LKQ CORP (LKQ) Q4 2024 Earnings Summary

Executive Summary

Q4 2024 revenue was $3.36B, down 4.1% YoY, and diluted EPS was $0.60; adjusted diluted EPS was $0.80. Management said Q4 “exceeded our expectations and guidance,” driven by strong Europe performance and favorable nonrecurring items .
Europe delivered a record Q4 segment EBITDA margin of 10.1% (third straight quarter of double digits), with CFO targeting sustainable double-digit margins in 2025; North America margin was 16.8%, aided by a one-time legal settlement .
Free cash flow in Q4 totaled $149M (FY 2024 FCF $810M), with $80M of buybacks and a $0.30 dividend; total debt ended at $4.2B and leverage at 2.3x EBITDA .
2025 outlook: organic parts & services growth 0–2%, adjusted EPS $3.40–$3.70, operating cash flow $1.075–$1.275B, FCF $0.75–$0.90B; tax rate assumption 27% and FX assumptions: EUR $1.04, GBP $1.25, CAD $0.70 .
S&P Global Wall Street consensus data was unavailable due to an API limit; estimate comparisons are noted as unavailable (we attempted retrieval via S&P Global and were rate-limited).

What Went Well and What Went Wrong

What Went Well

Europe delivered record Q4 EBITDA dollars and margin of 10.1%; CEO: “This was the third consecutive quarter the Europe segment attained double-digit EBITDA margins…” .
Portfolio simplification and cost actions supported margins; CFO: “Overall, Q4 results exceeded our expectations and guidance… despite challenging macroeconomic conditions” .
Self Service segment EBITDA margin improved to 8.3%, third consecutive quarter of YoY profitability improvement .

What Went Wrong

North America per-day revenue decline in collision parts (~8.5% headline; ~4% after adjusting for UAW strike and storms), with repairable claims down ~6%; Specialty segment still soft .
Salvage margins pressured by unfavorable vehicle cost trends and commodity prices; FX and metals pricing also headwinds to EPS .
Brief cyber incident in Canada impacted revenue; Europe competition from smaller players pushing price pressure; Specialty margins down on soft demand .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Billions)	$3.50	$3.58	$3.36
Diluted EPS (GAAP)	$0.69	$0.73	$0.60
Adjusted Diluted EPS (Non-GAAP)	$0.84	$0.88	$0.80
Gross Margin %	40.0%	38.8%	39.5%
Operating Income % of Revenue	7.9%	8.6%	8.1%
Net Income Margin % (to LKQ stockholders)	5.0%	5.3%	4.6%
S&P Global Consensus Revenue	N/A (unavailable)	N/A (unavailable)	N/A (unavailable)
S&P Global Consensus EPS	N/A (unavailable)	N/A (unavailable)	N/A (unavailable)

Note: S&P Global consensus data was unavailable due to API limit; we attempted retrieval via S&P Global but were rate-limited.

Segment breakdown (Revenue and Segment EBITDA):

Segment	Q4 2023 Revenue ($MM)	Q4 2024 Revenue ($MM)	Q4 2023 Segment EBITDA ($MM, %)	Q4 2024 Segment EBITDA ($MM, %)
Wholesale - North America	$1,467	$1,366	$239, 16.3%	$231, 16.8%
Europe	$1,546	$1,511	$129, 8.3%	$152, 10.1%
Specialty	$371	$349	$21, 5.7%	$14, 4.1%
Self Service	$118	$131	$7, 6.0%	$11, 8.3%
Total	$3,501	$3,357	$396, 11.3%	$408, 12.1%

KPIs and balance sheet/cash flow:

KPI	Q3 2024	Q4 2024
Free Cash Flow ($MM)	$341	$149
Operating Cash Flow ($MM, FY)	$886 (9M)	$1,121 (FY)
Total Debt ($B)	$4.4	$4.2
Leverage (Total, x EBITDA)	2.4x	2.3x
Cash & Equivalents ($MM)	$353	$234
Dividend per Share	$0.30 (Nov 2024)	$0.30 (Mar 27, 2025 payable)
Share Repurchases ($MM)	$125 (Q3)	$80 (Q4)
Effective Interest Rate	6.1% (Q2)	5.3% (Q4)
Variable Rate Debt / Swaps	$1.7B var.; $700M swapped	$1.7B var.; $700M swapped

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Organic parts & services growth	FY 2024	-(2.75%) to -(1.75%)	—	Updated lower in Oct; superseded by 2025 outlook
Organic parts & services growth	FY 2025	—	0% to 2%	Raised vs FY24 baseline
Diluted EPS (GAAP)	FY 2024	$2.59 to $2.73	—	FY24 updated lower in Oct
Diluted EPS (GAAP)	FY 2025	—	$2.91 to $3.21	New FY25 range
Adjusted Diluted EPS	FY 2024	$3.38 to $3.52	—	FY24 updated lower
Adjusted Diluted EPS	FY 2025	—	$3.40 to $3.70	New FY25 range
Operating Cash Flow ($B)	FY 2024	~$1.175	—	Maintained in Oct update
Operating Cash Flow ($B)	FY 2025	—	$1.075 to $1.275	Range set
Free Cash Flow ($B)	FY 2024	$0.85	—	Maintained in Oct update
Free Cash Flow ($B)	FY 2025	—	$0.75 to $0.90	Range set
Global tax rate assumption	FY 2024	27.0%	—	Maintained
Global tax rate assumption	FY 2025	—	27.0%	Maintained
FX assumptions (EUR/GBP/CAD)	FY 2024	EUR $1.10 / GBP $1.29 / CAD $0.73	—	Updated in Oct
FX assumptions (EUR/GBP/CAD)	FY 2025	—	EUR $1.04 / GBP $1.25 / CAD $0.70	New FY25
Dividend	Q4 2024	$0.30 declared (Nov)	—	Paid Nov 27
Dividend	Q1 2025	—	$0.30 declared (Mar 27 payable)	Maintained
Repurchase authorization	Oct 2024	+$1B to $4.5B total; $1.8B remaining	—	Increased authorization
Repurchase balance	Dec 2024	—	$1.7B remaining through Oct 25, 2026	Current balance

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
Repairable claims/macro	Q2: Repairable claims down ~7%; economic factors (insurance premiums, used car prices) main headwinds; study by BCG; expected temporary	Q4: Repairable claims down ~6% YoY; used car prices stabilizing; expect moderation in insurance costs in 2025	Improving into 2H 2025 per management
Europe margins and SKU rationalization	Q2: Double-digit long-term goal; SKU project targeting ~30% reduction in reviewed groups over 2–3 years	Q4: 10.1% EBITDA margin (record Q4); reviewed 50% of brands; targeting 600k SKUs by 2027; private label 22% aiming 30%	Positive margin trajectory; continued SKU work
Specialty (RV/marine)	Q2: Soft RV demand; margins pressured	Q4: Organic down 7.3% per day; RV outlook improving in 2025; expect 7–8% margin FY25	Early stabilization signs
Tariffs/supply chain	Q2: Panama Canal delays modest impact; price competition in Europe	Q4: Tariff environment fluid; NA wholesale “virtually 0” from China; Specialty ~15% exposure to China	Monitoring; potential competitive advantage
Capital allocation	Q2: Priority on buybacks; paused large M&A; $60M permanent cost cuts	Q4: $80M buybacks; >80% of FY24 FCF returned; finance committee formed; $0.30 dividend	Ongoing TSR focus

Management Commentary

CEO on Europe performance: “This was the third consecutive quarter the Europe segment attained double-digit EBITDA margins, and the Europe segment achieved its highest level of EBITDA dollars for a full year in 2024” .
CFO on Q4 performance: “Despite challenges in North America in Specialty and the stronger U.S. dollar affecting Europe, our fourth quarter performance exceeded expectations due to strong European results and some favorable nonrecurring items” .
CEO on tariffs: “Wholesale North America procures virtually 0 inventory from China… Specialty is the only segment with exposure to China, approximately 15%” .
CFO on FY2025 EPS drivers: “Our EPS guidance anticipates headwinds from lower foreign exchange rates, depreciation and amortization… partially offset by benefits from metals prices, interest and taxes” .
CEO strategic priorities: “Grow above the market… simplify operations… improve free cash flow… invest in small highly synergistic tuck-ins… return capital through repurchases and dividends” .

Q&A Highlights

Europe SKU rationalization: Management aims to reduce SKU count without harming revenue; private label expansion to lift margins; “so far, we haven’t seen any revenue concerns” .
Tariffs: Minimal direct exposure in NA; potential competitive benefit if competitors are more exposed; historically able to pass through costs .
Mega yards: Consolidation drives scale and longer holding periods, improving part sales per vehicle; early returns positive, long-term ROI embedded in model .
North America margin quality: ~50 bps FY nonrecurring uplift (legal settlement vs cyber outage) – normalized NA EBITDA margin ~16.1% .
Claims/total loss: Repairable claims down ~6% in Q4; total loss rate rose in 2024 but may moderate as used car prices stabilize .

Estimates Context

Wall Street consensus (S&P Global) for Q4 2024 revenue and EPS was unavailable at time of analysis due to API rate-limit; we attempted retrieval via S&P Global but were rate-limited.
Company said Q4 exceeded internal expectations and guidance; in absence of consensus, use internal guidance context for directional assessment .

Key Takeaways for Investors

Europe is the standout: sustained double-digit margins and SKU/private label work underpin multi-year margin expansion; CFO suggests 30–40 bps annual improvement for several years .
North America pressures should abate into 2H 2025 as repairable claims normalize with moderating insurance costs and stabilizing used car prices; normalized margin ~low-16% without one-time items .
Specialty likely troughing; management expects 7–8% FY25 margins with RV stabilization, offering upside if macro improves .
Strong cash generation supports TSR: >80% of FY24 FCF returned via buybacks/dividends; $1.7B repurchase capacity remains; dividend maintained at $0.30 .
2025 guide is conservative on growth (0–2% organic) but targets margin/FCF resilience; watch FX/metals/tariff headlines and Europe competitive dynamics .
Governance/capital allocation oversight strengthened via Finance Committee and new directors (insurance expertise), following cooperation with Ancora/Engine Capital—potential catalyst for portfolio optimization .
Near-term trading: stock likely sensitive to claims/used car pricing data, tariff developments, and signs of Europe private label penetration scaling; monitor Q1 cadence and summer weather impacts on collision volumes .