Analyst Note| Brian Bernard, CFA, CPA |
Narrow-moat LKQ performed about in line with our expectations for fourth-quarter and fiscal-year 2020. Compared with the prior-year period, revenue declined 2% during the fourth quarter and 7% for the full year. The full-year revenue decline was mostly due to a 19% drop in second-quarter revenue stemming from COVID-19 shutdowns. LKQ rebounded quickly in the second half of 2020 but continues to face headwinds in North America and Europe. We are optimistic about growth opportunities moving forward, as vaccine distributions commence in these geographies, and we therefore forecast 2021 revenue growth of 8% and 7% in North America and Europe, respectively. We forecast midcycle revenue growth of 3.5% for both segments.