Image source: LKQ.

The auto industry had a blockbuster year in 2015, and that success showed up in the results of parts specialist LKQ (LKQ 1.23%). LKQ sets itself out as an alternative to the new original-equipment parts that Delphi Automotive (DLPH) and other conventional parts makers offer, and coming into Thursday's fourth-quarter financial report, LKQ investors expected to keep seeing solid growth from the company. LKQ's results were fairly consistent with those expectations, falling short on the top line but exceeding hopes on the earnings front and celebrating passing the $7 billion mark in annual revenue for the first time. Let's look more closely at how LKQ did in its most recent quarter and what's ahead for the parts maker in the future.

LKQ keeps driving higher
LKQ's fourth-quarter results put in a mixed performance in the eyes of investors. Sales climbed 3.8% to $1.75 billion, which was slower than the 6% revenue growth rate that most investors were looking to see. Net income jumped 18% to $95.1 million, however, and after making some revisions for extraordinary items, adjusted earnings of $0.32 per share for the quarter were $0.01 higher than the consensus forecast among investors.

Looking more closely at LKQ's numbers, the company's three segments showed similar behavior to past quarters. The specialty parts segment saw sales jump 16%, split roughly evenly between acquisition-based and organic growth. Growth in North American revenue was solid at 8%, featuring organic growth of almost 6%. In Europe, a 7-percentage-point hit due to adverse currency movements held sales growth to just 4.6%, but acquisitions and organic growth played equally important roles in that region as well. Other revenue once again slumped almost 40%, taking $58 million away from revenue compared to the previous year's quarter.

However, in terms of profitability, it's important to note that the numbers don't match up perfectly to revenue figures. North America is LKQ's most profitable business, with EBITDA margins of 13% that are more than double what the specialty parts division posts. Overall, margins for LKQ rose slightly from year-ago levels.

CEO Robert Wagman put the spotlight on LKQ's employees in producing growth. "We reached a major milestone in 2015 by surpassing $7 billion in annual revenue for the first time," Wagman said, and he also pointed to the increase in operating margins in Europe for the full 2015 year as being instrumental in LKQ's overall success.

What's ahead for LKQ in 2016?
LKQ expects that success to continue moving forward into 2016. The company's full-year guidance calls for organic revenue growth of 6% to 8%, which is relatively consistent with the consensus forecast for 9% sales growth including both organic and acquisition-related increases. Similarly, adjusted net income guidance of $490 million to $520 million works out to adjusted earnings of $1.59 to $1.69 per share, and that compares favorably to the $1.58 per share that investors were expecting for 2016 prior to the report.

Those projections are consistent with what other industry players are projecting. Delphi Automotive expects revenue gains of 9% to 12%, but some of those increases will come from Delphi's recently completed acquisition of HellermannTyton Group in December. Unlike LKQ, however, Delphi investors were expecting better earnings guidance than the $6.05 to $6.15 per share that the company actually gave. That led to some short-term pressure on the stock, although Delphi Automotive shares have since rebounded.

LKQ investors reacted favorably to the news, sending the stock up 4% following the announcement. Looking forward, LKQ's business model appears to be taking advantage of good conditions in the auto industry. As long as the economy supports a generally healthy environment, LKQ should have the ability to keep moving higher and finding new sources of growth.