Lkq Corporation · NASDAQ:LKQ
Lkq — Merger or Acquisition (December 2017)
22 slides from Lkq's merger presentation, Dec 11, 2017
Slide 1: Investor/Analyst Conference Call: LKQ to Acquire Stahlgruber GmbH
Investor/Analyst Conference Call LKQ to Acquire Stahlgruber GmbH December 11, 2017
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-looki
Slide 3: Agenda
Agenda • Strategic Rationale – Nick Zarcone, President and Chief Executive Officer • Stahlgruber Overview - John Quinn, Chief Executive Officer of LKQ Europe • Financial Overview - Varun Laroyia, Executive Vice President and Chief Financial Officer • Q&A 3
Slide 4: Mission Statement
Mission Statement To be the leading global value-added distributor of vehicle parts and accessories by offering our customers the most comprehensive, available and cost effective selection of part solutions while building strong partnerships with our employees and the communities in which we operate
Slide 5: Transaction Highlights
Transaction Highlights • Acquiring Stahlgruber GmbH, a leading German wholesale distributor for passenger car parts, tools, capital equipment and accessories as well as related services • Acquisition will create first truly Pan-European parts wholesale footprint by linking additional EU countries wi
Slide 6: Strategic Rationale and Market Overview
Strategic Rationale and Market Overview
Slide 7: LKQ's Evolution
LKQ’s Evolution Wholesale Salvage Self Serve Keystone / Paint Reman-US Europe-Sator Europe-Rhiag 1998 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Aftermarket Refurbished Keystone Europe - Heavy Duty Europe-ECP Collision Wheels Specialty Stahlgruber 2003 2007 2011 2017(1) PF
Slide 8: Strategic Rationale for Acquisition of Stahlgruber
Strategic Rationale for Acquisition of Stahlgruber • Confirms LKQ as a leading independent wholesale distributor in Europe • Entry into Germany, Europe’s largest automotive aftermarket, with a market leading company • Opportunities to create significant synergies: • Improved procurement due to scale
Slide 9: European Market Overview
European Market Overview • Large car parc • Professional repairer focused • Fragmented industry • Segmented by the suppliers • Dominated by country champions • Focused on mechanical parts • Low penetration of alternative collision parts Source: 2014 Datamonitor; Management estimates. Note: All € in
Slide 10: Stahlgruber is a Natural Strategic Fit for LKQ
Stahlgruber is a Natural Strategic Fit for LKQ (€ revenue in billions) €5.1 €1.6 Stahlgruber(1) €0.6 Mekonomen(2) Norway Sweden €2.9 €1.7 €1.6 €1.5 €1.4 €1.4 €0.7 €0.6 €0.3 LKQ FR Ger Ger FR POL CH Swe UK UK Netherlands Europe- Stahlgruber(1) Autodis(5) Swiss Auto Uni-Select / PF Poland Group(7) Par
Slide 11: Stahlgruber Overview
Corporation Stahlgruber Overview
Slide 12: Stahlgruber Company Overview
Stahlgruber Company Overview 2016A Revenue • Major German wholesale distributor for passenger car parts, tools, capital equipment and accessories as well as related services By Geography Czech Other • Expected to generate €1.6 billion in sales and €128 million Republic (1) countries 6% in EBITDA(2)
Slide 13: Stahlgruber's Operating Presence and Key Markets
Stahlgruber’s Operating Presence and Key Markets 45.1 • Offers more than 500,000 products Germany Czech Rep • Key products include 155 40 5.1 • Chassis/brakes Largest car parc and • Engines/powertrain automotive aftermarket in Europe Austria • Electric components 4.7 • Workshop equipment, tools 18 S
Slide 14: Stahlgruber Is A Consistent Performer
Stahlgruber Is A Consistent Performer • Consistent Revenue and EBITDA growth each year • Healthy and stable margin profile (€ in millions) Revenue EBITDA (Margin %) 150 13.0% 140 12.0% €128 €1,614 130 €121 11.0% 120 €1,508 110 €107 10.0% €1,426 €98 100 9.0% €1,323 90 8.0% 80 8.0% 7.9% 7.5% 7.0% 70 7
Slide 15: Summary Combined Profile
Summary Combined Profile (1) (2) Revenue $9.4B $1.9B $11.3B EBITDA(6) $1.1B $151M $1.2B Specialty Specialty 13% 11% North North Europe Revenue America America Europe 100% 42% Contribution 37% 50% Europe 47% 11% European Revenue $3.4B $1.9B $5.3B 45% 44% European EBITDA $305M $151M $456M (4) (5) (3)
Slide 16: Financial Overview
Corporation Financial Overview
Slide 17: Transaction Summary
Transaction Summary • €1.5 billion in total consideration • Represents Net EV / 2017E EBITDA(1): ~10x, net of NPV of estimated future tax benefit, inclusive of Structure and expected synergies Consideration • Transaction expected to be financed with intended debt offerings, existing facilities, cash
Slide 18: LKQ Has Demonstrated Ability to Deleverage Following Significant Transactions
LKQ Has Demonstrated Ability to Deleverage Following Significant Transactions Credit Facility Historical Net Leverage Profile Over Time(2) ($ in millions) Total Capacity(1) $3,455 $3,155 3.4x $1,183 2.7x $1,337 2.5x $71 1.9x 2.0x 2.0x $71 1.7x 1.7x $2,201 $1,747 9/30/2017 9/30/2017 2011 2012 2013 20
Slide 19: Key Takeaways
Key Takeways • Consistent with LKQ’s growth and acquisition strategy in Europe • Markets where LKQ can be #1 or #2 • Maintains our discipline on operational profile and financial return metrics • Enhances our global diversification strategy with new large addressable markets and market leading posit
Slide 20: Appendix
Corporation Appendix
Slide 21: EBITDA Reconciliation - Stahlgruber
EBITDA Reconciliation - Stahlgruber (€ in millions) FY 2014 FY 2015 FY 2016 FY 2017E Net income €46.7 €59.3 €61.7 €65.8 Taxes on income (24.8) (22.0) (34.2) (31.3) Financial result (interest) (10.8) (8.8) (6.7) (8.2) Depreciation & amortization (15.9) (17.4) (18.2) (23.0) EBITDA €98.4 €107.5 €120.8
Slide 22: Adjusted EBITDA Reconciliation - LKQ Corporation
Adjusted EBITDA Reconciliation - LKQ Corporation Fiscal Year 9 Months Ended LTM ($ in thousands) 2016 2016 2017 09/30/17 Net income $463,975 $377,644 $409,573 $495,904 Subtract: Income (loss) from discontinued operations, net of tax 7,852 17,819 (4,531) (14,498) Income from continuing operations 456