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Item 5. Market for Registrant’s Common Equity

2021-02-26 compared with 2020-02-27 · 66 added, 25 removed, 74 unchanged (55% of the section changed)

2 unchanged sentences

We have not paid any cash dividends on our common stock.

We intend to continue to retain our earnings to finance our growth, repurchase stock through our stock repurchase program, and for general corporate purposes.

We do not anticipate paying any cash dividends on our common stock in the foreseeable future.

In addition, our senior secured credit agreement and our senior notes indentures contain, and future financing agreements may contain, limitations on payment of cash dividends or other distributions of assets.

We currently intend to continue to retain our earnings to finance our growth, repay our debt, repurchase stock through our stock repurchase program, and for general corporate purposes.

While we have no current plans to pay any cash dividends on our common stock, we may consider paying cash dividends in the future as we determine the best uses of our cash flows.

Our senior secured credit agreement and our senior notes indentures contain limitations on payment of cash dividends or other distributions of assets.

Delaware law also imposes restrictions on dividend payments.

Based on limitations in effect under our senior secured credit agreement and senior notes indentures, the maximum amount of dividends we could pay as of December 31, 2019 was approximately $1.9 billion .

Based on limitations in effect under our senior secured credit agreement, senior notes indentures and Delaware law, the maximum amount of dividends we could have paid as of December 31, 2020 was approximately $2.3 billion.

The limit on the payment of dividends is calculated using historical financial information and will change from period to period.

9 unchanged sentences

Among LKQ Corporation, the S&P 500 Index and the Peer Group

12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 12/31/2020

LKQ Corporation $ 100 $ 103 $ 137 $ 80 $ 120 $ 119

S&P 500 Index $ 100 $ 112 $ 136 $ 130 $ 171 $ 203

Peer Group $ 100 $ 113 $ 109 $ 139 $ 183 $ 200

This stock performance information is "furnished" and shall not be deemed to be "soliciting material" or subject to Rule 14A, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, and shall not be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date of this report and irrespective of any general incorporation by reference language in any such filing, except to the extent that it specifically incorporates the information by reference.

Issuer Purchases of Equity Securities

On October 25, 2018, our Board of Directors authorized a stock repurchase program under which we were authorized to purchase up to $500 million of our common stock from time to time through October 25, 2021.

Repurchases under the program may be made in the open market or in privately negotiated transactions, with the amount and timing of repurchases depending on market conditions and corporate needs.

The repurchase program does not obligate us to acquire any specific number of shares and may be suspended or discontinued at any time.

Delaware law imposes restrictions on stock repurchases.

On October 25, 2018, our Board of Directors authorized a stock repurchase program under which we may purchase up to $500 million of our common stock from time to time through October 25, 2021.

On October 25, 2019, our Board of Directors authorized an increase to our existing stock repurchase program under which the Company may purchase up to an additional $500 million of our common stock from time to time through October 25, 2022;

1 unchanged sentence

With the increase, the Board of Directors has authorized a total of $1.0 billion of common stock repurchases.

During the year ended December 31, 2019 , we repurchased 10.9 million shares of common stock for an aggregate price of $292 million .

There were no stock repurchases during the three months ended December 31, 2019.

Repurchases under the program may be made in the open market or in privately negotiated transactions, with the amount and timing of repurchases depending on market conditions and corporate needs.

The repurchase program does not obligate us to acquire any specific number of shares and may be suspended or discontinued at any time.

Delaware law imposes restrictions on stock repurchases.

During the three months ended and year ended December 31, 2020, we repurchased 0.8 million and 4.1 million shares of common stock for an aggregate price of $29 million and $117 million , respectively.

As of December 31, 2020, there was a total of $531 million of remaining capacity under our repurchase program.

During the three months ended December 31, 2019, no shares of common stock were repurchased.

The following table summarizes our stock repurchases for the three months ended December 31, 2020 (in thousands, except per share data):

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs

October 1, 2020 - October 31, 2020 — $ — — $ 560,181

November 1, 2020 - November 30, 2020 406 $ 35.27 406 $ 545,876

December 1, 2020 - December 31, 2020 413 $ 36.26 413 $ 530,895

Total 819 819

Securities Authorized for Issuance Under Equity Compensation Plans

4 unchanged sentences

(in thousands, except per share data) 2020 2019 2018 2017 2016

(1) (2) (3) (4) (5)

Statements of Income Data:

Revenue $ 11,628,830 $ 12,506,109 $ 11,876,674 $ 9,736,909 $ 8,584,031

Cost of goods sold 7,035,559 7,654,315 7,301,817 5,937,286 5,232,328

Gross margin 4,593,271 4,851,794 4,574,857 3,799,623 3,351,703

Operating income (6)

985,577 896,643 882,241 844,998 763,398

Other expense (income):

Interest expense 103,784 138,504 146,377 101,640 88,263

(Gain) loss on debt extinguishment

Loss (gain) on debt extinguishment (7)

12,751 (128) 1,350 456 26,650

Interest income and other income, net

(15,953) (32,755) (8,917) (23,725) (28,796)

Income from continuing operations before provision for income taxes

884,995 791,022 743,431 766,627 677,281

Provision for income taxes 249,498 215,330 191,395 235,560 220,566

Equity in (losses) earnings of unconsolidated subsidiaries (8)

Equity in earnings (losses) of unconsolidated subsidiaries (8)

5,012 (32,277) (64,471) 5,907 (592)

Income from continuing operations 640,509 543,415 487,565 536,974 456,123

Net income (loss) from discontinued operations

Net (loss) income from discontinued operations (9)

(95) 1,619 (4,397) (6,746) 7,852

640,414 545,034 483,168 530,228 463,975

net income (loss) attributable to continuing noncontrolling interest

1,888 2,800 3,050 (3,516) —

net income attributable to discontinued noncontrolling interest

103 974 — — —

Net income attributable to LKQ stockholders

$ 638,423 $ 541,260 $ 480,118 $ 533,744 $ 463,975

Basic earnings per share:

Income from continuing operations

Net income (loss) from discontinued operations

$ 2.10 $ 1.75 $ 1.55 $ 1.74 $ 1.49

Net (loss) income from discontinued operations (0.00) 0.01 (0.01) (0.02) 0.03

2.10 1.76 1.54 1.72 1.51

net income (loss) attributable to continuing noncontrolling interest 0.01 0.01 0.01 (0.01) —

net income attributable to discontinued noncontrolling interest

0.00 0.00 — — —

Net income attributable to LKQ stockholders

$ 2.10 $ 1.75 $ 1.53 $ 1.73 $ 1.51

Diluted earnings per share:

Income from continuing operations

Net income (loss) from discontinued operations

$ 2.10 $ 1.75 $ 1.54 $ 1.73 $ 1.47

Net (loss) income from discontinued operations (0.00) 0.01 (0.01) (0.02) 0.03

2.10 1.75 1.53 1.71 1.50

net income (loss) attributable to continuing noncontrolling interest

0.01 0.01 0.01 (0.01) —

net income attributable to discontinued noncontrolling interest

0.00 0.00 — — —

Net income attributable to LKQ stockholders

$ 2.09 $ 1.74 $ 1.52 $ 1.72 $ 1.50

Weighted average shares outstanding-basic

304,640 310,155 314,428 308,607 306,897

Weighted average shares outstanding-diluted

305,006 310,969 315,849 310,649 309,784

Year Ended December 31,

(in thousands) 2020 2019 2018 2017 2016

(1) (2) (3) (4) (5)

Other Financial Data:

Net cash provided by operating activities

$ 1,443,870 $ 1,064,033 $ 710,739 $ 518,900 $ 635,014

Net cash used in investing activities (165,887) (264,853) (1,458,939) (384,595) (1,709,928)

Net cash (used in) provided by financing activities

(1,512,551) (600,669) 882,995 (112,567) 1,225,737

Capital expenditures (172,695) (265,730) (250,027) (179,090) (207,074)

Cash paid for acquisitions, net of cash and restricted cash acquired

(7,363) (27,296) (1,214,995) (513,088) (1,349,339)

Depreciation and amortization 299,497 314,406 294,077 230,203 206,086

2 unchanged sentences

Working capital (11)

2,045,541 2,491,505 2,830,601 2,499,410 2,045,273

Long-term obligations, including current portion

2,871,138 4,041,756 4,310,500 3,403,980 3,341,771

Total Company stockholders' equity 5,655,718 5,008,876 4,782,298 4,198,169 3,442,949

(1) Includes the results of operations of seven businesses from their respective acquisition dates in 2019.

Includes the results of operations of Stahlgruber, from its acquisition effective May 30, 2018, and 13 other businesses from their respective acquisition dates in 2018.

Includes the results of operations of 26 businesses from their respective acquisition dates in 2017.

(1) Includes the results of operations of two businesses from their respective acquisition dates in 2020, and three businesses up to the respective dates they were divested.

(2) Includes the results of operations of seven businesses from their respective acquisition dates in 2019, and two businesses up to the respective dates they were divested.

(3) Includes the results of operations of Stahlgruber, from its acquisition effective May 30, 2018, and 13 other businesses from their respective acquisition dates in 2018, and one business up to the date it was divested.

(4) Includes the results of operations of 26 businesses from their respective acquisition dates in 2017, and one business up to the date it was divested.

(5) Includes the results of operations of:

(i) Rhiag, from its acquisition effective March 18, 2016;

(ii) the aftermarket automotive glass distribution business of Pittsburgh Glass Works LLC ("PGW autoglass"), from its acquisition effective April 21, 2016;

(ii) the aftermarket automotive glass distribution business of PGW ("PGW autoglass"), from its acquisition effective April 21, 2016;

and (iii) 13 other businesses from their respective acquisition dates in 2016.

Includes the results of operations of 18 businesses from their respective acquisition dates in 2015.

Reflects $47 million of impairment charges on net assets held for sale for the year ended December 31, 2019 .

See "Net Assets Held for Sale" in Note 4, "Summary of Significant Accounting Policies ," for further information.

Reflects a $33 million goodwill impairment charge on the Aviation reporting unit for the year ended December 31, 2018.

See "Intangible Assets" in Note 4, "Summary of Significant Accounting Policies ," for further information.

(6) Reflects $47 million of impairment charges on net assets held for sale for the year ended December 31, 2019 and a $33 million impairment charge on the Aviation reporting unit for the year ended December 31, 2018.

See "Net Assets Held for Sale" and "Intangible Asset" in Note 4, "Summary of Significant Accounting Policies," for further information.

(7) Reflects a loss on debt extinguishment of $13 million recorded in the first quarter in 2020 related to the early-redemption premium and the write-off of the unamortized debt issuance costs.

Notes (2023)" in Note 10, "Long-Term Obligations," for further information.

The year ended December 31, 2016 includes a loss on debt extinguishment of $24 million related to early payment of Rhiag debt assumed as part of the acquisition.

(8) Reflects impairment charges in 2019 and 2018 of $40 million and $71 million, respectively, related to the Mekonomen equity investment.

See "Investments in Unconsolidated Subsidiaries" in Note 4, "Summary of Significant Accounting Policies," for further information.

(9) Discontinued operations for the years ended December 31, 2020 and 2019 primarily relate to the Stahlgruber Czech Republic wholesale business.

Discontinued operations for the years ended December 31, 2018, 2017 and 2016 relate to the PGW autoglass glass manufacturing business.

See Note 3, "Discontinued Operations," for further information.

(10) The sum of the individual earnings per share amounts may not equal the total due to rounding.

Refer to "Recent Accounting Pronouncements–Adoption of New Lease Standard" in Note 4, "Summary of Significant Accounting Policies," for the increase in total assets compared to December 31, 2018 as a result of the adoption of the new lease standard.

(11) Working capital amounts represent current assets less current liabilities, excluding assets and liabilities of discontinued operations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity