Jeff Deck

Jeff Deck inquired about the potential tailwinds from the growing presence of EVs for LKQ's salvage and all parts businesses, given the EV lease return cycle and less robust EV parts network. He also asked about the feasibility of Europe achieving EBITDA margin expansion in a slightly negative revenue environment.

Answer

President and CEO Justin Jude explained that LKQ is well-positioned to capitalize on EVs due to agreements with OEMs, expertise in safely dismantling dangerous EV components, and interest from regulators and manufacturers in LKQ's recycling capabilities. Senior VP and CFO Rick Galloway affirmed that the 200 basis points of Europe's margin expansion opportunity is largely within LKQ's control, driven by SKU rationalization and cost actions, aiming for near double-digit EBITDA in 2026 without significant market recovery.

Jeff Deck inquired about the potential tailwinds for LKQ's salvage and all parts businesses from the growing presence of EVs and the upcoming EV lease return cycle, and asked about the feasibility of Europe achieving EBITDA margin expansion in a slightly negative revenue environment.

Answer

President and CEO Justin Jude explained that LKQ is well-positioned to capitalize on EVs due to its capabilities in safe dismantling, securing a larger share of totaled EVs. He sees it as a tailwind for both parts supply and recycling components, with interest from OEMs and government. Senior VP and CFO Rick Galloway affirmed that Europe's 200 basis points of EBITDA margin expansion is largely within LKQ's control, driven by SKU rationalization and cost actions, aiming for near double-digit EBITDA in 2026 and ultimately 12%, even without significant market recovery.