LKQ Corporation (LKQ), parent company of PGW Auto Glass, reported several decreases in its first quarter in 2020, according to its latest financial report. The company’s first quarter revenue went down by 3.2%, to the tune of $3 billion. Net income for its first quarter was $146 million, an increase of 49% when compared to its $98 million for the same period in 2019.
“Despite the negative impact of the COVID-19 pandemic on our March 2020 monthly results, we were able to achieve year-over-year growth in earnings per share, a testament to the strength of our business coming into 2020. Of particular note, during the first quarter of 2020 our North American segment achieved a Segment EBITDA margin of 16.4%, the highest level in a decade,” said Dominick Zarcone, LKQ Corporation CEO and president.
The company’s parts and services organic revenue decreased 3.5% while the net impact of acquisition and divestitures revenue was 0.1% and foreign exchange rates was 1.3%, for a total parts and services revenue decline of 4.6%.
According to the financial report, LKQ filed a current report on Form 8-K withdrawing its financial guidance previously issued on February 20, 2020 due to the continued uncertainties from the impact of the COVID-19 pandemic. Zarcone said once the virus continued to spread the company’s top priority was to ensure the health and safety of its employees, customers and vendor partners.
“Our businesses got off to an excellent start in January and February, carrying the strong momentum from 2019 on all fronts. Through February, each of our segments was in line with or ahead of our revenue and profit expectations,” Zarcone said. “As the restrictions on movement of people were imposed resulting in the decline of demand for our parts across all business segments, our financial results during the second half of March deteriorated.”
As a result of reduced demand, from the virus, LKQ’s April revenue went down by approximately 40% when compared to 2019, according to the financial report. According to Zarcone, the company anticipates a gradual improvement in revenue and profitability as governments around the globe begin the process of lifting the restrictions on mobility and opening their economies.
“To help mitigate the business disruption caused by the COVID-19 pandemic, and to position LKQ for earnings growth when the U.S. and European economies rebound, we have taken decisive action and implemented comprehensive cost reduction plans throughout the enterprise, including substantial staffing adjustments,” Zarcone said. “This focus on our cost structure and the variable nature of certain expenses has resulted in a potential annualized run-rate savings of more than $1 billion. As market conditions improve, we look forward to bringing our people back, so we can both fulfill the anticipated increase in demand.”