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.