| Metric (USD millions) | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|-----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| Wholesale - North America | $1,102  **[0001065696-23-000004_exhibit991.htm:14]**  | $1,229  **[0001065696-23-000040_lkq-20230331.htm:33]** **[0001065696-23-000040_lkq-20230331.htm:22]**  | $1,199  **[0001065696-23-000064_lkq-20230630.htm:40]**  | $1,387  **[0001065696-23-000102_lkq-20230930.htm:46]**  | $1,467  **[0001065696-24-000005_exhibit991.htm:13]**  | $1,500  **[0001065696-24-000086_lkq-20240331.htm:32]** **[0001065696-24-000086_lkq-20240331.htm:22]**  | $1,474  **[0001065696-24-000112_lkq-20240630.htm:38]**  | $1,423  **[0001065696-24-000125_lkq-20240930.htm:24]**  |
| Europe                | $1,390  **[0001065696-23-000004_exhibit991.htm:14]**  | $1,555  **[0001065696-23-000040_lkq-20230331.htm:33]** **[0001065696-23-000040_lkq-20230331.htm:22]**  | $1,638  **[0001065696-23-000064_lkq-20230630.htm:40]**  | $1,584  **[0001065696-23-000102_lkq-20230930.htm:46]**  | $1,546  **[0001065696-24-000005_exhibit991.htm:13]**  | $1,644  **[0001065696-24-000086_lkq-20240331.htm:32]** **[0001065696-24-000086_lkq-20240331.htm:22]**  | $1,639  **[0001065696-24-000112_lkq-20240630.htm:38]**  | $1,613  **[0001065696-24-000125_lkq-20240930.htm:24]**  |
| Specialty             | $365  **[0001065696-23-000004_exhibit991.htm:14]**  | $397  **[0001065696-23-000040_lkq-20230331.htm:33]** **[0001065696-23-000040_lkq-20230331.htm:22]**  | $443  **[0001065696-23-000064_lkq-20230630.htm:26]**  | $457  **[0001065696-23-000102_lkq-20230930.htm:46]**  | $371  **[0001065696-24-000005_exhibit991.htm:13]**  | $423  **[0001065696-24-000086_lkq-20240331.htm:22]**  | $466  **[0001065696-24-000112_lkq-20240630.htm:38]**  | $419  **[0001065696-24-000125_lkq-20240930.htm:24]**  |
| Self Service          | $144  **[0001065696-23-000004_exhibit991.htm:14]**  | $169  **[0001065696-23-000040_lkq-20230331.htm:33]** **[0001065696-23-000040_lkq-20230331.htm:22]**  | $169  **[0001065696-23-000064_lkq-20230630.htm:40]**  | $141  **[0001065696-23-000102_lkq-20230930.htm:46]**  | $118  **[0001065696-24-000005_exhibit991.htm:13]**  | $137  **[0001065696-24-000086_lkq-20240331.htm:32]** **[0001065696-24-000086_lkq-20240331.htm:22]**  | $133  **[0001065696-24-000112_lkq-20240630.htm:38]**  | $131  **[0001065696-24-000125_lkq-20240930.htm:24]**  |
| Eliminations          | $0  **[0001065696-23-000004_exhibit991.htm:14]**  | N/A | N/A | N/A | ($1)  **[0001065696-24-000005_exhibit991.htm:13]**  | N/A | ($1)  **[0001065696-24-000112_lkq-20240630.htm:38]**  | ($2)  **[0001065696-24-000125_lkq-20240930.htm:24]**  |
| **Total Revenue**     | $3,001  **[0001065696-23-000004_exhibit991.htm:14]**  | $3,349  **[0001065696-23-000040_lkq-20230331.htm:33]** **[0001065696-23-000040_lkq-20230331.htm:22]**  | $3,448  **[0001065696-23-000064_lkq-20230630.htm:40]**  | $3,568  **[0001065696-23-000102_lkq-20230930.htm:46]**  | $3,501  **[0001065696-24-000005_exhibit991.htm:13]**  | $3,703  **[0001065696-24-000086_lkq-20240331.htm:32]** **[0001065696-24-000086_lkq-20240331.htm:22]**  | $3,711  **[0001065696-24-000112_lkq-20240630.htm:38]**  | $3,584  **[0001065696-24-000125_lkq-20240930.htm:24]**  |

6a62daeb7bd33b119b23eb2e0bd14fbd316bd59382f008be66e49c790b2511c2

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

Selling, General, and Administrative Expenses (SG&A) [USD, Millions]

Research and Development (R&D) [USD, Millions]

Depreciation and Amortization (D&A) [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

Earnings Per Share (EPS) - Basic [USD, Units]

Earnings Per Share (EPS) - Diluted [USD, Units]

3d80efeb8b2154df27a42cb63032b626dabcea3ba599ed6680a8eb58d551b8ff

3313e198cae7bb0a43b53b3399b3a44c162bc360ad318873dbecdd5b7499fe9d

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from / Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

f2c08cb6db5aa706165397664a63554c0c430d0e2e9c74a874f46d4696ad532b

LKQ Corporation is a global distributor specializing in vehicle products, including replacement parts, components, and systems for vehicle repair and maintenance, as well as specialty aftermarket products and accessories that enhance vehicle performance, functionality, and appearance **[0001065696-24-000009_lkq-20231231.htm:4]** **[0001065696-24-000009_lkq-20231231.htm:95]** **[0001065696-24-000009_lkq-20231231.htm:56]**. The company operates through four main segments: Wholesale - North America, Europe, Specialty, and Self Service **[0001065696-24-000009_lkq-20231231.htm:4]** **[0001065696-24-000009_lkq-20231231.htm:95]** **[0001065696-24-000009_lkq-20231231.htm:56]**. LKQ Corporation sells vehicle products such as replacement parts and specialty products, and offers services including warranties, self-service yard fees, and diagnostic and repair services **[0001065696-24-000112_lkq-20240630.htm:12]** **[0001065696-24-000125_lkq-20240930.htm:12]**.

1. **Europe** - Offers alternative vehicle replacement and maintenance products across various European countries.
2. **Wholesale - North America** - Provides alternative vehicle collision replacement products, paint, and related products, and alternative vehicle mechanical replacement products in the United States and Canada.
3. **Specialty** - Distributes specialty vehicle aftermarket equipment and accessories in the U.S. and Canada.
4. **Self Service** - Operates retail facilities across the U.S. that sell recycled automotive products from end-of-life vehicles.

7da11e3b3c1cb67ca516353b71b67bd6fde91dd33936851805cbeb7d5d6ecbec

| Metric (USD Million) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|
| United States        | **1,681**  **[0001065696-23-000040_lkq-20230331.htm:11]**  | **1,690**  **[0001065696-23-000064_lkq-20230630.htm:12]**  | **1,759**  **[0001065696-23-000102_lkq-20230930.htm:16]**  | N/A     | **1,795**  **[0001065696-24-000086_lkq-20240331.htm:11]**  | **1,769**  **[0001065696-24-000112_lkq-20240630.htm:13]**  | **1,679**  **[0001065696-24-000125_lkq-20240930.htm:13]**  |
| Germany              | **416**  **[0001065696-23-000040_lkq-20230331.htm:11]**  | **436**  **[0001065696-23-000064_lkq-20230630.htm:12]**  | **418**  **[0001065696-23-000102_lkq-20230930.htm:16]**  | N/A     | **425**  **[0001065696-24-000086_lkq-20240331.htm:11]**  | **445**  **[0001065696-24-000112_lkq-20240630.htm:13]**  | **444**  **[0001065696-24-000125_lkq-20240930.htm:13]**  |
| United Kingdom       | **415**  **[0001065696-23-000040_lkq-20230331.htm:11]**  | **422**  **[0001065696-23-000064_lkq-20230630.htm:12]**  | **438**  **[0001065696-23-000102_lkq-20230930.htm:16]**  | N/A     | **445**  **[0001065696-24-000086_lkq-20240331.htm:11]**  | **423**  **[0001065696-24-000112_lkq-20240630.htm:13]**  | **430**  **[0001065696-24-000125_lkq-20240930.htm:13]**  |
| Other countries      | **837**  **[0001065696-23-000040_lkq-20230331.htm:11]**  | **900**  **[0001065696-23-000064_lkq-20230630.htm:12]**  | **953**  **[0001065696-23-000102_lkq-20230930.htm:16]**  | N/A     | **1,038**  **[0001065696-24-000086_lkq-20240331.htm:11]**  | **1,074**  **[0001065696-24-000112_lkq-20240630.htm:13]**  | **1,031**  **[0001065696-24-000125_lkq-20240930.htm:13]**  |
| Total Revenue        | **3,349**  **[0001065696-23-000040_lkq-20230331.htm:11]**  | **3,448**  **[0001065696-23-000064_lkq-20230630.htm:12]**  | **3,568**  **[0001065696-23-000102_lkq-20230930.htm:16]**  | N/A     | **3,703**  **[0001065696-24-000086_lkq-20240331.htm:11]**  | **3,711**  **[0001065696-24-000112_lkq-20240630.htm:13]**  | **3,584**  **[0001065696-24-000125_lkq-20240930.htm:13]**  |

8924df11b02456eabdedfc741cfd837771beedb70dd3d63e21bdd0bd9c80387a

eda223b90accf5c24f52d072c37111a0096474c0cd7de03fd5f8a92d1c6d032e

1. Given the continued softness in organic revenue in North America and Specialty, and with top-line headwinds expected to linger into 2025  **[LKQ_3403589_7]** , can you elaborate on the specific strategies you have in place to mitigate these declines and how confident are you that these initiatives will offset the revenue pressures?
2. You mentioned that the SKU rationalization in Europe is only 50% complete and won't be finished until early 2025, with benefits starting to show in the back half of 2025  **[LKQ_3403589_15]** ; considering the current economic slowdown in the U.K. and Germany  **[LKQ_3403589_20]** , what measures are you taking to expedite this process to improve profitability sooner?
3. With the recent sale of your Poland and Bosnia operations and indications of other potential divestitures  **[LKQ_3403589_1]** **[LKQ_3403589_16]** , are there additional underperforming businesses in your portfolio, and how do these divestitures align with your long-term strategic vision for Europe?
4. The hurricanes Helene and Milton forced significant closures of your locations in the Southeast and Florida, impacting revenue  **[LKQ_3403589_3]** ; how have these disruptions affected your Q3 results, and what is your outlook for recovery in these regions amidst potential future climate-related challenges?
5. In Europe, you cited increased competition and economic slowdowns in key markets like the U.K., Germany, and Benelux  **[LKQ_3403589_20]** ; how are you positioning LKQ to navigate these headwinds, and what are your expectations for market share and profitability in these regions going forward?

b2023dfe626f5545f1c7eb49676579fd2e2c66e40fe5db330fd388f2d73e1852

**Wholesale - North America salvage vehicles**

Number of Vehicles (thousands)

**Europe wholesale salvage vehicles**

**Self Service salvage vehicles**

Segment EBITDA Margin (%)

f3e14ab3ab25a757e99c4c9a261dab18fc2c9e401aa8d06741fa88efdaca8568

United States

Germany

United Kingdom

Other countries

North America

Europe

Specialty

- Other

Total Revenue

339a76f548f58085bebe88df7fe2620bc4d8273bc7154059c914b05819e39e93

- **OEMs**: Compete primarily on price and, to a lesser extent, on service and quality. They exert pricing pressure in the marketplace and have engaged in efforts to increase market share and restrict consumer choice  **[0001065696-24-000009_lkq-20231231.htm:23]** .
- **Alternative parts suppliers**: Compete on distribution network, efficient inventory management systems, and proprietary technology  **[0001065696-24-000009_lkq-20231231.htm:13]** .
- **Recycling businesses, refurbishing operations, parts remanufacturers, and internet-based suppliers**: Considered competitors in the vehicle collision and mechanical products market  **[0001065696-24-000009_lkq-20231231.htm:11]** .
- **Local owner-operated companies, larger regional suppliers, national and international providers, and internet-based suppliers and distributors**: Serve the vehicle replacement products industry and vehicle accessory parts industry  **[0001065696-24-000009_lkq-20231231.htm:23]** .
- **Warehouse distributors and mail order catalog businesses**: Deliver products to market and are considered competitors in the specialty vehicle aftermarket equipment and accessories market  **[0001065696-24-000009_lkq-20231231.htm:15]** .

895158476eb68c5d987756584cc60491c78121ea2e80cfb9638e5258005df75a

db5dd0a11ce2cf4d5555f54d5167b2f62d0bf85efaae03965ee32f402c22988c

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Organic Parts and Services Revenue**: Negative 275 basis points to negative 175 basis points  **[LKQ_3403589_7]** .
  2. **Adjusted Diluted EPS**: $3.38 to $3.52  **[LKQ_3403589_7]** .
  3. **Free Cash Flow**: 50% to 60% annual EBITDA conversion, approximately $850 million  **[LKQ_3403589_7]** .
  4. **North America's EBITDA Margins**: Low to mid-16s  **[LKQ_3403589_6]** .
  5. **Europe's EBITDA Margins**: Mid- to high 9s  **[LKQ_3403589_6]** .
  6. **Specialty's EBITDA Margin**: Closer to 7%  **[LKQ_3403589_6]** .
  7. **Global Tax Rate**: 27.0%  **[LKQ_3403589_7]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Organic Parts and Services Revenue**: Negative 125 basis points to positive 25 basis points  **[LKQ_3394258_8]** .
  2. **Adjusted Diluted EPS**: $3.50 to $3.70  **[LKQ_3394258_8]** .
  3. **Free Cash Flow**: 50% to 60% annual EBITDA conversion, approximately $850 million  **[LKQ_3394258_8]** .
  4. **Global Tax Rate**: 26.8%  **[LKQ_3394258_8]** .
  5. **North America Segment EBITDA Margin**: Around 17%  **[LKQ_3394258_6]** .
  6. **Europe Segment EBITDA Margin**: Mid- to high 9s  **[LKQ_3394258_7]** .
  7. **Specialties Segment EBITDA Margin**: Slightly lower than 8%  **[LKQ_3394258_7]** .
  8. **Self-Service Segment EBITDA Margin**: Roughly 10%  **[LKQ_3394258_7]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Organic Parts and Service Revenue Growth**: 2.5% to 4.5%  **[LKQ_3380235_6]** .
  2. **Adjusted Diluted EPS**: $3.90 to $4.20  **[LKQ_3380235_6]** .
  3. **Free Cash Flow**: Approximately $1 billion, 50% to 60% EBITDA conversion  **[LKQ_3380235_6]** .
  4. **Specialty EBITDA Margin**: Flat to slight increase  **[LKQ_3380235_5]** .
  5. **North America EBITDA Margin**: Around 17%  **[LKQ_3380235_4]** .
  6. **Europe EBITDA Margin**: Double-digit margins  **[LKQ_3380235_4]** .
  7. **Global Tax Rate**: 26.8%  **[LKQ_3380235_5]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  1. **Organic Parts and Services Revenue Growth**: 3.5% to 5.5%  **[LKQ_3374533_6]** .
  2. **Adjusted Diluted EPS**: $3.90 to $4.20  **[LKQ_3374533_6]** .
  3. **Free Cash Flow**: Approximately $1 billion, low 50% EBITDA conversion  **[LKQ_3374533_7]** .
  4. **Effective Tax Rate**: 26.8%  **[LKQ_3374533_7]** .
  5. **Capital Spending**: $350 million  **[LKQ_3374533_7]** .
  6. **Total Leverage Ratio**: 2.0x by Q1 2025  **[LKQ_3374533_6]** .
  7. **Interest Expense Sensitivity**: $12 million increase per 100 basis point rise  **[LKQ_3374533_6]** .
  8. **Foreign Exchange Rates**: Euro at $1.09, pound sterling at $1.27, Canadian dollar at $0.74  **[LKQ_3374533_6]** .

a835e759f7032aada6caa374730c681305a4eefbdc5b9199fa545e6830a7adab

| Name                  | Position                                                      | Start Date         | Short Bio                                                                                                                                                                                                                                                                                                                                                       |
|-----------------------|---------------------------------------------------------------|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Dominick Zarcone      | Executive Advisor                                             | July 1, 2024       | Dominick Zarcone became the President and CEO of LKQ in May 2017. He previously served as EVP and CFO from March 2015 to May 2017. He will retire as President and CEO on June 30, 2024, and transition to Executive Advisor from July 1, 2024, through December 31, 2024  **[0001065696-24-000009_lkq-20231231.htm:146]** **[0001065696-24-000069_lkq-20240321.htm:17]** **[0001065696-24-000039_lkq-20240312.htm:17]** **[0001065696-24-000069_lkq-20240321.htm:19]** .                                                                          |
| Michael T. Brooks     | Senior Vice President and Chief Information Officer           | February 2020      | Michael T. Brooks joined LKQ as SVP and CIO in February 2020. He previously held senior management positions at GATX Corporation and Constellation NewEnergy  **[0001065696-24-000009_lkq-20231231.htm:146]** **[0001065696-23-000008_lkq-20221231.htm:143]** .                                                                                                                                                                                           |
| Michael S. Clark      | Vice President – Finance and Controller                       | February 2011      | Michael S. Clark has been VP – Finance and Controller at LKQ since February 2011. He was previously Assistant Controller from May 2008 and SEC Reporting Manager at FMC Technologies, Inc.  **[0001065696-24-000009_lkq-20231231.htm:147]** **[0001065696-23-000008_lkq-20221231.htm:143]** .                                                                                                                                                             |
| Genevieve L. Dombrowski| Senior Vice President - Human Resources                       | March 2021         | Genevieve L. Dombrowski became SVP of Human Resources at LKQ in March 2021. She held various leadership positions at Republic Services and Aramark before joining LKQ  **[0001065696-24-000009_lkq-20231231.htm:148]** **[0001065696-23-000008_lkq-20221231.htm:143]** .                                                                                                                                                                                   |
| Rick Galloway         | Senior Vice President and Chief Financial Officer             | September 2022     | Rick Galloway became SVP and CFO of LKQ in September 2022. He was previously CFO of LKQ's Wholesale - North America and Self Service segments and held various positions at Alcoa Corporation  **[0001065696-24-000009_lkq-20231231.htm:148]** **[0001065696-23-000008_lkq-20221231.htm:141]** **[0001065696-24-000119_exhibit992-2024investord.htm:7]** .                                                                                                                                                       |
| Andy Hamilton         | Senior Vice President & President and Managing Director of LKQ Europe | January 2024       | Andy Hamilton became SVP and President and Managing Director of LKQ Europe in January 2024. He joined Euro Car Parts in 2010, which was acquired by LKQ in 2011, and held several executive roles including CEO of LKQ Euro Car Parts  **[0001065696-24-000009_lkq-20231231.htm:148]** **[0001065696-24-000009_lkq-20231231.htm:146]** .                                                                                                                   |
| Walter P. Hanley      | Senior Vice President - Development                           | December 2005      | Walter P. Hanley joined LKQ in December 2002 as VP of Development, Associate General Counsel, and Assistant Secretary. He became SVP of Development in December 2005  **[0001065696-23-000008_lkq-20221231.htm:143]** .                                                                                                                                                                                       |
| Justin L. Jude        | President and Chief Executive Officer                         | July 1, 2024       | Justin L. Jude became President and CEO of LKQ on July 1, 2024. He has been with LKQ since February 2004, serving in various roles including EVP and COO starting in January 2024  **[0001065696-24-000039_lkq-20240312.htm:13]** **[0001065696-24-000069_lkq-20240321.htm:13]** **[0001065696-24-000009_lkq-20231231.htm:146]** **[0001065696-24-000009_lkq-20231231.htm:148]** .                                                                                                                                                                |
| Matthew J. McKay      | Senior Vice President, General Counsel, and Corporate Secretary| March 2021         | Matthew J. McKay became SVP, General Counsel, and Corporate Secretary of LKQ in March 2021. He previously served as SVP of Human Resources and Associate General Counsel  **[0001065696-24-000009_lkq-20231231.htm:149]** **[0001065696-23-000008_lkq-20221231.htm:143]** .                                                                                                                                                                              |
| John R. Meyne         | Senior Vice President & President of Wholesale - North America | January 2024       | John R. Meyne became SVP and President of Wholesale - North America in January 2024. He has been with LKQ since 2009, following the acquisition of his aftermarket collision parts company  **[0001065696-24-000009_lkq-20231231.htm:149]** **[0001065696-24-000119_exhibit992-2024investord.htm:3]** .                                                                                                                                                          |
| Todd G. Cunningham    | Vice President, Finance and Controller                        | May 1, 2024        | Todd G. Cunningham serves as VP, Finance and Controller at LKQ Corporation, appointed on May 1, 2024  **[0001214659-24-008720_xslF345X02/marketforms-65817.xml:0]** **[0001065696-24-000112_lkq-20240630.htm:69]** .                                                                                                                                                                                                                                                 |

54bb0fcc7e341ccbf6e500d16e5e4b91b663fe8310f7803e9a0262e196355802

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | October 22, 2024  **[0001065696-24-000125_lkq-20240930.htm:64]**  |
| End Date/Duration        | October 25, 2026  **[0001065696-24-000125_lkq-20240930.htm:64]**  |
| Total additional amount  | **$1,000 million**  **[0001065696-24-000125_lkq-20240930.htm:64]**  |
| Remaining authorization  | **$796 million** as of September 30, 2024  **[0001065696-24-000125_lkq-20240930.htm:64]**  |
| Details                  | The program allows LKQ to purchase its common stock from time to time, with the amount and timing of repurchases depending on market conditions and corporate needs. The program does not obligate the company to acquire any specific number of shares and may be suspended or discontinued at any time.  **[0001065696-24-000009_lkq-20231231.htm:52]** **[0001065696-24-000086_lkq-20240331.htm:52]** **[0001065696-24-000125_lkq-20240930.htm:64]**  |

4bd2671df998d887cb2ae73664fe6c4043f05d4aed8df8d0744ed0cf8c2ddee7

**Annual guidance for FY 2024:**
- **Organic Parts and Services Revenue**: Negative 275 basis points to negative 175 basis points  **[LKQ_3403589_7]**  (lowered from negative 125 basis points to positive 25 basis points  **[LKQ_3394258_8]** )  
- **Adjusted Diluted EPS**: $3.38 to $3.52  **[LKQ_3403589_7]**  (lowered from $3.50 to $3.70  **[LKQ_3394258_8]** )  
- **Free Cash Flow**: 50% to 60% annual EBITDA conversion, approximately $850 million  **[LKQ_3403589_7]**  (no change from prior guidance  **[LKQ_3394258_8]** )  
- **Global Tax Rate**: 27.0%  **[LKQ_3403589_7]**  (raised from 26.8%  **[LKQ_3394258_8]** )  
- **North America's EBITDA Margins**: Low to mid-16s  **[LKQ_3403589_6]**  (lowered from around 17%  **[LKQ_3394258_6]** )  
- **Europe's EBITDA Margins**: Mid- to high 9s  **[LKQ_3403589_6]**  (no change from prior guidance  **[LKQ_3394258_7]** )  
- **Specialty's EBITDA Margin**: Closer to 7%  **[LKQ_3403589_6]**  (lowered from slightly lower than 8%  **[LKQ_3394258_7]** )  

82e36110d2162f7a8af5857dc0249f6253d87ae5e4a18ec11411458c9f563e73

| Name                  | Start Date | End Date | Reason for Change |
|-----------------------|------------|----------|-------------------|
| Deloitte & Touche LLP | 1998  **[0001065696-24-000009_lkq-20231231.htm:87]**    | Present  | Current auditor   |

dc8bafa7370a0822bdf27d18ee08a9532a6f4323755819aa3fa019054173f5fe

83d6bec167f7bf41f9f4d715e975621f1867a21a5dc42ca2914eba1ed66e7eb0

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $3,584 million (+0.4% YoY)  **[0001065696-23-000102_lkq-20230930.htm:2]** **[0001065696-24-000125_lkq-20240930.htm:2]**   
- Wholesale North America: $1,423 million (+3% YoY)  **[0001065696-23-000102_lkq-20230930.htm:30]** **[0001065696-24-000125_lkq-20240930.htm:24]** **[0001065696-24-000125_lkq-20240930.htm:12]**   
- Europe: $1,613 million (+2% YoY)  **[0001065696-23-000102_lkq-20230930.htm:30]** **[0001065696-24-000125_lkq-20240930.htm:24]** **[0001065696-24-000125_lkq-20240930.htm:12]**   
- Specialty: $417 million (**-9%** YoY)  **[0001065696-23-000102_lkq-20230930.htm:30]** **[0001065696-24-000125_lkq-20240930.htm:24]** **[0001065696-24-000125_lkq-20240930.htm:12]**   
- Self Service: $131 million (**-7%** YoY)  **[0001065696-23-000102_lkq-20230930.htm:30]** **[0001065696-24-000125_lkq-20240930.htm:24]** **[0001065696-24-000125_lkq-20240930.htm:12]**   
- United States: $1,679 million (-5% YoY)  **[0001065696-23-000102_lkq-20230930.htm:16]** **[0001065696-24-000125_lkq-20240930.htm:13]**   
- Germany: $444 million (**+6%** YoY)  **[0001065696-23-000102_lkq-20230930.htm:16]** **[0001065696-24-000125_lkq-20240930.htm:13]**   
- Other Countries: $1,031 million (**+8%** YoY)  **[0001065696-23-000102_lkq-20230930.htm:16]** **[0001065696-24-000125_lkq-20240930.htm:13]**   
- Operating Income (EBIT): $31 million (**-90%** YoY)  **[0001065696-23-000102_lkq-20230930.htm:2]** **[0001065696-24-000125_lkq-20240930.htm:2]**   
- Net Income: $192 million (**-8%** YoY)  **[0001065696-23-000102_lkq-20230930.htm:3]** **[0001065696-23-000102_lkq-20230930.htm:2]** **[0001065696-24-000125_lkq-20240930.htm:2]**   
- Diluted EPS: $0.73 (**-6%** YoY)  **[0001065696-23-000102_lkq-20230930.htm:2]** **[0001065696-24-000125_lkq-20240930.htm:2]**   

84b072a34ef129632768fc6fa65c19951b26608b110597c7a166940e98735616

| Year | Amount Due (in millions) | Debt Type                     | Interest Rate (%) | % of Total Debt                                                                 |
|----------|------------------------------|-----------------------------------|-----------------------|------------------------------------------------------------------------------------|
| 2024     | $17                          | Short-Term Debt                  | Not Specified         | 0.4% = (17 / 4,371) * 100 **[0001065696-24-000125_lkq-20240930.htm:53]** **[0001065696-24-000125_lkq-20240930.htm:50]**                                         |
| 2024     | $552                         | Euro Notes (Repaid in 2024)      | 3.88                  | 12.6% = (552 / 4,371) * 100 **[0001065696-24-000125_lkq-20240930.htm:16]** **[0001065696-24-000125_lkq-20240930.htm:18]**                                       |
| 2025     | $38                          | Term Loan Payable                | Not Specified         | 0.9% = (38 / 4,371) * 100 **[0001065696-24-000125_lkq-20240930.htm:53]** **[0001065696-24-000125_lkq-20240930.htm:16]**                                         |
| 2026     | $1,042                       | Term Loan Payable                | 6.32 / 5.92           | 23.8% = (1,042 / 4,371) * 100 **[0001065696-24-000125_lkq-20240930.htm:53]** **[0001065696-24-000125_lkq-20240930.htm:16]**                                     |
| 2028     | $1,801                       | Revolving Credit Facilities, U.S. Notes, Euro Notes | 6.33 / 5.75 / 4.13 | 41.2% = (1,801 / 4,371) * 100 **[0001065696-24-000125_lkq-20240930.htm:53]** **[0001065696-24-000125_lkq-20240930.htm:16]**                                     |
| 2031     | $835                         | Euro Notes                       | 4.13                  | 19.1% = (835 / 4,371) * 100 **[0001065696-24-000125_lkq-20240930.htm:16]** **[0001065696-24-000125_lkq-20240930.htm:18]**                                       |
| 2033     | $600                         | U.S. Notes                       | 6.25                  | 13.7% = (600 / 4,371) * 100 **[0001065696-24-000125_lkq-20240930.htm:16]**                                               |
| Various  | $127                         | Notes Payable, Finance Leases, Other Debt | 3.34 / 5.09 / 6.38 | 2.9% = (127 / 4,371) * 100 **[0001065696-24-000125_lkq-20240930.htm:16]**                                                |

a5efbf1fbbccab3499921658d163b6bbdbfcc34efb3310bed170a16853b9ee79

Organic Revenue Growth (Parts & Services) - Consolidated (percentage)

Organic Revenue Growth (Parts & Services) - Wholesale - North America (percentage)

Organic Revenue Growth (Parts & Services) - Europe (percentage)

Organic Revenue Growth (Parts & Services) - Specialty (percentage)

Organic Revenue Growth (Parts & Services) - Self Service (percentage)

Segment EBITDA for Wholesale - North America (USD millions)

Segment EBITDA Margin for Wholesale - North America (percentage)

Segment EBITDA for Europe (USD millions)

Segment EBITDA Margin for Europe (percentage)

Segment EBITDA for Specialty (USD millions)

Segment EBITDA Margin for Specialty (percentage)

Segment EBITDA for Self Service (USD millions)

Segment EBITDA Margin for Self Service (percentage)

Free Cash Flow (USD millions)

802bccd2617014e9d6f2eb6902a1c6e2b804b6aa94aa26aaf08bbe8d7f5844d9

- **Declining Repairable Claims Due to Economic Factors**: LKQ is experiencing a decrease in repairable claims in North America, primarily due to economic factors such as rising insurance premiums, higher repair costs, and declining used car values. CEO Justin Jude acknowledged that "the majority of the headwinds that we face in repairable claims" are due to these economic factors, which may be "hard to speculate on when some of these economic factors are going to start to improve." This ongoing decline could negatively impact revenue in the near term.  **[LKQ_3394258_18]** ,  **[LKQ_3394258_10]** ,  **[LKQ_3394258_14]**
- **Increased Price Competition from Smaller Competitors**: The company is facing increased price competition from smaller competitors in both Europe and North America. In North America, smaller competitors are "offering price more than service," which could pressure LKQ's margins. This increase in competitive pricing may affect profitability.  **[LKQ_3394258_15]**
- **Long-Term Impact of ADAS Technology Reducing Repairable Claims**: Advanced Driver-Assistance Systems (ADAS) are causing a consistent 1% year-over-year reduction in repairable claims. While LKQ anticipates growth opportunities from more complex parts and services, the ongoing reduction in accidents due to ADAS represents a long-term headwind to their core business. CEO Justin Jude confirmed that "we see that about as a 1% reduction, 1% year-over-year reduction in the repairable claims."  **[LKQ_3394258_21]**

98884f09d5b15d22639ab04c90631d38c188620bf742f14eca2433ea611aa02b

- **Economic slowdown in the U.K. and Germany** is negatively impacting LKQ's business, with these markets being the **worst economically** among their European operations.  **[LKQ_3403589_20]**
- The **SKU rationalization effort in Europe** will not be completed until **early 2025**, delaying anticipated improvements, which are expected to be **small in the back half of 2025**.  **[LKQ_3403589_15]**
- **Industry headwinds are weighing on top-line growth**, with **low visibility around recovery timelines** in both North America and Europe, potentially delaying recovery and impacting profitability.  **[LKQ_3403589_17]**

514d577bb9998888d299c5f10a3e55bf500d8baa3e09b78906849c17606e8d97

1. **North America Growth Guidance**  
   **Q:** Is 3.5%-5.5% organic growth guide fair for North America?  
   **A:** Rick Galloway indicated that North America will be on the higher side, primarily driven by volumes. He guided to an EBITDA percentage of **17%** for North America operations, including Uni-Select.  **[LKQ_3374533_11]** 

2. **Vendor Financing and Cash Flow**  
   **Q:** Room to drive vendor financing higher in Europe?  
   **A:** Ended the year with **$411 million** in vendor financing, including **$71 million** from Uni-Select, up from **$244 million** in 2022. Expect continued but smaller increases in 2024, still positively contributing to free cash flow.  **[LKQ_3374533_12]** ,  **[LKQ_3374533_13]** 

3. **Share Buybacks and Leverage**  
   **Q:** Will share buybacks be regular in capital allocation?  
   **A:** Pleased with free cash flow, hitting the **$1 billion** target, including **$30 million** in Q4 share purchases. Buybacks will be regular, but focus remains on reducing leverage ratios to **2x** by Q1 2025, so debt payments will be prioritized.  **[LKQ_3374533_12]** 

4. **Free Cash Flow Growth Outlook**  
   **Q:** When will free cash flow compound again?  
   **A:** After normalizing CapEx and trade working capital improvements, expect EBITDA growth to drive free cash flow. CapEx was **$358 million** this year, up from **$172 million** in 2020.  **[LKQ_3374533_13]** 

5. **European Vendor Financing Potential**  
   **Q:** Remaining gap between payables and inventory in Europe?  
   **A:** Had about a **20%** improvement in vendor financing in 2023; expect further, but smaller, improvements in 2024, still generating cash from trade working capital.  **[LKQ_3374533_13]** 

6. **Portfolio Optimization and Self-Serve**  
   **Q:** Do you need to own the self-serve business?  
   **A:** Continuously evaluating businesses; self-serve managed well in '23 and has been decent historically. Will optimize or consider divesting if it doesn't fit long-term model and financial metrics.  **[LKQ_3374533_14]** 

7. **Margin Expansion in Europe**  
   **Q:** Levers to drive margin expansion in Europe?  
   **A:** Focusing on category management, increasing private label offerings for better margins, leveraging inventory and logistics across countries to free up capital and improve fulfillment, and enhancing labor productivity.  **[LKQ_3374533_15]** 

8. **Improving Fulfillment Rates in Europe**  
   **Q:** How to improve fulfillment rates in Europe?  
   **A:** By rationalizing excess product lines and focusing on customer needs, carrying fewer brands but meeting applications, aiming to drive better fulfillment rates.  **[LKQ_3374533_15]** 

9. **Supply Chain Synergies with Bumper to Bumper**  
   **Q:** How much product can Bumper to Bumper source from Europe?  
   **A:** Identified less than **$10 million** in procurement synergies within the **$55 million** synergy target, leveraging European supply chain to bring in private labels to Canada, expanding product lines and improving margins.  **[LKQ_3374533_16]** 

10. **European Products in Canada**  
    **Q:** Opportunity to bring European products to Canada?  
    **A:** Targeting the **10%** of Canadian car park with European models by introducing product lines from European operations, capitalizing on LKQ's expertise in European parts.  **[LKQ_3374533_16]** 

11. **EV Battery Remanufacturing and Recycling**  
    **Q:** What's your approach to EV battery recycling?  
    **A:** Focusing on remanufacturing batteries by replacing defective cells to extend powertrain life. Exploring partnerships for recycling but not planning to own large facilities, leveraging salvage operations for supply access.  **[LKQ_3374533_17]** 

f9c3367f1ecb81adc7a261b38f45f04258bf59a17cf3f1c7ad446cdc454c3e20

- **Growing North American car parc leading to increased demand for alternative parts utilization**: LKQ is experiencing growth in the North American car parc, which is aging and driving the need for alternative parts utilization in both mechanical and collision sectors, whether used or remanufactured.  **[LKQ_3380235_16]**
- **European SKU rationalization to improve margins and efficiency**: The company is undertaking a significant SKU rationalization program in Europe, aiming for a **35% reduction in SKUs** over the next 2 to 3 years. This initiative is expected to lead to operational efficiencies, reduced suppliers, and increased margins through higher private label offerings.  **[LKQ_3380235_18]**
- **Positive progress in BUMPER to BUMPER business in Canada**: The integration of the BUMPER to BUMPER business has been very positive, with successful tuck-in acquisitions and opportunities arising from better collaboration between the hard parts and collision sides of the business, showcasing the full capabilities of LKQ in Canada.  **[LKQ_3380235_11]**

a5f3614d4701171f0690eb98e578af1b5bc924dddb49f75344a448c9a1770975

6580458e450b055cf3b97bf2076d208c720444d813f7b2b95f55f3e67ecddc93

- **LKQ is prioritizing share repurchases, viewing their shares as undervalued and focusing on total shareholder return.**  **[LKQ_3394258_12]**
- **Despite a 1% annual reduction in repairable claims due to ADAS technology, LKQ expects market growth from higher complexity and cost of replacement parts, increased parts per estimate, more calibration and service opportunities, and improvements in Alternative Parts Utilization (APU).**  **[LKQ_3394258_21]**
- **Management believes the decline in repairable claims has bottomed out, with revenue run rates stabilizing, indicating confidence in revenue for the back half of the year.**  **[LKQ_3394258_18]**

b573047455debb73295356c6cd672b4c4ed30ca729cfd0a346b1cd3354378c01

- **Higher insurance rates reducing repairable claims**: LKQ noted that **insurance premiums increased by 20% to 22% year-over-year**, leading to higher deductibles for consumers. This has resulted in some customers opting not to repair their vehicles, contributing to a reduction in repairable claims and potentially impacting LKQ's sales volumes.  **[LKQ_3380235_8]**
- **Rising labor costs in Europe affecting margins**: The company is experiencing **mid-teen increases in labor rates** in key European markets such as the Benelux area and Germany. While they are attempting to pass these costs onto customers through pricing actions, there is a risk that delays or inability to fully pass on these costs could **negatively impact profit margins** and market share.  **[LKQ_3380235_10]**
- **Potential future volume headwinds due to aging car parc dynamics**: Analysts expressed concerns that the **fewer new vehicle sales during the pandemic years (2020 and 2021)** could lead to a **smaller pool of 3- to 10-year-old vehicles** entering the market in the coming years. Since this age bracket is LKQ's primary market segment for collision parts, this may result in volume headwinds impacting organic growth.  **[LKQ_3380235_17]**

878b3b6b93aebe4ef8a7623b218b1c8cabd454ec67f5e15579ec9173a91057ec

- **LKQ is heavily weighted towards share repurchases**, believing it's the best use of capital at current stock price levels, indicating confidence in the company's future and returning value to shareholders.  **[LKQ_3403589_17]**
- **Integration of acquired businesses is providing competitive advantages**, such as the integration of FinishMaster into LKQ's footprint, enabling **superior service levels** and **cost efficiencies** that competitors find hard to match.  **[LKQ_3403589_10]**
- **Operational excellence initiatives**, including SKU rationalization in Europe, are expected to **drive better returns** by simplifying and rationalizing the business, with over **425,000 SKUs reviewed**, representing more than **50% of the project scope**.  **[LKQ_3403589_15]**

20a6aaa4b66b1966c9eec4b9f34eb09f328d398271ac41c03b7af6234199493e

- **Optimizing European Operations for Margin Expansion:** LKQ is accelerating the integration of its European businesses to leverage inventory and logistics across borders, focusing on category management and driving more private label products to improve margins. This strategy is expected to enhance fulfillment rates, drive organic revenue, and increase labor productivity.  **[LKQ_3374533_15]**
- **Strong Free Cash Flow Enabling Capital Allocation:** The company continues to generate strong free cash flow, achieving **$1 billion** in free cash flow in 2023. This financial strength enables balanced capital allocation, including debt reduction, share repurchases, and dividends, contributing to shareholder value. Management expects continued cash generation from trade working capital and is committed to maintaining a leverage ratio of **2x**.  **[LKQ_3374533_12]** **[LKQ_3374533_13]**
- **Growth Opportunities in EV Battery Remanufacturing and Recycling:** LKQ is focusing on the remanufacturing of EV batteries by replacing defective cells to extend battery life, positioning itself as a key player in the EV supply chain. The company is also exploring partnerships in battery recycling, leveraging its salvage operations to access batteries, an area where other companies lack supply chain access.  **[LKQ_3374533_17]**

19fabb2d8437ba3740d65c417e3c0505dba1b332401cc7274b5bb2d46bcb7956

1. **Repairable Claims Outlook**  
   **Q:** Is the downturn in repairable claims temporary?  
   **A:** Management believes the decrease in repairable claims is largely temporary, driven by economic factors such as rising insurance costs, higher deductibles, and lower used car values.  **[LKQ_3394258_10]** **[LKQ_3394258_18]**  They anticipate that as these factors stabilize, repairable claims volume will level off.  **[LKQ_3394258_18]** **[LKQ_3394258_19]**  The company conducted a deep dive with BCG, confirming that while some lost volume may not return, there is pent-up demand that could gradually come back.  **[LKQ_3394258_10]** **[LKQ_3394258_14]** **[LKQ_3394258_18]** 

2. **EPS Guidance Impact**  
   **Q:** What's behind the $0.37 EPS guidance reduction?  
   **A:** The **$0.37** reduction in EPS guidance is primarily due to lower volume, accounting for over **$0.50** impact, partially offset by cost reductions.  **[LKQ_3394258_16]**  Management is implementing **$60 million** in productivity initiatives to mitigate the impact.  **[LKQ_3394258_16]** **[LKQ_3394258_11]** 

3. **Cost-Cutting Measures**  
   **Q:** Will the $60 million cost cuts be permanent?  
   **A:** Yes, the **$60 million** in cost reductions, mainly from North America, are permanent.  **[LKQ_3394258_11]**  These actions aim to improve performance, with similar measures in Europe contributing in Q4 and fully benefiting in 2025.  **[LKQ_3394258_11]** 

4. **Capital Allocation Priorities**  
   **Q:** Is share repurchase the priority for free cash flow?  
   **A:** Management confirms that with comfortable debt levels, the priority for free cash flow is share repurchases to enhance total shareholder return.  **[LKQ_3394258_12]** 

5. **Growth Outlook for 2024-2025**  
   **Q:** Will there be a rebound in growth in 2025?  
   **A:** Management does not anticipate a significant rebound in 2025 but expects growth to resume from the new baseline established in the back half of 2024.  **[LKQ_3394258_20]**  They see no indications of a substantial uptick but expect normalized consumer behavior as economic factors stabilize.  **[LKQ_3394258_19]** **[LKQ_3394258_20]** 

6. **Impact of Accident Avoidance Technology**  
   **Q:** Is accident avoidance tech reducing accident frequency?  
   **A:** Advanced driver-assistance systems (ADAS) are reducing accidents by about **1%** annually.  **[LKQ_3394258_21]**  However, management expects market growth due to higher parts complexity, increased calibration services, and opportunities to improve average parts per estimate.  **[LKQ_3394258_21]** 

7. **Price Competition**  
   **Q:** Are smaller competitors impacting pricing?  
   **A:** There is price competition from smaller players in both Europe and North America.  **[LKQ_3394258_15]**  In North America, as smaller competitors restock inventory post-pandemic, they have resumed aggressive pricing, but this is not new and is part of the competitive landscape.  **[LKQ_3394258_15]** 

8. **Total Loss Rate**  
   **Q:** What was the total loss rate in the quarter?  
   **A:** The total loss rate decreased from **21.4%** in Q1 to approximately **20.7%** in Q2.  **[LKQ_3394258_15]** **[LKQ_3394258_21]** 

9. **CDK Outage and Hurricane Impact**  
   **Q:** Did CDK outage or Hurricane Beryl affect results?  
   **A:** The CDK outage led to a small volume uptick as some OEM dealers couldn't service parts, but it wasn't enough to offset a **7.1%** decline in repairable claims.  **[LKQ_3394258_17]**  Hurricane Beryl caused some facility shutdowns with minimal impact on volume.  **[LKQ_3394258_17]** 

10. **Repair Frequency Data**  
    **Q:** Do you have repair frequency data?  
    **A:** Exact repair frequency numbers are not available.  **[LKQ_3394258_13]**  However, management notes that while frequency wasn't as bad as repairable claims, accidents were occurring but weren't being repaired due to economic factors.  **[LKQ_3394258_13]** 

11. **Weather vs Economic Factors**  
    **Q:** How much weakness is due to weather vs economics?  
    **A:** While weather had a significant impact, the majority of the weakness in repairable claims is due to economic factors.  **[LKQ_3394258_10]**  After consulting with customers and BCG, management considers these factors temporary in nature.  **[LKQ_3394258_10]** 

f13e3a8dbdf8d37701b5073d0da25378f4ec61d3569d6dc3a6aef31bd3e80927

1. **Earnings Guidance Impact**  
   **Q:** Can you quantify the impact from storms and strikes on full-year guidance?  
   **A:** Rick Galloway explained that while storms had minimal impact on Q3, ongoing clean-up from hurricanes Helene and Milton is affecting Q4. Additionally, a decline in repairable claims and the impacts of two hurricanes and a strike have led the company to lower EPS guidance by **$0.07**, from consensus **$3.53** down to **$3.45**.  **[LKQ_3403589_12]** 

2. **2025 Recovery Outlook**  
   **Q:** When do you expect macro pressures to abate and claims to improve?  
   **A:** Justin Jude anticipates that used car pricing, which has been declining for almost two years, should start to moderate by mid-2025. As used car values increase, it becomes more economical for consumers to repair vehicles, improving repairable claims in the back half of next year.  **[LKQ_3403589_13]** 

3. **Capital Spending and Free Cash Flow**  
   **Q:** What capital spending adjustments maintain the $850M free cash flow, and implications for 2025?  
   **A:** The team managed trade working capital effectively, and some capital projects not meeting hurdle rates are delayed or canceled. These adjustments won't impact earnings or growth and aren't expected to increase capital spending in 2025. The free cash flow guidance remains at **$850 million** for 2024.  **[LKQ_3403589_14]** 

4. **Acquisition Strategy Amid Headwinds**  
   **Q:** Are you considering acquisitions as peers face headwinds?  
   **A:** Justin Jude stated that LKQ is not pursuing large acquisitions given the current stock price, focusing instead on smaller, highly synergistic tuck-in acquisitions with returns in the mid- to upper teens over a short period.  **[LKQ_3403589_17]** 

5. **Competition in Paint Category**  
   **Q:** What's happening in the paint category, and how are you addressing competition?  
   **A:** Due to the quiet period during the Uni-Select acquisition, FinishMaster lost some accounts pre- and post-acquisition. LKQ has since integrated the footprint and sales teams, moderated losses, and begun growing share. They believe their service and availability make it hard for competitors to match them.  **[LKQ_3403589_9]** 

6. **Value of Paint in Portfolio**  
   **Q:** How does having paint in your portfolio benefit customers?  
   **A:** Integrating FinishMaster allows LKQ to deliver paint to body shops twice a day, leveraging existing parts delivery routes. This high service level and cost structure make it difficult for competitors to compete.  **[LKQ_3403589_10]** 

7. **Aftermarket Business Dynamics**  
   **Q:** What's affecting the aftermarket business in North America?  
   **A:** The aftermarket segment is tied to collision repairable claims, which have decreased, putting downward pressure on sales. Tough comparisons from last year, including benefits from State Farm re-entering the market and OEM strikes, also impacted performance.  **[LKQ_3403589_11]** 

8. **Ongoing Portfolio Review**  
   **Q:** Are you considering closing other small operations in Europe?  
   **A:** Portfolio review is ongoing, and there may be more divestitures ahead. The company prefers to demonstrate results rather than discuss plans in advance.  **[LKQ_3403589_16]** 

9. **Elitek Business Update**  
   **Q:** Can you provide an update on the Elitek diagnostics business?  
   **A:** The Elitek business continues to grow but at a slower pace due to declining repairable claims. It remains strong with good margins. LKQ has no concerns regarding the ongoing lawsuit with Repairify.  **[LKQ_3403589_18]** 

10. **Working Capital Improvements**  
    **Q:** How much more can you enhance working capital to boost cash flow?  
    **A:** They've seen about a **10%** improvement in trade working capital, with European operations up **12%** in supply chain financing. Improvements are expected to continue for another year or two before tapering off around 2026.  **[LKQ_3403589_19]** 

11. **Competition in European Markets**  
    **Q:** Is competition increasing in Europe, especially from GSF in the U.K.?  
    **A:** While GSF is a competitor in the U.K., LKQ faces competitors in every market. The worst economic conditions are in the U.K. and Germany, but LKQ competes daily across all markets.  **[LKQ_3403589_20]** 

12. **European Product Review Timeline**  
    **Q:** When will the European product review be completed and benefits realized?  
    **A:** The analysis of 25 product categories covering 425,000 SKUs will be completed in early 2025, with changes expected to show improvements, albeit small, in the back half of 2025.  **[LKQ_3403589_15]** 

d8958e86633297a963c2890bfe10a861c4c40b98987bd8c3e457420c4938673c

- **Limited further potential for cash flow improvements from vendor financing in Europe**: While LKQ saw significant improvement in their vendor financing program in 2023, increasing from $244 million to $411 million, they cautioned that similar levels of improvement are not expected in 2024. This suggests that prior benefits to cash flow from this source may not be repeatable at the same scale.  **[LKQ_3374533_12]** **[LKQ_3374533_14]**
- **Challenges in European operations requiring significant integration efforts**: The company acknowledged the need to accelerate integration across its European businesses to drive margin expansion. The current fragmentation and inefficiencies may impact profitability, and the integration process could take time and resources to yield results.  **[LKQ_3374533_15]**
- **Entering the EV battery remanufacturing market poses risks**: LKQ is focusing on remanufacturing EV batteries and exploring partnerships for recycling. This strategic move into a new and evolving market may involve operational challenges, capital investments, and heightened competition, which could introduce risks to the company's performance.  **[LKQ_3374533_17]** **[LKQ_3374533_13]**

06480b90bd265f199ccc5c3b2dcf1ad51fcdd7f6428f8021025eae707ca10551

1. **North America Gross Margin and 17% EBITDA Margin Guidance**  
   **Q:** Explain North America gross margin decline and 17% margin guidance.  
   **A:** The gross margin decline in North America was primarily due to **mix effects** from the Uni-Select acquisition and a **salvage margin squeeze** that began in Q3 last year and continued as expected.  **[LKQ_3380235_9]**  Despite this, we expect to achieve a **17% EBITDA margin** for the year, as we anticipate margins to rebound with improved leverage and cost synergies from the Uni-Select integration.  **[LKQ_3380235_9]** **[LKQ_3380235_13]** 

2. **2024 Organic Growth Drivers: Volume vs Pricing**  
   **Q:** What drives 2024 organic growth—volume or pricing?  
   **A:** The revised 2024 organic parts and services revenue growth guidance of **2.5% to 4.5%** is mainly driven by **volume** rather than pricing.  **[LKQ_3380235_14]**  The adjustment reflects the Q1 revenue miss related to repairable claims, but we're pleased with growth in our European operations, which saw over **4%** organic per day growth.  **[LKQ_3380235_14]** 

3. **European Performance and Wage Inflation Impact**  
   **Q:** How did Europe perform amid wage inflation?  
   **A:** Europe showed **good organic growth** across all regions, with Central and Eastern Europe performing particularly well.  **[LKQ_3380235_10]**  However, **wage inflation** impacted EBITDA margins by about **200 basis points**, starting from Q2 last year.  **[LKQ_3380235_10]**  We've clawed back roughly **half** of that through pricing and productivity initiatives and expect further improvements as we continue to pass through price increases.  **[LKQ_3380235_10]** 

4. **Car Parc Dynamics and Future Growth**  
   **Q:** Will aging car parc impact future growth?  
   **A:** We see the car parc in North America **growing and aging**, which is positive for our business as it leads to increased alternative parts utilization in both mechanical and collision segments.  **[LKQ_3380235_15]** **[LKQ_3380235_16]**  Our sweet spot remains vehicles aged **3 to 10 years**, and we don't foresee the shift in car parc dynamics as a headwind to organic growth.  **[LKQ_3380235_15]** **[LKQ_3380235_16]** 

5. **Impact of Higher Insurance Prices on Repairable Claims**  
   **Q:** How do higher insurance prices affect business?  
   **A:** Significant increases in insurance prices—**20% to 22% year-over-year**—and higher deductibles have led some customers to forego repairs.  **[LKQ_3380235_8]**  While we believe the primary driver for reduced repairable claims in Q1 was **weather**, higher insurance rates and swings in used car pricing have also had some effect.  **[LKQ_3380235_8]** 

6. **European SKU Rationalization Impact on Margin**  
   **Q:** How will SKU reduction affect margins?  
   **A:** We plan to reduce SKUs by **35%** in Europe, focusing on fewer suppliers and expanding private label products, which typically come at **higher margins**.  **[LKQ_3380235_17]**  This should create operational efficiencies and contribute to margin improvements over the next couple of years, although we haven't quantified the exact impact yet.  **[LKQ_3380235_17]** 

7. **Alternative Parts Penetration and State Farm Impact**  
   **Q:** Any change in alternative parts penetration?  
   **A:** We saw an uptick in Alternative Parts Utilization (APU) of approximately **260 basis points** year-over-year in Q1, driven primarily by State Farm's increased use of recycled and aftermarket parts.  **[LKQ_3380235_12]**  This represents a market share gain in APU.  **[LKQ_3380235_12]** 

8. **Mechanical Repair Business Trends**  
   **Q:** How is the mechanical repair side trending?  
   **A:** Mechanical parts sales are up, driven by increased **vehicle miles traveled**, which leads to more maintenance and repairs.  **[LKQ_3380235_11]**  In Canada, our BUMPER to BUMPER business has integrated recent acquisitions and is showing positive progress, benefiting from collaboration between hard parts and collision sides.  **[LKQ_3380235_11]** 

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LKQ Corp (LKQ)

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