Lkq Corporation · NASDAQ:LKQ
Lkq — Deutsche Bank Leveraged Finance Conference 2008
22 slides from Lkq's conference presentation, Sep 24, 2008
Slide 1: Deutsche Bank Leveraged Finance Conference
Deutsche Bank Leveraged Finance Conference September 24, 2008 Mark Spears Executive Vice President and CFO
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements Certain statements in this presentation that are not historical are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements generally include expectations, beliefs, hopes, intentions or strat
Slide 3: LKQ Company Overview
3 $328 $425 $547 $789 $1,127 $976 $0 $300 $600 $900 2003 2004 2005 2006 2007 Q2 2008 YTD LKQ Company Overview Largest provider of alternative auto collision parts - Recycled OEM parts - Refurbished OE parts - Aftermarket parts Compelling value proposition as “one-stop” solution for recycled OEM part
Slide 4: LKQ Acquisition of Keystone
4 LKQ Acquisition of Keystone Purchased Keystone Automotive Industries - October 2007 Over $1.6 billion of combined sales, TTM June 2007 Reinforces value proposition as “one-stop” solution Goal to be the “first call” of the body shop 1H 2008 YTD Recycled OEM 32% Other 15% Aftermarket/ Refurbished 53
Slide 5: Repair Shop Replacement Parts Distribution
5 Repair Shop Replacement Parts Distribution New OEM Manufacturers Aftermarket Recycled OEM Refurbished Products Insurance and Extended Warranty Companies (Indirect Customers) (1) Paint and body shop supplies also sold to shops
Slide 6: Large Addressable Market
6 Large Addressable Market $109 $62 $41 $42 $21 $14 ($ in billions) Professional Service Overall Market Parts Market “DIFM” Professional Service Wholesale Parts Market Collision Market Mechanical Market ___________________ Source: AAIA and CCC Information Services, Inc.
Slide 7: Market Transition Opportunity
7 Industry shift to alternative parts being driven by: - Increasing ability of offshore aftermarket manufacturers to replicate parts - Growing availability of recycled OEM parts Potential for collision replacement parts market to mirror transition in more mature mechanical parts market - Alternative
Slide 8: The Alternative Part Value Proposition
8 The Alternative Part Value Proposition Recycled OEM *Estimated average. ...and improved cycle time for repairs Aftermarket Installed Price* New OEM Recycled OEM Savings Front Door $1,780 $938 47% Engine $3,935 $1,939 51% Rear Bumper $871 $656 25% Installed Price* New OEM Aftermarket Savings Fender
Slide 9: Strong Investment Considerations
9 Strong Investment Considerations Growing industry Alternative parts usually the lowest cost alternative Industry shifting toward non-OEM parts Favorable Industry Dynamics Market Leader #1 provider of OEM recycled parts, collision repair aftermarket parts & collision repair refurbished parts. Oppor
Slide 10: Supply Chain Management and Sourcing Advantages
10 Supply Chain Management and Sourcing Advantages Effectively identify and value recyclable cars at auctions Rapidly determine maximum price Disciplined, demand driven approach based on current inventory Company dedicates more resources to purchasing process than any competitor - Superior proprieta
Slide 11: Comprehensive "One-Stop" Offering
11 Comprehensive “One-Stop” Offering LKQ offers the largest and most complete inventory of recycled and aftermarket replacement parts Recycled Products Bumper Covers Bumpers Doors Fenders Front End Assemblies Grilles Head Lamp Assemblies Head Lamps Hoods Mirrors Quarter Panels Tail Lamp Assemblies T
Slide 12: Significant Distribution Network
12 Significant Distribution Network National network of close to 300 distribution points Distribution network results in recycled OEM product fulfillment rates of 65% - above industry average of 40-50% - leveraging distribution infrastructure Next day delivery routes in most markets Advanced technol
Slide 13: LKQ's Strong and Improving Margins
13 While LKQ has generated steady gross margins, it has continued to increase its operating margins from 8% in 2003 to 11% in 2007 $154 $198 $258 $358 $506 $212 $448 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 $550 $600 2003 2004 2005 2006 2007 Q2 2007 Q2 2008 0% 5% 10% 15% 20% 25% 30% 35% 4
Slide 14: Keystone's Strong and Improving Margins
14 Keystone’s Strong and Improving Margins Keystone has improved operating margins from less than 4% in FY 2005 to more than 6% in 1Q F2008 while gross profit margins have remained steady $191 $219 $243 $282 $319 $74 $81 $0 $50 $100 $150 $200 $250 $300 $350 $400 2003 2004 2005 2006 2007 1Q 2007 1Q 2
Slide 15: Favorable 2008 Outlook
15 Favorable 2008 Outlook Note: As of July 31, 2008. 2007 2008 Guidance Year-Over-Year Change Net Income $65.9M $120 -- $124M 82% -- 88% Diluted EPS $0.55 $0.85 -- $0.88 55% -- 60% Cashflow provided by Operations $54.4M Greater than $100M More than 85% Capital Expenditures $37.8M $68M -- $78M 80% --
Slide 16: Capitalization
16 Capitalization ($ in millions) Current Company Credit Ratings: S&P: BB Moody’s: Ba3 Capitalization as of June 30, 2008 Amount % Corporate debt, net (1) $543 37% Stockholders’ equity (book) 939 Total capitalization 63% $1,482 100% Corporate Debt Maturities $0 $100 $200 $300 $400 $500 2008 2009 201
Slide 17: LKQ Credit Statistics
17 LKQ Credit Statistics Financials Debt Net debt Net cash provided by operations (TTM) EBITDA (TTM) (1) Interest expense, net (TTM) Ratios Net debt/capital Net debt/cash from operations Net debt/EBITDA Interest coverage ratio Credit facility Bank line outstanding Bank line availability (2) Bank LOC
Slide 18: Liquidity
18 Liquidity Cash and cash equivalents ($ in millions) $200 Million Available Liquidity Liquidity As of June 30, 2008 Available capacity Total Available Capacity $104 96 $200
Slide 19: Investment Considerations
19 Investment Considerations Experienced Management Team Robust Free Cash Flow Generation Opportunities to Increase Market Share Proven Business Model Favorable Industry Dynamics Market Leader
Slide 20: Appendix
20 Appendix
Slide 21: EBITDA Reconciliation
21 EBITDA Reconciliation 30-Jun-08 (TTM) 31-Mar-08 (TTM) 31-Dec-07 (TTM) Net income 98 81 66 Depreciation and amortization 27 22 18 Interest expense, net 31 25 16 Provision for income taxes 61 53 42 Earnings before interest, taxes, depreciation and amortization ** 217 181 142 * Keystone was acquired
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