LKQ Corp. has announced results for its fourth quarter and full year ended Dec. 31, 2009. Income from continuing operations for the fourth quarter was $36.5 million and diluted earnings per share from continuing operations was 25 cents.
For the full year, income from continuing operations was $127.1 million and diluted earnings per share from continuing operations was 88 cents. Excluding restructuring expenses of $0.6 million for the fourth quarter and $2.6 million for the full year, and excluding the gain on bargain purchase related to the purchase of Greenleaf Auto Recyclers LLC, of $4.3 million for both periods, diluted earnings per share from continuing operations would have been 23 cents and 86 cents for the quarter and full year, respectively.
"We reached a major milestone in 2009 and exceeded the $2 billion revenue mark," said Joseph Holsten, president and chief executive officer of LKQ Corp. "Our more than 10,000 employees overcame the economic headwinds of early 2009 and maintained focus on being the premier source of alternative collision and mechanical parts for our customers. The fourth quarter was particularly strong and reflected, I believe, a continued trend to expand the use of alternative collision parts. Our organic revenue growth rate for parts and services was close to 10 percent, and excluding service revenue, it was 12 percent during the fourth quarter."
Holsten added, "We made a number of acquisitions in 2009 including the purchase of Greenleaf Auto Recyclers in October. The integration of the businesses with our existing operations is progressing in-line with our expectations."
For the fourth quarter of 2009, revenue was $555.9 million compared with $464.8 million for the fourth quarter of 2008, an increase of 19.6 percent. Income from continuing operations for the quarter was $36.5 million compared with $14.3 million in the prior year, an increase of 155.1 percent, and included a net after tax benefit of $4 million from the gain on bargain purchase offset by fourth quarter restructuring expenses. Results for the fourth quarter of 2008 were impacted by a steep decrease in commodity prices, and restructuring expenses of $1.1 million, net of tax. The organic revenue growth rate for parts and services was 9.8 percent for the fourth quarter of 2009.
For the full year of 2009, revenue was $2 billion compared with $1.9 billion for the full year of 2008, an increase of 7.3 percent. Income from continuing operations for the full year was $127.1 million compared with $97.1 million for the prior year, an increase of 30.9 percent. Income from continuing operations for the full year included $2.6 million, or $1.6 million after tax, of restructuring expenses compared to $8.6 million, or $5.2 million after tax, for the prior year. The results of 2009 also included an after tax gain on bargain purchase of $4.3 million. The organic revenue growth rate for parts and services was 7 percent for the full year of 2009.
As of Dec. 31, 2009, LKQ’s balance sheet reflected cash and equivalents of $108.9 million and long-term debt, including the current portion, of $603 million. The company had no borrowings on its revolving credit facility of $100 million, although availability was reduced by $25.8 million of outstanding letters of credit. In addition, during the fourth quarter of 2009, the company elected to prepay $22.4 million of its term loan payments scheduled for 2010.
During the fourth quarter of 2009, LKQ acquired three businesses: Greenleaf Auto Recyclers; a heavy-duty truck operation in Fresno, Calif.; and a wholesale recycled products business in Albuquerque, New Mexico. The historical annualized revenue of Greenleaf was $114 million. The combined historical annualized revenue of the heavy-duty truck operation and the wholesale recycled products business was $8.5 million.
During October 2009, LKQ sold to Schnitzer Steel Industries Inc. four self-service retail facilities and certain business assets at three other facilities, two of which were physically closed, and one of which was converted to a wholesale recycled products business during the fourth quarter. In January 2010, LKQ completed the planned sale of two additional self-service retail facilities in Dallas, Texas, to Schnitzer Steel. The results of the facilities sold or closed and the related restructuring expenses and a fixed asset impairment have been classified as discontinued operations for all periods presented.
"We anticipate that the current trends of improving miles driven and expansion in the utilization of alternative parts for collision repairs will continue in 2010 and support higher demand for the products we sell," said Holsten. "Revenue from parts and services is anticipated to grow organically at a rate of 6 percent to 8 percent."
Based on current conditions and excluding restructuring expenses and any gains or losses related to acquisitions or divestitures, LKQ anticipates full year 2010 income from continuing operations will be in the range of $145 million to $155 million and diluted earnings per share from continuing operations will be in the range of $1 to $1.06.
Net cash provided by operating activities for 2010 is projected to be approximately $160 million. The company estimates capital expenditures related to property and equipment will be between $85 million to $95 million.