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LKQ Corp LKQ

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

LKQ Reports Strong Q1 EBITDA Margin as Organic Revenue Marginally Increases; FVE Unchanged

Analyst Note

| Brian Bernard, CFA, CPA |

Narrow-moat LKQ posted solid first-quarter results, with organic revenue increasing 2.3% year over year (up a total of 5.7% on favorable foreign-exchange rates). Organic revenue growth was largely driven by the specialty segment, which was up almost 31% as demand for recreational vehicles stayed strong. While we do not believe the heightened demand for RVs will be sustained as restrictions are lifted and air travel increases, we think LKQ will continue to benefit from specialty-parts sales. North American organic revenue was down 8.4% year over year while Europe was largely flat. We remain optimistic about growth opportunities in these segments as the economic effects from COVID-19 subside.  Therefore, we forecast revenue growth of over 7% in 2021.

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Company Profile

Business Description

LKQ is a leading global distributor of non-OEM automotive parts. Initially formed in 1998 as a consolidator of auto salvage operations in the United States, it has since greatly expanded its scope to include distribution of new mechanical and collision parts, specialty auto equipment, and remanufactured and recycled parts in both Europe and North America. It still maintains its auto salvage business and owns over 75 LKQ pick- your-part junkyards. Separate from the self-service business, LKQ purchases over 300,000 salvage automobiles annually that are used to extract parts for resale. Globally, LKQ maintains approximately 1,700 facilities.

Contact
500 West Madison Street, Suite 2800
Chicago, IL, 60661
T +1 312 621-1950
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 44,000

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