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Tuesday Ticker: February 23, 2020

Toronto, Ontario ⁠— In this week’s Tuesday Ticker, Magna shatters Q4 2020 Wall Street expectations, LKQ reports its fourth-quarter results and Toronto-based auto parts maker ABC Technologies makes its trading debut with a thinner-than-expected IPO.

Magna makes moves

Magna beat Wall Street expectations for its 2020 fourth-quarter net income, reporting a 68 percent increase to its net income compared to a year ago, spurring an eight percent increase to company shares last Friday.

Net income attributable to the company increased to US$738 million from US$440 million in the prior year. On a per-share basis, earnings were US$2.45, up from US$1.43 last year.

Sales for the quarter also increased to US$10.56 billion from $9.39 billion a year ago. The stock is trading currently at US$82.02, up 8.7 percent from the previous close of US$75.45. It has traded in a range of $22.75-$83.34 on average volume of 1,296,500 for the last 52-week period.

Magna shares rose more than eight percent by mid-day Friday, after executives said the auto parts maker can grow despite a computer chip shortage plaguing the auto industry.

“With respect to the semiconductor shortage, we see near term disruptions to (manufacturers’) production. However, at this point, any shortages are expected to be made up by the end of 2021,” said Chief Financial Officer Vincent Galifi on a conference call with analysts.

Pump up the parts

LKQ reported fourth-quarter and full-year 2020 results last week, with revenue decreases but given the “headwinds faced throughout 2020,” said the company.

Fourth-quarter revenue was US$3.0 billion down 1.9 percent year-over-year, while annual revenue was US$11.6 billion, down seven percent year-over-year. 

According to the company, annual operating cash flow of US$1.4 billion was up 35.7%.

“Our focus throughout the COVID-19 crisis has been the health and safety of our employees as well as our customers,” said Dominick Zarcone, president and CEO. “Despite the headwinds we faced throughout 2020, we were able to execute on our key operating initiatives of pursuing profitable revenue, enhanced margins and free cash flow generation. Additionally, the cost reductions our teams implemented in 2020 to confront the pandemic’s impact on demand are lessons that we will apply to our operations in 2021 and beyond.”

He added that the company delivered strong quarterly results, with the fourth quarter 2020 being the second highest quarterly earnings, and highest fourth quarter earnings, in the company’s history. 

“We achieved our highest level of annual free cash flow at $1.3 billion and North America’s highest annual segment EBITDA margin of 16.8 percent.” said Zarcone. “As we look to the year ahead, I am confident that the strength of our operations, balance sheet and free cash flow all position LKQ for solid growth and value creation for our stakeholders.”

Easy as ABC?

Toronto-based auto parts maker ABC Technologies has begun trading on the Toronto Stock Exchange (TSX), a week after slashing its initial public offering (IPO) size by 60 percent.

The company began trading on the TSX Mon., Feb. 22 under the ticker symbol ‘ABCT’. Shares were priced at $10 per unit. 

ABC originally set out to raise $225 million at a price between $12 and $15 per share. After a few weeks of marketing, the company cut the deal size to $100 million and announced the $10-per-share offering. 

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