LKQ Corporation (NASDAQ: LKQ) stock surged 11.93% on September 12th, 2019 and continued its bullish momentum on 13th September, 2019 (as of 12:24 pm GMT-4; Source: Google finance) after it welcomed investment in the company by ValueAct Capital, and regularly engages with stockholders to understand and assess their views and opinions. The company appreciate constructive input and are focused on delivering enhanced value for all LKQ stockholders. The company continue to execute on a range of initiatives to support our strategy and improve operational performance. Notably, LKQ’s recent second quarter 2019 earnings results reflect the momentum in the business and strategy, as the company generated the highest quarter of operating cash flow in Company history. Further, the company has recently announced the “1 LKQ Europe” project to fully integrate the European business, enhance efficiencies and drive profitable growth. The company is confident in the ability to execute on the plan given the underlying strength of the Global business model and strategy, and the success the company have achieved in the North American segment since the company’s founding in 1998.
Moreover, LKQ has divested its recycled aviation parts business, AeroVision International, effective August 18, 2019. Terms of the transaction were not disclosed. LKQ has identified several businesses that it intends to sell over the course of the next year. These assets are held on the balance sheet as net assets held for sale. The AeroVision transaction represents the first divestiture of net assets held for sale, and with the disposal of these small, non-core businesses, the Company intends to simplify its operating model and improve margins.
On the other hand, LKQ has reported revenue for the second quarter of 2019 of $3.25 billion, an increase of 7.2% as compared to $3.0 billion in the second quarter of 2018. For the second quarter of 2019, parts and services organic revenue declined 2.1%, (1.3% on a per day basis), and acquisition revenue growth was 12.6%, while the impact of exchange rates was (2.5%), for total parts and services revenue growth of 8.0%. Net income for the second quarter of 2019 was $150 million, a decrease of 4.2% year-over-year. Diluted earnings per share for the second quarter of 2019 was $0.48 as compared to $0.50 for the same period of 2018, a decrease of 4.0%. Cash flow from operations totaled $638 million on a six-month year-to-date basis, up 94%, from a year ago. Free cash flow totaled $537 million, up 152%, year-over-year. The company has paid down $220 million of borrowings during the quarter, and as of June 30, 2019, the balance sheet reflected net debt of $3.7 billion. Net leverage as defined in the credit facility decreased to 2.8x EBITDA.