Slide 1: Second Quarter 2024 Earnings Call Presentation
Second Quarter 2024 Earnings Call Presentation July 25, 2024
Slide 2: Forward Looking Statements and Non-GAAP Financial Measures
Forward Looking Statements and Non-GAAP Financial Measures Statements and information in this presentation that are not historical are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are made pursuant to the “safe harbor” provisions of such A
Slide 3: Q2 2024 Highlights
Q2 2024 Highlights • Organic revenue for parts and services declined 2.1% ◦ Wholesale - North America: decrease of 5.3% reflecting repairable claims drop ◦ Europe: growth of 0.3% on a reported basis • Segment EBITDA(1) of $484 million; Segment EBITDA(1) margin of 13.0% ◦ Segment EBITDA(1) margin of
Slide 4: CEO Priorities - Justin Jude
CEO Priorities - Justin Jude Attentive Focus on Operational Excellence • Drive profitable revenue growth • Improve operating margins • Deliver strong cash flow • Continued portfolio evaluation Consistent Approach to Capital Allocation • Focus on total shareholder return ◦ Quarterly dividends ◦ Share
Slide 5: Outlook 2024
Outlook 2024(1) (effective only on the date issued: July 25, 2024) Full Year 2024 2024 Full Year Outlook Previous Outlook(5) Updated Outlook Organic parts and services revenue growth 2.5% to 4.5% (1.25%) to 0.25% Diluted EPS(2) $3.32 to $3.62 $2.71 to $2.91 Adjusted Diluted EPS(2)(3) $3.90 to $4.20
Slide 6: 2024 Adjusted EPS Guidance Walk
(1) 2024 Adjusted EPS Guidance Walk $4.50 Volume-driven lower organic growth; mix shift from Wholesale - North America to Europe drives negative margin impact Inflation outpacing European market pricing (3) Significant productivity to partially offset market dynamics $4.05 $4.00 $0.03 (3) ($0.37) ($
Slide 7: Consolidated Results Q2 2024
Consolidated Results Q2 2024 Revenue(1) EPS(2) Organic growth: (2.9)% +7.6% Currency translation (33.3)% (10.1)% $4,000 effect: (0.6)% $1.40 $1.40 Acquisition and divestiture: 11.1% $3,750 $3,711 $1.20 $1.20 $1.09 $1.05 $3,500 $1.00 $1.00 $0.98 $3,448 $3,250 $0.80 $0.80 $0.70 $3,000 $0.60 $0.60 $2,7
Slide 8: Financial Results Q2 2024
Financial Results Q2 2024 LKQ
Slide 9: Q2 2024 Revenue
Q2 2024 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign Organic Divestiture Exchange Total(1) 100.0% 4.3% 5.5% Wholesale - North America (5.3)% 30.2% (0.1)% 24.8% 1.5% 1.8% Europe 0.3% 0.8% (1.1)% —% 12.5% 12.8% Specialty (2.1)% 7.4% (0.2)% 5.2% 75.0% Self Service (1
Slide 10: Operating Results - Q2
Operating Results - Q2 Second Quarter ($ in millions, except per share data) 2024 2023 Change F/(U) Revenue $3,711 $3,448 7.6% Gross Margin 1,441 1,414 1.9% Operating Expenses 976 938 (4.1)% Operating Income 329 407 (19.2)% Income before provision for income taxes 266 389 (31.6)% Net income attribut
Slide 11: Wholesale – North America – Q2
Wholesale – North America – Q2 (2) Gross Margin Change % of Revenue 56.0% ($ in millions) 2024 2023 F/(U) 2024 2023 54.0% 52.0% 49.8% Total Revenue $1,474 $1,199 22.9% 50.0% Gross Margin $648 $598 8.5% 43.9% 49.8% 48.0% 49.5% 45.0% 46.0% 44.2% 43.9% Operating Expenses $397 $352 (12.9)% 27.0% 29.3% 4
Slide 12: Europe – Q2
Europe – Q2 Gross Margin 42.0% Change % of Revenue 41.0% 40.0% 39.4% ($ in millions) 2024 2023 F/(U) 2024 2023 39.0% Total Revenue(1) $1,639 $1,638 —% 37.8% 38.0% 38.7% Gross Margin $619 $645 (4.1)% 37.8% 39.4% 38.3% 37.9% 37.0% 37.8% Operating Expenses $456 $460 1.1% 27.8% 28.1% 36.0% (2) Segment E
Slide 13: Specialty – Q2
Specialty – Q2 Change % of Revenue Gross Margin ($ in millions) 2024 2023 F/(U) 2024 2023 30.0% Total Revenue $466 $443 5.1% 28.0% 26.7% Gross Margin $118 $115 2.7% 25.4% 26.0% 26.0% 25.7% 25.4% 26.0% 24.8% 25.0% Operating Expenses $79 $76 (4.8)% 17.0% 17.1% 24.0% Segment EBITDA(1) $41 $42 (2.2)% 8.
Slide 14: Self Service – Q2
Self Service – Q2 Change % of Revenue Gross Margin ($ in millions) 2024 2023 F/(U) 2024 2023 48.0% 43.9% Total Revenue(1) $133 $169 (20.9)% 45.0% 41.3% 41.3% 42.0% Gross Margin $56 $56 —% 42.3% 33.5% 42.3% 39.0% Operating Expenses $44 $50 12.9% 32.6% 29.6% 36.0% Segment EBITDA(2) $13 $7 93.1% 9.9% 4
Slide 15: YTD 2024 Capital Allocation
YTD 2024 Capital Allocation $2,000 ($ in millions) $816 $1,500 $1,000 $466 $(547) $(146) $(30) $(189) $500 $299 $(161) $301 $(155) $(52) $0 Beginning Cash Operating Proceeds from Repayment of Capex Acquisitions, Other Debt Dividends Share Other Activity, Ending Cash (1) 12/31/23 Cash issuance of Eur
Slide 16: Operating Cash Flow & Free Cash Flow
(1) Operating Cash Flow & Free Cash Flow (1) ($ in millions) ($ in millions) $1,600 100% $1,600 *Full Year Outlook 90% Actual FCF $1,400 conversion of $1,400 80% Adjusted $1,200* $1,200 EBITDA(2) $1,200 70% $1,000 60% 59% Targeted annual $1,000 60% FCF conversion of $850* Adjusted EBITDA $800 50% $8
Slide 17: Share Repurchase Program
Share Repurchase Program # of Shares 2.3 10.9 4.1 17.2 20.6 0.8 3.5 Repurchased Million Million Million Million Million Million Million $1,043M $877M $292M $117M $155M $60M $35M 2018 2019 2020 2021 2022 2023 2024 YTD Our Board of Directors has authorized a stock repurchase program under which we are
Slide 18: Leverage & Liquidity
Leverage & Liquidity ($ in millions) ($ in millions) Total Capacity(1) $4,500 $3,000 $4,334 $4,281 $2,500 $4,250 $2,000 $2,000 $2,000 2.3x 2.3x $4,000 $1,500 $976 $1,152 $1,000 $110 $3,750 $114 $500 $914 $734 $3,500 December 31, 2023 June 30, 2024 $0 December 31, 2023 June 30, 2024 (2) Total Debt To
Slide 19: Liquidity as of June 30, 2024
Liquidity as of June 30, 2024 • Rated Baa3 (investment grade) by Moody's; Outlook Neutral Credit Rating • Rated BBB- (investment grade) by S&P Global Ratings; Outlook Neutral • Rated BBB- (investment grade) by Fitch; Outlook Positive • Fixed Rate Instruments: ◦ $1.4 billion in aggregate ($800 millio
Slide 20: YTD Results and Supplementary Information
YTD Results and Supplementary Information
Slide 21: Consolidated Results YTD 2024
Consolidated Results YTD 2024 Revenue(1) EPS(2) +9.1% Organic growth: (2.0)% (37.4)% (15.1)% $8,500 Currency translation effect: 0.1% $3.00 $3.00 Acquisition and $8,000 divestiture: 11.0% $2.70 $2.70 $7,500 $7,414 $2.40 $2.40 $7,000 $2.12 $6,797 $2.10 $2.06 $2.10 $6,500 $1.80 $1.80 $1.80 $6,000 $1.5
Slide 22: YTD 2024 Revenue
YTD 2024 Revenue Revenue Changes by Source: Components of Revenue Acquisition and Foreign 100.0% Organic Divestiture Exchange Total(1) 4.4% 1.5% 5.7% 1.8% Wholesale - North America (4.3)% 28.6% —% 24.3% 12.0% 12.3% Europe 1.5% 1.1% 0.2% 2.8% 75.0% Specialty (1.8)% 7.7% (0.1)% 5.9% Self Service (10.8
Slide 23: Operating Results - YTD
Operating Results - YTD YTD ($ in millions, except per share data) 2024 2023 Change F/(U) Revenue $7,414 $6,797 9.1% Gross Margin 2,893 2,786 3.8% Operating Expenses 2,020 1,869 (8.1)% Operating Income 618 772 (19.9)% Income before provision for income taxes 497 750 (33.7)% Net income attributable t
Slide 24: Wholesale – North America – YTD
Wholesale – North America – YTD Change % of Revenue ($ in millions) 2024 2023 F/(U) 2024 2023 Total Revenue $2,974 $2,428 22.5% Gross Margin $1,311 $1,206 8.7% 44.1% 49.7% Operating Expenses $823 $718 (14.5)% 27.7% 29.6% Segment EBITDA(1) $500 $500 —% 16.8% 20.6% (1) Segment EBITDA for each segment
Slide 25: Europe – YTD
Europe – YTD Change % of Revenue ($ in millions) 2024 2023 F/(U) 2024 2023 (1) Total Revenue $3,283 $3,193 2.8% Gross Margin $1,242 $1,233 0.7% 37.8% 38.6% Operating Expenses $949 $901 (5.3)% 28.9% 28.2% Segment EBITDA(2) $317 $339 (6.5)% 9.7% 10.6% (1) The foreign currency impact on parts and servi
Slide 26: Specialty – YTD
Specialty – YTD Change % of Revenue ($ in millions) 2024 2023 F/(U) 2024 2023 Total Revenue $889 $840 5.9% Gross Margin $224 $221 1.4% 25.2% 26.3% Operating Expenses $160 $152 (5.5)% 18.0% 18.1% Segment EBITDA(1) $68 $73 (6.9)% 7.7% 8.7% (1) Segment EBITDA for each segment is a GAAP measure, while t
Slide 27: Self Service – YTD
Self Service – YTD Change % of Revenue ($ in millions) 2024 2023 F/(U) 2024 2023 (1) Total Revenue $270 $338 (20.1)% Gross Margin $116 $126 (7.6)% 43.1% 37.2% Operating Expenses $88 $98 10.4% 32.4% 28.9% Segment EBITDA(2) $29 $29 —% 10.9% 8.7% (1) Includes Other Revenue of $161 million and $215 mill
Slide 28: Metals Prices & Foreign Exchange
Metals Prices & Foreign Exchange Q2 2024 vs Q2 2023 Segment EBITDA Impact Average Metals Prices Wholesale - North ($ in millions) Self Service America Total $250 Scrap Steel $(3) $(2) $(5) $239 Precious Metals $(5) $(4) $(9) $227 $229 $200 $209 $203 Total $(8) $(6) $(14) $196 $151 $138 YTD 2024 vs Y
Slide 29: Inventory Procurement
Inventory Procurement ($ in millions, vehicles purchased in 000s) Q2 YTD 2024 2023 % Change 2024 2023 % Change Total aftermarket procurement $1,798 $1,486 21.0% $3,613 $2,930 23.3% Wholesale - North America salvage vehicles 66 65 1.5% 127 129 (1.6)% Europe wholesale salvage vehicles 7 7 —% 16 15 6.7
Slide 30: Non-GAAP Financial Measures
Appendix Non-GAAP Financial Measures This presentation contains non-GAAP financial measures. Following are reconciliations of each non-GAAP financial measure with the most directly comparable financial measure calculated in accordance with GAAP. 30
Slide 31: Constant Currency Reconciliation
Appendix 1 Constant Currency Reconciliation The following unaudited table reconciles revenue and revenue growth for parts & services and total revenue to constant currency revenue and revenue growth for the same measures: Three Months Ended Six Months Ended June 30, 2024 June 30, 2024 (in millions)
Slide 32: Constant Currency Reconciliation (cont.)
Appendix 1(cont.) Constant Currency Reconciliation Three Months Ended Six Months Ended June 30, 2024 June 30, 2024 Consolidated Europe Consolidated Europe Parts & Services Revenue growth as reported 9.0% —% 10.5% 2.8% Less: Currency impact (0.6)% (1.1)% 0.1% 0.2% Revenue growth at constant currency
Slide 33: Revenue and Segment EBITDA by segment
Appendix 2 Revenue and Segment EBITDA by segment Three Months Ended June 30 Six Months Ended June 30 % of % of % of % of (in millions) 2024 revenue 2023 revenue 2024 revenue 2023 revenue Revenue Wholesale - North America $1,474 $1,199 $2,974 $2,428 Europe 1,639 1,638 3,283 3,193 Specialty 466 443 88
Slide 34: Reconciliation of Net Income to Segment EBITDA
Appendix 3 Reconciliation of Net Income to Segment EBITDA Three Months Ended June 30 Six Months Ended June 30 (in millions) 2024 2023 2024 2023 Net income $186 $282 $344 $552 Less: net income attributable to noncontrolling interest 1 1 1 1 Net income attributable to LKQ stockholders $185 $281 $343 $
Slide 35: Segment EBITDA Reconciliation
Appendix 3 Segment EBITDA Reconciliation We have presented Segment EBITDA solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our segment profit and loss and underlying trends in our ongoing operations. Refer to p
Slide 36: Reconciliation of Net Income and Diluted EPS to Adjusted
Appendix 4 Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS Three Months Ended June 30 Six Months Ended June 30 (in millions, except per share data) 2024 2023 2024 2023 Net income $186 $282 $344 $552 Less: net income attributable to noncontrolling interest
Slide 37: Reconciliation of Net Income and Diluted EPS to Adjusted
Appendix 4 Reconciliation of Net Income and Diluted EPS to Adjusted Net Income and Adjusted Diluted EPS We have presented Adjusted Net Income and Adjusted Diluted Earnings per Share as we believe these measures are useful for evaluating the core operating performance of our continuing business acros
Slide 38: Forecasted EPS and Free Cash Flow Reconciliation
Appendix 5 Forecasted EPS and Free Cash Flow Reconciliation Forecasted Fiscal Year 2024 (in millions, except per share data) Minimum Outlook Maximum Outlook Net income(1) $719 $772 Adjustments: Amortization of acquired intangibles 144 144 Restructuring and transaction related expenses 122 122 Tax ef
Slide 39: Reconciliations of Operating Cash Flow to Free Cash Flow and Adjusted EBITDA
Appendix 6 Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Net Income to Adjusted EBITDA Three Months Ended June 30 Six Months Ended June 30 (in millions) 2024 2023 2024 2023 Net cash provided by operating activities $213 $480 $466 $703 Less: purchases of property,
Slide 40: Reconciliations of Operating Cash Flow to Free Cash Flow and Adjusted EBITDA
Appendix 6 Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Net Income to Adjusted EBITDA Year Ended December 31 (in millions) 2023 2022 Net cash provided by operating activities $1,356 $1,250 Less: purchases of property, plant and equipment 358 222 Free cash flow $
Slide 41: Reconciliations of Operating Cash Flow to Free Cash Flow and Adjusted EBITDA
Appendix 6 Reconciliations of Net Cash Provided by Operating Activities to Free Cash Flow and Net Income to Adjusted EBITDA We have presented free cash flow solely as a supplemental disclosure that offers investors, securities analysts and other interested parties useful information to evaluate our