LKQ Corporation · NASDAQ:LKQ
LKQ — Investor Presentation (March 2015)
32 slides from LKQ's investor presentation, March 2015
Slide 1: Investor Presentation
Investor Presentation March 2015 as of 2/26/2015
Slide 2: Forward Looking Statement
Forward Looking Statement Statements and information included in this presentation that are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are made pursuant to the “safe harbor” provisions of such Act . Forward-look
Slide 3: Company Overview
Company Overview
Slide 4: LKQ's Evolution
LKQ’s Evolution July 1998 February 2004 October 2007 November 2010 May 2013 January 2014 Wholesale Salvage Self Serve Keystone / Paint Reman EUROPE-Benelux Keystone Specialty February 2004 January 2006 March 2008 October 2011 August 2013 Aftermarket Collision Refurbished Wheels Heavy Duty EUROPE-UK
Slide 5: Market Leading Positions in Key Markets
Market Leading Positions in Key Markets 2014 5 Year CAGR* Revenue (in millions) $6,740 27% Net Income (in millions) $382 25% Earnings Per Share $1.25 23% #1 or #2 in Key Markets Alternative parts distributor to the collision repair industry in US and Canada Distributor of refurbished wheels, bumper
Slide 6: Operating Unit Overview
Operating Unit Overview Operating Units* Total Revenue North America Other 10% Sell more than 101,000 SKUs of aftermarket automotive products Purchased 290,000 vehicles for dismantling Includes aftermarket, recycled, refurbished, and remanufactured Purchased 514,000 vehicles at 71 self service facil
Slide 7: North America
Corporation North America
Slide 8: Clear Value Proposition
Clear Value Proposition High quality products at lower cost than OEM replacement products Recycled OEM Front Door Engine Rear Bumper New OEM $1,376 $3,458 $531 Recycled OEM $805 $1,125 $237 Savings 41% 67% 55% Aftermarket Fender Door Mirror Hood New OEM $209 $160 $446 Aftermarket $163 $92 $307 Savin
Slide 9: US Automotive Repair Industry
US Automotive Repair Industry Automotive Repair Market $213 bn Do It For Me (DIFM) DIY* $165 bn $48 bn Retail Collision Mechanical Price $40 bn $125 bn Parts & Collision Parts Labor Mechanical Parts Labor Labor $22 bn $18 bn $68 bn $57 bn Collision Markup Mechanical Markup (Wholesale) $7 bn (Wholesa
Slide 10: Collision Products, a $15 Billion Industry
Collision Products, a $15 Billion Industry Insurance Companies (Indirect Customers) New OEM Manufacturers Repair Shop 63% Refurbished & Recycled OEM Optional OE Products 13% Aftermarket 7% 17% Alternative parts = 37% of parts costs 10 Source: CCC Information Services –Crash Course 2014
Slide 11: Average Parts Replaced Per Claim by Part Type
Average Parts Replaced Per Claim by Part Type 10.0 2009 2010 2011 2012 2013 2014 8.9 8.0 7.8 6.3 6.0 5.8 4.0 1.9 2.0 1.2 0.5 0.5 0.2 0.2 0.0 0.1 0.0 OEM AM Recycled RO Opt OE Total Source: CCC Information Services Inc. 11
Slide 12: Regional Distribution Improves Fulfillment
Regional Distribution Improves Fulfillment Mid-Atlantic Region-Transfer Routes Salvage/AM Aftermarket Salvage Cross Dock 12
Slide 13: Locations Provide Strategic Advantage
Locations Provide Strategic Advantage Next day delivery leveraging regional distribution infrastructure 13
Slide 14: Age & Size of US Car Parc Improving
Sources: Sales & Production Data-Wards, Projection Data-BoFa Merrill Lynch Data assumes oldest vehicles are retired first in each year (not a precise assumption) Age & Size of US Car Parc Improving 140 4 year time 50 horizon 117 119 118 117 45 114 115 113 112 Number of Vehicles (millions) 120 107 10
Slide 15: Europe
Corporation Europe ZLKQ Coatings “=
Slide 16: European Automotive Repair Industry
European Automotive Repair Industry Automotive Repair Market €198 bn Do It For Me (DIFM) DIY* €188 bn €10 bn Retail Collision Mechanical Price €30 bn €158 bn Parts & Collision Parts Labor Mechanical Parts Labor Labor €22 bn €8 bn €120 bn €38 bn Collision Markup Mechanical Markup (Wholesale) €8 bn (W
Slide 17: Europe - Market Observations
Europe - Market Observations Large car parc Fragmented industry Dominated by country champions In transition from 3 step to 2 step distribution Professional repairer focused Segmented by the suppliers Focused on mechanical parts Low penetration of alternative collision parts 17
Slide 18: Euro Car Parts
Euro Car Parts Leading distributor of automotive aftermarket parts in the UK Nearly 35,000 commercial and retail customers 3 National Distribution Centers totaling 1.2MM square feet 12 regional hubs, 189 branches, 25 paint distribution locations Over 2,200 delivery routes Launched collision parts pr
Slide 19: Benelux Markets-Sator
Benelux Markets-Sator Leading distributor of automotive aftermarket parts in the Benelux offering more than 171,000 SKUs Proprietary, best-in-class online ordering technology for local distributors & repair shops Opportunity for meaningful purchasing synergies with Euro Car Parts Serve more than 9,5
Slide 20: Specialty
Corporation Specialty
Slide 21: Keystone Specialty
Keystone Specialty Keystone Overview Keystone’s Directly Addressable Market * Leading distributor and marketer of specialty Wheels & Tires $0.5 aftermarket equipment, accessories, and products in 8% North America RV ,Trailer & Performance Critical link between 800+ suppliers and approximately Other
Slide 22: Financial Overview
Financial Overview
Slide 23: Unique Combination of Strong Organic & Acquisition Revenue Growth
Unique Combination of Strong Organic & Acquisition Revenue Growth 30% 27.8% 23.6% 21.3% 20% 13.7% 11.0% 9.0% 8.3% 7.9% 10% 6.6% 6.0% 6.1% 4.0% 0% 2009 2010 2011 2012 2013 2014 Organic Revenue Growth Rates* Acquisition Revenue Growth Rates* * Parts and services only 23
Slide 24: Acquisition Strategy
Acquisition Strategy Strong Brands • Seek markets where we can be #1 or #2 • Keep discipline on return metrics • Criteria in new markets Among the leaders in the market Well run companies LKQ culture Ability to achieve synergies Examples: Euro Car Parts, Keystone Automotive, ATK • Criteria in existi
Slide 25: Historical Financials
Historical Financials Revenue Earnings Per Share ($ in millions) $7,000 $6,740 $1.40 $1.25 $6,000 $1.20 $5,063 $5,000 $1.02 $1.00 $4,123 $0.87 $4,000 $0.80 $3,270 $0.71 $3,000 $0.57 $0.60 $2,470 $2,000 $0.40 $1,000 $0.20 $- 2010 2011 2012 2013 2014 $- 2010 2011 2012 2013 2014 25
Slide 26: Historical Financials
Historical Financials Operating Cash Flow & CAPEX Debt & Leverage Multiple (a) Operating Cash Flow Capital Spending Debt Leverage $500 $2,000 $1,864 $428 $400 $371 $1,600 $1,306 $300 $1,200 $1,118 $956 $212 $206 $200 $800 $159 $141 $603 $601 $100 $86 $88 $90 $400 $61 2.4x 2.2x 2.3x 2.2x 2.1x 1.8x $-
Slide 27: Capitalization and Liquidity
Capitalization and Liquidity Capitalization Debt Maturity Profile ($ in millions) Amount % ($ in millions) Term Loan A Revolver Debt $ 1,865 41% ARS Facility Senior Notes Other Debt Revolver Availability Stockholders’ equity (book) 2,721 59% $2,500 Total capitalization $ 4,586 100% $2,134 $1,127 $2,
Slide 28: Guidance 2015
Guidance 2015 (effective only on the date issued: February 26, 2015) ($ in millions excluding EPS) Full Year Full Year 2014 2015 Actual Guidance (a) Organic revenue growth, for parts & services 9.0% 6.5% to 9.0% Net Income $382 $420 to $450 Diluted EPS $1.25 $1.36 to $1.46 Cash flow from operations
Slide 29: LKQ – Compelling Investment
LKQ – Compelling Investment Alternative Parts Usage is Products Offer Clear Value Expanding Proposition Increasing availability of quality Insurers focused on controlling repair aftermarket and recycled products costs Distribution network and inventory Alternative products offer savings of levels al
Slide 30: Appendix
Appendix Corporation
Slide 31: EBITDA Reconciliation
EBITDA Reconciliation (In thousands) 2014 Net Income $ 381,519 Depreciation and amortization 125,437 Interest expense, net 63,948 Loss on debt extinguishment* 324 Provision for income taxes 204,264 Earnings before interest, taxes, depreciation and amortization (EBITDA) $ 775,492 *Loss on debt exting
Slide 32: Adjusted EPS Reconciliation
Adjusted EPS Reconciliation The following unaudited table reconciles Net Income and Diluted Earnings per Share to Adjusted Net Income and Adjusted Diluted Earnings per Share, respectively: Three Months Ended Year Ended December 31, December 31, 2014 2013 2014 2013 (In thousands, except per share dat