LKQ Q4 2020 Earnings Report
Key Takeaways
LKQ Corporation reported strong Q4 2020 results, with the second-highest quarterly earnings and highest fourth-quarter earnings in the company's history. The company achieved its highest level of annual free cash flow at $1.3 billion and North America's highest annual segment EBITDA margin of 16.8%.
Fourth quarter revenue was $3.0 billion, a decrease of 1.9% year-over-year.
Fourth quarter parts and services organic revenue declined 5.2%.
Fourth quarter diluted EPS was $0.59, up 28.3%, and adjusted diluted EPS was $0.69, up 27.8%.
Free cash flow in the quarter totaled $246 million, bringing the total to $1.3 billion for the full year of 2020.
LKQ
LKQ
LKQ Revenue by Segment
LKQ Revenue by Geographic Location
Forward Guidance
LKQ anticipates a gradual recovery in the second half of 2021 as vaccination efforts take hold. Improving revenue trends combined with an improving cost structure should drive increased profitability relative to 2020 and contribute to another strong year of cash generation.
Positive Outlook
- Diluted EPS attributable to LKQ stockholders in the range of $2.40 to $2.60
- Adjusted diluted EPS attributable to LKQ stockholders in the range of $2.65 to $2.85
- Free cash flow at a minimum of $800 million
- Targeting free cash flow conversion of EBITDA at 55 - 60%
- Segment EBITDA margin targets for Europe provided at the September 10, 2020 investor day remain unchanged
Challenges Ahead
- Outlook is based on recent conditions, including scrap and precious metals prices remaining at recent prices and exchange rates for the British pound, Euro and Canadian dollar holding near recent levels.
- Outlook is also based on management’s current expectations regarding the recovery from the coronavirus outbreak and the impact of the United Kingdom’s exit from the European Union.
- 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.
- Adjusted figures exclude 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).
Revenue & Expenses
Visualization of income flow from segment revenue to net income