LKQ Corp.

Overview Key strengths Key risks Good geographic and product diversification. 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 could lead to worse credit metrics compared with historical periods. LKQ Corp. has demonstrated consistent good operating performance, increased market share, and strong free cash generation over the past couple of years, with EBITDA margins of over 15% both in 2021 and 2022. The company has also continued to maintain its European

...Earnings and cash flows remained quite strong in 2022, but we expect margins and free cash flow to contract modestly going forward. LKQ Corp. has demonstrated consistent good operating performance, increased market share, and strong free cash generation over the past couple of years, with EBITDA margins of over 15% both in 2021 and 2022. The company has also continued to maintain its European margins at around 10%. In 2023 and 2024, we forecast overall margins to normalize to around 14% because we expect margins in the self-service and specialty business to remain at lower levels and due to slight margin dilution from the acquisition of Uni-Select. The self-service margin deterioration is due to falling prices of scrap and precious metals that LKQ sells to...

Full Report