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LKQ Corporation Announces Results for Third Quarter 2020

October 29, 2020

  • Third quarter 2020 revenue of $3.0 billion (down 3.2% year-over-year)
  • Parts and services organic revenue declined 4.5% year-over-year
  • Net income¹ of $193 million (up 27.4%); adjusted net income of $228 million (up 20.9%)
  • Targeted cost and productivity actions continue to contribute to operating leverage
  • Diluted EPS¹ of $0.64 (up 30.6%); adjusted diluted EPS of $0.75 (up 23.0%)
  • Year-to-date 2020 operating cash flow of $1.1 billion (up 17.6%); free cash flow of $1.0 billion (up 28.1%)
  • Reduced borrowings by $256 million; year-to-date debt paydown of $1.0 billion
  • Net leverage down to 2.0x EBITDA
  • Liquidity up to $2.7 billion as of September 30, 2020
  • Share repurchase program to recommence in the fourth quarter 2020

LKQ Corporation reported third quarter 2020 results that reflect continued improvement in revenue trends, operational and balance sheet productivity, and further debt reduction.

“We delivered exceptionally strong third quarter results owing to the resilience and dedication of the entire LKQ organization. I couldn’t be prouder of what our global team accomplished during these unprecedented times,” noted Dominick Zarcone, President and Chief Executive Officer. “Facing a continued challenging demand environment, our team maintained their sharp focus on the cost structure, and we achieved the highest quarterly earnings in the Company’s history and delivered year-over-year margin improvements in each of our operating segments, with North America also achieving its highest level of segment EBITDA margin in the Company’s history. Additionally, year-to-date we have generated over $1.0 billion in global free cash flow. These metrics validate the continued focus of our team on our key operating initiatives of profitable revenue growth, enhanced margins and free cash flow generation.”

Third Quarter 2020 Financial Results

Revenue for the third quarter of 2020 was $3.0 billion, a decrease of 3.2% as compared to $3.1 billion in the third quarter of 2019. For the third quarter of 2020, parts and services organic revenue decreased 4.5% year-over-year, while the net impact of acquisition and divestitures revenue was (1.0%) and foreign exchange rates was 2.1%, for a total parts and services revenue decline of 3.4%.

Net income for the third quarter of 2020 was $193 million as compared to $152 million for the same period in 2019, an increase of 27.4% year-over-year. Diluted earnings per share for the third quarter was $0.64 as compared to $0.49 for the same period of 2019, an increase of 30.6% year-over-year.

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

On an adjusted basis, net income was $228 million compared to $189 million in the same period of 2019. Adjusted diluted earnings per share for the third quarter was $0.75 as compared to $0.61 for the same period of 2019, a 23.0% increase.

Cash Flow and Balance Sheet

Cash flow from operations totaled $222 million during the third quarter of 2020, for a year-to-date total of $1.1 billion. Free cash flow in the quarter totaled $189 million, bringing the total to $1.0 billion in the first nine months of 2020. The Company made $256 million of net repayments on borrowings during the quarter, for a total year-to-date debt reduction of $1.0 billion. As of September 30, 2020, LKQ’s balance sheet reflected net debt of $2.7 billion, the lowest net debt level since the second quarter of 2017. Net leverage, as defined in our credit facility, decreased to 2.0x EBITDA. As of September 30, 2020, the Company had approximately $2.7 billion in available liquidity, including $2.3 billion available under the credit facilities and $421 million of cash and cash equivalents.

Varun Laroyia, Executive Vice President and Chief Financial Officer, commented, “At the onset of the pandemic, we prioritized cash flow and a strong balance sheet, and during the quarter we maintained that focus by yet again delivering strong operating cash flow pushing the year to date total to over $1.1 billion. We continue to monitor market conditions to manage cash flow and liquidity so that we have the flexibility to deploy capital into the highest return opportunities, including resuming our share repurchase program.”

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 OE recycled and aftermarket parts, replacement systems, components, equipment, and services to repair and accessorize automobiles, trucks, and recreational and performance vehicles.

For additional details, including financial and supplementary data, view the full Press Release on the LKQ Investor Relations website.

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