LKQ Corp.

Overview Key strengths Key risks Dominant market share in each of its major geographies despite fragmented end market North American business dependent on continued acceptance by insurance companies for LKQ parts. Recycled, refurbished, and remanufactured parts, which offer buyers less costly alternatives and enhance LKQ's value proposition. Auto collisions, vehicle miles traveled, and general economic conditions affect demand. Steady demand from replacement market and a solid track record of consistent cash flow generation. Future debt-financed acquisitions that could lead to worse credit metrics compared with historical periods. LKQ Corp. has demonstrated consistently good operating performance, increased market share, and strong free cash generation despite somewhat lower margins in 2023. During 2023, S&P Global Ratings-adjusted EBITDA margins fell to around 14.6%

...Earnings and cash flow weakened in 2023, and we expect margins and cash flow to remain near recent levels over the next year before gradually improving. LKQ Corp. has demonstrated consistently good operating performance, increased market share, and strong free cash generation despite somewhat lower margins in 2023. During 2023, S&P Global Ratings-adjusted EBITDA margins fell to around 14.6% from 15.7% in 2022 as revenues and margins in the self- service and specialty business fell. Additionally, there was slight margin dilution from the...

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