LKQ Corporation · NASDAQ:LKQ
LKQ — Investor Presentation (June 2015)
35 slides from LKQ's investor presentation, Jun 1, 2015
Slide 1: June 2015 Investor Presentation
June 2015 Investor Presentation as of 6/1/2015
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 LTM 5 Year CAGR* (as of 3/31/2015) Revenue (in millions) $6,740 $6,888 27% Net Income (in millions) $382 $384 25% Earnings Per Share $1.25 $1.25 23% #1 or #2 in Key Markets Alternative parts distributor to the collision repair industry in US and Canada Di
Slide 6: Operating Unit Overview
Operating Unit Overview Operating Units* Total Revenue Other North America 9% Sell more than 101,000 SKUs of aftermarket automotive products Purchased 287,000 vehicles for dismantling Includes aftermarket, recycled, refurbished, and remanufactured Purchased 494,000 vehicles at 71 self service facili
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 64% Refurbished & Recycled OEM Optional OE Products 12% Aftermarket 6% 18% Alternative parts = 36% of parts costs 10 Source: CCC Information Services –Crash Course 2015
Slide 11: Average Parts Replaced Per Claim by Part Type
Average Parts Replaced Per Claim by Part Type Over 19 million repairable claims 10.0 2009 2010 2011 2012 2013 2014 8.9 8.0 7.8 6.3 6.0 5.8 4.0 2.6 2.0 2.0 0.0 OEM Alternative Parts 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
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) 120 107 105 40 102 97 98 95 94 94 100 35 30 80 67 68 68 67 67 67 66 66 63 63 25 59 56 54 60 51 48 49 18 20 17 17 17 17 17 18 17 16 17 16 14 40 13 13 15 12 10 10 20 5 - - 20
Slide 15: Crash Avoidance Systems Growing.... But Impact will Be Very Slow
Crash Avoidance Systems Growing…. But Impact will Be Very Slow CCC estimates less than 4% impact to losses in next 10 years Source: CCC Information Services Inc. Projections based on annual rate of change between 2010 & 2013 – Impact may increase on market adoption & system improvements 15
Slide 16: Europe
Corporation Europe ZLKQ Coatings “=
Slide 17: 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 18: 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 with ~7% APU across Euro
Slide 19: 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 13 regional hubs, 192 branches, 25 paint distribution locations Over 2,200 delivery routes Launched collision parts pr
Slide 20: Benelux Markets-Sator
Benelux Markets-Sator Leading distributor of automotive aftermarket mechanical 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 mo
Slide 21: Specialty
Corporation Specialty
Slide 22: Keystone Specialty
Keystone Specialty Keystone Overview Keystone’s Directly Addressable Market * Leading distributor and marketer of specialty Wheels & Tires $0.5 aftermarket equipment, accessories, and products in 8% North America RV ,Trailer & Performance Critical link between 800+ suppliers and approximately Other
Slide 23: Financial Overview
Financial Overview
Slide 24: Acquisition Strategy
Acquisition Strategy Strong Brands • Seek markets where we can be #1 or #2 • Keep discipline on return metrics • Criteria in new markets Among the leaders in the market Well run companies LKQ culture Ability to achieve synergies Attractive Returns of Capital High fulfillment rates • Criteria in exis
Slide 25: Unique Combination of Strong Organic & Acquisition Revenue Growth
Unique Combination of Strong Organic & Acquisition Revenue Growth 30% 27.8% 23.6% 25% 21.3% 20% 13.7% 15% 11.0% 9.0% 8.3% 7.9% 10% 6.6% 6.0% 7.5% 8.2% 6.1% 4.0% 5% 0% 2009 2010 2011 2012 2013 2014 Q1-'15 Organic Revenue Growth Rates* Acquisition Revenue Growth Rates* * Parts and services only 25
Slide 26: Historical Financials
Historical Financials Revenue Earnings Per Share ($ 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 26
Slide 27: First Quarter 2015 Results
First Quarter 2015 Results 2015 2014 % Change Revenue $1,774 $1,626 9.1% Earnings Per Share $0.35 $0.34 2.9% EBITDA $213 $203 4.8% EBITDA Margin 2015 2014 North America 14.3% 14.2% Europe 9.5% 9.8% Specialty 10.5% 10.1% ($ in millions excluding EPS) 27
Slide 28: First Quarter 2015 Revenue Growth
First Quarter 2015 Revenue Growth Foreign Acquisition Organic Exchange % Change (1) North America 1.4% 4.6% (0.9%) 5.1% Europe 12.7% 14.0% (10.7%) 16.0% Specialty 31.2% 6.3% (1.5%) 36.0% Parts and Services 8.2% 7.5% (3.8%) 11.9% Other 0.6% (17.7%) (0.3%) (17.4%) Total 7.5% 5.1% (3.4%) 9.1% (1) The s
Slide 29: Cash Flow & Leverage
Cash Flow & Leverage 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 $601 $100 $86 $88 $90 $400 $61 2.4x 2.3x 2.2x 2.1x 1.8x $- $- 2010 20
Slide 30: Capitalization and Liquidity
Capitalization and Liquidity Capitalization(a) Debt Maturity Profile (b) ($ in millions) Amount % Term Loan A Senior Notes Revolver ARS Facility Debt $ 1,735 38% Other Debt Revolver Availability Stockholders’ equity (book) 2,780 62% $2,500 Total capitalization $ 4,515 100% $2,122 Debt/LTM EBITDA $2,
Slide 31: Guidance 2015
Guidance 2015 (effective only on the date issued: April 30, 2015) ($ 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 $37
Slide 32: 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 33: Appendix
Appendix Corporation
Slide 34: EBITDA Reconciliation
EBITDA Reconciliation (In thousands) LTM as of 3/31/15 Net Income $ 383,961 Depreciation and amortization 127,044 Interest expense, net 62,736 Loss on debt extinguishment* Provision for income taxes 210,341 Earnings before interest, taxes, depreciation and amortization (EBITDA) $ 784,082 *Loss on de
Slide 35: 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 March 31, 2015 2014 (In thousands, except per share data) Net income $ 107,095 $ 104,653 Adj