LKQ Corporation announced results for the full year ended December 31, 2018. Total revenue was $11.9 billion, an increase of 22 percent from $9.7 billion in 2017, whilst parts and services organic revenue growth for the full year of 2018 was 4.4 percent.
However, net income from continuing operations attributable to LKQ stockholders for the full year of 2018 was $485 million, a decrease of 10.4 percent as compared to $540 million for the comparable period of 2017. Diluted earnings per share from continuing operations attributable to LKQ stockholders was $1.53, a decrease of 12.1 percent as compared to $1.74 for the same period of 2017. The 2018 results included non-cash impairment charges (net of tax) of $71 million related to the company’s equity investment in Mekonomen AB and $26 million related to a fourth quarter goodwill write down. These impairment charges reduced diluted earnings per share for the full year of 2018 by $0.31. On an adjusted basis, diluted earnings per share from continuing operations attributable to LKQ stockholders for the full year of 2018 was $2.19, an increase of 16.5 percent as compared to $1.88 for the same period of 2017.
“Looking back on 2018, I am proud of the team’s efforts to complete the Stahlgruber acquisition, produce solid organic growth across all our segments and effectively manage working capital to allow us to produce the highest annual operating cash flow figure in the company’s history. While I acknowledge that the 2018 results didn’t live up to our initial expectations due to operational challenges in parts of the business and economic headwinds, particularly in Europe, I believe that we are taking the necessary steps to position the company for continued success,” stated Dominick Zarcone, President and Chief Executive Officer of LKQ Corporation. “As we look forward to fiscal 2019, we will continue to execute on our productivity initiatives across each operating segment and remain focused on profitable revenue growth, margin enhancement, excellent cash conversion and optimising our capital allocation strategy.”
LKQ also reported that during the fourth quarter of 2018, it acquired three wholesale businesses in North America and two wholesale businesses in Europe for a total net consideration of approximately $14 million. Also in the fourth quarter, LKQ’s European operations opened five branches in Eastern Europe.
The company is projecting 2019 organic revenue growth for parts & services of 2.0 percent to 4.0 percent. The company projects net income from continuing operations of $641 million to $680 million. Varun Laroyia, Executive Vice President and Chief Financial Officer, commented, “Our 2019 annual guidance reflects our emphasis on profitable revenue growth and free cash flow generation. While we expect revenue growth to moderate from past levels, we believe that our margin enhancement initiatives will boost profitability in 2019 despite headwinds from lower scrap metals prices and a strengthening [US] dollar. The operational focus and continued momentum on active working capital management and prudent capital spending is expected to contribute to an increase in free cash flow generation.”
The guidance for the full year 2019 is based on current conditions, including acquisitions completed through February 28, including no material disruptions associated with the United Kingdom’s potential exit from the European Union. The guidance for the full year 2019 is based on scrap prices remaining at current prices and exchange rates for the British pound, Euro and Canadian dollar holding near current levels.
This article courtesy of Russell Thrall III, publisher CollisionWeek. Check out their website at: CollisionWeek