LKQ Corporation (NASDAQ:LKQ), a leading provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles, with annual revenues of $14.5 billion and a market capitalization of $9.87 billion, reported a cyber incident affecting its Canadian business unit, according to an 8-K filing with the Securities and Exchange Commission today.
According to InvestingPro, the company maintains strong financial health with liquid assets exceeding short-term obligations. The unauthorized access to the company's information technology systems was detected on November 13, 2024, and led to operational disruptions.
The company immediately initiated an investigation and recovery efforts, including the activation of its security incident response plans. LKQ Corp engaged with industry-leading forensic investigators and took measures to contain the impact on the affected systems. Law enforcement was promptly notified, and the company is in the process of notifying individuals and parties whose data may have been compromised.
Operations within the affected Canadian business unit suffered for several weeks due to the cyber attack. However, LKQ Corp has stated that the incident has been effectively contained and did not impact its other business segments. The unit is now operating at nearly full capacity. With a current ratio of 1.72, the company appears well-positioned to manage operational challenges.
LKQ Corp does not anticipate that the cyber incident will materially affect its financial health or operational results for the fiscal year. The company plans to seek reimbursement for the costs, expenses, and losses incurred due to the cyber incident through claims with its cybersecurity insurers, though the timing and amount of potential reimbursements remain uncertain.
Currently trading near its 52-week low, InvestingPro analysis suggests the stock is undervalued, with additional insights available in the comprehensive Pro Research Report covering this and 1,400+ other US equities.
The information for this report is based on a press release statement.
In other recent news, LKQ Corporation faced operational challenges due to temporary location closures caused by Hurricanes Helene and Milton.
Despite these difficulties, the company demonstrated its commitment to operational excellence and shareholder returns by increasing its share repurchase program by $1 billion. The company's North American and specialty segments saw a decline in organic revenue, while the European segment performed solidly.
LKQ Corporation also adjusted its full-year guidance, focusing on cost controls and productivity initiatives. The company repurchased 3 million shares for $125 million and paid a quarterly dividend in August of $79 million, planning a $0.30 per share dividend in November. The company's North America organic revenue declined by 7.5%, and specialty by 10% year-over-year. However, Europe's EBITDA margin improved by 90 basis points to 10.2%.
In addition to these developments, LKQ Corporation revised its Code of Ethics, broadening its commitment to sustainability, refining guidelines on gifts and entertainment, and strengthening measures against bribery and corruption.
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