Profile: LKQ Corp (LKQX.O)

LKQ Corporation is a provider of replacement systems, components, and parts needed to repair vehicles (cars and trucks). It participates in the market for recycled original equipment manufacturers (OEM) products, as well as the market for collision repair aftermarket products. It obtains aftermarket products and salvage vehicles from a range of sources, and dismantles the salvage vehicles to obtain a range of vehicle products that it distributes into the light vehicle repair market. It also refurbishes bumpers, wheels, head lamps and tail lamps. In August 2008, the Company acquired Pick-Your-Part Auto Wrecking (PYP), an operator of self-service facilities in the state of California. During the year ended December 31, 2008, the Company also acquired seven other businesses (three in the recycled OEM parts business, three in the recycled OEM heavy truck parts businesses and one wheel polishing business). In October 2009, the Company acquired Greenleaf Auto Recyclers, LLC (Greenleaf) from Schnitzer Steel Industries, Inc.

The Company’s customers include collision and mechanical repair shops and, indirectly, insurance companies, including extended warranty companies. The majority of its products and services are sold to collision repair. The Company operates self-service facilities that sell retail recycled automotive products. Retail customers are given access to salvage vehicles and allowed to remove the parts they desire to purchase.

The Company procures salvage vehicles, primarily at auctions. In addition, as an alternative source of salvage vehicles, it obtains some inventory directly from insurance companies, vehicle manufacturers and other suppliers. It purchases aftermarket products from manufacturers, primarily in Taiwan, using order management systems.

The Company’s recycled OEM products include engines, transmissions, vehicle front end assemblies, doors, trunk lids, bumper assemblies, wheels, head and tail lamp assemblies, mirrors, fenders and axles. When the Company obtains a mechanical product, wheels, bumpers or certain lighting products from a dismantled vehicle and determines that its has an excess supply of such product or it is defective, the mechanical item is then sold in bulk to mechanical remanufacturers, while the wheel, bumper and lighting items are sent to its refurbishment locations. The majority of the mechanical products are transferred to the Company’s core facility in Houston, Texas. Such products include engine blocks and heads, transmissions, starters, alternators, and air conditioner compressors. When the Company procures aftermarket products and refurbish wheels, bumpers and lights, it focuses on products that are required by the insured repair market. Its aftermarket products include head lamps, tail lamps, grilles, hoods, mirrors, bumpers, bumper covers and fenders. The Company also offers paint and related repair materials (like tape, sandpaper, paint guns and frame racks).

The Company competes with Schnitzer Steel Industries Inc.