Auto Parts Business delivered higher volumes and revenues in the first quarter of fiscal 2012 as compared to the prior year. However, weak market conditions led to a significant decline in commodities pricing which, together with the adverse impact of average inventory accounting, resulted in operating margins of 12%.
Summary of Auto Parts Business Results
| Item | Q1 '12 | Q1 '11 | Change |
| Revenues | 84 | 67 | 26% |
| Operating Income | 10 | 14 | -26% |
| Car Purchase Volumes ('000 lb) | 85 | 82 | 4% |
| Locations (end of quarter) | 50 | 45 | 11% |
In USD millions, except locations
Revenues: Revenues increased 26% from the prior year quarter. This reflects the impact of higher commodity prices on revenues from scrap and core sales, higher admissions and parts sales, and benefits from the acquisitions completed during fiscal 2011.
Margins: Operating margins of 12% were negatively impacted by falling commodities prices during the quarter and the adverse impact of average inventory accounting.
Auto Parts Business: Outlook
The following summary of management's outlook for the Auto Parts Business in the second quarter of fiscal 2012 is subject to uncertainty that may affect future results.
Revenues: Revenues are expected to be slightly lower than the first quarter of 2012 due to the normal seasonal decline in parts sales.
Margins: Operating margins are expected to increase 300 to 400 basis points to 15% to 16% versus the first quarter of 2012 due to an expected improvement in the commodities market, and despite the normal seasonal decline in parts sales.
