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LKQ Posts Solid Q3 Results As Strong Demand Drives Revenue and EPS Growth

Dawit Woldemariam Equity Analyst

Analyst Note

| Dawit Woldemariam |

LKQ reported solid third-quarter results on the back of a strengthening demand environment. Net sales in the quarter reached $3.3 billion, up approximately 8% year over year. The company experienced growth across its segments, as individual transportation continued to climb back from pandemic lows. Vehicle miles driven in the U.S. stood at 3.2 trillion miles in March 2020 before declining to 2.7 trillion miles in February 2021. Since then, miles driven have started to recover, up to over 3 trillion miles in August 2021 (the last measured month based on U.S. Federal Reserve data). The elevated level of average vehicle age is another driver for the alternative parts industry. From our estimates, the average age currently stands just under 12 years today. This will likely drive strong demand for LKQ’s products as more vehicle miles are logged.

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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 70 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.

500 West Madison Street, Suite 2800
Chicago, IL, 60661
T +1 312 621-1950
Sector Consumer Cyclical
Industry Auto Parts
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 44,000