Lkq Corporation · NASDAQ:LKQ
Lkq — Merger or Acquisition (February 2016)
23 slides from Lkq's merger presentation, Feb 29, 2016
Slide 1: Investor/Analyst Conference Call: LKQ to Acquire Pittsburgh Glass Works
Investor/Analyst Conference Call LKQ to Acquire Pittsburgh Glass Works February 29, 2016 Rob Wagman – President & Chief Executive Officer Nick Zarcone – Executive Vice President & Chief Financial Officer
Slide 2: Agenda
Agenda • Strategic Rationale & PGW Overview - Rob Wagman • Financial Overview - Nick Zarcone • Q&A
Slide 3: 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 4: Company Snapshot
Company Snapshot Market Leading Auto Glass Select Automotive Glass Capabilities • Pittsburgh Glass Works LLC (“PGW” or the “Company”) is the leading North American manufacturer, supplier and Windshields Sidelites Backlites Roof Panels distributor of automotive glass products – #1 in OEM with approxi
Slide 5: PGW Strategic Rationale
PGW Strategic Rationale • Fills a meaningful void in the LKQ product offering worldwide • Only pure-play automotive glass provider in North America • Leading competitive position in a large and growing global market • Positioned to capitalize on industry trends toward the use of innovative, higher v
Slide 6: Aftermarket Segment Overview
Aftermarket Segment Overview • Market leader in the fabrication and distribution of Revenue by Customer aftermarket automotive glass • Highly diverse customer base, serving over 7,000 glass repair Dealer Other, 5% and replacement shops Services, 7% • Maintain 97% platform coverage of vehicle models
Slide 7: Leading North American Distribution Network
Leading North American Distribution Network • Highly efficient nationwide system of branches operating in high-growth markets • Central distribution center in Chillicothe, OH optimally located to service North American customers’ distribution needs • Benefits from integrated supply chain of flat gla
Slide 8: OEM Segment Overview
OEM Segment Overview • North American market leader in the production and fabrication of automotive glass parts • Best-in-class technology capabilities across windshields, sidelites and backlites and roof glass – Leading windshield and tempered capabilities at Elkin, North Carolina facility support
Slide 9: Interactive Relationships with Blue-Chip Customer Base
Interactive Relationships with Blue-Chip Customer Base Aftermarket Top 5 U.S. Auto Platforms(2) PGW Make Model Aftermarket OEM `1 F-Series (OES) (1) 2 Silverado (OES) (1) OEM 3 Camry Ram 4 Pickup 5 Accord Strong Relationships with Blue-Chip Customer Base Across both aftermarket and OEM (1) Denotes O
Slide 10: Positioned to Capitalize on Increasingly Complex Automotive Glass Needs
Positioned to Capitalize on Increasingly Complex Automotive Glass Needs • Advanced users of glass technology require high levels of auto glass complexity such as HUD, antenna and advanced Advanced acoustic features • Mainstream and follower OEMs continue to move up the value chain by adopting the au
Slide 11: Financial Overview
Corporation Financial Overview
Slide 12: Transaction Summary
Transaction Summary • $635 million in total consideration Structure and • Represents EV / Adjusted 2015 EBITDA: 6.0x Consideration • Transaction expected to be financed with existing facilities • Strong combined financial profile allows for an all cash transaction • $9.2 billion in pro forma Revenue
Slide 13: Financing
Financing Credit Facility Net Leverage Per Bank Covenants(2) ($ in Millions) $3,600 4.0x $3,200 $3,000 Revolver $427 Availability* $66 3.0X 3.0x $2,400 $2,261 2.0x 2.0x $1,800 2.0x 1.9x $1,304 1.7x 1.7X $2,707 $1,200 $66 1.0x $600 $891 $0 (1) 0.0x 12/31/2015 Pro forma 12/31/15 2011 2012 2013 2014 20
Slide 14: PGW's Solid Revenue Growth
PGW’s Solid Revenue Growth $1,200 ($ in Millions) $1,066 $1,006 $1,000 $885 $848 $800 $600 $400 $200 $0 2012 2013 2014 2015 LTM* 13 * LTM as of 10/31/15
Slide 15: LTM Margin Analysis
LTM Margin Analysis • PGW has a different margin profile due to product mix & distribution model • We expect a decline in Operating Margin post-acquisition related to amortization of intangibles recorded with the transaction LTM Gross Margin(2) LTM Adjusted EBITDA Margin(2) LTM Operating Margin(2) 3
Slide 16: EPS Accretion
EPS Accretion • LKQ anticipates the acquisition will be accretive to EPS on both an Diluted EPS & Adjusted EPS basis Potential Accretion 2016 2017 Diluted EPS(1) $0.02 $0.04 Adjusted Diluted EPS(2) $0.06 $0.10 (1) Reflects estimated GAAP diluted EPS. Note that there are no charges for anticipated re
Slide 17: Historical Financial Performance
Historical Financial Performance (2) Revenue Adjusted EBITDA ($ in Millions) ($ in Millions) $10,000 $9,230 $1,200 $1,066 $8,000 $7,193 $1,000 $855 $6,740 $791 $800 $6,000 $5,063 $629 $4,123 $600 $515 $4,000 $3,270 $424 $2,470 $341 $400 $2,000 $200 $0 $0 2010 2011 2012 2013 2014 12/31/15 PF 2015 (1)
Slide 18: Key Takeaways
Key Takeaways • Consistent with LKQ’s growth and acquisition strategy • PGW is a recognized market leader and well positioned for the evolving complexity of automotive glass and the robust SAAR projections • Strong in-place management team • Attractive distribution system • Expands product portfolio
Slide 19: Appendix
Corporation Appendix
Slide 20: Pro Forma Revenue & Adjusted EBITDA
Pro Forma Revenue & Adjusted EBITDA The following unaudited table reflects pro forma 2015 revenue and adjusted EBITDA for LKQ Corporation: Adjusted (in thousands) Revenue EBITDA LKQ Corporation $ 7,192,633 $ 854,529 Rhiag 970,640 106,920 PGW 1,066,400 105,000 Total pro forma $ 9,229,673 $ 1,066,449
Slide 21: Adjusted EBITDA Reconciliation-LKQ Corporation
Adjusted EBITDA Reconciliation-LKQ Corporation The following unaudited table reconciles Net Income to EBITDA and Adjusted EBITDA for LKQ Corporation: Year Ended December 31, 2015 2014 2013 2012 2011 2010 (in thousands) Net income $ 423,223 $ 381,519 $ 311,623 $ 261,225 $ 210,264 $ 167,118 Depreciati
Slide 22: Adjusted EBITDA Reconciliation-Rhiag
Adjusted EBITDA Reconciliation-Rhiag The following unaudited table reconciles Net Income to EBITDA and Adjusted EBITDA for Rhiag: Rhiag Trailing 12 Months September 30, 2015 (in thousands) Net income € 13,264 Depreciation and amortization 39,497 Interest expense, net 41,019 Provision for income taxe
Slide 23: Adjusted EBITDA Reconciliation-PGW
Adjusted EBITDA Reconciliation-PGW The following unaudited table reconciles Net Income to EBITDA and Adjusted EBITDA for PGW: PGW Trailing 12 Months October 31, 2015 (in thousands) Net income $ 25,400 Depreciation and amortization 34,800 Interest expense, net 30,200 Provision for income taxes 300 Ea