LKQ Corp. reported fourth-quarter and full-year 2020 results today showing some revenue decreases, but the company is still positive despite the “headwinds faced throughout 2020.” In fact, some of the gains posted were company records. LKQ reports that it was able to post continued improvement in operational and balance-sheet productivity and further debt reduction, despite softening revenue trends in many markets as a result of mobility restrictions from COVID-19.
Fourth-quarter revenue was $3.0 billion (down 1.9% year-over-year), while annual revenue was $11.6 billion (down 7.0% year-over-year). According to the company, annual operating cash flow of $1.4 billion was up 35.7%.
“Our focus throughout the COVID-19 crisis has been the health and safety of our employees as well as our customers,” said Dominick Zarcone, president and CEO. “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.”
He added that the company 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%. 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,” Zarcone said.
Net income for the fourth quarter of 2020 was $180 million as compared to $140 million for the same period in 2019, an increase of 28.6%. Diluted earnings per share for the fourth quarter was $0.59 as compared to $0.46 for the same period of 2019, an increase of 28.3%, according to the financial results. Net income for the full year of 2020 was $639 million as compared to $541 million for the same period in 2019, an increase of 18.1%.
“We expect our global teams to build off the solid 2020 performance and execute on our ongoing operational excellence initiatives in 2021,” says Varun Laroyia, executive vice president and chief financial officer. “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.”