estimates of income from continuing operations attributable to LKQ stockholders, amortization of acquired intangibles for the full fiscal year 2021, restructuring expenses under previously announced plans, the loss on debt extinguishment related to the April 1, 2021 redemption of the Euro Notes 2026 and the related tax effect; we included for all other components the amounts incurred through June 30, 2021.

The following unaudited table reconciles Net Cash Provided by Operating Activities to Free Cash Flow:

  Three Months Ended   Six Months Ended
  June 30,   June 30,
  2021   2020   2021   2020
(In thousands)              
Net cash provided by operating activities $ 410,578     $ 718,489     $ 933,090     $ 913,052  
Less: purchases of property, plant and equipment 46,075     32,763       87,854     77,301  
Free cash flow $ 364,503     $ 685,726     $ 845,236     $ 835,751  

 

We have presented free cash flow solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our liquidity. We calculate free cash flow as net cash provided by operating activities, less purchases of property, plant and equipment. We believe free cash flow provides insight into our liquidity and provides useful information to management and investors concerning our cash flow available to meet future debt service obligations and working capital requirements, make strategic acquisitions and repurchase stock. We believe free cash flow is used by investors, securities analysts and other interested parties in evaluating the liquidity of other companies, many of which present free cash flow when reporting their results. This financial measure is included in the metrics used to determine incentive compensation for our senior management. Free cash flow should not be construed as an alternative to net cash provided by operating activities, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report free cash flow information calculate free cash flow 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 liquidity relative to other companies.

The following unaudited table reconciles Forecasted Net Cash Provided by Operating Activities to Forecasted Free Cash Flow:

  Forecasted
  Fiscal Year 2021
  Minimum
Outlook
  Maximum
Outlook
(In thousands)      
Net cash provided by operating activities $ 1,185,000     $ 1,310,000  
Less: purchases of property, plant and equipment 235,000     260,000  
Free cash flow $ 950,000     $ 1,050,000  

 

We have presented forecasted free cash flow in our financial outlook. Refer to the paragraph above for details on the calculation of free cash flow.

The following unaudited tables reconcile Gross Margin to Adjusted Gross Margin:

Consolidated Adjusted Gross Margin Three Months Ended   Six Months Ended
  June 30,   June 30,
  2021   2020   2021   2020
(In thousands)              
Gross margin $ 1,415,709   $ 1,011,004   $ 2,709,423   $ 2,224,880
Add: Restructuring expenses - cost of goods sold   5,705   (163)   5,741
Adjusted gross margin $ 1,415,709   $ 1,016,709   $ 2,709,260   $ 2,230,621
               
Gross margin % 41.2%   38.5%   41.0%   39.5%
               
Adjusted gross margin % 41.2%   38.7%   41.0%   39.6%

 

North America Adjusted Gross Margin Three Months Ended   Six Months Ended
  June 30,   June 30,
  2021   2020   2021   2020
(In thousands)              
Gross margin $ 651,182   $ 453,733   $ 1,250,674   $ 1,065,347
Add: Restructuring expenses - cost of goods sold   3,082   (163)   3,118
Adjusted gross margin $ 651,182   $ 456,815   $ 1,250,511   $ 1,068,465
               
Gross margin % 49.0%   44.9%   48.5%   46.3%
               
Adjusted gross margin % 49.0%   45.2%   48.5%   46.4%

 

Europe Adjusted Gross Margin Three Months Ended   Six Months Ended
  June 30,   June 30,
  2021   2020   2021   2020
(In thousands)              
Gross margin $ 605,324   $ 445,223   $ 1,167,326   $ 952,470
Add: Restructuring expenses - cost of goods sold   2,623     2,623
Adjusted gross margin $ 605,324   $ 447,846   $ 1,167,326   $ 955,093
               
Gross margin % 38.4%   36.8%   38.4%   37.0%
               
Adjusted gross margin % 38.4%   37.0%   38.4%   37.1%

 

We have presented adjusted gross margin solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate the operating performance of our continuing business across reporting periods and in analyzing our historical operating results. We calculate adjusted gross margin as gross margin plus restructuring expenses recorded in cost of goods sold. We believe adjusted gross margin provides insight into our operating performance and provides useful information to management and investors concerning our gross margins. We believe adjusted gross margin is used by investors, securities analysts and other interested parties in evaluating the operating performance of other companies, many of which present adjusted gross margin when reporting their results. Adjusted gross margin should not be construed as an alternative to gross margin, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report adjusted gross margin information calculate adjusted gross margin 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 reconciles Total Debt to Net Debt:

  June 30, 2021   December 31, 2020
(In thousands)      
Current portion of long-term obligations $ 90,825     $ 58,497  
Long-term obligations, excluding current portion 2,360,685     2,812,641  
Total debt, net of debt issuance costs 2,451,510     2,871,138  
Add: Debt issuance costs 14,630     25,538  
Total debt 2,466,140     2,896,676  
Less: Cash and cash equivalents 328,700     312,154  
Net debt $ 2,137,440     $ 2,584,522  

 

We have presented net debt solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our liquidity and financial position. We calculate net debt as total debt less cash and cash equivalents. We believe net debt provides insight into our liquidity and provides useful information to management and investors concerning our financial position. We believe net debt is used by investors, securities analysts and other interested parties in evaluating the liquidity and financial position of other companies, many of which present net debt when reporting their results. Net debt should not be construed as an alternative to total debt, as determined in accordance with accounting principles generally accepted in the United States. In addition, not all companies that report net debt information calculate net debt 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.