On February 20, 2025, LKQ Corp (LKQ, Financial) released its 8-K filing detailing the financial results for the fourth quarter and full year of 2024. The company, a leading distributor of aftermarket and recycled auto parts, reported a fourth-quarter revenue of $3.4 billion, slightly above the analyst estimate of $3.398 billion. The diluted earnings per share (EPS) for the quarter was $0.60, missing the estimated EPS of $0.66. For the full year, LKQ reported a revenue of $14.4 billion, slightly above the annual estimate of $14.42391 billion, but the annual diluted EPS of $2.62 fell short of the estimated $2.66.
Company Overview
Since its inception in 1998, LKQ Corp has grown into a prominent distributor of aftermarket and recycled auto parts, operating approximately 1,700 facilities across North America and Europe. The company primarily serves the professional channel, offering a wide range of collision and mechanical parts to body shops and mechanical repair shops. Additionally, LKQ operates over 70 pick-your-part junkyards and purchases around 250,000 salvage vehicles annually for parts resale.
Performance and Challenges
LKQ Corp faced a challenging market environment in 2024, with a 4.1% decrease in fourth-quarter revenue compared to the same period in 2023. Organic revenue for parts and services declined by 3.6%, impacted by a 0.7% decrease due to acquisitions and divestitures and a 0.3% decrease from foreign exchange rates. The company also experienced a 13% decline in diluted EPS for the quarter compared to the previous year. These challenges highlight the difficulties in maintaining revenue growth amid fluctuating market conditions and currency impacts.
Financial Achievements
Despite the challenges, LKQ Corp achieved significant financial milestones. The company generated an annual operating cash flow of $1.1 billion and a free cash flow of $0.8 billion. LKQ also returned over 80% of its free cash flow to shareholders through $360 million in share repurchases and $318 million in cash dividends, exceeding its commitment to return 50% of free cash flow to shareholders. These achievements underscore LKQ's focus on shareholder value and financial discipline.
Key Financial Metrics
For the fourth quarter, LKQ reported a net income of $156 million, down from $184 million in the same period of 2023. The adjusted net income was $207 million, a decrease from $226 million in the previous year. The company's gross margin for the quarter was 39.5%, slightly lower than the 40% reported in Q4 2023. On the balance sheet, LKQ ended the year with total assets of $14.955 billion and total liabilities of $8.923 billion, reflecting a stable financial position.
Analysis and Outlook
LKQ Corp's performance in 2024 reflects the challenges of operating in a dynamic market environment. The decline in organic revenue and EPS highlights the impact of external factors such as currency fluctuations and market conditions. However, the company's strong cash flow generation and shareholder returns demonstrate its resilience and commitment to financial stability. Looking ahead, LKQ's focus on operational excellence and portfolio simplification positions it for potential growth in 2025, with an anticipated organic revenue growth of 0% to 2% and an adjusted diluted EPS range of $3.40 to $3.70.
The LKQ team focused on our core strengths to manage difficult market conditions in 2024 and position the Company for greater success in the future," stated Justin Jude, President and Chief Executive Officer.
| Metric | Q4 2024 | Q4 2023 | % Change |
|---|---|---|---|
| Revenue | $3.4 billion | $3.5 billion | -4.1% |
| Diluted EPS | $0.60 | $0.69 | -13.0% |
| Net Income | $156 million | $184 million | -15.2% |
Explore the complete 8-K earnings release (here) from LKQ Corp for further details.
