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Item 5. Market for Registrant’s Common Equity

2022-02-25 compared with 2021-02-26 · 12 added, 108 removed, 32 unchanged (79% of the section changed)

1 unchanged sentence

Our common stock is traded on the NASDAQ Global Select Market ("NASDAQ") under the symbol "LKQ." At December 31, 2021, there were 16 record holders of our common stock.

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

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, 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.

On October 26, 2021, the Board of Directors of LKQ declared a cash dividend to stockholders.

The quarterly cash dividend of $0.25 per share of common stock was paid on December 2, 2021 to stockholders of record at the close of business on November 11, 2021 for an aggregate payout of $73 million.

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

Delaware law also imposes restrictio ns on dividend payments.

The l imit on the payments of dividends is calculated using historical financial information and will change from period to period.

Stock Performance Graph and Cumulative Total Return

The following graph compares the percentage change in the cumulative total returns on our common stock, the Standard & Poor's 500 Stock In dex ("S&P 500 Index") and the following group of peer companies (the "Peer Group"):

The following graph compares the percentage change in the cumulative total returns on our common stock, the S&P 500 Index and the following group of peer companies (the "Peer Group"):

Copart, Inc.;

14 unchanged sentences

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;

this extended date also applies to the original repurchase program.

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

this extended date also applied to the original repurchase program.

On July 28, 2021, our Board of Directors authorized an increase to our existing stock repurchase program under which the Company may purchase up to an additional $1,000 million of our common stock from time to time through October 25, 2024;

this extended date also applies to the original repurchase program, as previously extended.

With the increase, the Board of Directors has authorized a total of $2,000 million of common stock repurchases.

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.

3 unchanged sentences

As of December 31, 2021, there was a total of $654 million of remaining capacity under our repurchase program.

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

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.

The following table summarizes our stock repurchases for the three months ended December 31, 2021 (in thousands, except per share data):

6 unchanged sentences

Information about our common stock that may be issued under our equity compensation plans as of December 31, 2021 included in Part III, Item 12 of this Annual Report on Form 10-K is incorporated herein by reference.

SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 of this Annual Report on Form 10-K and our consolidated financial statements and related notes included in Item 8 of this Annual Report on Form 10-K.

Year Ended December 31,

(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

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 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 (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

$ 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

$ 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

Balance Sheet Data:

Total assets $ 12,360,533 $ 12,779,956 $ 11,393,402 $ 9,366,872 $ 8,303,199

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 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 PGW ("PGW autoglass"), from its acquisition effective April 21, 2016;

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

(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.

(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