LKQ Corporation (LKQ) Tops Q4 EPS by 10c, Revenues Beat; Offers FY21 EPS Guidance Above Consensus

LKQ Corporation (NASDAQ: LKQ) reported Q4 EPS of $0.69, $0.10 better than the analyst estimate of $0.59. Revenue for the quarter came in at $2.95 billion versus the consensus estimate of $2.9 billion.

• Fourth quarter revenue of $3.0 billion (down 1.9% year-over-year); annual revenue of $11.6 billion (down 7.0% year-over-year)
• Fourth quarter parts and services organic revenue declined 5.2%; annual parts and services organic revenue declined 7.6%
• Fourth quarter 2020 diluted EPS1 of $0.59 (up 28.3%); adjusted diluted EPS1 of $0.69 (up 27.8%)
• Annual diluted EPS1 of $2.09 (up 20.1%); adjusted diluted EPS1 of $2.55 (up 7.6%)
• Record segment EBITDA for North America operations; Europe segment tops second half 2020 segment EBITDA margin outlook
• Annual operating cash flow of $1.4 billion (up 35.7%); free cash flow of $1.3 billion (up 59.2%)
• Net debt leverage down to 1.9x EBITDA
• 2021 outlook provided

“Our focus throughout the COVID-19 crisis has been the health and safety of our employees as well as our customers. Despite the headwinds we faced throughout 2020, we were able to execute on our key operating initiatives of pursuing profitable revenue, enhanced margins and free cash flow generation. Additionally, the cost reductions our teams implemented in 2020 to confront the pandemic’s impact on demand are lessons that we will apply to our operations in 2021 and beyond,” noted Dominick Zarcone, President and Chief Executive Officer. “We again delivered strong quarterly results, with the fourth quarter 2020 being the second highest quarterly earnings, and highest fourth quarter earnings, in the Company’s history. Additionally, we achieved our highest level of annual free cash flow at $1.3 billion and North America’s highest annual segment EBITDA margin of 16.8%. Europe completed a strong second half with a Segment EBITDA margin of 8.9%, above the range of 8.0% to 8.5% presented at our September 2020 Investor Day. As we look to the year ahead, I am confident that the strength of our operations, balance sheet and free cash flow all position LKQ for solid growth and value creation for our stakeholders.”

GUIDANCE:

LKQ Corporation sees FY2021 EPS of $2.65-$2.85, versus the consensus of $2.45.

Varun Laroyia, Executive Vice President and Chief Financial Officer commented: "We expect our global teams to build off the solid 2020 performance and execute on our ongoing operational excellence initiatives in 2021. While the recovery in miles traveled slowed in the fourth quarter, we anticipate a gradual recovery in the second half of the year as the vaccination efforts take hold. Improving revenue trends combined with our improving cost structure should drive increased profitability relative to 2020 and contribute to another strong year of cash generation.”

For 2021, management is anticipating the following:

• Diluted EPS attributable to LKQ stockholders in the range of $2.40 to $2.60 (a)
• Adjusted diluted EPS attributable to LKQ stockholders in the range of $2.65 to $2.85 (a)(b)
• 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

For earnings history and earnings-related data on LKQ Corporation (LKQ) click here.

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